TRX Gold : Interim Condensed Consolidated Statements of Financial Position - Form 6-K

TRX Gold Corporation

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

(Expressed in Thousands of US Dollars)

		Note			February 29, 2024			August 31, 2023
Assets
Current assets
Cash						$	7,959			$	7,629
Amounts receivable			4				1,227				3,140
Prepayments and other assets			5				1,108				1,463
Inventories			6				5,874				4,961
Total current assets							16,168				17,193
Other long-term assets			4				3,328				2,948
Mineral property, plant and equipment			7				68,703				64,059
Total assets						$	88,199			$	84,200
Liabilities
Current liabilities
Amounts payable and accrued liabilities			15			$	12,802			$	11,571
Income tax payable							734				1,081
Current portion of deferred revenue			8				2,052				1,549
Current portion of lease liabilities							46				65
Derivative financial instrument liabilities			9				1,745				3,544
Total current liabilities							17,379				17,810
Lease liabilities							21				36
Deferred revenue			8				-				178
Deferred income tax liability							5,991				4,287
Provision for reclamation							887				833
Total liabilities							24,278				23,144
Equity
Share capital							165,518				164,816
Share-based payments reserve			12				9,088				8,807
Warrants reserve			13				1,700				1,700
Accumulated deficit							(121,309	)			(121,423	)
Equity attributable to shareholders							54,997				53,900
Non-controlling interest			14				8,924				7,156
Total equity							63,921				61,056
Total equity and liabilities						$	88,199			$	84,200

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

TRX Gold Corporation

Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Unaudited)

(Expressed in Thousands of US Dollars, except per share amounts)

			Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
		Note		2024			2023			2024			2023
Revenue		18		$	7,984			$	10,098			$	17,388			$	19,816
Cost of sales
Production costs					(3,681	)			(4,128	)			(8,189	)			(7,646	)
Royalty					(603	)			(757	)			(1,298	)			(1,454	)
Depreciation					(428	)			(294	)			(912	)			(487	)
Total cost of sales					(4,712	)			(5,179	)			(10,399	)			(9,587	)
Gross profit					3,272				4,919				6,989				10,229
General and administrative expenses		16			(1,767	)			(2,035	)			(3,978	)			(3,872	)
Change in fair value of derivative financial instruments		9			1,600				(965	)			1,799				2,400
Foreign exchange gains					142				65				62				58
Interest and other expenses					(445	)			(856	)			(918	)			(1,041	)
Income before tax					2,802				1,128				3,954				7,774
Income tax expense		10			(881	)			(1,178	)			(2,072	)			(2,664	)
Net income (loss) and comprehensive income (loss)				$	1,921			$	(50	)		$	1,882			$	5,110
Net income (loss) and comprehensive income (loss) attributable to:
Shareholders				$	1,080			$	(1,399	)		$	114			$	2,113
Non-controlling interest					841				1,349				1,768				2,997
Net income (loss) and comprehensive income (loss)				$	1,921			$	(50	)		$	1,882			$	5,110
Earnings (loss) per share attributable to shareholders:
Basic and diluted earnings (loss) per share		11		$	0.00			$	(0.00	)		$	0.00			$	0.01

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

TRX Gold Corporation

Interim Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(Expressed in Thousands of US Dollars, except share amounts)

		Share Capital		Reserves
			Number of Shares				Amount				Share-based payments				Warrants				Accumulated deficit				Shareholders'equity				Non-controlling interests				Total equity
Balance at August 31, 2022			276,146,184			$	163,946			$	6,825			$	1,700			$	(123,673	)		$	48,798			$	2,361			$	51,159
Shares issued for share-based payments			743,786				481				(481	)			-				-				-				-				-
Share-based compensation expense (Note 12)			-				-				1,600				-				-				1,600				-				1,600
Witholding tax impact on restricted share units ("RSUs")			-				-				87				-				-				87				-				87
Net income for the period			-				-				-				-				2,113				2,113				2,997				5,110
Balance at February 28, 2023			276,889,970			$	164,427			$	8,031			$	1,700			$	(121,560	)		$	52,598			$	5,358			$	57,956
Shares issued for share-based payments			379,728				194				(198	)			-				-				(4	)			-				(4	)
Share-based compensation expense			-				-				1,097				-				-				1,097				-				1,097
Witholding tax impact on RSUs			-				-				(33	)			-				-				(33	)			-				(33	)
Shares issued for cash, net of share issuance costs			200,000				105				-				-				-				105				-				105
Shares issued for cashless exercise of options			155,619				90				(90	)			-				-				-				-				-
Net income for the period			-				-				-				-				137				137				1,798				1,935
Balance at August 31, 2023			277,625,317			$	164,816			$	8,807			$	1,700			$	(121,423	)		$	53,900			$	7,156			$	61,056
Shares issued for share-based payments (Note 12)			1,610,306				702				(692	)			-				-				10				-				10
Share-based compensation expense (Note 12)			-				-				1,340				-				-				1,340				-				1,340
Witholding tax impact on share-based payments			-				-				(367	)			-				-				(367	)			-				(367	)
Net income for the period			-				-				-				-				114				114				1,768				1,882
Balance at February 29, 2024			279,235,623			$	165,518			$	9,088			$	1,700			$	(121,309	)		$	54,997			$	8,924			$	63,921

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

4

TRX Gold Corporation

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in Thousands of US Dollars)

				Six months ended February 29,			Six months ended February 28,
		Note		2024			2023
Operating
Net income				$	1,882			$	5,110
Adjustments for items not involving cash:
Non-cash items		20			2,744				1,630
Changes in non-cash working capital:
Decrease in amounts receivable					1,783				2,400
Increase in inventories					(709	)			(618	)
Decrease (increase) in prepaid and other assets					355				(1,193	)
Increase in amounts payable and accrued liabilities					445				3,561
(Decrease) increase in income tax payable					(333	)			536
Cash provided by operating activities				$	6,167			$	11,426
Investing
Purchase of mineral property, plant and equipment				$	(5,054	)		$	(9,635	)
Increase in other long-term assets					(380	)			(607	)
Cash used in investing activities				$	(5,434	)		$	(10,242	)
Financing
Withholding taxes on settlement of share-based payments				$	(367	)		$	(94	)
Lease payments					(36	)			(74	)
Cash used in financing activities				$	(403	)		$	(168	)
Net increase in cash				$	330			$	1,016
Cash at beginning of the period					7,629				8,476
Cash at end of the period				$	7,959			$	9,492
Taxes paid in cash				$	700			$	-

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

5

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

1.	Nature of operations

TRX Gold Corporation ("TRX Gold" or the "Company") is incorporated in the Province of Alberta on July 5, 1990 under the Business Corporations Act (Alberta). The Company's principal business activity is the exploration, development and production of mineral property interests in the United Republic of Tanzania ("Tanzania").

The Company's registered office is 400 3^rd Avenue SW, Suite 3700, Calgary, Alberta, T2P 4H2, Canada and 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.

2.	Basis of preparation

a)	Statement of compliance

The Company's interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standards ("IAS") 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, 2023.

These interim condensed consolidated financial statements were approved by the Board of Directors of the Company on April 10, 2024.

b)	Basis of presentation and measurement

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 17. All amounts in these interim condensed consolidated financial statements are presented in U.S. 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 U.S. dollars and C$ or CAD is to Canadian dollars.

3.	Material accounting policies, judgements and estimates

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, 2023, except as described below:

6

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

In February 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice Statement 2, Making Materiality Judgements, requiring that an entity discloses its material accounting policies, instead of its significant accounting policies. Accounting policy information is material if, when considered together with other information included in an entity's financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. Accounting policy information that relates to immaterial transactions, events or conditions is immaterial and need not be disclosed. The IASB has also developed guidance and examples to explain and demonstrate the application of the 'four-step materiality process' described in IFRS Practice Statement 2.

The amendments to IAS 1 and IFRS Practice Statement 2 were adopted on September 1, 2023 and did not have a material impact on the Company's interim condensed consolidated financial statements.

Definition of Accounting Estimates (Amendments to IAS 8)

In February 2021, the IASB issued amendments to IAS 8, Accounting policies, changes in accounting estimates and errors. The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error and effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors.

The amendments to IAS 8 were adopted on September 1, 2023 and did not have a material impact on the Company's interim condensed consolidated financial statements.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

In May 2021, the IASB issued amendments to IAS 12, Income Taxes. The amendments to IAS 12 narrow the scope of the initial recognition exemption so that it no longer applies to transactions which give rise to equal amounts of taxable and deductible temporary differences. The Company is to recognize a deferred tax asset and deferred tax liability for temporary differences arising on initial recognition for certain transactions, including leases and reclamation provisions.

The amendments to IAS 12 were adopted on September 1, 2023 and did not have a material impact on the Company's interim condensed consolidated financial statements.

7

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

4.	Amounts receivable

		February 29, 2024			August 31, 2023
Receivable from precious metal sales		$	-			$	488
Sales tax receivable(1)			4,491				5,554
Other			64				46
		4,555				6,088
Less: Long-term portion			(3,328	)			(2,948	)
Total amounts receivable		$	1,227			$	3,140

(1)

Sales tax receivables consist of harmonized services tax and value added tax ("VAT") due from Canadian and Tanzanian tax authorities, respectively. Tanzanian tax regulations allow for VAT receivable to be refunded or set-off against other taxes due to the Tanzania Revenue Authority ("TRA"). The Company has historically experienced delays in receiving payment or confirmation of offset against other taxes. The Company is in communication with the TRA and there is an expectation for either cash payments or offsetting of VAT receivable against other taxes in the future. VAT which the Company does not expect to recover within the next 12 months has been classified as long-term assets.

The Company held no collateral for any receivables. During the three and six months ended February 29, 2024, $nil (February 28, 2023 - $0.2million) of VAT was written-off. During the three and six months ended February 29, 2024, the Company recovered VAT refunds from the TRA of $1.3million and $2.6million, respectively (February 28, 2023 - $nil and $nil, respectively).

5.	Prepayments and other assets

		February 29, 2024			August 31, 2023
Prepaid expenses		$	401			$	796
Deferred financing costs(1)			707				667
Total prepayments and other assets		$	1,108			$	1,463

(1)

Consists of $0.5 million in commitment fees paid with respect to a share purchase agreement whereby the Company, at its sole discretion, has the right to sell up to $10 million of its common shares over a 36-month period and $0.2 million in deferred financing costs related to an At-the-Market Offering Agreement entered on May 12, 2023.

6.	Inventories

		February 29, 2024			August 31, 2023
Ore stockpile		$	4,183			$	3,361
Gold in circuit			808				689
Gold doré			109				52
Total precious metals inventories			5,100				4,102
Supplies			774				859
Total inventories		$	5,874			$	4,961

8

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

7.	Mineral property, plant and equipment

		Exploration and evaluation expenditures(1)			Mineral properties			Processing plant and related infrastructure			Machinery and equipment(2)			Other(3)			Total
Cost
As at August 31, 2023		$	1,864			$	41,202			$	23,063			$	1,624			$	351			$	68,104
Additions			206				2,106				3,465				12				-				5,789
As at February 29, 2024		$	2,070			$	43,308			$	26,528			$	1,636			$	351			$	73,893
Accumulated depreciation
As at August 31, 2023		$	-			$	899			$	2,138			$	828			$	180			$	4,045
Depreciation			-				864				131				114				36				1,145
As at February 29, 2024		$	-			$	1,763			$	2,269			$	942			$	216			$	5,190
Net book value
As at August 31, 2023		$	1,864			$	40,303			$	20,925			$	796			$	171			$	64,059
As at February 29, 2024		$	2,070			$	41,545			$	24,259			$	694			$	135			$	68,703

(1)	Represents exploration and evaluation expenditures related to the Eastern Porphyry and Anfield deposits on the Buckreef property.

(2)	Includes automotive, computer equipment and software.

(3)	Includes leasehold improvements and right-of-use assets.

8.	Deferred revenue

On August 11, 2022, the Company entered into a $5.0million prepaid Gold Doré Purchase Agreement ("Agreement") with OCIM Metals and Mining S.A. The Agreement requires funds to be made available to the Company in two tranches. During the three months ended November 30, 2023, the Company fully settled $2.5 million drawn on the first tranche of the Agreement.On July 11, 2023, the Company drew $1.0million from the second tranche of the Agreement in exchange for delivering 46.4 ounces of gold per month, commencing October 2023, for a total of 603 ounces of gold over 13 months. On September 26, 2023, the Company drew an additional $0.5million from the second tranche of the Agreement in exchange for delivering 23.5 ounces of gold per month, commencing December 2023, for a total of 305.4 ounces of gold over 13 months. On November 29, 2023, the Company drew an additional $1.0million from the second tranche of the Agreement in exchange for delivering 44.1 ounces of gold per month, commencing February 2024, for a total of 573.2 ounces of gold over 13 months.

		Amount
As at August 31, 2023		$	1,727
Drawdown			1,500
Accretion of deferred revenue			241
Revenue recognized			(1,416	)
As at February 29, 2024		$	2,052

9

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

		February 29, 2024			August 31, 2023
Current portion of deferred revenue		$	2,052			$	1,549
Non-current portion of deferred revenue			-				178
Balance at end of period		$	2,052			$	1,727

9.	Derivative financial instrument liabilities

		February 29, 2024			August 31, 2023
Derivative warrant liabilities		$	1,733			$	3,544
Gold zero-cost collars			12				-
Total derivative financial instrument liabilities		$	1,745			$	3,544

a)	Derivative warrant liabilities

		Amount
As at August 31, 2023		$	3,544
Change in fair value			(1,811	)
As at February 29, 2024		$	1,733

Derivative warrant liabilities of $1.7million will only be settled by issuing equity of the Company. For the three and six months ended February 29, 2024 fair value changes amounted to a gain of $1.6million and $1.8million, respectively (February 28, 2023 - loss of $1.0 million and gain of $2.4million, respectively).

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

		February 29, 2024		August 31, 2023
Share price		0.33		$0.39
Risk-free interest rate		4.40% - 4.60%		4.43% - 4.66%
Dividend yield		0%		0%
Expected volatility		46% - 49%		52%
Remaining term (in years)		2.0- 2.9		2.5- 3.4

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

10

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

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 29, 2024 would increase or decrease by:

		February 29, 2024
10% change in expected volatilities		Increase			Decrease
(Loss) income		$	(626	)		$	570

b)	Gold zero-cost collars

		Amount
As at August 31, 2023		$	-
Change in fair value			12
As at February 29, 2024		$	12

In December 2023, the Company entered into a series of gold zero-cost collar contracts for 600 gold ounces per month for a total of 3,000 gold ounces to be settled from January 2024 to May 2024, at a maximum and minimum gold price of $2,150 and $1,850 per gold ounce, respectively.

During the three and six months ended February 29, 2024, gold zero-cost collar contracts for a total of 1,200 gold ounces expired unexercised.

As at February 29, 2024, the following gold zero-cost collar contracts were outstanding:

Quantity (ounces)		Floor Price		Ceiling Price		Expiry Date
600		$1,850		$2,150		March 26, 2024
600		$1,850		$2,150		April 26, 2024
600		$1,850		$2,150		May 29, 2024

For the three and six months ended February 29, 2024, fair value losses amounted to $0.01million and $0.01million, respectively (February 28, 2023 - $nil and $nil, respectively).

11

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

10.	Income tax

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 70% of its taxable profit for the current year. The remaining 30% of taxable profit is subject to a statutory tax rate of 30%. As a result, Buckreef's current income tax is calculated at an effective tax rate of 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 29, 2024, the Company recorded income tax expense of $0.9million, comprised of current income tax expense of $0.1million and deferred income tax expense of $0.8million (February 28, 2023 - $1.2million income tax expense comprised of current income tax expense of $0.2million and deferred income tax expense of $1.0million). For the six months ended February 29, 2024, the Company recorded income tax expense of $2.1million, comprised of current income tax expense of $0.4million and deferred income tax expense of $1.7million (February 28, 2023 - $2.7million income tax expense comprised of current income tax expense of $0.5million and deferred income tax expense of $2.2million).

11.	Earnings (loss) per share

		Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
		2024			2023			2024			2023
Net income (loss) attributable to shareholders		$	1,080			$	(1,399	)		$	114			$	2,113
Weighted average number of common shares for purposes of basic EPS(1)			288,835,707				281,835,349				288,317,270				280,038,329
Effect of dilutive stock options, warrants, RSUs and share awards			2,126,123				-				2,478,001				6,109,446
Weighted average number of common shares for purposes of diluted EPS(1)			290,961,830				281,835,349				290,795,271				286,147,775

(1)	The weighted average number of common shares for basic and diluted EPS include 11.1 million gross number of vested, but unissued, common shares relating to common share awards.

For the six months ended February 29, 2024, the weighted average number of common shares for diluted EPS excluded 10.5million stock options and 36.2million warrants that were anti-dilutive for the period (February 28, 2023 - 7.4million stock options and 42.0 million warrants).

12

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

12.	Share-based payments reserve

Share-based compensation expense for the three and six months ended February 29, 2024 totalled $0.5million and $1.4million, respectively (February 28, 2023 - $0.8million and $1.6million, respectively).

As at February 29, 2024, the Company had 5,090,117(August 31, 2023 - 3,617,450) share awards available for issuance under the Omnibus Equity Incentive Plan.

a)	Stock options

Canadian Dollars denominated stock options

		Number of stock options			Weighted average exercise price per share
Balance - February 29, 2024 and August 31, 2023			4,986,000			CAD $0.41

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

						Remaining
		Number of options		Expiry		contractual
Exercise price		Outstanding		Exercisable		Date		life (years)
C$0.35		100,000		100,000		January 2, 2027		2.8
C$0.40		2,259,000		2,259,000		October 11, 2026		2.6
C$0.40		95,000		95,000		October 6, 2024		0.6
C$0.43		2,065,000		2,065,000		September 29, 2026		2.6
C$0.43		467,000		467,000		October 6, 2024		0.6
C$0.41(1)		4,986,000		4,986,000				2.4(1)

(1)	Total represents weighted average.

US Dollars denominated stock options

		Number of stock options			Weighted average exercise price per share
Balance - February 29, 2024 and August 31, 2023			10,450,000				$0.49

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

						Remaining
		Number of options		Expiry		contractual
Exercise price		Outstanding		Exercisable		Date		life (years)
USD $0.50		7,375,000		2,950,000		August 17, 2027		3.5
USD $0.45		3,075,000		615,000		August 28, 2028		4.5
USD $0.49(1)		10,450,000		3,565,000				3.8(1)

(1)	Total represents weighted average.

13

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

For the three and six months ended February 29, 2024, share-based compensation expense related to stock options totalled $0.1million and $0.3million, respectively (February 28, 2023 - $0.1million and $0.2million, respectively).

b)	Restricted Share Units

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

		Number of RSUs
Balance - August 31, 2023			3,473,077
Granted			57,432
Vested			(753,333	)
Balance - February 29, 2024			2,777,176

For the three and six months ended February 29, 2024, share-based payment expenses related to RSUs totalled $0.2million and $0.7million, respectively (February 28, 2023 - $0.1million and $0.3million, respectively).

13.	Warrants reserve

		Number of warrants			Weighted average exercise price per share			Weighted average remaining contractual life (years)
Balance - August 31, 2023			38,968,037			$	0.68				2.8
Warrants expired			(2,777,268	)		$	1.50
Balance - February 29, 2024			36,190,769			$	0.62				2.4

As at February 29, 2024, the following warrants were outstanding:

		Number of Warrants			Exercise price			Expiry date
Private placement financing warrants - February 11, 2021			16,461,539			$	0.80			February 11, 2026
Private placement financing broker warrants - February 11, 2021			1,152,307			$	0.80			February 11, 2026
Private placement financing warrants - January 26, 2022			17,948,718			$	0.44			January 26, 2027
Private placement financing placement agent warrants - January 26, 2022			628,205			$	0.44			January 26, 2027
Balance - February 29, 2024			36,190,769			$	0.62	(1)

(1)	Total represents weighted average.

14

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

14.	Non-controlling interest

Summarized financial information for Buckreef is disclosed below:

		Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
Income Statement		2024			2023			2024			2023
Revenue		$	7,984			$	10,098			$	17,388			$	19,816
Depreciation			428				294				912				487
Accretion expense			157				208				297				371
Income tax expense			881				1,178				2,072				2,664
Comprehensive income for the period			1,867				2,998				3,928				6,660

Statement of Financial Position		February 29, 2024			August 31, 2023
Current assets		$	9,314			$	11,238
Non-current assets			69,872				64,762
Current liabilities			(13,359	)			(12,113	)
Non-current liabilities			(6,878	)			(5,301	)
Advances from parent, net			(32,392	)			(36,049	)

		Six months ended February 29,			Six months ended February 28,
Statement of Cash Flows		2024			2023
Cash provided by operating activities		$	8,719			$	13,964
Cash used in investing activities			(5,430	)			(10,234	)
Cash used in financing activities			(3,819	)			(742	)

15.	Related party transactions

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.

15

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

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

		Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
Directors and key management personnel		2024			2023			2024			2023
Remuneration(1)		$	429			$	510			$	864			$	976
Share-based compensation expense			321				559				1,014				1,274
Total directors and key management personnel		$	750			$	1,069			$	1,878			$	2,250

(1)

Remuneration includes salaries and benefits for certain key management personnel and director fees. Certain members of the board of directors have employment or service contracts with the Company. Directors are entitled to director fees and share-based compensation for their services and officers are entitled to cash remuneration and share-based compensation for their employment services.

As at February 29, 2024, included in amounts payable is $0.1million of board fees (August 31, 2023 - $0.4million) due to related parties with no specific terms of repayment.

During the three and six months ended February 29, 2024, $0.1million and $0.3million for stock options granted to key management personnel was expensed, respectively (February 28, 2023 - $0.1million and $0.2million, respectively) and $0.1million and $0.4million for RSUs granted to directors and key management personnel was expensed, respectively (February 28, 2023 - $nil and $0.2million, respectively).

During the three and six months ended February 29, 2024, $nil and $0.2million related to common share awards granted to key management personnel was expensed, respectively (February 28, 2023 - $0.6million and $1.3million, respectively).

16

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

16.	General and administrative expenses

		Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
		2024			2023			2024			2023
Directors' fees (Note 15)		$	69			$	107			$	129			$	214
Insurance			86				100				171				199
Office and general			78				41				145				60
Shareholder information			139				186				297				314
Professional fees			56				136				245				237
Salaries and benefits (Note 15)			696				614				1,254				1,098
Consulting			179				126				356				177
Share-based compensation expense (Notes 12 and 15)			403				645				1,213				1,398
Travel and accommodation			35				56				113				103
Depreciation			19				18				32				58
Other			7				6				23				14
Total general and administrative expenses		$	1,767			$	2,035			$	3,978			$	3,872

17.	Financial instruments

Fair value of financial instruments

The following table sets out the classification of the Company's financial instruments as at February 29, 2024 and August 31, 2023:

		February 29, 2024			August 31, 2023
Financial Assets
Measured at amortized cost
Amounts receivable		$	1,227			$	3,140
Measured at fair value through profit or loss
Cash			7,959				7,629
Financial Liabilities
Measured at amortized cost
Amounts payables and accrued liabilities			12,802				11,571
Measured at fair value through profit or loss
Derivative financial instrument liabilities			1,745				3,544

17

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

Fair value estimates are made at a specific point in time based on relevant market information and information about financial instruments. These estimates are subject to and involve uncertainties and matters of significant judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The Company classifies its financial instruments carried at fair value according to a three-level hierarchy that reflects the significance of the inputs used in making the fair value measurements. The three levels of fair value hierarchy, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs, are as follows:

·	Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

·	Level 2 - Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly; and

·	Level 3 - Inputs for assets or liabilities that are not based on observable market data.

As at February 29, 2024 and August 31, 2023, cash was classified as Level 1, gold zero-cost collars were classified as Level 2 (Note 9), and derivative warrant liabilities (Note 9) were classified as Level 3 under the fair value hierarchy.

18.	Segmented information

Operating segments

The Company's Chief Operating Decision Maker, its Chief Executive Officer, reviews the operating results, assesses the performance and makes capital allocation decisions of the Company viewed as a single operating segment engaged in mineral exploration and development in Tanzania. All amounts disclosed in the interim condensed consolidated financial statements represent this single reporting segment. The Company's corporate division only earns interest revenue that is considered incidental to the activities of the Company and does not meet the definition of an operating segment as defined in IFRS 8, Operating Segments.

Geographic segments

The Company is in the business of mineral exploration and production in Tanzania. Information regarding the Company's geographic locations are as follows:

		Three months ended February 29,			Three months ended February 28,			Six months ended February 29,			Six months ended February 28,
Revenue		2024			2023			2024			2023
Tanzania		$	7,984			$	10,098			$	17,388			$	19,816
Total revenue		$	7,984			$	10,098			$	17,388			$	19,816

During the three and six months ended February 29, 2024, the Company generated 94% and 92%, respectively (February 29, 2023 - 93% and 96%, respectively) of its revenue from one (February 28, 2023 - one) customer totalling $7.5million and $16.0 million, respectively (February 28, 2023 - $9.4million and $19.1million, respectively).

18

TRX Gold Corporation

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended February 29, 2024 and February 28, 2023

(Unaudited)

(Expressed in Thousands of US dollars, except for share and per share amounts)

Non-current assets		February 29, 2024			August 31, 2023
Canada		$	46			$	55
Tanzania			71,985				66,952
Total non-current assets		$	72,031			$	67,007

19.	Commitments and contingencies

Commitments:

In order to maintain its existing mining and exploration licenses, the Company is required to pay annual license fees. As at February 29, 2024 and August 31, 2023, these licenses remained in good standing and the Company is up to date on its license payments.

Contingencies:

The Company is involved in litigation and disputes arising in the normal course of operations. Management is of the opinion that the outcome of any potential litigation will not have a material adverse impact on the Company's financial position or results of operations. Accordingly, no provisions for the settlement of outstanding litigation and potential claims have been accrued as at February 29, 2024 and August 31, 2023.

20.	Non-cash items

		Six months ended February 29,			Six months ended February 28,
		2024			2023
Depreciation		$	944			$	545
Change in fair value of derivative financial instruments (Note 9)			(1,799	)			(2,400	)
Share-based compensation expense (Note 12)			1,350				1,538
Accretion of provision for reclamation			54				70
Deferred income tax expense (Note 10)			1,704				2,129
Accretion of lease liabilities			2				7
Deferred revenue (Note 8)			84				(742	)
Accretion of deferred revenue (Note 8)			241				261
Foreign exchange losses (gains)			164				(26	)
VAT written-off (Note 4)			-				233
Other expenses			-				15
Total non-cash items		$	2,744			$	1,630

19