Gold prices have surged 87% since the start of 2025. TRX Gold Corporation (TRX 5.74%) is a junior gold miner that is benefiting from these soaring prices, and its own stock has increased 178% since the start of September. If you're looking for a leveraged play on gold, TRX Gold is one stock to watch. Here are three things to know first.
NYSEMKT: TRX
Key Data Points
1. Rising gold helps boost margins
TRX Gold is a junior gold miner, meaning the company has a market capitalization of under $500 million. What makes junior miner stocks intriguing is that they can act as a levered play on gold.
For example, a 1% rise in gold could help the stock rise by two or three times that amount. That's because higher gold prices help it realize higher revenue while expenses remain relatively the same, boosting its margins in the process.
In the first quarter, the company realized an average gold price of $3,860 per ounce. This helped it grow its adjusted EBITDA margin from 35.2% last year to 52.5% this year. While this benefits it during periods of rising gold prices, it can also hurt the miner if gold prices fall sharply.
2. It relies on a single project
Unlike major gold miners with dozens of mines worldwide, TRX Gold is tied to a single location. It operates as a Canadian corporation, but its flagship asset is the Buckreef Gold Project in northwestern Tanzania.
Image source: Getty Images.
Having one gold mine poses a risk to TRX Gold. For example, technical equipment failures, weather events, or disputes with local jurisdiction could expose it to political risk. During its recent January earnings call, Khalaf Rashid, senior vice president, Tanzania and managing director, noted that Tanzania "has been going through a difficult period" but that "things are normalizing."
TRX Gold operates the project as a joint venture with the Tanzanian government, giving the government a vested interest in the mine's success. However, TRX doesn't always have complete control over every decision.
3. Future expansion will be fully funded from operations
TRX Gold generated a record revenue of $25.1 million in the first quarter. It is also turning its negative working capital position into a positive one, capitalizing its balance sheet through operations rather than selling equity and diluting shareholders.
The company is using its free cash flow to fund capital expenditures, including down payments for thickeners, elution plants, and oxygenation systems, to support expansion. The capital cost for the plant expansion is projected at about $30 million, and the company expects to finance it entirely from internally generated cash flow over the next 18 to 24 months.
TRX Gold is not hedged, meaning it has 100% exposure to rising spot gold prices. As a junior gold miner, it faces risks, with the biggest being a fall in gold prices. That said, if you are bullish on gold, TRX Gold is a speculative mining stock that stands to benefit from the price surge.
