ECR Minerals PLC (AIM:ECR) said it has entered into a binding term sheet under which it has been granted a conditional option to acquire the entire issued share capital of Placer Gold Pty Limited.
Placer Gold is the beneficial holder of three granted mining tenements (EPM 27518, EPM 25855 and EPM 19437) located in NE Queensland, together known as the Hurricane Project.
The Hurricane Project area is situated in the Hodgkinson Province of NE Queensland and located in the Tregoora Belt to the north-west of the Northcote District. The area hosts several goldfields such as the Palmer River, West Normanby and Hodgkinson. Together these fields have produced more than 45 tonnes of gold from alluvial workings and mines.
ECR said its directors consider Hurricane to be a late-stage exploration project. Previously, the area has been the subject of intensive fieldwork and sampling with three tenements all highly prospective for gold and antimony, a pathfinder mineral often associated with the presence of gold.
The Hurricane Project is located approximately 400 kilometres due north of the Lolworth Range project, where ECR will shortly complete a soil sampling programme across its three exploration tenements.
In a statement, ECR CEO Andrew Haythorpe commented: "This is a project I have detailed knowledge of through work prior to joining ECR. It is also in an area I am very familiar with having worked as a geologist in Far North Queensland and studied at James Cook University. Historic mineral and rock chip samples are detailed in the raft of historical data on Hurricane compiled by Dr Harry Wilhelmij. Hurricane is a later stage gold and antimony property which I believe has exceptional near-term development potential.”
He added: “I believe this potential acquisition could add a new dimension of value to the ECR offering, and on the signing of the associated transaction documents, we expect to be in a position to commence additional exploration and study work on the ground, with the aim of establishing a maiden JORC Resource for the project. We anticipate satisfying the Option Fee and exercising the Option towards the end of the Option Period, after an extensive period of due diligence and additional exploration, and we look forward to providing shareholders with updates as this potential acquisition progresses.”
To secure the option ECR has to pay a A$200,000 (approximately £144,000) option fee which is to be satisfied by a contribution to costs, the implementation of a work programme over the assets and a balancing cash payment to the shareholders of Placer Gold. Once the option fee has been fully satisfied ECR can then exercise the option at any time prior to 30 September 2023, at its absolute discretion.
On exercise of the option, ECR will enter into the transaction documents necessary to effect the acquisition in accordance with the requirements set out in the term sheet. ECR has today made an initial payment of A$39,500 to the vendors (a total of approximately £22,000) which will be counted towards ECR’s payment of the option fee.
If the option fee is fully satisfied and the option is exercised, the total consideration for the acquisition of Placer Gold is A$6.9mln (approximately £3.8mln), including the option fee, a further cash payment of A$200,000 payable in the event of certain milestones being reached, and a 2% net smelter royalty payable in the event the Hurricane Project is taken into production in the future, capped at £3mln.
The acquisition is subject to completion of due diligence to ECR’s satisfaction, all necessary consents, approvals and licence renewals being obtained, and the execution of formal transaction documentation (including a royalty deed and shareholders agreement). Accordingly, at this stage, ECR said, there can be no guarantee that it will obtain the option or acquire Placer Gold.
Nevertheless, ECR said its directors have every expectation that the work programme will commence, due diligence enquiries will produce favourable results and that all necessary approvals and renewals will be received, such that the acquisition can proceed as intended.
A further update will be provided if and when ECR satisfies the option fee and another announcement will be made if ECR exercises the option and begins the process of acquiring Placer Gold.