Troy Resources : Sep 21 Quarterly Activities Report & Appendix 4C

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QUARTERLY REPORT &

APPENDIX 4C

COMPANY UPDATE AND QUARTERLY CASH FLOW REPORT FOR ENTITIES SUBJECT TO LISTING RULE 4.7B FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2021

24 January 2022

PASSING OF KEN NILSSON

Troy's Managing Director, Mr Ken Nilsson, passed away in September 2021 after failing to recover from a medical procedure. Ken initially became Managing Director in 1997 and, after stepping down, was reappointed as Managing Director in 2017. Ken was personally responsible for the development and operation of all the various mining operations held by the Company since his initial appointment.

Ken brought significant passion and energy to everything in his life and will be deeply missed by all.

HIGHLIGHTS

• Mr Richard Beazley, one of Troy's Non-Executive Directors, assumed the role of interim CEO and Managing Director to ensure that the Company's direction was maintained.
• Gold production for the September quarter was 659 ounces obtained from processing remaining stockpiles and minor ore from the Goldstar pit. Mining operations ceased during July 2021 with the mill entering into care and maintenance in mid-July 2021.
• Gold sales revenue for the quarter was US$2.4 million from the sale of 1,319 ounces in July 2021.
• During the quarter, the Company secured the Potaro tenements which are located approximately 20 kilometres to the south of the Karouni Mill. The tenements see the Company's landholding at Karouni increase to approximately 89,000 hectares.
• The various work streams required to announce the results of the Pre-feasibility Study and declare the Maiden Ore Reserve at Smarts Underground (mine design work, geotechnical, hydrological, gap analysis, etc) were finalised early in the September quarter.
• Maiden Smarts Underground Ore Reserve of 89,000 ounces announced in the September quarter - refer ASX announcement 26 July 2021.
• Consultant study demonstrates Smarts Underground to be economically viable; up-front cost to first ore relatively minimal at approximately US$7 million.
• At the end of the September quarter, cash totalled AUD$0.71 million.

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OPERATIONS

KAROUNI, GUYANA (Troy 100% through Troy Resources Guyana Inc.)

Results Summary

A summary of key operational parameters at Karouni for the September quarter is set out in Table 1.

1. The Karouni mine was placed under care and maintenance in August 2021. The cash and ASIC costs for the quarter are based upon July production figures only.

Table 1 - Quarterly Production and Costs Summary

Mining

During August, the mining activity in Smarts was related to the development of the UG Portal - specifically, development of the surface access ramp to the portal location and securing of the pit wall above the portal.

During the quarter, 40,645 tonnes of material were mined with 9,150 tonnes coming from Goldstar and 33,446 tonnes of waste being mined at Smarts in August 2021. Approximately 20,000 tonnes were mined from the benches immediately above the underground portal to stabilise the area and prepare a working pad and 13,000 tonnes were removed to develop the ramp access to the poral area. All this material was saprolite.

A total of 5,079 tonnes or ore at 1.02 g/t were mined from Goldstar.

The June 2021 mine plan considered mining at Goldstar pit from July to mid-September and processing the ore along with the remaining low-grade stockpiles. During late June, however, it was found the tonnes and grades for Hicks and Smarts mineralised waste stockpiles were lower than previously estimated which affected the amount of material available for processing along with the Goldstar ore. As a result, mining at Goldstar was suspended in early July 2021.

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• The suspension of mining activity in the Goldstar area with equipment and facilities returned to the Karouni site. The pit walls were cut back to shallower angles to prevent collapse and trenches were dug to allow for effective water drainage from the pits.
• The resumption of pumping in Smarts pit. Water elevation declined to below the 40m level before pumping was stopped. Pumps were placed on standby, however, due to very low rainfall in the month of September, with the water level more-or-less remaining at that elevation.
• The demobilising of the Ohio Creek camp. The accommodation blocks and equipment were returned to the Karouni site. Reclamation of the site garbage dump was completed, along with removal of the generator and fuel storage tanks. The washroom and kitchen block were left intact and the concession was handed back to the lease-holder (Kabouri Investments).
• The termination of the equipment maintenance and repair contract with Farm Supply in early July 2021, with an interim contract negotiated to support maintenance of a limited operating fleet for a period of approximately two months whilst Troy Resources Guyana could transition to an owner's maintenance program.

Processing

Mill throughput for the quarter totalled 14,844 tonnes, sourced from Goldstar pit and the remaining mineralised waste stockpiles. The mill feed grade of 1.38 g/t Au was higher than plan (0.93 g/t); however, this was due to the mill completing an inventory cleanout reclaiming all the gold-in-circuit. The total amount of gold produced was 659 ounces. Plant recovery was calculated at 95%; however, as this figure takes into account the final cleanout, it does not truly reflect recovery of the fresh feed ore.

The mill ceased feeding of crushed ore on 9 July 2021 and the CIL/elution circuit during late July 2021 representing the commencement of the mine site shutdown before entering into care and maintenance in August 2021.

From the end of July to the end of September, work in the plant was focused on cleaning out the CIL/detox tanks, ball mill, thickener and elution circuit and preparing the plant for care and maintenance status. A weekly and monthly maintenance plan has been implemented to prevent deterioration or damage to the key electrical and mechanical components.

In September 2021, Troy began the process of liquidating some of its reagent inventory, those with a use-by date in late 2021 or early 2022.

Due to the high cost of operating the power station to support the limited electrical load requirements during care and maintenance, the station was shut down and smaller, portable generators were deployed to provide minimum electrical requirements.

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1. The Karouni mine was placed under care and maintenance in August 2021. The cash and ASIC costs disclosed for the quarter are for July 2021.

Table 2 - Quarterly Cash Costs

DEVELOPMENT

SMARTS UNDERGROUND, GUYANA (Troy 100% through Troy Resources Guyana Inc.)

Work during the September quarter concentrated on completing the Pre-Feasibility Study (PFS) of the Smarts Underground Ore Reserve.

Auralia Mining Consulting (Auralia) was engaged to calculate the Maiden Ore Reserve, with this being released by the Company on 26 July 2021 - refer announcement "Maiden Smarts Underground Ore Reserve".

The Auralia report concluded that the Smarts Underground deposit was economically viable based on the parameters incorporated in the evaluation.

The Company considers the deposit has the ability to be extended, both at depth and along strike.

The PFS included a calculated total cost of US$3.7 million to arrive at the upper stoping blocks from the start of development mining, with construction of the actual portal and initial infrastructure of between US$2-4 million. In other words, the cost to first ore is relatively minimal at approximately US$7 million.

The Company considers that a further three geotechnical holes need to be drilled so as to finalise the geotechnical assessment and, in turn, the mine plan.

The Company is ready to proceed with development subject to finalising the geotechnical assessment and meeting the funding requirement.

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GUYANA (Troy 100% through Troy Resources Guyana Inc.)

Overview

During the Quarter, exploration activities were slowed down due to financial restrictions. In early to mid- August, all exploration activities ceased and only rehabilitation work was completed until mid-September.

Exploration activities for the quarter focused on the Gem Creek prospect with both reverse circulation (RC) and diamond drilling. The planned drilling in Honey Camp and Upper Itaki was put on hold, as was the proposed field work at Kaburi Hills.

At Potaro - Kuribrong JV, exploration work, encompassing detailed mapping, sampling and access development, was carried out by Barrick Gold Corporation (Barrick) pursuant to the earn-in announced on 1 July 2021.