TRX Gold has revealed the results of its Preliminary Economic Assessment (PEA) for the Buckreef Gold Project expansion in Tanzania.

 This assessment outlines plans to augment the current process plant's capacity to 3,000 tonnes per day and shift from open pit to underground mining over the next two to three years.

The PEA results suggest a promising financial outlook, with a base case net present value (NPV) of $701 million pre-tax or $442.2 million after tax, considering consensus gold price forecasts. An upside scenario with gold priced at $3,000 per ounce projects an NPV of $1,180.5 million pre-tax or $766.4 million after tax. Significantly, the company might finance the expansion through internally generated cash flows, avoiding initial capital outlay, and thus an internal rate of return was not quoted.

Over an estimated 17.6-year lifespan, the expanded plant aims to process 18.1 million tonnes at an average grade of 2.14 grams per tonne, with expected average gold production of around 62,000 ounces annually. In contrast, the first five years of underground operations are projected to yield over 80,000 ounces per year. Life of Mine (LOM) cash costs are projected to average $1,024 per ounce, with all-in sustaining costs averaging $1,206 per ounce.

The growth capital needed over the next four years totals $89 million, allocated as $55 million for underground expansion, $30 million for process improvements and infrastructure upgrades, and $3 million for tailings facility improvements. Overall LOM growth capital is estimated at $175 million, mainly focused on underground developments, alongside sustaining capital costs of $87 million for site and plant and $97 million for underground mining.

The PEA mine plan is based on Measured and Indicated Mineral Resources of 10.8 million tonnes grading 2.57 grams per tonne, containing 893,000 ounces of gold, with additional Inferred Resources of 9.1 million tonnes at 2.47 grams per tonne, containing 726,000 ounces. Leveraging existing infrastructure, TRX Gold anticipates commencing gold production from the underground expansion within three years.

Based on the one-year price targets offered by 3 analysts, the average target price for TRX Gold Corp (TRX, Financial) is $1.20 with a high estimate of $1.75 and a low estimate of $0.85. The average target implies an upside of 263.99 percent from the current price of $0.33. More detailed estimate data can be found on the TRX Gold Corp (TRX) Forecast page.

Based on the consensus recommendation from 3 brokerage firms, TRX Gold Corp's (TRX, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.

Based on GuruFocus estimates, the estimated GF Value for TRX Gold Corp (TRX, Financial) in one year is $0.84, suggesting a upside of 154.8 percent from the current price of $0.329675. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the TRX Gold Corp (TRX) Summary page.