The broker noted that ECR (ECR ) could potentially be producing from three of its Australian mines by the end of 2026, or early 2027.

“Presently the company has three near term projects all in Queensland which could commence commercial production by end calendar 2026/early 2027,” the broker wrote in a detailed note.

“These are Raglan, Maddens Underground and Blue Mountain. Of these Raglan and Maddens are arguably the most plausible start-ups given the existence of integrated processing facilities and mining permits. Blue Mountain production is largely contingent on the granting of a mining permit. Even modest production yields significant revenues for a junior at current prices: While ECR has given an indication of production for Raglan of 231 ounces per year, the potential of Maddens and Blue Mountain is unclear at this stage.” 

That being said, though, the broker is fairly optimistic that production will increases significantly in 2027. 

“During 2027, however, production could trend significantly higher, particularly if Blue Mountain development gathers pace and Salt Bush comes on-stream as expected. It needs to be remembered that even modest gold production of an annual 500 ounces per year yields over U$2 million in revenues at current prices of more than US$4,000/oz.”

As far as valuation goes, Allenby uses a sum-of-the-parts methodology. 

“The parts are a combination of the projects plus the tax loss credit relating to the Australian legal entity ECR Minerals (Australia) Pty Ltd, and the royalty entitlement on the earlier disposal of the Avoca and Timor licences in Victoria,” the broker said. 

“This time the projects include those associated with the recent Paleogold acquisition. In the case of the two most advanced projects in Victoria we have used the Creswick heads of terms joint-venture agreement with Exertis Pty Ltd as a base. This calls for Exertis undertaking A$3.0 million of exploration spending for an 80% interest. The implied valuation of A$3.75 million for 100% leaves ECR’s residual interest of 20% valued at A$750,000. For the Bailieston project, where ECR has a 100% interest, we have used A$3.75 million as the valuation in line with Creswick on a 100% basis. For the early-stage Tambo project in Victoria, we have assigned a valuation of A$500,000.”

For the Queensland projects the broker sticks with the valuations used in its previous note in February. 

“For the Maddens group of mines in northern Queensland our valuation methodology is similar to Raglan and Blue Mountain. We have assumed a resource across the seven mining leases of 150,000 ounces of gold gross, with the bulk at this stage relating to the hard rock underground mine. This has been adjusted for ECR’s 50% ownership interest, and risked by 50% to allow for the high level of uncertainty surrounding the size of the Maddens resource base. After applying a US$60 per ounce valuation coefficient the absolute net valuation for the resources is US$2.25 million. In the case of the processing facilities and related infrastructure, including the adit and tailings facilities, at the underground mine we have heroically assigned a valuation of US$4.50 million.”

Lolworth is valued at US$3 million, the Salt Bush interest at US$1.00 million, and the Tuckanara interest at US$1.5 million. 

 

View from Vox

 

With the A$4.5 million tax losses thrown in for good measure, there’s beginning to be a lot of value to be had in ECR, from a fair variety of projects. The key now will be to get the production up to respectable levels. The company has always said that the alluvial projects are really only designed to provide useful cashflow to cover expenses. Maddens, though, could be very significant when it comes on stream, as Allenby indicates. Even with the price of gold yo-yoing around there’s a lot here to be optimistic about.