ECR Ecr Minerals Plc

ECR MINERALS plc

("ECR Minerals", "ECR" or the "Company" and with its subsidiaries the "Group")

Unaudited Half-Yearly Results for the Six Months Ended 31 March 2024 and Business Update

ECR Minerals plc (LON: ECR), the exploration and development company focused on gold in Australia, is pleased to announce its unaudited half-yearly financial results for the six months ended 31 March 2024 for the Company, along with a review of significant developments during and post period.

HIGHLIGHTS

Operational highlights:

·    Geological mapping at Lolworth led to the discovery of numerous quartz outcrops within the ridgeline above those gold bearing streams in the Upper Gorge Creek area with best results from rock chipping of 13.75 g/t Au, 3.13 g/t Au and 2.17 g/t Au over a number of outcrops measuring up to 3m wide x 20m long

·    Discovery of a rhyolitic dyke in Gorge Creek East, Lolworth 5.5m wide x 200m long having anomalous gold valueswith the best rock chip from the centre of the dyke returning 8.02 g/t Au

·    Results from mapping a quartz veinlet system within the upper creek drainage of Flaggy Creek, Lolworth over a length of 70 metres long and within a zone up to 100m wide have proven to be gold-bearing with best results being 6.05 g/t Au, 5.96 g/t Au, 4.66 g/t Au and 3.97 g/t Au

·    Application submitted for an Exploration Licence at Kondaparinga, Queensland, approximately 120km² in area within the Hodgkinson Gold Province

·    Broader mineralisation and increased levels of high-grade gold reported from our drilling programme at Creswick, Victoria, with best individual grades 8.87g/t Au and 8.06g/t Au

·    Bulk sample testing at Davey Road, Victoria indicated extensive gold mineralisation, with a best result of 41.03 g/t Au

·    Tambo rock chip results comfortably exceeded those from previous exploration activities, with eight samples having gold grades greater than 5 g/t Au and best results of 51.5 g/t Au, 26.5 g/t Au and 24 g/t Au

Financial highlights:

·    Sale of non-core assets realise A$420,000

·    Ongoing examination of historic tax losses of A$75 million to potentially unlock significant value

·    Cost reductions through salary sacrifice scheme and closure of London office

·    Two fundraisings completed in September 2023 and March 2024 to raise almost £1.2 million in aggregate

Nick Tulloch Chairman said: "In the nine months since Mike Whitlow and I joined ECR, we have sought to implement a step change in the pace of our operations, coupling increased activity in our Australian projects with a prudent approach to cash management. Mike and I have always viewed ECR's project portfolio as a potential sleeping giant, and now with the results and developments reported across our tenements in recent months, we believe the Company is well on the way to realising the value of these assets."    

"As a Board, we are receptive to ideas to add value, new initiatives and projects to our operations. In recent months we have received approaches from other businesses in the resources sector offering co-development and other collaborative opportunities. While these developments in themselves have served to further confirm the nascent value within our project portfolio, in line with our own projects, we have retained a conservative approach to these discussions.  Expanding ECR's business is high on our agenda but we will do so only when we are satisfied the risk is low and that we can maximise gains for our shareholders."

"For the remainder of 2024, I want to reassure shareholders that, following on from a very successful period of work in Victoria, they can look forward to further newsflow as we re-commence our operations in Queensland."

FOR FURTHER INFORMATION, PLEASE CONTACT:

CHAIRMAN'S STATEMENT

In the six months since Mike Whitlow, as COO, and I joined ECR, we have a considerable amount to update shareholders on.

Against the backdrop of ongoing challenging stock market conditions around the world for small companies, we have raised close to £1.2 million of new funds, seen the share price increase by over 70 per cent. and daily trading volumes rise by over 200 per cent.  As we head into the second half of our financial year, we consider ECR to be well capitalised, with an extensive and fully funded exploration programme underway.  We also believe we have significantly raised the investment profile of the Company with new and potential investors. With gold prices setting new highs this year, we have a great deal to look forward to.

There are many uncertainties for investors in 2024.  With forthcoming elections in the UK and the US and ongoing conflicts in the Ukraine and Gaza, the changing macro picture around the world creates both challenges and opportunities.  Failing interest rates may rekindle enthusiasm for junior explorers and gold's safe-haven status may provide ongoing sanctuary for capital in turbulent times.  These factors are of course outside of our control but our commitment to shareholders is to focus on the areas that we can influence whilst continuing to build our following with new investors.

ECR has established a new reputation for frugal use of our capital resources, minimising our operating costs whilst spending our funds wisely on developing our portfolio of assets.  I said in our annual report in March 2024 that, for a small company, we have an extensive portfolio of projects and I have summarised below how we envisage developing these over the remainder of this calendar year.

All members of the board are fully aligned with shareholders. The salary sacrifice, first announced in September 2023 has since been extended through to the end of June this year.  Mike and I have a remuneration scheme that is almost 90 per cent. based in ECR shares which themselves are linked to performance.  Elsewhere we have closed our London office with a projected annual saving of over £50,000 and sold assets in Australia that were not being utilised for A$420,000.

With our growing financial strength and investor following, it will be no surprise that we are attracting enquiries from other companies looking for support to develop parts of their asset base or disposals of projects that they may no longer be in a position to develop.  The ability to expand ECR through acquisition at this stage in the commodity cycle may be significant and, over the past months, we have actively examined several such opportunities.  In line with our approach to our own assets, we will remain conservative and value-orientated.  Any cash commitments that we take on will be directed towards ground work and not purchase prices and any new project must be capable of producing significant gains for our shareholders.

Nevertheless our primary focus is on our existing projects and I am pleased to provide the following updates of work carried out in the period and planned for the near term.

QUEENSLAND

Lolworth

Much of ECR's focus during 2023 was on the development of our Queensland assets, and in particular the gold and battery metals at the Lolworth Range area in Northern Queensland, a 'greenfield' project with some 900 square km of ground to explore.   Approximately 700km² of the project has now been initially explored by stream sampling. Gold, Niobium-Tantalum and REE (in particular Neodymium) are the main commodities discovered from the stream sampling programmes. 

An extensive fieldwork campaign of soil sampling and rock chips was successfully completed before the natural break for weather conditions and the results supported our thesis that Lolworth has become a bona fide exploration opportunity. Visible gold was found in creeks that have had no modern exploration. Best results to date include 1395 ppm Au (Gorge Creek), 962 ppm Au (Butterfly Creek) and 594 ppm Au (Reedy Creek) (see our announcement dated 10 January 2024 for the full review of the Lolworth project). Multiple clusters of gold mineralisation have been found in specific streams of Flaggy Creek, Gorge Creek West, Reedy Creek West and Butterfly Creek. This led to outcrop sampling, mapping and soil sampling firstly at Flaggy Creek and then Gorge Creek West. 

Initial rock chip sampling and outcrop mapping at one notable hillslope at Flaggy Creek was reported last October. Best results from rock chip sampling included 4.66 g/t Au, 3.97 g/t Au and 3.28 g/t Au. Gold has also been discovered in quartz fragments lying on the surface, indicating gold veinlets in a primary source nearby. Where visible, the quartz veining at Flaggy Creek is aligned in groups of narrow veins that lie parallel to each other. The veins were traced along the surface for 70 metres before passing under soil cover. The anecdotal evidence from surface scree and fragments showed the parallel veins to be in a zone up to 100m wide. The best gold results from the soil sampling north and south of these veins were 0.41 g/t Au, 0.19 g/t Au and 0.13 g/t Au, highlighting three anomalous values which lie along a discrete north-easterly trend. Best results from soil sampling at Reedy Creek West was 2.01 g/t Au. 

Whilst work is still at an early stage, there are some indications that a much larger system may be present than has been mapped.  A number of exposed outcrops up to 3m wide x 20m long in the Gorge Creek West ridgeline show gold results up to 13.75 g/t Au from initial rock chip testing.   Furthermore, a rhyolitic dyke 5m wide x 200m long that contains anomalous gold was discovered in the Gorge Creek East area. Rock chips collected over the extent of the outcrop average 0.25 g/t Au, with one best result of 8.02 g/t Au.

Critical listed minerals Niobium-Tantalum (Nb-Ta) and Neodymium, a rare earth element, have also been discovered in the Oaky Creek drainage system. 

The next steps for Lolworth are trenching at Flaggy Creek and Reedy Creek.  We intend to trench across various outcrops and follow up with reverse circulation drilling.  We will also undertake further reconnaissance for niobium and gold in streams over the eastern tenements where geological mapping suggests the presence of pegmatite intrusion that covers approximately 45km² .  Work will restart in the coming weeks with the aim being to identify suitable future drill targets which we can then return to at the first available opportunity.

Kondaparinga

We took the decision to terminate the proposed Hurricane acquisition in October 2023 and shortly ahead of that applied for a new licence at Kondaparinga. This area is situated close to the original geological features that first brought Hurricane to the attention of our field team. Significantly, the area is also twice the size of Hurricane.  The licence would include an expenditure commitment of A$487,000 thereby costing around a tenth of what had been earmarked for Hurricane in total by the previous management. Although work is yet to start, we remain convinced this represents a better value opportunity for shareholders.

Blue Mountain

In April 2023, ECR announced the conditional acquisition of the Blue Mountain project, which includes the Denny Gully Gold project, situated south west of Gladstone port and south east of Biloela, the small regional pastoral-agricultural-coal mining centre in Queensland. Our Chief Geologist, Adam Jones, will shortly be conducting ECR's inaugural exploration campaign at Blue Mountain. Preliminary analysis suggests that work conducted by the previous operator presents compelling opportunities - especially for its alluvial gold potential. It is reported to include an alluvial resource which could potentially yield over 100,000 ounces. Subject to the necessary permissions, we are looking forward to advancing the project potentially towards production-readiness. Encouragingly, the landowners have expressed their willingness to work with us which has further increased our confidence that the project could well exceed our initial expectations.  As with Lolworth, our aim is to identify suitable drill targets to follow up on at the first available opportunity.

VICTORIA

Creswick

Historically, a considerable amount of investor interest has centred on our Creswick project but, prior to Mike and I joining the Company, this dropped lower down the agenda when the focus moved to Queensland.

However, late in 2023, we took the decision to return to drill at Creswick, with a twin reverse circulation drilling project at the Davey Road and Kuboid Hill locations.  This decision has been vindicated.  Bulk sample testing at Davey Road, following on from 522 metres of drilling, indicated both extensive prevalence and pleasing grades of gold with the best result being 41.03 g/t Au over 1 metre.  Results from Creswick, where a total of 1,032 metres was drilled across 17 holes, were particularly encouraging as they indicated the hallmarks of a potential future small scale operation.  The best individual grades were 8.87g/t Au and 8.06g/t Au but what is far more significant is the extensive broad mineralisation demonstrated in several holes where contiguous gold is present at 3.05g/t Au over 3 metres, 2.25g/t Au over 4 metres and 1g/t Au over 5 metres. The drilling recorded intercepts greater than 0.5 g/t Au average over a total of 51 metres with the broadest identified mineralised zone being over 15 metres.

Our 16 acre property at Brewing Lane, which sits within the Creswick tenement, is no longer required to achieve our strategic objectives there and is up for sale.  This decision is not related to the success we have had at Creswick but our strategy is to focus on the exploration and development of our projects and so holding expensive capital assets is not considered to be a good use of shareholder funds.

Bailieston

The extensive field work and drilling undertaken at the Bailieston property in previous years maintains this asset as one of our most prominent and as announced on 7 May 2024 we have recently completed a stream sampling programme throughout the northern part of the tenements.  Best results of 798 ppb Au and 712 ppb Au were recorded in sampling at three areas with no known historical workings.  Our encouraging findings of surface expression of anomalous gold give merit to further follow up work.

Tambo

We had previously recorded 22g/t rock chips with silver and bismuth credits at our licences in eastern Victoria covering the Tambo River and Swifts Creek region and, in recent weeks, our Chief Geologist Adam Jones has returned to site.  His work included detailed mapping of historical gold workings and the collection of 56 rock chips and 84 soil samples taken at spaced intervals across and along strike of the mineralisation to gain a better understanding of the spread of pathfinder elements. Results exceeded previous exploration done at Tambo with eight samples having gold grades greater than 5 g/t Au with our best results being 51.5 g/t Au, 26.5 g/t Au and 24 g/t Au.

Notably, historical mine development below 20 metres from surface remains unexplored but these encouraging findings support the potential for a drilling campaign in Tambo in the second half of this year.

It is also worth noting that this recent exploration programme in Tambo was our first use of PhotonAssay to analyse samples.  This is a relatively new, cost effective and non-destructive analytical technique, which can significantly reduce both sample preparation time and the receipt of final analysis.

OTHER ASSETS

Royalties

ECR continues to be entitled to royalties from our former Avoca and Timor exploration licences being:

1.         A$1 for every ounce of gold or gold equivalent of measured resource, indicated resource or inferred resource estimated, up to a maximum of A$1,000,000 in aggregate; and

2.         A$1 for every ounce of gold or gold equivalent produced, up to a maximum of A$1,000,000 in aggregate.

ECR retains an NSR royalty of up to 2 per cent. to a maximum of US$2.7 million in respect of future production from the SLM gold project in La Rioja, Argentina which was sold in February 2020. 

No payments under the Avoca and Timor exploration licence or SLM gold project were received in the year.

Asset Review

The Group's net assets at 31 March 2024 were £5,338,824 in comparison with £6,177,800 at 31 March 2023.

Despite maintaining intensive drilling campaigns and exploration activities, ECR's capital position has improved during the period.  The Company raised £580,000 before expenses in September 2023 and a further £585,000 before expenses in March 2024, with the latter fundraising being concluded at a more than 70 per cent. premium to our raise in September 2023. As mentioned above, the Company has adopted a salary sacrifice scheme for its board, coupled with a share-based remuneration package for Mike and me, thereby significantly reducing its cash outlays.  Savings from closing the London office are already being realised but, with this taking place after the period end, are not yet included in our financials.

In December 2023, we successfully sold a drilling rig and an excavator for a combined consideration of A$420,000 (with payments for the rig being spread over nine months) and began steps to sell our property at Brewing Lane (within the Creswick licence area). We are in the process of obtaining planning permission for a residential house pending putting the property up for sale.   Given the location of the block, it is a lengthy process but we believe that, with planning permission, the land value should increase and, equally importantly, so will the likely audience of buyers.

Importantly, we are now fully funded for our 2024 exploration programme. 

ECR's wholly owned Australian subsidiary, Mercator Gold Australia Pty. Ltd, carries historic tax losses of A$75 million that were incurred in previous operations in both Victoria and Western Australia.  In common with other countries, transferred tax losses in Australia are subject to certain restrictions, primarily on similarity of business operations, but nevertheless the quantum of these losses represents a potentially significant asset for ECR and work in ongoing to seek to realise this value.

Financial Review

The Group's ongoing activities are solely in mineral exploration and development. It is not in production at any of its current projects and therefore has no revenue.

As the Group is not generating revenue from operations, the Directors consider that profit and loss is a metric of less utility than in many other businesses. For the year to 31 March 2024 the Group recorded a total comprehensive loss of £451,412 compared with £724,566 for the corresponding period to 31 March 2023, reflecting the cost saving measures implemented in the autumn of 2023 and the sale of the non-core assets in Australia.  The largest contributor to the total comprehensive loss was the administrative expenses.

The Group's net assets as at 31 March 2024 were £5,192,056 in comparison with £5,012,403 at 30 September 2023.

Exploration activity took place in both Central Victoria and Northern Queensland, Australia during the period to 31 March 2024, as discussed in the Chairman's Report. Capitalised exploration assets are valued at cost; this value should not be confused with the realisable value of the relevant projects or be considered to determine the value accorded to the projects by the stock market, which in both cases may be considerably different.

Outlook

During the period, we have significantly advanced our assets across the group and, hopefully, as shareholders will observe, our pace of activity has accelerated into 2024. We have made a conscious effort to re-energise our investment case and activity levels are high - and reflected in increasing trading volumes on the stock exchange - so we believe that we have much to look forward to in the coming year. 

Over the remainder of this year, the Company's work programme will include:

·    Inaugural exploration campaign at Blue Mountain where work conducted by the previous operator is reported to include an alluvial resource which could potentially yield over 100,000 ounces

·    Trenching at Flaggy Creek and Reedy Creek in Lolworth, Queensland - trench across various outcrops followed up with Reverse Circulation drilling

·    Reconnaissance for Niobium, REE and Gold in streams over eastern tenements in Lolworth where geological mapping suggests the presence of pegmatite intrusion that covers approximately 45km²

·    Reverse Circulation drilling at Tambo, Victoria, where the Company has recorded 51.5g/t gold in rock chips

Through a combination of the placing announced in March 2024, the Board's focus on cost management and salary sacrifice and last year's assets sale, these activities are fully funded.

ABOUT ECR MINERALS PLC

ECR Minerals is a mineral exploration and development company. ECR's wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd ("MGA") has 100% ownership of the Bailieston and Creswick gold projects in central Victoria, Australia, has six licence applications outstanding which includes one licence application lodged in eastern Victoria (Tambo gold project).

ECR also owns 100% of an Australian subsidiary LUX Exploration Pty Ltd ("LUX") which has three approved exploration permits covering 946 km² over a relatively unexplored area in Lolworth Range, Queensland, Australia. The Company has also submitted a license application at Kondaparinga which is approximately 120km2 in area and located within the Hodgkinson Gold Province, 80km NW of Mareeba, North Queensland.

Following the sale of the Avoca, Moormbool and Timor gold projects in Victoria, Australia to Fosterville South Exploration Ltd (TSX-V: FSX) and the subsequent spin-out of the Avoca and Timor projects to Leviathan Gold Ltd (TSX-V: LVX), MGA has the right to receive up to A$2 million in payments subject to future resource estimation or production from projects sold to Fosterville South Exploration Limited.  MGA also has approximately A$75 million of unutilised tax losses incurred during previous operations.

ECR holds a royalty on the SLM gold project in La Rioja Province, Argentina which could potentially receive up to US$2.7 million in aggregate across all licences.

Notes to the Condensed Half-Yearly Financial Statements

For the six months ended 31 March 2024

1.     Basis of preparation

The condensed consolidated half-yearly financial statements incorporate the financial statements of the Company and its subsidiaries (the "Group") made up to 31 March 2024. The results of the subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date such control ceases.

These condensed half-yearly consolidated financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2023. They have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 September 2022.  The report of the auditors on those accounts was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, but did include a reference to matters which the auditors drew attention to by way of emphasis without qualifying their report.

The accounting policies have been applied consistently throughout the Group for the purpose of preparation of these consolidated half-yearly financial statements. New and amended standards, and interpretations

issued and effective for the financial year beginning 1 October 2023 have been adopted but do not have a material impact on the condensed consolidated financial statements. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The financial information in this statement does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006.  The financial information for the six months ended 31 March 2024 and 31 March 2023 is unaudited.  The comparative figures for the period ended 30 September 2023 were derived from the Group's audited financial statements for that period as filed with the Registrar of Companies.  They do not constitute the financial statements for that period.

2.     Going concern

The Directors are satisfied that the Group has sufficient resources to continue its operations and to meet its commitments for the immediate future. The Group therefore continues to adopt the going concern basis in preparing its condensed half-yearly financial statements.

3.     Cash and cash equivalents

Cash includes petty cash and cash held in bank current accounts. Cash equivalents include short-term investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

4.    Earnings per share

The disclosure of the diluted loss per share is the same as the basic loss per share as the conversion of share options decreases the basic loss per share thus being anti-dilutive.       

Notes to the Condensed Half-Yearly Financial Statements

For the six months ended 31 March 2024

5.     Income tax

No charge to tax arises on the results and no deferred tax provision arises or deferred tax asset is identified.

6.    Shares and options transactions during the period

The share capital of the Company consists of three classes of shares: ordinary shares of 0.001p each which have equal rights to receive dividends or capital repayments and each of which represents one vote at shareholder meetings; and two classes of deferred shares, one of 9.9p each and the other of 0.099p each, which have limited rights as laid out in the Company's articles: in particular deferred shares carry no right to dividends or to attend or vote at shareholder meetings and deferred share capital is only repayable after the nominal value of the ordinary share capital has been repaid.

All the shares issued are fully paid up and none of the Company's shares are held by any of its subsidiaries.

7.     Consolidated Cash Flow Statement