Tietto Minerals Ltd (ASX:TIE) has maintained its Speculative Buy recommendation and price target of A$0.60/share from Canaccord Genuity (TSX:CF, LSE:CF).
Canaccord’s research update follows multiple high-grade gold results from Tietto’s 30,000 metres infill diamond drill program at the AG deposit, within the Abujar Gold Project in Côte d’Ivoire.
The benefits of this current infill phase of drilling will not impact the DFS (as it is due in a matter of weeks) but will de-risk the open pit ahead of planned mining towards the end of 2022, according to Canaccord.
The following is an extract from the research update:
Tietto Minerals (TIE-ASX) has received the first batch of assays from a 30,000m infill (25m spacing) diamond drill program at the AG Core, within the Abujar Gold Project in Côte d’Ivoire. The drilling is being undertaken in tandem with DFS work, which is due late this month/early-October. Multiple high-grade results have been returned and include:
- 3m @ 35.7g/t Au from 85m (incl. 1m @ 98g/t Au)
- 7m @ 12.5g/t Au from 66m (incl. 4m @ 21.5g/t Au)
The drilling aims to convert a portion of the AG Indicated resource, which currently stands at 1.65Moz @ 1.5g/t Au, to Measured. Assays are pending for 63 holes (~11,000m) with a further 15,000m to be drilled before the next resource update in the DecQ’21.
Resource currently 3.35Moz: In July 2021 TIE grew the overall Abujar Indicated resource by 50% to 1.85Moz @ 1.3g/t Au whilst increasing the total project resource by 11% to 3.35Moz @ 1.2g/t Au. The DFS is due later this quarter with indications that throughput may increase from the previous 3.5Mtpa (in the PFS) to 4Mtpa. This may aid TIE’s aspirations of delivering 200kozpa for the first five years.
What this infill phase will do for the project: The benefits of this current infill phase of drilling will not impact the DFS (as it is due in a matter of weeks) but will de-risk the open pit ahead of planned mining towards the end of 2022. The previous resource underpinned a maiden reserve of 860koz @ 1.7g/t Au. Applying similar conversion factors to the recent updated resource, one could expect the reserve to increase to somewhere in the region of 1.3-1.5Moz in the upcoming DFS. Grade is unknown at this stage. While the DFS is nearing, a reminder of what the PFS outlined. The April 2021 PFS included a high-grade starter pit, producing 200koz in Year 1 and averaging 182kozpa in Years 1-3. Production averages 164kozpa over the 6.5-year LOM in the PFS and 153kozpa over the 9.4-year expanded case. We expect the DFS to improve on this in a number of areas including production in the first five years.
Valuation and recommendation: We maintain our SPECULATIVE BUY recommendation and price target of A$0.60/share. Our NPV12 valuation is on a fully diluted basis. With an EV of A$111m and a future funding requirement of ~A$280m, TIE trades at an EV/CF of 1.6x on Year 1 production.