Troy Resources dramatically reduces costs while upping production

Troy Resources (ASX: TRY) investors have rewarded the gold producer for a 29% reduction in all-in sustaining cost and 35% increase in production which put its quarterly cashflow at A$14.2 million.

Troy’s 29% reduction in all-in sustaining cost dragged the cost figure down US$297 to US$720 (A$950.58) an ounce in the March quarter, when compared to January 2018 quarterly results.

Troy’s managing director Ken Nilsson put the reduction down to a six-month cost reduction program and higher production levels.

The company increased production by 35% at its Karouni operation in Guyana to a record 21,703oz of gold, as reported to market on 9 April, when the share price closed up 10.4% to A$0.096.

The combination has today left Troy with a welcome A$14.2 million net cashflow from operations for the quarter, as reported in its March quarterly report.

“The results were in excess of budget which is based on a stable production rate at levels slightly lower than those produced in the March quarter,” Mr Nilsson said.

The production figures are good news for Troy’s forward estimates, which have been upgraded.

“Partly due to the quarter’s good performance, gold production guidance for the 2017-18 year has been increased to a range of 65,000oz to 70,000oz from the previous range of 60,000oz to 70,000oz,” the company’s MD and chief executive said.

Sales revenue was US$30.6 million (A$40.4m) after it sold 23,046oz of gold.

Troy is currently stockpiling 180,000 tonnes of ore or two months worth of processing capacity.

The company further reduced its debt levels in the quarter. It paid back funder Investec US$7 million (A$9.24m), including an already reported US$3 million (A$3.96m) on 3 January, and shaved back down its debt to US$16.2 million (A$21.4m).

Troy ended March with A$3.8 million cash, compared to the A$3.544 million cash reserves it had on 31 December.

The company used its March quarterly to highlight good results from its exploration drilling at Spearpoint and its Larken prospect.

These included seven metres at 13.08 grams per tonne gold, including 2m at 32.88g/t from 41m at Spearpoint and 5m at 4.36g/t from 9m at Larken.

Troy plans to undertake drilling in the June quarter to upgrade the Larken mineral resource and bring Spearpoint into a JORC-compliant category.

Troy’s share price pushed 26.1% higher to close at A$0.145.