The study, completed by consultants Core Resources, has recommended the junior narrow its focus to its New South Wales deposits at this stage, indicating that by focusing on just Webbs, Conrad, Strauss, and Kylo it can reduce its risks, but should be able to generate good cashflow over eight years based only on its deposits.

 

While it had planned to site the hub at Texas, the Queensland deposits have been sidelined given concerns with their commercial viability at current metal prices.

 

Thomson needs a silver price of A$28 per ounce, which is largely where the metal has been over the past two years, but is higher than where silver has traded over much of the past decade.

 

The numbers suggest, depending on the final configuration, just the four deposits could deliver free cash of $334 million over the expected life, with $206 million in the first three years - however operating margins are likely to be tight.

 

The report recommends the central processing facility be built near Tenterfield in New South Wales supported by a 1Mtpa crushing/grinding and flotation circuit at the Mt Carrington project it shares with White Rock Minerals, and a 750,000tpa facility its 100%-owned Webbs silver project.

 

Thomson's aim is to produce silver, gold, zinc, and copper in saleable forms. It will examine the Albion process to maximise zinc recoveries if it can't produce a zinc concentrate. 

 

Executive chair David Williams said the study had delivered a pathway for development, even in the current metal price environment, and without expanding the resources or fine tuning the processes, but he admits there's a lot more work to do.

 

Specific development costs were not released, given the indicative numbers generated internally have not been subjected to detailed engineering design work.

 

Thomson has resources of 87.1Moz of silver equivalent across NSW and Queensland, and is seeking to confirm 100Moz before it is comfortable making a final investment decision.

 

Given the clear need to improve margins and minimise capital costs, the company has decided to complete further engineering and "significant" metallurgical tests given the number of different resources that are to be developed.

 

It allows Thomson time to grow resources and hope for better metal prices.

 

The company, which has just $500,000 cash remaining, is being funded by a placement agreement with Lind that was extended this week.

 

Thomson's shares, which have traded at 1.9-9.9c over the past year, closed at 2.2c yesterday, valuing it at $18 million.