Ann: Amendment to Investec Loan Repayment Schedule, page-23

One of the most important charts...
We are on the verge of a financial collapse. Either a flirtation with a deflationary outcome or straight into inflation (which will be the ultimate outcome anyway). High inflation from a fixed and adjusted price perspective is just a masquerade of deflation. Something like rates going somewhat higher, breaking the market, money flowing back into bonds. If then the inflation rate continues to tick higher it will finish the market for good. Not something like the past "bear markets" - all throughs were just going down to historical averages - but making investing in financial assets obsolete for a generation.

Back to Troy. Here is the scenario before the deal. US$6m rate is very high compared to the past rates and it was only going to happen if Troy made something like 24k ounces production. Possible for August and September, but July was still in rain season and so I was reckoning no way. The only way to pay the US$6m would have been to slightly tap trade creditors again. Not hard to do as this is rolling debt with huge revenue being paid every month. Maybe only A$2m. So the payment would have been possible but at what price.

The deal with Investec - makes sense. Risk to Investic is reasonable as Troy kept the quality of the remaining ore on par with what has been mined over the last year. And production will continue at least twice as long as the debt repayments are due. Finally, finally we can put the Investec debt issue to rest. There is no forseeable risk anymore, this debt is history. This deal cuts the Gordian knot. And this will save Troy no matter what as the trade debt is not affecting tenements (those are held via the Pharsalus companies currently pledged to Investec, operations are via Troy Guyana).

The price of the deal. Well minor dilution. What I do not like is the extension and lower price of the 28m options to Investec. I would have preferred to keep the price but have a longer duration. So my initial assessment was the price paid was too high.

But thinking about it again I think having the lower strike price and shorter duration is a brilliant idea.

My thinking was that after the Investec debt is paid and Troy is free again a capital raise at a way more reasonable rate would be advantageous to existing shreholders because the capital is needed to prevent the worst outcome Troy is facing right now and to speed up development of new deposits and targets.

Of course the risk is that Troy will have to shut the plant if ore is running out and new deposits are proven but not ready to source ore. You have a long lead time and site costs in the jungle are very costly.

Because here you have your automatic capital raise: September 2019 Troy will get A$0.13 x 27.78m options = A$3.6m. In September 2019 Troy will be debt free, Spearpoint and Larken will have been developed and increased by additional drilling and investors will be better able to better evaluate the world-class potential of Goldstar and Ohio Creek with shear zones being much wider than e.g. the Smarts Shear. Also the gold market situation of rampant speculation on lower prices will not persist for a year. No way the share price is lower than 13 cents. 6% dilution, but some things just cannot be avoided. Especially as the strike price is equivalent to a market share price of 16.25 cents.

With that automatic capital raise Troy should not hesitate to fully utilize operational cashflow from 2019 onwards to prove the full potential of what they have at the north of Karouni.

We have a lot of naysayers still. Hint: Troy is not the only gold company. Look somewhere else, but get out of financial assets. P/E ratio 20, 25, 30 for stocks x,y and z. Where is the bubble? If that is the answer I get I cannot help people. One thing is for sure. The future will not look favorably on the financial madness of our time.