The Assay - Mercenary Alert: Trilogy Metals Delivers Again
The Assay - Mining investment news, insights and company profiles
Mining investment news, insights and company profiles
No Result
View All Result
Subscribe
  • Home
  • News
    • All News
    • Gold
    • Silver
    • Copper
    • Nickel
    • Lithium
    • Precious Metals
    • Base Metals
    • Battery Metals
    • Exploration
    • Development
    • Production
  • Articles
  • Africa Insights
  • Videos
    • CEO Interviews
    • Investor Discussions
  • Company Profiles
  • Magazine
  • Webinars
  • Newsletter
  • About
    • About Us
    • Our Team
    • Contact Us
    • Events
    • Partners
The Assay - Mining investment news, insights and company profiles
  • Home
  • News
    • All News
    • Gold
    • Silver
    • Copper
    • Nickel
    • Lithium
    • Precious Metals
    • Base Metals
    • Battery Metals
    • Exploration
    • Development
    • Production
  • Articles
  • Africa Insights
  • Videos
    • CEO Interviews
    • Investor Discussions
  • Company Profiles
  • Magazine
  • Webinars
  • Newsletter
  • About
    • About Us
    • Our Team
    • Contact Us
    • Events
    • Partners
No Result
View All Result
Subscribe
The Assay - Mining investment news, insights and company profiles
No Result
View All Result
Home Articles

Mercenary Alert: Trilogy Metals Delivers Again

byThe Assay
4 years ago
Mercenary Alert: Trilogy Metals Delivers Again

By Mickey Fulp, Mercenary Geologist, www.mercenarygeologist.com

In my last missive on Trilogy Metals Inc (TMQ.MKT; TMQ.TSX), I wrote that the next catalyst would be its much anticipated Arctic project pre-feasibility study in Q1 2018 (Mercenary Alert, December 22, 2017).

This major milestone was delivered right on schedule this week and the economics are quite robust. Here’s a link to the news release: Arctic Project Pre-Feasibility Study, Alaska.

The PFS for the Arctic project describes the technical and economic viability of establishing a conventional, open-pit, copper-zinc-lead-silver-gold mine-and-mill complex for a 10,000 tonne-per-day operation.

Trilogy’s base case parameters include long-term metal prices of $3.00/lb for copper, $1.10/lb for zinc,$1.00/lb for lead, $18.00/oz for silver, and $1,300/oz for gold. The economic study was prepared on a 100% ownership basis with a 1% net smelter return to NANA Corporation. It did not consider NANA’s option to purchase from 16 to 25% of Arctic with a 15% net proceeds royalty. It did not consider South 32 Ltd’s option to form a 50-50 joint venture with TMQ on its entire Alaska asset base for total consideration of $150 million.

Highlights of the Arctic study include:

  • Base case after-tax NPV at an 8% discount rate estimated at $1,413 million with an after-tax IRR of 33.4%.
  • Initial capital expenditure of $780 million and sustaining capital of $66 million for total estimated capital expenditures of $846 million over a 12-year mine life; closure and reclamation costs estimated at $65 million for an all-in capex of $911 million
  • Estimated after-tax payback of initial capital within 2 years
  • Probable mineral reserves of 43.0 million tonnes grading 2.32% Cu, 3.24% Zn, 0.57% Pb, 0.49 g/t Au, and 36.0 g/t Ag with a life-of-mine strip ratio of 6.9 to 1.
  • Minimum 12-year mine life supporting a maximum 10,000 tonne per day conventional grinding mill-and-flotation circuit to produce copper, zinc, and lead concentrates containing significant gold and silver by-products.
  • Average annual payable production projected at 159 million pounds of copper, 199 million pounds of zinc, 33 million pounds of lead, 30,600 ounces of gold, and 3.3 million ounces of silver.

This positive economic study means the Arctic project is ready to advance to permitting and feasibility. Since I last reported, the public scoping phase of the Ambler road access project was completed and a draft environmental impact statement is now underway.

In my opinion, the base case economic study is conservatively done in its assumptions: it uses metals prices below current spot levels (except for minor by-product Ag) and calculates an after tax net present value with an 8% discount rate.

I found none of the usual red flags that plague most economic studies tabled by mid-tier juniors. That said, I did not critically assess most of the study’s cost inputs and will leave that task to engineers and analysts who are experts in these areas.

The Arctic project is arguably the largest, highest grade, undeveloped volcanogenic massive sulfide deposit in the world. It grades more than 5% Cu equivalent with total projected production of 1.9 billion pounds Cu, 2.4 billion pounds Zn, 400 million pounds Pb, 367,000 ounces Au, and 40 million ounces Ag. With an estimated NPV at more than 1.5 times its all-in capex, Arctic appears to be a robustly economic deposit. In addition, the project has strong support from Alaska state government. However, as with all projects situated in remote, infrastructure- and climate-challenged regions, Arctic carries significant development, permitting, and financing risk.

That said, the pre-feasibility study documents the deposit’s superb economic value and is a huge step forward for Trilogy Metals. Trilogy Metals’ share price has been quite volatile over the past nine months and I expect that to continue. I picked the stock at 66 cents on May 25. It went to $1.35 just 11 weeks later, dropped to 69 cents during tax-loss selling in December, touched an intraday high of $1.64 in mid-January, and closed Friday at $1.45. With 106.4 million shares, TMQ’s current market capitalization stands at $155 million.

Mercenary Alert: Trilogy Metals Delivers Again

Trilogy Metals Inc was my top pick in copper space in the spring of 2017 and it remains exactly that today. The company is strongly leveraged to the price of copper and is not always especially liquid. That said, I think the upside for TMQ is good as the bull market for copper plays out and the company continues to advance its two flagship projects with most of the funding in 2018 provided by partner South 32 Ltd.

The opinions expressed herein are mine and are skewed by my shareholdings in the company and its sponsorship of this website. As always, I encourage you to do your own due diligence by digging deeper into this economic study.

TweetShareSend
Previous Post

Inflation at the Gate, Ready to Drive Commodities Higher

Next Post

Venturex Resources Limited (VXR)

Related Posts

Newrange Gold Provides Exploration Update
News

Newrange Gold Provides Exploration Update

byColin Sandell-Hay, Contributor - The Assay
17 May, 2022
Latin Builds On High-Grade Salinas Lithium Project In Brazil
News

Latin Builds On High-Grade Salinas Lithium Project In Brazil

byColin Sandell-Hay, Contributor - The Assay
17 May, 2022
Calidus On Target With Warrawoona Process Plant Commissioning
News

Calidus On Target With Warrawoona Process Plant Commissioning

byColin Sandell-Hay, Contributor - The Assay
17 May, 2022
Baroyeca Ready For Phase 2 Drilling At Atocha Property
News

Baroyeca Ready For Phase 2 Drilling At Atocha Property

byColin Sandell-Hay, Contributor - The Assay
17 May, 2022
Krakatoa Resources Commences Drilling At Critical Metals Project
News

Krakatoa Resources Commences Drilling At Critical Metals Project

byColin Sandell-Hay, Contributor - The Assay
17 May, 2022
Horizonte Minerals Releases Financial Results
News

Horizonte Minerals Releases Financial Results

byKatie Gordon, Junior Reporter - The Assay
17 May, 2022
Next Post
Venturex Resources Limited (VXR)

Venturex Resources Limited (VXR)

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Upcoming events

23May

121 Mining Investment London – 23-24 May

London
06Jun

121 Mining Investment New York – 6-7 June

New York
No event found!

Popular

  • Image source: Aurum Discovery

    The Lithium Companies Spearheading Europe’s EV Supply Chain Revolution

    0 shares
    Share 0 Tweet 0
  • The Assay Guide to Palladium vs Platinum

    0 shares
    Share 0 Tweet 0
  • Tantalum Production Riding the Lithium Boom Wave

    0 shares
    Share 0 Tweet 0
  • Domestic Rare Earths Industries: Closing the Gaps in Supply and Supply Chains

    0 shares
    Share 0 Tweet 0
  • Galileo Mining In ‘Exciting’ Norseman Palladium-Platinum Discovery

    0 shares
    Share 0 Tweet 0
  • The Assay TV – David Grondin, President & CEO, TomaGold (TSXV:LOT) – 21/2/2022

    0 shares
    Share 0 Tweet 0
  • The Assay TV – Eric Allard, Chief Executive Officer, Tantalex Lithium Resources (CSE:TTX, FSE:1T0) – 17/5/2022

    0 shares
    Share 0 Tweet 0
  • Home
  • News
  • Articles
  • Investor Discussions
  • CEO Interviews
  • Company Profiles
  • Newsletter
  • Magazine
  • About Us
  • Our Team
  • Contact Us
Part of Hyve Group Plc

Please note: This Web site and The Assay magazine and the information and materials on this Web site and in The Assay magazine are not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, any regulated products, securities or investments. This Web site and The Assay Magazine do not, and should not be construed as acting to, sponsor, advocate, endorse or promote any regulated products, securities or investments. This Web site and The Assay magazine and the information and materials on this Web site and in The Assay magazine do not, and shall not be construed as, making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of any regulated products, securities or investments, including, without limitation, any advice to the effect that any mining or metals related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated products, securities or investments should not be made in reliance on any of the information or materials on this Web site or in The Assay magazine. Before making any investment decision, prospective investors should seek advice from appropriately qualified and licensed financial, legal, tax and accounting advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.

Privacy Policy

© 2021 The Assay

No Result
View All Result
  • Home
  • News
    • All News
    • Gold
    • Silver
    • Copper
    • Nickel
    • Lithium
    • Precious Metals
    • Base Metals
    • Battery Metals
    • Exploration
    • Development
    • Production
  • Articles
  • Africa Insights
  • Videos
    • CEO Interviews
    • Investor Discussions
  • Company Profiles
  • Magazine
  • Webinars
  • Newsletter
  • About
    • About Us
    • Our Team
    • Contact Us
    • Events
    • Partners

Please note: This Web site and The Assay magazine and the information and materials on this Web site and in The Assay magazine are not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, any regulated products, securities or investments. This Web site and The Assay Magazine do not, and should not be construed as acting to, sponsor, advocate, endorse or promote any regulated products, securities or investments. This Web site and The Assay magazine and the information and materials on this Web site and in The Assay magazine do not, and shall not be construed as, making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of any regulated products, securities or investments, including, without limitation, any advice to the effect that any mining or metals related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated products, securities or investments should not be made in reliance on any of the information or materials on this Web site or in The Assay magazine. Before making any investment decision, prospective investors should seek advice from appropriately qualified and licensed financial, legal, tax and accounting advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.

Privacy Policy

© 2021 The Assay

Go to mobile version