Tuesday saw gold explorer ECR Minerals (LSE:ECR) report a “number of expressions of interest” in its portfolio of Australia assets amid the outbreak of Covid-19.
In its 2019 results, the firm said gold prices have traded at “record levels” in Australia dollar terms this year as investors have swarmed to the safe-haven asset en-masse in response to the pandemic.
The precious metal has been trending upwards from a low of $1,060/oz in December 2015 to hit a peak of $1,700/oz in February 2020. And despite the worldwide market crash in mid-March this year, prices have recovered strongly from $1,462/oz two weeks ago to regain stability above $1,600/oz.
As a result, there is currently “a very high level of interest” in gold exploration and mining in Australia, according to ECR, including in Victoria and Western Australia where the bulk of the firm’s assets are based. “A number of expressions of interest in ECR’s projects have been received from third parties,” said CEO Craig Brown, adding that the firm is also considering potential transactions that may create shareholder value.
Elsewhere, ECR’s chairman David Tang highlighted the impact that the suspension of many international travel routes as well as domestic movement restrictions have affected the company’s operations. However, he said the effect has been minimal, with the board expecting to be able to resume normal activities as restrictions lift.
From a cash perspective, ECR said it would be taking measures to conserve cash where possible in the face of the pandemic. At year-end, it had cash and cash equivalents of £268,517, with no borrowing. However, the company added that it would require further funding with 12 months from the date of approval of the 2019 financial statements to avoid a cash deficit.
“In addition, the potential impact of COVID-19, whilst not yet fully understood, will likely have an impact on the operations of the business and the ability to raise additional equity funds,” it added.
Over the financial year covered by the results, ECR reported a loss of £762,586, a slight increase on the £721,460 loss it made the previous year. However, it is worth noting that losses such as these are commonplace for exploration companies due to the prospective nature of their operations.
The company’s results also saw it detail the operational progress made across its portfolio of assets during the results period and beyond. The centre of the group’s operations over the year and subsequently was Victoria, Australia, where it completed significant exploration programmes in the Bailieston and Creswick gold project areas.
The critical area of focus at Bailieston has been the Blue Moon prospect, where reverse circulation drilling returned an intercept of 2 metres at 17.87 g/t gold within a zone of 15 metres at 3.81 g/t gold from 51 metres in hole BBM007. This confirmed the prospect as a new gold discovery.
Meanwhile, at Creswick, an RC drilling programme identified more quartz than anticipated, leading ECR’s geologist to surmise that the project contained an “extreme nuggety distribution of gold”. To assess the significance of this observation, the company devised a new testing program using gravity and electrostatic concentration on full bags of drill cuttings.
“In nuggety gold systems, increasing sample size increases the chance of nuggets being captured in the sample, and thus being appreciated as part of the gold endowment of the system,” said ECR.
Using this new approach, ECR has confirmed the presence of nuggety gold mineralisation at Creswick in a structure called the Dimocks main Shale. Some of this is thought to be very high grade.
Meanwhile, another critical area of focus for the firm has been the Windidda gold project in Western Australia, where it has been granted five licences. These cover areas potentially prospective for komatiite-hosted nickel-copper-PGE mineralisation, as well as orogenic gold.
Post-financial year-end, ECR also sold off its wholly-owned Argentine subsidiary Ochre Mining, which holds the SLM gold project in La Rioja. The money raised has enabled the company to focus on its gold operations, and it retains an NSR royalty of up to 2% over the project to a maximum of $2.7 million in respect of future production.
Author: Daniel Flynn