Troilus shifts to feasibility mode after high-grade Quebec discovery

North-central Quebec-focused Troilus Gold (TSX: TLG; US-OTCQX: CHXMF) has announced the discovery of a new higher-grade gold zone to the northern and southern extents of Zone 87 (Z87), the larger of two formerly mined pits.

To better define this potentially significant zone, the company decided to bypass the planned pre-feasibility study and shift its engineering focus to delivering a definitive feasibility study by the second half of 2023.

The new shallow and high-grade panel of mineralization has been defined at the border of the Z87 PEA pit shell, which was not modelled in the August 2020 PEA, nor previously considered part of the pre-feasibility engineering work.

Of the four highlight intercepts reported, two are near the surface, and two are further at depth. Near-surface holes 87-411 and 87-410 returned 2.52 grams of gold-equivalent per tonne over 25 metres, starting 54 metres downhole, including 12.36 grams of gold-equivalent per tonne over 3 metres and 3.15 grams per tonne over 6 metres, as well as 2.04 grams gold-equivalent per tonne over 17 metres, starting from 22 metres depth, including 4.95 grams per tonne over 5 metres.

At depth, hole 87-417 cut the best intercept drilled at the project with 154.27 grams gold-equivalent over 1 metre, within a larger 4.38 grams per tonne over 46 metres. Hole 87-416 intersected 1.28 grams per tonne over 61.6 metres, confirming consistent mineralization at depth beyond the PEA shells.

This new panel west of Z87 has thus far been identified over a 300-metre strike length and remains open at depth and towards the Gap Zone.

The new shallow and high-grade panel of mineralization has been defined at the border of the Z87 PEA pit shell. Credit: Troilus Gold.

The latest batch of assay results is part of the ongoing 11,000-metre drill program at its namesake brownfields project.

Laurentian Bank Securities views Troilus’ announcement in a positive light.

“Although some investors may see the decision to bypass the release of the PFS as a cause for concern, we agree with TLG’s view that the new panel of mineralization intercepted needs to be better defined as it could have a material positive impact on the project economics,” the bank’s Equity Research analyst, Jacques Wortman, wrote in a note to clients.

“With the additional time it will take to define the panel and drill other targets, TLG will continue to advance other project components to feasibility study levels, including metallurgy, engineering, and the environmental and social impact assessment (including water management). Management has indicated that the decision to move now to feasibility level study work is neutral to the overall project timeline,” according to Wortman.

The analyst maintains a ‘buy’ rating on the equity with a target price of $2.50. Troilus shares opened at a 12-month low on Monday at 35¢ apiece, adding a cent or 2.86% in the early afternoon session. It has a market cap of $75.8 million.