SGZ.L Regulatory News (SGZ)

17 April

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

Positive Results for Cononish Project Development Study

Highlights:

·; Robust project economics using base case gold price of US$1,100 /oz with £23.4M (A$35.7M) pre tax free cashflow over life of mine, pre tax IRR of 24.8% and NPV10 of £10.8M (A$16.2M)

·; Project highly cash generative at current gold prices of US$1,655/oz with £65.9M (A$100.7M) pre tax free cashflow over life of mine, pre tax IRR of 62.5%, NPV10 of £40.5M (A$61.9M) and payback after 18 months from start of production

·; Annualized processing plant recovery of 21,000 ozs Au and 74,700 ozs Ag to concentrate and doré

·; Average operating cash cost1 of $575 per oz Au eq2

Ongoing work

·; Discussions regarding financing options on-going

·; Infill drilling program in progress - three holes complete, awaiting results

·; Crown lease anticipated to be granted in May following statutory period of 3 months from decision notice (Feb 2012)

·; Study to be updated on completion of drilling and grant of lease

·; On track for start of development before year end subject to financing

Cononish Gold and Silver Project Development Study Results.

Scotgold Resources Limited ("Scotgold Resources" or the "Company") (ASX:SGZ AIM:SGZ) is pleased to announce results from the Cononish Project Development Study conducted by Australian Mining Consultants (UK) Ltd ("AMC") on its 100% owned Cononish Gold and Silver project in the Grampian Highlands of the United Kingdom.

The results demonstrate a robust project at the base case gold price with very attractive returns at current spot gold prices.

Key project financial parameters are shown in Table 1 below using a base case gold price of US$1100 / oz and current (NY close 13/4/2012) spot prices.

Note Silver price $20/oz

Table 1 Financial Highlights

At base case prices, the project generates £23.4M pre tax free cashflow with a pre tax Net Present Value10 of £10.6M and a pre tax Internal rate of return (IRR) of 25.4%.

At current spot prices, the project is highly cash generative with £65.9M pre tax free cashflow over the life of the project, a pre tax IRR above 60% and payback initial investment within 18 months of the commencement of production.

Base Case average operating costs1 are estimated to be $575 per ounce Au equivalent2 after commissioning of the project.

Chris Sangster, Director and CEO of Scotgold said:

"The results from the updated study clearly demonstrate the viability of the Cononish Project. At base case gold price assumptions, project financials are robust with more than acceptable returns. The project is highly leveraged to gold prices and at current prices is highly cash generative with over £65M in pre tax free cashflow over the life of mine. The results underpin Scotgold's intention to proceed to a production decision as soon as possible subject to securing financing."

Cononish Project Development Study.

Scotgold Resources commissioned AMC to complete the Cononish Project Development Study in December 2011. This followed the recommendation for approval of the grant of planning permission in October 2011, subject to the conclusion of various legal agreements and conditions. These agreements were concluded in February 2012 (see Press Release 14 Feb 2012: Award of Planning Permission at Cononish).

The overall study was compiled by AMC with input from Scotgold's processing, tailings and environmental consultants and the company.

AMC identified a 'mining inventory' (derived from Measured, Indicated and Inferred Resources) from the existing resource statement, estimated in accordance with the JORC code completed by Snowden Mining Industry Consultants Ltd of 427,900 t grading of 10.2g/t gold and 37.1g/t silver (diluted) using a cut off grade of 3.5g/t Au over diluted width. (Note: The 'mining inventory' does not constitute an 'Ore Reserve' as defined by JORC).

Tables 2 and 3 show the current Resource statement from which the Mining Inventory was derived.

Table 2: 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 1,000 t or 1,000 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 100,000 oz Au and 160,000 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 3: 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 1,000 t or 1,000 oz.

A mining production rate of 72,000 tpa is envisaged 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 21,000 ounces of gold and 74,700 ounces of silver annually.

Total recovered production to doré and concentrate over the project life is estimated to be 131,600 ounces of gold and 465,000 ounces of silver.

Preproduction project expenditure is estimated at £22.3M, with a further sustaining and deferred capital cost of £2.4M over the life of the project, including an overall 15% contingency allowance.

Overall operating costs (exclusive of smelter transport and royalty charges) amount to approximately £90 / t with an average operating cash cost1 (including smelter, transport and royalty charges) of US$575 / £360 / oz Au equivalent2.

Operating costs are estimated with an overall 16% contingency allowance.

Project Development

Scotgold have been actively pursuing a number of financing options with various parties. As a result of these discussions, Scotgold has commenced a further infill drilling program in part of the Inferred Resource with the aim of increasing the potential debt capacity of the project.

An initial program of six holes has been laid out and the first three holes have been completed and assays are awaited. This program is expected to be completed by the end of May.

'Ore Reserves' (estimated in accordance with the JORC code) for the project may only be estimated if all requisite qualifying criteria are met and these include the grant of the lease by the Crown which is expected to be granted in mid May.

A further study update will be completed subsequent to this, incorporating the results of the drilling program.

The company believes, subject to financing, that project development could begin in Q4 2012 leading to the first production of gold in Q4 2013

For further information please contact:

United Kingdom:

Australia:

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

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.

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 / 55) where the number 55 represents the ratio of base gold price used to silver price used. This ratio was calculated using base case prices of US$1100/oz Au and US$20 / oz Ag

3. Exchange rate GBP£1 = AUS$1.5279

4. NPV10 represents the pre tax Net Present Value calculated at a 10% discount rate.

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 licences of some 3200km2 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 April 2011 Scotgold announced that it had accepted an offer of a Regional Selective Assistance (RSA) grant from economic development agency, Scottish Enterprise, of up to £600,000 for the establishment of mine facilities and job creation, conditional on the firm obtaining planning permission.

·; 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