TRX Gold Corporation (TRX) Earnings Call Transcript & Summary

Commodity TV second day here at PDAC in Toronto, and you see it in my back. The people are rushing into the hall. It's high interest here also here at the second day. And now I have the pleasure to be joined from Stephen Mullowney, the CEO of TRX Gold, Stephen, thanks for having the time.

Well, thank you for having me here.

It's great to have it here. The sun is shining. Gold price is at an exceptional level. So you have to be happy.

Well, gold price is a lot hotter than it is outside. I think we got one of the coldest days in the year. But yes, look, there's a great tailwind from gold, and it's probably going to continue to go up from these levels here with all the uncertainty in the world.

And the perfect situation is you are a gold producer.

Correct.

So for me, it's also the first time to have the opportunity to talk to you. Please give me an overview about your company.

Yes. So we're TRX Gold. We're listed in New York and in Toronto under the ticker symbol TRX. We have about a $600 million market cap as of today. And we're producing gold in Tanzania at the Buckreef Gold project. We just released our results for second quarter this morning, pre-release of around record production in the second quarter.

Congratulations .

Yes, that's great. And that production should continue to grow. So we're very pleased with that, and we've got a lot of resource drilling to be doing too in the second half of this year, which is -- should be great, low cash cost, self-funded.

Nice. Okay. So you are telling me Tanzania for me...

Yes .

That's crazy. I've been there last year for holidays. Also walking up to Kilimanjaro, but how is the mining situation there?

The mining sector is great there. So there's a lot of large mines there. Barrick has large mines there. AngloGold Ashanti has large mines there. Perseus is building a large mine, and we're right in that region with all those other mines. So it's a great jurisdiction to operate in. The labor is there. The talent is there, electricity is there. We drive the site. So I got nothing but good things to say.

Wow, cool. Okay. And yes, what has -- how was your 2025? So how long are you in production now? Could you ramp up? What?

So 2025, in the first half, we did a stripping campaign. So our production was a little lower in the first half of 2025. Our year-end is August. And so now that we've got through that in the second half of 2025, our production picked up, as I mentioned, in Q1 and Q2, we've had record gold production. We're on track for our guidance of 25,000 to 30,000 ounces. We are also expanding our plant. So right now, we're in the midst of upgrading the plant from an efficiency perspective. And then we're going to do a good build around getting a SAGD, jaw crusher and another circuit in place in addition to the current circuit. So we'll be well above 3,000 tonnes per day in the next 12 to 18 months as we execute that plan. Our PEA says 62,000 ounces over 18-year mine life, which we released last year. That will be higher given that we are going to have a larger plant in that. And we should have resources soon to come into the profile as we continue our exploration on the property.

Okay. Can you tell me a bit more about the numbers of the PEA, so base case scenario?

So the PEA is all self-funded. This is going to be our fourth expansion. All of the previous ones were on time, on budget. The net asset value is around $3 billion at $5,000 gold. The IRR is infinite because there's no capital invested upfront. And the cash cost is expected to be $1,000 an ounce with all-in sustaining costs of $1,200 an ounce. Our goal is to get it to 80,000 to 100,000 ounces, well above 10-plus year mine life. So it's a very profitable operation.

Wow, cool, okay. And for the expansion, you already have all the mechanics on site or...

So the expansion, we're currently finalizing the schematics and the design for the new processing circuit that will go alongside and are already looking at procuring those items such as SAGD ball mills. We know where to go get this stuff. So it won't take us long to procure that sort of equipment. The equipment around upgrading the plant for efficiencies, that's already started with darken reactors, oxygen plants, all of those sort of things.

How much money are you making now?

Our cash costs last quarter were around $1,400 an ounce. So we're making quite a bit of profit. The EBITDA run rate right now, if I just take our quarter and annualize it, it's probably in the range of $75 million to $100 million in run rate EBITDA as of -- if you analyze Q2.

Nice. Great work.

Yes, great role.

So in terms of cash, of course, now you are generating cash. How is the cash situation in total? Do you have debt?

So we're a debt-free company. We got about $2 million or $3 million of leases. We have $25 million of cash on our balance sheet. And as I mentioned, EBITDA profile, so there's lots of cash flow generation.

Perfect. So also the expansion, everything you can pay out of your money.

Correct, yes. It's going to cost about $30 million. We're already through a fair chunk of that spend for the processing plant expansion. Then we'll go underground in the next 3 to 4 years. That will be paid out of the higher production levels of the expanded plant.

Okay. So at the moment, you are open pit miners.

Correct.

And what's your head grade actually?

Head grade as of today is just over 2 grams a tonne.

Well it is brilliant .

Yes, it's good. Yes.

Okay, cool. And in the underground area?

In the underground area, it's wide, so there won't be a lot of dilution. So we're expecting anywhere between 2.25 and 3 grams a tonne head grade.

Amazing. And what's your goal? When do you want to go downstairs, so underground?

Well, that all depends on the gold price has changed. So we did our study on $1,900 gold for the mine plan. So that comes up. So right now, it's envisioned within 3 years. I expect that gets pushed out to around 4 or 5 years or we may do both of it at the same time open pit and underground.

How is your share structure? How does it look like?

So we have 325 million shares outstanding as of today. There's no warrants outstanding, some options, but not a lot from there more management options, and we're a clean capital structure.

Okay. So no warrants. All warrants has been expired.

They've either been exercised or expired.

Okay. Cool.

We brought in, in the last -- in January, $20 million as a result of warrant exercises from capital raises that were done well over 4 years ago.

Amazing. And on the exploration side, how many meters do you drill? What's your target there?

So the target this year will be 25,000 to 30,000 meters. The drill hole database has 130,000 meters, and that will be a combination of RC and diamond drill. There's a new RC rig on site. A diamond drill showed up this week and another diamond drill will show up in the next month or so.

Is it more infill or you both...

It's going to be both.

Okay. Perfect. So what would you say how much percentage do you have explored on your project?

I think -- look, it's -- we stepped back into the geophysics study because no one has never been done on the project. So that gives you an indication that not a lot. The Buckreef Main Zone is drilled up quite well. We need to drill at Stamford Bridge and Anfield, which are both discoveries in the last 2 years, and there's lots of other targets to start drilling as well.

Amazing. And with your money, you can explore as much as you can.

We're going to try to.

Yes, that's perfect. That's wonderful. And where do you see your next catalyst within the next 3 to 9 months?

Yes, I'd say it's a combination. The drill hole results will start to come out in the second half. The expansion continues, the profitability is there. We will relook at mine plan given the change in the gold price. So there's lots of catalysts to continue to grow the enterprise value and overall market cap and share price going forward.

And the last question I -- all my partners like to ask is, next year, same stage, where do you want to see your company?

I want to see our plant phenomenally done on its way to creating a lot more gold and good exploration results, a lot more value.

Perfect. Stephen, thank you very much for your time.

Thank you.

It's a pleasure to talk to you. And ladies and gentlemen, as you heard, it's a great company, TRX Gold. It's a gold producer out of Tanzania, making cash, making money, doing a lot of exploration work on site. So check out the company and bye-bye here from Toronto.