Troilus Gold (TLG) - Technical Analysis

Troilus Gold Corp. is a Canadian-based junior mining company focused on the systematic advancement and de-risking of the past-producing Troilus gold and copper mine, moving into production. The company was founded in 2017 and is headquartered in Toronto, Canada.

Merlin-Marr Johnson caught up with Blake Hylands, Vice President of Exploration, Troilus Gold. Mr. Hylands has spent the majority of his career working in gold, base metals, and iron ore exploration in Canada, and internationally. He has held technical positions for several junior mining companies, where he developed grassroots mapping and sampling programs, managed large-scale drill programs, and helped transition projects from early exploration to the resource definition stage. Mr. Hylands holds a B.Sc. in Geology from Western University in London, Ontario. 

Company Overview

Troilus Gold Corp. is a development stage resource company focused on the mineral expansion and potential mine restart of the formerly producing Troilus gold and copper mine, located within the Frotêt-Evans Greenstone Belt in Quebec. The company is listed on the Toronto Stock Exchange (TSX-V: TLG), the OTC Markets (OTCQX: CHXMF), and the Frankfurt Stock Exchange (FRA: CM5R). 

Troilus Gold has a Quebec-based, pre-development, exploration gold-copper project. The company is drilling aggressively to push the project toward the Pre-Feasibility stage. At the same time, the company is entering into another big regional program in one of the best jurisdictions in the mining world. 

Company History 

Justin Reid started working with Blake Hylands, seeking opportunities that had been capitalised. Following the sale of the Shahuindo asset in Peru, the duo approached First Quantum Minerals Ltd. in 2017 to potentially pick up the old Troilus mine. This mine was operated by Inmet Mining between 1996 and 2010. This was a bulk tonnage, lower grade, gold-copper operation. At this point, the company had entered into a 2-year option agreement that allowed it to look at the project’s economic viability. Based on historic drilling, the project was anticipated as a bulk tonnage underground project similar to the Goldex and Young Davidson projects located nearby. 

One of the reasons for choosing a 2-year option agreement was because there was an environmental liability or a bond that needed to be replaced and a $1M vote was needed before the project could be capitalised. The company needed to ensure that it could take up the liability. 

In 2018, Troilus Gold decided that the project was economically viable from an underground perspective. This led to the founding of Troilus Gold. Over the years, the company has transitioned into an open-pit story, because it was later found that a lot of material was left behind. The project was in operation in a $250 gold environment. The company has now fully moved from an underground story to an open pit story. 

The company was looking at a 1.8g/t deposit, moving closer to an 8,000t-10,000t/day operation. The operations at Goldex and Young-Davidson located down the road had similar per-day output numbers. 

The existing infrastructure and the size and orientation of the deposit made the project feasible for the company. It expanded the deposit. The company’s original drilling was conducted to demonstrate that the deposit goes deeper and is continuous at an 800m depth. By stepping away and testing new ideas, the open pit story started developing. Since then, the company has made multiple interesting discoveries. The story keeps getting bigger at the surface, moving towards a 35,000t/day operation at around 0.8g/t ore body. 

Troilus Gold did not force an open-pit story but allowed the drill bit to grow organically. Since the historic operations were conducted in a low gold price environment, there wasn’t much exploration done. This meant that the opportunity was still open for the company, and over time, it was able to outline a large portion of the deposit. 

The company started with a 1.8Moz underground deposit. Currently, it has an 8.1Moz deposit of gold equivalent ounces, where 6.5Moz of the resource is surface-focused and growing. The company is looking to publish another resource update this year. It was able to grow the resource through drill bit alone. 

According to Troilus Gold, Inmet Mining made the most of its revenue in the last 2 years of operations. This was done by feeding some of the waste piles through the mill with little to no mining. Back then, Inmet wasn’t interested in gold in Quebec. As a base metal company, it was focused on its Las Cruces asset in Spain and Cobre Panama in South Africa. Even though gold had started to pick up, Inmet realised that significant capital would be required to bring the project into the next phase. 

Similar to Troilus Gold, Inmet Mining originally focused on an underground operation. The latter had done a 450m drift, anticipating a block case scenario. However, the project’s capital requirements served as a barrier. In the end, Inmet Mining was acquired by First Quantum Minerals in 2012 in a hostile takeover. This takeover was mainly done for the Cobre Panama and Las Cruces assets, while the old Troilus mine was left untouched for a few years. At this time, Troilus Gold came in and struck a deal. 

Resource Estimates

Troilus Gold has completed a PEA (Preliminary Economic Assessment) on the Troilus Gold Project and is moving towards a PFS (Pre-Feasibility Study). The Z87 pit and the J4 pit feature 2Moz copper for a 70,000t production. This is the zone where Inmet mining was previously produced. This area was the major focus of the company’s PEA. 

However, the Southwest zone is where the company has seen a lot of growth. In the PEA, the company had 8,000m of drilling to outline 600,000oz inferred equivalent ounces in the Southwest zone. This zone is 2.5km from the 87 pit. Since then, the company has drilled back 70,000m into the Southwest zone. As a result, the company has sufficient indicated resource to fit into a reserve that was already available in the PEA. This enables the company to transition into a PFS while simultaneously working on a resource update for the new Southwest zone. 

Notably, the company started with a 600m strike length on the PEA resource. At present, it has roughly a 2km strike length of surface mineralization. This is the expansion envelope which is open in all directions. 

Project Permitting

Troilus Gold had a strong focus on understanding mineralization, which led to the new discovery. Currently, The company is looking through the Gap zone and has plans to bring it back to the mine and to continue finding deposits along the surface without any pushback. This provides a lot of optionality which can be focused on continuous project improvement. The company is looking to update the brief and reach a point where it can feed the results into the PFS. This will also help the company with the permitting process.

The company has initiated the permitting process at the Federal side. However, a Scoping Study is needed to move the permitting forward. The Scoping Study is expected to conclude by mid-2022. Following this, the company will focus on the provincial side of the permitting process. The Scoping Study will enable the company to initiate the permitting process with the Quebec government and the Federal government.

Troilus Gold anticipates that it will be permitted and ready to construct by 2024-end or early-2025. The PFS is expected to be released by mid-2022. The company plans to include the Gap Zone as part of the planned Scoping Study due to its growth potential. 

Underlying Geology

The satellite overlay images show archean defamation with a very strong north-east, south-west alignment. The images of the pit shells in the Z87 pit demonstrate sub-vertical shoots of ore mineralization. Notably, mineralization is a feature of the whole district. Within the mineralization envelope, the deposit carries higher grades with steeply plunging sub-vertical shoots.

The archean portion of the deposit is believed to be either a porphyry model or a distal VMS-type early system. The company started with a 5,000-hectare land package. At present, it has a 142,000-hectare land package in a completely under-explored greenstone belt.

This project is the northern extension of Abitibi, one of the premier mining jurisdictions in the world. The north-east and south-west features are the belt’s main thrust directions. The company has been successful in areas near those sub-vertical columns where 65-70 degree ore shoots are a part of a broad disseminated package. Here, the company has identified orogenic overprinting that remobilizes the whole system while concentrating some of it on the main north-east and south-west trends in a somewhat oblique fashion. This feature has been observed on both the regional scale and the property scale. 

The Southwest area is brand new, and the company anticipates that it will provide optionality as it moves into the engineering aspects of the project. The company’s exploration team has observed that these features are hosted in feldspar porphyries, hosted quartz veins, and quartz carbonated vein sets. These features are typically seen in greenstone environments. 

The company has found carbonate with and without tourmaline, along with high-grade gold, pyrite, and chalcopyrite that is being re-concentrated, re-mobilized, and upgraded. These features played a major role in the discovery of the Southwest zone. 

Soil geochemistry has enabled Troilus Gold to follow some of the immobile features of the deposit. Geochemically, the company has seen interesting trends with aluminium and titanium ratios. Magnetism appears to be extremely important to the broader disseminated package. The broad exploration provides the best use case for the mag (magnetic) surveys and higher-res mag surveys. 

The company is focused on finding tighter packages hosted in the vein. It is looking for brittle units that fit into the main package. This is because as these structures break, it leads to brittle fractures and openings. The company anticipates that fracturing leads to fluid deposits. Gold and copper are already moving through this system. 

It is focused on determining the type of sulphide content that goes into the chemistry and lithology of the host rocks that come in its contact. The deposit can have very high-grade gold in these units. However, sulphide content is very little as the host rock lacks the required sulphur-iron content. The identification of the high-grade rocks has been a huge exploration success for the company. 

The district’s value comes from the broad system. It is 50km-70km long and 1km wide. This region has massive early depositional events. The company has found evidence of VMS (Volcanogenic Massive Sulphides) and magmatic systems. It has identified several early events that serve as good plumbing sources for the metals. It is a lower-grade background disseminated system. 

In the Southwest zone, the company can drill a hole from top to bottom and find gold presence throughout. The grade comes from the mechanical and structural traps that allow the remineralization to concentrate. The highest-grade opportunity comes from the orogenic-type features that overprint the whole system and re-concentrate further. Following the broader structure and drilling leads to some of the later structural features that have the potential for a high-grade opportunity. In the company’s PEA, the resource has come out a little lower. The broad system comes out with a slightly lower resource due to the cut-offs. However, the company anticipates that the actual resource will be a bit higher, around 0.8g/t. 

Drill Operations

The longitudinal section westwards is the 87 and the J zone features a resource that is similar to the Southwest zone. The drilling conducted in the Southwest zone has traces that hit mineralization, continuing to the northeast and southwest. This data is based on an older image, since then, the company has stepped out even further. 

The company hasn’t cut off the resource at depth yet. The underlying structures appear to behave like panels that have been found in the footwall during drilling. The company is currently working on bringing it back to the surface. 

To develop the indicated resource, the company had to come back and drill at 50m-60m spacing. Currently, the drilling operations are equally split between expansion and infill. The company has continued to step out in the Southwest zone for its upcoming PFS. It started with a 600m strike length on the Southwest zone for a 600,000oz inferred resource. Over time, the company realised that the strike length is actually over 2km. The company has identified continuous mineralization at surface through drilling operations. 

Troilus Gold’s focus was to step out slowly in smaller increments to see how the system was building. In essence, the company has been drilling the resource into the indicated category as it steps out. 

The Southwest zone is similar to the Z87 pit and the Z pit. The similarities are structural in nature, and the company anticipates that the grade will come in at a 1g mark. Mining these regions at 1g, the company was able to achieve 110% reconciliation of the mill. It needs to drill off on the structural system that pinches and swells. It is working on drilling the later oblique structures to develop an outline. 

Once the company enters the mining scenario, these areas will be a point of focus early in the mine life. The company plans to feed the higher grade material earlier into the mill and pay off the project quicker. The key component of the company’s drill operations is based on near-surface, good-grade drilling. 

Originally, the company was looking to start drill operations at the 87 zone and the J zone. Back then, it hadn’t discovered the Southwest zone. However, since the discovery, the company is looking to start drilling at the Southwest zone as it’s at surface. Since there isn’t a big push back, the economics work in the company’s favour. At the south end of the J7 pit, the material is still present. The company does not need pushback and early capital to retrieve the material. The PFS is expected to conclude by June-July 2022. 

Troilus Gold is expecting a data cut-off sometime next week. The company has benefitted from shorter assay turnaround times. While a lot of companies have a 90-day turnaround, the company is running at 30-50 days. It is prioritising drilling while the ground is frozen as it's preferable for some of the planned drill areas. The company plans to drill for 9 more days before the data cut off. Following this, the data would be fed into the PFS.

Following the release of the last set of drill data, the company plans to work on the modelling and visual estimation process. This will allow the company to put together the resource update, resource level, and the PFS. The company has attained excellent drill results in recent times with over 90% gold, over 90% copper and almost 90% silver. Notably, these results are much higher than the results from the PEA. This, in turn, will have a positive impact on the company’s pilot plant scale work. 

The company has plans to continue drilling. It currently has 5 drill rigs employed at the Southwest zone as it pushes for the PFS. The company is taking a conservative drilling approach rather than an aggressive one. 

The Troilus Gold Project is a large, robust mineral endowment with a 2.5km regional opportunity in the Gap Zone. The Southwest zone continues to expand. Once the PFS is complete, the company is looking to demonstrate a higher growth prospect along with a blue sky potential. It anticipates that this is a 50-year project. 

Troilus Gold is focusing on the regional exploration of the project. The project spans a 142,000 hectares area, which is twice the size of Toronto. This land package was acquired by the company in 2020. Over time, it discovered the Southwest zone and realised the opportunity’s district-scale potential. As a result, the company sought to acquire as much property as possible. There aren’t many companies around the project. Sumitomo has a bit of property around the Troilus Gold Project, in the Regnault Palador area. 

The Cressida vein is 20km along strike length of the J zone and the 87 zone. The rocks in all three zones are strikingly identical in geology. The company has worked on the Cressida vein to demonstrate its growth potential. This vein is on the road that provides access to the site and is very important for the company. 

Area number 3 is the test chart free gold area. Here, the company had a quartz vein hosted channel sample that ran over 200g gold, over 2,000g silver, and 6% copper. This is an area of interest as it has a massive scale. The area shares similar features to the Northeast and Southwest zones in terms of overall strike and trend. Area number 3 has an east-west higher grade overprinted trend as well. Upon sampling, the company has found parallel higher-grade structures. These structures are shear packages that are expected to cut the main foliation. 

The area features broad mineralization that is bound on both sides by intrusive amphibolite and granodiorite. These brittle features are relaxed and open. All these features are cross-cut by higher-grade overprinting. These characteristics and features were anticipated by the company from the high-grade deposits. 

Surveys Used

Troilus Gold is primarily using high-resolution magnetic surveys that have been excellent for the underlying structure. The company is a strong believer in prospecting and testing everything in order to make new discoveries. However, during covid, the company was unable to run magnetic surveys in the area. Instead, the team conducted an aerial survey around the property, looking for outcrops. Once the outcrops were identified, the company sampled the areas. As per the company, Troilus is still a discovery. 

Team Building

Troilus Gold has a strong, experienced team. It has formed an association with Western University. The company is collaborating with the University to work on the project’s scientific aspects. Furthermore, the company is hiring Master's students from the University that are working on different projects. This allows the students to build on each other’s projects from the years before. 

In the mining industry, starting salaries for graduate geologists range between CAD$90,000 and CAD$100,000. Although hiring and retaining top talent costs more, it enables the company to explore novel ideas such as orogenic overcrop. It has also allowed the company to carry out fluid inclusion studies, petrography, and geochemical work. The science-backed ideas help in advancing the project. 

Targets 2022 and Beyond

Last summer, Troilus Gold drilled 1,000m at the Testard area. Drilling was conducted by way of a fly rig. The company recently published a press release and is expecting the drill results in the coming weeks. The channel sample demonstrated interesting results and led to a new discovery in the area. 

Freegold has become an obvious drill target, especially on the east-west trends. This year, the company is planning between 5,000m-10,000m of drilling in the area. In case of early success, the company plans to conduct additional drilling, as it will help advance the project quicker. 

Although the company is set on the 5,000m-10,000m drill target at the Testard area. It has the budget to carry out additional drilling if required. The company has significant capital by way of flow-through funds. Notably, the Gap Zone drilling is excluded from this program and is included in the regional exploration instead. The Freegold area is a multi-kilometer target where the company is looking to make additional discoveries. The company is open to allocating additional drill meterage to this area. 

According to Troilus Gold, this project is still a developing story. Even after the PFS, the project continues to grow and the company continues to make new discoveries. It isn’t focused on finding more ounces but on finding higher-grade ounces. 

It currently has a 0.7g/t grade. If the company is successful in bringing the grade to 0.8g/t, it will be an immediate 12%-14% value increase for the entire project. The company found material at surface, which has provided the option to feed the higher grade early. It seeks to find the near-surface targets in the early 4-5 years of operation. This, in turn, would bring the grade up. Increasing the grade is highly achievable, the company would just need to carry out additional work. 

Troilus Gold currently has an 8Moz resource, with an additional 1Moz expected through recent drilling and exploration. In order to be a 200,000oz-250,000oz/year gold producer, the company would need to find an additional 1Moz-1.5Moz higher grade resource at surface. This would provide 5-7 years of high-grade output. This would allow the company to pay for the project. Following this, the company will reassess its position based on the gold and copper market prices.

To find out more, go to the Troilus Gold website