Scaling Through Discipline: Cash Flow Growth at Buckreef Gold in a Rising Gold Market

The gold market has entered a new era of sustained strength. Persistent inflation, geopolitical instability, and robust demand from central banks have pushed gold to record highs and kept it there. For producers, this environment is both an opportunity and a test of discipline. High commodity prices can magnify profitability, but often at the expense of disciplined capital allocation.

A more measured approach is taking hold among select producers. At TRX Gold, this discipline remains central. We continue to develop Buckreef Gold in Tanzania through phased growth funded primarily by internally generated cash flow. That discipline has shaped how we operate today and will guide our path forward. The objective is straightforward: stabilize operations, generate sustainable cash flow, reinvest in the asset, and expand responsibly.

The current gold market: Structural tailwinds

As of early 2026, gold prices have held above US $4,000 per ounce for an unprecedented stretch, one of the longest high-price cycles in decades. This strength is rooted not in short-term speculation, but in deep, structural shifts reshaping global capital flows.

Three key focuses continue to support this trend. First, persistent inflation and elevated input costs have eroded confidence in major fiat currencies. Central banks, particularly in China, India, and across the Middle East, continue accumulating physical gold as a long-term store of value and hedge against geopolitical fragmentation. Second, rising geopolitical risk has intensified investor demand for hard assets that transcend political borders. Third, softening real yields and slowing global growth have reduced the opportunity cost of holding gold, reinforcing its role as a safe-haven asset.

The result is a gold market defined by both high prices and unusual stability, a sharp contrast from past bull markets, where rallies tended to coincide with speculative peaks. Today’s market is underpinned by sustained, institutional buying. For producers like us, this creates a powerful tailwind. High and stable prices strengthen cash margins, accelerate project paybacks, and improve the economics of expansion. But this environment also rewards operational discipline. In a world of elevated costs for equipment, labour, and energy, controlling spending matters as much as ever.

Leveraging a strong gold market

The macro environment has reinforced the financial foundation of our expansion strategy. In fiscal 2025, Buckreef poured nearly 19,000 ounces of gold and sold over 19,000 ounces at an average realized price exceeding US $3,000 per ounce, generating record revenue and strong operating cash flow.

In the fourth quarter alone, Buckreef sold nearly 7,000 ounces at an average realized price of US $3,363 per ounce, producing US$23.5 million in revenue and US $12.7 million in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). These results illustrate significant operational leverage available to well-run producers in a sustained high-price environment.

Price leverage creates durable value, only when operations are efficient and capital allocation stays disciplined. Our steady progress at Buckreef, without reliance on excessive equity issuance or debt demonstrates how disciplined execution translates favourable market conditions into real shareholder value.

Building Buckreef through phased expansion

Over the past several years, we have advanced Buckreef through a series of measured expansions designed to improve efficiency while managing financial risk. The most recent milestone, commissioning the 2,000 tonne-per-day processing plant, was completed on time and on budget at a capital cost of only US $6 million.

Since commissioning, mill throughput has averaged around 1,700 tonnes per day, more than double the prior year’s level. As throughput rises, unit costs naturally fall. In fiscal 2025, mining costs declined to US $3.82 per tonne and processing costs to US $14.20 per tonne, reflecting both economies of scale and stronger operational execution.

Critically, these expansions were largely funded from Buckreef’s own operating cash flow. This approach preserves financial flexibility, reduces exposure to dilution, and supports growth grounded in profitability rather than speculative funding.

Operational improvements driving production growth

Operational performance has continued to strengthen as mine sequencing advances. Early in fiscal 2025, mining activity focused on a scheduled waste-stripping campaign to access higher-grade ore. While this temporarily lowered head grades, it positioned the team to reach stronger ore zones later in the year.

As those zones came online, average daily production increased from approximately 30 ounces per day in the second quarter to 50 ounces per day by year-end. This progression reflects the long-term benefit of strategic mine planning over reactive production targets. Illustratively, in Q1 2026, the Company produced a record 6,597 ounces of gold and in Q2 2026 continued the positive trajectory, producing another record 7,453 ounces of gold.

Improvements extend beyond mining. Recent metallurgical testing confirmed that finer grind sizes significantly enhance gold recovery from sulphide ore. Process optimization work is now underway to lift overall recovery rates and reduce unit processing costs, ensuring consistent margin improvement even during variable-grade periods.

A clear path to future growth

The 2025 Preliminary Economic Assessment outlines Buckreef’s robust economics and room to grow. The study projects average annual production of approximately 62,000 ounces over a 17.6-year mine life, with potential upside through underground development. At a gold price of US $4,000 per ounce, the project carries a pre-tax net present value approaching US $1.9 billion, a figure that underscores how current market conditions could accelerate value creation.

Planning is already underway for the next major development phase: an upgraded processing facility designed to handle sulphide, oxide, and transition material at higher throughput rates. As with prior stages, this expansion is expected to be funded primarily through internal cash flow.

Discipline as a competitive advantage

The gold industry is experiencing one of the most constructive markets in decades. History shows that even in strong cycles, only disciplined producers create lasting value. Volatile input costs, shifting currencies, and unpredictable investor sentiment make prudence indispensable, not just attractive.

At TRX Gold, discipline isn’t a constraint, It’s a competitive advantage. By building Buckreef incrementally, prioritizing operational performance, and reinvesting real cash flow, we’ve strengthened both the asset and the balance sheet. This approach aligns management with shareholders, supports sustainable growth, and reduces reliance on external financing when capital markets are uncertain.

With gold prices backed by enduring macroeconomic trends, improving operations, and continued exploration success, Buckreef Gold is well-positioned for its next stage of growth. The focus remains the same: execute consistently, expand responsibly, and build a durable, cash-generative gold business for the long term.

Working In Tanzania’s gold belt

On the ground, developing Buckreef means working in one of Africa’s most established gold jurisdictions, where large-scale mining coexists with artisanal operations and long-standing mining communities. Daily life for miners blends modern, safety-focused operations with the realities of a remote site: long rotations away from home, demanding technical work in heat and rain, and constant coordination with local suppliers, contractors, and community leaders. Formal operators are increasingly investing in training, safety, and local hiring to build skilled Tanzanian teams, in line with government priorities to deepen local content and expand mining’s contribution to GDP. Geopolitically, Tanzania remains one of East Africa’s more stable countries, with a long history of peaceful transitions under the CCM ruling party, now led by President Samia Suluhu Hassan.  For the mining sector, the government has paired this political continuity with an assertive resource policy: pushing for greater in-country value addition, including domestic gold refining, while simultaneously courting foreign investment through policy reforms, clearer licensing processes, and public commitments to an investor‑friendly climate. The result is a jurisdiction where operators can plan multi‑year expansions, but must stay engaged with evolving regulations, local communities, and ESG expectations as Tanzania seeks to lift mining well above its current 10 per cent of GDP in the coming years.