SGZ.L Regulatory News (SGZ)

Scotgold Resources Limited

September 2011 quarterly report

Cononish Gold and Silver Project

·; Planning approval granted for Cononish Gold and Silver Project subject to conditions

·; Unanimous decision from Parks Board

·; Study update to commence

·; Widespread support from community and authorities

Grampian Gold Project

·; Stream sediment sampling program over greater licence area continues

·; AQ drilling continues over identified prospects at Beinn Udlaidh and Auch

·; Two NQ diamond drillholes completed at Beinn Udlaidh River vein area

Corporate

·; Rights issue closed at 87% subscribed

·; Shortfall placed

Cononish Gold and Silver Project.

Planning

On 13 October 2011, the Director of Planning issued a report to the National Parks Board (the 'Board') recommending approval of the application subject to conditions.

The recommendation for approval was upheld unanimously by the Board at a special board meeting on 24 / 25 October 2011.

A number of legal agreements require to be completed regarding the development and three months from the conclusion of these, the Crown Estate will issue the requisite mining lease, which is expected to be in early 2012.

Scotgold lodged a Planning Application Notice in December 2010 as the start of the process of re-application and the Company submitted its revised application in July 2011 subsequent to the narrow refusal of its application in August 2010.

At the closure of the 'formal' consultation period in September 2011, the Scottish Environmental Protection Agency (as previously) had raised no objection to the application and although Scottish Natural Heritage raised a 'technical' objection, this objection was subsequently withdrawn prior to the Board meeting on agreement of conditions. The application drew widespread support from a range of national local and community organizations as well as individuals including local residents, politicians, academia and Scottish based jewelers.

During April 2011 the Company 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.

The revised application incorporated a significant reduction in the scale of the Tailings Management Facility (afforded by a commitment to underground disposal, post the creation of a suitable underground void) and a revised form for this Facility, in order to minimize the visual impact on the landscape. The application also incorporated more detailed restoration techniques and a number of additional measures aimed at mitigating possible impacts of the development.

The application was prepared with the assistance of Scotgold's planning and environmental consultants, Dalgleish Associates. Technical input regarding the application was provided by Scotgold's tailings consultants AMEC Earth and Environmental (UK) (AMEC), Cantab Consulting, Vibrock Ltd and Rathmell as well as by independent specialists in the fields of restoration, landscape and visual impacts and socio economic studies by Ecological Restoration Consultants Ltd, Land Use Consultants and Professor David Bell of Stirling University respectively.

The Board of Scotgold are grateful for the widespread support received from the local community and authorities, and the positive attitude of the Park's Executive and Board which has facilitated a decision that will bring benefits to all stakeholders in the Project.

Project Studies

In June 2010, Scotgold commissioned Australian Mining Consultants Ltd (AMC) to update critical components of the 2009 scoping study though this work was put on hold subsequent to the planning refusal in August 2010.

Scotgold are in the process of re-engaging AMC to resume work on the update. It is intended that AMC review and update the mining development and production schedule and mining capital and operating costs (with a target +/-15% accuracy) based on the updated resource at Cononish.

AMC will also oversee the compilation of the overall Project Development Study with contributions from the Company, its processing, tailings and environmental consultants as a key component of its development decision and basis for examining possible funding arrangements. The study is expected to be completed by December 2011.

During the 2010 study period, Scotgold completed a further phase of metallurgical testwork at AMMTEC Laboratories in Perth (Australia), to optimize and finalise the plant flowsheet. All testwork indicated a high amenability to the proposed flowsheet arrangements with recoveries from all testwork in excess of 90% for gold. Following this detailed metallurgical testwork program, Scotgold commissioned a Definitive Costing Study (+/- 10% accuracy) for the Cononish project processing plant. The study was substantially completed in September 2010 and Scotgold are in discussions to update capital and operating costs as input to the Project Development Study.

As part of the revised planning application, AMEC completed a revised feasibility level design for the Tailings Management Facility for the Cononish project. The design provides for a facility to retain 0.4Mt of tailings in line with the reduction of visual impacts discussed with the Park Authority and is designed in accordance with all applicable EU and UK legislation. Initial discussions have been held with potential contractors to provide costing input to the Project Development Study.

Pre-production development and construction is currently estimated to take one year from project commencement.

Exploration Update

The Company continues to actively conduct exploration activities on its substantial land position outside the National Park. A map showing these locations is available at www.scotgoldresources.com under ASX releases as Figure 1.

Grampian Gold Project

The delays at the assay laboratories previously reported have been resolved and a number of assays have been received and will be reported shortly.

Regional fieldwork including ongoing stream sediment sampling continued over the Inverliever, Cononish - Glen Orchy and Glen Lyon licence areas. A total of 573 samples (out of a proposed program of around 800) have now been taken and submitted for analysis. Interpretation of the results received to date is ongoing.

The British Geological Survey has recently made all of their aeromagnetic and gravity data available in digital format and the Company is in the process of having the data reinterpreted.

The planned airborne magnetic survey has been delayed as the proposed contractor is still awaiting clearance from civil aviation authorities to fly with the proposed configuration. It is likely this survey will now be conducted in early 2012.

Beinn Udlaidh and Auch project areas

Scotgold considers the veins systems in the Beinn Udlaidh area to be valid exploration targets in their own right in addition to the already identified breccia pipe target (see Press Release 18 February 2010 - Beinn Udlaidh - Breccia Pipes - Exploration Target Confirmation).

NQ drilling commenced into the high grade Mo and Au veins at the River Vein area, with two of four holes completed. RVNQ01 and RVNQ02 were drilled to a depth of 173m and 224m respectively. The core from RVNQ01 has been logged and samples submitted to the laboratory for analysis.

Mapping and surface sampling were undertaken and a program of AQ (short surface) diamond drilling undertaken into a dioritic mineralized intrusive at Sron Garb, situated outside the National Park and about 5 km NE of Cononish. To date, 8 holes have been completed and submitted for assay and results awaited.

Subsequent to completion of the program at Sron Garbh, drilling will move to test other priority occurrences in the Auch project area.

Corporate Activities

Rights Issue

On 22 July 2011, the Company announced a non renounceable rights issue to raise Aus$ 1.6M. The offer closed on 23 August 2011 with 87% take up. On 22 September 2011 the Company announced it had placed the balance of the shortfall.

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Competent Person's 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 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.