News: New Talisman Gold Mines raising funds, on road to production

New Talisman Gold Mines (ASX:NTL) is raising NZ$280,000 (A$250,661) through a placement to sophisticated investors for continued development of its Talisman Mine on New Zealand’s Coromandel Peninsula.

The company is preparing to process stockpiled ore and begin bulk sampling, which could deliver a cash surplus of A$1.3 million after 18 months.

The placement consists of NZ$230,000 of subscription funds received to date as well as a further commitment for a further NZ$50,000.

Talisman had previously produced 1 million ounces of gold and 3 million ounces of silver.

It has a current JORC Resource of 205,000 ounces of gold from two separate mines, Talisman and Crown.

The permit area also 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.

Stockpiled Ore

Sampling of about 50 tonnes of stockpiled ore from the Talisman Mine had returned an average grade of 1.5 ounces (42.52 grams) of gold per tonne, which will set the foundation for commercial terms on processing first ore from the mine.

The stockpiled ore is located at Newmont Mining’s (NYSE:NEM) facility at Waihi for processing.

Bulk Sampling

New Talisman is progressing towards soon starting bulk sampling that will develop and refurbish the drives and extract about 600 tonnes of ore per month at an assumed head grade of 10 grams per tonne gold.

Total capex is estimated at A$1.7 million, which fully funds the project for 18 months including corporate overheads.

This should produce approximately 6 kilograms of gold per month once at a steady state of production is achieved and provides a cash surplus of A$1.3 million at the end of 18 months based on a gold price of US$1200 having paid for all of the infrastructure and development for the full mine.

In addition, the bulk sampling will also carry all the infrastructure and mine upgrades for the fuller mine development and could further increase reserves.

A Pre-Feasibility Study completed in April 2013 for full underground mining at Talisman had 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.

Analysis

Excitement continues to build for New Talisman Gold Mines with the placement helping it move closer towards starting bulk sampling at the Talisman Gold Mine.

Capex for the bulk sampling project is estimated at A$1.7 million and is expected to provide a cash surplus of A$1.3 million at the end of 18 months.

As an added benefit, this will also carry the infrastructure and mine upgrades for the fuller mine development and could further increase reserves.

Milestones ahead include:

- Lodgement of health and safety plan, 13 October 2014;
- Finalisation of long term toll treatment agreement;
- Second and third batch of pad ore sent for processing;
- Upgrading hardstand area and road upgrades; and
- Initial mine refurbishment beginning in December/January

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