Proactive Investors: Tietto Minerals attracts buy recommendation with A$0.96 price target from Petra Capital


Petra Capital’s target share price of A$0.96 is predicated on a long-term (post-2024) gold price of US$1,600/ounce. At spot prices of US$1,850/ounce, that target price increases to A$1.16 per share.

Tietto Minerals Ltd (ASX:TIE), the West African gold developer and explorer, has received a buy recommendation and attracted a price target of A$0.96 per share in a research note from Petra Capital.

This comes after Tietto raised A$85 million at A$0.39 per share with the company now having the money in the bank to proceed with the Abujar Gold Project in Cote d’Ivoire, only seven weeks after releasing its definitive feasibility study (DFS).

The oversubscribed placement includes a substantial investment from Zhaojin Mining, one of China’s biggest gold miners. 

This news follows last week’s announcement that the company had secured US$130-140 million in capital from Taurus Mining Finance. 

Price upside 

Petra Capital’s research note and recommendations come on the back of these promising events.

The target share price of A$0.96 is predicated on a long-term (post-2024) gold price of US$1,600/ounce. At spot prices of US$1,850/ounce, that target price increases to A$1.16 per share. TIE shares are trading at A$0.415.

Robust metrics 

Strong financial and operational modelling suggests that the project is set to produce 260,000 ounces of gold at US$651/ounces in its first 12 months.

All permits have been secured, early works are already in progress and a strong operation team is in place to drive project delivery.

Tietto is targeting first gold production by the end of the coming year and Petra Capital believes there is potential for a significant upward re-rating as the company rapidly enters the gold producer peer group.

Capex covered 

The company’s pre-production capex is set at A$260 million, of which A$11 million is already covered.  

With A$190 million in debt already secured, along with A$33 million in existing cash, the A$85 million in new equity comfortably covers the remaining capex and leaves breathing space for working capital and ongoing exploration.

Petra Capital has drawn a positive analogy with the success of regional producer West African Resources Ltd (ASX:WAF). The project size, the initial targeted production and the successful and rapid securing of funding – both debt and equity – after the DFS, all bode well for TIE.

Petra also notes that Matthew Wilcox – who managed the construction and commissioning of WAF’s 2.6 million tonnes per annum Sanbrada mine in Burkina Faso – is chief operating officer at TIE and is driving the Abujar Gold Project’s delivery.  

Key dates ahead 

In early 2022, the company will make final financial arrangements and construction will start. First gold production is expected later in the calendar year.

Source: Proactive Investor