TRX Gold Corporation reported its results for the fourth quarter (“Q4 2022”) and year end August 31, 2022.
The TRX Gold team delivered two mill expansions on site at the Buckreef Gold Project. In Q2 2022, Phase 1 of the 1,000 tpd+ mill was commissioned, allowing for an increase in production rates and plant throughput to 360 tonnes per day (“tpd”).
Subsequent to year-end, in September 2022 Buckreef Gold announced successful commissioning of the second phase of the mill expansion to 1,000+ tpd. As a result, since Q2 2022, the production of low-cost, high margin gold ounces has steadily increased each month.
Thanks to TRX Gold’s local employees, contractors, trades people, material suppliers and service providers, the two mill expansions were delivered on time and on budget, at a capital cost of approximately $5.6 million for both phases. Tanzania continues to prove itself as a country that is self-sufficient, dependable and capable. Thanks to these qualities, Buckreef Gold did not experience any slowdowns or cost overruns caused by ongoing global supply chain challenges.
Revenues
For the year ended August 31, 2022, Buckreef Gold poured 8,874 ounces of gold and sold 8,598 ounces of gold. The Company recognized revenue of $15.1 million, cost of sales of $5.7 million and cash costs1 of $665 per ounce of gold, generating a strong full year gross profit of $9.4 million, gross profit margin of 62% and Adjusted EBITDA1 of $3.5 million.
For Q4 2022, Buckreef Gold poured 3,619 ounces of gold, a new quarterly production record, exceeding previous production guidance of 750-800 ounces of gold per month. Furthermore, 3,363 ounces of gold were sold, also a new quarterly sales record for the Company, resulting in positive operating cash flow of $2.4 million. Buckreef recognized revenue of $6.0 million in Q4 2022, cost of sales of $1.9 million, and cash costs1 of $560 per ounce of gold, below guidance, generating strong Q4 gross profit of $4.1 million, gross profit margin of 69% and Adjusted EBITDA1 of $2.2 million.
In 2022, the Company drilled over 22,000 meters at Buckreef Gold ($3.7 million) including infill drilling, step-out drilling and grade control drilling. During the year, the Company extended Buckreef Gold’s Main Zone by 300 meters or 30%, to 2.0 kilometers, as a result of its northeast step-out drilling program.
In Q4 2022, an additional drill rig was added to expand the exploration program and, to date, a total of 22 holes representing over 7,592 meters in the northeast extension of the Buckreef Main Zone, have been completed.
The Company executed an infill drill program at the Main Zone, consisting of 16 drill holes, representing 3,695 meters. Also, during Q4 2022, the Company explored under the South Pit and tested the South Zone extension with 24 drill holes, representing 4,255 meters. Results from both programs are pending. Subsequent to year-end, the Company commenced exploration drilling at the Anfield Zone, where the drill rig is now active with 9 drill holes representing 1,650 meters. Assay results from this program are also pending.
At the end of Q4 2022, TRX Gold had no debt on record, cash of $8.5 million and working capital of $5.4 million after adjusting for liabilities which will only be settled by issuing equity of the Company. During the year, the Company successfully closed three financing transactions providing the Company with additional flexibility and liquidity, if necessary, to help fund acceleration of its growth strategy including: (i) a registered direct offering with a single institutional investor for net proceeds of $6.4 million; (ii) a pre-paid gold purchase agreement with a contract price totaling $5 million with OCIM Metals & Mining SA; and (iii) a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) enabling TRX Gold, in its sole discretion, to sell up to $10 million of its shares to Lincoln Park over a 36-month period.
