ECR Minerals plc (AIM: ECR) has agreed to acquire Paleogold Limited (private) for a total consideration of up to A$10.6 million (£5.2 m). Paleogold owns interests in a portfolio of gold projects located in Queensland, Western Australia and South Australia. The most significant interest is a 50% interest in the six Maddens Flat Mines, which have a non-compliant mineral resource estimate of 6,322 ounces of gold.
This is a relatively small resource base, but it was compiled in 1999 and is based partly on known unexploited blocks. ECR believes there is potential to discover additional zones of mineralisation beyond these blocks. The project also comes with existing infrastructure, including a camp, processing plant, tailings dam, three freshwater dams, workshop, and storage sheds.
The transaction will also see ECR acquire a 20% interest in the Salt Bush Flat Gold Mine, which has been estimated by the owners to contain over 10,000 ounces of gold. ECR believes there is potential to extend the mineralisation along strike, with additional potential for parallel veins. ECR will also acquire Paleogold’s 80% interest in the Tuckanarra Project, an early-stage gold exploration project, located in proximity to Odyssey Gold’s (ASX:ODY) 407,000 oz Tuckanarra Gold Project.
Thesis Summary
- This acquisition gives ECR a portfolio of 10 exploration and development stage projects across four Australian states, with three mine development projects expected to be in production this year and a fourth next year.
- ECR plans to move the Maddens Flat Mines into production this year, alongside the development of alluvial gold mining at the Raglan and Blue Mountain Projects. Production at the Salt Bush Mine is targeted for Q2-Q3 2027.
- ECR believes it will take three to six months to move the Maddens Flat Mines into production. ECR will invest A$1 m to extend the decline 120 m to open a new level, which has the potential to contain 2,500 oz of gold.
- At Raglan, the ramp-up is ongoing with gold-bearing gravels being extracted from a series of test pits. These test pits will allow the definition of areas most favourable for mining. ECR expects to commence commercial production (meaning sales of gold) in the next 1-2 months.
- Production at Raglan will be followed by the commencement of the development of another alluvial gold mine at the Blue Mountain Project in Q3 2026.
- ECR believes it can fund the cash components of the acquisition from existing cash resources. ECR raised £1.5 million in early January and £0.75 million in October 2025.
- We maintain our BUY rating and have increased our price target by 16.5% to 0.68p per share from 0.58p.
