Troy (ASX:TRY) chairman provides roadmap for regaining producer status in 2021 AGM - Kalkine Media

Highlights

• Troy Resources to recommence gold production from the Karouni Project in the medium term.
• The Company’s recapitalisation plan is expected to provide a major boost to its development goals.
• Guyana is a developing country which remains highly unexplored, and the Company plans to capitalise on the first-mover’s advantage.

Speaking at the 2021 Annual General Meeting of Troy Resources Limited (ASX:TRY), Chairman Mr Peter Stern outlined challenges and opportunities cropping up for the Company. Troy operates the Karouni Gold Project in the Latin American country of Guyana.

The year 2021 was full of challenges for the Company. Gold-producing mines on the Karouni Project Hicks and Spearpoint ran out of commercial-grade ores sooner than expected. Potential prospects, including Ohio Creek and Goldstar, did not turn as initially expected.

Karouni Gold Project (Image source: TRY update)

The biggest blow for Troy last year was the untimely demise of Mr Ken Nilsson, the Company’s CEO and Managing Director, on 20 September 2021, after he failed to recover from a medical procedure. He was instrumental in several business success stories that Troy enjoyed over the years. That’s the reason Mr Stern called him an extremely competent professional and a great leader. But Troy seems to refuse to give up and move forward in life.

Karouni Mill on care and maintenance

Since the Company’s production mines went dry for commercial-grade ores much earlier than anticipated and no other prospect was ready to support the production, Troy was left with no other choice but to put the Karouni Mill on care and maintenance.

As operations were stalled and without operating cash flow, the Board decided to suspend securities of TRY from trading on the ASX. Besides cash flow, the Company has considerable debt too.

Since the Karouni Mill is the only operating mill in the region, the Company could use it for toll treat gold ores mined by other parties in the region.

Major overhaul in share capital

Troy has nearly AU$20.7 million of debt and liabilities. To come out of this debt and generate substantial funds for operations, the Company came out with a recapitalisation plan this year on 5 January 2022.

Under the recapitalisation plan, TRY plans to convert the Asian Investment Management Service’s (AIMS) loan of AU$13.8 million into equity at a price of AU$0.022 apiece. This will make AIMS the largest shareholder of the Company. Another creditor Exploservice has also agreed to convert an aggregate amount of AU$7.2 million of debt into equity.

Two of the current largest shareholders of TRY, M&G Investment and Ruffer have given their nods to subscribe for further shares in the amount of AU$4.2 million. Besides them, Troy has onboarded RiverFort Global Capital as a new financier for the Company. RiverFort has agreed to provide AU$0.5 million as equity and AU$2 million as a convertible note facility, with the additional potential for AU$3 million.

To know more on recapitalisation, click here.

All these transactions will help Troy in retiring a considerable debt and liabilities and generate nearly AU$7.2 million in cash.

Also, Troy leased and assigned certain non-core mining rights in Brazil, which is expected to generate US$4 million in a staged payment.

Mr Stern, referring to the dilution of shares after the recapitalisation, said that the outcome of all these transactions will put the Company on a path of development and the recapitalisation plan was the best option availed by the Company after carefully analysing all alternatives.

Way Forward

Troy’s Chairman made it clear that the Company acquired the Karouni Project with an aim to gain the exploration exposure of accompanying areas under the lease. The Makapa-Kuribrong Shear Zone is expected to hold substantial gold resources along its length.

Troy spent significant capital to acquire the project, which limited its funds to be spent on exploration programs. So, it is fair to say that the area remains highly underexplored and holds significant upside potential.

The world’s second-largest gold miner, Barrick Gold Corporation, farmed into the project last year. The entry of Barrick into the project is an endorsement of the prospectivity of the region. Barrick has pledged US$5 million over a period of six years for the exploration.

With the Smarts Underground deposit, TRY aims to return to the producer status in the medium term. The Company has mapped 89,000 ounces of Ore Reserve on Smarts Underground.

The Chairman seems optimistic about the future of the Company. He said Guyana was a fast-developing country and held immense potential in a highly underexplored mining district.