Troy Resources NL

Troy Resources NL

November 16, 2006 01:41 ET

Troy Resources NL: Purchase of Andorinhas Project in Brazil

WEST PERTH, WESTERN AUSTRALIA--(CCNMatthews - Nov. 16, 2006) - Troy Resources NL ("Troy") (ASX:TRY)(FWB:TRW) is pleased to announce that it has reached agreement to acquire the Andorinhas Gold Project ("Andorinhas") in Brazil from Agincourt Resources Limited ("Agincourt").

Under the agreement Troy will purchase all the shares in Agincourt Resources (Holdings) Limited whose wholly owned Brazilian subsidiary holds the mining leases at Andorinhas. The purchase price is US$10.14 million cash of which US$9.14 million will be paid on 30 November 2006 following execution of the formal Sale Agreement. The final US$1.0 million is payable after completion of all transfers and approvals.

The Andorinhas Project incorporates two mining concessions covering an area of about 200km2 in Para State in northern central Brazil (Figure 1). The gold mineralisation is hosted in Archean-aged greenstones in several deposits.

Andorinhas has a JORC compliant Indicated and Inferred Resource of 4.0 million tonnes @ 3.4 g/t for 435,000 contained ounces of gold (refer Table 1) as calculated by Snowden Mining Industry Consultants ("Snowden"). Within this Resource is a Probable Reserve of 594,000 tonnes @ 6.6 g/t for 126,300 contained ounces of gold (based on an earlier study).

A Scoping Study was completed by Snowden in September 2006 which concluded that the Project could sustain a 5-year life operation at an annual production rate of 50,000 to 60,000 ounces per annum. The preliminary mining studies incorporate a decline access to the underground Mamao deposit and an open pit operation at Lagoa Seca. Metallurgical test work indicates that the ore is free milling and gold recoveries above 90% can be achieved via a conventional CIL plant.

Troy will commence detailed planning for establishment of a mining operation at Andorinhas utilising its existing staff and resources as soon as possible. Troy will investigate several options for project development including constructing a new plant and the relocation of the plant from the Sertao operation after the reserves are exhausted.

Troy's CEO Tommy McKeith, noted that "Troy has considerable experience operating in Brazil and the Andorinhas Project is a natural addition to our existing operations. The project is at the Feasibility Study stage and with Troy's proven project development capability we intend to fast-track it to production.

The project has a Resource of about 430,000 ounces which equates to an acquisition cost of just over US$20 per resource ounce - a very competitive price in today's market. Troy believes the project area offers considerable exploration potential and we are hopeful of adding further resources in the medium term.

This transaction is consistent with our strategy of increasing the reserve life available to our existing mine infrastructure. Evaluation of other new opportunities are ongoing in line with the company's strategy of setting up and securing a long term production horizon".


The Andorinhas project is hosted in the Andorinhas greenstone belt. The belt is comprised of three formations the Mamao-Babacu formation (dominantly metabasalts, minor ultramafics and meta-greywackes), the Lagoa Seca formation, (dominantly metasediments, with minor mafics and ultramafics) and Banded Iron Formations ("BIFs").

The main resource is the Mamao deposit which is characterised by a series of gently dipping, high grade quartz veined shears that show good continuity down dip. This deposit is comprised of two main lodes, the Melechete and the M2. The main Melechete lode was worked down to 150m below surface by Garempeiros (artisinal miners) in the 1980's. Significant mineralisation exists both along strike and down dip from these workings. The M2 lode has been drilled to 200m below surface and remains open at depth. The Mamao deposit will be an underground mine accessed via a single portal.

The Lagoa Seca deposit is located approximately 6km west of Mamao. It was originally mined as a small open pit by Garempeiros to a depth of 20m. Gold mineralisation is associated with a 30m wide shear zone which comprises three high grade tabular zones over a strike length of 200m. This deposit will be mined as an open cut and previous drilling has returned some excellent intercepts including 53.5m @ 4.5 g/t from 31.5m and 33m @ 4.8 g/t from 23m.

ABN 33 006 243 750

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