Golden opportunity?

Buying a castle with gold deposits may be romantic, but don't count on making a profit, says Chris Partridge

Britain's most northerly castle is coming up for auction, but many buyers will be interested not in the building or its history, but in what lies beneath.

Gold.

Muness Castle, on the remote and windswept island of Unst in the Shetlands, was built in 1598 by Laurence Bruce, Sheriff of Shetland, as a base for extorting money out of the locals. He was very good at this - he collected taxes accompanied by a band of armed thugs, and changed the weights and measures to increase the takings.

It would be nice to imagine that the evil man's treasure is still concealed under the castle's floor, but the gold is actually buried deep within rocks under the castle's land. The presence of gold in "encouraging" quantities was revealed by an investigation by the British Geological Survey and the local council. Unfortunately, the survey also concluded that getting at it will probably involve major mining operations.

Despite this drawback, Jack Weatherall, of Andrews & Robertson, who will be auctioning the castle next week, has had considerable interest in the place. "A lot of people like the idea of striking gold on their property!" he says. But the attraction is such that he fears that someone might buy out of pure romantic sentiment. Buying land on the off-chance that there may be mineral wealth below it is not a good idea, because making a profit from it is likely to be a long, tedious and bureaucratic process. The first step is to find out what minerals are likely to exist by consulting the British Geological Survey at www.bgs.ac.uk.

The BGS publishes downloadable guides to metal deposits. The guide to gold says: "Gold has been found recently at Muness, in a sheared pyritic Dalradian phyllite 2m to 12m wide." This statement gives some indication of the challenge faced by non-geologists in interpreting the data. The BGS is also developing a computer-based map of mineral resources for planning purposes, including new survey work under the Mineral Reconnaissance Programme.

If the geology looks promising, the next step is to get permission to explore and extract from the owner of the minerals, namely, the Queen (except in the former Scottish county of Sutherland, where they are owned by the Duke of Sutherland). Gold and silver mines are known as "Mines Royal". Then a survey needs to be done, which is when the costs begin to escalate significantly. It is at this point that a landowner needs to bring in the professionals, according to Martin Ott, minerals surveyor at Savills.

"Gold in Britain tends to be spread throughout the rock, unlike in California, during the gold rush, where miners could dig up nuggets with a pick," he says. "It is very expensive to locate and a bit of a shot in the dark."

Even if viable deposits of gold or other metals are found, getting the stuff out of the ground requires planning permission, and this is likely to be highly controversial. Neighbours will be worried about noise, pollution and heavy-goods traffic. Conservationists will be concerned about the contamination of aquifers and the destruction of sites of scientific or rural value.

In the face of all these obstacles, the best idea is to negotiate a licence agreement with a large mining company, Ott advises.

At the end of the process, the profit on gold and other metals is often eroded by fluctuations in the global commodities markets. "When I worked in the City 20 years ago, gold was worth $800 an ounce," Ott recalls. "Now it is worth something like $250 an ounce."

Small wonder that only big landlords bother with mineral extraction, according to Eric Shearer of Knight Frank. "Landowners often retain the mineral rights when sellling land, allowing them to license the rights to extractors later," he explains.

Buyers should always check this, Shearer says, because nobody wants to endure someone else mining on their property, even if compensation is available.

At Muness Castle, the best way forward may be to pan for gold in the streams on the estate. For some incomprehensible reason, holidaymakers love standing ankle-deep in cold running water, swirling heavy sieves filled with sediment in the hope of spotting flecks of the precious metal. In the end, the source of the real gold may be the tourists rather than the land.

The auction will be held at the New Connaught Rooms, London WC2, on 20 July (020-7703 2662)