Hancock Prospecting takes US$120m bite into the Linderos copper project in Ecuador

Hancock Prospecting will spend up to US$120m to earn up to 80% in Titan Minerals’ Linderos copper project in Ecuador
Ecuador is the second most attractive mining destination in Latin America while copper supply looks to be tightening
Linderos is an early stage project with the potential to host multiple porphyry centres

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

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

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 US$120m ($186.3m) from Hanrine Ecuadorian Exploration and Mining SA – a wholly-owned subsidiary of Hancock Prospecting – to earn up to 80% in the Linderos copper project in Ecuador.

TTM’s shares have indeed climbed this morning by 6.25% 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 of course for their extensive copper deposits, with some estimates indicating that some 40% 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 regime has also been tightened up in recent years and 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, which is 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.

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 143km2 in southern Ecuador. All concessions are currently 100% 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% 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% 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.

Farm-in terms

Hancock is paying TTM US$2m to get the ball rolling, giving it a 5% interest in Linderos.

From here, it can increase its stake by a further 25% (to 30%) by carrying out the earlier of 10,000m of drilling or spending US$8m on exploration.

Another 21% can be earned by either drilling another 15,000m or spending US$12m. Once this met, Hancock will also pay TTM a further US$1m.

At the decision to mine, or at total expenditure of US$120 million, whichever occurs first, Hancock will then increase its interest up to the full 80%.

TTM chief executive officer Melanie Leighton said the company was pleased to partner with Hancock, which has 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 added.