NTL Half Year Report to 30 Sept 2019

Half year to September 2019 The directors are pleased to report the company achieved a number of key milestones during the half year period as follows:- ? Completion of rehabilitation works opening up both Mystery and Dubbo veins ? Completion of Phase 1 Metallurgical testwork -Gold and precious metals recovery rates achieved. ? Phase 2 metallurgical testwork commenced ? Completion of successful capital raising of 3.6M ? Commencement of design and planning for larger volume plant Rehabilitation work to provide access to the Dubbo and Mystery areas at Talisman was substantively completed in the last quarter of FY2018. The primary effort in the first half of the 2019 financial year has been directed towards securing a means of processing the ore produced at the mine. This has involved procurement, consenting and operation of a pilot processing plant to verify previous metallurgical testwork results. The ability to replicate the results is of primary importance to the consent, design and commissioning of a commercial scale gold processing plant capable of processing the mines planned output. Phase 1 of the testwork has been successfully completed and has proven that recovery of 64% of contained gold into 15% of the ore mass is reliably achievable through the gravity circuit. An average feed grade of approximately 10g/t yielded a primary concentrate of approximately 40g/t from the centrifuge. This concentrate can be further upgraded by passing it over the shaker table. 40kg of primary concentrate was treated in two batches yielding 650g and 600g of secondary concentrate at grades of 989g/t gold and 4,120g/t silver, and 876g/t gold and 2800 g/t silver respectively.While further optimisation of the process is planned these results are sufficient to underpin the design and procurement of a suitable, commercial scale plant. Phase 2 of the metallurgical testwork which aims to gather data on the plant outputs sufficient to meet council requirements for a resource consent for a larger volume plant, has commenced. The sampling from processing small quantities of various ore grades will ensure sufficient sample size for ore treatment data to be collected and included as part of final plant application. Once the required data is sufficient, final design work can be carried out for the larger gravity plant. Initial design work is underway with Terra Firma who have expressed interest in working with the company to develop a larger capacity plant and, with completion of Phase 1, both parties are now in a position to progress discussions on commercial terms. Other efforts have focused on the detailed design and costing of the short decline system from BM35 crosscut to access the extension of the Dubbo shoot approximately 7m below number 8 level. A key risk identified in this process is the potential for encountering unknown excavations below 8 Level. In order to quantify those risks NTL has aligned with a local company to investigate the possibility of deploying digital electro seismic mapping underground to identify possible extensions of the vein systems within the mine and to assist with the mapping of unknown excavations. If successful, this innovative approach will greatly assist with identifying exploration opportunities and aid mine planning. Work also continues on the planning and costings to attain a resource consent application for full mining in line with the 15 years remaining on the mine permit . The NZ political climate towards the minerals industry continues to be ambiguous with a bias towards the negative, and highlights the importance of ongoing security of tenure to ensure continuity of the operation on completion of the bulk sampling programme. During the period the company progressed discussions with a number of parties who have approached the company on the Talisman Mine project, once the initial metallurgical testwork and independent review of the resource estimate currently underway is complete the board will be in a better position to contemplate commercial proposals. TALISMAN MINE PROJECT The Diagram below shows the stages of development and evolution the mine has taken since Heritage commenced exploration activities through to mine development and planning. Metallurgical Testwork Pilot Plant Resource consent for operation of the pilot plant was granted in early July. The plant was commissioned shortly after that and processing of samples taken from the Talisman Mine commenced early in the September quarter. The pilot plant comprises scaled-down processing units (jaw crusher, rod mill, centrifuge, shaker table) that replicate the operations of a commercial plant to the same design as was used in metallurgical testwork carried out in South Africa, The process schematic is shown below. As detailed in previous announcements (please see https://www.asx.com.au/asxpdf/20190920/pdf/448ph1pf0k83hn.pdf) The process for separating metals from ore extracted from the Talisman Mine, as advised by Peacock and Simpson, to suit the very fine (sub 150 micron) grain size at which gold can be most efficiently recovered is as follows: 1) Ore is passed through the crusher which breaks it down to sub 10mm particle sizes; 2) The crushed ore is passed through the rod mill where steel rods in a rotating drum break it down further to sub 150-micron sizes; 3) The ground ore is passed through a 150 micron screen before entering the centrifuge which rotates at between 25,000 and 50,000 rpm and uses the gravitational forces generated by that rotation to trap the heavier metallic elements into a primary concentrate while discharging the lighter clay and silica particles to waste; 4) The primary concentrate is passed over the shaker table which uses the effect of differing specific gravity to further separate metals from host minerals resulting in a cleaner secondary concentrate. Testwork Results Phase 1 of the testwork is now complete and the results have demonstrated that the recovery rates achieved by Peacock can be replicated and as such met the basis for proceeding with gravity-based treatment of the ore. Recovery rates as high as 72% were achieved with an average above 60%. It is expected that further optimisation of the pilot plant, primarily through increasing the capacity of the centrifuge during phase 2 testwork, recovery rates will continue to improve with an aim of achieving an average of 73%. Grind size Grind size achieved in the phase 1 testwork was successful in confirming the grind size for Talisman mine ore of under 100 micron is required for achieving optimal recovery rates using gravity. Previous testwork has indicated that a grind size of 106 um is sufficient to liberate the electrum (gold/silver alloy) from host rock. The technical team were delighted with the results of the initial grind test work upon which is the one of major deliverables required to finalise the metallurgical process to be used in a larger scale plant. The completion of the grind testworks allows for the final designs for ore crushing and grinding circuit are well underway. Gold Recovery The major component in completing phase 1 testwork was the % of gold recovered in order to confirm the results of testwork completed overseas can be replicated in field settings at a plant scale and can produce the data of required size to base the design of a larger scale plant to meet the production planned during bulk sampling. This is achieved in 2 areas Primary recovery and concentrate. Primary Recovery In order to quantify the effectiveness of gold recovery into the primary concentrate a total of nine test batches were run, six on ore sourced from the Dubbo Zone and three from Mystery. The results are as follows: o On average 64% of the gold and 38% of the silver is recovered into 15% of the ore i.e. each tonne of ore treated yields 150kg of concentrate; o The average feed grade for Maria Ore was 10.05 g/t and for the Mystery Vein 9.61g/t both measured through sampling of mill output; o Concentrate grade of 41.5g/t was achieved for the Maria vein and 40.7g/t for the Mystery Vein; o There was no significant difference in recovery between the two ore types; o There was considerable variance between batches, with gold recovery ranging between 48% and 79% for Maria ore, and between 56% and 78% for Mystery ore. There is no relationship between feed grade and recovery, so this variance is attributable to the presence of coarse gold. The results prove that the process is capable of producing a concentrate that can be sold directly to a third-party operator with the above specifications exceeding the minimum specifications [provided to the company by a NZ buyer of gold concentrate. Secondary Concentrate processing testwork Testing of the effectiveness of further processing primary concentrate over the shaker table was quantified in phase 1 through the treatment of approximately 40kg of primary concentrate in two batches which yielded 650g and 600g of secondary concentrate at grades of 989g/t gold and 4,120g/t silver, and 876g/t gold and 2800 g/t silver respectively. High levels of other metals such as iron, copper and zinc are reported in the concentrate. Further data will be sampled as phase 2 metallurgical testwork required to gain additional data which will form the basis for an application for final plant consent. It is important to note as a New Zealand company New Talisman can acquire land for use in its activities without further OIO approvals required by a foreign owned company. Phase 1 of the metallurgical testwork has successfully achieved commercial recovery rates of optimal grind size of the equipment. Whilst improving on those results is of importance the primary focus of phase 2 is test work on the outputs of metals concentrate, bullion and sand processed from the ore (which can be used in a variety of building and civil works applications ) with the data from further batches processed through the pilot plant forming the basis for the higher volume plant design consent and construction. Talisman Underground operations Design and costing of the decline from BM35 crosscut to access the Dubbo shoot approximately 7m below number 8 level is well under way. The decline, which will be developed on vein where possible, aims to intersect a high-grade ore block in the area intersected by borehole TM002, drilled by NTL in 2004, which averaged 85g/t and 117g/t Ag over a 1.0m intersection on the Maria vein( please see https://www.asx.com.au/asxpdf/20170712/pdf/43kl6294htcscp.pdf for further details). Figure 3 - Installing support The decline can then be extended downwards in 7m lifts progressively exposing more of the ore body for sampling and delineation of extractive blocks. The work completed during the bulk sampling phase creates a solid platform for the Company's full scale mine plans contemplated in the Prefeasibility Study. Underground 3d Mapping of Dubbo A key risk to this work programme is the potential occurrence of unknown excavations in the area. In order to quantify and mitigate these risks the company has aligned with ATS, a local company to investigate the possibility of deploying digital electro seismic mapping underground to identify possible extensions of the vein systems within the mine and to assist with the mapping of unknown excavations. A beta test of the technology application for the Talisman mine is underway and results have shown promise. This technology is traditionally used for aquifer mapping, but an initial test has indicated that the system can potentially be adapted to work in the underground environment. A detailed test regime was developed to enable seismic readings to be correlated with known features identified in exploration boreholes which will allow the equipment to be calibrated to interpret the Talisman Mines geological environment. If successful, this innovative approach will greatly assist with identifying exploration opportunities and aid mine planning. Figure 4 - Seismic Survey testing Mystery Vein Updating of the mineral resource estimate for the Mystery vein, compliant with JORC 2012 reporting standards, is progressing well. The estimate will inform further development and exploration of this vein system which poses the most significant potential for mine expansion given the positive results achieved on proving the extension of high-grade gold and silver mineralization. The Mystery Vein was discovered in the 1980's and sits approximately mid-way between the historically productive Maria and Crown vein systems. It is believed that this vein had not been identified previously because of its location on the boundary between the two historic mining permits, although there is evidence that the vein may have been encountered in the lower levels of the Talisman Mine. The vein has been exposed over a strike length of some 50m and regular sampling carried out by New Talisman (then called Heritage Gold) identified samples on the face of Mystery with grades of up to 50 g/t. Recent check sampling of ore exposed at the drive face yielded grades of up to 40 g/t Au (please see https://www.asx.com.au/asxpdf/20180508/pdf/43tvlpmv420f4f.pdf. ) Corporate During the period after analysis of the commercial data available following phase 1 , Terra Firma Limited expanded the original proposal to include a number of commercial options including both contract mining and processing. These are being further advanced as the data from the pilot plant has provided the finer details upon which to base any commercial terms. Annual Review Meeting In September 2019 the company completed its annual review meeting with NZPAM. At that meeting the agreed work programme for the previous 12 months had been completed. Stakeholders who attended the meeting were most supportive of the progress made and compliance with the permit conditions confirmed. Looking Ahead ? Peer review of Talisman resource expected to be completed by year end. ? Completion of the costings and timings for lodgement of full mine consent aligned with the 15 years remaining on the permit is expected by end April. ? The detailed planning and design work for the decline development into the Dubbo area is progressing well and will be completed over the next quarter ? Completion of larger scale plant design following completion of phase 2 pilot plant testwork. Tenements Held Rahu Resources -EP90144 100% New Talisman Talisman Mine - MP51326 100% New Talisman Gold Mines Limited About New Talisman Gold Mines Ltd New Talisman Gold is a dual listed (NZSX & ASX: NTL) with over 2850 shareholders who are mainly from Australia and New Zealand and has been listed since 1986. It is a leading New Zealand minerals development and exploration company with a mining permit encompassing the Talisman mine, one of New Zealand's historically most productive gold mines. The company has commenced prospecting and upgrading activities at the mine and advance the exploration project to increase its considerable global exploration target into JORC 2012 resources. Its gold properties near Paeroa in the Hauraki District of New Zealand are a granted mining permit, including one of New Zealand's highest-grade underground gold mines, a JORC 2012 compliant mineral resource of over 469,000 ounces AuEq at an average above 15 g/t AuEq and a JORC compliant reserve statement. The Company owns 100% of the Rahu exploration permit, which lies along strike from the Talisman mine of which 80% was recently acquired from Newcrest Mining. The company will shortly commence exploration activities at Rahu. End CA:00345927 For:NTL Type:INTERIM Time:2019-12-13 08:30:58