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ECR Minerals soars as subsidiary moves closer to exit from administration

The release of ECR's subsidiary Mercator Gold Australia (MGA) from administration will entitle ECR to tax credits in future years.
ECR Minerals soars as subsidiary moves closer to exit from administration

Shares in ECR Minerals (LON:ECR) soared on Friday as the release of its subsidiary Mercator Gold Australia (MGA) moved a step closer.

The emergence from administration of MGA would entitle ECR to tax credits in future years.

MGA’s creditors have been invited to a meeting on 15 July to ratify proposed changes to the deed of company administration. If the changes are approved this would permit the retirement of the administrators, who were appointed in 2008.

Before the retirement of the administrators it is anticipated a small final dividend will be paid to unsecured creditors of MGA, with the exception of ECR. It is also expected that an insurance claim made under a public liability insurance policy held by MGA will be assigned to Main Roads Western Australia (MRWA). The claim relates to road deviation costs associated with mining activities carried out by MGA in 2008, and it is already the case that if successful the proceeds of the claim will be for the benefit of MRWA and not MGA, ECR’s statement asserted.

“The release of MGA from administration appears to be drawing nearer. When this occurs it is expected that MGA will possess tax losses estimated to total approximately A$80 million. These tax losses will be of significant benefit to MGA should it be successful in establishing profitable business activities following its release from administration,” said Stephen Clayson, chief executive officer of ECR.

Shares in ECR were up 30% at 0.28p in lunchtime trading.

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