www.ecrminerals.com
ECR Minerals (formerly Electrum Resources) plc is a diversified mining investment company with quality assets and the capability to undertake significant, value accretive transactions. ECR Minerals is dedicated to creating value for its shareholders through a process of finding value, adding value and realising value. In order to achieve this, Electrum Resources is able to access a pipeline of projects sourced from its global network and utilises the expertise of its directors and advisers.
ECR Minerals holds interests in the USA, Argentina, Indonesia, Thailand and Australia.
ECR Minerals set for re-rating if THEMAC enhances Copper Flat economics, says analyst
ECR Minerals (LON:ECR, OTC:MTGDY) may be set for a ‘re-rating’ in the coming months thanks to a project it sold last year, according to Old Park Lane Capital.
This morning ECR told investors that THEMAC Resources Group (CVE:MAC) has completed the first phase of drilling at the Copper Flat copper-molybdenum-gold-silver project in New Mexico. The project’s prefeasibility study is scheduled for completion in the first quarter of next year.
Copper Flat was sold by ECR – then known as Mercator Gold – through a deal agreed back in March 2010, in return for its 19 per cent stake in THEMAC.
While the project is no longer part of the ECR portfolio, Old Park Lane’s Phil Swinfen says the equity stake in THEMAC accounts for around 85 per cent of ECR’s current valuation.
Importantly the analyst believes that next year’s pre-feasibility could have a big impact for ECR.
“We would expect any improvement in the economics of Copper Flat to translate to a re-rating of both THEMAC and ECR’s share price,” Swinfen said in a note to clients today.
“The key catalysts to drive this will be the release of drilling results and the completion of the prefeasibility study.”
Now that the initial drill programme has been completed, THEMAC will embark on the 18 to 24-month construction phase of the copper-molybdenum-gold-silver project.
The resource estimate, upgraded last year, of Copper Flat was for 107 million tons that graded at an average of 0.3 percent copper classified as indicated resources, with an additional 46 million tons graded at an average of 0.24 percent copper classified as inferred resources.
In August 2009, ECR purchased an option over the Copper Flat project for US$150,000 and spent around £880,000 on the partial exercise of the option, as well as on technical, legal and permitting costs. ECR then agreed a transaction to place the project with THEMAC, with ECR contributing funding to the project in May 2010 of C$600,000 in return for shares and warrants in THEMAC as well as incurring further costs of £250,000.
"Transactions such as this are at the heart of ECR’s business model, and are intended to create value for ECR shareholders through exposure to upside potential from a range of mineral projects,” said Patrick Harford, ECR’s managing director.
“As well as its current 19.5 per cent shareholding, ECR’s holding of warrants gives the company the option to maintain or increase its shareholding at a relatively modest cost.”
Although the THEMAC stake is central to ECR’s current valuation, the group’s operational team is firmly focused on new opportunities. As far as investors are concerned the most exciting opportunity is found in Argentina.
In January ECR acquired four exploitation concessions. The newly acquired area includes the El Abra historic gold mine which hosted a high grade, albeit small scale, mining operation. In recent months these assets have come into focus as sampling work unearthed high grades, of up to 54 grams of gold per tonne.
ECR is also considering the acquisition of an iron ore project in Argentina, after it secured an option to buy up to 80 percent of the Unchimé property in the Salta Province.
Unchimé boasts historic indicated resources of 23.5 million tonnes and historic inferred resources of 372.8 million tonnes with reported grades of 35-45 percent iron, but ECR reckons the potential may be significantly larger.
Managing director of ECR Patrick Harford said the firm was excited that with further work, the project could become major.
"It may be feasible to develop a relatively small initial operation to supply the local market, with a larger export operation being developed at a later stage," he said in July.
Earlier this week the company extended its option over the project, at no cost, while it completes its due diligence. Core samples from the diamond drilling programme completed by the company at Unchimé during September are being analysed, however this process has been delayed due to a worldwide backlog of samples at suitable laboratories. ECR is continuing to implement a programme of metallurgical testwork on samples from Unchimé.
In order to acquire the initial 70 percent interest in the project, ECR is now required to make a payment to the owners of the project of US$1.3 million on or before December 1 2011, followed by an additional payment of US$500,000 not more than 7 months from the date of the initial payment.
