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The company behind plans to reopen a gold and silver mine in Stirlingshire is still seeking financial backing for the project.

In a stock market announcement, Scotgold Resources said it had made progress in preparing the mine near Tyndrum for production.

But it added it continued "to explore options to finance the project on a substantive basis".

It expects Cononish to start producing within 18 months of obtaining backing.

A year ago, Scotgold secured a pre-development loan worth nearly £1.2m from RMB Resources to help continue a drilling programme at the mine in the Loch Lomond National Park.

The price of gold later fell substantially.

In its statement, Scotgold said: "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."

Planning talks

Scotgold reported that it had now met nearly two-thirds of planning conditions set for development and was awaiting "discharge of the remaining conditions" subject to further talks with planning officials.

It added: "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."

The company estimates that the Cononish project could provide a post-tax 23% rate of return, despite the drop this year in the price of gold.

Scotgold's cash balance was just over £331,677 at the end of September - down from £570,000 at the end of the previous quarter.

It is expecting to spend £200,000 in the current quarter on administration and exploration and evaluation.