In a July 29 research note, Haywood analyst Pierre Vaillancourt reported that the Southwest zone at Troilus Gold Corp.'s (TLG:TSX; CHXMF:OTCQB) Troilus property in Quebec "makes the difference" in the updated resource estimate and, potentially, the project.
He also noted that Haywood increased its target price on Troilus Gold to CA$2.25 per share from CA$2 to account for the gain in the resource's open pit ounces. The current stock price, in comparison, is CA$1.30 per share.
"The overall resource increased by 25%, but the key addition was from the Southwest zone, which we believe could become the focus of the deposit," Vaillancourt commented.
He presented the primary data points of the updated resource, comparing them to the December 2019 estimate.
As for the total updated Troilus resource, it now consists of 4.96 million ounces gold equivalent (4.96 Moz Au eq) grading 0.87 grams per ton (0.87 g/t) Au eq in the Indicated category (up from 4.71 Moz grading 0.92 g/t Au eq) and 3.15 Moz Au eq grading 0.84 g/t Au eq in the Inferred category (up from 1.76 Moz grading 1.04 g/t Au eq).
The new total open pit resource is up by 48%, or 2.09 Moz Au eq, to 6.48 Moz Au eq. Of those ounces, 4.21 Moz grading 0.8 g/t Au eq are Indicated, and 2.27 Moz grading 0.7 g/t Au eq are Inferred. A higher gold price, of $1,600 per ounce versus $1,400, also helped the open pit resource, as deeper mineralization at the 787 and J zones could be included. They accounted for 1.5 Moz Au eq of the updated overall open pit resource.
Of note, Vaillancourt highlighted, the Southwest zone contributed 583,000 ounces Au eq grading 0.8 g/t Au eq to the Inferred open pit resource and "will become as important as the 787 zone."
Underground resources decreased, by 21% or 430 Koz Au eq, for a new total of 1.63 Moz. The Indicated resource went down 34%, and the Inferred, 9%.
Vaillancourt discussed what's next for Troilus Gold. Release of the Troilus preliminary economic assessment is just a month away and will consider open pit mining of the 787 and J zones for 12 years and then the Southwest zone for another five. "The plan will be for a 25,000 ton per day operation, producing 200 Koz per year with additional copper and silver," he wrote, adding, "There is additional underground potential which we believe could extend for over 10 years."
Also ahead for the company in the near term is the start of additional drilling, about 10,000–15,000 meters. The little amount of drilling done so far at the property suggests significant exploration potential exists, Vaillancourt pointed out.
"We are encouraged by the resource update and especially the initial open pit resource at the Southwest zone, which we believe will continue to grow and enhance the economics of the Troilus project," he concluded.
Haywood has a Buy rating on Troilus Gold.
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Disclosures from Haywood Securities, Troilus Gold Corp, July 29, 2020
Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.
Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.
Analyst Certification: I, Pierre Vaillancourt, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Of the companies included in the report, the following Important Disclosures:
▪The Analyst(s) preparing this report (or a member of the Analysts' households) have a financial interest in Troilus Gold (TLG-T).
▪ Haywood Securities, Inc. has reviewed lead projects of Troilus Gold (TLG-T) and a portion of the expenses for this travel have been reimbursed by the issuer.
▪ Haywood Securities, Inc. or an Affiliate has managed or co-managed or participated as selling group in a public offering of securities for Troilus Gold (TLG-T) in the last 12 months.