Talon CEO Henry van Rooyen said the new discovery is significant in part because it points to the effectiveness of the exploration program put together by Kennecott Exploration Company. Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) subsidiary Kennecott owns Tamarack North, and Talon currently has the right to earn a 30-percent stake in the project via an earn-in agreement signed in June 2014.He also said, "[t]his is a modern day example of how prolific nickel producing complexes came into being in years past," adding, "[w]e are pleased with these results and look forward to further updating our shareholders on the results from the remaining 10 holes drilled during the 2015 winter exploration program." Results from drill hole 15TK0219 were released earlier this month. What about financing? Investors who've been following Talon these past few months may be wondering about the state of its finances. Indeed, the last time Resource Investing News checked in with the company it had just received a US$4-million unsecured loan from Kennecott after running short on money for the Tamarack North earn in. Though Talon's first-year exploration spending obligations were set at $10 million, plus a $2.5-million option payment, it had spent just $6.6 million on exploration and had not made the option payment. Ultimately, Kennecott agreed to defer the $2.5-million option payment and agreed "not to make any cash calls from Talon beyond the amount of the Unsecured Loan until the fourth quarter of 2015." Talon said it would put the loan from Kennecott toward exploration activities at the project. Talon doesn't mention its cash situation in Thursday's press release, but a note from Haywood Securities provides some detail. In it, the firm states that under its model, it sees Talon needing to raise US$15 million this year to meet its near-term earn-in requirements at Tamarack North. It also points out that "current negative commodity price sentiment will likely continue to weigh on the near-term performance of base metal-focused equities," meaning that the company could face challenges in raising that money.
That said, the firm reiterates that it sees the US$4-million loan from Kennecott as a vote of confidence in Talon, and notes that the fact that Kennecott decided to option Tamarack North "in part suggest[s] its view on the project's potential." Furthermore, Haywood states, it still sees the earn in with Kennecott as a "tranformational move" for Talon as it "stands to position the Company with a significant interest in a high-grade sulpide deposit poised to gain additional market recognition on the back of an anticipated deficit in global nickel supply in mid-2015."At close of day Thursday, Talon's share price was down 6.25 percent, at $0.15. Haywood has a target price of $0.50 on the company and has assigned it a "buy" rating. It will be interesting to see further results from the 2015 winter drill program and to see what Talon ends up doing regarding funding. Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. Related reading: Talon Receives Vote of Confidence from Rio Tinto Subsidiary Talon Metals Reports New Discovery at Tamarack North Project from Nickel Investing News