Emmerson to open first new gold mine in Northern Territory in a decade
Australia's Northern Territory will soon be producing gold again thanks to Emmerson Resources (ASX:ERM), which is advancing the Edna Beryl gold mine along with Australian gold producer Evolution Mining (ASX:EVN).
On June 23 Emmerson announced that the NT government granted final approvals for mine production to begin – which is a milestone for the Northern Territory where no significant new gold mines have opened for 10 years. The Old Pirate mine in the Tanami Desert operated for just one year before closing in February 2016. Newmont's (NYSE:NEM) Tanami mine has been operating since 2002.
"The commencement of production at Edna Beryl is a pivotal step since Emmerson began exploration in the Tennant Creek Mineral Field in 2008": Emmerson’s managing director Rob Bills
Under a farm-in agreement, Evolution is funding $15 million in exploration by the end of the year in order to earn a 65% interest in the project, with an option to earn an additional 10% over the next two years through a $10 million commitment.
The mine is being developed in cooperation with the NT government, which is conducting a feasibility study into establishing a mill at Tennant Creek, which could lead to the mine's expansion. The first 600 tonnes of development ore averaged grades of 40 grams per tonne, which would make the mine high-grade. Mining at Edna Beryl East will be undertaken by the Edna Beryl Mining Company under a tribute agreement, the company stated.
It says the underground mine will start small (a production figure was not given) but has exploration upside.
"The agreement relates to a 3D envelope around the shallow mineralisation. Drilling last year extended the mineralisation beyond this 3D envelope, opening up the possibility of either expanding the current mining area or, if the next round of drilling is successful, contemplating a larger scale of development."
According to a project page Emmerson says it is employing "the world’s most powerful airborne time-domain electromagnetic system – HeliTEM – which has the potential to screen large areas quickly and effectively and under ideal conditions is likely to see down 500 metres below the ground surface."
In 2011 the company trialled the technology in the Tenement Creek Mineral Field, about 500 kilometres north of Alice Springs, and discovered two new areas of mineralization within a well-explored brownfield camp. Less than 6% of the Tenement Creek Mineral Field has been explored using HeliTEM.
"The commencement of production at Edna Beryl is a pivotal step since Emmerson began exploration in the Tennant Creek Mineral Field in 2008," said Emmerson’s managing director Rob Bills. "It not only provides a revenue stream but establishes a template for unlocking value in many of our other projects contained within our extensive, 3,000-square-kilometre tenement package. We believe this “tribute style of agreement” maximises value and mitigates risk whilst providing great insights for our near mine and regional exploration programs. As we know, small mines can often grow into big mines!"
Emmerson's stock price has risen 7.53% in the last 5 trading days since the announcement, compared to a year to date loss of 23.08% on the ASX.
Image of Alice Springs, about 500 kilometres south of the minesite, by Matt Cumming. Flickr Creative Commons license.