News

May 26, 2009

Troy Resources Is Adding A Bit Of Extra Value To The Development Of The Casposo Gold Deposit In Argentina

By Our Man in Oz

One plus one normally makes two. In the case of a gold-sector deal between two mid-tier Australian gold producers one plus one adds up to a bit more, because both companies get precisely what they need to grow. Troy Resources gets a project for which it is uniquely placed to add value. Intrepid Mines gets cash to expand a big Indonesian gold and copper resource. Last week, Minesite looked at the Intrepid side of this transaction, the sale of the Casposo gold deposit in Argentina. This week it’s worth taking a look at the deal from Troy’s perspective. The US$22 million purchase of Casposo is just what the doctor ordered to allow Troy to continue its singularly successful policy of developing smaller, high-grade, gold mines, and rewarding shareholders along the way with something equally attractive - a dividend stream.

Over the past nine years Troy’s dividend policy has been a unique feature among Australian gold stocks. Between 2000 and 2007 the dividend was steadily ratcheted up to A7.5 cents a share. Last year’s cut to A3 cents was largely the result of a loss triggered as the company made a gold production transition between mines. The fact that a dividend was paid at all emphasised the focus of management on generating returns for investors, a policy which is written all over the Casposo deal because...