Emmerson Resources Ltd (ASX:ERM) and partner, Evolution Mining Ltd (ASX:EVN) have found spectacular grades of gold up to 309.5 grams per tonne during pre-development shallow underground drilling at Edna Beryl in the Northern Territory.
Edna Beryl is a part of Emmerson Resources' managing director Rob Bills "small mines strategy" to generate a risk-free, near term income stream.
Even better, Emmerson receives 100% of its share from a royalty agreement over these small mines that are non-core assets until Evolution completes its earn-in.
This will fund exploration for new opportunities in New South Wales and Queensland.
As well it provides a pathway to monetise a pipeline of other non-core assets within Emmerson’s extensive tenement holdings.
This will also provide an underground base to more effectively test for additional mineralisation outside of the known ore envelopes.
Back to the 100% owned Edna Beryl results which are spectacular.
The bonanza gold intersections from the supergene zone:
-1.83 metres at 139.7 g/t gold from drill hole A;
-1.83 metres at 309.5 g/t gold from drill hole B; and
-1.83 metres at 93.4 g/t gold from drill hole C.
These first “spectacular” samples are from the upper level Edna Beryl ironstone. So while they may not be representative of the entire two ironstones, the non JORC” resource (based on drill holes) has an overall grade of 44g/t gold.
However, as some of these drill holes test the supergene, the bulk grade could conceivably be higher.
When commissioned, Edna Beryl might just be the highest grade gold mine in Australia.
Edna Beryl uncovered
The now refurbished cross cut drive has provided access to the top of the hematite ironstone and pre development drilling has now confirmed the exceptional grades associated with the first samples.
The refurbishment of the production shaft to 54 metres and the ventilation shaft to 26 metres at Edna Beryl is now complete.
Production and ventilation shafts have also been refurbished with all infrastructure and services established, including 8 person camp.
These drill holes are the first samples of the main supergene zone within the hematite ironstone.
Final soil testing is completed and evaporation pond design is underway. Permitting is being finalised ahead of mining.
Analysis
Emmerson's tribute agreement will generate a risk free return of up to 17% of the net profit of the gold dore. With the bonus that the volume of any ore discovered outside of this is not part of the tribute and is 100% Emmerson's.
While the "small mines strategy" is not the main game for Emmerson, it should prove lucrative in the current AUD gold price climate. So much so, that Rob Bills will look to fast track to production a pipeline of 6 small high grade resources.
These also have exceptional grades, based on limited drilling.
The (non JORC) exploration targets equate to about 160,000 ounces, which would generate cash flow to fuel Emmerson's big mines strategy - to make multiple large gold discoveries in conjunction with Evolution Mining, at Tennant Creek or with the company's strategic alliance partner, Kenex in New South Wales or Queensland.
So the Edna Beryl trial tribute agreement could be a template for exploitation of the small mines. Processing will likely be via a small portable mill or perhaps a toll treating arrangement with third parties.
Add in, Emmerson also has the development and mining of Chariot, which it is currently investigating with a current 100,000 ounce at 17.5g/t gold JORC compliant resource.
With tribute payments from small gold mines set to increase, the current market cap of $14 million does not even come close to capturing the value inherent in this company.
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