valuation comparison, page-19

Reserve grade of smarts is 2.46 g/t.
Measured resources of smarts inclusive of reserve is 2.38 g/t

Mined grade March quarter is 2.49g/t.
Milled grade is 3.27 g/t

3.27/2.46 is 32% of usual.

Milling capacity was at 214681 tonnes below previous 238646 tonnes - there was unscheduled downtime of mill in January and February.

214681/238646 is is 89.9% of usual.

Let's remove the effect of milling higher grade ore and unscheduled downtime.

Nominal production is therefore (1 / (3.27/2.46) ) / (214681/238646) * 21703 ounces = 18150 ounces, and nominal AISC is (21703/18150 * 720) = $860 per ounce.

Remember this $860 AISC includes mining extra ~56000 tonnes to be stockpiled but does not take into account reduced cost of unscheduled downtime of the mill. AFAIK the extra mining is worth a lot more than the unscheduled mill down time so I'll leave as is for a more conservative AISC.

At gold price of $1300, profit is $440 per ounce; Over the next 2 quarters, the profit would be (440 * 18150 * 2) = $15.9M. The last quarter as smarts is exhausted, I don't know what they will mine; The strip ratio is lower at bottom of an open pit but they would run out sooner. So let's set 3rd quarter mining from smarts to zero.

Current outstanding bank debt is US$16.2M.

It appears current mining will pay off the debt with no issues.

This is where Troy's CEO Ken Nilson's statement becomes all the more relevant.

“Leading in to the wet season, it is pleasing that we have established an ore stockpile in excess of 180,000 tonnes representing more than enough for two months processing.

Exploration at the Spearpoint and Larken Prospects during the quarter has returned some excellent results. These results have indicated the need for additional drilling to upgrade the mineral classification and this will be undertaken during the June quarter. The review of Ore Reserves and Mineral Resources is ongoing with the immediate intention of upgrading the Larken resource and bringing Spearpoint into a JORC compliant resource category.

Moving forward, plans are being prepared to re-establish exploration areas where there have previously been good mineral intercepts, particularly in the Goldstar area. In addition, Troy is looking at other opportunities in the Karouni area with known gold occurrences. The aim is to establish a strong and focussed programme to increase ore reserves.”

Weather
In 2016-2017, the wet seasons in December Quarter and June Quarter TRY mined 10% less tonnes than in dry season.

In 2017-2018, the wet season in December Quarter mined 400000 tonnes more than dry season March Quarter, and in the two Dry quarter and one Wet quarter so far, the tonnes mined ore in each quarter is within 1% of 270,000 tonnes.

I am going to take his statement on wet season as saying there's going to be increased risk in the operations but from last years results mining production was very smooth through all three quarters.

Stockpile
I don't know how much the additional drilling would cost but 180000 tonnes of stockpile at 1g/t (I think it's higher than this) is worth $11M of revenue. Since it's already been mined, the cost to mill will be low. It will pay for the drilling in June Quarter with change to spare. And the AISC of $860 I've calculated includes adding to this stockpile.

Spearpoint and Larken
Here's a picture of how big Spearpoint and Larken is relative to Smarts:







I've looked at the drill results, it seems the Smarts 3 results were a lot more impressive than the Spearpoint ones. Larken already has a mineral resource of 309000 tonnes at 3.20 g/t, i.e. 31800 ounces, which is a grade higher than the grade being mined from smarts, the June Quarter drilling aims to extend and infill drill this resource. I could not find much detail on Larken drill results - only found 2 holes - they had been focusing on Spearpoint a lot more. It would be great if someone could link it.

Hicks has lower grade than smarts and Larken which is why I suppose they are prioritising exploring Larken and Spearpoint.

Regional Exploration





There's a lot of promising ground to explore all within Troy resources' Exploration License: Goldstar, Whitehall, and more.

Potential acquisition or JV

There is a gold exploration company looking to explore gold near Karouni:

"Given that the Karouni Mine has known reserves to support only 2 years of operation, Tajiri believes significant value for the Company's share holders can be realised by defining satellite resources at its Kaburi project. By prioritising exploration for and definition of resources at Kaburi the Tajiri may rapidly produce a return on exploration investment through either outright sale, toll treatment or royalty streaming and if a large enough resource were to be delineated an acquisition of the Kaouni Mine itself may be possible."
https://globenewswire.com/news-rele...assess-Exploration-Results-and-Potential.html

Summary
Buyers of Troy resources are buying the Karouni mill, the extension of Larken resource, the lower grade Hicks resource, the potential of the Spearpoint resource, a potential Smarts UG mine (require a lot more capital) plus the potential of surrounding areas like Goldstar and Whitehall, remaining stockpiles at Smarts and whatever can be pulled out of Smarts in 3rd quarter CY 2018.