Time at last for ECR Minerals to shine?
“…Crucially, though, it has the money in the bank to give it time to turn things around. With a bit of good fortune ECR seems to have quite a few more opportunities to make an impression…”
ECR Minerals (AIM:ECR), a mineral exploration and development company drilling for gold in Australia’s prolific Victoria region, has failed to impress investors this year, money in the bank and steady drilling progress notwithstanding. We take a closer look to see if the company might be flying under the market’s radar.
Through its wholly owned subsidiary Mercator Gold Australia (MGA), ECR has 100pc ownership of the Bailieston and Creswick gold exploration projects. Bailieston, some 150 km north of Melbourne, is embedded in Victoria’s dynamic gold exploration scene, close to the successful Fosterville mine owned by Kirkland Lake Gold. The project targets epizonal or epithermal gold mineralisation within the major orogenic Lachlan Fold Belt. The company’s 2019 reverse circulation drilling programme encountered several promising intersections, including two metres at 17.87 g/t gold from 57 metres down hole within a zone of 15 metres at 3.81 g/t gold from 51 metres, and three metres at 3.88 g/t gold from 170 metres down hole within a zone of 11 metres at 2.42 g/t gold from 169 metres.
The Creswick project is focused on the Dimocks Main Shale (DMS), which extends over a 15 km trend from the mining centre of Ballarat, approximately 7 km of which is covered by ECR’s exploration licence and licence applications. The DMS is a major contributor to the Ballarat’s region’s historical alluvial and deep lead gold production of 11 million ounces (Moz). Two years ago the company recorded grades in nine holes ranging from 0.6 g/t to 44.63 g/t gold.
This summer ECR secured three exploration permits for a third Australian project, within the Lolworth Range in North Queensland. The permits, representing 300 sub-blocks covering a total 900 km2 of prospective ground containing historic producers such as Charters Tower (6.6 Moz) and Ravenswood (1 Moz), pave the way for licences expected to be granted later this or early next year.
ECR has stakes in three other Australian projects, Avoca, Moormbool and Timor, sold last year in a deal that entitles the company to receive payments of up to AUD$1,000,000 for every ounce of resource and gold produced within one of the project areas.
The company has two other interests, most notably a 25pc stake in the Danglay epithermal gold project in the Philippines, offering an inferred mineral resource estimate of 63,500 ounces of gold at 1.55 g/t gold. ECR has sunk some £1.2m into the project, but a court case brought by a shareholder has delayed the issuance of its holding since 2016. There are also ongoing concerns regarding the granting of mining licences under the regime of populist Philippines president Rodrigo Duterte. An update earlier this summer, however, indicated grounds for hope that the stalemate might be broken, Cordillera Tiger, the project’s majority stakeholder, reiterating its ‘continued support’ for ECR’s earn-in rights, and reporting changes in the composition of its board that may facilitate the deal’s progression.
ECR’s other interest is a net smelter return royalty of up to 2pc to a maximum of $2.7m in respect of future production from the SLM gold project in La Rioja Province, Argentina. The company is led by Non-Executive Chairman David Tang and CEO Craig Brown, who previously worked together to develop the Pakrut gold project in Tajikistan owned by China Nonferrous Gold Ltd, an AIM-listed company then known as Kryso Resources.
Progress through 2021
ECR has been focused since the beginning of the year on drilling programmes at Creswick and Bailieston. Having taken delivery of a new Cortech CSD1300G diamond drill rig, and established a new operational base at Bendigo, the company began drilling along the DMS at Creswick in January, the campaign getting off to a positive start with the intersection of gold at the first hole drilled, CSD001, the best sample recording 1 m @ 9.68 g/t. Subsequent drilling has continued to delineate gold mineralisation along the strike zone, with the four holes fully assayed so far intercepting multiple zones of quartz and gold, the results including 1m @ 4.78 g/t Au from hole CSD002, and 0.95m @ 9.93 g/t and 0.95m @ 23.58 g/t Au from hole CSD003. ECR continues to report third-party interest in the project, stating in its half-year results, published in June, that ‘discussions are ongoing in respect to a potential commercial transaction’.
This year’s programme at Bailieston, which is focused on establishing a maiden JORC compliant gold resource, began with the Byron Prospect in the Historic Reserve No 3 (HR3) area. 720 B-horizon soil samples taken across the central and eastern part of the HR3 between February and March 2021, revealed ‘high gold anomalies’ of up to 3.75 g/t Au. Samples have been sent for trace element analysis for gold, arsenic, antimony, zinc, copper and lead. A request for consent to undertake additional exploration drilling at the location has been submitted to regulators.
In July ECR reported that the logging of three diamond holes at the HR3 prospect has confirmed the existence of a steep south-plunging anticline sub-parallel to the Maori Reef line, hosting quartz-arsenopyrite mineralisation and elevated gold grades. Further drilling will help further define the size and shape of the structure. And earlier this month the company published initial results from its first drilling campaign at Bailieston’s Historic reserve number 4 (HR4), reporting the delineation of an anticlinal hinge striking through the centre of the goldfield, and one intercept of 0.5m @ 11.02 g/t Au from 98.85m depth.
The company has continued to beef up its operations capacity with the purchase of a second Cortech multi-purpose drilling rig, for what seems a bargain price of $402,957, to be delivered in Q4 2021. CEO Craig Brown offered a useful overview of ECR’s operations at both Creswick and Bailieston during a recent interview.
Fully funded for now
After an April placing – at 2.2p per share – that raised £2m ECR is in pretty good financial shape to fulfil its current programme. The company’s half-yearly results for the six months ending 31 March 2021 stated cash at 23 June 2021 of £5,242,081. As well as funding the programme the fundraise will also give the company the ‘financial flexibility to consider potential new opportunities as they arise’. ECR says it is ‘now fully funded for [the company’s current] programmes and don’t envisage requiring additional equity financing for quite some time.’ The company has also reduced its expenses, down to £468,112 from £1,846,202 for the six months ended 31 March 2020. It reported an operating loss of £403,079, compared with £369,102 for the previous period. It should be noted that ECR’s Australian subsidiary, MCR, has accumulated tax losses estimated to total approximately AUD$66 million from its past trading, losses which would be offset against any taxable profits made in future.
As we noted a few days ago in our report on Panther Metals, the gold market is currently somewhat subdued after surging last year during the darkest days of the pandemic. But at around $1,800 per troy ounce the precious metal has stabilised at a reasonable price, and may begin to climb again should the market’s rumbling concerns regarding the removal of pandemic support measures, higher interest rates inflation worsen.
But ultimately ECR’s fate is in its own hands. Despite the activity and steady news flow ECR has maintained this year the market has been somewhat underwhelmed by the gold grades it has so far recorded. The company’s share price has subsided from 4.25p at the turn of the year to just over 1.5p at the time of writing, failing to gain traction through the summer’s drilling activity.
ECR’s updates offer tantalising glimpses of gold, but has work to do to prove the metal can be found at sufficient grades and quantity to transform the company from another prospective small cap miner into a stable, profitable producer. Crucially, though, it has the money in the bank to give it time to turn things around. With a bit of good fortune ECR seems to have quite a few more opportunities to make an impression.