TROILUS PEA CONFERENCE CALL TO BE HELD SEPT. 1, 2020 @9:00 AM EST (details below)
August 31, 2020, Toronto, Ontario – Troilus Gold Corp. (TSX: TLG; OTCQB: CHXMF) (“Troilus” or the “Company”) is pleased to announce the positive results of a Preliminary Economic Assessment (“PEA”) completed on its 100%-owned Troilus Gold Project (the “Project”) located in Quebec, Canada. The PEA supports a combined open pit/underground mining scenario with low initial capital costs and high rate of return for a 35,000 tonne per day (“tpd”) operation over a 22-year mine life.
Highlights include (all results are reported in U.S. Dollars*):
*Assuming a US$:C$ exchange of $0.74. All figures reported in US$ unless stated otherwise
Justin Reid, CEO of Troilus Gold, commented “The entire Troilus team is pleased to present the results of our PEA, clearly demonstrating the potential for our project to become a major contributor as a large North American gold producer. The PEA supports: a project with production spanning 22 years, robust potential economics at discounted and current gold prices, low CAPEX, low capital intensity, and a rapid payback. The first 14 years will target production in excess of 246,000 ounces gold per year peaking at in excess of 300,000 ounces in Year 5. The Troilus Geological team has demonstrated the ability to identify an abundance of untested targets and has a track record of adding significant ounces over a very short period of time. We believe the Troilus property has the potential to extend the mine life beyond the projected 22 years presented in the PEA and provide the opportunity to expand the scale in the future by continuing to seek increases to the mineral resource estimate with ongoing exploration and drilling. Our goal is to make this a cornerstone mining Project within both the Quebec and Canadian Gold landscapes.”
“We believe the Project provides a strong foundation for building and growing the company in a mining friendly jurisdiction. With a strong treasury to support next steps, we will now be commencing pre-feasibility work and working towards finalization of an Environmental Impact Study for the Project while continuing to explore the geological potential of the 107,000-hectare Troilus property. We look forward to working with our partners in the Eeyou Istchee James Bay region including the Cree Nation of Mistissini, the Cree Nation Government, the local communities of Chibougamau and Chapais, and with the support of the Quebec and federal governments, to advance the Troilus Project.”
Financial Analysis
At a Base Case US$1,475 per ounce gold price and a US$:C$ exchange of $0.74, the Project generates an after-tax Net Present Value (NPV) of US$576M, at a 5% discount rate and an Internal Rate of Return (“IRR”) of 22.9%. Payback on initial capital is 4 years. Before taxes, NPV at a 5% discount rate is US$971M, IRR is 29.6% and payback is 3.7 years.
Table 1: Summary of Troilus Gold Economic Results by Gold Price (US$)
The Project generates cumulative cash flow of US$1.27 billion on a post-tax basis and US$2.04 billion pre-tax, at a Base Case of US$1,475 per ounce gold price based on a throughput of 35,000 tpd over 22 years. The PEA assumes an open pit operation for the first fourteen years with the underground operation coming online starting in year 8.
The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Figure 1: Post-Tax Cash Flow and Cumulative Cash Flow (US$)
Capital and Operating Costs The PEA capital and operating cost estimates for the Troilus Gold Project are summarized below. The Initial CAPEX (net of existing infrastructure) is US$333 million and Sustaining CAPEX over the life of the mine is an additional US$506 million. The underground mine will require US$240 million of initial underground capital in years 6 to 8 and US$175 million in sustaining capital to maintain the underground operation. The underground will start development with first mill feed projected to come online in Year 8. All in Sustaining Cost (“AISC”) is US$1,051 per ounce Au.
Table 2: Troilus Project Capital Expenditure Estimates Breakdown (US$)
*net of existing infrastructure (access road, power line, substation, tailings facility, water treatment plant, site roads)
Table 3: Summary of Troilus Gold Project Operating Cost Estimates (US$)
Projected gold production averages 220,000 oz per year over the first 5 years, 246,000 oz per year for the first 14 years and 98,000 from year 15 onwards. Projected payable Gold is 3.8 million ounces, payable Copper 265 million lbs and payable Silver 1.5 million ounces over the 22-year mine life.
Figure 2: Production Profile – Gold, Silver and Copper*
*Gold and Silver in Ounces (left axis), Copper in Pounds (right axis)
Mining The PEA considers an initial open pit mining using a 100% owner operated equipment fleet including 28- 181 tonne trucks, electric hydraulic shovels, wheel loaders and drills. The open pit will overlap mill feed production with the underground mine starting in year 8. The open pit will be complete in Year 14 and the underground mine will continue production until Year 22. The mine has been designed to deliver an initial 12.6 million tonnes per year (35,000 tonnes per day) of mill feed. The PEA contemplates a mine that will extract mill feed over a 22?year period not including 12 months of pre-production stripping. The PEA delivers 192.5 million tonnes with average head grades of 0.71 gpt gold, 0.08% copper and 0.97 gpt silver. The process plant is expected to have three months of commissioning in the first year of production.
The project will mine three areas: 87 Zone, J Zone and the new Southwest (SW) Zone. The 87 Zone will have a single-phase open pit followed by underground mining. The J Zone has been designed with 3 phases of open pit only for this study. The SW Zone design is comprised of 2 open pit phases. Mining commences in the 87 Zone pit and SW Zone pit areas in the pre-production period. The J Zone pit area starts production in Year 2. The 87 Zone pit will be complete in Year 6 and the underground mine will continue beneath the open pit from that point onwards. The SW Zone pit will be finished in Year 12. The J Zone pit will finish in Year 14. Underground mining finishes in Year 22. Waste from the open pits will be backfilled in the 87 Zone pit once open pit mining is complete. This provides fill for the underground and short waste haulage for the J Zone pit phases, reducing the overall size of the waste storage facilities.
The average strip ratio for the open pit life of the mine is estimated at 3.9:1. Material movement averages 71 million tonnes (feed and waste) in the first 5 years with the peak at 74 million tonnes in Year 1. The open pit will provide 150.1 million tonnes of feed to the process plant for the first 14 years of the project. Open pit bench heights of 10 metres will be mined and ore hauled with 181-tonne haul trucks and matching loading equipment including electric hydraulic shovels. The open pit mining fleet will be leased. Best practice grade control drilling will be done with reverse circulation drilling and rock sampling on mine benches prior to blasting. This provides the greatest flexibility for grade control during operations while maintaining reasonable mine operating costs and production capability.
Underground mine development will commence in Year 6 and first mill feed to the plant from underground occurs in Year 8. The underground mine will be located beneath the 87 Zone pit and utilize sub-level caving along the edges of the open pit and slot and mass blast in the lower levels. The portal is located adjacent to the primary crusher. Mill feed material and waste will be brought to the surface initially with trucks but will transition to the RailVeyor system for the life of the mine. The underground mine will ramp up production from its initial levels to 9,000 tpd by Year 9 and maintain that rate until the end of the mine life.
During the mining operation a stockpile will be maintained adjacent to the primary crushing plant to be used as supplemental feed as required to meet production targets, weather events and as mill feed in the later years of the operation. Waste rock will be hauled to dedicated waste management facilities near the open pits, backfilled into the 87 Zone pit and also used for lifts of the tailings management facility. Concurrent reclamation of the waste management facilities is planned.
Metallurgy Initial test work was completed by COREM and Kappes Cassidy as well the historical operating data, to develop the flow sheet. The process plant consists of primary crushing, SAG and ball milling with gravity gold concentration, copper flotation, concentrate filtration and tailings thickening and disposal. Copper concentrate, enriched with gold, will then be sent to a smelter for refining. Gold recovery is estimated to be 90%, with 30% produced onsite as gravity concentrate and the balance contained in the final copper concentrate. Copper recovery is expected to be 90%.
Infrastructure The Troilus Gold Project is located in Quebec, approximately 120 kilometres north of Chibougamau, where Inmet Mining Corporation operated a large mine/concentrator complex from 1996 – 2010. Access to the mine site from Chibougamau is by the Route du Nord.
The Troilus project benefits greatly from the upgraded, and substantial infrastructure on site including:
The existing tailings management facility has the capacity to accommodate the life of mine production as described in this PEA. As part of the design it is proposed to develop the tailings dam into a centreline constructed containment from the existing upstream designed containment. The building of this containment wall will utilise waste rock from the mine operations.
A NI 43-101 technical report supporting the PEA to be prepared by AGP will be posted on Troilus Gold’s website at www.troilusgold.com and on SEDAR at www.sedar.com, within 45 days following this news release.
Mineral Resources Estimate The total estimated indicated Mineral Resource Estimate upon which the PEA is based includes 4.96 Moz AuEq (177 Mt with an average grade of 0.87 g/t AuEq) and a total inferred Mineral Resource Estimate of 3.15 Moz AuEq (116.7 Mt with an average grade of 0.84 g/t AuEq).
Table 4 - Mineral Resource Estimate – Effective as of July 20, 2020
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability; Summation errors may occur due to rounding; Open pit mineral resources are reported within an optimized constraining shells.
Open pit cut-off grade is 0.3 gpt AuEQ where the metal equivalents were calculated as follows:
Metal prices for the AuEQ formulas are: $US 1,600/ oz Au; $3.25/lb Cu, and $20.00/ oz Ag; with an exchange rate of US$1.00:CAD$1.30; Metal recoveries for the AuEQ formulas are:
The resource constraining shells were generated with:
Underground cut-off grade is 0.9 AuEQ at Z87 Zone and J4/J5 Zone
The Mineral Resource estimate used for the PEA is effective as of July 20, 2020 and unchanged since the previously reported Mineral Resource estimate in the technical report entitled “Technical Report on the Troilus Gold-Copper Project Mineral Resource Estimate, Quebec, Canada” which was prepared by Mr. Paul Daigle, géo., Senior Associate Resource Geologist with AGP Mining Consultants Inc. (AGP) and filed on SEDAR at www.sedar.com on August 28, 2020 (the “Resources Report”). Mr. Daigle is an independent Qualified Person in accordance with the requirements of National Instrument 43-101 (“NI 43-101”).
PEA Review Conference Call & Webcast Troilus will be hosting a conference call to review the results of the PEA at 9:00 am EST, on Tuesday September 1, 2020. Chief Executive Officer, Justin Reid, Senior Vice-President of Technical Services, Ian Pritchard, and other members of the Troilus leadership team will be on the call to discuss the PEA results and latest corporate developments. Please click the link below to join the webinar:
https://us02web.zoom.us/j/87934871258
Or iPhone one-tap: US: +16699006833,87934871258# or +19292056099,87934871258#
Or Telephone: Dial (for higher quality, dial a number based on your current location): US: +1 669 900 6833 or +1 929 205 6099 or +1 253 215 8782 or +1 301 715 8592 or +1 312 626 6799 or +1 346 248 7799
Webinar ID: 879 3487 1258 International numbers available: https://us02web.zoom.us/u/kc0gb6ZH13
Qualified Person All technical information, not pertaining to the PEA, in this news release has been reviewed and approved by Bertrand Brassard, M.Sc., P.Geo., Chief Geologist, who is a Qualified Person as defined by NI 43-101. Mr. Brassard has verified the technical data contained in this press release using industry accepted standards. Mr. Brassard is an employee of Troilus and is not independent of the Company under NI 43-101.
The mineral resource estimate disclosed in this press release was prepared by Mr. Paul Daigle, géo., Senior Associate Resource Geologist with AGP, and the supporting Resources Report was filed on SEDAR (www.sedar.com) under the Company’s issuer profile on August 28, 2020. Mr. Paul Daigle, who is an independent Qualified Person as defined under NI 43-101, has reviewed and approved the mineral resource estimate disclosed in this press release.
The PEA was prepared in accordance with National Instrument 43-101 (NI 43-101) of the Canadian Securities Administrators under the direction and supervision of Gord Zurowski, P. Eng Principal Mining Engineer with AGP, and the supporting Technical Report (the “Technical Report”) will be available on SEDAR (www.sedar.com) under the Company’s issuer profile within 45 calendar days. Mr. Zurowski, who is an independent Qualified Person as defined under NI 43-101, has reviewed and approved the technical information pertaining to the PEA disclosed in this press release.
Non-IFRS Financial Measures
The Company has included certain non-IFRS financial measures in this news release, such as Initial Capital Cost, Cash Operating Costs ,Total Cash Cost, All-In Sustaining Cost, Expansion Capital and Capital Intensity, which are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. As a result, these measures may not be comparable to similar measures reported by other corporations. Each of these measures used are intended to provide additional information to the user and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
Non-IFRS financial measures used in this news release and common to the gold mining industry are defined below.
Total Cash Costs and Total Cash Costs per Ounce
Total Cash Costs are reflective of the cost of production. Total Cash Costs reported in the PEA include mining costs, processing & water treatment costs, general and administrative costs of the mine, off-site costs, refining costs, transportation costs and royalties. Total Cash Costs per Ounce is calculated as Total Cash Costs divided by payable gold ounces.
All-in Sustaining Costs (“AISC”) and AISC per Ounce
AISC is reflective of all of the expenditures that are required to produce an ounce of gold from operations. AISC reported in the PEAS includes total cash costs, sustaining capital, expansion capital and closure costs, but excludes corporate general and administrative costs and salvage. AISC per Ounce is calculated as AISC divided by payable gold ounces.
About Troilus Gold Corp.
Troilus is a Toronto-based, Quebec focused, advanced stage exploration and early-development company focused on the mineral expansion and potential mine re-start of the former gold and copper Troilus mine. The 107,326 hectare Troilus property is located within the Frotêt-Evans Greenstone Belt in Quebec, Canada. From 1996 to 2010, Inmet Mining Corporation operated the Troilus project as an open pit mine, producing more than 2,000,000 ounces of gold and nearly 70,000 tonnes of copper.
For more information:
Justin Reid Chief Executive Officer +1 (647) 276-0050 x 1305 Justin.reid@troilusgold.com
Paul Pint President +1 (416) 602-1050 paul.pint@troilusgold.com
Cautionary Note Regarding Forward-Looking Statements and Information
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no certainty that the Indicated Mineral Resources will be converted to the Probable Mineral Reserve category, and there is no certainty that the updated Mineral Resource statement will be realized.
The mineral resource estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such mineral resources. See the Resources Report, once filed, for more information with respect to the key assumptions, parameters, methods and risks of determination associated with the foregoing.
The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA is subject to a number of risks and uncertainties. See below and the Technical Report, once filed, for more information with respect to the key assumptions, parameters, methods and risks of determination associated with the foregoing.
This press release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, the results of the PEA, statements regarding the impact and implications of the economic statements related to the PEA, such as future projected production, costs, including without limitation, AISC, total cash costs, cash costs per ounce, capital costs and operating costs, statements with respect to Mineral Resource estimates, recovery rates, IRR, NPV, mine life, CAPEX, payback period, sensitivity analysis to gold prices, timing of future studies including the pre-feasibility study, environmental assessments (including the timing of an environmental impact study) and development plans, the Company’s understanding of the project; the potential to extend mine life beyond the period contemplated in the PEA, opportunity to expand the scale of the project, the project becoming a cornerstone mining project in Quebec and Canada; the development potential and timetable of the project; the estimation of mineral resources; realization of mineral resource estimates;; the timing and amount of estimated future exploration; costs of future activities; capital and operating expenditures; success of exploration activities; the anticipated ability of investors to continue benefiting from the Company’s low discovery costs, technical expertise and support from local communities; and the anticipated timing of filing the Technical Report. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “contemplates”, “goal”, “continue”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “will”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are made based upon certain assumptions and other important facts that, if untrue, could cause the actual results, performances or achievements of Troilus to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Troilus will operate in the future. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, amongst others, currency fluctuations, the global economic climate, dilution, share price volatility and competition. Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of Troilus to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: the impact the COVID 19 pandemic may have on the Company’s activities (including without limitation on its employees and suppliers) and the economy in general; the impact of the recovery post COVID 19 pandemic and its impact on gold and other metals; there being no assurance that the exploration program or programs of the Company will result in expanded mineral resources; risks and uncertainties inherent to mineral resource estimates; the high degree of uncertainties inherent to preliminary economic assessments and other mining and economic studies which are based to a significant extent on various assumptions; variations in gold prices and other precious metals, exchange rate fluctuations; variations in cost of supplies and labour; receipt of necessary approvals; general business, economic, competitive, political and social uncertainties; future gold and other metal prices; accidents, labour disputes and shortages; environmental and other risks of the mining industry, including without limitation, risks and uncertainties discussed in the latest annual information form of the Company, in the Resources Report (and the Technical Report to be filed) and in other continuous disclosure documents of the Company available under the Company’s profile at www.sedar.com. Although Troilus has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Troilus does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources
Mineral resource estimates have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in NI 43-101 and recognized by Canadian securities laws but are not defined terms or recognized under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be upgraded to mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Accordingly, these mineral resource estimates and related information may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder.