News

October 28, 2008

Cashed-Up Gold Producer Troy Resources Has Been Kissing A Lot Of Frogs Lately

By Our Man in Oz

Wise investors, like wise parents, try to avoid tossing the baby out with the bathwater. But that seems to be pretty much what seems to have happened with one of Australia’s better-run small miners, Troy Resources. Over the past year, as Troy’s share price has sunk from a peak of A$3.99 to recent trades at around A$1.02 the company’s financial position has actually got stronger, not weaker. Sure, gold production at its one-time flagship mine near Sandstone in central Western Australia has declined as closure looms, but that declining production has been replaced by a new gold mine in Brazil. And waiting in the wings is the possible start up of a small, but highly profitable iron ore mine. If that’s not enough to encourage a closer look at Troy, there’s the rather attractive pile of loot in the company treasury which, at the last counting, amounted to A$60 million, or about A86 cents for every share on issue.

The English translation of this situation is that everything in the Troy portfolio - profitable goldmines, an emerging iron ore mine, exploration tenements, and a spare gold processing plant in storage, which might become a very useful item of leverage at a time when funding mine start-ups has become a lot harder - is all valued by the market at roughly A20 cents a share, or around A$20 million. Minesite’s Man in Oz might be a little naive but he’s actually tempted to pop around to Macquarie...