LONDON: ECR Minerals plc (LON: ECR), an exploration and development company focused on gold in Australia, has entered into an exclusivity agreement for the potential sale of its subsidiary, Mercator Gold Australia Pty Ltd (MGA).
MGA is a non-core asset within ECR’s portfolio in Victoria and includes approximately A$75 million in tax losses. The agreement follows ECR’s previous announcement on July 2, 2024, regarding the potential sale of its tax losses.
A deposit has been received under the terms of the exclusivity agreement. While the exact value and structure of the sale are yet to be determined, discussions indicate the potential sale could involve significant cash consideration. However, these discussions are still in early stages, and other aspects of the agreement are not binding.
The interested party has until November 28, 2024, to negotiate the terms of the acquisition. The sale may require restructuring MGA to comprise only non-core assets. Depending on the final terms, the sale could be considered a fundamental change of business under Rule 15 of the AIM Rules for Companies, which would require shareholder approval in a general meeting.
ECR’s Managing Director, Mike Whitlow, stated that if concluded, this transaction could deliver significant funds to the company, aligning with its focus on core exploration activities and long-term shareholder value. Further updates will be provided as the process progresses.
ECR’s A$75 million in tax losses, incurred from 2006 to date, are within MGA. Australian rules on transferring tax losses changed in 2015, necessitating compliance with stricter historic rules for over 80% of MGA’s losses.
Whitlow emphasized the potential of this transaction to significantly benefit ECR and its shareholders, supporting the company’s strategic objectives.