TTM does US$10M deal with US$3.5BN capped strategic partner

Our Gold and copper Investment Titan Minerals (ASX: TTM) just received a US$10M strategic investment from US$3.5BN Lingbao Gold International Company…

Lingbao came in for a 9.9% equity stake in TTM in exchange for US$10m.

(The deal was done at an implied value of ~59c per share for TTM which is well above where TTM is trading today at 52.5c)

(Source)

TTM has four assets in southern Ecuador including:

• The Dynasty Gold Project which is TTM’s most advanced asset and hosts 3.1M ounces of gold and 22M ounces of silver.
• The Linderos copper project where Gina Rinehart’s Hancock is earning in up to a 80% stake in the project in exchange for US$2M cash plus US$120M in exploration spend. And
• Two earlier stage copper assets where we think TTM could do similar to the deal done with Gina.

TTM is actively drilling at Dynasty right now where a resource upgrade for the project was planned for late Q3, so shouldn’t be far away. (source)

At Linderos, the JV is also actively drilling.

With gold and silver prices trading at all time highs it's no surprise TTM has managed to attract corporate interest in the company.

Especially with that advanced resource at the Dynasty project (3.1Moz of gold and 22Moz of silver).

Lingbao actually made specific mention of TTM’s Dynasty asset in the commentary section of that announcement earlier in the week:

(Source)

We also noticed on page 2 of the announcement that Lingbao and TTM signed an “Exclusivity Deed” which would give Lingbao exclusivity rights for 90 days to get a deal done on Dynasty alone…

Clearly Lingbao really like that project and while gold and silver are running hard want to be the only ones who are able to negotiate with TTM directly on a potential deal:

(Source)

(they also got that right of first refusal clause in for 180 days - meaning they can match or beat any competing offers too)

We are not lawyers, but we have seen these exclusivity deeds get done on different assets several times over the last few decades.

These deeds are ways for interested parties to be the sole negotiators on an asset while they do their due diligence on the project.

Basically, they sit down with TTM over the next 90 days and try to agree a deal on that single asset.

IF a deal isn't done and someone else comes in and puts an offer in they have a “right of first refusal” to beat or match whatever is offered to TTM for the next 180 days.

Interestingly, they also put in place a similar arrangement for TTM’s two other earlier stage copper assets:

(Source)

So inside the next 90-180 days, we COULD see more corporate news from TTM… just as M&A activity in Ecuador is becoming more and more common.

(ofcourse there is no guarantee of this, M&A deals can always drag out much longer than anyone expects and nothing is a guarantee)

M&A activity in Ecuador has been heating up…

Over the last ~12-16 months we have seen:

1. China’s CMOC acquired Lumina in a deal worth US$421M.
2. SolGold signed a US$3.2BN deal with the Ecuador government for its Cascabel copper-gold project.
3. A Gina Rinehart backed subsidiary of Hancock Prospecting invested US$120 million for a 49% stake in six different projects, partnering with Ecuador’s national mining company, ENAMI (51%) and did the US$120M deal with TTM.

(Source)(Source)(Source)

That Lumina deal was particularly interesting to us.

Lumina is a single asset company with a giant copper-gold porphyry project (one of the top 30 biggest in the world).

It is the type of project that Gina Rinehart would likely have been looking for when her subsidiary group Hanrine signed that US$120M Joint Venture deal with TTM.

It could also be the type of asset that Dynasty could become if the porphyry exploration upside of the project comes in when TTM eventually drill those deeper targets.

TTM only started talking about the porphyry potential of Dynasty in presentations earlier this year. (Source)

Most of the drilling to date on TTM’s Dynasty asset has been shallow high grade gold and silver (down to 200m depths) - with 82% of the current resource estimate above 200m depths.(Source)

So far no drilling has been done at depth to test for the source of the high grade silver and gold near surface…

(Source)

Earlier in the year TTM ran ~920-line km geophysical survey across ~9km of strike to see if geophysics work can validate that theory.

Results from that geophysical survey could come any day now - they were due during the september quarter:

(Source)

So we could soon see if there is a big blue sky porphyry exploration target on Dynasty which is already a big gold-silver project as it sits right now.

We think that untapped exploration upside could be a really nice carrot that gets dangled infront of potential acquirers of the asset (in this case Lingbao who have exclusivity on the project for at least the next 90 days).

Here is where that Lumina asset sits relative to TTM’s portfolio of projects:

Ecuador copper & gold 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 ~A$27BN capped Lundin Gold - it's 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 Gold’s share price is ~CAD$101.97 per share and it has a market cap of ~A$27BN.

(Source)

Here is where Lundin's Fruta Del Norte sits relative to TTM’s assets:

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

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

That SolGold deal was the biggest ever mining investment commitment in Ecuador’s history AND it was completely separate to the ~US$311M SolGold had committed to previously.

(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 AND for the majors looking to increase in-country presence.

What’s next for TTM?

More drilling at Dynasty gold project 🔄

TTM is currently at Dynasty with a view of upgrading the projects resource estimate. .

We expect the company to complete this drilling over the coming months and set itself up for a resource upgrade.

Resource upgrade/update at Dynasty 🔲

TTM is working towards a resource upgrade on its project. A presentation from earlier in the year set a +5M ounce gold target for its Dynasty asset:

(Source)

More drilling at the Linderos Copper project (Gina JV) 🔄

The JV with Gina recently completed the second stage of the earn-in agreement AND kicked off exploration under the third phase of the deal:

We are looking forward to results from this stage of works: