Recent sale of Suyoc for £2.5m shows the lack of buyer appetite around for Philippine gold projects sadly. BZT another case in point. But focusing on Suyoc, ECR are for all intents and purposes ISRI as investors here hold out for a sale of Itogon at some point - "Apex Mining has acquired 98 percent of Itogon Suyoc Resources (ISRI) for P182.67 million" .. that's £2.5m ($4m), the majority paid in shares.
One of the chief rampers here has suggested that site is mined to buggery, yet the company state it will only cost about P150 million to restart operations (£2m or so)... and about P500 million to P600 million to make it profitable in three to four years (call it £8m)... Not sure they would agree with that prognosis nor stephen_pearce's previous attempts to justify $112/oz reserve sale value previously.
You would think considering ISRI owned the mill and production facilities in Sangilo, Itogon they could negotiate a better price. I suppose the only saving grace is ECR aren't debt laden yet, well not officially. They do of course have outstanding loans to YA to the tune of $835k who continue to convert to equity at ever lower prices.
Apex suggest a low capital outlay is all that is needed to bring it back online and considering the potential to make profitable at current prices in a short turnaround period, it begs the question why would anyone fork out many multiples more (...as some people here suggest on a daily basis...) for a maiden resource at Itogon?
Assuming ECR retain control and aim to prove up a partial reserve, they will require millions of dollars more to firm up grades and drill data. Are investors willing to suffer more dilution at the hands of YA or similar. There will be little value left for shareholders here of course.
A site like Suyoc sold for pittance doesn't bode well for ECR when they come to dispose of Itogon, how much have they already forked out on this venture?
Newbies love an exciting story and potential multibagger of course and will lap up comments like 'potential world class mine' and the like from gutless posters but the facts are this is being diluted to oblivion, the share price has fallen further than any listed gold explorer on AIM (the quality ones have retained a good amount of equity and cash) and the last throw of the dice rest on a maiden resource report due next month.
SMA are a prime example of an explorer announcing a maiden resource only to plummet days after once profit-takers left. Lack of cash and Ebola scares have left it where it is today. ECR will have over 6 billion shares in issue by the end of this year if YA draw down on their loan. If ECR raise new cash it will either be via more loans or placings again wiping out equity holders.
I'd expect a consolidation of stock to follow in 2016.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.