ECR Minerals has disposed of its entire stake in Gold Crest and its subsidiary ACS, the company announced Monday.
The mineral development group will hold a meeting in January to seek approval from shareholders.
The company said the disposal was necessary after it had failed to derive sales revenue or profits from its exploration assets.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The metal fabrication business in ACS was performing well when the company acquired a shareholding in Gold Crest in 2009. The board thought it would provide stability and cash flow to help rebuild the company following its collapse in October 2008 of its Meekatharra gold project into administration.
The investment contributed to overheads initially but shortly after the trading performance started to dwindle.
"As a result, far from ACS being a cash generator for the group, the company has had to inject funding from time to time into Gold Crest and ACS to enable ACS to continue operations," ECR said.
"The board has concluded therefore that continued ownership of the company's shareholding in Gold Crest is unlikely to provide the benefits for which it was originally acquired and, furthermore, is likely to constitute a significant diversion of management time in order to oversee the operations of ACS effectively."
The company plans to streamline the group by focusing on core investment positions in the mineral sector.
Shares were up 5.17% to 0.30p at 10:39 Monday.
RD
