Base metals: Talisman sells up nickel project to focus on gold

Junior explorer Talisman Mining (ASX: TLM) has flagged another asset sale to help fund exploration efforts elsewhere.

The company will divest its Sinclair nickel project to the $2.9b Saracen Minerals (ASX:SAR) in a $10m cash deal.

As part of the deal, Talisman will also receive a two per cent royalty on all future metal production at Sinclair. Saracen will also pay a two per cent royalty for all non-precious metal production at its Waterloo nickel project.

The market approved of the deal, sending Talisman shares up 10 per cent in morning trade while SAR shares ticked lower.

An $18m war chest

Talisman said its decision to sell came after considering multiple options including a restart of mining operations at Sinclair, which it first purchased from Glencore in 2014.

But recommencing mine operations at the site would’ve required a lot of cash.

Taking into account capital costs and operational risks, the Talisman board decided a sale would be “in the best interests of shareholders”. The deal also gets Talisman off the hook for $2m on annual holding fees.

Upon receipt of the cash proceeds, Talisman’s cash pile will rise to $18 million — funds the company will use to “focus on its expanding exploration activities at the Lachlan copper-gold project and Lucknow gold project in NSW”.

The deal will also allow Saracen to leverage some operational efficiencies by using the infrastructure at Sinclair to support its nearby Thunderbox gold operations.

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In other ASX base metals news today

Mexico-based Consolidated Zinc Limited (ASX: CZL) has purchased the remaining 10 per cent of its Mexican subsidiary, Minera Latin American Zinc S.A.P.I de C.V., that it didn’t already own. The subsidiary holds CZL’s Plomosas Mine, where it’s recommenced mining operations in the hunt for high-grade zinc, lead and silver.

And Hillgrove Resources Ltd (ASX:HGO) has compiled an exploration target for its high grade Kanmantoo copper-gold project in the Adelaide Hills. The company said drill testing “will be able to commence in 2020, depending on the required funding being available”. Shares in Hillgrove were unchanged at 6.3 cents.