ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2018

RNS Number : 1821C

Scotgold Resources Ltd

27 September 2018

 

SCOTGOLD RESOURCES LIMITED

ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2018

Scotgold Resources Limited ("Scotgold" or "the Company") (AIM:SGZ), which is focused on the development of its advanced stage Cononish gold and silver project in Scotland (Cononish Project) announces its final results for the year ended 30 June 2018.

The full results will be available shortly via the Company's website, www.scotgoldresources.com.

OPERATIONS REVIEW

BACKGROUND - 

Scotgold Resources Limited ("the Company") was established in 2007 and is listed on the AIM market of the London Stock Exchange (AIM:SGZ). The Company delisted from the Australian Securities Exchange on 21 October 2016.

The Company's principal objectives have continued to be:

a) the advancement of the Cononish Gold and Silver Project in Scotland's Grampian Highlands;

b) the ongoing exploration of the highly prospective tenements comprising the Grampian Gold Project with the view to identifying further project opportunities; and

c) the exploration and exploitation of its Portuguese and French projects.

Cononish Gold and Silver Project -

On 15th February 2012, the Board of the Loch Lomond and the Trossachs National Parks ("NPA") issued the Decision Letter granting planning permission for the development of the Project. The Crown Estate Commissioners unconditional grant of the Crown Lease was confirmed in May 2012.

During 2014, the Company made an application to vary this planning permission (relating to hours of operation of the processing plant and work on site) and on 24 January 2015, the Board of the Loch Lomond and the Trossachs National Park again voted unanimously to approve the Company's application. As a variation to a condition of the existing consent, this approval also had the effect of extending the date by which development should commence to January 2018.

In January 2015 the Company completed a Mineral Resource Estimate and subsequently, in August 2015 completed a Bankable Feasibility Study for the Cononish Project. On 24 February 2016 the Company announced its intention to conduct a Bulk Processing Trial ("BPT") and on 27 August 2016 the first official gold pour from the BPT was announced.

Experience from the BPT led to a radical rethink of the tailings disposal methodology and a study was conducted to determine the suitability of dry stack tailings disposal for the project. The benefits of the dry stack system include substantially reduced upfront capital costs, scalability and the potential for significant environmental benefits. The study determined that dry stacking was feasible and a number of options using this methodology were then modelled in the Update to the Bankable Feasibility Study, announced in March 2017. In line with ongoing finance discussions, the 'phased' approach was determined as the Company's preferred option to take the project forward.

Subsequently, the Company submitted a revised application for planning permission to incorporate the new tailings disposal methodology. The application was unanimously approved in February 2018 by the National Parks Authority  ("NPA") Board and a decision notice is expected in late 2018.

Grampian Gold Project - 

The Grampian Gold Project comprises Crown Option agreements covering approximately 4100 km² in the south west Grampians of Scotland and covers some of the most prospective areas of the Dalradian Series in the UK. This is a sequence of highly folded and metamorphosed sedimentary and volcanic rocks of late Precambrian to Early Cambrian age, which extends into regions that were contiguous at the time of its formation. This includes the western extension to the eastern seaboard of Canada and the Appalachian belt in the US, and the eastern extension into Norway and Sweden. The British Geological Survey has identified the Dalradian sequence as highly prospective for both significant gold and base metal deposits. On a more local scale, the Dalradian sequence extends to the south west from Scotland into Northern Ireland where it hosts other gold resources at Cavancaw (c. 0.8Moz of gold) and Curraghinalt (c. 4M oz of gold).

The Company has historically undertaken regional stream sediment sampling programs over the wider Grampian gold project area and identified a number of high grade outcrops in the vicinity of the Cononish project. In the current reporting period work has focused on orientation surveys over the known Cononish deposit in order to better understand the significance of these anomalies and improve our exploration methodology going forward.

Portuguese and French projects - 

In May 2016, the Company announced the acquisition of the Pomar licence area in eastern central Portugal by its wholly owned Portuguese subsidiary, Scotgold Resources Portugal Ltda. In May 2017, the Company was granted the Vendrennes PER (Permit Exclusif de Recherche / exclusive exploration licence) in France. In March 2018 the Company announced the conditional sale of Vendrennes and separately the entering of an "earn in" agreement for Pomar.

Corporate Activities-

In July 2017 the Company announced the completion of a 1 for 100 share consolidation.

In December 2017 a rights issue, followed by a placement on the same terms as the rights issue in January 2018, raised £2.66m (before expenses) and £0.45m respectively. This was the first tranche of funding for the development of the Cononish Project. In May 2018 the Company completed the final tranche of approximately £9.0m, consisting of £4.0m through the placement of shares and £5.0m as a debt facility.

The Company also strengthened it Board during the year with the appointment of Richard Barker, Peter Hetherington and William Styslinger.

CONONISH GOLD AND SILVER PROJECT

In December 2017 the Company concluded the Bulk Processing Trial, which had informed the Updated BFS (announced in March 2017) and provided a supply of "Scottish Gold".  Work on site has since focussed on preparations for the phased development of the Cononish project, in readiness for the completion of funding and issue of Planning consent Decision Notice.

The Bankable Feasibility Study ("BFS") for "The Cononish Gold and Silver Project" was conducted by Bara Consulting Ltd and published in August 2015. An update was published in March 2017.

The report highlighted that the Phased Project approach improved economic returns and reduced the development peak funding requirements to £7.4m¹

§ Project Development

The Project development is intended to take place in two stages to strengthen the mine's production ability whilst minimising technical risks. Assuming November 2018 commencement:

→ Phase One (December 2019 - February 2022): After a 4 month ramp up and commissioning period, the mine is intended to operate at a production level of 3,000 tonnes per month (36,000 tonnes per annum).

→ Phase Two (March 2022 - End of Life of Mine): The mining is intended to reach a steady state level of production at 6,000 tonnes per month (72,000 tonnes of ore per annum).

Phase Two is intended to be organically funded by Phase One. Within 2.5 years Scotgold aim to be in a position where profits generated by Phase One can be invested into the development requirements of Phase Two.

§ Tailings Storage Facility ("TSF")

The TSF is designed as a "Dry Stack" tailings system, where tailings (waste) are stored on the surface in the form of piles (dry stacks).

The stacks - 11 in total - will be built during the Life of Mine ("LOM") from mining waste, eliminating a previously required impoundment dam.

The lower upfront capex requirement enhances Project's operational flexibility and significantly lowers the capital costs.

Due to the avoidance of a reservoir facility, progressive rehabilitation and naturalistic final landform, the new design has significant environmental advantages.

Project Lifetime2
EBITDA	£  101,114,660
Pre Tax Cash Flow	£  81,017,398
Net Cashflow	£  68,256,497
IRR pre-Tax @ 10%	80%
Operating Margin	59%

Cost Dynamics2
Capital  Cost	£ 20,097,262
Operating Cost	£ 69,066,131
Average Operating Cost/oz Eq Au.	£ 373.09
Average Capital Cost/oz Eq Au.	£ 108.56
Total Average Cost/oz Eq Au.	£ 481.65

¹Provided by Bara Consulting BFS and Scotgold management

²As prepared by Bara Consulting on behalf of Management assuming a development of the mine funded through equity only. The information was drawn from the Update to the Cononish Bankable Feasibility Study (BFS) and Short Term Funding Plan referred to in the company press release of March 17^thThe adoption of this strategy has necessitated a revision to the existing planning consent and the requisite application was submitted to the Planning Authority and validated in August 2017.

Details of the material assumptions considered in the derivation of the production target and forecast financial information above and the BFS Study Update Executive Summary are provided on Scotgold's website at www.scotgoldresources.com.

Cononish Mineral Resources

The Mineral Resource Estimate ("MRE") is classified as Measured, Indicated and Inferred Mineral Resources, (adhering to guidelines set out in the JORC Code (2012 Edition)), and is reported at a cut-off grade of 3.5 g/t gold as is presented in the Table below. The Table also serves as the Company's Annual Mineral Resource Statement.

Table: Annual Mineral Resource Statement as at 30/06/2018

Cononish Main Vein Gold and Silver Mineral Resources, prepared in accordance with the JORC code (2012 Edition) and reported at a 3.5 g/t Au cut-off as at 12/01/2015, which remain current subject to the depletion of approximately 4.5kt from the Indicated Resources - Mined Stockpile

Scotgold Resources Limited - Cononish Gold Project Mineral Resource Estimate as at 12 January, 2015 Reported at a cut-off grade of 3.5g/t gold
Classification	K tonnes	Grade AU g/t	Metal AU Koz	Grade Ag g/t	Metal AU Koz	In-situ Dry BD
Measured - In-situ	60	15.0	29	71.5	139	2.72
Indicated - In-situ	474	14.3	217	58.7	895	2.72
Indicated - Mined Stockpile	7	7.9	2	39.0	9	2.72
Sub-total M & I	541	14.3	248	59.9	1,043	2.72
Inferred - In-situ	75	7.4	18	21.9	53	2.72
Total MRE	617	13.4	266	55.3	1,096	2.72
Reported from 3D block model with grades estimated by Ordinary Kriging with 15 m SMU Local Uniform Conditioning adjustment.  Minimum vein width is 1.2m. Totals may not appear to add up due to appropriate rounding.

Note: Mineral Resources presented above include Ore Reserves stated below.

There has been no change in the Mineral Resources reported as at 30/06/2017 other than the depletion of the mined stockpile, the resource will be adjusted for this depletion of the stockpile. Approximately 6.5kt had been depleted to the end of June 2018.

An internal review of the Mineral Resource Estimate concluded that the estimation techniques and parameters employed remained appropriate.

The Cononish mineralisation remains open at depth down plunge and to the west along strike. There is therefore potential to add to the resource by further extensional drilling.

In addition to the currently defined Mineral Resources, Scotgold believes that there is additional resource development potential close to the Cononish mine, subject to appropriate and successful further work. Extensive gold-in-soil anomalies, mineralisation associated with outcrops and trenches, and geophysical anomalies close to the current resource clearly warrant further follow up. In addition, there are indications that other reefs are present in the area. At this stage, such indications are highly conceptual and there is no guarantee that further exploration will define additional Mineral Resources.

Cononish Ore Reserves

As part of initial work towards developing the 2015 BFS, Bara Consulting Ltd ("Bara Consulting) completed a thorough review of the 2013 Cononish Development plan in order to identify opportunities to not only improve on the plan but to also improve the confidence in the plan.  As a result of this review, further work was undertaken on the mining methodology, access design, geotechnical evaluation and overall mine design.

The outcome of this work was that an Ore Reserve Estimate was completed on 25 May 2015, in accordance with the JORC code (2012 Edition) based on the Mineral Resource Estimate ("MRE") issued in January 2015. The subsequent addendum to the Bankable Feasibility Study resulted in no change to the Ore Reserve. Hence there is no change to the Ore Reserves reported for the project as of 30/06/2017. 

An internal review of the Ore Reserve Statement concluded that the modifying factors used in determining the Ore Reserve remained appropriate.

Table: Annual Ore Reserve Statement as at 30/06/2018

As at 25 May 2015 (JORC 2012 Code)
Classification	Proven	Probable	Total
Tonnes ('000)	65	490	555
Au Grade (g/t)	11.5	11.1	11.1
Au Metal (k oz)	24	174	198
Ag Grade (g/t)	51.5	47.2	47.7
Ag Metal (k oz)	108	743	851
(Bara Consulting Limited Ore Reserve Statement dated May 2015)

For greater detail on the parameters derived from this work and used for the Ore Reserve estimation process, please refer to the Company's announcement on 26/05/2015 - Cononish Gold Project Study Update and Reserve Estimate;  and to the subsequent announcement on 15/03/2017 - Update to Cononish Bankable feasibility study on the Company's website.

The Ore Reserve statement above does not take account of the depletion of the surface stockpile through the BPT. At 30 June 2018, approximately 605kt had been removed from the stockpile and the reserves will be adjusted on full depletion of the stockpile.

Both the Mineral Resource Estimate and Ore Reserve statement were compiled by suitably qualified Independent Competent Persons as identified at the time of their release.

GRAMPIAN GOLD PROJECT

The Company continues to actively pursue exploration activities on its substantial land position in the Dalradian Belt of the south west Grampians, a terrain highly prospective for both gold and base metal occurrences. The majority (85%) of the area currently under option to Scotgold is located outside the Loch Lomond and the Trossachs National Park.

Whilst advancing the Cononish project to production, the Company's strategy has been to conduct early stage regional exploration over the Grampian Gold project area in conjunction with follow up work on the more advanced prospects close to the Cononish project area.

The Grampian Gold project encompasses a large area (~4100 km²) of the highly prospective Dalradian sequence. Basic exploration data, including gravity and airborne magnetics, are available from government surveys but is of a quality and spacing that does not adequately reflect the prospectivity of the area. This, and the general lack of previous exploration over the area (other than early stage exploration in the vicinity of the Cononish project), has dictated the Company's approach to exploration.

In recent years an initial wide spaced regional scale stream sediment sampling program was undertaken and followed up by a more detailed infill sampling program in the anomalous result areas. In parallel previously identified high grade outcrop samples close to the Cononish project were resampled and this program confirmed the presence of a large number of high grade gold / silver vein outcrops in an area located between two major regional faults, the Tyndrum - Glen Fyne fault and the Ericht - Laidon fault, and associated with the fractures generated by movement along these faults.

Considerable follow up work has been undertaken to examine the extent of these occurrences through further fieldwork, detailed rock chip sampling, initial short surface drilling and (in some cases) deeper diamond drilling.

Scotgold Resources Ltd also conducted a structural study and initial analysis of Scotgold's extensive Geographic Information System ("GIS") database covering the Grampian Gold project ("The GIS Study").

Through 3 Dimensional ("3D") geological and GIS modelling, a preliminary prospectivity map was developed for the GIS study area to identify areas of high priority and potential. Based on this map, the GIS Study identified a series of high priority targets, with 6 targets being located within a 2.5 km radius of Cononish, including 2 targets outside the Loch Lomond and Trossachs National Park ("LLTNP").  A further 5 targets have been identified within the studied area, all of which are outside the LLTNP. Close to the Cononish deposit, Coire Nan Sionnach and Kilbridge are highlighted as highly prospective, along with two further parallel anomalies between the Cononish deposit and Coire Nan Sionnach.

More recently, the Company has conducted a further comprehensive exploration review on a wider scale to better focus ongoing exploration across the option areas outside Glen Orchy. This has involved a review of the lithological setting of known mineralisation in combination with the structural features identified in the structural report to identify potential for Cononish style mineralization whilst also recognizing that other styles of mineralisation may be present.

The review has also examined the most appropriate techniques for the ongoing exploration of the wider Grampian project and in the current reporting period work has focused on orientation surveys using these techniques over the known Cononish deposit. Once evaluation of these surveys is complete, it is intended the most promising will be applied to the high priority targets identified by the prospectivity map in order to inform future drill programs.

In order to advance its understanding of the regional setting the Company embarked on a regional scale stream sediment sampling program. In an initial wide spaced regional program, in excess of 750 stream sediment samples were taken across the project area. Interpretation of these results continues and this program has been followed up by a more detailed infill sampling program in the anomalous result areas in order to further target areas for detailed fieldwork and prospecting. To date in excess of 1200 samples have been collected with interpretation of these results on-going.

In parallel with this regional program, Scotgold continues to evaluate previously identified high grade outcrop samples identified by previous exploration close to the Cononish project. Initially, the Company conducted a re-sampling program to verify previously identified occurrences and this program confirmed the presence of a large number of high grade gold / silver vein outcrops in an area located between two major regional faults, the Tyndrum - Glen Fyne fault and the Ericht - Laidon fault, and associated with the fractures generated by movement along these faults.

Considerable follow up work has been undertaken to examine the extent of these occurrences through further fieldwork, de 

PORTUGAL - POMAR PROJECT

In May 2016, the Company announced the acquisition of the Pomar licence area in eastern central Portugal by its wholly owned Portuguese subsidiary, Scotgold Resources Portugal Ltda.

The Pomar licence area includes the historic antimony mines of das Gatas, Pomar and Casalinho, in addition to numerous small scale trials and occurrences.

Evaluation of styles of mineralization during initial site visits indicated the potential for undiscovered gold prospects in zones with quartz-only mineralization in addition to the known gold bearing felsic dykes traversing the area and potential extensions to the known antimony occurrences.

Initial exploration has included soil and rock chip sampling and development of a regional structural model.

Analysis of selected historical soil samples taken have indicated a long (c.1km) As (Arsenic) / Au (Gold) anomaly along the kilometric scale felsic dykes in the area.  Significant Au / Sb ("Antimony") / As anomalies have also been registered around the old workings of Das Gatas, Barroca da Santa, Casalinho, Monte da Goula, and Pomar workings. Statistical interpretation of the samples indicates a strong correlation between As / Au (for the dykes) and Au/Sb/As for historic workings and As is indicated as an important pathfinder for future exploration.

Results from selected rock chip samples taken from various locations around the old mines, waste tips and certain accessible outcrops indicate the presence of high grade gold (and some Tungsten) associated with historic antimony veins. Historic samples for Au along the felsic dykes need further correlation but their prospectivity is supported by soil sampling results.

A structural interpretation for the area has been prepared and postulates the mineralised Sb / Au veins as developing in an extensional fault roughly trending NS and reactivated as a thrust. Based on this interpretation, a number of areas around the old mines warrant follow up to determine the presence of extensions / repetitions to the know high grade Sb / Au mineralisation.

Further follow up work is planned to follow up the extent of possible mineralisation associated with the felsic dykes with an extended and closer spaced soil sampling program along with initial trenching / diamond saw sampling of available outcrop to verify previously taken chip samples. A detailed study of the mineralogy and paragenesis of the Au occurrences in the dykes will further inform their prospectivity.

Further work is planned to determine the nature of the high grade rock chip samples associated with the old workings and tips, and their possible extensions as postulated by the structural work. This will initially involve regaining access to and resampling the old workings.

On 19th March 2018, the Company announced an "earn in" agreement with PanEx Resources Limited over the Pomar Project.

FRANCE - VENDRENNES

In May 2017, the Company was granted the 'Vendrennes' Permit Exclusif de Recherche ("PER") / exclusive exploration licence, applied for in 2015.Two further applications remain under consideration.

The Vendrennes PER substantially covers the 'Vendée Antimony district', France's third largest antimony producing district which during the 19th and beginning of the 20th century produced over 18,000t of Antimony metal substantially from the Rochetrejoux vein. Most importantly, the PER includes Les Brouzils, a small high grade open pittable antimony deposit that was discovered by the BRGM ("Bureau de recherches géologiques et minières") - the French Geological Survey) during the 1970's and 1980's.

According to BRGM literature (L'Inventaire minier de la France), Les Brouzils hosts a 'geological resource' of 9,250t of antimony metal at a grade of 6.7% Sb to a depth of 100m and is open along strike and at depth.

NOTE: The above statement relating to a historic / foreign 'geological resource' and the figures quoted do not necessarily conform to current internationally recognized resource classification standards (e.g. JORC, PERC, CIM, SAMREC etc) and cannot thus be classified as a resource (Inferred, Indicated or Measured) under these Codes and is stated for historical information purposes only. No reliance should be placed on these figures and it is uncertain that following evaluation and/or further exploration work that the estimates stated above will be able to be reported as mineral resources or ore reserves in accordance with a recognised code. It will be the Company's intention to work to verify or otherwise such numbers as soon as it can access the appropriate data.

Production from a small open pit at Les Brouzils commenced in 1989 under a joint venture between Gagneraud and the BRGM and produced some 895t of Sb metal in concentrate before closure in 1992 as a result of a significant decline in the antimony price relating to the disposal of strategic metal stockpiles by the US and USSR. Concentrates were produced through gravity and flotation and quality was reported as excellent with no deleterious elements present.

The Company is currently considering its options with respect to maximising the value of Vendrennes PER to the Company.

TENEMENT DETAILS

United Kingdom -

The Company holds a lease (100%) from the Crown Estate Commissioners over Cononish Farm, county of Perth, Scotland UK.

The Company holds a lease (100%) from the landowner over Cononish Farm, county of Perth, Scotland UK.

The Company holds five Mines Royal Option Agreements (100%) with the Crown Estate Commissioners as detailed below:

Glen Orchy: Location - counties of Perth and Argyll, Scotland UK

Glen Lyon: Location - counties of Perth and Argyll, Scotland UK

Inverliever: Location - counties of Dunbarton, Argyll and Perth, Scotland UK

Knapdale: Location - county of Argyll, Scotland UK

Ochils: Location - county of Clackmannan, Perth, Kinross and Stirling, Scotland UK

Portugal -

The Company holds a 100% interest in the Pomar Licence which is valid for 3 years from May 2016 (with an option to extend) in eastern central Portugal, near Castelo Branco though its subsidiary Scotgold Resources Portugal Ltda.

France -

The Company holds a 100% interest in the Vendrennes PER (Permit Exclusif de Recherche or Exploration Licence) through its subsidiary SGZ France SAS.

No other beneficial interests are held in any farm-in or farm-out agreements and no other beneficial interests in farm-in or farm out agreements were acquired or disposed of during the period.

Competent Persons Statement:

The information in this report that relates to Exploration Results is based on information compiled by Mr David Catterall, Pr Sci Nat, who is a member of the South African Council for Natural Scientific Professions. Mr Catterall is employed as a consultant to Scotgold Resources Ltd. Mr Catterall has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Catterall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Note:  No new exploration results are presented in this report. All results have been previously notified under JORC 2004 and are contained in Scotgold Annual reports 2008 - 2016 and various corresponding market releases.

The information in this report that relates to the 2015 Mineral Resources for Cononish Gold Project (refer ASX release - Resource Estimate Update - 22/01/2015) is based on information compiled by Malcolm Titley, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Titley is employed by CSA Global (UK) Limited, an independent consulting company. Mr Titley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Titley consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to the 2015 Ore Reserves for Cononish Gold Project (refer ASX announcement dated 26/05/2015) is based on information compiled by Pat Willis, a Competent Person who is registered as a Professional Engineer (Pr.Eng.) with the Engineering Council for South Africa (ECSA) and a Fellow in good standing and Past President of the Southern Africa Institute of Mining and Metallurgy (FSAIMM). Mr Willis is employed by Bara Consulting Limited, an independent consulting company. Mr Willis has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Willis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Further, the Company confirms it is not aware of any new information or data that materially affects the information contained in the original announcements and that all material assumptions and technical parameters underpinning the estimate of Resources and Reserves continue to apply and have not materially changed.

STRATEGIC REVIEW

The Company continues to review its corporate structure, policies and practices with a view to maintaining and enhancing shareholder value. In the current period under review, the following initiatives have been implemented:

i)  On 25 August 2017 the Company concluded its 1 for 100 consolidation of its shares. Together with the sale of small shareholdings, the consolidation of shares has resulted in a more attractive and less cumbersome share structure.

ii) Streamlining of its share register to remove, at the holder's option, those shareholdings of less than a minimum value of $500. This has had the result of removing over 200 small shareholdings of a value of less than $500.00 each..

iii) The Company appointed BDO as Auditors in June 2018.

iv) The Company will adopt the QCA code of corporate governance which will supersede the currently adopted ASX code of Corporate Governance.

Operationally, the Company's immediate focus remains the development of the advanced stage Cononish Gold and Silver Project in Scotland. However, to provide longevity beyond Cononish, and potentially growth in overall production, the Company is developing a pipeline of projects that we anticipate will meet our criteria. First and foremost of these is our Grampian Project which consists of 5 Option Agreements ("Exploration Licences") in Scotland and includes the highly prospective ground in the vicinity of Cononish.

The fundamental technical work completed on Cononish in 2015, with the revised Mineral Resource Estimate and Ore Reserve Estimate, underpinned the Updated Bankable Feasibility Study (BFS) completed in March 2017.  This study amply demonstrated the project's technical and financial viability, but funding the new reduced capital remained a challenge. This challenge was met this year with the raising of two traches of funding, through a combination of Rights Issue, share placement and debt, totalling approximately £12m. The key remaining impediment to commencement of development is now the issue of the Decision Notice by the NPA relating to the planning application (approved by the NPA Board in February 2018). While the legal process which will enable the issue of the Decision Notice in on going, the Company has been actively progressing the anticipated technical submissions required by the Planning Permit conditions. Once these submissions are approved the Company will be in a position to commence development activities on site. 

The Updated BFS also demonstrated the increased value of Cononish given the improved gold market, particularly in GB Pound terms post the UK's Brexit decision.  The price has ranged between £1029/z and £929/oz over this reporting period and the assumed gold price in the Updated BFS of $1150/oz and exchange rate of $1.25/£ (which implies UK gold price of £920/oz) is still considered reasonable. With full project funding in place, the Company expects project returns in line with the Updated BFS estimates. 

The work completed on advancing our future pipeline of projects has been modest due to the need to focus cash and management resources on the advancement of Cononish. With sufficient funding in place for the development, the Company has also begun investing in further exploration on the Grampian Project.  These sums remain relatively modest and will focus on the design of cost effective future programs, utilising the Company's extensive data set to best advantage.  We will continue to minimise our expenditure on our Portuguese asset through the earn in agreement and continue to work towards the conclusion of the sale of the French asset.

The coming period will be dominated by the Cononish development activities and we look forward to reporting progress on these once the NPA Decision Notice is issued and works can commence.

The Updated BFS also demonstrated the increased value of Cononish given the improved gold market, particularly in GB Pound terms post the UK's Brexit decision.  The price has ranged between £1029/z and £929/oz over this reporting period and the assumed gold price in the Updated BFS of $1150/oz and exchange rate of $1.25/£ (which implies UK gold price of £920/oz) is still considered reasonable. With full project funding in place, the Company expects project returns in line with the Updated BFS estimates. 

The work completed on advancing our future pipeline of projects has been modest due to the need to focus cash and management resources on the advancement of Cononish. With sufficient funding in place for the development, the Company has also begun investing in further exploration on the Grampian Project.  These sums remain relatively modest and will focus on the design of cost effective future programs, utilising the Company's extensive data set to best advantage.  We will continue to minimise our expenditure on our Portuguese asset through the earn in agreement and continue to work towards the conclusion of the sale of the French asset.

The coming period will be dominated by the Cononish development activities and we look forward to reporting progress on these once the NPA Decision Notice is issued and works can commence.

For further information please contact:

Scotgold Resources Limited Richard Gray	Tel: [phone]
SP Angel Corporate Finance LLP Nomad and Joint Broker Ewan Leggat / Charlie Bouverat	Tel [phone]
Smaller Company Capital Ltd Joint Broker Rupert Williams	Tel: [phone]
Capital Markets Consultants Financial PR Simon Rothschild

DIRECTORS' REPORT

Your Directors submit their report on the consolidated entity consisting of Scotgold Resources Limited and its controlled entities ("Scotgold") for the financial year ended 30 June 2018. All amounts are presented in Australian Dollars, unless otherwise stated.

DIRECTORS

The following persons were Directors of Scotgold Resources Limited during the whole of the financial year and up to the date of this report unless otherwise stated:

				In office from	In office to
Nathanial le Roux	Non Executive Chairman		18/03/2015		present
Richard Gray	Managing Director		10/10/2014		present
Chris Sangster	Non Executive Director		10/10/2014		present
Phillip Jackson	Non Executive Director		14/08/2007		present
Richard Barker	Company Secretary/ Non Exec Director		09/10/2017		present
Peter Heatherington	Non Executive Director		18/06/2018		present
William Styslinger	Non Executive Director		18/06/2018		present

PARTICULARS OF CURRENT DIRECTORS AND COMPANY SECRETARY

Nathaniel le Roux                                Non-Executive Chairman                     MSc (Hons)

Qualifications and experience

Mr Nathaniel "Nat" le Roux has spent most of his career in financial markets and was Chief Executive of IG Group plc between 2002 and 2006.  He served as an independent director of the London Metal Exchange from 2008-2016 and is a trustee of various charities.  Nat was born in Scotland and was educated in Edinburgh.  He holds an MA in Law from Cambridge University and an MSc in Anthropology from University College London.

Other Directorships in past three years: None

Interest in Shares and Options at 30 June 2018

Fully Paid Shares	22,318,222
Options	1,744,657

Special Responsibilities

Overall strategic guidance and UK Capital markets.

Mr le Roux has advanced funds of £1.0 million to the Company for working capital purposes. The loan is secured over the business undertakings of the Company and all interest has been waived.

Richard Gray                                       Managing Director                   BSc (Hons)

Qualifications and experience

Mr Richard Gray most recently served as Head of Mining & Expansion at Avocet Mining PLC.  He has extensive international experience, in both underground and open pit mine operations, and brings considerable operational knowledge and management experience and skills to the Company, particularly in the development and implementation of gold mining projects.  He has previously held various roles at both majors and juniors within the gold mining sector and his successful career has included 15 years working in South Africa for Gencor Ltd and 10 years in West Africa for Golden Star Resources Ltd.  Whilst at Golden Star he served as General Manager of Bogoso Gold Limited, General Manager of Golden Star Wassa Limited and Senior Vice President Operations of Golden Star Resources Ltd.  He holds a BSc (Hons) Mining Engineering from the Royal School of Mines, Imperial College and an MBA from the Graduate School of Business, Cape Town University.

Other Directorships in past three years: None

Interest in Shares and Options

Fully Paid Shares	96,738
Options	1,008,939

Special Responsibilities

Mr Gray is the CEO / Managing Director and is responsible for the day to day running of the company.

Christopher Sangster               Non-executive Director                                    BSc (Hons), ARSM, GDE

Qualifications and experience

Chris has a BSc Hons in Mining Engineering from the Royal School of Mines, Imperial College in London and a GDE in Mineral Economics from the University of Witwatersrand. Chris has extensive experience worldwide in gold, diamond and base metal production environments.  Since 1999, he has held positions of Vice President Mining Services at KCM PLC and Principal Mining Engineer for Australian Mining Consultants. In 2007, Chris co-founded Scotgold Resources and was its CEO / Managing Director until October 2014. He is a Non-executive Director of Ariana Resources and also an Associate Consultant for Bara Consulting Limited.

Other Directorships in past three years: None

Interest in Shares and Options

Fully Paid Shares	202,045
Options	4,000

Special Responsibilities

Advice on technical and planning matters.  Mr Sangster provides consulting services at commercial rates to the Company under a management agreement with the Company.

Phillip Jackson                        Non-executive Director                        BJuris LLB MBA FAICD

Qualifications and experience

Mr Jackson is a barrister and solicitor with over 25 years legal and international corporate experience, especially in the areas of commercial and contract law, mining law and corporate structuring.  He has worked extensively in the Middle East, Asia and the United States of America.  In Australia, he was formerly managing legal counsel for a major international mining company, and in private practice specialised in small to medium resource companies. 

Mr Jackson was managing region legal counsel Asia-Pacific for a leading oil services company for 13 years.  He is now General Counsel for a major international oil and gas company.  He has been a Director of a number of Australian public companies, particularly mining companies.  He has been Chairman of Aurora Minerals Limited since it listed in 2004 and Peninsula Mines Limited, since it listed in August 2007.

His experience includes management, finance, accounting and human resources. He is a director of ASX listed companies Aurora Minerals Limited, Peninsula Mines Limited, and Predictive Discovery Limited.

Other Directorships in past three years: None

Interest in Shares and Options

Fully Paid Shares

43,313

Special Responsibilities

Mr Jackson is Chairman of the Audit Committee and is responsible for legal matters.

Richard Barker                                    Company Secretary                             BJuris LLB

Qualifications and experience 

Mr Barker is an Australian lawyer with 15 years' experience working with top Australian Law firms in NSW and WA.  For the past 6 years Mr Barker has provided corporate compliance and company secretarial services for both listed (ASX and AIM) and unlisted private companies. Mr Barker has extensive experience providing advice and services on equity raisings and corporate governance matters.

Other Directorships in past three years: None 

Peter Hetherington                              Non Executive Director                        B. Econ., Mstrs (Fin)      

Qualifications and experience 

Mr Hetherington is the Chief Executive Officer of IG Group Holidings Plc ("IG"), having joined IG as a graduate trainee in 1994.  He graduated from Nottingham University with a degree in Economics, and from the London Business School with a masters in Finance.  Mr Hetherington also served as an officer in the Royal Navy prior to joining IG. 

Other Directorships in past three years:

Deal City Limited
Dot Trading Registry Limited
DotBroker Registry Limited
DotCFD Registry Limited
DotForex Registry Limited
DotMarkets Registry Limited
DotSpreadbetting Registry Limited
Extrabet Financial Limited
Extrabet Limited
Financial Domaigns (Services) Limited
Financial Domaigns Limited
Financial Domaigns Registrar Limited
Financial Domaigns Registry Holdings Limited
Fox Japan Holdings
Fox Sub 2 Limited
Fox Sub Limited
IG Asia Pte Limited
IG Bank S.A
IG Finance
IG Finance  Two
IG Finance 5 Limited
IG Finance 8 Limited
IG Finance 9 Limited
IG Finance Four
IG Finance Three
IG Forex Limited
IG Group Holdings Plc
IG Group Limited
IG Index Limited
IG Infotech (India) Private Limited
IG Limited
IG Markets Limited
IG Markets South Africa Limited
IG Services Limited
IG Spread Betting Limited
ITS Market Solutions Limited
LLC IG Dev
Market Data Limited
Nadex Clearing, LLC
Nadex Domains Inc
North American Derivatives Exchange Inc
Extrabet Financial Limited
ITS Market Solutions Limited

Interest in Shares and Options

Fully Paid Shares	3,231,818

William Styslinger                               Non Executive Director                        BSc Engineering           

Qualifications and experience 

Mr Styslinger is a director of Nasdaq listed Casa Systems Inc, and served as Chairman, President and Chief Executive Officer of SeaChange International Inc, a Nasdaq listed provider of multiscreen video software and services, from its inception in July 1993 until his retirement in November 2011.   

Other Directorships in past three years: None

Interest in Shares and Options

Fully Paid Shares	1,990,555
Options	320,000

SHARES UNDER OPTION

At the date of this report unissued shares of the Company under option are:

Number of shares under option		Exercise price		Expiry date
30,000	$8.00		31 March 2022
2,124,699	£0.40		31 December 2019

OPERATING AND FINANCIAL REVIEW

A review of the operations of the consolidated entity during the financial year is contained in the Operations and Strategic Review section of this Financial Report.  The Company's strategy in Scotland continues to focus on advancing the 100% owned Cononish Gold and Silver Project to production whilst continuing to explore its large, highly prospective land position around Cononish and elsewhere in Scotland which extends to some 4,300km².

The consolidated entity also holds exploration interests in France and Portugal.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the year was mineral exploration, including the operation of the Bulk Processing Trial, and pursuing revised project planning permission and funding opportunities for the advancement of its Cononish gold and silver project in Scotland.

Operating Results

The consolidated loss after income tax for the financial year was $1,899,667 (2017: $1,348,167).

Financial Position

At 30 June 2018 the Company had cash reserves of $11,207,036 (2017: $572,332).

Dividends

No dividends were paid during the year and no recommendation is made as to dividends.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review not otherwise disclosed in this report or in the consolidated financial statements.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Company intends to continue its exploration activities and to further its objective of development of the Cononish silver and gold project with a view to the commencement of mining operations as soon as possible.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors held during the year ended 30 June 2018, and the number of meetings attended by each Director.  These meetings included matters relating to the Remuneration and Nomination Committees of the Company.

	Number eligible to attend	Number attended
Nathaniel le Roux	6	6
Richard Gray	6	6
Chris Sangster	6	6
Phillip Jackson	6	6
Richard Barker	6	6
Peter Hetherington	1	1
William Styslinger	1	1

AUDIT COMMITTEE

The Audit Committee is comprised of Mr Jackson (Chairman) and Mr Barker.  One meeting of the audit committee was held during the year ended 30 June 2018.

REMUNERATION REPORT (audited)

This report details the nature and amount of remuneration for each director and executive of Scotgold Resources Limited. 

Remuneration policy

The board policy is to remunerate Directors at market rates for time, commitment and responsibilities.  The Board determines payments to the Directors and reviews their remuneration annually, based on market practice, duties and accountability.  Independent external advice is sought when required. No advice has been sought in the current year. The maximum aggregate amount of Directors' fees that can be paid is set at $300,000 and may be increased from time to time, subject to approval by shareholders in general meeting. Fees for Non-Executive Directors are not linked to the performance of the consolidated entity. The Annual Report, containing this Remuneration Report is presented and considered at at the Annual General Meeting, however, no shareholder approval is required.

The Company's aim is to remunerate at a level that will attract and retain high-calibre Directors and employees.  Company officers and Directors are remunerated to a level consistent with size of the Company.

All remuneration paid to key management personnel is valued at cost to the company and expensed, unless it has been incurred in connection with activities which are capitalised as deferred exploration.

The group does not operate an Employee Share Scheme and there are no deferred shares.

Performance-based remuneration

The company does not pay any performance-based component of salaries.

Details of remuneration for year ended 30 June 2018

Directors' Remuneration

No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year except for Richard Gray who was salaried.  Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or companies associated with the Directors in accordance with agreements between the Company and those entities.

Details of the agreements are set out below.

Agreements in respect of remuneration of Directors:

Executive Director

Richard Gray (Managing Director) is on a contract dated 22 September 2017 which provides for a fixed salary and benefits, with a termination period of three months.  The remuneration is reviewed annually.  At the date of this report the annual remuneration for Richard Gray is £135,000 ($241,000) plus pension contribution.  In the event of a termination of contract giving less notice than provided for in this contract, the remaining notice period will be paid in full.

In the year ended 30 June 2018, Mr Gray was granted 1,000,000 options to acquire shares in the company at an exercise price of 30p per share. The options vest on the later of one year from date of grant or the commencement of gold production from the Cononish mine. The options will expire 10 years after the date of grant, being 1 May 2028. The grant of the options is subject to shareholder approval which, at the date of this report is outstanding. Accordingly, $Nil value has been ascribed to the options and no amount has been accounted for in the Financial Statements

Non-Executive Directors

i) Chris Sangster earns fees from the Company as a consultant on technical issues. In addition to his director's fees, Mr Sangster earned fees of $115,614 in the year ended 30 June 2018 (2017 - $115,079).

ii) Through his service company, Barston Corporation Pty Ltd, Richard Barker also acts as Company Secretary. In addition to his director's fees, Mr Barker earned fees related to Company Secretary services of $39,996 in the year ended 30 June 2018 (2017 - $Nil).

iii) The Chairman and major shareholder, Nat le Roux, has advanced funds to the Company in accordance with the terms of a loan agreement, as amended. Up to March 2018, interest was charged at 10%, however, at that date the terms of the loan were re-negotiated to be interest free and the repayment date extended. Further details of the loan are shown in Note 11 to the Financial Statements.

Loans to Directors

There are no loans due from Company Directors.

Shareholder approval of Directors' remuneration

The Company's constitution provides that the Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate sum determined by a general meeting.  The aggregate remuneration has been set at an amount of $300,000 per annum.  The Directors may approve a Managing Director whose fee or salary is agreed by the Directors within such aggregate sum. A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.  A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.  Executive Directors may be paid on commercial terms as the Directors see fit.

The total remuneration paid to key management personnel is summarised below:

			Short-term benefits		Post		Performance
Director/Executive		Associated Company	Fees	Consulting / Salary	Employment	Total		based
			$	$	$	$		%
Year ended 30 June 2017
Nat le Roux         *			-	-	-	-		-
Richard Gray			-	168,180	3,364	171,544		-
Chris Sangster			17,186	115,079	-	132,265		-
Phillip Jackson	Holihox Pty Ltd		17,887	-	-	17,887		-
Gabriel Chiappini	Laurus Corporate Services Pty Ltd		14,145	39,655	-	53,800		-
Peter Newcomb	Symbios Pty Ltd		-	20,000	-	20,000		-
			49,218	342,914	3,364	395,496		-

Year ended 30 June 2018
Nat le Roux         *			-	-	-	-	-
Richard Gray			-	173,551	3,471	177,022	-
Chris Sangster			17,420	115,614	-	133,034	-
Phillip Jackson		Holihox Pty Ltd	18,192	-	-	18,192	-
Richard Barker		Barston Corporation Pty Ltd	12,554	39,996	-	52,550	-
Peter Heatherington			-	-	-	-	-
William Styslinger			-	-	-	-	-
			48,166	329,161	3,471	380,798	-

* Mr le Roux has waived his director fees for the time beKey management personnel share holdings

	Balance 30 June 2016		Purchase and Sales		Conversion of Note		At date of resignation		Balance 30 June 2017
Year ended 30 June 2017
Nat le Roux	576,120,806		-		56,100,000		-		632,220,806
Richard Gray	4,204,240		1,000,000		-		-		5,204,240
Chris Sangster	18,204,484		-		-		-		18,204,484
Phillip Jackson	4,331,250		-		-		-		4,331,250
	602,860,780		1,000,000		56,100,000		-		659,960,780

	Balance 30 June 2017		Share Consolidation		Right issue/ Placing		At date of resignation/ appointment		Balance 30 June 2018
Year ended 30 June 2018
Nat le Roux	632,220,806		(625,898,598)		15,996,014		-		22,318,222
Richard Gray	5,204,240		(5,152,197)		44,695		-		96,738
Chris Sangster	18,204,484		(18,022,439)		20,000		-		202,045
Phillip Jackson	4,331,250		(4,287,937)		-		-		43,313
Richard Barker	-		-		-		-		-
Peter Hetherington	-		-		-		3,231,818		3,231,818
William Styslinger	-		-		-		1,990,555		1,990,555
	659,960,780		(653,361,171)		16,060,709		5,222,373		27,882,691

Key management personnel option holdings

Year ended 30 June 2017

		Free attaching options			Expiry or exercise of options		Date of resignation		Balance 30 June 2017
Nat le Roux		45,656,433			-		-		45,656,433
Richard Gray		291,294			-		-		291,294
Chris Sangster		493,333			-		-		493,333
		46,441,060			-		-		46,441,060

Year ended 30 June 2018

		Free attaching options			Expiry or exercise of options1		Rights Issue2		Balance 30 June 2018
Nat le Roux		45,656,433			(45,656,433)		1,744,657		1,744,657
Richard Gray		291,294			(291,294)		8,939		8,939
Chris Sangster		493,333			(493,333)		4.000		4,000
William Styslinger							320,000		320,000
		46,441,060			(46,441,060)		2,077,596		2,077,596

¹  includes those options cancelled due to the share consolidation

²  The Rights Issue options are exercisable at 40p and expire 31 December 2019

Aggregate amounts payable to Directors and their related entities.

	Consolidated Entity		Consolidated Entity
	2018		2017
	$		$
Accounts payable	29,477		14,248

There were no performance related payments made during the year.  The grant of 1,000,000 share options to Mr Gray, the Managing Director, is subject to shareholder approval which, at the date of this report is outstanding. 

End of remuneration report.

ENVIRONMENTAL ISSUES

The consolidated entity has conducted exploration activities on mineral tenements.  The right to conduct these activities is granted subject to environmental conditions and requirements.  The consolidated entity aims to ensure a high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental regulations.  There have been no known breaches of any of the environmental conditions.

SUBSEQUENT EVENTS

There have been no events or transactions, subsequent to balance date, to be disclosed as Subsequent Events. 

INDEMNIFICATION OF DIRECTORS

During the financial year, the Company has not given an indemnity or entered into an agreement to indemnify any of the Directors.

AUDITOR

The Perth based affiliate of BDO International, BDO Audit (WA) Pty Ltd, was appointed as auditors in June 2018.

The former auditor, Mann Judd HLB resigned as auditor on 18 June 2018.

NON-AUDIT SERVICES

The Directors have considered the position and are satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by BDO Corporate Tax (WA) Pty Ltd, set out below, did not compromise the auditor independence requirements of the Corporations Act 2001, for the following reasons:

·     All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor; and

None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants

BDO Audit (WA) Pty Ltd provides income tax services to the Company - 2018: $3,519 (2017: $3,060) .

AUDITOR'S INDEPENDENCE DECLARATION

The auditor's independence declaration has been received for the year ended 30 June 2018 and forms part of the Directors' report.

PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Signed in accordance with a resolution of the Directors.

..............................................................         

RICHARD GRAY - Managing Director

Dated at London, England, this 27th day of September 2018

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2018

		CONSOLIDATED
		2018		2017
		$		$
Interest income		969		211
Other income		1,666		41,417
Gain on loan renegotiation		263,707		-
Administration costs		(514,758)		(389,511)
Interest expense		(172,144)		(64,966)
Unwinding of convertible note discount		-		(55,974)
Depreciation and gain on disposal of property, plant and equipment		(69,907)		(103,132)
Exploration expensed as incurred		(68,009)		(111,579)
Employee and consultant costs		(438,955)		(211,191)
Listing and share registry costs		(313,221)		(260,438)
Legal fees		(226,734)		(60,622)
Office and communication costs		(112,727)		(91,117)
Other expenses		(249,554)		(41,265)
LOSS BEFORE INCOME TAX		(1,899,667)		(1,348,167)
Income tax benefit		-		-
LOSS FOR THE YEAR		(1,899,667)		(1,348,167)
Other Comprehensive Income
Items that may be reclassified to Profit or Loss
Exchange difference on translation of foreign subsidiaries		109,191		(41,477)
Total comprehensive result for the year		(1,790,476)		(1,389,644)
Basic (loss) per share (cents per share)		(7.92)		(8.60)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018		CONSOLIDATED
		2018		2017
		$		$
CURRENT ASSETS
Cash and cash equivalents		11,207,036		572,332
Trade and other receivables		59,267		42,110
Inventory		62,850		222,248
Other current assets		53,082		16,269
Total Current Assets		11,382,235		852,959
NON-CURRENT ASSETS
Trade and other receivables		97,894		92,923
Plant and equipment		226,042		289,840
Mineral exploration and evaluation		16,685,135		16,346,365
Total Non Current assets		17,009,071		16,729,128
TOTAL ASSETS		28,391,306		17,582,087
CURRENT LIABILITIES
Trade and other payables		294,262		180,522
Other current liabilities		43,529		45,895
Loans payable		1,740,867		1,742,964
TOTAL LIABILITIES		2,078,658		1,969,381
NET ASSETS		26,312,648		15,612,706
EQUITY
Issued capital		39,706,967		27,216,549
Reserves		73,474		54,283
Accumulated losses		(13,467,793)		(11,658,126)
TOTAL EQUITY		26,312,648		15,612,706

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2017

CONSOLIDATED

		Issued Capital				Accumulated Losses			Options Reserve		Convertible Note Reserve		Foreign Currency Translation Reserve				Total Equity
Year Ended 30 June 2017	$				$			$						$			$
Balance 1 July 2016	25,829,677				(10,558,714)			224,769			248,755			(129,009)			15,615,478
Placements (Note 12)	880,000				-			-			-			-			880,000
Options exercised	4,133				-			-			-			-			4,133
Share issue expenses	(53,861)				-			-			-			-			(53,861)
Equity portion of notes converted	556,600				248,755			-			(248,755)			-			556,600
Total comprehensive result for the year	-				(1,348,167)			-			-			(41,477)			(1,389,644)
	27,216,549				(11,658,126)			224,769			-			(170,486)			15,612,706

Year Ended 30 June 2018	$		$		$				$		$
Balance 1 July 2017	27,216,549		(11,658,126)		224,769		-		(170,486)		15,612,706
Issue of shares	4,612,375										4,612,375
Placements (Note 12)	7,971,620		-		-		-		-		7,971,620
Options exercised	12,187		-		-		-		-		12,187
Options expired	-		90,000		(90,000)		-		-		-
Share issue expenses	(105,764)		-		-		-		-		(105,764)
Total comprehensive result for the year	-		(1,899,667)		-		-		109,191		(1,790,476)
	39,706,967		(13,467,793)		134,769		-		(61,295)		26,312,648

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018		CONSOLIDATED
		2018			2017
		$			$
CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers		(1,744,357)			(1,328,402)
Interest income received		969			-
Net Cash Outflow From Operating Activities		(1,743,388)			(1,328,402)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure		(247,268)			(717,927)
Purchase of property, plant and equipment		(6,172)			(45,216)
Net Cash Outflow From Investing Activities		(253,440)			(763,143)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options		12,596,182			884,133
Share and option issue transaction costs		(105,764)			(53,861)
Borrowings costs and interest		-			(38,658)
Proceeds from borrowings		-			1,166,667
Net Cash Inflow From Financing Activities		12,490,418			1,958,281
Net increase/(decrease) in cash held		10,493,590			(133,264)
Effect of exchange rate fluctuations on cash and cash equivalents		141,114			(33,270)
Cash and cash equivalents at the beginning of this financial year		572,332			738,866
Cash and cash equivalents at the end of this financial year		11,207,036			572,332

NOTES TO AND FORMING PART OF

THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

	2018		2017
	$		$

NOTE 1 - REVENUE

Revenue
Interest received	969		211
Other income	1,666		41,417
Gain on loan renegotiation	263,707		-
Total revenue	266,342		41,628

NOTE 2 - LOSS FROM ORDINARY ACTIVITIES BEFORE TAX EXPENSES

Expenses
Interest expensed	172,144		64,966
Total borrowing cost expensed	172,144		64,966
Depreciation of non-current assets
Plant and Equipment	68,171		100,892
Motor vehicles	1,718		2,220
Office furniture and equipment	18		20
Total depreciation of non-current assets	69,907		103,132

NOTE 3 - INCOME TAX

The prima facie tax benefit at 27.5% (2017: 27.5%) on loss from ordinary activities is reconciled to the income tax benefit in the financial statements as follows:

	Loss from ordinary activities		(1,899,667)			(1,348,167)
	Prima facie income tax benefit at 30.0% (2017 27.5%)		522,408			370,746
	Tax effect of permanent differences
	Share issue costs amortised		29,018			25,407
	Other non-deductible expenses		-			-
	Income tax benefit adjusted for permanent differences		551,426			396,153
	Deferred tax asset not brought to account		(551,426)			(396,153)
	Income tax benefit		-			-
		2018			2017
		$			$

INCOME TAX BENEFIT

The directors estimate the cumulative unrecognised deferred tax asset attributable to the company and its controlled entity at 27.5% is as follows:

UNRECOGNISED DEFERRED TAX ASSETS
Revenue losses after permanent differences	2,637,395		2,747,235
Capital raising costs yet to be claimed	55,150		55,083
	2,692,545		2,802,318

The potential deferred tax asset has not been brought to account in the financial report at 30 June 2018 as the Directors do not believe it is appropriate to regard the realisation of the asset as probable.  This asset will only be obtained if:

(a)        The company and its controlled entity derive future assessable income of an amount and type sufficient to enable the benefit from the deductions for the tax losses and the un-recouped exploration expenditure to be realised;

(b)        The company and its controlled entity continue to comply with the conditions for deductibility imposed by tax legislation; and

(c)        No changes in tax legislation adversely affect the company and its controlled entity in realising the benefit from the deductions for the tax losses and un-recouped exploration expenditure. 

Franking Credits

No franking credits are available at balance date for the subsequent financial year.

NOTE 4 - TRADE AND OTHER RECEIVABLES

Current
GST / VAT receivable	56,424		38,900
Other receivables	2,842		3,210
	59,266		42,110

Non-current
Bond on Tenement	97,894		92,923

NOTE 5 - INVENTORY

Inventory of gold concentrates

62,850

222,248

NOTE 6 - OTHER CURRENT ASSETS

	2018 $		2017 $
Prepayments	53,082		16,269

NOTE 7 - PLANT AND EQUIPMENT

Plant and equipment
Cost	661,402		655,293
Accumulated Depreciation	(435,360)		(365,453)
	226,042		289,840

Movement for the year
Opening balance	289.840		348,626
Additions	6,109		44,346
Depreciation expensed	(69,907)		(103,132)
Closing balance	226,042		289,840

NOTE 8 - MINERAL EXPLORATION AND EVALUATION

Opening balance	16,346,365		15,730,586
Net (gain)/loss from the BPT	(280,331)		(32,357)
Additional expenditure deferred during the year	619,101		648,136
Closing balance	16,685,135		16,346,365

The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and commercial exploitation, or sale of the respective areas.

The net gain of $280,331 (2017 $32,357) from the BPT is an integral part of the Company's Mineral Exploration and Evaluation, and includes $203,177 of revenue from Dore sales (2017: $78,841), $634,631 of revenue from Concentrate sales (2017: $308,015) and $557,477 of production costs (2017: $354,499).   The criteria to reclassify Mineral Exploration and Evaluation expenditure to Development have not yet been met and continue to be accumulated. 

During the year, minor preliminary works were commenced on the development of the Cononish Mine. Certain of these costs have been capitalised and included in deferred expenditure and total $130,635 (2017: $Nil). The appropriate amount of deferred Mineral Exploration and Evaluation expenditure related to the Cononish Mine will be transferred to Mine Development at the appropriate time (refer Note 1 (e)).

NOTE 9 - TRADE AND OTHER PAYABLES

Trade creditors	294,262		180,522
Other accruals	43,529		45,895
	337,791		226,417

Trade creditors and accruals relating to exploration expenditure	42,814		96,822
Trade creditors and accruals relating to administration	294,977		129,595
	337,791		226,417

Trade creditors are non-interest bearing and are normally settled on 30 day terms (2017: 30 days).

NOTE 10 - LOANS PAYABLE

Shareholder loans

a) On 14 March 2017 the Company entered into a short term loan agreement for £1,000,000 with Nat le Roux, the Company's non-executive Chairman and major shareholder.  The original term of the loan was one year ending on 14 March 2018 with an interest rate of 10% per annum.  On 15 March 2018 it was announced that the loan agreement had been amended and the repayment date was extended to 30 September 2018 and all interest previously accrued was waived and the loan became interest free.  The principal is repayable at the expiry of the term and the loan is secured by a charge over all the Company's assets. 

The loan balance outstanding at 30 June 2018 is made up as follows:

		Shareholder loan
		$
Principal sum drawn (£1,000,000) on 14 March 2017		1,666,667
Interest accrued to 30 June 2017		50,091
Foreign exchange		26,206
Loan brought forward at 30 June 2017		1,742,964
Interest accrued to 14 March 2018		122,199
Gain on loan renegotiation		(263,707)
Unwinding of discount to 30 June 2018		48,684
Foreign exchange		90,727
Loan balance at 30 June 2018		1,740,867

b) On 18 May 2018, SGZ Cononish Limited a subsidiary of the Company entered into a secured loan facility of £5,000,000 with Bridge Barn Limited a wholly owned and controlled company of Nat le Roux, the Company's Non-Executive Chairman and major shareholder. The terms of the secured loan are as follows:

i)          Drawdown of up to £3,000,000 within 30 days of 1 September 2018 and the balance of £2,000,000 to be drawn down within 30 days after 1 October 2018;

ii)          Term of loan is 30 months from earliest date of draw-down, being 1 September 2018, with early repayment at option of the Borrower for no penalty;

iii)         Interest rate is 9.0% calculated and payable annually for the first 24 months from the earliest draw-down date on the outstanding principal and then for the six month stub period to repayment date. If the Secured Loan is repaid early, interest will be calculated up to date of repayment; and

iv)           Security by way of Debenture over all of the assets and undertakings of the Company's 100% owned subsidiaries, Scotgold Resources Ltd (SC309525) and SGZ Cononish Ltd (SC569264), including the transfer of security of the issued capital of each of the subsidiaries.

DIRECTORS' DECLARATION

1.   In the opinion of the Directors of Scotgold Resources Limited (the 'Company'):

a.   the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including:

i. giving a true and fair view of the consolidated entity's financial position as at 30 June 2018 and of its performance for the year then ended; and

ii. complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements.

b.   there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

c.   the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2018.

This declaration is made in accordance with a resolution of the Board of Directors.

..............................................................   

RICHARD GRAY - Managing Director

Dated at London, England, this 27th day of September, 2018.

ANALYSIS OF SHAREHOLDING

Voting Rights

Article 16 of the Constitution specifies that on a show of hands every member present in person, by attorney or by proxy shall have :

a)   for every fully paid share held by him one vote

b)   for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over the nominal value of the shares

Substantial Shareholders

The following substantial shareholders have notified the Company in accordance with Corporations Act 2001.

Mr Nat le Roux			22,318,222		52.01%
Mr Peter Hetherington			3,231,818		7.53%
Mr William Styslinger			1,990,555		4.64%
Mr Charles Outhwaite			1,454,545		3.39%

Directors' Shareholding

The interest of each director in the share capital of the Company is detailed in the Directors' Report.

The Board of Directors of Scotgold Resources Limited is responsible for the corporate governance of the Company.   The Board guides and monitors the business and affairs of Scotgold Resources Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.  This statement reports on Scotgold Resources Limited's key governance principles and practices.

Details of the Corporate Governance Statement can be found on the Scotgold Resources Limited's website at http://www.scotgoldresources.com.au/corporate/corporate-governance/

 

END

 

 

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