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ASX:TTM

Titan Minerals Limited

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ASX:TTM
- Titan Minerals Limited
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$0.435

Last Price

Investment Memo:

Titan Minerals Limited (ASX:TTM)

- LIVE

Opened: 29-May-2024

Shares Held at Open: 12,152,769


What does TTM do?

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

What is the macro theme?

As of writing this memo gold, silver and copper price are moving upwards.

Gold and silver are both precious metals that are thought of as hedges against currency inflation.

Silver also has industrial use cases including in the manufacture of solar panels. Demand for silver from solar panels is forecast to go exponential and as such can be considered important to the energy transition.

Meanwhile copper is predominantly used for electricity transmission. Renewable energy projects require A LOT of copper to link them up to the grid from remote areas.

Copper is also used in data centres for AI and in electric vehicles (EVs) - there are roughly 80kgs of copper in an average EV.

Our Big Bet for TTM

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

Why did we invest in TTM?

Advanced stage asset with giant JORC resource

TTM’s primary asset (Dynasty) has an existing 3.1M ounce gold, 22M Ounce silver JORC resource. We think the resource at Dynasty underpins TTM’s valuation.

TTM has agreed to terms on a US$120M farm-in deal with Hancock Prospecting subsidiary

TTM has agreed to terms on a JV / earn in for its earlier stage copper project. Once binding, we think the deal validates the potential for a seriously big copper discovery, given the deal was signed at such an early stage and for such a large amount.

TTM essentially has a free carried option at giant copper porphyry discovery

We think the proposed deal with Hanrine (Gina’s subsidiary) gives TTM a free option at being a 20% holder in a giant copper porphyry discovery in a deal that is worth more than TTM’s current market cap on its own.

Right commodities at the right time

TTM gives us exposure to gold, silver and copper. All three commodities are currently running with gold and copper both trading at all-time highs and silver breaking out into decade highs.

Rare copper exposure with tier 1 discovery potential

We think it is hard to find small cap stocks on the ASX that have genuine tier 1 copper discovery potential. Especially not one with funding secured to drill out a potential discovery. TTM has both at its Linderos project.

TTM has institutional backing

For such a small company, TTM already has some impressive funds on its share register including Tribeca, Nero Resources Fund, Bacchus Capital, and Thorney.

Ecuador is a mining hot spot

All of TTM’s assets are in Ecuador. The country is well known for being home to big discoveries and blue chip mining companies like Anglo American, Newmont, BHP, Barrick, Lundin. Large cheques are being written for Ecuadorian mining projects. We think TTM’s assets could be of increased interest over the coming months.

What do we expect TTM to deliver?

Objective #1: Upgrade Mineral Resource Estimate at Dynasty

  • We want to see TTM grow its existing 3.1M ounce gold and 22M ounce silver JORC resource at its Dynasty project.

Milestones

in-progress JORC resource upgrade #1

complete Drilling Results 1

not done Drilling Results 2

not done JORC resource upgrade #2

Objective #2: Economic assessment of the Dynasty project

  • We want to see TTM move the Dynasty project into the feasibility study stage. TTM’s first target for this stage is a pre-scoping study which should give a high level overview of the project's economics.

Milestones

not done Metallurgical Testwork Results

not done Pre-Scoping Study results

Objective #3: Progress Linderos Project through to MRE

  • We want to see TTM complete the deal with Hanrine and start drilling out the Linderos project all the way through to a maiden JORC resource estimate.

Milestones

in-progress Complete JV deal with Hanrine (Gina Rinehart subsidiary)

in-progress Drill program #1

not done Drill program #2

not done Confirmation of copper Porphyry discovery

not done Maiden JORC resource estimateMineral Resource Estimate published

Objective #4: Sign JV/strategic partnership on earlier stage projects

  • We want to see TTM progress its earlier stage assets (Copper Duke and Copper Field) through a farm out deal similar to the one signed on Linderos.

Milestones

not done Joint venture or farm-in partner announced

not done Drilling exploration program commences

not done Drilling exploration program results

What could go wrong?

Exploration / Drilling risk

There is no guarantee that TTM’s extensional drilling programs will be successful and TTM may fail to uncover enough economic mineralisation to justify the expense.

Funding risk/dilution risk

As a small cap company, TTM is reliant on capital markets to advance its projects if it cannot do strategic deals with partners.

If something negative happens at a macro or company level, TTM could struggle to access capital on favourable terms.

These capital raises may take place at a discount, and result in the issuance of new shares which incur dilution to existing shareholders.

Commodity price risk

At the time of writing this memo all three of the base metals that TTM’s projects are leveraged to are running hot.

Should the price of these commodities fall, it could hurt the TTM share price and the look-through value of its assets in any takeover scenario.

Deal risk

Specific for the Linderos Project, the deal with Hanrine is subject to conditions including a formal earn-in and JV agreement being signed.

It is possible that the deal falls through for whatever reason, in which case we think the market would react negatively and lead to a fall in TTM’s share price.

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.

We also note a recent surge in violence could have a dampening effect on investments.

What is our investment plan?

We plan to hold the majority of our position in TTM for the next 12 months (and beyond) as it progresses through both its Dynasty project as well as completing its deal with Hanrine for the Linderos Project.

However we may de-risk a portion of our Investment if the share price appreciates materially in line with our standard de-risking plan.


Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 12,152,769 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.

Our Investment Summary

Date of Initial Coverage

08-Jul-20

Inital Entry Price

$0.667

Returns from Initial Entry

-35%

High Point

155%