With gold ore plummeting in two key pits, Troy Resources Limited on Monday announced that processing activities could cease in August or Septem-ber at its Region Seven site until a delayed underground mine project gets underway.
The Australian miner said that the start of Guyana’s first underground gold mining project has been further delayed as challenges related to the COVID-19 pandemic have prevented the company from completing the necessary groundwork.
And even as the company stated that the earliest start date is now set for late 2021, it announced that it is currently exploring various corporate and funding options as it seeks to advance the Smarts underground project and bring it into production.
Ore from the underground mine is expected to become the primary source of mill feed as other pits are close to being exhausted. Once in production, approximately 290,000 ounces of gold is expected to be produced from the underground facility.
However, Troy acknow-ledged that one key challenge is that with this being the first operation of its kind in Guyana, the Mines Department at the Guyana Geology and Mines Com-mission (GGMC) has no experience in this area.
On this front Troy said it is working closely with GGMC and other government departments to assist in the formulation of a set of Mining Regulations for underground mining operations in Guyana.
The government, the Australian company said, is highly supportive of Troy’s plans and has already issued a permit to the company to commence infrastructure works.
“Various spectacular mineralised intersections have been achieved, suggesting that Smarts Under-ground is going to be a very valuable asset for Troy as we move forward. The geotechnical work illustrated that ground conditions for underground mining are excellent. How-ever, previous estimates around the time of completion of reserve calculations, economic assessment and the commencement of production will not be achieved,” the company said.
The COVID-19 pandemic has delayed the additional drilling requested by both the resource calculation and geotechnical consultants, and contributed to the lack of timely availability of contractors and service providers.
At this time, Troy said that they are not in a position to announce the results of the Pre-feasibility Study (PFS) and declare an initial Ore Reserve. The company said that they will be in a position to formally announce the PFS and Ore Reserve for the Smarts Underground shortly and noted that capital costs, operating costs estimates and delivery schedules are currently being finalised.
“The current preferred mine plan involves bulk mining of the deposit to maximize gold production. A two-stage development approach is currently preferred to minimise capex requirements. This will see initial development of a relatively short drive of approximately 800 metres to the first ore zone of approximately 30,000 ounces, revenue from the sale of which will be used to fund further development,” the company disclosed.
In October 2020, the company announced that it had ‘struck gold’ with a bonanza discovery of a vein at its Smarts underground mining project at its Karouni mining site in Region Seven showing 131.93 grams of gold per tonne.
Meanwhile, Troy has informed shareholders that they are likely to see minimal fluctuation in production for May and June and with the pits likely to be exhausted the company said they will enter into care and maintenance between August and September.
Over the month of April the company reported that gold production totaled 2,140 ounces with forecasting figures being pegged at 2,400 and 1,909 ounces for May and June respectively.
The gold mining company made the disclosure in their monthly update to shareholders on the Karouni Gold Project.
Troy in the update related that their two pits Hicks 4 and Spearpoint, which have been supplying ore to the mill are likely to be exhausted by mid-June/ early July of this year.
“The remaining volumes of ore in both pits are somewhat lower than had previously been expected with a recent internal review of the calculation of model versus actual grade control data identifying a relatively modest unfavourable discrepancy,” the company said and explained that the primary source ore over the last 15 months has been from the Hicks 4 pit while in recent months, a modest contribution came from Spearpoint pit.
With the company forecasting that ore processing activities will cease at Karouni later this year, it informed that the downtime will be used to place the mill on care and maintenance. With limited ore available for the mill, Troy said it is exploring the possibility of using third-party ore.
“Whilst the plant has been operating well over the last four months or so, it is normal in the life cycle of a plant for extended shut-downs to occur. Troy will use this opportunity to rejuvenate worn equipment as well as implement various modifications, which will be beneficial once processing recommences,” the company stated before assuring the mill’s power supply will also benefit significantly from repair and maintenance work, with most of the parts required already available on site.
Goldstar
Touching on the Gold-star Prospect, Troy said that optimization work produced disappointing results.
“During late 2020, early 2021, the Company conducted both reverse circulation and diamond drilling at Goldstar, achieving reasonable results. However, the optimization work in respect of Goldstar has returned disappointing results, resulting in the mapping of a less-than-anticipated Ore Reserve of approximately 74,000 tonnes at 1.2 g/t Au for approximately 2,600 ounces. This represents little more than one month’s additional production.” It was estimated that the some 25,500 ounces of gold could have been produced from the pit.
Troy nonetheless told shareholders that despite the low grade, should gold prices increase to US$2,000 per ounce, it can put them in a position to economically mine additional ore.
In a separate update, the company also announced that it has managed to acquire tenements over targets adjacent to their project site.
The Company has secured a package of tenements over an area referred to as the Potaro target, which is located approximately 20 kilometers to the south of the Karouni Mill. The new tenements are highly prospective for gold for large-scale gold discovery, the company said, before indicating that it has been in discussions for the past six to eight months.
The acquisition increases Troy’s landholding to an area of approximately 3,000 hectares.
The company explained that the area which lies by the Makaba Kuribrong Shear Zone (MKSZ) is mostly covered by sand along the newly acquired tenements.
Loan
Further, the company announced that the Company and Asian Investment Management Services Ltd (AIMS) have reached agreement to a further extension of the maturity date of its gold loan. The new loan extension is for 17 months with the new maturity date being 16 June 2023.
The extension will provide Troy with time to get the Smarts Underground operational, from which this ore stream will provide the principal amount to the Facility for repayment.
No fees were payable by Troy for the extension of the gold loan, the company stated.
Troy has encountered a series of setbacks in recent years. It closed its operations in October 2019 after an employee died at its Karouni mine site. It restarted its operations in January 2020 and was then affected by the COVID-19 pandemic. It did also experience financial difficulties which saw it entering into a gold loan facility of 5,200 ounces with Asian Investment Management Services Ltd (AIMS), a Malaysian based investment fund (Facility).
In February this year, Troy produced 2,653 ounces of gold, up from 2,113 ounces in January, putting production for the first two months of 2021 at 4,766 ounces in comparison to 4,195 ounces for the last quarter of 2020.
By contrast and prior to encountering major difficulties, Troy produced 58,118 ounces of gold in 2018 and 70,207 ounces in 2017.
