REG-ECR Minerals plc Annual Financial Report <Origin Href="QuoteRef">ECRE.L</Origin> - Part 1

ECR MineralsAnnouncement

05/03/2015 12:22

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LONDON--(Business Wire)--


ECR MINERALS plc

("ECR Minerals", "ECR" or the "Company") 

AIM: ECR 

US OTC: MTGDY 

AUDITED FINANCIAL STATEMENTS FOR YEAR ENDED 30 SEPTEMBER 2014

AND NOTICE OF ANNUAL GENERAL MEETING

LONDON: 5 MARCH 2015 - ECR Minerals plc is pleased to announce its audited
financial statements for the year ended 30 September 2014. The information
presented below has been extracted from the Company`s Annual Report and Accounts
2014. 

Copies of the Annual Report and Accounts 2014 together with a notice of annual
general meeting will be posted to shareholders on 6 March 2015 and will be
available from that date on the Company`s website www.ecrminerals.com and from
the Company`s registered office at 2nd Floor, Peek House, 20 Eastcheap, London
EC3M 1EB. The text of the notice of annual general meeting is provided below. 

FOR FURTHER INFORMATION PLEASE CONTACT: 
 
 ECR Minerals plc                              Tel: +44 (0)20 7929 1010    
 Paul Johnson, Non-Executive Chairman                                      
 Stephen Clayson, Director & CEO                                           
 Richard (Dick) Watts, Technical Director                                  
                                                                           
 Email: info@ecrminerals.com                                               
 Website: www.ecrminerals.com                                              
                                                                           
 Cairn Financial Advisers LLP                  Tel: +44 (0)207 148 7900    
 Nominated Adviser                                                         
 Jo Turner/Emma Earl                                                       
                                                                           
 Daniel Stewart & Company plc                  Tel: +44 (0)20 7776 6550    
 Broker                                                                    
 Colin Rowbury                                                             
 
 
The directors of ECR Minerals plc (the "Directors" or the "Board") present their
report and audited financial statements for the year ended 30 September 2014 for
ECR Minerals plc

("ECR", the "Company or the "Parent Company") and on a consolidated basis (the
"Group")

CHAIRMAN`S STATEMENT

In my statement last year I talked about the transition made by ECR from a phase
of restructuring and refinancing to active operations. During the past year the
Group has indeed been operationally focused and we have made much progress on
the ground, most notably at our Itogon gold project in the Philippines, but also
in respect of our evaluation of the concept of small scale gold production at
the SLM project in Argentina. 

As Chairman of the Company I take the time to discuss our business and how it is
perceived with our investors and market participants generally. I note the
frustration in some quarters with what may seem to be slower progress than
anticipated. 

Whilst we would have preferred to have undertaken even more operational
activity, that desire for activity and progress on the ground has to be tempered
by the availability of funding and as outlined by Stephen in his report, the
environment for listed companies in the mineral sector is perniciously poor and
has been increasingly so over recent years. 

In addition, the practicalities of thorough exploration mean that time needs to
be taken to carefully plan and execute work programmes. The price of such
diligence is time taken in delivery, but the outcome should be a more cost
effective operation. I believe this approach builds a stronger and more
investable company going forward. 

The ECR organisation is quite a small one as far as the number of individuals
comprising the Board, field team and administrative staff is concerned. As a
result all team members bear a great degree of responsibility. I would like to
thank all members of the team for their work during the last year. In
exploration companies, very often field staff are the unsung heroes. During my
visit to the Philippines in October 2014, I observed the professionalism and
capability of the team on the ground there. From a Board perspective we are
fortunate to have Stephen Clayson as CEO. Stephen manages the vast array of plc
matters and field operations extremely well and is key to the successful
continuation of ECR`s existing projects and the negotiation of new
opportunities. Dick Watts as Technical Director brings not only a great deal of
knowledge but also a tough, common sense approach to decision making; these are
qualities which are much needed but oft lacking in small cap mineral companies. 

ECR is an ambitious company, and whilst the Group is already active in the
Philippines and Argentina we are seeking new opportunities that fit the project
selection criteria we have discussed before, and in this regard we are working
intensively to review a small number of projects and interests. Regrettably, for
commercial and regulatory reasons, the specifics of the work we are undertaking
cannot be disclosed unless a transaction is finalised. That makes it impossible
for investors to see the full extent of the work the team are undertaking. I
would however like to reassure investors that we will only engage with
opportunities that could significantly enhance the ECR investment proposition,
on terms that are not unreasonable given the Company`s financial capabilities
and available management time. 

As a contrarian investor in the mineral sector I am excited by the opportunities
a deep bear phase brings. I appreciate the support and commitment of private
investors to this sector of the market in general and to ECR Minerals in
particular. I remain available to investors at any time and can be reached via
info@ecrminerals.com. 

Paul Johnson 

Non-Executive Chairman 

4 March 2015 

CHIEF EXECUTIVE OFFICER`S REPORT

Since my last report to shareholders, published on 27 June 2014, ECR`s principal
focus has remained on exploration at the Itogon and SLM gold projects in the
Philippines and Argentina, respectively. Significant effort has also been
devoted to the review of a small number of potential new opportunities. The work
involved has been varied and often fascinating, and I would like to thank my
fellow Directors, Paul Johnson and Richard (Dick) Watts, as well as our staff
and consultants, for their valuable contributions to these activities. 

I continue to look to ECR`s future with optimism, notwithstanding the further
deterioration which has occurred in financial market conditions for companies in
the mineral sector. Perhaps the best bellwether of such conditions globally is
found in the level of the TSX Venture Exchange Composite Index, which has
declined approximately 30% since the beginning of September 2014, and is now at
little over half the level at which it began 2013, and less than a third of its
2011 high. 

This state of affairs is reflected in the valuation of virtually every company
in the mineral sector, wherever its shares may be traded, and is ultimately
dictated by the prices of mined commodities and expectations as to the most
likely direction of those prices. These prices and expectations tend to be the
single greatest influence on the valuation of both producing mines and
exploration or development stage projects. 

It is possible that conditions will worsen further, but it is also possible that
a strong recovery is just around the corner. Either way, the world continues to
demand mined commodities, and opportunities to create value in the mineral
sector will remain for companies which take a disciplined and prudent approach
to their activities. As such a company, it is the business of ECR to seek out
and develop these opportunities. 

It is not generally expected that mineral exploration and development companies
will generate corporate profits. The classic exit from an investment in an
exploration company is via a takeover, where a larger company acquires the
explorer lock, stock and barrel in order to integrate the principal project of
the latter into the wider business of the former. Projects can also be sold on a
standalone basis, or may be developed all the way to production by the
exploration company, which then graduates to the status of mining company. Much
depends on the attributes of the project in question, but nothing is possible
without exploration dollars first being spent on the ground, and accordingly,
ECR`s main focus is on advancing carefully selected exploration projects, with
due regard to the innate risks but also with an eye to the significant rewards
which may accompany exploration success. 

ITOGON PROJECT, PHILIPPINES 

The centre of ECR`s activities remains the Itogon gold project in the northern
Philippines. ECR is the operator of Itogon and has the right to earn a 50%
interest in the project. The Company, in conjunction with its drilling
contractor, is currently carrying out a 990m diamond drilling programme at
Itogon. 

The drilling programme has been designed in view of the results of reverse
circulation (RC) drilling completed at Itogon in April 2014, and with the
benefit of extensive surface and underground mapping and sampling which has
taken place since then. The current drilling is primarily intended to provide
information as to the orientation of the interpreted mineralised structures, the
extent of near surface supergene enriched zones, and the continuity of certain
zones of mineralisation intercepted by the RC drill holes. 

SLM PROJECT, ARGENTINA 

The SLM project is located in La Rioja Province, Argentina and is 100% held by
ECR`s wholly owned subsidiary Ochre Mining SA ("Ochre"). Following completion of
the detailed geological mapping exercise carried out in the latter part of 2014,
it is planned that bulk sampling will commence at the Maestro Agüero prospect in
March 2015. The Directors consider Maestro Agüero to be the most promising
prospect at SLM on the basis of exploration results to date. 

Ochre`s channel sampling at Maestro Agüero has demonstrated the presence of
moderate to high gold grades in narrow mesothermal quartz veins over a strike
length of up to approximately 300m. However, it is apparent that gold grades
change abruptly along strike, which is indicative of a nugget gold effect. In
order to obtain a more representative indication of grade, it is planned that a
bulk sample will be taken at Maestro Agüero in March 2015. Collection of the
bulk sample will also provide additional information on the morphology of the
veins. 

FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014 

For the year to 30 September 2014 the Group recorded a total comprehensive
expense attributable to shareholders of the Company of £1,858,040, compared with
£7,528,366 for the year to 30 September 2013. As with last year and indeed the
year before that, much of this year`s expense occurred as a result of changes in
the estimated value of the Company`s interest in THEMAC Resources Group Ltd
("THEMAC"), reflected in the line items "impairment of available for sale
assets" and "loss on revaluation of financial assets at fair value through
profit or loss". Other major contributors were the loss on disposal of shares in
THEMAC, referred to as "loss on disposal of available for sale financial asset",
and of course the costs of operating the Company and carrying out exploration,
comprised in the line item "other administrative expenses". 

The Group`s net assets as at 30 September 2014 were £4,609,044, in comparison
with £6,269,458 at 30 September 2013. This decrease in net assets is mainly due
to a fall in the estimated value of the Company`s interest in THEMAC, comprised
in the line items "available for sale financial assets" and "other financial
assets", but also due to the inclusion of "interest bearing borrowings", which,
it should be noted, represent a convertible loan received under a facility with
YA Global Master SPV Ltd. This loan is expected to be repaid in full via
conversions of principal and interest into new ordinary shares of the Company.
ECR is also entitled to prepay the loan in cash. The principal terms of the
convertible loan facility were announced on 3 September 2014. 

As the net assets of the Company, at £4,918,670 are slightly less than half its
called-up share capital, the Directors are compelled by section 656 of the
Companies Act 2006 to call a general meeting to consider whether any, and if so
what, steps should be taken to deal with the situation. Relevant here is the
fact that for most of its existence since incorporation in 2004, ECR has
operated as a different business with a different board of directors. 

Initially this was as Mercator Gold plc, under which name the Company funded
development of a gold mine in Australia that commenced production in 2007, only
to fall into administration in 2008. The operating company of the Group in
Australia, Mercator Gold Australia Pty Ltd ("MGA") was released from
administration in late 2014. The assets of MGA were sold several years ago for
the benefit of MGA`s creditors. These assets had been obtained primarily using
the proceeds of loans from the Company, the total amount of which is considered
unlikely to be recovered. The funding used by the Company in order to make such
loans was raised via the issuance of shares and convertible loan notes of the
Company from 2004-2008. This issuance of shares is today reflected in the
Company`s share capital, but the corresponding assets are much reduced. 

A similar process was repeated by the Company between 2009 and 2010, again under
substantially the same board of directors as had presided over the Meekatharra
investments, with respect to the Copper Flat project in New Mexico, USA. After
substantial investment by the Company, again financed by the issuance of shares,
an option over the Copper Flat project was sold to THEMAC, in exchange for a
holding of common shares and common share purchase warrants of THEMAC. While the
Group recorded a large profit in the year ended 30 September 2011 as a result of
this transaction, the value of the shares and warrants fell drastically
thereafter. Once again, the shares issued by the Company to fund this investment
continue to be reflected in the Company`s share capital, but the corresponding
assets are much reduced. In the final reckoning, the Company`s investments in
the Meekatharra and Copper Flat projects were not successful. The same can be
said of other, more minor investments made under the same board of directors. 

However, the Board of the Company has been completely reconstituted since the
time those investments were initiated. The Directors are strongly of the opinion
that the international mineral exploration and development sector, although it
is inherently high risk, can offer attractive investments for the Company, even
in light of the present day financial constraints discussed earlier in this
report. Moreover, the Directors believe that the Board as presently constituted
is well suited to manage the process of identifying and making such investments
successfully. Accordingly, the Company continues to invest in the Itogon and SLM
projects, and potential new opportunities continue to be evaluated. On this
basis, the Directors do not consider that any steps should be taken in respect
of the level of the Company`s net assets in relation to its share capital.
Nevertheless, this year`s annual general meeting, which will be held on 31 March
2015, will serve as a venue for the consideration of this matter, in accordance
with the Companies Act 2006. 

MERCATOR GOLD AUSTRALIA 

In December 2014, MGA was released from external administration, to which it had
been subject, as explained above, in 2008. MGA is a wholly owned subsidiary of
the Company. As at 30 June 2014, MGA`s accumulated tax losses are estimated to
total A$80 million. This deferred tax asset gives MGA its value. The Company has
been advised that under certain circumstances, its shares in MGA may be sold
without invalidating MGA`s tax losses. Given the absence within the Group of any
income producing assets located in Australia, the high cost base of that
country, and the highly competitive nature of its mineral exploration and
development industry, it is the Company`s intent to sell its shares in MGA in
due course. Finding a buyer for these shares is, though, a process which is
likely to take some time. Hence, MGA continues to be held as a non-current
asset. 

Stephen Clayson 

Director & Chief Executive Officer 

4 March 2015 

Consolidated Income Statement

For the year ended 30 September 2014

ECR Minerals plc company no. 05079979 
 
                                                                                              Year ended           Year ended           
                                                                                              30 September 2014    30 September 2013    
                                                                                      Note    £                    £                    
                                                                                                                                        
                                                                                                                                        
 Continuing operations                                                                                                                  
 Other administrative expenses                                                                (824,639)            (980,527)            
 Impairment of available for sale financial assets                                            -                    (26,216)             
 Impairment of available for sale assets                                              9       (600,645)            (2,317,004)          
 Currency exchange differences                                                                9,609                (2,811)              
 Impairment of other current assets                                                           -                    (38,282)             
 Total administrative expenses                                                                (1,415,675)          (3,364,840)