Mercator Gold praises 'highly promising assets' as Copper Flat disposal proceeds

In its interim results, soon to be renamed Mercator Gold (LON:MCR) told investors that it has assembled a highly promising suite of assets encompassing a range of jurisdictions and commodities, as the disposal of the Copper Flat project is due to complete in August.

Mercator said its new strategic approach effectively insulates the company from project-level risks and allows it to more swiftly realise value from its asset portfolio, as and when appropriate. The company will be renamed Electrum Resources plc shortly, after receiving shareholder approval last month.

The most significant event, in the six months ended 31 March, was the signing of a definitive agreement to sell Mercator’s option over the Copper Flat project to THEMAC Resources Group (TSX-V: MAC.H). Through the transaction the company will retain an indirect interest in the project.
“The transaction with THEMAC in relation to Copper Flat is at the heart of Mercator’s strategy of situating its projects in development vehicles most appropriate for raising capital in order to provide them with the best possible foundation for success”, the company stated. Mercator will receive 10.5m shares in THEMAC, as well as 10.5m five-year warrants exercisable at C$0.28 per share. Subsequently, the company Mercator expects to hold 30-40% of THEMAC’s issued shares, depending on the take-up and pricing of a concurrent placing which is being carried out by THEMAC.

In the current financial period, in May 2010, the project’s independent contractor, SRK Consulting, updated the historic Copper Flat resource, to estimate Indicated Mineral Resources of 107 million short tons at an average grade of 0.303% copper - equating to 645 million lbs of contained copper. Additionally, SKR estimated an Inferred Mineral Resources of 46 million short tons at an average grade of 0.240% copper, equating to 222 million lbs of contained copper.

SKR is expected to complete a NI43-101 preliminary economic assessment (PEA) of the Copper Flat imminently.

The company’s assets comprise of a diversified portfolio of mineral projects,  a controlling interest in a steel manufacturing business, and a solar-power project.

The Warm Springs project is to be developed near the Copper Flat, by Mercator’s Warm Springs Renewable Energy Corporation (WSREC) subsidiary. Alongside its development partner Remote Energy Solutions, the company intends to build a 20MW solar power plant, with the construction phase slated to start in 2011.

Mercator’s  70%-owned Thailand-based steel products business, contributed £20,000 per month to the company through management fees, and subsidiary generated £3.16 million in turnover for the six month period.

Furthermore, Mercator highlighted that between 20-30% of “the capital cost of a solar power development is usually accounted for by the supporting steelwork, and ACS Asia is well placed to fulfil the steelwork requirements of the Warm Springs project”.

Mercator’s mineral projects include: a stake in Asian focused gold explorer Paniai Gold; interests in Silver Swan Group - a Western Australian precious and base metal explorer; interests in the Meekatharra gold project; And uranium exploration and mining licences in Argentina.