Titan Mining Corporation (TI) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Titan Mining's Q1 2026 Analyst and Investor Update Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Irina Kuznetsova, Director of Investor Relations at Titan Mining.

Thank you, operator, and thank you, everyone, for joining Titan Mining's First Quarter 2026 Analyst and Investor Update Call. We are pleased to be introducing this quarterly update format as part of our efforts to provide more regular insight into our progress and priorities. The quarter marked important milestones for the company, including the commencement of graphite concentrate shipments from its end-to-end U.S. operation and the recent announcement of a germanium recovery initiative with Teck Metals, further advancing Titan's domestic critical mineral strategy. I would like to draw your attention to the cautionary statement on Slide 2 as we will be making several forward-looking comments during our prepared remarks and likely in the Q&A as well. On the call to assist with the presentation and answer questions are Rita Adiani, our President and CEO; and Joel Rheault, our Vice President of Operations. I will now turn the call over to Joel to discuss the operational highlights.

Thank you, Irina. In the first quarter, Titan delivered solid operational and strategic progress, including revenue growth, positive operating cash flow and important advancements across our U.S. Critical Minerals Platform. Our Zinc business continues to provide a stable cash flow foundation that supports our growth strategy. In Q1, we delivered consistent production in line with the mine plan and maintained cost discipline, reinforcing the strength of our operating platform. I'll now turn the call over to Rita to discuss our strategic initiatives and corporate developments.

Thank you, Joel. Today, we announced a cooperation agreement with Teck Metals to evaluate the recovery of germanium from our existing process stream. This represents a potential high-value, low-capital byproduct opportunity, leveraging our current operations. I'll provide details on this initiative shortly. Turning to Graphite. We achieved a key milestone during the quarter with commencement of graphite concentrate shipments from our demonstration facility, marking the first end-to-end domestic natural gate graphite production in the U.S. in decades. This is a critical step in advancing customer qualification and transitioning from development to commercial execution. The facility enables product testing, metallurgical optimization and operating validation at scale, supporting ongoing engagement with customers across industrial, advanced technology and defense-related supply chain. These discussions are progressing through qualification, an important step towards establishing long-term commercial relationships through offtake. In parallel, the fully funded feasibility study for a 40,000 metric ton per year Killbourne Project is progressing alongside continued drilling and permitting activities. Exploration results released during the quarter confirmed mineralization extending beyond the current resource boundary, highlighting meaningful expansion potential. Killbourne is well positioned to advance efficiently supported by existing infrastructure, operating expertise and cash flow from our Zinc business as we move toward establishing a scalable and domestic supply solution. With production underway, commercial engagement advancing and multiple near-term catalysts in place, our focus remains on disciplined execution and continued progress towards commercial scale activities. I'll now turn on to discuss the germanium opportunity in a little bit more detail. Germanium is a critical mineral with applications across defense, semi's and advanced optics and global supply remains highly concentrated and subject to Chinese export restrictions. The U.S. is heavily reliant on imports with China controlling approximately 60% of global production with export restrictions having had a significant increase in pricing. Against this backdrop, we see a compelling opportunity to unlock value from our existing operations. Through our cooperation agreement with Teck, we are evaluating the recovery of approximately 13,000 kgs per year of contained germanium from material that has already been mined and forms part of our existing zinc process stream. This is a capital-efficient opportunity that does not require new mining and the targeted recovery is from our existing process streams, as I mentioned, leveraging our existing infrastructure and operational footprint. Teck is -- Teck's trail operations is one of the only commercial scale germanium facilities in North America for recovery from primary ore. And this partnership provides a clear route to refining and potential commercialization, and that's why we're very excited by this prospective initiative. From a strategic standpoint, this position is Titan within a critical domestic supply chain for high-value material within very, very critical U.S. sectors such as defense and semi. Looking ahead, our focus is on advancing the technical validation and the processing pathway and developing a commercial long-term relationship with Teck Metals in some form of offtake engagement. I'll now turn the call over to Joel to provide additional details on our operational results.

Thank you, Rita. In Q1, we delivered 14.2 million payable pounds of zinc, which is in line with our mine plan while maintaining our cost performance within guidance. Operations were focused on disciplined execution with mining activity concentrated in the Mahler, New Fold and Mud Pond Apron mining zones. Long-hole stoping delivered above target grades and tonnes supported by optimization toward higher-grade areas. In January, a temporary hoisting disruption impacted production, but the issue was fully resolved within 30 days, maintaining mining activity and recovering the majority of the deferred production through increased milling and extended shifts. Capital development progressed key infrastructure, including the new fold Mahler ventilation connection and ongoing ramp development, while the commissioning of new underground equipment enhanced operational efficiency and supports continued productivity. Our 2026 guidance remains 62 million to 66 million payable pounds, reflecting a mine plan that prioritizes development and sustained access to higher quality ore bodies to support production stability and cost control. Turning to Kilbourne. Following completion of the preliminary economic assessment, we advanced the project into feasibility and formally launched the fully funded feasibility study this quarter. The work is focused on reserve conversion, final mine design, process optimization, infrastructure layout and refinement of capital and operating cost estimates. A multidisciplinary engineering team has been appointed to lead execution across mining, concentrator and downstream processing. In parallel, we commenced commissioning and commissioning of the demonstration facility in the fourth quarter, achieving first graphite concentrate production in January of 2026. The plant has an operating capacity of approximately 1,200 tonnes per year, scalable up to roughly 2,500 tonnes per year on a double shift basis. Current efforts are centered on recovery optimization, plate size consistency, throughput stability and overall process reliability. So far, the facility is performing in line with commissioning expectations and is generating operating data to support feasibility level design. Permitting is advancing alongside engineering supported by environmental baseline programs and site level planning. The sequencing is structured to maintain schedule alignment and manage execution risk. We continue to target a construction decision in late 2026 or early 2027, subject to study completion and permitting progress. Turning to Exploration. At Empire State Mines, underground drilling in Q1 focused on the Mahler and Mud Pond zones with 4,726 feet completed to support Near-mine Resource Expansion and mine planning. Drilling included exploration work also on the Little York target, where whole LY25-004 intersected 3.3 feet of 31% zinc, confirming high-grade upside potential. Underground drilling will continue through 2026 with emphasis on Mahler, Mud Pond, New Fold and N2D to support development sequencing and resource growth. At Kilbourne, drilling totaled 13,384 feet across 37 holes in Q1, focused on resource delineation, geotechnical work and testing eastern extensions. Results confirmed graphite mineralization extending approximately 2,500 feet beyond the current conceptual pit with grades consistent with the main deposit, including 255 feet at 3% and 92.2 feet at 3.1%, highlighting strong expansion potential. Drilling will continue in Q2 with a focus on delineating eastern mineralization and advancing the geotechnical work. Beyond active programs, ongoing compilation and digitization of historic data sets continue to generate near mine and district scale targets. The company maintains a significant land position of over 120,000 acres in St. Lawrence County, supporting long-term district scale exploration potential. I'll now turn it back to Rita to discuss financials.

Thanks, Joe. Turning to the financial results. For the first quarter, we generated revenue of approximately $19.6 million, up 22% year-over-year, supported by consistent sales volumes and an average realized zinc price of $1.47 per pound. Adjusted EBITDA from zinc operations was approximately $3.9 million during the quarter. Graphite-related expenditures totaled approximately $2.3 million, including the demonstration facility and feasibility work at Kilbourne. Net loss before tax for the quarter was $13.3 million, which was primarily driven by noncash fair value adjustment relating to derivative instruments, which does not reflect the underlying operating performance of the business. The net loss also takes into account all the growth activities, which are fully funded from equity and the EXIM's facility. So I would like to stress that the net loss reflected in this quarter is primarily driven by noncash technical accounting adjustments unrelated to the operations of the business, which continue in a very robust capacity. C1 cash costs were $0.98 per pound per payable pound with AISC of $1.01 per pound, which are both within or below guidance, reflecting continued cost discipline and stable operations. Capital expenditures during the quarter totaled approximately $1.8 million, primarily directed towards underground development and equipment as well as upgrades to the graphite demonstration facility. We ended the quarter with $13.8 million in cash, supporting continued investment in our growth initiatives. Titan continues to generate operating cash flow from Zinc business whilst advancing graphite and germanium opportunities, positioning the company to progress on multiple growth initiatives from a position of strength. To conclude, Titan has had a very strong first quarter, and we're very well positioned to execute on our priorities for 2026. We're generating consistent cash flow from zinc operations. We've commenced graphite shipments from our domestic platform, and we're advancing through a fully funded Feasibility Study. At the same time, we have introduced a very new and potentially substantially lucrative opportunity from germanium through our cooperation agreement with Teck and our goal is to unlock a high-value byproduct from existing operations. Our approach to capital allocation remains disciplined with focus on maintaining liquidity, funding growth efficiently and advancing development in a manner that supports long-term value creation. Our priorities are clear. We look to deliver operational consistency at ESM on the zinc and on any value-add opportunities, look to advance the feasibility study permitting at Kilbourne, look to enter into commercial offtake engagements and grow our critical minerals platform to become a significant player within the U.S. domestic supply chain. We look forward to updating you on our continued progress quarter-on-quarter. Thank you for your time today, and we'll be happy to take any questions.

[Operator Instructions] Our first question comes from Heiko Ihle with H.C. Wainwright.

I have Keith here on behalf of Heiko. Congrats on the first quarter. You gave some background on the teck venture in your press release today. I was as who started the initial conversation? How long has it been in the making? And is there any internal time line you have until we get more concrete takeaways from the cooperation agreement?

Thanks for the question, Keith. As you might be aware, these conversations, they start and they stop. That's to say it's been -- as we said, it's a cooperation agreement. So it's a 2-way dialogue between ourselves and our partners at Teck Metals. And the potential time line associated with this is still being worked through. But as is mentioned in the press release, we're working through the initial feedstock threshold component, which we're very confident that we'll be able to meet. And from there on, we'll be refining the process pathway with Teck Minerals with Teck Metals to be able to move towards a commercial offtake arrangement. Our goal is to be able to see some form of pathway towards the commercial offtake agreement within the next 12 months.

And just a follow-up. Until there's a long-term offtake arrangement, there's no cash payment from either side until then, right? And the only expense would likely be just a little bit of R&D on your side?

Correct.

[Operator Instructions] Our next question comes from Tate Sullivan with Maxim Group.

And you've mentioned the consistent cash flow from the zinc operations and gross profit in the quarter was about $6 million. What is your proxy for the cash flow from zinc in the quarter for us to carve out the graphite project expenses, please? Or is that $6 million a good proxy?

I think the $6 million is a good proxy. If you look at the results, Tate, you will be able to find an adjusted EBITDA calculation. And obviously, you will be able to see some operational cash flow numbers. To the extent -- if you read through the notes, you will see the expenditures, which is about $2.3 million, which has been incurred for graphite. So you can probably do an add-back on that to be able to get to your zinc cash flow number.

Okay. Great. And then on the germanium initiative, I imagine your processing facility is quite full now with the graphite processing equipment as well, but would you have to set up a separate concentrate line in your existing facility? Or would you have a new facility potentially?

No. The cooperation agreement with Teck is very much focused on finding a capital-efficient solution where we are looking to deliver a high-grade germanium concentrate. And to be able to do that, we require some minor amendments to our existing zinc process stream, not a fully independent refining solution or a processing solution.

Great. And then on the graphite project expenses, $2.3 million in the quarter in the first quarter, will these fluctuate with more output? Or what are the determinants of that expense line, please?

Yes. The determinants of that, I mean, are 2 real component parts. One is the working capital associated with the graphite demonstration facility. We have budgeted about $1.5 million in working capital for the year. But the second variable really to that tape would be the expenditures incurred with the feasibility study, and that will vary quarter-on-quarter. As we started the feasibility study at the start of the year, expenditures would be slower, and they will ramp up during the course of the year. And we're happy to share with analysts any detailed projections, which may be required.

Thank you. I would now like to turn the call back over to Rita Adiani for any closing remarks.

So we just wanted to say thank you, everyone, for attending the call and for supporting the success of Titan. We have some very exciting opportunities for all stakeholders in the pipeline, and we look forward to providing more updates as we get through them during the course of this year.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.