In a July 8 research note, Red Cloud Securities analyst Timothy Lee reported Troilus Gold Corp.'s (TLG:TSX; CHXMF:OTCQX) recent positive drill results of infill and stepout holes targeting the J zone at its Troilus project. The J zone is at the far north end of the property and where the two past producing pits were located.
"These are excellent results," Lee wrote. They "demonstrate the potential to further improve project economics."
Lee discussed the results. Of the eight holes reported, he noted, hole ZJ21-241 was the highlight, as it extended the zone's western extension another 150 meters (150m) along strike to 850m. Within 150m from surface, the hole returned 1.57 grams per ton gold equivalent (1.57 g/t Au eq) over 31m, including 4.72 g/t Au eq over 7m and 22.51 g/t Au eq over 1m within 150m from surface. These and other new intercepts are inside the pit shell outlined in the 2020 preliminary economic assessment (PEA).
"This will likely add significant ounces to the resource and improve project economics, as we anticipate the conversion of mineralization in areas previously considered as waste to lead to lower strip ratios," Lee commented.
The analyst pointed out that there now is "potential for a larger pit and/or an underground resource." Stepout drilling extended mineralization from the PEA pit, up to about 90m below it and about 60m downdip. Further, drilling outside the PEA pit returned mineralization with grades equal to or better than those of the J zone's existing resource. Those intercepts include 1.19 g/t Au eq over 19m, including 3.29 g/t Au eq over 4m, in hole ZJ21-240, and 0.88 g/t Au eq over 22m, including 3.65 g/t Au eq over 2m in hole ZJ21-239.
Over the summer, noted Lee, Troilus Gold will continue resource expansion drilling of multiple targets at Troilus, completing about 10,000m per month. Two of the four rigs active on the property are drilling in the Southwest zone.
Later this year, for the Troilus project, Troilus Gold is expected to release a resource estimate update for followed by a prefeasibility study. These two events, along with additional drill results in the meantime, all are potential catalysts for the company's stock.
Lastly, Lee indicated, Red Cloud updated its model on Troilus Gold to include the recent CA$45 million financing and share issuance from the UrbanGold acquisition. The result is a decrease in Red Cloud's price target on the explorer to CA$3 from CA$3.50. The target price still, however, indicates the stock has triplebagger potential, as it is trading now at about CA$0.95 per share. Red Cloud rates Troilus Gold Buy.
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