Titan Mining Corporation (TSX: TI) is a Canadian-based mining company which produces zinc concentrate at its 100%-owned Empire State Mine (“ESM”) in St. Lawrence County, New York State. ESM includes a suite of seven historic zinc mines. One of these – ESM #4 mine – has recently restarted production and, with both near-mine and regional exploration activities underway, this historic mining district is being revived. Backed by strong leadership and local community support, Titan Mining is focused on discovering and developing additional high-grade, low-cost mineral resources, increasing production and extending the mine life at ESM.
Built for Growth – Leveraging Excess Capacity to Drive Cash Flow
St. Lawrence County has a rich history of mining which spans 100 years. Titan Mining controls over 80,000 acres of mineral rights in the district and has established mining and processing infrastructure. Mill commissioning was completed and the first ore hoisted at ESM in late January 2018. Mill throughput is expected to ramp up to a rate of 1,800 tons per day (“tpd”) by the first quarter of 2019. The capacity of the shaft and mill are both significantly higher at 3,800 tpd and 5,000 tpd, respectively.
Backed by a positive long-term outlook for zinc prices, Titan Mining is moving forward with the revival of the mining district. Strong leadership and local community support are two key factors in this success.
Leadership at Titan Mining
Chair and CEO Richard Warke has spent over thirty years in the global resource sector, with a focus on mining. An experienced and well-respected leader in the resource industry, Richard Warke has a successful, long-term track record of creating shareholder value at the Augusta Group of Companies – this includes the merger of Newcastle Gold into Equinox Gold (~C$200M deal in 2017) and the sale of Arizona Mining (sold for ~C$2.1B in 2018), Augusta Resource Corporation (sold for ~C$666M in 2014) and Ventana Gold Corp. (sold for ~C$1.6B in 2011).
The rest of the management team at Titan Mining is comprised of executives with an extensive track record in capital markets and responsible exploration, development and operations.
Directors at Titan Mining include George Pataki, the former, three-term Governor of New York, and Donald Taylor and Robert Wares, award-winning explorers with a combined 65 years of experience in mineral exploration and research. Donald Taylor received the Prospectors and Developers Association of Canada’s (“PDAC”) 2018 Thayer Lindsley Award for the 2014 discovery of the Taylor lead-zinc-silver deposit in Arizona. Robert Wares is the co-winner of the PDAC’s 2007 “Prospector of the Year Award” for the discovery of the Canadian Malartic gold deposit in Quebec.
Local Community Support
The company is well aware that the discovery, development and production of mineral resources requires broad community support and is committed to partnering with the local community. To promote local growth, the company purchases goods and services from nearby businesses and has developed a training program to provide prospective local workers with the skills needed to become qualified underground miners. Program graduates become part of the workforce of over 200 people, of which approximately 70% are from the local area. The result is a 21st century mine with strong local support and potential for impressive growth.
The reopening of the mine on June 12, 2018 was a cause for celebration in the town of Gouverneur, New York, and other communities surrounding the mine. Organizations such as the New York Power Authority (“NYPA”) and Workforce Development Institute are supporting the mine by providing funds for the new miners’ training program. NYPA has also committed to provide low-cost power from the St. Lawrence-Franklin D. Roosevelt Power Project as part of an initiative to help businesses in the North Country over the long term.
Looking to the Future
Based on an updated preliminary economic assessment filed in May 2018, ESM is forecast to produce an annual average of 80 million pounds of payable zinc in concentrate over its eight-year mine life, at C1 cash costs of US$0.70/lb and all-in sustaining costs (“AISC”) of US$0.79/lb of zinc(1). With first concentrate shipped in March 2018, the company expects to achieve commercial production in Q3/18.
There is good potential to increase both production and mine life at ESM. A study has already commenced on an expansion of production at ESM #4 mine to 3,000 tpd in 2020, and an extension of the mine life beyond the initial estimate of eight years. In 2022, management is targeting further expansion of production to fill the mill capacity of 5,000 tpd.
Production growth and mine life extension are expected to be supported by the recently-expanded mineral resources at the mine, further near-mine mineral resource additions, and district and regional exploration. In June, the company identified several mineralized zones close to the #4 shaft at the mine. These zones contain historic mineralized material and are open down-plunge. If economic, there is potential for them to be developed relatively quickly and with lower capital expenditure than would be required for more distal zones.
The restart of mining in this historic district is driven by attractive economic returns. Modernization and innovation are expected to be an integral part of the growth plan at ESM, driving an increase in productivity of up to 20-40%, and lowering costs at the mine.
Titan Mining is positioned to benefit from any strengthening in zinc prices, which are currently supported by low inventories, and expects to transition to positive free cash flow in H2/18.
1. C1 cash costs are defined as site-level cash operating costs (mining, processing, G&A, royalties), plus off-site transportation and treatment charges. AISC refers to all-in sustaining costs which are defined as C1 cash costs plus sustaining capital. C1 cash costs and AISC per pound are calculated by dividing the C1 cash costs and AISC, respectively, by the payable metal production expected in the period.
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