in 2013 NTL commissioned a Pre-Feasibility Study on the Talisman Mine. The Pre-Feasibility Study analysed a range of options around the mining method, materials handling and backup services with a view to identifying the preferred option to establishing a low impact, small-scale underground mining operation. The operation will focus on the high confidence resources, immediately adjacent to the accessible 8 Level drives, delineated during the 2005 exploration program, and create the infrastructure necessary to support further exploration activity. Key findings from the study were:
Mining Method – Ore veins are steeply dipping, from 70° to near vertical, with widths ranging from ~1.0m in the Welcome/Crown area to >6.0m in the Woodstock. Preliminary stope designs were constructed encompassing the volume of estimated payable ore in each resource block. Analysis indicates that the geometry of the lodes is potentially suitable for a number of mining methods. The study recommended that a sub-level stoping design be implemented to provide the flexibility to switch between hand-held and long-hole drilling techniques where applicable.
Materials Handling – An option analysis was carried out on the installation of rail bound transport systems underground compared with the deployment of a fleet of small, rubber tyred loaders and trucks. Results clearly demonstrated that the flexibility of a trackless fleet, which would enable extraction of the resources below 8 Level through a series of small ramp systems, held significant advantage to the project.
Production Plan – A production plan was developed based on the above assumptions. It indicated that an initial five-year operation, with peak production of 35,000 tonnes per annum and 12,000 gold ounces in years 3 and 4 was possible. 65% of the total 106,000 tonnes mined would be derived from the better understood Woodstock and Dubbo Sections. Production planned from the Mystery and Welcome/Crown blocks would primarily comprise on-reef development required to improve and extend the confidence of resource estimates within these areas.
Services – Systems required to support mining operations, such as power, water and compressed air reticulation, have been designed to support double the production rates estimated in the plan. This would permit the possible future expansion of the mine into newly proven areas. Considerable consideration has been given to designing systems that would minimise impact on the environment.
Processing and Metallurgy – The study evaluated several processing options including non-chemical gravitation separation, flotation and cyanide leaching. Historically, cyanide leaching of ore from Talisman achieved a 95% gold recovery and 70% silver.. NTL is awaiting results of test-work undertaken by Auckland University and intends to embark on a bulk sampling program and further metallurgical test-work to inform detailed design of the ore processing flow-sheet. Additionally the company is holding discussions with a number of local gold producers to investigate the potential for a toll treating agreement.
Environmental Management and Permitting – Considerable care has been exercised during the design process to restrict the mine’s footprint to the existing disturbed areas and to minimise environmental impacts. The company is in advanced discussions with regulatory bodies regarding the consents required to begin low impact bulk sampling.
Cost Estimates – Capital and Operating Cost estimates were determined from supplier quotes and budget prices. The total capital requirement estimated for the project, including sustaining capital, rehabilitation provision and contingency was NZ$10.9 million, with an initial drawdown of NZ$4.3m in year one. Total operating costs, inclusive of royalties and overheads, amount to NZ$33.5m over the five-year mining period. Maximum cash exposure amounts to NZ$7.3m incurred during the second year of operation following which the mine would be completely self-funding.
Project Economics – A Discounted Cash Flow analysis based on a weighted consensus average gold price forecast of NZ$2000/oz. and a 10% discount rate indicated a net present value (NPV) for the project of NZ$15.5 million. Unit cash costs were estimated at NZ$692/oz. with an all in cost, including capital expenditure of NZ$1166/oz.
A gap analysis on the study was carried out by Hatch-Goba which confirmed that it conformed to the requirements of a technical study as defined by the JORC Code (2012). Based on this information NTL announced a maiden ore reserve for the project in September 2013. Ore Reserves at the Talisman gold project, based on an average in-situ cut-off grade of 1.7g/t, are 82,500 tonnes at 10.8 grams per tonne gold and 48.1 grams per tonne silver. Ore Reserves are derived from and contained within, not additional to, the Measured and Indicated portions of the Mineral Resource. Reserves are tabulated below: