06-Nov-2020: Canaccord Genuity: Titan Minerals (TTM): Dynasty drilling underway, newsflow imminent
Analysts:
- Reg Spencer | Analyst | Canaccord Genuity (Australia) Ltd. | rspencer@cgf.com | +61.2.9263.2701
- Paul Howard | Analyst | Canaccord Genuity (Australia) Ltd. | phoward@cgf.com | +61.8.9263.1155
Titan Minerals (ASX: TTM): Dynasty drilling underway, newsflow imminent
- Rating: SPECULATIVE BUY
- Price Target: A$0.25
- Price: A$0.12
- 52-Week Range (A$) : 0.03 - 0.19
- Avg Daily Vol (000s) : 1,559.75
- Shares Out. (M) : 1,115.2
- Market Cap (A$M) : 133.8
- Dividend /Shr (A$) : 0.00
- Dividend Yield (%) : 0.0
Titan Minerals (TTM:ASX) is a mineral exploration company focused on gold and copper-gold targets in Ecuador. Its key assets are the 2.1Moz Dynasty Gold project and the Copper Duke porphyry project. Canaccord Genuity (Australia) Limited has received a fee as Lead Manager to the Titan Minerals placement announced on 28 May 2020. Canaccord Genuity (Australia) Limited has received a fee as Lead Manager to the Titan Minerals capital raising announced on 16 December 2019.
Dynasty gold project - recap: As detailed in our recent initiation report (Opening the door in Ecuador), TTM's 100%-owned Dynasty gold project in Southern Ecuador features a non-JORC Resource of 2.1Moz at 4.5 g/t hosted within an extensive, but under-explored, epithermal vein system. While prior exploration and small-scale production focused on higher grade vein hosted mineralisation, the presence of "bulk tonnage" mineralisation and potential for a higher vein density supports the potential for significant extension to the existing Resource base, and prospects for a commercialscale mine development, in our view.
Drilling underway - we expect newsflow to increase: Drilling at Dynasty commenced in late September 2020, with the initial 6,000m diamond program (three rigs) designed to validate existing drill hole data and test geological controls on mineralisation. This initial drilling is part of a broader Resource drilling (infill and extensional) program which, combined with re-sampling of historical core, we expect to inform a re-estimation of Project Resources in accordance with JORC guidelines in early 2021.
We highlight prior high grade hits such as 14.5m at 6.4 g/t from 119m and 24m at 4 g/ t from 108m (Cerro Verde), 8.5m at 13.9 g/t from 97m and 4.8m at 7.6 g/t from 111m (Iguana) as providing support for both high grades and broader mineralised zones. In our view, positive drilling results could act as a share price catalyst ahead of ongoing exploration.
Non-core Peruvian assets divested: In Early October 2020, TTM completed the divestment of non-core exploration assets in Peru to Oro X Mining (OROX:TSX | Not rated) for upfront consideration of US$1.65m cash and 4.25m shares. The sale includes contingent payments to TTM on certain project Resource milestones. We note that other non-core assets such as the Zaruma Gold project and 700ktpa Portovelo processing plant (care and maintenance) present as further divestment opportunities, with any consideration providing further funding for exploration activities in Ecuador.
High grade Jerusalem gold project reinstated - another string to TTM's Ecuadorian bow: The Jerusalem gold project is located in the Zamora Chinchipe province of Southern Ecuador, ~40km south of Lundin's 300kozpa Fruta del Norte mine. The project features high grade, quartz hosted gold mineralisation with a non-JORC Resource estimate 1.2Moz at 14 g/t. The concession had been the subject of a prior legal dispute since 2017, with a recent court ruling finding in favour of TTM.
While we expect TTM's immediate focus to remain at Dynasty, the addition of an under-explored high-grade gold system such as Jerusalem, as well as the relatively unexplored large-scale Copper Duke porphyry target and earlier stage Linderos gold project, provides a highly prospective exploration portfolio, in our view. TTM finished the September quarter with cash of US$6m (excluding proceeds from recent asset sales) leaving it sufficiently funded for planned exploration.
Valuation and recommendation
Our target price (Resource multiple) of $0.25 and SPEC BUY rating are unchanged.
--- click on the link at the top for the full CG report on TTM ---
[Bear77 note: Where/When I hold shares in a company that I post a straw or a forum post on, I will always disclose in that straw or post that I do own shares in that company - usually at the end. If I don't then I do NOT own shares in the company, as in this case. I.e. I do NOT own TTM shares.]