TRX Gold Corp (TRX) 2023 Q4 法說會逐字稿

Welcome everyone to the TRX Gold Corporation 2023 Year End and Fourth Quarter Results Presentation. (Event Instructions)

I would like to now turn the meeting over to Stephen Mullowney, TRX Gold Chief Executive Officer. Stephen?

Yes, thank you, Christina, and before we begin the call today, I'd like to recognize that our Founder and Chairman passed away during the quarter. And during this year, and I know all of us here had a good relationship with Mr. Sinclair, and he'll be greatly missed.

So with that, this is our 2023 year end conference call. Obviously, we'll have an Annual General Meeting conference call in the new year, as part of the Annual General Meeting, and I'm quite excited for what we had in 2023.

We had a significant amount of growth. We're really starting to see what the potential is for the Buckreef Gold Project. We had another plant expansion. We have another one underway. We're getting a much better sense for the geological potential of the property, and are quite excited for that, and where that can go over time, particularly hopefully increasing resources on our property quite significantly, as well as continuing to increase the production profile of property as well.

So 2023 was a great year. We're quite excited for today's call, and for where we're going as a company as well. So obviously, there's a cautionary note, we will be talking about forward-looking statements. So I'd ask everyone to go to our website in our corporate presentation to read the cautionary note.

Today's speakers, obviously we have myself. We have Andrew -- raise your hand -- our COO here in Toronto. We have Mike, our CFO, here with me as well, and Christina is joining us from Montreal.

So TRX -- a lot of you will hear this in our presentations -- we are a very growing company. We have an experienced management team that continues to deliver rapid growth, both on the production side -- specifically on the production side -- and we have a lot of exciting blue sky potential on our property and the growth of resources over time.

So the Buckreef Gold Project -- just to give everybody a reminder -- the Buckreef Gold Project, right now, we have under the 2020 resource statement, 2 million ounces in the measured and indicated category in the realm of around 1.8 grams a tonne.

As a lot of you know, the deposit does come to surface, and it's relatively flat, and it's a vertical shear zone, so it's easily mineable. The width's are around 20 meters -- easy metallurgy -- and grind crush CIL in the oxide ore.

And as we'll get into in this presentation, which were very exciting during the year, is our results around the sulphide ore, which continue now to be moved into the mine plan and process. We are fully permitted to grow as large as we can. Our permit has been extended to 2032, and is renewable for the life of the deposit.

The processing plant and mine consistently are meeting production guidance. We have a minimal environmental footprint. We recycle all water. We have good tailings management. We're connected to the national power grid, and we adhere to all international standards around environmental standards, and a good ESG program as well.

And we have exceptional exploration potential, which hopefully will mean this mine life goes on for a considerable period of time. And with the special mining license, we can do that.

So with regards to the 2023 highlights, there was a lot of growth. And as we -- as a management team have told market participants, is our goal now is to predominantly self-fund operation, and manage capital -- your capital -- with minimal dilution. And I think we've achieved that in 2023. We generated record revenue, operating cash flow, and adjusted EBITDA, with a great profit margin.

Michael will get into statistics now in a minute, and then predominantly reinvested that right back into the business to continue to grow. So I think this is the first year that we've been able to execute on that business plan. And with the expansion that is to occur in the next three to six months, then that's going to enable us to have even more cash flow to reinvest back into the business and the business potential, both on a production profile basis, as well as a resource expansion basis.

So in 2023, we executed on 1,000 tonne per day plant that came in on time and on budget for $6.4 million. We are now going through another mill expansion, which will increase its throughput capacity by 75% to 100%. The production capacity will be dependent on the grade that will go through that, and we'll give more guidance on that in the future.

We're also unlocked the whole deposit, particularly the Buckreef Main Zone, because everything we're talking about here right now is Buckreef Main. And so we're not talking about Anfield or Eastern Porphyry or other exploration targets on the property.

The sulphide ore has gone through the mill. We did a bulk sample. It continues to go through the mill today. What we're in the process of doing now is -- and this is normal operational sort of things with regards to processing plants -- is what's the right mix of oxides and sulphides to go through to get an appropriate, more balanced recovery rate over time, and over the life of the project. That all has to do with suspensions and things like that, that the metallurgists really get into.

And in 2023, we've extended the known mineralization around our Main Zone by 500 meters. And we've also had discovery of the Anfield zones, and continue to work on figuring out where to go next, Andrew. And you'll get into that in about 10 to 20 minutes, how you're going to go about blocking and tackling a good exploration program, particularly as this new plant comes onboard and expand -- hopefully expand -- the life of the deposit.

With that, I had planned to hand over to Mike, and he will go through the financial results for 2023.

Thank you, Stephen. Good morning, everyone, and thanks for joining us. As Stephen touched on, that was a record year operationally for us at TRX. We produced over 21,000 ounces on the year. That was in line with our full year guidance of 20,000 ounces to 25,000 ounces. And that was after us having brought the 1,000 tonne a day plant online back in October of last year.

We sold all of what we produced during the year at an average realized price of $1,845 an ounce for the full year. You can see, in Q4, gold prices exceeded $1,900 an ounce and are now trading beyond $2,000 now. And that in fact, this morning we were up over $2050. So record levels, and certainly suggests record growth going into into next year.

In terms of the financials, the record production drove record financial results as well. As Stephen touched on, we had record revenues of over $38 million. Cost of sales came in at just over $20 million, which had a gross profit of over $18 million, or almost 50%. So a very cost effective, high-margin operation. We had record net income of $7 million, EBITDA of almost $14 million. And importantly, operating cash flow over $17 million, which got reinvested back into the business. And I'll touch on that.

But again, for investors who have been tracking this story, this is the third year of growth. Since we've come on board, it has been year over year over year growth. And we certainly expect this growth to continue into next year as we expand to 2,000 tonnes a day.

On the cash cost side, we reported cash costs of $904 an ounce for the full year, and this was above the high end of our previously guided range of $750 to $850 an ounce. And this was primarily due to higher than expected processing costs that we incurred in Q4.

So there's a couple of reasons for that that we called out in our MD&A, one of which was a higher than expected maintenance costs. We ended up encountering a mill motor failure on one of our ball mills that required some unexpected maintenance, and that was coupled with an overhaul of our of crushing circuit. So there was roughly $30 an ounce variance for unplanned maintenance that we expect to normalize into next year.

And secondly, in Q4, we experienced inconsistent unstable power from the TANESCO power grid. What that meant was we ended up using a higher than expected gensets power, which consumes fuel at a higher rate than what we had previously forecast or budgeted. And that led to about an $18 an ounce impact on full year cash cost.

Importantly, we have since been reconnected to a new substation that is substantially closer to Buckreef. This substation is about 60 kilometers away from Buckreef, where the previous substation was over 250 kilometers away from Buckreef. We got connected to that grid in November, and have seen consistent growth now over the last few weeks and consequently expect costs to be lower heading into next year. We'll talk about guidance in a moment, but suggests lower costs year on year.

And I guess the last bullet I'll touch on, as Stephen mentioned at the outset, our mantra is using organically-generated cash flow to reinvest back into the operation around value-accretive activities. We took that $17 million-$18 million of operating cash flow that we generated, and put it right back into the business.

As we've touched on many times, we expanded the plant from 360 tonnes a day to 1,000 tonnes a day. We're on our way towards 2,000 tonnes a day, having already procured a mill. We've set ourselves up for this growth by expanding our tailings storage facility to accommodate the higher production volumes.

And again, we look at additional infrastructure, capital assets -- we're doing long-term studies -- all in an effort to support the long-term growth of this business and doing what we said we would do -- reinvesting cash flow in value-accretive way.

Next slide, please.

Excellent. Well, thank you, Michael. That's great. Financial metrics are improving significantly, and we continue to expect those financial metrics to improve into this year, which we'll get into guidance again.

These are, I think it's fair to say, projects that you get going, and you're able to expand it much more quickly over time. So it's almost like pushing a snowball off a hill. It gets bigger and bigger and bigger as it goes down that hill and it gets easier to do.

Yes. So we're quite excited for that. And one of those factors is the sulphides. So we were in an extremely wet season. Last year, it was raining. I think it was a once in 100 years or something like that, Andrew, that relative to rainfall, it goes into spring.

And so when you're into that environment, hard rock is easier to process than oxide rock, because hard rock is not as sticky. Doesn't have clay in it as oxides do.

So we pivoted a little bit to the sulphides to see how they would work. They worked out just fine. I believe the 2019 or 2020 metallurgical study -- 2020 preliminary metallurgical study said that should get at recovery rates in the mid-to-high 80s. That's what we experienced when we put the mill feed through our mill.

And now subsequently, that will go into the long-term mine planning now and into the current mine planning. So this is significant, because 90% of the resources on the Buckreef Main Zone are in sulphides. And we are hitting the sulphides -- who's that on top of the pit area and are on top of the harder rock?

That's Paschal. That's our Senior Mining Engineer who is clearly demarcating the sulphides, which you can see, which has come from rock which you can see because it's come from brokers that kind of gray color. And that particular block is actually running at 5.8 grams a tonne.

And so Andrew take, in the picture on the bottom, can you take the investors through what they're really seeing in the pit? Because you could see the transition zone, you can see the oxide zones, and you could see it start to sulphide zones.

That's right, Stephen, thank you very much and good morning to everybody. So on the photograph on the on the bottom part, obviously if you look at the pit itself, you see the top part of the very top part of the bit you see, the brown layer, that is our top soil.

And then in regards to sort of the ochre orange colors, and that is our oxide zones, about 20 meters, 25 meters thick. And then if you just look right in the back of the bottom of the pit, you'll see the gray rock. And that is our sulphides. So you'll see we have started to expose the sulphides in the very deepest part of our pit, which is what you've been talking about here with our bulk sample.

Yes, exactly. So on to the next slide -- the 2000 tonne per day mill expansion. So as I've explained to lots of investors over time, we are on a pay-as-you-go program. And what does a pay-as-you-go program mean? It means that as the business generates cash, it will be reinvested into the business to grow it.

So that essentially means that time lines can move up, and time lines can move backwards depending on hitting targets. So as Mike mentioned, in Q4, we ran into power issues which have subsequently been resolved. And we also had a [board go out], which was really related to power issues from a [bus], so we didn't hit the production profile.

Although we hit year-end guidance, we were a little bit behind on where we were ideally hopeful to get. So that has delayed, and the pay-as-you-go program, the mill expansion a little bit, but not a lot. And so we expect this project to come on in the first half of fiscal 2024.

The mill is on site. The other long lead items have been ordered, and we are going to expand, and this is a little bit of a switch from what I explained previously, the crushing circuit will be expanded first to over 2,000 tonnes a day. That will enable us to put in place an expanded crushed stockpile, which will give us more consistent mill feed. And I'm hopeful on, and I'll be pushing the team, to get over 1,000 tonnes a day while we have that crushing system up and running.

We haven't budgeted for that, but that's the goal. And then subsequently to that, the rest of the system will come online, including the electrical works, the [planks] will be ported soon. That's a long lead item on the ball mill, and all the other parts and tanks and things of that nature will come in thereafter.

So the cost capital cost of the mill expansion is around $6 million. That's going to be funded through existing cash resources. Obviously, we've got a big ore stockpile and goal forward, sales and bank financing, which we're always in conversations around.

And we're going to build this in a 100% Tanzanian way, just as we built the previous mill expansions. And expect that to come in, and work just as well as the existing plants have worked. We don't anticipate any problems in the ramp up of this plant because we're producing 1,000 tonnes a day, really doubling it.

Ironically, this year, the mining rates don't need to increase to accommodate this in this year's budget. So we're good on that angle.

And the tailings facility, as you can see down at the bottom, is constructed. There are going to be a couple of lifts, but that's straightforward. And you could see the procurement and fabrication on-site of various other components around the the mill expansion.

I expect as investors here, we'll have quite a few questions on that as we get to the end of the presentation. But now onto the excitement -- that's expansion -- but I know, everybody wants to understand, how are we going to take this physical assets in processing capacity, and we're obviously going to continue to grow after we get the 2,000 tonnes a day.

But how are we going to feed it, and where our resources are going to come. So we could have a long long, long mine life here? Andrew, over to you.

Thank you, Stephen, and thank you, Mike. And as you know, I particularly like this slide. We're going to be here for a few minutes folks, do bear with me. You can see we did have a program that was just under 7,000 meters of drilling, including infill sterilization and pure exploration.

Stephen already mentioned that we've been able to extend the mineralization to the north a little bit deeper to the south as right into the south pit -- about 500 meters there -- to the northeast and southwest in the depth.

And we've also been able to get some exploration results through the drillbit now on the Anfield and Eastern Porphyry, which has confirmed that multiple zones have strong mineralization of the sub parallel and in close proximity to the Buckreef Main Zone.

And this is a very, very important opportunity for future mineral resources. Why do I I say that? The way to sort of secure continuous increase in throughput is probably to have several pits available to us.

So we would have the main pit. We'll have the south pit. In time, we will also be going underground. And the thing is, it's the first time you heard me talking about this deposit work underground.

Through our geological work we have been able to delineate and define two to three high-grade shoots, and so I'm very confident to say that this deposit will go underground. And it also talks to a much longer life of mine.

But in multiple pits -- Main Zone, South Pit, and then Anfield and Eastern Porphyry -- that gives us optionality and time, continuity for mining.

I'm just going to pause you there, Andrew, for a sec before you get into that. So why don't you explain to the investors when you determine how you switch from open pit, to underground and the importance of strip ratio in that? Just so the investors can understand how you can make that economic decision?

It's a really, really good question, Stephen. It's also a very, very important part in mine planning and scenarios that we're currently in the middle of doing. So once the strip ratio gets say high, maybe six, seven to one, or that kind of number, it becomes more economical to go underground. And we have to find those higher grade shoots.

And when we go underground, we also will be mining at a higher grade over those 20 meters to 30 meters, which we have [micro grade,] economical mining and aggregate environments and into [stoking the well], we'll be doing. So it will be a cost trade-off between strip ratio -- so [alternative customers you have to mine] -- versus the development that we have to put in place to go mine stopes underground.

So given we have a vertical deposit, as you go out, and you go deeper, you have to strip it out and you have to get your valves angled properly. So given that we are vertical and 20 meters wide, this deposit is very susceptible -- and good rock continuity -- it's very susceptible to underground mining, and it probably will be cheaper overtime to underground mine.

It will be. And also be the quality of the rock underground, we've seen from the preliminary reports -- it's very good. And I can also talk from my background as an underground miner that the rock is very, very good for underground mining.

So we won't need to see as we were talking about exploring all kinds underground deals, parts that add up to the cost because we got very competent property football submission as far as revenue.

And just a quick comment and that we are mining through some very, very small amounts of old stopes from the old days that's in the report. And then those stopes and that development has stayed open for years know that it's still still there.

Yes, outage and the other there's an important point about how the old stopes have been there 40 years, even flooded not dried up. We pump them out and there's still very intact.

That's correct. Step has been very good. So very quickly one of the highlights because it is very resistant to two of my favorites, and I have some.

On the Eastern Porphyry, importantly, what are we seeing here? Our best result here was the 14 meters, great width at 3.5 grams a tonne, including 3 meters at just under 11. And to note that, that is from 27 meters below surface, so very, very close to the surface.

In addition to that, we've got the Anfield Zone. So it's about another 1.5 kilometers away. We intersect at 2.9 meters at 13.7 grams a tonne. And again, quite shallow from 43 meters.

And some of the investors that have been with us for a couple of years you might -- and I think it's the end of the presentation though, Christina -- we still have the picture of a guy holding a rock, and that is from that Anfield Zone.

So we drew all that position. And here we are, just under 3 meters, nearly 14 grams a tonne. Great results very early in the program.

I still remain very, very bullish on the overall trend. And then underneath the South pit, we've been very pleasantly surprised by getting wide zones of mineralization at between 1 to 2 grammes a tonne rate similar to our main deposit. We're actually currently doing water in the South pit, trying to get that back into the mine plan later this year.

Excellent.

Thank you Stephen.

So with regards to guidance for the year, obviously, as everyone knows, and hearing the TRX story, we're able to build mills and capacity relative to the market extremely cheaply, Mike. Like, I don't see anybody able to put up 2,000 tonne per day plant. f we look at all of the costs that including our expansions, it's less than $20 million. It's more around $16 million, $17 million.

I -- we challenge people to go see where else that has been done for, because I haven't seen anything less than $50 million, $60 million, $70 million for a similar type of asset in other parts of the world.

And I think we have studies suggesting as much. So this has been very capital efficient to your point.

Yes, exactly. So we're going to be doing that at the third mill expansion. The production guidance for the year is going to be 25,000 ounces to 30,000 ounces. That's not the run rate of the 2,000 tonne per day plant. That's a 1,000 tonne per day plant operating for over the majority of the year, and then the 2,000 tonne per day plant coming online. So the 2,000 tonne per day plant is higher than that guidance.

Cash costs will come in at $800 to $900 an ounce as of next year. And again, we expect that to probably be a little bit lower when the full plant comes online as a run rate.

Well I might just make a couple of comments on that, Stephen. I mean, we're talking about power and being connected to a grid substation that's substantially closer to site, so expect some benefit that way. But importantly, we expect to receive significant economies of scale from a larger plant.

We've been telling investors this for quite some time. We don't need to expand the workforce substantially to grow from 1,000 tonnes to 2,000 tonnes a day. So inevitably, things like your processing cost per tonne and your cash cost per ounce come down, because you're able to use the existing workforce to produce twice the output.

Yes, exactly. So the numbers that we're presenting here are blended numbers between 1,000 tonnes and 2,000 tonnes today.

And I might just make one final comment. You touched on our mantra -- our pay as you go mantra. And we explained how the extent there had been unexpected variances to the downside, like mill motor breakdowns or power connectivity issues. It can go the other way as well.

If the team is able to exceed some of the targets and guidance figures that we've put on the slide here, we'll move up some of that capital expenditure, and try to bring up that plant online ahead of time.

Yes. When we look at the models, it makes sense to do that.

Yes, 100%.

100% -- so it really makes sense to do that. So again, our business plan is pretty simple. Produce gold; pay for exploration to drilling; pay for additional capital programs; and enhance our social license as we do that over time. That's the goal that we have and the 2023 we're able to do with. And I'm hopeful that in 2024, we're able to do it again and thereafter.

So mindful ESG. When I say ESG, we are good corporate citizens. I've always said this that mine has a lot of inputs in mining, construction and capital cost and things of that nature. Thus, as you could see in our operating cost, plus capital, would be over 50% of the revenue -- because you've got to believe capital expenditures in there too -- and the biggest beneficiaries of that should be local people.

We're able to do that, and 100% Tanzanian onsite, and we procure as much as we can in Tanzania, and they are great workers, and have done a good job in building out our assets. That helps to reduce local social risks. We also have artisanal miners in this area around Buckreef. That is not abnormal for Tanzania or Africa. And we work with them, and we reinvest into schools, and into health facilities.

We have STAMICO as our joint venture partner, and overall goal is to have a much more clean, smooth, and efficient operation as a result of utilizing as much local content as possible, and adhering to the highest corporate governance as possible as well.

Stephen, if I may, it substantially reduces our supply chain risk as well.

Yes, it does. And inflation risk, as well, which is what you're seeing in the Western world. So with regards to news flow upcoming, the mill expansion is underway. We will have a updated study or release modeling of the Buckreef Gold Main Zone.

So everything we've been talking about around production is Main Zone-only. We have metallurgical geotechnical studies underway currently that will feed into that, and then we need to give the market a much better sense of where this Main Zone can gom and what our business plan is around increasing resources to have much longer life project here at Buckreef.

With regards to share price over the last year or so, our share price relative to market participants I believe, has held up decently well. We're in a cash position of $7.6 million as of August 31, 2023. As of today we're a little bit above that. So we've been maintaining our liquidity profile in this environment. And we're covered by three brokerages at the United States -- I believe some of them are on this call and will be asking questions.

So we -- all in all, I'd like to see a higher share price. Everybody always likes a higher share price. Tough market conditions -- I think we're weathering the storm fairly well, but ultimately, we do want to make sure that we get to a higher share price over time. We believe that we can do that by driving the current business plan. May take time because we're on a pay-as-you-go program, it could move up or move back a little bit.

And now I would like to hand it back to Christina and the operator for any questions. As you can see from our slide -- and a lot of participants would have seen this slide -- always a lot of activity happening at Buckreef.

(Event Instructions)

Heiko Ihle, H.C. Wainwright.

Can you hear me?

Yes.

Yes, we can hear you.

Wonderful. Okay, apparently, when it says your microphone is on, you still have to click that button. Okay, fair enough. Sorry about that.

In your press release, you state, quote, lower cash costs are expected in the second half of year, once the ramp-up is complete and the processing plant achieves a steady state. Can you maybe quantify the lower cash costs that you think we might see? I assume there are some sort of modeling you've done?

And then also, just conceptually, would it be fair to take the first half of the year at the higher end, the $900 mark of your range, and then assume the second half will be closer to the lower end of the range? Or is the delta even bigger in a way that the first half is over $900, and the second half below the $800?

Mike?

Yes. I mean, we've obviously not guiding to that level of detail, Heiko, but yes, inevitably, as I mentioned, we expect to realize economies of scale as we move towards 2,000 tonnes a day. So certainly expect Q4 to be amongst the lowest cost quarter once the 2,000 tonne a day plant hits its steady-state capacity. But I think the way you're thinking about it is right.

The front end of the year will be towards the higher end of the range, and the back end of the year towards the lower end and sort of the average out over the course of the year.

Okay. In your internal model, the 2,000 tonne per day processing plant, when do you think that will become cash flow positive on a monthly basis? Is there any sort of modeling that's been done?

Q4.

But monthly?

When you say monthly, Heiko, you mean is a cash flow positive on a monthly basis?

Which month is more money coming out than going in?

I'd say the start of Q4 is the expectation if it comes online in Q3. So in our case, that's probably June.

Yes. So Heiko, the way this is working, and is, it's always operating cash flow positive. It's significantly operating cash flow positive. It's just that the operating cash flow is being reinvested in CapEx to build it out. And so once the new plant comes online, obviously, we're moving we're using all our operating cash flow to bring this plant on as quickly as possible. Or predominantly most of it.

So it will be -- at least on the current schedule -- it will be built and commissioned, and that sort of ramping up over the course of Q3, and then fully operational towards the start of Q4, at which point starts generating excess cash.

Okay. I'll get back in queue. Thanks for your time.

Thanks.

Thank you, Heiko.

Jake Sekelsky, Alliance Global Partners.

Hey, guys. Congrats on the strong year. Thanks for taking my questions.

Thanks Jake. Good morning.

Just building on Heiko's question, in the ramp to 2000 tonnes a day, Are you able to touch on the anticipated grade profile at the higher levels of throughput? I mean is it going to be similar to what we've seen over the last year or so? Any color there would be helpful.

Do you want to comment on what the grade profile -- do you want to take this one?

Yes, so Jake, as we get to 2000 tonnes a day, you'll see a little bit of a pullback on the grade. There's two reasons for that. Obviously, real fast-tracking the high-grade so that we can build the plant. As a result of that, we end up with a medium to lower grade stockpile, which is available for us to process. Of course, we won't be incurring the mining costs on that because it's already mined. So expect to see some pullback on the grade in the final quarter.

Okay. That's helpful. And then just looking out over the medium term. Now looking at additional expansions beyond the 2,000 tonnes a day plant, do you expect to continue to scale gradually like you have been, or do you think you might trade and step-up to call it the 100,000 ounce a year range in a single expansion scenario?

Yes. So that's -- we're prepared to do it both ways, as long as it makes valuation sense from a shareholder perspective. So right now, as I mentioned, the cost of us able to build these plants has been very good. We are aware of where to get plants that can get us there quicker.

And so in the end it comes down to a financing question around the capital requirements for that versus the pay as you go program, and the ability of bringing in external sources of financing such as bank finance, project finance -- those sort of things would need to be procured if you were to go a lot quicker. But certainly, I think we're going to look at that, and we're going to go into most shareholder accretive fashion.

Our goal is to have the highest NAv per share that we can, the highest EBITDA per share -- those type of metrics -- and to do an evaluation for the expansion project. And we're currently going under that -- you know, looking at some of that analysis now, Jake, and it will be done in that fashion. But certainly that option will be fully on the table if it makes sense for shareholders.

Okay. And then just timing for that, I mean, it sounds like you're looking at both options now. Is that something we might see news on in the first quarter, towards the middle of next year?

I would suspect that's going to be more towards the middle of next year when looking at that, and just because we put a particular type of scenario into the market, we always adjust if it makes sense. So it could change over that particular period of time.

And we're gettingit now as we get a good feel of the asset, and it's taken us a while to do that. Now that we have a really good feel on the asset, we should be able to get sort of any sort of pivots into the market a lot quicker.

Got it. Okay. That's all for me. Thanks.

Thanks, Jake.

Mike Niehuser, ROTH MKM.

Good morning. Can you hear me okay?

Yes, we can hear you Mike. How are you?

Thank you. I just wanted to congratulate you on your discipline, Stephen, since you've come on, and particularly over the last year. How almost -- the operating cash flow equals your investment, it's pretty pretty clear that you're keeping to putting all the money back into the project and really pushing it out in all the directions that appears.

So I most of my questions were answered on either your presentation or the other analysts, but if I could just throw out -- this is kind of re-ask in a general way to get a little bit more comment, I would appreciate it if you don't mind.

One thing you mentioned was the gold price and costs in Tanzania. How -- from a US or US, North America perspective, how do you look at the benefit of working in Tanzania from an operating cost basis?

Yes, I would say, look, we have this debate a lot between how I guess the market does, between what is a Tier 1 jurisdiction. And, you know, I look at Tanzania in the case of the social infrastructures in place.

So what does that mean? It means that you get qualified people that run and operate your business and that have good experience in mining world-class mining operations. Elsewhere -- particular, throughout Africa and come back home. So the educational system is in place before that. Also the skilled laborers in place to to build tanks and plinths and electrical works and all that. So that's very important as well.

And building out an operation, there's lots of contract miners. Remember, we haven't bought a fleet to do our mining here. We're 100% contract mining. And then you have the cost profile, just what labor cost in Tanzania versus elsewhere -- what electricity cost, obviously, fuel is a world product versus a local product, and so you have to set your cost taker and at that front.

So I would say in our experience, we've had a very positive experience in operating in Tanzania versus some of the risks that you have into supposed Tier 1 jurisdictions of cost overruns, labor disputes -- a lot of assets in North America have been picked over. So you get an operational issues too, and recovery rates and things of that nature.

So with regards to operating in Tanzania, it's been nothing but a positive experience. A lot of the noise that you do hear from a Tanzanian perspective is at the national government level at Dodoma.

So I kind of separate what's in the press versus the actual operating experience on the ground a little bit, because we manage the Dodoma atmosphere quite well, and that's easier to manage than the operational aspects of things underground.

So on the ground, it's been very good. At the Dodoma level too, it's been extremely good. Thus far, it's been a good experience. Does that answer?

It's a good answer. Illustrated with one great little example, Mike, it references made to the old power line being somewhat unreliable. We approached the original commissioner. The mining commission said, hey, this is not working for us as well as we'd like. And in no short order we were put on another power line which was extended just a matter of a few kilometers. And now as of November, we've been having substantially better power reliability.

Yes, TANESCO built that line. They built that line, and we didn't pay for that line.

Yes. But then again, the ability to work with the government was very much there.

They want to see us be a big producer at the end of the day. Lots of royalties, lots of jobs, and economic activity around it. That's their goal, like ours.

Yes, and Stephen, the other way to think of things is, as we continue to work in Tanzania, so we're consistently de-risking the project.

Well, that's a very complete answer. It made me want to follow up. I think that -- I was curious with your comment of also about going underground, and I'm not really familiar with Buzwagi, but I think that was shutting down. And is that an underground mine, or an open pit?

And could you talk about your timing with going underground, and how that's going to impact culture at least on an operating level?

Yes. So it's a good question, Mike. Look at the end of the day, we're talking about Buckreef Main Zone right now. So I fully expect my gut feel -- and I'm pretty confident in it -- is this will be underground Buckreef Main with pits, and satellite pits all over it. And so that will be ultimately where it is -- hopefully forms out.

Obviously, there's some exploration and drilling to do that, because I personally don't like having people go and dig up the earth where there is no gold. And lots of projects do that, so it does need to be drilled.

And so ultimately, that is the case at Buckreef Main. As you're familiar, it is a vertical deposit. It is quite wide. So you're not going to take a lot of dilution on mining of that. it will make sense to go underground.

I like underground. It reduces your footprint on surface, and it's easier to manage things like security risk when you're underground versus being an open pit environment. So I, you know, over time, I think the project gets derisked more by going underground than staying open pit. And tailings have environmental factors as well against backfill. It all happens when underground.

So I imagine this year, as you say, you're still 100% focused on mine Buckreef Main. But by the end of the year, with you coming on with the additional ball mill in the last quarter, you're probably going to be really leaning heavily into making sure there's no mine development from either Buckreef Main underground to the south, or these other pits to make sure that it's fed in with more growth in mind. I know it's too early to say, but how do you see prioritizing the resource development outside of Buckreef Main?

We do rank these, Mike, I can quickly answer.

Well, actually, I think the question goes into -- so the priority right now is expansion. Taking that cash flow expansion into a robust exploration program, which Andrew has delineated the targets of where we believe to be most prospective around the property. Did I get that right?

You got that right. And Mike, if you look at the slide that we have, the Anfield Zone is only about 200 to 250 meters to the east of our Main Zone. Very early stages, we've got some spectacular grades results there. If you remember, just over three meters at 14 grams a tonne that's sitting in a much broader zone of mineralization as well. But this, if you ask for priorities, it's to secure the most attractive results to start off with.

So I missed the last sentence you said.

You go after the most attractive results, and that's why I put them up there, Mike, is Eastern Porphyry and Anfield (multiple speakers) -- our main focus and then the South extensions of the main pit.

Excellent. That's very helpful. So really for the dense analyst like myself, and it will become more apparent as we move through the year, that these priorities will naturally emerge again. That's that's pretty much the questions I had.

I just wanted to say one more thing about Jim Sinclair, to add, is that his involvement in Tanzania back to Sutton, really was making him not just Mr. Gold, but Mr. Tanzania, in terms of bringing exploration to this part of the country, and I'm sure he was very pleased with your your activities in the last year and probably took a great deal of pride from. But I'll stop there and thanks for taking my questions.

Thank you.

Thank you, Mike. All the best.

Thanks, Mike.

Craig Sutherland, Conceptual Solutions Limited.

Good morning. Can you hear me?

We can hear you just fine, Craig.

Very good. Good morning, guys. A majority of the questions I had have already been answered, but first and foremost, congratulations on the progress. It's really been amazing to see how much you guys have fast tracked this in a way that we were all hoping for.

But I guess the question that I had was our focus is on the Buckreef Main, but also now looking out into future possibilities, like you said, with Anfield and the Eastern Porphyry. Are you identifying anything beyond gold in your drilling or what you're looking for, such as silver or copper.

Are there any other possibilities that would increase the value of the property, or not change the scope and enhance the scope as we go forward? Do the geologicals, and the rest?

Yes. So currently what we're seeing is in our doré bars, there is only a small portion of silver here, because you do pick that up in the processing. And there's a small little amount of copper. We're not seeing anything in the assay results that would indicate that this could be a copper gold project for instance, it's just not that good geological formation.

Andrew, you want to get into that just a little bit deeper, please?

Yes. We're in an Archaean greenstone system. It's predominantly gold. I'm assuming you summarized it. There is a little bit of silver that comes with it, but this is a gold play.

It's a gold play, and in the region it's almost all gold plays as well.

Good. That's that's it for me, everything else has been answered. So again, continued success to all of you, and very happy with the progress.

Thank you.

Thank you, Greg.

[Stephen Riser, A Family Office.]

Mr. Riser, are you able to unmute your line? It's showing unmuted on our end.

Hi, can you hear me?

Yes, we can.

Little bit of a technical -- let's say, glitches there to work through. Firstly, I too want to congratulate the team on the strong effort for 2023 in terms of cleaning up the balance sheet, increasing production, the exploration work, and of course, the very strong stewardship of shareholder capital and funds. That's clearly evident from the discussion.

The question I wanted to ask the team is really centered on market positioning and customer acquisition -- a little bit of the softer issues -- in an environment where there really is a tightening liquidity in the gold market industry, and many miners that are kind of competing for capital.

From an asset manager standpoint, as you all will readily be aware, there will be some natural wariness to investing in Africa, particularly for US asset manager, or hedge fund, or family office. But when there or a miners like, for example, Snowline Gold, or Hercules Mining, in Vancouver and in Idaho, for example, that have high intrinsic potential ounces, and are in regions that might be perceived as easier to work within.

So I wanted to understand what the team is doing on a one, in addition to the rhetorical discussions in the past on Africa, and that it's safe and one can drive the car successfully, what might be going on from a more structural standpoint to see reports or information published, even put on the website, that cast aside some of these concerns about Africa and Tanzania?

And then secondarily -- unrelated point -- what's been done in terms of acquiring additional investors? I know that 15% institutional slice, and the 15% friends family and officers slice have been fairly steady for a while.

But given the intrinsic value of this firm, there is value in very strong programs to acquire additional investors and customers. So again, market positioning, and then structural things to overcome perceptions that may exist about Tanzania and Africa, and also the active cultivation of really deep-pocketed investors?

Yes. So thank you for the question, Steve. So with regards to aroubd Tanzania, there's been a lot of progress at the government level towards foreign direct investment. As you're fully aware of, the former president Magufuli passed away just two years ago. The new president is all about foreign direct investments.

We've discussed, you know, where the government is going on foreign direct investment, and where it wants to go, and how Tanzania is improving as an investment jurisdiction. You're seeing it in the funds flows. I think we've had it in presentations before around the investments that Barrick is making. There were just recently an acquisition of OreCorp by Silvercorp, and we're starting to see a lot more investment in the infrastructure of Tanzania.

You are correct. There's not a lot of that on our website, and as we've spoken before, we need to get that onto our website -- a lot of the positive articles around Tanzania. I think, in my conversations, and the team's conversations with investors, that's started to come through, with regards to seeing a reduced risk in the current administration in Tanzania versus the prior administration.

And that is starting to resonate a little bit. I think you will see that come out in ratings around such as the Fraser Institute and other ratings over time. Kind of similar to the road -- the analogy that I like to use is Ecuador 10 years ago. Not a lot of investment today, kind of put out there with other jurisdictions.

With regards to the acquisition of -- basically what you're asking is new shareholders. When we go through the shareholder registry, I do see a turnover in shareholders. And new shareholders -- I even see it, and when I just go down the screen here today, and look at them, the participants that are here on this call versus the participants that would have been on a similar call last year. It's much more broad, and it's new priorities as well.

And we -- as you're fully aware, I was in Switzerland last week -- I did meet quite a few shareholders that I didn't even realize were shareholders in the OBO list versus the NOBO list. So those communications continue, we continue to have a lot of meetings and reach out to institutional investors, and also large retail and family offices.

So that continues. I would say that will ramp up significantly too, as we start to formulate our more medium to longer term business plans. I'm hopeful that once that is more formulated, we become more investable than we are currently today. And that has to do with, you know, you've seen the tenements of that today with regards to talking about underground mining, Buckreef Main Zone, plant expansions.

Today, if you were to have tried to look at what does 4,000 tonnes a day or 6,000 tonnes a day look like at Buckreef Main, you couldn't answer that question. I can answer that question much better, but I don't have all the information on that yet, and that will be more into more knowns as we go forward here, which will enable people to put evaluation in the traditional mining sense into the company. Does that kind of answer your question?

Yes, it does. And certainly we're going to be grateful and look forward for further fact-based insights on the site that dispel some of the perceptions that might exist for, particularly Western asset managers about Tanzania and Africa.

And look, it's helpful too, Steve, that you have acquisitions of mining property starting to occur in Tanzania as well. That means that there are larger sources of capital that aren't afraid to make investments there. You know, the OreCorp property, the envisioned CapEx for that is $0.5 billion. So that's going to be a large equity check there written by somebody.

Sounds good.

Thanks, Steve.

Thank you.

John Tumazos, John Tumazos Very Independent Research.

Thank you. Congratulations on the profitable progress.

Thanks, John.

Thanks, John.

Good morning. Your press release is probably succinct, and may simplify. Is the 1,000 tonne a day ball mill installation all that is necessary for the expansion, where excess mine capacity exists, and excess capacity exists in other parts of the process plant -- flotation cells, et cetera -- and tailings capacity exists, or are there other parts of the expansion underway, too?

Yes. So there's other parts of the expansion underway as well. So the crushing circuit is being expanded first. And so, that equipment should arrive onshore this month, and then be going to Buckreef. So that's jaw crushers, and things of that nature. The plinths need to be built for the ball mill, that should be built this month as well.

There's electrical components that need to come in as a result of the expansion, and that's going to come online in the new year. The tank capacity does need to be expanded. We have a plan for that as well. That will be locally done.

And with regards to tailings, we do need -- and I told lots of market participants that after about two years -- we do need a longer-term tailings plan. We are in the process of doing that, putting that together, looking at a lot of dry stack options, whether it's through dry stack tailings and filter presses.

We're also looking at thickeners and all those sort of type of processes as we speak, to put that in place over time. But we can also expand our wet tailings facility, if so desired, in that period of time as well.

So rightfully, your question is right. I think we've got all the components on that. On mining, we can maintain current mining rates data to achieve our outlook. We did a lot of mining last year, and our prior M&A said that opened up the deposit for the medium term. And that is the case.

And just a point of clarity that, John, we don't have a flotation circuit at this time.

In terms of regional exploration, could you talk about what your drilling programs might be in 2025 and 2026, as the cash flow comes in, from the production or other uses of funds that may be priorities?

Go ahead, Andrew, tell him. The regional program will develop over time, but --

Certainly. Maybe if I could ask us to go back maybe, Stephen, just to the one slide of exploration.

Yes. Give me a second. Just have to get out of the Q&A. I can't --

You can even scroll on the bottom there. Just go to one of the arrows.

And there we go.

John, it's a bit easier with this slide to talk about it. As you can see, the Main Zone with all the colors there in the center is very clear. Just to the immediate east of that, all those white dots. So far we understand there's three zones over three kilometers -- anchored in the northeast with the Eastern Porphyry deposit which is still open to the northeast, and in the south, by an intermittent mining operation by some locals under the Chinese group.

There is so little drilling in that, but there's so much opportunity that we have to test. Outside of that, you see some additional red arrows. I'll start off with the east. We've identified another trend just off to the east side, you can see that red set of arrows. You'll notice also that it's on the same trend as both the Eastern Porphyry, Anfield, and the Main Zone. And similarly, if I then take your eye over to the extreme west, or the left, again we've identified through field work the additional two trends there.

So, '25, '26, there's no shortage of targets to go and drill on that. Broadly in the region as you'd expect -- and I always like to use the phrase John -- we obviously keep a track of who's who in the zoo around us. And as opportunities arise there, and so there may be some further activity.

Yes, a lot of guys have approached us too. When I think that through this and as I said, this business plan will develop more fully over time is, once the processing plant is up and running, is there a hub-and-spoke model that can be had here, because there's a lot of high grade, smaller type of pits.

And when you think about successful companies that have done that, Calibre is one that comes to mind in Nicaragua. So that's -- it's a human capital constrained at this point in time, but certainly we need to focus on the processing plant first; what's on our property second; and then go look to how that all integrates into the region.

Yes. We have new drivers too. We have mostly been receiving, John, inbounds, which we assess both locally and within Eastern Africa.

If I could ask one more? As gold rises above $2000, probably other projects advance in Tanzania. The graphite industry is also active in East Africa. Are there shortages of skilled labor or any inputs to production?

Yes. So on that, on the inputs we've been good thus far. On skilled labor, where I think there is some -- and I think this is a global thing versus a just Tanzanian thing -- there is a lack of highly skilled mining engineers. And that's more of a global shortage than it is a Tanzanian shortage, and we supplement our mining engineer skill set with the professional services firms and individuals and supplement that with [site.]

But with regards to the other disciplines around metallurgists and geologists, we haven't seen a shortage in that skill set or a shortage of skilled labor in Tanzania to execute. I would say there's excess supply of those skills in Tanzania but the one that is shortage, and is global, is mining engineers.

Yes. I think you said also, John, we have been able to attract key people, and we also have a very modest turnover.

Yes.

So we've been able to retain very well, but as such we wish to retain.

Yes. And I think when you're in a growing project, it's easier to attract and retain people as well. So long as we continue to grow and now and pay people well, then we should be okay in that regard on the HR side.

Thank you very much.

Thank you, John. See you later this month. (multiple speakers)

I would now like to hand -- oh, sorry, I was just going to hand it over to you, Stephen, for the question in writing.

So we don't have any text questions, Mike, just Q&A.

There are, you just need to click on the text column in the Q&A.

Yes. Can people see the questions or should we read them out?

No. They cannot see them.

Okay. So Stephen, maybe you can read the question.

Yes, I'll read the question. So we have, from a private investor, and I think this comes -- I get asked this question all the time and it's a question from the past -- is there a realistic possibility to get future dividends paid in physical gold?

Right now, in the short to medium term, I would say that that is not something that we are looking at. As you're aware, while the Tanzanian government does put a royalty on gold, it does track its gold fairly closely and we have a joint venture partner in the government of Tanzania through STAMICO. So I don't see a dividend in short to medium term in physical gold.

The second question from the individual is, based on the great exploration numbers support presented, would you agree with my personal opinion that there's a high possibility TRX Gold has about 5 million to 10 million ounces of gold under the ground?

So obviously, we are traded on the public markets. That would be a personal opinion versus a fact-based opinion at this point in time. We do need to do a lot of work on the exploration potential of this property to drill that out to 5 million to 10 million ounces.

Personally, I'm hopeful that that property will come to that sort of level. Andrew is hopeful that the property will come to that sort of level, but it does need to be proven out through the drill bit.

That's correct, Stephen. It's very much a personal opinion. I would say again, we've had very positive early results.

Yes.

And there is no shortage of exploration potential on our special mining license.

Exactly. But it does need to be proven out.

There's a lot of drilling to be done, but that's the name of the game.

That's the name of the game, yes. So the next question is, when do you expect to bring out an updated indicated and inferred resources report? How would you describe?

Okay. So two questions there. So with regards to updated indicated and inferred resources report, what we are doing is looking at what is the economic potential of the Buckreef Main Zone, and as part of that, there would be an update on resources that are currently in the Buckreef Main Zone. Would that be correct, Andrew?

Yes.

So that is expected to come out in the first half of fiscal 2024.

Yes.

By June.

Calendar.

Sorry, calendar. Not fiscal year. Calendar. Not fiscal. Yes. So the next question to that is how would you describe the current relationship with the Tanzanian government, since there were rumors -- some rumors of the old aggressive Tanzanian President not being so friendly to foreign investors.

And I think we did it in Steve Reiser's question, we did answer this. The current relationship is good. We have a good relationship with the mining minister, and the old mining minister as well who's now the vice prime minister.

We have a good relation with the permitting secretary. We have good relationship with the mining commission and with our our joint venture partner. And the reality is in countries in Africa, if you put an asset into production, you continue to grow.

If you become a good taxpayer, become a good employer, have a good reputation, you generally have a good relationship with the government. They want to see the asset grow just as much as we would. And that's in -- what I will say, aggressive regimes and more not so aggressive regimes.

And you're right. The old president was not as friendly to foreign investors. When we started, and I came on board with the old president in power, and as soon as we start to build the asset, that relationship was fine.

And so I think -- I've often said this to people is -- when you go into foreign countries -- and I've been to a lot of them, and I've done business in a lot of them, particularly in my prior role of managing government relationships both on the government side and on the investor side -- the world is open.

And so what does that mean? Everybody has a smartphone. Everybody has an Internet connection. Everybody has access to the same information, which wasn't the case 30 years ago. And so in that -- and then lot of the people now are very mobile, and are educated in the same educational institutions, particularly in the West.

As long as you have a fair, open, and transparent relationship. Generally, you have a good relationship. And that's the approach that we've been taking.

And I think you talked about foreign direct investment, Stephen, it's fairly well publicized, but one of the key metrics the new government has to put into place is growing mining as a percentage of GDP.

That's correct.

And they put out some targets and numbers around that. So certainly a new regime. And to Stephen's point, we're getting along well, and as long as we continue to execute, we don't expect that to change.

So the next question is when and how are shareholders going to rewarded? So markets go up, markets go down; markets sometimes are good, markets sometimes are bad.

And what's within our control is not so much what the markets are, what the market value companies at, it is what's in control of us is to reach out to as many investors as possible, put forward a story to as many investors as possible, but also come up to a business plan that is investable. And a business plan that could survive those ups and downs from market perception, I think we've managed to do that.

That was one of my -- I was asked this a lot over the last couple of weeks is, why did you go with the business plan you went with? And a lot of people don't realize, but a large part of my education is in economics. There is a full realization that interest rates could never be zero forever. They never were in the history of mankind.

And when interest rates go up, generally valuations go down. It's a pretty simple equation. Liquidity usually dries up as well, and the ability to access capital user drives up with it. And so you need to have in place a business plan that will survive those ups and downs.

And in the junior explorer, I could tell you, when I joined, the business plan would not have survived this market. Today, the business plan does survive this market.

It's predominantly a self-funding operation. We wanted to slow it down and build up liquidity and we could. We don't see that as being necessary at this point in time, but the business plan can survive this type of market, and over time as the business grows -- its cash flow profile, its EBITDA profile and its resource profile -- then shareholders should ideally get rewarded from that growth.

So the next question I have is I hope investors who were part of this from the beginning could be made whole again, I'm in good shape. I feel those who got into division when TRA was trading at the all-time lows and highs. I appreciate the progress you've made.

And I addressed this in almost all our presentations is -- the management team came on board just over three years ago. I believe we've moved the project forward since that point in time. That business plan is much different than the original business plan of being a royalty company, and predominantly an exploration call.

It has a different risk profile associated with it. I would say it's probably a little bit less risky today than it was before. And markets -- TRE was at its high, markets on gold were extremely bullish.

We don't have that same bullishness in the market today, and if that bullishness or come back then hopefully we'll trade a lot higher. And that's ultimately the goal of getting to as many investors as we can. So I hope that answers that question.

Operator?

There are no further questions at this time, so I'll hand it back to you for your concluding remarks.

Yes, thank you. As everyone has heard from us, we are a growth company. We've grown quite well in 2023. We're hopeful that that growth continues into 2024, and stay tuned for a lot of news to come. I think 2024 will have a lot more news in 2023.

We have a lot underway. We had a plant expansion. We have the formation of a business plan for the Buckreef Main Zone, and we will then start to really turn the drill bit, and that will produce a lot of exploration results.

As I said, I like to be flexible. The management team here likes to be flexible. What was presented today is the current business plan for 2024, but if a new one and a better one emerges, there will be a pivot. So we will always want to make sure that we keep shareholder value in mind and attempt to minimize dilution as much as possible. And I thank everybody to today's call for being a shareholder and sticking with us. Thank you.

This concludes the meeting. You may disconnect. Thank you for participating, and have a pleasant day.