TIDMECR
AIM: ECRUS OTC: MTGDY
ECR MINERALS plc
("ECR Minerals", "ECR", the "Company" or the "Group")
OPERATIONAL AND FINANCIAL UPDATE
LONDON: 2 AUGUST 2016 - The directors of ECR Minerals plc (the
"Board") provide the following update on ECR's strategy and
activities.
AVOCA GOLD PROJECT, AUSTRALIA
The Company is concentrating on its activities in Australia,
which currently comprise the Avoca and Bailieston gold projects in
Victoria. This reflects the attractiveness of Australia as an
operating environment, particularly for gold projects. Australia
offers security of tenure, low political risk and access to all
necessary skills and services for mining projects. In addition, the
Australian dollar gold price is at close to a record high, and the
Group expects to have the benefit of significant tax losses in
Australia (for further information on the tax losses in relation to
this project please see the About ECR section below).
As previously announced, ECR is working on a conceptual economic
study in relation to the proposed reprocessing of alluvial waste
dumps at the Avoca project in order to extract remnant gold. The
principal outstanding items in relation to the study are: 1) the
receipt of metallurgical testwork results from the independent
laboratory carrying out the testwork, which are due shortly; and 2)
compilation of resource estimates for multiple dumps, which is
ongoing.
The Directors recognise that the above work streams have taken
longer than originally anticipated to complete. Strong demand for
laboratory testwork services in Australia and the need for
additional check assays has led to delays which, although
frustrating, highlight Australia's role as a leader in the revival
of the gold mining industry. The study will be completed as soon as
possible following receipt of the testwork results and completion
of the resources.
A batch of encouraging assay results from samples (all samples
screened to -600 microns, in line with the anticipated processing
method for the dumps) taken from the Golden Lake East dump were
received late last week, and included grades of up to 4.12 g/t
gold, with all seven samples averaging 3.4 g/t gold. These assay
results will be incorporated into the Golden Lake East resource,
although they should not be taken to represent the likely resource
grade or as representative of the entire dump.
Further to the Company's announcements dated 13 June 2016 and 30
June 2016, reconnaissance sampling within the Exploration Licence
("EL") application area (as defined in those announcements) in the
vicinity of the Avoca project has begun, along with surveying of
the larger dumps to enable resources to be estimated after
sufficient sampling has been carried out. The dumps within this EL
application area are not included within the JORC Exploration
Target announced by the Company in relation to the Avoca waste
dumps, nor will they be included in the conceptual study and
resource estimates which are currently being produced.
Although ECR's primary current objective is to demonstrate the
viability of reprocessing historical waste dumps at Avoca to
produce gold, additional exploration concepts which may be pursued
in the future at the Avoca and Bailieston projects include the
following:
-- Quartz vein hosted gold and related placer-style "deep lead"
mineralisation in the Avoca EL. This concept is premised on
the
considerable mining history of such deposits at Avoca and a
significant historically identified potential gold accumulation
within
buried river channels, derived from drilling conducted in the
1930s.
-- Epithermal "Carlin" style disseminated or sheeted vein hosted gold
mineralisation at the Bailieston EL. This concept is premised on
the
presence of such a deposit that was recently exploited at
Perseverance's Bailieston mine, immediately north of the
tenement and
considerable evidence that the structure that hosts this deposit
is
repeated within the Bailieston project area. Other modern nearby
open
cut gold operations which operated include Hill 158 at Nagambie,
Red
Hill at Heathcote and the various pits at Fosterville and
Costerfield.
These latter two continue to operate as higher-grade
underground
mining operations and Fosterville has recently produced its
one
millionth ounce. Further information regarding both projects can
be
found in ECR's previous announcements, including the
Company's
announcement dated 20 April 2016.
When the conceptual study on the Avoca waste dumps is complete,
the Company will be in a position to consider next steps for the
Avoca project and the potential for revenue generation from this
project, and how it may be financed. Possibilities for financing
could include a joint venture or spin-out, involving either or both
of the Avoca and Baillieston projects, or continued financing by
ECR.
CORPORATE AND FINANCIAL
The Company announced on 4 July 2016 that it had raised net
proceeds of approximately GBP323,750 by way of a placing of new
shares ("Placing"). The Company announced at this time that it
intended to use the net proceeds to repay all amounts owed by the
Company under the convertible loan facility (the "Facility") in
place with YA II PN Ltd (formerly known as YA Global Master SPV
Ltd), an investment fund managed by Yorkville Advisors Global
LP.
Since receipt of the Placing proceeds, which occurred on 21
July, the Company notes several things:
-- the Company's share price did not react positively to the announcement
of the Company's intention to repay the Facility, contrary
to
expectations;
-- the UK pound has failed to recover significant value relative to the
US dollar; and
-- the Company has been subject to adverse social media and internet
comment concerning, inter alia, threats to requisition a
general
meeting and/or effect changes to the make-up of the Board.
As a result of the above, the Board consider that the Company's
ability to raise additional equity financing on acceptable terms
has been affected, at least in the short term. Therefore, for the
time being, the Board do not consider it is in the interests of the
Company to make any repayment of the amount owed by the Company
under the Facility until the Company has been able to secure
additional working capital (of which there can be no guarantee).
The outstanding principal amount owed under the Facility is
currently US$400,000 (approximately GBP302,000 at current exchange
rates). The Company's current cash position following completion of
the Placing is approximately GBP375,000.
The Board has for several months been reviewing ECR's corporate
strategy, cost base and management structure with a view to
identifying any changes which may be appropriate. A decision was
made several months ago to close the Company's London office, by
early 2017 at the latest, in order to reduce overheads, and further
cost savings are being made across the Group where possible. A
number of potential paths for the future development of the Company
are being considered, some of which may involve a change to the
make-up of the Board. The market will be updated with any material
developments.
Whilst the Board considers the strategy of the Group and
evaluates a number of proposals for providing working capital to
the Group, Bill Howell and Stephen Clayson have voluntarily reduced
their salaries/fees as set out below, with effect from 1 August
2016:
-- Bill Howell, Non-Executive Chairman - GBP36,000 per annum;
-- Stephen Clayson, Director & CEO - GBP50,000 per annum.
The Company wishes to clarify that, as disclosed in the
Company's audited financial statements for the year ended 30
September 2015 (page 29), Stephen Clayson is currently owed
GBP100,000 by the Company as a result of voluntary salary deferrals
during calendar years 2014 and 2015. These deferrals are equivalent
to an interest free loan to ECR, and helped ensure the Company was
able to complete its exploration programmes.
Cautionary Statement
Given the continuance of commentary regarding the Company on
unauthorised and unregulated websites, investors and shareholders
are warned to exercise caution in dealing in the Company's shares
and if in any doubt seek the advice of a person duly authorised and
regulated by the Financial Conduct Authority (FCA).
Review of Announcement by Qualified Person
This announcement has been reviewed by William (Bill) Howell BSc
(Hons), FAusIMM, FSEG, ECR's Non-Executive Chairman. Mr Howell is a
geologist with 49 years of experience in the minerals industry, and
is a Qualified Person as that term is defined by the AIM Note for
Mining, Oil and Gas Companies.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
ABOUT ECR
ECR is a mineral exploration and development company. ECR's
wholly owned Australian subsidiary Mercator Gold Australia (MGA)
has agreed to acquire 100% ownership of the Avoca and Bailieston
gold projects in Victoria, Australia. Mercator Gold Australia is
estimated to have tax losses of approximately AUD 66M as at 30 June
2015, which may be available, subject to certain conditions (as
described in ECR's announcement dated 4 December 2014), to reduce
MGA's future taxable profits. This is considered particularly
significant in view of an opportunity which may exist at Avoca to
establish relatively near term gold production from the
reprocessing of historical mine dumps, with the potential for sale
of gravel and sand by-products. A competent person's report in
relation to the Avoca and Bailieston projects is available for
download from ECR's website.
ECR has the right to earn a 50% interest in the Danglay
epithermal gold project in the Philippines. Danglay is an advanced
exploration project located in a prolific gold and copper mining
district in the north of the Philippines. An NI43-101 technical
report was completed in respect of the Danglay project in December
2015, and is available for download from ECR's website.
ECR's wholly owned subsidiary Ochre Mining has a 100% interest
in the SLM gold project in La Rioja Province, Argentina.
Exploration at SLM has focused on identifying small tonnage
mesothermal gold deposits which may be suitable for relatively near
term production.
FOR FURTHER INFORMATION, PLEASE CONTACT:
ECR Minerals plc Tel: +44 (0)20 7929 1010
William (Bill) Howell, Non-Executive Chairman
Stephen Clayson, Director & CEO
Craig Brown, Finance Director
Richard (Dick) Watts, Non-Executive
Technical Director
Email: info@ecrminerals.com
Website: www.ecrminerals.com
Cairn Financial Advisers LLP Tel: +44 (0)20 7148 7900
Nominated Adviser
Emma Earl / Jo Turner
Vicarage Capital Ltd Tel: +44 (0)20 3651 2910
Broker
Rupert Williams / Jeremy Woodgate
Blytheweigh Tel: +44 (0)20 7138 3204
Public Relations
Tim Blythe / Camilla Horsfall
FORWARD LOOKING STATEMENTS
This announcement may include forward looking statements. Such
statements may be subject to a number of known and unknown risks,
uncertainties and other factors that could cause actual results or
events to differ materially from current expectations. There can be
no assurance that such statements will prove to be accurate and
therefore actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward looking statements. Any
forward looking statements contained herein speak only as of the
date hereof (unless stated otherwise) and, except as may be
required by applicable laws or regulations (including the AIM Rules
for Companies), the Company disclaims any obligation to update or
modify such forward looking statements as a result of new
information, future events or for any other reason.
View source version on businesswire.com:
http://www.businesswire.com/news/home/20160802006267/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
August 02, 2016 10:09 ET (14:09 GMT)
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