EMX’s royalty portfolio in Serbia initially resulted from prospect generation and organic royalty growth via the 2006 sale of its properties, including Brestovac West, to Reservoir Capital Corp., for uncapped NSR royalties of 2% for gold and silver and 1% for all other metals. Reservoir Capital Corp. later transferred those interests to Reservoir Minerals Inc. (“Reservoir”). Subsequently, EMX acquired 0.5% NSR royalty interests (note: the royalty percentage is subject to reduction only as provided in the royalty agreement) covering the Brestovac and Jasikovo-Durlan Potok properties (see EMX news release dated February 4, 2014), which along with Brestovac West, are included in the Timok Project controlled by Nevsun Resources Ltd. (“Nevsun”) after its acquisition of Reservoir in 2016. EMX notes that: a) the original Brestovac and Brestovac West permits are now covered by the Brestovac Metonivca and Brestovac Zapad permits, and b) portions of a reconfigured Jasikovo-Durlan Potok permit (i.e., expanded in some areas and reduced in other areas) are not covered by the EMX royalty. Nevsun was acquired by Zijin Mining Group Co. Ltd. in in Q1 2019 (see Nevsun news release dated January 11, 2019).
The Brestovac royalty property covers the Cukaru Peki deposit’s Upper Zone high-grade epithermal copper-gold project and the Lower Zone porphyry copper-gold project. The Upper Zone’s resources at a US $35/tonne “resource NSR” cutoff include 2.2 million tonnes averaging 8.6% copper and 5.7 g/t gold as measured, 26.6 million tonnes averaging 3.3% copper and 2.1 g/t gold as indicated, and 13.9 million tonnes averaging 1.6% copper and 0.9 g/t gold as inferred (see Nevsun news release dated October 26, 2017). Nevsun’s Upper Zone Pre-Feasibility Study outlined a 10 year underground mine life yielding approximately 1.7 billion pounds of payable copper and 516 thousand ounces of payable gold, with an after tax NPV8 of US$1.82 billion valued at the start of construction (see Nevsun news release dated March 28, 2018). As an important step forward towards production, construction of the Upper Zone exploration decline commenced in 2018 (see Nevsun news release dated June 5, 2018). Initial production from the Upper Zone is expected in 2022 (see Nevsun news release dated May 28, 2018).
In addition to Upper Zone development work, the Lower Zone porphyry project is being advanced by Zijin (previously in a joint venture with Freeport). The initial Lower Zone inferred resource at a $25/tonne “dollar equivalent” cutoff is 1.659 billion tonnes averaging 0.86% copper and 0.18 g/t gold, and containing 31.5 billion pounds of copper and 9.6 million ounces of gold (see Nevsun news release dated June 26, 2018). The mining method is assumed to be by block cave. According to Nevsun “There are multiple high grade Upper Zone style exploration targets above the Lower Zone and our exploration licenses have the potential to host entirely new porphyry systems with associated high grade Upper Zone style mineralization.”
EMX’s other Timok royalty interests include Brestovac West, which is ~700 meters west of Cukaru Peki and contains the Corridor Zone high-grade gold prospect, and the Jasikovo East-Durlan Potok property which occurs to the north in the Timok belt.
EMX’s Timok royalty properties occur along trend from the world-class Bor-Majdanpek mining complex and add strategic upside potential in one of the richest mineral belts in Europe.
* The royalty percentage is subject to reduction only as provided in the royalty agreement.