Troilus Gold advances project financing with additional LOIs for $500m

Troilus Gold (TSX: TLG) has progressed further with its project financing with the signing of two letters of intent (LOI) with the export credit agencies of Finland (Finnvera) and Sweden (EKN) for $300 million and $200 million, respectively.

These follow the recently announced LOI for a $500 million financing with Germany’s Euler Hermes, acting on behalf of the German Federal Ministry for Economic Affairs and Climate Action as an export credit agency.

“The partnerships with the Finnish, Swedish and German export credit agencies, underscore the strength of the project’s fundamentals and the confidence these global institutions have in Troilus,” CEO Justin Reid said in a news release.

Finnvera’s support is contingent on strategic partnerships with an unnamed Finnish equipment provider and Sweden’s Boliden, one of Europe’s largest smelting companies. This collaboration contemplates an equipment procurement deal with the Finnish provider for between $50-$100 million and a 10-year copper-gold concentrate offtake agreement with Boliden estimated at an annual value of $200 million.

Sweden’s EKN, in parallel with Finnvera, is providing cover of approximately $200 million, or up to 25% of the offtake agreement with Boliden under the Swedish Raw Material Guarantee.

Capex covered

Troilus’ sole focus is to advance its flagship gold-copper asset of the same name towards production. Located in the Val-d’Or district of Quebec, the Troilus project hosts a former mine that produced 2 million oz. of gold and almost 70,000 tonnes of copper between 1996 and 2010.

In May, the company produced a feasibility study that demonstrated the potential for Troilus to be among the largest gold producers in Canada. Over an estimated 22-year mine life, its annual production in gold equivalent would average 303,000 oz., with peak production of 536,400 oz.

As outlined in the feasibility report, the project has an after-tax net present value (at 5% discount) of $884.5 million and an internal rate of return of 14% under the base case scenario. The initial capital cost to build the 50,000-tonne-per-day open pit mine is estimated at approximately $1.07 billion.

“With the addition of $500 million in LOIs from Finnvera and EKN, we have now received in-principle support representing a significant percentage of the project’s total capex,” Reid noted in Tuesday’s press release.

As a result of the previous operation, the Troilus property already has well established infrastructure valued at approximately $500 million, the company estimates. These include an extensive network of all-weather access roads, a 50MW substation and over 60 km of power lines maintained by Hydro-Quebec, a permitted tailings facility, and operating water treatment plants.

Shares of Troilus Gold rose 1.8% to C$0.28 by 11:25 a.m. ET, giving the Canadian mine developer a market capitalization of C$99.8 million ($71.4m).