Scotgold Resources Limited (AIM:SGZ) said it has agreed to issue 3.3mln shares to settle the amounts owed by wholly owned subsidiary SGZ Cononish under the short-term loan funding provided by certain directors of the company by issuing new shares.
The company has issued 3,301,420 new ordinary shares at a price of 60.58p apiece to the directors, Nathaniel le Roux, Bill Styslinger, Peter Hetherington and Ian Proctor and an unrelated third party.
The loan settlement share price of 60.58p represents a 15.07% discount to the volume weighted average price of the ordinary shares for the last 30 trading days.
Scotgold noted that a 15.07% discount is the average discount for equity issues for cash by AIM basic materials companies over the five-month period ending 31 August 2021.
Chief executive Phillip Day said: "This a clear signal to the market of the board's continued commitment to the success of Scotgold, and also to their confidence in our combined ability to generate real returns for our shareholders. The agreement of this short-term loan in May came at a time when the management were addressing a number of operational challenges as part of the ramp up of our Cononish Gold-Silver Mine in Scotland, with the funds used judiciously to continue this process with a view to achieving targeted design processing capacity. As communicated in my monthly operational updates, this process has been successful, and we are on track to achieve monthly operating targets.
"Today's settlement and conversion is an important development for Scotgold, and I look forward to continuing this forward momentum by building on our operational successes and enhancing our financial performance over the coming months."