In a May 15 research note, Stifel GMP analyst Tyron Breytenbach reported that Troilus Gold Corp.'s (TLG:TSX; CHXMF:OTCQB) new model of the past-producing Troilus gold project in Quebec "uncovered high-grade gold the base metal miners neglected."
Breytenbach reviewed results of Troilus' recent drilling there, which "continues to show that the SW Zone has a brittle, high-grade component within the broader bulk volume." He also noted that "the newly discovered >1 km mineralized trend remains open along strike andat depth."
The analyst highlighted that the geology of the holes, all of which hit the targeted system, was consistent with that of the main resource area Z87 that is less than 3.5 kilometers to the northeast of the SW Zone.
He also pointed out that SW Zone drilling encountered several high-grade intercepts that were within wider intervals of disseminated gold, which has a geology similar to the main deposit. "We expect that tighter data density will improve the average grade of the resource," commented Breytenbach.
Returned assays from the SW Zone included 46.4 grams per ton (46.4 g/t) gold equivalent (Au eq) over 1 meter (1m) in hole TLG-ZSW20-190. Other highlight intercepts came in hole LG-ZSW20-181, which showed 13.28 g/t Au eq over 1m within a broader intercept of 1.18 g/t Au eq over 21m, starting 143m downhole.
Hole TLG-ZSW20-186 returned 16.1 g/t Au eq over 1.1m, 1.33 g/t Au eq over 5m and 1.43 g/t Au eq over 5m with the zone starting 156m downhole.
Breytenbach highlighted that the "trajectory of the grade is upwards which, along with the >$500 million worth of inherited infrastructure, will drive a re-rating of the ounces as the current $14.0/oz valuation is an unusually high discount for a Canadian asset."
Stifel has a Buy rating and a CA$3.40 per share price target on Troilus Gold. The stock is currently trading at about CA$0.97 per share.
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Disclosures from Stifel GMP, Troilus Gold, May 15, 2020
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