It was a significant moment for ECR Minerals (LON:ECR) when it put out a resource update for its Danglay gold project in the Philippines on 5 November.
“It was our first resource estimate for the project,” says ECR chief executive Stephen Clayson. “And we were reasonably pleased with the numbers.”
All told the project is now known to contain 1.2mln ounces of oxide ore grading 1.6 grams per tonne for 60,500 ounces in the inferred category.
It’s not big, but it’s a start.
“Small fish can be sweet,” says Clayson.
After all, there are plenty of signs that there could be bigger and greater things to come from Danglay.
ECR’s new exploration target anticipates the further delineation between 600,000 tonnes of underground sulphide ore grading 5 grams gold per tonne for 95,000 ounces and 700,000 tonnes at 7.5 grams for 170,000 ounces.
The target is purely conceptual in nature at this stage, but has nonetheless been determined by a qualified person and disclosed in accordance with the Canadian National Instrument 43-101.
“Overall we can certainly see a future there,” says Clayson. “There’s potential for some pretty exciting results.”
Mining the surface ore at Danglay would be a relatively simple undertaking as the mine would have a low strip ratio and benign metallurgy.
Add in the good infrastructure and the long history of mining in the local area, says Clayson, and the project as a whole has “a very good chance of being economic.”
So what’s next?
“In an ideal world you’d really go and drill this thing aggressively,” continues Clayson. “But we have to ask ourselves the question are we going to get value from it?”
By that, of course, he means value from the market.
It was a regrettable but noticeable sign of the times that when ECR put out its resource update for Danglay investors headed for the exits, even in the face of a relatively positive news release.
“Sometimes it’s better to travel than to arrive,” says Clayson somewhat ruefully.
In the circumstances of the wider economic malaise in the mining markets, it’s perhaps not surprising that ECR is now weighing up its options very carefully.
“It’s just a matter of strategy,” says Clayson.
Would the company be better off orchestrating a follow-up drill campaign, or perhaps instead focussing on a more detailed assessment of the economic potential of Danglay and perhaps a PEA?
Certainly that’s one option, says Clayson.
“We’re working on a 43-101 report with our joint venture partner which will cover much more than just the statistics. That will be out within 45 days of the resource update, and could be followed up by a PEA on the existing resource.”
The snag, of course, is that you can’t do a PEA on an exploration target. But you can do one on an inferred resource.
We’ll have to wait and see exactly what ECR decides to do.
But although time is of the essence in a market impatient for success, two factors allow for a certain amount calm reflection before the next move is decided.
The first is that the earn-in terms for Danglay aren’t overly onerous.
“We’ve now got ten years,” says Clayson, “and that reflects the reality of permitting timelines in the Philippines. We’re supposed to spend US$200,000 per year, but beyond that there’s no spending requirement set in stone.”
The second is that ECR’s backers are likely to continue to support it.
“I don’t have any doubts about the availability of further funding,” says Clayson. “We have some high net worth shareholders who I know are supportive.”
Indeed, high net worths, alongside the Aim-traded investment vehicle Metal Tiger (LON:MTR) have just topped up ECR’s coffers to the tune of £250,000.
The knowledge of that support sets ECR’s current work in a slightly different context and should encourage any investors disheartened by the recent share price weakness that sunlit uplands could be just around the corner.
We shall see.