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.

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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.