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Value Stocks: This Hidden Asset Could Be Very Undervalued

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Troilus Gold (TSX:TLG) is a Toronto-based, advanced-stage exploration and early-development company focused on the mineral expansion and potential mine re-start of the former gold and copper Troilus Mine. The company owns and operates a project called the Troilus project, which could be significantly undervalued. The company has approximately 21 employees and consultants, including senior management.

Valuable project

The 107,321-hectare (ha) Troilus project is located within the Frotêt-Evans Greenstone belt in Quebec. From 1996 to 2010, Inmet Mining operated the Troilus Project as an open pit mine, producing more than 2,000,000 ounces of gold and nearly 70,000 tonnes of copper.

The Troilus project is a past-producing mine, but a new mineral resource estimate was outlined in July 2020. The Troilus Project is located in central Quebec and is situated approximately 120 kilometres north of a town called Chibougamau. The mineral rights for the Troilus Project are comprised of a single mining lease and 1,988 mineral claims that cover a total area of approximately 107,321 ha.

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Growth by acquisition

The project is one project divided into two, namely the Troilus gold copper project and the Troilus Frôtet project. The Troilus gold copper project was acquired through three transactions. The first consisted of the acquisition of the one mining lease and 81 mineral claims, which collectively covered approximately 4,714 ha and included the former Troilus mine from First Quantum Minerals in April 2018.

The second transaction consisted of the acquisition of 209 mineral claims in the north half of the Troilus project, covering approximately 11,309 ha in December 2018, whereby Troilus acquired the Troilus north property located immediately to the north and east of the Troilus property. The next transaction consisted of the acquisition of three mining claims, covering approximately 162 ha in November 2019. These claims are labelled as the Holmstead Bloc by the company and were intelligent purchases by Troilus.

The Troilus deposit is hosted by volcanic and hypabyssal intrusive rocks in a region of intense deformation, known as the Parker domain. The project is represented by a thick volcanic sequence, predominantly mafic to intermediate in composition.

Reduced customer risk

The company is an exploration and early-development company and is not in production. If it develops a precious or base metal property into production, there is a global market into which Troilus could sell minerals produced and, as a result, the company does not currently expect to be dependent on a particular purchaser with regard to the sale of any minerals that it produces.

Troilus competes with numerous companies and individuals that have resources significantly in excess of the resources of the company in the search for attractive mineral properties, qualified service providers and labour, and equipment and suppliers. The ability of the company to acquire additional mineral properties in the future will depend on Troilus’s ability to operate and develop the company’s present property or obtain other sources of financing and also on the company’s ability to select and acquire suitable producing properties.

In short, Troilus could be the owner of a very valuable asset that is possibly not fully appreciated by the market.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

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