Talisman Mining Limited (ASX: TLM)

SUCCESSFUL EXPLORERS IN QUALITY GROUND
Since rewarding shareholders with a A$0.22/share return of capital and fully franked dividend
from the sale of the 30% share in the Springfield JV in WA to Sandfire Resources (ASX: SFR,
“Sandfire”), Talisman Mining Limited (“Talisman” or “the Company”) is now concentrating
exploration activities on the Cobar Basin in the Lachlan Fold Belt (“LFB”) of New South Wales.
The Cobar Basin, which is the most mineralised poly-metallic basin in New South Wales, has
a long history of mining dating back to 1871, and is the home to a number of past and present
major base and precious metal operations, including, amongst others CSA and the Peak. The
region continues to deliver very strong results from exploration, with our view being that
further economically viable discoveries are still to be made.
Following the discovery of Monty (adjacent to Sandfire’s DeGrussa operation), and the
subsequent JV with Sandfire, the Company reviewed exploration opportunities in highly
prospective terranes, and settled on the Cobar Basin - this has resulted in Talisman putting
together a largely contiguous package of exploration ground over the highly prospective and
prolific, but for all intents and purposes underexplored Canbelego-Mineral Hill Rift Zone on the
eastern edge of the basin.
Although the region has seen significant previous exploration, it has been piecemeal
(particularly south of Cobar), and thus with consolidating ground Talisman has the opportunity
to undertake a concerted regional programme, concentrating from early stage work through to
further appraisal of advanced prospects. The approach has paid off in the 24 months Talisman
has been operating in the Cobar Basin, including confirming, through drilling, the potential of
the advanced Blind Calf Cu prospect, and identifying a number of earlier stage prospects that
now require follow up work, including drilling.
The NSW strategy has also resulted in a recent agreement to earn up to 70% of the Lucknow
Gold Project (“Lucknow”), located near Orange in Ordovician volcanics of the Macquarie
Arc - the NSW Ordovician is a globally significant Cu-Au province. Lucknow was reportedly
the historically highest grade gold mine in Australia, and possibly globally, producing over
400,000 oz at grades of >100 g/t Au. Mining ceased in 1937, with only limited exploration since.
Recent discoveries have focussed market attention Eastern Australia - these include the
discovery of a significant porphyry copper-gold system by Alkane Resources (ASX: ALK,
“Alkane”) at the North Molong Project in the Macquarie Arc, and Stavely Minerals’ (ASX: SVY,
“Stavely”) high grade copper-gold lode discovery at the Thursday’s Gossan Project in Victoria.
Although the latter is not directly analogous to Talisman’s holdings being older, the tectonic
setting and rock types at the prospect are broadly similar to those hosting the Lucknow gold
mineralisation.
Finally, the recent sale of the Sinclair Nickel Project (“Sinclair”) in Western Australia will provide
an extra A$10 million in cash to the Company, and also remove up to ~A$20 million of liabilities
over the next five years, and allow the Company to focus exclusively on the New South Wales
properties without the distraction of a non-core asset.
KEY POINTS
Quality exploration property portfolio: Talisman has taken the opportunity, without the
stress of a weak balance sheet, to assemble a portfolio of quality exploration properties over
highly prospective geology in prolific mining districts.
Healthy balance sheet - effective exploration: With current cash of ~A$8 million, and A$10
million to come from the Sinclair sale the Company is well cashed up compared to other
juniors, and thus exploration will be dictated by what is effective, and not by available cash.
In a proven mining district with established infrastructure: The Central West of NSW is a
proven mining destination, with well developed transport and utility infrastructure, and ready
access to skilled labour and services.
Experienced personnel with a history of delivering value to shareholders: This is
demonstrated by the outcome from the WA Springfield discovery, JV and sale, and the results
of exploration to date in the Lachlan Cu-Au Project, centred on the Cobar Basin.
Leveraged to exploration success: With an enterprise value (“EV”) of under A$10.0 million,
Talisman is well leveraged to exploration success, as has been seen with the recent Stavely
and Alkane discoveries.
Steady news flow: We expect to see a steady and positive news flow with ongoing exploration
activities - this includes work at all properties.
Quality confirmed by our site visit: IIR visited a number of prospects in the Cobar area in
June 2019, with this confirming the quality of the Project, personnel, and work.