Troilus’ Preliminary Economic Assessment Delivers an After-Tax NPV5% of US$1,156 Million With a 38.3% IRR at a Spot Price of US$1950/oz Gold and an NPV5% of US$576 Million and 22.9% IRR at Base Case US$1475/oz Gold
TORONTO, Aug. 31, 2020 (GLOBE NEWSWIRE) — 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*):After-tax IRR of 22.9% and NPV5% of $576 million based on $1,475/oz gold increasing to 32.2% and $915 million at $1,750/oz gold and 38.3% and $1,156 million at $1,950/oz spot gold prices (see Table 1)Projected gold production of 220,000 oz average per year for the first 5 years and 246,000 oz average per year for the first 14 yearsOpen pit mine life of 14 years and total mine life of 22 years with future underground developmentInitial capital of (“CAPEX”) of $333 million, including all mine pre-production costs, net of existing infrastructure (access road, power line, tailings facility, substation, camp, water treatment plant)After-tax payback of 4.0 years at base case $1,475/oz goldAverage cash operating costs of $919/oz gold and all-in sustaining costs of $1,051/oz goldCumulative cashflow of $1.27 billion after tax and $2.04 billion pre-tax over 22 years on base case assumptionsPayable Gold of 3.8 million ounces, payable Copper of 265 million lbs and payable Silver of 1.5 million ouncesAverage strip ratio for the open pit life of the mine estimated at 3.9:1*Assuming a US$:C$ exchange of $0.74. All figures reported in US$ unless stated otherwiseJustin 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 AnalysisAt 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$1,475 per ounce gold price based on a throughput of 35,000 tpd over 22 years. The PEA assumes an open pit operation for the first fourteen years with the underground operation coming online starting in year 8.The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.To view Figure 1: Post-Tax Cash Flow and Cumulative Cash Flow (US$) please click the following link:
https://www.globenewswire.com/NewsRoom/AttachmentNg/7fc58b1d-e99f-4095-a5e1-145becf22584Capital 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 underground development CAPEX 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.To view Figure 2: Production Profile – Gold, Silver and Copper* please click the following link:
https://www.globenewswire.com/NewsRoom/AttachmentNg/c0a4404c-039c-432f-9ae7-a8188ec614b2 MiningThe 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. MetallurgyInitial 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%.InfrastructureThe 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:Power line and 50MW substation sufficient for project power requirements,All weather access road,Tailings facility and water treatment plant,Camp facilities,Site roads,Water supply,Septic system.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, 2020Mineral 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.Z87 Zone: AuEq = Au grade + 1.2566 * Cu grade + 0.0103 * Ag gradeJ4/J5 Zone: AuEq = Au grade + 1.2979 * Cu grade + 0.0108 * Ag gradeSW Zone: AuEq = Au grade + 1.2768 * Cu grade + 0.0106 * Ag gradeMetal 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:Z87 Zone: 83% for Au recovery, 92% for Cu recovery and 76% for Ag recoveryJ4/J5 Zone: 82% for Au recovery, 88% for Cu recovery and 76% for Ag recoverySW Zone: 82.5% for Au recovery, 90% for Cu recovery and 76% for Ag recoveryThe resource constraining shells were generated with:Metal Prices: Gold $US 1600/oz, Copper $US 3.25/lb, Silver $US 20/ozMining Costs:
o J Zone and 87 Zone base cost $Cdn 1.71/t moved,
o SW Zone base cost $Cdn 1.66/t moved
o Incremental cost $Cdn 0.03/t waste moved, $Cdn 0.02/t feed movedProcess and G&A Costs: $Cdn 8.44/t processedWall slopes: varied between 49.5 to 60 degrees depending on pit area and slope sectorMetal Recoveries:
o Gold: 90% all zones except in lower grade (Au<1/2 g/t) portions of SW zone = 88%
o Copper: 90% all zones except in higher grade (Cu%>0.13%) portions of SW zone = 92%
o Silver: all zones 40%Underground cut-off grade is 0.9 AuEQ at Z87 Zone and J4/J5 ZoneThe 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: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 7799Webinar ID: 879 3487 1258
International numbers available: https://us02web.zoom.us/u/kc0gb6ZH13Qualified 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.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
[email protected]Paul Pint
+1 (416) 602-1050
[email protected] 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.Cautionary Note to U.S. Investors Concerning Estimates of Mineral ResourcesMineral 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.