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“To position Troy as a highly profitable mid-tier gold producer with a portfolio of quality long-life assets within prospective regions providing further exploration growth.”

Message: Otto sez ............'my pick of 2009, has just added investor value.'

Otto sez ............'my pick of 2009, has just added investor value.'

posted on Mar 26, 2009 04:45AM
"inca kola news" <[email protected]>

Troy Resources (TRY.to) (TRY.ax) News

Posted: 25 Mar 2009 07:41 PM PDT

Map from Intrepid Mining website

Troy Resources today announced it was paying U$20m (straight from the kitty) to buy the 'Casposo' deposit in the San Juan region of Argentina from Australian miner Intrepid Mines (IAU.ax) (IAU.to). Looks like a good deal to me. TRY has had a full production facility in mothballs for some time and has made no secret of the fact that it's been looking for a place to put it, with an ideal deposit grading 3g to 4g/t Au. That's what they've found in Casposo.

Check out the paste of the PR below, but you'll note an envisaged six year mine life for 338k oz Ag (including inferred) and 9m oz Ag (incl inferred), so via memory and quick ballpark numbers, your humble correspondent expects Troy expects to run its mothballed plant basically at optimum speed, as 60k oz Au per year with silver credits sounds just right (note more gold than silver production expected to begin with, with the mix changing in the later years). Also, notably most of the gold deposit is already in the probable reserves column...that's positive. As for the U$20m pricetag, if we use the totally totalled 454,900oz Au Eq number (below) that comes out of the Casio at U$44/oz. That works.

Importantly, very importantly in fact, please note that San Juan Argentina is very much miner-friendly country. As mentioned several times on this blog in previous posts, Argentina can be pro or anti mining, the key being the provincial level of government, not the national or local township levels. San Juan is a province that welcomes mining and has a long history of mining activity. It is the province that is home to the Argentine side of Barrick's contentious Pascua Lama gold project, but as Casposo is just 700masl and the polemic Pascua Lama is over 4000masl up the circumstances are very different. Add to the mix that the deposit is low sulphide and (although I'm assuming somewhat) is unlikely to need use of cyanide to extract the gold. Make no mistake, Troy is in pro-mining country.

This type of small deposit is tailor-made for Troy, a company with a track record of bringing mines to production quickly (again, see below). It will also be able to totally fund the project from cash held at bank, so no need to get sticky in the credit markets.

Bottom line: Troy Resources, my pick of 2009, has just added investor value. DYODD, because I own (avg buy C$0.84). Right now TRY.ax (Aussie listing) is up 6.3% at A$1.285 which is C$1.106 at current forex. TRY.to closed at C$1.01 today.
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