Q1 2023 TRX Gold Corp Earnings Call
Speaker 1: The all, all.
Speaker 2: And we.
Speaker 3: That.
Speaker 4: And the everythat.
Speaker 5: You are now re-joining the main conference.
Speaker 6: Welcome, everyone. We'll just pause for a moment as participants make their way in from the lobby.
Speaker 7: Welcome to the TRX Gold Corporation first quarter 2023 financial results presentation.
Speaker 8: As a reminder, all participants are in listen-only mode and the meeting is being recorded.
Speaker 9: After the presentation, there will be an opportunity to ask questions. If you wish to ask a question, please click on the Q&A icon on the left-hand side of the screen. You will see the option to raise your hand to join the queue and ask your question verbally or write a question to submit your question in writing.
Speaker 10: When you are introduced, your line will automatically be unmuted.
Speaker 11: Analysts who have dialed in to the conference call may press star then 1 on your telephone keypad to join the question queue.
Speaker 12: I would now like to turn the meeting over to Stephen Maloney, CEO . Go ahead.
Speaker 13: Yeah, thank you and welcome everybody to the Q1 2023 results call. On your screens you'll see an updated picture of our Buckry's main zone pit. The ore from this pit... According toribed instructions, the hiker and the property owner did a beautiful job
Speaker 14: is what has provided us with the Q1 financial results and the good progress that we've made at site. It is also providing us with an exploration program that is funding the drilling program that is ongoing by Andrew who's currently at site and and the team at Buck Reef.
Speaker 15: in the immense blue sky potential that we've discovered over the last year at Buck Grief.
Speaker 16: that we've discovered over the last year at Buck Grief.
Speaker 17: Q1 2023 is really a turning point in the company's history. It's the first quarter where we can start to see the real
Speaker 18: profitability potential of Buck Reef. The company has now been stabilized and has a great growth platform going forward. We're very excited to get into what we've done, what the results were, and where we're going.
Speaker 19: So first, a cautionary note. You'll find this in our corporate presentation. We will be, from a legal perspective, we have to say this. We will be talking about forward-looking information and such forth. Please have a read as a cautionary note. Thank you.
Speaker 20: I'm on the call today with myself. We have Andrew Cheadle, our COO. Andrew.
Speaker 21: So Andrew actually just arrived 10 minutes ago at site, I believe Andrew.
Speaker 22: That's a pretty accurate address, yep. Ten minutes ago. And they've served you a delicious filet of tilapia.
Speaker 23: That is correct. I think analysts that have been here will appreciate that indeed.
Speaker 24: Yes. Also on the call as well is Mike Leonard, our CFO .
Speaker 25: Good morning, everyone.
Speaker 26: and also our VP investor relations, Christina Lali.
Speaker 27: Good morning, everyone.
Speaker 28: Excellent. Thank you guys.
Speaker 29: So we'll get into some of the things that we got into in the past. And as I mentioned to a lot of people as I get presentations now, this story is getting a lot easier to tell. And it's also getting a lot easier to...
Speaker 30: to portray the growth potential that is in front of us from a production perspective, from a resource expansion perspective, or from a value perspective. So TRX, we're led by a team of experienced leaders.
Speaker 31: I think we're a little bit different in regard that, you know, some people would say we're not promotional enough, but I do believe we are. We stand behind what we're going to do. And we say what we're going to do as well. So I think that is underlying the philosophy of the management team.
Speaker 32: We've experienced rapid growth from a production perspective and from just a site perspective in everything that we're doing. There's now well over 400 people on the Buck Reef Gold site across all facets including our employees and contractors. So they're doing mining, geology.
metallurgy processing right across the board and X. Well, that's exploration. So since I've joined just over two years ago now, we always knew that the Buck Reef main zone, and we said this before, had great potential. We've extended that by 500 meters, the mineralization.
The more you dig underneath the surface at Buck Brief and just a mining package that is available here
There's a lot more potential, and it's not only the Buckthrieft main zone. We keep on talking about the Anfield, Easton, Palfrey, but there's other things around us as well. We'll get into that in a few minutes as we get through the presentation.
Doh!
The Foundation for Future Growth.
This is really setting the stage. It's already a great resource here that can grow significantly. There's 2 million ounces of gold in the measured and indicated category.
The great thing is comes to surface. You see the pit in my background here. It comes to surface. We're mining it. We're processing it very cheaply. The key is wide too. It's 20 meters wide of mineralization, which helps us out with our cash costs. Recoveries are great at 90% and we've been experiencing that for a while now.
great recovery rates. We have a minimal environmental from an ESG perspective. We're on the electrical grid in Tanzania. We recycle all water. It's currently the rainy season, so there's no shortage of water at this point in time.
It's just a really good property from that perspective. We have exponential expiration potential, which Andrew will get to in a second. We'll be right back.
So with regards to Q1 2023 highlights, we completed the 1000 ton per day plan.
It's up and running. We declare commercial production on that. That's led to good goal production of over 5,500 ounces which led to great quarterly gross sales.
gross profit, net income, operating cashflow and adjusted EVDA, real company statistics that are all really good and growing.
That positive operating cash flow is funded to business, including the exploration program. We've done over 4,600 metres of drilling in Q1 on the Buck Reef main zone, as well as Amfield and Easter periphery, and those results are pending. And importantly, we've done it all safely. We've had zero lost time injuries, no confirmed COVID cases.
We've achieved a million operating hours with no LTIs or long-term incidents. So, injuries, sorry.
And so it's all been done really safely, really quickly, and we're really proud of that. Andrew, you just want to mention something on the safety record that we have at site because it's something that we're all really proud of.
That's right Stephen, the team here lives in brief safety every day in terms of from toolbox meetings through to job analyses through to a culture where people can stop somebody and say hey let's just stop the work here that doesn't look safe.
We've got a new safety leader at site who's come across from North Maribyrack.
Just a remarkable achievement for those that have been in mining for a long time to achieve a million hours because LTI free is quite something.
and doesn't happen every day. Of course, we need to do it again. We need to get to 2 million now.
And we did that during the construction, which is always.
It's always risky business, but construction is always more risky than normal operations.
That's right, but again it was just wonderful as I did my own work to see people doing proper job observations, especially with working at heights, which is where a lot of accidents occur. So people were properly tied off on Five Point Safety systems, for example.
But thanks for highlighting that, Stephen. The team here is very, very proud of this achievement.
Thank you, Andrew. Now I'm going to hand the presentation over to our CFO , Mike Leonard, who will go through the Q1 2023 financial results.
Bye.
Thanks Stephen and good morning again everyone. On the financial side for the quarter, Q1 was another milestone quarter for the company. Stephen touched on it but during the quarter we declared commercial production on the 1000 plus ton per day plant at the end of October after achieving nameplate.
throughput levels and despite only one full month of operating at that full nameplate capacity, excuse me, of a thousand tons per day, the company did achieve record results, record production, record sales, gross profit, net income, operating cash flow, adjusted EBITDA, all of which Steven touched on.
During the quarter we sold over 5,700 ounces at an average realized price of almost $1,690 an ounce. And that drove quarterly revenues of almost $10 million.
This was all achieved at low cash cost as Stephen touched on of $732 an ounce. That was below guidance so really efficient and effective quarter in that regard. Gross margins were again quite significant, operating at low cost so consequently the gross profit margins were quite high at 55%.
driving some of those net income record numbers that we spoke of. On the balance sheet, it continues to be very, very strong. We've got a cash balance of almost $9 million at quarter end and growing. Our working capital is almost $5 million after adjusting for liabilities that will settle with equity.
And again, adjusted EBITDA was record as well at over $4.5 million, which is really a good proxy for cash flow. And all of this really demonstrates the strong liquidity that the company does have to fund organic growth around value-accretive activities like exploration.
that again Stephen touched on earlier. Importantly, as we continue to grow and see a full quarter of operating results at 1000 tonnes per day, we are endeavouring to improve on all these metrics over the course of the year now that the plant is running at full capacity.
Next slide, please, Steven.
In terms of the fiscal 2023 outlook, during the quarter you would have seen in our MD&A that we reconfirmed our full year of production guidance of between 20 and 25,000 ounces. We do continue to expect the second half of the year's production to be higher than the first half. Again, we did declare commercial production on the plant.
As mentioned, we did come in just below that number at $732 an ounce for the quarter, but reconfirmed that full year guidance accordingly.
In terms of future growth, we do continue to advance a project that we touched on at year end which is aimed at increasing plant throughput between 75 and 100% through the addition of a new ball mill. We're expecting to finalize plans to purchase that new ball mill in the coming days, this week I believe.
and hope to commence construction on an expanded facility in Q3, Q4 this year.
So importantly that guidance, the guidance figures that we spoke of, the 20-25,000 ounces does not consider the impact of the potential benefit of this upcoming expansion. So stay tuned and we'll update the market accordingly when that project comes online.
In terms of the sulphide portion of the deposit, we are continuing with ongoing network to assess whether the process plant and flow sheet can efficiently process the sulphide portion of the deposit and potentially be expanded to accommodate much larger production levels.
Stephen will touch on that, but that's really how we're referring to this deposit now. It's not so much an oxide slash sulfide deposit, but what we're looking at is a much, much, much larger mine. We are looking at that very, very closely, and as we work through the oxide layer into the transitional and sulfide material.
looking at using our current plant and flow sheets to hopefully accommodate that portion of the rock.
And in the interim, we commenced some geotech work and studies to analyze a deeper pit design. We are continuing to mine. You saw the picture on the opening slide. You can see an aerial view of the starter pit in December to your right. As we continue to go deeper, we are looking at geotechnically how to go about doing that.
With that, I think I'll pause there and hand it over to Andrew who will take us through the exploration results. Andrew. Just before we hand it over to Andrew, Mike, a couple of other items of note on the larger project development. We've done an exploration program or an in-field drill program as well.
to solidify some of those reserves and convert some of the resources to reserves.
as well as the geotech work we're really looking at. Just to give the audience a sense of what we're doing there is, in any open pit mining assets, you have pit slopes.
The steeper you can put your pit slope, the lower your strip ratio. We need to confirm what our pit slope design is going to be and that incorporates what our mine plan looks like as well. Andrew, anything else to add with the work that we're doing around this? It's quite extensive everything that's going on. It is.
from Canada tomorrow. So that brings everybody right up to speed on that. I would also comment that just on a visual observation the footwall and hanging wall or the waste rock for the pit, the core looks very good. We're getting very good recoveries and we are expecting to have positive results but of course
terrain and sgs do have to do that work but it's
that work but it visually looks very good.
Yeah, so Anand I was going to mention, I'm allowed to say who's getting the network, but I think you just mentioned who's getting the network.
I didn't mention the name though.
I didn't mention the name though.
We'll put out a separate press release with that.
We confirmed that, but the samples are getting ready to ship. It's a global name, obviously. Yes, it's a global name and a global lab. That's correct. Without further ado, everybody's always interested in opsci, the blue sky potential.
So it always puts a smile on my face as well because we haven't had any bad news or or anything negative coming out of what we're finding. It's always still positive. So why don't you take the group and our investors and analysts through what you're seeing.
Yeah, thanks Stephen and greetings everybody from Buck Reef. I am actually in Tanzania at the moment and...
Looking forward to getting out and going through a lot of this with the team over the next few days. Stephen, we look forward to your arrival at the end of the month.
And so...
Just to refresh those who have looked at this before, the image on the right...
is a composite from our drone footages. The SML is outlined in red, and each of the black squares is two by two kilometers, and the entire property is 16, just over 16 square kilometers.
The main zone is very evident by the number of drill holes, all those sort of reds and yellows that you see.
A drill hole is projected to surface.
I'll touch on that a little bit in a moment. The white is the ongoing work from our geologists that have continued to put their boots on the ground. Again, you'll see more and more little white dots appearing. These are the historical ASM pits that we've looked at and I'll specifically focus in on a couple of those.
But let's get back to the main zone, the results that came out in the last quarter from the south. I think the south had previously thought of as being at its limit but when you get results for example over 35 meters at 1.3 grams a ton including 10 at say 3 grams per ton internally in that.
and other intersections that are in that press release. You realize that we're still on the trend. And Stephen, if you could just put your cursor where the south extension is.
Just a little bit further up, we're good.
And you see if you, the red lines that I've got, it's another nearly 1.2 kilometers to another series of artisanal workings which I've been on to, and that they're very strong. They are historical, they're not being worked at the moment. And what we've realized is to the south, we're still wide open. We know that we're still wide open to the north.
Stephen, I think you mentioned earlier that we've extended now by about 500 meters in total. Not the resources, but the understanding of the shear zone and the deposit continues that. We will obviously do infill drilling following up on the white space exploration work.
So that in itself is over a 30% increase.
And it's a classic same, but this deposit, the main zone, still remains open on strike to the south, to the north, and at depth. And on the depth side of things, if you do go back to the press release on the south, you'll see that some of the results are from underneath the pit, the south pit.
and very strong results indeed.
So that's it.
the main zone. So it's still open, still ought to play for on that. Let's just focus in now on the eastern porphyry and the Anfield zone.
I'm going to get into a little bit more detail than I have before, but those with a keen eye will see that there's actually three parallel trends of white.
before, but those with a keen eye will see that there's actually three parallel trends of white artisanal workings.
The 30 gram per tonne samples that we've had before are from the western part. We've drawn those, we are rating assays, but as we've continued to understand the controls and goldenization. So, we've been looking at the
So we've continued to understand the growing importance of the eastern porphyry That will give us as the shareholders like to say some some sizzle We have redraw the
an RC or a chip hole that came back at 30 grams at a time over 3 meters.
We've been able to identify the shear zone in some wide space drilling and there is very much a trend here that's got an awful lot of work ahead of it.
But we're off to a really good start.
And then finally, to the audience just in terms of...
targets, if you look down to the sort of, see if you could just sort of go down by tempo please.
There's sort of two trends, just up a little bit there, there's two trends that go from these two trends. Again, I've been on the ground there, these are strong workings, and over the course of the year we'll continue to put a few holes into those. But again, you see all this looking and aligning in that sort of classic.
northeast-southwest trend for us.
So what we're going to be doing is updating the mineral resource over the next few months.
internally to start off with. We'll continue to sort of expand on this. We have to.
Move the drawer rig now to some grade control drilling. The road is about to be relocated around the edge of the property. That opens up now the main zone so we've got to get the...
the great control drilling in that. And then some sterilization drilling. We do have to obviously test the ground where we're going to put the drill.
For the finalization drilling, we do have to obviously test the ground where we're going to put some tanning stamps.
And West ters and then throughout again the year. Ro continues to look at by creeef West. Is t por free?
and the Anfield. So it's all self-funded.
And I think about if I if I had a three times as much money I think we could spend it wisely and spend it well, but yeah, I'm not too sure people would like to share account at that point but We were doing it regarding it step by step
and it is happening and BRI is continuing to put out good results.
Andrew, one of the things, just to give the audience a sense that you and even myself and others on the phone really, really...
understand geology, but when you say there's three trends in the Amfield Eastern property zone, you want to give just the investors and others just a simple explanation of how deposits are formed with hanging walls and foot walls and main zones? Yeah, sure I can do that because that lines up to the three trends.
It does. And it looks like we do have a series of, you can sort of see where the eastern porphyry, the red line that goes to the eastern porphyry, if you were to say that was the main zone, you can see that we've got a hangable zone to the west and some all zones off to the south.
to the east. So again quite classic to sort of see these displays and multiple zones.
coming in on a shared zone hosted deposit.
This is exactly similar to what the main zone is. The main zone has one line here, but in reality you have a 20m main zone. On one side, what is our hanging wallet? 3-5m, and on the other side you have another 3-5m mineralization.
Yeah, that's right. We're finding a number of zones hang war on football. Sometimes they're not as continuous as the main zone But they're there and again
That's very evident in the Northeast extension. Again, if people want to get into the details, if you look on the western side of the main zone, you'll see there's a couple of sections with some very, very strong results in the west.
the football.
Yeah, exactly. And this is normal for this type of deposit. Totally normal. And I certainly would invite anybody in the audience if they wanted to go into a deeper geology lesson and discuss riddle, shear zones, etc., etc., with me. We'll have a good session, but not for today. You're starting to lose me now.
Yes. What I would say Stephen, again for our audience, is that this kind of mineralization is well understood.
It's very similar to Canada, very similar to the yore garden in Australia. And geologists do understand it's kind of called mineralization very well.
So turning our attention to the next slide, Andrew, and on the main zone.
Let's discuss the extension because we had 300 meters to the northeast extension last year. That's 200 meters to the south, which is overall 30 percent.
more of a strike length drilled out for a mineralization perspective. Give the audience a sense of what that means.
Yeah, I mean, first of all, you can sort of see it if you put the cursor again on the very last hole there, Stephen.
We can see that we've got some good grades, some good widths in there. We've got some good grades under the pits as well, like for example under the pits, 34 meters at 1.3 grams a ton, including 10 at 3. These are very minable widths.
Whilst we're using the old historical south pit at the moment as a water storage, I mean, we'll drain that eventually, but what it means to us all is that we will continue to find and add houses to resources and reserves in these areas.
And one thing that I did notice when I was on site last time is, and it's the first time that we did this, is the road over to Anfield on this slide, which is right here. And we've always stated Anfield of being...
about 500 meters from the main zone, but I walked it and it didn't take me any time. So it's certainly closer to 500 meters.
That's right Stephen, I mean we talked about 500 meters, we're referring to the sort of the main trend on Anfield and the artisanal workings. Yeah. But you're quite correct, this hangar wall zone here is about 200 meters away from the main zone. You can see the draw pad just right at the very end of that. Yeah, right here, yeah. And that is the location of the samples that...
came out from some artisanal working, it was 28 grams of ton, 36 grams of ton. They were grab samples, but nonetheless they're very exciting grab samples from Fresh Rock.
And I think that's an important point for our audiences. Fresh rocks and it looks exactly like our main zone.
Excellent.
Thank you, Andrew. That's a great update. Great. Thank you, everybody.
So now with regards to an ESG perspective, what I would like to...
Take away from this slide here is the land compensation process.
So the land compensation process, in order to buy the land from landowners, was a long process, a very detail-oriented process as well. That is now predominantly been completed. I don't think there's very many left to...
to be compensated. We went through the final process over the last couple weeks and made final payments. That program costs around $2.6 million. It was funded over a couple year process as the land evaluators went in, evaluated the land, and made the appropriate...
payments to those landowners. So now the 16 square kilometres of the most of that property is now owned by the Buck Reef Gold Company. Andrew, you want to just mention a few other points around that process because it was a long-argest process and quite a successful one actually.raid ofAnd I was much more concerned.
It has been very successful. Again we're very proud to say that...
The government of Tanzania now references buck reef and the work that TRX has been doing with buck reef
as the example for others to follow.
It's been a very meticulous, very patient process.
But at the same time we've had a lot of buy-in and there's evidence Steven, when you're sort of just driving into site tonight, the amount of new buildings that have gone up around the property.
new roofs that have gone on and
The locals whose land we've compensated because there's mainly farmland and agricultural land.
very grateful.
I'm just very pleased to see that kind of response in the community.
Yeah, it's not only that, Andrew. I think the mine is starting to have a secondary.
impact on the economy in the local region.
And, you know, when you stand outside gates and there's taxis, shift changes, a lot of our employees and the contractor employees are from the local area. So we're now starting to see the spin-off effects of the mine generating income and growing.
Absolutely, the secondary industries, businesses, as you rightly say, a lot of motorbikes, it's a knock-off time from work.
I think I'll just highlight one other thing. We continue to focus on education, Stephen.
We know we're going to be here for a long time.
things we have to do is a little bit of CSR work as part of the law in the land. And we've worked with our communities and with our local governments on education. You can see here a group of students in a new science laboratory.
Typically the type of science laboratory we would have all been used to in our own school days and it's our ambition that we would hire from the local communities and students that are doing very well in science, technology, engineering and math. So it's got a bit of a longer-term impact as well.
Thank you.
So what I'm going to leave the audience with is there's a lot of rapid progress at BuckBrief. We've made great progress.
As I mentioned earlier, the company has now been stabilized. It's cash flow positive. It's growing. We're funding the growth of that business. So we have a growth profile, as Mike mentioned. New ball mill should be ordered shortly. We have a larger project to develop over time.
We're doing a lot of activities around that including evaluating ball mills. I believe Andrew is going to be on a trip in the next couple weeks doing that.
We're going to the MET study, the GeoTech study, a lot of activity around that, and then it's underpinned by a great resource.
already a great resource that has a lot of growth potential.
So all in all, this is a...
straightforward growth story that we've positioned a company for this growth and we're very excited for what we're seeing. So I'm very proud.
of everybody at site, Gaston our General Manager, Isaac our Geology Manager, the work that Andrew's doing, the work that Mike's doing on finance, work that Christina's doing in investor relations. All in all I'm quite pleased with the growth of the company and where we're positioned for growth.
That's what I would like to leave our investors and our analysts with. We'll open it up for questions.
Thanks.
Thank you.
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Hey guys, congrats on the quarter and thanks for taking my questions.
Thanks, Jake.
So, I mean, obviously, growth is the focus right now. And you were just talking about looking at adding an initial ball mill. And it sounds like, you know, you might be pretty close to taking one up. Are you able to provide any color on, you know, the hopeful timeline there? You know, if we assume
you guys purchased one this quarter, do you think we might see some contributions from it in fiscal Q4 or any color on that timeline would be helpful?
We've identified it. We know the size of it. We'll announce that when we actually put the deposit on it. It's coming from China again. It will take about 60 to 90 days to come to Tanzania. In the meantime, we'll be putting together the program to build some extra tanks.
and as well as figuring out the
the longer term tailing strategy and we're well advanced on all of those fronts. I would expect there is the possibility that you will see some production from it in Q4 of this year, but I would think that this is more of a 2024 story at this point in time.
term tailing strategy and we're well advanced on all of those fronts, I would expect there is the possibility that you will see some production from it in Q4 of this year, but I would think that this is more of a 2024 story at this point in time. Andrew, anything to add to that?
I think that's a fair comment, Stephen. We would love to squeak it in into Q4, but the 2024 timeline is a good comment at the moment.
Yeah, and so Jake, just the philosophy around that is we just want to make sure we get it right. There's a lot of activity going on at site and we got to make sure and they've been really, really busy. So I don't want to strain the human capital aspects of the business either.
And we're cash flow positive at these levels as well.
Yeah, Steve, just one final comment.
that comes to mind and that centers around the power and
We've been very fortunate in that the local town of Katorev, about 40,000 to 50,000 people, has come off our power line.
and gone on to a major cross-country power line. And that's freed up about 10 megawatts of power that we now have access to.
So that side of it has gone very, very well.
which means it can grow a lot bigger without...
New power line, yes. That's correct, well substation and so on. That actually brings up another good point. I mean, from a permitting standpoint, is there anything that you guys need to bring that ball mill online or are you all set there? No, we're all set.
ald03 Henry
Yeah, we've been green-lighted by the government on that.
on that.
To give you a sense of one of the things, I would have liked to have it sped up a little bit further, but in Tanzania you have to go through the local procurement process, which means it's really a planning process. It's a little bit what I'll call laborious on the paper side, and we've gotten that approval through the Mining Commission to go ahead and purchase this ball mill.
I think we got that approval about a week and a half ago or so. That's Friday. Yeah. Okay.
Got it. Okay. That's very helpful. And then just looking out longer term at BoK Reif, are you able to provide any updates on how the sulfide development study is done?
Yeah, so to give you a sense of how we're blocking and tackling that.
of how we're blocking and tackling that.
is we need to get the met work done just to confirm the metallurgy, what we're thinking, and the processing flow sheet. The first processing flow sheet that we mentioned was a flotation followed by a regrind. We mentioned when we...
released the drill hole results from that MET study, the current flow sheet that we're using, which is Grind Crush CIL, which in the preliminary study had almost identical recovery rates. So what we're learning in current operations and what that preliminary study mentioned to us.
is it's about grind size.
And so if you get 75 microns passing 80.
In a CIL tank, you're going to get about 90% recoveries.
depending on the grade profile, if you do the average grade of the deposit.
And so, we need to confirm that. And so, that's one aspect. The next aspect is there needs to be a redesign of the pit from the 2018 pit. So, we need to get the geotech work in. That —
The pit design had 52-degree slopes, so we're hopeful, but we have to confirm this, that we'll be able to be more aggressive on the slopes given the hard rock of the deposit. What that would mean is a lower strip ratio and a deeper pit over time. Also, the infill drill program.
that has been done will extend the length of that pit. As Andrew mentioned, there is drill results now under the south pit.
which means in the first 2018 pit, that was a very shallow 40 meter pit. So that will now go a lot deeper than what was envisioned. So it is angling up to be a much larger overall project than originally imagined.
in that 2018 PFS. Also, we're working with Asanko on longer term tailings.
So that is the bottleneck at this point in time is longer term tailings, but that's well advanced on Not where that would be located how will be designed and Ultimately, it will be built
more than likely from the waist.
from the waste, from the mining activities.
So you'll just take your waste from one pit and build a berm over another side to put your tailings behind it, which is unique for a mining project because in most of these mining projects your tailing facility is built up front from overburdened stripping.
We're just going to use our waste.
to build that tailing facility over time has been designed into a longer-term plan. So there's a lot of activity happening and at the same time Andrew and and team are evaluating ball mills.
Now, and we're getting out in front of that for a longer term solution to that as well.
Anything else to add to that and your mic?
Micah?
No, I think that was well said, Stephen. Nothing further to add. Thank you. Yeah, I think, Jake, what I would take away from that is if you think about a feasibility study, you need your cost inputs. Well, we're operating, we know those. You need your building cost inputs. Well, we built stuff, so we kind of got a good sense of that.
And then you need your pit design. Well, we're doing the geo tech work for that and the resource modeling. So it's whatever plan comes out, you may not have a feasibility study level stamp on it, but it has all the feasibility level inputs.
Yeah, Stephen two quick points for me and hello Jake.
Can't wait to get you over here at some point. We look forward to that.
Two points. We do have a test plant so we will also be able to do some bulk sampling. We're even able to sort of isolate the 360 ton per day, the initial circuits for even more extensive sulfide testing when that moment comes.
The starter page in just one area is...
just meters away from intersecting sulfides and we might be able to skip just a few of those and to do some initial bulk samples to supplement the variability study that comes from the drill holes. And those that are looking even longer term, in my mind there's no doubt that this project will go underground.
as well. Fair enough. That's all very helpful.
Yeah, so a lot of work going down on that. Yeah.
Next question is from Heiko Ile with HC Wainwright. Please go ahead.
Hey guys, this is Marcus Gini calling in for echo. Thanks for giving our questions.
Thank you. So there's a sentence in the release that sort of caught our attention where you stated that through ongoing drilling it becomes more evident that Buck Reef has the potential for a much larger footprint and project.
which implies that things seem to be improving sequentially.
So we're wondering if you could just provide a bit of color and maybe some of the exploration results in that area that you know Particularly surprised you relative to maybe what you anticipated
I think I'll let Andrew.
follow up on my answer to this question, but.
As I stated previously, you know.
We were always comfortable with the Buck Reef's main zone prior to joining this company.
What we're seeing now is
There's still a lot of work to do, but as Andrew lined it up, you're seeing a trend from
the eastern periphery north, right down south through Anfield and right on down through.
There's 2.5 million ounces of resources in the Buckbeef main zone.
And this other trend has not been drilled out nearly as extensively. So there's that potential and then there's potential around the rest of the property, particularly around what Andrew was referring to in.
Down south in around Tembo. There's some strong showings there and Tembo itself is is very good but it's a there's still artisanal working in that area with the
What do they call the mine superintendent, the government official Andrew there?
Or the resident engineer. Yeah, the resident engineer, so there's a lot of gold here.
And it's starting.
to come to the surface, quite literally. And you're anything that. If I could ask you just to go back to the exploration slide. Yeah.
That's why. And thank you for the question. So the line broke up a little bit, but I think the question was, has anything surprised us? Is that right?
Yeah, and my answer, Andrew, was...
But, you know, we like the main zone and now we...
are looking at, and they're probably nether means.
I think yeah, that's very good comments, and I think what is really
surprised me is just how much
gold potential there is here. Now if you were to just even take Eastern Porphyry in the Anfield
and put that anywhere else on the planet, that would make a really great junior mining company exploration play.
So when we sort of, for example, started to delve into the database at the Eastern Porphyry, which hasn't really been worked for over 10 years.
So we unpackaged that, had a look at it, and we start to see some of the historical drilling of
30 grams a ton over three meters and the fact that these zones are starting to sort of line up the surprise factor is like wow it actually is really sort of happening in terms of true exploration potential. Then as you said Stephen, the stuff by Tembo and then
Some of you might have spotted over to the east, halfway between.
the main zone area and the bingo on the far right or the far east, we've identified yet another trend through having our boots on the ground. So it's exciting from that point of view. Yeah, and I would add to Andrew, the Med-Hole results.
from an assay perspective, we're very good. So as you guys are aware, particularly in the analyst community, usually these deposits are built up through drill hole.
analysis results, assay results over time.
And usually you get some of them are good, some of them are great, and some of them are average, and it builds up a deposit over time.
Whereas Buck Reef never had that sort of evolution. As Andrew mentioned, you go back in and dig into the results of the eastern prophrhe, his eyes popped at some of them. You get those in the main zone as well.
And so as we start to get really into this, it wasn't built up the same way as other exploration plays were. So it came together as a resource potential, but when you start to look at it, there's some really good zones in both of these deposits.
Yeah, that sort of speaks to the continuity and again those on the call understand that continuity is critically important to build a mineral resource in the mine.
Yeah, you have to have continuity because what you can't do is go through one great zone and it better pay for getting to the next zone. That doesn't happen here. It's 20 meters wide and continuous.
in the main zone and we're seeing similar trends on the amp field east appropriate zones.
Okay, awesome. Yeah, no, that was a fantastic. Which is kind of a highlight, probably. Yeah, no, perfect. Thank you.
And then just trendlining the quarter, we're at essentially 5 million of gross profit, 4.4 million EBITDA.
Could you maybe walk us through as much as you're comfortable with in this setting, what you think Buck Reef can do in the next several years and what you model out as realistic goals from the cash flow and be the gun perspective?
Mike, do you want to take a stab at that? I think it's a little early for some of that sort of stuff. We've indicated what we're doing on the larger project perspective, which is where you're really going with that.
Mike, you want to just take a quick stab? Yeah, I think so. I mean, we obviously haven't guided out that far yet guys. And so a little bit premature, I think start speculating on cash flow again. Again, I mean, I think in the near term, you know, you've heard about what we're doing with our meal that we're looking to purchase doubling throughput.
and certainly depending on the grade profile, hopefully coming close to doubling production in the near term. What we're modeling out is how much strip and dirt we need to move to continue to get at the deeper part of the deposit, producing at a 50,000 plus ounce production profile over the next couple few years.
Once we have our arms around that, we will certainly guide the market accordingly. I think in the near term, you have heard when we expect the mill to come online and roughly what we expect the production levels to look like. You could probably extrapolate the very near term, what our current cash flow levels look like.
on a quarterly basis for the next four to six quarters and we'll guide the market early next year on longer term guidance thereafter.
Yeah, I think the best way, Mike, to really answer this question, I'll ask Andrew, if you could just give a broad range.
the size of ball mills you would envision for a larger project.
Yeah, well certainly the short-term one that we're looking to get on-site in Q3, it'll be
a thousand tons a day. So that's the doubling of tonnage.
As you alluded to Mike, we've...
We're not going to quite double gold production because of great profiles, but we'll get as close as we can. And then beyond that, we're going to be looking at about 6,000 tonnes of that into the sulphide project.
So a mine that will be well in excess of 100,000 ounces a year is what we're looking at. That's the kind of mill I'm going to be looking at the first week of February .
Hey, you might have given a little bit too much information there, Andrew, but thank you. That wasn't quite a range. Let me give that as a range. Four to 8,000. All right. With the tons of data. All right. Murph, 9, catcher,
Fair enough. Fair enough. Okay, thanks for the question. Thanks for the answer, guys. I would like to just – it's a good question. Maybe back to Stephen and Mike on this. We built the first thousand tons a day for what, six million, Mike? Six and a half. Yeah. Six and a half, right? Are we able to shed any light on the cost of the expansion, the first part of that?
We haven't quite guided to that yet, but I would certainly use the first 1,000 tonne a day.
cost profile as a good analog for what we expect the next thousand to look like.
Yeah, it's the same. I'm a little deeper than that. Mike, we can say it's gonna be cheaper than six and a half. So.
It's going to be a little cheaper than that, Mike. We can say it's going to be cheaper than six and a half. Don't expect it to get that high.
Thank you.
Thanks, Marcus.
Yeah, no thanks guys.
The next question is from Mike Niehoser with Roth Capital Partners. Mike Niehoser, you're live in the call. Great. I'll keep this quick as we're running short on time. Page 9, Andrew, I show a map of the mining concession.
And when I was after the project a year ago, I got the feeling that the South zone kind of petered out at surface and it went deeper in the north. And I guess what I'm seeing here to everybody's surprise is that it actually seems to be more horizontal than dipping to the north. And when you look at those artisanal
you know, workings to the south, it just sticks out, you know, in a big way. So really, could this be a much more horizontal than a dipping, mineralized body?
Yeah, what would you refer into Mike and then and greetings?
the high-grade shoots.
Do dip if you like what they plunge at approximately say 20 30 degrees
it does look like they are flattening to the north. The south has been a very pleasant surprise to me. As you rightly say, you know, if you look at the historical data and the culture that had built up around that particular part of the deposit.
I wasn't anticipating as strong a result as the ones we got, so very pleasantly surprised.
with the tenure of those. So there will be definitely gold mineralization, I think, continuing down the trend, but there will be high ratios within that.
Well, it just seems to be very consistent. I mean, you used that word earlier in the call, but North and South, it just seems to be.
You know it seems it wouldn't be a surprise to have your expectations met to the south. I guess that's what I'm saying Yeah, yeah, there's this precious little drilling there, so We do see in the main zone that we have so far very clearly those
there's continuous memorization, but then if you like there's an overlay of just three higher grade shoots that's very evident in the data.
And did I hear you correctly that you're going to be coming out with the updated resource in the next couple months?
We're doing this work internally first, Mike, and then obviously this kind of work does ultimately have to hit the market.
So I'm going to remain noncommittal on that timeline at this point as we only just started our work So so when you do come up with at some point sooner or later, you will be announcing that to the market Maybe not in a couple months, but maybe
Four to six months or so so let me keep it very very broad and Steven's laughing I think a little bit. Let me just be very deliberately broad at Mike I'd love to get it out as soon as I can but very confident We will get it in this fiscal year and we have to because we're now mining and we have to update the reserves and we have to update the mineral resources.
Yeah. Also, is there a point where you might be updating us on the metallurgical work, the summary of conclusions, even on a preliminary basis?
Uh, later in the year, do you have a, do you have a whole you can share for that?
Yeah, the overall work will take about six months, but I would agree with you. Once we have some key metallurgical results, we would feed those into the market as we have done and demonstrated so by releasing the
the meters and grade of the samples that are going off to be analyzed.
And I guess just lastly, about your million hours of lost time, you know, without a lost time accident is just stunning to me.
And it seems to be, I know the mantra is growth, growth, growth, but it's not coming at the cost of safety. And I know you guys are careful, you know, at the top, you know, in the C-suite, but all the way down to a guy with a hammer and a thumb. So I just want to compliment you. It is something that.
You know almost shouldn't lead, you know all the metrics, but thank you for that glad to be included in the call. Thank you Yeah, thank you Mike and Come back anytime
But thank you for that. Glad to be included in the call. Thank you. Thank you, Mike. And come back any time. Thank you.
The next question is from Robert Paulsen with Paulsen Strategy Group. Robert Paulsen, youíre live in the call....
Mr. Paulsen, your line is open.
Yeah, Robert also texted in his question, so what I can do is read aloud the question and answer it if he's not online.
Okay, so that's what I'll do. His question is congratulations.
on all the great things you and TRX team are doing to make TRX a successful growth opportunity. Gold is at or close to long-term highs and stock price is at or close to all-time lows. What are the thoughts about TRX being a takeover target and how committed are you to the long term?
I'll answer the first part of that question. I've been here for just over two years. In that two years there's been gyrations in markets.
vis-a-vis other junior mining companies, I would say that we've outperformed those particular companies on a year-to-date, sorry, last year basis. We're about even on a five-year basis. The stock is about even.
It's outperformed the vast majority of junior miners. I think a lot of long-time shareholders go way back to 2012 and remember $3, $5, $7, $9 stock prices.
and the company has transitioned and had a lot of change since that period of time.
And for myself, I look at our performance over the last two years since joining. With regards to being a takeover target, look, if you become a takeover target, you've done your job successfully, hopefully, particularly if you're not in a distress situation.
We are not in our distress situation. I don't go out seeking takeover targets.
We're committed to the long term. We think this project has a lot of potential.
We're committed to the long term. We think this project has a lot of potential.
You know, right now, when we consider ourselves a takeover target, I think we still got some work to do to really display what the long term potential of this project is. As we continue to execute, I'm hopeful that we'll get rewarded in the markets for that and shareholders will be rewarded as well.
I hope that answered your question, Robert.
Yeah, and I'm just going to add also, the team that the audience is looking at, backed up by the team here at site and in country, is really also kicking into gear.
and there's also delivering on the results.
Cindy, next question. Thank you.
The next question is a text question from Craig Sutherland. We have heard for a long time about dividends. What is the company's plan additionally with the M&A activity picking up?
Have we had any discussion on this topic or doing a joint venture with a major?
Yeah, so dividends is a topic that has been discussed around this company in the past when it was.
set up more as a royalty company.
As shareholders have heard from myself about growth plans, I believe the company is still better served growing. It's cash flow, it's revenue, it's EVDA and all the valuation metrics that are used by mining.
investors and analysts including net present value. That is the current plan of the company. There is a lot of capital needs. We would prefer to generate cash flow to fund those capital needs. That is certainly the mantra in the short to medium term. That will change over time as a company reaches its potential, particularly on a production profile basis.
With regards to doing a JV with a major, the company already has a 55-45% ownership split between TRX and the state mining company. So it would be very difficult to bring in a major into that joint venture discussion.
It would mean dilution on our part and dilution on Stemenko's part. So what I would say is,
Under the right situation, we might do that. But certainly it's not in the short term. I'd prefer to unlock the value of Buck Reef first before having any of those discussions.
All right.
It concludes the question and answer session. If you have any additional questions, please email Christina Lally, Vice President of Investor Relations. I'd now like to hand the conference back over to Stephen Maloney for a few closing remarks. Stephen Yes, thank you. Q1 2023 was a great transition period.
We've got the plant up and running. You see the pit in the background to me. We're mining. We're processing. And the drill pits are turning. So I believe, and our management team believes, and our employees and colleagues believe there's a great potential at the asset.
and we continue to grow and we're all having fun doing it. So I'll leave the audience with that. I think this has been a very in-depth.
and we're all having fun doing it. So I'll leave the audience with that. I think this has been a very in-depth and insightful conference call.
Thank you. This concludes the meeting. You may disconnect. Thank you for participating and have a pleasant day.