Troilus Gold Ramps Up Resource and Advances Toward Feasibility

• Troilus Gold has increased its mineral resource estimate to 13 million ounces of gold equivalent indicated and inferred.
• The resource includes high-grade zones like the new X22 zone discovered this year.
• A feasibility study for redeveloping the Troilus mine is on track for completion in early 2024.
• Permitting is underway, with the goal of submitting an environmental impact assessment by Q3 2024.
• Financing discussions are starting, with the goal of showing a structured financing package to the market in the first half of 2024.

Major Expansion of Gold-Copper Resource to 13 Million Ounces

Troilus Gold has announced a significant expansion of the mineral resource estimate for its namesake project in northern Quebec. The new estimate totals 13 million ounces of gold equivalent across all categories, with 11.2 million ounces in the indicated category. This represents a major increase from the previous resource estimate done in 2020.

According to CEO Justin Reid, the growth in resources comes after 350,000 meters of drilling by Troilus over the last four years. The average grade stands at 0.69 g/t gold equivalent for indicated and 0.67 g/t for inferred. Importantly, Reid emphasized that 99% of the resource is contained in open pittable material, given the project’s location in a historic Brownfield site.

New High Grade Zones Discovered

A key driver of the resource growth has been the discovery this year of the new X22 zone, located 2.5 kilometers from the main mineralized area. Reid described X22 as a “greenfields discovery” that rapidly grew from 600,000 ounces to over 2 million ounces of gold. The first discovery hole hit an impressive 30 meters of 4.3 g/t gold from surface. X22 sits along a D2 structural trend, whereas most of Troilus’ other zones follow the main D1 northeast-southwest trend. The high-grade mineralization at X22 appears confined to the hanging wall in this location. According to Reid, Troilus will be exploring the potential for more D2-hosted zones across the property based on favorable geophysics.

Incorporating New Zones Causes Engineering Changes

Incorporating X22 and other new zones like the Connector zone between the J and Z87 zones has presented challenges on the engineering side, Reid admitted. The resource shells keep getting larger as lower-grade material is encompassed, dragging down the average grade from what Troilus initially envisioned for underground mining. For example, the X22-J zone-Connector zone will likely become one massive pit 3 kilometers long and 1.5 kilometers wide. Reid said this has required redoing metallurgy and geotechnics to a feasibility level for the new zones added over the past year.

Permitting Progressing on Schedule

On the crucial permitting front, Troilus has already submitted detailed project descriptions to provincial and federal regulators. Baseline environmental studies are well advanced, given extensive historical data and over a decade of new data collected by Troilus since acquiring the project. The goal is to submit the full environmental impact assessment by mid 2023. Reid expects provincial permits first, followed by federal permitting. He says the timeline for permitting in Canada is always difficult to predict precisely, but sees no major roadblocks given the Brownfield nature of the project and solid stakeholder relations.

Feasibility Study On Track for Early 2023

Nonetheless, Reid said Troilus now has all the information needed to deliver a feasibility study in early 2024 as planned. He expects the results will be published sometime after the holidays this year. The feasibility will be based on a throughput rate of 35,000 tons per day, utilizing as much of the existing infrastructure as possible. This includes roads, power lines, tailings dams and other facilities leftover from the mine’s previous owner that Troilus acquired when they restarted the project.

Leveraging Existing Infrastructure to Control Costs

Reid maintains Troilus can mitigate capital costs substantially by leveraging this existing infrastructure, in contrast to an example like the Detour Lake mine which required building everything from scratch at a $1.5 billion price tag. He estimates the infrastructure Troilus already has in place is worth around $500 million. Adding typical inflation seen in the industry lately, Reid believes the initial capital cost for Troilus will likely range from $600-700 million. With the infrastructure accounted for, he sees it as a $1.2 billion project. This compares favorably to Equinox Gold’s Greenstone project in Ontario of similar scale and grade that is projected to cost over $1 billion to build.

Copper Production to Provide Flexible Financing

Copper is expected to make up 15-20% of Troilus’ revenue, although the proportion varies by zone. The copper concentrate produced on site will be of high quality, assaying approximately 17% copper, 140 g/t gold and 250 g/t silver. Reid sees strong demand and attractive off-take agreements for this product helping finance construction. The company also benefits from buying back a prior 2.5% royalty from First Quantum in 2020, which improves the economics.

Financing and Partnerships Under Discussion

With feasibility studies nearing completion and permitting progressing steadily, Troilus has now turned its attention to financing discussions. Reid shared that third parties are already tearing apart the updated resource as part of due diligence for debt options. The company is speaking with potential off-takers for the copper concentrate as well. While streaming and royalty financiers have expressed interest, Reid sees those as a last resort if needed rather than a preferred route.

Ideally, Troilus hopes to show the market a complete structured financing package in the first half of 2024 contingent on the feasibility study results and permitting. Reid acknowledged a project of this scale at over $1 billion may be large for a junior mining company like Troilus to finance alone. He said the company is open to partnerships, if the terms create value for shareholders. Several recent examples like IAMGOLD at Cote Lake and Equinox at Greenstone have seen mid-tier producers take on junior partners. Reid reported active partnership discussions are already occurring.

The Investment Thesis for Troilus Gold

• Recently expanded gold-copper resource of 13 million ounces in an historic Canadian mining district
• Resource includes new high-grade zones amenable to open-pit mining
• Feasibility study on track for completion in early 2024, showing robust project economics
• Utilizing extensive existing infrastructure to control capital costs below competitors
• Steady progress on permitting, targeting mid-2023 for submission
• Advancing financing discussions for construction capital; considering strategic partners
• Management team with a track record of building mines in Canada
• Potential to become a 300,000 oz/yr gold producer in a Tier I jurisdiction