Emmerson Evolving At Tennant Creek
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An advanced explorer with a strong technical pedigree that’s pursuing aggressive exploration and appraisal activity with respect to its Tennant Creek acreage, in conjunction with quality partner Evolution Mining.
|Status: Emerging Producer|
|Size: Small Cap|
|Commodity Exposure: Gold|
|Share Price: $0.041|
|12-month Range: $0.021 - $0.048|
|Shares: 377m, Options: 2.1m|
|Top 20: 61%|
|Net Cash: $3.2m|
|Market Value: $15m|
|Key Parameters||Rating (✓out of 5)||Quarterly Statistics|
|Management Quality||✓✓✓✓✓||Q2 2015 Exploration Spend: $0.776m|
|Financial Security||✓✓✓✓✓||Q2 2015 Administration Spend: $0.280m|
|Project Quality||✓✓✓✓✓||Exploration Spend 73%, Admin. Spend 27%|
|Exploration / Resource Potential||✓✓✓✓✓||Q3 2015 Forecast Exploration Spend: Nil|
|Project Risk||✓✓✓✓✓||Q3 2015 Forecast Admin. Spend: $0.3m|
Emmerson Resources has for the past eight years maintained aggressive exploration activity on its high-grade gold-copper acreage package at Tennant Creek within the Northern Territory. We’ve long held confidence in the company’s ability to ‘crack the code’ with respect to the geology of Tennant Creek, with the ultimate goal of achieving production status. The 2014 joint venture tie-up with quality gold producer, Evolution Mining (ASX: EVN), has reaffirmed our confidence in the overall story.
One of Emmerson’s biggest attractions has been technological. Emmerson utilises a technique that is able to clearly identify fresh gold-copper targets that have a strong chance of being mineralised. Within the Tennant Creek context this means the identification of mineralisation-bearing host ironstones. The use of HeliTEM surveys has allowed for the identification of extensions to prospective mine corridors, thus expanding mineralized trends well outside of areas previously defined by magnetic surveying alone.
We believe there is a fundamental lack of broader market appreciation for the significance of the farm-out/joint venture deal with Evolution Mining (ASX: EVN). The deal has huge implications for a company of Emmerson’s modest size - with Evolution set to invest almost $29 million in both Tennant Creek exploration and Emmerson itself - over the next five years. Evolution’s commitment reinforces our long-held view on the overall resource potential of Emmerson’s Tennant Creek portfolio.
New High-Grade Gold Discovery
Emmerson has announced encouraging final assay results from the maiden three-hole RC drilling program completed at the Mauretania prospect within the Eastern Project Area (EPA) of the Tennant Creek Mineral Field.
Recent exploration work completed at Mauretania and its immediate surrounds has comprised systematic geochemistry over selected areas from RAB drilling, rock-chip sampling and geological mapping.
The first of three RC drill-holes completed at Mauretania (MTRC004) targeted the centre of an interpreted (but blind) northwest-trending magnetic anomaly, 400 metres south of the old Mauretania mine that intersected ~60 metres of brecciated quartz-hematite-specularite ironstone. This hole returned encouraging assay results of 6 metres at 2.26g/t Au from a down-hole depth of 195 metres.
The discovery hole (MTRC006) was drilled up-dip of MTRC004 and intersected a 70-metre thick interval of ferruginous limonitic-kaolin-quartz-jasper alteration, while drill-hole MTRC005 was drilled below the base of the supergene and yielded correspondingly low-level assay results.
The gold rich zone comprises:
- 30 metres at 3.22g/t Au, 13.1g/t Ag, 0.33 % Cu and 723 ppm Bi from 57 metres
- incl. 15 metres at 5.67g/t Au, 14.7g/t Ag, 0.11% Bi, 0.24% Cu from 60 metres;
- 3 metres at 21.3g/t Au, 5.01g/t Ag, 0.20% Bi, 0.23% Cu from 63 metres
- with a lower copper-rich zone that comprises 24 metres at 1.07% Cu, 8.51g/t Ag, 0.40g/t Au from 78 metres
The Mauretania discovery is open along strike and is associated with multi-element geochemical anomalies and rock chip assays up to 214g/t gold. The Mauretania area has been targeted using the recent high-resolution aeromagnetic survey that highlighted a number of new, subtle anomalies corresponding with major structures - and in some cases historical mines.
These results reflect early success from Emmerson’s revised exploration model that places a much greater emphasis on the structural styles and the potential for magnetite destruction by gold-rich fluids and supergene effects.
By way of background, the bonanza-grade Nobles Nob Mine that is situated 35km to the south, produced more than 1.1 million ounces of gold at an average recovered grade of 17.3g/t gold from a very small footprint of ~200 metres in strike extent and within 100 metres of surface. Furthermore, the alteration, geochemistry and mineralogy from the recent drilling at Mauretania is similar, with high-grade gold associated with silver, copper and bismuth within hematite ironstone.
In exploration, this corresponds to weak magnetic geophysical signatures that have been overlooked by many previous explorers and is reflective of conversion of primary magnetite to mostly non-magnetic, supergene hematite in the near-surface environment.
The Emmerson-Evolution joint venture has a strong pipeline of opportunities to drill-test during the December quarter, with drilling to re-commence at Mauretania later this month and then move to further follow-up drilling after recent successes at the Gecko-Goanna project.
High-Grade Copper-Gold at Goanna
Emmerson Resources and joint venture partner Evolution Mining recently announced encouraging assay results from the pre-collar of deep diamond drill-hole GODD032 within the Tennant Creek project. The hole was co-funded as part of the Northern Territory’s “Creating Opportunities for Resources Exploration” (CORE) initiative.
The pre-collar to this deep hole has intersected multiple zones of copper sulphide mineralization associated with quartz - chlorite veins, which are considered analogous to the recently-discovered Goanna mineralisation some 800 metres to the east.
Drill-hole GODD032 intersected multiple zones of high-grade copper:
- 7 metres at 5.98% Cu from 123 metres, including 3 metres at 10.4% Cu
- 3 metres at 4.75% Cu from 162 metres, including 1 metres at 10.6% Cu
- 1 metres at 2.37% Cu from 221 metres
The drill-hole was designed to test a new structural and geological interpretation, based on the application of a 2D seismic reflection survey – the first application of seismic within the Tennant Creek Mineral Field.
Emmerson expects to receive assay results shortly on deeper intersections within drill-hole GODD032, where further new zones of copper, pyrite and bismuth mineralisation associated with hematite have been encountered.
As background, Goanna was discovered by Emmerson during 2011 and together with the Gecko deposit already hosts an Inferred Resource of 4.4 million tonnes at 2.1% Cu and 0.11g/t Au. Significantly this mineralisation is shallow and like Goanna, has remained undetected by previous explorers - thus opening up the potential for further similar mineralisation. The intersections indicate potential to materially extend the Goanna resource within the already-significant 2.7km long Gecko-Goanna-Monitor mineralised corridor
Tribute Mining at Edna Beryl
Emmerson also recently signed a “small mines” Tribute Agreement with Edna Beryl Mining Company (EBMC), which will allow EBMC to commence permitting and if successful, undertake mining of Emmerson’s high-grade Edna Beryl gold deposit, situated within its Northern Project Area.
EBMC are narrow-vein mining specialists, with more than 50 years’ of combined mining and mine management experience. EMBC’s principals are highly familiar with the Tennant Creek Mineral Field, having started their careers at the White Devil gold mine and successfully completed similar small-scale underground mining projects at Rising Sun and New Hope.
EBMC also has prior underground experience at Edna Beryl, having been involved with exploratory shaft sinking and ore extraction under previous owners Giants Reef Mining, producing approximately 410 ounces of gold between 2004 and 2005 from the upper mineralised pod. EBMC intend to commence mining as soon as all statutory requirements are met.
Edna Beryl was discovered by prospectors during 1935 and was mined via underground during the 1940s & 1950s to a maximum depth of approximately 50 metres. Production up until 1952 was reportedly 2,700t of ore at an exceptional grade of 53g/t gold.
More recent exploration within the Edna Beryl area between 1996 and 2000 by Giants Reef Mining outlined additional high-grade gold mineralisation below the historic workings, resulting in an estimate being reported in 1998 by independent consultants in accordance with 1998 JORC. Whilst this estimate does not meet the minimum reporting requirements under the current 2012 JORC Code, Emmerson considers the Edna Beryl mineralisation to constitute a conceptual exploration target of between 5,000t and 10,000t, with a likely grade of 20 - 30 g/t gold.
Edna Beryl Proposed Shaft Development
The Tribute Agreement with EBMC provides Emmerson with a totally risk-free, near-term income stream from what is essentially a non-core asset. And there are more non-core assets that could also be monetized in this manner. The resumption of mining activity within the Tennant Creek Mineral Field is in itself an important development and will help supplement the company’s cash reserves and provide further opportunities to gain access to these historic, high-grade mines for near-mine exploration. Some of the most significant mines within the mineral field, such as White Devil, were discovered from similar strategies.
Evolution Minerals Farm-in
Under the terms of the farm-in deal announced back in mid-2014, Evolution can sole-fund exploration expenditure worth $15 million over a three-year period in order to earn a 65% stake in Emmerson’s 2,500 sq km Tennant Creek project area. Evolution can then spend a further $10 million minimum over a further two-year period to earn an additional 10% stake in the Tennant Creek project area, taking its stake to 75%.
Evolution also subscribed to a placement of 49.144 million Emmerson shares at a price of $0.0381 each that raised $1.872 million, whilst Emmerson also received approximately 2.5 million Evolution shares at an issue price of $0.7986 per share (currently trading at $1.48).
The tie-up with Evolution Mining provides shareholders with financial security, technical expertise, a high level of exploration activity - potentially accelerating the company’s transition from advanced exploration status to that of a producer. The aim is to achieve this through aggressive near-mine drilling programs aimed at growing the existing JORC-compliant resource base, combined with regional exploration work. Exploration activity is drawing upon Evolution’s vast development and exploration expertise, but is managed and operated by Emmerson. The Tennant Creek mineral field has in fact produced more than 5.5 M ounces of gold and 470,000 tonnes of copper over its history, making it one of the highest-grade goldfields within Australia. Accordingly, Emmerson Resources will remain held within our Watch-List Portfolio.
After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.
Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.