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Scotgold Resources Shares Fall as Production Takes a Hit

Sam Boughedda
Sam Boughedda trader
Updated 27 Apr 2021

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Shares of Scotgold Resources (LON: SGZ) have fallen on Tuesday, currently down 22%, after the company said it is looking at short term financing options to ensure it has adequate funds through a production ramp-up period.

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In an update released this morning, Scotgold revealed it has resolved the various outstanding technical issues affecting the processing plant at the Cononish Project. Scotgold said it is now operating consistently, and they are focused on ramping up to full design capacity expeditiously.

However, the AIM-listed firm commenced a review of the mine plan for Cononish at the beginning of April 2021, and it was concluded that the ramp-up of underground mining production will be slower than initially planned.

Scotgold stated that the mine development is insufficient to provide optimal ore quantity and quality in the short term, but it is not predicted to have long term impacts.

“The mine team at Scotgold has undergone a reshuffle in leadership and approach to ensure it can deliver reliable and robust short term mine plans. Accordingly, the company expects production for calendar year 2021 to be materially less than the guidance range previously announced on 31 March 2021,” stated Scotgold.

Despite the company raising £1.5 million last month, the delays have impacted the company’s cash position, and they are now investigating short term financing options.

Scotgold Resources shares are currently trading at 55p, down 21.99% from Monday’s close.

Should you invest in Scotgold Resources shares?

Scotgold Resources shares are traded on the London stock exchange’s AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Scotgold Resources shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.