Titan merger strengthens its gold position in South America
Titan Minerals Ltd (ASX:TTM) is merging with Core Gold Inc. (TSX-V: CGLD) to create a diversified Latin America-focused ASX-listed gold company with a robust portfolio of exploration and production assets in both the emerging mining jurisdiction of Ecuador and the well-established mining jurisdiction of Peru.
The pair has entered into a binding arrangement agreement pursuant to which Titan will acquire all of the issued and outstanding Core Gold common shares by way of a share exchange in a transaction that is similar to a merger of equals.
This initiative will provide multiple growth opportunities for Titan outside its established operations in Southern Peru.
Management’s experience in South America is a decided advantage, and the fact that it already has a producing operation demonstrates its ability to bring exploration projects into production.
As a backdrop, Titan’s Vista Gold Plant is expected to be commissioned by April.
The company is currently receiving ore material at Vista to establish stockpiles for commercial production and commissioning of the plant over the coming weeks with over 1500 tonnes averaging 21.6g/t gold received at the plant in December.
Once commissioned, management is in a position to increase production.
However, for the moment all eyes are on the Core Gold merger given that it incorporates a particularly high grade large resource project in Ecuador, as well as the Zaruma Underground Mine which has produced 60,000 ounces of gold averaging grades of more than 8 g/t gold, and a mix of early stage gold-copper prospects and processing infrastructure.
Quality assets with capital for exploration
Commenting on the merger, Matthew Carr, executive chairman of Titan said, “The combination of Titan and Core Gold has compelling strategic logic and merit, which was recognised by the Board of Directors of both companies.
“The combined organisation will be an emerging Ecuador-focused gold company with a standout exploration portfolio of gold assets.
“We are confident that merging the companies will result in significant benefits to both sets of shareholders with the opportunity for a re-rating for the expanded shareholder base from the enhanced equity capital markets profile.
“With the A$20 million of additional capital to be financed prior to closing the merger, we can undertake a robust drilling program to unlock the value of Core Gold’s exploration assets.”
Dynasty Goldfield - the jewel in the crown
The Dynasty Goldfield project in the Loja Province of Ecuador is the Core Gold’s flagship asset.
Dynasty is an advanced gold project with a CIM compliant Measured and Indicated Mineral Resource Estimate of 1,022,000 ounces gold averaging 4.6 g/t gold and 8.5 million ounces silver averaging 38.5 g/t silver.
The inferred mineral resource estimate is 1,118,000 ounces gold averaging 4.4 g/t gold and 9.9 million ounces silver averaging 39.4 g/t silver.
Dynasty Goldfield is currently operating as a small-scale open pit mining operation and is the first fully-permitted open pit gold mine in Ecuador.
The Dynasty Goldfield project consists of three mining concessions at altitudes ranging from 1100 metres to 1800 metres above sea level and covers an area of approximately 6700 hectares.
More than 120 major veins have been identified across a six kilometre strike, predominantly drilled to less than 100 metres vertical extent.
JORC Mineral Resource Estimate in progress
An updated NI 43-101 compliant technical report with re-stated JORC (2012) mineral resource estimation is imminent.
Core Gold is currently operating the Dynasty Goldfield project and processing all material at the Portovelo mill and processing plant.
The increased liquidity, access to capital and strengthening of the board, which includes the appointment of the highly experienced Laurence Marsland as chief executive are developments that add to the group’s corporate appeal, suggesting that there is the prospect of the revitalised company receiving shareholder support.
Shares rally under strong volumes
The fact that the group will be generating cash flow from existing operations is an added attraction for investors looking for exposure to exploration upside while still having the security of an asset earning regular income.
With multiple share price drivers it wouldn’t be surprising to see Titan maintain the upward share price momentum that has been evident since December.
It is worth noting that recent positive momentum has been under stronger than usual trading volumes, including the 10% rally that occurred just prior to the company entering a trading halt.
Titan appeared to be a casualty of the broader sell-off in equity markets, and with the gold price continuing to perform well the company appeals as an emerging junior.