TRx Gold Corporation (ticker: TRXG) has revealed its financial results for the first quarter of 2024, signaling a period of strategic growth and operational expansion. The company is constructing a new plant, which is expected to enhance production capacity and improve cash flow.
Despite a slight increase in cash costs due to higher fuel expenditures, TRx Gold reported solid earnings with a gross profit of just under $4 million and an adjusted EBITDA of $3 million. The firm is also focusing on exploration and drilling activities to bolster production.
Key Takeaways
- TRx Gold's new plant construction is 60-65% complete and is anticipated to be operational by early 2024.
- Q1 2024 results show production of just under 5,000 ounces and revenues over $9 million.
- Cash costs were above guidance at just over $1,000 per ounce, mainly due to higher fuel costs.
- The company has not pursued a capital raise in over two years, reflecting a strong financial position.
- TRx Gold is committed to increasing production and cash flow to fund further exploration and expansion.
Company Outlook
- TRx Gold expects the new plant to come online by the end of January or early to mid-February, depending on weather conditions.
- The expansion is projected to bring significant economies of scale and reduce processing costs.
- The company is evaluating larger expansions to achieve its goal of producing over 100,000 ounces of gold annually for more than a decade.
Bearish Highlights
- Higher fuel costs have led to cash costs exceeding the full-year guidance range.
- A better strategy for tailings management is identified as a medium-term need.
Bullish Highlights
- The company reports a strong balance sheet with over $8 million in cash and positive working capital.
- Improvements in recoveries are expected in the third quarter as the new crushing circuit becomes operational.
- The stock price has remained resilient compared to industry peers.
Misses
- Q1 2024 cash costs were higher than expected, primarily due to increased fuel prices.
Q&A Highlights
- The company is focused on growing the Buckreef project and improving the financial profile without diluting shareholder value through equity raises.
- M&A opportunities are being considered with a preference for those offering better growth potential than the existing Buckreef project.
- There are smaller high-grade deposits in Tanzania that could potentially be developed in the future.
In conclusion, TRx Gold Corporation is on a path to expand its operations and increase its financial metrics. With a new plant nearing completion and a strategic focus on exploration and cost management, the company is poised for growth. The firm's emphasis on internal cash flow generation and prudent capital management positions it well for future opportunities, including potential M&A activities that align with shareholder interests.
InvestingPro Insights
TRx Gold Corporation (TRXG) is navigating a critical period of growth, with its latest financial figures reflecting a commitment to expanding its production capabilities. InvestingPro data and analysis provide additional context to the company's current financial health and future prospects.
InvestingPro Data highlights a market capitalization of $96.29 million, indicating the company's size and investment presence in the market. Despite a challenging quarter, TRx Gold has shown impressive revenue growth over the last twelve months as of Q1 2024, with a substantial increase of 53.18%. This suggests that the company's strategic initiatives, such as the new plant construction, may be contributing to top-line growth. However, the company's P/E ratio stands at -45.53, reflecting market skepticism about its earnings potential in the short term.
InvestingPro Tips reveal that TRx Gold holds more cash than debt on its balance sheet, which is a positive sign of financial stability. Moreover, analysts predict that the company will become profitable this year, aligning with the company's own outlook for growth and operational efficiency as the new plant becomes operational.
The company's stock has been trading near its 52-week low, presenting a potential opportunity for investors who believe in the company's growth trajectory and may be seeking value buys. With the new plant expected to enhance production capacity, TRx Gold's focus on internal cash flow generation could translate into improved financial metrics in the near future.
For investors looking for more in-depth analysis, InvestingPro offers additional insights. There are currently six more InvestingPro Tips available for TRx Gold, which can be accessed with an InvestingPro+ subscription. Now on a special New Year sale, subscriptions are available with up to a 50% discount. To get an additional 10% off a 2-year subscription, use coupon code SFY24, or use SFY241 for an additional 10% off a 1-year subscription.
Full transcript - Tanzanian Royalty Exploration BATS (TRX) Q1 2024:
Operator: It's now my pleasure to introduce Christina Lalli, Vice President, Investor Relations with TRX Gold. Christina, the floor is yours.
Christina Lalli: Thank you, [Gaeleen]. 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 [Operator Instructions]. Stephen, I hand the conference over to you.
Stephen Mullowney: Thank you, Christina. We've got a little bit of technical difficulties this morning. So you're hearing us from actually Mike's iPhone. So you'll see me move the iPhone across the table as different people speak, and I hope everybody can hear us just fine this morning. So thank you for joining us for our first quarter 2020 results webcast. We're at a very interesting point because right now, we can -- both Andrew and Mike are on line with me, and you start to see now there’s a new plant and when it's going to come online. So we're really getting through the crushing circuit. That is now, I think, around 60% to 65% built or so. So yes, we're having a lot of rain. So we're hopeful that it will come online between the end of January, early to mid-February. It was all dependent on the weather. It's rained a lot more than anticipated this year in East Africa, particularly in Tanzania. So that is exciting. And then at the same time, the ball mill components and stuff like that are underway and starting to get installed as well. So we're really excited for that because that enables us to really put on the drill bit towards the back half of the calendar year, given that the increase in cash flow should be coming through as that plant gets online. So really, really excited. It's a really exciting period. So without further ado, obviously, as a public company, I have to refer people to the cautionary note and reference to that there will be forward-looking statements in this presentation. And so I would ask investors and any other people to go through our website to view the cautionary note. So on the line today, we have myself, the Chief Executive Officer. Andrew is joining us from Tanzania. You can see he’s in an orange shirt. We like to keep him in Tanzania as much as possible. And then we have Mike here who's next to me and Christina who is next to me as well. So just starting off with some similar points that we make in all presentations, particularly for everybody who's new on this call, we are TRX Gold. We're a team of experienced leaders developing and rapidly developing the gold project in Tanzania. We have an operating plant that's been achieving high margin positive cash flow, we’ll get into that in a few minutes, and we have a special mining license that has significant blue sky potential for new gold discoveries. An overview of our property. The 2020 resource statement had 2 million ounces in the measured and indicated category. The deposit comes to service, which enables us to do all of this with 20 meters wide. We have straightforward metallurgy and grind crush CIL. We're fully permitted under a special mining license, our current license post 2032 and is completing renewable until the end of the life of the deposit. We've had a processing plant that's been online for just over a year at 1,000 tonnes per day, that is specifically meeting production guidance. We have a minimal environmental footprint. We recycle water. We have contaminant management connected to the national power grid. And as I mentioned before and it always brings a great smile to my face is the exploration potential around this property. Our business plan that has been communicated is to grow production, to increase cash flow, to eventually increase exploration. But one of the things that we've been very proud of and is starting to really show in the numbers, and it’s starting to really grow is we haven't done a capital raise and I believe in over two years now, Mike?
Mike Leonard: Correct.
Stephen Mullowney: 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, so both by -- 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 operation 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 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 contactors 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 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 to the cash for drilling, but it would slow down the plant expansion. And 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.
Mike Leonard: 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 [MET] 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 Steven 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 grindability of the rock and the material and consequently expected to improve recoveries as we head into the latter part of this year.
Stephen Mullowney: 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 2 foot 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 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 MET studies that we have. Right now, given the plant is a bottleneck versus the order 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.
Mike Leonard: 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 at still lofty and robust levels. We realized [$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 continued to be a high margin operation. And adjusted EBITDA that we talked about as well is $3 million. So good proxy for cash flow. In terms of cash costs, we recorded cash cost 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 cost has 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 hour. 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 is prudent capital managers 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 in 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 we assets build.
Stephen Mullowney: Yes. So Mike, I'd like to touch on what you mentioned around cash cost for a second. Now on the mining costs, we're very comfortable where they are, and we think we can put that down a little bit lower. But where those cash costs will start to come down is on the processing cost per tonne. And the expanded plant doesn't incur any more fixed cost or not a lot -- very little extra fixed cost. So you're going to have to get a lot more fixed cost absorption due to higher throughput rates. And really, we still have a relatively small plant for the skis and scale of what Buckreef can be. And in order to get those costs out, we need to continually expand and have that overhead absorption and other cost absorption in the processing plant. And that's really what's driving the higher cash costs, it's both on the plant versus mine.
Mike Leonard: 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 principal, your processing cost of, say, $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.
Stephen Mullowney: Yes, exactly. So as we move on, the 2,000 tonnes a day plant, as I said out smiling, given the progress that we're making here. And you will see some pictures here, the new crushing equipment has arrived outside. I think you see our General Manager by a cone crusher. And then you see our truck -- new jaw crusher, you'll see the expanded tailings facility just a matter less to go on to that. And then you'll start to see the conveyors being put in place and the concrete works and things like that. You all know the soil is pretty moist still. As I mentioned earlier, there's been lots of rain in Tanzania, a lot more than normal, but we're managing through it, and the team is continually constructing on site. They're going both on day shifts and night shifts at this point of time constructing our new plant. So there's only so much labor capital available and that's one of the reasons we got the need to do the crushing circuit first and then we'll move on to the grinding or ball mill circuit in order to put it all together, but we're pretty excited with what's going on. Our suppliers on the crushers has put in place a -- we will be putting in place a critical spares and critical parts warehouse and we want them pretty close to us in order to reduce a lot of the potential and breakdowns and things of that nature. So that looks to be turning out to be a very, very good relationship. And this is expected to drive a lot of cost savings and increased production and increased cash flow, which will hopefully end up bringing the value of this project with exploration drill bit as well as an increased production profile over time. Anything to add, Andrew?
Andrew Cheatle: 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 [Indiscernible] 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 [Indiscernible] out like to add. The 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.
Stephen Mullowney: 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.
Andrew Cheatle: Yes, much more at the end of the year. What's -- or perhaps 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 27 meters from surface or 25 meters [indiscernible] 1.6 from 27 from 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 43 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 hasn't changed. It was sourced to the Northeast and mines in the Southwest, a clear evidence with all those white dots of smart scale, operational [indiscernible] miner, which is none of that is active that's going to pick up by geology team. So it's a good thesis. It hasn't changed, we like drilling.
Stephen Mullowney: Excellent. Well, thank you, Andrew, for that. So as I get on to the next slide. Basically, what we're doing on this slide is reiterating our business plan and reiterating production guidance around when that mill expansion should come online. The production guidance of 25,000 to 30,000 ounces, I remind that's at the run rate that's what we expect for the full year with the 1,000 tonnes and then the expanded 2,000 tonne per day plant, obviously, put us greater than that and we'll give the market guidance at the appropriate time for that. The cash costs, we're reiterating our cash cost guide to $800 to $900 an ounce. And what the increase in cash from the new plant will be used for there'll be additional capital programs, CSR, ESG programs. Obviously, we are operating and will have more employees and increase in the exploration and drilling focus are around the property. So I always say we have mindful ESG. We work with communities, we integrate our ESG into our operating cost profile. We hire a lot of local people, a lot of local people on contractors, things like that to build other assets and starting to pay significant amounts of royalties and taxes as a result. And we always keep a good eye on making sure that people are happy as well as that the schools, the medical facilities and such forth in the local communities around us are continuing improving. With regards to what to expect over the next three to four months. Our MET study and our geotech studies are coming to an end. Currently, we see no surprises there. So we'll be coming [Technical Difficulty]. With regards to -- we are consistently and that will integrate into a, what I'll call, a mine plan update. We are looking at long term tailings solutions, thickeners and things of that nature. And we'll come out with an updated study at some point in time that will detail a little bit more on what's known today and as well as what the exploration program for tomorrow is in order to give the market and investors a much more guided business plan around how Buckreef is going to roll out over time. With regards to how markets have performed. I don't think anybody in this call likes the current market. We are in a higher interest rate environment than we have been in the last 35 years or so. That is expected to continue, which means capital is much more expensive. Also, the alternatives that people have for investing are also different. So we need to get out there, we consistently get out there and tell our story. We are now a self funded growth story, which is good. And our stock price, although, we'd like to have it higher, we always like to have it higher. I think relative to peers, it's actually held in okay. But certainly, this is something that we are consistently on and expect to see ramp ups in investor relations program. And on that note, there are some new pictures. Again, we're rapidly expanding self funded growth story and we are excited for what the future is about to bring to Buckreef, particularly as this plant expansion comes online. So [Gealeen], I'd like to hand it over to any questions.
Operator: [Operator Instructions] Our first question is from Jake Sekelsky with Alliance Globe Partners.
Jake Sekelsky: 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?
Stephen Mullowney: So I think it's more second half. Well actually, should be not second quarter, but third quarter as grinding circuit -- crushing circuit comes online to get the much more consistent product going to the ball mills. So it is a balance with sulphide ore between throughput and cash flow and recoveries. And so we're not seeing anything that gives us concerns relative to the studies that have been done at Buckreef. We do know that an increase in grind site, making the grind site and longer retention times does increase recovery rates quite significantly. When we put out the press release in August that had doubled their retention times than while we are currently experiencing to get the throughput through, and that had a much higher recovery rate as a result. So there's also this complete balance. I'm not seeing anything that's concerning at this point in time in our recoveries.
Jake Sekelsky: That's helpful…
Stephen Mullowney: The ore actually is acting the way we thought it would. So that's real positive.
Andrew Cheatle: It's very similar to the very initial metallurgical studies, Stephen. Just to remind our investors that these are the very final days of the old crushing circuit was here for the test plant, and we are now mining into the sulphides as expected. And it was just weeks away quite literally from having that new crushing circuit up and running. And as I mentioned earlier, we will have a very good product going into the ball mills. Just draw your attention also to the -- Jake, just to the bottom right hand photograph there, we've got Pascal, Senior Manager there standing on top of the high grade zone this now into the sulphides, just for your visual appearance.
Jake Sekelsky: And 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.
Stephen Mullowney: 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.
Jake Sekelsky: 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?
Stephen Mullowney: 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 a -- 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.
Operator: The next question is from Heiko Ihle with H.C. Wainwright.
Heiko Ihle: 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 expense, right, it's really just your staff?
Stephen Mullowney: 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.
Heiko Ihle: Can you maybe give a bit of a breakdown of that?
Stephen Mullowney: Andrew? Well, what's that roughly 50-50?
Andrew Cheatle: 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, Heiko…
Stephen Mullowney: 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, sort of outsourcing trades as need be?
Andrew Cheatle: 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.
Heiko Ihle: We're watching smart people do the work, right?
Andrew Cheatle: Well, yes. So the 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 actually East Africa, some of the best people I've ever worked with in the name of CSI. You've got to get that right.
Heiko Ihle: 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?
Stephen Mullowney: 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.
Andrew Cheatle: So currently, the cost of inflation or inflation in terms is approximately 5%. And yes, we're not in negotiations.
Stephen Mullowney: And you're getting into, not unlike other emerging jurisdictions, you are getting some currency depreciation of the sharing, but not to the extent as other jurisdictions.
Operator: The next question is from [Robert Paulson with Paulson Strategy Group].
Unidentified Analyst: 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, 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 under the way. My question really is, is like it's more of like 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?
Stephen Mullowney: 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 and get the company pointed into 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 market 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 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 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 then that's both of 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?
Unidentified Analyst: 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?
Stephen Mullowney: We have these discussions every day around, okay, what's in our control, what's outside of our control, because that's one of the things you have to take into consideration when answering the question that you just answered -- I just asked that we believe that in consistently increasing that financial profile, doing, as you say, being extremely prudent with capital, a lot of these things you can speed up, but it is adding the best interest of shareholders. So for instance, in making the decision, we could have just went out and raised equity last year and had the [indiscernible] come online nine months ago or six months. But is that in the best interest in the long-term value of shareholders and so you have to keep that into consideration. And we decided just to do it internally generated the cash flow. Yes, that takes a little bit more time, but the denominator now is not great in share count. So those are the sort of things that we try to get through and make capital allocation decisions on in getting the best value for shareholders over the medium to long term.
Unidentified Analyst: 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?
Stephen Mullowney: Right now, I don't think so. We've built in a lot of redundancy on purpose into this business model. For instance, at year end we described motors going down in August, but we had three ball mills. So production didn't go down and we were able to get through it without any shutdowns and things of that nature. The crushing circuit is very important and there's going to be redundancy built into that crushing circuit as well, because I go through with a team, give me every piece of equipment that could shut down the whole thing at 100% and make sure that, that piece of equipment is on site. And so we go around and infill that. In the medium term, I would say we need to get a much better handle on tailings. And we got a handle on it but we need to build it out, we need to come up with a longer term strategy of that. That's the only thing that I could see that can really slow us down and we got to handle on it right now in order to -- and we'll have a study on the go at some point in time year soon…
Andrew Cheatle: Yes, that's already kicked off, Stephen…
Stephen Mullowney: Yes, that’s already kicked off [indiscernible] to get their dry stack. So we're out ahead of the stuff that we can see. I think what you're really asking is and it's hard to predict is what can't you see that can trip you up? That one's the most [Multiple Speakers]. I'm trying to figure out what we can [Multiple Speakers], the unknowns, right? And you get them and then they happen time to time, but we take a philosophy that you're building up redundancy and you should be okay.
Andrew Cheatle: And Stephen, we've often commented that it's a lot wetter. Whilst we were prepared, having the El Niño effect has really come hard, but the pumps are keeping the pit dry. It's money but it's -- rest still mining, we're not flooding, yes.
Stephen Mullowney: So it's just one thing that I always look at is, okay, say if something we're to happen. We have a large stockpile on site. I think there's 12,000 ounces there now in stockpile. We need to get a much larger crush stockpile, which will work on when we get the new crushing system up and running. 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.
Unidentified Analyst: Thank you for your answering those questions, I know the very surface kind of questions. There are some who've been around a while and our 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.
Operator: I'd like to hand the meeting back over to Stephen Mullowney who will take us through questions submitted in writing.
Stephen Mullowney: So the question submitted in writing. So we have one question here on, I think it's ‘25, ‘26 comment slides for M&A opportunities and time lines. So let's talk about that on the M&A for a second. I think it's just more along the lines of what M&A opportunities are out there. So we're always consistently looking at M&A opportunities that would make sense for our shareholders. And as you're getting the sense is we don't really mind situations where you got to get in there, roll up your sleeves, maybe a little bit messy and create value from it. That would be similar to when I came into this opportunity as well as a team. So we'll evaluate things that make sense. What I would say is we're very prudent on making sure we do not cannibalize the growth opportunities at Buckreef, cannibalize the clean balance sheet and bring on stuff that may offset that. When we look at companies that typically are in trouble from an equity price perspective, from a market cap perspective, usually they have securities that rank ahead of equity on their balance sheets that are very problematic. And that's very difficult to get out of because what ends up happening is your business becomes undercapitalized over time, and mining is a very capital intensive business. So we will prudently evaluate opportunities. But given -- it has to make sense for shareholders. It also has to increase growth potential vis-a-vis Buckreef, because Buckreef has a lot of growth potential. And so it has that better growth potential for shareholders than Buckreef does in order to make sense, and that's difficult to find. And so that's how we evaluate the M&A opportunities.
Mike Leonard: 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.
Stephen Mullowney: We have people approach us all the time, seeing what we’re doing at Buckreef, 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. So the next question there, is there any plans that get very long growth again, require additional mining means co-operations, small cap miners in next two to three years. I think I just answered that question. Yes, we will evaluate that. We’ve also -- look, as we continue to evaluate growth profile at Buckreef, Tanzania is an interesting landscape and there are quite a few high-grade smaller deposits around. And there are other companies out there that do have hub-and-spoke models. And I think that will be something that will be evaluated further over time. So we have in Buckreef we had to build roads, we have learned how to build plans, very cost effectively. So there are growth profile opportunities that we’ll start to -- as we get through this expansion, which is where our focus needs to be today, to really look at for longer term strategy. I think there are certain people on our board that are very happy with the questions that's been asked by investors today.
Andrew Cheatle: Yes. And Stephen, maybe just to give a little bit of more color to that. As you'd expect from our geological team, we do like to know who's around us and what they're doing at a very high level. We don't spend a large percentage of time on it, but we also just keep a very high level inventory.
Stephen Mullowney: So I think, [Gealeen] that's all the questions that are in the queue today.
Operator: That's right. Would you like to give any concluding remarks before we conclude?
Stephen Mullowney: 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.
Andrew Cheatle: Actually yes, that's true.
Stephen Mullowney: Thank you.
Operator: This concludes the meeting. You may disconnect. Thank you for participating. And have a pleasant day.
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