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Tietto Minerals PFS could include high-grade starter pit to drive early capital payback: Canaccord Genuity

The PFS is expected to examine a nine-year open-pit operation producing 150,000 ounces per annum on average through a 3.5 million tonne per annum CIL plant.

Tietto Minerals Ltd - Tietto Minerals PFS could include a high-grade starter pit to drive early capital payback: Canaccord Genuity
The price target for the company is $0.80 per share and the rating remains unchanged at SPECULATIVE BUY.

Tietto Minerals Ltd (ASX:TIE) could be one of the next gold mine builders in West Africa, with Canaccord Genuity predicting the company will release its pre-feasibility study (PFS) for the Abujar Gold Project in Côte d'Ivoire sometime this quarter.

Recent progress at the Abujar Gold Project in Côte d'Ivoire includes:

  • The granting of the mining lease;
  • Talks with the Government around the mining convention;
  • The appointment of a COO to lead the development of Abujar;
  • Increased project ownership;
  • Early site works planned;
  • Nearing completion of the PFS; and
  • Infill drilling to feed DFS planned in late 2021.

Canaccord has set the price target for the company at $0.80 per share with a rating of SPECULATIVE BUY.

Mining licence and mining convention

In late December, the Côte d'Ivoire mines ministry granted the mining licence for the Abujar project.

The company and the Ivoirian Government will now work on agreeing terms for the mining convention in the first half of 2021.

Canaccord said: “This will involve negotiating tax holidays and rates, government ownership and other fiscal terms.

“The government will likely take a 10% free-carried interest and allow for a tax holiday (we model 2.5 years).”

COO with proven track record

The company has appointed Matt Wilcox to the role of chief operating officer (COO), tasked with progressing studies, followed by construction and ramp-up of Abujar.

Canaccord stated: “We see this as an excellent appointment given Wilcox has a proven track record of building gold mines in West Africa.

“He was most recently responsible for building West African Resources’ (ASX:WAF) Sanbrado mine in Burkina Faso, ahead of schedule and under budget, and has also held senior roles with Nordgold over a 20-year career.

“This is a timely appointment for TIE given that it's readying its PFS for release to the market this quarter.

“We believe Wilcox will want to put his stamp on the PFS so we would expect it to be released sometime next month.”

Additionally, the board has approved US$2.5 million for early site works including access upgrades, camp improvement and purchase of long-lead items.

Increased ownership

Notably, the company has purchased (cash and scrip) an additional 3% of the tenement containing the 3.02-million-ounce Abujar resource from the third party owner, taking its ownership to an expected 88% (assuming the Côte d'Ivoire takes 10%).

Total consideration (including option value) is around A$8 million.

Upcoming PFS

Canaccord is eagerly awaiting the release of the Abujar PFS this quarter, stating: “We expect to see a nine-year operation producing 150,000 ounces per annum on average through a 3.5 million tonne per annum CIL plant (and perhaps a small heap leach).

“We see a strong potential for a high-grade starter pit to deliver 200,000-250,000 ounces per annum for years 1 and 2 to drive early capital payback.

“We model a funding requirement of US$230 million with LOM ASIC of US$900-950/ounce, and much lower in the initial years.

“This is likely an open pit scenario, but we wouldn’t write off seeing a small underground in the PFS.”

Infill drilling

Infill drilling at the project continues and will feed into an interim resource in May this year.

Latest results from seven holes of 28 drilled (drilling 28,000 metres of infill) include:

  • 6 metres at 6.3 g/t gold from 389 metres (including 1 metre at 25.2 g/t);
  • 1 metre at 17.2 g/t from 48 metres; and
  • 5 metres at 4.9 g/t from 63 metres.

Geotech drilling is also being conducted (2,500 metres) as part of a large, six rig program to drill 70,000 metres with all data expected to flow into the definitive feasibility study (DFS).

Canaccord said: “Observations are that mineralisation pinches and swells like many other shear hosted gold deposits, so infill is key for a robust mine plan.

“The next, interim resource in May is likely going to yield more confidence (increased indicated material) than growth, with growth expected late in the year in the DFS.”

Quick facts: Tietto Minerals Ltd

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Price: 0.34 AUD

Market Cap: $155.1 m

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