Troy Resources slashes capital costs for Casposo

Troy Resources (TRY-T, TRY-A) has figured out a way of rolling back the estimated capital cost of its Casposo gold-silver project in Argentina by 47% to US$45 million.

The US$41 million reduction from the previous published estimate in 2008 sent Troy shares up 4¢ or 3.03% to $1.36 in mid-afternoon trading in Toronto.

The Australian junior gold producer forecasts Casposo will start producing gold in the September quarter of 2010.

Troy said a decision to use a 100%-owned (and nearly new) gold plant that currently is in storage in New South Wales was largely responsible for the lower cost estimate. Plans to use in-house project managers instead of contractors also helped reduce costs.

Casposo is about 150 km northwest of the city of San Juan in the Department of Calingasta in Argentina’s San Juan province.

Battle Mountain Gold was the first to pinpoint mineralization at Casposo in 1998 and conducted surface sampling, geological mapping, trenching and pitting, an airborne magnetic and resistivity survey, and diamond drilling.

Troy acquired Casposo from Intrepid Mines (IAU-T) in May 2009. Intrepid had started exploring the project in 2002 and completed a feasibility study in March 2007.

In terms of mineralization, gold and silver occurs in both rhyolite and underlying andesite of the Permian-Triassic Choiyoi group, where it is associated with banded quartz-chalcedony veins, typical of low-sulphidation epithermal environments.

The principal mineralized structures are in the Kamila zone, consisting of the Aztec, Inca and B veins, and the adjacent lower grade Mercado zone.

The Kamila deposit will be mined first with the upper portion being mined by open-pit and the deeper one underground. The Kamila open-pit is made up of a large pit (the Kamila main pit) and a small satellite pit 100 metres to the southeast (the Kamila SE pit), with a separate open pit developed at Mercado.

All production for the first three years is to come from the Kamila open pits and underground ore production is anticipated to start towards the end of the fourth year. The Mercado open-pit will be mined in year 4 due to its lower grade and because it is further away from the processing plant.

In addition to the current capital estimate of US$45 million, which is the capital to first gold production, two additional capital items remain unchanged from the earlier published estimates: US$14.5 million contribution for the construction of local power infrastructure and US$12.8 million for ongoing capital — the majority of which is to be used to develop an underground mine.

As of June 2008, Casposo’s total open pit and underground mining reserves in the probable category tallied 1.73 million tonnes grading 5.16 grams gold per tonne and 120 grams silver per tonne. (The cut-off grade used for the open pit portion was 1.56 grams gold equivalent ounce and for the underground portion was 3.5 grams gold equivalent ounce.

Last month Troy released an updated resource estimate demonstrating indicated resources of 2.37 million tonnes grading 5.4 grams gold per tonne and 201.7 grams silver with an inferred resource of 261,000 tonnes grading 3.6 grams gold and 255.1 grams silver. (The increase in the mineral resource incorporated the results from the last drill program undertaken by Intrepid Mines and updating price assumptions.)

In addition to Casposo, Troy has two producing gold mines; Sandstone in Western Australia and Andorinhas in Brazil’s Para state.

Troy has 69.82 million shares outstanding. Over the last year it has traded in a range of 51¢ -$1.63 per share.