SGZ.L Regulatory News (SGZ)

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

JUNE 2013 QUARTERLY REPORT

Company considering means by which the Cononish project can be advanced towards production

Options being actively evaluated with objective of securing the funding to commence construction of the mine 

On April 30, the Company announced the results of the final Cononish Development Study conducted by AMC

·; Strong project economics using base case gold price of US$1,300 / oz (£812 /oz) generates £26.3M pre tax free cashflow over life of mine, pre tax IRR of 26% and NPV10 of £11.8M

·; Project highly cash generative at then current spot price (24/04/2013) of US$1,428/oz (£935 /oz) with £39.8M pre tax free cashflow over life of mine, pre tax IRR of 37%, NPV10 of £21.1M and payback 26 months from start of production

·; Annualized processing plant recovery of 20,200 ozs Au equivalent to concentrate and doré

·; Average operating cash cost1 of $698 per oz Au equivalent2

Results from final phase (east raise area) of infill drilling program include:

·; CF 12 - 17 - 25.6 g/t Au / 52.5 g/t Ag over 1.40m (estimated true width)

·; CF 12 - 18 - 5.1 g/t Au / 20.5 g/t Ag over 2.65m (estimated true width)

Cononish Gold and Silver Project

Cononish Gold and Silver Project

Scotgold Resources Limited ("Scotgold Resources" or the "Company") (ASX:SGZ AIM:SGZ) provides an update on its activities in the period to 30 June 2013. During the quarter the Company completed the Cononish Project Development Study and whilst this has coincided with a softening in the capital markets that makes fund raisings more difficult, the group's Cononish project demonstrates strong economics and the board is actively exploring means of funding the mine.

Project Development and Funding

Since the update of the resource statement in November 2012 Scotgold has advanced a number of aspects relating to the project to enable the shortest possible lead time to development, subject to securing finance.

The decision notice issued by the Planning Authority on 13 February 2012 required a number of conditions to be satisfied prior to the start of development. In conjunction with Scotgold's planning and other consultants, all submissions have now been made, 60% of the conditions have been discharged and the Company awaits discharge of the remaining conditions.

Market conditions for raising finance for the project remain severely challenging and the Company continues to evaluate a number of strategic alternatives to finance the project to progress to production. The board are considering all options with the twin objectives of preserving shareholder value and securing the funding to enable construction of the Cononish mine to commence on a feasible basis.

Development Study Results

On 30 April 2013 Scotgold Resources announced results from the Cononish Project Development Study conducted by AMC Consultants (UK) Ltd ("AMC") on the 100% owned Cononish Gold and Silver project. Key project financial parameters are shown in Table 1 below using a base case gold price of US$1300 / oz and the then current (London PM fix 24/04/2012) spot prices.

Table 1 Project Financial Highlights

Note Silver price $22.50/oz

Notes:

1. Average operating cash cost is calculated from total operating (non capital) costs (including smelter, transport, royalty costs) divided by recovered Au equivalent ozs. - see Note 2

2. Au equivalent ozs. Gold equivalent ozs are calculated: Recovered gold ozs + (Recovered silver ounces / 57.8) where the number 57.8 represents the ratio of base case gold price used to silver price used. This ratio was calculated using base case prices of US$1300/oz Au and US$22.5 / oz Ag

3. NPV10 represents the project Net Present Value calculated at a 10% discount rate.

At base case prices, the project generates £26.3M pre tax free cashflow with a pre-tax Net Present Value10 of £11.8M and a pre tax Internal rate of return (IRR) of 25.9%.

Base Case average operating costs are estimated to be $698 per ounce Au equivalent after commissioning of the project.

Scotgold has estimated anticipated project post tax returns at varying gold prices as shown in Table 2.

Table 2 Estimated Post tax returns

Note - post tax returns assume 100% project basis before corporate costs

Scotgold has also performed a sensitivity to Inferred resource grade to demonstrate the impact of the grade range quoted in the Resource statement (between 10g/t and 15g/t Au) and have estimated that an increase in the Inferred resource grade to the midpoint at 12.5g/t Au (should it be realized), equates approximately to an additional $120 / oz on the gold price.

Cononish Project Development Study.

Scotgold Resources commissioned AMC to complete the Cononish Project Development Study in December 2012. The overall study was compiled by AMC with input from Scotgold's processing, tailings and environmental consultants and the Company.

Tables 3 and 4 show the current Resource Statement considered for the study which assumes 100% conversion of Inferred Resources.

Table 3: Cononish Main Vein Gold Mineral Resources (reported at a 3.5 g/t Au cut-off).

Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 100 t or 100 oz. Grade rounded to the nearest 0.1 g/t Au. The Inferred Resource grade is reported with a grade range to indicate the likely upside due to the information effect.

Scotgold Note: Incorporating the grade range, the Inferred Mineral Resource is estimated to lie between 85,000 oz Au and 127,000 oz Au. It should be noted that any upside may not exist or it may only be present in a portion of the resource.

Table 4: Cononish Main Vein Silver Mineral Resources (reported at a 3.5 g/t Au cut-off).

Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 100 t or 100 oz.

The Mineral Resources quoted in Table 2 and 3 above are INCLUSIVE of those Mineral Resources modified to produce the Ore Reserves.

AMC has declared ore reserves for the project as shown in Table 5 below

Table 5: Cononish Ore Reserves (reported at a 3.5 g/t Au cut-off).

Notes:

1. The Reserve was estimated using; gold price of US$1,300/oz, silver price ofUS$22.50/oz and an Exchange Rate of GBP:USD of 1:1.6

2. A mining study on the Cononish Gold Project was carried out by AMC Consultants (UK) Limited. This study utilised the Mineral Resource estimation by Simon Dominy of Snowden Mining Industry Consultants Pty Ltd, November 2012. The Ore Reserves were estimated by Martin Staples of AMC Consultants (UK) Limited in April 2013.

3. Reported at a diluted Au cut-off grade of 3.3 g/t

The study considers a mining production rate of 72,000 tpa from underground operations, subsequent to a one year pre production and commissioning period.

A conventional gravity / flotation concentrator is planned, which will treat 72,000 tpa. It is intended that about 25% of gold will be recovered by gravity for smelting on site to a doré bar. The balance of the gold reports to a sulphide rich concentrate which will be treated through a third party facility remote from site.

The overall recovery from the processing plant is predicted at 93% for Au and 90% for Ag to doré and concentrate and recovered production (to doré and concentrate) is estimated at 19,000 ounces of gold and 73,000 ounces of silver annually.

Total recovered production to doré and concentrate over the project life is estimated to be 121,800 ounces of gold and 469,700 ounces of silver.

The study assumes 100% conversion of Inferred Resources.

Pre-production project expenditure is estimated at £22M, including an overall 15% contingency allowance on capital expenditure (excluding working capital and fixed bond amounts).

Overall operating costs (exclusive of smelter transport and royalty charges) are estimated at approximately £86.50 per tonne of material with an average operating cash cost (including smelter, transport and royalty charges) of US$698 (£436 / oz) Au equivalent.

Operating costs are estimated with an overall 16.6% contingency allowance.

The Executive Summary of AMC's Development Study can be found on Scotgold's website at www.scotgoldresources.comunder ASX announcements.

Infill drilling East Raise Area Program

A total of eight holes were drilled (including one in 2009 and two in 2010) into the eastern portion of the Inferred Resource. Final results from the program are shown in Table 6.

Table 6 - Infill drilling results (2009 - 2012) - East Raise Area

Drill statistics are shown in Appendix A

Chris Sangster

Managing Director

For further information please contact:

United Kingdom:

Australia:

Appendix A Drill statistics

Note CF 12- 15 - Abandoned

Competent Persons Statement:

The Information in this report that relates to Mineral Resources is based on resource estimates compiled by EurGeol Dr S C Dominy FAusIMM (CP), FGS (CGeol), FIMMM (CEng), FAIG (RPGeo), Executive Consultant with Snowden based in the Ballarat, Australia Office. Dr. Dominy has sufficient experience that is relevant to the style of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves. Dr Dominy consents to the inclusion in the report of the matters based on this information in the form and context in which it appears

The Information in this report that relates to Ore Reserves is based on information compiled by Mr. Martin W Staples BSc, FAusIMM., Director and Principal Mining Engineer with AMC Consultants (UK) Ltd based in the Maidenhead, UK office. Mr. Staples has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Staples 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 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 2004 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.

Forward Looking Statements:

This release includes certain "forward looking statements." All statements, other than statements of historical fact, are forward looking statements that involve various risks and uncertainties.

There can be no assurances that such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.

Background

Scotgold Resources

·; Scotgold Resources is a mining exploration and development company listed on the Australian Securities Exchange in January 2008 and the AIM market of the London Stock Exchange in the UK in February 2010.

·; The Company was formed with its sole focus on exploring for gold and silver in Scotland, with the already identified Cononish Gold and Silver Project as its core asset. Once in production, the Project will be Scotland's first commercial gold mine.

·; The Company holds Crown options of some 4200km2 covering the highly prospective Dalradian terrain in the SW Grampians of Scotland

·; Scotgold acquired the Cononish Gold and Silver Project in 2007 and has been working towards bringing the project to production in conjunction with its ongoing exploration efforts at Cononish and in the south west Grampians.

·; In July 2011 Scotgold submitted its reapplication for planning permission, which was recommended for approval in October 2011 subject to finalizing conditions and various legal agreements

·; In February 2012, the Decision Notice granting planning permission was issued by the Planning Authority