I have just wasted 15 minutes of my life reading the NRB article.
Here it is again .... enjoy
“All that glisters is not gold,” warned wise man William Shakespeare 420 years ago in The Merchant of Venice, a snappy little parable that involves a merchant who squanders his estate and defaults on the large amount of money he owes.
New Talisman Gold Mine’s [NZX: NTL] shareholders are fervidly anticipating that all that glisters does in fact turn out to be gold – they’ve been waiting long enough.
The mining minnow has had a run of tough luck, as Shoeshine charitably sees it, since it listed in 1986 to acquire prime gold areas in the Coromandel.
New Talisman, as it is now, grew out of Heritage Gold in 2012, shrugging off projects in Mongolia and Papua New Guinea to focus solely on the Talisman prospect near Paeroa.
This prospect had been mined on and off for more than 100 years from the 1880s, producing over its operating life upwards of one million ounces of gold and three million ounces of silver – making it New Zealand’s second most productive gold mine. Funding dried up in the early 1990 s and the work stopped.
New Talisman expects the mine to still yield between 200-220oz of gold a month at an on-mine cost of $900 an ounce, while the current market price of gold is more than $2000.
The company’s October 2012 prospectus indicated mining would start mid-2014 but a couple of years later and more than a few attempts at capital raising, a pick-axe is yet to be swung.
Part of the delay came from fighting off a legal challenge from a local anti-mining group (the mine sits on conservation land) to have the council’s resource consent judicially reviewed. The group eventually withdrew its application last year.
But the company has also had trouble pinning down funding sources, including from two Chinese investor groups that called off heads of agreements at the eleventh hour.
Last month it signed another non-binding agreement with Shenzhen-based Amer International for 70% of the company in return for cash and guaranteed profit underwrites for three years.
“We’re very keen to progress discussions for them to take a position in the company. It is not over yet, that matter is wide open and we’re looking to progress it with some urgency,” says New Talisman chairman Murray McKee, who has served on the board for 20 years.
He would not give an indication of when this might be set in stone. “New Talisman is a small company and not experienced enough in working through these arrangements with offshore investors to put a date on it now.”
Shoeshine hopes this doesn’t go down the plughole along with the other potential Chinese funding deals.
There is a trickle of money to keep the company afloat, though. Last week, the company announced it had raised $4.69 million in a rights issue – it had hoped to raise up to $12.26 million – with the shortfall showing fewer than half of the shares for sale were bought by investors.
The company intends to use this money for bulk sampling – including from the enigmatically-named Mystery Vein – which would let it complete a feasibility study and also provide some cash flow, as it would involve extracting about 600 tonnes of rock a month at an average 10 grams of gold a tonne.
Optimistic
Mr McKee says the green button has been pressed on the bulk sampling programme and there might be enough left over for further exploration. “We’re very confident the funds raised will be more than sufficient to complete that programme.”
It also signed a 20% joint venture last month to explore the neighbouring Rahu mine with Newcrest Mining, which has a five-year exploration permit.
Mr McKee puts the reluctance of the 1900 mainly New Zealand-and-Australia-based shareholders to plug more money into the company down to antipathy towards the resources sector generally.
“There has been a huge reduction in prices for coal, oil and petroleum and that has affected the mining sector’s ability to raise money in the market. We think our result is absolutely extraordinary and a real sign of confidence on behalf of our shareholders who took up their rights.”
However, not all the comments from the market are quite so laudatory, with some anonomous commentators questioning how proceeds from previous capital raisings have been allocated.
The company, which increased its loss by 450% in 2016 to -$2.8 million, expects actual mining to start in 2018.
But NZ Shareholders Association chairman John Hawkins urges caution. “With these struggling start-ups, it always has to be caveat emptor.
“Don’t invest in very early stage companies like this with money that you cannot afford to lose as they are relatively high risk, with many things that can go wrong between setting out and actually generating income. Many of these issues may be beyond the control of the company.”
The board says the company is at a pivotal point in its history and shareholders will be rewarded for their patience. “We’re 100% confident we’ll be pulling it all out of the mine within months. Within months, not years, that’s for sure,” promises Mr McKee.
Let’s hope, for the sake of the shareholders at least, that this gold glisters brightly soon.
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