ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”) has entered into a deed of assignment and assumption (the “Deed”) with Currawong Resources Pty Ltd (“Currawong”) for the acquisition by MGA of 100% ownership of the Avoca and Bailieston gold projects (the “Projects”) located in Victoria, Australia.
The following information pertaining to MGA and the Projects should be read in conjunction with the relevant ECR regulatory announcements.
- Currawong has identified significant exploration potential for mesothermal quartz vein hosted gold and related placer-style ‘deep lead’ gold mineralisation at Avoca, and epithermal ‘Carlin’ style disseminated or sheeted vein hosted gold mineralisation at Bailieston;
- An opportunity exists to generate relatively near term revenue from reprocessing of historical mine dumps at the Avoca project (subject to confirmation as described below);
- A JORC Code-compliant technical report in relation to the Projects is being prepared by Snowden Mining Industry Consultants, and is expected to be published by ECR during March 2016 (the “Report”);
- The consideration for the acquisition comprises up to AUD 250,000 in ECR shares (based on certain milestones described below), and a net profits interest royalty of 20% in respect of mine dumps and 10% in respect of other deposits (royalty capped at AUD 3.5M);
- The acquisition remains conditional on the necessary Victorian government authorisations and registration of the transfer of the Projects to MGA.
The Projects comprise two exploration licences issued by the state government of Victoria: EL5387 (Avoca project), granted on 25 January 2012 and expiring on 24 January 2017, currently covering 115 graticular sections; and EL5433 (Bailieston project) granted on 28 March 2013 and expiring on 27 March 2018, currently covering 79 graticular sections. A graticular section occupies 1” by 1” of arc (around 2.5km by 2.5km, dependent on latitude).
The Avoca and Bailieston projects are located approximately 183km west northwest and 150km north, respectively, of the Victorian state capital Melbourne, with good road access. The Projects are located geologically within the major orogenic Lachlan Fold Belt (LFB). The LFB is subdivided into zones, based on distinct geological and metallurgical characteristics, with the Avoca project lying to the west, within the Stawell Zone, and the Bailieston Project lying to the east, within the Melbourne Zone.
STRATEGY OF MGA FOR THE PROJECTS
Currawong, and its parent company Flitegold Pty Ltd, have carried out significant early stage exploration in relation to the Projects, including: soil and rock chip sampling at Bailieston; and augur sampling of historical mine dumps, ground penetrating radar surveys, preliminary development studies and limited drilling at Avoca.
ECR and MGA are still in the process of assessing available data in relation to the Projects, including historical exploration results and production records, and the results of exploration and evaluation to date by Currawong, and will use this data to determine appropriate work programmes for MGA to further assess the potential of the Projects.
However, it is likely that continued studies in relation to the reprocessing of historical mine dumps at the Avoca project will be an immediate priority, given the possibility that such an operation would be capable of generating revenue in the relatively near term and with relatively low capital costs. MGA is expected to have a significant economic advantage in such an activity, on the basis of its estimated tax losses of approximately AUD 66M as at 30 June 2015, which may be available, subject to certain conditions (as described in ECR’s announcement of 4 December 2014), to reduce MGA’s future taxable profits.
Additional licences and permits would be required to commence reprocessing of the dumps. If warranted, these will be applied for by MGA in due course. Application for renewal of the exploration licences currently pertaining to the Projects is permitted under Victorian mining law, and such applications, if warranted, would be made by MGA prior to expiry of EL5387 and/or EL5433.
Snowden Mining Industry Consultants has been asked to produce a JORC Code-compliant technical report regarding the Projects for MGA. This Report will provide a summary of all material scientific and technical information in respect of the Projects as of the effective date of the Report, and is expected to be available during March 2016.
Related News Releases
|Update on Availability of JORC Report and Communications Update||29-Mar-2016|
|Acquisition of Avoca and Bailieston Gold Projects by Mercator Gold Australia||03-Mar-2016|
|Placing of Shares and Update||18-Nov-2015|
|Release of Mercator Gold Australia from Administration||04-Dec-2014|
|Update on Mercator Gold Australia||10-Nov-2014|
|Update on Mercator Gold Australia||14-Oct-2014|
|Update on Mercator Gold Australia||15-Sep-2014|
|Update on Mercator Gold Australia||27-Aug-2014|
|Update on Mercator Gold Australia||15-Jul-2014|
|Update on Mercator Gold Australia||04-Jul-2014|
|Update RE Itogon Gold-Silver Project, Mercator Gold Australia and Review of Potential New Projects||30-Aug-2013|
|Mercator Gold Australia Update||08-Aug-2013|
|Update on Activities||22-Oct-2012|
Latest Corporate Presentation
|27 November 2015|