After years of holding TAM I am convinced that the Central Tanami Project (CTP) JV is 'gold banking'. The following chart shows how good the existing 2.6Moz high-grade resource is when compared to other much lower grade undeveloped projects. Because TAM is not researched by any broker it has gone under the radar and even in this chart its 50% share of the CTP with NST has not been recorded.
The 2.6Moz is incredibly conservative as the JV has used $A2,700 for its resource cut-off calculation plus they have not upgraded resources to include successful expansion drilling at the Ripcord, Jims and Groundrush deposits. Potentially when adjusted for a higher gold cut off (say $3.500) plus drilling expansion, the resource is more likely to be well over 3Moz. I also believe there is real potential for the JV to pick up cash strapped PRX's 'stranded' 430Koz Hyperian resource at close to discovery cost.I have copied NST's 2015 statement made on completion of the JV deal in July 2015 by NST's Bill Beament who is arguably Australia's most successful mining CEO:"With the joint venture agreement now settled, Northern Star will proceed with its strategy to bring the Central Tanami Project back into production in 2017. Central Tanami is an outstanding high-grade project which will form a key part of Northern Star’s pipeline of emerging production assets. The flagship deposit at Central Tanami, Groundrush, produced 611,000oz at 4.3gpt over four years under Newmont’s ownership. Current Resources at Groundrush stand at one million ounces at 4.8gpt(2) .Northern Star’s immediate objective is an aggressive drilling program to upgrade existing Resources and extend known mineralisation along strike and at depth at Groundrush to optimise mine designs and the refurbishment plan for the processing plant. Northern Star Managing Director Bill Beament said he was confident Central Tanami would quickly become a major low-cost producer with long mine life. “I believe we will soon demonstrate that Central Tanami will be a low-cost 150,000ozpa producer” Mr Beament said. “In the process, the project will help ensure Northern Star maintains its record of strong production and outstanding Shareholder returns.”In 2015 gold was under A$1,500 Vs todays price of A$5,000 so the decision to delay mining and resource bank has certainly added considerable asset value plus expanded potential annual revenue by around 330% Vs costs up say 80-90%. Startup should be relatively quick and cost efficient given Newmont's existing plant (some refurbishment required) and infrastructure are in place together with all mining approvals.
IMV at TAM's current price of 2.8c it's a potential multi-bagger once the announcement to re-commence mining is made. There is also minimal downside as TAM holds 2.8c in cash and NST shares. Unbelievably TAM's 50% CTP holding has an enterprise value of ZERO!!!
In my 50 years of resource investing I have never seen a cheaper gold stock...Perhaps it's being held back pending some corporate action?
DYOR
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