Growing gold output wins battle for Troy

Junior gold producer, Troy Resources has made a remarkable recovery after suffering a severe loss last year, posting a $16.7 million profit amid enhanced gold production and increased revenue.

This year's profit results compares to a $17.6 million loss in FY 2008.

Gold production and sales revenue have soared over the last 12 months.

The company produced 61,832 ounces, an increase of more than 20,000 ounces on 2008 figures.

And gold sales revenue of $75.4 million close to doubled the $39.7 million generated in the previous corresponding period.

The result included the first full year of production from the Company's new underground gold mine at Andorinhas in Brazil.

Troy chief executive, Paul Benson said last year was a year of transition as he positioned the company for growth while this financial year the company has laid strong foundations and started delivering on that growth.

"Although the results for the year were impressive, it's the foundation that we have laid for the Company's future growth which has been most pleasing," Mr Benson said in a statement.

"With the acquisition of the Casposo project in Argentina, Troy now has the longest forecast production profile in the Company's history.

"The Casposo acquisition and exploration at Sandstone have led to significant increases in gold Reserves and Resources, again giving us the largest gold and silver inventory in the company's history."

At the end of July, Troy had cash reserves of over $35 million, with no debt and no forward sales in place.

And Troy's $16.7 million profit result was achieved after allowing $7.2 million for exploration expenditure, down on last year's $11 million, and $10.5 million for depreciation and amortization, doubling last year's $5.1 million.

The company said it has an aggressive exploration program aimed at increasing reserves and resources and generally this expenditure is expensed in the year it is incurred.

Full announcement below:

Troy Announces a Profit of A$16.7 Million and Builds the Foundation for Future Growth

Highlights:

- Net profit after tax of A$16.7 million

- Pays 10th consecutive fully-franked cash dividend. FY2009 4 cents per share

- 53% increase in gold production to 61,832 ounces

- Acquired the Casposo gold/silver deposit in Argentina

- 32% increase in the Casposo Mineral Resource

- Commenced production from the high grade Mamão underground mine at the Andorinhas operation in Brazil

- The Sandstone mine which was due to close in February 2009, will now continue production through at least July 2010 with the mining of additional ore (30,000oz) from a cut back to the pit at the Lord Nelson deposit

- Discovery of high-grade mineralisation at the Two Mile Hill prospect at Sandstone, Western Australia including an intercept of 13.7m at 25.98g/t Au

- 96% increase in gold Reserves to 539,500oz, a 60% increase in Measured and Indicated gold Resources to 893,400oz and a 240% increase in Indicated Resources to 648,400oz

- Maiden silver Reserves of 6.7 million ounces and silver Indicated Resources of 15.4 million ounces

- Cash reserves of over A$35 million

- Unhedged gold and silver position

- Debt free

PERTH, Western Australia: Growing junior gold producer, Troy Resources NL (TSX/ASX: TRY) today announced a profit of $16.7m for the financial year ended 30 June 2009. This result compares to a loss $17.6m in FY 2008.

The profit for the year came from gold production of 61,832 oz and gold sales revenue of $75.4 million (FY2008: 40,318 oz and $39.7m). The result included the first full year of production from the Company's new underground gold mine at Andorinhas in Brazil.

Commenting on the results Troy's CEO, Paul Benson, said: "This has been a very good year for Troy. Last year we said FY2008 had been a year of transition as we positioned the Company for growth. In FY2009 we have laid strong foundations and started delivering on that growth.

"We saw a 53% increase in gold production compared to last financial year and have reported a profit of A$16.7 million. We have rewarded shareholders with a 33% increase in our dividend to 4 Australian cents per share which represented a dividend yield of 2.3%. It is worth noting that this is Troy's 10th consecutive, fully-franked cash dividend.

"Although the results for the year were impressive, it's the foundation that we have laid for the Company's future growth which has been most pleasing. With the acquisition of the Casposo project in Argentina, Troy now has the longest forecast production profile in the Company's history. The Casposo acquisition and exploration at Sandstone have led to significant increases in gold Reserves and Resources, again giving us the largest gold and silver inventory in the Company's history.

"We have started development of the Casposo project and expect it to be in production in the September quarter of 2010. Casposo will be a low cost gold mine that will help lift the Company's production well above 100,000 ounces per year.

"We see the year ahead as just as exciting with excellent potential to add further to our Reserve and Resource base. The high grade discovery at the Two Mile Hill prospect at Sandstone will be tested before the end of the calendar year. Similarly we will be testing targets at Andorinhas in Brazil and surface targets at Casposo.

"Troy is excellently placed to achieve its vision of becoming a profitable mid-tier gold producer," Mr Benson said.

Clean Balance Sheet

At the end of July 2009, Troy had cash reserves of over $35 million, with no debt and no forward sales in place.

Notably, Troy's profit result for FY2009 was achieved after allowing $7.2 million for exploration expenditure (FY2008: $11m) and $10.5 million for depreciation and amortization (FY2008: $5.1m). Troy has an aggressive exploration program aimed at increasing reserves and resources and generally this expenditure is expensed in the year it is incurred.

10th Consecutive Dividend

In recognition of the excellent potential to continue growing Troy's gold resources the Board increased the final annual fully-franked dividend by 33% to 4 Australian cents per share (FY2008: 3.0 cents). This represented a yield of 2.3% based on the share price on August 7, 2009. The record date for entitlement to the dividend was August 21 and it will be paid on September 4, 2009.

Operations

During the year mining was completed in the Lagoa Seca open pit at Andorinhas with production now coming from the higher grade Mamão underground mine.

At Sandstone low grade stockpiles were processed for the majority of the year. A new cut back in the Lord Nelson pit will provide mill feed through the 2010 financial year. Drilling of the Two Mile Hill prospect led to the discovery of high grade mineralisation which will be drill tested before the end of the 2009 calendar year.

In May 2009 Troy acquired the Casposo deposit in Argentina from Intrepid Mines paying US$20 million from cash reserves. An additional US$2 million is payable on the 6th month anniversary of first production. Construction will commence in the September quarter of 2009 and first production is expected in the September quarter of 2010.