TRX Gold Corp (TRX) 2025 Q2 法說會逐字稿

And welcome, everyone, to today's event, the TRX Gold Corporation second quarter 2025 results presentation. (Operator Instructions) The meeting is being recorded. (Operator Instructions) I would now like to turn the meeting over to Stephen Mullowney, CEO. Please go ahead, sir.

Yes. Good afternoon, and good morning to everyone. Welcome to our Q2 conference call for our Q2 results as well as a lot of people are aware of, we did release the results of a PEA yesterday. We're going to certainly focus on that today. So the nature of this meeting today is what we're going to present a high-level overview of our Q2 results, but also go through what the results are of that PEA study and directionally where we're going.

The results of PEA study, we're all excited and got a big smile on our face. With that, it's a culmination of a lot of really years of work culminating into a high-level document around what this business could be looking like today and where it can go in the future. And joining me today in the room is Michael, our CFO; on the line from Perth, Australia, is Richard, our COO. Richard, put up your hand. There you go.

We also have joining us from Dar es Salaam in Tanzania, our SVP, Khalaf, raise your hand. There you go. And so, we're all going to present here today, and we look forward to your questions. I expect a lot of questions. I see quite a few people on the line.

And I know many of you, Mike knows many of you as well as Khalaf and Richard. So we do -- we will leave extra time for a lot of questions today. So without further ado, let's get into it. First, we have our disclaimer. This disclaimer has changed now.

The PEA report has been prepared by P&E Consultants. The summary is them and their qualified persons pulling all the information together with the assistance of TRX Gold. They are all independent as well as our QP, Bill van Breugel is also independent. And so the information that you see from the PEA is developed by independent persons. With regards to TRX Gold at a glance, this is now changing given what we've put into the press release yesterday.

So the Buckreef Gold project is in Tanzania. We continue to operate at around 2,000 tonnes a day on our last expansion. We are now updating the market on what the potential is to continually expand that asset as well as the refocus on blue-sky exploration potential while continuing to operate a really good asset. A couple of things that you will see from yesterday is the grade profile is now higher. So we've now refocused the ore body on economics versus sheer ounces.

And with that, you have a higher cutoff rate in your economic analysis. We'll get into that in one of the slides. And so your grade is a lot higher in your resource statement. And as we've explained to a lot of investors and a lot of participants on this call over time, grade is a significant driver of cash cost. The lower the grade, the higher the cash cost.

The higher the grade, the lower the cash cost. And so, we evaluate the business on a per tonne basis and go and look at the deposit, and every deposit is significantly different. And when we look at that, we look to accelerate economics and cash versus sheer ounces in the ground. You can lower the cutoff grade to 0.1, 0.2, but that doesn't mean that you're going to come out of there profitably and expand your grade profile. So under the PEA, when we look at this as an economic basis, at $3,000 gold, it produces around $1.2 billion pretax net present value as well as a $766 million post-tax net present value.

And we didn't quote an IRR because under our business plan, right now, it's looking -- in that business plan, it has the mine expanding the processing plant first and then expanding into the underground portions of the deposit, and that is -- there's a lot of cash flow created from that. So anything to add to that, Mike, from our release yesterday?

No, I think it's pretty clear, Stephen. I think what's important to note is we have been able to demonstrate with this study a long mine life. It's just under 18 years mine life. Average annual production of over 60,000 ounces, peaking at over 90,000 under this current structure. Lots and lots of room to optimize.

We'll get into that when we talk about the study. But importantly, when you talk about cutoff grade and things like that, you'll note that the life-of-mine cash cost is still very low. It's in the lowest quartile of the cost just over $1,000 an ounce. So again, a high-margin operation that should generate plenty of free cash as demonstrated in the study over the life of mine.

Thank you, Mike. I did have that in my notes here that I forgot to mention on the cash cost. That was really good as well. That's continually to focus on the economics. On the next slide, so with -- we are an emerging producer.

So we're still small production. We're going to get into why we're increasingly bullish in the second half of the year versus the first half of the year. We did undergo an extensive strip campaign. Richard will explain to us that we have a couple of slides to really demonstrate that from a visual perspective of where that confidence comes from in the second half of the year versus the first half of the year. As Mike mentioned, we are a high-margin business.

We do have a significant resource that's now high grade. We will refocus priority on drilling to expand that because that's one of the upside and continually focus on sustained cash flow. With regards to the -- we're currently seeing over -- versus the first half versus the second half of the year, we're currently seeing daily production over 50 ounces a day now and increasing. I saw The Daily this morning, it was quite nice. And that is -- Rich will get into why that is the case on a slide that shows a grade profile that we're currently mining versus what we have been mining.

So once we get that moving, the expansion and those sort of other things will come on the backend of that.

Stephen, I might just comment for those that might be new to the story, after having seen the study of the PEA results. We are in Tanzania, as you mentioned. And we comment here on the slide, we do see it as a Tier 1 jurisdiction. And I think it's important to note that part of the reason we characterize it that way is because this is a part of the world we can get things done. You've heard us say that before, but this asset is fully permitted.

We've got a special mining license that allows us effectively to grow this asset on an unencumbered basis. So when you look at the study and the growth that we've modeled in our business plan, the special mining license that we have, which is unique to Tanzania, allows us to grow this asset and achieve a lot of the targeted metrics that we've included in the study. So a very, very good place to do business.

Yes. Thanks, Mike. So with regard to what Mike was just saying, obviously, I mentioned that we put out a robust PEA yesterday with great numbers in it. I did mention Buckreef has a significant gold resource that's higher grade now, which means lower cost. It is a shallow deposit that does come to the surface and continues downward.

It's a vertical body. We are understanding metallurgical recoveries more and more every day and have studies to achieve high-80s to low-90s of recoveries over time as we upgrade our plant. Richard is in the throes of that right now. And it continually deals with the labs around metallurgy, and we understand it more and more every day. We are fully permitted with the special mining license going to 2032.

Obviously, we're environmentally responsible on the ground. I've spoken a lot of times about that. We have very high priority known gold zones from an exploration blue-sky potential. That's not included in the PEA. That will be upside over time as the drill bit gets in the ground.

And we have established infrastructure, both from a physical infrastructure perspective and a social or HR infrastructure perspective as well around the assets to continually be able to give us the confidence to continually expand this asset. We've done three expansions. I don't see another reason why we can't do another expansion to really start to unlock the value of Buckreef. And Richard, I'm going to pause there and anything to add to what I just said here because you're in the throes of this day-to-day.

Stephen, I concur with what you say. We've been growing the capacity of the plant and the project and the people over an extended period now. And the more we have some successes in the project, the more those good results are repeated. So we're starting to see some good consistency and repeats now. And as you've mentioned, we've turned a bit of the direction of the mine around.

We've got through some hard work, and we're now at the other side of some of that hard work and seeing some good grades coming through the project. So plenty of upside still. It's a very young project. It's a very young team that is learning a lot. And we've got a lot of growth potential, not only in ounces, but in efficiency and productivity to come as well.

Thanks for that, Richard. So with regards to -- we've had a fast-paced transformation, as Richard has mentioned. And I know a lot of people would like to see this is a little bit backward-looking. We will, over time here now, give more forward-looking information here because a lot of the 2021, 2022, 2023, that's in the rearview mirror. We're going to be focused solely on what's the goal forward and the PEA provides basis of that.

The upside in that PEA is the gold price was at $1,900 for resources. So gold price is higher today. The plant size, we'll get into this in a second, 3,000 tonnes per day, you can increase that and move up some of the economics as well as increase your mining rates, move up the economics as well as over time moving in your exploration success into that plan. So although it's a layout at a period of time, it will consistently change over time as we continue to refine it. With regards to the operational growth since 2021, this is what really starts to give us the confidence to really focus on expanding again is we've done this 3 times.

Richard and team have the detailed flow sheet. They have the detailed cost for that. That is in the PEA study. We're starting to put together timelines, which are always fluid as you bring these components in. We do have similar people executing it, and it has been signed off by reputable engineering firms on flow sheet.

What you will notice in Q2 results and Q1 results is look at the average head grade. So when you have a lower head grade, you have higher cash cost. We will get into in a second. I see the slides coming up around what the head grade looked like from a visual perspective in the first half and what it can look like in the second half. You do see a little bit of slowdown in what I'll call processing tonnes, given you're into a little bit harder rock versus what we were in the early part of the mine plan.

But that will be improving as we improve the plant and upgrade that plant in order to get higher throughput levels coming out. But look, the processing cost per tonne have come down. Our mining costs are consistent, and we know how to get those lower, and we're getting the better head grade as we go forward. Anything to add here, Mike, because you're knees-deep into the numbers all the time.

No, I think you said it well, Stephen. I mean the processing cost would be the key one to highlight. I mean, through the expansions, what we've begun to realize our economies of scale, particularly when we went from 1,000 tonnes a day of throughput to 2,000 tonnes a day of throughput, our costs have come down from $22 a tonne down to sort of $13, $14 a tonne, which is certainly in line, if not below international standards. So we're starting to see as we scale this plant up economies of scale and expect with a full year of operations going forward that we should benefit from that larger plant.

I consistently put out this slide, and this is in a different format this time around prudent capital management to achieve profitability and move through. And this does take -- look, a lot of mining companies raise a big amount of capital, put a drill bit in, put the plant into production and then it ramps up extremely quickly. This business model has taken a little bit more time because of the nature of it is -- we've reused basically cash flow from operations as well as some supplier financings to build out the operations to date. In Q2 and half fiscal 2025, we are seeing the record gold prices come through. We will continue to see those come through in the back half.

EBITDA is a little bit lower than what it will be in the second half. And that is, as Mike just mentioned, grade profile. But the cost profile on a per tonne basis is still there while holding our G&A expenses throughout the period of time. So in the first half, we generated $22 million of revenue and just over $5 million of EBITDA and reinvested that back into the business. I'm going to come back to this slide because it's not really in the order.

I'm going to go into what gives us a level of confidence in the back half first, and then I'll reverse and come back to this slide because that sets up for the PEA fairly well. So second half, I took in a few messy pictures here. Richard will be able to explain this slide better than I can. But what you see here is what our stripping campaign is. And so you see March 2024, the pit is high.

It's not down in and around the high-grade areas. And you see April 2025, and what you'll notice is there's more benches. I think there's two or three more benches in that photo. You'll see the sulfide rocks there being starting to be exposed and you will also see the pit being a lot wider. Rich, you want to just give the investors just a quick overview of what you're really looking at here?

Well, we're looking at the main pit from the south to the north. And we're really just getting back into this part of the pit having spent a good six or eight months further north where you'll see if you can sort of distinguish the drop in vertical descent, probably we've dropped about 30 meters in that northern block, and we're down about 20 to 25 meters in the southern area now, and we're quickly catching that up. So from what you can see on the -- a year ago, we were mining in very easy minable oxide material. Now we're into much harder sulfide ore. We're now taking 10-meter benches, as you can see there instead of 3- to 5-meter lifts in a year ago.

It's pretty hard to distinguish, but there's a larger fleet of equipment now operating and our production rate is climbing up towards 20,000 tonnes a day at the moment as we're exposing bigger areas of the pit, and we're getting ourselves organized with the cycle of open pit mining, drilling, blasting, hauling and back to drilling again.

So I'm going to put it down to this slide because this slide now visually shows where we were. And I'll move my cursor, Richard, as you explained this because we were up in this area here in the first part of the year. Anything above the line is what we mined in the first part of the year on the ore basis of waste and anything below the line is what we expect to do in the second half. You want to just give the investors a quick overview of what you're really seeing here. We like purple and pink colors in our models.

That means basically it's higher grade, as you can see in the legend here. And then first half, we had -- we don't like the yellow and green, but you've got to move through it. It's all positive.

Exactly, Stephen. Unfortunately, you've got to take these pits down in a relatively even fashion. And we've now done the hard work over on the right-hand side of the north of the pit, moving that down out of the -- and we've had to endure some fairly low grades while we've been mining that in the first half of the financial year. We've moved now our focus back over to the south. And as you can see where the line is in the very far south, we've got a bit to drop down to get that to an even basis.

But the good news is if you look for the warmer colors, the reds and the purples, the grades in that southern section are particularly good, attractive, very good for an open pit mine. So yes, we should be seeing and we will be seeing and we are already seeing some higher grades coming through the mill now and we'll see those gold production quarterly numbers start to jump up now.

And just want to give a quick explanation of the black areas here because these are underground workings from the old mining areas.

Certainly, black is not a good grade. These are voids taken from the underground mining that was conducted in the 1980s and '90s or '70s, '80s and '90s. There's been about 80,000 to 90,000 tonnes removed in that 20-year period. And our job now is that those holes or voids were never filled. So we have to take care when we're mining around those.

All of the production or the ounces in that has been removed in our schedules and our resource models. But we now have to be careful as we go down through these areas. So we've got a very clear plan that everybody is working to that allows us to work safely around and through and down past these void areas.

Yes. It's not by accident that the void areas are around the nice warmer colors as you put it in the purples, particularly in and around here, and in and around here and then over here. So we will have another slide in a few minutes on the PEA, which will show where we're going underground. And you'll see underground workings coming around here, all in around here, and then to the north up here and then off junction into the Stamford Bridge area, which needs to continually be drilled out further. So now I said I'm just going to jump back.

So I'm going to jump back. So we just gave you an overview of why we feel more confident in the second half of the year. Look, gold prices are great. That helps, always helps. The better the gold price the better profit is going to be.

But you can't let your costs get away from you even in a good gold price environment. So we're continually focused on those operating cost reductions. As Mike mentioned, there is more economies of scale in this plant. There's also economies of scale in mining as well, which we're starting to experience and those costs will come down. That, combined with better grade profile will mean that there will be more ounces produced, as Richard just went through, given the grade profile where we're getting to in the second half of the year versus the first half of the year.

So good gold prices, focus on operating costs, good grade means higher ounces and hopefully, higher profitability. The larger scale operation, as I mentioned, we've done this 3 times before. Richard and team have gone through all of the engineering details that is all spec'd out. It's all costed out and now it needs to start to be executed upon and phased in over time. And in that plant, we are looking at upgrades to the circuit, particularly around a flotation and regrind to get a higher recovery rate, so moving from 80s to high 80s, maybe low 90s.

That is the goal. Also on the front end of the plant, that's on the back end of the plant, we're looking at potentially, say, 80. But in the near term, it may be a crushing upgrade. That's not in the PEA because we can get higher throughputs just by a crushing upgrade, and then we need to put the flotation and regrind on the back end. We are also upgrading the elution circuit because we have more of a rudimentary elution circuit now to a fully state-of-the-art elution circuit.

That will give us a couple of points on recoveries as well. And so that is all well underway. The exploration success, once we get refocused now with that higher cash flow coming in the back half, putting the drill bit back into the ground, we fully expect that to be coming through as well. We got those high target areas in Anfield, which is adjacent to the pit. If we can bring in some open pitable resources there, that would be great.

And then we have Stamford Bridge, which is the highest grade portion of what we're seeing thus far at over 5 grams a tonne from a resource perspective, initial resource perspective to look at the gold mine as well. Richard, anything to add to what I just mentioned?

The good thing is we've got an operating mine now, and we -- when we're doing our cost estimates, we've got real data to go off and real experience on what is available with throughputs and everything else. We've done some metallurgical test work already to define how we can improve recovery. I'm very confident that these -- they'll be very successful. And we'll have some small incremental recovery rates, but then a very significant one when we expand the plant with the flotation circuit, which is a pretty standard technique for sulfide gold ores around the world and certainly in Africa.

So on that basis, let's get into the PEA and what the approach was. As Richard mentioned, it's based on a lot of the data in the PEA is actually based on real data. So typically, when you go through studies is the feasibility study in a preproduction property still has not actual costs, not actual data around recovery rates and has more theoretical cost. Whereas even though this is a lower level of report in the feasibility study, it probably has better data than a lot of feasibility studies because it's actual real data. And that's why we went with this sort of approach.

And other miners that are into production go with similar approaches because you want to give the market a sense of what the overall project can look like based on real data and then bringing in your inferred resources in feasibility study, you can't bring in inferred resources. In a PEA, you can't. And we're confident in the measured and indicated category as well. So when you look at our deposit, it's drilled more off top than it is down bottom. So the inferred resources in that mine plan are later out versus the front end of the PEA is based on better data in the measured and indicated category.

It's more intensely drilled. So when we look at the mine and plant expansion, we look at 3,000 tonnes a day, so from 2,000 to 3,000 tonnes per day. And as I mentioned, that is one of the areas which we can upgrade over time to move up economics. We'll make sure that when we do an expansion, it may be greater than 3,000 tonnes a day throughput as we get there, but it's certainly something that will be open. And we'll, as we've done already, make sure the plant is easily upgradable by putting more tanks on or a bigger ball mill over time to do easy expansions.

The mine plan, as I mentioned, Buckreef is a vertical deposit. So -- and I've said this to market participants a lot is you will have several years of open pit and then you will go underground because what does happen when you go back to the picture of the pit, you notice how it goes out wider. So the further you go down, the wider you got to go out in order to be safe. And that means you got to move a lot of waste. And when Mike is computing the cost of moving waste without gold in it, he doesn't like it.

So he wants to minimize that. And so when we get into the underground workings is your costs and upfront are more underground development of tunnels essentially that go in and get the ore body. But when you go to the ore body, you don't take weeks to the outside of it like you would in an open pit. You're just going to take your ore body. And so that's why it goes underground and that's why the Buckreef is fairly wide from a mineralization perspective.

You're able to get good mining costs at even 2.5 grand a tonne underground. With regard to process and recovery, we mentioned this several times. It will be flotation and regrind. So what that really is doing is right now the plant is capable from a throughput perspective of getting around 80%, passing 75 microns. That gives you high 70s, low 80s recovery rates.

If you grind that finer, you expose more gold to the cyanidation process. If you grind that down to, say, 40 or 50 microns through floating it and regrinding it in a high-intensity grind mill, then your recovery rates will come into the range that were mentioned here, 88% to 92% is what we're looking at. The PEA, as we've mentioned to a lot of market participants is we've expanded the plant off of cash flow thus far. The PEA has a similar type of business approach in it. Open pit profit is used for underground development, while continual cash flow is used to upgrade plant.

So the way the PEA is laid out, upgrade plant, increase cash flow, do underground development. I think, Mike, in the simplicity, that's really what's happening in that underground development.

Yes, that's well said.

Now when I was saying, here's a picture of what this underground development looks like. As you can see, I went into the areas of the pit that, that encompasses. So we have the Eastern Porphyry, which you can see in the grade profile, to the side with an open pit resource as well as underground workings. This is the north part of the pit going down, and this is the south part of the pit going down. You'll see all the works and details.

This takes a lot of time to do of your underground development, your tunneling and costing that out and things of that nature. So with regards to the economics of the PEA, it's on average 61,000 ounces or 62,000 ounces a year over 17.6 year of mine life. As I said, you increase the plant, increase mining rates that gets higher and moved up. The annual free cash flow is around $64 million at $3,000 an ounce. Growth capital in the first four years, as I mentioned, is phased in around $90 million.

Over the life of mine, it's $185 million. Cash costs are around $1,000, $1,200 for all-in sustaining costs. I suspect that it is well in the lowest quartile. Pretax NAV of $1.2 billion and $770 million after tax, net present value all at $3,000 gold. This gives an overview of the breakdown of this.

Now we're getting into real data here. The first two columns or first two rows are for the plant upgrade. Then you have your underground workings. You see it detailed by year. We do have to have a tailings expansion for the open pit.

For the underground, we're going to have a paste backfill. So what that entails is you're basically -- when you mine out your underground workings, you put it back with a little bit of cement and it's a paste backfill, so you have a paste backfill plant. And so your tailings go back underground where they came from versus having to have a big tailings facility. That reduces operating risk from our perspective. We have line tailings facilities that are quite safe.

In Tanzania, the regulations are quite high around tailings. So we sleep at night as a result of that, but having a paste backfill will be good. You'll see a breakdown here, and I don't think anybody has really seen this breakdown before around how you build up your cash cost, and how you build up your total all-in sustaining cash cost to the $1,000 an ounce and $1,200 an ounce, and mining, you're processing general and admin royalty costs, selling costs, quite detailed.

I wonder if it's worth maybe Richard just commenting in terms of capital, particularly the underground capital. It's far less capital intensive than folks may have seen in other underground development projects. Richard, maybe it's worth commenting just for a minute on the approach we're taking to going underground and why it's so efficient from a capital perspective.

I don't know that it's that capital unintensive. It's well thought out. The design so far, the ore body lends itself towards being relatively efficient. We've got good ore tonnage and ounce profile for every sort of vertical meter we drop in the -- down through the underground workings as you would have seen in the schematics. It allows us to access it from only two declines, whereas other projects may need multiple declines to do that.

We don't see value in putting in expensive infrastructure like a hoisting shaft or other conveying systems and things like that because our model is and our plan is simple. We have to get the equipment underground, the mobile equipment underground and that same portal to get our equipment and personnel down will be the same means by which we bring all the ore out. So -- that's really why we keep this thing at a low capital base, and we develop as we need it. So we will develop the mine progressively rather than having to do a significant amount of development just to start the mine. And that means we get into production a lot faster as well.

Thank you.

Thank you. So with regard to sensitivities, purpose of this slide, I'm not going to spend a lot of time on this. This is in the press release. And it does show a great leverage to gold price. If you keep your cost profile low, you will have leverage to gold price.

And as I said, there is upside. You can play with this a little bit by lowering your cutoff grades, bringing in more mining rates. But if you lower your cutoff grades, as I mentioned, you have higher costs. But you have to balance that with actual sheer cash flow. So if you were to do that, you actually create more sheer cash flow and EBITDA off that even though it would be lower margin. And that's the equation that you look at in these mining studies and in your mine plan.

Perhaps just to state the obvious, the upside case is $3,000 an ounce. We're currently running at about $300 an ounce above that today. So onward and upward from here.

Yes. So with regards to the updated resource statement as a result of looking at economics, the key here is there's much different classification between the 2020 resource statement and the 2025 resource statement. 2020 would be on an unconstrained basis, which means you do not have to put economic pits or economic underground workings around your resources. The 2025 resource statement and new rules require you to put economic workings in open pit as well as underground workings around your resource and applying costs towards those to ensure that there are economic ounces. And so what we've done is we've done a bridge between the 2025 MRE and the 2020 MRE and put it there.

And part of it is we come down to a 450 level; in 2020, there were resources down below that. In any mining area, you would have what you call a hanging wall and a footwall outside of the main zone. Those would be off to the side and harder to get to. And when you go underground versus going above ground or open pit, you have a higher cutoff grade versus an open pit resource. So our resource has a cutoff grade for the open pit and then has a higher cutoff grade for the underground to make sure that it is profitable.

And as I mentioned before, there are artisanal workings in Tembo and Bingwa on the peripheries of the deposits. So we haven't included those this time as well. So that is -- so where we get to is a much higher grade deposit and a much more profitable deposit than we had before, even though the sheer number is lower.

Well, Stephen, just to reiterate and at the risk of being repetitive, just saying it again here, the focus when you talk about things like cutoff grade, when you talk about things like pit design and scheduling and sequencing, when you talk about underground development and how you expect to access that ore body, our focus was on economics and maximizing NPV and free cash flow. So economics was the basis for this study, and we are very happy to see the end result.

So as I mentioned, we will need to get back into putting more drill bits in the ground around the Blue-sky potential. So we can make those economics even further better. The focus will be on Anfield and Stamford Bridge as we go forward. We'll also do a geophysics survey to see if we have any potential higher grade trends that we haven't identified around the property as well as we get into the second half of the calendar year. Stamford Bridge in our resource statement, I think we brought in around 40,000 ounces in the inferred category around 5 grams a tonne.

Obviously, we need to continue to drill this out and infill that drill program. So as we infill it, get it deeper down and infill along trend, that gives a higher level of confidence to go mine this stuff in between, and that will be a focus as well going forward. With regards to Tanzania, I always going to mention Tanzania. We got Khalaf on the line here today. Look, we consider Tanzania to be a good jurisdiction.

I must say, over time, and everybody asked me a lot of questions about government and how government is acting, we get more and more comfortable with how to manage the government, what they're going to do, what the motives are behind it and how to work with them and be fair and open and transparent. So although it does go up and down, they do have economic and political objectives, understanding those, understanding where they're coming from and how to work with people is certainly something that we become more and more comfortable with over time, particularly myself, and to manage that. We get things done there. So that's one of the things. We're on the national power grid, great, good electricity.

Julius Nyerere is up and running, it's hydro. We get our gold out. And it's -- there's a large mining presence in Tanzania to Barrick and Anglo. Lots of employees can come from there and a good employee skill set. Lots of money has gone into Tanzania on the M&A side.

Mines continually expand. I believe and I just got to look at my LinkedIn feed, they might have met a 10% target. Certainly, gold prices will help them get there just organically. But I think they may have met that and the minister is telling that today. And we're able to bring things in and get the asset moving forward to create value.

With regards to share price, markets are continually being tough. We have seen a pop in the last couple of weeks. I'm hopeful that now that this study is into the market, people are able to more readily see a road map to value creation versus what we presented before, and that will help underpin the share price and bring in some new investors into the stock as we continually execute on a roadmap in the business. So key investment highlights. Again, we've done this before.

We'll continue to grow, keep an eye on profit margins. We have that track record of doing things on time, on budget. We now have an overarching guideline. I call it a PEA guideline. It's not the actual business plan, but it's a guideline of what we can do with the current resource.

It will change as we get more and more information, but we at least have a roadmap there. We're comfortable operating in Tanzania and dealing with the various day-to-day issues there. And as you are getting a sense, we have a very experienced team here and good leadership to be able to continually execute as we go along. And I am going to stop there for questions.

(Operator Instructions) Mike Niehuser, ROTH Capital.

Can you hear me okay?

I can hear you just fine.

Yes. Good to see Khalaf as well. So you can smile, Khalaf. I just want to maybe make a comment that's more of a complement as well. It's interesting to go back to the prior technical report in 2020 and the world you were facing with high capital costs and really, as you say, a lot of assumptions compared to now having cash flow and real data is really something that needs to be kind of layered over your presentation because it really -- again, it's a complement to what you've accomplished, and of course, higher gold price doesn't hurt too.

So lots to take in with this, the last couple of press releases. Could you just give me a flavor and put up the Anfield slide again? Is that something you can do?

Yes, absolutely.

And I had a question about that. Is there any open pit potential there?

Yes. Yes, absolutely. That does come to surface and it's quite shallow. So when you go through our holes there, Mike, I don't have it in this presentation, but it certainly is shallow and continues to go down.

And how soon will the PEA be out be filed?

It has been filed within 45 days. We're hopeful to get it done before that.

Okay. Very good then. Really no questions, but really quite a remarkable milestone coming from where you were a couple of years ago, and congratulations.

Yes. Thank you, Mike, and thank you for your support.

Jake Sekelsky, Alliance Global Partners.

So just looking at the $89 million in growth CapEx spread over that four-year period, is this timeline assuming a self-funding strategy? I guess what I'm getting at, is there an opportunity to accelerate the timeline for the expansion, if you explore external funding options?

Yes. The answer to that is, yes, there's a timeline to put that, and I see Richard smiling at me when I say that. But there are sequence items there, too. So it's a balance is what I would say. You can accelerate it, but you would increase your risk profile.

And so there's a balance between the two. To be quite honest, some of it has already started.

Okay. That's helpful. And then just on permitting, is the underground included in the existing special mining license or are there some additional permitting items that need to be done to go underground there?

Yes, special mining license does cover underground. Whether there's going to be what I'll call ancillary permits, we'll wait for the bigger study to come out in the next 45 days, but it's the same as the open pit operations. You have special mining licensing, you go mining, but you still need to get a tailings permit.

Stephen Reiser, Family Office.

Can you all hear me okay?

Yes.

Yes, I echo the comments of many of the analysts. These are very exciting results even at the PEA level and certainly very much appreciated by the investor community. I wanted to get your view on a couple of items. First, actually, probably a little more tactical. You've used a 5% NPV in the results.

And I wanted to get your view as to why that. Normally, personally, I've modeled this at around a 10% cost of capital. Thinking about the actual cost of the equity and normal capital asset pricing models. So we're now more in the range of 30-year T-bill is the discount rate. It's a lower risk for discounting.

And that could be okay. That was done in the time of the 23-101B as well. But just wanted to get your view on the use of that discount rate.

Yes. So when you're doing mining valuations, and I got lots of experience doing this, you typically use for all mining assets, a 5% discount rate. Now the analysts will tell you that it's because gold is kind of a special sort of commodity that should get that type of discount rate. Where you adjust, Steve, from asset to asset is in your price to net asset value multiple. So what would end up happening is, and we see this in the market, assets that are in North America trade at a higher price to net asset value multiple than African assets.

And you would also notice that the price to net asset value for a company for multiple assets is usually a lot higher than the price to net asset value for a single asset company. So you use your 5% discount rate from a comparability perspective and then you adjust your valuation through your price to net asset value multiple. Going from 5% to 10%, you can do it that way or you can do it on a price to net asset value multiple basis.

Okay. That makes sense. The other element you hinted on is that the effort could be self-financing. I know in your forecast for the price of gold, you've used in year one, I believe, around $2,700, just a little over, and then drops down by year three to $2,500. So if gold was at those prices, which are significantly less, of course, than the price today, would you actually be able to self-finance? Is your $89 million estimate consistent with that step-down in gold prices and ability to self-finance there?

So based on the financial model that was developed and it's in the press release, you'll see that we stack chart, one at the gold prices that are base case and one at the $3,000 per ounce case. It's a lot tighter, obviously, at the base case, but still theoretical and IRRs and stuff like that are based on base case. And you have to keep in mind, too, that the base case is based on what we have to report from a market perspective, and that's more regulatory driven. And so you have to go with consensus pricing, and analysts take time to update their consensus pricing. So that first four years is based on what we have to from a regulatory perspective, report.

Okay. So based on the step-down in prices in the base case, is it fair to assume that TRX could finance at those prices used in the step-down and the prices used in the model for the price of gold that, that would be still a region of self-financing for the $89 million? Or would it be different?

Yes. So the way you phrased it, region and potential, yes, the financial model as developed says it's potentially possible, yes, assuming that you've executed based on the plan that's been put in front of you and you have no hiccups. Or you can also -- like you can play with it, you can delay it and bleed it in a little bit more over time. And so that is one thing that we always look at is how do you create higher shareholder value. Although we've done this plan this way, Steve, thus far, unfortunately, the share price has declined even though we haven't been to the market in almost four years now, isn't?

Yes.

But certainly, the fundamentals, I think, as one of the analysts mentioned, continue to come through, and hopefully, the share price will catch up in due course. I also wanted to ask, Stephen, you talked earlier in the presentation about the expansion to 3,000 ounces first. And then -- well, let's call it somewhat -- these phases can be staggered, but somewhat the move to expand the plant first, then to continue the move or transition from the surface drilling to the deeper drilling thereafter.

As one looks out over the next 36 months and also very encouraged to hear that some of this has already started in your commentary, are there key operational milestones, and I don't want to say looking out quarter-by-quarter, but looking out on a time temporal basis, that investors should be looking for to see that things are moving according to that overarching plan? So just trying to get a little more detail on what might be some of the sub milestones to be looking for.

You kind of -- it's a real-time conversation. So some of the milestones and Richard is knees-deep into this is, look, we want to get throughput even incrementally higher because that creates more gold, obviously. And in order to do that, one of the things is there are certain, what I call, more maintenance CapEx items that are going into the plant to help there and perhaps on the crushing circuit as well in the interim. But the biggest things are getting that flotation and regrind plant up and running. There's also a need to have a thickener on the front.

So currently, one of the impediments to higher head grade is we do need to mix oxide materials to the float carbon from the viscosity perspective, and getting really in the metallurgy now. And once we put the flotation plant in -- sorry, the thickener plant on the front end, that will help alleviate that and put 100% high-grade sulfides through the plant at that point. So those are a couple of the milestones which we're currently -- and that's all in the CapEx, which we're currently costing out as well as the elution plant as well. So it's going to be -- what we're hearing from me is it's not one specific item. It's going to be several items over time to get to an end goal.

So right now, Richard is focused on thickener and elution, and then we'll focus on flotation and regrind. Did I get that in the right order, Richard? Then you'll focus on safety.

Pretty much yes. We'll do the things that give us the biggest bang for the buck initially. And then ultimately, we'll increase the overall capacity of the plant once those other flow sheet aspects are taken care of. And at that stage, we'll be mining underground and feeding a combination of open pit and underground feed.

Yes. It's fully anticipated too, Steve, that throughput should be able to go up just by putting the flotation and regrind on. So even without, say, the upfront. The amount of increase yet, we haven't estimated that yet. And that's part of some of the work that we're doing as we continually focus on recovery rates and metallurgy work that's currently ongoing and it's always ongoing.

Okay. And again, the operation continues to show greater and greater potential as you all proceed, which is very encouraging to hear. In terms of this company being acquired, I know you've spoken about this in past earnings releases and other conference calls like the AGM, Stephen. This clearly is a PEA. So a major that would look at the company would probably be more cautiously optimistic here.

It's not necessarily a feasibility study. In terms of ultimately someone looking to acquire TRX and how they might view the situation, in your personal view, are they going to be looking for more credibility and actually showing elements of the plant move up, showing additional exploration before a major would start to become interested? In other words, are there some additional triggers? And I'm thinking about what ultimately boosts the stock price and a variety of stakeholder interest. Are there other triggers that probably still need to be seen before we get to that window?

Yes. So I'm going to reflect on other companies. And first, I address the feasibility study versus PEA. The feasibility study is still all theory, if it's not in production. And a lot of companies that went through that feasibility study stage have had hiccups afterwards because it's not real data.

So they don't understand recovery rates. They don't understand mining. They don't understand the nature of the deposit, different zones of the deposit, and the operating costs are all still theoretical, even though they're pulled back. Whereas our PEA has all actual data. So I would say that -- I wouldn't say our PEA is not going to hold up versus the feasibility study because the data that we have behind it is actual.

If you look at where value creation really comes off of if I look at other companies, and we have looked at other companies and why we've taken this approach is, first, you need to put in the art of possible based on what you have. The PEA does that, provides a basis for that. And as I said, it's independent. It's not developed by us. It's developed by an independent party in P&E and all their QPs that are around it as well as our independent QP with our support.

Then I think you do need to show growth. So the drill bit is important to that and adding to what I'll call the art of possible over time through the success of the exploration drill bit. All those are required to drive value. You drive value, you drive interest.

Okay. Great. Well, I appreciate that you all and Stephen, that you've taken time to answer the questions. It's clearly an impressive PEA, and we really compliment TRX and the management team for bringing us to this point.

Thank you for that. And as I mentioned to a lot of people, it's -- look, the focus, I know that you get ground down in the day-to-day quarterly results as you build it up, but there's been a lot of learnings over the period of time on this particular asset in order to get to this point, and we need to reorient people's focus to the potential of the property and the growth potential and the value creation potential of the property as opposed to getting bogged down too much in smaller production quarterly results at this point in time. We need to continually grow those quarterly results.

Mike Niehuser, ROTH Capital.

Yes. Probably just answered the question, but maybe a chance for Richard to chime in. In addition to the capital costs being managed, the way you have, one of the concerns that I had early on was the recoveries of gold from sulfide ores. And that really doesn't seem to be a problem in what you've experienced. As you say, as you gained the knowledge, it's a matter of grinding, flotation, and there's really nothing especially difficult about metallurgy here.

It's just about optimizing. Is that a correct view, Richard?

I think so, Mike. It's not a refractory ore. So it's your fairly standard sulfide pyrite associated fine grain gold association, and what you've got to do is get the grind down so you can get the cyanide in. So we're not overly concerned about sulfidation or anything like that. We don't have that problem to worry about that other mines do.

So no, we're seeing the same sort of things that you see in all these other mines around us, Geita and Barrick Bulyanhulu, Buzwagi had it alongside. So get the grind size down by selectively recovering the sulfides and then you'll open the thing up for great recoveries.

Very good answer. I'm glad I asked the question. And I guess lastly, Stephen, probably can't respond on this, but any talk about the government with regards to the joint venture share?

No. Look, an update on that and Khalaf is on the line as well. We've been in front of the government negotiating team, continue to be in front of the government negotiating team and deal with the ministries. They are going through an election cycle. So look, any time you deal with governments, it's government.

It's not as quick as you and me making a decision.

We got one question here for Richard to Mike on Q&A.

Yes, Richard, in the text, Neil (inaudible) texted in and asked the question, do you refer to the underground mine plan using a decline ramp from surface? If so, can underground mining be done with one production ramp for both that south and the north zones, and can underground production follow right at the end of the open pit production?

Okay. We have two declines planned. The strike length of the ore body is about 950 meters, and then there's some outliers beyond that as well. So we're looking at a total strike length of around 1,200 meters, and that's a very difficult strike length to access of a single decline system. So we've looked at options of up to three or four declines.

We're very comfortable with two. And from those two, we will be able to access the Stamford bridge. In terms of timing of access, we intend to access both declines whilst the open pit is in operation. It will still have at least two years to go once we're up and developing those declines. One of the declines comes off a level within the pit, a broad area that's suitable for us to access and another one comes from the surface.

There is a small decline coming off the Eastern Porphyry open pit at the end of that project life. That will come in much later in the mine life. And there's very little point in opening that one up any earlier.

Thank you.

Thank you, Richard. I think that's it for the questions.

Chris, are there any more questions in the queue, please?

No, sir. There are no further verbal questions at this time.

Well, on that note, thank you, everybody, for joining this morning. Greatly appreciate it. Thanks, Richard, for staying up late in Perth, Australia. Thanks, Khalaf, for joining us from Dar es Salaam. And look, it's very exciting.

It's taken a while to get here, but we're getting there. And stay tuned. And any shareholders have any questions, please reach out to any of us any time. And as they say in Tanzania, thank you very much or Asante sana.

Asante.

Thank you. This brings to a close today's meeting. You may now disconnect. Thank you for participating, and have a pleasant day.