TRX Gold Corporation

Welcome everyone to the TRX Gold Corporation 2023 year end and fourth quarter 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 located on the hand side of the screen. You will see the option for raise your hand to join the queue and ask your question verbally. or you may write a question to submit your question in writing. When you're introduced, your line will automatically be unmuted. For analysts who have joined us today into the conference, you can click on one on your telephone keypad and join the question queue that way as well. I would like to now turn the meeting over to Stephen Maloney, TRX Gold Chief Executive Officer. Stephen?

Yeah, thank you, Christina. Before we begin the call today, I'd like to recognize that our Founder and chairman passed away during the quarter and during this year. And all of us here had a good relationship with Mr. Sinclair, and he'll be greatly missed. So with that, this is our 2023 year-end conference call. Obviously, we'll have an annual general meeting conference call in the new year as part of the annual general meeting. And I'm quite excited for what we have in 2023. We had a significant amount of growth. We're really starting to see what the potential is for the Buck Reef Gold Project. We had another plant expansion. We have another one underway. We're getting a much better sense for the geological potential of the property and are quite excited for that. And where that can go over time, particularly now. hopefully increase the resources on our property quite significantly, as well as continually increase the production profile of property as well. So 2023 was a great year. We're quite excited for today's call and for where we're going as a company as well. So obviously there's a cautionary note. We will be talking about forward-looking statements. So I'd ask everyone to go to our website and our corporate presentation to read the cautionary note. Today's speakers obviously have myself. We have Andrew, raise your hand, our COO here in Toronto. We have Mike, our CFO, here with me as well. And Christina is joining us from Montreal. So TRX, a lot of you will hear this in our presentations. We're a very growing company. We have experienced management team that continues to deliver a rapid growth, both on the production side, specifically on the production side, and we have an exciting blue sky potential on our property and the growth of resources over time. So the Buck Reef Gold Project, just to give everybody a reminder of the Buck Reef Gold Project, right now we have under the 2020 resource statement, 2 million ounces in the measured and indicated category at around 1.8 grams a tonne. As a lot of you know, the deposit does come to surface, and it's relatively flat, and it's a vertical shear zone, so it's easily mineable. The widths are around 20 meters. Easy metallurgy in brine crush CIL in the oxide ore. And as we'll get into in this presentation, which is very exciting during the year, is our results around the sulfide ore, which continue now to be moved into the mine plan and processed. We are fully permitted to grow as large as we can. Our permit has been extended to 2032, and it's renewable for the life of the deposit. The processing plant and mine consistently are meeting production guidance. We have a minimal environmental footprint. We recycle all water. We have good tailings management. We're connected to the national power grid, and we adhere to all international standards around that. around environmental standards and a good ESG program as well. And we have exceptional exploration potential, which hopefully will mean that this mine life goes on for a considerable period of time. And with a special mining license, we can do that. So with regards to the 2023 highlights, there was a lot of growth. And as we as a management team have told market participants is our goal now is to predominantly self-fund operation and manage capital, your capital, with minimal dilution. And I think we've achieved that in 2023. We generated record revenue, operating cash flow, and adjusted EBDA with a great profit margin. Mike will get into the statistics in a minute. And then predominantly reinvested that right back into the business to continue to grow it. So I think this is the first year that we've been able to execute on that business plan. And with the expansion that is to occur in the next three to six months, then that's going to enable us to have even more cash flow to reinvest back into the business and the business potential, both on a production profile basis, as well as a resource expansion basis. So in 2023, we executed on the 1,000-tombardade plant. It came in on time and on budget for $6.4 million. We are now going through another mill expansion, which will increase the throughput capacity by 75 to 100%. The production capacity will be dependent on the grade that will go through that. And we'll give more guidance on that in the future. We're also unlocked the whole deposit, particularly the Buck Reef Main Zone, because everything we're talking about here right now is Buck Reef Main. And we're not talking about Anfield or Eastern Porphyry or other exploration targets on the property. The sulfide ore has gone through the mill. We did a bulk sample. It continues to go through the mill today. What we're in the process of doing now is, and this is normal operational sort of things with regards to processing plants, is what's the right mix of oxides and sulfides to go through to get an appropriate, more balanced recovery rate over time and over the life of the project. And that all has to do with, you know, suspensions and things like that that a metal lurch is really get into. And in 2023, we've extended the known mineralization around our main zone by 500 meters. And we've also had discovery of the anfield zones and continue to work on figuring out where to go next, Andrew. And you'll get into that in about 10 to 20 minutes on how you're going to go about blocking and tackling a good exploration program, particularly as this new plant comes on board and expand, hopefully expand the life of the deposit. So with that, I had planned to hand over to Mike and he will go through the financial results for 2023. Thank you, Stephen.

Good morning, everyone. Thanks for joining us. As Stephen touched on, it was a record year operationally for us at TRX. We produced almost 21,000 ounces on the year. That was in line with our full year guidance. of 20 to 25,000 ounces, and that was after us having brought the 1,000 ton of aid plant online back in October of last year. We sold all of what we produced during the year at an average realized price of $1,845 an ounce for the full year. You can see in Q4, gold prices exceeded $1,900 an ounce and are now trading beyond $2,000 an ounce. In fact, this morning, we were up over $2,050. record levels and certainly suggest record growth going into next year. In terms of financials, the record production drove record financial results as well. As Stephen touched on, we had record revenues of over $38 million. Our cost of sales came in at just over $20 million, which meant a gross profit of over $18 million, or almost 50%. So a very cost-effective process. high margin operation. We had record net income of $7 million, EBITDA of almost $14 million, and importantly, operating cash flow over $17 million, which got reinvested back into the business. And I'll touch on that. But again, for investors who've been tracking this story, you know, this is the third year of growth since we've come on board. It's been year over year over year growth. And we certainly expect this growth to continue into next year as we expand to 2,000 tons a day. On the cash cost side, we recorded cash costs of $904 an ounce for the full year. This was above the high end of our previously guided range of $750 to $850 an ounce. And this was primarily due to higher than expected processing costs that we incurred in Q4. There's a couple of reasons for that that we called out in our MD&A, one of which was higher than expected maintenance costs. We ended up encountering a mill motor failure on one of our ball mills that required some unexpected maintenance, and that was coupled with an overhaul of our crushing circuit. So there was roughly a $30 an ounce variance for unplanned maintenance that we expect to normalize into next year. And secondly, in Q4, we experienced inconsistent, unstable power from the Tunesco power grid. What that meant was we ended up using higher-than-expected gensets which consumed fuel at a higher rate than what we had previously forecast or budgeted. And that led to about an $18 an ounce impact on full year cash costs. Importantly, we have since been reconnected to a new substation that is substantially closer to Buck Reef. This substation is about 60 kilometers away from Buck Reef, where the previous substation was over 250 kilometers away from Buck Reef. We got connected to that grid in November, and have seen consistent group power over the last few weeks and consequently expect costs to be lower heading into next year. We'll talk about guidance in a moment, but suggest lower costs year on year. And I guess the last bullet I'll touch on, as Steven mentioned at the outset, our mantra is using organically generated cash flow to reinvest back into the operation around value accretive activities. We took that $17, $18 million of operating cash flow that we generated, put it right back into the business. As we've touched on many times, we expanded the plant from 360 tons a day to 1,000 tons a day. We're on our way towards 2,000 tons a day, having already procured a mill. We've set ourselves up for this growth by expanding our tailing storage facility to accommodate the higher production volumes. And again, we look at additional infrastructure, capital assets. We're doing long-term studies, all in an effort to support the long-term growth of this business and doing what we said we would do, reinvesting cash flow in value-accredited way. Next slide, please.