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Tietto Minerals is a low risk option in the junior resources space: Argonaut

The company’s 50,000-metre drilling program comprising infill and extensional drilling continues to yield positive results.

Tietto Minerals Ltd - Tietto Minerals is a low risk option in the junior resources space: Argonaut
A further resource update is due in Q3 2020, which Argonaut predicts could surpass 3 million ounces

Tietto Minerals Ltd’s (ASX:TIE) fully funded 50,000-metre drill program continues with the goal of increasing the resource inventory of existing deposits as well as identifying new prospects within the Abujar Gold Project in Côte d’Ivoire.

Argonaut has maintained its speculative buy recommendation on Tietto with a 48 cents target price (current share price – 18 cents).

Following is an extract from Argonaut’s research update dated March 10, 2020:

Quick Read

Tietto Minerals (TIE) released extensional drill results from the Abujar‐Gludehi South deposit (AG South), part of Tietto’s 2.2Moz Abujar Gold Project in Côte d’Ivoire. The current 50,000 program comprising infill and extensional drilling continues to yield positive results. The best result from today’s release included 6m @ 17.52 g/t Au from 34m at the southernmost end of the AG deposit, outside the defined Resource pit shell. We see potential to join the AG and Abujar-Pischon-Golikro (APG) deposits and increase the total Resource to +3Moz this year. SPEC BUY recommendation maintained.

Event & Impact: Positive drill results

Joining AG to APG: TIE released extensional drill results from the AG South deposit. This zone continues to deliver shallow high grade mineralisation with better results including:  6m @ 17.52 g/t Au from 34m  2m @ 2.86 g/t Au from 113m  3m @ 2.22 g/t Au from 56m The Company is targeting the 8.5km strike-length zone from the APG deposit to AG South. These most recent results are ~1.5km south of the high grade zone of the AG deposit which incorporates 1.4Moz @ 2.2g/t. Importantly, it shows the potential to link the AG and APG deposits and extend the total Resource strike to over 14km.

Strong newsflow: TIE has more than 2,000m of diamond core results pending which will continue to provide strong newsflow. When Argonaut was on site last month, TIE was ~20,000m into an aggressive 50,000m diamond drill program (Link: Site Visit Report). A Scoping Study for Abujar is due in the current quarter. We believe the Company will initially target a 2.0-2.5Mtpa mill with a head grade of ~2g/t and strip ratios within a starter pit of less than 5:1. Initial metallurgical testwork has shown excellent recoveries of >98% in all rock types with gravity recoveries up to 84%. A further Resource update is due in Q3 2020, which we predict could surpass 3Moz.

Enough cash to ignore bear market distractions: TIE is in a strong position with $17.4m cash and no debt as of February 2020. While the Company’s share price is suffering the impact of the broader COVID-19 (Coronavirus) market correction, the cash balance negates the need for a defensive reduction in operational spending and removes the need to access volatile equity markets for an extended period. We also highlight that the Company owns and operates its own diamond rigs, which provide exceptionally low drilling costs of just ~US$35/m.

Recommendation

Argonaut maintains a Speculative Buy recommendation with a $0.48 target price (50% risk weighted to our $0.95 NAV). Given the Company’s strong cash balance, exposure to gold and ongoing newsflow, we regard TIE as a low risk option in the junior resources space.

Quick facts: Tietto Minerals Ltd

Price: 0.455 AUD

ASX:TIE
Market: ASX
Market Cap: $205.35 m
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