05/01/2022 - 15:50

Troy to recapitalise amid debt woes

05/01/2022 - 15:50

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ASX-listed Troy Resources is undertaking a $26 million recapitalisation in a bid to save the company, after conceding it had found itself in a precarious financial position.

Troy to recapitalise amid debt woes
Troy told shareholders it hoped the plan would allow it to progress the development of the Smarts Underground project at its Karouni Gold Mine in Guyana, pictured.

ASX-listed Troy Resources is undertaking a $26 million recapitalisation in a bid to save the company, after conceding it had found itself in a precarious financial position.

In a statement to the ASX this morning, Troy announced plans to convert $18.7 million worth of debt to equity and raise $7.2 million in new funds.

The plan includes the company’s largest creditor, Malaysia-based Asian Investment Management Services, converting almost $14 million of debt into equity.

Further, creditor Exploservice has agreed to convert about $4.6 million, about 40 per cent of what it is owed, with the repayment of the remaining amount to be deferred until April 2023.

Troy told shareholders it hoped the plan would allow it to progress the development of the Smarts Underground project at its Karouni Gold Mine in Guyana, the first phase of which is expected to set the company back $9.6 million.

It said ore from the Hicks 4 pit ran out earlier than anticipated, and long before ore from Smarts Underground had been upgraded to ore reserve status.

The company will also be hoping the recapitalisation provides the working capital necessary for it to recommence trading on the ASX, after entering a voluntary suspension in August last year.

A plan, which is still pending shareholder approval, is expected to be formally considered at an annual general meeting in late March.

Troy’s non-executive chair, Peter Stern, said the company had found itself in a precarious financial position, having to manage its cash reserves to service its debts while without production cash flow.

He urged shareholders to back the proposal, saying it would go a long way in restoring the miner’s financial status and allowing it to progress its exploration efforts.

“While the various share issues are unavoidably dilutionary, I can assure shareholders that this proposal is far more attractive than alternative transactions that were considered,” Mr Stern said.

“The recapitalisation will allow us to get on with the various tasks at hand: progressing plans for the development of the Smarts Underground Project and, if the rights issue raises sufficient funds, continuing to explore our highly underexplored but highly prospective ground position.”

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