Tanzanian Royalty Exploration ((TSE:TRX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Tanzanian Royalty Exploration painted a generally positive picture, highlighting significant improvements in production, sales, and strategic agreements. Despite facing challenges related to costs, working capital, and operational optimizations, the company expressed a strong outlook for the future.
Increased Production and Sales
Tanzanian Royalty Exploration reported a notable increase in production, with just under 4,700 ounces produced in Q3 2025, a substantial rise from the previous quarter. The company also benefited from high gold prices, which positively impacted sales.
Record Gold Prices
The company realized over $3,100 per ounce of gold, with some sales exceeding $3,300 per ounce. These record prices contributed significantly to the company’s strong financial metrics for the quarter.
Cost Improvements
There were notable improvements in processing and mining costs. The processing cost per tonne dropped below $15, and mining costs were significantly reduced due to the use of the company’s own fleet.
Strong Financial Performance
Tanzanian Royalty Exploration reported Q3 revenue of $12.5 million, with a gross profit of $4.5 million, reflecting a 35% margin. The adjusted EBITDA stood at $4 million, marking an improvement from previous periods.
Strategic Agreement with Bank of Tanzania
The company signed a strategic agreement to sell a minimum of 20% of its local gold production to the Central Bank at market rates, benefiting from a reduced 4% royalty rate.
Higher Cash Costs
Cash costs in Q3 were higher due to the grade profile going through the mill, which impacted the overall cost structure.
Negative Working Capital
The company continued to experience negative working capital, primarily due to short-term liquidity lines funding long-term assets. However, improvements are reportedly underway.
Operational Challenges
Tanzanian Royalty Exploration faces ongoing operational challenges, particularly in optimizing plant operations and increasing recovery rates, which are currently lower than desired.
Joint Venture Agreement Uncertainty
The current 55-45 joint venture agreement with STAMICO is seen as less favorable, and negotiations with the Tanzanian government are ongoing to address this.
Forward-Looking Guidance
Looking ahead, TRX Gold Corporation has outlined ambitious growth plans, projecting higher revenue and EBITDA than the previous fiscal year. The Buckreef Gold project is central to these plans, with production expected to average 62,000 ounces annually over an 18-year lifespan. The company plans to expand plant capacity and develop an underground mine, with a $90 million capital expenditure outlined over the next four years.
In summary, Tanzanian Royalty Exploration’s earnings call conveyed an optimistic outlook, underscored by increased production, strategic agreements, and ambitious growth plans. Despite facing some operational and financial challenges, the company is poised for future growth, driven by high gold prices and strategic initiatives.