SCOTGOLD RESOURCES LIMITED

SEPTEMBER 2014 QUARTERLY REPORT

CONONISH GOLD AND SILVER PROJECT

In order to facilitate financing under current market conditions, the Company, in conjunction with its consultants, have continued to examine and evaluate possible alternative configurations for the Cononish Gold and Silver Project with a view to optimising returns and attempting to reduce the initial capital expenditure and the overall funding requirement to bring the project to production.

The initial options considered to date have considered varied processing rates, strategic mining sequences and mining selectivity.  Whilst these options remain under review,  a number of other options relating to construction, commissioning and production build up periods, as well as plant configuration, are also being considered for further examination and evaluation before a preferred development option can be finalised.

From the initial options considered, it was apparent that a change to the current planning condition (Condition 13) regarding the hours of operation of the processing plant presented an attractive opportunity to be actively pursued. Current planning conditions restrict hours of operation of the processing plant from 07h00 to 23h00 Mondays to Saturdays with no processing on Sundays or recognised Scottish public holidays. A change to 24/6 operations (though still with no processing on Sundays or recognised Scottish public holidays) would enable a significant decrease in the 'name plate' plant hourly throughput rate, whilst maintaining previously considered annual production rates, with attendant possible capital reductions for the processing plant and associated infrastructure.

To this end, the Company held a number of discussions with the Loch Lomond and the Trossachs National Park Planning Authority ("the Planning Authority"). Scotgold submitted a formal letter to the Planning Authority requesting pre-application advice regarding variation to this condition. The Company has received the response and recently conducted a site visit with the Planning Authority and relevant other authorities in this regard and will submit the requisite application to vary this condition shortly.

The Company is also continuingdiscussions with possible plant suppliers regarding the capital costs and financing of the possible smaller facility and is in negotiations relating to supplier financing for the mining equipment required with the aim of achieving further reductions in the initial capital expenditure.

GRAMPIAN GOLD PROJECT

The Company continues to actively pursue exploration activities on its substantial land position in the Dalradian group of the south west Grampians, a terrain highly prospective for both gold and potential base metal occurrences. The majority (85%) of the area currently under option to Scotgold is located outside the Loch Lomond and the Trossachs National Park.

The company's strategy has been to advance the Cononish Project to production whilst conducting early stage regional exploration over the wider Grampian Gold project area in conjunction with follow up work on the more advanced prospects close to the Cononish project area.

The Grampian Gold project encompasses a large area of the highly prospective Dalradian sequence. Basic exploration data, including gravity and airborne magnetics, is available from government surveys carried out between 1950s and 1970s but is of a quality and spacing that does not adequately reflect the prospectivity of the area. This and the general lack of previous exploration over the area (other than early stage exploration in the vicinity of the Cononish project) has dictated the Company's approach to exploration.

In order to advance its understanding of the regional setting, over the past three years, the Company has embarked on a regional scale stream sediment sampling program.

In the initial wide spaced regional program, in excess of 750 stream sediment samples were taken over the area. Initial interpretation of these results continues and this program is now being followed up by a more detailed infill sampling program in the anomalous result areas in order to further target areas for detailed fieldwork and prospecting. To date a further 300 samples have been taken in the infill program with a further 187 to be taken.

In parallel with this regional program, Scotgold continues to evaluate previously identified high grade outcrop samples identified by previous exploration close to the Cononish project.

The Company believe that the next phase of exploration in the central 'Tyndrum' option area should compromise an airborne geophysical survey in order to assess the nature and continuity of the structural regime in this area with a view to determining its potential to host similar  'Cononish style' deposits. Results from the infill stream sediment sampling program will guide further exploration effort in areas outside the immediate Cononish area.

Subsequent Events

The Company announced certain changes to the Board of Directors with Mr Alexander Littlejohn appointed Non-Executive Chairman, Mr Richard Gray as Managing Director and Chief Executive Officer and Mr Nathaniel le Roux and Mr Richard Harris as Non-Executive Directors. Mr Christopher Sangster has stepped down as Managing Director and Chief Executive Officer, however the Company will retain his experience as he will become a Non-Executive Director of the Company. Mr John Bentley resigned as Executive Director and Chairman.

The Company also announced that it intends to undertake a pro-rata non-renounceable rights issue of 1 new Share for every 1 existing Share held at an issue price of $0.006 per Share ("the Rights Issue").

Mr Nathaniel le Roux and Mr Alexander Littlejohn have agreed to fully underwrite the rights issue. The funds raised will be used for ongoing mine development studies at Cononish, further debt retirement, exploration and working capital purposes.

The Rights Issue is a related party transaction for the purposes of the AIM Rules. Accordingly, as required by the AIM Rules, the independent directors of the Company having consulted with the Company's nominated adviser, Westhouse Securities Limited, consider that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.

Further details of the Rights Issue, including the timetable for the Rights Issue were released on 14 October 2014 ( see Release - Non Renounceable Rights Issue).

United Kingdom:

Tenement details

The Company holds a Lease (100%) from the Crown Estate Commissioners over Cononish Farm, County of Perth, Scotland UK.

The Company holds a Lease (100%) from the landowner over Cononish Farm, County of Perth, Scotland UK.

The Company holds five Mines Royal Option Agreements (100%) with the Crown Estate Commissioners as detailed below:

Glen Orchy: Location - counties of Perth and Argyll, Scotland UK

Glen Lyon: Location - counties of Perth and Argyll, Scotland UK

Inverliever: Location - counties of Dunbarton, Argyll and Perth, Scotland UK

Knapdale: Location - county of Argyll, Scotland UK

Ochils: Location - county of Clackmannan, Perth, Kinross and Stirling, Scotland UK

No tenements were acquired or disposed of during the quarter

No other beneficial interests are held in any farm-in or farm-out agreements

No other beneficial interests in farm-in or farm out agreements were acquired or disposed of during the quarter