TRX Gold (AMEX:TRX) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below.

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The full earnings call is available at https://www.renmarkfinancial.com/live-registration/third-quarter-2026-results-virtual-conference-call-tsx-trx-nyse-american-trx-oo2UH2LQXO

Summary

TRX Gold Corporation reported strong financial performance for Q3 2026 with $33 million in revenue and a record adjusted EBITDA of nearly $21 million, demonstrating leverage in a high gold price environment.

The company is expanding its Buck Reef Gold project with significant investments in mill and TSF expansions, supported by a robust $66.8 million adjusted EBITDA over the past year.

Future outlook includes achieving higher production and EBITDA, with expectations to update the PEA in Q4 2026 to reflect increased capacity and potentially higher NAV.

Operational highlights include record quarterly throughput and improvements in gold recovery, with new plant enhancements anticipated to further reduce costs and increase margins.

Management emphasized ongoing exploration efforts with several drill targets identified and plans to increase drilling activity to expand the resource base.

Full Transcript

Julia Perron, Virtual Event Moderator

Hello and good morning, ladies and gentlemen. Welcome to today's presentation. My name is Julia Perron, Virtual Event Moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone for joining us today for TRX Gold Corporation's third quarter 2026 results. TRX Gold is streaming on the Toronto Stock Exchange under the ticker symbol TRX and on the NYSE American under the ticker symbol TRX. Presenting today is Stephen Mullowney, Chief Executive Officer; Michael Leonard, Chief Financial Officer; Khalaf Rashid, Senior Vice President Tanzania; and Richard Boffey, Chief Operating Officer. The presentation will last approximately 20 to 25 minutes and will be followed by a formal Q&A session for which you can participate using the chat box on the top right-hand corner of your screen. With that being said, I will now hand it over to Stephen.

Stephen Mullowney, Chief Executive Officer

Thank you and welcome everybody to today's Q3 corporate presentation of results. Richard is not on the line yet. I was just talking to him on top of the TSF, and he's making his way back to the office, so he should join us in about five to ten minutes. He's at Buck Reef today. Also, as Julia mentioned, Michael and Khalaf are here with me as well. We're coming back in Toronto today. I was staying in Tennessee and Texas last week. I should have stayed there given I came home to 38, 40 degrees, and now we have yellow skies and apparently the big campfires up north that blanketed us with smoke.

So anyways, it was pleasant to be down in the United States last week. So without further ado, Julia, can you... Here's Richard. Richard is joining us now. How are you doing today, Richard?

Richard Boffey, Chief Operating Officer

Yeah, afternoon everybody. Apologies for being late. Just got back from a little bit of an inspection.

Stephen Mullowney, Chief Executive Officer

Yeah, exactly. I told them that you were talking to me on top of the TSF. So if we can go to slide number four. Obviously, we're going to have prior slide was forward-looking statements. There will be some forward-looking statements today and in this presentation. So with regards to Buck Reef, we had a great third quarter. We've actually had a good start to the year, nine months. So our goal here at TRX Gold is to rapidly develop Buck Reef Gold project into a world-class mining operation. It is today a world-class mining operation and is expanding quite rapidly, and we'll get through the details of that now in a few minutes with the mill expansion, TSF expansions, and other enhancements that are going on at Buck Reef as well as the exploration programs.

But a little summary on the year to date. We've done almost 28,000 ounces for an LPM period that's starting Q4 of last year to the end of Q3 this year. With $115 million of revenue and a healthy $66.8 million of adjusted EBITDA. This is what gives us confidence in funding our expansion projects in that time period. We've made significant capital investments. As for the press release this morning, we've made almost, I believe, $47-48 million of investments over the last 12 months both in working capital, which we've been normalized now.

That investment will no longer go forward in around $17-18 million and the rest on capex. The focus now going forward is on capex and exploration. The Buck Reef project is anchored by 1.5 million ounces at around 2.5 grams a ton. We're online with the PEA that was released last year with first-year production of around 27,000 ounces. As I mentioned in the press release, we've already achieved our guidance of 25-30,000 ounces as of today and expecting to be within that range as we get through Q4, more than likely towards the top of that range.

With regards to the CapEx program that was in that PEA, the first part of that PEA was mill expansion. The mill has been ordered, which we'll get into that in a few minutes, and that capital project is well underway, and planning is done, and it's now starting to be executed. I will remind people. I know I'm going to get a lot of questions around stock price. We're going to address that later, evaluation, and things of that nature. The pre-tax NPV on the study that was released in May of last year was $1.9 billion at $4,000 gold.

That study is now being updated with the new capacity as well as the new mine plan. The mine plan will drive the throughput rates we expect to have excess capacity, and then it's going to be up to us to figure out how we're going to fill it. But it's certainly going to be well above 3,000 tons per day that were in the prior PEA study. What does that mean? That more than likely means a higher NAV. It also, with the increase in gold price, should drive higher resources. But that work is yet to be finalized and will be finalized in the next couple of months. We expect that PEA to be released in Q4 of calendar 2026. So can we go to the next slide, Julie? So like I said, our focus is growing the underlying valuation metrics.

So valuation works by having certain multiples. The multiples go up and down depending on markets. Multiples are compressed on an EBITDA basis with a gold price defined in this last couple of months. We expect those to get to normalize over time. And what the market does is say, okay, you have a little bit of a decrease in gold price. So EBITDA will be coming down in minor. So we have to adjust the forward multiples. That's typical of what happens in a market adjustment.

Our EBITDA will continue to grow. It will grow as a result of an increase in production over time. We're very comfortable at today's gold price of $4,000 an ounce. As I mentioned, the expansion is underway. So there'll be a new 3,500 ton per day SAG and ball mill that will operate with the existing optimized and upgraded plant operating alongside of it. We expect emerging or cost reductions, particularly on the processing side of things, which we'll get into that in a minute.

With this improved scale as well as the enhancements that have been made. For instance, we put in place an oxygen plant that reduces chemicals such as hydrogen peroxide to get oxygenation up. So we're going to continue to be a low-cost operation going forward. Our margins are quite healthy with regards to NAV. We just discussed that with regards to updating the PEA to give a good sense of what Buck Reef maintenance can be, and it will be revised, and that will be put into the market in Q4, 2026.

And also we'll get into an exploration program. The geophysics study is done. We now are going to start to just drill out some targets there as well as go back to prior targets such as Stamford Bridge and Anfield to hopefully grow the resource base. There are some significant good targets around this property, and that drill bits will start to really start to ramp up soon, and assays will start to flow into the market shortly thereafter. So we have a proven track record of doing these expansions.

This is our fourth expansion. We are a self-funded model with a very improved balance sheet, $27 million in cash, significant EBITDA, significant working capital buildup, and undrawn credit lines. We can go out and get further credit lines and credit facilities if we want to. They're offered to us every day. We just don't see the need to do that today. It's very easy to get a credit facility in the $50 to $100 million range at Buck Reef at this point in time.

But right now, we don't see a need to put that onto the balance sheet. We are located in Tanzania where we're able to get things done. There's a lot of geology in the area. We're also looking at other properties in the area as well as we have discussions with the government. We have right now a large, high-quality resource base. Next slide, please. So now I'm going to hand it over to Mike, and Richard will also poke in on some of the things around processing costs and some of the other items around operations.

So Mike and Richard, over to you guys.

Richard Boffey, Chief Operating Officer

Well, thanks Stephen and good morning everyone. Thanks for joining us here today. Richard, looks like you may have some connectivity issues, so I'll do my best to talk to the process and cost improvements that you touched on earlier, Stephen. But Q3, I mean you mentioned it at the outset, it was a very, very strong quarter for us both operationally and financially. The plants, as you will have seen, achieved record quarterly throughput of 1,690 tons per day of throughput.

And that was not only an increase from last year's prior year comparative, but also last quarter we also achieved a grade of 1.96 gram a ton for the quarter. But importantly, recovery continues to improve. And year over year you would have seen recovery increase from 67% last year to almost 85% this year. As we make some of those metallurgical improvements that Stephen touched on as well as upgrades to our 2000 ton a day plant. We commissioned things like a thickener, an oxygen plant and a knockin reactor.

This quarter we're bringing online additional improvements like an ADR plant and gold room in the coming quarters. So we expect both recovery and throughput to continue to improve. But those benefits that we saw this quarter through the mill drove gold production of over 7,400 ounces this quarter. And that's up almost 60% relative to the prior year comparative period. You couple that with a Q3 realized gold price of over $4,700 an ounce, which was up 50% from the prior year.

And we recorded revenue of almost $33 million, which obviously is a significant year over year improvement on the back of both higher production and higher gold prices. So the company continues to demonstrate leverage to that high gold price environment. Illustratively, Buck Reef continues to show that it's a low cost, high margin operation, even touched on it early. But you know, at an average Cash cost on a full year basis of between 14 and $1,600, we've been able to produce gross profit margins of almost $20 million for the quarter or running at about a 60% gross margin ratio.

Now with that all said, there is an opportunity for margin to continue to improve as we go. You will see mining costs at just over $3 a ton that started to normalize this quarter from about $4 a ton last quarter following the signing of a new contract mining arrangement. And on the processing cost per ton side, we are up over $25 a ton. As Stephen mentioned, using things like hydrogen peroxide and other consumables and reagents to maximize recovery and consequently produce more gold.

But as these plant improvements and enhancements continue to come online at a nameplate normalized capacity, we expect that costs per ton come down and consequently margins would improve and expand. With that all said, I mentioned that we show leverage to gold price. We did record a record GAAP net income number of $8.4 million for the quarter. And very importantly, a record adjusted EBITDA number of almost $21 million. That's a record for the company.

And if you annualize that, I know Stephen touched on the last 12 months of being about $66 million. But if you annualize this quarter's EBITDA, you end up at over 80, which puts us in a really, really good position to fund and execute our growth plan and our capital plan. And you know, you couple that with our working capital position. We reported working capital of 2.2 times or over $36 million. We have a cash position of almost 27 million. Stephen touched on the undrawn credit lines, so again, really well positioned to fund our capital plan and just sort of looking forward.

We did report a record buildup in circuit inventory in the CIL tanks this quarter as we worked on metallurgical improvements and enhancements. We've got almost 1600 ounces in those tanks at the end of Q3, coupled with a Rompad stockpile of over 19,000 ounces. The expectation in Q4 is to draw down on some of that inventory to help supplement and benefit production into Q4. And looking at our full year guidance numbers, we've reported full year guidance of between 25 and 30,000 ounces.

We've already achieved the low end of our guidance range as of today, so we achieved our full year guidance numbers. But over the next six weeks we expect to continue to produce that at these levels. Drawdown on inventory and what we hope is to have a record production quarter for Q4. And finally I'll just touch on the cash cost. We continue to be right in the middle of that 1400 to $1600 an ounce cash cost range which again is in part what's driving that significant gross margin that we're seeing this quarter.

So all in all a record quarter both financially and operationally and the cash flow and EBITDA that we're generating positions us very, very well to fund our capital plan and growth plan going forward. Stephen, back to you.

Stephen Mullowney, Chief Executive Officer

Excellent, thank you. So with regards to next slide, Julia or Mike. So with regards to rapid EBITDA growth, as I mentioned the project is being expanded again. So obviously with higher throughput you're going to get higher results and higher EBITDA going forward. This is our fourth expansion with regards to the CAPEX plans that we have around this. Over the next 12 to 18 months we have roughly a 50 million dollar budget which includes 30 million dollars for the new mill.

That includes the actual mill and all the other workings. TSF will be around 10 million. That will be a plan for predominantly the life of the mine, which is great because we currently doing it in pods and we estate sustaining capital over at 10 million. Of that 50 million about, you know, I would think around 6 to 8 million has already been spent and the rest of it will be paid for over the next 12 to 18 months out of cash flow. If we do have bulges in that capex, which we don't anticipate too many, we have those on drawing credit lines to smooth out any of those bulges.

So we're quite comfortable with that and we're quite comfortable that we're going to get to a much higher EBITDA number as a result of executing that plan and a very reasonable plan and it's well planned out and it is starting really rapidly. Mike, anything to add to that? Next slide please. So with regards to. Oh this is the same slide, isn't it? Yeah. Okay. With regards to the PEA, I'll just go over some of those numbers. Like I said, the PEA is being updated so we expect these numbers to be better. Take a look at the cash cost with scale. Cash cost comes down, Mike is referencing around $1,400. Cash cost in the study were around $1,000. It's going to be expanded even larger than that now. So I would expect cash cost to be rent same as well as all in sustaining costs.

And the pre production, sorry the pre tax NPVs where hopefully our goal is to get these significantly higher as well with annual production hopefully ranging in the range of anywhere from 80 to 100,000 ounces over time. Next slide please. So as I mentioned, look we are on track with our PEA, particularly in the capital bills around the expanded plant. If you look at year one here, you had 27,000 ounces of production. We've already into that range.

Year two has around 38,000. So we're well on track with regards to, you know the profile of PEA. PEA was always contemplated due to plant first expand that, expand your mining operations at the same time, particularly open pit. It was originally envisioned here three years. We expect that to go on longer and then go into your underground development all self funded. That's why we didn't release an IRR because it's infinite. If you want to put an IRR on that $1 then it would be exponential.

So it's a very good plan here that's been put in place by Richard and the team and they're well through the execution on that. And can we go to the next slide with regards to increasing the resource base? You know Tanzania has a lot of resources and we are in one of the better resources in the inner arc of the Lake Victoria greenstone belt and a lot of other major assets in the area. Clock. Get into it in a second with how we, you know, discuss these sort of things with government.

One of the things is there are a lot of resources that may or may not become available over time in Tanzania that we wouldn't mind taking a look at. Next slide please. Richard, I'm going to turn this over to you with regards to exploration and we're planning. There was never a geophysics study done at Buck Reef, but now that there is one, you now have a much better sense of where to go.

Richard Boffey, Chief Operating Officer

Thanks Stephen. And hi everybody. Well, there were geopolitics studies done in the past by IAMGOLD and Anglo over the past 20 or 30 years. But for one reason or another, a lot of the data is the raw data was missing and a lot of the test work was done was looking very shallow deposits. And as we've found in Main Zone and Stanford Bridge, these things are a lot deeper. So we came to the conclusion that starting again with pretty much the standard geophysical approach to most of these arcane gold systems would give us some new targets and probably confirm some of our existing targets. And that's exactly what's happened over the last three quarters.

We've done a detailed magnetic survey, followed up by an electro resistivity pole to dipole survey, followed up again with overlaps on the highs and anomalies from those two on a dipole to dipole survey. And from that we've now given ourselves about nine or ten strong targets that we've developed drill programs for. And the first of those targets will be drilled in next week. Basically we're should be hopefully moving the drill on there about Monday.

So yeah, we're pretty excited to see all of that and we've got to do a lot of strategizing now with the resources we have. We have two exploration drill rigs on site at the moment. A third has been delayed at our port, but it's in country and we're expecting it any week now and that'll immediately go to work on Stamford Bridge. And then a fourth drill rig is sitting in China at the port ready to come over to us and we've got an option now on a fifth.

So yeah, we're pretty excited about getting into these new targets and getting into some of the stuff that was never really drilled properly at Anfield and a few other areas as well. So there's a lot going on with exploration in the coming months and we expect that we'll start getting some assays back on some of these nine anomalies from the geophysics starting in August and we'll probably have our first round of drilling done, I would suggest in September with results out in October.

Stephen Mullowney, Chief Executive Officer

Oh, there's a lot of drilling to happen coming up with four to five drill rigs on site, potentially turning, which is great. And part of that will be with regards to ongoing operations. Part of that is on the exploration program. So with regards to Stanford Bridge, I won't go over this again. As Richard mentioned, it will be subject of the new drill reduction country. It will get started on this area again expecting to see very. Best assay results thus far with regards to stakeholder engagement and communication for this One, we're going to bring it over to Khalaf and I'll add a few bits and pieces as well.

Go ahead, Khalaf.

Khalaf Rashid, Senior Vice President and Managing Director for Tanzania

Yeah, thank you, Steven. Good morning to everybody in North America and good afternoon or evening to us in Tanzania. Just a short brief discussion update on what I would say are three focus areas for us, really designed to reduce our risks, improve operational efficiency, and just basically avoid business disruption and increase our opportunity to activities in the future. So when it comes down to the three main areas, we've been focused on community development, which is essentially all the projects that we're doing in and around our sort of mine sites, with the immediate communities around us, the wards that neighbor us.

So we've done quite a lot of work and we have been doing for a number of years in health and education, supporting schools and some of the health centers. Obviously, we do look at the local procurement by our immediate community and what can be supplied and what services can be provided immediately, which supports the development in our area. And we work very closely with the local government authority in Gator and maintain very good relationships with them.

Government engagement, as you can imagine, is hugely important in our parts of the world. Relationships are important. We exist in, I would say, an overly regulated environment, so maintaining and keeping good relations with government gets the mine operating better. So we've maintained a very strong relationship with central government authorities. I personally attend all of the meetings with the team here, various meetings, especially on regulatory matters, so that we can provide our input and advocate for change where we find that there are things which are difficult for us to work with.

And obviously, I think, Stephen, you might want to say a little bit more about the current negotiations ongoing with the government of Tanzania. I think we've mentioned this a few times, that we are quite, I believe, advanced and the prospect and the outcome that we want is basically better terms and more investable terms for TRX Gold Corp. I'm sure you mentioned that. And the last bit that I would like to just sort of mention is that we've enhanced our communication basically just to raise the image of TRX Gold Corp as an investor in Tanzania, communicating through different media channels about all the various benefits that come as a consequence of our investment, particularly in creating jobs, obviously paying taxes, procurement that has been generated from all the good work that we have done at the mine site. And we've communicated this across all different media, targeting all different levels of government and public, some direct, some obviously using various channels, social media, and traditional media. So we are safe, very visible, we feel very consistent with our messaging. So I believe we are in a very good position.

And we are looked at in Tanzania as a thought leader in the industry. I would say one of the more high-profile operators in Tanzania.

Stephen Mullowney, Chief Executive Officer

Sorry. Yeah, yeah. Buckreef, anybody would have seen, is particularly on our latest video that Richard and I did with Isaac. It's becoming a substantial operation. It has around 1,000 employees and contractors in and around the site, particularly with the build at this point in time, and it's profitable as everyone can see. And with profitability, there's royalties, taxes, and a lot of jobs, and so that leads well into government relations as well as we're very keen on local content as well.

We have a lot of good suppliers that we utilize in-country and work well with them, and they're very supportive of the development that is happening at Buckreef. So we have an overall good relationship, and that is leading into what I'll say is negotiations around joint venture and go forward are further along. I still can't give a definitive timeline on those sorts of things given it is in the political realm and politics takes a little longer. As you know, there's an African saying that we have the watch, but they have the time, and so it's an ongoing process, but we're more confident in a successful outcome.

That's a win-win-win situation. Next slide, please. And with regards to valuation, I will answer this more substantially in the Q&A portion. Obviously, valuations across the sector have come up, not only our valuation stock price decline, but it's come across the entire sector. This gives an idea we've fallen down versus where we were before, given I believe our decline has been further than others with regards to that. But as I said, we know we're constantly onto these valuation metrics of growing them, particularly the EBITDA, PNAV, and resources.

Those are all part of the business plan. The plant expansion is EBITDA. The PNAV is new studies and better mine plans, and the resources are on exploration. So all three of these buckets are being looked after in the business plan, and eventually someone will recognize it. Eventually someone will, but you got to be patient, and eventually it will get there. Next slide, please. With regards to capital structure, the capital structure is now clean, and there's no warrant outstanding.

There's 27 million of capital or cash on the balance sheet, very little debt, there's a few leases outstanding, that's about it. And undrawn liquidity line. So we're in an extremely good position with the cash flow that we have as well as liquidity lines of cash to execute our business plan around capex to get this plant expanded. And once this plant gets expanded, Richard will be all smiles. He likes building it, but he'll be all smiles with all the cash flow that comes out of it as well, particularly with the higher mining.

Next slide, please. So the key investment highlights. We're growing, and we're going to continue to grow. We're very confident in the growth.

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