Obviously all just speculation and if it is the case that Coyote...

Obviously all just speculation and if it is the case that Coyote CIP is put on care and maintenance while Kavanagh is developed we should be sensitive that some people will be losing their jobs. Having said that, if the commitment is made to cease operational mining and the current team do the development then the impact would be mainly to above ground jobs. I figure that is one reason for the trading halt as the company needs to craft its communications with staff.

300m is not a trivial distance to tunnel so it will not be quick. The 5m diameter decline would be 15,000 tonne of rock. With drilling, blasting, clean up and rock bolting you would be lucky to average 3m per day. There is a lot going on at the face and it gets very crowded. You are going to need some new gear also because any breakdown will have a big time and money cost. After you have the main decline in, to make it safe, there needs to be a secondary exit and ventilation. It may be that raise bore is used but this cannot be commenced until the incline is complete so it may be that another access point from Coyote underground is constructed in parallel.

The general rule of thumb is $5K per metre but you generally double this cost for the services, rock bolting etc. so that is $3M. Secondary exit/access and ventilation may be another $1-1.5M so I would revise this cost up to $5M and 6 months minimum and probably 9 months till it was operational with ore on the ROM pad. It will take at least 18 months to turn on satellite tonnage of oxidised ore given that lots more infill exploration drilling is required and resouces then need definition and ML's applied for and mine plan done. Permitting should be relatively simple on the WA side. It may be that Coyote only operates a gravity circuit from K1 lodes for some time with a stock pile of 2-3g/t "tails". These tails could then be processed with oxide ore once coyote CIP recommences. Once mining is underway at "K1" resource definition can then be undertaken for the extension of "K1" and "K2" which are both open. "K3" shows real promise for more big high grade tonnage and exploration drilling for other Kavanagh Lodes will be possible once the decline is in.

My buy recommendation comes simply from the view that you cannot put the toothpaste back in the tube with TAM. The story can only get better. If you take away the distraction of loss making production, you have an outstanding exploration and project story. Redefining Kavanagh as a project with $5M in up front capital costs makes it a no brainer. For a further $1M in drilling there is every real potential for 500K oz story in high grade out of K1, K2 and K3 but this is only possible once they get the decline complete.

The real issue is that TAM will burn $2-3M in corporate overhead in 12 months. They will need to spend at least $3M on exploration. It's easy to see where the $12M balance on the loan facility goes before Kavanagh and Coyote CIP are back in production but as a development and exploration story, TAM is worth a lot more than 12 cents. With the clean story told, the market will have to stand back and look at TAM's parts and realise that even in a depressed market, its current market cap is a lot less than the value of its assets.