ECR Minerals (LON:ECR, OTC:MTGDY) has inreased its stake in Paniai Gold Ltd through the conversion of A$337,937 in loans plus interest into 50 million new Paniai shares. It now holds 100 mln shares and is Paniai’s largest shareholder with a 26 percent stake.
It also raised approximately £375,000 in a placing and a drawdown of the Standby Equity Distribution Agreement (SEDA) with Yorkville Advisors fund YA Global, earmarked for the planned drilling programme at ECR’s El Abra gold prospect in La Rioja Province, Argentina, and for working capital purposes.
Drilling at El Abra is expected to commence in the second week of January 2012.
Paniai Gold is, through a holding in West Wits Mining Ltd (ASX:WWI), interested in the Derewo River gold project in Papua, Indonesia. It holds 46 million West Wits Mining performance shares and 12.5 million options exercisable at A$0.08 for 5 years.
The performance shares convert to ordinary shares subject to Derewo River achieving production of 20,000 ounces gold within two years of the project’s acquisition from Paniai by West Wits, which occurred in July 2011.
ECR also holds 11.15 million West Wits ordinary shares.
Regarding the fundraising, ECR arranged a placing of 32,460,000 new shares at a price of 1 pence each to raise GBP324,600 before costs. It also allotted 5 million shares at 1 pence each to YA Global in connection with an advance of £50,000 under the SEDA with Yorkville.
Managing director Patrick Harford said: “ECR deliberately positioned itself to acquire a larger shareholding in Paniai Gold at an appropriate time, and we believe that time has now come. We expect great progress to be made at the Derewo River gold project during 2012, and ECR shareholders now have significant exposure to the success of the project through the company’s shareholdings in West Wits and in Paniai Gold.”