News: New Talisman Gold Mines’ ore to be processed at Newmont’s Waihi facility

New Talisman Gold Mines (ASX:NTL) has confirmed that its 50 tonne batch of ore from the Talisman Mine on the Coromandel Peninsula, New Zealand, is at Newmont Mining’s (NYSE:NEM) ore treatment facility at Waihi for processing.

Indicative analysis of ore crushed at this time suggests the grade will exceed one ounce of gold per tonne and several ounces of silver per tonne.

Speaking to shareholders at the company’s annual general meeting, chairman James McKee said results from this batch testing will set the parameters for longer term toll treatment arrangements.

He added that 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.

“Of course the Talisman project is not insensitive to the price of gold but the high grades of the reserves at Talisman afford us the ability to ride out troughs in the price cycle, albeit at lower production levels,” McKee added.

He also noted that the company will be New Zealand’s first underground gold mine operator to provide the High Hazards Unit of WorkSafe NZ with its safety management system.

“The overall system document includes hazard identifications and risk assessments together with principal hazard management plans covering such areas as ventilation and explosives,” McKee said.

“As we are the first cab off the rank it is taking us just a little longer to work through the issues. We now expect the final document to be filed with the High Hazards unit on 13 October.”

Talisman Mine

NTL had last month received Authority to Enter and Operate from the New Zealand Department of Conservation, a major step on the road from explorer to producer.

It is working closely with the Department and other government agencies to finalise the regulatory aspects of its trial mining project plan.

This is expected at a steady state to deliver 600 tonnes of ore per month in the build up to full production.

A Pre-Feasibility Study completed in April 2013 for underground mining at Talisman confirmed an initial Phase One life of mine of 5 years to generate NZ$68.2 million in revenues for a cash surplus of NZ$23.4 million.

Start-up capital was estimated at NZ$5.4 million.

The mine previously produced 1 million ounces of gold, 3 million ounces of silver, and has a current JORC Resource of 205,000 ounces of gold from two separate mines, Talisman and Crown.

The Talisman permit area has the potential to host between 0.55 million to 2 million ounces of gold and between 1.5 million to 6 million ounces of silver.

Analysis

Results from processing the 50 tonne batch of ore from the Talisman Mine at Newmont’s Waihi treatment facility will allow New Talisman Gold Mines to set the parameters for longer term toll treatment arrangements.

Indications are promising that grade will exceed one ounce of gold per tonne and several ounces of silver per tonne are promising and would provide for additional capital to be applied to the bulk sampling project once treated.

At a market cap of circa $6 million, we believe that NTL is under rated.

Proactive Investors continues to assign an EV of $11.96 million on current resource ounces, or around A$0.021 per share.

Further upside will be garnered from an increase in gold resources and reserves, and any increases in the gold price.

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