Embattled Scotgold Resources places staff on unpaid leave

Struggling miner Scotgold Resources, which operates Scotland’s only gold mine, said on Friday it had begun talks with an administration specialist as a precautionary measure should it fail to secure financing to continue operating.

The company, which earlier this month halted trading on insolvency risks, also said it had put staff on unpaid leave “until further notice.”

Scotgold said it will keep key trained staff members for mine and plant maintenance. “This care and maintenance team will maintain the company’s assets and ensure compliance with statutory, regulatory and environmental reporting obligations for the immediate future,” it said in a statement.

The company, which received initial approval for the Cononish mine in 2018, poured first gold in December 2020 and achieved commercial production in July last year.

A few months later, on March 27, Scotgold shocked shareholders by announcing that its gold grades, revenues and working capital had suddenly deteriorated, to a point where its ability to keep operations going was in question.

It cited failed efforts to optimize production using what it considered a more cost-effective method of mining called long hole stoping. Any delays in switching to the new process, the miner warned at the time, would inevitably put a strain on its finances.

In July, Scotgold launched a third-party review of its operations after “disappointing” production results in recent months. This would initially encompass an assessment of the mine design, schedule and production forecasts.