Emmerson Resources Limited (ASX:ERM) continues to progress its goal of realising a low-risk royalty stream from gold assets in the 100% owned Tennant Creek mineral field in the Northern Territory.
A Letter of Intent has been signed between ERM's strategic alliance partner Territory Resources Ltd and Blue Cap Mining for the development and mining of further deposits in the Tennant Creek field.
Blue Cap has experience in small gold projects, including Red Dog and Penny’s Find, and can fund the working capital required to advance the development and mining of multiple gold projects in the southern project area (SPA) of the Emmerson and Territory Joint Venture.
Emmerson managing director Rob Bills said: “The Letter of Intent between Territory Resources and Blue Cap Mining marks a very positive step forward for our emerging gold royalty business in Tennant Creek.
“Blue Cap is an experienced and highly regarded operator, bringing specialist project and mining skills to fast-track the development of multiple gold projects in the Tennant Creek Mineral Field.
“Blue Cap has the ability to fund its working capital across these projects and has a demonstrated track record of successful delivery.”
Emmerson formed a strategic alliance with Territory in 2018, with Territory to build a central mill in Tennant Creek to support processing from Emmerson’s small gold mines and other third-party feed.
Edna Beryl Gold Mine
Blue Cap and Territory are now finalising the mining schedule which aims to maximise the full capacity at the Warrego Mill through fast-tracking the development of multiple gold projects, including the high-grade Edna Beryl gold mine.
The next steps include deepening of the current shaft, adding a further sub-level and commencing the exploration drill drive.
Maximising mill capacity
Territory has completed all major equipment purchases for the Warrego Mill including the power solution, Falcon In-Line Leach Reactor and Sepro Concentrator – all key components in modernising the mill and maximising gold recoveries.
Initial throughput from the Warrego Mill is aimed at 100,000 tonnes per annum but includes plans to increase this up to 240,000 tonnes.
Bills said: “Our strategic partner, Territory Resources, has completed the purchase of all the major components for the refurbishment of the Warrego Mill which will modernise the existing mill and maximise efficiencies and recoveries.
“Emmerson will receive a low-risk royalty stream from its assets at Tennant Creek, which are mined and processed through the Warrego Mill.
“We look forward to an updated mine and mill schedule once the COVID -19 constraints are resolved.”
Emmerson’s Tennant Creek Project
COVID-19 impacts
Blue Cap and Territory are working on a new mining schedule which aims to maximise the full capacity of the mill by pulling forward some of the larger gold projects within the Emmerson/Territory JV area.
Territory believes there are 12-14 weeks remaining in the build/refurbishment schedule to reach commissioning, however, this will likely be impacted by COVID-19 protocols in place.
This will require the isolation of the construction workforce from the Tennant Creek population and plans are in place to establish a camp at Warrego and Edna Beryl.
Exploration will also recommence once COVID-19 restrictions allow it to be done safely and efficiently.
Low-risk royalties
Emmerson receives a low risk 12% gold production royalty at Edna Beryl which is free of all costs associated with development, mining and processing.
Emmerson is also entitled to a similar 6% royalty at the Chariot deposit, with the remainder of the gold projects in the SPA on a 75/25 (Territory/Emmerson) profit share basis.
The SPA also falls under an exploration JV with Territory where Territory can earn a 75% interest by spending $5 million over five years.
Emmerson remains manager and operator until completion of the earn-in.