The acquisition of landholdings encompassing a formerly producing gold mining operation has been a successful strategy employed by many aspiring exploration stories. So-called ‘Brownfield’ projects are attractive because they offer the advantages of established infrastructure, productive geology, and the opportunity to follow up on previous discovery success while employing a fresh perspective and modern exploration technology.
In 2017, an aspiring Canadian junior explorer, Troilus Gold Corp, acquired the Troilus Mine project as a Brownfield prospect. The property included the workings of a significant open-pit gold mine that had been in operation for fourteen years. More than 2 million ounces of gold and 70,000 tonnes of copper were produced until active mining was suspended in 2010 by the previous operator, Inmet Mining Corp.
Troilus inherited remnant gold-copper resources estimated at approximately 2 million gold-equivalent (AuEQ) ounces in the indicated category within the previously mined open pits. The project also includes established infrastructure, including roads and river crossing, power lines, a 50MW substation, and a permitted tailings facility. Historical exploration data and drill core were reinterpreted to provide new targets for previously overlooked resources.
Key Milestones Achieved by Troilus Build the Value Proposition
Following the acquisition, Troilus embarked on numerous aggressive drilling programs to outline a much larger deposit area around the previously mined pits. Drilling in 2018 identified broad areas of mineralization to expand the Zone 87 and the J Zone. Ongoing work through 2019 confirmed additional resources, laterally and further at depth. In 2020 the focus shifted to showings further south along strike, resulting in the discovery of the Southwest Zone ~2.5km southwest of the formerly mined pits. In 2022, Zone X22 was discovered as part of an ongoing drill program targeting the extremities of the Z87 pit at its southwestern extremity and extending into the Gap Zone. More than 322,000m of drilling have been completed since 2018.
A continuous deposit has now been defined, connecting the northern extension of the J Zone through to the X22 Zone. The SW Zone has also increased in magnitude, and recently reported assay results include sub-intervals of high-grade gold values. Meanwhile, there are also many regional targets in proximity to the main deposit zones, which attest to the district-scale potential of the Troilus project.
The most recent Mineral Resource Estimate was reported in an update in 2023, amounting to more than 11.2 million ounces AuEQ* Indicated, plus a further 1.8 million ounces AuEQ inferred. The total resource has expanded by 446% from the inherited deposit area when the Company acquired the project. This is a testament to the superb mineral endowment of this project and the exploration team that has delivered new discovery success year after year. The Troilus project amounts to one of the largest undeveloped gold-copper deposits in all of Canada.
Moving forward, Troilus remains aligned with its development plan toward a producing asset. A definitive feasibility study is in progress to investigate the potential economics for this generational-scale asset and is expected to be complete in early 2024. Meanwhile, consultations with local community groups and First Nations are already underway, advancing both the federal and provincial permitting processes, which were initiated in May 2022.
Experienced and Proven Management Team
While the quality and grade of the mineral resources is an important factor for any mine development prospect, the caliber of the management team itself cannot be overlooked. There are many formidable challenges along the path to establishing a viable gold mining operation. Highly respected and seasoned professionals lead Troilus with proven skills to navigate each critical phase.
The market conditions have not been ideal for the precious metals sector in recent years; however, the most attractive projects continue to gain support. In November Troilus completed a significant bought deal financing to raise gross proceeds of more than $10 million. The deal provides financial strength to enable Troilus to maintain its aggressive posture to advance the project through toward a development decision. This support from institutional investors and funds is a demonstration of confidence in the management team to continue advancing the Company along the value curve.
Prioritizing Environmental Stewardship and Respect for Community and Individual Concerns
Another appealing aspect of this story that cannot be underestimated is the commitment to sustainable environmental stewardship. Troilus management understands its responsibility to preserve the environment. Troilus previously engaged Tugliq Energy to develop a roadmap towards a carbon-neutral mining operation with the goal of reducing and offsetting future GHG Emissions from activities. Effective treatment of mine waste and tailings and the restoration of the landscape following the eventual end of productive mining activity at the project are important priorities and amount to a philosophy of Environmental Consciousness.
The Social Capital objectives for the company are also an important priority at all levels of the business plan. Troilus is working with the local communities, respectfully participating in consultations to identify and address potential concerns as part of the planning process. In addition, Troilus has implemented proactive policies to respect individuals, advancing equity and diversity objectives for all employees and contractors.
Compelling Investment Merit
Taken in the context of an emerging mine development opportunity, Troilus provides a compelling case for investment. The project is located within an established mining trend in the heart of a top-tier mining jurisdiction. Led by an experienced management team, Troilus has delivered several years of exceptional results through comprehensive exploration to establish a robust resource positioning the project as one of the largest undeveloped gold and copper deposits in North America. Much of the critical infrastructure is already in place. Engineering and financial optimization studies are underway. The process of obtaining Federal and Provincial permitting applications is advancing. Troilus is well-positioned to advance the project toward a construction decision.
The Company remains at an attractive value range for investors with a market cap of around $160 million (CAD). For reference, the estimated value of the inherited infrastructure and assets acquired by Troilus is $350 million. An impressive resource has been achieved, and new targets are being investigated on this large property. A margin of financial safety is established with a lavish treasury and a clean balance sheet. There is also no long-term debt obligations. Taken as a whole, the positive factors for this story build the expectation for a successful outcome. Troilus is advancing down the home stretch to become a successful gold mining company in Northern Quebec.
* Indicated: 508.3 Mt at 0.69g/t AuEQ; Inferred: 80.5 Mt at 0.69g/t AuEQ. Cut off grades are based on $US 1850/oz Au, $4.25/lb Cu, and $23/oz Ag with a currency exchange rate of US$1.00 : CAD$1.30. Recoveries varied with an average of 90% gold, 92.5% silver and 91.8% copper, not including consideration from other metals. AuEQ formulas are calculated as follows:
Z87 Zone: AuEQ = Au grade + 1.5628* Cu grade + 0.0128* Ag grade
J Zone: AuEQ = Au grade + 1.5107* Cu grade + 0.0119* Ag grade
X22 Zone: AuEQ = Au grade + 1.5628* Cu grade + 0.0128* Ag grade
SW Zone: AuEQ = Au grade + 1.6823* Cu grade + 0.0124* Ag gradep
