ECR Minerals (ECR ) has agreed to acquire Paleogold Limited.
Through Paleogold, ECR will have interests in gold projects across Queensland, Western Australia and South Australia, including most significantly, through the exercise of Paleogold’s option acquire 50% of Lucky Strike Mining Ventures, which holds the hard rock Maddens Flat group of mines.
As part of the exercise of this option, ECR will commit to spend A$1 million on the Maddens Flat group of mines to advance gold production.
ECR will also, through Paleogold, acquire 20% of Salt Bush Flat Mines, which owns the Salt Bush project in South Australia and, as part of that investment, is undertaking to spend A$200,000 to prepare it for gold production.
The consideration for the Paleogold transactions will be satisfied via the issue of shares, A$3.86 million in deferred convertible loan notes, warrants and, in the case of the initial cash consideration, from ECR's existing cash resources.
Cash payments, include A$140,000 to certain vendors, and a subsequent A$2 million payment due in six months.
This staged transaction structure is designed to be aligned with future cashflow from planned production.
The entire issued share capital of Paleogold will be exchanged for a total of up to 621 million ECR Shares, with an aggregate of 207,000,000 ECR Shares issued on completion and a further 207 million shares to be issued subject to ECR earning not less than A$5 million of revenues from Lucky Strike, the Salt Bush project and Tuckanarra.
A final tranche of 207,000,000 shares will be issued on the second anniversary of the acquisition, subject to ECR earning not less than A$10 million of cumulative revenues from the Paleogold projects.
The acquisition is also structured to enable ECR Australia's existing tax losses to be applied against any future profits generated from the Paleogold projects.
Gold production from the 50% interest in the Maddens Flat group of mines in North Queensland is expected later this year. This project includes an established processing plant, infrastructure and camp.
Historically, production at Maddens underground mine has been high-grade, averaging around 14 grams per tonne, with additional zones running at six-to-seven ounces per tonne.
There’s also significant exploration upside.
Additional production is expected from Salt Bush in 2027.
The Paleogold operational team will join ECR, providing on-site capability and continuity to oversee development and production.
"The acquisition and associated investments in Lucky Strike and Salt Bush will significantly expand both the scale and geographic reach of ECR,” said ECR Chairman Nick Tulloch.
“With 10 projects across four states in Australia, ECR will be a diversified gold mining business with the potential for gold production across multiple sites. The deferred cash consideration and convertible loan note have been designed to match future cash flow from expected production to make the Acquisition fully funded. The exercise of the Lucky Strike option is expected to add hard rock gold production at the Maddens Flat group of mines to our alluvial operations in Raglan and in due course Blue Mountain. Production plans for later in 2026 at the Maddens Underground Mine and Blue Mountain are anticipated to be followed by Salt Bush next year.”
View from Vox
Yet again ECR, under current management, has show itself to be a creative dealmaker. Completion of the Paleogold transactions will transform ECR into a multi-asset gold company with a portfolio of 10 projects across four Australian states, and deliver to the company its first JORC resource. At the same time, if all goes to plan, neither the balance sheet nor shareholders will be hard pressed to fund the deal. This is a good tie to be building up a gold production portfolio and ECR’s is growing nicely.