TRX Gold Corporation

It's now my pleasure to introduce Christina Lally, Vice President, Investor Relations with TRX Gold. Christina, the floor is yours.

Thank you, Gaylene. Welcome, everyone, to the TRX Gold Corporation third quarter 2023 financial results presentation. As a reminder, all participants are in listen-only mode and the meeting is being recorded. After the presentation, there will be an opportunity to ask questions. If you wish to ask a question, please click the Q&A icon on the left-hand side of the screen. You will see the options raise your hand to join the queue and ask your question verbally, or write a question to submit your question in writing. When you are introduced, your line will automatically be unmuted. Analysts who have dialed into the conference call may press then 1 on your telephone keypad to join the question queue. I would like to turn the meeting over to Stephen Maloney, CEO of TRX Gold.

Thank you, Christina, for the introduction. My name is Stephen Maloney. I'm the CEO of TRX Gold, as mentioned by Christina. And we're pleased to give you the Q3 2023 financial results, as well as an update on operations at the Buck Reef Gold Project. Q3 was, I believe, our third quarter with the 1,000-ton-per-day plant. started in Q1 halfway through. And so we've been learning a lot throughout our operations throughout the year. And one of the biggest things in Q3 to come forward is the fact that we processed sulfide ore, which was 6,500 tons of hard, fresh rock, went through the plant at a good recovery rate, which opens up the much broader deposit to mining. And that will be now incorporated into our mine plans. We've also upgraded the plant from our learnings from that. Recently, a cone crusher was installed, as well as the conveyors and other parts of the crushing system got upgraded in order to accommodate that harder rock. So that's a very, very exciting and extremely important value creation piece that occurred in Q3. We'll get into that in much more broader detail in the presentation. So I'm going to flip the slides here to the next slide. Obviously, I've got to say the cautionary note and forward-looking statements. You can find this note on our website, and we'll just leave it at that and move forward. Today's speakers will be myself, Andrew, our COO, who's next to me across from the table, Mike, who is also across from the table, Christina, who is sitting next to me. New people to TRX. I know there's a lot of shareholders on this call as well as analysts, but for new people, what is TRX? We are a team of experienced leaders who have been executing on the Buck Reef Gold Project very rapidly. We've gone from zero ounces of production to an annual run of 25,000 ounces and growing very quickly. It's a high-margin operation that has positive cash flow. And as we'll get into further in the presentation, the exploration upside is still here. Dairy, it is an underexplored property. There is still a lot of opportunity to increase minimum resources and mineable ounces here at Buck Reef. Again, just as a very high level around the Buck Reef Gold property, the last resource statement had two plus million ounces and measured indicated. The resources come to surface. That's where you see us mining in the oxides. Deposit is wide at 20 meters of width with consistent mineral localization over two kilometers. We say easy metallurgy because it's grind crushed CIL that is both in the oxides and has been proven out in the sulfides through the bulk sample. There's a MET study being done for the broader deposit, particularly deeper parts of the deposit with SGS in South Africa. We're fully permitted to And that special mining license is renewable for the life of the mine of the deposit. The processing plant and mine have consistently been meeting the production guidance that we've provided. We have a minimal environmental footprint. We recycle all water. We have good tailings management connected to the national power grid, which is predominantly hydropower, particularly with the Julius and Erie facility to come online. And we have expiration potential, a lot of blue sky potential in this property over time. So with regards to the Q3 2023 highlights, the 1,000 ton per day plant continues to run very efficiently. As a lot of the audience knows, there's three main ball mills there, 15 tons per hour ball mills. It equals 1,000 tons per day, which gives us flexibility in our operations. We've poured over 15,000 ounces and sold over 16,000 ounces gold, respectively, in the nine-month end of May 2023. We've recorded positive operating cash flow that will continue to fund growth at both the operation and exploration levels. I believe, Mike, to Q3 2023, it's almost $15 million of investment. That's right, just under $15 million, correct. Yeah. And so we have strong profit margins of 42% and 49% respectively. And, you know, in Q3, it was down a little bit given that the ounces weren't as high given the wet season. So we expect that to pick up, particularly with oil prices being higher now as well. We continue to reinvest the cash flows we mentioned. There is a new ball mill that will be coming to basically double the production rate, 75% to 100% of the production rate. processing capacity. That mill is now shipped. Saw pictures of it on a truck last week, Andrew, leaving China. On the way to the ports. On the way to the port. So that's the longest lead item, and it's well underway. We're getting on top of other long lead items here now. We've successfully processed the sulfide bulk sample, which I mentioned at the beginning of this call is a game changer, really, from a planning and operational perspective. We continue to achieve positive near surface drill results that Anfield needs to be offering. We are now evaluating where best to go next in order to bring in mine allowances and to increase the overall resources of the property. So in any exploration program, you have what I'll call fits of starts and stops to reevaluate. We're in that reevaluation phase now before we ramp it up again. We reported no environmental or community related incidents during the nine months ended May 31st and continue to have a very strong social license in Tanzania. So with that, I'm now going to hand it over to Mike, our CFO, who will go through our Q3 financial highlights.

Well, thank you, Stephen, and good morning, everybody. Thanks for joining us today. TRX continued to report strong financial results during the quarter, and this was off the back of, again, lofty gold prices. as well as production from the 1,000-ton-per-day plant that Stephen touched on that continues to produce very, very efficiently and very, very effectively. During the quarter, we produced and sold approximately 4,800 ounces at a realized price of almost $1,960 an ounce. That's out from Q2 where gold prices were trending around $1,850 an ounce. So we did benefit from an uptick this quarter, and we continue to see gold prices maintaining. In fact, this morning it was somewhere around $19.75. So we continue to benefit from top-line revenues on gold price and production. We recorded revenues of over $9 million for the quarter. And on a year-to-date basis, as you can see, almost $30 million of revenue. That generated operating cash flow. of over $3 million for the quarter, or almost $15 million year to date, as Stephen touched on. And again, we've substantially reinvested that operating cash flow right back into the business. Stephen touched on one example with a new ball mill that we've recently purchased, but we've also expanded our tailing storage facility, for example, quite significantly, which will accommodate much, much, much larger production We relocated a road which will allow us lifeline access to a main zone and unlock high grade blocks. And we've also purchased other pieces of capital equipment For example, new gen sets, new generators this quarter. Yeah, those will replace units that we had previously rented that were quite costly on a rental basis and impact our cash costs. So by purchasing pieces of capital equipment like that, you end up benefiting longer term. And the payback on those pieces of equipment is very, very, very short. So very value accretive. So the key takeaway, I would say, again, this is our philosophy and our model. You know, we're using organically generated cash flow. to help grow the business by reinvesting right back into Buck Reef. On the cash cost side, just the previous slide, Stephen, one or two more comments. Yeah, one or two more comments for the benefit of the audience. Cash costs for the quarter were just over $1,000 an ounce. And again, the mine sequence during the quarter had us undertake a stripping campaign, which we touched on in Q1 and Q2. That stripping campaign involves sort of going wider and deeper in the pit as well as undertaking blasting activities, which unlock high-grade ore blocks, which we really expect to see benefit Q4's production and certainly production into early next year. Stephen touched on this, but Q3 is the traditional rainy season in Tanzania, which was extraordinarily wet this year compared to prior years. So it had a bit of an impact on head grade. quarter on quarter, but again, on a cash cost basis, we still expect to fall within that $750 to $850 full year guidance range that we put in at the start of the fiscal year, albeit towards the higher end of that. Importantly, being a low cost operation, gross profit margins continue to be very, very high. You can see on a year to date basis, gross profits almost 50% and was 42% for the quarter What that shows is that the plant and the ore that we're bringing out of the ground, you know, again, is really, really efficient and effective and importantly, from a financial perspective, profitable. On a year-to-date basis, we produced over 16,000 ounces. Stephen touched on that. Again, revenues of almost $30 million. So year on year, quite a significant achievement as we continue to grow this business. And again, importantly, operating cash flow of around $15 million that we put right back into the ground. Again, we've used cash flow from operations to make value, accretive investments back into the business. And you touched on a big one, Stephen, with the new ball mill that we expect to be on the ground in the coming weeks. The balance sheet continues to be strong. We had a cash balance of over $7 million on our bump set quarter end, as well as lots of other pieces of liquidity that We can access working capital was positive at over $3 million, even over $3 million as well. Again, all demonstrating strong liquidity, which helps fund organic growth. We do expect Q4 to be our strongest production quarter of the year. And we'll touch on guidance here shortly, but we're certainly on track to meeting our full year numbers. And Stephen touched on between 20 and 25,000 ounces. I think I'll leave it there for now on the financial highlights. Back to you, Stephen.

Yeah, thank you, Mike. So on the next slide, I'm going to hand it over to Andrew to go through the preliminary bulk sample that was done on sulfides, and I'll supplement your comments, Andrew, around this. As I said, this is a game changer. What we found in that bulk sample is what we anticipated to find, which is the buck brief ore is really about grind size at the end of the day. So the finer you grind it, the higher the recovery rate of the gold that you'll get. When we grind it to 75 passing 80, which we did in this bulk sample, we got what we expected, which was around 89% recovery rates. This lined up very well to what was achieved in the SGS preliminary MET study. When you really go through that study, we presented a number that was over 90%. That was with a slightly different flow sheet of a flotation followed by a regrind and CIL. But if you just do a straight grinding and CIL, it came out to what we anticipated it to come out to. If we grind it finer, we get higher recovery rates. So it's a trade-off between how much energy you use and the capex you put in to get that finer grind to get the higher grinding size. So that will be trade-off studies that will be done in the future. But, Andrew, go ahead. Well, Stephen, you said it also very well.

But perhaps I could just talk a little bit about that. We did take advantage of – operational sequencing in the wet season to take that six and a half thousand tonne software sample. We're obviously delighted with the results. As you say, we've got recoveries here at 88.7%, which is very much in line with the test work that SGS had done in the prior year. But what is also very important to have that work is what we learned. What we learned is that we do have to particularly crush finer, and hence we've purchased the cone crusher, which is on-site, commissioned, and is available for when we do fresh ore again. The whole goal of that, as you said, is to get the better grind and throughput. What I like to see is you can sort of see up on the oxide ore going up those conveyor belts there, but when it's fresh rock, we want to see popcorn-sized rock going up into the bore wells. The hard work of grinding down is then a lot easier for the bore wells if they're getting a finer feed. So we've learned that. And then we do the upgrades to 2,000 tons a day, but again, the focus is on making sure we get, as I like to call it, popcorn going into the bulk mills. I think that's it, really.

Yeah, so what does this really mean at the end of the day? Well, what this really means is sulfide ore will go through the existing plants. That's correct. And be recovered at a good rate. So that means that, you know, there's no need to come up with a new circuit at this point in time for sulfide ore. which means we can continue to expand Buck the Reef the way it's being expanded, which is expanding existing plants and equipment over time or maybe faster, but it doesn't mean a whole new processing facility for sulfide ore. And that's a related capex in a much more complicated system. Yeah.

And this all ties in very nicely with, I think we have to touch on this, ties in with the more detailed metallurgical studies we're doing now with SGS in South Africa.

So on that point, what are we doing? So obviously, there's a 2018 PFS that the company did prior to the management team around the table coming in. We've talked about this at year end. A lot of work has gone into the infill drill program. That's been completed. We're doing the MET study, as we mentioned a couple of times. That's across the deposit to make sure what we found in the bulk sample and in the preliminary study, that there's no changes in the ore across the deposit, both along strike and at depth. So that's what that MET study will do. The geotech study is ongoing. That determines the pit slopes of Buck Reef. We have hard rock there. So we're optimistic that we'll get some good pit slopes in our planning. Currently, our pit slopes, Andrew, are around 45 degrees. 40 degrees. Yeah, about 40 degrees, and that's in the soft rock. So once we get to the harder rock, we expect that to be higher. There's long-term TSF planning ongoing. Obviously, It's easier to take it out of the ground and store it. It's got to be stored somewhere afterwards after it goes through the processing plant. So that is continuing ongoing, identifying lands to purchase for that. Also, taking a really good look, a re-look at dry stack tailings. That will be done over the next couple of months. We're updating the mineral resource model to make sure that we have all our ducks in a row as we put in place an update of mine plant. And then that will all wrap into what a life of mine plan looks like today. Obviously, we anticipate that to improve over time as more and more drilling is done around Buck Reef, getting the blue sky potential around the anfield, the east of Proffery and other parts of the deposit, as well as what's at depth and along Strike in the main zone. It's our anticipation that this will be a deposit, given the width and the grade of the deposit, that will go underground over time. There will be eventually the tradeoff between do you do more stripping to go wider to get deeper, or do you just do your underground development? And there will be a point in time in any mine plan where that tradeoff will cross and you will go underground. And so that is something that will be looked at as we, you know, do the mine modeling of the broader deposit over time. So anything to add to that, Andrew? Did I forget anything?

I think the other thing we'd like to do, Stephen, is we'll see this on the expiration slide, is to get a couple of satellite pits up and running. Yeah. And it builds optionality for the mine plan.

So, for instance, in Q3, we had that optionality because we had crushed stockpile. We had stockpiles. We had a main pit. Now we're going to supplement that. As everybody knows, my mindset is to have redundancies. Yes. In any operation to reduce risk. So that's essentially what you're doing in opening up other areas. You may not mine there right away, but if something happens over here in the main pit, for instance, you can pivot over to the satellite pits. It's the same concept of having three ball mills operating. If one goes down or you've got to replace the liners in one, the whole operation doesn't shut down when you're a single-mine company. So we're very positive on putting in place those redundancies over time. Okay, so on the exploration side, Andrew, tell everybody what they have here and where you're going.

Yeah, I think those that have been with us on previous presentations will remember the map on the right here. For those that are new, just very quickly, each of the black squares is two by two kilometers. You're looking at the special mining license in the red boundary, the existing main zone where all the colored dots are, and you can see where the plant is. And then highlighted in the dashed lines are exploration areas. So we continue to be very excited, I think, as the geology team that's at our site is getting very, very familiar with the geological models and controls on gold mineralization. So just in summary, we've did 239 meters in Cube 3. We've done over 11,000 meters so far this fiscal year. So in terms of results for the quarter that came out, we did get some drilling on the Eastern Palfrey and the Anfield. These both lie a few hundreds of meters to the east of the main zone. As you'd expect, I put the best results up here for you to see. So, but it was very, very encouraging. But look at this, 14 meters at three and a half grams a ton, including three meters at 10 in Eastern Palfrey. We've also had another intersection there in the same hole, about 25 meters of 1.6. So we know that that zone can contain some very, very significant intersections, a lot more drilling to do. Another intersection, again, showing good width and a good grade for an open pit at 1.22. And then from the amphitheater, we had some grab samples previously from a artisanal mine shaft. We withdraw that, coming back at 2.94 meters at 13.7 grams a tonne. For me as a geologist, explorationist, that's very significant for a first drill hole to go into that target. And again, some of these are good widths and grades. The second hole from there is 6.1 meters, creating 1.41 grams a ton. I do draw your attention also to the fact that these intersections are shallow. And obviously that's very encouraging for getting some initial open pits going. Back to you, Stephen.

Thank you, Andrew. So with regards to the year-end sort of guidance, as we've mentioned, we're a low-cost, low-risk approach to growth in the gold space. 1,000 ton per day plant has been operating at name-pick capacity since the end of October. we're going to reiterate our production forecast of 20,000 to 25,000 ounces. I think we're almost at 20,000 ounces now.

Yeah, we did 16,000 as of Q3, and, again, we've obviously been producing since then, so well on track, yes.

Yeah, so we're almost there anyway, so as of today.

And, again, as I mentioned, we expect Q4 to be the highest production quarter, so well on track towards meeting that goal, yeah.

Yeah, so the cash cost guidance, we reiterate that as well. We're advancing the third mill expansion in less than 18 months. Now we'll put 2,000 tons per day, which is roughly around 750,000 tons per annum, Andrew. That's a small operation up to a decent size. And now we'll obviously increase the production levels at Buck Reef. We don't expect it to double instantaneously because you've got a great profile as well to deal with in putting it through the mill.

I think also, Steve, we're not expecting to substantially increase our fixed costs. So we're going to see some benefits on our cash costs as a result.

Yeah, we're going to see. Yeah, exactly. So all in all, things are going as expected. And any time we run into extra rain, for instance, and things of that nature, we're able to pivot and do value-creating activities.

Just again for our audience, the wet season this year was about three times as wet as the prior year. Yeah, exactly. There was a lot of rain there. Should we say it built a lot of bench strength amongst the team, the resilience. Yeah.

So with regards to ESG, it's something that's a public company in the mining space that we need to talk to and be participatory in. Our philosophy on ESG is that it's mindful. It benefits and is integrated with the business. If you hire more local people, you don't have to have them on site. It helps money in the community. It reduces social risk. And it also increases your productivity and governance procedures by hiring a lot of local people. So, you know, our mindset is the biggest beneficiary of a mining operation is always the local community because if the workers come from the local community, they're the biggest beneficiaries of the spend at the mining site. That helps reduce cost at corporate, the social risk of the project. And then you want to reinvest in that community if your employees are from that community in schools and in medical facilities because that's where your employees are going or their children are going. That's really the philosophy that we have with regards to ESG and will continue to do so.

Steve, if I could just have one quick comment again for new shareholders, and I think they might have heard the story before. It's worth hearing it again, is we also take a very clear approach to local procurement. So, for example, the CIL tanks were procured three or four hours away. There's still works coming from the shipbuilding industry, and ones are substantially reducing cost, substantially reducing risk in terms of supply chain and giving us a lot of credit with the local government people. So shareholders, communities, governments, and everybody's just winning all around. We're not winning tanks from, say, Asia or Turkey or South Africa.

Everyone's benefiting. So with regards to milestones that are upcoming, we continue to deliver on the milestones that we put into the market. The third mill expansion, we'll have that online hopefully early next year. We'll have planning and execution on a much larger mine than we currently have in the next 12 to 18 months. And that's continued to progress. Med studies, geotech studies, resource modeling, mine plan updates, all that is continuing as well as continuation in drilling. So more of the same, but just continuing to execute at the Buck Reef Coal Project. On that front, this is a stock chart over the last year or so. As you can see, we've been in a range from a trading perspective. We've had peaks and valleys. And relative to the market, I would say we've held up really well relative to a lot of single asset producers, as well as the pre-production comp set that we look at. From a trading perspective, we've held up decently well against that comp set. On that front, I invite anybody for any questions.

Thank you. We'll now begin the question and answer session. If you wish to ask a question, please click on the Q&A icon on the left-hand side of the screen. You'll see options to raise your hand to join the queue and ask your question verbally, or write a question to submit your question in writing. When you are introduced, your line will automatically be unmuted. Analysts who have dialed in to the conference call may press star then 1 on your telephone keypad to join the question queue. Our first question is from Jake Sikalski with Alliance Global Partners. Please go ahead.

Hey, guys. Thanks for taking my questions. Hi. Good morning, Jake. Hi, Jake. Good morning. First on the rainy season, and you guys touched on it a bit with it being a bit more severe this year than in the past. I'm just curious, was the duration the same, the typical March to May timeframe, or did it extend into June or even July a bit? Yeah, you can answer that one. Yeah.

So, yeah, Jake, it started a little bit earlier and went on a little bit later as well. It was quite consistent. That said, the team obviously knuckled down and got on with the job. It was obviously something a bit tougher for us, but we got through it and learned to be prepared better for next year.

Andrew, I think it didn't trickle too far into June, though, from memory. I think it had largely been sort of subsided towards the back end of May. So I think we're going with that, Jake, in terms of modeling Q4. Don't expect it to have a significant impact.

Yeah. Yeah. Yeah. So on that point, in Tanzania, it either rains or it doesn't. There's really no in-between. So it is quite dry at site at this point in time. As you can see where the guys on the bottom right there are running out of the lineup. Yeah, that's right. Yeah, that would have been a couple weeks ago. That's right. Yeah, I'm going to take one question from the Q&A from the cube right now. The question is, what do you foresee as being the biggest threat to overall costs? The IRR and gross net margins are great. With anticipated rising costs in gold price, the multiple expansion could look stunning. However, controlling costs is a premium. So, yes, having a control on cost is always number one. The operation has grown quite rapidly. So there's a lot more controls going in place, even as we speak, around cost and following those costs. So that is one area where we're managing costs. We continue to procure local, which is reducing cost. And it also reduces supply chain risk. We're also – what I would say is our next expansion, it isn't proceeding as quickly as the other two expansions. And part of that is to control the cost to make sure that – The operations are currently cash flow positive, so we can control the cost of that build a lot better than if we were to rush it. Obviously, we've got to double mining rates as well in that equation. Fuel prices have stabilized, so fuel is always a large component of cost in any mining operation. So we're good there. I don't see any overly bearing inflation pressures, Mike.

No, no, and Andrew, you touched on this earlier. I mean, the plant is scalable as well, so you don't expect to see a lot of additional fixed costs as we grow and expand our plant. Don't expect headcount to expand dramatically. Again, a big benefit from this sulfide bulk sample is that we can expand this facility, as you've touched on a few times, and, again, expect costs to come down as a result.

Yeah, exactly. So, you know, as Mike mentioned, there's a lot of what I'll call infill capex. Tailings has been expanded. We look at things like generators. They cost us a lot of money, so we bought them. And an IRR payback is quite good on that, so that reduces costs. Load loaders this morning, right? So we currently rent a lot of loaders, so we're now purchasing those, and that's got a payback for three months or something like that, right? So we're looking at that across the entire operation. So that's the answer to that question. Yeah.

Steve, you mentioned fuels. This is an example of us just drawing down a little bit there. Yeah. We have now got vendors to basically a fuel station at Buck Reef. But to access that controller, the operators get cars. They have to be swiped. That all goes into our electronic system and through the enterprise system that you look at. Yeah, the ERP, it's fully integrated. So it's all integrated. Anomalies can be observed, as you'd expect. It's all got cameras as well. Yeah. So these are examples of just controls that are going in.

And Stephen, I think we got a little ahead. I think Jake is probably still on the line. Jake, back to you if you had any further questions.

One moment, please. I need to unmute his line again. One second. Jake, your line is open.

Great. Just one more quick one for me. On the sulfide you know, you mentioned the resource estimate due out around the end of this year. How quickly do you expect to move forward with an updated economic study on the back of that resource update?

Yeah, we're right in the throes of that at the moment, thanks for the question. And we're anticipating to close out on that in the next quarter. Yeah, I always expect by the end of the year. Yeah.

Okay, so you think we might see that economic study sometime in the first half of next year or before that?

No, we're going to be doing an economic analysis on that concurrently.

Got it. Okay, that's helpful. Thanks.

Yeah.

Thanks, Jake. Back to you, operator.

There are no further questions in the queue.

All right, so I'm going to answer a couple of questions in the chat. So one was an update on Jim Sinclair. So, you know, Jim is currently chairman of the company. I spoke to him yesterday. So he's well, still working part-time, and is more in what I'll call semi-retirement type given his age of 83, but he's doing extremely well. Another question is, I keep on getting asked this one, is a dividend paid in gold? So back in, you know, company has changed significantly over time. Back in the day when I believe a dividend paid in gold was mentioned, company would have been much different than it is today. But the Buck Reef property has a joint venture agreement with Stamenco in Tanzania. And as part of that, the gold is sold to Arbor Horace in Switzerland to fund operations. And that revenue then comes back into a bank account into Tanzania. So I wouldn't expect to see a dividend paid in gold in the short to medium term is the quick answer to that question. And then I think the next one, I think that's it for the questions because they've all been answered. Operator, any other questions? Maybe one at the bottom there.

Yes, we actually do have two questions now from the meeting. I'm going to announce Stephen Reiser, your line is open.

Thanks very much. And I hope you all can hear me. Thanks very much for the update. Appreciate the strong operational performance coming out of TRX. I wanted to ask you, you indicated on one of the PowerPoint slides that you're expanding, looking or aiming to expand the scope of the PFS by two to four times. I know you talked about 18,200, Stephen, metric tons in that original study. By two to four times, what actually does that mean? Is that expanding the metric tons by two to four times? Or is there another way to think about what that means tangibly?

Yeah, so I'm going to go back to that slide, Steve, and answer that question and how we think about this. So we're now about halfway to the annual ore billing tons of 1.5 million tons. So once we do the next expansion, we're at around 750,000 tons. So our goal here, and ironically, almost at the average annual gold production amount in the next expansion. So what our goal is, the way I always think about value from a mining operation is the goal is to have 10 plus years of mine production at over 100,000 ounces of annual production. Then you get into the metrics of having a valuable mining operation. And so that is how we think about two to four times the PFS levels. We want an increase in the goal production and hopefully an increase in the life of mine of the project. Okay, maybe not 16 years, maybe less than that, but certainly a lot more in the ounces in production, which expands over time with additional resources through the dropper. Does that answer your question?

Yes, appreciate the clarification, Stephen.

Thanks, Steve. Thanks, Stephen.

There are no more questions at this time from meeting participants by voice. Oh, we do have another question. It's from Christopher Taylor. Christopher Taylor, your line is open. Mr. Taylor, your line is open. Doesn't seem to have a connection. The floor is back over to you.

Yeah, so there's a couple more questions in the queue. With regards to Mr. Sinclair, no, he has not sold the company. He's still a shareholder in the company. In order to sell the company, all shareholders would have to sell their shares. There's over 15,000 shareholders in TRX Gold. With regards to share-based payment expense, Mike, you want to just answer that question, what that relates to?

Yeah, maybe you can scroll down a little bit so I can see the rest of the question in the queue. It just says under. Okay, very good. So that, I presume, is referring to a line on our GNA section of our PML, our income statement. That's basically a mark-to-market on share-based compensation for the management team and the site-based employees. So we recognize those shares on our books via mark-to-market.

Yeah, and part of that is, you know, there are some liabilities in the equity for shares to management, which we have not received yet and have done that in order to maintain capital balances in the company. Yeah, good point, Steve.

We do have another question, verbal question from a meeting participant. Craig Sutherland, your line is open.

Yeah, hi, everybody. Continued success. I like what I'm seeing. I came onto the call a little bit late, so I apologize if this question's already been answered. But expansion of existing resource base, I know there's been production with other drilling. Is there a time period on what that might look like? And can you comment on possible size of expansion of the resource?

Andrew? Yeah, thank you very much, Andrew. For that, Greg, we're in the process of updating the mineral resource. As I alluded to earlier, we're going to do that in the next quarter, along with an updated economic model. So as you probably are aware, I can't comment on any numbers in this meeting.

So what you'll see in that update, to give you some guidance on how mineral resources are now classified as you have in-pit amounts. So what is looked at is what's mineable ounces, what you can take out today and mine at a profit in a pit or in an underground scenario. That is really what the focus is, is a real big focus on mineable ounces, and that is where the new standards came in that all companies now have to follow. The old standards were Where is all your gold, and will it be mined in the fullness of time, is the way to put it. And so these are – what we're looking at is what is mineable.

Out of those – So it certainly is more global. Nowadays, the reporting has to be more focused. More focused on mineable animals.

Underground, yeah. What does a pit-constrained mineral resource look like? That's what we're working on. Yeah. So one question that we have here is, explain the initial plant capex over three years of 76.5 million. So this is a good question. And so in this 2018 PFS, remember the company had no production in 2018. So the engineering firm would have went about its work saying, if you were to construct a plant, What would it cost? And in order to get the level of production, they would go and get quotes, those sort of things. And in that 2018 PFS, to get the average annual production of 51,000 ounces, it would have cost $76.5 million in 2018. We've gone and developed this property differently and the production profile of the property differently by going and putting it into production and building the plants on our own, not utilizing, for instance, EPC contracts. So to get to the level of production that we're anticipating at 2,000 tons per day, the plant cost all in of that will have ended up being around, I think, $13 million, Mike? Yeah, that's about right. So significantly under that $76.5 million. So even if you double it to get to 1.5 million tons per annum, we'd be looking at $25 million roughly versus $76 million. And obviously the 76, that's plant capital. So it, you know, we're coming in a lot under that number. And this is the beauty of testing the sulfites. And as we mentioned before, we don't need to go out and build a plant right away if we don't want to or don't have the capital resources to do it. We can continue just incrementally increasing this plant size over time or if the economics make a lot of sense. doing a lot more quickly. So, and the IRR payback and the EBDA increase is there to make it accretive to all shareholders. So, we have options now that we didn't have in the 2018 PFS. I hope that answers the question. Operator, any more questions?

There are no further questions at this time.

Okay. Now, just let me, one clarification, so. So chairman selling the company. To go through the way companies are bought and sold in the mining industry as a public company. So if the company were to be sold, shareholders would have to vote on it. It would go through a process in which it is marketed to a lot of companies under a strategic advisory type of mandate. And then you would take the highest probable price by a party that would have full financing in place, and then the shareholders would have to vote on it. The chairman, in and of himself, cannot sell a company. I cannot sell a company. This is sort of would need to be approved first by the board of directors and then taken to the shareholders for approval on the vote. The board would have a recommendation. The shareholders would then get to vote on that. Operator?

We have no further questions at this time.

Excellent. Well, thanks, everybody, for joining our Q3 2023 conference call. A lot of good things going on, a lot of moving parts, but we're pretty positive on what's upcoming. We've reiterated our production guidance, our cash cost guidance, where we're going in our planning of Buck Reef, and we continue to look forward to positive operating and expiration results going forward. Thanks, everybody. Everyone for joining the call today, greatly appreciate it. You can call any one of us anytime with any questions. Asante Santa.

Goodbye.

Thanks, everyone. Thank you.

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