Troilus looking for partner with copper carrot

Reid said he is encouraged by Gold Fields partnering with Osisko Mining to develop the Windfall deposit, also in Quebec, as major and mid-tier gold companies look for portfolio additions in the coming years.

"When you look at the market we're in, you raise money at $2 per share, then $1.50. It is going the wrong way, and you're going to blow out your capital structure if you continue to go down that path. Would you rather own 49% of something with a fixed share count when you're trading at one times NAV (net asset value), or 100% of something with a share account that's five times more than you have now?" said Reid.

"When we Windfall, we see a sharing of risk, with a big brother and a little brother, credibility and validation to your asset as it brings a second set of eyes and the technical ability, advice and expertise of a big brother. It lowers your overall cost of capital, and ultimately, if you had to say what is the single best thing for Troilus shareholders today, from my standpoint, that is the way to go. If I brought in a partner and used their capital to build the mine, it would be the single most creative thing I could do, unless the market changes," said Reid.

Reid is looking for partners among different groups of candidates: majors and mid-tiers who already have a position in Quebec and are "looking to leverage assets they already have, such as mines shutting down that might have idle fleet or where some infrastructure could be brought to Troilus, companies looking to diversify out of other jurisdictions to perceived safer jurisdictions, and those looking to fill a gap from a production drop in the next four to five years," he said.

It is also looking at companies looking to step up to 1Mozpa of production, "producers successfully operating a single, or maybe two assets, and are looking to join kind the upper echelon," said Reid.

Reid attended the Precious Metals Summit in Beaver Creek and the Gold Forum Americas in Colorado Springs earlier this month, and noted a more serious attitude among the miners.

"I was impressed by the aggression of the producers, looking for the next growth within the developers. With the issues we've seen in West Africa, tier one jurisdictions remain a focus, and size and scale remain a focus," said Reid.

Troilus plans to give another clear indication of the size and scale of the Troilus deposit in the December quarter when it is due to release a resource update, which will be followed in early 2024 with a feasibility study. The company last published a resource estimate in 2020 of 8.1Moz of gold equivalent.

"We have just shut down the drills after four and a half years of continuous drilling. Since the September 2020 resource, of which 70-75% was measured and indicated, we have drilled another 240,000m, so the resource being finalised right now is going to include about 340,000m. I think we'll be able to show well north of 10Moz," said Reid.

In addition to infilling existing areas of the deposit and extending zones such as JN87, drilling has made the Southwest discovery and the X22 discovery, which are extending mineralisation to the southwest.

Feasibility

The feasibility will continue with the 35,000tpd operation outlined in the preliminary economic assessment, but the drilling means the company can make various improvements.

Instead of an open pit transitioning into an underground mine, the plan will now be for an open pit for 18-23 years, targeting high grade in its initial years, with underground as future upside. "On a gold basis, it would produce 250,000-300,000ozpa for the first four to five years, and then life of mine, 210,000-220,000ozpa. The underground is still real, but somebody else can worry about that long into the future," said Reid.

Troilus also has an ace up its sleeve as the deposit also hosts copper and silver and could potentially produce 35-50Mlbpa pf copper, which is likely to open up more partner and funding avenues and perhaps even some competitive tension.

As a brownfield site, Troilus has always benefited from existing infrastructure, an even more valuable asset due to development cost inflation. "In September 2020, we estimated the replacement cost of our infrastructure at about US$350 million. Today, that's worth probably $550 million, so the capital intensity for a build of this scale, is very similar to what you see at Greenstone and Magino," said Reid.