TRX Gold's Q4 2025 Earnings Call: Contradictions Emerge on Drilling Costs, Exploration Plans, and Plant Capacity

Date of Call: None provided

Financials Results

• Revenue: Almost $60.0M for FY2025 (record annual revenue); Q4 benefited from record production and realized gold price of $3,363/oz (company notes selling >$4,200/oz in early 2026)
• Gross Margin: 53% gross profit in Q4 (company highlighted as high-margin operation; no prior-year % disclosed)

Guidance:

• 2026 production guidance: 25,000–30,000 ounces of gold; cash cost guidance $1,400–$1,600/oz.
• 2026 CapEx guidance: $15,000–$20,000 (for plant upgrades, expansions and life-of-mine tailings); PEA contemplates self-funding via cash flow.
• Mill/processing upgrades: thickener to impact by end of Q2; ADR and oxygenation improvements underway; expanded 3,000–3,500 tpd circuit targeted in H1 FY27.
• Exploration/drilling: ~35,000m program planned; RC to start at Eastern Porphyry; company acquiring owner-operated rigs to cut drilling costs and increase pace.
• Hedging: company is unhedged and expects to remain unhedged while maintaining conservative budgeting.

Business Commentary:

* Record Quarterly Performance: - TRX Gold Corporation recorded record production and sales in Q4, with over 6,400 ounces of gold produced and nearly 7,000 ounces sold. - The company attributed this record performance to the completion of a stage one stripping campaign and access to high-grade ore blocks.

• Financial Metrics Improvement:
• TRX reported record revenue of $40 million and gross profit of $25 million for 2025.
• The growth was driven by record gold prices, reaching $3,363 per ounce in Q4, and improved cost efficiencies due to economies of scale.

• Mine Plan and Expansion Initiatives:
• The company is aiming for gold production between 25,000 and 30,000 ounces for 2026, with CapEx focused on plant upgrades and expansions.

• The expansion plans are part of a strategic effort to enhance mill processing capacity and recover efficiencies from resource initiatives.

• Government Relations and Geophysics Exploration:

• TRX is negotiating a potential switch in its JV agreement to change the 45% dilutable government interest to a 16% non-dilutable interest.
• The company is conducting a geophysics study to identify additional drill targets, indicating a strategic focus on exploration and resource expansion.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management repeatedly described Q4 and FY2025 as "record" across revenue, gross profit, net income, operating cash flow and Adjusted EBITDA; stated "we’re in a really good position" and "feeling really confident"; provided constructive 2026 guidance (25–30k oz, $1,400–$1,600/oz cash cost) and a self-funded expansion plan in the PEA.

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 and timeframe for drilling, and background on costs/changes to costs since owning rigs should be cheaper than contracting?
  Response: RC rig will start immediately at Eastern Porphyry for resource definition (~$25/m); diamond rig to start ~Q3 with expected drilling ~2,000–2,500 m/month at ~$50/m; company plans a ~35,000 m program to upgrade initial underground resource to Indicated and owning rigs roughly halves contractor drilling cost.

• Question from Heiko Ihle (H.C. Wainwright): If you add a second rig, how long does it take to get one (logistics/import timing)?
  Response: Procurement/imports can take months generally (4–5 months), but one rig was arriving imminently and a second was on the water with an expected on-site timing of ~7–8 weeks in this instance.

• Question from Heiko Ihle (H.C. Wainwright): What are the top three catalysts over the next 12 months that may be underappreciated by the market?
  Response: Management highlighted (1) higher gold prices boosting free cash flow, (2) potential conversion/clarification of the JV/government stake (move from 45% dilutable toward a 16% framework) and (3) geophysics-led exploration plus drilling that could discover additional near-surface Stanford Bridge-style targets.

• Question from Unidentified Investor (Written): What is the company’s hedging strategy in the event of declining gold prices next year?
  Response: Company is currently unhedged and expects to remain unhedged; has used collars historically but will keep conservative budgeting and downside sensitivity rather than hedge at present.

• Question from Unidentified Investor (Written): Is there any plan for a stock buyback?
  Response: No commitment; buybacks are being considered as part of capital-allocation discussions but priority remains plant expansion and drilling; any repurchase would depend on cash repatriation, JV negotiations and capital needs.

• Question from Unidentified Investor (Written): Will the leadership remain focused on growing the business rather than being acquired?
  Response: Management stated they are focused on executing the business plan and increasing asset value rather than discussing or prioritizing an acquisition.

• Question from Unidentified Investor (Written): What explains the sustained increase in daily trading volume—institutional demand?
  Response: Management attributes higher volume to improved financial results drawing peripheral and some institutional interest, warrant-related activity and possible short-covering; the core shareholder base remains sticky.

• Question from Unidentified Investor (Written): Are there near-pit oxide resources that could be economic at higher gold prices and where are other oxide targets?
  Response: Yes—management sees near-surface oxide potential (notably Eastern Porphyry and other pockets); these will be targeted by geophysics and drilling and can be processed via the existing ~1,000 tpd oxide circuit once identified.

• Question from Unidentified Investor (Written): Thoughts on M&A activity in Africa and protecting shareholders if approached?
  Response: Management expects M&A activity and valuations to increase; TRX notes a diversified/sticky shareholder base and limited free float, which would make an opportunistic takeover difficult and likely benefit existing shareholders if bids arose.

• Question from Unidentified Investor (Written): Any impact from civil unrest in Tanzania on operations or stability?
  Response: Operations unaffected aside from one lost day due to an electrician delay; management reported protests settled peacefully, security remains calm and operations normal.

Contradiction Point 1

Drilling Costs and Strategy

It involves changes in drilling cost strategies, which could impact operational budgeting, efficiency, and financial planning.

Where are your drilling focus areas? What are the expected drilling meters in the timeframe? Can you provide details on costs and cost changes? - Heiko Ihle (H.C. Wainwright)

2025Q4: The reverse circulation drill will start immediately at a cost of about $25 per meter, which is half the cost of contractor rates. - Richard(COO)

Are you prioritizing resource development outside Buckreef Main? - Richard Niehuser (ROTH MKM)

2023Q4: We are looking at potentially bringing in a contractor or a custom contracted rig that could reduce the drill costs by up to 35%. - Stephen Mullowney(CEO)

Contradiction Point 2

Exploration Plans

It involves changes in exploration priorities and strategies, which could impact resource discoveries, revenue potential, and strategic planning.

What are the three underappreciated catalysts for the company over the next 12 months that you're most excited about? - Heiko Ihle (H.C. Wainwright)

2025Q4: The priority is on expansion, taking that cash flow expansion into a robust exploration program. We have an infill and sterilization drilling program, and we're looking to expand into the Anfield and Eastern Porphyry zones. - Stephen Mullowney(CEO)

Are you prioritizing resource development outside Buckreef Main? - Richard Niehuser (ROTH MKM)

2023Q4: The priority right now is expansion, taking that cash flow expansion into a robust exploration program. We have an infill and sterilization drilling program, and we're looking to expand into the Anfield and Eastern Porphyry zones. - Stephen Mullowney(CEO)

Contradiction Point 3

Plant Capacity and Output

It relates to the capacity and output expectations of the plant, which directly affects production, revenue projections, and operational efficiency.

Where will you focus drilling? What are the expected drilling meters and costs? - Heiko Ihle (H.C. Wainwright)

2025Q4: The current ratio is 25% oxides, 75% sulfides. Plans include installing a pre-leach thickener to enable processing 100% sulfides by year-end, which should raise head grade by about 0.3-0.4 grams. - Stephen Mullowney(CEO)

Will the oxide to sulfide ratio in throughput change in upcoming quarters? - Jacob G. Sekelsky (Alliance Global Partners, Research Division)

2025Q3: The plant was operating at a throughput capacity of 3,000 metric tonnes per day in the fourth quarter of 2022 and 2023, and the plant is not expected to be expanded beyond its current 3,000 metric tonnes per day capacity during the PEA mine plan. - Stephen Mullowney(CEO)

Contradiction Point 4

M&A Activity and Shareholder Protection

It involves differing perspectives on the M&A landscape and shareholder protection measures, which are crucial for investors and stakeholders.

Have you noticed increased M&A activity in North America? What's your outlook for the deal landscape in Africa? How will you ensure shareholder interests are protected? - Questioner (Text)

2025Q4: M&A activity is expected to increase in Africa, similar to North America. Shareholders are protected by a diversified shareholder base and the sticky nature of the shareholder group. - Stephen Mullowney(CEO)

What operational milestones should investors monitor for plant upgrades and exploration? - Stephen Reiser (Family Office)

2025Q2: M&A activity has picked up, and there have been a number of attractive deals in the last couple of months, some of which we have looked at. - Stephen Mullowney(CEO)