TRX Gold possesses two major attributes gold mining investors should be seeking. Firstly, it is ramping up production at their Tanzanian gold mines. And secondly, it is utilising cash flow from current production to pursue further exploration and upgrades to their assets.
TRX Gold Corporation (TSX:TNX) (NYSE American:TRX) operates the Buckreef Gold Project in Tanzania and is delivering on a strategy to increase their production capacity and overall resources in the pursuit of shareholder value creation.
Ramping up production
The $104m market cap gold miner invested $4m in mill processing facilities 12 months ago with the objective of increasing the original 360 tpd capacity to 1,000 tpd.
In late September, TRX Gold announced this target would soon be hit enabling TRX Gold to produce 15,000-20,000 ounces of gold annually over the life of the oxide mine plan.
Early success at the new plant saw TRX Gold hit a quarterly production record in the third quarter with 2,733 ounce of gold produced. TRX Gold also hit a sales record with 3,033 ounces of gold sold.
Increasing the resource base
Many junior gold explorers will be highly envious of TRX Gold’s position. TRX Gold are able to fund further exploration and the expansion of their resources with cashflows from ongoing production, a scenario many junior explorers can only dream of.
TRX Gold do not have to raise cash through dilutive secondary issues, nor are they being forced into a joint venture to facilitate development of their assets.
Funding further exploration through cashflows from operations means TRX is creating the most favourable scenario short and long term value creation.
This is of course reliant on the success of their expansion operations and upgrades to the resource – and the most recent results are positive.
Exploration activity at Buckreef Gold Project recently yielded an additional strike extension of 250 meters, representing 16% increase in the strike length of the Buckreef Main Zone to 1.8 kilometers.
TRX Gold are undergoing an intensive drill programme looking to expand 2020’s NI43-101 Measured and Indicated Mineral Resource of 35.88 MT at 1.77 g/t gold containing 2,036,280 oz of gold and an Inferred Mineral Resource of 17.8 MT at 1.11g/t gold for 635,540 oz of gold.
TRX Gold’s low cost production
Compounding TRX’s ramp up in production and expanded resource, TRX Gold are achieving a low cash cost of $508 per gold ounce driving gross margins of 73%.
TRX Gold generated $9.06m revenue in the nine months to May 31st 2022. Much of this was generated in the three months to May 31st with TRX Gold recording $5.7m revenue and $3.18m profit for the period.
TRX Gold’s comprehensive income for the nine months to May 31st 2022 was $28,000 due to higher share based expense.
Investors will be looking forward to TRX Gold’s full year results and the additional revenue from increased capacity at the Buckreef Gold Project.