Hartleys has maintained its Speculative Buy recommendation for Tietto with a 12-month price target of 40 cents which includes a downside risk if a 2.5 g/t gold reserve cannot be achieved.
Following is an extract from Hartleys’ research report on Tietto:
Increase to 2Moz on the cards for Abujar
Last week we visited Tietto Minerals’ (TIE) Abujar Gold Project in central-west Côte d’Ivoire. TIE is currently drilling to increase the size and confidence of the existing 37.6Mt @ 1.4g/t Au for 1.73Moz inferred resource. The CY19, 30,000m diamond drill program is well advanced and our expectation is that the resource could grow to exceed 2Moz by years’ end; we may also see an increase in the overall grade considering recent drilling efforts have concentrated on the high-grade core at Abujar-Gludehi (AG). The existing high-grade resource at AG is 1.06Moz @ 2.1g/t Au over a 1.4km strike length. Metallurgical test work to date highlights all free milling ores, which implies to conventional CIL processing in the future.
Artisanals lead the way
Artisanal mining activities have existed at Abujar long before TIE. Ten to fifteen meters of surficial oxide material is estimated to have been mined over ~400m strike at AG. There are also substantial pits to greater depths dotted throughout the project. Owing to the fact that these illegal artisanal miners continue to extract free gold, TIE has focussed primarily on drilling beneath the workings with only ~10% of the 70km regional shear zone drill tested to date. The presence of artisanal miners, regional aeromag and IP has highlighted the potential for parallel mineralisation and further high-grade shoots along strike from Abujar. The exploration potential is large.
Impressive on-site drilling logistics despite project access
Access along the ~40km route from Côte d’Ivoire’s third largest city, Daloa, was not without challenge. The 30km of bitumen requires work and the 12km of local unsealed tracks need upgrading and made suitable for all weather, despite TIE’s efforts. Nevertheless, TIE has continued to drill through the wet season, owing to its in-house drilling division, made up of ‘man-portable’, Chinese built and operated diamond drill rigs. The rigs have an impressively small footprint and are equally cheap to run; ~US$35/m (ex. depreciation). Advancement rates average ~50m per shift of NQ equivalent core with excellent recovery in the foliated granodiorite and ortho-gneiss host rocks. The rigs (3) are modular in design and are rated up to (still to be tested) 800m drill depth. So effective are the rigs that they have managed to beat of competition from well-known African drill contractors through cost efficiencies, productivity and in accessing small and waterlogged locations. Alas, an ephemeral creek at the northern end of the AG deposit appears to have halted drilling extensions along strike until the waters abate later in the year. TIE has an equally impressive on-site technically team made up of Ivorian trained geologists that diligently manage day to day operations, utilising modern mining software to a high standard.
More to come; maintain Speculative Buy
Viability and profitability of a mine at Abujar will depend on grade. A successful operation will require a grade in excess of the current 1.4g/t resource grade, and our view is that the high-grade AG core could yield >1Moz at 2.5g/t Au in time. We rate TIE as high risk until we have a better understanding of the economics of the higher-grade core. We recently updated our gold price assumptions and TIE’s share price appreciation has also had a positive impact on our valuation. We maintain our Speculative Buy recommendation. Our 12-month price target is 40c and includes risk to the downside if a 2.5g/t reserve cannot be achieved.