Minesite article By Alastair Ford

Electrum Has The Assays It Needs In Argentina, The Trick Now Will Be To Get The Tonnes

“Electrum”, according to Wikipedia, “is a naturally occurring alloy of gold and silver, with trace amounts of copper and other metals”. Not everyone is convinced of the accuracy of its definition, however. The associated plea says it all: “please help improve this article by adding citations to reliable sources”. So here’s one, for Minesite readers, at any rate, from the Concise Oxford Dictionary: “an alloy of silver and gold used in ancient times; native argentiferous gold ore”. Your investigative-minded correspondent also searched for another, in the McGraw-Hill Dictionary of Geology and Mineralogy, but found, between “electroflitration” and “eleolite”, nothing but empty space.

As yet, there’s also an empty space where the “see also” link should be at the top of the Wikipedia entry, but one day that might change, because a new, or at least re-invented, company has just emerged on the scene, and taken the name Electrum to mark its new beginning. The company in question is the old Mercator Gold, which never went away, but, let’s face it, did endure a torrid time at just about the same time that the storms of the global financial crisis were at their worst. One way or another Mercator’s efforts to mine gold at Meekatharra came to naught, and the company’s efforts at recovery were stymied again and again by hostile market conditions. “Meekatharra was an absolute disaster, and it’s a long road back”, says Electrum managing director Patrick Harford. But he kept plugging away, and even though the operating company went into administration, the listed entity survived.

Deals were done, short-term, and long-term, and gradually, as the market picked up, Mercator’s fortunes revived too. “It’s taken some time, I don’t deny that”, says Patrick. But, he adds, speaking after the completion of his latest deal, the acquisition of two prospective gold and base metals licences in Argentina, “we’ve slowly and surely got all the ducks lined up”.

Prior to the acquisition of the Argentinian ground, the most important recent development was the renegotiation of the terms of nearly £2.6 million worth of convertible loan notes issued back in 2007. That issue was resolved when the loan note holders agreed to a three year extension based on a price of 1.1p per share and a 10 per cent coupon at a recent extraordinary meeting. And at that point, Electrum was really set free.

And it was Electrum by then: the name change came on 28th September; financial liberation on 29th. Until that point, the notes, exercisable at a strike price of 95p had been hanging like a sword of Damocles over the company’s future. And the noteholders can’t have been too overjoyed either, given that the shares have been bumping along at around a penny for several months, and haven’t been up at 95p since around the time the notes were issued. Back then the coupon was slightly less onerous, at 8.5 per cent.

All that’s done and dusted now, though, and the focus, at long last, can move on to the assets. All told, Electrum now has a 40 per cent stake in a copper development asset in New Mexico, a 10 per cent stake in an Aussie-listed gold explorer, a stake in a metal construction products business in Thailand, a stake in Uranio’s uranium tenements in Argentina, some exposure to renewables, an interest in an alluvial gold project being run by Warwick Grigor, and now this new ground in Argentina. Patrick appears to have learned a hard lesson from the global financial crisis: “We wanted to have a spread. We’re not a single asset company”.

Having said that, though, it’s the ground in Argentina – Sierra de las Minas, and Los Aquirres – that really seems to float his boat at the moment. “It looks like when we got to Kalgoorlie in the 1980s”, he says, enthusiastically. “I believe there’s a lot of high grade gold there near surface.” What Electrum needs to do now, he adds, is work out the scale of it. Of the grades there’s no doubt. Of 348 geochemical samples collected by a previous owner in the late 1990s, 163 showed up as being anomalous in gold. Some of the better numbers included 153.9 grams per tonne gold and 2.4% copper, and 44.6 grams per tonne gold and 9.4% copper.

Patrick is clear in his mind as to what’s on offer here. “I’m quite sure that near-surface, high-grade material is going to be available, and that it’s going to be valuable.” Will there be enough of it though? That’s the big question, and the one Electrum will now focus on, big time. “This project generates the assays. Now let’s see if generates the tonnes”, says Patrick. To that end, geophysics and mapping will now get underway, and newsflow should be fairly consistent from here on in. “We now need a little bit of luck”, says Patrick, and given the company’s recent history, perhaps it’s about due. “We’ve thrown the bones up in the air. They need to land in our favour.” Time will tell.