Scotland's only gold mine on brink of collapse, says main shareholder

Scotgold Resources operates the Cononish gold mine near Tyndrum

Scotland's only gold mining company is close to going into administration, according to its main creditor.

Nat le Roux, who owns a third of shares in Scotgold Resources, announced he is resigning from the board "with considerable regret".

Confirming administrators are due to be appointed soon, he said he faced an "unavoidable conflict of interest" if he stayed on the board.

The company operates the Cononish gold mine near Tyndrum.

Its management was bullish about its prospects at the start of this year, having trebled gold production during 2022 to more than 8,500 ounces (241kg).

• Warning over future of Scotland's only gold mine

• Read more stories on Scottish business

Scotgold Resources sold more than 1,000 tonnes of gold concentrate last year for nearly £12m.

The company also holds licences to drill for gold in other parts of the central Highlands of Scotland, where it sees good prospects.

But subsequent mining developments and the need for more capital have thrown the firm into a financial crisis.

In July, it said the first half of the year was "disappointing" in terms of gold production and development of the underground mine at Cononish.

It added its long-term future would depend on the quantity and grade of ore mined and processed, and whether that remains within the company's forecasts.

Investor talks 'unsuccessful'

Mr le Roux and a company he controls delayed payments on money he was owed, and he contributed to a £4.5m of new funding from shareholders in two tranches this year.

A review of mining strategy was being carried out during summer, and in September, most staff were put on unpaid leave. There were nearly 100 working for the company at the start of the year.

Trading of shares on London's Alternative Investment Market was also suspended in September.

Discussions with one unnamed potential investor did not conclude with a deal and on Tuesday, the company told shareholders that talks with a second potential strategic investor had also ended without success.

It stated: "Therefore, the directors, having assessed the options open to them, are now considering the appointment of administrators over the coming days".

In Mr le Roux's resignation statement on Wednesday, he said: "After almost 10 years on the board, I have made this decision with considerable regret.

"As Scotgold's operating subsidiary heads towards administration, there is an unavoidable conflict between the interests of the company and my personal interest as the major secured creditor, and I believe it is in the interests of shareholders generally that I now stand down.

"I remain the company's largest shareholder, and the board has my full support at this very difficult time."

Nat le Roux was born in Scotland and went to school in Edinburgh. He had a successful career in London finance, becoming chief executive of IG Group between 2002 and 2006.