SGZ.L Regulatory News (SGZ)

31 October 2013

SCOTGOLD RESOURCES LIMITED

SEPTEMBER 2013 QUARTERLY REPORT

CONONISH GOLD AND SILVER PROJECT

During 2012 and early 2013, the Company made significant progress towards preparing the Cononish Gold and Silver project for financing its development; this culminated in the Final Cononish Development Study prepared under the auspices of AMC Consultants (UK) Ltd (AMC).

The project, although small by international standards, has the ability to provide an estimated post tax 23% rate of return at $1300/oz which is at the lower end of the current trading range for gold.

All necessary permitting has either been granted or due to be granted shortly and engineering design work is at a stage where it can be rapidly finalised on securing finance and thus ensure a rapid start to development.

Given the advanced state of project development, the Company believes Cononish could be producing gold and silver within 18 months of obtaining financing.

Key financial results from the study are shown in Table 1 below using a base case gold price of US$1300 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 and have estimated that a 10% increase in the Inferred resource grade (should it be realized), equates approximately to an additional $50 / oz on the gold price.

Further details and the Executive Summary of AMC's Development Study can be found on Scotgold's website at www.scotgoldresources.comunder ASX announcements - Cononish Development Study Results 30/04/2013 and also in the recently released annual report.

Project Permitting

The decision notice granting planning permission to the project 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, 64% of the conditions have been discharged and the Company awaits discharge of the remaining conditions subject to further discussion with the Planning Authority.

The Company recently submitted its application for a licence under the Water Environment (Controlled Activities) (Scotland) Regulations 2011 to the Scottish Environment Protection Agency relating to the proposed burn diversion works. The licence has now been granted.

Financing

Since early April, when the gold price rapidly declined from $1600 /oz to around $1300/oz, market conditions for raising finance for the project have remained difficult and the Company continues to evaluate a number of strategic alternatives to finance the project to progress to production within the shortest timeframe possible.

During the quarter, the Company announced a small equity placing and continues to explore options to finance the project on a substantive basis.

Grampian Gold Project

The Company continues to evaluate the results of the stream sediment sampling program in order to focus on going exploration efforts for next year's field season.

Chris Sangster

Managing Director

For further information please contact:

United Kingdom:

Australia:

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 and the Crown lease granted in May 2012