Interview with Justin Reid, CEO of Troilus Gold Corp.

Our previous interview: https://www.cruxinvestor.com/posts/troilus-gold-tsxtlg-charging-ahead-with-resource-expansion-and-restart-4245

Recording date: 23rd May 2024

Troilus Gold Corp (TSX:TLG) offers investors a compelling opportunity to gain exposure to a large-scale, advanced-stage gold-copper project in the top-tier mining jurisdiction of Quebec, Canada. The company recently released a positive feasibility study on its wholly-owned Troilus project, outlining a robust 22-year mining operation with strong economics and free cash flow generation potential.

The study envisions a 50,000 tonne per day open pit mine producing an average gold production of 244,600 ounces, 17.3 million pounds of copper and 446,700 ounces of silver annually over a 22-year mine life. All-in sustaining costs are estimated at $1,148/oz AuEq, putting Troilus among the lower half of the industry cost curve. The initial capex of $1.08 billion is reasonable for a project of this scale, with a chunk of the costs already covered by existing infrastructure.

From an economic standpoint, the feasibility study delivers a base case after-tax NPV5% of $885 million and 14% IRR at $1,950/oz gold. While the IRR is on the low end, CEO Justin Reid argues that the market is undervaluing the true long-term cash flow potential of the asset. Over the life-of-mine, Troilus is estimated to generate a cumulative $2.2 billion in free cash flow at conservative gold prices and over $3.5 billion at spot prices, with annual FCF averaging $150-200 million. This FCF profile is very attractive for a company with a current market cap of just $150 million.

To fund mine construction, Troilus is pursuing multiple avenues including potentially bringing in a strategic partner, securing offtake and stream financing, and tapping debt from Quebec government institutions. Management believes they can raise a significant portion of the required capital while limiting equity dilution. They are already in active discussions with several interested parties.

The Troilus project benefits from its location in the Frotet-Evans greenstone belt, a prolific mining district that hosts several large gold and base metal deposits. As a past-producing mine, Troilus already has extensive infrastructure in place including power, roads, and a tailings facility. This reduces both capex and development risk.

Importantly, the current mine plan and economics are based on only about half of the project's 13 million ounce resource base. Management sees good potential to further expand the resource and extend the mine life through additional drilling, providing production and cash flow upside.

With a multi-decade production profile, substantial free cash flow generation potential, a strategic land package, and a depressed valuation, Troilus Gold offers a compelling risk-reward proposition for long-term investors  out of its large-scale, low-cost mine to deliver significant returns to shareholders.

View Troilus Gold's company profile: https://www.cruxinvestor.com/companies/troilus-gold

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