PERTH (miningweekly.com) – Junior New Talisman Gold Mines has secured A$2-million in financing to assist in the development of its Talisman mine, in New Zealand.

The ASX-listed company reported on Monday that the financing facility provided New Talisman with A$1.6-million of the converting note facility, on the satisfaction of certain conditions, including entering into satisfactory security and other facility documentation.

The converting notes provided for New Talisman to either convert 70% of the loan into equity at the end of the 12-month period, and on repayment of 30% of the facility, or to repay the loan in full.

The junior developer could also choose to repay 30% of the loan, and roll over the remaining 70% of the loan for a further 12 months.

New Talisman told shareholders that the funds drawn down from the facility would be applied towards bulk sampling at the Talisman mine, and for working capital requirements.

The bulk sampling project provided for the first cash flow from operation, and would allow the company to be cash flow positive within 12 months from the start of sampling, which was scheduled for the second half of this year.

New Talisman has been forced to seek alternative financing solutions for its mine, after a hoped-for investment from a Chinese firm fell through.

“In a very difficult climate for junior miners, particularly gold-related juniors, New Talisman is particularly pleased to have been able to attract an offer to finance the development of the Talisman mine through to first production,” said executive director Matthew Hill.

“This is an indication of the very attractive investment proposition the Talisman mine represents.”

Hill noted that the company remained on track to reopen the mine.

The Talisman mine is the second largest historic gold producer in New Zealand with production of one-million ounces of gold and three-million ounces of silver. Previous underground drilling and channel sampling delineated a Joint Ore Reserves Committee-compliant inferred resource of 205 000 oz gold at a grade of 6.9 g/t and 800 000 oz silver at a grade of 27 g/t.