Acquisition of Avoca and Bailieston Gold Projects by Mercator Gold Australia

ECR Minerals plc

("ECR Minerals", "ECR" or the "Company")






LONDON: 3 MARCH 2016 - The directors of ECR Minerals plc (the “Directors”) are pleased to announce that the Company’s wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”) has entered into a deed of assignment and assumption (the “Deed”) with Currawong Resources Pty Ltd (“Currawong”) for the acquisition by MGA of 100% ownership of the Avoca and Bailieston gold projects (the “Projects”) located in Victoria, Australia.


  • Currawong has identified significant exploration potential for mesothermal quartz vein hosted gold and related placer-style ‘deep lead’ gold mineralisation at Avoca, and epithermal ‘Carlin’ style disseminated or sheeted vein hosted gold mineralisation at Bailieston
  • An opportunity exists to generate relatively near term revenue from reprocessing of historical mine dumps at the Avoca project (subject to confirmation as described below)
  • A JORC Code-compliant technical report in relation to the Projects is being prepared by Snowden Mining Industry Consultants, and is expected to be published by ECR during March 2016 (the “Report”)
  • The consideration for the acquisition comprises up to AUD 250,000 in ECR shares (based on certain milestones described below), and a net profits interest royalty of 20% in respect of mine dumps and 10% in respect of other deposits (royalty capped at AUD 3.5M)
  • The acquisition remains conditional on the necessary Victorian government authorisations and registration of the transfer the Projects to MGA

The Projects comprise two exploration licences issued by the state government of Victoria: EL5387 (Avoca project), granted on 25 January 2012 and expiring on 24 January 2017, currently covering 115 graticular sections; and EL5433 (Bailieston project) granted on 28 March 2013 and expiring on 27 March 2018, currently covering 79 graticular sections. A graticular section occupies 1” by 1” of arc (around 2.5km by 2.5km, dependent on latitude).

The Avoca and Bailieston projects are located approximately 183km west northwest and 150km north, respectively, of the Victorian state capital Melbourne, with good road access. The Projects are located geologically within the major orogenic Lachlan Fold Belt (LFB). The LFB is subdivided into zones, based on distinct geological and metallurgical characteristics, with the Avoca project lying to the west, within the Stawell Zone, and the Bailieston Project lying to the east, within the Melbourne Zone.



The Avoca project is centred on mesothermal quartz vein hosted gold and related placer-style ‘deep lead’ gold mineralisation. There is a considerable local history of mining both kinds of deposit. The term ‘deep lead’ refers to buried auriferous river bed deposits.

Currawong has also identified an opportunity to reprocess a number of historical mine dumps located within EL5387 to recover gold, with potential for the sale of by-products (gravel and sand) as construction material. On the basis of this concept, Currawong has conducted preliminary economic studies in relation to certain historical dumps at Avoca, reprocessing of which may have the potential to generate relatively near term revenue (12-24 months from today) with relatively low capital costs (less than AUD 1M).

The aforementioned timescale and capital cost estimate are subject to confirmation, but are derived from the results of prior studies by Currawong. These studies are preliminary, and further work will be required to provide conclusive results. Currawong has estimated mineral resources in respect of a number of dumps located up to 1km apart. As yet, these resources do not comply with any Standard, as that term is defined by the AIM Note for Mining and Oil & Gas Companies, and are therefore not being disclosed. An update will be provided following finalisation of the Report.



The Bailieston project is centred on epithermal ‘Carlin’ style disseminated or sheeted vein hosted gold mineralisation at Bailieston. This concept is premised on the exploitation of such a deposit immediately to the north of EL5433 by Perseverance Corporation in the mid-1990s, and geological evidence that the structure which hosts this deposit is repeated within the Bailieston project area.

The Fosterville gold mine, owned by Newmarket Gold (TSX: NMI), is located some 20km to the west of the Bailieston project, and is currently the largest producing gold mine in Victoria, which as a state has a rich and varied gold mining history going back to the nineteenth century. The Fosterville gold mine recently celebrated the production of its one millionth ounce of gold. The Costerfield gold-antimony mine, owned by Mandalay Resources (TSX: MND), is located some 30km southwest of the Bailieston project. The Directors are of the view that these successful modern operations indicate that Victoria is a workable jurisdiction for large scale mineral development.



Currawong, and its parent company Flitegold Pty Ltd, have carried out significant early stage exploration in relation to the Projects, including: soil and rock chip sampling at Bailieston; and augur sampling of historical mine dumps, ground penetrating radar surveys, preliminary development studies and limited drilling at Avoca.

The Directors are still in the process of assessing available data in relation to the Projects, including historical exploration results and production records, and the results of exploration and evaluation to date by Currawong, and will use this data to determine appropriate work programmes for MGA to further assess the potential of the Projects.

However, it is likely that continued studies in relation to the reprocessing of historical mine dumps at the Avoca project will be an immediate priority, given the possibility that such an operation would be capable of generating revenue in the relatively near term and with relatively low capital costs. MGA is expected to have a significant economic advantage in such an activity, on the basis of its estimated tax losses of approximately AUD 66M as at 30 June 2015, which may be available, subject to certain conditions (as described in the Company’s announcement of 4 December 2015), to reduce MGA’s future taxable profits.

Additional licences and permits would be required to commence reprocessing of the dumps. If warranted, these will be applied for by MGA in due course. Application for renewal of the exploration licences currently pertaining to the Projects is permitted under Victorian mining law, and such applications, if warranted, would be made by MGA prior to expiry of EL5387 and/or EL5433.

Snowden Mining Industry Consultants has been asked to produce a JORC Code-compliant technical report regarding the Projects for MGA. This Report will provide a summary of all material scientific and technical information in respect of the Projects as of the effective date of the Report, and is expected to be available during March 2016.

The Report will include Exploration Targets, as defined by the JORC Code, for each project. The JORC Code defines an Exploration Target as: “…a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade (or quality), relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource.”

The principal elements of the Report will be announced by ECR and the full Report will be made available on the Company’s website (



Under the Deed, Currawong has agreed to assign all of its legal and beneficial right, title and interest in the Projects to MGA, conditional on the granting of all government authorisations required for the assignment of the Projects to MGA to be effective and the transfer of the Projects to MGA being registered with the Victorian government. If this condition is not met within 180 days of the execution date of the Deed, MGA may terminate the Deed (“Termination”). A further announcement will be made when these conditions have been satisfied or in the event of Termination.

In respect of future production from the Projects (if any), Currawong will be paid a net profits interest royalty of 20% in respect of mine dumps and 10% in respect of other deposits. These royalty rates will also apply to further licences (if any) acquired by MGA within a 10km distance of the current boundaries of the Projects. The total royalty payable to Currawong is capped at AUD 3.5M. The royalty would be payable quarterly and calculated based on MGA’s gross revenue received from the Projects minus allowable deductions and adjustments.

In addition, Currawong will receive up to AUD 250,000 worth of fully paid ordinary shares of ECR (“Ordinary Shares”) on the following basis (together, the “Consideration Shares”):

  1. i) AUD 50,000 worth of Ordinary Shares due on execution of the Deed (the “Initial Consideration Shares”);
  2. ii) A further AUD 50,000 worth of Ordinary Shares due six months from execution of the Deed;
  3. iii) A further AUD 50,000 worth of Ordinary Shares due on commercial production being established from either of the Projects;
  4. iiii) A further AUD 50,000 worth of Ordinary Shares due six months from such commercial production being established;
  5. v) A further AUD 50,000 worth of Ordinary Shares due twelve months from such commercial production being established.


Ordinary Shares due to Currawong are to be issued within fourteen London business days of the due date. The value of such Ordinary Shares is to be based on the average mid-market closing price of the Ordinary Shares over the twenty London business days immediately preceding the due date.

The Initial Consideration Shares are now due and are expected to be issued and allotted shortly. For the avoidance of doubt, the remaining Consideration Shares would not be issued in the event of Termination.


Effect on Metal Tiger Agreement

The acquisition of the Projects by MGA is unrelated to the agreement between the Company, MGA and Metal Tiger plc which was announced by the Company on 22 January 2016. Accordingly, Metal Tiger plc is not entitled to any payment in relation to the acquisition of the Projects. The agreement with Metal Tiger plc remains in force for the time being, and MGA will continue to evaluate opportunities in Australia, in addition to the Projects, as they arise.


Review of Announcement by Qualified Person

This announcement has been reviewed by William (Bill) Howell BSc (Hons), FAusIMM, FSEG, ECR’s Non-Executive Chairman. Mr Howell is a geologist with 49 years of experience in the minerals industry, and is a Qualified Person as that term is defined by the AIM Note for Mining, Oil and Gas Companies.



ECR is a mineral exploration and development company with the right to earn a 50% interest in the Danglay epithermal gold project in the Philippines. Danglay is an advanced exploration project located in a prolific gold and copper mining district in the north of the Philippines. An NI43-101 technical report was completed in respect of the Danglay project in December 2015, and is available for download from ECR’s website.

ECR’s wholly owned subsidiary Ochre Mining has a 100% interest in the SLM gold project in La Rioja Province, Argentina. Exploration at SLM has focused on identifying small tonnage mesothermal gold deposits which may be suitable for relatively near term production.

ECR’s wholly owned Australian subsidiary Mercator Gold Australia (MGA) has agreed to acquire 100% ownership of the Avoca and Bailieston gold projects in Victoria, Australia. Mercator Gold Australia is estimated to have tax losses of approximately AUD 66M as at 30 June 2015, which may be available, subject to certain conditions (as described in ECR’s announcement dated 4 December 2015), to reduce MGA’s future taxable profits. This is considered particularly significant in view of an opportunity which may exist at Avoca to establish relatively near term gold production from the reprocessing of historical mine dumps, with the potential for sale of gravel and sand by-products.



ECR Minerals plc    
William (Bill) Howell, Non-Executive Chairman Tel: +44 (0)20 7929 1010
Stephen Clayson, Director & CEO    
Richard (Dick) Watts, Technical Director    
Email:This email address is being protected from spambots. You need JavaScript enabled to view it.    
Cairn Financial Advisers LLP    
Nominated Adviser Tel: +44 (0)20 7148 7900
Emma Earl/Jo Turner    
Vicarage Capital Ltd    
Broker Tel: +44 (0)20 3651 2910
Rupert Williams/Jeremy Woodgate    
Public Relations  Tel:   +44 (0)20 7138 3204
Tim Blythe/Camila Horsfall    


This announcement may include forward looking statements. Such statements may be subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations. There can be no assurance that such statements will prove to be accurate and therefore actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements. Any forward looking statements contained herein speak only as of the date hereof (unless stated otherwise) and, except as may be required by applicable laws or regulations (including the AIM Rules for Companies), the Company disclaims any obligation to update or modify such forward looking statements as a result of new information, future events or for any other reason.

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