ttm.jpg

Titan Minerals Limited Limited

ASX:TTM

Last Price:

$0.059

Our Investment Summary

Date of
Initial Coverage

08-Jul-20

Initial
Entry Price

$0.067

Returns from
Initial Entry

-12%



Investment Memo: Titan Minerals Limited (ASX:TTM) - LIVE

Opened: 01-Mar-2022

Shares Held at Open: 4,249,250


What does TTM do?

Titan Minerals Ltd (ASX:TTM) is an exploration and development company on the hunt for world class gold and copper assets in the emerging global minerals hotspot, Ecuador.

What is the macro theme?

Gold remains a safe haven investment and hedge against inflation, and has historically outperformed in times of volatility (e.g market bubble crash, armed conflicts…).

Bullish gold market conditions persist, particularly with the go-to response to the pandemic being unprecedented worldwide monetary and fiscal stimulus (i.e. ripe conditions for sustained inflation).

Copper demand is set to grow from its already robust position on the back of unprecedented stimulus spending on infrastructure and construction projects globally.

Why did we invest in TTM?

Prime gold/copper real estate

TTM is an early mover in securing prime real estate within one of the world’s latest exploration and mining hotspots - Ecuador. TTM owns several exploration and development assets in the country. Ecuador has only recently become an attractive exploration and mining jurisdiction through improved and stable legislation. With Ecuador mirroring the geology of several of its mining-rich neighbouring nations, there is a good opportunity for big discoveries still to be made here. TTM could appeal to larger mining groups now seeking to attain or grow a significant land position within this hotspot.

Flagship project already with a big resource base

TTM’s Dynasty gold project has a “foreign resource estimate” of 14.5Mt @ 4.53 g/gold + 36g/t silver for a total contained resource of 2.1Moz gold + 16.8Moz silver. TTM is drilling in order to re-classify the resource to JORC standards, with potential upside of further growing the deposit. This could form the basis of a possible local mining operation down the track.

Copper side bets

TTM has two highly prospective copper projects in their pipeline, not far from where several major copper discoveries have been made of late. These provide blue-sky potential upside, should a discovery be made.

What do we expect TTM to deliver in 2022?

Objective #1: Resource conversion to JORC standards at Dynasty

  • We would like to see TTM convert their existing ‘foreign estimate’ resource into a maiden JORC resource estimate this year.
  • We also want to see extensional drilling produce an expanded exploration target that highlights the potential to grow the current resource base.

Here is how we will rank the JORC resource estimate result (our opinion only):

Objective #2: Follow-up drilling at Linderos

  • With promising early exploration results late last year, it shouldn’t take too long for TTM to prioritise the prospects at Linderos, and generate numerous drill targets.
  • Follow-up drilling at the targets is already underway, and we anticipate assays in 2Q22.

Objective #3: Commence drilling at Copper Duke

  • Following the recent recon-drilling program alongside ongoing geophysical surveys and geochemical soil sampling, TTM should be in a position to define drill targets for 2H22.
  • We want to see an extensive drilling program later this year, with initial assay results before year-end. This will shed light on the potential for Copper Duke.

What could go wrong?

Capital requirements

TTM is not a producer, remaining an explorer, and so requires continuous funding as it continues to advance its assets. As such, the company will be required to raise capital for survival when the current cash at bank drains. However, there is no guarantee that capital markets will be conducive at that point. We note that they have a substantial cash balance at present, which minimises this risk for 2022.

Underlying commodity risk

TTM is exposed to commodity price risk, which depends on macroeconomic factors and demand and supply dynamics of the underlying commodities, i.e. gold and copper. Market sentiment closely correlates with commodity prices, and hence TTM’s valuation will be impacted by commodity prices as well. There is no guarantee that gold and/or copper sentiment will trend positively this year.

Geological risk

The resource for the flagship project is an estimate only, and there is no guarantee that the current “Foreign resource estimates” is substantially converted into JORC resources. Even if the JORC reclassification occurs, it could be at a much lower grade, size or level of confidence, which would impact its value.

Sovereign risk

TTM’s prospects are all located in the developing nation of Ecuador. There is no guarantee that local authorities and/or communities will favour development of TTM’s prospects, and so could hinder advancement.

What is our investment plan?

We first invested in TTM at 6.67c and increased our position again at 10c in anticipation of the JORC resource estimate on its Dynasty gold project.

We intend to de-risk our investment keeping 80% of our position in the lead up to the JORC resource definition.

We plan to sell up to 50% of our investment in TTM if the share price increases 4-fold from our initial investment price in the lead up to the JORC resource.

Depending on the outcome of the JORC resource estimate, our investment strategy for TTM will change:

  • TOP OF CLASS OUTCOME - We will de-risk our position if the share price increases 4-fold from our initial investment price.
  • PASS OUTCOME - we will likely hold on to our TTM position and evaluate the project's merits going forward based on the gold price at the time.
  • FAIL OUTCOME - we will need to evaluate the merits of TTM’s other projects at the time, either buying back into the stock at a lower price or selling a portion of our holding to de-risk.

General updates from TTM

Managing Director increases shareholding [19-Jul-2022]

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 4,249,250 TTM shares at the time of publication. S3 Consortium Pty Ltd has been engaged by TTM to share our commentary and opinion on the progress of our investment in TTM over time.


Investment Milestones for TTM

Initial Investment: @ 6.6c
Top Slice
🔲 Free Carry
Initial Investment: @ 10c
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years


Investor Presentation

Noosa Mining Investor Conference round-up

Jul 22, 2022

Macro: Commodities


Spanning three days on the pristine Sunshine Coast of Queensland, the Noosa Mining Investor Conference kicked off its 12th year on Wednesday. Attracting a diverse and large spread of corporates, brokers, retail and institutional investors, this year’s event featured over 60 companies presenting and over 1,000 people in attendance, all hosted within the coastal town's Peppers Resort.

At the event, we caught up with a number of executives from our Investment companies (including AKN, AOU, BPM and PFE) as well as companies of interest, either as potential additions to one of our Portfolios, or to gain expert insight to macro and regional headwinds impacting the markets.

The conference is held in the ideal location to mix work with pleasure, and meet a host of CEOs of ASX juniors. Each day ends with a short ‘business at the bar’ session that quickly morphs into talking tactics about where to eat and drink. On Thursday and Friday nights, many head to the Noosa Surf Club for its networking sessions, enjoying its glassed indoor area and open deck to the beach.

We look forward to providing updates on companies we met with down the road.


Managing Director increases shareholding

ASX:TTM Jul 19, 2022 Announcement

Investment Memo: TTM IM-2022


This morning we saw the Managing Director of our gold exploration Investment Titan Minerals (ASX: TTM), Matthew Carr, increase his shareholding in TTM.

Mr Carr’s purchases were made off-market for a total of $380k at an average share price of 7.55c per share.

The “change in director's interest notice” showed that the transaction was completed on the 15th of July - a day when the TTM share price closed at 5.4c per share.

Effectively Mr Carr ended up paying an almost 40% premium to the market price on Friday to purchase the shareholding.

Mr Carr now holds ~28M shares in TTM.

We always like seeing the directors of our portfolio companies step up and buy shares on market, as it signals to us that the people closest to the company clearly see some value in topping up their shareholdings.

TTM has been one of those companies that has seen its share price fall from almost 11c per share all the way down to a low of 5c per share despite no fundamental changes to the business.

Buying from the company’s directors is also usually a good indicator to us that the sell off may be unwarranted or not indicative of internal views about the performance and future prospects of the company.


China considering US$1.1 trillion infrastructure stimulus

Jul 15, 2022

Macro: Commodities


China plans to make up to US$1.1 trillion in financing available for infrastructure spending, which we think will increase commodity demand. Read the following Bloomberg article for details.

Read the full article here.

Below are our key takeaways:

  • China is making 7.2 trillion yuan ($1.1 trillion) in funds available for infrastructure spending.
  • According to Citigroup, infrastructure investment in 2022 is likely to rise by 7.7% versus 2021.
  • President Xi Jinping has called for an “all out” effort to increase infrastructure spending this year to fuel economic growth and meet a GDP growth target of around 5.5%.

The Bloomberg article touches on the impacts of China’s COVID induced lockdowns on the domestic economy.

With economic growth tipped to slow, the Chinese government is getting ready to lean on fiscal stimulus through infrastructure investment to spur economic growth.

We think this type of fiscal stimulus is likely to become a common theme in China and the West, with macro themes like decarbonisation requiring massive CAPEX.

This infrastructure spending forms part of our “commodities supercycle” investment thesis, where we see increased fiscal stimulus and CAPEX investment spurring higher demand for commodities already facing supply shortages.


China considering US$220Bn in infrastructure stimulus

Jul 08, 2022

Macro: Commodities


The following Bloomberg article highlights China’s plan to spend up to US$220 billion to spur economic growth through infrastructure spending.

All of this new infrastructure will require more commodities.

Read the full article here.

Below are our key takeaways:

  • China’s Ministry of Finance is considering US$220 billion of infrastructure funding aimed at shoring up the country’s beleaguered economy.

  • The funding is to be brought forward from next year’s quota, marking the first time the issuance has been brought forward due to concerns around the dire state of the world’s second largest economy.

  • The funding would primarily be used on infrastructure spending to boost an economy hit by Covid lockdowns and a housing downturn.

  • Commodities rallied in European trading hours following the news, with copper moving 3.6% higher on the London Metal Exchange.

For over two years, we have been writing about an upcoming commodities supercycle brought about by infrastructure spending, following decades of underinvestment in the “real economy”.

All this investment in the “real economy” requires raw materials, which is why we think the macro backdrop for commodities over the next decade is strong.

The Bloomberg article highlights the readiness of the Chinese government to lean on fiscal stimulus to spur economic growth at a time when the Chinese economy is slowing down.

Generally, governments would try to respond to slowdowns in economic growth by cutting interest rates. With this tool exhausted after the COVID pandemic, we think infrastructure spending will become the new policy of choice for governments worldwide.

Again, this infrastructure spending will increase demand for commodities which we expect will take commodity prices higher.


VW CEO breaks down batteries and supply chain issues

Jul 08, 2022

Macro: Commodities


The following Bloomberg article showcases the moves major carmaker Volkswagen is making in the batteries industry.

Read the full article here.

Below are our key takeaways:

  • VW is pressing forward with investments along its battery supply chain, commencing construction at a new cell factory in Salzgitter, Germany, one of five facilities in Europe under the carmaker’s PowerCo subsidiary.
  • Salzgitter is home to VW’s main motor factory, and it is where the company last year opened an $80 million facility to research, develop and test EV batteries.
  • Roughly $2 billion will be invested in the new cell factory, where production is scheduled to begin in 2025.
  • VW expects its battery business to generate €20 billion in revenue by the end of this decade.
  • VW CEO Herbert Diess said, “We are invested in some startups and we are looking forward to a joint venture together with Bosch for the machine tools and equipment for those plants, so we’re really gearing up to become one of the bigger battery cell producers”.

The news is just another sign that downstream investment in battery supply chains is showing no signs of slowing down.

VW is one of the world's largest carmakers and is heavily investing in downstream production capacity. It expects this part of its business to generate over €20 billion in revenues by the end of the decade.

This is a situation where investment in midstream/downstream (manufacturing/battery industry) is far ahead of upstream investment (mining), this leads to the supply/demand imbalances for the raw materials required to produce batteries only becoming worse.

The imbalance comes from the timing of these mega projects. Building a downstream / midstream facility could take 1-4 years whereas it takes around 7 years on average to bring a new resource discovery into the production stage.

As a result, we think that raw materials prices will remain high for at least the next decade whilst the mining industry catches up to demand.


Promising sampling at Linderos copper/ gold project

ASX:TTM Jun 09, 2022 Announcement


INVESTMENT MEMO: TTM 2022

GENERAL: Exploration results


Our exploration investment Titan Minerals (ASX:TTM) announced early exploration results from its Linderos project in Southern Ecuador earlier today.

Channel sampling at the Copper Ridge porphyry copper prospect returned promising copper and coincident molybdenum results, including:

  • 46m @ 0.24% copper, 9.71ppm molybdenum in channel CRC040
  • 32m @ 0.21% copper, 3.91ppm molybdenum in channel CRC051

At the nearby Meseta Gold prospect, promising gold results from channel sampling included:

  • 4.5m @ 12.69g/t gold and 3.48g/t silver in channel MGC22-025
  • 2.9m @ 9.81g/t gold and 2.69g/t silver in channel MGC22-024

These results have led to numerous drilling targets ahead of the initial drilling to test the potential of these high priority targets in 2H22.

Today’s news fits in with our #2 Objective we’d like to see management deliver this year:

We take confidence that a turn around is not too far away with TTM, noting that several directors have being increasing their holdings recently:

  • Managing Director Matt Carr purchased $102.5k in shares on market
  • Newly appointed director Tamara Brown purchased $20k in shares on market
  • Non-Exec chairman Peter Cook purchased $152k in shares on market.

We consider directors purchasing shares in times where a company’s share price is depressed off the back of a news vacuum is generally a positive sign, as the people closest to the company see value in topping up their shareholdings.

To see all of the key objectives we want to see TTM achieve in 2022, the reasons why we continue to hold TTM in our portfolio and the key risks to our Investment thesis, check out our 2022 TTM Investment Memo here.


Managing Director purchases more shares on market

ASX:TTM May 18, 2022 Announcement


Investment Memo: TTM 2022

General: Director Buying


Just last week we saw the three of TTM’s directors step up and purchase ~$275k in shares on market.

This morning we saw a filing made by Managing Director Matt Carr who purchased another $52.5k in shares on market at ~7c per share.

Combined with last week's purchases, Matt has now brought ~$155k in shares on market around these levels.

We always like seeing the directors of our portfolio companies step up and buy shares on market, as it signals to us that the people closest to the company clearly see some value in topping up their shareholdings.

To see all of the key objectives we want to see TTM achieve in 2022, the reasons why we continue to hold TTM in our portfolio and the key risks to our Investment thesis, check out our 2022 TTM Investment Memo here.


Directors buying shares on market

ASX:TTM May 16, 2022


Investment Memo: TTM 2022

General: Director Buying


The last few weeks have been rough across the entire micro cap market and this has been reflected in the TTM share price which has gone from ~10c per share to now trade around the ~7.2c per share mark.

The company’s directors have taken this as an opportunity to add to their shareholdings with 3 directors purchasing ~$275k in total.

  • Managing Director Matt Carr purchased $102.5k in shares on market
  • Newly appointed director Tamara Brown purchased $20k in shares on market
  • Non-Exec chairman Peter Cook purchased $152k in shares on market.

We think directors purchasing shares in times where a company’s share price has moved off the back of no news is generally a good sign, as the people closest to the company see value in topping up their shareholdings.

To see all of the key objectives we want to see TTM achieve in 2022, the reasons why we continue to hold TTM in our portfolio and the key risks to our Investment thesis, check out our 2022 TTM Investment Memo here.


High grade gold and silver results in

ASX:TTM May 05, 2022 Announcement


Titan Minerals Limited (ASX:TTM) has now received all assays from its maiden 2021 drill campaign of the high-grade, epithermal gold veining at Cerro Verde Prospect within its Dynasty Gold Project in Southern Ecuador.

The Dynasty gold project has a “foreign resource estimate” of 14.5Mt @ 4.53 g/gold + 36g/t silver for a total contained resource of 2.1Moz gold + 16.8Moz silver.

The drilling and trenching results confirm extension of mineralisation at depth and along the length of the foreign resource.

The latest assays are from 12 diamond drill holes for approximately 3,510 metres of diamond drilling from the Cerro Verde prospect.

These diamond holes primarily targeted the extension and infill of the known epithermal veins and secondly intercept the structural ore shoots in the Cerro Verde prospect located on the western part of the Dynasty Gold Project.

TTM also reported that assay results have been received for twelve trenches totalling 398.18m This is part of the total length of 1,797.06m of trench sample that has been conducted in 51 trenches.

This channel sampling was completed in conjunction with geological mapping to better define the surface projection of mineralised veins for the resource evaluation.

This latest infill drilling at Cerro Verde is only a portion of the overall Dynasty resource as estimated in the previous foreign resource estimate by Core Gold Inc. in 2019. The project’s nine kilometres of the strike is split into three main prospects: Papayal, Iguana, and Cerro Verde.

The results include further indications for potential increases in resource volume that wasn’t included in the previous resource estimation.

However, assay turn-around time has been very slow for the final batches of assays submitted for the 2021 drill campaign.

TTM had expected to complete the reclassification of its foreign resource to a JORC resource estimate by the end of 2021, but the company says that this was not possible due to the additional time taken to complete the drilling and receive assays.

This was our primary objective that we wanted to see TTM achieve this year, so while disappointed in the delay, will be watching closely for further updates on this.


As indicated in the announcement today, once TTM completes the geological works on the old drill holes and the re-modelling of wireframes incorporating the new data, it will be able to provide a direct comparison of a JORC 2012 standard resource for this subset of the Dynasty ore system.

Assay results from a final six drill holes at the Iguana prospect in the second drilling campaign are expected in the coming weeks.

Further insight into why we invested in TTM and what we expect the company to achieve in 2022 can be found in our TTM Investment Memo.