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Tietto Minerals has price target boosted to 75 cents by Euroz

Published: 07:45 13 Jul 2020 BST

Tietto Minerals Ltd - Tietto Minerals has price target boosted to 75 cents by Euroz
A resource update is due later this quarter

Tietto Minerals Ltd (ASX:TIE) is continuing to hit more high-grade gold at the Abujar-Gludehi (AG) deposit, part of its 2.2-million-ounce Abujar Gold Project in Côte d’Ivoire, with results of up to 3 metres at 17.16 g/t gold 150 metres below the existing resource.

The 3-metre interval in the ongoing diamond drilling program at AG was within 7 metres at 8.16 g/t from 440 metres with another strong result being 2 metres at 15.91 g/t from 233 metres.

Euroz has reiterated its speculative buy rating for Tietto and has upgraded the price target to 75 cents per share from 50 cents (current share price: 68 cents).

The following is an extract from Euroz’ research update:

Rampant Gold Market: Peer Comps Support higher Valuation

Investment case

The gold sector is running: African peers are being priced (albeit at a significant discount to their Australian peers) at an average EV:Resource ounce of $90/oz. With results supporting an upgraded Resource of 3moz later this H, TIEs inventories support a Valuation closer to $0.73/ sh. Furthermore, strengthening A$ may see the valuation gap between domestic and offshore producers narrow. Ex-gold price collapse and/ or sovereign/COVID19 risks manifesting, we see little impediment to TIEs current trajectory. Drilling is active and newsflow commensurate. Economics are being matured: The development potential of TIEs flagship Abujar Project are taking shape. As we have seen with successful West African explorers, where a standalone development scale resource is defined, EV:Resource metrics will ‘gap-up’. We view that the current pace of activity can achieve this for TIE within the next 1-2yrs. Our Price Target increases to $0.75/sh. Speculative Buy remains.

Key points

  • We have adjusted our Valuation of TIE to reflect the current universe of ASX listed gold explorers and developers;
  • The African sub-set is currently being ascribed an average EV:Resource ounce of $90/oz:
  • This remains a substantial discount to the domestic peers – we view that this arbitrage may narrow with continued strength in the A$;
  • Regardless, the current peer average, acknowledging a strong gold market and emerging M&A (PRU acquiring ERX), warrants adjustment to our TIE Valuation;
  • Given the on-going results including today’s announcement of high grade intercepts 150m beneath the current AG Resource, we view that the Company will near 3moz with the upcoming revised Resource;
  • Our Valuation increases to $0.73/sh (prev. $0.50/sh) applying $90/oz (prev. $70/oz):
  • We dilute for 79m options in the money (netting c.$15m of unpaid capital);
  • Catalysts are ongoing:
    • Ongoing Resource infill and extensional drilling for 4 diamond rigs;
    • Resource update later this Q;
    • Scoping Study being progressed in parallel;
    • On-going metallurgical testwork;
    • Sector M&A.
  • We set $0.75/sh Price Target (prev. $0.50/sh) as a result.

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