Craig Brown, Chief Executive Officer of ECR, commented: “We are delighted to sell these non-core but high-potential licences to Fosterville South, while maintaining exposure to upside from the Licences as a result of future resource estimation or production.
We believe Fosterville South is well placed to advance the Licences with its strong local exploration team and backing from North American high-net worth and institutional investors, while ECR will continue to concentrate its resources on our core projects in Victoria, Bailieston and Creswick.
The initial cash to be received from this disposal, in addition to the recently announced placing for £500,000, puts ECR in a robust working capital position which we can apply toward development of our core projects.
It is worth noting that other external parties are currently reviewing data on our Bailieston and Creswick gold projects with a view to potential commercial transactions, including joint venture opportunities, although there can be no guarantee that any transaction will occur. In addition, whilst ECR remains open to transactions on these licence areas, the ECR board believe both to hold considerable potential and inherent value for the Company.”
SALE OF EXPLORATION LICENCES
ECR Minerals plc (LON: ECR), the gold exploration and development company focussed on Australia, is pleased to announce the sale by ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”) of the licences comprising the Avoca, Moormbool and Timor gold exploration projects (the “Licences”) in Victoria, Australia to Fosterville South Exploration Ltd (“Fosterville South”) for total potential cash consideration of up to A$2.5 million.
Fosterville South, which recently listed on the TSX Venture Exchange with the code FSX, has agreed to acquire MGA’s 100% ownership of the Licences by way of Currawong Resources Pty Ltd, a wholly owned subsidiary of Fosterville South, for the following consideration:
1. A$500,000 in cash to be paid to MGA immediately;
2. A further payment of A$1 for every ounce of gold or gold equivalent of measured resource, indicated resource or inferred resource estimated within the area of one or more of the Licences in any combination or aggregation of the foregoing, up to a maximum of A$1,000,000 in aggregate;
3. A further payment of A$1 for every ounce of gold or gold equivalent produced from within the area of one or more of the Licences, up to a maximum of A$1,000,000 in aggregate.
The Licences comprise exploration licences EL5387 (Avoca project), EL006280 and EL006913 (Moormbool project), and EL006278 (Timor project) in Victoria, Australia.
The book value of the Licences as derived from ECR’s unaudited management accounts for the period ended 30 March 2020 was approximately A$282,000, which is the equivalent of approximately £144,000, based on £1 = A$1.9626*. No turnover, profits or losses are attributable to the Licences.
The maximum potential cash consideration receivable by MGA in respect of the sale of the Licences is A$2.5 million, which is the equivalent of approximately £1.275 million, based on £1 = A$1.9626*
The Company intends that the consideration to be received immediately, and any future consideration received, will be applied by ECR to augment its ongoing working capital position as well as towards its exploration and development activities.
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