TRX Gold (TSX:TRX) - Record Gold Run Powers Self-Funding Mill Expansion and Resource Update

Stephen Mullowney (0:00)

Hi, my name is Stephen Mullowney. I'm the CEO of TRX Gold. We are operating and growing the exciting Buckreef Gold Project in Tanzania.

We did almost 30,000 ounces in our fiscal year last year. We're more than doubling the size of the plant, and we're hoping to get to an 80 to 100,000 ounce production profile as we continue to execute from our free cash flow that's funding that project.

Crux Investor (0:24)

Stephen, good to see you. Right, let's reintroduce folks to the story and maybe start with yourself first.

What's the background? Where have you been? What have you done? And how's that role and to what we're trying to do today?

Stephen Mullowney (0:35)

Yeah, so my background is I joined here just over five years ago. Prior to that, I was a partner at PWC. And in that role, I led the deals mining practice in lots of work around the world with governments, with mining companies, with operational turnarounds and et cetera.

So big focus on mining there, as well as in investment banking and asset management prior to that.

Crux Investor (1:00)

OK, and we need to talk about, I guess, Tanzania for some folks. North America won't know much about the continent of Africa, let alone Tanzania. So what are you doing there?

Stephen Mullowney (1:10)

Yeah, Tanzania. We're developing and operating the Buckreef Gold Project in East Africa. And it's grown quite well. We got a run rate EBITDA of about $80 million right now at this point in time, funding our project expansion from Free Cash Fall.

Crux Investor (1:24)

Right, but tell us more about Tanzania itself. It's not a place that most folks understand. Do you do business there?

Stephen Mullowney (1:31)

Yeah, I find it very easy to do business there. We've done three expansions while I've been here, to 2000t per day with all local contractors.

And the reason for that is there is a good mining environment there. Barrick's there, AngloGold Ashanti's there, Perseus is now there in a big way, Shanta's there, we're there. So a lot of investment going into that country and a lot of history in mining, which makes it easier to do business.

Crux Investor (1:56)

Right. And now I think it's fair to say that you've... We'll get into the weeds a little bit in a second, but again, so staying helicopter a bit. You've demonstrated you can use operating cash flow to expand production, but without repeated dilution, I guess the question is whether the model still works when you move to that kind of incremental expansion stage and material a larger, more complex build scenario.

Stephen Mullowney (2:21)

Yeah, I could talk to that absolutely. You saw me smile because I get asked that question all the time because I think I'm in an industry where a lot of people haven't been able to pull it off and need to go back to markets to do capital raises. So let me just set the scene. So we do this stuff ourselves. It's a straightforward flow sheet. It's going to be a safety ball mill feeding into takes which will be expanded and then an ADR system as well as TSM. So that's being expanded for life of mine.

And in that, that's going to cost us about a $50 million capital program. We've incurred some of that to date. We have $30 million of capital on our balance sheet today and we have on-drawn credit lines in the range of $15 to $20 million, as well as, as I just mentioned, on the 2000t company plant that's operating at around 30,000oz per annum, that creates a million EBITDA a year.

That $50 million of CAPEX is over the next 12 to 18 months, so we feel quite comfortable financing it for pre-cash flow.

Crux Investor (3:21)

Right, okay, but 30,000oz annual production, like you've done at incremental stages, but people will want a heck of a lot more than that, and I guess you will too. What have you learned about the ore body, the metallurgy operating environment during that expansion stage?

Stephen Mullowney (3:37)

Yeah, so what we've learned about the ore body is we've gotten recovery rates now into that 85 to 90 percent range. That's where it should be. So we feel quite comfortable with the metallurgy. We're down in the sulfide, so we've identified the different zones with different metallurgical compositions. So we feel quite comfortable with that. We feel quite comfortable with mining contractors in the area doing their own mining around the Buckreef Open Pit.

And we also feel quite comfortable in procurement and getting it through. So the ball mill has been ordered from Metso and say the mills from Metso in South Africa. We know where we're going to get our tanks and how to procure that. We have a contractor on site now doing the TSF, so we feel quite comfortable with all these priorities that we're using. We've used them before in the past, and we continue to use them and feel quite comfortable with them.