Emmerson Resources Ltd (ASX:ERM) has entered a new strategic alliance with Tennant Consolidated Mining Group (TCMG) for the Northern Project Area (NPA) of Tennant Creek in Northern Territory aimed at driving aggressive gold exploration, production and royalty streams.
The agreement is covered by a binding Heads of Agreement (HOA) with TCMG, a subsidiary of TA Private Capital Security Agent Ltd advised by TransAsia Private Capital (TA).
This alliance establishes a funded pathway for the development of Emmerson’s high-grade gold projects and provides substantial new funding for exploration to continue to build the resource pipeline.
TransAsia support
TransAsia is a Hong Kong-based asset management firm that established TCMG, which is managed by a number of senior mining industry executives who are well known to Emmerson, specifically for the purposes of making this investment.
TCMG is focused on rationalising assets in the Tennant Creek area with the objective of undertaking detailed studies with the ultimate goal of developing a centralised processing facility effectively unlocking existing mill feed sources.
The NPA is highly prospective for high-grade gold deposits and hosts the notable historical deposits of Warrego, White Devil, North Star and Emmerson’s recent discovery at Mauretania.
“Important development”
Emmerson managing director Rob Bills said: “We welcome the Tennant Consolidated Mining Group as our new strategic partner at Tennant Creek and view the new agreement as an extremely important development.
“Our vision for a central processing mill at Tennant Creek remains unchanged and we believe we now have a partner with greater access to capital, deeper technical expertise and stronger alignment to make this happen.
“We have been as frustrated as our shareholders with the lack of progress over the last two years but have had to work within the confines of the legal agreements which are now terminated.
“This recast exploration and mining JV has clear hurdles and minimum production levels to drive our vision of receiving multiple royalty streams across many of our mines.
“The new agreement secures greater access to capital, has clearly defined project milestones and strong alignment between partners.”
New alliance
The new strategic alliance with TCMG includes:
- $2 million equity investment in Emmerson at 13 cents per share;
- Exploration earn-in and JV managed by Emmerson whereby TCMG provides the next $5.5 million of funding to earn a 75% interest in the NPA over five years;
- A Small Mines Joint Venture (SMJV) covering the NPA with Emmerson to receive 6% gold gross revenue royalty from all small mines and a guarantee of 6% of a minimum 30,000 ounces gold gross revenue royalty or cash payment of shortfall; and
- A Major Mines interest whereby Emmerson retains up to a 40% interest in any major discovery (>250,000 ounces gold equivalent).
Emmerson retains 100% ownership of the Edna Beryl, Jasper Hills and Southern Project Areas and upon completion of the TCMG investment, Emmerson’s cash on hand will exceed $7.5 million.
Bills said: “The exploration earn-in and JV will combine Emmerson’s experience and technical expertise with significant funding to discover new deposits and extend existing deposits.
“The inclusion of the Major Mines JV and broadening the reach of our partnership to a 20,000 kilometres area of mutual interest aligns both parties to the longer-term future of this strategic alliance.
“In parallel, TCMG has consolidated several other projects in the Tennant Creek region and intends to unlock value through building a larger, central modern processing facility. The location and size of this new facility is the subject of current studies.
“Emmerson is encouraged by the diligent, long-term approach being taken by TCMG to realising full value from one of Australia’s premier goldfields.”
“Clear production potential”
TCMG managing director Peter Main said: “TCMG’s advisory group TransAsia Private Capital is best known for its private debt solutions including short tenor trade finance through mid to longer tenor term and project loans.
“Emmerson has a strategic land package around Tennant Creek with clear production potential, which aligns with our consolidation strategy in the Tennant Creek Mineral Field of establishing a modern processing facility to unlock value.
“TCMG’s next step is to conduct further detailed studies with the objective of establishing a pipeline of mining projects ready for production.”
Next steps
The HOA with TCMG has been executed and secured with a $200,000 non-refundable deposit.
Both parties will continue to work in good faith toward accelerating programs and studies relating to the exploration, mining and processing.
This includes proceeding with the planned drill program at Mauretania later this month, which will now count toward the earn-in expenditures by TCMG.
TCMG has a team in Tennant Creek-fast tracking studies on the various mill and processing options and are continuing with various mine and development studies.