EMMERSON RESOURCES LIMITED — Capital/Financing Update 2019

Jun 26, 2019

27 June 2019

ASX Announcement

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An Emerging Gold Royalty Company

• Final payment from Territory Resources of $300k concludes the sale and transfer of the Warrego Mill and Mining Lease at Tennant Creek.

• Territory is in the process of re-establishing Warrego as a central processing facility for Tennant Creek after securing financing that is contingent on successfully meeting progress milestones.

• Territory is finalising the recommissioning timetable with the refurbishment of the crushing, grinding and gravity circuits expected in calendar Q4, 2019.

• Strategic Alliance with Territory sees priority processing of high-grade gold ores from Emmerson’s projects at Warrego on a “cost+” basis.

• Emmerson’s 12% share of gold from the first parcel of ore from the Edna Beryl mine has funded recent successful drilling, and geophysical programs at its 100% owned Mauretania project.

• According to Territory (the operator of the Edna Beryl mine), resumption of mining will follow dewatering and shaft deepening which is expected to be undertaken in calendar Q3, 2019.

Emmerson’s Managing Director; Mr Rob Bills commented:

“The development of a modern, centralised processing facility at Warrego is the key to unlocking a portfolio of undeveloped gold assets in the Tennant Creek Mineral Field. The finalisation and transfer of the Warrego ML to Territory marks a major step forward for not only Emmerson shareholders, but all Tennant Creek stakeholders.

It is a critical milestone towards realising Emmerson’s vision to establish an integrated exploration, mining, and processing hub. Also reflecting a low risk path to generating cash-flow from its gold assets via a gold royalty or profit share whereby partner, Territory are responsible for the permitting, development, mining, and processing.”

Emmerson Resources Ltd ( Emmerson ) entered into a Strategic Alliance with Territory to build a central mill in Tennant Creek to support and monetise Emmerson’s gold mines and other third-party feed (ASX: 31 May 2018). This alliance also extends to a $5m earn-in by Territory over Emmerson’s southern project area (SPA) (where Emmerson is the Operator and Manager) plus a Mining Joint Venture over a portfolio of Emmerson’s small mines on a 75/25 profit share basis, excluding the Edna Beryl and Chariot mines where Emmerson receives a 12% and 6% gold production royalty respectively.

Emmerson Resources Limited ABN 53 117 086 745

t: +61 8 9381 7838 | e: rbills@emmersonresources.com.au | w: www.emmersonresources.com.au 3 Kimberley St, West Leederville 6007 WA

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Note: Emmerson retains 100% ownership of the Northern Project area which contains the recent Mauretania gold discovery.

Finalisation of the Warrego Mill Sale

The final $300k payment from Territory now completes the sale of the Warrego mill and triggers the transfer of the tenement (ML 30888). Territory is currently progressing the re-establishment of the Warrego Mill and now plans to fast track the first stage refurbishment of the crushing, grinding and gravity circuits. This follows the approval of the Mine Management Plan (MMP) by the NT Government and attainment of a financing facility.

The toll treatment of the first parcel of ore from Emmerson’s Edna Beryl mine confirmed that most of the gold (~60%) was liberated from simple crushing, grinding and gravity process and thus provides a low-cost option to mirror this at Warrego. Moreover, the mill head grade of ~30g/t gold from this first parcel of ore not only makes it one of the highest-grade gold mines in Australia but is indicative of the likely production grades which are not necessarily reflected in the surrounding surface drilling. Thus, the establishment of the exploration strike drive (at Territory’s expense) and underground exploration drilling (at Emmerson’s expense) will be instrumental to better understanding the grade distribution and future potential of this mine. A timetable for this work program will be finalised shortly.

Importantly the Ministerial approval and transfer of the tenement to Territory releases Emmerson from any historical and future liabilities.

Gold Royalties

Emmerson has now received royalty payments totalling $275k pertaining to the first ore parcel from the Edna Beryl Mine. Although initially modest, this payment represents the beginning of a growing royalty stream for Emmerson which it intends to replicate across multiple mines in the Tennant Creek Mineral Field (Figure 2). As previously outlined, the royalty model removes the high-risk transition from discovery to mining and processing, with royalty companies typically trading at multiples to their Price Earnings (PE) (Figure 3). This royalty model allows Emmerson to concentrate on its core business of discovering new deposits through deploying new exploration technologies. The discovery and recent diamond drill program at Emmerson’s Mauretania project, which intersected 15m at 45g/t gold including 4m at 158g/t gold plus deployment of a new Sub-Audio Magnetic (SAM) geophysical survey is an example of this approach (ASX: 11 June 2019).

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For further information, please contact:

Rob Bills

Managing Director and CEO

E: rbills@emmersonresources.com.au

T: +61 8 9381 7838

Media enquiries

Michael Vaughan, Fivemark Partners E: michael.vaughan@fivemark.com.au T: +61 422 602 720

Competency Statement

The information in this report is based on information compiled by Dr Ana Liza Cuison, MAIG, MSEG. Dr Cuison is a Member of the Australian Institute of Geoscientists and has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2004 edition and the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Cuison is a full-time employee of the Company and consents to the inclusion in this report of the matters based on her information in the form and context in which it appears.

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Figure 1: Location of Emmerson’s tenement 100% package (blue), the JV area with Territory Resources (pink) and the Warrego ML (pink) .

The above Mauretania exploration results were reported in ASX Announcements dated 11 June 2019 and 18 February 2019 and there is no new information or data that materially affects the information included in those previous announcements.

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Figure 2a . Average Net Smelter Royalty held by streaming companies = 2.2%. Edna Beryl Mine = 12% and Chariot Mine = 6%

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Figure 2b . Average Net Profit Interest or Net Proceeds Royalty held by streaming companies = 11.4%. For mines within the Southern Project Area (and excluding Chariot and Edna Beryl), the JV Profit Share is 75% Territory and 25% Emmerson (on a non-diluting basis).

Source: Franco-Nevada Corporation, Wheaten Precious Metals Corp., Royal Gold Inc., Osisko Gold Royalties Ltd, Sandstorm Gold Ltd.

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Franco- Nevada Wheaton Royal Gold Osisko Sandstorm Average
Primary Exchange TSX TSX NASDAQ TSX TSX NA
Key Commodity Exposure Au, PGMs & Oil & Gas Ag & Au Au, Ag, BM Au, Ag, BM Au & BM NA
Listing Year 2007 2004 1990 2014 2009 NA
No. of Production Royalties 109 20 40 19 21 41
Market Cap US$ Millions 13,470 7,340 5,140 1,240 793 5,597
TTM Revenue US$ Millions 670 840 444 364 71 478
EV/Revenue 20x 10x 12x 4x 10x ~11x
EV/EBITDA 26x 15x 17x 22x 16x ~19x
Forward Looking P/E 63x 30x 35x 59x 54x ~48x

Figure 3. Typical returns from Royalty Companies reflecting low risk revenue streams

Source: Yahoo Finance (7 December 2018) TTM – Trailing twelve months, EV – Enterprise value, PGMs – Platinum group metals, BM – Base metals, EBITDA – Earnings before interest tax depreciation and amortisation, P/E – Price earnings

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