As part of a farm-in and joint venture, Evolution will sole fund exploration of $15 million over the next three years to earn 65% of Emmerson’s 2500sq.km of ground at Tennant Creek and must spend at least $7.5 million before it can withdraw.

Evolution will be able to earn a further 10% by sole funding a further $10 million of exploration over the following two years.

As well as the JV, Evolution subscribed for 49.1 million Emmerson shares at 3.81c per share to raise $1.87 million, boosting Emmerson’s cash balance to $3.5 million.

Emmerson will receive $2 million worth of Evolution shares to be held in escrow for 12 months.

Emmerson’s Tennant Creek ground has an existing resource of 246,000 ounces of gold but has seen limited modern exploration with only 8% of drilling below 150m depth.

That is what attracted Evolution, with the exploration-driven company believing there are still discoveries left to be made in Tennant Creek.

Evolution discovery vice-president and chief geologist Dr Roric Smith has a history in Tennant Creek, previously working there with Normandy Mining.

“[The deal has] been driven by Roric who understands the potential,” Emmerson managing director Rob Bills told MiningNewsPremium.

Bills said the average grade in Tennant Creek was 15-20 grams per tonne gold.

“The prize is big in terms of grade and production,” he said.

Emmerson had been in talks with Evolution since November last year and the deal is significant, not just because of its size but also that it represents Evolution’s first major farm-in deal and its entry into the Northern Territory.

The deal was announced on June 12 and the companies wasted no time in getting to work, holding the first technical meeting the next day.

Evolution made the first $500,000 payment last week and the first 2500m drilling campaign, comprising reverse circulation and diamond drilling, kicked off.

The initial campaign will focus on the Chariot and Eldorado historical mines, with Evolution keen to quickly grow resources.

Bills said drilling at Chariot East below the existing pit could double the existing resource of 170,000 tonnes at 17.4gpt gold.

Eldorado produced 122,000oz gold at a head grade of 17.9gpt gold, though the pit is only 150m deep.

Underground rock chip sampling beneath the Turner fault suggests the continuation of the orebody at depth, with the single diamond hole of the campaign testing that potential.

The first results are expected this month.

“I think it’s going to be a very exciting first round of drilling,” Bills said.

This month, a joint targeting exercise is planned to finalise the exploration program for the remainder of the year.

The final targets are expected to be a mix of near mine/brownfields targets as well as some fresh greenfields targets.

Bills said despite Tennant Creek’s history, the region remained underexplored.

“They’ve found all the easy stuff but what they haven’t found is anything deeper than 150m,” he said.

He said the technical challenge would be finding resources from 150-500m depth.

“That’s where the next win will come from.”

Evolution was also attracted to the powerful HeliTEM technology used by Emmerson, which found extensions leading to the discovery of the Goanna and Monitor deposits.

Emmerson previously completed a HeliTEM survey over its known deposits to test efficiency at a cost of $800,000.

“But we found two deposits so it was very effective in terms of expenditure,” Bills said.

Bills said aeromagnetic surveys in the 1970s led to a higher rate of discoveries and production in Tennant Creek and HeliTEM could do the same now.

“It’s opened it up again,” he said.

There are no current mines in the region but Emmerson is the dominant landholder and expects to be the next Tennant Creek producer.

“We’ve basically tied up 95% of the Tennant Creek mineral field,” Bills said.

The area is well-developed with access to power, roads, water, a town and other infrastructure.

“The hurdle to get into production is quite low,” Bills said.

Importantly, Emmerson has a strong relationship with the region’s traditional owners and enjoys full government support.

“I think they see us as the big white hope of Tennant Creek,” Bills said.

As of Monday, Emmerson had received the placement funds from Evolution and all conditions had been satisfied for the deal.