The explorer's recent drilling success at its namesake property is expected to help improve the economics of the project prefeasibility study expected next year.
In an Oct. 19 research note, Stifel analyst Ian Parkinson reported that Troilus Gold Corp.'s (TLG:TSX; CHXMF:OTCQX) continuing expansion of the Southwest and J zones at its Troilus property in Quebec bodes well for the upcoming prefeasibility study (PFS).
"Both avenues represent economic upside versus the 2020 preliminary economic assessment (PEA)," he wrote.
This is illustrated in newly available drill results, for six broad stepout holes at the Southwest zone, noteworthy for three reasons, according to Parkinson. One, results of these holes, located outside of the PEA pit outlined in the 2020 PEA, extend the zone's strike length of near-surface mineralization by 300 meters (300m) to 1.85 kilometers. In comparison, the strike length of the mineralization comprising the resource used in the PEA is 850m.
Two, results contain a grade that is slightly higher than that in the PEA. Three, the results show that drilling in this area is encountering a growing amount of base metals.
One highlight intercept comes from hole TLG-ZSW21-530, drilled 350m away from the current PEA pit. It returned 26m of 0.97 grams per ton gold equivalent (0.87 g/t Au eq) from 76m downhole. The copper portion is 0.29% over 26m.
With respect to this interval, about "46% of the gross metal revenue per ton would come from copper, not including deductions," Parkinson wrote.
Another new solid result, from hole TLG-ZSW21-216, is 16m at 1.03 g/t Au eq at 197m downhole.
"Today's drilling shows the zone is still open in both directions along strike, and the center of gravity at Troilus is moving closer to the Southwest zone," commented Parkinson.
Along with building ounces at Southwest, Troilus Gold has been expanding mineralization at existing pits, including in the J zone, the analyst wrote.
Drilling at the J zone to date achieved two ends that should help improve the economics in the PFS, expected in 2022. Drilling widened the area of mineralization and decreased the strip ratio by converting waste to ore.
Parkinson described Troilus Gold as "one of few development projects in eastern Canada with scale and a significant sunk capital head start with existing infrastructure on site." Despite the company's potential and upside, its stock is trading cheaply, at about CA$0.87 per share, or on average, CA$65 per ounce. In comparison, Stifel's price target on this Buy-rated explorer is CA$4 per share.
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Disclosure for Stifel Financial Corp., Troilus Gold Corp., Oct. 19. 2021
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Import and Disclosures
Troilus Gold is a client of Stifel Canada or an affiliate or was a client of Stifel Canada or an affiliate within the past 12 months.
Troilus Gold has paid the research analyst's travel expenses to view their material operations.
Troilus Gold is provided with investment banking services by Stifel Canada or an affiliate or was provided with investment banking services by Stifel Canada or an affiliate within the past 12 months.
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