From 1996-2010 the Troilus mine produced gold and copper. What was the appeal of this brownfield opportunity for Troilus Gold Corp.?
Troilus produced 2 million ounces of gold and 70,000 tons of copper during those 14 years. However, the corporate objectives of Inmet, who operated the mine during that period, were focused elsewhere. They were a global base metal company building Las Cruces in Spain. They also found and were developing Cobre Panama, which is now the sixth largest copper mine in the world. Troilus was a low grade, bulk tonnage gold deposit in Canada in a weak gold market. It was not a corporate priority for them, so when they were taken over by First Quantum, the rationale behind that was Cobre Panama. As a result, they shut the mine down. The reserve was exhausted, it was an undercapitalized mine, and most importantly it had not been explored at all for 25 years. We saw this as an opportunity to acquire a past producing mine that, over its life, had seen very little expansionary or exploration capital put into it, not because it was not a good asset, but because corporate priorities were elsewhere. Troilus took over in 2017 and since then we have put substantial money into the ground and significantly increased the resource giving the project a new life.
Can you speak to the results of your PEA? At what price are your assets able to produce economically viable gold?
We completed our PEA at US$1,475 gold, showing a 22 year mine life, producing 250,000 ounces of gold per year for at least the first 14 years via open pit. We produce gold at all in sustaining costs of about US$850 an ounce, which at those commodity prices gives you almost a US$600 million NPV after tax, and about a 23% after tax IRR. If you use today's prices that is closer to a billion dollar NPV and almost a 40% IRR. Since we put out the PEA we bought back our royalty from First Quantum, which was a 2.5% royalty, so that adds an additional US$100 million dollars to that value. On our base case assumptions this is an asset valued anywhere between a US$600 million to a billion dollars.
How would you assess the prospectivity of the Frotet-Evans belt, and is the mining world now waking up to the potential of the area?
300 km to the south and to the west of Troilus is the Abitibi, one of the most prolific gold belts in the history of the world. As you move north, the Frotet-Evans belt generally is the same greenstone belt, the same age, and same metamorphic grade. However, the difference is that where the Abitibi is exposed at surface, while we are buried underneath 10 to 15 meters of glacial till. Historically, the majority of exploration in Northern Québec has been overwhelmingly focused on rocks that you can see, and the Frotet-Evans belt was considered more of a base metal belt than a gold belt. It was not until the last 12-15 years that any kind of modern exploration techniques have been applied to this belt, and it was not until TLG took over the Troilus deposit that significant results have been found in the belt. It is a new belt in an old district.
What are the characteristics that distinguish the Troilus Gold project from others in the province?
Our scale is the first attribute that pops out. We are looking at a large, structurally controlled polymetallic belt, where we are seeing multiple generations of mineralization. This is indicative of a very large system. The fact that it is structurally controlled also gives us a focus for our exploration, which has enabled us to add 6.5 million ounces in the last two and a half years at Troilus. We are now sitting with a resource across all categories of 8.1 million ounces equivalent, making it one of the largest developing gold assets in Canada.