Epstein InvestorIntel CEO Interview: Brad Boyle, Triton Minerals Ltd.
The following interview of Triton Minerals’ CEO Brad Boyle was conducted by phone and email in the week ended September 19th.
Please describe Triton Minerals for readers less familiar with your company.
Triton Minerals Limited (ASX:TON) is a diversified, Australian-listed minerals exploration company with 3 graphite projects in Mozambique, Africa. These comprise the Balama North, Balama South, and Ancuabe projects, located in the Cabo Delgado province. Balama North is our main focus. It’s largely made up of the Cobra Plains and Nicanda Hill deposits. So far, only Cobra Plains has a maiden JORC complaint resource. It has 103mm Inferred tonnes. Most of the recent drilling has been on Nicanda Hill, where very strong drill results and assays have been reported. All 3 projects are near infrastructure, one is a past producing mine. Ports, highways, labor, power and water are all readily accessible. A major highway is 25 kms from site and a deep water port 230 kms. Very wide intercepts and ore grades averaging about 10% Total Graphitic Carbon, “TGC” at Nicanda, with intercepts up to 30.5% TGC, could make the combined Cobra Plains & Nicanda Hill 1 of the 2 largest deposits in the world.
On September 16th, Triton released positive metallurgical results for Nicanda Hill, can you summarize that news and explain its importance?
The first and probably most important takeaway is the head grade of up to 19.5% TGC in the 200kg sample we tested. Also exciting was the 0.35% reading on vanadium, an encouraging sign. The test results reconfirmed what we thought, namely that in this case we were able to achieve up to 97.3% TGC with simple floatation alone. This is a high grade product that can be sold as is. Also important is that the graphite liberates easily from the host rock. This sample was taken from the middle of the deposit, based on the characteristics of the deposit, we think that even better material might be found to the north. Of course, that remains to be seen. Keep in mind that it’s still early on in the testing. We will be at this for at least another 6 months going through multiple stages to try to optimize grade, quality and flake sizes.
When do you expect to report Triton’s next upgraded JORC compliant resource report?
We expect our next resource update by the end of 2014. We are very excited about what that report might show. We’ve done extensive drilling since our maiden resource report in February, 2014. Even at 103 million tonnes of Inferred resource, that’s already a top 5 graphite resource in the world. Our drill results and assays to date provide evidence that our next report will come in significantly larger than our maiden resource. We hope to not only increase the size of our JORC compliant resource but possibly move some tonnes into the higher category of, “Indicated.”
Please describe Triton’s resource.
We are very excited about our resource and look forward to reporting an updated and enhanced JORC resource report before year-end. As it stands, we have delineated a maiden resource of 103 million Inferred tonnes, (JORC compliant) at Balama North’s Cobra Plains. However, with subsequent drilling since February at Nicanda, we’ve determined that with a cut-off of 6% TGC, the average grade is 10.3% TGC and the size of Nicanda’s deposit is simply tremendous. Our cut-off grade is higher than some other company’s average grade. Our deposit is near surface to a vertical depth of 400 meters and remains open in all directions and at depth. Using the drill results outside the maiden resource, as well as results from trenching, mapping, and sampling, Triton and consultant Optiro have identified a cumulative exploration target of 760Mt to 1,290Mt at Balama North, in addition to the JORC resource at Cobra Plains. Cobra Plains also contains vanadium with an average grade of 0.23%.
Is Mozambique a good country to work in? For example, how is the infrastructure situation?
Mozambique has been politically stable for the past 30 years. Our main focus in on Balama North and we have 2 other projects to the east and west. Access to infrastructure is actually good. Some are surprised when they learn that we have a major highway just 25 kms from our project. Balama North is about 230 kms from the deep water port of Pemba in northern Mozambique and an international airport. There’s an even bigger port about 300 km from site. The project also has power, labor and water available.
Please give us a snapshot of the current capital structure?
Sure. We have 310 million shares outstanding, zero debt and about $5 million in cash. At the current share price of A$ 0.37, our market cap is about A$ 115 million. I own 5.4 million shares.
Triton has about $5 million of cash. How long does that fund the company for? When do you think Triton will reach initial production?
Our $5 million cash balance will fund all activities through the end of the year. With regard to initial production, there are of course many moving parts, but our goal is to reach initial production by late 2016 or early 2017. If we can achieve that timeline, we will be in production before many other projects and at an ideal time to address the growing demand for graphite.
Does Triton have any Aboriginal challenges?
No, we don’t believe so. Are relations with the local communities is strong. We’ve been working closely with five surrounding communities. Proactive community outreach is unquestionably a win-win. We’re upgrading water infrastructure, providing doctors and investing in schools. We will employ as many locals as possible and in fact are already utilizing a number of locals including a geologist. In addition to robust local support, we believe that we have support at the Federal level as well.
When might the company seek strategic investments and/or off-take agreements?
We have had and continue to have exploratory conversations with prospective investors and off-take partners. However, until our updated resource is released and we finish our internal scoping study, the talks will not progress too far. These key de-risking events are next year’s business at the earliest. We expect we will receive interest from parties in Europe, Japan, the U.S. and China. Let me also say that we will seek multiple off-take agreements to diversify risk.
Given Triton’s Balama North is close to Syrah Resources, what are some key takeaways from your proximity with them?
Good question, we naturally get compared to Syrah Resources a lot. Some ask if Syrah will acquire us. Both Triton and Syrah are sitting on massive deposits, possibly the 1st and 2nd largest in the world. We don’t need Syrah and Syrah doesn’t need Triton. I would estimate that Syrah is up to 12 months ahead of us. For example they have signed 2 preliminary off-take agreements. Strong interest in Syrah’s deposit suggests that our deposit will also be quite attractive to third parties as well.
Since Balama North is your main focus, what if anything is happening at your other 2 projects, Balama South and Ancuabe?
We continue to advance both the Balama South and Ancuabe projects. At Balama South, further exploration mapping, trenching and sampling programs are ongoing. This project is a few years behind Balama North, so we see no urgency to spend a lot of capital there at this time. Anacuabe is very interesting as it’s a former producing mine. The location is also closer to port, about 60 kms from Port Pemba. There is a great deal of infrastructure on site, some of which we are refurbishing. But to be clear, Balama North will continue to get the lion’s share of attention and capital.
To reiterate, what are the company’s near-term catalysts?
Most important on any list of near-term catalysts is the release of Triton’s next JORC compliant resource report by year-end. After that we will be able to finish our internal scoping study on Cobra Plains. With a scoping study in hand, we can begin to have more substantive talks with strategic and off-take partners. Along the way we will continue drilling to enhance our knowledge of the deposit. All of this should enable us to deliver a Pre-Feasibility Study by the end of next year. Since our deposit is so close to surface, we can easily obtain material to conduct further metallurgy work and sample material to send to interested parties.
Triton has one of the highest market caps among graphite juniors, what do you think about your company’s valuation?
I think that investors are certainly taking notice of Triton Minerals. Our stock is up quite a bit from its 52-week low. However, the stock is also down significantly from its 52-week high. At our current market cap of A$ 115 million, we are trading at something like an 80% discount to the valuation of Syrah. While others might like to compare themselves to Syrah due to its A$ 750 million market cap, clearly we are the only one that is a true peer. I think our valuation remains attractive and that announced de-risking activities including additional drilling and especially the release of a new JORC compliant resource will help us close the valuation gap.
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