Paniai Gold Update

Paniai Gold Update

ECR Minerals plc

ECR MINERALS plc
(“ECR Minerals”, “ECR” or the “Company”)

AIM: ECR
US OTC: MTGDY

PANIAI GOLD UPDATE

London: 4 February 2011 - ECR Minerals plc is pleased to announce that Paniai Gold Limited (“Paniai”) has entered into a binding heads of agreement with West Wits Mining Limited (ASX: WWI) (“West Wits”) for the sale to West Wits of Paniai’s interest in the Derewo River gold project in Papua, Indonesia. ECR currently holds 16% of Paniai’s issued shares.

Key terms of the sale are as follows:

• Consideration to Paniai of 80 million West Wits ordinary shares, 46 million performance shares and 12.5 million options exercisable at A$0.08 for 5 years
• Performance shares convert to ordinary shares subject to the Derewo River project achieving production of 20,000oz gold within 2 years
• Funds of A$300,000 to be made available to the Derewo River project by West Wits immediately
• West Wits to raise approximately A$3 million through the placement of 33.75 million new ordinary shares at A$0.04 (with subscribers to receive 1 option exercisable at A$0.08 and valid for 3 years for every 4 shares) combined with the placement of 33.75 million ordinary shares currently held by Mintails Limited at A$0.05, the proceeds of which will be transferred to West Wits in settlement of an existing obligation
• Raising of an additional A$500,000 through placement of 12.5 million ordinary shares with existing shareholders (with subscribers to receive 1 option exercisable at A$0.08 and valid for 3 years for every 4 shares)
• The closing price of West Wits shares on the ASX on 4 February 2011 was A$0.05

On completion of the sale Paniai will become West Wits’ largest shareholder, with approximately 28% of West Wits’ issued shares (allowing for the financings described above) plus performance shares and options. Paniai will nominate two directors to the board of West Wits, and the locally based project team assembled by Paniai will remain in place.

It is expected that Paniai will retain its interest in West Wits for the foreseeable future, and that Paniai will seek to identify and evaluate potential new projects in South East Asia.

ECR has been actively involved in the management of Paniai to date, including the structuring of the proposed transaction with West Wits, and will remain so going forward. Paniai is currently a debtor of ECR to the amount of approximately A$350,000, and this balance may be converted into new Paniai shares (by agreement and at a conversion price to be negotiated), thus increasing ECR’s interest in Paniai.

The announcement made by West Wits regarding the sale can be viewed here:

http://www.asx.com.au/asxpdf/20110203/pdf/41wkwdw324hk08.pdf

The sale is subject to due diligence and to shareholder and regulatory approval. The heads of agreement provides for the completion of due diligence by 31 March 2011 and entry into a definitive agreement within 30 days thereafter.

West Wits currently has gold exploration projects located in the West Rand region of South Africa, and some of the funds to be raised by West Wits will be applied to the development of these projects, which both Paniai and ECR consider to be of significant merit. In particular, West Wits plans to undertake a drill programme with the objective of expanding and upgrading its current South African JORC resource inventory of 426,700oz gold (plus JORC reserves of 58,800oz gold).

The Derewo River Gold Project

The Derewo River project consists of one granted 40 hectare mining licence, an application for a further 491 hectare mining licence, and exploration licence applications extending over approximately 129,000 hectares. Paniai is a private Australian company formed to advance the Derewo River gold project in joint venture with a local party, and has previously raised in excess of A$700,000 in seed funding.

The terms of the joint venture are as follows:

• With respect to the mining licences, Paniai is to fund the establishment of a modern alluvial mining operation, revenues from which will be distributed equally between the joint venture partners after the deduction of all operational costs
• With respect to the exploration licences, Paniai is to fund the first US$2 million of exploration, beyond which the joint venture partners are to fund activities pro rata. Paniai’s joint venture partner may be reduced to a carried interest in the exploration licences of 20% in the event that it does not fund its share of exploration (Indonesian law requires a local party to hold a minimum of 20% equity in mining and exploration licences)
• Paniai is to manage both mining and exploration activities
• The rights and obligations of Paniai under the joint venture will be assumed by West Wits on completion of the sale

During 2010 the granted mining licence and the mining and exploration licence applications comprising the Derewo River project were brought into compliance with revised Indonesian mining laws. An EIS (environmental impact statement) has been submitted to provincial authorities and is at an advanced stage of processing. Certain major capital items have been purchased and transported to the project area by Paniai, and an Indigenous Landowners’ Agreement, one of the first of its kind in Papua Province, has been signed with Wolami People.

The Derewo River flows WNW through the Central Highlands of Papua for approximately 75km before turning northwards to the south of the city of Nabire and flowing a further 35km to the sea. The river has been the site of intense local gold mining since 2004, with local miners working colluvial/eluvial deposits and remnant river terraces of a very high gold grade. Several tonnes of gold are believed to have been extracted by local miners in recent years.

Patrick Harford, Managing Director of ECR Minerals plc, comments:

“The acquisition of Paniai’s Derewo River gold project by West Wits is expected to see the project well financed for development, and we believe that the combination of the West Wits and Paniai management teams will be an effective one.

The interest in West Wits to be received by Paniai means that ECR shareholders will remain exposed to upside from the Derewo River project via ECR’s shareholding in Paniai, and we are excited about the potential for Paniai to continue to develop as a company by acquiring new projects.”

About ECR Minerals

ECR is a mineral development company with interests in the USA, Argentina, Indonesia, Thailand and Australia.

For further information please contact:

ECR Minerals plc
Michael Silver, Chairman Tel: [phone]Michael Silver, Chairman Tel: [phone]
Patrick Harford, Managing DirectorPatrick Harford, Managing Director
Stephen Clayson, Chief Financial Officer Stephen Clayson, Chief Financial Officer

Email: [e-mail]
Website:Website:www.ecrminerals.com

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Oliver Rigby/Tessa Smith Tel: [phone] Oliver Rigby/Tessa Smith Tel: [phone]

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Forbes Cutler Tel: [phone] Forbes Cutler Tel: [phone]

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Larry Kaplan Tel: [phone]Larry Kaplan Tel: [phone]