“The reason for bringing the Chinese in is that they provide us with a gateway to China.” So says Craig Brown, the chief executive of ECR Minerals PLC (LON:ECR), following the announcement that Shenyang Xinliaoan Machinery Co has agreed to subscribe for a 29.9% shareholding in the company at a price of 1p per share.
That news sent ECR shares skyrocketing by over 26% on the day of the announcement and although they’ve since given up some of those gains the shares are still trading at just about double where they were at the start of this year.
Watch: ECR Minerals' partnering up with Chinese investors 'a positive development' says CEO Craig Brown
But what does Brown mean when he talks of “a gateway to China”?
After all, ECR has assets in Australia, Argentina and the Philippines.
Aside from the nicety that the Chinese are investing big into Argentina at the moment, Brown is effusive about having Chinese partners in general and brings first hand experience with him from a previous role as boss of Kryso Resources, now known as China Non-Ferrous (LON:CNG).
“The Chinese have some of the best technology and their metallurgy is so much cheaper than using anybody else’s,” he says.
“When we were with Kryso Chinese equipment was not only much cheaper, but the spares were cheaper too and the after-sales care was good.”
But the implications go beyond working at the operational level.
“Also, we can get debt financing more cheaply,” says Brown.
This may or may not be true of Chinese debt markets generally, but in the case of ECR and Shenyang Xinliaoan, the thinking is that ECR may become an acquisition vehicle of choice.
First off, there’s Argentina. ECR has its eyes on expansion there in a small way already, and is contemplating the acquisition of a small plant to allow a demonstration gold mining operation to get underway. But with Chinese backing, there could be more to come.
But it’s not only Argentina.
“We’re looking at projects in Africa,” says Brown. “If these projects are good, they’ll pump more money in.”
And who can forget the Chinese forays into Australia itself during the last mining boom. ECR has a presence on the ground there already, and although nothing’s been formalised, there is talk of creating a separate vehicle to run those assets independently.
If that vehicle were to be seeded by Chinese money, it really could hit the ground running when the time came.