Emmerson Resources Ltd. entered into a joint venture agreement enabling Territory Resources Ltd. unit TRL Tennant Creek Pty. Ltd. to mine and explore the South Project Area of Emmerson's Tennant Creek Mineral Field mining operation in Australia's Northern Territory.
Exploration is expected to kick off in the coming weeks with surface drilling focused on predevelopment and expanding resources.
Emmerson announced plans for the alliance in late May. The deal also includes the sale of Emmerson's Warrego mill to Territory Resources, which is now complete, according to a Sept. 6 release. Under the deal, Territory Resources will build a carbon-in-pulp processing plant with a capacity of 300,000 tonnes per year at the site.
"Construction work on this important regional facility has commenced with the first production scheduled for late 2018 or early 2019," Emmerson Managing Director Rob Bills said.
Territory Resources also committed to contribute A$5 million over five years to earn a 75% equity interest in the South Project Area, or SPA, after which a joint venture can be formed whereby Emmerson can choose to either maintain its equity position in the SPA by contributing 25% to the exploration programs, dilute or convert to a royalty.
In addition, Territory Resources subscribed for 19,323,671 Emmerson shares at 10.35 Australian cents apiece, which will raise about A$2 million to support Emmerson's ongoing exploration efforts and provide general working capital.
Emmerson will receive a 12% gross revenue royalty on gold produced at the Edna Beryl mine and a 6% royalty on the Chariot mine, which both form part of the SPA project. The company will also receive a 25% profit share from any other mine developed within the SPA, with Territory Resources to fund development, mining and processing.
Emmerson will continue to retain 100% control of its Tennant Creek property outside of the SPA, collectively called the Northern Project Area and equal to about 75% of the property, which includes the Mauretania gold and Jasper Hills gold-copper-cobalt prospects.