ASX listed Austral Gold Ltd have agreed to purchase 51% of Troy Resources’ marginal Argentine gold/silver mine known as Casposo for USD$3m.
As part of the deal, Austral are obliged to free carry Troy in a USD$10m capital works program designed to re-engineer the plant that was recently placed on care and maintenance after it fell victim to the impact of high inflation and capital controls in Argentina coupled with a falling US dollar gold price.
Austral will have an option to acquire an additional 19% of the project for a further $1m payable within 12 months.
The parties have also agreed that Austral can take its stake in the project from 70% to 100% for another USD$7m over a three year period commencing on December 2018.
However if the silver price at the time is in excess of USD$16 an ounce then the price will increase accordingly.
Austral are planning to get Casposo into profitability within 12 months via a 3 point capital injection plan that will principally focus on a new geological, mine design and processing study, the redesigning of mine operations according to the size of the deposit and optimising the processing cycle.
Managing Director Martin Purvis said: "Troy has made considerable efforts over the past 6 months to restructure the operations at Casposo in order to provide a platform to unlock further value in the mine. In partnering with Austral Gold, a company with extensive experience and operating skills in both Argentina and the region, Troy believes it has created a strong foundation to deliver the benefits now being created for the mining industry, by the new government in Argentina."
Austral’s Executive Director Stabro Kasaneva commented: “The Casposo Project represents a unique opportunity for Austral. We are excited to begin the process of leveraging our experienced technical team to transform Casposo into a profitable project, just as we have done with Guanaco in Chile. We have already identified the team to lead the Project locally and implement the capital investment plan."
In the six months to December 2016, Troy produced 13,243 ounces of gold and 1,428,401 ounces of silver from Casposo at an all in sustaining cost of USD$1283 per gold equivalent ounce.
