Titan Minerals (ASX: TTM) has locked in a potentially game-changing joint venture with Hanrine Ecuadorian Exploration, a subsidiary of Gina Rinehart's Hancock Prospecting. The deal centres on Titan’s Linderos Copper Project in southern Ecuador, where Hanrine is set to invest up to US$120 million to secure an 80% stake. This partnership could be pivotal in progressing the early-stage project, which has already shown promising signs of a significant copper-gold system.
The agreement allows Hanrine to gradually earn its stake in the Linderos Copper Project through a series of milestones, with an initial US$2.01 million earning them 5%. From there, the spend increases, with a commitment to either hit exploration targets or cough up serious cash – to the tune of US$120 million over 15 years – to reach a maximum of 80% ownership.
For Titan, the benefits are clear. It gets access to Hanrine's technical expertise and financial heft, all while being free-carried through the earn-in period, meaning Titan won’t need to stump up any cash until Hanrine hits the 80% ownership mark. After that, Titan can either co-fund development or let its stake dilute.
Titan’s CEO, Melanie Leighton, emphasised the strategic value of the partnership: “We are pleased to be partnering with Hanrine, who have a well-established team in-country with the technical capability and financial capacity for us to mutually benefit from exploration success,” she said. The sentiment underscores how critical this deal is for Titan, especially given the scale of the required investment.
The Path Ahead
The plan kicks off with a 10,000-metre drilling campaign, marking a substantial step forward in understanding the project’s potential. Prior drilling at the Linderos site in 2022 had already provided a tantalising glimpse of what might be underground. Notably, Titan reported a 308-metre intersection grading 0.4% copper equivalent, including higher-grade sections that have sparked excitement about the porphyry system’s potential.
Beyond drilling, there’s evidence suggesting the system could be even larger. A geophysical survey revealed a significant +2km porphyry alteration footprint at the Copper Ridge prospect within the Linderos Project. Given the size and scale of porphyry systems, the project could become a much larger story if ongoing exploration continues to produce positive results.
Hanrine's Staggered Earn-In
The deal’s structure is built on four main milestones, each tied to a larger slice of ownership:
- Initial 5% Interest: US$2.01 million payment (US$0.25 million has already been received by Titan).
- 30% Interest: Completion of 10km of new drilling or US$8 million in spending within 3 years.
- 51% Interest: An additional 15km of drilling or a further US$12 million spent within 7 years.
- 80% Interest: A decision to mine or total expenditure of US$120 million within 15 years.
There’s also a neat little clause in the fine print for Hanrine: If Titan undergoes a change of control, Hanrine can accelerate its earn-in to 51% by paying US$6 million.
Should Titan’s stake ever fall below 10%, it will convert into a 2.7% net smelter royalty, giving Titan an ongoing revenue stream from future production, even if its equity position dilutes out.
Strategic Location and Copper Outlook
The Linderos Project sits in a prime spot in southern Ecuador, where a combination of infrastructure and favourable mining laws have made the region increasingly attractive for global players. Ecuador is shaping up as a rising star in the copper world, and the demand for the red metal isn’t slowing down, driven by the global push towards electrification and renewable energy.
Titan has focused exploration on the Copper Ridge prospect, but there’s broader potential across the Linderos concessions, with early signs pointing to the presence of both porphyry and epithermal gold systems. Hanrine’s substantial financial commitment suggests it’s betting on a big discovery.
A Welcome Boost for Titan
Titan’s share price has been relatively subdued, but news of the Hanrine deal could inject some much-needed optimism. With the company’s cash reserves standing at a modest A$1.6 million (as of June 2024), the financial backing of Hancock’s deep pockets is a game changer. Investors are likely to keep a close eye on the drilling results, which will shape the next phase of the project and Titan’s potential upside.
This deal represents a significant step forward for Titan Minerals. The scale of Hanrine’s commitment is a strong endorsement of the Linderos Project’s potential, and if drilling confirms the early promise, this could be one of Ecuador’s standout copper stories in the coming years.
