Ann: Trading Halt, page-60

I said this in February:

Yes, Echo is a spec gold company in an industry which has scores of underperforming explorers and many underperforming new gold producers. Echo, though, should not get a free pass to closer scrutiny and needs to be accountable for all the money it ‘mines’ from shareholders through continual, dilutive, capital raisings.

I’ve looked back at the last 7 capital raisings and it totals almost A$50 million (if you include the latest raising).

The reason is always the same:  to fund “under-explored” tenements & “pre-development” activities, all the while Echo uses the illusion that Bronzewing is a near-term production option. The hint of near-term production has been going on for 5+ years, under consecutive MDs and the same names on the BoD (even before EAR merged with MKO).

In terms of looking back at EAR’s ASX announcement history, it has become a little more difficult as EAR has taken down their ASX announcements page on their website some time over the last two weeks. EAR had about 30 pages of announcements that went back to about its list date around 2006. Perhaps the removal is temporary (maybe website is being updated), or perhaps EAR suddenly doesn’t like to have all of its history easily accessible?

* For reference it EAR’s announcement history was here: http://echoresources.com.au/investors/asx-announcements/
*Annual report page also gone: http://echoresources.com.au/investors/annual-report-archive

Fortunately, the ASX has an archive (search EAR by year): https://www.asx.com.au/asx/statistics/announcements.do

A brief history of EARs (seven most recent) capital raisings: (^ see footnote)

2 May 2019: A$15 million @ 13 cents – reason “accelerate the recently outlined exploration strategy at the Yandal Gold Project, which aims to unlock further value from our underexplored but very prospective tenement package.”

6 Dec 2018: A$6.56 million @ 11 cents – reason “ongoing initiatives over the medium term and will be used to: provide pre-development funding (approximately $4million); provide working capital, (approximately $1.3 million); Fund further exploration at Mt Joel (approximately $1million)”

25 Oct 2017: A$15 million @ 22 cents – reason: “apply at least $10 million of funds raised into exploration, including resource and reserve development, brownfields and greenfields exploration, with $5 million earmarked for project development studies and general working capital.”

27 July 2017: A$5 million @ 10 cents – reason: “continuation and expansion of the 2017 exploration program designed to delineate new deposits and increase existing gold resources and reserves”

27 January 2017: A$3.2 million @ 16 cents – reason: “underpin an active exploration campaign designed to increase gold Resources and Reserves.”

19 May 2016: A$3.23 million @ 17 cents – reason: “aggressive but targeted approach with regard to resource definition, mine development activities and testing of the Company’s regional gold targets.”

3 June 2015: A$1.52 million @ 4 cents – reason: “to fund exploration on the Company’s Julius Project and Gnaeus Prospect and repay a debt”.

Total capital raised A$49.5 million (since June 2015).

* Expected shares outstanding following May 2019 raise: 666.6 million.
* At 13 cents per share gives market capitalisation of A$86.7 million (undiluted).
* In other words, EAR’s last 7 cap raisings total well over half EAR’s current undiluted market cap…

This is a EAR monthly chart showing the last 7 capital raisings:


* As stated in the chart (above), EAR tends to raise capital towards its share price lows. Three of the last four raisings were at 10 cents, 11 cents and 13 cents and were raised at these lows despite the EAR share price often multiples higher in the months prior.

Beyond May 2019:
* How many more capital raisings (and debt financing) to come before first gold pour?
* Remember the Yandal gold belt has had decades of exploration by multiple companies. EAR itself has been drilling in the Yandal since it listed on the ASX in May 2006.

The leopard doesn’t change its spots. Shareholders are called upon (often two to three times a year) for more and more money to  fund “under-explored” tenements & “pre-development” while the carrot (Bronzewing plant) of near term production continues to be dangled above. I would have thought that raising tens of millions of dollars and drilling multiple deposits across the Yandal over the last 5+ years, that EAR would have more than four years of initial mine life (which currently relies on just two deposits).

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^ Note: (This list does not include capital raisings completed by Metaliko Resources (MKO) which merged with Echo on 27 January 2017. eg. Nov 2015: MKO raised A$2.6 million – reason included: “Exploration and development activities at the Bronzewing and other gold projects”.)