Earlier this month, we highlighted Trillium Gold Mines Inc. (TSXV: TGM) (OTCQX: TGLDF) as a Canadian junior miner that has a favorable risk-reward profile. We believe that the company has been able to de-risk the opportunity by completing strategic bolt-on acquisitions of property that is located near or next to the site of a major precious metal discovery.
We believe that Trillium Gold has been nothing short of an execution story and are favorable on the strategy that the management team has used to identify potential acquisition targets. Over the next year, we expect the company to announce several significant developments as it relates to these acquisitions and believe the market is discounting the growth potential that is associated with the business.
Last week, Trillium Gold announced a major milestone and reported to have initiated a major drill program at the Newman Todd Property in Red Lake along with additional earlier stage projects. For Trillium Gold, this development represents the second phase of drilling at Newman Todd in 2020 and is expected to increase to more than 25,000 meters as new targeting methods show the potential for positive results.
Going forward, the management team plans drill 25,0000 to 30,000 meters on Trillium Gold’s advanced and early stage projects. Trillium Gold also plans to follow up and test additional high-priority targets and we are favorable on the potential upside that is associated with a potential positive discovery.
We Have a High Conviction Level in the Management Team
One of the reasons we are confident with Trillium Gold is related to the amount of human capital that is associated with the business. The company reported to have increased the number of full-time geologists that work under the leadership of VP of Exploration Bill Paterson. Trillium Gold has four geologists on staff, and we consider this to be an important aspect of the story due to the knowledge base of the collective team.
When it comes to analyzing any company, we conduct substantial due diligence on executives to better understand how their prior experience will benefit the company. As it relates to Trillium Gold’s team of geologists, most of the team has spent the majority of their careers in the Red Lake region while working for companies like Goldcorp and Rubicon Minerals. The team has more than 100 years of combined exploration and production experience in the Red Lake Greenstone Belt and we are considered this to be a key pillar of the story.
A key next step for Trillium Gold is the testing and the exploring of previously untested structures and geology on the property. As part of the process, the company will work to optimize the direction that it will drill, and we are favorable on the expertise that is associated with the team that is supporting this initiative.
Over the last two quarters, Trillium Gold has collected important drilling and outcrop data that should allow it to complete a targeting model for more than 1,000 meters of strike length within the Newman Todd Zone. We are favorable on the amount of work that was conducted on the property ahead of the second phase of the project and expect the data to further de-risk the opportunity. Going forward, Trillium Gold expects to its precision targeting to improve as they continue to learn about the property and are favorable on this approach.
Another reason we are excited about the Red Lake property is due to the approach the business is taking to drilling. Trillium has tested new drill angles and azimuths which were not previously tested, and we are favorable on the strategy that it has to maximize value from the property. The data that Trillium Gold received is proving to be meaningful in how the company understands mineralization controls in the region.
An Undervalued Opportunity with Large Growth Catalysts
Trillium Gold announced that the results from the remainder of the phase one drilling program has continued to show positive outcomes. Going forward, the company will continue to test various drill orientations in order to develop a comprehensive understanding of the mineralization and structural controls and test the depth potential of the Newman Todd
The data that was collected implies that there are several high-priority drill targets on Trillium Gold’s property. As a result of the findings, the company expects to increase the phase one drill program from 8,000 meters to 25,000+ meters and we find this to be significant.
Trillium Gold also announced that Rodren Drilling was awarded the contract for the next phase of drilling, which is expected to continue well into 2021. We believe that the company has significant potential catalysts for growth and will continue to closely monitor the story.
At current levels, Trillium Gold is trading at a massive discount to its peers and we consider the valuation to be compelling. Positive data from the drilling program represents the most significant potential growth catalyst and we believe that Trillium is an opportunity to be aware of.
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