Troilus Gold (TSX: TLG) has inked preliminary deals for US$1 billion in loan guarantees from Germany, Sweden and Finland to help restart a former copper and gold mine in Quebec.
Export credit agencies EKN for Sweden, Finerva for Finland, and Euler Hermes Aktiengesellschaft for Germany issued letters of intent in November. The amounts were US$200 million, $300 million and US$500 million, respectively.
“The partnerships with the Finnish, Swedish and German export credit agencies underscore the strength of the project’s fundamentals and the confidence these global institutions have in Troilus,” CEO Justin Reid said in a Nov. 19 release.
The company’s focus is to advance its main gold-copper asset, the former Troilus mine in the Val-d’Or district of Quebec. It mined 2 million oz. of gold and almost 70,000 tonnes of copper between 1996 and 2010 and could once again become one of Canada’s largest producers.
Capex covered
Initial development costs for the project to restart the former Troilus mine are estimated at just over US$1 billion, according to a feasibility study released in May. It would be a 22-year open-pit operation with a processing capacity of 50,000 tonnes per day.
The mine is expected to produce an average of 303,000 gold-equivalent ounces (GEOs) per year, or 135.4 million lb. of copper-equivalent annually. Peak production would reach 536,400 GEOs or 237.6 million lb. of copper-equivalent per year.
The German loan is contingent upon Troilus signing an offtake agreement with Hamburg copper smelter Aurubis. The offtake term would be up to 15 years and is subject to standard due diligence including economic, technical, environmental and social assessments.
Finnvera’s support is contingent on strategic partnerships with an unnamed Finnish equipment provider and Sweden’s Boliden, one of Europe’s largest smelting companies. The equipment collaboration is valued at $50 million to $100 million while an anticipated 10-year copper-gold concentrate offtake agreement with Boliden is estimated at $200 million annually.
Sweden’s EKN is providing cover of about US$200 million or up to a quarter of the offtake agreement with Boliden under the agency’s Swedish Raw Material Guarantee.
Infrastructure
The property has well established infrastructure valued at about US$500 million, Troilus said. This includes an extensive network of all-weather access roads, a 50MW substation and over 60 km of power lines maintained by Hydro-Quebec, a permitted tailings facility, and operating water treatment plants.
The project has an after-tax net present value (at a 5% discount) of $884.5 million and an internal rate of return of 14% under the base case scenario, according to the study.
Shares of Troilus Gold traded at 27¢ apiece in Toronto on Nov. 19 for a market capitalization of $98 million.
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