Troy Resources NL

Troy Resources NL

October 01, 2009 22:11 ET

Chairman’s Letter to Shareholders-Troy Resources Update

PERTH, WESTERN AUSTRALIA--(Marketwire - Oct. 1, 2009) - Troy Resources NL ("Troy") (TSX:TRY)(ASX:TRY) -


Dear Fellow Shareholder


Notice of Shareholder Meeting

As you are aware, the Company received, on 25 September, a 249D notice from Warrigal Pty Ltd, (a 9.63% shareholder in the Company associated with Mr John Jones, a Non-Executive Director in the Company).

Mr Jones, through his company, Warrigal Pty Ltd, is requisitioning a meeting of shareholders to:

- Remove Mr Paul Benson, the current CEO of the Company, as a Director

- Remove Mr Alan Naylor, the founding shareholder and a Director of the Company since 1984, as a Director

- Remove Dr Denis Clarke, the Chair of the Company's Audit Committee and a Director of the company since 1999, as a Director

And replace them with:

- Mr Peter Stern, an advisor to Mr Jones

- Mr Robin Parish, and

- Mr Andrew Barclay

The Board has formed a sub-committee to guide the Company's response to the above requisitions.

It is anticipated that a general meeting will be held towards the end of November, most likely on the same day as the Company's Annual General Meeting. An explanatory booklet will be sent to shareholders ahead of this general meeting, and each director to whom the 249D notice relates, along with Warrigal Pty Ltd's proposed nominees to the Company's board, will be asked to provide details for the booklet, to assist shareholders in making a decision.

Casposo Project

The 249D notice came at a time when the Company was finalising its evaluation of a range of capital raising alternatives to secure the balance of funding required to complete construction of the Casposo Gold Project (Casposo) in San Juan Province Argentina.

There has been some media commentary on the funding of Casposo. In light of that, I thought it would be useful to recap the Company's recent progress regarding this project.

After finalising the acquisition of Casposo in May 2008, Troy set about recalculating the Casposo Mineral Resource to incorporate data from 61 new diamond drill holes completed by the previous owners, Intrepid Mines Limited which had not been incorporated into their published resource numbers.

The new calculations resulted in a 32% increase in contained gold equivalent Indicated Resource ounces as was announced to the market on 29 July.

On 5 August 2009, a capital cost revision was completed for Casposo to produce a revised estimate of US$45 million to develop the project to first production. The revised estimate represents a 47% or US$41million reduction on the capital cost estimate previously announced by Intrepid.

The capital savings were realised from utilisation of existing near-new plant, which had been held in storage in Cobar, NSW and bringing the project management in-house utilising Troy's existing capacity and expertise in South America, resulting in a significant decrease in costs over using an EPCM contractor.

This work led to a significant improvement in project economics and on 6 August the Board authorised the commencement of construction at Casposo. First gold production is planned for the September quarter 2010.

The Board is continuing to work through the best ways to fund Casposo. It is anticipated that funding will now be required by the end of 2009, in light of, among other things, advantageous pricing of certain capital items if they are acquired now.

As a first step in obtaining that funding, the Company's partly paid shares have been called, to raise $1,946,418 by 23 October 2009.

The Board continues to evaluate the best way to raise the balance of the capital required to ensure timely completion of construction and will keep shareholders informed.

Financial Results

I would also like to take this opportunity to inform shareholders that the Company's full year statutory accounts for 2009 were released to the ASX on 30 September 2009, and are available for your review on the ASX website.

ASX 300

We were pleased that on 18 September 2009 the Company joined the ranks of Australia's top 300 companies with its admission to the ASX300.

Further announcements will be made as and when updated information becomes available.

In the interim, please do not hesitate to contact me on or visit Troy's website should you require any further information.

Yours Sincerely

John Dow, Non-Executive Chairman

ABN 33 006 243 750

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