Troilus sells claims to Sayona for $40M in shares, 2% NSR royalty

Troilus Gold (TSX: TLG; US-OTC: CHXMF) is selling a package of 1,824 claims covering 985 sq. km to Sayona Quebec, a subsidiary of Sayona Mining (ASX: SYA; OTC: SYAXF). 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 21.7¢ each, for an aggregate value of $40 million. Troilus will also be granted a 2% net smelter return (NSR) royalty. None of the transferred claims cover the company’s Tortigny gold deposit, any claims included in a 2020 preliminary economic assessment (PEA) for the Troilus gold-copper project, or areas of recent exploration by Troilus.

The former Troilus mine 170 km north of Chibougamau, Que., produced about 2 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 gram gold per tonne, 0.08% copper, and 1.17 grams silver for 4.3 million oz. gold, 332.6 million lb. copper, and 6.7 million oz. silver. The inferred portion is 116.7 million tonnes at 0.73 gram gold, 0.07% copper, and 1.04 grams silver fo 2.8 million oz. gold, 198.7 million lb. copper, and 3.9 million oz. silver. The Z87, J4/J5, and SW zones were included in the resource.

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 tonnes per day.

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 US$1,475 per oz. gold price, a post-tax net present value at a 5% discount of US$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 US$719 per oz. gold-equivalent. The initial capex is expected to be US$333 million and the payback period four years.

Troilus Gold stock rose more than 12% on the news by mid-day in Toronto to 55¢, giving the company a market capitalization of $115 million.