Source: Africa Studio, Shutterstock
- Troy Resources’s gold production for 1H of FY21 totalled 10,529 ounces at an AISC of US$2,460 per ounce.
- Amid the bullish gold market, the average realised price for gold sales stood at US$1,890 per ounce.
- The Company operates (100%) the Karouni Gold Project in Latin America.
South America-focused gold explorer and producer Troy Resources Limited (ASX:TRY) shared a half-yearly report for the period ending on 31 December 2020. The Company operates the Karouni Gold Project in Guyana.
Karouni Project Targets Overview (Source: ASX Update, 29 January 2021)
Amid the disruptions caused by COVID-19, Troy Resources managed to produce 10,529 ounces of gold during the half-year period. Heavy rainfall and unavailability of the excavators and trucks marred the production operations. During the December quarter, 23 employees were tested positive for the deadly virus. They were moved to isolations for treatment and health care.
Despite all the disruptions, the robust operational management led to the stripping of 3,373,710 tonnes of material, which is 48% higher than the December quarter of 2019. The mine grade deteriorated to 1.12g/t. For the same period previous year, mine grade was 2.0 g/t.
The disruptions led to a higher All in Sustaining Cost (AISC) of US$2,460 per ounce.
How well the Company fared financially?
Troy Resources generated revenue of A$27.19 million during the half-year period. The Company sold 10,368 ounce of gold at an average price of US$1,890 per ounce. The revenue was 2% higher than 1H of FY19. The higher gold prices during the most part of 2020 boost sales revenue than previous years.
The underlying EBIDTA was a loss of A$8.67 million. The Karouni Project is still under development phase and exploration activities incur heavy investments. The money put into projects exploration are often reported as losses for bookkeeping purposes. Net loss after tax was A$17.66 million for the reporting period.
Troy Resources included depreciation and amortisation of its assets by A$7,926,000, which led to the deterioration in the Company’s net asset position. The Company reported a net asset deficiency during 1H of FY21 as A$3,257,000.
Financial result for the half year-period (Image Source: ASX Update, 26 February 2021)
A fire accident at the stores of the Company during mid-September 2020 affected the operations. There was an immediate shortage of reagents and spare parts for the mills. Infections due to COVID-19 decreased human resources on the project, which also affected the overall production during the period.
Hicks 4 Phase 3 & 4 deposits returned lower than expected ounces (nearly 50%). Lesser ounces through the grade control model led to increased cost and lower production.
Troy Resources launched an investigation internally and also took the expertise of outside consultants to pin-point the operational shortcomings and rectified them as well. Last month, on 28 January, Troy reported that the production was moving towards normal levels and the Company was keeping a close tab on it.
Going forward, the Board of the Company is confident that the Troy would be able to deliver positive cash flow and secure additional funds if required. Some of the key operational activities that will impact the near-term plans of the Company are mentioned below.
- Troy will strive to achieve the planned operational performance and positive cash flow from its underground as well as open pits in the next 12 months.
- Update on the Reserve and Resource estimate for the Smarts Underground.
- Optimising pit design and mine operation further.
- Troy will finalise the trial mining results from the Ohio Creek prospect.
- The mining and mineral resource plan is in progress for the greenfield target- Goldstar.
Troy Resources closed the day trade at A$0.071 with a market cap of A$60.6 million as on 01 March 2021.