Scotgold Resources Limited (AIM: SGZ), is pleased to provide a Q4 2021 production and operations update for its Cononish Gold and Silver Mine in Scotland ('Cononish') and 2022 strategy as the Company targets production of c.23,500oz p.a. run rate of gold by end of Q1 2023.

Cononish Gold & Silver Mine

Production and Optimisation During the quarter ended 31 December 2021 ('Q4 2021'), the Company produced 1,508 ounces of gold and 7,200 ounces of silver from Cononish. In line with the newly appointed management and leadership team in April 2021, a redesign of the 2021 mine schedule/design was completed in May 2021. The redesign allowed faster access to higher grade zones within the ore body at Cononish by utilising a method of mining called 'cut and fill stoping'. This method utilises the fact that the gold vein in some zones of Cononish has better continuity vertically than it does horizontally. In addition to a redesign of the mine schedule/design, the Company completed modifications and upgrades to the process plant including the relining the ball mill in October 2021; purchased critical and required spares for the processing plant and mining operations and implemented maintenance planning practices to ensure the mine runs efficiently.

During Q4 2021 production continued to be ramped up in line with the mine plan re-design and Phase 1 Ramp-up production is near completion, with 6,168 tonnes of ore fed to the processing plant. Whilst strong operational progress has been made at Cononish during Q4 2021, November 2021's underground development and production was negatively impacted by Covid-19 related supply issues for explosives, that are used to blast the mine face for ore extraction. This meant that 1,011 ounces of gold were produced in November and December 2021, 290 gold ounces lower than the Company targeted due to November's production impact. This issue was resolved during November and ore extraction continues in line with the Company's mine plan.

However, the Company is delighted to report that in December 2021, Scotgold had a record month of production in terms of gold concentrate with 101 tonnes produced. The concentrate grade equates to around 700 ounces of contained gold and 3,000 ounces of contained silver and marks a c.60% increase to the Company's previous record monthly concentrate production. In terms of 2022 mine plan development, the focus of Q1 2022 will be to prepare for access to the second 'cut and fill stope' which is planned to be accessed in Q2 2022.

This focus on mine development is very normal in underground mines and is well understood to come with some risk of grade variability. That grade variability has been experienced over the past two weeks with low grade ore being produced. We have limited knowledge when this will improve and as a result the Company's working capital remains challenging. As such, the Board has taken the prudent decision to accept an additional loan of GBP0.5M provided by Mrs Jane Styslinger a related party of Non-Executive Director Mr Bill Styslinger as defined by the AIM Rules for Companies (the 'Additional Loan') to mitigate this risk and ensure continued financial robustness during this period while this work is completed.

Additional financing may be required if the grade remains poor until the Company is able to access the next 'cut and stope' area in Q2 2022. In Q3 2022, Scotgold plans to commence retreat long hole stoping, as per the original mine design, which will significantly transform the ability to access reserve mine gold grade more readily. Additionally, the focus in Q1-Q2 2022, will be the implementation of several low-capex processing plant and mine optimisation initiatives by the end Q2 2022. The planned tailings thickener is expected to provide significant optimisation to the throughout of the processing plant. As such, Scotgold has a target of achieving Optimisation Phase Production monthly run rate of c. 4,000 feed tonnes to the process plant by end of Q2 2022 ramping up to 4,500 feed tonnes by Q4 2022 which equates to c 16,000 - 17,500 ounces p.a. run rate of gold by the end of Q2 2022

It is the Company's plan to continue to increase the production rates of its processing plant and achieve Phase 2 production at Cononish - this entails achieving a run rate of 23,500 ounces of gold per annum. Scotgold is completing due diligence work to determine whether to install an Ore Sorter between the existing crushing unit and the Mill. The installed crushing unit is already designed for the Phase 2 production rate so will not require expansion. This option will realise an increase in ounces of gold processed per tonne at lower tonnages and potentially lower CAPEX and OPEX. A significant benefit includes the reduction of fine tailings generated from the processing plant, which is a constraint to the expansion of Cononish's Reserves. We expect the due diligence to be completed by the end of Q2 2022 and the sorter, if approved, to be operational by the end of Q1 2023. The alternative is to install a further Mill and downstream processing capacity as per the original Phase 2 mine plan upgrade.

Contact:

Tel: +44 (0) 20 3470 0470

Scotgold Resources Ltd (AIM: SGZ), is Scotland's first commercial gold producer. The Company poured first gold in November 2020 at its Cononish Gold and Silver Mine ('Cononish) in Tyndrum, Scotland and is developing it into a +23,500-ounce gold mine per annum by end of Q1 2023. Cononish is a highgrade underground mining operation with a central processing plant producing gold concentrate for off-take and gold dore for the Scottish Jewellery industry.

Once in full production, the mine has anticipated forecast operating costs of c.GBP544/oz AISC, which will place Cononish in the lowest quartile of gold mining operations globally. It is Scotgold's vision to build a mid-tier gold mining company in Scotland with multiple operations in the country that enhance the local environment and economy in ways that have an enduring positive impact.

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