TORONTO, ONTARIO -- (Marketwired) -- 10/30/14 -- Teranga Gold Corporation (TSX: TGZ)(ASX: TGZ) -
(All amounts are in US$000's unless otherwise stated)
For a full explanation of Financial, Operating, Exploration and Development results please see the Interim Condensed Consolidated Financial Statements as at and for the period ended September 30, 2014 and the associated Management's Discussion & Analysis at www.terangagold.com.
-- Gold revenue for the three months ended September 30, 2014 increased 12
percent to $56.7 million compared to the same prior year period, gold
sales increased 18 percent to 44,573 ounces of gold.
-- Gold production for the three months ended September 30, 2014 increased
32 percent to 48,598 ounces of gold compared to the same prior year
period.
-- Total cash costs were $781 per ounce sold(1) and all-in sustaining costs
were $954 per ounce sold(1) for the three months ended September 30,
2014.
-- Based on year to date production, and the deferral at Sabodala of
approximately 10,300 ounces (87,000 tonnes at over 3.5 gpt) into 2015,
the Company is lowering its 2014 annual production guidance by about
5,000 ounces to approximately 215,000 ounces(2). Total cash costs are
now expected to average about $725 per ounce, and all-in sustaining
costs are expected to average about $900 per ounce, both $25 per ounce
higher than the top end of the original guidance ranges(1).
-- The Company expects a strong fourth quarter with higher production of
about 75,000 ounces and lower costs resulting from higher grades mined
at Sabodala and from higher production from Masato.
-- Consolidated profit attributable to shareholders for the third quarter
of 2014 was $2.4 million ($0.01 per share), compared to a consolidated
loss of $0.4 million ($0.00 loss per share) in the same prior year
period.
-- Mining of the Masato deposit commenced on schedule during the third
quarter of 2014, the first of the Oromin Joint Venture Group ("OJVG")
deposits to be mined.
-- Infill drilling results from the Masato high grade zone confirm
interpretation of the resource model and provide additional confidence
in the nature of high-grade mineralization.
-- Technical analysis on mill optimization was completed during the
quarter, showing an expected increase of 5 to 10 percent in throughput.
-- Preliminary heap leach test results during the quarter are in line with
Company's initial expectations, with potential to contribute between 10
and 20 percent of annual production.
-- Cash balance at September 30, 2014 was $28.0 million, including
restricted cash.
-- The Company remains on track to retire the balance of the debt facility
outstanding by December 31, 2014.
-- Exploration programs are expected to ramp up in the fourth quarter after
the rainy season to follow up on encouraging results on both the mine
license and regional land package.
-- Optimization of the 2015 mine plan is expected to result in an
improvement of $40 to $60 million compared to the technical report filed
in the first quarter of the year.
(1) Total cash costs per ounce, all-in sustaining costs per ounce and total
depreciation and amortization per ounce are prior to an inventory write-down
to net realizable value. Total cash costs per ounce, all-in sustaining costs
per ounce and total depreciation and amortization per ounce non-IFRS
financial measures and do not have a standard meaning under IFRS. Please
refer to Non-IFRS Financial Measures at the end of this report.
(2) This production target is based on existing proven and probable reserves
only from both the Sabodala mining license and OJVG mining license as
disclosed in the Company's Management's Discussion and Analysis for the year
ended December 31, 2013. The estimated ore reserves underpinning this
production guidance have been prepared by competent persons in accordance
with the requirements of the 2012 Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code").
This production guidance also assumes an amendment to OJVG mining license to
reflect processing of OJVG ore through the Sabodala mill. See competent
persons statement at the end of this report.
"We expect to finish the year on a strong note with higher fourth quarter production of about 75,000 ounces and lower costs allowing us to meet one of our key objectives which is to be debt free by year end. The optimization of the 2015 mine plan completed during the quarter is expected to improve our 2015 cash flow by $40 to $60 million, which should allow us to build up our cash balances," said Richard Young, President and CEO. "Overall, operationally, things are running well, and) we are very pleased to have started mining Masato on schedule as having multiple pits will provide us with greater operating flexibility. We are also making very positive strides on our growth initiatives which we believe will add significant value."
Review of Financial Results
(US$000's, except where Three months ended Nine months ended
indicated) September 30 September 30
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Financial Data 2014 2013 2014 2013
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Revenue 56,711 50,564 184,035 239,625
Profit (loss) attributable to
shareholders of Teranga 2,422 (442) (5,639) 51,737
Per share 0.01 (0.00) (0.02) 0.20
Operating cash flow 13,822 16,692 18,332 61,170
Capital expenditures 5,252 17,165 14,808 65,331
Free cash flow(1) 8,570 (473) 3,524 (4,161)
Cash and cash equivalents
(including bullion receivables
and restricted cash) 28,025 36,156 28,025 36,156
Net cash (debt)(2) 6,726 (40,283) 6,726 (40,283)
Total assets 709,423 617,495 709,423 617,495
Total non-current liabilities 127,102 69,333 127,102 69,333
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Note: Results include the consolidation of 100% of the OJVG's operating
results, cash flows and net assets from January 15, 2014.
(1) Free cash flow is defined as operating cash flow less capital
expenditures.
(2) Net cash (debt) is defined as total borrowings and financial derivative
liabilities less cash and cash equivalents, bullion receivables and
restricted cash.
Review of Operating Results
Three months ended Nine months ended
September 30 September 30
------------------------------------
Operating Results 2014 2013 2014 2013
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Ore mined ('000t) 1,272 537 3,508 2,548
Waste mined - operating ('000t) 4,201 3,321 15,585 8,518
Waste mined - capitalized ('000t) 524 4,853 1,479 14,645
------------------------------------
Total mined ('000t) 5,997 8,711 20,572 25,711
Grade mined (g/t) 1.71 1.08 1.58 1.63
Ounces mined (oz) 69,805 18,721 178,858 133,378
Strip ratio waste/ore 3.7 15.2 4.9 9.1
Ore milled ('000t) 903 887 2,613 2,292
Head grade (g/t) 1.89 1.41 1.87 2.28
Recovery rate % 88.5 91.6 89.4 92.0
Gold produced(1) (oz) 48,598 36,874 140,545 154,836
Gold sold (oz) 44,573 37,665 142,625 161,845
Average realized price $/oz 1,269 1,339 1,286 1,245
Total cash cost (incl.
royalties)(2) $/oz sold 781 748 760 621
All-in sustaining costs(2) $/oz sold 954 1,289 934 1,086
Mining ($/t mined) 3.12 2.48 2.93 2.57
Milling ($/t milled) 15.96 17.56 18.39 20.97
G&A ($/t milled) 4.46 4.60 4.74 5.59
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(1) Gold produced represents change in gold in circuit inventory plus gold
recovered during the period.
(2) Total cash costs per ounce and all-in sustaining costs per ounce are
prior to non-cash inventory write-downs to net realizable value and are non-
IFRS financial measures that do not have a standard meaning under IFRS.
Please refer to Non-IFRS Performance Measures at the end of this report.
Three months ended September
30, 2014 Masato Sabodala Total
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Ore mined ('000t) 215 1,057 1,272
Waste mined ('000t) 603 4,122 4,725
---------------------------------
Total mined ('000t) 818 5,179 5,997
Grade mined (g/t) 1.18 1.81 1.71
Ounces mined (oz) 8,142 61,663 69,805
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Review of Cost of Sales
Three months ended Nine months ended
(US$000's) September 30 September 30
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Cost of Sales 2014 2013 2014 2013
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Mine production costs - gross 37,230 39,265 121,287 127,197
Capitalized deferred stripping (1,749) (13,327) (4,710) (41,820)
----------------------------------------
35,481 25,938 116,577 85,377
Depreciation and amortization -
deferred stripping assets 6,915 1,966 19,385 5,780
Depreciation and amortization -
property, plant & equipment and
mine development expenditures 9,310 11,596 28,617 45,420
Royalties 2,789 2,507 8,692 11,865
Rehabilitation - 4 - 6
Inventory movements (3,346) (2,247) (16,343) 3,393
Inventory movements - non-cash (2,805) (2,393) (4,486) (5,863)
----------------------------------------
Total cost of sales before write-
down to net realizable value 48,344 37,371 152,442 145,978
(Reversal) write-down to net
realizable value (250) - 8,861 -
(Reversal) write-down to net
realizable value - depreciation (121) - 4,191 -
----------------------------------------
(371) - 13,052 -
----------------------------------------
Total cost of sales 47,973 37,371 165,494 145,978
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OPERATIONAL HIGHLIGHTS
-- Gold production for the quarter was higher than the same prior year
quarter, but weaker than expected. The Company experienced about a 5,000
ounce discrepancy between predicted gold production based on the daily
production report assays and reconciled gold poured and gold in circuit
production at quarter end. Management is investigating the source of the
discrepancy. Based on an initial assessment, it would appear that there
is a bias in the assays by the independent lab on site that began in the
third quarter and further investigation is underway. In addition,
Management is reviewing the impact that processing Masato material may
have had on moisture content and gold in circuit which independently or
in combination could account for this discrepancy.
-- Total cash costs per ounce for the quarter, excluding the reversal of
non-cash inventory write-downs to net realized value ("NRV"), were
marginally higher than the same prior year quarter mainly due to lower
capitalized deferred stripping, partly offset by higher gold production.
-- All-in sustaining costs for the quarter, excluding the reversal of non-
cash inventory write-downs to NRV, were 26 percent lower than the same
prior year quarter due to lower capital expenditures in the current year
period.
-- Total tonnes mined for the quarter were 31 percent lower compared to the
same prior year quarter as mining activities were mainly focused on the
lower benches of phase 3 of the Sabodala pit which has an overall
reduced stripping ratio. During the current quarter, mining began on
schedule at Masato, the first of the OJVG deposits to be developed, with
over 800,000 tonnes mined.
-- Steps taken to improve grade control in the quarter included hiring a
new mine manager, additional leadership in the production geology
department, improved blast hole sampling and statistical controls,
increased Reverse Circulation ("RC") infill drilling and reducing to 5
metre benches when necessary. As a result of these steps taken, mine
performance significantly improved compared to the second quarter.
Overall high-grade ounces mined during the quarter were greater than the
reserve model predicted, however the average grade of this ore mined,
which was modeled at approximately 3.5 gpt was about 2.8 gpt, and
impacted production for the quarter.
-- Mining for the balance of the year is taking place in the high grade
areas of the Sabodala pit and the upper benches of Masato. Access to the
lowest benches of Phase 3 Sabodala which were originally scheduled for
mining during the fourth quarter, have been deferred into 2015 due to
bench access constraints. In total, approximately 10,300 high-grade
ounces (87,000 tonnes at over 3.5 gpt) originally part of the 2014 mine
plan are now expected to be mined and processed during first quarter
2015. As a result of this deferral, gold production will be impacted by
about an approximately net 8,000 ounces for the year as this high-grade
material is displaced by low-grade feed to the mill.
-- Total tonnes mined are expected to increase in the fourth quarter to
over 9 million tonnes, with approximately two thirds mined from Masato
and the remainder from Sabodala. The change in the mine plan at Masato
is due to better grade and tonnage than originally expected combined
with fewer ore tonnes mined at Sabodala due to the access constraints
anticipated on the lower benches of Phase 3. Overall for the year, total
material moved is expected to increase from 26 million tonnes to almost
30 million tonnes.
-- Total mining costs for the quarter were 13 percent lower than the same
prior year quarter due to decreased material movement and lower costs
for light fuel oil (LFO) from lower market fuel prices. However unit
mining costs for the quarter were 26 percent higher due to fewer tonnes
mined. The higher unit costs in 2014 are due to the fact mining is
mainly concentrated on the lower benches of phase 3 of the Sabodala pit
with limited space resulting in lower productivity.
-- Ore tonnes milled for the quarter were marginally higher than the same
prior year quarter due to the introduction of softer oxide ore from
Masato in the second half of September. Ore tonnes milled are expected
to increase in the fourth quarter to over 1 million tonnes mainly as a
result of blending the softer, finer oxide ore from Masato with harder
Sabodala ore to achieve higher mill throughput. No major downtime is
scheduled for the balance of the year.
-- Processed grade for the quarter was 34 percent higher than the same
prior year quarter mainly due to higher ore grades mined but was lower
than planned as described earlier. The reported grade mined may also be
understated if the reported gold in circuit is understated. As mentioned
earlier, a review is underway.
-- Total processing costs were 7 percent lower than the same prior year
quarter and unit processing costs for the quarter were 9 percent lower
than the same prior year quarter, mainly due to lower maintenance
activities in the current quarter.
-- Total mine site general and administrative costs for the quarter were 3
percent lower than the prior year quarter and unit costs were 3 percent
lower than the prior year quarter mainly due to lower insurance costs
and higher throughput.
FINANCIAL HIGHLIGHTS
-- Gold revenue for the quarter was 12 percent higher than the same prior
year quarter. The increase in gold revenue was due to 18 percent higher
gold sales volume, partially offset by 5 percent lower realized gold
prices during the quarter.
-- During the quarter, the Company recorded profit attributable to
shareholders of $2.4 million ($0.01 per share), compared to a loss
attributable to shareholders of $0.4 million ($0.00 loss per share) in
the same prior year period. The increase in profit and earnings per
share over the prior year quarter were primarily due to higher revenues
in the current year quarter.
-- During the three months ended September 30, 2014, the Company recorded a
$0.4 million reversal of a portion of the non-cash write-down on long-
term low-grade ore stockpile inventory that had been previously recorded
during the second quarter 2014. Higher grades mined during the third
quarter resulted in a decrease in the per ounce cost of inventory
(including applicable overhead, depreciation and amortization). Higher
or lower per ounce inventory costs have a greater impact on low-grade
stockpile values because of the higher future processing costs required
to produce an ounce of gold.
-- The non-cash write-down recorded during the second quarter 2014
represent the portion of historic costs that would not be recoverable
based on the Company's long-term forecasts of future processing and
overhead costs at a gold price of $1,300 per ounce. Fluctuations in the
mine plan result in wide fluctuations in the per ounce cost of our long-
term ore stockpiles. During periods where lower grades are mined, per
ounce costs rise, while during those periods when higher grades are
mined, per ounce costs fall. As mining takes place in areas of Sabodala
and Masato containing higher grades, a portion, if not all, of these
non-cash write-offs are expected to reverse, including a portion during
the fourth quarter. Conversely, should long-term gold prices decline or
future costs rise, there is a potential for further NRV adjustments.
-- Cash flow provided by operations was $13.8 million for the quarter
compared to cash flow provided by operations of $16.7 million in the
same prior year quarter. The decrease in operating cash flow compared to
the prior year quarter was primarily due the impact of delivering a
portion of current period production to Franco-Nevada at 20 percent of
gold spot prices, partially offset by higher revenues.
-- The decrease in capital expenditures for the quarter was mainly due to
lower capitalized deferred stripping in the current quarter.
-- The Company's cash balance at September 30, 2014 was $28.0 million,
including restricted cash. Cash and cash equivalents were similar to the
balance reported at June 30, 2014, as cash flow provided by operations
of $13.8 million was offset by debt and interest repayments totaling
$8.9 million and capital expenditures of $5.3 million.
-- For the year to date, the Company has made a total of $44.2 million in
one-time payments. This includes $24.6 million in debt repayments, $3.1
million in payments to the Republic of Senegal and one-time payments
related to the acquisition of the OJVG, including $9.0 million for
transaction, legal and office closure costs and $7.5 million to acquire
Badr's share of the OJVG. For the balance of the year, the Company
expects to make a further $20.0 million in one-time payments, including
about $18.0 million in debt repayments and about $2.0 million in
payments to the Republic of Senegal. In total, the Company will have
made approximately $65.0 million in one-time payments during 2014.
Approximately $15.0 million in one-time payments to the Republic of
Senegal, are now expected to be paid in 2015. The one-time payments
described herein, exclude $30.0 million in debt retired in the first
quarter as part of the Franco-Nevada transaction.
OUTLOOK 2014
-- Based on the deferral of Sabodala high-grade ounces into 2015 and year
to date production, the Company is lowering its 2014 annual production
guidance to approximately 215,000 ounces, from the Company's previous
guidance update when it guided to the bottom end of its original
guidance range of 220,000 to 240,000 ounces. The lower production
forecast is a result of a deferral of mining approximately 10,300 ounces
(87,000 tonnes at over 3.5 gpt) at Sabodala into 2015 due to access
constraints, as well as, the negative mill reconciliation of
approximately 5,000 ounces during the third quarter. This is partly
offset by higher expected tonnage and ore grades mined at Masato, as
well as, higher overall throughput in the mill. Over and above normal
operating risks, the primary risk to not achieving this revised
production target is lower ore grades in the highest grade material to
be mined at Sabodala and Masato. Over the final two months of the year,
more than half of the planned mill feed is expected to be greater than 3
gpt.
-- Total exploration and evaluation expenditures for the Sabodala and OJVG
mine licenses as well as the Regional Land Package (including
capitalized reserve development) are now expected to total approximately
$10.0 million for 2014. During the second quarter, the Company indicated
that expenditures may increase to $12.0 million, for additional
drilling, to expedite the conversion of resources to reserves on the
mine licenses. This additional drilling is expected to take place in the
fourth quarter, however, as a result of cost reductions on exploration
overhead, we now expect total exploration expenditures to fall back in
line with the original budget for the year.
-- Administrative and Corporate Social Responsibility ("CSR") expenses are
expected to be $15.0 to $16.0 million, in line with guidance. These
include corporate office costs, Dakar and regional office costs and CSR
costs, but exclude corporate depreciation, transaction costs and other
non-recurring costs.
-- Capitalized expenditures, including sustaining mine site expenditures,
project development expenditures for growth initiatives, capitalized
deferred stripping, reserve development expenditures and payments to the
Republic of Senegal are now expected to be approximately $20.0 million.
A change in the accounting treatment for the advanced royalty payment to
the Republic of Senegal results in the reclassification of approximately
$10.0 million of capital expenditures to prepayment of operating
expenditures.
-- As a result of the revised production guidance and changes to the mine
plan that result in an additional 16 percent increase in material
movement and a 4 percent increase in throughput increasing cash cost
guidance to approximately $725 per ounce, $25 per ounce higher than the
top end of the Company's original guidance. The Company expects all-in
sustaining costs of about $900 per ounce, $25 per ounce higher than the
top end of the original guidance range of $800 to $875 per ounce(1).
-- Total depreciation and amortization for the year is expected to be
between $285 and $315 per ounce sold in line with guidance, comprised of
$125 to $140 per ounce sold related to depreciation on Sabodala plant,
equipment and mine development assets, $40 to $45 per ounce sold related
to assets acquired with the OJVG and $120 to $130 per ounce sold for
depreciation of deferred stripping assets. At the end of 2014, the
balance of the deferred stripping asset related to Sabodala is expected
to be approximately $32.0 million, which will be amortized over the
mining of phase 4 of the Sabodala pit.
BUSINESS AND PROJECT DEVELOPMENT
2015 Mine Plan
-- During the quarter, the Company's technical team completed optimization
work to improve on the 2015 mine plan included in the Company's
technical report filed in the first quarter of this year. The goal is to
increase the amount of free cash flow generated next year by reducing
the amount of material moved at Masato, which in turn frees up required
mobile equipment for the operation of Gora, thereby reducing 2015
capital expenditures. Overall, an improvement in the range of $40 to $60
million(2) is targeted as compared to the previous plan, including the
benefit of the deferral of ore containing approximately 10,300 ounces
(over 3.5 gpt) from the Sabodala mine plan that was originally scheduled
to be mined in 2014.
(1) Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce are prior to an inventory write-down to net realizable value. Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS Financial Measures at the end of this report.
(2) Based on US$/EUR exchange rate of 1.325 and LFO of $1.15 per litre
Mill Enhancements
-- The average hourly mill throughput rate when the crusher is in operation
is approximately 430 tonnes per operating hour (tpoh) or 3.5 million
tonnes per annum (mtpa). However, the mill has experienced periods of
sustained operation where the mill throughput has exceeded 480 tpoh.
These situations have typically occurred when both the primary and
secondary crushed ore stockpile levels were full. Analysis of plant data
shows that there is a correlation between the crusher downtime and mill
throughput, which in turn is directly related to the inventory level of
the crushed stockpiles.
-- The study to quantify and optimize the relationship between an increase
in crusher availability to the SAG and Ball Mill system (SABC), as well
as, other design enhancements within the crushing and grinding system
was completed during the third quarter, and supported the Company's
initial expectations. A related study to install a second crushing
system was also completed in the third quarter.
-- The overall mill throughput increases will be accomplished by
adjustments to the design of the SAG, Ball Mills and crusher systems
that collectively will provide for an integrated increase in total plant
throughput by 5 to 10 percent.
-- These upgrades are expected to be operational over a span of
approximately 18 months, with continual improvements earlier from the
sustaining capital initiatives. Using scoping and prefeasibility study
level (PFS) engineering cost estimate level of accuracy, the total
estimated capital cost for all the initiatives are expected to range
from $12.0-15.0 million with an IRR of 30 to 60 percent.(2)
(2) Key Assumptions: gold spot price/ounce - US$1,250, recovery rate - 90%
Heap Leach Project
-- The LOM plan shows a significant amount of both oxide and sulphide low
grade reserves that are mined during the operating period but not
processed until the end of the mine life. Significant potential also
exists along an 8km mineralized structural trend covering both the
Sabodala and OJVG mine leases which could add to the known reserves with
near surface, oxidized ore.
-- The potential benefit to extracting value from this ore earlier by
feeding it through a heap leach process is being evaluated. The program
is spilt into two phases, Phase 1 tests the oxide material and Phase 2
is to test the fresh material.
-- The Company is encouraged by the results of the Phase 1 program to date.
Preliminary results to date have indicated key variables (recovery
rates, agglomeration and cyanide consumption of the oxide ore zones) are
in line with the Company's initial expectations.
-- The hard transition oxide ore, (representing approximately 40 percent)
is being tested at a top size of 12.5 mm crush with 8 kg/t of cement
addition that passed percolation tests representing a lift height to 16
metres. Preliminary results from the column leach tests indicate
recovery of 80 percent and 0.6 kg/t cyanide consumption after 53 days.
-- The soft transition ore (representing approximately 50 percent) has
variable characteristics throughout the deposits and will require
further optimization as the engineering progresses to the next stage.
These samples are currently being tested at 25mm top size crush with a
range of 8-20 kg/t cement that passed percolation tests representing a
lift height from 8-16 metres. Preliminary results from the column tests
indicate gold recovery ranging from 70-80 percent and 0.4-0.6 kg/t
cyanide consumption after 53 days.
-- Additional testwork is ongoing for the saprolite ore (representing
approximately 10 percent).
-- A bulk sample comprising some of the 9Mt of low grade fresh ROM
stockpile will be prepared for testwork in the fourth quarter and into
2015.
-- The Company is targeting production from heap leach commencing in 2017,
with the quantities and scale of operation to be defined upon the
completion of Phase 2 and completion of drilling of potential low-grade
heap leach material on the combined mine licenses. At this point, the
Company anticipates that heap leach could account for 10 to 20 percent
of annual production once it is fully operational.
Gora Development
-- The high-grade Gora deposit will be operated as a satellite deposit to
the Sabodala mine requiring limited local infrastructure and
development. Ore will be hauled to the Sabodala processing plant by a
dedicated fleet of trucks and processed on a priority basis, displacing
lower grade feed as required.
-- The environmental approval for the Gora project, the final phase of the
permitting process, has been validated by the technical committee
charged with its review. The environmental assessment report is now in
the public communication phase which we expect to be completed during
the fourth quarter.
-- Anticipating a successful conclusion to the public communication phase
of the Gora environmental process, Management expects the permit process
to be completed in the fourth quarter 2014. However, construction
permits required to initiate construction for the access road are
expected to be granted shortly. Planning and engineering for the access
road is ongoing. Selection of contractors is expected within the next
few weeks, with mobilization and initiation of construction by late
2014.
OJVG Mine License Reserve Development
-- The OJVG mine license covers 213km2. As we have integrated the OJVG
geological database into a combined LOM plan, a number of areas have
been revealed as potential sources for reserve additions within the
mining lease. These targets have been selected based on potential for
discovery and inclusion into open pit reserves.
Masato
-- Development of the Masato deposit is complete and mining commenced on
schedule during the quarter.
-- An advanced exploration program began at Masato during the second
quarter and continued into the current quarter to, among other
objectives, test the continuity of portions of the high-grade sub-
domains, which were removed from the Masato reserve base after the
acquisition of the OJVG earlier this year.
-- The overall program consisted of drilling and trenching to confirm
interpretation of domains and high-grade sub-domains, infill gaps and
upgrading Inferred Resources, determining optimal RC grade control drill
spacing, and obtaining additional geotechnical data for pit slope
analysis. Overall, the program confirms our interpretation of the
resource model and provides additional confidence in the continuity of
high-grade mineralization within the deposit.
-- All drill hole assay data for the 2014 Masato exploration program,
including drill hole locations and a location map, will be available on
the Company's website at www.terangagold.com under "Exploration".
-- The Company is in the process of updating the Masato resources and
reserves, which is expected in the fourth quarter. The updated results
will incorporate the results of the exploration program this year
including interpreting the infill drill results from the high-grade sub-
domains compared to the previously interpreted high-grade sub-domains.
Golouma
-- Infill drilling commenced during the quarter for potential conversion of
inferred resources and to evaluate the mineralization potential of
structural features along strike and to the northwest of the existing
reserves. Seven diamond drill holes were completed before the annual
rainy season impeded access. The remainder of the 25 hole program is
expected to be completed in the fourth quarter, as well as, follow up on
near surface mineralization encountered in several of the seven holes
completed in the quarter.
Masato Northeast
-- Detailed mapping and trenching programs were initiated on the Masato
Northeast prospect which is situated 1km northeast along strike of the
Masato deposit. The prospect overlies a 2.5km long structural splay of
the main Masato structural trend. Grab samples collected along the
structure have yielded gold values of 5.7 gpt Au, 16.1 gpt Au and 25.2
gpt Au. A diamond drilling programme to test these trench results is
expected to commence in the fourth quarter.
Kerekounda
-- Both RC and Diamond Drill Hole ("DDH") drilling is planned to determine
the extent of mineralization further along strike of the existing
reserves. This program is expected to commence in fourth quarter.
Niakafiri SE and Maki Medina
-- Both RC and DDH drilling is planned for potential conversion of inferred
resources, geotechnical holes for pit wall determination and exploratory
holes to the north toward the Niakafiri deposit to evaluate the
extension along strike. Pending results of the heap leach test work,
additional drilling to determine near surface oxide resources may also
be evaluated. Due to the positive results for the heap leach testwork,
work in these areas is expected to commence in the fourth quarter 2014,
but may be deferred into 2015 to coincide with drilling near Sabodala
village on the Niakafiri reserves.
Regional Exploration
-- The Company currently has 9 exploration permits encompassing
approximately 1,055km2 of land surrounding the Sabodala and OJVG mine
licenses (246km2 exploitation permits).
Ninienko
-- An extensive mapping and a trenching program, over 1,500 metres, was
conducted during second and third quarter 2014 at the Ninienko prospect
and is ongoing. This work outlined a 500 metre-plus wide zone with gold
mineralization occurring in flat lying, near surface (0-2 metres) quartz
vein and felsic breccia units developed over a strike length of 1,500
metres.
-- An isopach plan of the mineralized quartz vein and felsic breccia
systems is in progress, and will be used to develop a plan for DDH and a
possible RC drill program. Due to the limitation of surface trenching
and mapping used to develop the flat lying mineralized zone at surface,
additional trenching and mapping will also be undertaken in prospective
zones near to the area to expand on the currently defined zone and to
further develop an understanding of the source of mineralization zones
for potential drill targets at depth. A detailed geochemical soil
sampling program has been planned for the fourth quarter which will
follow up and test co-incident gold-molybdenum-copper and potassium
anomalies identified by earlier regional termite mound sampling
programs. A diamond drill program will commence once this work has been
completed, likely to be scheduled for early 2015.
Soreto
-- Following up on a small 5 DDH program at the Soreto prospect in 2013, a
program totaling 15 DDH for 2014 was completed during the quarter. These
were located along two fence lines placed 150 metres on either side of
the 2013 fence that intersected gold values including 3 metres at 2.1
gpt, 7 metres at 1.38 gpt and 1 metre at 12.2 gpt. At least three
continuous shear zones were intercepted along strike. These featured
shallow dipping (25 - 35 degrees ) altered shear zones with felsic dyke,
sheared and brecciated silicified metasediments containing quartz-
carbonate veins with disseminated pyrite and visible gold in places. The
shear zones coincide with the major NNE regional shear structure with an
associated 6km long geochemical soil anomaly and when projected to
surface, align with the surface workings from artisanal mining.
The significant intercepts for the holes are shown in the table below.
----------------------------------------------------------------------------
Intersections, greater than 0.5g/t Au with max 2m internal dilution
----------------------------------------------------------------------------
Intercept Values
UTM29N UTM29N Downhole (core length @
HOLEID East North Azi Dip Depth (m) g/t Au)
----------------------------------------------------------------------------
HKDD0008 185,469 1,487,713 305 -55.0 15.0 1m @ 7.64 g/t
---------------------------
37.0 1m @ 1.51 g/t
---------------------------
77.0 1m @ 3.07 g/t
----------------------------------------------------------------------------
HKDD0009 185,406 1,487,358 305 -55.0 75.0 2m @ 2.52 g/t
----------------------------------------------------------------------------
HKDD0010 185,272 1,487,454 305 -55.0 96.0 3m @ 1.47 g/t
----------------------------------------------------------------------------
HKDD0011 185,298 1,487,807 305 -55.0 57.5 2.5m @ 2.78 g/t
-------------------------------------
including 59.5 0.5m @ 11.45 g/t
-------------------------------------
178.0 1m @ 1.27 g/t
----------------------------------------------------------------------------
HKDD0014 185,173 1,487,903 305 -55.0 25.0 0.5m @ 1.97 g/t
----------------------------------------------------------------------------
HKDD0015 185,497 1,487,473 295 -55.0 108.0 2m @ 2.71 g/t
---------------------------
131.0 3m @ 1.63 g/t
----------------------------------------------------------------------------
HKDD0018 184,897 1,486,763 305 -55.0 37.0 2m @ 1.00 g/t
----------------------------------------------------------------------------
HKDD0019 184,819 1,488,367 305 -55.0 81.5 2.5m @ 6.41 g/t
-------------------------------------
including 82.5 0.5m @ 19.30 g/t
-------------------------------------
121.0 2m @ 1.20 g/t
----------------------------------------------------------------------------
HKDD0020 184,646 1,488,488 305 -55.0 47.0 1m @ 2.20 g/t
----------------------------------------------------------------------------
HKDD0022 184,473 1,488,608 305 -55.0 147.0 1m @ 1.33 g/t
----------------------------------------------------------------------------
1. True widths are unknown.
2. Intercept gold values are determined from uncapped assays.
-- Further infill drilling is being planned for the fourth quarter to
further extend these mineralized shear zones along strike and infill
drill to 50 metre spacing between the fence lines.
Gora Northeast Extension and Zone ABC
-- Trenching and mapping programs are being planned for the fourth quarter
to investigate potentially gold mineralized extensions of the Gora gold
deposit into the Zone ABC prospect which has significant gold soil
anomalies co-incident with regional structural trends.
Quarterly Operating and Financial Results
(US$000's, except
where indicated) 2014 2013 2012
-----------------------------------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
2014 2014 2014 2013 2013 2013 2013 2012
----------------------------------------------------------------------------
Revenue 56,711 57,522 69,802 58,302 50,564 75,246113,815122,970
Average realized
gold price
($/oz) 1,269 1,295 1,293 1,249 1,339 1,379 1,090 1,296
Cost of sales 47,973 62,236 55,285 50,527 37,371 52,636 55,971 57,250
Net earnings
(loss) 2,422(12,018) 3,957 (4,220) (442) 7,196 44,983 54,228
Net earnings
(loss) per share
($) 0.01 (0.04) 0.01 (0.01) (0.00) 0.03 0.18 0.22
Operating cash
flow 13,822 (9,793) 14,303 13,137 16,692 20,838 23,640 59,670
Ore mined ('000t) 1,272 974 1,262 1,993 537 698 1,312 2,038
Waste mined -
operating
('000t) 4,201 5,233 6,151 6,655 3,321 2,683 2,513 4,362
Waste mined -
capitalized
('000t) 524 458 497 420 4,853 4,770 5,023 912
Total mined
('000t) 5,997 6,665 7,910 9,068 8,711 8,151 8,848 7,312
Grade Mined (g/t) 1.71 1.39 1.61 1.61 1.08 1.59 1.87 2.04
Ounces Mined (oz) 69,805 43,601 65,452103,340 18,721 35,728 78,929133,549
Strip ratio
(waste/ore) 3.7 5.8 5.3 3.6 15.2 10.7 5.7 2.6
Ore processed
('000t) 903 817 893 860 887 709 696 725
Head grade (g/t) 1.89 1.69 2.01 2.11 1.41 2.36 3.31 3.40
Gold recovery (%) 88.5 89.8 90.1 89.7 91.6 92.3 92.1 90.7
Gold produced(1)
(oz) 48,598 39,857 52,090 52,368 36,874 49,661 68,301 71,804
Gold sold (oz) 44,573 44,285 53,767 46,561 37,665 54,513 69,667 71,604
Total cash costs
per ounce
sold(2)
(including
Royalties) 781 815 696 711 748 642 535 532
All-in sustaining
costs per ounce
sold(2)
(including
Royalties) 954 1,060 813 850 1,289 1,185 898 1,004
Mining ($/t
mined) 3.1 2.9 2.8 2.6 2.5 2.6 2.6 3.1
Milling ($/t
mined) 16.0 21.3 18.2 18.0 17.6 23.8 22.5 19.9
G&A ($/t mined) 4.5 4.9 4.8 4.8 4.6 6.3 6.2 6.4
----------------------------------------------------------------------------
(1) Gold produced represents change in gold in circuit inventory plus gold
recovered during the period.
(2) Total cash costs per ounce and all-in sustaining costs per ounce are
non-IFRS financial measures and do not have a standard meaning under IFRS.
Please refer to Non-IFRS Performance Measures at the end of this report.
Non-IFRS Financial Measures
The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company's financial results. Refer to the Non-IFRS Financial Performance Measures at the end of this report for further details.
Three months ended Nine months ended
(US$000's, except w here indicated) September 30 September 30
----------------------------------------
Cash costs per ounce sold 2014 2013 2014 2013
----------------------------------------------------------------------------
Gold produced(1) 48,598 36,874 140,545 154,836
Gold sold 44,573 37,665 142,625 161,845
Cash costs per ounce sold
Cost of sales 47,973 37,371 165,494 145,978
Less: depreciation and amortization (16,225) (13,562) (48,002) (51,200)
Less: realized oil hedge gain - - - (487)
Add: non-cash inventory movement 2,805 2,393 4,486 5,863
Less: inventory reversal (write-
down) to net realizable value 371 - (13,052) -
Less: other adjustments (94) 1,962 (591) 317
----------------------------------------
Total cash costs 34,830 28,164 108,335 100,471
Total cash costs per ounce sold 781 748 760 621
All-in sustaining costs
Total cash costs 34,830 28,164 108,335 100,471
Administration expenses(2) 2,449 3,207 10,071 9,897
Capitalized deferred stripping 1,749 13,327 4,710 41,820
Capitalized reserve development 2,293 158 2,524 2,995
Mine site capital 1,210 3,680 7,571 20,516
----------------------------------------
All-in sustaining costs 42,532 48,536 133,212 175,699
All-in sustaining costs per ounce
sold 954 1,289 934 1,086
All-in costs
All-in sustaining costs 42,532 48,536 133,212 175,699
Social community costs not related
to current operations 580 745 1,482 1,453
Exploration and evaluation
expenditures 672 849 2,399 4,362
----------------------------------------
All-in costs 43,783 50,130 137,093 181,513
All-in costs per ounce sold 982 1,331 961 1,122
Depreciation and amortization 16,225 13,562 48,002 51,200
Non - cash inventory movement (2,805) (2,393) (4,486) (5,863)
----------------------------------------
Total depreciation and amortization 13,420 11,169 43,516 45,337
Total depreciation and amortization
per ounce sold 301 297 305 280
----------------------------------------------------------------------------
(1) Gold produced represents change in gold in circuit inventory plus gold
recovered during the period.
(2) Administration expenses include share based compensation and exclude
Corporate depreciation expense and social community costs not related to
current operations.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF COMPREHENSIVE INCOME / LOSS
(Unaudited and in US$000's except per share amounts)
Nine months ended
Three months ended September 30 September 30
2014 2013 2014 2013
----------------------------------------------------------------------------
Revenue 56,711 50,564 184,035 239,625
Cost of sales (47,973) (37,371) (165,494) (145,978)
----------------------------------------------------------------------------
Gross profit 8,738 13,193 18,541 93,647
----------------------------------------------------------------------------
Exploration and evaluation
expenditures (672) (849) (2,399) (4,362)
Administration expenses (3,190) (3,839) (11,217) (11,526)
Share-based compensation (325) (394) (986) (677)
Finance costs (2,640) (3,441) (7,404) (8,998)
Gains on gold hedge contracts - - - 5,308
Gains on oil hedge contracts - - - 31
Net foreign exchange gains/(losses) 1,342 (300) 1,342 (784)
Gain/(loss) on available for sale
financial asset - 452 - (4,003)
Share of income from equity investment
in OJVG - 41 - 41
Other income/(expense) 36 (4,792) (1,997) (8,474)
----------------------------------------------------------------------------
(5,449) (13,122) (22,661) (33,444)
----------------------------------------------------------------------------
Net profit/(loss) 3,289 71 (4,120) 60,203
----------------------------------------------------------------------------
Profit/(loss) attributable to:
Shareholders 2,422 (442) (5,639) 51,737
Non-controlling interests 867 513 1,519 8,466
----------------------------------------------------------------------------
Net profit/(loss) for the period 3,289 71 (4,120) 60,203
----------------------------------------------------------------------------
Other comprehensive income/(loss):
Items that may be reclassified
subsequently to profit/loss for the
period
Change in fair value of available
for sale financial asset, net of
tax (1) - 3 (6,418)
Reclassification to income/(loss),
net of tax - - - 962
----------------------------------------------------------------------------
Other comprehensive (loss)/income for
the period (1) - 3 (5,456)
----------------------------------------------------------------------------
Total comprehensive income/(loss) for
the period 3,288 71 (4,117) 54,747
----------------------------------------------------------------------------
Total comprehensive income/(loss)
attributable to:
Shareholders 2,421 (442) (5,636) 46,281
Non-controlling interests 867 513 1,519 8,466
----------------------------------------------------------------------------
Total comprehensive income/(loss) for
the period 3,288 71 (4,117) 54,747
----------------------------------------------------------------------------
Earnings (loss) per share from
operations attributable to the
shareholders of the Company during
the period
- basic earnings/(loss) per share 0.01 (0.00) (0.02) 0.20
- diluted earnings/(loss) per share 0.01 (0.00) (0.02) 0.20
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF FINANCIAL POSITION
(Unaudited and in US$000's)
As at September As at December
30, 2014 31, 2013
----------------------------------------------------------------------------
Current assets
Cash and cash equivalents 13,025 14,961
Restricted cash 15,000 20,000
Trade and other receivables 2,265 7,999
Inventories 60,209 67,432
Other assets 7,424 5,762
----------------------------------------------------------------------------
Total current assets 97,923 116,154
----------------------------------------------------------------------------
Non-current assets
Inventories 78,068 63,740
Equity investment - 47,627
Property, plant and equipment 203,640 219,540
Mine development expenditures 266,547 176,391
Other non-current assets 8,054 947
Goodwill 55,191 -
----------------------------------------------------------------------------
Total non-current assets 611,500 508,245
----------------------------------------------------------------------------
Total assets 709,423 624,399
----------------------------------------------------------------------------
Current liabilities
Trade and other payables 50,483 56,891
Borrowings 21,299 70,423
Deferred revenue 21,870 -
Provisions 2,719 1,751
----------------------------------------------------------------------------
Total current liabilities 96,371 129,065
----------------------------------------------------------------------------
Non-current liabilities
Borrowings - 3,946
Deferred revenue 95,745 -
Provisions 14,923 14,336
Other non-current liabilities 16,434 10,959
----------------------------------------------------------------------------
Total non-current liabilities 127,102 29,241
----------------------------------------------------------------------------
Total liabilities 223,473 158,306
----------------------------------------------------------------------------
Equity
Issued capital 367,851 342,470
Foreign currency translation reserve (998) (998)
Other components of equity 16,205 15,776
Retained earnings 91,102 96,741
----------------------------------------------------------------------------
Equity attributable to shareholders 474,160 453,989
Non-controlling interests 11,790 12,104
----------------------------------------------------------------------------
Total equity 485,950 466,093
----------------------------------------------------------------------------
Total equity and liabilities 709,423 624,399
----------------------------------------------------------------------------
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in US$000's)
Nine months ended September 30
2014 2013
----------------------------------------------------------------------------
Issued capital
Beginning of period 342,470 305,412
Shares issued from public and private
offerings 27,274 23,487
Less: Share issue costs (1,893) (180)
----------------------------------------------------------------------------
End of period 367,851 328,719
----------------------------------------------------------------------------
Foreign currency translation reserve
Beginning of period (998) (998)
----------------------------------------------------------------------------
End of period (998) (998)
----------------------------------------------------------------------------
Other components of equity
Beginning of period 15,776 21,814
Equity-settled share-based compensation
reserve 426 1,417
Investment revaluation reserve on change
in fair value of available for sale
financial asset, net of tax 3 (5,456)
Stock options to Oromin Explorations Ltd.
("Oromin") employees - 585
----------------------------------------------------------------------------
End of period 16,205 18,360
----------------------------------------------------------------------------
Retained earnings
Beginning of period 96,741 49,225
(Loss)/profit attributable to shareholders (5,639) 51,737
----------------------------------------------------------------------------
End of period 91,102 100,962
----------------------------------------------------------------------------
Non-controlling interest
Beginning of period 12,104 11,857
Non-controlling interest - portion of
profit for the period 1,519 8,466
Non-controlling interest - acquisition of
Oromin - 11,005
Dividends accrued (1,833) (7,672)
----------------------------------------------------------------------------
End of period 11,790 23,656
----------------------------------------------------------------------------
Total shareholders' equity as at September
30 485,950 470,699
----------------------------------------------------------------------------
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF CASH FLOW
(Unaudited and in US$000's)
Three months
ended September Nine months ended
30 September 30
2014 2013 2014 2013
----------------------------------------------------------------------------
Cash flows related to operating
activities
Profit/(loss) for the period 3,289 71 (4,120) 60,203
Depreciation of property, plant and
equipment 6,383 9,635 18,787 35,869
Depreciation of capitalized mine
development costs 9,842 4,024 29,215 15,548
Inventory movements - non-cash (2,805) (2,393) (4,486) (5,863)
Inventory write-down to net realizable
value - depreciation (121) - 4,191 -
Amortization of intangibles 150 249 555 770
Amortization of deferred financing
costs 830 902 2,434 1,770
Inventory write-down to net realizable
value (250) - 8,861 -
Unwinding of discounts 690 25 897 74
Share-based compensation 325 394 986 677
Deferred gold revenue recognized (5,715) - (17,385) -
Net change in gains on gold forward
sales contracts - - - (42,955)
Net change in losses on oil contracts - - - 456
Buyback of gold forward sales contracts - - - (8,593)
(Gain)/Loss on available for sale
financial asset - (452) - 4,003
Loss on disposal of property, plant and
equipment - - - 99
(Increase) / decrease in inventories (2,440) (834) (15,782) 3,692
Changes in working capital other than
inventory 3,644 5,071 (5,821) (4,580)
----------------------------------------------------------------------------
Net cash provided by operating
activities 13,822 16,692 18,332 61,170
Cash flows related to investing
activities
Decrease in restricted cash - - 5,000 -
Acquisition of Oromin Joint Venture
Group ("OJVG") - - (112,500) -
Expenditures for property, plant and
equipment (1,472) (2,391) (2,755) (13,531)
Expenditures for mine development (3,780) (14,738) (12,053) (51,691)
Acquisition of intangibles - (36) - (109)
Proceeds on disposal of property, plant
and equipment - - - 35
----------------------------------------------------------------------------
Net cash used in investing activities (5,252) (17,165) (122,308) (65,296)
Cash flows related to financing
activities
Net proceeds from equity offering - - 25,485 -
Proceeds from Franco-Nevada gold stream - - 135,000 -
Repayment of borrowings (8,194) (9,088) (54,582) (9,088)
Draw down from equipment finance
facility, net of financing costs paid - - - 13,843
Financing costs paid - (1,200) (1,000) (1,200)
Interest paid on borrowings (732) (1,474) (2,864) (4,687)
Dividend payment to government of
Senegal - - - (2,700)
----------------------------------------------------------------------------
Net cash (used in) / provided by
financing activities (8,926) (11,762) 102,039 (3,832)
Effect of exchange rates on cash
holdings in foreign currencies - (44) 1 431
----------------------------------------------------------------------------
Net decrease in cash and cash
equivalents (356) (12,279) (1,936) (7,527)
Cash and cash equivalents at the
beginning of period 13,381 44,474 14,961 39,722
----------------------------------------------------------------------------
Cash and cash equivalents at the end of
period 13,025 32,195 13,025 32,195
----------------------------------------------------------------------------
CORPORATE DIRECTORY
Directors Alan Hill, Chairman Richard Young, President and CEO Jendayi Frazer, Non-Executive Director Edward Goldenberg, Non-Executive Director Christopher Lattanzi, Non-Executive Director Alan Thomas, Non-Executive Director Frank Wheatley, Non-Executive Director Senior Management Richard Young, President and CEO Mark English, Vice President, Sabodala Operations Paul Chawrun, Vice President, Technical Services Navin Dyal, Vice President and CFO David Savarie, Vice President, General Counsel & Corporate Secretary Kathy Sipos, Vice President, Investor & Stakeholder Relations Aziz Sy, General Manager, SGO & Vice President, Development Senegal Registered Office 121 King Street West, Suite 2600 Toronto, Ontario, M5H 3T9, Canada T: +1 416 594 0000 F: +1 416 594 0088 E: investor@terangagold.com W: www.terangagold.com Senegal Office 2K Plaza Suite B4, 1er Etage sis la Route due Meridien President Dakar Almadies T: +221 338 693 181 F: +221 338 603 683 Auditor Ernst & Young LLP Share Registries Canada: Computershare Trust Company of Canada T: +1 800 564 6253 Australia: Computershare Investor Services Pty Ltd T: +1 300 850 505 Stock Exchange Listings Toronto Stock Exchange, TSX symbol: TGZ Australian Securities Exchange, ASX symbol: TGZ Issued Capital As of October 30, 2014 -------------------------------------------------- Issued shares 352,801,091 Stock options 23,009,933 Exercise Price (C$) Options -------------------------------------------------- $3.00 15,218,333 $1.09 - $2.17 7,791,600 --------------------------------------------------
FORWARD-LOOKING STATEMENTS
This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Teranga, or developments in Teranga's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, all disclosure regarding possible events, conditions or results of operations, future economic conditions and courses of action, the proposed plans with respect to mine plan, anticipated fourth quarter results and consolidation of the Sabodala Gold Project and OJVG Golouma Gold Project, mineral reserve and mineral resource estimates, anticipated life of mine operating and financial results, the approval of the Gora ESIA and permitting and the completion of construction related thereto. Such statements are based upon assumptions, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments that management believe to be reasonable and relevant. These assumptions include, among other things, the ability to obtain any requisite Senegalese governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic conditions and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks involved in exploration and development of mineral properties, including government approvals and permitting, changes in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Teranga, as well as other risks and uncertainties which are more fully described in the Company's Annual Information Form dated March 31, 2014, and in other company filings with securities and regulatory authorities which are available at www.sedar.com. Teranga does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities.
COMPETENT PERSONS STATEMENT
The technical information contained in this document relating to the mineral reserve estimates for Sabodala, the stockpiles, Masato, Golouma and Kerekounda is based on, and fairly represents, information compiled by Mr. William Paul Chawrun, P. Eng who is a member of the Professional Engineers Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Chawrun is a full-time employee of Teranga and is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has consented to the inclusion in this Report of the matters based on his compiled information in the form and context in which it appears in this Report.
The technical information contained in this document relating to the mineral reserve estimates for Gora and Niakafiri is based on, and fairly represents, information and supporting documentation prepared by Julia Martin, P.Eng. who is a member of the Professional Engineers of Ontario and a Member of AusIMM (CP). Ms. Martin is a full time employee with AMC Mining Consultants (Canada) Ltd., is independent of Teranga, is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Martin has reviewed and accepts responsibility for the Mineral Reserve estimates for Gora and Niakafiri disclosed in this document and has consented to the inclusion of the matters based on her information in the form and context in which it appears in this Report.
The technical information contained in this Report relating to mineral resource estimates for Niakafiri, Gora, Niakafiri West, Soukhoto, and Diadiako is based on, and fairly represents, information compiled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.
The technical information contained in this Report relating to mineral resource estimates for Sabodala, Masato, Golouma, Kerekounda, and Somigol Other are based on, and fairly represents, information compiled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.
Teranga's exploration programs are being managed by Peter Mann, FAusIMM. Mr. Mann is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Mr. Mann has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Mann is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. The technical information contained in this news release relating exploration results are based on, and fairly represents, information compiled by Mr. Mann. Mr. Mann has verified and approved the data disclosed in this release, including the sampling, analytical and test data underlying the information. The RC samples are prepared at site and assayed in the SGS laboratory located at the site. Analysis for diamond drilling is sent for fire assay analysis at ALS Johannesburg, South Africa. Mr. Mann has consented to the inclusion in this news release of the matters based on his compiled information in the form and context in which it appears herein.
Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). CIM definitions of the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", are substantially similar to the JORC Code corresponding definitions of the terms "ore reserve", "proved ore reserve", "probable ore reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the JORC Code would not be materially different if prepared in accordance with the CIM definitions applicable under NI 43-101. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.
NON-IFRS FINANCIAL PERFORMANCE MEASURES
The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company's financial results.
Beginning in the second quarter of 2013, we adopted an "all-in sustaining costs" measure and an "all-in costs" measure consistent with the guidance issued by the World Gold Council ("WGC") on June 27, 2013. The Company believes that the use of all-in sustaining costs and all-in costs will be helpful to analysts, investors and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. These new measures will also be helpful to governments and local communities in understanding the economics of gold mining. The "all-in sustaining costs" is an extension of existing "cash cost" metrics and incorporate costs related to sustaining production. The "all-in costs" includes additional costs which reflect the varying costs of producing gold over the life-cycle of a mine.
"Total cash cost per ounce sold" is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. The Company reports total cash costs on a sales basis. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure, along with sales, is considered to be a key indicator of a Company's ability to generate operating earnings and cash flow from its mining operations.
Total cash costs figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is considered the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measure of other companies.
The WGC definition of all-in sustaining costs seeks to extend the definition of total cash costs by adding corporate general and administrative costs, reclamation and remediation costs (including accretion and amortization), exploration and study costs (capital and expensed), capitalized stripping costs and sustaining capital expenditures and represents the total costs of producing gold from current operations. The WGC definition of all-in costs adds to all-in sustaining costs including capital expenditures attributable to projects or mine expansions, exploration and study costs attributable to growth projects, and community and permitting costs not related to current operations. Both all-in sustaining and all-in costs exclude income tax payments, interest costs, costs related to business acquisitions and items needed to normalize earnings. Consequently, this measure is not representative of all of the Company's cash expenditures. In addition, the calculation of all-in sustaining costs and all-in costs does not include depreciation expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company's overall profitability.
"Total cash costs", "all-in sustaining costs" and "all-in costs" are intended to provide additional information only and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. The following tables reconcile these non-GAAP measures to the most directly comparable IFRS measure.
"Average realized price" is a financial measure with no standard meaning under IFRS. Management uses this measure to better understand the price realized in each reporting period for gold and silver sales. Average realized price excludes from revenues unrealized gains and losses on non-hedge derivative contracts. The average realized price is intended to provide additional information only and does not have any standardized definition under IFRS; it should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate this measure differently.
"Total depreciation and amortization per ounce sold" is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
ABOUT TERANGA
Teranga is a Canadian-based gold company listed on the Toronto Stock Exchange (TSX: TGZ) and Australian Securities Exchange (ASX: TGZ). Teranga is principally engaged in the production and sale of gold, as well as related activities such as exploration and mine development.
Teranga's mission is to create value for all of its stakeholders through responsible mining. Its vision is to explore, discover and develop gold mines in West Africa, in accordance with the highest international standards, and to be a catalyst for sustainable economic, environmental and community development. All of its actions from exploration, through development, operations and closure will be based on the best available techniques.
THIRD QUARTER CONFERENCE CALL & WEBCAST
The Company will host a conference call and webcast on October 31, 2014 at 8:30 a.m. EDT Toronto (Sydney 11:30 p.m. AEDT).
Telephone Toronto: 416-340-2216 North America toll-free: 1-866-223-7781 International: 1-416-340-2216 Live Webcast The webcast can be accessed directly at: www.gowebcasting.com/5930 and on Teranga's website at www.terangagold.com
The conference call replay will be available for two weeks after the call by dialing 1-905-694-9451 or toll-free 1-800-408-3053 and entering the Passcode: 8085369.
Contacts:
Teranga Gold Corporation
Kathy Sipos
Vice-President, Investor & Stakeholder Relations
+1 416-594-0000
ksipos@terangagold.com
www.terangagold.com
