ECR MINERALS
plc
("ECR Minerals" or the
"Company")
Appointment of adviser to
realise value from tax losses
ECR
Minerals plc (LON:ECR), the exploration and development company
focused on gold in Australia, is pleased to announce that it has
engaged Argonaut PCF Ltd ("Argonaut") to assist it in realising
value from the A$75 million of tax losses through the potential
sale of certain of the company's Victorian assets which carry those
losses.
Argonaut is an Australian based
investment banking and corporate advisory firm focused on the
natural resources sector with offices in Perth and Sydney. It
typically targets corporate clients with market capitalisations
between A$30 million and A$5 billion and has advised on, arranged and
participated in excess of A$10 billion of corporate finance
transactions over the past decade. With Argonaut's market
presence in Australia, ECR considers that this appointment offers a
conduit to senior mining executives, mining companies, institutions
and other interested parties.
By way of an indicative guide to
investors, current tax rates for companies in Australia vary
between 25 per cent. and 30 per cent, depending on circumstances,
meaning that ECR's tax losses could have a theoretical value to a
prospective buyer in the range of approximately A$18 - 22 million.
In practice, any valuation will be based on several different
attributes of any buyer including its existing profits, type of
business, ongoing profit expectations and its own assessment of how
quickly the tax losses could be used. Taking these factors
into account, the Directors are advised it is unlikely that any
buyer would pay more than half of this theoretical value and even
then, this is still a very early stage and specialised
process. There can be no guarantee that any offer will be
received by ECR.
Background to tax
losses
ECR's tax losses are held within
Mercator Gold Australia Pty. Ltd ("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. It is also likely that some of MGA's
assets may need to be sold as part of any transaction (but it is
not expected that any of ECR's primary assets will be included in
any potential transaction).
Nick Tulloch
Chairman of ECR commented: "The market for transferring tax losses
is understandably very specialist and relatively small.
However, it would be an understatement to say that the potential
value of tax losses that we are carrying within MGA could be
significant to ECR.
"We have been
examining suitable processes for advertising this asset and we have
concluded that this is the right time to extend our market reach.
Argonaut provides a very comprehensive marketing programme, well
suited to our purpose, with the ability to deliver our offering
directly to the key decision makers of small, medium and large
companies with operations in Australia.
"Any sale of
these tax losses would most likely be realised through a sale of
MGA and so, in anticipation of a transaction, we have already put
plans in place to ensure that our valuable Victorian projects are
removed from that company, although still retained within the
Group, ahead of any sale. The availability of the tax losses
is going to be very personal to any prospective buyer based on its
type of operations so we will ensure we retain flexibility on the
structure to maximise the value."
Depending on the terms that are agreed for any
transaction to realise the tax losses, it is possible, but not
guaranteed, that the disposal of MGA may be a fundamental change of
business pursuant to Rule 15 of the AIM Rules for Companies. 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
conversations progress.
FOR
FURTHER INFORMATION, PLEASE CONTACT:
ECR Minerals
plc
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Tel: +44 (0) 1738 317 693
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Nick Tulloch, Chairman
Andrew Scott, Director
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Email:
info@ecrminerals.com
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Website:
www.ecrminerals.com
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WH Ireland
Ltd
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Tel: +44 (0) 207 220 1666
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Nominated Adviser
Katy Mitchell / Andrew de Andrade
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Axis Capital
Markets Limited
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Tel: +44 (0) 203 026
0320
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Broker
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Ben Tadd/Lewis Jones
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SI Capital
Ltd
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Tel: +44 (0) 1483 413500
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Broker
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Nick Emerson
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Brand
Communications
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Tel: +44 (0) 7976 431608
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Public & Investor
Relations
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Alan Green
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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 holds a royalty on
the SLM gold project in La Rioja Province, Argentina which could
potentially receive up to US$2.7 million in aggregate across all
licences.
MGA also has approximately A$75 million of
unutilised tax losses incurred during previous
operations.