VSA Morning Miner, 21/12/20

Tectonic Gold (NEX:TTAU)

Tectonic Gold (NEX:TTAU) has announced the initial three assay results from the recent drill programme highlighting validation of the exploration model with a 100% success rate in terms of intercepting gold, copper and silver mineralisation.

Two of the results reported today highlight the shallower mineralisation overlaying the deeper system with intercepts of

7m at 3.01g/t Au, 2.33g/t Ag and 0.14% Cu from 96m including 1m at 16.30g/t Au, 8.31g/t Ag and 0.34% from and 3m at 3.95g/t Au, 5.09g/t Ag and 0.32% Cu from 98m.

9m at 0.84g/t Au, 0.62g/t Ag and 0.19% Cu from 18m, including 1m at 2.37g/t Au from 18m and 1m at 0.85g/t Au, 2.58g/t Ag and 1.56% Cu from 23m.

The initial results indicate the presence of a mineralised breccia zone with veins a couple of metres wide with disseminated mineralisation outside. As previously highlighted this is typical of IRGS systems. These early results demonstrate the presence of the system that TTAU is targeting and further results will confirm continuity and scale in line with the 3km strike length already identified. We are encouraged by the polymetallic style of mineralisation which is encouraging for future potential economics.

The vein system indicates the potential for open pittable ounces, however, the geophysical anomalies stretch to more than 500m depth and two holes in this programme have begun to assess this potential drilling to depths of around 200m. The first of these demonstrates encouraging results with porphyry type mineralisation and robust grades at 1.23g/t Au, 15.85g/t Ag and 1.77% Cu over 1m from 136m. This in our view, warrants more and deeper drilling to assess the wider potential. The mine model which TTAU seeks to replicate is the Cadia mine where initial open pit provided cash flow for underground development.

Eight drilled holes have assays outstanding and are out for analysis at the labs, while the remaining couple of drill holes have been delayed by a recent storm. We expect these to be drilled early in the New Year at the Southern Copper and Mt Cassidy targets.

Overall, this is a strong starting point confirming the presence of the mineralised system that TTAU is chasing and that management’s excitement is well placed. We are encouraged by the news that in the outstanding cores waiting to be assayed, visible characteristics are consistent with these early results. Investors will be looking to future drilling programmes and we note the outstanding “drill warrants” at 0.7p, in the money but need the programme to be complete to be exercisable and this could lead to an additional GBP1.025m in funding for TTAU.

We reiterate our Speculative Buy recommendation.

Oliver O’Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: [email protected]

Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: [email protected]

VSA Capital Research | T: +44 (0)20 3005 5000 | E: [email protected]

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