Troilus Gold (TLG) - Plan to Find Grade, Not More Ounces

Troilus Gold Corp. is a junior mining company focused on the advancement of its Troilus Gold project located northeast of the Val-d’Or mining district of Northern Quebec. The project holds a combined mineral resource estimate of approximately 8.1 million ounces of gold equivalent.

The company announced on the 16^th of November 2022, that it had entered into a definitive sales agreement with a subsidiary of Sayona Mining Ltd. for the sale of 1,824 claims totalling a land position of approximately 985 km². The package of claims does not include any claims of Troilus Gold Corp. on which the company holds a NI 43-101 compliant mineral resource estimate.  The sales agreement consists of the issuing of approximately 184 million shares of Sayona Mining Ltd. to Troilus Gold Corp. representing an aggregate amount of CAD$ 40 million, as well as the granting of a 2% net smelter return (NSR) royalty on all mineral products from the transferred claims. Sayona Mining Ltd. will also subscribe to CAD$ 4.8 million worth of shares of Troilus Gold Corp. The company announced the closure of the sales agreement on the 17^th of November 2022.

Troilus Gold Corp. at the start of November 2022 released partial assay results from an 11,000 m exploration drilling program conducted at the connector zone of its Troilus Gold Mine. The highlights of the partial assay results include a mineralisation interval of 5.19 g/t of AuEq over 21 m in a larger 138 m mineralisation interval at an average grade of 1.75 g/t AuEq.

Troilus Gold Corp. plans to continue its exploration drilling initiatives at both its X22 and Connector zones in 2023. The company will allocate 3 to 4 drilling rigs towards the areas, with the aim being to expand the size of the deposits. The company is focused on expanding the higher-grade mineralisation zones of the Troilus Gold project, which will mitigate the effect of a high-inflationary environment on the project’s economics.

The company is well financed to meet its milestones for 2023, with CAD$ 65 million in cash and a CAD$ 120 million market cap. The fruition of the planned feasibility study will amount to approximately CAD$ 15 million with the planned drilling initiatives and is scheduled to be published in H2 2023.

Sayona Mining Ltd. sale

The company announced on the 16^th of November 2022, that it had entered into a definitive sales agreement with a subsidiary of Sayona Mining Ltd. for the sale of 1,824 claims totalling a land position of approximately 985 km². The package of claims does not include any claims of Troilus Gold Corp. on which the company holds a NI 43-101 compliant mineral resource estimate. 

Justin Reid, the CEO of Troilus Gold Corp. explains that the rationale regarding the sale of the land package was not only capital but also to release a non-core position, which did not add immediate value to the company.

“All of the targets that I've been talking about to our shareholders and to the market, over the last 3 years, we have retained. Basically, what we've done is the first pass on this big land position, we've identified the key gold and copper properties that we want to keep, which include Testard, Pallador and Cressida, 400 km² to boot, which is a huge ground package on the main trend. The other ground was essentially non-core, still prospective but non-core, and we couldn't afford to spend CAD$ 10 million to CAD$ 12 million per year on regional exploration, having a portfolio the size of most majors.”

The sales agreement consists of the issuing of approximately 184 million shares of Sayona Mining Ltd. to Troilus Gold Corp. representing an aggregate amount of CAD$ 40 million, as well as the granting of a 2% net smelter return (NSR) royalty on all mineral products from the transferred claims. Sayona Mining Ltd. will also subscribe to CAD$ 4.8 million worth of shares of Troilus Gold Corp. The company announced the closure of the sales agreement on the 17^th of November 2022. Reid explains:

“For the last 10 months, we've been working very closely with Sayona Lithium, an AUD$ 3 billion Australian developer and a producer in 100 days. At the end of our road, or at the beginning of theirs, is their Moblan deposit, which is a spectacular spodumene intrusive that they're aggressively advancing. They needed additional ground. They saw an opportunity for exploration which wasn't core to us, and we cut a CAD$ 50 million deal. It was in two parts. It was a private placement, which collectively we have done at about a 35% premium to market. They are now our largest shareholder at 9.3%, the same size as their partners, Investissement Quebec. We sold the ground for CAD$ 40 million in Sayona stock”

Reid explains that the average trading volume of Sayona Mining Ltd. shares on the ASX is approximately AUD$ 90 million per day. The advantage of holding a stock which is readily traded is the optionality it provides, should Troilus Gold Corp. ever need liquidity.

“Sayona trades about AUD$ 90 million per day on the ASX. It is liquid. It is light stock. We are not sellers today, certainly, we're huge supporters of them, but it provides that liquidity should we need it moving forward. Now we have a balance sheet that's CAD$ 65 million off of a CAD$ 110 million to CAD$ 120 million market cap company. We are in unbelievable shape for the next 3 years.”

The sale to Sayona Mining Ltd. has given Troilus Gold corp. optionality, without diluting its shareholders, which Reid explains has been met with little to no criticism.

“We're capital spenders right now, and from our perspective, to sell non-core assets that we were not going to work on and bring capital in so that our shareholders do not have to be diluted. We're not a major company, we are focusing on the development of the Troilus operation. We have some great exploration peripheral to it that we will continue with, but our biggest shareholders, our top 20, do not want to hear that I'm spending CAD$ 10 million to CAD$ 12 million flying airborne surveys 1,000 km away from our mine. From that standpoint, it was about the allocation of capital and the prudent use of capital. I have a very strong feeling that if we want to get that ground back at certain times, we will be able to go get it. We're working very closely with Sayona.”

Moving past PFS to Feasibility Study

The Troilus Gold project is a 435 km² land package which holds 4.96 million ounces of gold equivalent (AuEq) in the indicated category and 3.15 million ounces of AuEq in the inferred category. The project’s X22 and Connector zones both host gold mineralisation close to the surface, with the X22 zone showing 4.38 g/t of AuEq over 46 m and the Connector zone showing 1.75 g/t of AuEq over 138 m in past exploration. Reid explains that the company’s initial intent was to publish a pre-feasibility study of the Troilus Gold project, but upon discovering the two zones, the company decided to forego the pre-feasibility study and move directly into the creation of a feasibility study for the project.

“The decision we made to go straight to the feasibility study was predicated on the identification of 2 brand new zones: X22 and the Connector Zone. These are both right at the main deposits. They are at the surface, so readily accessible and significantly higher grade. At the Connector Zone, I won't go through it all as it is in the press releases, but we had 46 m of 4.4%. We had 101 m at 1.3 g, and 22 m at 3 g. This X22 zone is right off the main deposit. The road between the two pits actually goes, it comes to the surface, and we've drilled it off over a 300 m strike length. We are now extending it over 1 km. So, the impact is very simple: in the first 2-3 years, you put 1.2 g, 1.3 g, 1.5 g or higher through the mill rather than 1 g, that's 50% more revenue if you think of it that way. It is shallow, easily accessible.”

The creation of a pre-feasibility study would’ve required the allocation of capital from the company, whilst it would also have needed to allocate its capital towards exploration drilling initiatives. The conclusion of the exploration drilling would then have led to the creation of a feasibility study, ultimately costing more money and delaying the end result by a minimum of three months.

“We need to drill these out for 30,000 m, that's 4-5 months of additional work and probably CAD$ 5 million more money. We can do that, and we can put our pre-feasibility out in the middle of next year, and that's just pushed everything out by a year. The pre-feasibility work today is incorrect because it doesn't include these zones. We already know our metallurgical, geotech and tailings work is done at a feasibility level, so let's just go straight to feasibility. Let's save 3 months on our ultimate timeline. This is accretive to time when you think about ultimate production, and let's save CAD$ 5 million to CAD$ 6 million and include these high-grade discoveries, which are going to add ounces. Troilus doesn't need more ounces. Our new resource, when it comes out, will be a lot more ounces. We need better ounces.”

Regional Exploration and future initiatives

Troilus Gold Corp. plans to continue its exploration drilling initiatives at both the X22 and Connector zones in 2023. The company will allocate 3 to 4 drilling rigs towards the areas, with the aim being to expand the size of the deposits.

“We are finishing up our regional drilling right now. We've drilled at Testard, we've drilled at Pallador, and all the drills are back at the Troilus mine site. We will be drilling through December 19^th. That's when the camp shuts down for Christmas, and we will fire back up on January 10^th, with 3-4 drills.”

The company is focused on expanding the higher-grade mineralisation zones of the Troilus Gold project, which will mitigate the effect of a high-inflationary environment on the project’s economics.

The company is well financed to meet its milestones for 2023, with CAD$ 65 million in cash and a CAD$ 120 million market cap. The fruition of the planned feasibility study will amount to approximately CAD$ 15 million with the planned drilling initiatives and is scheduled to be published in H2 2023.

Reid notes that thanks to the company’s financial position it will be able to reach its milestones for the next three years, and weather any storm in the commodities market.

“This week, unlike everybody else who is waiting for the window of equity financing to open so they can all run through the window as fast as they can and dilute everybody down, we just put essentially non-dilutive financing, 3 years of runway in the bank for our team and our shareholders. We can pretty much weather any storm now and move forward aggressively and to plan. You don't have to force anything through to get news to the market because you have to raise money. We can deliver the project without a lot of stress.”

To find out more, go to the Troilus Gold website