TRY - Troy Resources

[Bintang]

Intrepid Mines has sold Casposo to Troy Resources for US$22 million.

Construction costs are too high I imagine.

I think this is a good result!

Unhedged gold company and now cash to put into Paulsens and the Indonesia mine.

Looks like the market liked it too.

Intrepid mines thread is excited about this being a good deal for IAU. Where's the excitement for TRY? Let me try to generate some:
Troy has just bought 454,900 oz equivalent gold discovered in-the-ground resources for only US$44/oz. They are paying cash for the transaction, (no debt) they have an existing gold production facility they can use to help develop the project at low capital cost. They have a proven track record of bringing new projects onstream quickly. In my opinion TRY has just added very significant shareholder value which deserves more crowing from the rooftops than what I hear from the IAU shareholders, for whom their company management has just sold off part of the farm.

 

[So_Cynical]

Intrepid mines thread is excited about this being a good deal for IAU. Where's the excitement for TRY? Let me try to generate some:
Troy has just bought 454,900 oz equivalent gold discovered in-the-ground resources for only US$44/oz. They are paying cash for the transaction, (no debt)

I'm exited...Casposo is a good fit for Troy, its a very advanced project and at a
guess IAU would of prob already spent about 10 > 15 million on development so
far, so its not like its a bad deal for either party.

I brought into Try and IAU about the same time....i sold out of IAU last Month,
Troy has a proven fast mine development track record, and Casposo is the sort
of project they can get into production within 2 years....just like they did with
Andorinhas....they have a mothballed mill in Cobar, surely it will be on its way
to Argentina quick smart.

 

[Bintang]

I'm exited...Casposo is a good fit for Troy, its a very advanced project and at a guess IAU would of prob already spent about 10 > 15 million on development so far, so its not like its a bad deal for either party....

So_Cynical in respect of Troy it's more than just "not like a bad deal" I think its a great deal. I've done some analysis of Troy's shareholder value generation since 2001 - see the attached chart, which plots cumulative shareholder value versus cumulative market value of Troy's gold production.
The y-axis of the chart is Net Asset Value plus cumulative dividends paid and the trend shows that for every Australian dollar's worth of marketable gold produced by Troy, the company has generated on average A$0.276 of value for its shareholders.

Now lets' consider TRY's position at 31 Dec 2008: Its remaining gold reserves (proved + probable for Australia + Brazil are 243,250 oz = the reserves reported at 30 Jun 2008 minus production Jul-Dec 2008). Let's now assume this quantity of gold once produced gets sold for an average market price of US$900/oz or (A$1300/oz assuming ROE A$1.00 = US$0.69). That's a total market value of A$316.2 million. Based on TRY's past performance this should increase nominal shareholder value by A$87.3 million = A$1.24/share (have assumed 70 million shares)

Repeating the above calculation using TRY's remaining gold resources (measured + inferred) of 523,650 oz gives a value generation of A$2.06/share.
At A$1.36 TRY’s current share price is less than its net asset value per share as of 31 Dec 2008 (A$108.9 million/ 70 million = A$1.55 per share) and the market is not factoring in the incremental value of TRY’s future production from it existing mines. If I add some discount factors to the above analysis to account for the time it takes to actually produce the gold (and hence the revenue) I estimate that TRY should be worth around A$2.60 to A$3.40 per share and this is before the Casposo deal.

Now let’s consider the impact of the Casposo purchase. This adds probable reserves of 382,500 eq gold oz and inferred resources of 454,900 eq gold oz at a cost to shareholders of around A$0.46/share (purchase price approx A$32 million). However, in TRY’s hands these reserves should generate incremental nominal shareholder value of around A$140 to A$160 million, i.e. A$2.14 per share. After allowing for the purchase price and time required for development and production, the Casposo deal ought to add another A$1.30/share of value to TRY – that’s a full valuation range of A$3.90 to A$4.70 per share!

For these reasons I consider TRY shares a great bargain at any price below $2.00. As I have indicated in previous posts I am an existing TRY shareholder and I continue to accumulate whenever I have spare funds available.

 

[solomon]

For these reasons I consider TRY shares a great bargain at any price below $2.00. As I have indicated in previous posts I am an existing TRY shareholder and I continue to accumulate whenever I have spare funds available.

Thanks for the analysis, I'm appreciating the share price performance of late, but have been reluctant to top up. Your analysis has challenged me to think a little bit harder about my own analysis.

 

[Bintang]

Thanks for the analysis, I'm appreciating the share price performance of late, but have been reluctant to top up. Your analysis has challenged me to think a little bit harder about my own analysis.

I am of course taking a long term view. The market is not going to suddenly go wild and bid TRY up to my valuation range - not under prevailing market sentiment that’s for sure. But for the astute and patient I think TRY offers tremendous value. I can redo the analysis much more conservatively but the current price under $2.00 still looks very cheap - and that is without factoring in any value for Andorhinas iron ore or any gold exploration upside (in Brazil and/or Mongolia). Meanwhile today TRY jumped another 5%, touching $1.49 before closing at $1.445.

 

[So_Cynical]

Meanwhile today TRY jumped another 5%, touching $1.49 before closing at $1.445.

So that's well over a 100% turn around since the low of 0.67 in November, also notice the
increased volume since the low...love the way troy seems to trend with consistency.

 

[So_Cynical]

Troy have released some very nice drill results from the two mile hill prospect, 3 Kilometers
from Troys production mill at Sandstone...8 new holes to follow up the 2 interesting results
from last year.

Last years drilling (2 holes)

• 387.0m @ 1.57g/t gold
• 96.6m @ 1.66g/t gold

The 8 new holes

• 6.8m @ 15.73g/t gold
• 25.9m @ 16.56g/t gold
• 96.6m @ 1.66g/t gold
• 205.5m @ 1.14g/t gold
• 156.3m @ 1.14g/t gold
• 353.3m @ 1.04g/t gold
• 158.6m @ 0.83g/t gold
• 230.4m @ 1.62g/t gold

There is alot of gold at two mile hill...and alot of it is pretty deep down, maybe too
deep :dunno: and still open at depth....details below.

http://www.asx.com.au/asxpdf/20090716/pdf/31jl93f4lmcjht.pdf
.

 

[So_Cynical]

Casposo resource upgrade out today...and as usual with Troy its all good news, a 32% increase in contained gold equivalent Indicated Resource ounces.

http://www.try.com.au/default.aspx?ContentID=79
.

 

[champ2003]

Casposo resource upgrade out today...and as usual with Troy its all good news, a 32% increase in contained gold equivalent Indicated Resource ounces.

http://www.try.com.au/default.aspx?ContentID=79
.

I believe that TRY could end up being the market darling of the year if it keeps on going like this.

 

[So_Cynical]

I believe that TRY could end up being the market darling of the year if it keeps on going like this.

Yep...and they reckon they will be in production at Casposo by September 2010 as far as i know the mill to be used at Casposo (Argentina) is still in pieces in Cobar NSW....as ive stated before Troy are prob the best small mine developers in the Country, they set a fast, ambitious target and beat it every time.

I'm of the opinion Troy is at, or very close to that point in time when a small company becomes a large company, like a tipping point or turning point in history...all the great company's/businesses have had one.

 

[champ2003]

Yep...and they reckon they will be in production at Casposo by September 2010 as far as i know the mill to be used at Casposo (Argentina) is still in pieces in Cobar NSW....as ive stated before Troy are prob the best small mine developers in the Country, they set a fast, ambitious target and beat it every time.

I'm of the opinion Troy is at, or very close to that point in time when a small company becomes a large company, like a tipping point or turning point in history...all the great company's/businesses have had one.

I agree,

I like the announcement today.

Exceptional profit for a mid tier Gold mining company with exceptional growth.

Couldn't ask for anything more really.

 

[So_Cynical]

Tomorrow (12/11/2009) is the record date for Troy's pro-rata non-renounceable entitlements issue, so if u didn't buy a couple of days ago your to late one Share for every six held at the issue price of $2 per share...Troy hit 2.86 today so if Gold holds at near current levels, the issue should end up being very profitable to holders.

I'm taking my full entitlement.

 

[Bintang]

Tomorrow (12/11/2009) is the record date for Troy's pro-rata non-renounceable entitlements issue, so if u didn't buy a couple of days ago your to late one Share for every six held at the issue price of $2 per share...Troy hit 2.86 today so if Gold holds at near current levels, the issue should end up being very profitable to holders.

I'm taking my full entitlement.

So_Cynical what are your thoughts just now on Troy?
I notice everyone's been quiet since the entitlements issue last November (of which I also took my fill).

On my part I decided to take profits recently at just under $2.50 and have reduced my holdings by 85%. My main reasons:
1) From the news releases I noticed a spate of Director share sales between 15 Mar and 23 April ( C.R. Parish and John Jones) during which they off-loaded over 300,000 shares at an average price of around $2.27.
2) The December half year report ($5.5 million loss) and the March quarterly report were disappointing with lower than expected gold production at Andorhinas.
3) After examining the March quarterly report I am projecting a loss for the current financial year of over $9 million or close to -$0.11 per share.

Also I see corporate overheads increasing year-on-year as dividends have declined.
The $16.5 million profit in 2008/2009 looks to have been a once off that was due to a prudent sale of investments before share markets tanked in 2008.

TRY share price has held up quite well during this week’s global turmoil and maybe if the gold price keeps on going the way it has I will regret going short last month. On the other hand I realized some very nice gains at the time.

 

[So_Cynical]

So_Cynical what are your thoughts just now on Troy?
I notice everyone's been quiet since the entitlements issue last November (of which I also took my fill)

Troy is my biggest holding by far...in fact about 19% of my total portfolio, and today was a great example of why i still want to have a high exposure to Gold...the only 3 stocks i hold that went up today were Goldies.

Financially this year will not be a Stella year for Troy mostly due to Casposo dev costs, however next year will be stellar...high grade ore at Andorhinas and production from Casposo kicking in will see to that, then 2012 on target to be the best ever...add into the equation the continuing USD and EURO weakness and a little inflationary pressure and POG could see 2K+

I would expect the divi to hold this year and increase in 2011 etc and would expect Troy management to do there usual and acquire and test surrounding tenements....the big positives for TRY are direct gold & silver exposure and low risk/can do management.

I'm determined not to take profit before the SP reaches 2.90 however reserve the right to sell some of my more expensive shares at cost or small profit just to free up some funds.

 

[Bintang]

..... and low risk/can do management.

When I see Directors of the company selling shares just before the release of a disappointing quarterly report I get a bit suspicious. For a stella year in 2011 they will definitely need the higher POG.

 

[Sean K]

Cash costs at Andorinhas look pretty high to me. Looks dangerous if there is a major correction in POG (which I doubt, but a risk).

Unit cash costs at A$853/oz were 2% lower than the A$872/oz in the
December quarter.

And Sandstone:

Lower throughput and gold production, longer haulage and harder ore
resulted in unit cash costs of A$1,039 per oz compared to A$916/oz in
the December quarter.

eeeek

I'm not sure why you've got 20% in this SC.

Certainly been good since the Nov low like most goldies, but over 5 years you're still down. I suppose it all depends on your time frame.

 

[Sean K]

When I see Directors of the company selling shares just before the release of a disappointing quarterly report I get a bit suspicious. For a stella year in 2011 they will definitely need the higher POG.

Interesting.

Jones sold $145k on 20 April.
Parish sold $113k on 26 March.
Parish sold $220k on 24 March.
Parish sold $125k on 19 March.
Parish sold $93k on 9/10 March.

Not sure what Parish does for this company except sell shares.

Robin Parish, Non-Executive Director appointed 27 November 2009, has been a Director of the El Oro Mining and Exploration Company since 1971, a mining investment company now domiciled in Guernsey, and listed on the Channel Islands Stock Exchange as El Oro Ltd.

How did he get his interest in this company anyway? He was made a director on 27 Nov 09, and then only had 137k ordinary shares direct interest and had 4.3m shares indirect interest?

Looks like he's just an investor who had to be made a director through Channels...

 

[Sean K]

Cash costs at Andorinhas look pretty high to me. Looks dangerous if there is a major correction in POG (which I doubt, but a risk).

Just checking a presentation from late last year and found this gem on Andorinhas:

Forecast production ~50k pa
 Forecast cash costs: ~US$500/oz

Then from quarterly:

Unit cash costs at A$853/oz were 2% lower than the A$872/oz in the
December quarter.
Full FY2010 production now expected to be in the order of 30,000oz.

Hmm, that is way outside of guidance. Way.

 

[Bintang]

Just checking a presentation from late last year and found this gem on Andorinhas:



Then from quarterly:



Hmm, that is way outside of guidance. Way.

Kennas, your observations are spot and are precisely why I found Troy's last two reports (half-yearly and quarterly) disappointing. Am wondering if the 'can-do' management team is starting to lose its touch.

 

[So_Cynical]

Cash costs at Andorinhas look pretty high to me. Looks dangerous if there is a major correction in POG (which I doubt, but a risk).

I'm not sure why you've got 20% in this SC.

I never started out with a plan to have so much in Troy...just worked out that way and realise that i really do need to take some money off the table...now unlike Parish and Jones there's no way im selling any of my TRY shares for less than 2.59

Certainly been good since the Nov low like most goldies, but over 5 years you're still down. I suppose it all depends on your time frame.

Also depends on what you paid and how many you got at what price, lowest i paid was 0.77 highest was 2.60 something, average price is around 2.15 i think....anyway i figure if your going to hold gold stocks wanting long term exposure to the POG bull then you mite as well be collecting dividends and franking credits...and very few Goldies offer that.

Then there's management that actually tell the truth and looks after share holders, in the last 4 years TRY has done 1 very small private placement and 1 smallish rights issue....TRY's cash cost per ounce is always on the high side of any comparison chart because there real numbers.

Just look at CTO with a cash cost far less than TRY yet they cant fund there own operations out of operational cash flow, and thus constantly need to tap the market/shareholders for additional funds.

And look at LGL with that super deposit at Lihir island..took them how many years to pay a crappy dividend, while management decided to sell Ballarat for 4.5 million after spending what 200 mill on it...brilliant stuff.

Looking at the Aussie gold producers sector, Troy is a shining light among a mostly small, motley and incompetent bunch...IMO