TRX Gold Corporation (TSX:TNX, NYSE-A:TRX) has reported results for its third quarter ended May 31, 2023, highlighting the strong profit margins at Buckreef Gold.
The company said Buckreef Gold recognized revenue of $9.3 million and cost of sales of $5.4 million, generating gross profit of $3.9 million, gross profit margin of 42% and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $3.3 million.
During the quarter, Buckreef Gold poured 4,764 ounces of gold and sold 4,810 ounces of gold, resulting in positive operating cash flow of $3.2 million. Year to date, Buckreef Gold poured and sold 15,794 and 16,068 ounces of gold respectively; both nine-month production records for the company, resulting in positive operating cash flow of $14.6 million.
Also during the quarter, the company pivoted its mining plan to include a test bulk sample of sulphide ore which was subsequently processed through Buckreef Gold’s existing processing plant. Over 6,500 tonnes of sulphide ore were successfully processed, achieving an indicative gold recovery of 88.7%. The bulk sample test indicates that the company can likely process sulphide ore through its existing processing plant, thus potentially minimizing capex for future plant expansions.
The company said it has been using cash flow from operations to invest in the further growth of Buckreef Gold, including the procurement of an additional 1,000 tpd ball mill to increase annual throughput by 75-100%.
The company said it drilled 839 meters (m) at Buckreef Gold and announced near surface drill results at the Anfield and Eastern Porphyry Zones, with highlights of 14m at 3.5 grams per ton (g/t) including 3.0m at 10.9 g/t from a downhole depth of 47m from the Eastern Porphyry zone, and 2.94m grading 13.74 g/t, from a downhole depth of 43m in the Anfield Zone. Year to date, the company drilled 11,171m of exploration, infill and sterilization drilling.
“These positive results continue to demonstrate the immense opportunity at Buckreef Gold and reflect successful execution of the company’s sustainable business plan where cash flow from operations funds value-creating activities,” TRX Gold CEO, Stephen Mullowney, said in a statement.
Looking ahead, the company said it continues to expect gold production from the 1,000-over tpd processing plant for fiscal 2023 to be between 20,000-25,000 ounces and expects total average cash cost to be at the upper end of the originally estimated range of between $750 - $850 per ounce.
It continues to advance a project aimed at increasing the average annual throughput by 75-100% with an expansion of the existing carbon-in-leach plant. The capital cost of the expanded plant is expected to be approximately $6 million and will be funded using operating cash flow from Buckreef Gold. Construction of the expanded milling circuit is expected to start in the final quarter of 2023 and potentially benefit production in early calendar year 2024.
The company said it continues to work with its principal consultants on advancing the larger development project that will target a large-scale gold mine operation, including advanced metallurgical testing across the deposit and geotechnical studies for a deeper pit.
TRX Gold is rapidly advancing the Buckreef Gold project which currently hosts an NI 43-101 Measured and Indicated Mineral Resource of 35.88 Mt at 1.77 g/t gold containing 2,036,280 ounces of gold and an Inferred Mineral Resource of 17.8 Mt at 1.11 g/t gold for 635,540 ounces of gold.
Contact the author at jon.hopkins@proactiveinvestors.com