TTM: 3 million ounces of gold now - 5 million ounces by the middle of next year?

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 1,020,823 TTM shares at the time of publishing this article. The Company has been engaged by TTM to share our commentary on the progress of our Investment in TTM over time.

For the third time in two weeks... gold hit a NEW all time high.

We keep writing about it, because it's hard to ignore the move...

Usually when a commodity like gold runs, gold companies share prices respond upwards in this order:

1. Companies producing and selling gold first,
2. Companies with JORC defined gold resources second;
3. And those exploring for gold third.

So far the producers have started running, we expect that next will be the ones with existing gold JORC resources.

We think our Investment Titan Minerals (ASX:TTM) will be one of those.

TTM owns 100% of a project in Ecuador with a JORC resource of 3.1M ounces of gold and 22M ounces of silver.

TTM is about to start a 10,000m drilling campaign for resource growth, and is targeting 5M ounces of gold by mid 2025.

For context, gold is currently selling for AUD ~$4,100 per ounce.

(the silver price is running too, which is also good for TTM - 22M oz. of silver is already an excellent start)

TTM also holds three copper exploration assets - one of which recently managed to attract a US$120M farm-in agreement (for up to 80% of the asset, TTM will retain 20%) with a Gina Rinehart controlled subsidiary (Hanrine).

Hancock Prospecting is also firing up the drill rig in the coming weeks.

On the Linderos copper project, TTM is fully carried for US$120M in expenditure OR until the project is ready for a decision to mine, meaning TTM spends no cash on the asset till it is a lot more advanced.

That frees up TTM to spend its cash on further growing its gold/silver resource.

A large part of TTM’s gold project has never been drilled before.

~82% of TTM’s current 3.1M ounce gold + 22M ounce silver resource is from drilling down to just ~200m depth, so there is potential for TTM to increase the resource with deeper drilling as well.

Here is a quick map of TTM’s current asset portfolio in Ecuador:

Over the last two weeks TTM put out two announcements showing where that resource growth might come from.

TTM announced trenching results from two target areas at its project:

1. Iguana south and Iguana east targets - where TTM returned up to 3m @ 21.4g/t gold and 14.1g/t silver from shallow trenches.
2. Tomahawk target - where TTM returned 5m @ 5g/t gold and 20.6g/t silver, again from shallow trenches.

Before those announcements in a previous TTM note, we had said we expect the resource growth to come by TTM drilling out the gaps in its resources.

(Red in the image below is the resource, the areas in between have never been drilled before).

That area is ~9km long and before the trenching results TTM had plenty of soil geochemical anomalies across that area.

One thing we like about TTM’s approach over the last ~18 months is that instead of sitting around waiting for conditions to improve for gold/silver stocks, TTM has been in field ranking drill targets since late 2023.

With whatever cash was available, TTM focused on “low cost generative exploration” on parts of its projects that haven't been touched before.

Here is what TTM’s targets looked like before that work started:

(Source)

And here is how it looks after ~12 months of work and the two announcements put out over the last two weeks:

We are looking forward to TTM’s drill program which should start any day now - the announcement from 10 days ago said drilling should begin ‘in the coming weeks’.

Any significant drill results, while the gold and silver prices are running, could be a nice trigger for further movement in TTM’s share price.

Copper exploration free carried - TTM gets to benefit at no cost

TTM has three copper assets that are at various different stages of exploration:

TTM’s Linderos project (JV with Hancock subsidiary)

We mentioned it earlier and in previous notes - TTM’s copper exposures are also a big part of the TTM story.

First of all the farm-out with Hanrine, a wholly owned subsidiary of Hancock Prospecting is huge for TTM.

Hancock Prospecting is owned by the $40BN mining magnate Gina Rinehart, Australia’s richest person.

TTM gets 20% ownership of a copper porphyry (the type of deposit that can be truly massive) after its partner spends US$120M on the project.

The look through valuation based on TTM’s 20% ownership at the end of the farm-in period would be ~US$30M (~AU$45M) based on the deal alone.

By the time Hanrine is finished drilling out the project, it could become a monster deposit and that 20% could be worth a whole lot more to TTM.

We also like that TTM has brought in a partner like Hanrine with deep pockets and experience on mega scale projects.

Porphyries can be hard to explore for junior’s because of the scale and depth the systems can extend into.

Drilling something like this could cost a junior hundreds of millions of dollars that would be impossible to fund on a drill/raise/drill/raise cycle.

The JV with Hanrine was executed on the 18th of September, and Hanrine is expected to start drilling soon.

Next and Hanrine will kick off a 10,000m drill program at the ~2km long porphyry (Copper Ridge prospect) fully funded by Hanrine:

We covered more on the TTM / Hancock JV news in our previous note here: TTM and Hancock subsidiary seal US$120M JV deal

Copper Duke and Copper Field Projects (100% owned exploration assets)

TTM’s other two copper assets are both relatively early stage, but that hasn't stopped TTM from getting “significant inbound M&A interest”.

At Copper Duke TTM has a similar exploration theory to the one that brought about the monster porphyry copper hits at Linderos.

There, TTM is at a similar stage where Linderos was before that 2022 drill program.

So any drilling here could be worth watching out for - if it produces the type of results Linderos did, it could attract more partnership interest.

Copper Field is TTM’s earliest stage asset.

As we mentioned above, cashed up majors have the balance sheet to fully drill out big copper porphyry targets, so we will be watching with interest to see if TTM can strike additional deals on these copper assets.

In the short term though, we want to see the drill program begin at TTM’s gold/silver project.

Ecuador copper in favour amongst the major miners...

One of the highest grade gold mines in the world is operating in Ecuador right now.

The project is owned by ~$9BN capped Lundin Gold - its actually their cornerstone asset.

Lundin was built off the back of Fruta Del Norte’s success - back in 2016 when the project was in the feasibility study stage Lundin’s share price was less than CAD$5 per share.

Since then Lundin has raised billions of dollars, built its project and is producing almost half a million ounces of gold per annum.

Now Lundin’s share price is ~CAD$34 per share and it has a market cap of ~$9BN.

More recently Ecuador has started attracting interest from major miners for copper.

Earlier in the year SolGold signed a $3.2BN deal with the Ecuador government for its Cascabel copper-gold project.

That move triggered rumours of BHP corporate interest in SolGold.

(BHP is already a shareholder of SolGold and its pretty well known they are on the lookout for more copper exposure)

(Source)

Gina Rinehart, who controls one of the world’s biggest private mining groups (& TTM’s joint venture partner at Linderos) is also pushing itself into Ecuador.

Before the deal with TTM, Gina invested US$120 million for a 49% stake in six different projects partnering with Ecuador’s national mining company, ENAMI (51%).

Overall, we think the moves by the bigger miners into Ecuador can only be good for the country.

Once they go in and work with the government to develop the industry, it makes juniors like TTM more attractive for the mid tier miners.

It also makes it easier for juniors like TTM to finance their assets AND also puts more eyeballs on what they are doing (hopefully more attention means higher valuations)...

Two key catalysts we want TTM to deliver before the end of the year:

🔲 Start drilling to upgrade the Dynasty JORC resource again

We want to see TTM kick off its 10,000m drill program to upgrade its 3.1M ounce gold & 22M ounce silver JORC resource.

As mentioned earlier in today’s note, we want to see TTM drill out the parts in between its current JORC resource and hopefully hit extensions to existing mineralisation OR make completely new discoveries.

TTM’s target is to get the resource up to ~5M ounces of gold which we think would be a big success if it comes from just this one drill program.

🔲 Exploration drilling at Linderos funded by Hanrine (Gina JV)

We also want to see Hanrine kick off the 10,000m drill program at its copper JV with TTM.

In a recent presentation TTM flagged that this is expected to start this quarter.

TTM can't really control the timing on this given Hanrine is going to fund the program but we are looking forward to seeing the results from this drilling - especially because TTM will be getting all this newsflow and (hopefully) valuing adding events at no cash cost.

In the short term these are the key catalysts we will be tracking.

Ultimately we are hoping that a mix of the exploration results from TTM’s copper joint venture with Gina Rinehart’s Hanrine and its gold/silver project help TTM achieve our Big Bet which is as follows:

Our TTM Big Bet:

“We want to see TTM prove up a $1BN plus copper or gold discovery in Ecuador which is so attractive that a mining major acquires the company.”

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 TTM Investment memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

What could go wrong - key risks in the short term

In the short term there are two key risks for TTM - exploration risk and funding risk.

Exploration risk because TTM is about to kick off a 10,000m drill program where the results could be anything.

TTM’s share price could start rallying as its share price could start pricing in some level of exploration success.

IF TTM’s drill program fails to find anything of note, then its share price could re-rate lower, as expectations aren't met.

There is some funding risk because TTM is going into the drill program having ended the June quarter with $1.6M cash in the bank and ~$3.3M in debt.

Since then TTM has however received US$1.75M (~AU$2.6M) from the JV with Hanrine and ~$2.7M from in the money options being exercised on the 18th of October.

Thats a total of ~$5.3M that TTM should have received since the last quarterly was published.

(We should get the September quarterly sometime next week - the deadline for quarterlies is market open on the 1st of November)

The upcoming 10,000m drill program won't be cheap, and so TTM will need a strong balance sheet to fund exploration.

One way we think TTM could fill in a funding gap is through its in the money options.

TTM still has another 18.8M 35c options in the money which means they could get another ~$6.6M into the bank account without having to raise cash.

(Source)

Our TTM 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.

Click here to read our TTM Investment Memo where you will find:

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