Troilus revisits ‘orphaned’ gold-copper mine in Abitibi

VANCOUVER — Troilus Gold (TSXV: TLG) wants to stage a revival at the dormant Troilus gold-copper mine, 175 km north of Chibougamau, Que., where it holds a two-year option agreement with First Quantum Minerals (TSX: FM; NYSE: FM) signed in 2016.

Troilus is a new venture from the core team at Sulliden Mining, which merged with Rio Alto Mining in a $300-million deal in mid-2014.

Troilus CEO Justin Reid and president Paul Pint kept the property option in Sulliden Mining Capital (TSX: SMC) for nearly two years so they could bring it back to  the market.

The company can buy a 100% interest in the project subject to a net smelter return royalty that slides between 1.5% and 2.5%, depending on the gold price. To exercise the option, Troilus must spend at least $1 million in engineering and technical studies and make three $100,000 cash payments.

Troilus Gold director and CEO Justin Reid. Credit: Deep Yellow Limited.

“We kept our team together and have been waiting for this opportunity. We’ve been essentially operating as a publicly traded mining fund looking for undervalued precious metal assets that are resource backed,” Reid says during an interview.

“We wanted opportunities that could be re-engineered and recapitalized, and then relaunched. Troilus has been on our radar for around 10 years because we like Canadian gold and we love Quebec as a jurisdiction. We thought our technical expertise could really give new life to an orphaned asset.”

Inmet Mining ran an open-pit operation at Troilus between 1996 and 2009, mining over 2 million oz. gold and nearly 70,000 tonnes copper.

The shuttered site is undergoing remediation and environmental monitoring, while the historical 20,000-tonne-per-day mill was sold and shipped to Mexico in late 2010.

Meanwhile, Inmet was taken out in a $5.1-billion hostile takeover by First Quantum nearly five years ago.

The remote property sits along the eastern segment of the Frotêt-Evans greenstone belt in Quebec’s Abitibi region. It is underlain by a sequence of intermediate to mafic flows and breccia, locally with felsic volcanic rocks, and comagmatic gabbro and ultramafic sills.

Gold mineralization is hosted in a multi-phase gabbro to diorite intrusion and mostly consists of disseminated fine-grained chalcopyrite, pyrite and pyrrhotite, and streaks and stringers along the foliation and fractures.

Checking out core box stacks at the past-producing Troilus gold-copper mine, 650 km north of Montreal, Quebec. Credit: Troilus Gold.

Roscoe Postle Associates completed an updated resource on the historical Z87, J4 and J5 zones in late 2017, which includes open-pit and underground material.

Troilus now has indicated resources of 44 million tonnes grading 1.27 grams gold and 0.12% copper for 1.8 million contained oz. gold and 116.5 million contained lb. copper. Inferred resources total 18.7 million tonnes at 1.03 grams gold and 0.084% copper for 622,000 contained oz. gold and 34.8 million contained lb. copper.

Drill core from the Troilus gold project in Quebec. Credit: Troilus Gold.

The company is contemplating a smaller operation that may run at 8,600 tonnes per day and could produce between 100,000 and 150,000 equivalent oz. gold per year. It would leverage mostly underground resource material, where Inmet historically reported 82% plant recoveries for gold and 90% for copper via a gravimetric and flotation flow sheet.

“We’ve used a number of lower-grade, bulk-tonnage underground deposits as our analogs,” Reid says. “We’re very close with Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and we see an almost identical comparison to their Goldex operation in terms of grade, mining method and tenor of mineralization. We’re largely institutionally held and our plan is very simple. So we’re mobilizing the drills in the next couple of weeks for an infill program that we hope can essentially double the existing gold-equivalent resources.”

Looking out towards the J4 open pit and waste pile at the Troilus gold-copper project in Quebec. Credit: Troilus Gold.

The company has outlined a 30,000-metre drill program focused on infilling and upgrading existing resources.

It also plans to analyze down-dip extension potential and follow up on historical open-pit targets across the 47 sq. km property package. Reid said there are “easily 20 to 30 targets” at Troilus with “potentially economic drill intercepts” that could see near-term exploration.

In November, Troilus closed a $23-million, bought-deal private placement wherein it sold 14 million subscription receipts priced at $1.64 each. National Bank Financial acted as sole bookrunner, while Haywood Securities and PI Financial served as co-lead underwriters. Sulliden Mining Capital has a 40% equity stake.

“It’s really a different gold-price environment. I like to use the analogy of the race track when talking about the work that has been done on the project. When we look at the infrastructure, jurisdiction and resources, it’s not hard for me to say we’re halfway around the track compared to many of our peers,” Reid says.

“We’re also looking at it from a regional standpoint. If you look at the northern Abitibi it’s become a very busy neighbourhood. You’re seeing a lot of companies active up there because it’s really an under-explored region relative to the southern belt. We believe it’s the next big exploration district in Quebec.”

Troilus began trading on the TSX Venture Exchange on Jan. 3, with 41.5 million shares outstanding. The company closed at $1.94 per share at press time for an $80.5-million market capitalization and reported $20 million in cash.