TRX TRX Gold Corporation

TRX Gold Corporation (“TRX Gold” or the “Company”) was incorporated in the Province of Alberta on July 5, 1990 under the Business Corporations Act (Alberta). On March 27, 2025, the Company completed its continuance from the jurisdiction of the Province of Alberta into the Province of British Columbia under the Business Corporations Act (British Columbia) (“Continuance”). The Company’s principal business activity is the exploration, development and production of mineral property interests in the United Republic of Tanzania (“Tanzania”).

Subsequent to the Continuance, the Company’s registered office is 550 Burrard Street, Suite 2501, Vancouver, British Columbia, V6C 2B5, Canada. The Company’s principal place of business is 277 Lakeshore Road E, Suite 403, Oakville, Ontario, L6J 6J3, Canada.

The Company’s common shares are listed on the Toronto Stock Exchange in Canada (TSX: TRX) and NYSE American in the United States of America (NYSE American: TRX).

The Company is primarily focused on development and mining operations, exploring, and evaluating its mineral properties. The business of exploring and mining for minerals involves a high degree of risk. The underlying value of the mineral properties is dependent upon the existence and economic recovery of mineral resources and reserves, the ability to raise long-term financing to complete the development of the properties, government policies and regulations, and upon future profitable production or, alternatively, upon the Company’s ability to dispose of its interest on an advantageous basis; all of which are uncertain.

The Company’s interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). The interim condensed consolidated financial statements do not include all disclosures required by International Financial Reporting Standards (“IFRS”) for annual financial statements and should be read in conjunction with the Company’s consolidated financial statements for the year ended August 31, 2024.

These interim condensed consolidated financial statements were approved by the Board of Directors of the Company on April 10, 2025.

These interim condensed consolidated financial statements have been prepared on a going concern basis under the historical cost basis, except for certain financial assets and liabilities which are measured at fair value as disclosed in Note 19. All amounts in these interim condensed consolidated financial statements are presented in United States dollars with all amounts rounded to the nearest thousand, except for share and per share data, or as otherwise noted. Reference herein of $ or USD is to United States dollars and C$ or CAD is to Canadian dollars.

The accounting policies, judgements and estimates applied in these interim condensed consolidated financial statements are consistent with those set out in Notes 3 and 4 of the Company’s annual consolidated financial statements for the year ended August 31, 2024, except as described below:

Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand, and short-term deposits with an original maturity of three months or less, which are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value. Bank overdrafts which are repayable on demand and form an integral part of an entity's cash management are included as a component of cash and cash equivalents in the statements of cash flows.

The Company held no collateral for any receivables. During the three and six months ended February 28, 2025, the Company recovered VAT refunds from the TRA of $0.9 million and $1.8 million, respectively (February 29, 2024 – $1.3 million and $2.6 million, respectively).

Income tax expense is recognized based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The maximum amount of tax losses that a business can utilize in Tanzania is 60% (2024 - 70%) of its taxable profit for the current year. The remaining 40% (2024 - 30%) of taxable profit is subject to a statutory tax rate of 30%. As a result, Buckreef Gold Company Limited’s (“Buckreef”) current income tax is calculated at an effective tax rate of 12% (2024 - 9%) until Buckreef’s tax loss carryforwards are fully utilized. Tax losses in Tanzania can only be utilized by the entity to which the tax losses relate to.

The carrying value of Buckreef’s Mineral Property, Plant and Equipment is higher than their tax written down values due to historical mining incentives in Tanzania and accelerated depreciation for tax purposes. The taxable temporary difference between the carrying value of Mineral Property, Plant and Equipment and its tax basis in excess of available tax loss carryforwards resulted in a deferred tax liability.

For the three months ended February 28, 2025, the Company recorded income tax expense of $0.1 million, comprised of current income tax credit of $0.3 million and deferred income tax expense of $0.4 million (February 29, 2024 – $0.9 million income tax expense comprised of current income tax expense of $0.1 million and deferred income tax expense of $0.8 million). For the six months ended February 28, 2025, the Company recorded income tax expense of $1.8 million, comprised of current income tax expense of $0.1 million and deferred income tax expense of $1.7 million (February 29, 2024 – $2.1 million income tax expense comprised of current income tax expense of $0.4 million and deferred income tax expense of $1.7 million).

On August 11, 2022, the Company entered into a $5 million prepaid Gold Doré Purchase Agreement with OCIM Metals and Mining S.A. (“OCIM Agreement”). The OCIM Agreement required funds to be made available to the Company in two tranches. On May 6, 2024, the Company amended the terms of the OCIM Agreement to allow for additional prepayments and drew $1.0 million in exchange for delivering 40.85 ounces of gold per month, commencing June 2024, for a total of 490.2 ounces of gold over 12 months. On October 30, 2024, the Company drew an additional $0.5 million in exchange for delivering 17 ounces of gold per month, commencing November 2024, for a total of 204 ounces of gold over 12 months.

On January 7, 2025, the Company entered into a Gold Prepayment Facility with Auramet International, Inc. (“Auramet Gold Prepayment Facility”) through which Buckreef may, at its discretion, sell up to an aggregate amount of 1,000 ounces of gold, up to 21 calendar days prior to deliver, on a revolving basis for a one-year term. On January 8, 2025, the Company sold 421.6 gold ounces under the Auramet Gold Prepayment Facility for proceeds of $1.1 million and concurrently purchased 421.6 gold ounces for $1.1 million to settle all outstanding gold ounces remaining under the OCIM Agreement. On January 10, 2025, the OCIM Agreement was terminated.

As at February 28, 2025, the Company had 1,000 gold ounces outstanding under the Auramet Gold Prepayment Facility. Subsequent to February 28, 2025, the Company settled 475 gold ounces on the Auramet Gold Prepayment Facility.

Lease liabilities are measured at the discounted value of future lease payments using the lease-specific incremental borrowing rate. Lease payments are apportioned between interest expense and the reduction of the liability. Interest expense is based on the lease-specific incremental borrowing rate at the commencement date of the lease. The incremental borrowing rate differs between each category of asset, location of asset and the duration of the lease. The Company’s lease liabilities are primarily comprised of leases for 14 pieces of equipment for use in Buckreef’s mining operations.

The carrying amounts of lease liabilities and movements during the period were:

The following amounts are recognized in the statement of (loss) income and comprehensive (loss) income:

As at February 28, 2025, the Company had the following lease commitments:

As at February 28, 2025, the carrying value of right-of-use assets amounted to $4.4 million (August 31, 2024 - $1.7 million). Mobile equipment under lease contracts are depreciated over their useful lives as the purchase prices at the end of the lease terms are immaterial.

On December 5, 2024, Buckreef entered into a secured debt facility with Stanbic Bank Tanzania Limited (“Stanbic Facility”). The Stanbic Facility consists of a $5.0 million overdraft facility (“Overdraft Facility”) to support working capital requirements and $4.0 million vehicle and asset financing facility (“VAF Facility”) for purchase of machinery, equipment and vehicles for expansion of the processing plant. The Stanbic Facility is secured by all Buckreef assets, including the Special Mining License, in favour of Stanbic up to the facility limits.

The Overdraft Facility bears interest at the United States Federal Funds Target Rate Midpoint plus a margin within a range of 4.10% to 4.13% with a floor rate of 9.5%, payable on a monthly basis. The Overdraft Facility is repayable on demand with a maximum tenor of twelve months.

The VAF Facility bears interest at the three-month Secured Overnight Financing Rate plus a margin within a range of 4.10% to 4.9% with a floor rate of 9.5%, payable on a monthly basis. Principal repayments on the VAF Facility is generally repayable equally over 36 months from the date of drawdown.

As at February 28, 2025, $1.0 million (August 31, 2024 - $nil) 0 was drawn on the Overdraft Facility and $nil (August 31, 2024 - $nil) was drawn on the VAF Facility.

Derivative warrant liabilities of $0.6 million will only be settled by issuing equity of the Company. For the three and six months ended February 28, 2025, fair value changes amounted to a gain of $0.8 million and $1.7 million, respectively (February 29, 2024 – gain of $1.6 million and $1.8 million, respectively).

Fair values of derivative warrant liabilities were calculated using the Black-Scholes Option Pricing Model with the following assumptions:

The fair value is classified as Level 3 as expected volatilities is determined using adjusted historical volatilities and were therefore not an observable input.

Sensitivity analysis

If expected volatility, the significant unobservable input, had been higher or lower by 10% and all other variables were held constant, net income and net assets for the three and six months ended February 28, 2025, would increase or decrease by:

For the six months ended February 28, 2025, the weighted average number of common shares for diluted EPS excluded 1.2 million share awards, 17.0 million stock options, 4.7 million RSUs, and 36.2 million warrants that were anti-dilutive for the period (February 29, 2024 – 10.5 million stock options and 36.2 million warrants).

Share-based compensation expense for the three and six months ended February 28, 2025 totaled $1.3 million and $1.5 million, respectively (February 29, 2024 – $0.5 million and $1.4 million, respectively).

As at February 28, 2025, the Company had 2,697,508 (August 31, 2024 - 5,997,632) share awards available for issuance under the Omnibus Equity Incentive Plan.

Canadian Dollars denominated stock options

Options to purchase common shares carry exercise prices and terms to maturity as follows:

US Dollars denominated stock options

Options to purchase common shares carry exercise prices and terms to maturity as follows:

For the three and six months ended February 28, 2025, share-based compensation expense related to stock options totalled $0.2 million and $0.3 million, respectively (February 29, 2024 – $0.1 million and $0.3 million, respectively).

The following table sets out activity with respect to outstanding RSUs:

For the three and six months ended February 28, 2025, share-based payment expenses related to RSUs totalled $1.0 million and $1.1 million, respectively (February 29, 2024 – $0.2 million and $0.7 million, respectively).

As at February 28, 2025, the following warrants were outstanding:

Summarized financial information for Buckreef is disclosed below:

Related parties include the Board of Directors and officers, extended relatives and enterprises that are controlled by these individuals as well as certain consultants performing similar functions.

Remuneration of Directors and key management personnel of the Company was as follows: