By Harry Dacres-Dixon
- Drilling to success in Victoria.
- Gravity concentration tests the way forward?
- Australian gold mining – Production Cliff?
- Australian gold – the future.
It’s been a busy two months for precious metals exploration and development company ECR Minerals (AIM:ECR).
The London AIM listed junior mining and exploration company is primarily focused on key projects in the Central Victorian Goldfields and the Yilgarn Craton in Western Australia. Both areas have a rich history of gold production, with Yilgarn in particular host to some 30% of the world’s known gold reserves.
The past month has seen a string of drilling announcements on the back of developments across a number of the group’s highly prospective Central Victoria projects.
Victoria drilling shows promise
Located immediately to the south of the territory where Aussie mining giant Newmont Mining has also applied for a license, ECR completed 485 meters of drilling across 18 shallow holes at Black Cat.
Although the site had no previous history of drilling, the results showed promising intersections and grades. These included 7 metres at 1.76 g/t gold from 35 metres in BCD11, 3 metres at 4.26 g/t gold from 16 metres in BCD18, and 1 metre at 6.3 g/t gold from 18 metres in BCD03.
As well as samples, the results also provided important additional geological information. ECR CEO Craig Brown said he was “delighted with the positive outcomes from the programme”…adding that the drilling results “may help vector further exploration in the project area”
The pace of developments continued into May. On the 1st of the month, ECR provided shareholders with an update from its Bailieston gold project. A complete set of results was provided for the Blue Moon (EL5433) prospect following reverse circulation drilling at the site in February.
The news followed their previously released high-grade assay results from the same site, where ECR notably achieved an intersection of 17.87 g/t gold over two meters.
Data from the latest report significantly expanded the potential at the Blue Moon prospect. These included:
- 2 metres at 1.40 g/t gold within a zone of 14 metres at 0.54 g/t gold in BBM005 from 132 metres;
- 1 metre at 1.94 g/t gold from 138 metres and 5 metres at 0.46 g/t gold from 152 metres in BBM010.
Of the Blue Moon results, Brown made the following statement: “With the knowledge gained from the RC programme we believe that the gold mineralisation intensifies further west and now have a clear action plan to follow the system. We are excited by the findings and will continue our work at Blue Moon and other prospects in the Bailieston project area, with our strategic objective remaining a multi-million ounce gold discovery.”
Just seven days later, ECR announced to the markets that it’s multiple-prospect drilling programme had identified quartz in over one-third of the 1,687 metres drilled across 17 holes at their Creswick project.
This announcement had a marked effect on the stock, propelling ECR’s share price up from year lows of 0.65p on May 7th to a year high of 0.97p by the end of the following day.
Gravity Concentration tests show initial Creswick results understated gold content.
Across the nine assessed holes at Creswick, the mineralisation revealed ranged from 0.6 g/t gold to 44.63 g/t gold (1.44 oz per tonne). These results however were effectively knocked out of the park by a follow-up sample gravity concentration bag test, which showed that the initial assay test had understated the gold content by 84.2%. ECR said that the ‘nuggetty nature’ of the gold mineralisation increases the chance of it being missed in the drilled metre and when samples from the drill holes are sent for assay. As a result, all drilling samples are now undergoing the gravity concentration bag test.
Craig Brown was delighted with the news:“The work we are undertaking at Creswick is highly exciting given the transformational potential this large footprint gold system offers.
He added…”directors believe that the outcome has the potential to be Company transformational and is therefore deserving of our close attention.”
“ECR are now eagerly awaiting the findings from the whole of bag gravity concentration work and will report back to the market as significant developments occur.”
R&D Refund helps to keep prices growing
To round off a highly successful run of results, May 14th saw a further shot in the arm for the investment case as ECR received a Research and Development refund of A$318,971 (approx £171,000) for it’s wholly owned Australian subsidiary Mercator Gold. Added to this, ECR are expecting an additional refund around August 2019 for an anticipated A$370,000.
To round off May, the company launched a new website to fully articulate projects, data and results to the global investing community. With the company now firmly in the investor spotlight, ECR stock broke out of a long standing trading range to close at a 3 year high of 1.3p on 3rd June 2019.
Australia Gold Market Production Cliff?
For the global mining investment community, Australia is ranked second in the world thanks to its pro-mining attitude and world-class infrastructure.
Producing 107.3m ounces, it’s annual output for last year came second only to China, and was valued at a staggering $19.2 billion at Australia’s current gold price of $1,820 an ounce.
However, despite expectations of a new record high of 109.6 million ounces this year, concerns have been raised over a possible ‘production cliff’ in the coming years.
Canadian research analyst Chris Galbraith, of S&P Global Market Intelligence, has predicted that Australia’s gold production will be in decline by 2022 as mines grow older.
These claims have been dismissed by Richard Hayes, CEO of Perth Mint, the company responsible for refining the majority of Australian gold.
“Every year I go to conferences where I see people putting up graphs which show a production cliff, where all of a sudden in the next year or two or three, there’s a massive drop off,”
“In the quarter of a century since I’ve been here I certainly haven’t seen any evidence of any of those predictions ever coming true” Mr Hayes said.
“I would be very, very surprised if there’s this production cliff we’re all going to fall off in five years’ time.”
Australian Gold – the future?
Whilst we can’t be sure what the long-term future holds for Australia’s gold mining industry, one thing that looks increasingly likely. Small, ambitious gold exploration companies such as ECR Minerals will play a big part.
New exploration and analysis techniques mean that hitherto unexplored or previously abandoned territories can be explored and revisited. ECR’s recent drilling activities and data analysis has confirmed once and for all to the global investing community that this small cap miner not only has a portfolio capable of delivering big results, but that it is very keen to get the ball rolling too.
With strong management, a clear focus and highly prospective sites in two world-class regions of Australia, if ECR can keep delivering good news and solid results – who knows, maybe… just maybe it’ll be their multi-million-ounce gold discovery that will propel Australia’s gold mining industry to new highs. And for the legions of gold investors around the globe, watching the impact of such a development on their portfolio will be the next best thing to being there on the ground with a pickaxe and panning kit!
ABC News (2019):Australia’s $19b gold industry on edge of ‘production cliff’ as mines run out of gold, analyst warns
Ferret (2019):Australia welcomes top March quarter of gold production in over two decades predicts a positive future for Australian Gold Market amid concerns productions could decline from 2022.
Gold prices dropped slightly this week as the dollar reclaims it’s haven appeal, hitting two year high.
- A new record high of 109.6 million ouncesis expected to be reached this year
- Australian dollar gold price trading near historic highs of about $1,820 an ounce
- Australia’s biggest new gold mine prepares to pour its first gold bar in June – The $621 million Gruyere project in WA’s Great Victoria Desert
Canadian research analyst Chris Galbraith, of S&P Global Market Intelligence,
- Australia second largest producer after China, with 10.7m ounces worth $19.2 billion
- Production set to fall by 40% to 6.3 million ounces over next five years
- He predicts global gold production will be in decline from 2022
Perth Mint CEO Richard Hayes
- “”Australia is the second largest producer of gold and has the world’s largest known gold reserves, so I would be very, very surprised if there’s this production cliff we’re all going to fall off in five years’ time.”