Orezone Gold Corporation press release
TRX Gold Reports Robust PEA on Next Buckreef Gold Expansion
TSX - Toronto Stock Exchange · Gold · Silver · Canada
Pre-tax NPV 5% of US$701M at US$2,296/oz Increasing to US$1.2Bn at US$3,000/oz
TORONTO, April 22, 2025 (GLOBE NEWSWIRE) -- TRX Gold Corporation (TSX: TRX) (NYSE American: TRX) (the “Company” or “TRX Gold”) is pleased to announce positive results of a Preliminary Economic Assessment (the “PEA”) on the expansion of its Buckreef Gold Project (“Buckreef Gold”) in Tanzania. The PEA evaluated the following scenario: (i) an expansion and upgrade of the existing process plant at Buckreef Gold to 3,000 tonnes per day (“tpd”); and (ii) a transition from open pit mining to underground mining over the next 2-3 years. The PEA will be filed under the Company’s profile on SEDAR+ within 45 days of this announcement.
Stephen Mullowney, TRX Gold CEO commented: “We have taken what we have learned over the past couple of years and have now provided a more in-depth roadmap of Buckreef Gold’s potential based on what is currently known, with a keen focus on maximizing the economics of Buckreef Gold. This PEA yields positive results based on a relatively straightforward expansion, similar to the expansions we have successfully completed previously. The PEA and associated project economics can also be further enhanced by additional process plant capacity and mining rate increases in the future, and the Company will now begin to evaluate these opportunities. The PEA does not currently contemplate inclusion of any new exploration discoveries at Buckreef Gold. The Anfield Zone has not been included and only a small portion of Stamford Bridge Zone has been reflected in this PEA. This is our first insight into Stamford Bridge, and it is still early days there as we continue to execute our exploration program across the entire Buckreef Gold concession. The future is looking bright, and we are well on our way towards making Buckreef Gold an exceptional gold producing asset.”
The Key Outcomes of the PEA:
Base case NPV 5% of US$701.0 million pre-tax, or US$442.2 million after tax at consensus forecast case gold prices (US$2,707/oz year 1, US$2,646/oz year 2, US$2,495/oz year 3, US$2,400/oz year 4, US$2,245/oz thereafter) and NPV 5 % of US$1,180.5 million pre-tax, or US$766.4 million after tax at an upside US$3,000/oz gold price; The PEA demonstrates the Company’s ability to potentially finance the expansion from internally generated cash flow without an upfront capital requirement, thus there is no quoted Internal Rate of Return; Over a 17.6-year period, the total process plant throughput is expected to be 18.1 million tonnes averaging 2.14 g/t Au with average recovered gold production of approximately 62,000 oz Au per annum. During the first five years of the underground operation, average recovered production is planned to be over 80,000 oz Au per annum; Life of Mine (“LOM”) cash costs average US$1,024/oz Au and all-in sustaining costs (“AISC”) average of US$1,206/oz Au; Growth capital of US$89 million will be deployed over the next four-year period comprised of: (i) US$55 million in capital for the underground expansion; (ii) US$30 million for process improvements, process plant throughput expansion, and camp upgrades; and (iii) US$3 million for tailings facility upgrades. LOM growth capital is estimated to be US$175 million and is primarily for underground development. LOM sustaining capital cost of US$87 million is estimated for site and process plant, and US$97 million for underground mining; The PEA mine plan was developed from Measured and Indicated Mineral Resources of 10.8 million tonnes (“Mt”) grading 2.57 grams per tonne (“g/t”) gold containing 893,000 ounces of gold and Inferred Mineral Resources of 9.1 Mt grading 2.47 g/t gold containing 726,000 ounces of gold; and With the existing open pit mine operating, the underground expansion plan benefits from the existing on-site process plant and mine infrastructure in place. The Company anticipates gold production from the underground expansion could be achieved within 3 years.
The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to enable them to be categorized as Mineral Reserves. Therefore, there is no certainty that the PEA economics will be realized. Mineral Resources that are not Mineral Reserves may not have demonstrated economic viability. The Company engaged P&E Mining Consultants Inc. (“P&E”) to complete an updated Mineral Resource Estimate for Buckreef Gold (Table 8) which provides the Mineral Resource basis for the PEA, and expansion of the mine to include underground production, and for the existing process plant to increase capacity to approximately 3,000 tpd.
Stephen Mullowney, TRX Gold CEO, further states, “The results of the PEA, as summarised in Table 1, show an extremely robust project capable of producing 1.1 million gold ounces over a 17.6-year life, with low cash costs of only US$1,024/oz Au and AISC of US$1,206/oz Au. The PEA indicates an upside pre-tax NPV 5 % of US$1.2 billion and after-tax NPV 5 % of US$766 million at US$3,000/oz gold. We will now start work on optimizing results further, including evaluating an additional process plant expansion and increased mining rates. We believe that will help to solidify a project which ultimately is capable of producing 100,000+ gold ounces per year for 10+ years, based on what is currently known and excluding any new additional Mineral Resources. It should be noted that Mineral Resources were also estimated at a US$1,900 per oz gold price and there is also the potential to add additional economic material if gold prices remain at current levels.
The growth capital cost for the expansion is estimated at US$89 million over a four-year period, inclusive of a process plant expansion, process improvements, and tailings facility upgrades. The Company has already commenced some preparatory work for this expansion, including capital expenditure for the process plant upgrades and camp expansion.
In addition, TRX Gold has established a strong Operations team of mining professionals on the ground in Tanzania, which has successfully managed Buckreef Gold’s three previous expansions on-time and on-budget, in achieving the current 2,000 tpd throughput capacity. The Company has been further enhancing the skillset of this team to ensure that the necessary personnel are in place to support the next step in the development of Buckreef Gold.”
Based on the estimated production schedule, capital costs and operating costs, a cash flow model was prepared by TRX Gold for the economic analysis of the Buckreef Project. The cash flow model was reviewed and approved by P&E. All information used in this economic evaluation was derived from work completed by P&E, with support by TRX Gold.
Project economics were evaluated using a discounted cash flow method that measures the before-tax and after-tax Net Present Value (“NPV”) of future cash flow streams. The PEA economic model was based on the following key assumptions in Table 1.
Table 1 – PEA Summary of LOM 25 Key Metrics and Project Economics
| Summary of Project Economics | | Life of Mine | | Base Case Gold Price | US$ | 2,707/oz year 1; 2,646/oz year 2; 2,495/oz year 3; 2,400/oz year 4; and 2,245/oz thereafter | | Discount Rate | % | 5 | | Mining Parameters | | | | Open Pit - Tonnes of Mineralization | Mt | 3.5 | | Open Pit - Avg Grade | g/t Au | 1.92 | | Open Pit - Strip Ratio | w:o | 6.0 | | Underground - Tonnes of Mineralization | Mt | 14.4 | | Underground - Avg Grade | g/t Au | 2.22 | | Mine life - Open Pit & Underground | Years | 17.6 | | Process Plant Parameters | | | | Recovery | % | 87 | | Rate | tpd | 2,824 | | Total Tonnage Processed | Mt | 18.1 | | Average Annual Production | oz/year | 61,700 | | Average Annual Production (first five years of underground) | oz/year | 80,100 | | Capital Expenditures | | | | Initial Capital Expenditures | US$M | Nil | | Growth Capital Expenditure | US$M | 174.5 | | Sustaining Capital Expenditure | US$M | 184.4 | | Closure Cost | US$M | 13.4 | | Operating Costs | | | | Mining Cost - Open Pit | US$/t mined | 3.78 | | Mining Cost - Underground | US$/t processed | 33.09 | | Processing Cost | US$/t processed | 12.68 | | G&A cost | US$/t processed | 6.50 | | Cost per Ounce | | | | LOM Cash Cost | US$/oz | 1,024 | | LOM All-in Sustaining Cost | US$/oz | 1,206 | | Financial Analysis | | | | Pre-tax NPV 5% | US$M | 701.0 | | Post-tax NPV 5% | US$M | 442.2 |
Financial Analysis
Figure 1 – Annual After-Tax Free Cash Flow (US$ millions), Cash Cost and AISC (US$/oz)
Figure 2 – Annual EBITDA (US$ millions)
Sensitivities
Table 2 – PEA Sensitivity Analysis – Gold Price
| Gold Price (US$/oz) | Pre-tax NPV 5% (US$M) | Post-tax NPV 5% (US$M) | | $3,000 | 1,180.5 | 766.4 | | $2,800 | 1,040.9 | 672.0 | | Base Case (avg. $2,296) | 701.0 | 442.2 | | $2,400 | 761.6 | 483.1 | | $2,200 | 622.0 | 388.7 | | $2,000 | 482.4 | 294.2 | | $1,800 | 342.8 | 199.3 |
Table 3 – PEA Sensitivity Analysis – Operating Costs
| | Pre-tax NPV 5% (US$M) | Post-tax NPV 5% (US$M) | | | | Operation Cost | Base Case (avg. US$2,296) | Upside Case @ US$3,000 | Base Case (avg. US$2,296) | Upside Case @ US$3,000 | | Base case -25% | 858.9 | 1,338.3 | 552.6 | 876.9 | | Base case -10% | 764.2 | 1,243.6 | 486.4 | 810.6 | | Base case 0% | 701.0 | 1,180.5 | 442.2 | 766.4 | | Base case +10% | 637.9 | 1,117.3 | 398.0 | 722.2 | | Base case +25% | 543.2 | 1,022.6 | 331.6 | 656.0 |
Table 4 – PEA Sensitivity Analysis – Growth Capital Costs
| | Pre-tax NPV (US$M) | Post-tax NPV (US$M) | | | | Growth Capital Cost | Base Case (avg. US$2,296) | Upside Case @ US$3,000 | Base Case (avg. US$2,296) | Upside Case @ US$3,000 | | Base case -25% | 735.9 | 1,215.4 | 468.7 | 792.9 | | Base case -10% | 715.0 | 1,194.4 | 452.8 | 777.0 | | Base case 0% | 701.0 | 1,180.5 | 442.2 | 766.4 | | Base case +10% | 687.1 | 1,166.5 | 431.6 | 755.8 | | Base case +25% | 666.2 | 1,145.6 | 415.6 | 739.9 |
_ Production _
Annual production over LOM is expected to average approximately 62,000 ounces with peak production of 94,000 ounces in year 5 (Figure 3). Underground production commences in Year 3.
Figure 3 – Production Profile
Capital Expenditures
The growth capital expenditures are estimated at US$89 million in Years 1 to 4. LOM growth capital expenditures are estimated at US$175 million and the sustaining capital expenditures are estimated at US$184 million (Tables 5 & 6). A contingency of US$23 million and US$19 million is included in growth and sustaining capital expenditures, respectively.
Growth and sustaining capital expenditures were estimated based on current costs received from vendors as well as developed from first principles, while some were estimated based on factored references and experience from similar operating projects.
Figure 4 – Capital Expenditure Profile (US$ millions)
Table 5 – Growth Capital Expenditures (US$ millions)
Table 6 – Sustaining Capital Expenditures (US$ millions)
| Cost Element | LOM Total | | Site and Process Plant - US$5M per year | 87.5 | | Underground | 96.9 | | Total Sustaining Capital | 184.4 |
_ Total Cash Costs _
The total unit cash costs are estimated at US$1,024/oz. The AISC is estimated at US$1,206/oz. Operating cost estimates were developed using first principles methodology, vendor quotes, and based on historical actual operating information at Buckreef Gold.
Table 7 – Total Cash Cost and AISC
| Cost Element | LOM Total (US$M) | Average LOM (US$/tonne processed) | Average LOM (US$/oz) | | Mining (Open Pit) | 91.7 | 26.6 (1) | 84.5 | | Mining (Underground) | 475.0 | 33.1 (2) | 437.7 | | Processing | 229.2 | 12.7 | 211.2 | | General & Admin. | 117.5 | 6.5 | 108.3 | | Royalty & Selling Cost | 197.5 | 10.9 | 182.0 | | Total Cash Cost | 1,110.8 | 61.4 | 1,023.7 | | Sustaining Capital | 184.4 | 10.2 | 169.9 | | Reclamation | 13.4 | 0.7 | 12.4 | | Total AISC | 1,308.7 | 72.4 | 1,206.0 |
Notes: (1) Per tonne of ore processed from open pit only. (2) Per tonne of ore processed from underground only.
Mineral Resource Estimate
An updated Mineral Resource Estimate for Buckreef Gold including the Stamford Bridge domain is presented in Table 8 and has an effective date of April 15, 2025.
Mineral Resource Estimate Methodology
The Buckreef Gold and Stamford Bridge Mineral Resource models were developed by P&E from 135 wireframes and one respective wireframe, all created by P&E over respective 2.2 km and 155 m strike lengths. Buckreef Gold utilized 884 drill holes while Stamford Bridge utilized eight. Wireframes were developed from an open pit cut-off of 0.40 g/t Au while underground was 1.20 g/t Au. Both Mineral Resource models utilized 1.0 m capped composites ranging from no capping to 60 g/t Au. Block models were set up with 2.5 m x 5.0 m x 5.0 m blocks rotated 30 degrees clockwise and used a bulk density of 2.70 t/m 3 . Grade interpolation was done with inverse distance cubed estimation. Based on variography, Measured Mineral Resources were those blocks classified within 20 m of three drill holes while Indicated Mineral Resources were classified within 40 m of three drill holes. All other wireframe constrained grade blocks were classified as Inferred Mineral Resources. Pit-constrained and out-of-pit Mineral Resources were reported above respective 0.42 g/t and 1.31 g/t Au cut-offs.
Table 8 - Mineral Resource Estimate (1-7)
| Zone | Cut-off Au g/t | Tonnes (k) | Au g/t | Au ozs (k) | | MAIN | | | | | | Measured | 0.42/1.31 | 2,982.8 | 2.36 | 226.4 | | Indicated | 0.42/1.31 | 6,193.9 | 2.72 | 542.6 | | Meas + Ind | 0.42/1.31 | 9,176.7 | 2.61 | 769.0 | | Inferred | 0.42/1.31 | 7,549.3 | 2.37 | 576.0 | | SOUTH | | | | | | Measured | 0.42/1.31 | 23.6 | 1.68 | 1.3 | | Indicated | 0.42/1.31 | 35.3 | 1.95 | 2.2 | | Meas + Ind | 0.42/1.31 | 58.9 | 1.84 | 3.5 | | Inferred | 0.42/1.31 | 53.8 | 1.70 | 2.9 | | WEST | | | | | | Measured | 0.42/1.31 | 40.3 | 3.27 | 4.3 | | Indicated | 0.42/1.31 | 204.7 | 2.52 | 16.5 | | Meas + Ind | 0.42/1.31 | 245.0 | 2.64 | 20.8 | | Inferred | 0.42/1.31 | 73.9 | 2.37 | 5.6 | | EASTERN PORPHYRY | | | | | | Measured | 0.42/1.31 | 2.9 | 6.97 | 0.6 | | Indicated | 0.42/1.31 | 1,306.4 | 2.35 | 98.8 | | Meas + Ind | 0.42/1.31 | 1,309.3 | 2.36 | 99.4 | | Inferred | 0.42/1.31 | 1,198.8 | 2.44 | 94.0 | | STAMFORD BRIDGE | | | | | | Inferred | 1.20 | 272 | 5.38 | 47.0 | | TOTAL | | | | | | Measured | 0.42/1.31 | 3,049.6 | 2.37 | 232.6 | | Indicated | 0.42/1.31 | 7,740.3 | 2.65 | 660.1 | | Meas + Ind | 0.42/1.31 | 10,789.9 | 2.57 | 892.7 | | Inferred | 0.42/1.20/1.31 | 9,147.8 | 2.47 | 725.5 |
Notes: (1) Mineral Resources, which are not Mineral Reserves, may not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. (2) The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration. (3) The Mineral Resources were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council. (4) Gold price used is US$1,900/oz Au. (5) The pit constrained cut-off grade of 0.42 g/t Au was derived from 80% process recovery, US$21.04/tonne process and G&A cost, and a royalty of 7.3%. The constraining pit optimization parameters were US$3.88/t mining cost and 45-degree pit slopes. (6) The out-of-pit cut-off grade of 1.31 g/t Au was derived from 80% process recovery, US$21.04/tonne process and G&A cost, a US$40/tonne underground mining cost, and a royalty of 7.3%. The out-of-pit Mineral Resource grade blocks were quantified below the constraining pit shell and within the constraining mineralized wireframes. Out–of-Pit Mineral Resources are restricted to areas which exhibit geological continuity and reasonable potential for extraction by cut and fill and long hole mining methods. (7) The Stamford Bridge cut-off grade of 1.20 g/t Au was derived from 80% process recovery, US$21.04/tonne process and G&A cost, a US$35/tonne underground mining cost, and a royalty of 7.3%. Mineral Resources are restricted to areas which exhibit geological continuity and reasonable potential for extraction by cut and fill and long hole underground mining methods.
Table 9 – TRX 2020 to 2025 Mineral Resource Estimate Transition
| | 2020 MRE | 2025 MRE | | | | | | Classification | Tonnes (M) | Au (g/t) | Au oz (k) | Tonnes (M) | Au (g/t) | Au oz (k) | | Measured & Indicated | 38.6 | 1.77 | 2,195 | 10.8 | 2.57 | 893 | | Inferred | 19.6 | 1.14 | 718 | 9.1 | 2.47 | 726 |
The generation of an April 15, 2025, Buckreef Gold updated Mineral Resource Estimate (“MRE”) has undertaken material differences in reporting protocols not utilized in the previously published May 15, 2020, MRE. The 2025 MRE utilized the 2014 CIM Standards on Mineral Resources and Reserves and 2019 CIM Best Practices Guidelines and reports Mineral Resources with a reasonable prospect of eventual economic extraction (i.e.: constrained mineral inventory basis), versus the 2020 MRE, which utilized the 2003 CIM Best Practice Guidelines and reports Mineral Resources on an unconstrained mineral inventory basis.
The major sources of differences between the 2020 MRE and 2025 MRE are as follows:
The 2025 MRE utilized a constrained optimized pit shell and underground workings which resulted in a reduction in volume for material to the 450 m EL level (which is the maximum depth of the underground workings in the PEA) as well as the exclusion of certain footwall and hanging wall low grade material (combined, this resulted in a reduction of ~10 Mt of material grading ~1.50 g/t Au containing ~500 koz); The 2025 MRE utilized a cut-off grade of 1.3 g/t Au for underground mining versus a 0.4 g/t Au cut-off grade in 2020 MRE (this resulted in a reduction of ~25 Mt grading ~0.70 g/t Au containing ~500 koz); Removal of ~ 4.5 years of production to date (this resulted in a reduction of 1.35 Mt grading 1.95 g/t Au containing 85 koz Au); and Removal of Tembo and Bingwa deposits from 2025 MRE due to unquantifiable small scale mining activity by local residents (this resulted in a reduction of 2.1 Mt grading 2.12 g/t Au containing 143 koz).
Mining
Current open pit mining operations have been planned for Years 1 to 4. The first two years will process 1,750 tpd of mineralization, then will increase to 3,000 tpd in Year 3. The Main Pit and the smaller East Pit will be mined out over the four-year period. Low-grade mineralization will be stockpiled for processing at the end of the mine life.
Underground mine development will commence in Year 3. A total of 14.4 Mt of mineralized material at an average grade of 2.22 g/t Au will be extracted over the LOM from five different underground mining areas:
1. The Main zone, with 94% of the gold ounces to be mined, subdivided into four areas; 1. North, with 55%; 2. South, with 34%; 3. Stamford Bridge, with 4%; and 4. Satellite, with 1%;
2. The East zone, with 6% of the ounces to be mined.
The open pits and underground mining areas are shown in Figure 5.
Figure 5 – 3D Projection of the Open Pit and Underground Designs and Mining Areas
The underground mining method will be longhole with longitudinal retreat stopes measuring 3 to 13 m wide, corresponding to 82% of the stope tonnage and transverse longhole mining designed for stopes 13+ m wide, which account for 18% of the stope tonnage. Divisions between transverse and longitudinal mining areas are not strict, with approximately 25% of transverse areas being less than 13m wide and 5% of longitudinal areas being more than 13m wide.
Stope dimensions are planned to be 30 m high, 3 to 15 m wide, and 30 m long. The average transverse stope size is approximately 16 kt, and the average longitudinal stope size is 11 kt. An average of 95 stopes will be mined annually. Stope mining recovery varies from 80 to 95%, and averages 92.4%. Development mining recovery is set at 99%. Stope backfilling is assumed to be 100% cemented paste backfill, although potential exists for co-mingling rockfill with paste, or utilizing unconsolidated rockfill in certain areas.