Hancock Prospecting plans $US120m bite of the Linderos copper project in Ecuador

With copper supply tightening, Hancock Prospecting will spend up to $US120 million to earn 80 per cent of Titan Minerals’ Linderos project in Ecuador.

When Australia’s richest person Gina Rinehart and her company Hancock Prospecting move to invest in companies or projects, folks tend to sit up and take notice.

Just consider that shares in Lynas Rare Earths (ASX:LYC) rose nearly 6 per cent on Wednesday after Rinehart was found to have built a substantial stake in the rare earths producer.

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So it shouldn’t come as a shock that eyes have now tracked to Titan Minerals (ASX:TTM), which has just drawn an investment of up to $US120 million ($186.3 million) from Hanrine Ecuadorean Exploration and Mining SA – a wholly-owned subsidiary of Hancock Prospecting. That investment, once complete, will allow Hanrine to earn up to 80 per cent in the Linderos copper project in Ecuador.

TTM’s shares have indeed climbed this morning by 6.25 per cent to 3.4c with some significant volumes with more than 31 million shares changing hands.

Here’s what might have got Hancock interested.

The investment picture

Ecuador and its fellow South American countries are known for their extensive copper deposits, with some estimates indicating that some 40 per cent of the world’s reserves can be found in the region.

It certainly helps that not only is Ecuador relatively unexplored compared to its neighbours, its mining regimen has also been tightened up in recent years and it is now considered to be the second-most attractive mining destination in Latin America, according to the Fraser Institute.

Meanwhile, prices in copper have been rallying on the back of persistent warnings about the red metal’s tight supply.

Copper is essential for electrification, a key component of the drive towards net zero emissions.

Accelerating electrification will require greater quantities of copper, which will in turn require new sources to be developed.

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Early stage exploration copper project

Hancock is clearly looking to capitalise on this expected growth and is betting that it can get its money’s worth by investing in an early stage project and dragging it up towards a decision to mine in time to take advantage of high demand (and high prices).

Linderos consists of four contiguous mineral concessions covering a total of 143sq km in southern Ecuador.

All concessions are wholly owned by TTM and are fully permitted for exploration and small-scale mining.

Surface geochemistry and geophysics has already highlighted the presence of multiple porphyry centres across project, with evidence for shallow epithermal gold systems also observed in mapping and geochemistry.

Most work to date has focused on the Copper Ridge porphyry and the Meseta gold prospect, with the former of greater relevance to Hancock’s investment.

Copper Ridge Prospect features surface copper-molybdenum anomalism highlighted by surface geochemistry with mineralisation hosted within a diorite porphyry.

A maiden drill program of eight diamond holes totalling 3700m that TTM drilled in 2022 successfully confirmed broad zones of copper porphyry mineralisation from shallow depths.

Notable assays include 308m at 0.4 per cent copper equivalent (CuEq) from 54m while Copper Ridge’s potential to host higher grade porphyry mineralisation is supported by intersections such as 76m @ 0.5 per cent CuEq from 132m.

To top it off, six of the eight holes ended in mineralisation, highlighting strong potential for both lateral and depth extensions at the prospect.

An induced polarisation survey has also indicated that a much larger porphyry system than previously recognised in surface mapping, geochemistry, and drilling is present at Copper Ridge.

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Farm-in terms

Hancock is paying TTM $US2 million to get the ball rolling, giving it a 5 per cent interest in Linderos.

From here, it can increase its stake by a further 25 per cent (to 30 per cent) by carrying out the earlier of 10,000m of drilling or spending $US8 million on exploration.

Another 21 per cent can be earned by either drilling another 15,000m or spending $US12 million. Once this met, Hancock will also pay TTM a further $US 1 million.

At the decision to mine, or at total expenditure of $US120 million, whichever occurs first, Hancock will increase its interest up to the full 80 per cent.

TTM chief executive officer Melanie Leighton said the company was pleased to partner with Hancock, which had the balance sheet and capability to fully explore and develop the project.

“The agreement represents a fantastic endorsement of our belief in the Linderos Project’s potential to host a large-scale copper porphyry system,” she said.

This content first appeared on stockhead.com.au

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