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05 August 2015 The Company Announcements Office Australian Securities Exchange Limited 4th Floor 20 Bridge Street SYDNEY NSW 2000

CONONISH GOLD AND SILVER PROJECT BANKABLE FEASIBILITY STUDY RESULTS AND FINANCE UPDATE

Scotgold Resources Limited (‘Scotgold’ or ‘the Company’) is pleased to announce the results of the Bankable Feasibility Study (‘BFS’) for its wholly owned Cononish Gold and Silver Project conducted by Bara Consulting Ltd of the UK. This study is based upon the Mineral Resource Statement announced in January 2015 and confirms the Ore Reserve Estimate announced in May 2015, both of which were compiled using guidelines recommended in the JORC Code (2012). The Cononish Gold and Silver Project is part of the Company’s gold portfolio located in Scotland.

SUMMARY OF BFS HIGHLIGHTS

PRODUCTION

Average Production 72,000 tonne per annum

Average LoM Grade (Au Eq) 11.8 gram/tonne

Average Metal Produced 23,370 ounce equivalent gold* per annum

Life of Mine 8 years

FINANCIAL (at Gold US$1,100/oz & Silver US$15/oz)

Peak Funding Requirement £18.5M

Unit Operating Costs £327/ ounce equivalent gold (US$523/ ounce equivalent gold)

Net pre-tax cashflow £43M

NPV (10%) pre-tax £23M

IRR pre-tax 45%

Payback Period 19 months

* Ounces equivalent gold = ounces gold + ounces silver*15/1100 – ratio calculated at base case prices of $1,100/ ounce gold and $15.00/ ounce silver

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PRE-TAX CASHFLOW SENSITIVITY TO GOLD PRICE

Gold Price US$700/ ounce

US$900/ ounce

US$1,000/ ounce

US$1,100/ ounce

US$1,200/ ounce

US$1,300/ ounce

US$1,500/ ounce

Pre Tax Cashflow

£1.5M £22.5M £32.9 £43.4M £53.9 £64.3M £85.3M

NPV (10%) (£4M) £9M 16.1 £23M 29.8 £37M £50M

IRR 0% 25% 35% 45% 54% 64% 82%

Robust Project economics using a base case gold price of US$1,100/ounce (£688/ ounce) with a EBITDA of £67.4M, a pre-tax free cashflow of £43.4M, pre-tax NPV(10%) of £22.5M and a pre-tax IRR of 45%.

Low operating cost with Life of Mine (‘LoM’) average of £327/ ounce equivalent gold (US$523/ ounce equivalent gold) (including Royalties) and Project breakeven (0% IRR) at US$689/ ounce equivalent gold

Peak Funding Requirement of £18.5M and all in LoM Capital including contingencies, replacements etc. of £24.0M

Average annual gold production of 23,370 ounce equivalent gold with peak production in Year 2 of 28,540 ounce equivalent gold.

Average LoM grade of 11.8 grams equivalent gold /tonne and peak grade of 15.4 grams equivalent gold / tonne in year 2.

Rapid Implementation schedule of 16 months post contract and finance completion and short payback period of 19 months from full production.

Based on the earlier PFS, the company has been offered indicative terms by leading banks to provide debt finance for the majority of the project’s funding requirement.

Completion of this BFS facilitates the selection of the preferred finance route and the signing of a mandate with the selected institutions in near future

Richard Gray, Chief Executive of Scotgold, commented:

“The BFS illustrates the robustness of the Cononish Project with the mine profitable down to US$700 per ounce and provides a very solid base for our ongoing discussions with potential project finance providers. Once concluded, we look forward to putting this fully permitted project into development and pursuing its strong upside potential, which includes a possible Mineral Resource extension and the likely price premium for gold with proven Scottish provenance.”

Details of the material assumptions considered in the derivation of the production target and forecast financial information above are provided in Appendix 1.

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The BFS Study Executive Summary is published on Scotgold’s website at www.scotgold.com

Key Attributes of Cononish Gold and Silver Project

In summary, the key attributes of the project are:

Mineralization occurs in a narrow (average width of about 2 m) near vertical quartz vein.

The project has a resource estimate in Measured, Indicated and Inferred categories (see ASX release “Resource Estimate Update” dated 22/01/2015) prepared by Mr M.Titley of CSA Global ( see below) of 541,000 tonnes at a gold grade of 14.3 g/t and a silver grade of 59.7 g/t. The average Bulk Density is 2.72 tonne/m3.

After taking into account various modifying factors, the proven and probable ore reserves (see ASX release “Cononish Gold Project Study Update and Reserve Estimate” dated 26/05/2015), prepared by Mr P Willis of Bara Consulting (see below) comprises 555,000 tonnes at a gold grade of 11.1 g/t and a silver grade of 47.7 g/t.

Proven and probable ore reserves represent 12% and 88% of the reported production target respectively. No inferred resources are considered in the BFS.

Access will be from the existing exploration adit and footwall ramps will provide access to ore drives at a 15 m vertical interval. A rock pass system has been included to improve ore handling and the transfer of waste.

The mining method will be a retreat top down Long Hole Open Stoping (LHOS) method using conventional trackless equipment. Shrinkage stoping was investigated but was only economically viable in the very narrowest (<1.4 m) areas of the mine and was therefore not considered further.

Full production will be at 72,000 tonnes per annum. The life of mine at full production based on the current reserves in the Proven and Probable categories is approximately 8 years. The mining production schedule adequately takes into account the constraints mentioned below. Average gold and silver production will be approximately 22,208 ounces gold and 85,081 ounces silver per annum respectively or 23,370 ounce equivalent gold.

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Mining permission has been granted but with certain conditions which have been accommodated within the mine plan. Approximately 129,000 tonnes of tailings (after taking into account the mass pull) is scheduled to be stored in old stopes towards the end of the mine’s life, enabling the full capacity of the Tailings Management Facility (‘TMF’) to be restricted to 400,000 tonnes and minimising surface impact.

Waste is only trucked to surface when required for the building of the TMF and various screening berms (73,000 tonnes). All other waste will be stored in old stopes (163,000 tonnes).

Based on extensive testwork by Lakefield, Gekko and AMMTEC, the plant is designed as a conventional gravity and flotation plant. 25% of the gold is estimated to be recovered on site into a doré bar with the balance being produced as concentrate to be treated off site. Overall estimated recovery is 93% for gold and 90% for silver The doré and concentrate will be sold “at the gate” to third party processors.

The process plant will be housed in a single multi-use building which will also contain a workshop and office area. This is designed to have minimal visual and noise impact on the surrounding area.

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Cononish Gold and Silver Project Study Results

The following costs have been estimated at an accuracy of between -5% and +15% and include appropriate contingencies:

o Peak funding requirement (pre production expenditure): £18.5 million.

o Total LoM Capital Expenditure: £24 million.

o Average operating cost: £110 per tonne treated (including marketing, interest and royalty charges). It should be noted that transport, smelting and refining charges where reflected as cost of sales in the PFS. These costs have been included as part of operating costs in the BFS.

o Average operating cost: £ 327 (US$ 523) per ounce equivalent gold (on the same basis as above

o All in cost including capital £455 (US$ 729) per ounce equivalent gold

The following financial results were estimated using a gold price of US$ 1,100/ounce, a silver price of US$ 15/ounce and a US$/£ exchange rate of 1.6:

o Pre-tax NPV@10% £22.9 million

o Pre-tax IRR 45%

o Post-tax NPV@10% £18.5 million*

o Post-tax IRR 41%*

o Average profit margin 53%

o Payback 19 months

* Note post-tax calculations are based on a hypothetical all equity funding scenario and as such are illustrative only.

Yours faithfully

Peter Newcomb Company Secretary

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Scotgold Resources Limited Westhouse Securities Limited

Richard Gray Martin Davison

Chief Executive Officer

Tel: +44 (0)7905 884 021 Tel: +44 (0)20 7601 6100

Capital Markets Consultants Vicarage Capital Limited

Simon Rothschild Rupert Williams

Tel +44 (0)7703 167 065 Tel: +44 (0)20 3651 2911

Forward Looking Statements

This announcement contains certain statements that may constitute “forward looking statements”. Such statements are only predictions and are subject to inherent risks and uncertainties, which could cause actual values, results, performance achievements to differ materially from those expressed, implied or projected in any forward looking statements.

Competent Persons Statement The information in this report that relates to the 2015 Ore Reserves for Cononish Gold Project (refer ASX announcement dated 25/05/2015) is based on information compiled by Pat Willis, a Competent Person who is registered as a Professional Engineer (Pr.Eng.) with the Engineering Council for South Africa (ECSA) and a Fellow in good standing and Past President of the Southern Africa Institute of Mining and Metallurgy (FSAIMM).. Mr Willis is employed by Bara Consulting Limited, an independent consulting company. Mr Willis 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 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Willis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to the 2015 Mineral Resources Estimate for Cononish Gold Project (refer ASX announcement dated 22/01/2015) is based on information compiled by Malcolm Titley, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Titley is employed by CSA Global (UK) Limited, an independent consulting company. Mr Titley 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 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Titley consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Further, the Company confirms it is not aware of any new information or data that materially affects the information contained in the original announcements and that all material assumptions and technical parameters underpinning the estimate of Resources and Reserves continue to apply and have not materially changed.

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APPENDIX 1

JORC Code, 2012 Edition – Table 1 - Scotgold Cononish Gold and Silver Project

ORE RESERVE as at 11th May, 2015

Section 1 Sampling Techniques and Data – refer ASX announcement 22 January 2015

Section 2 Reporting of Exploration Results – refer ASX announcement 22 January 2015

Section 3 Estimation and Reporting of Mineral Resources – refer ASX announcement 22 January 2015

Section 4 Estimation and Reporting of Ore Reserves

(Criteria listed in section 1, and where relevant in section 2 and 3, also apply to this section.)

Criteria JORC Code explanation Commentary

Mineral Resource estimate for conversion to Ore reserves

Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.

Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.

A JORC 2012 Mineral Resource Estimate (MRE) was issued on 20th January 2015 by CSA Global. The reported MRE and its classification are consistent with the Competent Person’s (CP) view of the deposit. The CP was responsible for determining the resource classification. The Table below presented the Cononish gold and silver project MRE as at 12 January, 2015.

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The Mineral Resources are declared inclusive of Ore Reserves.

Site visits Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

If no site visits have been undertaken indicate why this is the case.

The CP visited the site on 12th January 2015 and on a number of occasions since then

accompanied by mining design engineer and geotechnical engineers.

Study Status The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.

The Code requires that a study to at least Pre‐Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.

A Development Plan was produced in April 2013 by Australian Mining Consultants (AMC). This contained all the technical work done to date in one document. This included resources, mine design, process design and all the peripheral infrastructure. It included cost estimates and a financial model. Bara undertook an independent review of this document. It is our opinion that this work was at least to Prefeasibility Study (PFS) standard with some work to Bankable Feasibility Standard (BFS) with the exception of the geotechnical work which was at Concept level. A geotechnical investigation was subsequently commissioned, which included extensive underground investigation and detailed core logging, and completed by Bara in April 2015. The resources and geological model where updated by CSA Global in January 2015. A new mine design and

K TonnesGrade Au g/t

Metal Au Koz

Grade Ag g/t

Metal Ag Koz

In‐situ Dry BD

60 15.0 29 71.5 139 2.72474 14.3 217 58.7 895 2.72

Indicated ‐ Mined Stockpile 7 7.9 2 39.0 9 2.72541 14.3 248 59.9 1,043 2.7275 7.4 18 21.9 53 2.72617 13.4 266 55.3 1,096 2.72

Reported at a cut‐off grade of 3.5 g/t gold

Scotgold Resources Limited ‐ Cononish Gold ProjectMineral Resource Estimate as at 12 January, 2015

Reported from 3D block model with grades estimated by Ordinary Kriging with 15 m x 15 m SMU Local Uniform Conditioning adjustment. Minimum vein width is 1.2 m.Totals may not appear to add up due to appropriate rounding.

Classification

Measured ‐ In‐situIndicated ‐ In situ

Sub‐total M&IInferred ‐ In‐situTotal MRE

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schedule to Feasibility Study status has just been completed (May 2015) by Bara based on the revised geological model and the updated geotechnical work as part of a BFS to be completed by July 2015. This reserve statement is therefore based on the AMC 2013 Development Plan, the CSA 2015 Resource and Geological Model, the Bara Geotechnical Report and the Bara 2015 Mine Design. Bara has been commissioned by Scotgold to update the areas of work in the AMC Development Plan, which are considered to be at PFS levels, and produce a BFS. This is expected to be completed by July 2015.

Cut‐off parameters

The basis of the cut‐off grade(s) or quality parameters applied.

A breakeven grade was calculated based on the operating costs for mining, processing and administration as well as the prevailing metal prices and exchange rates. In order to simplify the calculations based on grade, the value of silver and gold were combined by the calculation of an equivalent gold value. The calculation considered the different metal prices and recoveries. The equation used for calculating equivalent Au g/t is:

Equivalent Au (g/t) = Au g/t + (Ag g/t *0.015) Details of the calculation are shown in the table below.

BREAKEVEN GRADE CALCULATION

Item Value Source of data

Gold price ($/oz) 1,100 Scotgold

Exchange rate (GBP/US$) 0.66 3 month average

Gold Price ($/g) 35.37

Gold price (GBP/oz) 726.00

Gold price (GBP/g) 23.34

Cost of sales (GBP/g) 1.91 AMC Development Plan, cost/g RoM

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Net Gold price (GBP/g) 21.43

Mining cost (GBP/t milled) 48.40 AMC Development Plan

Processing cost (GBP/ t milled) 31.09 AMC Development Plan

General and Administrative cost (GBP/t) 8.23 AMC Development Plan

Total direct operating costs (GBP/t milled) 87.72

Breakeven recovered grade (g/t) 4.09

Metallurgical recovery 93%

Smelter recovery 96%

Refinery recovery 99.8%

Breakeven RoM grade (Equivalent Au g/t) 4.61

Based on this calculation a mining cut‐off of 4.6 g/t Equivalent Au (RoM) was applied in the mine plan. Only stopes with in‐situ grades above the cut‐off were targeted in the plan. In limited cases it is necessary to mine lower grade blocks in order to access the targeted blocks, rather than re‐developing around the lower grade blocks, and so some lower grade stope blocks are included in the plan. A marginal pay limit was calculated in the same manner, but by setting the mining cost to zero, to determine the cut‐off grade for development ore. The marginal cut‐off grade is 2.3 g/t in‐situ, which equates to 2.1 g/t RoM grade. To ensure at least some profit margin on marginal ore the cut‐off grade applied in determining which development ore to process was set at 2.5 g/t equivalent Au RoM grade.

Mining factors or assumptions

The method and assumptions used as reported in the Pre‐Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).

The choice, nature and appropriateness of the

The geological block and structural models produced by CSA were used to develop the detailed mine design. The level intervals (15 m) proposed by AMC were considered appropriate as was the mechanised longhole open stoping mining method. The mine design includes a rock pass system (which was not included in the AMC design) and a revised layout for the ramp systems. The rock

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selected mining method(s) and other mining parameters including associated design issues such as pre‐strip, access, etc.

The assumptions made regarding geotechnical parameters (eg pit slopes, stope sizes, etc), grade control and pre‐production drilling.

The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate).

The mining dilution factors used. The mining recovery factors used. Any minimum mining widths used. The manner in which Inferred Mineral Resources are

utilised in mining studies and the sensitivity of the outcome to their inclusion.

The infrastructure requirements of the selected mining methods.

pass system introduced considerable more flexibility and will lead to reduced operating costs by reducing truck haul distances. Appropriate pillars where built into the mine design. These were based on a detailed geotechnical investigation completed in April 2015.

Waste from development will either be used in TDF construction or stored in stoped out voids.

No inferred resources where included in the mine design. Mining infrastructure as appropriate to a small scale mechanized underground

mine has been incorporated into designs and appropriately costed within the study.

The mine design is presented in the vertical projection below looking north and colored by years.

MRE was diluted to a minimum mining width of 1.2 m (pre mining dilution).

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The estimate of the predicted dilution and the width of the vein in each of eleven cases measured in the Adit were plotted against each other and a regression curve determined. The best fit for the data set was a power function, where: Total dilution (%) = 0.792 X Width (m)(‐1.638) This formula was used to allocate dilution to each stope block in the mine plan. The average stope dilution is 30%. An additional source of dilution in the mine plan is development. Ore development was categorised into grade categories in the mine plan: Pay – RoM grade (Eq Au g/t) > 4.6 g/t Low grade ‐ RoM grade (Eq Au g/t) < 4.6 g/t and >2.5 g/t Unpay ‐ RoM grade (Eq Au g/t) < 2.5 g/t Both pay and low grade development ore will be processed and therefore have been

included in the Mineral Reserve estimate. The unpay development ore will be treated

as waste material.

An allowance was made for ore loss to account for: Broken ore not recovered from stopes

Ore not broken due to inaccurate mining or mining complications such as stope

bridging

Ore lost during the mucking and hauling process, between the stope and the

RoM pad.

Based on experience from other narrow vein gold operations ore loss was set at 10%.

Metallurgical factors or assumptions

The metallurgical process proposed and the appropriateness of that process to the style of mineralisation.

Whether the metallurgical process is well‐tested technology or novel in nature.

The nature, amount and representativeness of

Testwork on a variety of processing routes (gravity, flotation, gravity flotation and

cyanidation) was carried out by Lakefield (1988,1989,1995), Gekko systems (2009,

2010) and AMMTEC (2010). Initial metallurgical testwork in 1987 was been

conducted on selected drill core, subsequent testwork on samples and bulk

samples (upto 1.5t) from the exploration adit. These samples were taken from a

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metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied.

Any assumptions or allowances made for deleterious elements.

The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole.

For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications?

number of positions in the adit deemed representative of the mineralization as

exposed in the adit and observed in drill core

The choice of sample processing route taken by the various testing bodies is

appropriate, the metallurgical test‐work has been correctly selected and, and has

been performed in accordance with best practice principles.

The outcome has been the selection of a conventional gravity and flotation

process plant and is appropriate to the style of mineralisation. However, similar

projects would undertake intensive cyanidation and electro‐winning of the

flotation concentrates on‐site which is not possible in this case due to permitting

restrictions. The basic process approach adopted by Consulmet for their final

design is considered conventional and shown in the block flowsheet below. The

overall recovery of gold is estimated to be approximately 93% (and silver 90%).

No metallurgical domaining has been applied as results from testwork indicate

largely uniform recoveries from the representative zones tested.

Testwork has not indicated any deleterious elements that impact recovery or

concentrate treatment

Size reduction

Gravity process

Run of mine

Flotation

Smelt onsite to Au/Ag bullion/Dore

Despatch for offsite Au/Ag recovery

Tailings

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Environmental The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.

A completed EIS was submitted for planning application in July 2011, and Planning permission was granted early in 2012, subject to a number of conditions. The Decision Notice was issued in February 2012, with various ‘suspensive’ conditions to be satisfied prior to the start of development, and the requirement that work should start within 3 years. The project has since successfully applied for an extension of this planning notice,

One of the prerequisite conditions for the permitting of the project was submission and approval of the project Construction Environmental Management Plan (CEMP), and a Decommissioning and Restoration Plan (DRP). The CEMP was completed in March 2013, and there were continued discussions with LLTNP about various additional requirements. All submissions to the LLTNP authority have now been made (except for those that need to be made immediately prior to the start of development) and 64% of the Permit conditions have been met.

In addition to the Planning Permission, Scotgold has also submitted an application for a water licence for the work required for the proposed stream diversion under the Water Environment (Controlled Activities) Regulations 2011 (CAR regulations), and all the necessary permits for these works have been granted by the Scottish Environmental Protection Agency (SEPA).

In summary, all of the necessary permitting has either been granted or can be completed within a short time frame. The target gold and silver is spatially associated with sulphides, mainly as pyrite with lesser galena, chalcopyrite and sphalerite, in the quartz vein host rock. The proposed processing routes for the Cononish ore includes gravity and sulphide flotation, which should effectively remove the majority of potentially acid‐generating material in the concentrate product that will be shipped away from the site. The Tailings Facility has been designed and approved in accordance with the EU Mines Waste Directive as translated in Scottish legislation under the

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Management of Extractive Waste (Scotland) Regulations 2010 which requires the appropriate testing and characterisation of mine waste. Development waste and tailings are classified as inert (as defined by the regulations).

Infrastructure The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided, or accessed.

The Cononish project is located in the Grampian Highlands of mid‐western Scotland and forms the core economic basis of Scotgold’s Grampian Project. The deposit is located on the Cononish farm, near Tyndrum, within the north‐western extremity of the Loch Lomond and Trossachs National Park (LLTNP), about 90 km north‐wet of Glasgow.

The Company holds a lease over Cononish Farm from the landowner enabling it to develop the necessary infrastructure at the mine site.

It has easily access to all the necessary infrastructure and transport routes. There is a history of mining in the area and local unemployment is high so there is an ample supply of labour. There are a number of small towns within commuting distance so ample accommodation is available.

Provision is made within capital estimates for the construction of a powerline from the mine to grid power.

Costs The derivation of, or assumptions made, regarding projected capital costs in the study.

The methodology used to estimate operating costs. Allowances made for the content of deleterious

elements. The source of exchange rates used in the study. Derivation of transportation charges. The basis for forecasting or source of treatment and

refining charges, penalties for failure to meet specification, etc.

The allowances made for royalties payable, both Government and private.

The construction of the plant and associated building and the TDF represent the majority of the total capital cost. These and other capital costs have been obtained by detailed tender estimates from the supply companies. The capital cost estimates are as follows:

Capital Cost

GBP millions

Estimate

Mine Development 3.648

Mining Equipment 2.734

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Processing Plant 10.728

Tailings Facility 4.112

Infrastructure 0.996

Environmental and Social 1.174

Labour (pre‐production) 0.375

Total 23.767

Operating costs were derived from a zero base have been obtained from budget

estimates. The operating cost estimate is as follows:

Operating Cost

GBP/RoM tonne

Estimate

Mining 48.40

Processing 31.06

Administration 8.51

Total 87.97

The lease gives Scotgold the right to mine the Cononish project for ten years from “Planning Completion” – as defined within the lease. In exchange, Scotgold will pay to the Crown, a rent; which is in part made up of fixed (certain) rent, and in part a royalty rent totally 4% of “net realisable” revenue as defined in the lease (to exclude transport, smelting and refining charges). The payment of certain rent and royalty rent follow different schedules with certain rent due 6 months in advance and royalty rent due 6 months in arrears, In addition, there

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are provisions if royalty rent does not exceed certain rent in any one year, it can be offset against certain rent payment in the following year.

Revenue factors

The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.

The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co‐products.

The metal price used in calculating cash flow for this economic assessment was USD 1,100/Au oz and USD 15/Ag oz and an exchange rate of $1.00 / £ 1.60 was applied. These prices were provided by Scotgold and are considered appropriate.

Scotgold have indicated the following indicative recoveries from various smelters through previous work by MRI Trading AG. The terms included: 95% of recovery of agreed Au content, Au subject to a minimum deduction of

2g/dmt.

95% of recovery of agreed Ag content, Ag subject to a minimum deduction of

100g/dmt.

Estimated concentrate treatment charge of US$450/dmt.

No recovery of Tellurium.

Based on the concentrate specifications of potentially deleterious elements provided, no penalty charges were anticipated. Refining charges were quoted as €10/oz for paid Au and €20/kg of paid silver.

A 2% gross value charge is made for marketing The following parameters have been used in the financial model.

METALLURGICAL PARAMETERS FOR FINANCIAL MODELING

Au Recovery overall 93%

Ag Recovery overall 90%

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Au Gravity recovery 25%

Ag Gravity recovery 5%

Mass pull to sulphide concentrate

4.75%

Market assessment

The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.

A customer and competitor analysis along with the identification of likely market windows for the product.

Price and volume forecasts and the basis for these forecasts.

For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract.

The product produced by the Cononish Mine is gold bullion and gold in concentrate. Prices for both products are subject to prevailing gold price.

An additional value added product under consideration is the sale of branded Scottish gold. Initial assessment of this possibility shows potential for premium sales prices to be achieved. This has not been included in the financial model used to test the viability of the Ore Reserves.

Economic The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc.

NPV ranges and sensitivity to variations in the significant assumptions and inputs.

The metal price used in calculating cash flow for this economic assessment was USD 1,100/Au oz and USD 15/Ag oz and an exchange rate of $1.00/£ 1.60 was applied. These prices were provided by Scotgold and are considered appropriate.

The estimate showed that the planned operation returns a positive cash flow, with a pre‐tax NPV of £21.3 million at a discount rate of 10 per cent and a pre‐tax IRR of 45%. This confirms that the operation is economically viable.

Sensitivity analysis indicates the highest sensitivity to variations in the gold price.

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Social The status of agreements with key stakeholders and matters leading to social licence to operate.

The Crown Estate Commissioners unconditional grant of the Crown Lease was confirmed in May 2012.

The local community have been involved in numerous community feedback meetings and their unequivocal support of the project was largely the reason for successful planning permission.

Other To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:

Any identified material naturally occurring risks. The status of material legal agreements and

marketing arrangements. The status of governmental agreements and

approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre‐Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.

A completed EIS was submitted for planning application in July 2011, and Planning permission was granted early in 2012, subject to a number of conditions. The Decision Notice was issued in February 2012, with various ‘suspensive’ conditions to be satisfied prior to the start of development, and the requirement that work should start within 3 years. The project has since successfully applied for an extension of this planning notice, which gives time to finalise the few remaining commitments and to obtain funding.

One of the prerequisite conditions for the permitting of the project was submission and approval of the project Construction Environmental Management Plan (CEMP), and a Decommissioning and Restoration Plan (DRP). The CEMP was completed in March 2013, and there were continued discussions with LLTNP about various additional requirements. All submissions to the LLTNP authority have now been made (except for those that need to be made immediately prior to the start of development) and 64% of the Permit conditions have been met.

In addition to the Planning Permission, Scotgold has also submitted an application for a water licence for the work required for the proposed stream diversion under the Water Environment (Controlled Activities) Regulations 2011 (CAR regulations), and all the necessary permits for these works have been granted by the Scottish Environmental Protection Agency (SEPA).

In summary, all of the necessary permitting has either been granted or can be

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completed within a short time frame.

Classification The basis for the classification of the Ore Reserves into varying confidence categories.

Whether the result appropriately reflects the Competent Person’s view of the deposit.

The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).

The classification of the Ore Reserves is shown below:

ORE RESERVE STATEMENT

Classification ‘000

Tonnes

Grade

Au g/t

Metal

Au ‘000 oz

Grade

Ag g/t

Metal

Ag ‘000 oz

Proven 65 11.5 24 51.5 108

Probable 490 11.1 174 47.2 743

Total 555 11.1 198 47.7 851

This reflects the Competent Persons view of the deposit. Proven ore reserves derive directly from Measured resources and Probable ore

reserves derive directly from Indicated resources. No Measured Resources have been converted to Probable Reserves.

Audits or reviews

The results of any audits or reviews of Ore Reserve estimates.

This is the initial Ore Reserve estimate under JORC 2012 and a number of internal audits have been performed. It is planned to undertake an independent audit and review of the BFS in July 2015. This will include an audit of the Ore Reserves estimate.

Discussion of relative accuracy/ confidence

Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the

The accuracy and confidence level of the selected modifying factors are

commensurate with a definitive feasibility study.

The accuracy and confidence in the cost estimation, which is based primarily on

the work completed by AMC as part of the Mine Development Plan, are

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reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage.

It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

considered to be in the upper limit of pre‐feasibility accuracy. The costs when

estimated in 2013 were considerably more accurate than pre‐feasibility study

level. In many cases the costs have been adjusted to take account of the new

mining schedule.

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