ECR Minerals #ECR – Half-year Report

UNAUDITED HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2023 AND UPDATE

LONDON: 30 JUNE 2023 – ECR Minerals plc, the gold exploration and development company, is pleased to announce unaudited interim results for the six months ended 31 March 2023, along with a review of significant developments during and post period.

HIGHLIGHTS

• Although somewhat depressed during the final quarter of 2022, the gold price recovered strongly to within three US cents of the $1800 benchmark at the end of Q1 2023. The strong market enjoyed by producers didn’t result in a read across to junior explorers, and along with its peer group companies, the ECR board has worked hard to conserve cash and husband resources amid challenging markets.

• ECR’s initial exploration campaign at Lolworth in Queensland exceeded expectations. The 2022 sampling campaign returned multiple gold anomalies and occurrences of visible gold in samples (14% visible gold strike rate) plus significant levels of Tantalum and Niobium. Post period end, Technical Director Adam Jones and the field team were back on the ground at Lolworth, and with the recent discovery of key Rare Earth Elements from last year’s sampling, the mineralisation at Lolworth is becoming ever more interesting and diverse. The Board are now of the view that Lolworth could potentially host significant Gold, Niobium, Tantalum and rare earth element accumulations.

• During the period under review, ECR was granted two new tenements at Bailieston (EL006911 and EL006912), bringing the total land package across all three tenements (EL5433, EL006911, EL006912) up to 179 square kilometres. The culmination of the extended drilling campaign there did however deliver a disappointing overall outcome. The Board were keen to see results from a drilling programme at the Blue Moon project (sited within Bailieston license area EL5433), which was designed to test for mineralised continuity of the gold bearing structure. Post period end, the drilling programme was completed, but it was established that both the width and strike of the predicted anomaly was narrower than at first thought. As a result, the rig and team were moved to Creswick.

Following a trip to ECR’s Creswick project earlier in 2022, the Directors decided to re-assay selected diamond drill core from the Creswick diamond drilling programme completed in 2021. Results included 0.7m @ 47.75 g/t Au from 147m in hole CSD001 and 1.1m @ 6.13 g/t Au from 98m in hole CJD002 (see announcement dated 19 October 2022). The duplicate samples demonstrated the high variability of coarse gold present at Creswick across licences EL006907, EL006184 and new licence area EL006713. Subsequently, a campaign was planned around and adjacent to the 2019 RC drilling campaign. Further soil geochemistry work identified a potential new parallel gold system within the Dimocks Main Shale (DMS). Along with new prospects Davey Road and Blue Gum South, there were strong indications that gold mineralisation originated from the North end of a line of historical gold workings. Work was also undertaken with over 600 soil samples from the new Mills Reef system.

• In October 2022, ECR announced the conditional acquisition of Placer Gold Pty Limited (Placer), the beneficial holder of three granted mining tenements (EPM 27518, EPM 25855 and EPM 19437) known as the Hurricane Project and located west of Cairns in the Hodgkinson Province, NE Queensland. Hurricane was previously the subject of field work and surface sampling with undrilled gold and antimony discoveries. The Board believes the extent of the mineralisation warrants drilling for potential resources. As set out in the announcement dated 27 October 2022, ECR will pay a A$200,000 (approximately £144k) option fee to be satisfied by a contribution to costs, the implementation of a work program over the assets and a balancing cash payment to the shareholders of Placer. Once the option fee has been fully satisfied ECR can then exercise the option at any time prior to 30 September 2023.

• During the period under review, ECR increased its shareholding in Cordillera Tiger Gold Resources, Inc (“Cordillera”), owner of Exploration License EP-006 at the Danglay gold project in the north of the Philippines, from 70% to 90%. The increase was due to the conversation of an intercompany loan of 28,354,525 pesos (approx. £420,800) owed by Cordillera to ECR in relation to certain fees and explorations expenses. The loan was satisfied by the issue of 6,666,667 new ordinary shares to ECR, following which ECR now holds 8,999,996 Ordinary Shares in Cordillera representing 90% of its issued share capital.

• In February 2023, ECR completed the sale of its Bailieston property at 127 Nagambie-Rushworth Road for a sale price of A$670,000. The funds have been deployed into ECR’s ongoing 2023 exploration programme.

• During the period under review, the purchase of ECR’s second drill rig was completed (see announcement dated 11 October 2022). Following a review of the Company’s likely requirements for this rig in 2023 and 2024, the Company is reviewing options to monetise the value of the rig.
• Group comprehensive expenses of £684,492 are reported for the six months ended 31 March 2023 (H1 2022: £324,333) and net assets of £6,081,330 at 31 March 2023 (H1 2022: £7,536,210).
• Despite some lingering effects from the COVID-19 pandemic, felt primarily through extended delays in receiving lab assay results, the Board is very excited by the multiple near term opportunities across the asset portfolio.

FINANCIAL RESULTS

ECR reports a pre tax loss for the six months ended 31 March 2023 of £724,566 (H1 2022: loss of £552,202).

The Group’s total assets were £6,177,800 at 31 March 2023 (H1 2022: £7,674,007). The decrease in total assets has occurred largely due to the impairment of Danglay Gold project.

Cash and cash equivalents at 31 March 2023 was £319k (H1 2022: £1,204,289)

REVIEW OF PRINCIPAL DEVELOPMENTS DURING THE PERIOD AND SUBSEQUENTLY

Led by our CEO Andrew Haythorpe. ECR has taken some key steps during the period in question, despite continued challenging market conditions for junior explorers. Your Board remains focussed on working to improve the efficiency of our exploration efforts and subsequent target delineation, and on a more general level the efficient management of all our assets and careful husbanding of cash resources.

Victoria

At Bailieston the Company was granted two new tenements (EL006911 and EL006912), bringing the total land package across all three tenements (EL5433, EL006911, EL006912) up to 179 square kilometres. The culmination of the extended drilling campaign there did however deliver a disappointing overall outcome. The Board were keen to see results from a drilling programme at the Blue Moon project (sited within Bailieston license area EL5433), which was designed to test for mineralised continuity of the gold bearing structure. Post period end, the drilling programme was completed, but it was established that both the width and strike of the predicted anomaly was narrower than at first thought. As a result, the rig and team were moved to Creswick.

Following a trip to ECR’s Creswick project earlier in 2022, CEO Andrew Haythorpe and Technical Director Adam Jones decided to re-assay selected diamond drill core from the Creswick diamond drilling program completed in 2021. Results included 0.7m @ 47.75 g/t Au from 147m in hole CSD001 and 1.1m @ 6.13 g/t Au from 98m in hole CJD002 (see announcement dated 19 October 2022 for the full details of these results). The duplicate samples proved the high variability of coarse gold present at Creswick across licences EL006907, EL006184 and new license area EL006713. Subsequently, a campaign was designed to drill at least 10 short holes into the DMS Slades Reef around and adjacent to the 2019 RC drilling campaign. Further soil geochemistry work was undertaken, which among other things identified a potential new parallel gold system within the Dimocks Main Shale (DMS). Along with new prospects identified at Davey Road and at Blue Gum South, there were strong indications that gold mineralisation originated from the North end of a line of historical gold workings. Work was also undertaken at new tenement EL006713, which yielded over 600 soil samples from the new Mills Reef system.

In February 2023, ECR completed the sale of its Bailieston property at 127 Nagambie-Rushworth Road for a sale price of A$670,000. The funds have been deployed into ECR’s ongoing 2023 exploration programme.

Queensland

The Company’s Lolworth campaign exceeded expectations across all metrics. The 2022 sampling campaign returned multiple gold anomalies and occurrences of visible gold in samples (14% visible gold strike rate) plus significant levels of Tantalum and Niobium. Post period end, Technical Director Adam Jones and the field team are back on the ground at Lolworth, and with the recent discovery of key Rare Earth Elements (“REE”) from last year’s sampling, the mineralisation at Lolworth is becoming ever more valuable and diverse. The Board are now of the view that Lolworth could be host to significant Gold, Niobium, Tantalum and REE discoveries.

On 27 October 2022, ECR announced the conditional acquisition of Placer Gold Pty Limited (Placer), the beneficial holder of three granted mining tenements (EPM 27518, EPM 25855 and EPM 19437) known as the Hurricane Project and located west of Cairns in the Hodgkinson Province, NE Queensland. Hurricane was previously the subject of intensive field work and sampling and is considered to be a late-stage exploration project with three tenements all highly prospective for gold and antimony. While Hurricane doesn’t currently have a recognised JORC compliant resource estimate, the Board believes the physical extent of the identified mineralisation coupled with rock chip sampling results supports additional exploration and study work. To secure the option ECR will pay a A$200,000 (approximately £144k) option fee to be satisfied by a contribution to costs, the implementation of a work programme over the assets and a balancing cash payment to the shareholders of Placer. Once the option fee has been fully satisfied ECR can then exercise the option at any time prior to 30 September 2023. Further updates on this, and any decision on the exercise of the option, will be provided in due course as appropriate.

Philippines

ECR increased its shareholding in Cordillera Tiger Gold Resources, Inc (“Cordillera”), owner of Exploration License EP-006 at the Danglay gold project in the north of the Philippines, from 70% to 90%. The increase was due to the conversation of an intercompany loan of 28,354,525 pesos (approx. £420,800) owed by Cordillera to ECR in relation to certain fees and explorations expenses. The loan was satisfied by the issue of 6,666,667 new ordinary shares in Cordillera, following which ECR now holds 8,999,996 Ordinary Shares in Cordillera representing 90% of its issued share capital.

Outlook

Along with many of its peer group junior explorers, the ECR board has worked hard to conserve cash and husband resources amid challenging markets. Whilst working capital remains constrained, the board are progressing with a number of initiatives to supplement the cash position of the Company – including through the proposed disposal of non-key assets and monetisation of the Company’s drill rigs through potential leasing arrangements. In addition, as results from exploration and drilling work continue to come in across our projects in Victoria and Queensland, the Board and exploration team are working hard to improve efficiencies both in the field and on a general operational and logistical basis. Post period end the results from Victoria have been generally inconsistent, and while some great unexplored potential still exists at both Creswick and Bailieston (and Tambo), in the interests of finding the best possible value for money from the Company’s assets, the Board have decided to focus resource on our Queensland assets in the near term. Sampling results from Lolworth have exceeded expectations on every metric to date, so working smarter and harder we will prioritise efforts there in the near term. The Directors believe that the Hurricane project too offers exceptional potential, and with the Blue Mountain project acquisition announced just post period end, also in Queensland, ECR intends to maximise efficiencies and set up a Queensland operational hub to ensure funds are deployed across all three projects as quickly and efficiently as possible.

In summary, the Board have every expectation of delivering a Company changing discovery during the 2023 exploration campaign, and we look forward to sharing developments with you as the story unfolds.

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