Australian mining company Troy Resources Limited yesterday announced that it has secured needed capital for the immediate restart of its Karouni Gold Mine operations in Region Seven, for which it will be hiring workers.
“Since late November the Company has been working on sourcing the working capital required to make a formal decision to restart the operations… With that funding now secured, the Board has formally approved the recommencement of operations at the Karouni Gold Mine,” the company said in a statement yesterday. The funding secured amounts to approximately US$10.3 million.
“The restart of operations will begin immediately but progressively, initially with the employment of personnel involved in mining activities and later, after approximately two weeks, personnel involved in the processing area,” the statement said. The company, which had sacked some 300 workers after a forced closure, explained that the “lag” in the hiring is due to all available ore having been processed before the mill was placed on care and maintenance and so a rebuild of ore is required before milling can recommence. “Maintenance on the processing plant will continue to take place while awaiting a full restart of ore processing,” it said, while adding that it is likely that first gold sales revenue from the restart of operations will not be received for some six to eight weeks.
The company also announced the restart of trading of its shares on the Australian Stock Exchange (ASX) after a voluntary suspension. It noted that all matters required to be finalised for the restart of operations in Guyana, including financing and working capital, had been put into place.
The company explained that it has made a placement of 40 million fully paid ordinary shares at a price of 10 cents per share. The placement was made to its two largest shareholders, M&G Plc and Ruffer LLP, and raised $4 million before costs. The company also signed a Term Sheet for the provision of a gold loan from Malaysian-based investment fund, Asian Management Investment Services Ltd (AIMSL). The loan is for the amount of 5,200 ounces of gold and is available in one or more tranches as required by the company. Based on a gold price of US$1,450/oz, this equates to funding of approximately US$7.54 million or approximately A$11 million based on an AUD:USD exchange rate of 0.68. It has to be repaid within 12 months with early repayment permitted. The loan will be secured by a general security interest over Troy’s assets.
Completion of final documentation and provision of the security deed to secure the loan is expected to be completed by mid-January, 2020. Together, this provides total funding of approximately A$15 million, supplementing the company’s remaining cash reserves, and will be used for the purposes of restarting operations at the Karouni Gold Mine.
It is against this background that the company said it has now complied with all the requirements of, and received all the requisite approvals from, all the various governmental agencies in Guyana to enable operations to restart. This includes the transfer of the mining tenements and licences in respect of Ohio Creek and the reissuance of the importation permit conforming to the previous agreed “Karouni Mineral Agreement” between Troy and the Guyana government.
As a result, trading in the company’s shares on the ASX was due to recommence yesterday.
“I am delighted that we have finally been able to put together the funding package required for the restart of operations. It is with great relief that we can now get back to the business of producing gold,” Troy’s Chief Executive Officer Ken Nilsson was quoted as saying, while expressing the Board’s gratitude to workers, shareholders and suppliers for their patience during the “difficult time.”
“We would also very much like to thank M&G and Ruffer for their continued support, and also AIMSL for the provision of the gold loan as we embark on this new chapter in the Company’s journey.
“In both Hicks Extension and Ohio Creek, we now have two new and relatively high-grade sources of ore, the prospectivity of which is yet to be fully determined, but which we believe can sustain the Karouni operation for quite some time to come,” he added.
Operations at the company came to a halt after it was issued with a cease order on October 10th by Minister in the Ministry of Social Protection with responsibility for Labour Keith Scott following the death of geologist Ryan Taylor.
Taylor died on October 8th while working on the construction of a “bench” in a mining pit. A slippage occurred, which led to him falling and being covered by the rubble. On October 15th, Minister of Social Protection Amna Ally rescinded the order but Troy suspended operations after what it said was the knee-jerk reaction by Scott.
As the company paid out severance packages to sacked workers, Nilsson had told Stabroek News last month that he hoped to secure the needed financial backing to restart operations.
“I’m travelling to London to meet some of our investors to possibly secure about US$5 million,” he said, before adding that if he can’t secure this sum in the coming week, he will “get it by other means.”
At the time, Nilsson was hopeful that the gradual reemployment of workers would begin this month, with the company reemploying a “full complement sometime in January.”
Nilsson had lamented that while the company had money in various forms, it lacked liquidity, which was exacerbated by its recent closure. He explained that before its closure, the company was making in one month just over the US$5 million needed to stay afloat, the excess of which was being used to service debt.
