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

Thank you, welcome, everyone, to TRX Gold Corporation First Quarter 2024 Results Presentation. As a reminder, all participants are currently in listen only mode and meeting is being recorded. Stephen, I hand the conference over to you.

Thank you, Christina. We are experiencing some technical difficulties this morning, so you'll be hearing from us via Mike's iPhone. I hope everyone can hear us well. Thank you for joining our first quarter 2024 results webcast. We are at an exciting juncture as both Andrew and Mike are on the line with me. We are starting to see progress with the new plant and its timeline for coming online. The crushing circuit is now about 60% to 65% complete. Despite the heavy rains, we hope the plant will be operational by the end of January or early to mid-February, although this is weather-dependent. This year, East Africa, particularly Tanzania, has seen more rain than expected. Additionally, the installation of the ball mill components is underway, which is exciting as it allows us to ramp up production in the latter half of the calendar year. We anticipate increased cash flow as the plant comes online. This is indeed an exciting time for us. As a public company, I must mention that forward-looking statements are included in this presentation, and I encourage everyone to check our website for the cautionary note. On the line today, we have myself, the CEO, Andrew joining us from Tanzania in his signature orange shirt, and Mike and Christina are with me as well. To give a brief overview for those new to the call, we are TRX Gold, a team of experienced leaders developing a rapidly advancing gold project in Tanzania. Our operating plant has been generating high-margin positive cash flow, which we will discuss shortly, and we hold a special mining license with significant potential for new gold discoveries. Our resource statement revealed 2 million ounces in the measured and indicated category, with the deposit coming to the surface, allowing us to operate at 20 meters wide with straightforward metallurgy and grinding crush CIL. We are fully permitted under a special mining license, which is renewable for the life of the deposit. Our processing plant has been running for just over a year at 1,000 tonnes per day, consistently meeting production guidance. We maintain a minimal environmental footprint, recycle water, and manage contaminants while connected to the national power grid. What brings me great joy is the exploration potential surrounding this property. Our communicated business plan focuses on increasing production, enhancing cash flow, and eventually boosting exploration. Notably, we have not conducted a capital raise in over two years, which we take pride in.

Correct.

Yes. So when we originally got into the business, there's a lot of historical investors that are aware, we had to recapitalize the business, to do all the things that we're doing. So in that, when we look at the net equity cash that was raised over two years ago in around $23.5 million. And then we look at what we've invested into the property since then, both from those raises as well as free cash flow that's been generated by the asset, the multiplier on equity now that was raised is around 1.7 times and growth. So this is starting to prove out that the business model is much different than we’re going to build as we go and increase that investment to increase cash flow. And you're seeing that in both the production numbers as well as the adjusted EBITDA and cash flow from operational numbers. So in fiscal 2023, which was August, we had sales of almost $38 million, over $38 million with cash flow from operations of over $17 million and adjusted EBITDA of around $14 million. So we're starting to really see it in the financial results of the company's business plan working. We've done this while controlling G&A expense at the same time, which is great. So we've grown from in that period of time from around, including about 30, 35 employees, to now including contractors at Buckreef to well over 500 people while keeping our G&A in check. Q1 2024 highlights, and Mike will get into this in a second, so I'm going to phrase it at a very high level. We have positive operating cash flow again in this quarter, which has been reinvested in the growth projects. So I think we’ve invested almost $4 million. As I mentioned earlier, we continue to have prudent capital management. We are on a third consecutive mill expansion. As of today, we have approximately $3 million to $3.5 million to spend on that, which we generated in cash flow from operations and other resources. We continue to have strong gross profit margins. We expect those to rise as the new plant comes online with gold prices staying at the same level, and we expect the new plant to come online towards the back half of the fiscal year and just prior to the end of the second quarter calendar year. And then thereafter, as that cash flow comes online, we will commence a much more in-depth drilling program and we're starting to plan that now. We could have used part of the cash for drilling, but it would slow down the plant expansion. It makes much more sense given the economies of scale that we should achieve from the new plant to really spend our capital on that plant. So we have a much more robust exploration program at the end of that plan. So that's really why we're doing the things in the sequential order that we're doing it. And we continue to have a great safety record at Buckreef. We began for the second point, achieved a million work hours LTI free. So kudos to everybody at Buckreef for working safely. We'd now like to hand the presentation over to Mike. As I said, I'm going to push the phone over, so you won't hear too much from me on this, and Mike will go through our financial results.

Well, thank you, Stephen. And good morning, everybody. Thank you for joining us for our Q1 call today. Q1 was a fairly steady state quarter relative to what you have seen over the last three quarters. Production was just under 5,000 ounces. If you look at Q2, 3, and 4 of last year, that's consistent with the outlook we've been achieving from our 100 tonnes a day plant operating at or near capacity. Year-over-year, production was down slightly as Q1 of last year was the first quarter where we were commercially operated. And to get it up and running what we have done was we prioritized high-grade oxide ore, 2 gram plus material put through that mill to get it up and running for the first quarter. With that said, what we will have seen for Q1 of this year, we put through head grade of almost 2.6 grams a tonne, which is still well above the average grade of the deposit and very robust for our open pit operations. What you would have also noted operationally, as recoveries were partly impacted and had an impact on year-over-year production, we realized recovery rates on average about 81%, which is at the lower end of what we're seeing from our metallurgical study based on our current rock composition, which is roughly 50-50 sulphide and oxide ore material that we've been putting through the mill as well as grind size and the tension size that we've been realizing through the plant. But as Stephen touched on, we're very, very excited about the standard and enhanced crushing circuit that we expect to come online, and then that's really expected to improve the grindability of the rock and the material and consequently expected to improve recoveries as we head into the latter part of this year.

Yes. So Mike, I'm just going to pause you for a second and explain that. So in any mining operation, there's a balance between the recovery rate and you throughput rate. So what you do is you try to maximize cash flow from operations by balancing that. So we know if ore sits in the tanks longer or has a higher retention time, we will get a higher recovery rate. We also know if we grind it a lot finer, we'll get a much higher recovery rate. And so that's lining up into the metallurgical studies that we have. Right now, given the plant is a bottleneck versus the ore we have available, we balance recovery rates and throughput rates in an attempt to maximize cash flow from operations given that we're going to build out things. But we have a good hand on recovery rates and how to improve them. When the new crushing circuit comes online, it's one of the reasons why we decided to go with the crushing circuit first versus the milling circuit of the ball mill is the crushing circuit is the bottleneck in the current system. And in order to free up to be able to mill more even in the current system, we need to have the crushing circuit up and running first, which provides then a much more consistent product to the mill to obtain a much more consistent client size to increase those recovery rates through the milling process.

Thanks, Stephen. On the financial side, we sold just under 4,900 ounces for the quarter. So effectively, all of what we produced. And that gave rise to revenues of over $9 million. So again, you see the realized price on the screen. Gold prices are still lofty and robust levels. We realized around $1,942 for the quarter. We've been selling well north of $2,000 an ounce this quarter. So lots of upside potential on gold price. Our gross profit is just under $4 million or 40%, as Stephen alluded to, so this continues to be a high margin operation. And adjusted EBITDA that we talked about as well is $3 million. So a good proxy for cash flow. In terms of cash costs, we recorded cash costs of just over $1,000 an ounce for the quarter, that's above the full-year guided range of between $800 and $900 an ounce. So this is largely in line with expectations as we talked about on our year-end call. As we touched on with our year-end results, our year-end and Q1 cash costs have been impacted in part by higher fuel costs associated with our selling to run generators to keep the mill operating at capacity due to unstable and inconsistent grid power. As we talked right on the year-end call we since then reconnected to a substation far closer to the site in November that we expect to benefit things like processing costs as we head into the latter part of this year. We're now operating at roughly 80% grid power versus 20% generated power. So we expect that cash cost to improve over Q2, 3, and 4 and get back to that full-year guidance of between $800 and $900 an ounce. And I guess, finally, and Stephen touched on it, but we've effectively done what we said we would like to do, which is prudent capital management organically generated cash flow to invest in value accretive opportunities on both, we generated operating cash flow of over $5 million. We put almost $4 million of it back into the operation in part to advance the expansion that Stephen touched on as well as grow things like our tailings storage facility to accommodate much larger growth as well as put the capital equipment in place to allow for that growth profile. We've got a strong, robust balance sheet with cash of over $8 million, positive working capital, and well placed to grow our assets.

Yes. Mike, I want to discuss the cash costs you mentioned. We're satisfied with the current mining costs and believe we can reduce them further. The decrease in cash costs will mainly come from lowering the processing cost per tonne. The expanded plant will not significantly increase fixed costs, so we will benefit from better fixed cost absorption due to increased throughput. Currently, we have a relatively small plant compared to the potential scale of Buckreef. To reduce those costs, we need to keep expanding and improve overhead absorption and other costs in the processing plant. This is what's contributing to the higher cash costs, originating from both the plant and the mining operations.

No, it's a good point, Stephen. I mean the plant will have significant economies of scale, exactly to your point. You're doubling your throughput from 1,000 tonnes a day to 2,000 tonnes a day without any additional overhead. So in principle, your processing cost of $26 a tonne that we reported in Q1 should roughly be half as we get that plant expansion online. So lots of efficiency and economies of scale.

Yes, exactly. As we progress with the 2,000 tonnes a day plant, I'm pleased with our advancements. You can see that the new crushing equipment has arrived, and there are images of our General Manager by a cone crusher, along with our new jaw crusher and the expanded tailings facility. You'll soon observe the installation of conveyors and concrete work. The soil remains quite moist due to the heavy rainfall in Tanzania recently, but we're managing effectively, and our team continues to work both day and night on site to build our new plant. There is a limitation on available labor capital, which is why we are prioritizing the crushing circuit first before moving on to the grinding or ball mill circuit to integrate everything. We are very excited about the progress. Our suppliers for the crushers have established a warehouse for critical spares and parts close to our site, which should help minimize potential breakdowns. This relationship looks promising and is expected to lead to significant cost savings, increased production, and improved cash flow, ultimately enhancing the value of this project alongside exploration and an increased production profile over time. Anything to add, Andrew?

We're just sitting here, marveling at how both of you are doing an amazing technical description and thank you very, very much. I’d say the mood here is very, very positive. I am back at site happening here since the second of January. The progress is, I think you mentioned, it's about 65% now on that crusher. The key thing there is we're going to be crushing there the sulphide bulk growth that I like to call and that will then greatly enhance what we're getting in terms of our mills, in terms of grindability. So I think it's all working out well. And I'd like to add that our geologists are keen to see the money, they're keeping them busy in terms of functioning the targets and they're still having them get out and about and continue to explore the SML around us.

So I'm just going to move the slide forward and just continue on, Andrew, about what you should start to see in the second half of the year.

Yes, much more at the end of the year. What I could remind people of is obviously the SML itself is in the red outline; it's 16 square kilometers. We see the main zone itself there with all sort of red and pink and magenta spots, that's what we're currently mining. We’re currently in the process of sourcing pumps to dewater the South Pit; that will be dewatered in short order. We stopped mining there. Then in terms of the exploration, the key thing for us now will be to drill that piece of ground between what we call Eastern Porphyry and our southern boundary where there's an adjacent Chinese run operation. We have over 3 kilometers to go and test. But I'll just take a moment, Stephen, to just remind our listeners that we had some great results right at the end of our last drilling campaign. And the Eastern Porphyry obviously saw the better results, 14 meters at 3.5 grams a tonne. And I really do have to point out, these are very shallow metrics from the surface. And then about 1.5 kilometers southwest of that, we had 3 meters running at 13 grams a tonne in the Anfield and again really shallow meters. So overall drilling, it's going to take us a number of quarters to get through that. But it's a great story. Gold deposits haven't changed. It was sourced to the Northeast and mined in the Southwest, a clear evidence with all those white dots of the smart scale, operational efficiency, which is none of that is active that's going to pick up by our geology team. So it's a good thesis. It hasn't changed; we like drilling.

Thank you, Andrew, for that. Moving on to the next slide, we are reiterating our business plan and production guidance regarding when the mill expansion should be operational. The production guidance of 25,000 to 30,000 ounces is what we expect for the full year with the initial 1,000 tonnes, and the expanded 2,000 tonne per day plant will exceed this figure. We will provide market guidance at the appropriate time. We are reaffirming our cash cost guidance to $800 to $900 an ounce. The increased cash from the new plant will fund additional capital programs, as well as CSR and ESG initiatives. Our operations will require more employees and an enhanced focus on exploration and drilling on the property. We prioritize ESG and work with local communities, integrating it into our operating cost structure. We employ many local people and contractors to develop other assets, resulting in significant royalty and tax contributions. We also ensure local communities see improvements in schools, healthcare facilities, and overall satisfaction. Looking ahead to the next three to four months, our metallurgical and geotechnical studies are concluding without any unexpected results, and we will provide updates. This will inform a mine plan update as we explore long-term tailings solutions. We plan to release an updated study detailing current findings and future exploration programs to give the market and investors a clearer business plan for Buckreef’s development. Regarding market performance, I don’t think anyone on this call is pleased with current conditions. We are facing a higher interest rate environment than we have seen in the last 35 years, which is expected to continue, making capital more expensive. Additionally, investment alternatives are changing. Therefore, we need to actively communicate our story. We are now a self-funded growth story, which is positive. While we would prefer our stock price to be higher, it has remained relatively stable compared to peers. We are focused on enhancing our investor relations program and are excited about our self-funded growth and the upcoming plant expansion. I would now like to open the floor for any questions.

Our first question is from Jake Sekelsky with Alliance Globe Partners.

So just starting with recoveries, and I think Mike touched a bit on them. They're in the low 80s this quarter, and some of the work that you're doing to improve on them through network and the upgraded equipment and the like. Are those improvements something we should expect this quarter or is that more of a second half of calendar '24 type thing?

I believe the improvements will be more evident in the second half, particularly leaning towards the third quarter, as the grinding circuit and crushing circuit come online, allowing for a more consistent product to feed into the ball mills. There is a balance to maintain with sulphide ore in terms of throughput, cash flow, and recoveries. I am not seeing any issues concerning the Buckreef studies. We know that increasing the grind size and extending retention times can significantly enhance recovery rates. Our August press release indicated that we had doubled the retention times, resulting in much higher recovery rates. There is a necessary balance to strike here, but I am not currently worried about our recovery levels.

That's helpful. Do you think you might get it back up to the 90s range or high 80s, is that something that we should be expecting? Any color there would be helpful.

I think, Jake, I would say we'll get into the high 80s range. There's ways to get it into the mid-90s, but it’s going to require capital to do that, and we'll be evaluating that trade out studies at a further date. We've just grown so quickly. We can't commit to that at this point in time. But certainly, mid to high 80s is achievable.

And then sort of in that vein on growth, with the completion of the most recent expansion coming to an end here. You've obviously got some options as far as how you tackle growth going forward. Can you just touch on sort of how you're viewing that in a couple of the routes that you're considering here, whether additional staged expansions or a single large expansion? And I guess what that decision ultimately hinges on?

So as you rightfully said, what are your options or thought processes there. So that's not something that's determined at this point in time. I would fully expect it will be either going to be a larger expansion, which say another doubling, because I think we can do that. But the focus will be to step back at this point in time with that increase in cash flow and make those capital allocation decisions, what's best for the business between the exploration program as well as an expansion. Ultimately, this project needs to get to 100,000 ounces plus for well over 10 plus years or even greater than that with an exploration drill bit and that's our ultimate and our goal. There's various ways to get there, and we will evaluate them after this expansion.

The next question is from Heiko Ihle with H.C. Wainwright.

What are you seeing with that 2,000 tonne per day expansion with labor? I assume it's not really any outside employees working on the expansion, right, it's really just your staff?

Yes, it's some of our staff and it's outside companies as well. So like electrical, for instance, you bring in an outside contractor for that and some of the welding and things like that, you'll bring some outside contractors in. So it's a combination of both our staff and outside contractors that we manage.

Can you maybe give a bit of a breakdown of that?

Andrew? Well, what's that roughly 50-50?

During the construction phase, yes, because we're bringing in contractors in terms of the civils, we bring in CSI Energy for the electricals as you mentioned. But we then provide a lot of the, if you like, the nuts and bolts, the operators that are then sort of putting it together.

Sorry to interrupt you, Andrew, is it fair to say the methodology, the approach we're taking to the expansion is similar to the first one, which is it's not sort of an EPC managed project. We're managing it in-house, outsourcing trades as need be?

Yes, that's right. What we've done is we've brought Jeff Duval back as an overseer, if you like, of the capital projects. We've hired a Capital Project's Manager at site, who's actually in one of those photographs, Gaston Mujwahuzi. But also what the idea behind it is if you keep that core team in the plant involved in the construction as well and then the specialized contractors then fall away, but then you end up with a team at site that can carry on with the project.

We're watching smart people do the work, right?

Well, yes. So one of the things that's really crucial is to have, as you frankly say, smart people. When it comes to heavy electrical engineering, you want to have smart people. We actually do use one of the best contractors in East Africa, some of the best people I've ever worked with in the name of CSI. You've got to get that right.

Speaking of staffing, what do you think we'll see with labor costs for the remainder of the year? I mean, anything that you can maybe share with us in regards to negotiations or just what you're seeing with turnover, that kind of stuff?

I think Heiko, that question comes from more of a North American and European perspective of labor rate increases that we're seeing in our economies here. We're not seeing the same type of increases there as you would have seen here in North America.

So currently, the cost of inflation or the inflation in terms is approximately 5%. And yes, we're not in negotiations.

And you're getting into, not unlike other emerging jurisdictions, you are getting some currency depreciation of the shilling, but not to the extent of other jurisdictions.

I'd like to say congratulations to Stephen, Andrew, Michael, Christina, and the TRX team for transforming TRX, been around a while, and doing things that really needs to be done to growing and be more successful. I appreciate the questions earlier about improvements, growth expansion, all great questions, great answers. And my curiosity, probably similar to many, is with gold steady, basically holding all-time highs $2,000-plus volatility is really strong as far as being minimal, the company is profitable, cash flow positive, strong profit margin, solid team, communities looking great. Central banks just keep increasing their exposure and de-dollarization is underway. My question really is, is like it's more of a personal question, like what do you believe needs to happen for TRX to reflect all these great things that are going on, like is that an internal event, something going on for us with exploration or an external event, or just wonder if you could elaborate a little bit?

Yes, that's a very broad question, and I'll try to get down to a little bit more granularity, but thank you for your comments at the outset on the turnaround of the company. Obviously, as you mentioned, the company has been around a long time. I've been here just over three years, and I would say in another way, we'd like to create it here internally, we're probably in the sixth or seventh inning of what we're trying to do here. The original part was to stabilize, recapitalize, reestablish relationships and things like that to get the company pointed in the right direction. And then thereafter, we started to expand it. So with regards to when will someone actually stand up and take notice of what we're doing, I think is sense of your question. We're on the road of marketing. What I like to say is and what I'm seeing in current markets, and I don't think you're going to disagree with this, is a lot of companies will be out there doing a lot, even more marketing than we are, but you can't out market your financial results. So if you don't have good financial results, it doesn’t matter how much marketing you’re doing, your stock price declines, and a lot more than what we've experienced over the last couple of years. And so our focus has been really on turning around the operations and we're increasing that cash flow. And then taking that cash flow and putting it into the drill bit to expand the resource profile to make this a very attractive mining project that creates cash flow and has blue sky upside. It's taking time to do that. I think, as in my former role, things happen very quickly. In a mining project, it happens slower than you would like, but you've got to keep an eye on it and keep your eye on the long-term price. I think what's necessary here is we continually execute, continually do, as we say, continually increase those financial profile, those financial metrics, while at the same time, growing the resource base. I think the slow and steady approach that I just mentioned is what you have to do if you come along and you hit 100 grams a ton on a drill bit, because you’re drilling more than great, that's always a catalyst in any mining project, but you can't bank on it. You've got to get out there and continually do what you do, both in the business. And then make sure that you have that optionality in your business plan to spring it if you can hit those drill holes. Does that make sense?

Yes, it does make sense. And then thank you for respecting the question, you guys are doing a wonderful job. I think everybody can agree that the company now versus where it was a short time ago is a much different company, more grounded, more opportunity, clean financials, like a lot of the things people are really looking for in a marketplace that's looking quite attractive. And my question really is, as you guys have your fingers on the pulse and see things that other people may not see. Is intuition saying like we're just doing all the right things and it's a patience thing or are there things that we should be considering doing that we're not doing?

We have discussions daily about what we can control and what we cannot. This is important when addressing your question. We believe in consistently enhancing our financial profile and being very careful with our capital. Many aspects can be expedited, but they must align with the best interests of our shareholders. For instance, we could have raised equity last year, which would have allowed us to expedite the project's launch by six to nine months. However, we considered whether that would truly serve the long-term value for our shareholders. Therefore, we opted to generate cash flow internally. While this approach may require more time, our share count is not excessively large. These are the types of considerations we weigh when making capital allocation decisions to maximize shareholder value in the medium to long term.

If you allow me to ask one more question kind of in line with what we're just discussing. Is there something that we could see in the future or something that's kind of close that like when we talk about obstacle-wise, is there anything that we can see that's in the way right now that would hold us back from doing or being the things that we want to be doing?

Right now, I don't think so. We've intentionally built a lot of redundancy into this business model. For example, at year-end, we noted that motors went down in August, but we had three ball mills, so production continued without any shutdowns. The crushing circuit is also crucial, and we will incorporate redundancy there too. I work with a team to identify each piece of equipment that could halt operations completely and ensure that we have that equipment on site. We regularly assess and fill in any gaps. In the medium term, we need to improve our management of tailings. We currently have a grasp on it, but we need to develop a long-term strategy for that. This is the only potential issue I foresee that could truly impede us, and we aim to address it soon with ongoing studies.

Yes, that's already kicked off, Stephen.

Yes, that’s already kicked off. So I'd like to kind of think about, okay, how do I build all those, what I'll call, internal insurance policies into the company.

Thank you for your answering those questions, I know they're very surface kind of questions. There are some who've been around a while and are fans of what you and Andrew and Michael and the rest of the team are doing, we've been at it a while and we're certainly looking forward to what seems to be coming down the road. So maybe where we started was congratulations and maybe that would be a great place for me to end. Congratulations, and thank you.

I'd like to hand the meeting back over to Stephen Mullowney who will take us through questions submitted in writing.

We have a question regarding the slides for M&A opportunities and timelines. Let's discuss M&A for a moment. We're always exploring M&A opportunities that would benefit our shareholders. We don't shy away from situations that require effort and might be complicated, as we aim to create value from them. This is similar to my initial experience with this team. We will assess opportunities that align with our strategy. It's crucial for us to ensure that we do not undermine the growth prospects at Buckreef, disrupt our healthy balance sheet, or take on elements that could be detrimental. Companies that are struggling often have problematic securities on their balance sheets, which can lead to undercapitalization over time, especially since mining is capital intensive. We will carefully evaluate potential opportunities. However, it must make sense for our shareholders and enhance growth potential compared to Buckreef, which has significant growth prospects. Therefore, any opportunity must present better growth potential than Buckreef to be considered viable, which is a challenging requirement. This is how we approach M&A evaluations.

And I might just add to that briefly, Stephen, the comment around 2025, 2026. So obviously, you've heard our focus for this upcoming year is getting Buckreef to the point where it's operating at 2,000 tonnes a day consistently and predictably and effectively running itself before we start entering too deep into strategic waters elsewhere.

We have people approach us all the time, seeing what we’re doing at Buckreef. They say, 'Can you comment, help us?' But maybe start talking to equity holders about and they’re saying, 'Oh, it’s worth this, it’s worth that.' And we’re there, thank you but no, thank you on a lot of those opportunities.

That's right. Would you like to give any concluding remarks before we conclude?

Yes, just one final remark. I think we said it. We’re very excited for the future. We are moving through the business plan as anticipated, looking forward to the increase in cash flow from this expanded plant. And I can tell you Andrew and the geologist team are, no pun intended, chomping at the bit. Thank you.

Actually yes, that's true.

Thank you.

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