ASX LETTER OF 9 MAY 2012

RNS Number : 0663D

Scotgold Resources Ltd

10 May 2012

 



10 May 2012

Mr Wade Baggott

Senior Advisor, Listings (Perth)

ASX Limited

Level 8, Exchange Plaza

2 The Esplanade

Perth WA 6000

By email

ASX LETTER OF 9 MAY 2012

We refer to the Australian Securities Exchange letter dated 9 May 2012 regarding the information contained in the Appendix 5B and respond to the questions as follows.

ASX Question 1.         Is it possible to conclude on the basis of the information provided that if the Company were to continue to expend cash at the rate for the quarter indicated by the Appendix 5B, the Company may not have sufficient cash to fund its activities?  Is this the case, or are there other factors that should be taken into account in assessing the Company's position?

SGZ Reply             The Company confirms it has sufficient cash to fund its activities. In addition to the cash on hand at March 31 2012 of $363,000 the Company has received $187,929 by way of options exercised in April. The Company's cash expenditure is based on exploration programs and development studies which are by their nature discretionary and thus able to be managed within the Company's financial capabilities. Therefore, past cash expenditure rates are not an accurate guide to ongoing expenditure rates.

ASX Question 2.         Does the Company expect that in the future it will have negative operating cash flows similar to that reported in the Appendix 5B for the quarter and, if so, what steps has it taken to ensure that it has sufficient funds in order to continue its operations at that rate?"

SGZ Reply             The Company will have negative operating cash flows for the foreseeable future as is normal for a resource company conducting exploration and development activities. As noted in 1, future operating cash flows will be managed within the Company's financial capabilities. As has been stated in various press releases the Company is entering into a mine development and plans to raise both equity and debt to fund the capital expenditure and ongoing exploration and working capital. Current discussions with both equity and debt providers gives the Board confidence that a capital raising to support the continuing operations of the Company is achievable.

The Company continues to monitor its cash and funding requirements.

ASX Question 3.         What steps has the Company taken, or what steps does it propose to take, to enable it to continue to meet its business objectives?

SGZ Reply             Refer points 1. and 2. above. The Company continually reviews its expenditure commitments and as additional funds are required, the Company will actively pursue fund raising initiatives.

ASX Question 4.         Can the Company confirm that it is in compliance with the listing rules, and in particular, listing rule 3.1?

SGZ Reply             Scotgold Resources Limited hereby confirms it is in compliance with the listing rules and in particular listing rule 3.1.

ASX Question 5          Please comment on the Company's compliance with listing rule 12.2, with reference to the matters discussed in the note to the rule.

SGZ Reply             The Company is of the opinion that it is in compliance with listing rule 12.2 for the reasons stated in the Quarterly Activity Report and further that:

a)         The Company has no material current liabilities;

b)         The Company has sufficient cash to meet its current activities;

c)         All assets are unencumbered; and

d)         The Company has a reasonable expectation, based on current discussions with a variety of other parties, that it will be able to fund its planned future activities.

If you have any queries in this regard please do not hesitate to contact me.

Yours faithfully,

P Newcomb

Company Secretary

Scotgold Resources Limited

 

END

 

 

MSCBKKDDCBKKQPD