Precious metals explorer ECR Minerals (LSE:ECR) jumped 13.8pc to a nine-month high of 0.98p on Tuesday after announcing that it had received a significant payment from the Australian government. The £4.3m firm said its subsidiary Mercator Gold has received a cash research and development refund of c.£171,000 under the R&D Tax Incentive from the Department of Industry, Innovation, and Science. The money relates to qualifying expenses incurred by Mercator in the year ended 30 June 2018.

Furthermore, Mercator is entitled to submit another claim for the year ended 30 June 2019. Based on current, estimated qualifying expenditure, ECR believes its application for the current period will hit around £198,000, which it expects to receive in August. Elsewhere, ECR announced that Mercator has also carried forward corporate income tax losses of c.£35.5m in its tax return for the year ended 30 June 2018.

ECR’s chief executive Craig Brown said the R&D refund would supplement its existing cash resources and be applied to its active gold exploration programmes in Australia.

‘We are grateful for the immense support offered by the Australian Government which we believe demonstrates the attractiveness of Australia as a destination for investment in exploration and development projects,’ he added. ‘As a result of Government support, the Company’s cash resources are bolstered, enabling it to maintain a considerable and active exploration programme.’

The refund continues an active couple of weeks for ECR, which entered May at 0.7p a share. Last Wednesday, the company soared by 49.23pc after announced that its Creswick gold project in Victoria, Australia may be much more prospective than previously thought.

To date, the firm has carried out 1,687m of RC drilling in 17 holes at Creswick targeting multiple quartz vein orientations within a 15km-long hard rock geological feature called the Dimocks Main Shale (DMS). More than one-third of its drilled area has encountered quartz, including a zone exceeding 60m in width - more than twice the 25m width expected. Meanwhile, the business has met gold in all of the holes it has drilled so far, with grades in nine holes ranging from 0.6g/t to a whopping 44.63g/t.

Critically, a technical review of the programme and its assay results - which has nearly completed - has confirmed that the mineralisation is ‘nuggety’ in nature. The discovery that gold within the DMS is nuggety is also important because such a style of mineralisation can lead to understated assay results. This is because the chance that a gold nugget will be captured in a drilled meter decreases as the nugget increases in size. Likewise, only a small portion of each RC drilling sample bag is actually tested, meaning results could be understated if one or more large nugget is not included in the examined portion.

That being said - as ECR pointed out - this could also lead to results being overstated if a large nugget is captured in the small tested portion that does not accurately represent the sample bag as a whole.

To fix this issue, the business has resolved to complete gravity concentration tests on entire sample bags for all of its drilling to date. This new approach is already reaping rewards for the organisation, with a nugget being identified in a previously untested portion of a sample bag from hole CSR011. All-in-all, the whole bag has demonstrated gold grades of 11.8g/t from the new gravity concentration tests - some 528pc higher than the previous 1.88g/t assay result.

The firm ended said it believes there is potential for a ‘very substantial gold deposit’ within the DMS, with Brown adding that the extensive footprint gold system at Creswick offers ‘transformational potential’.

Author: Daniel Flynn

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