Tietto Minerals Ltd (ASX:TIE) recently raised $17 million and has already commenced a 50,000-metre diamond drill program aimed at growing the recently updated Abujar Gold Project resource in Côte D'Ivoire.
Hartleys has maintained its Speculative Buy recommendation for Tietto. The broker has increased its 12-month price target to 42 cents from 40 cents.
Following is an extract from Hartleys’ research update on Tietto:
Last month, the company met our expectation and delivered a substantial upgrade to the resource, delivering a 24% increase to 45.5Mt @ 1.5g/t Au for 2.15Moz (from 1.7Moz @ 1.4g/t).
Importantly, the core of the AG deposit grew both in terms of tonnes and grade; now 19.3Mt @2.2g/t Au for 1.4Moz.
What is really exciting to see is the Indicated resource within the ‘core’ now stands at 9.6Mt @ 2.5g/t Au for 760koz, and forms the basis of our base case model for a future operation at Abujar.
Opportunities to optimise
While resource growth is highly likely, the bigger prize that could help pay back capital earlier, is potential for a higher-grade starter pit in the northern end of the deposit.
TIE has pointed to a continuous 1.4km zone where at a 1.5g/t cut-off, the resource yields 1Moz @ 3.4g/t Au. The Company has received 6 drill intervals of >200 gram-metres from this zone.
While very encouraging at this stage, we await further detail as to how this will play out.
Is this a 2Moz mine or bigger?
A Scoping Study could be released before the end of the MarQ CY20 but we view the latest resource update as an interim update.
TIE has 3,000m of samples awaiting assay and is drilling a further 50,000m with 4 company owned diamond rigs to deliver another resource update in the SepQ CY20.
A target of 2.7-3Moz could be a reasonable expectation given the deposits are open, presence of artisanal miners and promising geochem on adjacent shears.
Also, the deposit is only defined to ~350m below surface and remains open, so deeper underground opportunities may present themselves.
The question is whether this is a 2Mtpa, 150kozpa open pit scenario today; or does TIE delay Scoping Studies to demonstrate a much larger opportunity with underground potential and/other additional open pits in 12 months’ time?
Is there continuity?
The published drill results show that the foliated ortho-gneiss and thicker mineralised intervals are generally carried by a narrow but very high-grade zone, surrounded by a halo of lower grade gold above a 0.3g/t Au cut-off.
This would appear to be mineable at open pit depths. There are often 1m or 2m of internal dilution and from our review, the mineralisation appears continuous, albeit complex, both along strike and down dip.
It looks to be hosted in 10+ echelon lodes (see figures 1 and 2 within). More selective mining methods may be required at depths beyond an economic open pit.
Maintain Speculative Buy
We are pleased with the ongoing resource growth and continue to rate TIE as high risk until we have a better understanding of the economics of the higher-grade core.
Viability and profitability of a mine at Abujar will depend on grade and continuity.
A scoping Study could be on the horizon, but we wouldn’t be surprised if the Company continued to focus drilling on defining a project larger than that currently demonstrated with the resource.
We maintain our Speculative Buy recommendation. Our 12-month price target is 42c (up from 40c). Cash, post placement, is estimated at just below A$20M.