ECR Minerals (LSE:ECR) has raised £500,000 in a 100 million share equity placing at 0.5p per share to ensure it is fully funded for the rest of 2020. Chief executive Craig Brown said the cash proceeds would be used to support its gold exploration projects in the Victoria region of Australia. The placing was arranged by the company’s broker SI Capital Ltd.
For each new share, investors will receive a warrant which can be exercised for one new ordinary share in ECR Minerals at a price of 1p, for up to 24 months from the date of admission. If all these warrants were exercised, it would generate an additional £1 million for the company.
ECR’s main focus is on gold projects through its wholly-owned Australian subsidiary, Mercator Gold Australia. These include Creswick and Bailieston in central Victoria and the Windidda project in Yilgarn, western Australia.
On the placing, Brown said: “We are pleased by the confidence in ECR shown by investors in the Placing. The Company is now in a strong position to implement our strategy, which centres on our exciting portfolio of gold projects in Victoria, Australia. Discussions with third parties regarding certain of these projects are continuing, and we hope to be in a position to update the market shortly.”
Physical gold is in very short supply at present. As investors digest the wider volatility in equity markets, gold miners with the full backing of their shareholders will be best placed to take advantage of strong commodity prices.
The spot price of gold is now approaching a retest of the seven-year highs seen in mid-March. In morning trading on 6 April the precious metal was trading at $1,632/oz.
ECR’s placing comes just days after it announced 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.
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 Brown at the time, adding that the firm is also considering potential transactions that may create shareholder value.
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, 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
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