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.
$0.345
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
Milestones
JORC resource upgrade #1
Drilling Results 1
Drilling Results 2
JORC resource upgrade #2
Objective #2: Economic assessment of the Dynasty project
Milestones
Metallurgical Testwork Results
Pre-Scoping Study results
Objective #3: Progress Linderos Project through to MRE
Milestones
Complete JV deal with Hanrine (Gina Rinehart subsidiary)
Drill program #1
Drill program #2
Confirmation of copper Porphyry discovery
Maiden JORC resource estimateMineral Resource Estimate published
Objective #4: Sign JV/strategic partnership on earlier stage projects
Milestones
Joint venture or farm-in partner announced
Drilling exploration program commences
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.
Opened: 01-Mar-2022
Closed: 29-May-2024
Shares Held at Open: 4,249,250
Shares Held at Close: 12,152,769
Reason Memo Closed: New Material News
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.
[Memo Assessment - 29-May-2024]: Sentiment = Strong
For a while market sentiment for gold, silver and copper was all relatively weak.
However, in recent months the price of gold, silver and copper have all started rallying and sentiment has started to pick up again.
We are marking the sentiment for TTM’s macro theme as “strong” but we are conscious of the sentiment having been low at points during our first Investment Memo
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?
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.
[Memo Assessment - 29-May-2024]: Grade = B
While the overall prospectivity of this part of Ecuador has only improved as TTM has gone about its exploration efforts - the current political situation in Ecuador is markedly more tense.
In a positive for TTM, we note that recently elected President Noboa attended PDAC in Toronto to re-emphasise Ecuador’s attractiveness as a home for mining investment.
Additionally, a number of mining majors have invested heavily in the region of Ecuador that TTM operates in.
However, since our initial TTM Investment Memo was published, we note that a surge in violence in Ecuador may have a dampening effect on potential investment.
Friction between the Ecuadorian federal government and local stakeholders could be a source of risk for TTM, along with the potentially volatile political environment in the country.
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.
[Memo Assessment - 29-May-2024]: Grade = B
Although TTM managed to deliver an upgrade to the Foreign Resource Estimate, it took much longer than expected.
This caused investor sentiment to wane in the project and the JORC upgrade wasn’t enough to offset the delays in the project.
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.
[Memo Assessment - 29-May-2024]: Grade = A
TTM managed to sign a Joint Venture agreement for one of its copper side-bets “Linderos” with a subsidiary of Gina Rienhart’s Hancock Prospecting.
For TTM to extract some value from these “side-bets” is a big win in our eyes.
What do we expect TTM to deliver?
Objective #1: Resource conversion to JORC standards at Dynasty
Here is how we will rank the JORC resource estimate result (our opinion only):
[Memo Assessment - 29-May-2024]: Grade = A
TTM managed to publish an upgraded JORC resource of 3.1M ounces of gold and 22M ounces of silver. This beat our “Bull Case” scenario for the project.
Objective #2: Follow-up drilling at Linderos
[Memo Assessment - 29-May-2024]: Grade = B
Assays from TTM’s follow up drilling came back strong, with 308m at 0.4% copper equivalent. TTM did not follow up this program with more drilling but did conduct IP surveys for more target generation.
From this work, TTM was able to sign a Joint Venture worth up to US$120M to develop the project (in exchange for 80%).
Objective #3: Commence drilling at Copper Duke
[Memo Assessment - 29-May-2024]: Grade = D
TTM was able to define drill targets for Copper Duke but no drill program was done. This was due to financial constraints and resources allocated to the Dynasty project.
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.
[Memo Assessment - 29-May-2024]: Risk = Materialised
Through this TTM Investment Memo the company has raised $5.5M at 5 cents per share, $4.1M at 3.3 cents per share.
Each of TTM’s last four capital raises has been done at a lower and lower valuations, which has been painful for existing investors.
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.
[Memo Assessment - 29-May-2024]: Risk = Materialised
Although the sentiment for copper, gold and silver is strong, in 2023 when TTM was raising capital, the sentiment for these commodities was relatively weak.
This has meant that TTM has needed to raise capital at depressed valuations, diluting existing shareholders.
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.
[Memo Assessment - 29-May-2024]: Risk = Decreased
TTM was able to publish a JORC resource and de-risk the project from a geological perspective.
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.
[Memo Assessment - 29-May-2024]: Risk = Unchanged
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:
[Memo Assessment - 29-May-2024]: Grade = D
TTM’s share price did not materially appreciate during the life of the memo and we did sell down a portion of our holdings at a loss.
Although the “Top of class outcome” was beat by TTM’s results, the JORC resource was delayed and the commodity price risk materialised.
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.
TTM: 3 million ounces of gold now - 5 million ounces by the middle of next year?
Oct 25, 2024
Oct 25, 2024 |
10 min
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 and Hancock subsidiary seal US$120M JV deal
Sep 18, 2024
Sep 18, 2024 |
12 min
This morning, Hanrine (one of Gina Rinehart’s Investment vehicle) executed a BINDING Joint Venture agreement to earn up to 80% in TTM’s copper project in return for spending US$120M on exploration and development.
TTM - Gold, Silver and… Copper with a Gina JV?
May 29, 2024
May 29, 2024 |
22 min
Gold is at all time highs… Copper is also trading at all time highs…. The silver price just hit decade highs again - touching over US$32/oz overnight. And our Investment Titan Minerals (ASX: TTM) is leveraged to all of them.
Gina Rinehart Hancock Subsidiary to earn into TTM Copper Asset
Apr 18, 2024
Apr 18, 2024 |
11 min
Our gold-copper Investment Titan Minerals (ASX: TTM) has just agreed to terms with a subsidiary of Hancock Prospecting - owned by Australia’s richest person, Gina Rinehart.
TTM Defines a 3 million oz. Gold JORC Resource
Jul 6, 2023
Jul 6, 2023 |
13 min
Today, Titan Minerals (ASX: TTM) announced its maiden JORC-compliant resource estimate, 3.12 million ounces of gold and 21.98 million ounces of silver.
TTM provides Dynasty drilling update
Dec 20, 2024
Dec 20, 2024 |
1 min
Our gold, silver & copper Investment Titan Minerals (ASX: TTM) announced today that the company has made significant progress in its Dynasty Gold Project - having now completed 4,600m of drilling.
TTM raises $20M for gold and copper drilling
Dec 5, 2024
Dec 5, 2024 |
2 min
Our gold & copper Investment Titan Minerals (ASX: TTM) just closed a $20M capital raise at 44c per share.
More High-Grade Gold in Extensional areas at Dynasty Gold Project
Nov 29, 2024
Nov 29, 2024 |
2 min
Our gold, silver and copper Investment Titan Minerals (ASX:TTM) has announced strong new exploration results at its Dynasty Gold Project in Ecuador, revealing high-grade gold finds in previously untested areas.
TTM kicks off 10,000m copper drill program
Nov 27, 2024
Nov 27, 2024 |
2 min
Titan Minerals (ASX: TTM) just kicked off a 10,000m drill program at its US$120M copper Joint Venture with a subsidiary owned by Hancock Prospecting (Gina Rineheart).
TTM starts drilling, finds veins setting up drill rig?
Nov 4, 2024
Nov 4, 2024 |
2 min
Today, our gold, silver and copper Investment Titan Minerals (ASX: TTM) commenced a major 10,000m diamond drilling program at its flagship Dynasty Gold Project in Ecuador.
6-8 Week Bull Run: Recovery Signal?
Dec 15, 2024
Dec 15, 2024 |
18 min
There is a big positive to take away from the last 3 months. Over the last two years it was rare to see a good, fully green week. Let alone two in a row. It was grim. So for the small end of the market to have finally strung together a full 6-8 week bullish run is certainly a big milestone for positivity returning.
What Newsflow is left for this Year?
Dec 7, 2024
Dec 7, 2024 |
19 min
In the business world, the christmas break is often treated as an “artificial deadline” to get deals done and finish projects. Three weeks ago we said we are watching 16 companies that had guided the market to expect material news before christmas… Usually only a handful of companies that guide news actually deliver it on time.
A Quiet, but Green Week in the ASX
Nov 30, 2024
Nov 30, 2024 |
18 min
It was another quiet-ish week across much of the small cap markets. The smaller end of the market where we operate appears to be in a holding pattern of sorts.
Market Optimism Peaks Ahead of the Holidays
Nov 16, 2024
Nov 16, 2024 |
11 min
The world is still digesting what exactly the US election result will mean for the next four years. The weeks after an election is often a “honeymoon phase”.
Insights from Industry Leaders at IMARC
Nov 2, 2024
Nov 2, 2024 |
17 min
A few of our team was in Sydney this week for the IMARC conference, and to hear from some of our Portfolio Companies. IMARC is the largest mining conference in Australia - so the big mining companies show up, but also well attended by small cap companies and investors. The sentiment “vibe” is definitely improving, something we’ve been observing and pointing out in recent weekend editions.
