REG - ECR Minerals PLC - Adviser appointed to realise value from tax losses

ECR MineralsAnnouncement

02/07/2024 07:15

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RNS Number : 7635U  ECR Minerals PLC  02 July 2024

ECR MINERALS plc

("ECR Minerals" or the "Company")

Appointment of adviser to realise value from tax losses

ECR Minerals plc (LON:ECR), the exploration and development company focused on
gold in Australia, is pleased to announce that it has engaged Argonaut PCF Ltd
("Argonaut") to assist it in realising value from the A$75 million of tax
losses through the potential sale of certain of the company's Victorian assets
which carry those losses.

Argonaut is an Australian based investment banking and corporate advisory firm
focused on the natural resources sector with offices in Perth and Sydney.  It
typically targets corporate clients with market capitalisations between A$30
million and A$5 billion and has advised on, arranged and participated in
excess of A$10 billion of corporate finance transactions over the past
decade.  With Argonaut's market presence in Australia, ECR considers that
this appointment offers a conduit to senior mining executives, mining
companies, institutions and other interested parties.

By way of an indicative guide to investors, current tax rates for companies in
Australia vary between 25 per cent. and 30 per cent, depending on
circumstances, meaning that ECR's tax losses could have a theoretical value to
a prospective buyer in the range of approximately A$18 - 22 million. In
practice, any valuation will be based on several different attributes of any
buyer including its existing profits, type of business, ongoing profit
expectations and its own assessment of how quickly the tax losses could be
used.  Taking these factors into account, the Directors are advised it is
unlikely that any buyer would pay more than half of this theoretical value and
even then, this is still a very early stage and specialised process.  There
can be no guarantee that any offer will be received by ECR.

Background to tax losses

ECR's tax losses are held within Mercator Gold Australia Pty. Ltd ("MGA") and
were incurred in the period since 2006 to date.  Activities undertaken by the
company in this period were predominantly exploration for gold in originally
Western Australia and thereafter Victoria over a series of projects.
Australian rules on transferring tax losses changed in 2015, the main change
being that the "similar" business test replaced the "same" business test.  As
over 80 per cent. of MGA's losses predate 2015, any buyer will need to comply
with the tighter historic rules. It is also likely that some of MGA's assets
may need to be sold as part of any transaction (but it is not expected that
any of ECR's primary assets will be included in any potential transaction).

Nick Tulloch Chairman of ECR commented: "The market for transferring tax
losses is understandably very specialist and relatively small.  However, it
would be an understatement to say that the potential value of tax losses that
we are carrying within MGA could be significant to ECR.

"We have been examining suitable processes for advertising this asset and we
have concluded that this is the right time to extend our market reach.
Argonaut provides a very comprehensive marketing programme, well suited to our
purpose, with the ability to deliver our offering directly to the key decision
makers of small, medium and large companies with operations in Australia.

"Any sale of these tax losses would most likely be realised through a sale of
MGA and so, in anticipation of a transaction, we have already put plans in
place to ensure that our valuable Victorian projects are removed from that
company, although still retained within the Group, ahead of any sale.  The
availability of the tax losses is going to be very personal to any prospective
buyer based on its type of operations so we will ensure we retain flexibility
on the structure to maximise the value."

Depending on the terms that are agreed for any transaction to realise the tax
losses, it is possible, but not guaranteed, that the disposal of MGA may be a
fundamental change of business pursuant to Rule 15 of the AIM Rules for
Companies. This would require, amongst other items, the transaction to be
conditional on the consent of shareholders being given in a general meeting; a
shareholders circular detailing the terms of the transaction and certain other
disclosures as set out in the AIM Rules. Further updates on the way forward
will be provided as conversations progress.

FOR FURTHER INFORMATION, PLEASE CONTACT:

 

 ECR Minerals plc                                                                                                                                                                                                                                           Tel: +44 (0) 1738 317 693
 Nick Tulloch, Chairman

 Andrew Scott, Director

 Email:

 info@ecrminerals.com (mailto:info@ecrminerals.com)
 Website: www.ecrminerals.com
 (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.ecrminerals.com%2F&esheet=51817334&newsitemid=20180605005810&lan=en-US&anchor=www.ecrminerals.com&index=1&md5=820ad49dc1fc2c84a0538453c017bc1b)

 WH Ireland Ltd                                                                                                                                                                                                                                             Tel: +44 (0) 207 220 1666
 Nominated Adviser

 Katy Mitchell / Andrew de Andrade

 Axis Capital Markets Limited                                                                                                                                                                                                                               Tel: +44 (0) 203 026 0320
 Broker
 Ben Tadd/Lewis Jones

 SI Capital Ltd                                                                                                                                                                                                                                             Tel: +44 (0) 1483 413500
 Broker
 Nick Emerson

 Brand Communications                                                                                                                                                                                                                                       Tel: +44 (0) 7976 431608
 Public & Investor Relations
 Alan Green

 

ABOUT ECR MINERALS PLC

ECR Minerals is a mineral exploration and development company. ECR's wholly
owned Australian subsidiary Mercator Gold Australia Pty Ltd ("MGA") has 100%
ownership of the Bailieston and Creswick gold projects in central Victoria,
Australia, has six licence applications outstanding which includes one licence
application lodged in eastern Victoria (Tambo gold project).

 

ECR also owns 100% of an Australian subsidiary LUX Exploration Pty Ltd ("LUX")
which has three approved exploration permits covering 946 km2 over a
relatively unexplored area in Lolworth Range, Queensland, Australia. The
Company has also submitted a license application at Kondaparinga which is
approximately 120km2 in area and located within the Hodgkinson Gold
Province, 80km NW of Mareeba, North Queensland.

 

Following the sale of the Avoca, Moormbool and Timor gold projects in
Victoria, Australia to Fosterville South Exploration Ltd (TSX-V: FSX) and the
subsequent spin-out of the Avoca and Timor projects to Leviathan Gold Ltd
(TSX-V: LVX), MGA has the right to receive up to A$2 million in payments
subject to future resource estimation or production from projects sold to
Fosterville South Exploration Limited.  ECR holds a royalty on the SLM gold
project in La Rioja Province, Argentina which could potentially receive up to
US$2.7 million in aggregate across all licences.

 

MGA also has approximately A$75 million of unutilised tax losses incurred
during previous operations.

 

 

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