Trillium Gold Mines: Company Overview
Trillium Gold Mines Inc. (TSXV: TGM) is a junior gold mining company that owns the second largest landholding in the Red Lake mining district of Ontario, one of the most prolific and gold-rich mining regions in the world. Mines in the region produced a total of 29.5 million ounces of gold at an average gold grade of 15.41 grams of gold per tonne of resource (g / t), with the Red Lake-Campbell mine representing more than about 80% of this total.
Trillium’s flagship property is the 198 hectare Newman Todd Project. It also owns a number of other promising gold properties such as Gold Center (80% interest), which is directly adjacent to the Red Lake-Campbell mine, and Leo (100% interest).
The investment thesis for Trillium Gold Mines is based on the following:
- The current macroeconomic environment has created a bullish catalyst for the price of gold, with the world’s largest central banks expanding their balance sheets to close the GDP gap due to reduced productivity.
- Trillium Gold is the second largest landowner in the region, just behind Evolution Mining.
- Newman Todd appears to have strong gold mineralization, with 41% of the holes drilled intercepting 10 g / t gold or more.
- The Gold Center property, while not the company’s flagship product, is directly adjacent and within 300 meters of Evolution Mining’s current Red Lake mine operations.
- The firm has an experienced management team with decades of experience.
The strengths of Trillium
Much of the pattern behind Trillium appears to be the process of aggregating high-value assets in the Red Lake area to command a stronghold in the area. To date, the company has built a portfolio of a number of high potential properties, including the following.
Newman Todd seems to be a project with great potential. The project contains a network of rich gold veins and remains open at depth. Perhaps more interestingly, 41% of all holes ever drilled at Newman Todd intercepted gold concentrations of 10 g / t or greater.
In addition, it has only been drilled sparingly at depths less than 400 meters. Other projects with similar geologies have produced substantial gold at greater depths. Indeed, a hole drilled more than 400 meters deep (NT-129) gave very promising results.
The project itself includes both the Newman Todd property and the adjacent Rivard property, now renamed Newman Todd Southwest, which is contiguous to the project. In total, the property covers 288 hectares and is close to several former mines in production. On December 31, 2020, Trillium completed the purchase of a 16.5% stake in Newman Todd, bringing its stake to 100%.
Trillium completed a 16-hole, 6,027-meter drill program at Newman Todd in 2020. With the latest testing published, the company now classifies the project as “the next open pit deposit at Red Lake.” Highlights of the drill program include 15.41 g / t gold over 7.05 meters in hole NT20-169 and 8.63 g / t gold over 6.55 meters in hole NT-20- 167, among others.
Many gold deposits in Canada that formed in Archean rock formations similar to Newman Todd’s extended to great depths, in some cases over 2,000 meters. As Newman Todd (and potentially Gold Center) are drilled to significant depths, it is possible that results compatible with other mines may be found there as well.
Archean rock formations are considered the oldest rock formations on the surface of the earth and are found in Greenland, Siberia, the Canadian Shield, the Baltic Shield, Western Australia, as well as in d ‘other places. Archean rocks were formed by heat flux 3.875 to 2.75 billion years ago.
The Gold Center property
At the end of August 2020, Trillium signed a binding joint venture agreement to acquire an 80% stake in the Gold Center project from Rupert Resources Ltd. Although it is not classified as the “flagship” asset of the company, it is perhaps the most attractive property owned by the company.
Interest in Gold Center property is a result of its location. The property is within 300 meters of underground exploration and mining currently being conducted by Evolution Mining at their Red Lake mine. This mine, located in the highest grade gold camp in North America, produced a total of 24 million ounces of gold at an average grade above 16 g / t.
Additionally, last week, Trillium announced it would embark on an 8,000 meter drill program on the property, via a total of eight holes – meaning the company is looking to conduct deep drilling to determine if the Mineralization continues from the Red Lake Mine property to the Gold Center property. If so, well, maybe an acquisition that took place ten years ago can provide some insight into potential valuations.
A fairly recent discovery southeast of the high grade Campbell-Red Lake mine area is a constructive data point for Gold Center. This discovery – a reach of 7.9 meters with a concentration of up to 63 g / t gold – suggests the possibility that the Red Lake mine trend could dip through the Gold Center property.
Other Trillium Assets
Apart from the Gold Center and Newman Todd properties, Trillium also owns several other high potential assets in the area, including properties close to Great Bear Resources’ Dixie project. Full details on these properties can best be found here.
Overburden drilling on the 100% owned Leo property is also expected to begin this year. Leo, which is only 15 kilometers from the Great Bear Dixie Project, may have several gold zones on its surface. In addition, a regional fault system linked to gold mineralization divides the property in two.
Taking into account the roughly $ 13 million in cash the company raised in a private equity placement in October 2020, Trillium’s balance sheet is in excellent shape. She has no debt and her cash balance is expected to fund the company’s drilling needs for a period of time. Trillium’s operating losses and operating cash flow deficits have widened significantly over the past two quarters due to its aggressive (and successful) drilling program at Newman Todd.
|(in thousands of Canadian dollars, except for outstanding shares)||2T FY21||1T FY21||4T FY20||3T FY20||2T FY20||1T FY20|
|Operating income||($ 4,385)||($ 1,545)||($ 1,240)||($ 142)||($ 169)||($ 121)|
|Operating cash flow||(4,298)||(1771)||(171)||(143)||(253)||(43)|
|Cash – End of period||8,567||1,169||1,832||987||129||392|
|Debt – End of period||0||0||85||85||85||85|
|Shares outstanding (millions)||31.6||23.4||20.9||13.3||9.1||9.1|
Russell Starr, President and CEO, Director
Russell Starr is an entrepreneur and finance professional focused on private and public mining and exploration, business consulting, corporate development, and mergers and acquisitions. Mr. Starr has over 20 years of experience in corporate finance, mergers and acquisitions, investment and business development. Mr. Starr is co-founder and co-owner of Echelon Wealth Partners, a leading Canadian securities broker. As an executive at Cayden Resources, he was instrumental in the marketing, financing, development and final sale of Cayden for C $ 205 million to Agnico Eagle.
Bill Patterson, Vice President of Exploration
Bill Patterson is a professional geologist in Ontario and has extensive experience in surface and underground exploration at Red Lake, including managing the ultra-deep surface drilling program at the Cochenour mine which has progressed to underground development, bulk sampling and starting mine status.
Queenie Kuang, CPA, CGA
Queenie is a Chartered Public Accountant and holds a Bachelor of Business Administration in Accounting and Finance from Simon Fraser University, which she obtained in 2007.
We advise investors to take into account the following risks:
- Gold production for years to come. While Trillium continues to report impressive gold interception and concentration data from its Newman Todd drill programs, no production and no cash flow will occur for some time.
- Trillium will likely need to raise more liquidity through private equity placements. If the company’s concurrent drilling programs are successful, Trillium will most likely need to raise equity to fund further exploration activities. If so, the company would likely sell new shares at prices much higher than its current valuation (a high class issue).
Many small, pre-revenue Canadian copper mining companies trade on the TSX and CSE. Below we list a few whose main projects are located in the Red Lake mining district.
|Company||Teleprinter||Market capitalization (in millions of dollars)||Land ownership (hectares)|
|Trillium Gold Mines||TGM.v||50||~ 58,000|
|Great Bear Resources||GBR.v||881.6||~ 29,000|
|Battle North Gold||BNAU.v||240.4||~ 28,000|
|Pacton Gold||PAC.V||34.2||~ 27,000|
|BTU metals||BTU.v||18.3||~ 20,000|
Some potential catalysts that could have a significant impact on Trillium’s share price include:
- Drill results at Newmon Todd, Gold Center and Leo Projects. Further exploration of these properties should yield positive results based on past data. Continued reduction of property risk should be a net benefit to the business
- Consolidation activity for minors. Trillium has valuable mineral resources in one of the most prolific and richest gold mining regions in the world, but its enterprise value is only around $ 45 million.
Trillium is an attractive gold miner due to the favorable location of its properties and the early drilling success the company has had on its flagship Newman Todd property. Moreover, few young miners have both the attractive projects and the financial strength to drill and explore several projects at the same time. Despite this favorable position, Trillium is trading at an enterprise value of just $ 41.6 million, less than many comparable junior miners with much less potential.
FULL DISCLOSURE: Trillium Gold Mines is a client of Canacom Group, the parent company of The Deep Dive. The author was paid to cover Trillium Gold Mines on The Deep Dive, with The Deep Dive having full editorial control. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title.