Emmerson Resources (ASX: ERM, Share Price: $0.09, Market Cap: $34m) is one of our most highly-regarded copper-gold exploration plays. Emmerson has successfully employed high-tech modern exploration techniques in the evaluation of its Tennant Creek Mineral Field (TCMF), with the aim of generating company-making copper-gold discoveries in what is a historic gold production region.
Emmerson has advised that development work within the first small mine at Edna Beryl in Tennant Creek has intersected visible, high-grade gold within the development drives; whilst pre-development drilling at the second small mine, Black Snake, has intersected 7 metres at 4.79g/t gold from 18 metres depth.
Market Significance
Emmerson’s share price hit a 12-month high of $0.195 during November 2016, but since then has suffered from a seasonal lull in exploration activity (due to the NT wet season). This is about to change as the 2017 work program cranks up in terms of the Edna Beryl small-scale gold production opportunity, which is based around near-term cash-flow potential. The project’s ultra-high-grade mineralisation remains open both along-strike and down-plunge, with strong potential for repeated, hematite ironstone-hosted gold mineralisation at depth. The company’s small-mine production opportunities have excited the market.
Announcement Detail – Small Mines Strategy Update
Emmerson has provided an update on the strong progress being made with respect to its small mines strategy, which aims to monetise a pipeline of small high-grade gold projects within the company’s Tennant Creek project in the Northern Territory.
Figure 1: Location of Emmerson Resources Small Mines Projects in the Tennant Creek Mineral Field of the Northern Territory. Note yellow circle denotes potential site for a Common User Milling Facility.
Edna Beryl
The first of these is the Edna Beryl Mine that is nearing production, with development drives intersecting visible gold on two levels. The Mine Management Plan is awaiting approval from the NT Department of Mines before production can commence. Additional drilling at Edna Beryl will be undertaken in order to ascertain the size potential of the greater Edna Beryl mineralisation and corresponding economics associated with various development options.
Black Snake
The second project in the small mines category is at Black Snake, which is considered an Advanced Exploration Target. Based on available data it is considered to host around 7,000 – 10,000oz of gold. Pre-Development drilling at Black Snake has intersected 7 metres at 4.79g/t gold from 18 metres depth (including 3 metres at 9.51g/t gold from 18 metres and 1 metre at 14.9g/t gold from 19 metres). A small program of pre-development RC drilling has confirmed the shallow, high-grade nature of the gold mineralisation. Samples from this drilling will now be composited and sent for metallurgical, ore and waste characterisation.
Technical Significance
The Black Snake mineralisation is interpreted to strike east-northeast within a vertical-dipping shear zone, and where gold occurs within hematite shale and veins that have yet to be closed off by drilling. The high-grade gold mineralisation at Black Snake is very typical of the Tennant Creek Mineral Field and as similar to Edna Beryl, is hematite dominant and thus gone virtually undetected by previous explorers.
Figure 2: Long section of the greater Edna Beryl Project showing 2016 drilling and the Edna Beryl East “small mine” development and tribute area (yellow dotted outline)
Next Steps
Permitting of the Black Snake Mine ahead of development is well advanced, with the Mining Management Plan and Heritage survey completed. Discussions on commercial terms for the development and mining of the Black Snake project are underway and will likely be similar to the Tribute style agreement at Edna Beryl. Planning continues on the remaining pipeline of small mines, the largest of which is the Chariot Mine with JORC Resources of 170,000t at 17.4g/t gold.
Summary
We initiated coverage of Emmerson Resources at a price around $0.041 during October 2015 – representing a gain of around 120%. We also had the opportunity to attend MD Rob Bills’ presentation at the Resources Roundup Conference in Sydney last week.
It is accelerating its small mines initiative – aimed at monetizing existing resources and providing underground drill platforms for near-mine exploration. Its first small mine at Edna Beryl has now intersected the ore zone on three levels and once sign-off is achieved from the NT Government, mining and processing will commence.
