ECR Minerals plc (AIM: ECR), the gold exploration and development company focused on Australia, is pleased to announce that, further to the Company’s previous announcements, it has entered into a legally binding sale and purchase agreement to acquire Raglan Resources Pty Ltd, the owner of Licence ML 3665 (the “Raglan Project”), which is a fully permitted alluvial gold project and operation located in Queensland, Australia (the “Acquisition”), for a cash consideration of A$1.01 million. The purchase price is to be funded from ECR’s existing cash resources.
Highlights of the Raglan Project
- Granted Mining Lease: the Raglan Project includes a granted mining lease over approximately 300 acres and 2.9km of main creek systems
- Turnkey Infrastructure: the Raglan Project includes a near-new 60 tonne per hour wash plant, gold room, water supply, camp, mobile mining fleet and supporting facilities – ECR estimates that the second hand value of this equipment alone may be around the A$1.01m purchase price
- Nearer-Term Production: The existing equipment and mining lease should enable gold production and cashflow within a shorter-term timeframe, with potential for more than 200 working days per year
- Exploration Upside: Bulk sampling during a previous site visit confirmed coarse nuggety gold and grades that may be consistent with ECR’s nearby Blue Mountain, with potential for both further alluvial resources and a hard-rock source
Raglan Gold Project
The Raglan Project lies approximately 40 minutes west of Gladstone, Queensland, close to mechanical services and infrastructure. The lease has historically produced coarse, nuggety gold and test pits from ECR’s due diligence confirmed recoveries from both upper gravels and deeper bedrock wash. Mining at the Raglan Project to date has been largely small scale with several untested areas and depths within the property area.
Completion of the Acquisition will provide ECR with plant and equipment that is estimated by management to be valued close to the purchase price alone, including a 60 tonne per hour gravity processing plant with jig and concentrator, gold room, generators, loaders, dump truck and camp facilities. These assets may also be redeployed to ECR’s Blue Mountain project at a later date, which is expected to add long-term flexibility and value to ECR’s broader alluvial mining operations in Queensland.
As stated previously, with regard to planning for future production, ECR estimates that the cost of operations at the Raglan Project, inclusive of diesel and personnel, would be around A$3,000 per day which, at the current gold price, would require production of only around 0.6 oz/day to cover overheads.
Acquisition structure and tax losses
ECR’s wholly owned subsidiary, ECR Minerals (Queensland) Pty Ltd (“ECR Queensland”), is acquiring Raglan Resources Pty Ltd (“Raglan Resources”), the current owner of the Raglan Project and its associated equipment and infrastructure. ECR Queensland has entered into a sale and purchase agreement with Fire Creek Mining Pty Ltd and HIG20 Pty Ltd, the two selling shareholders of Raglan Resources. The purchase price of A$1.01 million (approximately £0.5 million) in cash will be payable by ECR on completion and is fully funded from ECR’s existing cash resources.
Under the sale and purchase agreement, completion of the Acquisition (“Completion”) is expected to take place before the end of 2025. With the sale and purchase agreement signed, there are a limited number of mostly administrative matters for the parties to address as conditions precedent to allow for Completion, including change of officers of Raglan Resources and updates to the company’s bank accounts and regulatory filings. A further announcement will be made in relation to Completion in due course.
Prior to Completion, Raglan Resources will be restructured by the Vendors whereby certain tenements and assets which are not part of the Raglan Project but are nevertheless currently owned by Raglan Resources are excluded from the Acquisition and Raglan Resources will acquired on a cash-free and debt-free basis (save that ECR will assume a bond in the favour of the state of Queensland of approximately A$13,900 in relation to the Raglan Project’s mining lease). This restructuring has no bearing on ECR’s planning in relation to the Acquisition.
The Board believes that the structure of the Acquisition should enable ECR’s existing tax losses of some A$75 million to be applied against any profits generated from future production at the Raglan Project, meaning that operations are expected to be effectively tax-free for a considerable period of time. Raglan Resources also has A$1.2 million of tax losses which will likewise be expected to be applied against future profits.
Raglan Resources reported unaudited total assets of A$1.37 million for the year ended 30 June 2024 and an unaudited total net loss of approximately A$0.15 million for the same period. This unaudited financial information is before the proposed restructuring of Raglan Resources, as described above.
Next steps
Once the acquisition of the Raglan Project has completed, ECR will look to start production in the new year. Preparations for this are already underway, initial mining locations are being determined and discussions have commenced with production partners. As a turnkey project, the Board expects for operations to commence promptly and that revenues can be generated in the nearer-term
Once operational, the Raglan Project’s equipment and production team are intended to provide a stepping stone to assist with operations at Blue Mountain, which is a larger project, accelerating the pathway to production across ECR’s wider Queensland portfolio.
ECR’s Chairman, Nick Tulloch, added: “Investors will be well aware of how important the Raglan Project is for ECR. It is very literally a turnkey operation with a mining lease and all equipment in place. Our due diligence confirmed what we consider to be an economic mining plan as well as exploration upside.
“As a standalone asset, Raglan is an exciting project but its proximity to our Blue Mountain project further adds to its value. As we conclude our plans to bring Blue Mountain into production, there will very likely be sharing between the two projects of the production team, plant and equipment and technical know-how. It is too early to talk about economies of scale, but we have no doubt that the joint operation of the two projects should lead to significant benefits for ECR.
“We now expect to enter the new year with a clear and identified path to nearer-term revenue generation. We believe that 2026 will mark the transformation of ECR from an explorer into a production company.”
Review of Announcement by Qualified Person
This announcement has been reviewed by Adam Jones, Chief Geologist at ECR Minerals Plc. Adam Jones is a professional geologist and is a Member of the Australian Institute of Geoscientists (MAIG). He is a qualified person as that term is defined by the AIM Note for Mining, Oil and Gas Companies.
FOR FURTHER INFORMATION, PLEASE CONTACT:
| ECR Minerals Plc | Tel: +44 (0) 20 8080 8176 |
| Nick Tulloch, Chairman
Andrew Scott, Director |
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