Page 17 - pd249 May17 mag-web

Full on Monty for
Talisman and Sandfire

Talisman Mining Ltd is the upside. The fee that we
close to finalising a deci- have agreed is dependent

sion on the make-up of its on a number of factors that

portion of the financing for basically recognises all of

development of the Monty the downstream process-

project, which is set to be one ing costs associated with a

of the highest grade copper tonne of ore and converting

mines in the world. it into a concentrate and then

Talisman managing direc- selling it on the market; we

tor Dan Madden told Paydirt feel it is quite closely aligned

Australia’s big four banks with Sandfire,” Madden said.

were among a host of poten- Monty, just 10km from De-

tial financiers the company grussa, is within the wider

was in discussions with and a Springfield project area in

number of scenarios were on Western Australia’s Bryah

the table. Basin, which is a proven

Madden said traditional world-class VMS province.

debt financing was the pre- It was less than two years

ferred option and he was con- ago that the Monty discovery

fident of securing 100% of the hole was released to market

funding required. Resources at Monty currently total 1.05mt @ 9.4% copper and and with Sandfire already set
Monty is a JV between Tal- 1.6 g/t gold for 99,000t copper and 55,000oz gold up at Degrussa (where ore is
expected to last until 2021)
isman (30%) and Sandfire

Resources NL (70%), with a completed and purchase agreement – applicable to proving its economic viability has hap-

feasibility study last month indicating Monty ore and near Monty extensions – pened relatively quickly.

total capital to bring the Monty under- struck with Sandfire. Madden is certain there is potential for

ground – 920,000t for 80,000t copper @ Monty is part of the wider Springfield more high-grade deposits around Monty

8.7% copper and 42,000oz gold @ 1.4 JV between Talisman and Sandfire and – laterally and at depth – and within the

g/t (reserves) – on-stream was $90 mil- any further discoveries will be subject to Springfield package.

lion. separate ore sale and purchase agree- At the time of print, the JV was prepar-

Talisman’s share of capex for mine de- ments. ing three deep diamond holes either side

velopment is $22 million, with a payback In relation to Monty, up to 400,000 tpa of Monty, with results expected in a cou-

period of 17 months, pre-tax IRR 78% of ore will be blended with Sandfire’s De- ple of months.

and pre-tax cash flow of $64 million esti- grussa feed, with the point-of-sale occur- While Madden is happy with the Sand-

mated in the company’s feasibility study. ring when Monty ore hits the weighbridge fire partnership and willing to contribute

“The financing is a question that needs near the Degrussa ROM pad. to unearthing the exploration potential,

to be resolved and put out to market, Talisman will receive a net ore sale rev- he also knows the time and money it

which we will look to do probably in the enue payment on an equivalent payable takes to bring such deposits to fruition.

next month or two,” Madden said. metal-in-concentrate basis after deduc- “When you have got grade like that

“It may be the missing piece in the tion of ore treatment fee (of which some then you have significant value, it then

puzzle to investors but we are looking up components are subject to annual index- comes down to a question of scale and

to 100% financing there, which means ation and/or pegged to annual industry capital costs,” Madden said.

there is no equity component involved. determined benchmarks) per tonne of “Sandfire have the processing plant

“There are other considerations to do delivered ore and royalties. and therefore have an economic ad-

with the big four banks and their views; The ore sales are derived from inde- vantage [in the region] and cost basis to

hedging is something that we don’t want pendently calculated head grade, pre- compete against but the value that these

to have mandatory exposure to and we’re vailing metal prices, fixed recovery for- things can deliver means they certainly

cognisant of the equity market in terms mulae and fixed payabilities. have the potential to stand on their own

of what the gearing ratio is and wheth- All of this will come into effect towards two feet. They are obviously very hard

er we’ll need equity. All of those factors the back end of 2018 when first produc- things to find which means you need the

will come into play in our final decision tion from Monty is targeted. patience. It is early stages across the

but we have some good options, from “We feel that the agreement we have basin looking for these, so there maybe

well respected financiers, to fund up to entered into with the ore sales and pur- parties that want to persevere but Sand-

100%.” chase agreement will basically minimise fire certainly has a significant footprint in

While Madden is confident on closing a lot of the downside risk to us, while the region.”

a financing deal soon, he said the mar- exposing ourselves to participation in – Mark Andrews
ket may need time to digest the ore sale increase in grade and the majority of

AUSTRALIA’S PAYDIRT MAY 2017 PAGE 17