TRX Gold Corporation (AMEX:TRX) Q4 2023 Earnings Call Transcript

TRX Gold Corporation (AMEX:TRX) Q4 2023 Earnings Call Transcript December 4, 2023

Christina Lalli: [Call Starts Abruptly] year-end and fourth quarter results presentation. As a reminder, all participants are in listen-only mode, and the meeting is being recorded. After the presentation, there will be an opportunity to ask questions. If you wish to ask a question, please click the Q&A icon on the left-hand side of the screen. You will see the options to raise your hand, to join queue and ask your question verbally, or write a question to submit your question in writing. When you are introduced, your line will automatically be unmuted. For analysts who have joined us today into the conference, you can click on 1 on your telephone keypad and join the question queue that was as well. I would like to now turn the meeting over to Stephen Mullowney, TRX Gold Chief Executive Officer. Stephen?

Stephen Mullowney: Yes. Thank you, Christina. Before we begin the call today I’d like to recognize that our Founder and Chairman passed away during the quarter and during this year and all of us here had a good relationship with Mr. Sinclair and he’ll be greatly missed. So with that, this is our 2023 year-end conference call. Obviously, we’ll have an Annual General Meeting conference call in the new year as part of the Annual General Meeting, and I’m quite excited for what we have in 2023. We had a significant amount of growth. We’re really starting to see what the potential is for the Buckreef Gold Project. We had another plant expansion. We have another one underway. We’re getting a much better sense for the geological potential of the property and are quite excited for that and where that can go over time, particularly hopefully increase the resources on our property quite significantly as well as continuing to increase the production profile of the property as well.

So 2023 was a great year. We’re quite excited for today’s call and for where we’re going as a company as well. So, obviously, there’s cautionary note. We will be talking about forward-looking statements, so I’d ask everyone to go to our website and our corporate presentation to read the cautionary note. Today’s speakers obviously are myself; we have Andrew, raise your hand, our COO here in Toronto; we have Mike, our CFO here with me as well; and Christina is joining us from Montreal. So TRX, a lot of you will hear this in our presentations. We’re a very growing company. We have experienced management team that continues to deliver a rapid growth both on a production side, specifically on the production side, and we have a exciting blue sky potential on our property and the growth resources over time.

So the Buckreef Gold Project, just to give everybody a reminder, the Buckreef Gold Project, right now we have under the 2020 resource statement, 2 million ounces in the measured and indicated category, around 1.8 grams tonne. As a lot of you know, the deposit does come to surface and it’s relatively flat and it’s a vertical shear zone, so it’s easily mineable. The widths are around 20 meters, easy metallurgy, and grind crush CIL in the oxide ore. And as we’ll get into in this presentation, which is very exciting during the year, is our results around the sulphide ore, which continue now to be moved into the mine plan and processed. We are fully permitted to grow as large as we can. Our permit has been extended to 2032, and it’s renewable for the life of the deposit.

The processing plant and mine consistently are meeting production guidance. We have a minimal environmental footprint. We recycle all water. We have good tailings management. We’re connected to national power grid and we adhere to all international standards around environmental standards and a good ESG program as well. And we have exceptional exploration potential which hopefully will mean that this mine life goes on for a considerable period of time and with a special mining license, we can do that. So with regards to the 2023 highlights, there was a lot of growth. And as I’ve — as — we, as a management team have told market participants is our goal now is to predominantly self-fund operation and manage capital, your capital with minimal dilution.

And I think we’ve achieved that in 2023. We generated record revenue, operating cash flow and an adjusted EBITDA with a great profit margin. Mike will get into the statistics now in a minute. And then predominantly, reinvested that right back into the business to continue to grow it. So I think this is the first year that we’ve been able to execute on that business plan. And with the expansion that is to occur in the next 3 to 6 months then that’s going to enable us to have you more cash flow to reinvest back into the business and the business potential both on a production profile basis, as well as at the resource expansion basis. So in 2023, we executed on the 1,000 tonne per day plant, it came in on time and on budget for $6.4 million. We are now going through another mill expansion which will increase its throughput capacity by 75% to 100%.

The production capacity will be dependent on the grade that will go through that and we’ll give more guidance on that in the future. We also unlocked the whole deposit, particularly in the Buckreef Main Zone, because everything we’re talking about here right now is Buckreef Main. And so we’re not talking about Anfield or Eastern Porphyry or other exploration targets on the property. The sulphide ore has gone through the mill. We did a bulk sample. It continues to go through the mill today. What we’re in the process of doing now is — and this is normal operational sort of things with regards to processing plants, is what’s the right mix of oxides and sulphides to go through to get an appropriate, more balanced recovery rate over time and over the life of the project.

That all has to do with suspensions and things like that, that the metallurgies didn’t really get into. And in 2023, we’ve extended the known mineralization around our Main Zone by 500 meters, and we’ve also had discovery of the Anfield zones and continue to work on figuring out where to go next, Andrew. And you’ll get into that in a few — in about 10 to 20 minutes on how you’re going to go about blocking and tackling a good exploration program, particularly as this new plant comes on board and expand — hopefully expand the life of the deposit. So with that, I had planned to hand over to Mike and he will go through the financial results for 2023.

Michael Leonard : Thank you, Stephen. Good morning, everyone. Thanks for joining us. As Stephen touched on, it was a record year operationally for us at TRX. We produced almost 21,000 ounces on the year that was in line with our full year guidance of 20,000 to 25,000 ounces and that was after us having brought the 1,000 tonne a day plant online back in October of last year. We sold all of what we produced during the year at an average realized price of $1,845 an ounce for the full year. You can see in Q4, gold prices exceeded $1,900 an ounce and are now trading beyond $2,000 an ounce. In fact, this morning, we were up over $2,050. So record levels and certainly suggest record growth going into next year. In terms of financials, the record production drove record financial results as well.

As Stephen touched on we had record revenues of over $38 million. Our cost of sales came in at just over $20 million which meant a gross profit of over $18 million or almost 50%. So a very cost effective high margin operation. We had record net income of $7 million, EBITDA of almost $14 million and importantly operating cash flow over $17 million which got reinvested back into the business, so I’ll touch on that. But again for investors who’ve been tracking this story, this is the third year of growth since we’ve come on board. It’s been year over year over year growth and we certainly expect this growth to continue into next year as we expand to 2,000 tonnes a day. On the cash cost side, we recorded cash costs of $904 an ounce for the full year.

Now this was above the high-end of our previously guided range of $750 to $850 an ounce. And this was primarily due to higher than expected processing costs that we incurred in Q4. There’s a couple of reasons for that, that we called out in our MD&A. One of which was higher than expected maintenance costs. We ended up encountering a mill motor failure on one of our ball mills that required some unexpected maintenance and that was coupled with an overhaul of our crushing circuit. So there was roughly $30 an ounce variance for unplanned maintenance that we expect to normalize into next year. And secondly, in Q4 we experienced inconsistent unstable power from the TANESCO Power Grid. What that meant was we ended up using higher than expected gensets power which consumed fuel at a higher rate than what we had previously forecast or budgeted and that led to about an $18 an ounce impact on full year cash costs.

Importantly, we have since been reconnected to a new substation that is substantially closer to Buckreef. This substation is about 60 kilometers away from Buckreef where the previous substation was over 250 kilometers away from Buckreef. We got connected to that grid in November and have seen consistent grid power over the last few weeks. And consequently, expect cost to be lower heading into next year. We’ll talk about guidance in a moment but suggest lower costs year-on-year. And I guess the last bullet I’ll touch on as Stephen mentioned at the outset, our mantra is using organically generated cash flow to reinvest back into the operation around value accretive activities. We took that $17 million, $18 million of operating cash flow that we generated, put it right back into the business.

As we’ve touched on many times, we expanded the plant from 360 tonnes a day to 1,000 tonnes a day. We’re on our way towards 2,000 tonnes a day and we have already procured a mill. We’ve set ourselves up for this growth by expanding our tailings storage facility to accommodate the higher production volumes. And again, we look at additional infrastructure capital assets. We’re doing long-term studies, all in an effort to support the long-term growth of this business and doing what we said we would do, reinvesting cash flow in value-accretive way. Next slide please.

Stephen Mullowney: Excellent. Well, thank you, Michael. That’s great. Financial metrics are improving significantly and we continually expect those financial metrics to improve into this year, which we’ll get into guidance again and these are, I think it’s fair to say projects that you get it going and then you’re able to expand it much more quickly over time. So it’s almost like pushing a snowball off a hill. It gets bigger and bigger and bigger as it goes down that hill, and it gets easier to do. Yes. So we’re quite excited for that. And one of those factors is the sulphides. So we were in an extremely wet season last year. It was raining. I think it was once in a 100 years or something like that, Andrew, with regards to the rainfall in the spring.

And so when you’re into that environment, hard rock is easier to process than oxide rock, because hard rock is not as sticky, doesn’t have clay in it, and sulphides — sorry, oxides do. So we pivoted a little bit to the sulphide to see how they would work. They worked out just fine. I believe 2019 or 2020 metallurgical study, 2020 preliminary metallurgical study said that we should get recovery rates in the mid to high-80s. That’s what we experienced when we put the mill feed through our mill. And subsequently, that will go into the long-term mine planning now and into the current mine planning. So this is significant, because 90% of the resources on the Buckreef Main Zone are in sulphides and we are hitting the sulphides. Who’s that on top of the — in the pit there, Andrew, on top of the harder rock?

Andrew Cheatle : Well, that’s, Paschal. That’s our Senior Mining Engineer who is clearly demarcating the sulphides, which you can see, which has come from rock is — that’s kind of gray color. And that particular rock is actually running at 5.8 grams a tonne.

Stephen Mullowney: And so, Andrew take — in the picture on the bottom, can you take the investors through what they’re really seeing in the pit? Because you could see the transition zone, you could see the oxide zones, and you could see it started sulphide zones.

Andrew Cheatle: That’s right, Stephen. Thank you very much and good morning to everybody. So in the photograph on the bottom, obviously if you look at the pit itself you’ll see the top part of the — very top part of the pit you’ll see the brown layer. That is our top soil. Then we go into sort of the ochre orange colors, that is our oxide zone. It’s about 20, 25 meters thick. And then if you just look right at the back of the bottom of the page, you’ll see the gray rock. And that is sulphides and so we’ve started to expose the sulfides in the very deepest part of our pit, which is what you’ve been talking about here with the whole example.

Stephen Mullowney : Yes. Exactly. So on to the next slide, the 2,000 tonne per day mill expansion. So as I’ve explained to lots of investors over time, we are on a pay as you go program, and what does a pay as you go program mean? It means that as the business generates cash, it will be reinvested into the business to grow it. So that essentially means that timelines can move up and timelines can move backwards, depending on hitting target. So as Mike mentioned, in Q4, we ran into power issues, which have subsequently been resolved. And we also had a motor go down which was really related to power issues from a bus. So we didn’t hit the production profile. Although we hit year-end guidance, we were a little bit behind on where we were ideally hopeful to getting to.

So that has delayed and the pay as you go program, the mill expansion a little bit, but not a lot. And so we expect this project to come on or — in the first half of fiscal 2024. The mill is on site. The other long lead items have been ordered. We are going to expand, and this is a little bit of a switch from what I explained previously. The crushing circuit will be expanded first to over 2,000 tonnes a day. That will enable us to put in place a expanded crush stockpile which will give us more consistent mill feed and I’m hopeful and I’ll be pushing the team to get over a 1,000 tonnes a day while we have that crushing system up and running. We have budgeted for that, but that’s the goal. And then subsequently to that the rest of the system will come online, including electrical works.

The plinth will be poured soon, we got some long lead item on the ball mill and all the other parts and tanks and things of that nature will come in thereafter. So capital costs of the mill expansion is around $6 million. It’s going to be funded through existing cash resources. Obviously, we’ve got a big ore stockpile and go forward sales at bank financing, which we’re always in conversations around, and we’re going to build this in a 100% Tanzanian way just as we built the previous mill expansions and expect it to come in and work just as well as the existing plants have worked. We don’t anticipate any problems in the ramp up of this plant because we’re producing a 1,000 tonnes a day, really doubling it. Ironically, this year, the mining rates don’t need to increase to accommodate this in this year’s budgets.

So we’re good on that angle and the tailings facility as you can see down in the bottom is constructed. There need to be a couple lifts, but that’s straightforward and you can see the procurement and fabrication on site of various other components around the mill expansion. And I expect that investors here will have quite a few questions on that as we get to the end of the presentation. But now on to the excitement, that’s expansion. But I know everybody wants to understand how are we going to take this physical assets in process capacity and we’re obviously going to continue to grow it after we get to 2,000 tonnes a day. But how are we going to feed it and where are all the resources going to come so we can have a long, long, long mine life here?

Andrew, over to you.

Andrew Cheatle: Thank you, Stephen and thank you, Mike. And as you know I particularly like this slide. We’re going to be here for a few minutes folks and do bear with me. As you can see we did have a program that was just under 7,000 meters of drilling including infill sterilization and pure exploration. As Stephen you already mentioned that we’ve been able to extend mineralization to the North a little bit deeper to the South. It’s right underneath the South pit, about 500 meters there to the Northeast and Southwestern at depth. And we’ve also been able to get some exploration results through the drill bit now on the Anfield and Eastern Porphyry which has confirmed multiple zones of strong mineralization that is subparallel and in close proximity to the Buckreef Main Zone.

And this is a very, very important opportunity for future mineral resources. Why do I say that? The way to sort of secure continuous increases in throughput is probably to have several pits available to us. We’ll have the main pit, we’ll have the South pit in time. We will also be going underground and I think this is the first time you’ve heard me talking about this deposit brought to underground. Through archaeological work we have been able to delineate and define 2 to 3 high grade shoots and so I’m very confident to say this deposit will go underground and that also talks to a much longer life of mine. But in multiple pits Main Zone South pit, and then, Anfield and Eastern Porphyry, that gives us optionality and continuity of our mining.

Stephen Mullowney: I’m just going to pause you there, Andrew, for a sec before you get into that. So why don’t you explain to the investors when you determine how you switch from open pit to underground and the importance of strip ratio in that and just so the investors can understand how you make that economic decision?

Andrew Cheatle: It’s a really, really good question, Stephen. It’s also a very, very important part in our mine planning and scenarios that we’re currently in the middle of doing. So once the strip ratio gets say high maybe 6, 7 to 1 or that kind of number, it becomes more economical to go underground. And we have to find those high grade shoots. And when we go underground, we also would be mining at a higher grade over those 20 to 30 meters. Those widths we have made for very economical mining and underground environments in the stripping that we’ll be doing. So it will be a cost tradeoff between strip ratio, so all turns plus the widths we have to mine, versus the developments that we have to put in place to go and mine the stopes underground.

Stephen Mullowney: So given we have a vertical deposit.

Andrew Cheatle: Perfect.

Stephen Mullowney: As you go around and you go deeper, you have to strip out and you have to get your valves angled properly. So given that we’re vertical and 20 meters wide, this deposit is very susceptible and good rock continuity. It’s very susceptible to underground mining. And it probably will be cheaper over time, the underground mining at the pit.

Andrew Cheatle: It will be and also the quality of the underground. We’ve seen already from preliminary reports, it’s very good. And I can also talk from my own background as an underground miner that the rock is very, very good for underground mining.

Stephen Mullowney: So we won’t need to see as we were talking about this morning, all kinds of underground, steel supports that add up to the cost because we — where you got very common of rock where you put bolts and mesh in.

Andrew Cheatle: That’s right. We won’t. And just as a quick comment you know we are mining through some very, very small amounts of old stopes from the old days that’s in the reports. And that those stopes and that development has stayed open for the last 40 years. No. It’s still there.

Stephen Mullowney: Yes. I pictured that the other day. That’s an important point. How the old stopes have been there 40 years, they’ve been flooded, not dried up. We’ve pumped them out, and they’re still very intact.

Andrew Cheatle: That’s correct. It’s been very good. So, very quickly one of the highlights — and I’ve — of course you’d expect me just to choose 2 of my favorites and I have. On the Eastern Porphyry what have we seen here? Our best result here was a 14 meters great width at 3.5 grams a tonne including 3 meters at just under 11. And do note that, that is from 27 meters below surface. It’s very, very close to the surface. In addition to that, we’ve got the Anfield Zone. So it’s about another 1.5 kilometer away. We intersect at 2.9 meters at 13.7 grams a tonne. Again, quite shallow from 43 meters. And some of the investors that have been with us for a couple of years, you might — and I think it’s the end of the presentation though Christina, we still have the picture of a guy holding a rock and that is from the Anfield Zone.

So we drew all that position and here we are just under 3 meters. That’s nearly 14 grams a tonne. A great result very early in the program. I still remain very, very bullish on that overall trend. And then underneath the South pit, we’ve been very pleasantly surprised by getting wide zones of mineralization at between 1 to 2 grams a tonne rate, similar to our main deposit. And we’re actually currently doing water in the South pit, trying to get that back into the mine plan later this year.

Stephen Mullowney: Excellent.

Andrew Cheatle : Thank you, Stephen.

Stephen Mullowney: So with regards to guidance for the year, obviously, as everyone knows and hearing the TRX story, we’re able to build mills and capacity relative to the market, extremely cheaply, Mike. Like, I don’t see anybody able to put up a 2,000 tonne per day plant. If we look at all of the costs of that, including our expansions, it’s less $20 million. It’s more around $16 million, $17 million. We challenge people to go and see where else that has been done for because I haven’t seen anything less than $50 million, $60 million, $70 million for a similar type of asset in other parts of the world.

Michael Leonard : And I think we had studies suggesting as well. So this has been very capital efficient to your point.

Stephen Mullowney: Yes. Exactly. So we’re going to be doing that as the third mill expansion. The production guidance for the year is going to be 25,000 to 30,000 ounces. That’s not the run rate of the 2,000 tonne per day plant. That’s a 1,000 tonne per day plant operating for over the majority of the year and then the 2,000 tonne per day plant coming online, so the 2,000 tonne per day plant is higher than that guidance. Cash costs will come in at $800 to $900 an ounce as of next year. And, again, we expect that to probably be a little bit lower when the full plant comes online as a run rate.

Michael Leonard: Well, I might just make a couple of comments on that, Stephen. I mean, we talked about power and being connected to a grid, a substation that’s substantially closer to site, so expect some benefit that way. But importantly, we expect to receive significant economies of scale from a larger plant. We’ve been telling investors this for quite some time. We don’t need to expand the workforce substantially to grow from a 1,000 to 2,000 tonnes a day. So inevitably, things like your processing cost per tonne and your cash cost per ounce come down because you’re able to use the existing workforce to produce twice the output.

Stephen Mullowney: Yes, exactly. So the numbers that we’re presenting here are blended numbers between 1,000 tonne and 2,000 tonne today.

Michael Leonard: And I may just make one final comment. You touched on our mantra, our pay as you go mantra. And we explained how to the extent there had been unexpected variances to the downside like no motor breakdowns or power connectivity issues, it can go the other way as well. If the team is able to exceed some of the targets and guidance figures that we’ve put on the slide here, we move up some of that capital expenditure and try and bring that plant online ahead of time.

Stephen Mullowney: Yes. When we look at the models, it makes sense to do that.

Michael Leonard : Yes. 100%.

Stephen Mullowney: 100% So it really makes sense to do that. So again, our business plan is pretty simple. Produce gold, pay for exploration to drilling, pay for additional capital programs, and enhance our social license as we do that over time. That’s the goal that we have. In 2023 we’re able to do it and I’m hopeful that in 2024 we’re able to do it again and thereafter. So mindful ESG, when I say ESG, we are good corporate citizens. I’ve always said this that a mine has a lot of inputs in mining, construction and capital costs and things of that nature. Thus, as you can see in our operating cost plus capital would be over 50% of the revenue because you got to put your capital expenditures in there too. And the biggest beneficiaries of that should be local people.

We’re able to do that and we’re a 100% Tanzanian on site and we procure as much as we can in Tanzania and they are great workers and have done a good job in building out our assets. That helps to reduce local social risk, we also have our traditional miners in this area around Buckreef, that is not abnormal for Tanzania or Africa, and we work with them and we reinvest into schools and into health facilities. We have to — it may call a joint venture partner and overall goal is to have a much more clean, smooth and efficient operation as a result of utilizing as much local content as possible and adhering to the highest corporate governance as possible as well.

Andrew Cheatle: Stephen, if I may. I mean, it substantially reduces our supply chain risk as well.

Stephen Mullowney: Yes, it does. And inflation risk as well, which you’re seeing in the Western world. So with regards to news flow upcoming, the mill expansion is underway. We will have a updated study or at least modeling of the Buckreef Gold Main Zone. So everything we’ve been talking about around production is Main Zone only. We have metallurgical geotechnical studies underway currently that will feed into that and then we need to give to market a much better sense of where this Main Zone can go and what our business plan is around increasing resources to have much longer life project here at Buckreef. With regards to share price over the last year or so, our share price relative to market participants I believe has held up decently well.

We’re in a cash position of $7.6 million as of August 31, 2023. As of today we’re a little bit above that. So we’ve been maintaining our liquidity profile in this environment and we’re covered by 3 brokerages out of United States. I believe some of them are on this call and will be asking questions. So all in all, I’d like to see a higher share price. Everybody always likes to see a higher share price. Tough market conditions, I think we’re weathering the storm fairly well, but ultimately we do want to make sure that we get to a higher share price over time. We believe that we can do that by driving the current business plan, may take time because we’re on a pay as you go program, it could move up or can move back a little bit. And now I’d like to hand it back to Christina and the operator, for any questions.

As you can see from our slide and a lot of participants would have seen this slide, always a lot of activity happening at Buckreef.

Christina Lalli: Thank you, Stephen.

Operator: [Operator Instructions] Our first question is from Heiko Ihle with H.C. Wainwright.

Heiko Ihle: In your press release, you state and quote, lower cash costs are expected in the second half of year once the ramp up is complete and the processing plant achieves a steady state. Can you maybe quantify the lower cash costs that you think we might see? I assume there is some sort of modeling you’ve done. And then also just conceptually, would it be fair to take the first half of the year at the higher end, the $900 mark of your range, and then assume the second half will be closer to the lower end of the range, or is the delta even bigger in a way that the first half is over the $900 and the second half below the $800?

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Q&A Session

Stephen Mullowney: Mike?

Michael Leonard: Yes. I mean, we’ve obviously not guided to that level of detail, but — yes, Heiko. But inevitably as I mentioned, we expect to realize economies of scale as we move towards 2,000 tonnes a day. So certainly expect Q4 to be amongst the lowest cost quarter once the 2,000 tonne a day plant hits its steady state capacity. But I think the way you’re thinking about it is right. The front-end of the year will be towards the higher end of the range, and the back end of the year towards the lower end, and certainly average out over the course of the year.

Heiko Ihle: Okay. In your internal model, the 2,000 tonne day processing plant, when do you think that will become cash flow positive on a monthly basis? Is there any sort of modeling that’s been done?

Michael Leonard: Q4.

Heiko Ihle: But monthly?

Michael Leonard: When you say monthly, Heiko, you mean, is it cash flow positive on a monthly basis?

Heiko Ihle: Which month is more money coming out than going in?

Michael Leonard: I’d say the start of Q4 is the expectation if it comes online in Q3. So in our case, that’s probably June.

Stephen Mullowney: Yes. So, Heiko, the way this is working and — it’s always operating cash flow positive. It’s significantly operating cash flow positive. It’s just that operating cash flow is being reinvested into CapEx to build it out. And so it will — once the new plant comes online, obviously, we’re moving — we’re using all operating cash flow to bring this plant on as quickly as possible or predominantly most of it.

Michael Leonard: So it’ll be — based on the current schedule, it’ll be built and commissioned and sort of ramping up over the course of Q3 and then fully operational towards the start of Q4 at which point it starts generating excess cash.

Operator: The next question is from Jake Sekelsky with Alliance Global Partners.

Jake Sekelsky: Just building on Heiko’s question a bit in the ramp to 2,000 tonnes a day. Are you able to touch on the anticipated grade profile at the higher levels of throughput? I mean is it going to be similar to what we’ve seen over the last year or so? Any color there would be helpful.

Stephen Mullowney: Do you want to comment on what the grade profile at the strip?

Andrew Cheatle : Yes. So Jake as we get to 2,000 tonnes a day, you’ll see a little bit pull back on the grade. There’s two reasons for that. Obviously we are fast-tracking the high grade so that we can build the plant. As a result of that we end up with a medium to lower grade stockpile which is available for us to process. Of course, we might be incurring the mining costs on that because it’s already mined. So we expect to see some pullback on the grade in the final quarter.

Jake Sekelsky: And then just looking out over the medium-term, looking at additional expansions beyond the 2,000 tonne a day plant, do you expect to continue to scale gradually like you have been? Or do you think you might try and step up to call it, the 100,000 ounce a year range in a single expansion scenario?

Stephen Mullowney: So that’s — we’re prepared to do it both ways, as long as it makes valuation sense from a shareholder perspective. So, right now, as I mentioned, the cost of us able to build these plants has been very good. We are aware where to get plants that can get us there quicker. And so then it comes down to a financing question around the capital requirements for that versus the pay as you go program and the ability of bringing in external sources of financing such as bank finance, project finance, those sort of things would need to be procured if you were to go a lot quicker. But certainly, I think we’re going to look at that and we’re going to go in the most shareholder-accretive fashion. Our goal is, is to have the highest NAV per share that we can, the highest EBITDA per share, those type of metrics and to do an evaluation for the expansion project and we’re currently going under that looking at some of that analysis now, Jake, and it will be done in that fashion.

But certainly, that option will be fully on the table if it makes sense for shareholders.

Jake Sekelsky: And then just timing for that. I mean, it sounds like you’re looking at both options now. Is that something we might see news on in the first quarter or towards the middle of next year?

Stephen Mullowney: I would suspect that’s going to be more towards the middle of next year looking at that. And just because, we put a particular type of scenario into the market, we always adjust if it makes sense. So it can change over that particular period of time and we’re getting now as we get a good feel of the asset and it’s taken us a while to do that. The — now that we have a really good feel of the asset, we should be able to get sort of any pivots into the market a lot quicker.

Operator: The next question is from Mike Niehuser with ROTH MKM.

Mike Niehuser: I just want to congratulate you on your discipline, Stephen, since you’ve come on and particularly over the last year how almost the operating cash flow equals your investment. It’s pretty clear that you’re keeping to putting all the money back into the project and really pushing it out in all directions it appears. So, most of my questions were answered on either your presentation or the other analysts, but if I could just throw out — kind of re-ask in a general way to get a little bit more comment, I would appreciate it if you don’t mind. One thing you mentioned was the gold price and cost in Tanzania. From a U.S., North America perspective, how do you look at the benefit of working in Tanzania from an operating cost basis?

Stephen Mullowney: Yes. I would say, look, we have this debate a lot between — well, I guess the market does between what is a Tier 1 jurisdiction? And I look at Tanzania in the case of the social infrastructure is in place. So what does that mean? It means that you get qualified people to run and operate your business and they have good experience in mining — world class mining operations elsewhere particularly throughout Africa and come back home. So the educational system is in place before that. Also the skilled labor is in place to build tanks and plinths and electrical works and all that. And so that’s very important as well in building out an operation. There’s lots of contract miners. Remember, we haven’t bought a fleet to do our mining here.