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.