Tietto Minerals Limited

Company Overview: Tietto Minerals Limited (ASX: TIE) is a West African gold developer and explorer focused on fast-tracking the development of its Abujar Gold Project, which comprised of three contiguous tenements, namely, Abujar South, Abujar Middle, and Abujar North. The Abujar Gold Project is located close to the major regional city of Daloa in central western Côte D’Ivoire and has access to excellent regional and local infrastructure. The company was listed on ASX on 18 January 2018.

TIE Details

Q1FY22 Operational Highlights: During the quarter ended 30 September 2021, Tietto Minerals Limited made significant progress in the development of its Abujar Gold Project. Some of the key highlights of the September 2021 quarter as follows:

• DFS Delivered Robust Production and Economic Results: Over the quarter, the company completed the Definitive Feasibility Study (DFS), which delivered robust production and economic results for the Abujar Gold Project. As per DFS, the project is expected to produce 260,000oz of gold in the first year of production, which is 30% higher than the estimate of Pre-Feasibility Study (PFS).
• Exploration Update: During the quarter, the company added multiple high-grade gold drill intercepts from infill drilling and is now planning to convert a portion of Indicated Resources (35Mt @ 1.5 g/t Au for 1.65Moz) to Measured, targeting the first two years of Abujar’s gold production.
• Cash Balance Update: Over the quarter, the company spent $5.2 million on exploration and evaluation activities. As at 30 September 2021, the company had cash and cash equivalent of $32.8 million, down from $45.19 as at 30 June 2021.

FY21 Result Highlights:

• Rise in Interest income: For the year ended 30 June 2021, TIE reported total interest income of $303,455, higher than the interest income of $91,702 in FY20.
• Increase in Losses: Due to the rise in exploration and administrative expenses, the company incurred a loss of $19.55 million in FY21, compared to the loss of $12.5 million in FY20.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Metrics: Current ratio for FY21 stood at 10.57x, down from 18.85x in FY20, but higher than the industry median of 1.80x. The company had nil debt to equity ratio in FY21. Asset to equity ratio stood at 1.09x in FY21, lower than the industry median of 1.8x.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Top 10 Shareholders: The top 10 shareholders together form around 45.47% of the total shareholding, while the top four constitute the maximum holding. Hongkong Ausino Investment Ltd. and Ontario Corp. (5013423) are holding a maximum stake in the company at 9.59% and 5.67%, respectively, as also highlighted in the chart below:  

(Source: Analysis by Kalkine Group)

Secured US$140 million Debt Funding: On 16 November 2021, TIE announced that it has secured up to US$140 million in debt funding from Taurus Mining Finance Fund No.2 L.P. (Taurus) to build its Abujar Gold Project. As per the update, TIE has mandated Taurus to provide between US$130 million to US$140 million of secured project financing facility. Notably, the loan facility is for five years, and the repayment will commence on 30 June 2023.

High-Grade Gold Results from Abujar: On 12 November 2021, the company announced high-grade gold results from the fifth batch of infill drilling recently completed at the Abujar-Gludehi (AG) deposit. TIE has discovered multiple high-grade gold drill intercepts with infill drilling at AG Core returning results including 8m @ 12.43 g/t Au from 187m incl. 2m @ 48.37 g/t Au.

Key Risks:

• Fluctuations in Gold Price: The company is exposed to the risks related to the fluctuations in the gold price, as it could impact the company’s financials.
• COVID-19 Uncertainties: The company is also exposed to the uncertainties surrounding the COVID-9 pandemic as it could delay the company’s exploration programs.

Outlook: The robust financial results of Abujar Definitive Feasibility Study (DFS) as well as the recent exploration results have confirmed Abujar’s potential to be one of the largest gold producing mines in Côte d’Ivoire. It is expected that Abujar has the potential to produce more than 260,000 ounces of gold in the first year and 1.2M ounces of gold in the first six years.  With its recently secured debt funding and a cash balance of ~$32.8 million as at 30 September 2021, the company seems well funded to fast-track the development of its Abujar Gold Project. The company is expecting its first gold at Abujar in Q4 CY2022. The company is planning to hold its next Annual General Meeting on 23 November 2021.

Technical Note: On the weekly chart, TIE's stock price witnessed a breakout of the horizontal trendline resistance at AUD 0.394 level and sustaining above the same. Moreover, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, indicating a bullish momentum. The momentum oscillator RSI (14-period) is at (~62.16 level), indicating positive momentum in the stock. An important support level for the stock, is placed at AUD 0.37, while the key resistance level is placed at AUD 0.55.

Stock Recommendation: Over the last one month, the stock has been corrected by ~3.12%. The stock has a 52-week low and high of $0.285 and $0.485, respectively. Looking ahead, the company is focused on driving rapid resource growth at the 3.35Moz Abujar Gold Project and fast-tracking the development of the Abujar Gold Project. Considering the robust economic and production result from DFS, the company’s decent balance sheet, recently secured debt funding, decent production outlook of Abujar Gold Project, technical levels mentioned above, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of 0.460, up by ~2.22% as on 16 November 2021.

TIE Weekly Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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