Royalty Payments at Risk if JV Gold Production Falls Short by Mid-2026

Commercial Production Milestone Achieved

Emmerson Resources Limited (ASX: ERM) has announced a significant operational milestone as its joint venture partner Tennant Mining, a subsidiary of Pan African Resources, commenced commercial gold production at the Nobles Project near Tennant Creek. The newly operational 840,000 tonnes per annum carbon-in-leach (CIL) processing facility marks a pivotal step forward in unlocking value from one of Australia’s historically rich gold regions.

Currently, production is sourced exclusively from deposits wholly owned by Tennant Mining. While this initial phase does not yet generate royalty income for Emmerson, the company remains poised to benefit from future processing of joint venture (JV) deposits. The timing of this transition remains uncertain, leaving investors attentive to forthcoming updates.

Royalty Payments and Financial Implications

Emmerson shareholders are reminded of the minimum production thresholds embedded in the JV agreement. Should Tennant Mining fail to produce at least 60,000 ounces of gold from the JV tenements by mid-2026, Emmerson is entitled to minimum production payments equivalent to a 6% gross production royalty on the shortfall. Based on Pan African Resources’ initial production forecasts, this shortfall could range between 57,500 and 60,000 ounces, potentially translating to staged payments of approximately $18 million between April and August 2026.

This arrangement provides a financial safety net for Emmerson, ensuring value capture even if JV production lags initial expectations. It also underscores the commercial importance of the JV deposits within the broader Tennant Creek project portfolio.

Strategic Outlook and Exploration Potential

Emmerson’s Managing Director, Mike Dunbar, expressed optimism about the collaborative progress, congratulating Tennant Mining and Pan African Resources on their rapid advancement to commercial production within four and a half years of the JV’s inception. Looking ahead, Emmerson anticipates active development of JV-owned gold deposits and the receipt of uncapped royalties from Small Mines JV deposits.

In addition, Emmerson is preparing for the evaluation and potential development of the White Devil Gold Project, boasting a substantial 611,400-ounce resource where it holds a 40% contributing interest. The company also highlights its extensive exploration landholding of approximately 1,800 square kilometres in the Tennant Creek Mineral Field, a region known for its high-grade gold and copper deposits.

Beyond the JV, Emmerson continues to advance its 100% owned gold-copper projects in both Tennant Creek and New South Wales, exploring collaborative opportunities with partners such as CuFe Limited and Tennant Minerals. These efforts reflect a broader strategy to leverage new technologies and geological models to unlock underexplored mineral potential.

Balancing Opportunity with Uncertainty

While the commencement of commercial production is a clear positive, uncertainties remain regarding the timing and volume of JV deposit processing. These factors will directly influence the scale and timing of royalty payments to Emmerson. Additionally, as with all mining ventures, exploration and development carry inherent risks, including commodity price fluctuations and operational challenges.

Nonetheless, Emmerson’s diversified portfolio and strategic partnerships position it well to capitalize on the evolving opportunities within the Tennant Creek district and beyond.