SGZ.L Regulatory News (SGZ)

SCOTGOLD RESOURCES LIMITED

("Scotgold" or "the Company")

HEADS OF AGREEMENT AND PLACING

Scotgold is pleased to announce that it has entered into a binding Heads of Agreement with three strategic investors (the "Investors") to take a significant shareholding in the Company. The agreement with the Investors will result in the Company raising up to A$1,825,000, with a further A$225,000 raised through a wider placement.

The first stage of the transaction is an immediate placing of 90 million shares at a price of A$0.0075 (approximately 0.4 pence) per share to raise A$675,000 (the "Placing"). The Investors have subscribed for 60 million of the 90 million Placing shares.

In addition the Investors, subject to certain conditions including shareholder and regulatory approvals, will commit to a convertible note issue and further placing which when aggregated with its participation in the Placing will amounting to a total investment of A$1,825,000 (the "Finance Agreement"). The major investor is Nat le Roux, the former CEO of IG Group plc, and a non-executive director of the London Metal Exchange.

The details of the Finance Agreement with the Investors are as follows:

· 60 million Placing shares have been placed with the Investors.

· Subject to shareholder and regulatory approval unlisted convertible notes amounting to A$1,000,000 will be issued with a two year term and a 1% per annum coupon (the "Notes"). The Notes will be convertible into Scotgold ordinary shares at a price of A$0.0075 per ordinary share at any time between issue and maturity with anti-dilution provisions in the event of a new capital raising. Holders of the Notes will receive one attaching unlisted option per ordinary share converted under the Notes with the options being exercisable at any time before 31 March 2016 at a price of A$0.012 per ordinary share. It is the intention that the proceeds of the note will be substantially used to pay down a portion of the Company's current RMB Resources loan. This element of the transaction will be subject to the approval of RMB Resources to the terms of any loan repayment.

· Coterminous with the issue of the Notes, and provided the Notes are issued before 30 June 2014, a further placement to the Investors of 50 million ordinary shares will be made at a price of A$0.0075 per share (the "Second Placement Shares"). The Second Placement Shares will be issued together with one attaching unlisted option per share, the option being exercisable before 31 March 2015 at a price of A$0.012 per ordinary share.

The Finance Agreement includes a commitment from both the Company and the Investors to establish a new company ("Marketco") which will market a proportion of the future gold and silver produced onsite at Cononish in the form of dore bars. This product will be identifiable and marketable as Scottish gold and silver and Scotgold will undertake to sell it to Marketco at a premium of 10% to the Comex Fix less any costs associated with refining the dore bars. Scotgold will hold 40% of the shares in Marketco with the remainder being held as to 20% by public interest entities including the Strathfillan Community Development Trust with the balance being held by the Investors.

Application to the ASX and AIM for admission of the Placing shares will be made and is expected to occur within the next 5 days. The placing price represents a discount of approximately 25% to today's average closing price on the ASX but a premium of 50% over the price of the recent rights issue.

The Company intends to convene a meeting of shareholders as soon as practicable to complete the conditional aspects of the Finance Agreement. The Company notes that under the Rules of the ASX an Independent Expert's Report as to the fairness and reasonableness of the conditional elements of the transaction will be required.

Following the issue of the Placing shares, the Company will have a total of 477,740,043 shares in issue (the "Enlarged Share Capital"). This figure should be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their significant holding in, or a change to their significant holding in the Company.

The issue of the Placing shares will result in the following new significant (>3%) shareholders:

110 million shares are held directly by Richard Harris and 10 million are held through Richard Harris' interest in Golden Matrix Holdings Pty Ltd

John Bentley, Executive Chairman, stated that "This transaction enables Scotgold to rapidly progress towards the point at which the full development financing can be sought. The board is delighted that investors of the calibre of Nat le Roux see the potential in the development of Scotland's first commercial gold mine. We are also very pleased that we intend to enter into an arrangement on the marketing of Scottish gold and silver which will particularly benefit the local community who have been amongst our most loyal and patient supporters".

Nat le Roux said "I fully support Scotgold management's plan to bring the Cononish mine into production within the next eighteen months. As a Scot I am pleased to be involved in this material step to the development of a significant Scottish gold mining industry."

For further information please contact:

United Kingdom:

Australia: