PERTH, WESTERN AUSTRALIA--(Marketwire - Aug. 14, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Profitable gold producer Troy Resources Limited (TSX:TRY)(ASX:TRY) is pleased to advise that it has reached agreement to sell its Sandstone property in the East Murchison region of Western Australia, excluding any nickel interests, to Australian gold development company Southern Cross Goldfields (ASX:SXG). Key terms of the transaction include:
- payment of A$5 million of which approximately $2.5 million will be to replace the environmental bonds on the property;
- a 2% uncapped NSR (net smelter return) royalty on all non-nickel production from the site; and
- the issue of 43.665 million warrants for Southern Cross shares, equivalent to 15% of the current issued capital of SXG, with a strike price of 10c per share and a term of 5 years.
The transaction is subject to SXG completing financing and standard approvals. At this stage, both companies expect the transaction to be completed within 3 months.
Importantly, Troy will retain its exposure to any potential nickel discovery on the property through its free-carried interest in a joint venture with Western Areas (WSA), which is exploring for nickel on the Sandstone leases. WSA has already earned a 51% interest in any nickel discovery by meeting the minimum expenditure commitments in the JV.
Commenting on the announcement, Troy's CEO, Paul Benson, said: "We are very pleased to have reached this agreement with Southern Cross Goldfields. This is a perfect example of a win-win outcome. By being able to utilise the Sandstone plant, SXG will be able to accelerate the development of their exciting Marda development, located north of Southern Cross, for a lower capital cost and add the resources on the Sandstone property to their inventory.
"For Troy shareholders, the transaction will realise cash plus royalties on future production from the Sandstone property while at the same time maintaining exposure to Western Areas' ongoing nickel exploration programs.
"In addition, Troy will emerge with a significant interest in Southern Cross Goldfields as it moves towards commencement of gold production at Marda, benefiting from the growth and re-rating of that company going forward."
ABOUT TROY RESOURCES
Troy Resources (TSX:TRY)(ASX:TRY) is a dividend-paying gold producer, with a clear growth strategy. The Company has two producing gold operations; Andorinhas Mine in Para State, Brazil and the Casposo gold and silver mine, in San Juan province, Argentina.
Troy has an experienced Board and management team with a track record of successful, fast-track mine development and low-cost operations.
Troy has an annual exploration budget in excess of $15 million and a proven track record in exploration discoveries and strategic acquisitions.
Following the development of the Casposo project in Argentina, Troy has entered a renewed growth phase which has lifted the Company's annual gold production above 100,000 ounces per annum.
The Company is well positioned to continue its path of strong growth and profitable operations, and on track to achieve its vision of becoming a highly profitable mid-tier gold producer with a portfolio of quality long-life assets.
The Company maintains a robust balance sheet and forecasts continued strong cash flow from its current assets. Troy's gold production is unhedged; allowing its shareholders access to the full benefit of current and future gold price upside.
Troy is a responsible corporate citizen, committed to the best practice of health and safety, environmental stewardship and social responsibility.
ABN: 33 006 243 750