Titan Mining Corp
COO: Keith Boyle
About: Titan is a Canadian-based zinc exploration and development company with its principal asset being the Empire State Mine in the State of New York.
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Keith Boyle, the COO for Titan Mining Corporation. The company trades on the Toronto Stock Exchange; ticker symbol is TI. Thanks for joining us today there Keith.
Keith Boyle: Thank you, Juan.
WSA: So starting off, please give us a history and overview there of the company for some of our listeners that are new to the story?
Keith Boyle: Sure. So Titan Mining was really created if you will, with the purchase of Empire State Mines in late December of 2016, and the assets of the old Balmat mines in Upstate New York. There are zinc mines that have been around for 100 years. The district has been around for 100 years has had continuous production from 1915 to 2001 and then briefly from ’06 to ’08, shut down with the financial crisis. And so we were able to purchase the assets in late 2016 and have been busy working since the beginning of ‘17 to put together a study—did an IPO in October—raised over $51 million Canadian in order to then restart the mine.
And the mine itself we’re looking at ramping it up to 1800 tons a day, which will give us a run rate of about 100 million pounds of zinc production a year at an all-in cost of about $0.80 a pound. And the really exciting part for us is that this infrastructure that we bought is really underutilized although we’re ramping up to 1800 tons, the mill itself is a 5,000 ton a day mill, and the shaft we’re producing from is 3,800 tons a day capacity.
So we have a three phase-strategy here: In the first instance we want to extend our mine life; in the second instance fill the shaft; and then fill the mill at 5,000 with satellite deposits so that we can target something more like 225 million pounds of production a year and give us a long life asset.
WSA: So bring us up the speed on some of your other recent activity there including updates at the Empire State project?
Keith Boyle: Okay. So like I said, we raised the funds to restart the operation in October. So since the beginning of November we’ve been rehabilitating and refurbishing the infrastructure, getting the equipment going, increasing the workforce. We had about 24 people back in October and [we’re] now sitting at over 160 people, business is growing. In the beginning of last week we hoisted our first ore to surface. And so now we’re busily ramping up our production to get to what we call commercial production or profitability in second quarter of this year with like I said ramping to 1800 tons, the full 1800 tons by Q1 of 2019.
WSA: And what are some of the key trends that you’re seeing right now in this sector Keith and how is the company positioned to capitalize?
Keith Boyle: Well, we were quite opportunistic if you will towards the end of ‘16. We saw the market for zinc tightening quite a bit, the stocks were on a steady downtrend, so we knew that the supply clearly wasn’t meeting the demand for zinc. In general that seems to be the general feel of the industry for the next three to five years, a very tight zinc market. So we see it that we’re in a very good position right now to take advantage because we’re very quickly into production. It’s not one of these new builds that take a couple of years, so we’re quickly into production with this restart taking advantage of the high zinc price over $1.60 and $1.62. I think the last I saw it there, and want an upward trend we’re seeing some of the banks even forecasting higher prices than that in the next couple of years. So we’re quite excited that we’re able to take advantage of that uptick and actually see the uptick lasting quite like I said probably three to five years.
WSA: Great. And what are some of the factors there that you feel make Titan unique from some of the other players in the sector?
Keith Boyle: Well, for us this is a past producer, like I said it was in continuous production from ‘15 to 2001. So the ore bodies are well known, a continuous ore body that are relatively high grade deposit of the zinc. And so we’re able then to restart the operation and get it back to operating form in this high zinc market right away. The other part of this is we control a land package of well over 80,000 acres with fantastic exploration potential. The exact land package had in its history seven different operations which when you look at it, didn’t really use the techniques of today as part of the exploration, and so we’re quite excited that we’re going to hit the exploration front hard. As part of that if you will, third point in our strategy filling the mill. We’re looking for the next large deposit in the area. So we’ve got quick production, quick cash flow, and lots of exploration upside to grow that cash flow in the coming years.
WSA: So what are some of the other goals and milestones here that you’re looking to accomplish over the course of the next six to 12 months?
Keith Boyle: So over this year we’ve got quite a bit going on. Like I said, we’ll have exploration results going on. The other thing that we’re doing is we’re stepping back and reevaluating, I’ll call it the decades of data, that’s really not in modern electronic form. And with that we’re identifying, call it historic resources or reserves that were never really catalogued or kept as part of the current reserve. And so those are quick feeds for us, we believe, as part of a growing mine plan. And then the next part to that is next quarter we’ll of course be announcing commercial production, and then growing through the year with focusing on reaching that filling of the shaft part of the strategy growing, how are we going to grow that production to over 1000 tons a day.
WSA: Right. And perhaps you can talk about your background experience, Keith, and about some of the key management there as you’ve had some recent appointments?
Keith Boyle: Sure. So if we start up actually just the board level we got quite an experienced board and advisors. One member, Richard Warke is founder, really the person behind the Augusta Group, has a great track record of investing and creating shareholder value. And then you’ve also got another team member there; he is George Pataki, the ex three term Governor of New York, and so what we feel is a good board. And then as far as management goes, myself, call it well over 30 years in building and operating mines, and managed to attract a couple of key players here onsite that work together to build a couple of those mines.
Well, we know each other very well and we’re quite proud actually of having the success that we’ve had thus far in basically two and a half months getting this place restarted and skipping our first ore on time and schedule.
WSA: So, as far as investors and the financial community what are some of the drivers there that you wish they better understood about you guys?
Keith Boyle: Well, I think one, and you touched on was that there is a real positive outlook on the zinc prices. And like I said, we see that lasting for a while. So the cost structure here is well known. We’ll be working diligently on optimizing and getting our costs down. But even so, just that that margin there, we’re quite positive on that outlook. So I think the second part is this is really a low risk restart – it’s a low risk restart, it has got great exploration upside, so strong organic growth. Like I said we’re ramping up now with what we know is 100 million pound a year run rate, but has the potential to really knock it out of the park by bringing all this together, and our target there is 225 million pounds a year at less than $0.80 a pound. And then when you actually look at the valuation on our stock, it sure doesn’t reflect all of that. And so we hope to break out of these I call it higher risk developer into a producer. And then once I think once people see that we’re hitting our targets, the stock is very attractively valued today, and to take advantage of that rerate as we demonstrate production and cash flow.
WSA: Sure. And as far as the way that the company operates within the sector, would you consider any sort of a joint venture or a strategic alliance?
Keith Boyle: Well, we as the company itself looking to one asset and as we execute on our plans, we’re of course looking for other opportunities to grow the company. First priority is to get this one up and going, but of course open to discussions as all companies are.
WSA: Certainly, so once again, joining us today is Keith Boyle, Chief Operating Officer for Titan Mining Corporation, which trades on the Toronto Stock Exchange, ticker symbol TI. Currently trading at $1.28 a share, market cap is about $130 million. And before we conclude here to recap some of your key points why do you believe investors should consider the company as a good investment opportunity there today?
Keith Boyle: Well, we’ve started production, so I would say it’s a very low risk restart. It’s very well valued when you consider that we’re ramping up that within about 18 months we’ll be at a run rate of about $50 million to $60 million a year of free cash flow. And so for that looking at as you mentioned about $130 million Canadian market cap, and so as we execute on our plan that’s quite a distinguishing feature for us. On top of that we’ve got all this exploration upside that that will allow growth and continued mine life. And later on top of that, it’s a great zinc market right now.
WSA: Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today Keith and update our investor audience on Titan Mining. It was great having you on.
Keith Boyle: Well, thank you very much for having us on Juan.