A new debt-financing accord brings Troilus Mining (TSX: TLG; US-OTC: CHXMF) closer to securing the entire capital needed to develop its namesake copper-gold project in Quebec.
Germany’s KfW IPEX-Bank and France’s Société Générale agreed to underwrite $850 million (C$1.2 billion) of senior secured debt as part of a planned $1.1-billion package, Troilus said this week in a statement. A proposed $250-million contribution from Export Development Canada (EDC) remains subject to final approval.
The financing package “marks a significant step forward” for Troilus, Desjardins Securities mining analyst Bryce Adams said in a note this week. “It significantly derisks project financing and advances the project toward development.”
Adams expects a construction decision next year, ahead of first ore in 2029.
A new study, published Sept. 9, more than tripled the mine’s estimated value thanks to detailed engineering, an expanded reserve and higher metal-price assumptions.
Troilus now carries a post-tax net present value of $3.2 billion (C$4.4 billion), a 22% after-tax internal rate of return, a 3.6-year payback period and a 26-year operating life, the Montreal-based developer said in its updated technical report last month. Its base-case scenario uses long-term prices of $3,600 per oz. gold, $5 per lb. copper and $50 per oz. silver.
The report builds on a May 2024 feasibility study, which outlined an after-tax NPV of $884.5 million and a 14% IRR. That study contemplated a 22-year, 50,000-tonne-per-day open-pit operation.
Construction start
Construction is anticipated to start next year, with commercial production targeted for March 2030, Troilus said last month.
The updated report is “kind of our cleansing statement as we go into putting the final pieces on our financing,” CEO Justin Reid told The Northern Miner in a September interview.
The $850-million debt commitment moves a substantial part of the financing from a mandate to credit-approved underwriting. Troilus is still working to complete the wider package and reach financial close.
The debt facilities include a repayment grace period of up to three years during construction, followed by a sculpted repayment profile over a notional 10-year period aligned with expected cash flow generation, Troilus said. Final terms and further details should be disclosed upon execution of definitive financing documentation.
Troilus is now working with several European export credit agencies on remaining approvals and support arrangements for the broader debt financing package.
As a mandated lead arranger, EDC is working closely with the lending syndicate and the participating European export credit agencies to advance the financing while continuing to work toward its final approvals, Troilus said.
Export credit agencies “are providing AAA-rated sovereign debt to us, and so you know we’re getting well below 10% fixed over extremely long terms,” Reid said in the interview. “Our borrowing costs, when finalized and put out in the market, will be among the cheapest seen this cycle.”
Capital increase
Initial capital is now estimated at about $1.43 billion, reflecting a more advanced project definition supported by about 95,000 hours of engineering. Life-of-mine operating costs are estimated at $19.21 per tonne of ore processed, while all-in sustaining costs are about $1,340 per oz. of payable gold, net of copper and silver credits.
Although inflation in mine-building is an issue, “the capital increase that we’re seeing, which is manageable, is certainly being replaced by an increase in the commodity prices,” Reid said in the interview. “Our margin is expanding, not contracting.”
The company’s latest mine plan is based on 478 million proven and probable tonnes grading 0.44 gram gold per tonne, 0.05% copper and 0.92 gram silver for contained metal of 6.7 million oz. gold, 568 million lb. copper and 14.2 million oz. silver. The reserve tonnage is about 26% larger than in the 2024 feasibility study.
Crews are carrying out drilling aimed at converting inferred material, optimizing the pits and expanding resources beyond the current mine plan. The company earlier this year began a 40,000-metre exploration program on its 435-sq.-km land package.
Payable production over the life of the operation is expected to reach 5.63 million oz. gold, 472 million lb. copper and 10.9 million oz. silver. Average annual payable production during the active mining period is estimated at about 251,000 oz. gold, 20.1 million lb. copper and 466,000 oz. silver.
Former mine
Located about 120 km north of Chibougamau in north-central Quebec, the project sits on the site of a former mine that produced roughly 2 million oz. of gold and almost 70,000 tonnes of copper between 1996 and 2010. Troilus acquired the asset in 2017.
Existing infrastructure includes all-weather roads, a 50-MW substation, more than 60 km of high-voltage power lines, a permitted tailings site and water-treatment infrastructure.
In June, Troilus secured a 70-MW allocation of hydroelectric power from Hydro-Québec and the provincial government.
“That was a major challenge and a lot of work,” Reid said. “We’re now placing our long lead time items for the mills. We are shortly selecting our fleet and the shovels and all the ancillary equipment.”
Although miners in Canada have long complained of lengthy approval delays, the tide appears to be shifting.
Troilus in July became one of the first projects selected for Quebec’s new Filon initiative, a specialized support service established by the province to advance strategic mining projects.
That followed Quebec City and Ottawa unveiling a proposed “One Project, One Review” agreement aimed at harmonizing provincial and federal environmental assessments and reducing duplication for major projects.
“We’re seeing the impact of that in real time,” Reid said of Troilus being named to the Filon process. “The federal government as well is certainly delivering on everything that they were saying. We are seeing a focus on major projects. We’re seeing expedited permitting. We’re seeing [governments] being very reactive, which is excellent, far more than in the past.”