Buckreef's Cash Flow Covers the Build at Lower Gold Prices & Funds Drilling

• Buckreef's 2025 preliminary economic assessment estimates a ratio of earnings before interest, taxes, depreciation, and amortization to total capital expenditures of 1.8x to 3.6x in years 1 to 4 at April 2025 consensus gold prices of US$2,400 to US$2,707 per ounce.
• At US$2,000 per ounce, pre-tax net present value at a 5% discount rate (NPV5%) is US$482.4 million, against a pre-tax NPV5% of US$701.0 million in the consensus base case, which averages US$2,296 per ounce.
• Growth capital totals US$88.7 million over the first 4 years, about US$30 million for the plant expansion and about US$60 million for underground development.
• TRX Gold held US$26.8 million in cash and US$40 million of supplemental liquidity, and has invested US$90.5 million in Buckreef since 2021 against US$19.1 million of original net capital raised.
• The same cash flow funds exploration across a 16-square-kilometer license, where Stamford Bridge lies 250 meters from the Main Pit, Anfield lies 500 meters east of the Main Zone, and a geophysics program identified 10 targets.

What Has Happened

TRX Gold Corporation (TSX: TRX | NYSE American: TRX) is adding a 3,500+ tons per day (tpd) semi-autogenous grinding and ball mill circuit beside its upgraded 2,000 tpd plant at the Buckreef Gold Project in Tanzania, for a combined nameplate capacity of 5,500 tpd. The fourth mill expansion follows 3 completed on time and on budget, largely funded from operating cash flow.

The company's 2025 preliminary economic assessment (PEA) quantifies how that funding performs across gold prices. TRX Gold modeled growth capital of US$88.7 million over the first 4 years and earnings before interest, taxes, depreciation, and amortization (EBITDA) at levels that cover total capital expenditures (CAPEX) in both the April 2025 consensus price case and a US$ 4,000-per-ounce case.

Exploration is the second use of that cash flow. A geophysics program has identified 10 targets across the 16-square-kilometer license, and initial drill results from them are the next exploration data point.

Growth Capital Is Covered at Lower Gold Prices

The PEA base case uses consensus gold prices from April 2025: US$2,707 per ounce in year 1, US$2,646 in year 2, US$2,495 in year 3 and US$2,400 in year 4, then US$2,245 thereafter. Against those prices, TRX Gold estimates an EBITDA-to-CAPEX ratio of 2.3x, 1.8x, 1.8x and 3.6x in years 1 to 4. At US$4,000 per ounce, the same ratios are 5.3x, 3.4x, 3.4x and 7.4x.

Net present value stays positive across the price range TRX Gold tested. At US$2,000 per ounce, the company estimates pre-tax net present value at a 5% discount rate (NPV5%) of US$482.4 million and post-tax NPV5% of US$294.2 million. The consensus base case, which averages US$2,296 per ounce, gives a pre-tax NPV5% of US$701.0 million and a post-tax NPV5% of US$442.2 million, and the US$4,000 case gives a pre-tax NPV5% of US$1,878.5 million and a post-tax NPV5% of US$1,238.6 million.

Current operations run at higher prices than the PEA cases. In the third quarter of fiscal 2026, the 3 months ended May 31, 2026, TRX Gold realized an average gold price of US$4,703 per ounce and reported record adjusted EBITDA of US$20.7 million, which annualizes to more than US$80 million.

Staged Capital Puts the Larger Tranche Later

About US$30 million of the growth capital goes to the plant expansion and about US$60 million to underground development. The plant is under construction now, and underground development begins in year 3 of the 2025 PEA schedule.

The 2025 PEA schedules open pit mining in years 1 to 4 and underground mining from year 3 onward, for a 17.6-year mine life. A higher gold price has added material to the pit design, and the updated mine plan is evaluating a longer open pit. Chief Financial Officer of TRX Gold, Michael P. Leonard, described the sequence under evaluation:

"It looks like we may be able to defer or delay some of the underground development. Maintain the open pit for maybe 5 years before going underground."

Deferring underground development would move part of the larger tranche further out in the schedule. A 25% increase in growth capital moves base case pre-tax NPV5% from US$701.0 million to US$666.2 million.

Capital Markets Stay in Reserve

TRX Gold held US$26.8 million in cash and US$2.9 million in borrowings as of May 31, 2026, with working capital of US$36.3 million. Supplemental liquidity of US$40 million consists of a US$25 million at-the-market (ATM) facility and a US$15 million credit facility and gold prepayment facility, and the company reports no financial instruments or warrants on its books.

Since 2021, the company has invested US$90.5 million in Buckreef against US$19.1 million of original net capital raised, with US$65.9 million of operating cash flow over the same period. TRX Gold plans to fund the fourth expansion through operating cash flow, with the supplemental facilities available as reserve.

A 16 Square Kilometer License Beyond the Main Zone

Buckreef's resource of 893,000 ounces measured and indicated at 2.57 grams per tonne (g/t) gold and 726,000 ounces inferred at 2.47 g/t gold is largely in the Main Zone, a relatively small part of the 16 square kilometer license. The drill hole database holds more than 125,000 meters, and about 20% of the resource is oxide and 80% sulfide.

Two zones lie close to the Main Zone. Stamford Bridge, 250 meters from the Main Pit, returned the best drill results in Buckreef's history, including 37 meters at 6.86 g/t gold, and forms a shear zone with potential strike length of 1 kilometer between the Main Zone, Eastern Porphyry and Anfield. Management said the discovery was not considered in the 2025 PEA, while the April 2025 resource estimate carries 47,000 ounces of inferred resource at Stamford Bridge. Anfield lies 500 meters east, with shallow historical artisanal workings that produced grab samples above 28 g/t and a drill intercept of 2.94 meters at 13.74 g/t. Leonard pointed to the geologist's read on the parallel structures:

"Since we joined, we've identified a series of parallel shear zones and splays that come off the main zone with both grade and mineralization that looks like the material that's coming out of the main zone, according to our geologist."

An 810 line-kilometer ground magnetic survey identified 10 exploration targets, and a follow-up 40 line-kilometer gradient array resistivity and induced polarization (IP) survey was initiated. Management is aiming for oxide material in the new zones, which would supplement the harder sulfide rock.

Exploration Draws on the Same Cash Flow

TRX Gold's plan uses operating cash flow to fund growth in EBITDA, net asset value (NAV), and the resource base. The fiscal 2026 exploration budget of US$3 million to US$5 million covers geophysics, resource drilling at the Main Zone, exploration drilling at Stamford Bridge, and reverse circulation drilling at Eastern Porphyry, and the company is targeting an aggressive drilling program.

Management ties each workstream to a different valuation measure: EBITDA growth to the enterprise value (EV) to EBITDA multiple, production growth in line with the study to the price to NAV (P/NAV) multiple, and added ounces to the EV to resource multiple. As of September 4, 2026, TRX Gold trades at 3.0x EV to 2027 estimated EBITDA against a 3.3x producer average, and at 0.55x P/NAV against a 0.67x average for producers and developers, with TRX Gold's figures calculated from its PEA at June 2026 consensus gold prices.

What to Watch Next

The updated PEA is the next test for the coverage ratios. TRX Gold is targeting the fourth quarter of 2026 for a study built on 5,500 tpd nameplate capacity, a longer open pit, and a higher gold price, with possible movement into early 2027. Initial drill results from the 10 geophysics targets and the fiscal 2026 year-end results are the other near-term data points.

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