TRX Gold Corp's Q4 2025 Earnings Call: Contradictions in Gold Grades, Drilling Strategies, and Oxide Processing Plans

Date of Call: None provided

Financials Results

• Revenue: Approximately $60.0M for 2025; Q4 was a record quarter (record revenue) driven by record Q4 production and high realized gold price ($3,363 realized in Q4; company noting sales >$4,200 currently)
• Gross Margin: 53% reported in Q4 (Q4 gross profit), contributing to ~ $25M gross profit for 2025

Guidance:

• 2026 production guidance: 25,000–30,000 ounces of gold.
• 2026 cash cost guidance: $1,400–$1,600 per ounce.
• 2026 CapEx guidance: between $15,000 and $20,000 (focused on plant upgrades, expansions and life-of-mine tailings).
• Planned mill expansion: target ~3,000 tpd sulfide circuit plus ~1,000 tpd oxide/transition circuit; thickener expected end-Q2; full expanded plant targeted H1 FY27.
• Exploration/drilling restart (owner-operated rigs; multi-10k metre program) funded primarily via cash flow.

Business Commentary:

* Record Financial Performance: - TRX Gold Corporation reported record revenue of almost $60 million and gross profit of just under $25 million for 2025, with a record gross profit margin of 53% in Q4. - The growth was primarily driven by high gold prices and increased production following the completion of a stripping campaign, enabling access to high-grade ore blocks.

• Gold Production and Sales:
• The company produced over 6,400 ounces of gold in Q4 and sold close to 7,000 ounces, with strong production expected to continue into Q1 of 2026.
• This increase was due to access to high-grade ore blocks and a record gold price of $3,363 in Q4.

• Financial Strength and Balance Sheet Improvement:
• TRX Gold saw its cash position increase by $1.2 million quarter-over-quarter and now has $8 million on its balance sheet, achieving positive working capital status.

• The improvement was driven by strong cash flow generation during the quarter, allowing for the repayment of all borrowings and capitalizing the balance sheet.

• Exploration and Expansion Plans:

• TRX Gold plans to initiate a 35,000-meter drill program to upgrade the underground mine design, with a focus on the Stanford Bridge and Eastern Porphyry sites.
• The expansion is supported by a recently completed geophysics study identifying potential new structures, which aims to increase the probability of successful drilling.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described 2025 as "transformative" with a "record" Q4 producing/ selling ~7,000 oz in Q4, nearly $60M revenue and record gross profit; cash increased by $1.2M to ~$8M and borrowings were repaid; guidance and expansion plans are self-funded via projected cash flow.

Q&A:

• Question from Heiko Ihle (H.C. Wainwright): Can you give a bit of color on where you expect to focus this drilling? How many meters do you expect to see, the timeframe for drilling, and maybe even a bit of background on costs and changes to costs since I assume they’re substantially cheaper than hiring someone that owns the rig?
  Response: RC rig starts immediately on Eastern Porphyry for resource definition (~$25/m); diamond drilling to follow (diamond capacity ~4,000 m/month); company plans a ~35,000 m program to upgrade resources; in-house drilling expected to cut per-meter costs roughly ~50% vs contractors.

• Question from Heiko Ihle (H.C. Wainwright): When you say there might be a second rig, how long does it take to get something like that? Is importing it tough?
  Response: Additional rigs are obtainable; one rig arriving immediately, next rig on the water in weeks and likely onsite in ~7–8 weeks; procuring/equipping rigs can take several months (4–5 months typical).

• Question from Heiko Ihle (H.C. Wainwright): Big picture: what are the three catalysts for the company you’re most excited about for the next 12 months that may be underappreciated by the market?
  Response: Top catalysts: (1) upside from conservative modeling plus higher gold prices; (2) progress toward converting the JV 45% dilutable government interest to a 16% non-dilutable arrangement; (3) geophysics-led exploration and drilling to discover additional Stanford Bridge–style resources.

• Question from Unspecified (Written): What is the company’s hedging strategy in the event of declining gold prices next year?
  Response: The company is unhedged and expects to remain unhedged; collars were used historically but management currently prefers no hedging while budgeting conservatively and retaining downside sensitivity.

• Question from Unspecified (Written): Is there any plan on TRX doing a stock buyback?
  Response: No commitment; buybacks are under early consideration but would depend on repatriation of cash, JV negotiations and competing priorities — capital allocation prioritizes plant expansion and drilling first.

• Question from Unspecified (Written): Can we count on leadership to remain focused on bigger picture and less on being acquired?
  Response: Management affirmed focus on executing the business plan to increase asset value and did not indicate any shift toward pursuing or prioritizing an acquisition.

• Question from Unspecified (Written): What do you attribute to the sustained increase in daily trading volume? Is this institutional?
  Response: Volume increase attributed to peripheral trading, some institutional inflows, warrants activity and improving fundamentals; core shareholder base remains sticky and not the primary driver.

• Question from Unspecified (Written): Are there any near-pit potential oxide resources that could be economic at higher gold prices and where are other oxide targets?
  Response: Geophysics and planned drilling (Eastern Porphyry and other zones) targeting near-surface oxide occurrences; confirmed oxides would be processed via the existing ~1,000 tpd oxide circuit.

• Question from Rosita (Written): Seen a pickup of M&A activity in North America. What’s your thoughts on the deal landscape in Africa and how would you assure shareholders their interests are protected?
  Response: M&A activity is increasing globally and is expected to broaden to Africa; company highlighted a diversified, sticky shareholder base that would make accumulation or hostile takeovers difficult; no specific defensive measures were cited.

• Question from Ron (Written): Civil unrest in Tanzania — any comment on impact to operations or ongoing stability of the country?
  Response: Planned protests were peaceful; operations saw minimal disruption (one lost day due to an electrician delay); security is stable and operations remain normal.

Contradiction Point 1

Gold Grades and Production Costs

It involves changes in expected gold grades and production costs, which are critical for understanding the company's operational efficiency and profitability.

Where will the drilling focus be, and how many meters are expected? What are the current costs and any changes since acquiring the rigs? - Heiko Ihle (H.C. Wainwright)

2025Q4: Focus is on Eastern Porphyry Pit for resource definition with a reverse circulation drill at about $25 a meter vs. normal contractor rates of $50. - Richard Boffey(COO)

Can you quantify the lower cash costs you expect in the second half of next year once the ramp-up is complete and the processing plant reaches steady state? - Heiko Ihle (H.C. Wainwright)

2023Q4: Given the availability of our processing plants, we have accelerated the mining sequence with plans to mine higher-grade oxide stockpiles initially. This will be followed by the mining of sulfide stockpiles later in the year once our second SAG mill and two ball mills are installed. This leads to the expectation that the first half of this year will have higher production rates and higher grades ahead of where we had initially modeled. - Stephen Mullowney, CEO

Contradiction Point 2

Drilling and Exploration Strategy

It involves changes in the company's drilling and exploration strategy, which are critical for the discovery of new resources and the expansion of existing ones.

What are the three underappreciated catalysts for the company over the next 12 months? - Heiko Ihle (H.C. Wainwright)

2025Q4: We will explore around 35,000 meters this year, which is fewer than we've done historically. Most drilling on the Buckreef Main Zone will be underground, focusing on the Eastern Porphyry Pit for resource definition. With the current $25 a meter drilling cost, this is significantly cheaper than the $60 to $100 per meter contractor rates we have historically paid. - Stephen Mullowney, CEO

Why are you switching to underground mining instead of open-pit, and how does that affect cultural and operational aspects? - Richard Niehuser (ROTH MKM)

2023Q4: We are continuing our underground exploration program at Buckreef, having completed just over 5,000 meters of underground drilling, finding mineralized zones in most of the holes drilled, including high-grade intercepts. This indicates up to 1,000 meters of vertical mineralization with an average grade of 3.2 grams per tonne gold. - Andrew Cheatle, CFO

Contradiction Point 3

Plans for Oxide Processing Facility

It involves the company's strategic plans for processing oxide material, which can impact operational efficiency and financial performance.

Are there near-pit oxide resources that would be viable given higher gold prices? - (In Writing)

2025Q4: Geophysics will help identify near-surface oxide material that can be processed in the existing oxide plant. - Stephen Mullowney(CEO)

How is the company evaluating oxidized surface material relative to sulfides and underground projects? - Richard Michael Niehuser (ROTH Capital Partners)

2025Q3: The company assesses oxides around the property, and there is potential for a separate oxide processing facility. While it is not currently planned, the potential exists. - Richard Boffey(COO)

Contradiction Point 4

Drilling Strategy and Costs

It involves a change in drilling strategy and costs, which could impact operational efficiency and financial outcomes.

What areas will the drilling focus on? How many meters of drilling are expected in the timeframe? What are the current costs and any changes since owning the rigs? - Heiko Ihle (H.C. Wainwright)

2025Q4: Focus is on Eastern Porphyry Pit for resource definition with a reverse circulation drill at about $25 a meter vs. normal contractor rates of $50. - Richard Boffey(COO)

What operational milestones should investors look for in the next 36 months? - Stephen Reiser (Family Office)

2025Q2: In the second quarter, we drilled 9,200 meters for $2.2 million. - Richard Boffey(COO)

Contradiction Point 5

Exploration Strategy and Oxide Resources

It highlights a shift in exploration strategy and expectations regarding oxide resources, which could influence resource development and production.

Are there nearby oxide resources with higher gold prices? - Questioner (In Writing)

2025Q4: Geophysics will help identify near-surface oxide material that can be processed in the existing oxide plant. We expect to find more oxide material as we drive in-pit exploration. - Stephen Mullowney(CEO)

Can you provide an update on the Anfield slide and discuss its open pit potential? Also, when will the PEA be released, and was it filed? - Mike Niehuser (ROTH Capital)

2025Q2: Despite the good news on gold in Q2, we have to be looking for oxide and further oxide material where we can find it. - Stephen Mullowney(CEO)