Troy Resources NL
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TSX : TRY

Troy Resources NL

March 25, 2009 21:01 ET

Troy to Acquire the Casposo Gold-Silver Deposit From Intrepid Mines Ltd

PERTH, WESTERN AUSTRALIA--(Marketwire - March 25, 2009) - Troy Resources NL ("Troy") (TSX:TRY)(ASX:TRY) -

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Highlights

- Troy has reached agreement to buy the Casposo gold-silver deposit in San Juan province of Argentina from Intrepid Mines Ltd ("Intrepid").

- The acquisition price is US$20 million on closing and US$2m on the 6th month anniversary of first production. Troy will fund the acquisition from cash reserves.

- Troy will look to fast track the mine development utilising the gold plant it holds in storage in New South Wales, Australia.

Troy Resources NL ("Troy") announces it has reached agreement with Intrepid to acquire its 100% interest in the Casposo deposit in San Juan Province in Argentina (to see Figure #1 please click on: http://media3.marketwire.com/docs/try325.jpg). Troy will fund the acquisition out of cash reserves. Completion of the acquisition is subject to receipt of any consent or approval under any law or regulation affecting the parties and to completion of a reorganisation of certain subsidiaries of Intrepid not intended to be included in the acquisition. Completion is also subject to the parties settling a definitive acquisition agreement on usual commercial terms.

Commenting on the result, Troy CEO, Paul Benson, said: "This is an exciting acquisition for Troy. Casposo is an excellent deposit and Intrepid have done a great job exploring and proving up the resource. We see this as tailor made for Troy as we can use our in-house expertise to bring the mine into production quickly. Our aim is to minimise capital and time to first production by utilising an existing gold plant we hold in storage. Ken Nilsson who has built and operated all of Troy's mines will take responsibility for Casposo."

"The March 2007 feasibility study completed by Intrepid envisaged a 6 year mine life with the first 4 years being fed by a gold rich open cut followed by 2 years from a silver rich underground mine. The Argentinean based Intrepid team of geologists working on the project have done an outstanding job to date and we look forward to this group joining the Troy team as employees and continuing the exploration program with the aim of adding to the resource inventory and extending the mine life."

"The province of San Juan has a very supportive attitude to mining and we look forward to working with the local regulators and communities to bring the mine into production as soon as possible."

Troy has a track record of building mines quickly, efficiently and at low cost and this will be Troy's third mine in South America. In 2002 Troy acquired its first mine, Sertao, as an in-situ resource and quickly sourced an appropriately sized second-hand plant in Australia that was refurbished and transported to Brazil. In addition, Troy completed an infill drilling program which increased reserves whilst awaiting shipping. Time from acquisition to first production was just 14 months with an initial capital of just US$8m. Plant construction including earth works took approximately 6 months.

Andorinhas, Troy's second Brazilian operation was acquired as an in-situ resource in November 2006 and developed by relocating the mill and plant from Sertao. As additional milling capacity was required, a second-hand mill was sourced from Western Australia. Following the acquisition Troy converted the resource to reserve status, constructed the processing facility and developed the open cut mine and poured first gold in March of 2008, sixteen months from acquisition to first production with an initial capital cost of just US$16m. In mid 2007, Troy commenced development of the high grade Mamao underground mine which is now ramping up to full production.

With Casposo we will look to similarly fast track development to bring it into production as quickly as possible and expect to utilise some or all of the gold plant we have in storage in Cobar, New South Wales to lower the capital cost and time of the mine development.

The Casposo project is subject to royalties payable to the original owners of the property of US$6 per gold equivalent ounce on the first 450,000 gold ounces (less royalties already paid totalling up to US$900,000) and a royalty of US$5.00 per gold equivalent ounce for each ounce of gold produced in excess of 450,000 ounces.

Casposo is a typical Low Sulphidation epithermal style gold-silver deposit where mineralisation is hosted within rhyolite breccias and andesite. Veins are typically banded quartz-chalcedony colloform - crustiform banded with quartz - carbonate infill. Mineralisation is associated with an assemblage consisting of quartz, chalcedony, adularia, calcite, illite, sericite and trace sulphides. Gold and silver occur as electrum, native silver, sulfosalts and silver sulphides.

Mineralisation at Casposo occurs along a 10 kilometre long west-northwest-east-southeast (N60 degrees W) regional structural corridor, with the main Kamila Vein system forming a sigmoidal set 500 metres long near the centre. The main structural corridor consists of 2 parallel vein sets dipping to the southwest at -60 degrees to -65 degrees (B Vein & Inca Veins). A secondary mineralised trend comprises multiple north-south striking sigmoidal structures that dip to the west at -65 degrees (Aztec, AF, B North & MV1 - Mercado Veins). Ore shoots are typically lenticular bodies up to 200 metres in length and up to 15 metres wide.

Work completed included surface sampling and geological mapping, trenching and pitting, detailed trench sampling of the vein systems, reverse circulation and diamond core drilling, an airborne magnetic survey, ground gradient-array induced polarization (IP) and pole-dipole IP surveys as well as bulk sampling for metallurgical studies. A feasibility study, commissioned in 2005, was competed in March, 2007.

The latest Casposo Resource estimate was completed in July 2008 by AMEC International Chile. Open pit resources were contained within a Whittle pit shell using a gold price of US$760/oz. Resources below this were classified as underground resources with a cut-off grade of 3.5g/t Aueq. Grade interpolation techniques were inverse distance weighted.

The Casposo project is subject to royalties payable to the original owners of the property of US$6 per gold equivalent ounce on the first 450,000 gold ounces (less royalties already paid totalling up to US$900,000) and a royalty of US$5.00 per gold equivalent ounce for each ounce of gold produced in excess of 450,000 ounces.



Table #1 Casposo Resources and Reserves
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CASPOSO MINERAL RESOURCES
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Gold Silver Gold Gold
grade grade equivalent Gold Silver equivalent
Tonnes (g/t) (g/t) grade (g/t) Ounces Ounces ounces
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Open pit
Indicated 1,882,400 5.39 130 7.05 326,000 7,854,100 426,900
Inferred 15,800 5.61 137 7.38 2,800 69,900 3,700
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Underground
Indicated 193,800 1.97 196 4.49 12,200 1,223,200 28,000
Inferred 8,800 2.43 294 6.21 700 83,000 1,700
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TOTAL
Indicated 2,076,200 5.07 136 6.81 338,200 9,077,300 454,900
Inferred 24,600 4.47 193 6.96 3,500 152,900 5,400
--------------------------------------------------------------------------


--------------------------------------------------------------------------
CASPOSO MINERAL RESERVES
--------------------------------------------------------------------------
Gold Silver Gold Gold
grade grade equivalent Gold Silver equivalent
Tonnes (g/t) (g/t) grade (g/t) Ounces Ounces ounces
--------------------------------------------------------------------------
Open pit
Probable 1,399,000 5.44 96.05 6.80 244,600 4,320,300 305,900
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Underground
Probable 335,000 3.99 220.5 7.11 43,000 2,375,200 76,600
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TOTAL
Probable 1,734,000 5.16 120.1 6.86 287,600 6,695,500 382,500
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Notes:

1. Mineral Resources are estimated using a US$760/oz gold price and US$13/oz silver price. An economic function that includes operating costs, metallurgical recoveries and royalty costs has been applied.

2. Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content.

3. Tonnage and grade measurements are in metric units. Gold ounces are reported as troy ounces.

4. All Mineral Reserves are reported in the Probable category.

5. Mineral Reserves are estimated using a gold price of US$690/oz and US$11.80/oz silver price and an economic function that includes operating costs, metallurgical recoveries and royalty costs.

6. Cut-off grades for Mineral Resources were 1.41g/t gold equivalent for open pit and 3.5g/t gold equivalent for underground. Gold equivalent grades for Mineral Resources were based on metal prices of US$760/oz gold and US$13/oz silver and processing recoveries of 93.7% for gold and 80.6% for silver.

7. Cut-off grades for Mineral Reserves were 1.56g/t gold equivalent for open pit and 3.5g/t gold equivalent for underground. Gold equivalent grades for Mineral Reserves were based on metal prices of US$690/oz gold and US$11.8/oz silver and processing recoveries of 93.7% for gold and 80.6% for silver.

8. The information regarding Mineral Resources and Mineral Reserves is drawn from the technical report entitled "NI 43-101 Technical Report, Intrepid Mines Limited, Casposo Project - July 2008" that was filed on September 16th 2008 by Intrepid under its profile on SEDAR at www.sedar.com.

Information of a scientific or technical nature in this news release was prepared under the supervision of Peter J. Doyle, Vice President Exploration and Business Development of Troy, a "qualified person" under National Instrument 43-101 - "Standards of Disclosure for Mineral Projects", a member of the Australasian Institute of Mining and Metallurgy. Mr. Doyle has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration, and to the activity he is undertaking, to qualify as a "competent person" as defined in the 2004 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Doyle has reviewed and approved the information contained in this press release. For further information regarding the project, including a description of the quality assurance program, quality control measures, the geology, samples collected and testing procedures in respect of the project please refer to the technical report entitled "NI 43-101 Technical Report, Intrepid Mines Limited, Casposo Project - July 2008" that was filed on SEDAR on September 16th 2008 by Intrepid Mines Limited and which is available under Intrepid's profile at www.sedar.com.

This news release contains forward-looking statements. These forward-looking statements reflect management's current beliefs based on information currently available to management and are based on what management believes to be reasonable assumptions. A number of factors could cause actual results, performance, or achievements to differ materially from the results expressed or implied in the forward looking statements. Such factors include, among others, future prices of gold, the actual results of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in ore grade or recovery rates, plant and/or equipment failure and delays in obtaining governmental approvals or in the commencement of operations.

ABN 33 006 243 750

Contact Information

  • Troy Resources NL
    Paul Benson
    Chief Executive Officer
    +61 8 9481 1277
    or
    Troy Resources NL
    John Dow
    Chairman
    +61 8 9481 1277
    +61 8 9321 8237 (FAX)
    Email: troy@troyres.com.au
    Website: www.try.com.au