ECR Minerals (ECR ) has completed its acquisition of Paleogold Limited. 

Following completion, ECR has acquired interests in gold projects across Queensland, Western Australia and South Australia.

The acquisition includes 50% of Lucky Strike Mining Ventures, which holds the hardrock Maddens Flat group of mines in North Queensland, and 20% of the Salt Bush project in South Australia. 

The acquisition has been funded by the issue of up to 621 million shares, A$3.86 million in convertible loan notes, warrants, and an initial cash consideration. 

Additional deferred consideration has been structured so that it matches the timing of the expected production at the Maddens underground mine.

As part of the exercise of Paleogold's option, ECR has invested A$1 million to extend the Maddens underground mine decline another 120 metres to open up the next level. Based on historical grades produced and on its discussions with Paleogold, it’s believed that the next level has the potential to generate around 2,500 ounces of gold. 

At Saltbush, ECR is committing A$200,000 over six months to prepare the project for future gold production. The funds will primarily be used to secure all the licensing required, plan out the camp and other facilities, including water supply and electricity, and prepare for vat leach production. 

 Future share issues to Paleogold shareholders are contingent on ECR earning not less than A$5 million of revenues from the Paleogold projects in year one, and ECR earning not less than a cumulative A$10 million of revenues in year two.

Work is already underway for targeted gold production later this year from Maddens Flat.

Production from Salt Bush is expected around the middle of 2027.

The company will also undertake exploration upside at Tuckanarra, which is adjacent to Odyssey Gold’s resource.

"In what was already expected to be a pivotal year for ECR, with our Raglan and Blue Mountain alluvial gold projects, the acquisition of Paleogold is truly transformational for the company,” said ECR chairman Nick Tulloch.  

"With our new interests in Maddens and Salt Bush, ECR now has exposure to multiple nearer-term production, development and exploration assets across Australia, creating what we believe is a very deliverable growth platform. What is especially compelling is that these are not purely conceptual exploration assets. Underground development is already underway at Maddens, operational activity continues at Raglan, Blue Mountain is advancing towards production, and preparations are beginning at Salt Bush. We believe ECR is now transitioning into a genuine multi-asset Australian gold company with multiple pathways to production, cash flow and exploration upside."

 

View from Vox

 

It’s a fine time to be building a portfolio of production and near-term production assets. The gold price has been yo-yoing around a bit in the wake of the recent Middle East conflict, but remains at historically high levels. That means that though the ECR operations are comparatively small, nonetheless the cashflow should be significant. It’s notable that the deferred cash element of the deal is contingent on production, but that it is also expected to be paid off in a matter of months. It won’t be too long before ECR has cashflow coming in from multiple sources of gold production, with ongoing exploration adding further upside.