Welcome everyone to today's event, the TRX Gold Corporation Second Quarter 2025 Results Presentation. All participants are in a listen-only mode and the meeting is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the meeting over to Stephen Mullowney, CEO. Please go ahead, sir.

Yes, good afternoon and good morning to everyone. Welcome to our Q2 conference call for our Q2 results. As many of you are aware, we released the results of a PEA yesterday. We're certainly going to focus on that today. The nature of this meeting is to present a high-level overview of our Q2 results and to go through what the results of that PEA study imply for our direction. The results of the PEA study were all exciting; we have big smiles on our faces. This is the culmination of years of work distilled into a high-level document detailing what this business could look like today and where it can go in the future. Joining me today in the room is Michael, our CFO. On the line from Perth, Australia, is Richard, our COO. Richard, put up your hand. There you go. And we also have our SVP, Khalaf, joining us from Dar es Salaam, Tanzania. So we’re all going to present here today and look forward to your questions. I expect a lot of questions. I see quite a few people on the line and I know many of you; Mike knows many of you as well as Khalaf and Richard. So we'll leave extra time for questions today. Without further ado, let's get into it. First, we have our disclaimer. This disclaimer has changed now. The PEA report has been prepared by P&E consultants. The summary is theirs and their qualified persons pulled all the information together with the assistance of TRX Gold; they are all independent, as well as our RQP, Bill Van Bruegel, who is also independent. Therefore, the information you see from a PEA is developed by independent parties. Regarding TRX Gold at a glance, this is now evolving given what we've communicated in the press release yesterday. The Buckreef Gold project is in Tanzania. We continue to operate at around 2,000 tonnes a day following our last expansion. We are now updating the market on the potential for continued expansion of that asset, as well as refocusing on blue-sky exploration potential while continuing to operate a solid asset. A couple of notable points from yesterday's communication: the grade profile is now higher, as we've refocused the ore body on economics versus sheer ounces. With that, there's a higher cutoff rate in our economic analysis. We'll dive into that in one of the slides. Your grade is significantly higher in your resource statement. As we've explained to many investors and participants on this call over time, grade is a significant driver of cash cost. The lower the grade, the higher the cash cost. The higher the grade, the lower the cash cost. Thus, we evaluate the business on a per tonne basis and look at each deposit, recognizing that every deposit is significantly different. We look to accelerate economics and cash versus sheer ounces in the ground. Under the PEA, considering an economic basis at $3,000 gold, the project produces an estimated $1.2 billion pretax net present value, along with a $766 million post-tax net present value. We didn't quote an IRR because, under our current business plan, it emphasizes expanding the processing plant first and then advancing into underground portions of the deposit, which is expected to generate significant cash flow. So, Mike, do you have anything to add about our release yesterday?

No, I think it's pretty clear, Stephen. I think what's important to note is we have demonstrated through this study a long mine life. It’s just shy of 18 years with an average annual production of over 60,000 ounces, peaking over 90,000 under this current structure. There's plenty of room for optimization. We'll address that when we discuss the study further. Importantly, when discussing cutoff grade, it’s worth noting that the life-of-mine cash cost remains very low—it's in the lowest quartile at just over $1,000 an ounce. This reflects a high-margin operation that should generate plenty of free cash, as shown in the study over the mine’s life.

Thank you, Mike. That was an important point that I had in my notes but forgot to mention. Importantly, we are an emerging producer, still small in production. We’ll explain why we are increasingly bullish about the second half of the year compared to the first half. We underwent an extensive strip campaign. Richard will walk us through a couple of slides to visually demonstrate the confidence we have in the second half relative to the first half. As Mike mentioned, we are running a high-margin business, with a significant resource that is now high-grade. We will refocus our priorities on drilling to expand that, as that represents significant upside and supports sustained cash flow. Currently, we are observing production exceeding 50 ounces a day—something that has notably improved. Richard will elaborate on why that’s the case with a slide that showcases the grade profile we’re currently mining as opposed to what we've previously been mining. Once we get that movement, the expansion and related matters will follow on the backend.

For those who may be new to the story after reviewing the PEA results, we're in Tanzania, as you pointed out. We characterize it as a Tier 1 jurisdiction because we are in a part of the world where we can get things done efficiently. This asset is fully permitted, with a special mining license that allows us to expand this asset unencumbered. When looking at the study and the growth we've modeled, that unique special mining license enables us to grow the asset and achieve many of the targeted metrics included in the study. It’s indeed a favorable environment for business.

Thanks, Mike. I want to reiterate that we published a robust PEA yesterday with strong numbers. I highlighted that Buckreef possesses a significant, higher grade gold resource, which corresponds to lower costs. The deposit is shallow, extending to the surface and continuing downward, presenting a vertical body. We're continuously improving our understanding of metallurgical recoveries, which are projected in the high 80s to low 90s as we upgrade our plant. Richard is actively engaged in that effort, interfacing with labs around metallurgy and enhancing our understanding daily. We are fully permitted under the special mining license that extends to 2032 and are committed to environmental responsibility onsite. I've repeatedly stated that we possess high-priority known gold zones related to exploration blue-sky potential, which are not incorporated into the PEA but will represent upside as we drill further. Our established infrastructure supports both physical and social or HR aspects around the assets, ensuring our confidence in expanding this asset. We've executed three expansions previously, and there's no reason to believe we can't pursue further expansions to unlock the value of Buckreef. Richard, I’ll pause here for you to add anything based on your day-to-day experience.

Stephen, I concur with your points. We've been incrementally growing the capacity of the plant, the project, and our personnel over a significant period. Our project’s successes continue to validate our direction, and now we're witnessing good consistency and results. As you mentioned, we've shifted the direction of the mine, overcoming challenges, and are now experiencing favorable grades emerging from the project. So while we still have considerable upside, it's important to highlight that we are still in the early stages of this project with a young team that is rapidly learning. We've got substantial growth potential, both in terms of ounces and improvements in efficiency and productivity.

Thanks for that, Richard. We’ve undergone a rapid transformation, as you’ve said. Many would prefer this conversation to be more focused on immediate results, but we’ll start to present more forward-looking insights as we now shift our focus from reviewing past performances in 2021, 2022, and 2023, to concentrating on future goals, with the PEA laying a foundation for that outlook. The PEA upside was based on a gold price of $1,900 for resources. We currently see a higher gold price today. The planned plant size is 3,000 tonnes per day. We can increase that, improving economics, alongside better mining rates. The layout within the PEA will continually adapt as we refine our operations. Regarding operational growth since 2021, this development enhances our confidence in re-engaging on expansion efforts. We've executed it three times previously, and Richard and the team have detailed flow sheets and costs outlined within the PEA study. We’ll be crafting timelines which will remain fluid based on these advancements. Pay attention to our Q2 and Q1 results, particularly the average head grade. A lower head grade correlates with higher cash costs. Look for upcoming slides that visually depict our head grade from the first half versus expectations for the second half. Notably, there may be a temporary slowdown in processing tonnes, due to slightly harder rock compared to earlier phases of the mining plan. We anticipate improvements as we enhance the plant, ultimately elevating throughput levels. The processing cost per tonne is decreasing, and our mining costs remain stable, with potential to lower them further while achieving a better head grade moving forward. Any further insights, Mike, given your detailed involvement with the numbers?

You've stated it well, Stephen. The processing cost is key to highlight. Through expansions, we're beginning to see economies of scale, particularly when we increased throughput from 1,000 to 2,000 tonnes a day. Our costs have decreased from $22 per tonne to around $13 or $14 per tonne, which aligns with or falls below international standards. This plant scaling is beginning to reveal economies of scale, and we anticipate benefiting from this larger plant over the coming full year.

I consistently present this slide in the context of prudent capital management to achieve profitability and progress. Many mining companies may raise large amounts of capital, start drilling, launch their plant into production, and ramp up quickly. Our business model requires more time due to its nature. We have primarily reused cash flow from operations and secured some supplier financing to develop operations thus far. In Q2 and the first half of fiscal year 2025, we're seeing record gold prices materializing, which we expect to persist in the second half. While our EBITDA has been lower than anticipated for the first half—mainly due to grade profiles—our per-tonne cost fundamentals have remained intact while maintaining stable G&A expenses throughout. In the first half, we generated $22 million in revenue and just over $5 million in EBITDA, which has been reinvested into the business. I’ll revisit this slide; however, first I'll go over the factors contributing to our confidence in the back half of the year. Gold prices are favorable, which helps profitability. However, it's crucial not to let costs escalate, even in a strong gold price environment. We're steadfast in minimizing operating costs. As Mike pointed out, we’re experiencing economies of scale in the plant, and we're recognizing similar efficiencies in mining, contributing to declining costs. Coupled with an improved grade profile, we anticipate producing more ounces, as Richard highlighted, especially given the anticipated improvements in the second half versus the first. Good gold prices, a focus on operational costs, and solid grades are expected to enhance productivity and profitability. The larger scale operation has been proven successful three times already. Richard and the engineering team have thoroughly reviewed all engineering details, and it's generously planned and costed out for execution in a phased manner. We’re also planning to upgrade our processing circuit, particularly concerning flotation and regrind to achieve higher recovery rates, aiming from the current 80s to above into the low 90s. Additionally, considering the front end of the plant, we might consider initial upgrades in crushing, which isn’t mentioned in the PEA, as we can achieve greater throughput through a better crushing process. We also plan to upgrade the elution circuit, transitioning from a basic to a modern setup, which should slightly improve recoveries. Our exploration success is another focus; with increased cash flow anticipated in the back half, we’re eager to return to drilling. Key high-target areas we will target include Anfield, adjacent to the pit, and Stamford Bridge, which is the highest-grade portion we've seen thus far at over 5 grams per tonne from an initial resource perspective. Richard, do you have anything to add regarding my previous comments?

The positive aspect is we're operating an active mine, and when making our cost estimates, we have real data from our operations to reference, alongside genuine experience regarding throughput. We've already conducted some metallurgical test work, helping identify how we can improve recovery rates. I'm confident we can achieve small incremental recovery improvements and more substantial enhancements when we expand our plant with our flotation circuit, a standard method for sulfide gold ores globally, including in Africa.

On that note, let's delve into the PEA and our approach. As Richard noted, much of the data within the PEA is practical. Typically, mining valuations rely on theoretical data for feasibility studies in preproduction properties lacking actual costs or recovery rates. While our PEA is a lower-level report, it possesses more practical data than many feasibility studies, which is why we opted for this approach. Other miners enter production with similar modeling practices, aiming to provide a clear market perspective on potential project presentations based on realistic data. Bringing inferred resources into feasibility studies isn't permissible, but within the PEA, we're confident in the measured and indicated categories. The layout of our deposit is drilled primarily on top versus below, reflecting that in the inferred resources in our mine plan. Our mine and plant expansion targets 3,000 tonnes a day, up from 2,000. As I stated, this is an area where we can make upgrades to further enhance economics. We will ensure that any expansion remains scalable, allowing for easy upgrades by simply adding more tanks or a larger ball mill. The Buckreef mine plan is oriented vertically, indicating we will have several years of open-pit operations followed by underground development. As noted in earlier discussions, as the pit depth increases, there's a requirement for widening to ensure safety, thereby necessitating waste removal with associated costs. Transitioning into underground workings entails more development costs upfront while benefiting from good mining costs at depths around 2.5 grams per tonne. We've frequently mentioned the grinding and recovery processes; enhancements here, alongside flotation and regrinding, will help achieve higher recoveries. The PEA reflects our strategic use of open-pit profits to finance underground development while leveraging continuous cash flow to enhance the plant. Mike, simply put, this is the essence of our underground strategy.

That was well articulated.

This slide outlines what our underground development looks like. It illustrates sections of the pit as it relates to the surrounding open-pit resource as well as the underground workings. This represents the northern and southern sections of the pit going down. The process takes significant time to develop due to the complexities around tunneling and cost estimations. Moving on to the PEA's economic summary, we're looking at an average production rate of 61,000 to 62,000 ounces a year over a mine life of 17.6 years. As previously mentioned, increasing plant capacity and mining rates could elevate those figures. Expected annual free cash flow sits close to $64 million at a gold price of $3,000. In the first four years, we're seeing phased growth capital of about $90 million, which will total $185 million over the mine's life. All-in sustaining cash costs will likely range between $1,000 to $1,200. I expect that will remain in the lowest quartile. The pretax net present value stands at $1.2 billion and $770 million after tax, all calculated at a $3,000 gold price. Here’s a detailed breakdown of this information. We’re also indicating the need for a tailings facility expansion on the open-pit front. For underground operations, we will implement a paste backfill system. This involves returning tailings back to the mine post-extraction, drastically reducing operational risks. In Tanzania, tailings regulations are quite stringent, so we uphold a high level of safety due to our regulatory compliance, and implementing a paste backfill will improve that safety even further. Here you will see a breakdown of how cash costs are structured, revealing total all-in sustaining cost approximations at $1,000 and $1,200 per ounce, factoring in mining, processing, administration, royalty, and selling costs in considerable detail.

Richard, could you provide some context surrounding the capital, specifically concerning the underground efforts? The efficiency of our methodology appears to differ from other underground operations that may require extensive capital input.

It's not that the capital input is significantly lower; it's that the design is optimally structured for this ore body. Our ore tonnage and ounce profiles per vertical meter of underground extraction are advantageous. We’re only utilizing two declines for access, avoiding extravagant investments typically required for hoisting shafts or additional conveying systems. Our straightforward plan involves bringing mobile equipment underground, employing the same access point for personnel and ore extraction. Because of this progressive development strategy, we’re able to bring the mine into production faster.

As for the sensitivities surrounding this section, the purpose here isn't to delve deeply; the information has been disseminated through our press release. You will see that there is substantial leverage to gold pricing. If you maintain low operational costs, you'll realize significant leverage on gold prices. There is potential upside by reducing cutoff grades, which can boost mining rates. However, it's essential to accurately balance that against the immediate cash flow generated. If you achieve that, you can enhance cash flow and EBITDA, even if margins appear lower. That’s a critical calculation in our mining evaluations.

Just to be explicit, the upside scenario assumes a $3,000-an-ounce scenario. We are currently about $300 above that mark.

Regarding the updated resource statement and the variations noted in economic classifications from 2020 to 2025, it’s worth clarifying that the 2020 model lacked economic constraints in its resource statement. In contrast, the 2025 statement incorporates economic pit and underground considerations, along with applied costs ensuring they are economically feasible. Thus, we see a bridge between the two, wherein the new model uses a 450 cutoff while older models had resources extending beyond that. Mining regions typically colloquialize terms 'hanging wall' and 'footwall' where extraction is harder. The underground versus open-pit approach leads to significantly differing cutoff grades. While our resources might show a lower volume now, the quality and profitability have improved substantially.

To reiterate, our focus is on maximizing net present value and free cash flow while ensuring the economic viability of our approach across operations.

We must return to the drill bit for blue-sky exploration potential, aiming to enhance our economics further. Our key focuses will be Anfield and Stamford Bridge going forward, alongside geophysical surveys to identify possible high-grade trends that may not yet be accounted for. When assessing Stamford Bridge, I think we included around 40,000 ounces in the inferred category at around 5 grams per tonne. It is imperative that we drill this area thoroughly to better gauge its potential, ensuring we consistently infill further alongside this. With Tanzania in mind, it's crucial to highlight that it’s a favorable jurisdiction; we have Khalaf on the line with us today. Over time, I've become increasingly comfortable in managing our relationship with the government, which is vital in understanding and respecting their economic and political motives. Through transparency and fair dealings, we navigate any complexities in managing expectations. We’re on the national power grid with reliable hydroelectric power, and there is a considerable mining presence across Tanzania, including Barrick and Anglo. The employee base is skilled, bolstered by significant investment in Tanzania on the M&A side. As a result, we envision enhanced operational progress in moving our assets forward. Regarding share prices, we recognize that the market is challenging; however, recent weeks have shown a positive uptick. I'm optimistic that our PEA's release will allow stakeholders to view a clearer roadmap to value creation compared to previous presentations, fostering new investor interest as we execute our strategies.

Again, we’ve navigated these waters before. We will continue to grow while maintaining awareness of profit margins. We have a track record of delivering projects on time and within budget. We now have a foundational guideline through the PEA, which acts as a framework for our current asset management. We are adaptive and responsive to challenges while operating in Tanzania amidst daily operational issues. We are equipped with a highly experienced team that continually executes upon these strategies.

Thank you, Stephen. And today's first question comes from Mike Niehuser with ROTH Capital. Please proceed.

Mr. I’m good. Thank you. Can you hear me okay?

I can hear you just fine.

Yes, good to see Khalaf as well. So you can smile, Khalaf. I want to make a comment that’s more of a compliment. It’s interesting to revisit the prior technical report from 2020 and the challenges you faced with high capital costs. The progress you’ve made with actual cash flow and real data contrasts sharply with the assumptions of two years earlier. Clearly, higher gold prices help. Lots to digest from the recent press releases. Could you put up the Anfield slide again?

Yes, absolutely.

Is there any open-pit potential there?

Yes. Yes, absolutely. It does extend to the surface and is quite shallow. The drilling indicates that.

When will the PEA be filed?

It has been filed within 45 days. We are hopeful to complete that sooner.

Okay. Very good then. Really no questions, but a remarkable milestone considering the progress made over the last couple of years. Congratulations.

Thank you, Mike, and thank you for your support.

Hey, guys. Thanks for taking my questions.

Good morning, Jake.

Good morning, Jake.

Regarding the $89 million in growth CapEx spread over that four-year period, is this strategy assuming a self-funding approach? Is there an opportunity for accelerating the timeline for expansion by exploring external funding options?

Yes. The answer is yes, there is a timeline. I see Richard smiling at me when I say that. There are sequencing items to consider, though. It’s a balance. You can accelerate it, but who knows how it may impact risk profiles. To be honest, some of it has already started.

That’s helpful. Regarding permitting, is the underground operation covered under the existing special mining license, or are there additional permits required for underground work?

Yes, the special mining license covers underground developments. There may be additional permits needed, which we'll clarify following the larger study to be released in the next 45 days.

Got it. That’s all for me. I’ll hop back in queue. Congrats.

Thanks, Jake.

Oh, hi, everybody. Firstly, thanks. Can you all hear me okay?

Yes. Good morning, Stephen.

Great, thanks, and I echo the comments from other analysts. These are extremely promising results at the PEA level and are well-received by the investor community. I wanted to get your perspective on a few items. First, operationally, you've used a 5% NPV in the results, and I want to understand why that was the case. Ordinarily, I model that around a 10% cost of capital, reflecting actual equity costs and standard capital asset pricing models. Considering the current environment, a lower risk value for discounting could be valid, especially since that was the basis during the 23-101B. I’d like your thoughts on this discount rate choice.

In mining valuations, especially for all mining assets, a 5% discount rate is the standard. Analysts relate this to gold being a unique commodity. The valuation adjustments are typically made through the price to net asset value multiple. Thus, assets with North American presence tend to trade higher in price to net asset value compared to African assets, and single-asset companies generally exhibit lower multiples. Therefore, applying a 5% discount rate allows for basic comparability, while you can adjust evaluations according to your predetermined price to net asset value multiples.

That comprehensively makes sense. You also mentioned the potential for self-financing. In your forecast, you estimate a gold price of around $2,700 in the first year, tapering to about $2,500 in year three. Assuming gold remains at the stated levels, could TRX self-finance based on the $89 million estimate? Is it consistent with the projected price adjustments?

The financial model developed and detailed in the press release presents stacking charts for both gold price scenarios, one illustrating base-case assumptions and another projecting $3,000 gold prices. The margins shrink significantly under base-case scenarios, while IRRs remain theoretical. Our base case reflects necessary regulatory market reporting, requiring consensus pricing, which analysts will gradually update. The first four years stem from consensus projections.

So, to assume that at the specified price drops utilized in the model, would it be reasonable to imply that with effective execution, TRX could manage to finance the $89 million within the upper thresholds specified?

Yes, with the conditions framed correctly, that’s potentially achievable. The financial model as structured does imply a feasible pathway, assuming no operational hiccups. Alternatively, we can also take a delayed approach to manage outflows incrementally over time.

Thank you, and I appreciate the ongoing operational strengths you've exhibited, which are quite encouraging. Regarding the company's acquisition potential, considering this is a PEA, hypothetical majors may be cautiously optimistic—it's not yet a feasibility study. Do you think this means they would look for more credence in operational success and evidence of improvements before pursuing acquisition interests? What other triggers must be observed to catalyze such discussions?

It's essential to consider other companies in the sector. First, regarding feasibility studies versus PEA: feasibility studies often involve theoretical data that may not hold up post-production due to unforeseen challenges. In contrast, our PEA is grounded in tangible data. Therefore, the PEA holds equal, if not greater, weight than some feasibility studies. For value creation, putting forward the art of the possible based on established data is vital. The PEA provides that framework. Furthermore, demonstrating growth through focused drilling and successful exploration is key for ongoing value enhancement.

Great. Thank you for your responses and for the time shared to discuss the opportunities ahead. It’s an impressive PEA, and we commend TRX and the management team for their progress.

Thank you for your feedback. We appreciate your recognition. It's worth emphasizing that there have been substantial learnings during this lengthy progression to arrive at this stage. Our intention is to shift stakeholder focus to the property’s potential for growth and value creation as opposed to getting bogged down solely by smaller production results in quarterly outcomes. We need to develop those results further.

The next question is a follow-up from Mike Niehuser with ROTH Capital. Please proceed.

I think you've addressed most of my concerns, but another chance for Richard to comment might be valuable. Beyond effective capital management, I had early reservations regarding recovery rates from sulfide ores. It seems you've gained enough knowledge in the process to simplify this aspect. Successfully optimizing gold recovery appears attainable. Is that a fair perspective, Richard?

Absolutely, Mike. Our ore isn’t refractory, and thus the recovery process involves standard sulfide pyrite game mechanics. Our goal is to refine grind size to allow effective cyanide access to the ore. We’re not facing issues that others, more affected by complexities in metallurgy, might encounter. We’re seeing consistent recovery patterns similar to our peers, such as Geita, Barrick Bulyanhulu, and Buzwagi, as we optimize recoveries.

I’m glad I raised that point. Finally, Stephen, I realize it may be sensitive, but any updates on government engagement related to the joint venture share?

We have been engaging consistently with government negotiation teams, maintaining a focus through the electoral cycle. However, dealing with governmental structures often requires patience; decisions are not always promptly made.

We have one additional question, which was texted in. Neil Bigelow has inquired whether the underground mining plan involves a single decline ramp from the surface? If so, would underground production be achievable through a single ramp for both the southern and northern zones, and could you follow underground production immediately post-open pit operations?

Great question. We design two declines. Given the ore body’s substantial strike length of approximately 950 meters, we have outliers beyond that. Accessing it with just one decline would be unreasonable. We believe two declines are appropriate, enabling access to Stamford Bridge effectively. We plan to develop both declines while the open pit operations continue. There’s still at least two years left when we start the declines, with one decline coming from a designated pit level where there's ample space and another starting from the surface. The decline related to the Eastern Porphyry open pit will be opened later in the mine life. It’s not necessary to utilize it any sooner.

Thanks for that response, Richard. I think that wraps up our questions.

Chris, are there any further questions in the queue?

No, sir. There are no further verbal questions at this time.

Thank you, everyone, for joining us today. We truly appreciate it. Thank you, Richard, for staying up late in Perth, Australia, and thank you, Khalaf, for joining us from Dar es Salaam. It's incredibly exciting to be at this point. Stay tuned, and for any shareholders with concerns, please don't hesitate to contact any of us. As we say in Tanzania, thank you very much, or 'Asante sana.'

Asante.

This concludes today's meeting. You may now disconnect. Thank you for participating and have a pleasant day.