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Emmerson Resources surges on raising $2 million for alliance to reinvigorate Tennant Creek gold production

Last updated: 23:27 23 Mar 2021 GMT, First published: 23:25 23 Mar 2021 GMT

Emmerson Resources Ltd - Emmerson Resources raises $2 million with Tennant Consolidated Mining Group as part of strategic alliance over Northern Project Area
Emmerson remains in a strong financial position with around $6 million in cash available to support exploration activities

Emmerson Resources Ltd (ASX:ERM) (FRA:42E) has raised $2 million with Tennant Consolidated Mining Group (TCMG) in a placement enabling the strategic alliance over the Northern Project Area (NPA) of Tennant Creeek Project in the Northern Territory to advance towards gold production.

The placement has resulted in all conditions precedent to the Earn-In, Small Mines and Major Mines Joint Ventures covering the NPA being satisfied.

Shares have surged as much as 55% to 10.5 cents in early trading and are up from 5.8 cents at the market close on March 10.

This placement is another key step supporting the strategic alliance's strong start including advanced pre-mining studies at Mauretania, continuation of the 2020 extensional drilling program at Mauretania and a strong focus on revaluating existing projects to bring them into the mining schedule.

“Important milestone”

Managing director Rob Bill said: “The completion of this placement is an important milestone in setting the foundation to progress our vision for reinvigorating the Tennant Creek Mineral Field (TCMF), historically one of the highest-grade gold and copper provinces in Australia.

“We have worked seamlessly with our new JV partner, TCMG, to fast-track exploration and development plans and are well on the way to establishing an integrated exploration, mining and processing hub that will have flexibility in processing the gold, copper and other products such as copper, iron and cobalt.

“The exploration and mining joint ventures have clear delivery hurdles and minimum production levels to drive our vision of receiving multiple royalty streams across many of our projects.

“TCMG have progressed the Mauretania project from discovery to the Small Mines Joint Venture, with mining studies already well advanced.

“Our 2021 exploration program will commence shortly and consist of drilling on both JV and 100% ERM projects, plus various scoping studies to advance projects to the mining schedule.”

Conditions precedent to the Earn-In, Small Mines and Major Mines Joint Ventures are:

  • $2 million equity investment in Emmerson at 13 cents share (escrowed for 12 months) with an attaching option at 20 cents (expiring December 2025) – a significant premium to the current share price and reflective of unlocking value from this joint venture; and
  • Exploration Earn-In and Joint Venture (EEJV) Agreements executed (to be managed by Emmerson) whereby TCMG contributes $5.5 million toward exploration over 5 years to earn a 75% interest in the NPA.
  • The Small Mines Joint Venture (SMJV) agreement has been executed with Emmerson to receive 6% gold gross revenue royalty from all small mines production and guarantee of a 6% gold royalty from a minimum 30,000 ounces of gold production by the end of the earn-in period or cash payment of the shortfall.

Strategic alliance with TCMG

The strategic alliance with TCMG establishes a funded pathway for the development of Emmerson’s high-grade gold and copper projects and provides substantial new funding for exploration under the EEJV and continues to build the resource pipeline under the SMJV (funded by TCMG).

Emmerson will receive a 6% gold gross revenue royalty and a 2% gross revenue royalty on all other products including copper and iron from projects in the Small Mines Joint Venture (SMJV).

Any major discovery or extension to an existing mine (deemed to be >250,000 ounces of gold equivalent) will be treated as a separate Major Mine Joint Venture (MMJV), where ERM can receive an immediate 40% equity interest or a 20% free carried interest through to definitive feasibility study.

Under the joint venture agreements with TCMG, performance obligations include the requirement to supply detailed staffing, mining, and processing plans to Emmerson within six months and there ensures tangible project advancement.

TCMG is also obliged to produce a minimum of 30,000 ounces of gold within five years (from which Emmerson will receive a 6% production royalty) or make the equivalent payment in cash.

These agreements, together with funding and mining expertise from TCMG provide a low-risk pathway for Emmerson shareholders to monetise our high-grade gold and copper assets in Tennant Creek.

It allows Emmerson to drive future exploration and discovery both at Tennant Creek and NSW while minimising dilution to shareholders.

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