Interview with Justin Reid, CEO of Troilus Gold Corp.

Our previous interview: https://www.cruxinvestor.com/posts/troilus-gold-tlg-advancing-gold-project-in-quebec-with-strong-financial-backing-3233

Recording date: 17th October 2023

Troilus Gold has announced a large increase to the mineral resource estimate for its past-producing gold-copper mine in Quebec. The new resource totals 13 million ounces of gold equivalent, with 11.2 million ounces in the indicated category. This represents substantial growth compared to the last estimate in 2020, thanks to extensive drilling by Troilus over the past four years.

According to CEO Justin Reid, the average grade stands at a respectable 0.69 g/t gold equivalent for indicated material. 99% of the resource is contained within open pit shells, given the project’s Brownfield location. This bodes well for lower-cost mining scenarios as Troilus advances feasibility studies and permitting.

New High-Grade Zones Discovered
Several new zones discovered in the past year have driven the resource expansion. Notably, the X22 zone uncovered 2.5km from the main orebody has grown rapidly from 600,000 ounces to over 2 million ounces. The first holes hit exceptional high-grade intercepts up to 30 meters of 4.3 g/t gold from surface. While most of Troilus’ mineralization follows a northeast-southwest trend, X22 sits along a cross-cutting structural zone. More exploration around X22 is warranted as Troilus looks to add resources in the future.

Incorporating these new high-grade zones has increased engineering complexity. As lower-grade material is encompassed in larger pit shells, the average grade drops below what Troilus initially envisioned for underground mining. For example, the X22-J zone-Connector zone will likely merge into one huge 3 by 1.5km pit. Despite the challenges, Troilus has completed sufficient metallurgy and geotechnics to incorporate the new zones into its upcoming feasibility study.

Feasibility Study On Track for Early 2023 Release
According to Reid, Troilus remains on schedule to publish the feasibility study results early next year. The base case scenarios examine a 35,000 tonne per day operation utilizing as much existing infrastructure as possible. This includes roads, power lines, tailings facilities and other items inherited from the past producing mine.

Leveraging this infrastructure is expected to keep capital costs below comparable projects. Reid suggests the existing infrastructure carries a replacement value around $500 million. Adding in typical industry cost inflation, he estimates the initial capital cost for Troilus will range from $600-700 million. Accounting for the infrastructure, Reid sees this as effectively a $1.2 billion project. By comparison, Equinox Gold’s Greenstone project of similar scale in Ontario is projected to cost over $1 billion.

Attractive Economics from Gold and Copper Production
The study will assess economics from both gold and copper recovery. Copper is expected to contribute 15-20% of revenue, although proportions vary by zone mined. The copper concentrate will assay approximately 17% copper, 140 g/t gold and 250 g/t silver. Reid anticipates strong demand and margins from concentrate sales, given declining global inventories. Troilus also benefits from acquiring a prior 2.5% royalty from First Quantum in 2020, further boosting potential profits.

Permitting Tracking Toward Mid-2023 Submission
On permitting, Troilus has already filed detailed project descriptions with regulators and completed substantial baseline work. The goal is to submit the full environmental impact assessment by mid-2024. Reid expects provincial permits first, followed by federal approval. He notes permitting timelines in Canada is difficult to predict but sees a clear path for Troilus as a Brownfield project with consistent community support.

Financing and Partnerships Under Discussion
As the technical work advances, Troilus has pivoted focus to financing options. Third parties are evaluating the resource as part of due diligence for potential debt solutions. Off-take agreements are under discussion for the copper concentrate output. While some early interest from royalty financiers exists, Reid views this as a last resort given the strong project economics.

Troilus hopes to announce a complete financing package in the first half of 2024, after the feasibility study and permitting milestones are met. A project of this scale, at over $1 billion, may require a producing partner to co-develop the asset. Reid reports active partnership talks are already underway, with deals in place at other projects like IAMGOLD’s Cote Lake and Equinox’s Greenstone. With Reid’s proven mine building experience, Troilus appears well-positioned to advance this emerging district-scale opportunity in mining friendly Quebec.
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View Troilus Gold's company profile: https://www.cruxinvestor.com/companies/troilus-gold

Troilus Gold (TLG) - Charging Ahead With Resource Expansion and Restart