SGZ.L Regulatory News (SGZ)

30 March 2022

Scotgold Resources Limited ("Scotgold" or the "Company")

Interim Results

Scotgold Resources Limited (AIM: SGZ), is pleased to announce its Interim Results for the six months ended 31 December 2021 ('H1 2022').

Overview

· Significant progress made at Cononish Gold and Silver Mine ('Cononish') in Scotland as the Company targets gold production run rate of c.23,500oz p.a. by end of Q1 2023

· Vision to build a multi-asset gold production company in Scotland

· Total revenues of A$6.4m in H1 2022 (H1 2021: nil)

· Loss before taxation in H1 2022 of A$5.3m (H1 2021: A$2.8m)

· Cash at 31 December 2021 of A$963k (30 June 2021: A$2.6m)

Scotgold Resources CEO, Phil Day said, "It's been a transformative time for Scotgold which has seen the team work determinedly to deliver on our targets and maximise value at our flagship Cononish mine. The second half of calendar year 2021 saw us lay the foundations for growth by implementing initiatives to increase Cononish's gold recoveries and in turn improve the gold production profile of the mine. During the past quarter we have been focused on preparing the access to the second cut and fill stope at Cononish and I'm pleased to report we accessed it as of 21 March 2022. This is a pivotal moment in our mine development plan, allowing us to access reserve mine gold grade more readily, which should see our gold grades increase significantly inline with our mine plan during 2022 and beyond.

"I look forward to reporting on our calendar year Q1 2022 production results in due course, as we continue to implement optimisation initiatives at Cononish to increase our gold production profile with the target of achieving a c.23,500oz p.a. production run rate of gold by end of Q1 2023."

Chairman Statement

We are Scotland's and the UK's first commercial gold producer, committed to the principles of sustainable and responsible mining and delivering enduring value to our employees, stakeholders, and the communities where we operate. Ultimately our vision is to build a multi-asset gold mining company in Scotland by investing and effectively managing our portfolio of producing and exploration assets.

Our principal asset, Cononish in Tyndrum, Scotland, is a high-grade/high-margin underground mining operation with a central processing plant producing both gold concentrate and gold doré.

I am pleased to report on the progress we have made during the period under review, where we continue to implement optimisation initiatives at Cononish to achieve gold production of c.23,500oz p.a. run rate by end of Q1 2023.

Considerable progress was made H1 2022 seeing us successfully ramp up production, in line with our accelerated expansion plan. To this end, calendar year Q4 2021 saw us produce 1,508 ounces of gold and 7,200 ounces of silver from Cononish with the month of December 2021 being a record month in terms of gold concentrate with 101 tonnes produced to date. The concentrate grade equated to around 700 ounces of contained gold and 3,000 ounces of contained silver and marked a c.60% increase to the Company's previous record monthly concentrate production.

As previously announced in our strategy update (see press release 14.01.22 and our AGM presentation), 2022 is focused on growth. Growth in terms of continuing to implement optimisation initiatives centred on maximising mining efficiencies and improving the production profile of Cononish in line with our stated targets. We have now completed Phase 1 of our production development at Cononish, achieving 9,910oz average run rate of gold production per annum. The end of Q2 2022 will see us commence our Optimisation Phase of development targeting an average annual run rate of gold production of 17,500oz, again in line with our stated targets. To do this we plan to introduce a number of optimisation initiatives, for which we are in discussions with debt providers to fast-tack implementation. We are looking to introduce a tailings thickener, a cost-effective technology to improve the throughput and recoveries of concentrate product in the processing plant and continue to enhance mining efficiencies of the underground mine to ensure 24hr support. As previously announced, we are currently waiting on a due diligence report regarding installing an ore sorter at the processing plant between the existing crushing unit and the mill. We believe, if installed, it will increase the ounces of gold processed per tonne at lower tonnages and potentially lower CAPEX and OPEX of Cononish. If approved, the ore sorter is planned to be operational by the end of Q1 2023 and will help achieve Phase 2/Expansion Production Development with the target of achieving average annual run rate gold production of 23,500oz.

Figure 1. Cononish Phased production development plan

Whilst concentrating on the mine optimisation and ramp-up production plans of Cononish has been our priority during 2021 and 2022, our overarching vision is to build the Company into a multi-asset gold production company in Scotland that enhances the local environment and economy in ways that have an enduring positive impact. We have 13 licences covering a significant 2,900km position of the Dalradian Belt and have identified three prospective areas, close to Cononish. It's our intention to explore these as part of our wider growth strategy.

We have a commitment to sustainability and embrace the principles of sustainability in all aspects of our business. Operating in Scotland's first national park, we have an important duty of care to the environment. As part of our commitment to sustainability we have also undertaken numerous initiatives including no use of cyanide at Cononish and implementing dry stack tailings, rather than conventional wet tailings that sadly have seen terrible mismanagement and accidents over the years at mine sites globally. Dry stack tailings are much more environmentally friendly and safer as it completely dries the tailings into sand like material before placing into gullies. This allows us to fill the gullies to match the natural landscape rather than have impoundments (as with conventional tailings) that would impact the look of the landscape for generations to come. In line with our commitment to reduce CO2 emissions we are reviewing the use of hydro power at site and will update the market accordingly on this initiative.

Importantly, we are supported and driven by our people. As at 31 December we had 73 employees which has increased 27% to 93 employees as of 28 February 2022. We have ambitious growth plans to continue to increase our headcount during 2022. We are led by an experienced executive leadership team with a proven track record that will help us to deliver on our vision an in-turn generate value for all stakeholders.

I would like to extend my gratitude, firstly to the team here in Scotland who have worked tirelessly and with conviction during the past year to deliver on production targets. I would also like to thank my fellow board members, leadership team, advisors, and shareholders for their continued support. We remain confident of our 2022 outlook and look forward to updating the market on our progress with our upcoming calendar year Q1 2022 production results to be announced shortly and other operational updates throughout the year.

Chairman

Peter Hetherington

A full version of Scotgold's Interims for the six months ended 31 December 2021 is available via the Company's website or via the following link. http://www.rns-pdf.londonstockexchange.com/rns/4727G_1-2022-3-29.pdf

For further information please visit www.scotgoldresources.com or contact the following: