TRX Gold(TRX) - 2024 Q3 - Quarterly Report

Financial Statements Consolidated Statements of Financial Position (Balance Sheet) The company's total assets grew to $92.6 million, driven by increased PP&E, while liabilities rose to $30.1 million Financial Position Summary | Financial Item | May 31, 2024 ($'000) | August 31, 2023 ($'000) | | :--- | :--- | :--- | | Total Current Assets | 16,775 | 17,193 | | Mineral property, plant and equipment | 72,504 | 64,059 | | Total Assets | 92,614 | 84,200 | | Total Current Liabilities | 21,823 | 17,810 | | Total Liabilities | 30,065 | 23,144 | | Total Equity | 62,549 | 61,056 | | Total Equity and Liabilities | 92,614 | 84,200 | - Mineral property, plant and equipment increased by 13.2% to $72.5 million from $64.1 million at the end of the previous fiscal year[3] - Total liabilities rose by 30.0%, driven by a 24.9% increase in amounts payable and accrued liabilities and a 70.6% increase in the deferred income tax liability[3] Consolidated Statements of (Loss) Income (Income Statement) Net income for the nine-month period fell sharply to $0.2 million due to lower revenue and derivative value changes Income Statement Summary | Metric | Nine months ended May 31, 2024 ($'000) | Nine months ended May 31, 2023 ($'000) | | :--- | :--- | :--- | | Revenue | 27,536 | 29,133 | | Gross Profit | 11,342 | 14,112 | | Change in fair value of derivatives | (925) | 1,670 | | Income before tax | 4,012 | 9,119 | | Net (Loss) Income | 226 | 4,736 | | Basic and Diluted (Loss) Earnings Per Share | ($0.01) | $0.00 | - For the three months ended May 31, 2024, the company reported a net loss of $1.7 million, a significant increase from the $0.4 million loss in the same period of 2023[6] Consolidated Statements of Changes in Equity Total equity grew to $62.5 million, as an increase in non-controlling interest offset a net loss to shareholders - Shareholders' equity decreased from $53.9 million to $52.6 million during the nine-month period, mainly due to a net loss of $2.5 million attributable to shareholders[9] - Non-controlling interest increased significantly from $7.2 million to $9.9 million, contributing positively to total equity[9] Consolidated Statements of Cash Flows Operating cash flow decreased to $9.3 million, while investing activities focused on PP&E purchases Cash Flow Summary | Cash Flow Activity ($'000) | Nine months ended May 31, 2024 | Nine months ended May 31, 2023 | | :--- | :--- | :--- | | Cash provided by operating activities | 9,282 | 14,580 | | Cash used in investing activities | (8,765) | (15,764) | | Cash used in financing activities | (480) | (86) | | Net increase (decrease) in cash | 37 | (1,270) | | Cash at end of the period | 7,666 | 7,206 | - Investment in mineral property, plant and equipment was the primary use of cash, totaling $8.4 million for the period, though this was a reduction from the $14.7 million invested in the same period last year[13] Notes to the Financial Statements Company Overview and Operations The company is a dual-listed Canadian entity focused on mineral exploration, development, and production in Tanzania - The company's primary business is the exploration, development, and production of mineral properties in the United Republic of Tanzania[15][17] - The company's shares are listed on the TSX in Canada and the NYSE American in the United States[16] Inventories Total inventories increased to $6.5 million, driven primarily by a significant rise in the ore stockpile value Inventory Breakdown | Inventory Type ($'000) | May 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | Ore stockpile | 4,821 | 3,361 | | Gold in circuit | 807 | 689 | | Gold doré | 80 | 52 | | Supplies | 794 | 859 | | Total inventories | 6,502 | 4,961 | Mineral Property, Plant and Equipment (PP&E) The net book value of PP&E grew to $72.5 million following additions of $10.3 million in the period - Total additions to PP&E amounted to $10.3 million for the nine months ended May 31, 2024[36] - The most significant investments were in the processing plant and infrastructure ($6.1 million) and mineral properties ($3.8 million)[36] Financing and Derivative Instruments The company drew $2.5 million in deferred revenue and saw derivative warrant liabilities rise to $4.2 million - Under a prepaid Gold Doré Purchase Agreement, the company drew down an additional $2.5 million in the nine months to May 31, 2024[38][40] - Derivative warrant liabilities increased from $3.5 million to $4.2 million, with the change in fair value resulting in a loss of $0.7 million for the nine-month period[41][42] - The company entered into gold zero-cost collar contracts for 3,000 ounces; as of May 31, 2024, all contracts were settled, with realized losses of $0.2 million[45][46][47] Income Tax Total income tax expense was $3.8 million, with an effective current tax rate of 9% at its Tanzanian subsidiary Income Tax Expense Breakdown | Income Tax Expense ($'000) | Nine months ended May 31, 2024 | Nine months ended May 31, 2023 | | :--- | :--- | :--- | | Current income tax expense | 800 | 800 | | Deferred income tax expense | 3,000 | 3,600 | | Total income tax expense | 3,800 | 4,400 | - In Tanzania, the company can utilize tax losses against 70% of its taxable profit, resulting in an effective current tax rate of 9% at the Buckreef subsidiary until tax losses are fully used[48] Share Capital and Equity Instruments The company recorded $1.7 million in share-based compensation expense with 36.2 million warrants outstanding - Share-based compensation expense for the nine months ended May 31, 2024, was $1.7 million, down from $2.1 million in the prior year period[53] Outstanding Equity Instruments | Instrument | Number Outstanding (as of May 31, 2024) | | :--- | :--- | | Stock Options (CAD & USD) | 15,436,000 | | Restricted Share Units (RSUs) | 2,327,176 | | Warrants | 36,190,769 | - Approximately 2.8 million warrants with an exercise price of $1.50 expired during the period[58] Related Party Transactions Total remuneration for directors and key management personnel was $2.5 million for the nine-month period Key Management Compensation | Compensation Type ($'000) | Nine months ended May 31, 2024 | Nine months ended May 31, 2023 | | :--- | :--- | :--- | | Remuneration (Salaries, Fees) | 1,293 | 1,414 | | Share-based compensation expense | 1,173 | 1,682 | | Total | 2,466 | 3,096 | Segment and Geographic Information The company operates as a single segment in Tanzania with significant customer concentration and assets located there - The company operates as a single operating segment: mineral exploration and development in Tanzania[71] - For the nine months ended May 31, 2024, one customer accounted for 92% of total revenue, representing $25.4 million[72] - As of May 31, 2024, $75.8 million (or 99.9%) of the company's non-current assets were located in Tanzania[74]