Ann: Troy to Recommence Mining at Sandstone , page-2

Whatever your valuation of Troy, following this announcement, add $7m to your valuation...

At current spot prices of around A$1,250, Troy will mine an extra 30,000 ounces this year at Sandstone.

We can assume a cash cost of A$900 or less (this is the price at which the production put options have been bought). And the most recent low-grade production at Sandstone was around this cost per ounce.

So at current prices, with all capital costs already paid for, we have 30,000 of extra ounces at a (current) cash margin of A$350/oz. $10.5m of extra revenue before tax gives us an extra $7m after tax.

This will be less if the A$ gold price drops, and will increase if the price firms further. But the put options protect the downside from a loss.


This announcement also highlights what a ridiculous valuation there is on Troy as a whole. CURRENTLY IN PRODUCTION, ramping up to 50,000ozpa in Brazil, with life-of-mine cash costs of US$300oz, and with all capital costs paid for. You do the math...

AND TRADING JUST ABOVE ITS CASH POSITION - ie AT CURRENT PRICES, AN INVESTMENT IN TROY GETS THEIR PRODUCING GOLD MINE FOR FREE!

Not only that, what the recommencement of mining at Sandstone reveals is that not only does the gold price create huge profit margins from existing production, but it makes mineable low-grade ounces that would otherwise be uneconomic to mine...

Do your research (QUICKLY). And then I challenge you to find a producing gold company trading at a cheaper price.