This is a very brief summary of what was a lengthy interview. Don’t rely on this summary. Watch the full interview which is linked at the end of this post.
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Time to Read: 4 minutes
Troilus Gold Corp (TSX: TLG) Company Overview
Troilus Gold Corp. (TSX: TLG) is advancing one of Canada’s largest proposed gold-copper mining projects. Located in Quebec, the Troilus project hosts one of the largest undeveloped gold equivalent deposits in North America. With a history of gold and copper production from 1996 to 2010, Troilus is currently a brownfield project poised for significant growth. The company is committed to developing a sustainable and economically viable operation, leveraging existing infrastructure to minimize environmental impact and capital costs.
The feasibility study was a critical milestone, showcasing a 50,000 tonnes per day operation with a 22-year mine life. This is a project with the scale and scope that majors look for, offering a long-term production profile and leverage to multiple commodities, including gold and copper.
- Justin Reid, CEO Troilus Gold Corp.
Troilus Gold Corp (TSX: TLG) CEO Interview Summary
What do you think the market is not liking about Troilus Gold Corp.?
Justin Reid: There are a few factors at play here. Firstly, the mining sector is experiencing significant inflation, affecting costs across the board. We’re seeing other projects with similar size and scope facing substantial cost overruns. Troilus is the first feasibility study in recent years that reflects the current inflationary environment, especially in North America.
Secondly, there’s a broader market trend of risk-off behavior, with limited new capital entering the exploration and development space. Many of our peers, including Troilus, are trading at valuations well below what could be considered fair value.
Specifically for Troilus, the capital requirement of over $1 billion may have caught some off guard, particularly retail investors. Our previous PEA four years ago projected a much smaller operation at $350 million in capital, but we’ve since expanded our scope to a 50,000 tonnes per day operation, one of the largest in Canada.
While the institutions, financiers, and strategic partners were not surprised by this number, some retail investors might have been. However, when you consider our existing infrastructure, which brings about $500 million in capital savings, and the strong cash flow profile of the project, we believe the economics are robust.
What can you do to push the company’s stock price closer to its real-life value?
Justin Reid: We need to break out of the current market sentiment surrounding junior miners. It’s about differentiating ourselves as a company that will deliver on its promises. For Troilus, this means methodically advancing the project, focusing on permitting and financing. We’ve been in the permitting process for over two and a half years and are on track to submit our Environmental Impact Assessment (EIA) by the end of this year. If everything goes as planned, we could be fully permitted by the end of next year.
By advancing the project towards production, we aim to demonstrate the significant value inherent in Troilus. We have a well-defined path forward, and while we can’t control the broader market, we can control our execution and continue to communicate our progress effectively.
Is that what it will take to get a potential major interested in Troilus?
Justin Reid: I believe we’re already at that point. The feasibility study was a critical milestone, showcasing a 50,000 tonnes per day operation with a 22-year mine life. This is a project with the scale and scope that majors look for, offering a long-term production profile and leverage to multiple commodities, including gold and copper.
Majors have been focused on mergers and balance sheet improvements, but we’re starting to see them shift towards growth and asset acquisition. Troilus offers a unique opportunity, especially with its leverage to copper, which is increasingly important in the context of electrification and green energy.
Is there something you can do to improve the project’s economics, like starting with a smaller pit?
Justin Reid: We’ve looked at various options, including potential optimization scenarios, but given the scale and nature of the deposit, a phased approach isn’t as feasible as one might hope. The best grades are at the bottom of the pits, and significant upfront capital is needed to access these areas.
That said, we’re exploring other opportunities within our belt that could provide higher-grade feed, but our primary focus is advancing the current plan without altering the permitting timeline. We don’t want to reset the clock on permitting, as maintaining our timeline adds significant value.
What are institutional investors or potential partners telling you regarding guidelines for investment?
Justin Reid: For majors, it’s less about IRR and payback and more about scale and longevity. They are interested in projects that can produce substantial ounces over a long period. Troilus offers a production profile of over 300,000 ounces annually, peaking at over 500,000 ounces in certain years. This is the type of scale that attracts major players, providing them with long-term cash flow to make strategic decisions.
How does it make sense to keep investing in the project if the market isn’t giving you value now?
Justin Reid: That’s a fair question. Troilus doesn’t need more ounces right now; we need to advance the asset strategically. We’re focusing on low-cost technical advancements and regional exploration that can add significant value. Our infrastructure is a key asset, and maintaining it requires ongoing investment. We’re reducing exploration spend and focusing on technical advancements that de-risk the project and enhance its value.
How much are you budgeting for this year, and do you need to raise capital?
Justin Reid: For the remainder of the year, we’re looking at a budget of about $8.5 million, which includes G&A. Our exploration spend will be materially reduced, focusing on maintaining liquidity and advancing key initiatives. We have enough cash on hand, but we’re always exploring options for non-dilutive financing and strategic partnerships.
What about royalties and streams as financing options?
Justin Reid: We prefer not to encumber the asset with royalties or streams, but it’s something we’re open to if it aligns with our long-term goals. We have significant flexibility, having repurchased a royalty in 2020, which has proven to be a wise decision. We’re exploring various options, including potential silver streams, as they don’t significantly impact the project’s overall value.
Can you explain the permitting process for Troilus and how long it might take?
Justin Reid: Permitting is a complex process, especially for a project of this scale. However, Troilus is on an active mining lease with a fully permitted tailings facility, which gives us an advantage. We’ve been actively engaged in consultations and have submitted detailed project descriptions. By the end of the year, we’ll submit our EIA, and we’re working closely with regulatory bodies and stakeholders to streamline the process. While timelines are always fluid, we anticipate being fully permitted by the end of next year.
How will you address potential environmental concerns, particularly with water quality and geochemical stability?
Justin Reid: Environmental management is a top priority. We’re fortunate that Troilus uses no cyanide, which is a significant advantage. We’ve engaged extensively with our Cree partners to design environmentally sensitive solutions, such as rerouting an existing diversion channel with their input. Our waste rock has shown no Acid Rock drainage potential, supported by extensive testing and historical data. We’re committed to addressing these concerns proactively and transparently.
Given the history of operational challenges at Troilus, how are you addressing potential risks?
Justin Reid: The historical issues at Troilus were primarily due to a lack of investment in the front-end processing plant. We’ve learned from these challenges and have conducted extensive metallurgical testing to ensure we have a robust plan. Our pilot plant tests have provided us with a high level of confidence in our recovery rates, and we’re focused on maintaining these standards throughout the project’s life.
What am I forgetting to ask you? What else should we know about Troilus?
Justin Reid: I think you’ve covered the critical points. I want to emphasize that Troilus is a rare asset with significant size and scale, poised for long-term production. Our feasibility study reflects current market conditions and is defensible and robust. Troilus is one of the types of assets that get built, offering immense leverage and cash flow at scale. We’re excited about the future and confident in our ability to execute our plan.
Troilus Gold Corp (TSX: TLG) FULL CEO Interview (VIDEO)
In this interview with Justin Reid, President and CEO of Troilus Gold Corp., we delve into the challenges and opportunities facing the Troilus project. Reid discusses the impact of inflation on mining costs, the importance of existing infrastructure, and the company’s strategic focus on feasibility and permitting. He addresses the market’s perception of Troilus, the project’s economic viability, and the path forward to unlocking shareholder value. Key takeaways include the project’s substantial potential for long-term production, the strategic value of its location in Quebec, and the ongoing efforts to secure financing and partnerships to bring the project to fruition.
