One of Australasia’s prominent mining leaders John Dow said...

One of Australasia’s prominent mining leaders John Dow said Australian investor confidence had reached a puzzling level of negativity when a gold miner with a strong record of profits and paying dividends would see it being traded below its cash backing and the fact it is producing economic gold from two mines.

Author: Ross Louthean
Posted: Wednesday , 26 Nov 2008

PERTH -


In his chairman's address at the annual meeting of Troy Resources Ltd (ASX & TSX: TRY) in Perth this afternoon, John Dow, said the company had a positive path ahead with $A60 million ($US38.8 M) in the bank, no debt, no hedging and with a spare gold plant to negotiate a deal.

Dow was the founding Australasian manager of Newmont Mining Corporation when the American giant bought the gold mining assets of Australia's then premier gold producer Normandy Mining Ltd. Since retiring from that position he has maintained an active role in affairs of The Australasian Institute of Mining & Metallurgy, is chairman of the new New Zealand resources industry lobby Straterra and is chairman of Troy Resources and Glass Earth Gold Ltd (TXS-V and NZAS).

He said despite incurring a loss of about $A17 M ($US11 M) for the last financial year - brought about by write-downs, and development costs on the new Andorinhas mine in Brazil which should produce 50,000 oz in 2009 - the company had maintained paying a dividend.

He said Troy had a cash backing of about A80 cents/share. (The last trade today on the ASX was at A73¢).

Managing director Paul Benson told shareholders that Troy's long standing operations at Sandstone in Western Australia were under review with operations now working off stockpiles. While recent exploration had shown a wide system in that region the mineralisation was not high grade and was at a significant depth with a sterile cover.

He said the Lagoa Seca open cut mining at Andorinhas would cease this month while the nearby high grade Mamão underground mine was progressing and should provide plant feed early next year.

As well as some major exploration targets at Andorinhas the company had joint ventures in the area and had also established high grade iron ore deposits that included a washed and screened probable reserve of 2.8 million tonnes grading 63.6% Fe.

In the September quarter Troy sold its remaining 14.5% stake in the TSX-listed company Comaplex Minerals Corporation to Agnico-Eagle Mines Ltd for $C46.9 M ($A47.9 M at the time) and this was a 21% premium to the market.

Benson said this was sold because Troy had been unable to secure a controlling interest in Comaplex to take the Meliadine gold project near Rankin Inlet in the north Canadian province of Nunavut into production. Had it been sold in the current market malaise Troy's equity stake would have been worth significantly less.