yesterday's australian

BARGAIN SENSITIVE MARKET FLYING HIGH

CRITERION: Tim Boreham From: The Australian October 05, 2010 12:00AM

Talisman Mining (TLM) $1.14

Sandfire Resources (SFR) $7.06

AS with real estate, a desirable neighbour is paramount and that's why Talisman screams "location location location".

Talisman's Springfield copper-gold project might not be conveniently situated near shops and schools, but it's next door to Sandfire Resources' Doolgunna (DeGrussa) project, otherwise known as WA's next big thing.

Preferring to focus on Springfield, Talisman yesterday struck a deal to sell its Wonmunna iron ore project in the Pilbara to E-Com Multi (ECE, 0.8c) for $32m, plus a $7m (9 per cent) stake in E-Com.

Strictly speaking, E-Com has an option to buy the project, which is also wedged on strategic ground near three major projects: West Angelas, Hope Downs and BHP Billiton's Mining Area C.

Talisman chief Gary Lethridge says Talisman's $125m market cap ascribes "virtually no value" to Wonmunna, which in theory means a $32m bonus.

Talisman is 14.7 per cent-owned by Kerry Harmanis, who sold Jubilee Mines to Xstrata in 2007 (that is, just at the right time).

E-Com Multi, whose share price hovers below a cent, plans a capital raising of up to $45m and a one-for-25 consolidation. Talisman will also end up with $7.5m of E-Com shares as a result of the sale, so still has some skin in the Wonmunna game.

Springfield, in the Bryah Basin, north of Meekatharra, hopes to emulate Sandfire's volcanogic massive sulphide (VMS) zone, which assayed bumper grades.

We would be quite happy to see Talisman use the cash, which would add to its June 30 balance of $13.6m, to drill some more holes.

Criterion had Talisman as a spec buy at 94c on March 30.

We also rated Sandfire as an avoid at $3.58 and the stock has doubled since then, which wasn't in our blueprint.

We'll treat Talisman as a spec buy, Sandfire as a hold and will avoid E-Com Multi until it later proves a worthy buyer of Talisman's surplus real estate.