TRY - Troy Resources

[jman2007]

Hi jman, I'm with you there. TRY has been on my watchlist for the last 12 months. Looking for an entry with sp below cash backing. When (if?) some normalcy returns to the markets, I'm expecting the cash rich to do relatively well.

Yes cash will be king, absolutely. It's a little unnerving to say the least watching this behavioural-based trading slash the sp's of some of the more robust companies for no apparent reason. In saying that, TRY up 6.5% so far today, but I similarly would be waiting for some kind of sanity to be returning first.

Cheers
jman

 

[So_Cynical]

Looking quite cheap

At 76c yet another stock trading close to its cash backing. Never held them before, don't know much about them yet either. Balance sheet looks healthy with $60M in the bank, debt free and unhedged.

Me and the CEO topped up @ this weeks lows...

http://www.try.com.au/default.aspx?ContentID=69

Mr Benson brought alot more than i did...:

With all that cash and gold speckies getting absolutely hammered,
surely Troy will buy something, or take over a little explorer.

Good prospective land aint gona get much cheaper than it is now...or next few months.

 

[Sham]

Jumped in and bought a handful of these at 76c which seems a bargain with all the cash they hold. If TRY go lower then so be it but if your not trading this is a decent price to start accumulating.
Anyone buying these should be well rewarded by holding long term.

 

[Sean K]

80c cash backing and sitting at 70c but what are their assets now?

Two mines about to be closed, a low tonnage underground mine to be commissioned and a few mil of fe tons, with some land around it. Not much really there is there?

Disasterous chart. Long term buy and holders must be wrestless in the farter.

Any real reason to invest in this other than the cash in the bank?

Q3 Highlights:

• Total gold production of 17,217oz at a cash cost of A$698/oz (US$574/oz)
• Improved throughput at Sandstone resulted in 10,271oz of gold and a commensurate reduction in unit cash costs
• Higher throughputs and grade at Andorinhas resulted in nearly doubling production compared to the June quarter
• Sale of the Company’s equity interest in Comaplex Minerals (TSX), at a 21% premium to the then market price, resulted in a 77% return on the company’s initial investment
• Troy announced reserves and resources for the iron ore located on the Andorinhas leases in Brazil. Work in ongoing to commercialise these resources
• Troy has no debt, no hedging and cash and bank deposits of A$60m.

 

[sinner]

Hi kennas,

I know for example TRY has lots of 1.5g/t low grade dirt stockpiled at the Aussie site they are closing (can't remember the name sorry), from my understanding, most small-caps which would usually throw this away are currently milling it lucratively thanks to the high AUD price of gold.

It looks like they are trying to reduce their oz/year profile from the 100000s to the 50000s although I am not sure why.

 

[herbert]

Hi kennas,

I know for example TRY has lots of 1.5g/t low grade dirt stockpiled at the Aussie site they are closing (can't remember the name sorry), from my understanding, most small-caps which would usually throw this away are currently milling it lucratively thanks to the high AUD price of gold.

It looks like they are trying to reduce their oz/year profile from the 100000s to the 50000s although I am not sure why.

I can tell you why they're a long term buy at these ridicolous levels:
The colluvial iron ore mine will only take 5M$ to get started and they can sell 500.000t - 1Mt p.a. , which will add a revenue of around 25M$ annually.

Then add the 50.000 ounces/year at a cast cost of 300- 350 USD which will add another 25M$ revenue and you'll see some compelling value when you hold long term.

On the other hand they'll use their cash wisely to make acqusitions and grow their gold production.

I bought some more today because this has to be one of the cheapest producing gold companies out their trading below cash value !

Cheers

 

[prawn_86]

Herbert,

Realistically how close are they to IO production? Have they done PFS, BFS etc? And with IO demand drop its not looking healthy for juniors.

They do seem to spend their cash wisely from the little research i have done, but past performance does not assure future success

 

[So_Cynical]

80c cash backing and sitting at 70c but what are their assets now?

Two mines about to be closed, a low tonnage underground mine to be commissioned and a few mil of fe tons, with some land around it. Not much really there is there?

As i said before Troy really do need to buy a project or takeover an explorer with
potential....Troy still have plans to be a mid sized producer, and to do that they
need to be a multi mine operation.

The land they have around it (Andorinhas)...its very prospective and peppered
with small historical workings, and is over 112.000 hectares in size....there's prob
a decade of exploration just there.

Troy management have a rock solid record of delivering returns to share holders
(dividends) and mine development, 5 in the last decade, these guys are conservative
and realistic...they have a track record of low cost, fast mine development.

 

[herbert]

Herbert,

Realistically how close are they to IO production? Have they done PFS, BFS etc? And with IO demand drop its not looking healthy for juniors.

They do seem to spend their cash wisely from the little research i have done, but past performance does not assure future success

Prawn,
It's all been done. PFS is complete and the latest quarterly indicated that production could get online in mid 2009, so in about 6 months time.

Even at these low iron ore spot prices, the colluvial mine will be profitable because production costs are very low... digging, trucking and delivering.


Take a look at the gold price, 1300AUD$/ounce, even 2g/t stockpiles will work out very profitable at these prices let alone 300USD$/ounce when the underground mine in Andorinhas gets online.

Only 69M shares on issue and TRY plummeted from a high of 4 $ , technical research would indicate that TRY bounces back to 1.50 $ level in the short- medium term.


DYOR

Cheers

 

[prawn_86]

technical research would indicate that TRY bounces back to 1.50 $ level in the short- medium term.

Yes the fundies do look to be falling into place, but i dont for the life of me see how you can say the above statement.

Nothing on the graph indicates its going to jump 100%, in fact a chart cant even predict that big of a rise.

What t/a techniques are you using???

 

[herbert]

Yes the fundies do look to be falling into place, but i dont for the life of me see how you can say the above statement.

Nothing on the graph indicates its going to jump 100%, in fact a chart cant even predict that big of a rise.

What t/a techniques are you using???

Prawn,
take a look at the chart: TRY has been way oversold considering that the fundamentals are still the same or even better ( gold price) than at the beginning of 2008 when it traded at 3.5 $ .
Look at the sharp decline on low volume, it went down to around 67c which is a fall of around 85% from its high . When the markets recover this should make its way up to above 1$ imho, target 1.50$.

They'll be cashflow positive next year and are currently trading below cash.


DYOR
Cheers

 

[Sean K]

Look at the sharp decline on low volume, it went down to around 67c which is a fall of around 85% from its high . When the markets recover this should make its way up to above 1$ imho, target 1.50$.

The The error in this logic is that it must have been well priced previously. It may have been overvalued and has come back in line with where it should be. Just like the XAO was overbought at 6800. The market will always over and undershoot.

If they get some sales agreements in place for the IO it would be nice, but when there's a whole bunch of other producers cutting back due to lack of demand and agreements being renegged on elsewhere, there just might not be a buyer. And any idea how it's getting to a port? Soory, haven't seen the PFS.

One thing that strikes me with their deposits is that there's not much really in the ground.

6.5m tn IO, and
350K Au

BRM is sitting on 1.5b IO and is valued at $60m with $105 cash in the bank.
A little goldie like AZM with 750K Au valued at about $6m

Obviously very difficult to do peer comparisons but it just sends signals to me.

Maybe everything is undervalued right now?

 

[herbert]

The The error in this logic is that it must have been well priced previously. It may have been overvalued and has come back in line with where it should be. Just like the XAO was overbought at 6800. The market will always over and undershoot.

If they get some sales agreements in place for the IO it would be nice, but when there's a whole bunch of other producers cutting back due to lack of demand and agreements being renegged on elsewhere, there just might not be a buyer. And any idea how it's getting to a port? Soory, haven't seen the PFS.

One thing that strikes me with their deposits is that there's not much really in the ground.

6.5m tn IO, and
350K Au

BRM is sitting on 1.5b IO and is valued at $60m with $105 cash in the bank.
A little goldie like AZM with 750K Au valued at about $6m

Obviously very difficult to do peer comparisons but it just sends signals to me.

Maybe everything is undervalued right now?

Kennas,
that's the big issue that makes TRY stand out among all the other junior gold plays, and that is the cash of around 60 M$.

The reason why AZM is valued at 6M$ is because they aint got no cash and the market believes they'll not be able to raise any more money in this environment... That is where TRY comes in because they're looking for some real bargain acquisition which they'll get for next to nothing with their 60 M$ in cash. Look at what they could do with all that cash.... They could buy lots of advanced, huge gold resources for a bargain and that is exactly what they're doing right now !!

The so-called small IO resource can be compared to the Andorinhas 250k ounces resource in terms of value as this will produce approx. the same cashflow.

So it's more like a 100.000 ounces/ year production.

As for the transport of the ore, they'll only have to truck it to the nearby city where the steel mills are and the ore is required.
That's why it will only take 5 M$ to get it online and production costs are extremely cheap.... Off-take agreements are underway btw.


I couldn't find another gold junior trading below cash value with some extremely profitable resources, management which already operated 5 profitable mines in the last decade and a dividend paid every year !


You know what, once hedge funds get back into the market they'll be looking for undervalued companies with a trackrecord of paying dividends annually and TRY will be one of them.

TRY traded at 3-4 dollars for about 4-5 years, and that was for a reason.


DYOR

Cheers

 

[Sean K]

Yes, good points.

Will be interesting to see what they end up buying to add value.

I'd be happy if they bought AZM for $20m ....

 

[So_Cynical]

Yes, good points.

Will be interesting to see what they end up buying to add value.

I'd be happy if they bought AZM for $20m ....

More like 10 mill.. and a 3% royalty :

While on the subject of AZM, and TRY's need for good ground

http://www.try.com.au/default.aspx?MenuID=23

Troy,s Strategic Investments

Birim Goldfields Inc (now Volta Resources Inc)

In May 2006, the Company entered into a strategic alliance with Birim for the
exploration of gold mining projects in Ghana. Pursuant to this strategic alliance
Birim granted the Company a right of first offer or refusal, as the case may
be, in respect of any of Birim’s interests or properties which Birim proposes to, or
receives an offer to, joint venture, divest or transfer. In addition, Troy subscribed
for, and was issued, 5,000,000 units of Birim.

Notice how Birim, now Volta has land to the West and South of AZM

http://www.voltaresources.com/i/pdf/factSheet.pdf

 

[Sean K]

More like 10 mill.. and a 3% royalty :

While on the subject of AZM, and TRY's need for good ground

Interesting SC, thanks for that!

No doubt there will be some consolidation in the resources sector. Just hard to pick which scraps will be picked up...


Bounced ok off the potential bottom, but could only initially enter on a short term trade with a tight stop imo. Longer term until these red lines are broken, it's still going down, I'm afraid to say.

Obviously long term fundamental holders may stick it out. Hope general market world economics and sentiment change for you soon.

 

[newanimal]

Heavy increase in volume today,anyone know what thats about? my tools are limited at the moment. Nice trend seems to be establishing itself, at least to my novice eye.

 

[So_Cynical]

Heavy increase in volume today,anyone know what thats about?

Heavy increase in volume for the last 3 months...coinciding with the rejuvenated
POG, especially in Brazilian and Australian dollars.

TRY Quarterly Report http://www.try.com.au/default.aspx?ContentID=70

Highlights

• 60 Million in Cash and Bullion
• No debt
• Total gold production of 15,233oz at an average cash cost of A$792/oz
• Sandstone mining to restart due to high AUD gold price ($1350+)
• Lord Nelson Pit (sandstone) will add about 30,000 ounces to Troy’s production 2009.
• Regional exploration of the Horizonte JV area (Brazil) produced encouraging preliminary
  channel sampling results of 3.0m grading 13.55g/t gold and 3.5m grading 9.65g/t gold
• Horizonte JV area zone remains open along strike and at depth. Exploration is continuing.

Troy have 112.000 hectares around the Andorinhas mill...they prob have enough gold
there to keep them going for 20 years.

---

 

[JTLP]

That is a bit of a worrying high cash cost is it not?

Are there any reasons behind this? (operation problems etc)

Is it expected to come down with a production ramp up?

 

[So_Cynical]

That is a bit of a worrying high cash cost is it not?

Are there any reasons behind this? (operation problems etc)

Is it expected to come down with a production ramp up?

There overall cost per ounce is prob slightly higher than the average
for Aussie operators....worrying ? no

At Andorinhas (Brazil), 56,744t at 4.34g/t gold were processed resulting
6,804oz at an average cash cost of A$775/oz (US$535/oz).

At Sandstone (Aust), the excellent performance in the previous quarter
continued through the December quarter with 139,424t at 2.12g/t processed
resulting 8,429oz at a cash cost of A$806/oz (US$557/oz)

At the Mamão underground mine, development continued with the mining of
first ore during the quarter. Development ore grading about 5g/t gold is due
to enter mill feed in February. The underground grade will increase in the
June quarter as more ore is sourced from stoping rather than sill development.