Tag Archives: Hallgarten & Company

ECR Minerals investment case keeps growing as gold continues to shine in Australia

by Harry Dacres-Dixon

• Gold prices on the up
• Australia breaks production record
• ECR Minerals promising portfolio
• New Non-Exec Director to strengthen ECR board
• A quality portfolio in a first world operating environment

Gold hits March high

Gold has extended its price gains for March, hitting $1,322.48(XAU/USD) at the end of Monday, it’s highest price since February 28th. This growth reflects safe haven demand as investors hedge against worsening global market conditions as a result of creeping concerns over an economic recession in the US, the continued contraction of the German manufacturing sector and the ongoing Brexit saga.

Image courtesy of BP Trends

Gold started 2019 strongly, rising above $1,340 on the 19th of February, before prices temporarily crashed down to $1,292 on the 1st of March. The yellow metal has since gone on to shine again, last week posting its third consecutive weekly gain. No real surprise for some though: these returns are simply in line with numerous bullish forecasts for 2019.

Asset management firm Altana Wealth wrote in a note to clients; “We are entering a period of high uncertainty for fundamentals and risk assets and if this were to heighten further, gold could break out substantially, helped by safe-haven flows, lower yields and expectations of a possible return to quantitative easing,” (Reuters).

INTL FCStone analyst wrote; “The dollar has been a bit weaker along with equities. A lot of macro numbers we have been getting have been deteriorating sharply. Central banks, which are already dovish, will be more dovish, which is good for gold,” (Reuters).

Meanwhile Business Insider revealed that central banks have bought more gold than at any time since the end of World War II, as the commodity becomes an increasingly valuable hedge against growing global instability.

2019 set be a record breaker for Australian gold production?

Australia’s gold production hit a record high of 317 tonnes in 2018, according to gold consultancy firm Surbiton Associates who valued the production at A$17.3 billion at the average spot price.

The previous record of 314.5t was set back in 1997. But with 2019 set to be another big year for Australian production, we may not be waiting long for a new record number.

While global gold production in 2019 is expected to be stable, outputs in Australia-Oceania, Europe and Africa are expected to rise.

New Australian production in 2019 is expected to come from a number of projects, including Gold Fields and Gold Road Resources new 300,000oz per annum Gruyere mine in Western Australia and Kirkland Lake Gold’s Fosterville mine in Victoria, which is en-route to a record year of around 600,000oz of gold production for 2019 (Mining Journal);

Australian gold miners have also benefited from the twin effect of rising gold prices and falling value of the Australian dollar. Evolution Mining, Northern Star Resources and Newcrest Mining have also seen their share prices pushed higher (Forbes).

Australia’s biggest gold producer, Newcrest Mining, revealed last month that it had raised its ‘underlying profit in the six months to December 31st by 104% to $168 million ($A237 million) thanks to a 6% increase in gold production and a 13% reduction in costs’ (Forbes).

ECR Minerals quality portfolio

Another company making moves in Australia is AIM listed precious metals exploration and development company ECR Minerals (AIM:ECR).

Focusing their attention on the Central Victorian Goldfields and the Yilgarn Craton in Western Australia, ECR have amassed a growing portfolio, which has not gone unnoticed by the mining industry and investing community, particularly following the appointment this month of Australian mining industry veteran Sam Garrett to the board.

Following oversubscribed fundraising initiatives in 2018, coupled with expected R&D rebates from the Australian government, cash balances are strong and see ECR fully funded through to Q2 2020.

Central Victoria Projects

ECR currently holds five highly prospective projects located geologically within the major orogenic Lachlan Fold Belt in the historically prolific Central Victoria region.

These are Avoca (EL5387) and Bailieston (EL5433) held since 2016; Timor (EL006278) and Moormbool (EL006280) since 2017; and Creswick (EL006184) since early 2018. ECR also applied for three additional tenements around Bailieston and one near Creswick at the end of 2018.

ECR’s Victoria projects are sited close to mines and projects owned by some of the largest gold producers in the world. Fosterville, Australia’s fifth largest gold producer is located just 50km to the west of the Bailieston project, while Newmont Mining has applied for a mining license on ground adjacent to ECR’s Bailieston project.

Drilling Announcements

In Q1 2019, ECR currently has two ongoing drilling campaigns across three prospects in the Victoria region.

The company announced on the 28th of February that a combined 2,461 metres of reverse circulation drilling had been completed in less than a month at the Creswick and Bailieston Blue Moon prospect.

Subsequently high grade gold assay results were reported from the Blue Moon prospect at the Bailieston gold project. Significant intersections reported include 2 metres @ 17.87 g/t gold from 57 metres down hole in BBM007 within a zone of 15 metres at 3.81 g/t gold from 51 metres.

ECR CEO Craig Brown commented: “These results quantify the field geologists’ assessment of visible gold at Blue Moon during drilling of BBM007 and provide great encouragement for the Company and the Bailieston gold project

To achieve an intersection of 17.87g/t gold over 2 metres is notable. But also of significance is that this was part of an intersection of 15 metres at 3.81g/t gold from relatively shallow depth”

ECR also announced on the 4th March that an additional 250 meters of rotary air blast drilling had been completed at the Company’s Black Cat prospect in the Bailieston project area. The 10 target holes were drilled immediately south of territory included in the Newmont Mining license application.

ECR expands Windidda gold project, WA

Despite the high profile nature of their Victoria projects, ECR have remained both ambitious and strategic in their exploration plans. The company announced at the beginning of January that it had applied for 9 new exploration licences covering approximately 1600 km2 in the Yilgarn region, Western Australia.

At the time, Craig Brown said he expected the license applications to be approved within the next three to six months.

The Yilgarn Craton geology is extensively documented. The region is known to host around 30% of the world’s known gold reserves and produces two-thirds of all gold mined in Australia. Unsurprisingly the area attracts more than half of Australia’s minerals exploration expenditure.

As such, ECR have been very lucky to pick up such prospective potential undercover greenstone acreage, in one of the world’s most productive gold provinces.

Sam Garrett ECR’s new Non-Exec Director commented; “This is one of the great provinces of the world and as a consequence the ground position is pretty much flooded, it’s almost impossible to acquire ground.”

New Non-Exec Director to strengthen ECR board

As already stated, ECR announced the appointment of Sam Garrett as the new Non-Executive Director at the end of February, a move that brings substantial credibility to ECR and significantly strengthens the team led by Craig Brown.

With 30 years of exploration management, project assessment and operational experience working for large multi-national and junior mining and exploration companies in ten countries, Mr Garrett is an excellent addition.

Craig Brown commented:“Sam brings extensive geological experience onto the board, not just in Australia but also in South America and the Philippines, where the Company has existing business interests.

The timing of Sam’s appointment is key, as we look to rapidly advance our existing interests and continue to identify new strategic acquisition opportunities.”

A quality portfolio in a first world operating environment

With the yellow metal firmly back in the spotlight and likely to stay put, going digging for gold looks like a no-brainer option for investors, with Australia probably offering the richest cross section of opportunities at this time. With a highly educated workforce, the latest technology, fantastic infrastructure and a pro mining government, Australia is the premier destination for doing business when it comes to gold.

If you’re looking for a gold small cap with experienced management, strong finances and sites that have the potential to deliver big then ECR looks a great buy. Their exciting Victoria projects have already began to demonstrate their huge potential, whilst additional sites in an in demand Western Australia offer a massive opportunity and great potential upside for the company.

‘The company is well resourced and planned exploration only makes a relatively small dent in funds. This implies little to no dilution in the short term. Therefore we have rated ECR Minerals as a Long position with a 12-month target price of GBP 2.5 pence’ (Hallgarten & Company).

References

1. FXStreet– Gold Price Forecast: Why it is rising on US recession fears and the big levels to watch
2. Bullion Vault– Gold Prices Start 4th Week of Gains as US Yield Curve Inversion Signals Recession
3. Reuters– PRECIOUS-Gold hits 3-week high as global growth fears lift safe-haven appeal
4. Bloomberg– Industry Insiders Bullish on Gold, Forecast of $1585
5. Business Insider– Central banks are buying the most gold since the end of World War II — here’s why
6. Mining Journal– New high for Australian gold output
7. Kitco– Global Gold Mining Expected To Remain Stable In 2019
8. Forbes– Rising Gold And Falling Currency Delivers Strong Profits For Australian Gold Miners
9. Brand Communication– Gold Drilling Update – Creswick & Blue Moon Australia
10. Brand Communications – High Grade Gold Assays from Drilling at Blue Moon Prospect Victoria, Australia
11. Brand Communications– ECR Minerals plc (ECR) Gold Drilling Update – Bailieston Black Cat Prospect Victoria Australia
12. Brand Communications– Central Victoria gold rush revival continues as ECR Minerals applies for licensing at an additional four sites following Newmont’s application a few weeks ago
13. Brand Communications– Windidda gold project to further expand ECR Minerals’ #ECR Australian gold portfolio
14. Brand Communications–ECR Minerals #ECR – Experienced Geologist Sam Garrett joins ECR Board as Non-Exec Director
15. Hallgarten & Company– Initiation of Coverage Research Report for ECR Minerals