REG - ECR Minerals PLC - Exclusivity agreement relating to non-core assets

ECR MineralsAnnouncement

01/11/2024 07:00

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RNS Number : 4855K  ECR Minerals PLC  01 November 2024

1 November 2024

ECR MINERALS PLC

 

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

 

Exclusivity agreement signed for the potential sale of non-core assets in
Victoria, including A$75 million of tax losses

 

ECR Minerals plc (LON: ECR), the exploration and development company focused
on gold in Australia, is pleased to announce that it has entered into an
exclusivity agreement (the "Exclusivity Agreement") with one of the companies
that previously signed a non-disclosure agreement for the potential sale of
ECR's subsidiary, Mercator Gold Australia Pty Ltd ("MGA"), a non-core asset
within the Company's portfolio in Victoria.  The potential sale would include
the Company's circa A$75 million of tax losses. This follows the Company's
announcement of 2 July 2024 and subsequent announcements in relation to the
potential sale of the Company's tax losses.

 

A deposit has been received as part of the terms and conditions of the
Exclusivity Agreement. The value of the potential sale, as well as the
structure of the sale, will be determined in forthcoming negotiations but
discussions so far indicate that the potential sale, if realised, would be for
a material cash consideration.

 

Notwithstanding this positive progress, discussions remain at an early-stage
and, save for exclusivity provisions, other aspects of the Exclusivity
Agreement are not binding and there can be no certainty that final binding
terms will be agreed, nor as to the timings or final terms or quantum of
consideration for the potential disposal of MGA.

 

Under the terms of the Exclusivity Agreement, the interested party has until
the end of 28 November 2024 to negotiate the terms of the potential
acquisition of MGA. The potential sale may therefore necessitate a
restructuring of MGA such that it comprises only non-core assets.

 

Depending on the final terms that are agreed for any transaction to realise
the tax losses, as well as the structure of the transaction, it is possible,
but not guaranteed, that the potential disposal of MGA may be deemed a
fundamental change of business pursuant to Rule 15 of the AIM Rules for
Companies. If applicable, 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 matters are progressed.

 

Background to the tax losses

As announced on 2 July 2024, ECR's circa A$75 million of tax losses are held
within 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.

 

Mike Whitlow, ECR's Managing Director said: "This potential transaction, if
concluded, represents a very significant step for ECR having the potential to
deliver significant funds to the Company.  It aligns with our strategic focus
on our core exploration activities and supports our objective of delivering
long-term value to our shareholders. We look forward to working closely with
them through the remainder of this process."

 

FOR FURTHER INFORMATION, PLEASE CONTACT:

 

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

 Andrew Scott, Director

 Email:

 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)

 Allenby Capital Limited                                                                                                                                                                                                                                              Tel: +44 (0) 3328 5656
 Nominated Adviser                                                                                                                                                                                                                                                    info@allenbycapital.com (mailto:info@allenbycapital.com)

 Nick Naylor / Alex Brearley / Vivek Bhardwaj

 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 also holds a royalty on the SLM
gold project in La Rioja Province, Argentina.

 

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

 

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