Troy Resources (ASX.TRY) Recapitalisation Plan to De-Risk & Generate Income

Proceeds (capital raise & debt conversion) will place?Troy Resources?in a strong position to potentially create significant short-term value?by utilising the Karouni processing plant for generating income (to materialise within 1 year), and de-risking the business through acquiring additional revenue generating assets outside the Karouni, which includes exploration and mining assets (expected to materialise within 1-3 years).

Quick company facts

• The Karouni mill is the only mill in its region?with gold resources held by surrounding companies with no capacity to develop and produce gold. Furthermore, the core of the Company’s in-country staff remains on the payroll representing our expertise and know-how.
• Guyana is the last seriously under explored?greenstone belt in the world and Troy has significant tenure in that belt.?Barrick Resources recognises this potential value?and has placed significant resources into our tenements working towards exploration success
• Strong institution and sophisticated investor support?for the recapitalisation as Troy successfully raised new cash and converted debt at a price of 2.2 cents via placements and debt conversions, specifically including;

1. Asian Investment Management Services (AIMS), agreed to convert all of its $13.8m loan to equity, and will become Troy’s largest shareholder.
2. Troy’s two current largest shareholders, M&G Investments and Ruffer, agreed to subscribe to approximately $4.2m in shares.
3. Their largest creditor Exploservice has agreed to convert half of its outstanding credit balance of approximately $7.3m into shares
4. RiverFort Global has come onboard as a new financier, agreeing to provide $0.5m as equity and $2m as a convertible note facility, with the potential for an additional $3m.

These transactions will see approximately?$20.7m worth of debt and liabilities paid,?along with the raising of?cash in the amount of approximately $7.2m.

• Troy’s recapitalisation is economically positioned?to take advantage of the macro environment, as numerous economists have taken a view to raise their gold forecast pricing, indicating potential long periods of inflationary pressure along with increased concerns of a US recession which could potentially see?gold prices higher in the medium term.?In any scenario where inflation increases rapidly and sustainably, gold may outperform other assets.

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A recapitalisation focused on commercialisation?as the company remains focused on delivering two specific key objectives 1) Generate Income and 2) De-risking the business;

1. Generate Income?– to operate the processing plant (Karouni mill) which includes mining of ore from the company’s tenements (underground and open-cut), engage their neighbouring tenement owners to put in place toll treating opportunities and engage in M&A opportunities with the aim of operating the mill at full capacity. Important to note that Karouni mill is the only gold processing plant in the local region.
2. De-risk the business?– to increase resilience to negative factors that reduce income generation this includes establishing exploration and mining activities outside the Karouni district, this includes M&A opportunity in Guyana and another region outside Guyana.

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Opportunity to capture short-term shareholder value?with the development of the Smarts Underground Project. This involves bringing the project into production as the company has to date mapped approximately 89,000 ounces in Ore Reserves adjacent to the Karouni Mill, with good upside potential. The project is already essentially approved by the Guyanese authorities. There’s a US$7m capital requirement and the company is already in discussions with an interested financier.

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• Interim CEO and Managing Director - Richard Beazley, has an established 30-year+ track record as a mining engineer,?which includes strong corporate, operational and technical background in the resources industry. Richard was the Interim Chief Operating Officer of Sandfire Resources NL?(SFR.ASX valued at $1.79 billion)?and Director of Altair Mining Consultancy. His former roles have included Managing Director of Peak Resources Limited, General Manager Operations at Consolidated Minerals and General Manager - Southern Cross Operations at St Barbara Limited?(SBM.ASX valued at $1.05 billion).?Richard is an active member of the Australian Institute of Company Directors (AICD) and The Australasian Institute of Mining and Metallurgy (AusIMM).

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TROY RESOURCES LIMITED?(TRY)?is an ASX-listed company, and is a small to midsize gold producer with a history of developing and operating mines in Australia and South America.

Troy has been operating in South America since 2002. In July 2013 the Company acquired Azimuth Resources Limited which had discovered and defined the 100% owned Karouni Project in Guyana (Northern Mainland of South America). The Company fast tracked development of Karouni with first gold production occurring in November 2015 with FY 2017 being the first full year of production.

As part of the recapitalisation strategy to turn the business around and provide shareholder value, the company’s focus will be primarily to 1) generate income in the short term (6months – 1 year) and de-risk the business through diversified exploration and M&A activity (1-3 years). The actions to execute on the strategy includes;

• Recent institutional and sophisticated investor support will see the?retirement of debt and liabilities in the amount of approximately $20.7m,?along with the raising of?cash in the amount of approximately $7.2m.
• Provide shareholders with the opportunity to participate via a Rights Offer at a discounted price of 0.022.
• Significant exploration potential of the Karouni project, with the Makapa Kuribrong Shear Zone known to host a number of multi-million ounce gold deposits in the Guiana Shield. Barrick Gold Corporation, 2nd?largest gold mining company in the world worth approx. USD$25b, farmed into various Troy tenements. Back in Feb 2019, Barrick noted that the Guiana shield was underexplored and one of the most prospective in the world for large scale hold discoveries, and their work is underway, committing US$5m over 6 years.
• Bring Smarts Underground into production as the company has mapped to date approximately 89,000 ounces in Ore Reserves adjacent to the Karouni Mill, with good upside potential. The project is already approved by the Guyanese authorities. There’s a US$7m capital requirement and they company is already in discussions with an interested financier.
• Being the largest independent mill operator in Guyana provides Troy with the opportunity to toll treat gold deposits owned by other parties. Discussions with a number of such opportunities are in the works and ongoing.