Troilus Gold sells claims to Sayona Quebec for $30 million, retains 2% NSR royalty

Staff Writer | November 16, 2022 | 7:43 am Exploration Canada Copper Gold

The Z87 open pit at the former Troilus gold-copper mine in Quebec. Credit: Troilus Gold

Troilus Gold (TSX: TLG) is selling a package of 1,824 claims covering 985 km² to Sayona Quebec, a subsidiary of Sayona Mining (ASX: SYA). The claims are adjacent to and near Sayona’s North American Lithium (NAL) project that is returning to production early next year.

Yesterday, Sayona offered details of its acquisition of the Vallée claims adjacent to NAL.

In return for the claims, Troilus will receive approximately 184.3 million Sayona shares, valued at a price of C$0.217 each, for an aggregate value of C$40 million ($30m). Troilus will also be granted a 2% net smelter return (NSR) royalty.

None of the transferred claims cover the Tortigny deposit nor do they cover claims included in the preliminary economic assessment (PEA) of 2020 for the historic Troilus gold-copper project or areas of recent exploration by Troilus.

The former Troilus mine 170 km north of Chibougamau, Quebec, produced about 2.0 million oz. of gold and 70,000 tonnes of copper between 1996 and 2010 when it was operated by Inmet.

The recent PEA put the indicated resource at 177.3 million tonnes grading 0.73 g/t gold, 0.08% copper, and 1.17 g/t silver, containing 4.3 million oz. gold, 332.6 million lb. copper, and 6.66 million oz. silver. The inferred portion is 116.7 million tonnes at 0.73 g/t gold, 0.07% copper, and 1.04 g/t silver, containing 2.76 million oz. gold, 198.7 million lb. copper, and 3.91 million oz. silver. The resources from the Z87, J4/J5 and SW zones were included.

Troilus is advancing the project toward production as a conventional open pit and then will begin development for an underground mine. The company plans a mill flowsheet that includes crushing, grinding and gravity concentration followed by flotation and cyanidation. The mill may have a capacity of 35,000 t/d.

A feasibility study is planned for completion in the first half of 2023, but until then the parameters set out in the PEA include a base case with a $1,475/oz. gold price, a post-tax net present value at a 5% discount of $567 million, and post-tax internal rate of return of 22.9%.

The project would have a life of 22 years, during which time the annual gold production would average 246,000 oz. at an all-in sustaining cost of $719/oz. gold-equivalent. The initial capex is expected to be $333 million and the payback period four years.