Overview: Talisman Mining Ltd (“Talisman”, “the Company”) is an Australian minerals company with operations in WA. Its most advanced asset is a 30% interest in the Springfield JV, covering 198km2 immediately to the east of Sandfire Resources NL’s DeGrussa Copper-Gold Mine in the northern Murchison Goldfields. Indicated and Inferred resources totalling 1.05Million tonnes (Mt) grading 9.4% Cu and 1.6g/t Au have been delineated at the Monti deposit. Talisman also holds the 290km2 Sinclair Nickel Project, near Agnew, which incorporates the historic Sinclair Mine and infrastructure.
Catalysts: A feasibility study incorporating the Monti deposit is due for completion in Q1 2017 and is expected to form the basis of a development decision. Its proximity to the Degrussa Mine has the potential to drive M&A. Two years after acquiring the Sinclair Project in late 2014, Talisman has commenced exploration drilling with the aim to delineate new resources close to existing infrastructure.
Hurdles: There is no guarantee existing resources at Monti can be economically mined, or extended through additional exploration. Talisman is reliant on external capital and there is no guarantee it will be able to deliver its share of development capex at the Springfield JV. Talisman’s minority shareholding in the Springfield JV may impair its ability to optimise development planning and scheduling. Certified resources aren’t delineated at the Sinclair Project and there is no guarantee exploration will be successful.
Investment View: Talisman offers speculative exposure to the copper and nickel mining industries. We are attracted to the profile of its board, management, and shareholders. Technical studies at Monti have the potential to drive near-term interest towards the stock, whilst the Sinclair Project underpins a longer-term value play. Originally discovered by Talisman’s “ex Jubilee” team in 2005, Sinclair hosts infrastructure with a $120million replacement value and potential for additional resource delineation. With exploration and feasibility activities progressing concurrently, we initiate coverage with a ‘speculative buy’ recommendation.
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