Ann: MEETING: NTL: Chairmans Address

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					NTL
19/09/2013 10:33
MEETING

REL: 1033 HRS New Talisman Gold Mines Limited

MEETING: NTL: Chairmans Address

19 September 2013
ANNOUNCEMENT BY NEW TALISMAN GOLD MINES LIMITED (NTL, NTLOA or NTLO)
FOR IMMEDIATE RELEASE
CHAIRMAN'S ADDRESS
ANNUAL MEETING 19 SEPTEMBER 2013
Introduction
The director's report for the year to 31 March 2013 was circulated with the
Annual Report. Before I ask you to formally receive the Annual Report
together with the Financial Statements and the report of the Auditors I will
speak to several of the issues raised in the report.  I also want to use this
opportunity to provide a little more background to the resolutions contained
in the notice of meeting that will be put to the vote later in the meeting.

The External Environment
At the conclusion of my address to shareholders last year I made reference to
some bullish predictions for the price of gold.  The predictions were from
reputable analysts and chief executives with international banks and major
gold mining companies and were representative of many other forecasts being
bandied about at the time.   The particular forecasts to which I referred
ranged from US$2,500 per ounce to US$3,400 per ounce over the next two years.
The rationale behind those forecasts was the extraordinary quantitative
easing programmes, more colloquially described as money printing, being
undertaken in the United States and Europe at the time.  The argument went
something like this: You can print as much money as you like but you can't
print any more gold.  Gold is the one constant store of wealth and
accordingly it has to go up in price relative to the increased amount of
money in circulation.  A pretty compelling argument I thought. On the day of
last year's AGM, the 28th of September, gold was quoted in New York at
US$1750 an ounce.  A week later on October the 4th it hit $1790 an ounce.  So
far, so good.

But how times have changed, in mid to late June this year you could have
bought one of those very same ounces of gold in New York for just US$1,200.80
per ounce.    Since then the market has slowly strengthened again and has
been as high as US$1,420 per ounce and currently holds at US$1,363.   I will
ask Executive Director Matt Hill to expand on this issue and its effects
across the listed gold company sector after the formal part of the meeting.

The point I want to make is that that period of extraordinary volatility in
the price of gold has had a salutary effect on the way your directors have
thought about the development of the Talisman gold mine.  With gold trading
at US$1,200 per ounce and bearish forecasts suggesting $1,100 or even $1,000
per ounce we took a second hard look at the financials in the pre-feasibility
study we released to the market in March.  It is fair to say that we came out
of that review with a renewed sense of confidence in the project and its
resilience across a wide range of price scenarios.  We made the decision to
progress the development of Talisman mine while other juniors and senior gold
companies were cutting back and pausing the development of major projects.

For reasons that Wayne Chowles our Principal Mining Engineer will explain
more fully in his presentation after the formal session is concluded, the
very high grades contained in some of the seams in Talisman present an
opportunity to mix and match ore grades and production rates to the price of
gold in the market and still generate an attractive rate of return.

I am not suggesting that the Talisman project is insensitive to the price of
gold.  Of course price is a key sensitivity but the unique features of the
reserves at Talisman afford us the ability to ride out troughs in the price
cycle, albeit at lower production levels.    Key to this is the flexibility
we have in changing which faces of ore we move to.   Whilst we have a
preferred sequence of targets we have the ability to focus on the high grade
ore face to ensure cash flows should the price of gold decline significantly.

Capital Raising
 I also want to make the point that the recent volatility in the price of
gold has played a very significant role in the timing of our capital raising
programme.   In the period to 31 March 2013 we successfully raised A$1.5
million to fund the Talisman mine prefeasibility study and working capital
through a rights issue that was fully underwritten by Cannacord Genuity.
That was against the background of the more bullish outlook for gold I
referred to at the start of this address.  As noted in the Annual Report the
prefeasibility study was completed on time and under budget in March this
year.

Post balance date we raised, by way of a placement to sophisticated
investors, a further A$543,000 to fund the due diligence exercise on the
Mpokoto heap leach project in the Congo and for general working capital.
That capital was raised against the background of a declining gold price and
fell somewhat short of our expectations.  The decline in the price of gold
inevitably influenced our view of the Mpokoto project. At this time we
retain a 12.5% shareholding in Netcom, the company with rights to 80% of the
project, and have an option to take that up to 25% if we convert the loan to
Netcom to equity.  Netcom and the Mpokoto project are presently the subject
of an offer by a publicly listed UK entity.

Given the positive outcome of the Prefeasibility Study and the second hard
look at the financials that I referred to above, we would have liked to have
raised the capital necessary to get to bulk sampling and trial mining at
Talisman somewhat earlier than now.   In June we visited a range of Sydney
brokers that have supported the company in the past.  At that time the price
of gold was heading south but had not hit bottom.  It was apparent to us it
was not possible to raise capital for a gold project in that climate at a
sensible, acceptable price.  So we have had to cut our expenditure to the
barest minimum in the intervening period.

However, we now judge the market has turned as reflected in the recent gold
price range.  In short there are clear signs of recovery.  As you are aware
we have invited all shareholders to participate in a share purchase plan that
will fund the project to the point of first trial production.  If you have
not already resolved to support the share purchase plan I trust the
presentation after the formal session will assist in your decision to
participate.

Finally on the subject of raising capital, you will note there are two
resolutions on the notice of meeting intended to give your directors
additional flexibility with respect to raising additional capital in the
future.  Dependent on the outcome of the full feasibility study we may or may
not need this flexibility but if the full feasibility study confirms the
preferred development directions identified in the pre-feasibility study then
some capital investment in underground plant and equipment will be required
to optimize ore production levels.

The Journey from Explorer to Producer
The annual report for the period to March 2013 reflects the very real
progress the Company has made on its journey from explorer to developer and
on to producer.  The report highlights the changes made to the board and
management team to give effect to the strategic decision to focus on
developing the Talisman mine, on completing the prefeasibility study, on
upgrading the mine access road and hard stand area and on commencement of
work on the full feasibility study including trial mining, bulk sampling and
identification of the optimal processing route for the gold ore.

Wayne will set out for you later the detailed scope of work intended in the
full feasibility study and the proposed direction of developments
underground.  I want to draw to your attention some other aspects of the
journey from explorer to producer that your directors are confronting.

First, the mix of skills and experience required to drive the Talisman
project to a successful conclusion is changing.  This applies both to
executive staff and to board members.  In the past both staff and board had a
distinct leaning towards geological and exploration skills and we tended to
buy in mine engineering and other skills on an as-needed basis.  Today it is
the other way around in terms of staff.  That has implications for the level
of remuneration required to attract and retain individual staff with
qualifications and experience in the requisite disciplines.  In the near
future the company will also be engaging miners and process workers and that
has implications for the overall amount applied to remuneration.

Second, your board is very conscious of the value of cash in today's
investment climate and considers that remuneration of senior executive staff
and board should be structured with a mix of cash and equity.  The share
option portion of the remuneration offers employees and board members an
incentive to go the extra mile for the benefit of the company and in that
sense aligns the interests of staff and board members closely with the
interests of shareholders.   I will be happy to speak further to this issue
when we come to the relevant resolution in the next section of this meeting.

Third, your board presently comprises only three members.   That presents
some challenges in terms of best governance practice but also has some
advantages in terms of agility and speed of decision making.  On balance we
judge an additional member or two would be preferable particularly in terms
of deepening the engineering and financial disciplines on the board.  So the
resolution on the order paper seeking an increase in the directors' fee pool
is about attracting another member or two to the board, not about paying
directors more. As an aside I note that post the various enquiries into the
Pike River mine disaster and the collapse of the finance companies, directors
are more exposed to the risk of expensive litigation, financial penalties and
potentially imprisonment. Directorship of a mining company is not an office
that people take on lightly.

Looking to other developments associated with the development of Talisman
mine I can report that we are confident we are close to finalizing the terms
and conditions of the access agreement to the mine and the terms and
condition of the resource consents required to operate the mine during the
bulk sampling phase.  Those of you who have followed the project closely from
its inception will know that the mine site is located on land managed by the
Department of Conservation.   We have been very careful to confine all our
proposed operations within the footprint of the old mine and to contain all
water take and discharge to within the old underground workings.  Overall the
scale of operations we are proposing is small relative to the gold mining
operations undertaken nearby at Waihi. Nevertheless we have had to go
through a very rigorous application process which we have accepted as a
necessary step on the journey to production.

Finally, I wanted to share with you that on Tuesday afternoon we released to
the market an announcement concerning gold and silver produced from ore
samples recovered from old stockpiles on the hardstand area at Talisman as
part of the more extensive studies being undertaken into processing options.
This gold was recovered from ore samples using simple crushing and
gravitational separation measures.  Wayne will speak further to this exercise
in his presentation.

And on one final bright note Citibank Analyst Tom Fitzpatrick's most recent
forecast is for the price of gold to hit $3500 sometime during the next 2
years.

That concludes my address.

J Murray McKee
Chairman
NEW TALISMAN GOLD MINES LIMITED
+64 9 303 1893

About New Talisman Gold Mines Ltd
New Talisman Gold is a dual listed (NZX Main Board & ASX: NTL) with 1800
shareholders who are mainly from Australia and New Zealand. It is a leading
New Zealand minerals development and exploration company with a portfolio of
high quality mineral interests. Its gold properties near Paeroa in the
Hauraki District of New Zealand are a granted mining permit, including a JORC
compliant mineral resource within the original Talisman underground mine, and
an adjacent exploration permit along strike from the mine. The company is now
advancing its plans to develop the mine, and advance the exploration project.
Through a subsidiary company, New Talisman Gold owns 21.7% of Broken Hill
Prospecting Limited, which is planning to develop a cobalt project at
Thackaringa, about 25 kilometres south-west of Broken Hill in Australia. BPL
is listed on the ASX (Code: BPL). More about New Talisman Gold at
www.newtalisman.co.nz
End CA:00241301 For:NTL    Type:MEETING    Time:2013-09-19 10:33:38