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3.0¢ troy resources limited

Thanks for sharing this perspective. From your earlier post,...

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02/08/17

18:58

Post #: 26249328
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Originally posted by kojak78 ↑

The report leaves a lot of questions...

1. strip ratio
2. ore mined
3. royalties

1. The strip ratio during June quarter was 7 if we use (total mined - mined ore) / mined ore.
It will be 8-10 from now for 2-3 months because of the cutback in Smarts 3. After that it will be 4. If this implies that the strip ratio already is 4 for actual mining operations outside of Smarts 3, Troy will have as much as 75% more mined ore available.

2. Ore mined. This has been lower than material/"ore" processed for 3 quarters. Nearly 50k tonnes in stockpiles? Why did they not use more stockpiles in March quarter? Used stockpiles in June would have been 13k tonnes at 8 g/t. Or is it they report mined ore vs the ore model and all of the processed material is from the mined material with the higher tonnage and higher grade as a result of material outside of reserves? And why no mill capacity usage if stockpiles are available? Makes no sense at all. The balance sheet only contained minimal amounts of stockpiles and I think that is true...

3. Royalties way too high at $129/oz. I think that may be explained by additional royalties on individual claims paid to former owners.

Well, this company still is a mystery. Given the June quarter figures they have
1. 50% upside in tonnage moved: enough spare capacity for a cutback
2. up to 50% upside in mined ore due to lower strip ratio at the areas actually mined
3. 270k tonnes mill capacity vs the 196k tonnes used in June
4. higher grades being maintained because of better grade control and being in fresh rock
5. Dry weather

So here is how I think September will turn out:
1. 250k tonnes ore mined
2. 270k tonnes material processed
3. grade 2.5 g/t
4. moved material due to mining 1250k tonnes
5. additional increase due to cutback to 1750k tonnes

So cost increase of A$2m. Cash outflow in June was A$8.5m. In September they need A$10.5m in additional revenue to be cash flow neutral and because they still have A$3.2m in available reserves A$7.3m is needed to not violate the minimum reserve level.

270k tonnes * 2.5 g/t * 0.95 / 31.1g/oz = 20600 ounces = 5200 ounces more than in June quarter = A$8.7 additional revenue.

So it could be that Troy does not need additional capital at all and the December quarter will be even better with the Smarts 3 higher grade areas kicking in in addition to the 15-20k other areas.

Still not convinced though.

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Thanks for sharing this perspective.

From your earlier post, exploration was only stopped in mid May. This $1.4 million could also be considered a further saving to your calcs above.

TRY Price at posting: 11.0¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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