TG1: Reveals new giant copper-gold drill targets at Blue Devil project

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 7,360,000 TG1 Shares and 1,650,594 TG1 Options at the time of publishing this article. The Company has been engaged by TG1 to share our commentary on the progress of our Investment in TG1 over time.

$5M capped TechGen Metals (ASX:TG1) now has a giant copper-gold target to drill this year...

Today, TG1 put out EM results from its copper-gold project in WA (Blue Devil project).

A good time for it with strong copper and gold prices.

It's early days, but TG1’s new big red EM blobs look highly drillable...

TG1’s Blue Devil has never been drilled before and MD Ash Hood reckon its “the most promising prospects” TG1 has identified to date.

So what does this image mean?

Basically, TG1’s drill target generation work has yielded two big, red, EM conductors that look very interesting to drill for a new copper-gold discovery:

So far, TG1 has rock chips lining up with the red EM conductors...

Rock chips up to 50.5% copper, 18g/t gold right in and around where the big EM targets are:

TG1 didn't give any guidance yet on when to expect a drill program on the target, but the project was recently acquired and is still in the application stage, so there could be a few more months between now and a drill program on the project.

Like generally happens with exploration, as we get closer to a drill program on these targets, we expect the market to start showing more of an interest in TG1.

Especially if gold and copper prices continue their recent runs.

TG1 is a tiny exploration stock, so it can have pretty good share price runs into new drilling programs.

We saw it happen in the lead up to TG1 drilling its Ida Valley lithium targets last year (even though lithium sentiment was a bit soft at the time).

And we think a crack at drilling a giant copper-gold target that’s never been drilled will also pique the markets interest, given where copper and gold prices are trading at right now...

Early stage exploration is high risk high reward - especially when drilling for big new discoveries on completely virgin ground.

Contrary to what most would think, it is the smallest companies (junior explorers... and their shareholders) who are the ones attempting these discoveries... in spite of the risk.

Companies with market caps in the hundreds of millions, billions, have other things to worry about like optimising development plans for existing discoveries or extracting as much profit as possible from depleting assets.

That essentially leaves the tiny explorers with the responsibility of finding the next big discovery.

Fun fact: 70% of all discoveries in Australia have been made by tiny companies (like TG1) since 2000.

(See more on this here: Why we invest in junior explorers, Critical Minerals and more...)

That asymmetric risk-reward is why we Invest in small cap exploration.

(and we accept the risks that most drilling for a new discovery will fail)

TG1 is currently capped at $5M with $1.7M in cash at 30 September 2024 and so we think the company’s valuation is leveraged to a successful discovery.

We have been Invested in TG1 since its IPO back in April 2021.

TG1’s had a few cracks at exploration, across multiple projects, but we haven't got that big discovery from them... yet.

We are still waiting for that one discovery that gives TG1 a sustainable re-rate, but one thing is for sure, TG1 will continue to have more “shots on goal”.

But in the exploration game, its all about rolling the dice as many times as you can to finally get that outsized winner.

Today we have our first look at TG1’s big roll of the exploration dice - Blue Devil.

And these targets published today are the first step towards a drilling program that could be ‘company making’ for TG1 if they deliver a significant new copper gold discovery..

High-risk, high-reward exploration drying up? Opportunity for TG1...

Spending on mineral exploration has been drying up in the last few years and it feels to us like the market is starved of genuine shots at new discoveries.

(Source)

Most exploration companies have gone into cash preservation mode.

We have noticed that most exploration minnows are focused on infill and extensional drilling on existing discoveries, so that the risk of complete dusters are lower.

Companies have stepped away from the “swing for the fences” style drilling on never before tested ground.

The risk at the moment is just too high when stacked up against the realities of trying to raise cash for the next exploration program.

BUT this whole “risk off” attitude presents an opportunity for brave companies to have a genuine crack at a new discovery.

Because there is far less noise in the market these companies get the spotlight pre-drill, and an even bigger spotlight if a discovery is made.

ESPECIALLY when it comes to copper targets...

(spotlight = investor interest and usually volatility in the share price depending on the results of the program).

That could mean a potential share price run leading up to and during drilling, then a re-rate (down or up) depending on the results.

The most recent example was Renegade Exploration - one that we followed quite closely on our watchlist.

Renegade rallied from 0.05c to ~2.5c as it defined its targets (with similar announcements to TG1 today), and then eventually started drilling...

From the lows to the highs, the share price moved up ~400% during that period:

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Unfortunately, the drill results didn't quite deliver what the market was starting to price in and Renegade’s share price came down post-results.

We think that there is a good chance TG1 could see this sort of action as it nears its own drill program.

Especially if strong gold and copper sentiment continues.

At the moment, TG1 has not yet put out a timeline for when to expect drilling but we hope to see it become clearer soon.

The company will be going for a genuine attempt at a copper-gold target that is over 2.75km long.

And right now, it's capped at only $5M.

Renegade for comparison was capped at ~$28M at the peak during that drill program.

The world needs more copper, but discoveries are becoming harder.

Earlier this week BHP published that copper production from its giant mine in Chile was at a “decade high”.

This was driven by copper demand from global "electrification".

But over the last decade the resources from existing copper projects is depleting:

(Source)

This has led to a wave of consolidation across copper projects with billions of $ spent since 2013.

Last year this peaked with the BHP/Lundin Mining $4.1B acquisition of Filo Corp’s copper project:

(Source)

This consolidation is because it is becoming harder and harder to make new copper discoveries and there are less juniors out there conducting copper exploration.

(as we mentioned above)

Companies are going deeper and deeper to find new copper discoveries, they are much smaller and becoming less frequent:

We think this means that any hint of a new copper discovery by TG1 could re-rate it strongly.

(particularly given recent copper market dynamics, and the relatively limited options on the ASX for copper exploration exposure)

TG1’s targets published today are around a depth of ~200m, which is much shallower than recent copper discoveries.

It's still relatively early days for TG1’s Blue Devil targets, but we think drill programs on targets like this could help TG1 achieve our Big Bet which is as follows:

Our TG1 ‘Big Bet’:

“That TG1 will return 10x by discovering and defining a significant enough deposit to move into development studies for one of its projects.”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our TG1 Investment memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

What’s next for TG1?

Blue Devil Project (Copper-Gold)

✅ EM Survey Results
🔄 Exploration permit granted

🔲 Heritage surveys complete

🔲 Drill targets selected

🔲 Drilling program of work

Other Kimberly Projects

🔄 EM Survey Results

Station Creek & Mt Boggola (Copper-Gold-Antimony)

🔲 Geophysics (early 2025)
🔲 Geophysics results

🔲 Heritage surveys

John Bull (Gold, NSW) - 30% interest

🔲 Drilling results by farm-in partner NOVO

What could go wrong?

At the moment, TG1’s Blue Devil is still an ungranted exploration license application.

There are still a fair few permitting hurdles that TG1 will need to get through before it can drill its targets.

In the short term, with no exploration drilling happening right now, the key risk to TG1 is “permitting risk” and “delay risk”.

The market interest in the project will likely pick up once these permits are secured, so any delays in permitting or heritage surveys may cause impatient investors to leave the stock to chase more immediate catalysts.

Another risk to keep in mind for TG1 in the short term is “funding risk”.

TG1 had $1.7M cash in the bank on 30 September 2024.

The December quarterly reports are due by Friday next week, which is when we should get a more updated look at the company’s cash position.

There is a chance TG1 looks to raise some cash, especially if the market starts to show an interest in the company’s new drill targets.

Any capital raise in the short term could create some selling pressure as the company churns through the placement shares.

To see more risks to our TG1 Investment Thesis, check out our TG1 Investment Memo here.

Our TG1 Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing. We use this memo to track the progress of all our Investments over time.

Below is our TG1 Investment Memo, where you can find the following:

• What does TG1 do?
• The macro theme for TG1
• Our TG1 Big Bet
• What we want to see TG1 achieve
• Why we are Invested in TG1
• The key risks to our Investment Thesis
• Our Investment Plan