The 1.06 million ounces high-grade core of the AG Deposit sits within Tietto’s 1.7 million ounces Abujar Gold Project in the West African country.
Euroz Securities has initiated coverage on Tietto with a speculative buy recommendation and a price target of 45 cents per share (current share price: 32 cents).
Following is an extract from Euroz’ research report on Tietto:
Undeveloped ounces in West Africa attract a range of market values. Principal consideration is the accessed quality of the ounces, location and the ability of an ultimate economic proposition. High grade, shallow, close to infrastructure ounces will attract a higher multiple that low grade, deep, stranded deposits.
TIE is an active West African gold exploration company, focused primarily on its Abujar Project, south central Cote d’Ivoire. The Company has an established and growing shallow Resource, with a high-grade core. It has the landholding over a large contiguous land position, clearly fertile for gold discovery.
Abujar is covered by over 1,100km2 of granted exploration tenure, in three permits. The permits coincide with over 70km of gold bearing greenstone shear hosted mineralisation, defined by artisanal workings. TIE has 100% of Abujar South, 90% of Abujar Middle and 50% (with an option to inc. to 80%) of Abujar North.
Abujar Middle has been the primary focus of drilling since 2014 and in 2019 will attract the majority of the 30,000m DD and RC drilling programme this CY. Work since the Company listed in 2018 resulted in upgraded Resources in Apr 2019 of 1.73moz at 1.4g/t from 30.6Mt. The Resource is effectively in two parts: The main Abujar-Gludehi Deposit (‘AG’) and the Abujar-Pichon-Golikro Deposit (‘APG’) along strike to the southwest of AG.
Importantly, the Resource has, to date, proven robust whereby applying 1.0g/t cut-off (vs 0.4g/t for the Resource) retains 77% of total ounces. Also of significance, is that a high grade core exists within AG: 15.7Mt @ 2.1g/t for 1.06moz. This is +80% of the AG Resource and 62% of total Resources.
Completion of the infill and extensional drilling at Abujar this Q will see an updated Resource by CY’19 end. Noting the recent spate of high-grade drilling results announced, we believe that 2moz is a likely outcome. The work will result in a substantial portion of the Resource (100% Inferred currently) converting to Indicated Category.
A similar drilling programme in CY20 will push resources towards 3moz in our view. We believe that a resource of this size – noting continuity of mineralisation and grade to date – will more that substantiate a standalone proposition. Citing other West African success cases, this will see a re-rate in the implied value of TIEs inventories and therefore share price.
In parallel, the Company will look to table (mid CY’20) initial scoping studies, focused on the existing (and likely to be expanded) AG 1.06moz, high grade, open pit-able core to the Resource. Extensive metallurgical test-work has shown the AG oxide thru primary material to be highly amenable to traditional gravity and CIL process flow sheets. This will enhance TIEs appeal as critical mass is established.
We initiate coverage with a Speculative Buy recommendation and $0.45/sh Price Target. Our $0.49/sh Valuation is benchmarked against its ASX listed gold exploration and development peers, sense-checked against direct peers in terms of its current stage of evolution. The Company offers on-going and material news-flow over the short to medium term, set against a favourable gold back-drop.