Attending the Noosa Mining Investor Conference 17-19 July 2024 (+pre-event & post-event)

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District Scale Gold Endowment with Development Pathways

District Scale: with 570 km2 of tenure and a 20 km confirmed gold corridor, there is plenty of scope to increase the 1.5 million ounces delineated so far at the Ternera Gold Deposit. Beyond the exploration target of 1.6 to 3.0 million ounces defined for Ternera, a multi-million ounce gold system is at play at the El Zorro Gold Project justifying the strategic position taken by Gold Fields (JSE: GFI, NYSE: GFI) on the TSO register.

Gold Fields Support: with an increase on the TSO share register from 14% to 19% in January 2024, Gold Fields (JSE: GFI, NYSE: GFI), already operating the Salares Norte gold mine at 4,200-4,900m altitude and further north in Chile, has confirmed its strategic interest in the El Zorro Project.

Geological Model: the Intrusive Related Gold System consists of plutonic intrusions and associated fault systems. Gold mineralisation is found widely spread with higher concentrations close to the key fault systems.

Targeting Model: the recent discovery at Ternera East validates the targeting model used by the Tesoro exploration team and bodes quite well for further discoveries to extend the Ternera mineral resource and add further gold deposit discoveries at the El Zorro project. Mineral resource increases are getting close to becoming a function of drilling meters.

Metallurgy: metallurgical test work indicates that 45% of the gold mineralisation can be recovered via gravity with a grind size of 150 µm, giving an overall process recovery of 94.5% via a conventional CIP plant.

Key Infrastructure Readily Available: in Chile, this means low altitude (600m, rather than a few thousand meters), access to water (25km away with multiple options) and power (20km away with spare capacity), both critical for ore processing.

Project Benchmarking: our comparative analysis indicates that El Zorro gold ounces attract a higher market value than peer projects. The El Zorro project displays also a significantly lower capex and capital intensity than the Salares Norte project while the operating costs are in line with peers.

Scoping Study: on 4th April 2023, TSO released the results of a scoping study confirming the development potential of the El Zorro Project based on the Ternera deposit mineral resource as delineated so far. The positive results confirm the economic viability of the project and should be seen as a “stepping stone” towards a larger project with even more attractive economics.

Ternera Financial Modelling: using the scoping study parameters as a base, we have assumed an increased mining inventory by 10 Mt to 27.1 Mt, at the same head grade of 1.25 g/t Au resulting in excess to 1 million ounces gold produced. Our plant throughput assumption is increased from 2.4 to 3.0 mtpa to produce 110,000 to 120,000 ounces of gold per annum rather than 93,000 oz from the Scoping Study. We also allow for increased capital expenditure and operating costs in consideration for the current inflationary environment.

TSO valuation: our sum of the parts valuation assumes a capital raising of $10 million (340 million shares at $0.03) sometime in FY2025 to fund exploration/drilling programs and project evaluation. Our TSO valuation amounts to $106 million or $0.067 per share. The risks to our valuation are on the upside considering renewed investor interest in the gold sector, high probability of further exploration success and the strategic position of Gold Fields.



 

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