Titan Minerals - Building a Copper & Gold Portfolio in Ecuador's Untapped Mining Frontier

• Titan Minerals (ASX:TTM) is an explorer and developer focused on copper and gold projects in Ecuador. Their most advanced asset is the Dynasty gold project.
• Dynasty hosts a 3.1Moz gold and 22Moz silver resource at 2.23 g/t gold across a 9km epithermal corridor, with potential to grow to 5-6Moz. Titan aims to expand and upgrade the resource.
• Titan recently did a deal with Hancock Prospecting for Hancock to earn up to 80% of Titan's Linderos copper project for $120M USD spend.
• Ecuador is underexplored but has the same mineral endowment as Chile and Peru. The government is supportive of responsible mining. Major miners are investing significantly in the country.
• Titan sees itself adding value through early-stage exploration to demonstrate project potential before farming out to major partners to fund large-scale development. Copper Duke is the next farm-out target after Linderos.

Titan Minerals (ASX:TTM) presents a unique opportunity for investors to gain exposure to the emerging mining jurisdiction of Ecuador. Despite sharing the mineral-rich geology of its neighbors Chile, Peru and Colombia, Ecuador has seen far less investment in mining exploration historically. However, this is rapidly changing, with major miners now pouring hundreds of millions into the country. The time appears ripe for Ecuador's mining sector to take off, and Titan Minerals is well positioned to capitalize with a portfolio of advanced copper and gold projects.

Titan's Strategy

Titan's business model focuses on acquiring and advancing early-stage projects to demonstrate their potential, before farming them out to major partners who have the financial capacity to fund their large-scale development. As CEO Melanie Leighton explains,

"Ultimately, these porphyry projects, they're large, and they require a significant amount of work to explore, develop and to build. You're talking about multi-billion dollar capex's sometimes, there's no way that a 50, 60 million market cap junior can fund that."

By doing the early geological work to identify targets and demonstrate mineralization through initial drilling, Titan can attract major miners and negotiate favorable farm-out terms. They successfully executed this model recently with their Linderos copper project.

The Linderos Deal

In April 2024, Titan announced a deal with Hancock Prospecting, the private company of Australian billionaire Gina Rinehart, on the Linderos project. Hancock can earn up to an 80% stake in Linderos by spending US$120 million to reach a decision to mine, including $2 million in upfront cash payments to Titan.

The staged deal structure will see Hancock initially fund 10,000m of drilling within 2 years to earn 25%, followed by another 15,000m within 5 years to reach 51% (with another $1M cash payment to Titan). The majors' total spend is capped at $120M to earn 80% over up to 12 years, taking the project to a decision to mine - at which point Titan can elect to contribute its pro-rata share of development costs or dilute to a 2.7% NSR royalty.

This deal structure allows Titan to retain significant exposure to Linderos' upside while Hancock funds the high-risk exploration and development phases. If the project is successfully advanced to production, the 2.7% NSR could be extremely valuable to Titan. CEO Leighton commented,

"It's a very healthy exposure to what could be a really meaningful scale copper project."

The deal also provided $2M in cash payments to Titan, allowing them to focus on advancing their flagship Dynasty gold project.

Interview with Chief Executive Officer, Melanie Leighton

Dynasty - The Crown Jewel

Dynasty is Titan's most advanced asset, hosting a 3.1 million ounce gold resource at an average grade of 2.23 g/t (plus 22Moz silver at 15 g/t). Mineralization extends from surface along a 9km corridor of epithermal veining.

Two-thirds of the current resource sits in the Inferred category. Titan aims to upgrade the confidence level and extend the deposit through additional drilling. Despite only 5,000m of infill drilling late last year, the company is working on an updated resource estimate to better demonstrate the scale and further de-risk the asset.

CEO Leighton sees potential for Dynasty to reach a 5-6 million ounce resource with further drilling, noting that only about half of the known mineralized corridor is included in the current estimate. She explains:

"The 3 million ounces of gold is contained within a 9 km epithermal corridor on which I would say maybe half has been effectively drilled, and quite shallowly drilled, in fact. So there's resource extensions that are really quite probable at depth and then also the significant gaps within that corridor that have not seen any exploration or drilling. And so we believe that the 3 million ounces could quite easily grow to 5 to 6 million ounces, and that's what we're targeting."

Over the next 12-18 months, Titan plans to demonstrate Dynasty's growth potential through targeted drilling in the identified gaps and downdip extensions. In parallel, early-stage metallurgical testwork and pit optimization studies are underway to lay the groundwork for an eventual economic assessment of the project.

While Titan aims to organically advance Dynasty further than their earlier-stage assets before considering a farm-out, the company remains flexible. Leighton acknowledges:

"We'd absolutely have to up our team and our skill set if we wanted to build it ourselves. But it's not to say that it can't be done, it could be us if we end up going that path or it certainly would be an attractive proposition to anyone else."

Copper Duke - The Next Farm-Out Target

After Linderos, Titan views their Copper Duke project as the next candidate for a farm-out deal. Despite not drilling the project yet, Titan has considerably advanced its understanding of the system's potential through low-cost exploration work including geochemical sampling, geophysical surveys, and mapping.

This work has identified multiple compelling drill targets across the 7km long porphyry system. Titan is considering putting "some well targeted holes in to understand what the opportunity could be there" in the second half of 2024 before re-engaging with potential partners.

The company reports "overwhelming positive feedback" from majors' technical teams who have reviewed the project so far. CEO Leighton expects "it's only a matter of time until we find the right partner for that project," noting the suitor could even be Hancock again.

Ecuador - The Right Address

Underpinning Titan's entire portfolio is their view that Ecuador is entering a mining renaissance. The country shares the prolific mineral endowment of the Andes mountains with its neighbors, but has seen a small fraction of the exploration investment until recently.

Political winds are shifting in Ecuador though. The current government is vocally supportive of the mining industry's growth. President Lasso aims to more than double mining's contribution to the country's GDP through attracting foreign investment. Permitting is being streamlined and mining companies are being offered investment protection agreements.

Major miners are voting with their dollars, pouring hundreds of millions into the country to secure a foothold in this emerging mining hotspot. CEO Leighton points to "the Newmonts, the Barricks, the First Quantums and the big guys in country," continuing:

"The level of investment that we're seeing now. I mean they wouldn't be in country if they didn't think that it's the right time. They have a low appetite for risk and they wouldn't normally go somewhere if they feel like they're going to risk losing hundreds of millions of dollars."

Titan has spent several years establishing a strong in-country team and honing their exploration methodology. With demonstrated deal-making ability, a track record of delivering low-cost exploration wins, and a first-mover portfolio of attractive projects, Titan is well positioned to be a prime beneficiary of Ecuador's mining emergence.

Conclusion

Titan Minerals offers investors a unique opportunity for exposure to Ecuador's rapidly accelerating mining industry. The company's business model of prospect generation and farm-outs is well suited to the current market environment. Investors can anticipate a steady flow of catalysts across the company's portfolio, including upcoming drilling at Dynasty, a potential farm-out deal on Copper Duke, and ongoing work by partner Hancock Prospecting towards advancing Linderos. If Titan can continue to demonstrate its ability to cost-effectively advance projects and bring in major partners, the company appears significantly undervalued relative to the potential of its asset base.

The Investment Thesis for Titan Minerals

• Early mover in Ecuador, an underexplored mining jurisdiction with enormous geological potential
• Portfolio of copper and gold projects spanning from resource stage to grassroots
• Proven deal-making ability - attracted a major partner in Hancock to fund Linderos' advancement
• Dynasty is a potential multi-million ounce gold system with expansion drilling planned
• Linderos deal brings cash payments and large potential upside value via future NSR royalty
• Copper Duke shaping up as an attractive farm-out opportunity based on early-stage exploration
• Geologically attractive projects in the right address at the right time as majors invest in Ecuador
• Cost-effective exploration methodology and experienced local team honed over several years in-country
• Potential for steady news flow from upcoming catalysts across asset portfolio

Macro Thematic Analysis

Ecuador is shaping up to be one of the most exciting emerging mining jurisdictions globally. The country is geologically blessed, sharing the same mineral-rich Andean geology as Chile and Peru. However, Ecuador's mining industry is decades behind, having seen little investment until recently. Several factors are converging to change that:

1. Growing government support: The Lasso administration recognizes mining's potential as a major economic engine for the country. They are proactively attracting foreign investment through offering tax incentives and investment certainty agreements.
2. Increased investor interest: As maturing mining jurisdictions become picked over, the industry is on the hunt for new frontiers. Attention is turning to Ecuador as an underexplored region with the potential to host world-class deposits.
3. Major miners moving in: The ultimate validation of Ecuador's geological potential is the majors voting with their dollars. Nearly every large cap miner now has a foothold in the country.
4. First-movers being rewarded: We are starting to see Ecuador-focused exploration companies being taken over by majors at significant premiums. The market appears willing to pay up for first-mover portfolios with scale potential.

This backdrop creates an incredibly favorable setup for well-positioned Ecuador-focused juniors. Companies with the right projects and people stand to benefit from growing investor interest and M&A potential. Titan Minerals CEO Melanie Leighton sums up the opportunity:

"I think Ecuador is where the opportunity lies. Ecuador has the same geology [as Chile and Peru], it just hasn't had the same level of investment. This time is right."