Troilus signs LOI for US$500M German loan guarantee for Quebec copper-gold project

Troilus Gold (TSX: TLG) has inked a preliminary deal for a US$500-million loan guarantee to support its copper and gold project in Quebec from Germany’s Euler Hermes Aktiengesellschaft.

The guarantee, made on behalf of the country’s Ministry for Economic Affairs and Climate Action, is in the form of a letter of intent. It is contingent upon Troilus signing an offtake agreement with German copper smelter Aurubis.

The offtake term would be up to 15 years and is subject to standard due diligence, including economic, technical, environmental, and social assessments.

Troilus shares surged 13.7% by 10:40 a.m. EDT, and were at 27¢, up 5.8% for the day, in late afternoon. The miner has a market capitalization of $98 million.

“This LOI is a strong endorsement of the Troilus project’s significant economic potential and strategic value,” Troilus CEO Justin Reid said in a release.

“With rising European demand for copper concentrate and our advantageous proximity to these markets, we are advancing through financing discussions from a solid strategic position.”

Initial development costs for the project are estimated at just over US$1 billion, according to a feasibility study, released in May. The study details plans for a 22-year open-pit operation with a processing capacity of 50,000 tonnes per day.

The mine is expected to produce an average of 303,000 gold-equivalent ounces (GEOs) per year, or 135.4 million lb. of copper-equivalent annually, with peak production reaching 536,400 GEOs or 237.6 million lb. of copper-equivalent per year.

The Troilus mine began production in 1996 and reached commercial production the following year. During its life, the mine produced 2 million oz. of gold and about 154.3 million lb. of copper. The mill capacity was doubled to 20,000 tonnes per day by 2005. The pits were mined out in April 2009, but milling continued to June 2010. The plant was sold three months later, and the camp was dismantled.