Too Long Didn’t Read (TLDR) Summary:NTL has lots of gold, has done all the hard legal work, is rubbing shoulders with giant producing giants Amer International and Newcrest on its respective projects, has begun a 6-month development programme to begin limited production and looks set to become a very profitable organisation.
Introduction
New Talisman Gold Mines Limited (NTL:ASX / NTL:NZX) has shown it has the rugged determination to fight red tape, unreasonable and irrational green activists and a depressed commodities market to get into limited production.
NTL also has a holding of under 5% of Broken Hill Prospecting (ASX:BPL) following a recent sell down of the stock. BPL is very popular at the moment for its exploration of a cobalt tenement in Australia (think electric vehicles and the likes).
At close on 29 April 2016 the company's undiluted ASX stats were:
Total Issue: 817,722,586 shares
Market Capitalisation: $6,541,781 (@.8 cents)
Location
NTL’s development and exploration interests are a few kilometres down the highway from Oceania Gold (OGC:ASX / OGC:NZX) at Karangahake (as per these maps):
OGC recently purchased the Waihi mine from Newmont and they plan to expand their mining in the area. As per the map, NTL’s interests are located right next to a major state highway. No doubt, NTL’s interests are in politically stable (although sometimes a bit too much red tape) New Zealand.
Talisman Mine
The Karangahake area is a historic mining area and historically the Talisman mine produced over 1 million ounces of gold and 3 million ounces of silver. In 2013, NTL released its pre-feasibility study. This study is likely to be substantially overhauled (as per the company announcement discussed below) but it specified that a profitable mine can be set up:
- Phase 1 development of Talisman mine to deliver cash surplus of NZ$23.4 million
- Robust C1 cash cost of US$588/oz. and C3 Cash cost of US$1075/oz. – well below current price
- Flexible mine plan offers resilience in the event of ongoing price volatility
- Initial 5 year start up project forecast to generate NZ$68.2 million in revenue
- Start-up capital requirement of NZ$5.4 million
- Peak annual gold output of 12,115 oz. Au and 36,000 oz. Ag
- Progression to larger, long term operation subject to resource proving
- Phase 1 surplus to provide funding for Phase 2 resource proving and mine expansion
I have added current NZD gold prices into to demonstrate the in-ground value of the reserve/resource:
It is notable that since the pre-feasibility study was completed, the company has carried out further work on defining the resource in the Talisman mine, obtained historic records produced and collected by former owners of the mine, computerised historic data and NTL said in its most recent quarterly that is it soon to release an updated pre-feasibility study with updated information. Could be very interesting reading.
In terms of regulatory approvals, NTL has ticked most of the boxes:
- Mining permit under the Crown Minerals Act 1991;
- Access agreements across Crown land under the Conservation Act 1987;
- Traffic management plan for the bulk sampling project approved in principle (working on adjusting some roads and paths);
- Resource consent for the bulk sampling project granted by the Hauraki District Council (resource consent is the BIG hurdle in New Zealand, this is where the local government says the project is lawful and environmentally sound under the Resource Management Act 1991).
NTL are currently working on installing airlock ventilation into the Talisman mine. During this process NTL should be able to finalise its Health and Safety Plan under the Health and Safety at Work Act 2015 and the Health and Safety at Work (Mining Operations and Quarrying) Regulations 2016, at which point as far as I am aware it’s all good to go.
Another notable piece of information is that Amer International has been identified as the Chinese Investor who is looking at taking a potentially substantial stake in NTL or the Talisman mine (it is not yet known). Amer International is ranked about 380 of the Fortune 500 companies. This could be massive for NTL and its shareholders.
Rahu tenement
The Rahu tenement (see the map) is directly across the road from the Talisman Mine. NTL declared a resource at Rahu when it held the exploration permit for the tenement. NTL has been negotiation a joint venture with Chinese gold giant Newcrest for a joint venture in the area. NTL has contractual access arrangements for the Rahu area.
As per below, New Zealand Petroleum and Minerals messed around for over a year when NTL applied to extent its mining licence to Rahu. During this time NTL’s exploration permit lapsed. Some people questioned whether the NTL/Newcrest JV would fall over. However, NTL has twice since extended the Heads of Agreement with Newcrest, so my guess is that Newcrest may have applied for Rahu and will connect with NTL but with Newcrest holding the permit. In the most recently quarterly the company juxtaposed the two facts which sends a reasonably clear message:
During the period under review NTL executed an extension to the Heads of Agreement signed with Newcrest on the proposed joint venture at Rahu. As announced the application for an extension of land over Rahu was declined.
After all, the Rahu field is right in the middle of a joint venture with Laneway and Newcrest (see map).
There is a lot of work to do on exploration the Rahu area but NTL has indicated before that the resource may be contiguous with the Talisman resource:
NTL have completed some 2,492m of drilling at Rahu which, together with previous drilling campaigns and geological investigations, provides evidence that mineralisation and alteration present at Rahu represent the upper levels of and northern extension of the Talisman epithermal gold system. Most of the drilling has intersected broad zones of low-medium grade Au and Ag mineralization with narrower higher grade intervals. This is characteristic of the upper parts of an epithermal system. Highly mineralised quartz vein fragments (up to 7.6g/t Au) in hydrothermal breccia zones present within drill core attest tithe presence of deeper higher-grade quartz veining that is characteristic of the veins mined within the Talisman Mine and provides further evidence that Rahu is an extension of the Talisman. The EOL to include Rahu in the Talisman MP will allow for a natural extension of mining operations from the Talisman.
Given the size and grade of the Talisman resource this has enormous potential. Why would Newcrest be so interested? Think about it.
Off the radar
NTL is not a well-known stock amongst ASX investors. It has been stuck in a time warp of sorts due to issues outside of its control:
- Time wasting court proceedings by green activists – At the start of 2015 the group known as Protect Karangahake brought judicial review proceedings, challenging the lawfulness of the consent for the bulk sampling project. This was very much a time wasting mechanism and there was no shred of evidence to support their contentions in fact or law. It has been discontinued and the consent remains in force. The Hauraki District Council actually made a specific website putting to bed all of the rumours spread by the Protect Karangahake group (which was recently taken down, but fortunately I stored it on the Internet Wayback Machine). This delayed progress at the Talisman mine by over a year.
- New Zealand Petroleum and Minerals wasting time – Around August 2015, NTL applied to NZPAM to extend its mining permit over the Rahu tenement. Over a year later, NZPAM came back and declined the application. However, it occurs to me that there is still something going on with the JV with Newcrest over Rahu (as per above). This delayed progress at the Rahu mine by over a year.
- Previous Heritage Gold management – NTL used to be part of Heritage Gold. Heritage Gold never got very far, over a long, long period of time. It did not sit well with investors. However, NTL has made great progress over the last 3 years, and now is on the cusp of moving into production.
Further discussion welcome
There is more information about this company out there, I’m happy to discuss my knowledge about this stock. I have been holding, acquiring and even sometimes trading it for over 3 years. Definitely worth a look, could be up for a very substantial rerate in the near future once the market catches on.
