ECR Minerals plc, the precious metals exploration and development company, is pleased to announce unaudited half-yearly financial results for the six months to 31 March 2019 for the Company as consolidated with its subsidiaries, along with a review of significant developments during the period and subsequently.
HIGHLIGHTS:
Victorian Goldfields Gold Project Portfolio
- Significant expansion in operational activity in the period culminating in the January 2019 commencement of a gold focus drill programme across two projects at Bailieston (Black Cat prospect and Blue Moon prospect) and Creswick;
- Post period end in April 2019 successful reconnaissance drilling confirmed at Black Cat prospect announced, in licence ground adjacent to a large licence application package lodged by Newmont Mining
- In May 2019 new gold discovery announced at the Blue Moon prospect, confirmed by reverse circulation (RC) drilling results
- In June 2019, extreme nuggetty gold geology confirmed at Creswick leading to the launch of a gold nugget test programme at the project
- ‘Whole-of-bag’ testing underway on RC drill samples from the Creswick, which the Company believes may host a very substantial gold deposit subject to further drilling and evaluation
Western Australian Portfolio
- In January 2019 the Company announced the formation of the Windidda project, including nine licence applications covering 1,600 square kilometres covering a buried Archean Greenstones
- Archean greenstones host many of Western Australian and the world’s most prolific gold deposits
Financial Results
- Group comprehensive expense of £305,180 for the six months ended 31 March 2019 (£321,433 for the six months ended 31 March 2018)
- Net assets of £4,052,109 at 31 March 2019 (£3,413,792 at 31 March 2018)
- Financing undertaken in December 2018 to raise £700,000 and providing sufficient cash resources for planned business activities until at least Q2 2020
- In May 2019 the Company announced a tax update confirming an Australian research & development cash refund of A$318,972 (approximately £175,188) and an anticipated further claim to be made of approximately A$370,000 (approximately £198,000);
- The Company also confirmed in May 2019 that its 100% owned operating subsidiary Mercator Gold Australia Pty Ltd had carried forward corporate income tax losses of A$66,203,862 (approximately £35.5million) in respect of historical losses which are available for carry forward
Craig Brown, Chief Executive Officer, gave the following statement on the results.
The six months to 31 March 2019 and the period since have been marked by a series of exciting developments for ECR, all of them related to the Group’s primary strategic activity, which is exploration for multi-million ounce gold deposits in Australia through ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”).
The focus of on-the-ground activities was and continues to be MGA’s projects in the state of Victoria, but also important are the applications lodged in December 2018 for the exploration licences which will comprise the Windidda gold project in Western Australia. Windidda represents a strategic move by ECR into the Yilgarn Craton which, like Victoria, is one of the world’s major gold provinces.
EXPLORATION ACTIVITIES IN THE VICTORIAN GOLDFIELDS
The first half of calendar year 2019 saw significant drilling activity at MGA’s Creswick gold project in Victoria, and at the Black Cat and Blue Moon gold prospects within the Bailieston project area. A great deal of preparation for the drilling, consisting of planning and preliminary exploration including rock chip and soil sampling and geological mapping, took place in the second half of calendar year 2018.
This preparatory work also informed the application by MGA for a number of additional exploration licences to expand its ground position in the Creswick, Bailieston and Moormbool areas. We were also encouraged by the fact that in late 2018, a subsidiary of Newmont Mining applied for an exploration licence abutting MGA’s Bailieston licence to the north.
New Gold Discovery at Blue Moon Prospect
Turning to the drilling itself, the results of reverse circulation (RC) drilling at Blue Moon have confirmed the prospect as a new gold discovery.
Highlights included intersections 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 BBM007, and 3 metres at 3.88 g/t gold within a zone of 11 metres at 2.42 g/t gold from 169 metres in BBM006. Twelve holes were drilled for a total of 1,718 metres.
The drilling results indicate that the host sandstone is thicker and the gold grades significantly higher on the westerly section, and further exploration will therefore seek to follow the system to the west, subject to agreeing access with landowners.
Successful Reconnaissance Drilling at Black Cat Prospect
Rotary air blast (RAB) drilling at the Black Cat prospect, which is located immediately south of the ground applied for by Newmont, constituted a successful reconnaissance programme at a prospect which had never been drilled before.
The programme targeted numerous quartz reefs with 18 shallow holes for 485 metres of drilling in total. Significant intersections included 7 metres at 1.76 g/t gold from 35 metres in BCD11 and 3 metres at 4.26 g/t gold from 16 metres in BCD18.
As well as the encouraging grades, the drilling provided important geological information which may help vector further exploration at Black Cat and in the wider Bailieston gold project area.
Nuggety Gold Confirmed at Creswick and Whole-of-Bag Tests Underway
At Creswick, MGA completed a total of 1,687 metres of reverse circulation (RC) drilling in 17 holes, targeting multiple quartz vein orientations within the Dimocks Main Shale (“DMS”).
Drilling identified more extensive quartz than anticipated, in a zone exceeding 60 metres in width (more than twice the 25 metres expected), with quartz identified in more than one third of the 1,687 metres drilled. Gold mineralisation was identified in the majority of holes, with grades in nine holes ranging from 0.6 g/t gold to 44.63 g/t gold (1.44 oz/t).
MGA’s geologists have hypothesised an extreme nuggety distribution of gold based on observations and results, including capturing a small 0.27 g nugget in gravity tests conducted on a single sample bag. This means that gold is not evenly distributed in bags of RC drilling samples.
The Company previously assayed 2 kg sub-samples from a 30 kg bag, which is industry practice but too small a sample for an extreme nuggety distribution. There was a significant likelihood that coarse gold could be excluded from the sample.
This meant that assays of the 2 kg sub-samples could be understated for gold, and this was demonstrated in one whole-of-bag test where the assay from a 2 kg sub-sample reported gold of 1.88 g/t whereas the 30 kg whole-of-bag sample test showed the bag actually contained a substantially higher 11.8 g/t. Alternatively, a single assayed nugget will overstate the average from a 2 kg sub-sample.
In order to address these issues, a comprehensive process of whole-of-bag testing has commenced to determine the full extent of the gold within the RC drill samples. This is a sizeable exercise. Of the 1,687 metres drilled, 640 bags of close to 30 kg each contain quartz and these bags plus the surrounding bags will be tested in a process which is fully discussed in the Company’s announcement dated 11 June 2019.
Internal modelling suggests the DMS has significant prospective tonnage to potentially host an important gold deposit at Creswick, and therefore a better indication as to the true grade of the mineralisation which will be provided by the results of the whole-of-bag testing will be of great significance for the Company.
WINDIDDA GOLD PROJECT, WESTERN AUSTRALIA
The Windidda project comprises nine exploration licence applications for a 1,600 square kilometre land package which has been identified as a buried Archean greenstone trend with the potential to host orogenic gold deposits.
The granting of the licences is awaited, and consultants instructed by MGA have already begun geophysical data processing and modelling to determine structural trends within, and the depth to, the interpreted buried Archean greenstones.
The opportunity to apply for the Windidda project was introduced to ECR by Sam Garrett, who joined the Company as a non-executive director in February 2019. Sam is an Australian geologist with 30 years of exploration management, project assessment and operational experience working for large multi-national and junior mining and exploration companies in ten countries including Australia, Argentina and the Philippines.
ARGENTINA AND PHILIPPINES PROJECTS
ECR continues to have 100% ownership of the SLM gold project in La Rioja, Argentina, and is entitled to a 25% interest in the Danglay gold project in the northern Philippines. The status of both projects remains as disclosed in the Company’s latest annual report and accounts published in March 2019.
FINANCIAL RESULTS
For the six months ended 31 March 2019 the unaudited financial statements of the Company as consolidated with its subsidiaries (the “Group”) record a total comprehensive expense of £305,180, the largest component of which is other administrative expenses of £432,387, which relate primarily to the development of the Group’s projects, but which cannot be capitalised under applicable accounting standards. The Group reported a total comprehensive expense of £321,433 for the six months ended 31 March 2018.
The Group’s net assets were £4,052,109 at 31 March 2019 compared with £3,413,792 at 31 March 2018, including £622,457 of cash and cash equivalents at 31 March 2019. The Group’s cash position benefited from a £700,000 equity financing completed by the Company in December 2018.
Post the period end, MGA, ECR’s 100% owned Australian subsidiary, received a research and development refund of A$318,971.73 (approximately £175,188) from the Australian government. This refund relates to qualifying expenditure incurred by MGA in the year ended 30 June 2018, and in due course MGA intends to submit a further claim for the year ended 30 June 2019.
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