TRX Gold Corporation (TRX) Earnings Call Transcript & Summary

So welcome, everyone, to TRX Gold's 2026 Annual General Meeting and Special Meeting of Shareholders. Joining me today is our Board of Directors. We have Dr. Norman Betts. Norm, you want to raise your hand?

Hello.

Hi. We have John McVey, Shubo Rakhit, our Chairman; and Richard Steinberg. Richard, are you on -- where is your picture? You must be way down there now. He's there. And also joining us is our CFO, Michael Leonard as well.

Hi. Good morning, everyone.

Before we kick off, I need to go through a few things that I'm just going to read from my screen. As most people know, I don't typically read off a script. But for this part of the meeting, I need to do this in order to make sure that votes are done appropriately. So for those registered shareholders present online who wish to vote during the meeting, please check in with the scrutineers, Odyssey Trust Company, and that's Kari Hobbis. To verify your identity and shareholder control number on your proxy form. Note, you must be a registered shareholder in order to vote today. If you hold your shares through an intermediary, such as a broker, you need to vote online or through your broker prior to this meeting as explained in the circular. If there are any shareholders online now who wish to cast a vote during the meeting, please speak up now or indicate in the chat box so the scrutineer can add you to the attendance and track your voting. Please note that the webcast is being recorded as indicated by Evan Strong at REVlaw. Shareholders have the opportunity to ask questions of management by submitting your questions via the chat function more towards the end of the meeting, which questions will be addressed upon completion of the formal part of the meeting thereafter and as well as remarks from management. We'll begin the formal part of the meeting, followed by remarks by myself and Mike Leonard. It is now my pleasure to turn the meeting over to our Chairman of the Board of Directors of today's meeting. Over to you, Mr. Rakhit. Thank you.

Thank you, Steve, and good morning, everyone. I hope everyone is surviving the weather we've been having this past week. So welcome to our Annual General and Special Meeting of the TRX Gold Corporation. I'd like to call the meeting to order. I'm the Chairman of the corporation in accordance with the corporation's articles and approval of the Board, I'll act as Chair for the meeting. I thought I'd just start off with some comments before I hand it over to the formal part to Norm. This past year was all about saying what we would do and actually doing it. We came up -- we have more ounces, more cash flow and we have benefited from rising gold prices. I was just thinking about this. I was sitting -- I remember sitting with Mr. Gold, Jim Sinclair, our late founder, who believed that gold would go to $5,000 an ounce. And here we are with momentum. So it's been a great year for the gold sector. Our team has been very focused working diligently on bringing our working capital in line, managing our liquidity and allocating capital more effectively. We're already preparing to double our production over time with a well-capitalized balance sheet. All the things that have led to this, I would say, is the -- one of the big cornerstones, I'd say, significant cornerstones of our business has been operational excellence. That's so core to our values. We completed a stripping campaign in the first half of the year to access higher-grade ore. We fully commissioned our 2,000 tonne per day processing facility that set the stage for record quarterly ounces in Q4 and continued into Q1 of this year. We're already investing in a bigger processing facility and supporting infrastructure. So I'm quite proud of our team around operational focus, and that's been our discipline since the team took over to really operationalize this asset and move it forward. The second thing is -- and I was actually looking at my notes from last year is around drilling. And it's fair to say that we're going to drill more aggressively. We're well capitalized. But you actually think about over the last 4 years, we've been nimble and very focused on where we pursue exploration. We're so focused on stabilizing and prioritizing producing -- having a producing mine. Coupled with our best drilling results ever at Stamford Bridge and our other targeted zones presents a real opportunity to be additive to Buckreef and make it much more bigger. And that all leads all that hard work operationally has led into record EBITDA and positive cash flow for 3 consecutive years. On the back of our Q4 results, we continue to see improvements in fiscal '26. We stepped up our investor communications. Furthermore, we have a solid balance sheet and to move forward through disciplined capital management. And lastly, I'll just talk a little bit about Tanzania. We have local senior relationships in Tanzania that maintain an active dialogue, and we continue to share our perspective on best practices for success. We actually -- we employ over 800 people in Tanzania at Buckreef today. And needless to say, Steve and our other team members have been flying across to Tanzania on a very active basis, meeting with government, meeting with our employees, looking at our operations. So it's fair to say their boots on the ground as often as they can be. We continue to maintain and step up our efforts that have resulted in strong safety and environmental record. We continue to give back in our community. We had five projects on the go, of which most are completed. We have a few left to go. And I just want to thank all of our shareholders for their trust, dedication and patience to allow us to demonstrate what TRX can be. I would like to especially thank our management team, employees, contractors and partners who've worked extremely hard this past year to bring us where we are today. I will now hand it over -- I'll now hand over the formal part of our meeting to Norman Betts, Chair of our Audit and Risk Committee.

Thank you, Shubo. Good morning, everyone. Kari Hobbis of Odyssey Trust Company is present electronically and will act as our scrutineer. I will ask Carmen Diges of REVlaw to act as Secretary of the meeting. I have before me the declaration of Odyssey Trust Company, transfer agent for the corporation, attesting to the due mailing on January 26, 2006 of the notice of meeting, information circular and proxy. I would ask the Secretary to table the declaration of mailing and notice of meeting and information circular and append them to the minutes of this meeting. We have extra copies available and invite any shareholder or proxy holder to review them. In view of this, I dispense with the calling for reading of the notice, and I will ask the Secretary to file the declaration as to mailing with the minutes of this meeting. Section 11.3 of the corporation's articles stipulate that a quorum for a transaction of business at a meeting of shareholders is two shareholders entitled to vote at the meeting present in person or represented by proxy. I have before me the scrutineer's interim report indicating that there are a total of 326 shareholders represented by proxy, holding 136,312,808 shares, representing 47.28% of the issued and outstanding shares of the company. I therefore declare that a quorum is present and that the meeting is regularly called and properly constituted for the transaction of business. As all votes have been cast by way of proxy, I confirm that as management's proxy nominee, Stephen Mullowney will be making motions and as a significant shareholder of the corporation, Shubo Rakhit will be seconding the motions. The minutes of the last annual meeting held on February 27, 2025, are filed in the minute book and available for inspection. With your consent, I will propose we dispose of the reading of these minutes and the minutes be taken as read, approved and adopted as tabled. Is there any objection? No questions or objections have been raised. Thank you. The first item of business is the presentation of the audited annual financial statements. Audited financial statements for the last fiscal year ended August 31, 2025, together with the auditor's report were made available under the corporation's profile on SEDAR and mailed to requested shareholders -- mailed to registered shareholders who requested them. I hereby declare that the audited financial statements for the last year of the corporation ended August 31, '25, be hereby received as submitted. The management update and question-and-answer period will be conducted at the end of this meeting. The next item of business is to set the number of directors of the corporation for the ensuing year. As noted in the management information circular, management recommends that the number of directors be set at five. I now call for the following resolution: Be it resolved that the number of directors of the corporation to hold office for the ensuing year is set at five.

I move that, that resolution be adopted.

I second the motion.

Is there any discussion regarding this matter? [Voting]

As a majority of the proxy votes are in favor, the motion is carried. The next item of business is the election of directors to serve until the next Annual Meeting of Shareholders or until their successors are duly elected and qualified. There are five positions to be filled. Management has nominated the following persons to serve as directors of the corporation to hold office until the next annual meeting of TRX Gold and until their successors are duly elected: Stephen Mullowney, Shubo Rakhit, Norman Betts, John McVey and Richard Steinberg. The corporation has received no other nominations. Therefore, I declare that the nominations for directors are closed. Is there any discussion regarding this matter? Thank you. I now call for the following motion. Be it resolved that Steve Mullowney, Shubo Rakhit, Norman Bettss, John McVey and Richard J. Steinberg be elected as directors of the corporation to hold office until the next annual meeting.

I move that, that resolution be adopted.

I second the motion.

Is there any discussion regarding this matter? [Voting]

As a majority of the proxy votes are in favor, the motion is carried. The next item of business is to appoint an auditor for the ensuing year-end and authorization of the directors to fix their remuneration. As noted in the management information circular, management has proposed that Dale Matheson Carr-Hilton LaBonte LLP, chartered accountants of Vancouver, British Columbia, be reappointed as auditor of the corporation for the ensuing year. I now call for the following motion. Be it resolved that Dale Matheson Carr-Hilton LaBonte LLP chartered accounts be appointed as auditor of the corporation for the ensuing year and that the directors of the corporation be authorized to fix the remuneration to be paid to the auditor.

I move that, that resolution be adopted.

I second the motion.

Is there any discussion regarding this matter? [Voting]

As the majority of proxy votes are in favor, the motion is carried. The regular business of the meeting has been completed, and there is no other legal business which may properly come before the meeting, which does not require notice. Since there's no further business, I will call for a motion to terminate the meeting.

I hereby move that the meeting be terminated.

I second the motion.

Unless anyone is opposed, the formal motion of this meeting is now terminated. Over to you, Shubo.

Yes. Thank you, Norm, and back to you, Steve, for some comments on the business and any questions that we may have.

Yes. Excellent. Thank you, Shubo, and thank you, Norm, for leading us through the formal part of the meeting. As I've indicated to many shareholders, first of all, I would like to thank the shareholders for being patient with us. As I've indicated before in the past, we do have a very strong, stable shareholder base, and we appreciate that stability and appreciate the support of management. A couple of themes that Shubo did indicate is one is I've been here 5 years now. So it's been a journey that has required a lot of patience and a lot of heavy lifting and a lot of work. It does take patience and time to execute a mining project. It's even slower than I would have liked. But given my background, I can be impatient at times, but it's required quite a bit of patience. What I would say is 2025 was really an instrumental year. And the reason why I consider an instrumental year is, yes, we've had great results. But I think the biggest part is in the development of a mining asset and the way that we chose to do this, what in industry terms is bootstrapping and then cash flowing your way to very good profitability. The tougher parts are in the rearview mirror at this point in time. So we have a very good sense of metallurgy. We have a very good sense of mine plan. We have a very good sense of how to build things in Tanzania. And so we have a very good sense of how to get to the next level of profitability and production and how to grow this asset. The -- we've done this -- I reflected on this over the last week, and Mike and I were discussing this. And we come back to basically just over 4 years ago, maybe 5 years ago when we were on site, I think we might have had maybe 35, 40 employees at that point in time. We were losing, I think it was in the range of $0.5 million a month. And we're there, but this is burning a hole in our wallet. And so we sat down with the team and we looked at them and walked around the property. We said, how do we take this from a $0.5 million burn a month to something that's profitable. And that is when we sketched out our first plant. And that was the 360 tonne per day plant. Mike remembers it very well, don't you, Mike?

I certainly do.

Yes. And we essentially mapped it out with Gaston and Isaac right there in the spot in about I would say, 15, 20 minutes of what it would cost to build, how much it could mine and how profitable it could be. And one thing that we've always never wavered on because it drives a lot of the other financial metrics is payback period. And I think when we were calculating the payback period of that particular investment, it was well under 3 months. I think, Mike, it was like 6 to 8 weeks.

Yes, it was weeks. That's right.

Yes, it was weeks. And we said, great, approved. So that was the genesis of the bootstrap model. And then we went from 360 tonnes per day to 1,000 tonnes per day to 2,000 tonnes per day. And as we announced in September, we're going to go well above what we have in the PEA of 3,000 tonnes per day. And we feel quite confident in that. We're taking our time. I'm doing it right, making sure we're on time, on budget. Richard, our COO, is looking at ball mills as we speak over the last couple of weeks and putting that into place. So we're looking at the [ SAGD ] ball mills, the jaw crushers and the whole plant system. And we have three or four options there. We have a good sense now of all the test results that have been coming in over the last 4 or 5 months of what size and how this is going to be pieced together. We gave an outline of that in September. It is changing somewhat more to the positive angles of it. And we're quite confident in executing that over the next 12 to 18 months. The PEA. So in any mining asset, and I've said this before, particularly a lot of people will come forward and say, okay, what is it going to be your business plan? And it has taken us -- it took us some time to get this together. We released it in April of last year. It's really what I'll call a guideline of a business plan. Our goal is to exceed it, but the numbers in this PEA are really good. So on the Buckreef Main Zone, which has 1.5 million ounces at 2.5 grams per tonne, we're anticipated to have an 18-year mine life. Obviously, if we have a bigger plant, the profitability will be higher and will have slightly lower mine life in the study. But as we explore, more than likely, we're going to find more gold ounces, so it's going to go back up again. But at $5,000 gold, for instance, in that study at an average of 62,000 ounces a year over 18-year mine life, this study has a net present value of over $2.6 billion pretax. It's quite a robust asset just in the Buckreef main zone. And that is anticipated not even to go down to the last drill hole result, which is 750 meters. So this will be a long-life asset as it continues to grow out over time. In that study, at EBITDA in years 4 and 5 at what's anticipated to be the production profile in the study, I would expect EBITDA to be over $300 million, which is quite significant. At 4,000, it was $250. So at 5,000, it will be quite significantly more. And this is all off the back of net capital raises back in the early days of $20 million. So our goal is to get an asset into the $80,000 to $100,000 ounce range off of that initial capital raise. I would challenge anybody to go out and find anybody else who has done that off that little capital. Normally, plants of that size and the projects of that magnitude are requiring $200 million to $250 million of capital. I remember back in the day, Mike, you understand this as well, even on chat rooms, even in front of investors, everywhere, people would challenge us to say, no way you're going to be able to do this. You know you're going to require $200 million of capital. How many conversations we have like that, Mike?

Multiple per day.

Multiple per day. And now that we've kind of gotten through and executed that, now how are our conversations go now, Mike, with institutional investors?

You guys did what you said you were going to do. It went from being a show-me story to one of, okay, you've done it three times on time, on budget over the last 3 years. I look forward to seeing you do it again as part of your PEA.

Correct. So now -- and that's part of the reason why you start to see us start and be reflected of coming along with the gold market. Did we have challenges last year? We did from what I'll call a public markets perception around working capital. And that was necessary because in year three, the mine plan was always going to be difficult on a strip campaign. And we needed to go through that. And in doing so, working capital went upside down. It was below one. We worked with our suppliers, gave them the outlook of the business, particularly around grade profile as you get through the strip campaign, moving from a low head grade to a higher head grade and thus the profitability on the other side. We've now come through that and have executed that really well as we've had record Q4, Q1. We know what Q2 is looking like, and I'm smiling. You get a sense of that, hopefully, next week. And so that sort of journey continues. And working capital today has gone from probably a ratio of 0.5, I believe, in our financial statements, and I suspect it's well over 3 today. And so that has been a great turnaround, and that means the capital is available for the execution of the business plan. The business plan is quite straightforward, has been demonstrated by us, and you'll hear us on our quarterly reports where we get more in depth around this is the business plan is to utilize cash flow from operations to expand the plant to well over 3,000 tonnes a day, utilizing that expanded plant's cash flow to invest in the underground, which opens up a very long-term mine plan. We are on track with that business plan. There is in the business plan as well, exploration. And what we did with exploration, and I would ask shareholders who have been patient over the last 4 or 5 years as we execute the production profile is exploration needs some patience as well. And the reason for that is it needs to be done properly. So this is the first time that we've had a geophysics study done on the property. Phase 1 is completed. Phase 2 is underway of that geophysics study. It has identified a lot more targets. We don't want to have situations where Anfield was discovered as a result of artisanal miners. Stamford Bridge, it came through the pit. So it was great that we discovered these high-grade -- potential high-grade zones, but we want to know where all of them exist. A geophysics study does that for us. It identifies structures such as Stamford Bridge and such as Anfield. And we're going to be -- we're going to start to drill those structures this year as we get more into exploration in the second half of the year. And we hope that we find a lot more gold combined with what we already have in the Buckreef Main Zone. And perhaps our study indicates all-in sustaining cost of around $1,200, cash cost of $1,000 an ounce as we expand. maybe that even goes down if we find better zones. Maybe the mine plan gets better. Maybe that NAV goes from $2.6 billion pretax to $4 billion pretax, depending on what you find. That's the nature of this business. That is certainly our hopes and our goals as we continually execute this asset. With regards to government relations. Look, any time you move from sub-50 employees to 800, including contractors today. It's a big operation. There's -- we were there a couple of weeks ago. A lot of things getting built, just activity. It's just amazing. We have thickener pads in. We have new mess houses. I think we're going to have our first gym here pretty soon. New accommodations popping up all over the place, lots of CSR projects. The asset is growing significantly. And it is very exciting to see all of that. And so I reflect upon that, and that is great from a government relations perspective. The government likes that, too. A lot of employees, growing asset, more royalties, taxes and jobs. Obviously, they have a law that -- and we've indicated this that they're attempting to get to 16% free carried interest under a framework agreement process that similar to what Nyanzaga has for Perseus, similar to what Lifezone has in Kabanga and other miners in the country. We have 45% dilutable interest by STAMICO. We are always in discussions with them of how we get to more of a standardized sort of agreement, but it takes time. It's politics. I expect it to continue to take some more time. But the relationship is solid, it is strong, and the dialogue is open between us and them to get a win-win-win type of scenario for shareholders, for governments and mainly for local people. They should be always be the biggest beneficiaries of mining assets through employment. And so we continue to go down that journey. I'm fairly confident in it. I can't get definitive time lines on it, but it's certainly top of mind on their side and top of mind on our side. So with that, I'm more than happy to start taking questions. Mike, anything to add to what I just said?

No, I think you said it well, Stephen. And just to echo some of your comments, I want to thank our shareholders for being loyal and committed and certainly patient. As you mentioned, Stephen, we spent the last few years really putting in place a foundation for us to grow from. That foundation, thankfully, has helped us gain leverage to these record gold prices that Shubo mentioned at the outset of the call, we're approaching $5,200 an ounce here. So that's allowed us to focus on things like liquidity, focus on things like working capital and really set us up to execute against that PEA study, Stephen, that you touched on that demonstrates more growth and value. And mercifully, we're seeing the equity get a little bit of traction in the market here. So as we continue to execute and grow, we hope it goes from here.

So we have one question in the queue, Mike, and it is, does the Tanzanian government stake in the JV contain a royalty stake in Buckreef Gold project? Yes. The government has a -- on gold that's exported, the all-in royalty is 7.3% roughly. That includes the local royalty plus the government royalty. On gold that is refined in country, which is about 20% of our gold is sold in the form of dore to the Bank of Tanzania, that gets a royalty rate of approximately 4.3%. When you talk about drilling in the second half, do you mean fiscal second half or calendar year second half? Kind of both, more calendar than fiscal. So it will be fourth quarter fiscal, second half calendar.

Well, I think, Stephen, maybe it would be helpful to comment that we do have a diamond drill -- excuse me, an RC drill or reverse circulation drill that's arrived on site. A diamond, I believe, is meant to arrive on site in the next week or so. Concurrent with their arrival, the drilling will really ramp up from here. So it's very near term. And as many shareholders have asked, we will press release assay results as and when they come in and hope to update shareholders at that time.

The next question is, please expand on the large increase in daily average volume of the stock for the last 2 months. This doesn't appear to be retail. Can you confirm inclusion in index or additions of larger institutions? Yes. So I think -- look, the whole gold market has had an increase in liquidity. So that's part of it, particularly when gold prices went through $5,000 an ounce. That's one part of it. The second part of it, we do see institutions coming into it based on what we track. I'm not aware of being included in any indexes at this point in time. I haven't seen that, but I would expect that to start. What I would say is there's been some institutional liquidity as a result of warrant expiry dates that happened on February 11. And so I would say part of the volume has been driven by that as well. And I think a large part of the volume has been driven by this is now a well-capitalized business that is growing and getting a lot more interest. So the next question is, what is the drill assay turnaround period? So once you deliver the core, -- so typically, what you would do is you would drill a core and then you would deliver it to a lab. It will go under -- it would then be analyzed and then turn around. Usually, you do this in a batch sort of period. So it is a -- in that regard, it would take around 2 to 3 months to turn around roughly. Next question. What is the net asset value of share? Well, I'll do that right now in front of you. If we had $5,000 gold pretax at $2.9 billion, divided by -- yes, $4, $5 a share is what I would suspect, net asset value.

I think the mathematics is as simple as taking the value of the study that you talked about earlier over the current outstanding share count, which is around 300 million shares. So $2.9-odd billion divided by $300 million.

And I applied 55% there to be conservative.

Yes.

So if the ownership was higher, and then it would be higher. I think that's it for the questions. Excellent. If nobody has any other questions, my -- you can always reach out to our IR inbox. We're constantly following that. The management team is more than happy to take calls with shareholders to answer any further questions. Stay tuned for our quarterly releases and our quarterly conference calls. We do take investors through presentation and more, what I'll call, quantitative data on the business. At those meetings, it will happen four times a year. And stay tuned for our progress and where we're going. Like I said, the expansion is on time, on budget, and we will have a good second quarter as well.

I think, Stephen, there is one final question. Are you creating any more shares? And I think the philosophy is to continue, as you've mentioned, to use organic cash flow from operations to self-fund our growth. So the expectation is to self-fund our PEA, correct?

Correct. The business plan has not changed. Excellent. Evan, I'll hand the meeting back to you to close. I think we've answered all questions. And if anybody has any additional questions, please give Mike or I a quick call. Thank you. And as I would say in Tanzania [Foreign Language].

All right. Thank you, everyone. The meeting is now ended.

Thank you.

Thank you.