TRX Gold(US:TRX)2019-12-02 13:47Financial Performance - For the fiscal year ended August 31, 2019, the company reported a net loss of $29,317,517, compared to a net loss of $6,897,397 in 2018, indicating a significant increase in losses [31]. - The company's accumulated deficit as of August 31, 2019, reached $132,462,683, reflecting ongoing financial challenges since inception [38]. - Total assets decreased to $38,118,925 in 2019 from $53,235,140 in 2018, showing a decline in the company's financial position [32]. - The company had a working capital deficiency of approximately $9,095,970 as of August 31, 2019, highlighting liquidity issues [39]. - The company has never generated revenues and does not expect to do so until one of its properties is placed into production [38]. - As of August 31, 2019, the company had cash of approximately $3,389,319, which raises concerns about its ability to fund ongoing operations [39]. - The company has issued $6,927,371 in loans, including $4,998,127 in gold bullion loans, which may dilute existing shareholders if converted into common shares [49]. - The company reported a net loss of $29,317,517 for the year ended August 31, 2019, which included $22,229,752 in mineral properties and deferred exploration expenses written off [103]. Operational Challenges - The company has faced litigation risks that could adversely affect its financial condition and share price [43]. - Internal controls over financial reporting were deemed ineffective, which could lead to material misstatements and loss of investor confidence [47]. - The Company has recorded an accrual of $707,000 for unpaid license fees as of August 31, 2019, compared to $260,000 as of August 31, 2018 [74]. - The Company is subject to a potential penalty of approximately $219,000 related to unpaid license fees as of August 31, 2019, up from $125,000 in the previous year [75]. - The Company has made a payment of $172,330 in connection with settlement discussions regarding penalties for not bringing the Buckreef Project into production by the specified date [77]. - The Company has not established proven mineral reserves for most of its properties, with the exception of the Buckreef Project, which is still in the exploration stage [54]. - The Company may face additional payments to the Tanzanian government if the Buckreef Project is not brought into production by a certain date, with potential extension payments of $500,000, $625,000, and $750,000 for subsequent years [76]. - The Company has faced disruptions from illegal mining activities at the Buckreef Project, which have previously forced a halt to operations [71]. - The Company relies on key management personnel, including the Executive Chairman, whose absence could significantly impact operations [56]. Exploration and Development Activities - The Company focused on the Buckreef Project during fiscal 2019, completing multiple phases of drilling and reporting significant intercepts [105]. - The Company has completed several drilling programs at the Buckreef Project, but significant expenditures will be required to upgrade mineral resources and develop mining facilities [65]. - The Buckreef Project is held under a special mining license expiring June 11, 2027, with no guarantee of renewal processing times [83]. - The Company is conducting a three-phase drill program to enhance the economics of the Buckreef Project, with Phase One involving approximately 4,500m of infill drilling [130]. - The infill drilling program aims to upgrade mineable ounces, moving inferred resources to measured and indicated categories, with a focus on confirming strong intersections and grades from deep holes [132]. - Significant intercepts from the infill RC drill program include 28m grading 4.23 g/t Au from Hole PBR05, with notable intersections of 16m grading 6.72 g/t Au [135]. - The ongoing Phase II drilling program targets gold mineralization 50 to 200m below the pit bottom, with previous holes encountering significant mineralized widths [142]. - The geophysical survey completed in September 2019 will assist in developing a new resource-geology model, analyzing resistivity and chargeability of host rocks [146]. - The Buckreef Project has a total of 28 active licenses and 104 forfeited licenses, with outstanding financial liabilities of approximately US$511,548 as of September 30, 2019 [153][155]. - The Buckreef Project encompasses five prospects and is fully licensed for mining and extraction of gold, located in the Geita District of Tanzania [156]. - The company has assembled a database of over 892 holes totaling 137,509.95m, which includes geological information and gold assays for resource modeling [150]. - The initial phase of the geophysical survey covered 10 holes with a total survey length of about 3,620m, with plans for additional holes in Phase Two [145]. - Significant intercepts from Hole U22-1 include 89.6m grading 1.5 g/t Au, with notable high-grade intersections found below the open pit [141]. - The company has revised its license portfolio to focus on the Buckreef Project, discarding certain licenses to reduce liabilities from statutory payments [152]. - The Buckreef Project mineral resources as of August 31, 2019, are estimated at 29 million tons at 1.04 g/t Au, containing approximately 984,144 ounces of gold [165]. - The company completed a total of 1,503 meters of Reverse Circulation (RC) drilling during the reporting period, focusing on resource upgrade drilling [157]. - An additional eight Diamond Core (DD) drill-holes were completed during the reporting period, totaling 2,716.12 meters [160]. - Significant assay results include 66.7 meters at 4.51 g/t Au from 357.30 meters depth, including 31 meters at 7.10 g/t Au from 385 meters [162]. Regulatory and Compliance Issues - The Company is required to comply with local content regulations that mandate the use of Tanzanian companies for procurement and services [84]. - The company has maintained compliance with annual fee payments for all active licenses during the reporting period [185]. - The company must submit regular reports in accordance with mining regulations, which adds to its operational requirements [204]. - The anticipated liabilities from forfeited licenses are being tabulated by the Ministry, indicating potential future financial obligations [186]. - The company is adhering to new Mining Regulations, which require relinquishing half of the active license area upon renewal, with a grace period for new applications [188]. Project-Specific Information - The Buckreef Project is located in north central Tanzania, comprising five gold deposits within two mining areas, approximately 25km apart [219]. - The Company has completed pre-feasibility studies on the Buckreef Project, focusing on gold exploration and development [208]. - Historical production at the Buckreef area included an indicated ore reserve of 106,000 tons at a grade of 8.7g/t Au [214]. - The Company has conducted extensive drilling and exploration, resulting in a 121% increase in mineral resources as per the NI 43-101 report [215]. - The Buckreef Project is situated in the Lake Victoria Goldfields, the third largest gold-producing region in Africa [222]. - The Company has applied for a 10-year renewal of the Buckreef Special Mining License, which was granted [216]. - The Buckreef Project has undergone various phases of exploration and development since its discovery, with significant activities recorded from 1959 to 2019 [214][215]. - The geological setting of the Buckreef Project includes low to medium grade orogenic gold deposits associated with quartz vein arrays in altered shear zones [220].