Q2 2012 webcast final
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Teranga produced 45,495 ounces of gold in Q2 2012, a 36% increase over Q2 2011. Cash costs were $645 per ounce, 20% lower than the previous year. Production and cost guidance for 2012 remains at 210,000-225,000 ounces at $600-$650 per ounce. Financially, revenue was $62 million and profit was $12.6 million compared to a loss in Q2 2011. Teranga is focused on growing reserves and production through exploration and mill expansion, and maintaining financial strength.
Q2 2012 webcast final
- 2. CAUTIONARY STATEMENT This presentation contains forward looking information, within the meaning of applicable Canadian securities legislation, and forward looking statements, within the meaning of applicable United States securities legislation, which reflects management’s expectations regarding Teranga Gold Corporation’s (“Teranga” or the “Company”) future growth, results of operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Wherever possible, words such as “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, have been used to identify such forward looking information. Although the forward looking information contained in this presentation reflect management’s current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, Teranga cannot be certain that actual results will be consistent with such forward looking information. A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward looking information, including those listed in the “Risk Factors” section of Teranga’s Annual Information Form , dated March 28, 2012 (the “AIF”). These factors should be considered carefully and prospective investors should not place undue reliance on the forward looking information. Forward looking information necessarily involves significant known and unknown risks, assumptions and uncertainties that may cause Teranga’s actual results, performance, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward looking information. Although Teranga has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in the forward looking information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, prospective investors should not place undue reliance on such forward looking information. Teranga expressly disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities law. Forward looking information and other information contained herein concerning mineral exploration and management’s general expectations concerning the mineral exploration industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of any misstatements regarding any industry data presented herein, mineral exploration involves risks and uncertainties and industry data is subject to change based on various factors. In addition, please note that statements relating to “reserves” or “resources” are deemed to be forward looking information as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably mined in the future. While management has confidence in its projections based on exploration work done to date, the potential quantity and grade disclosed herein is conceptual in nature, and there has been insufficient exploration to define a mineral resource, therefore it is uncertain if further exploration will result in the targets being delineated as a mineral resource. This presentation does not constitute in any way an offer or invitation to subscribe for securities in Teranga pursuant to the Corporations Act 2001 (Cth) and has not been lodged with the Australian Securities and Investment Commission. 2
- 3. Q2 2012 WEBCAST FOCUSED ON GROWTH Alan R. Hill Chairman & CEO FOCUSED ON: Richard Young President & CFO GROWING RESERVES GROWING PRODUCTION FINANCIAL STRENGTH 3
- 4. OPERATING HIGHLIGHTS Q2 2012 • 45,495 oz’s produced • 36% higher than Q2 2011 • 9% higher than Q1 2012 • $645/oz cash cost • 20% lower than Q2 2011 • 4% lower than Q1 2012 • 38,503 oz’s sold • Increase to gold in circuit / gold bullion inventory to 20,382 oz’s* • Lower than oz’s produced; reduced capacity to pour gold during tie-ins for mill expansion *Gold produced is change in gold in circuit inventory plus gold recovered during the period 4
- 5. OPERATING HIGHLIGHTS Q2 2012 • Total tonnes mined 15% higher than Q2 2011 • Improved productivity and efficiency in mining operations • Drilling and loading – 3 new blast hole drill rigs, 4 new haul trucks • Better maintenance practices – improved loading and hauling efficiencies 5
- 6. OPERATING HIGHLIGHTS Q2 2012 • Unit mining cost • $2.50/t mined, on plan • Mill throughput • 25% lower than Q2 2011 • Harder ore, mill expansion tie-ins • Offset by higher grades, 3.2 gpt • Manage operations based on production not grade • Hard/Soft ore • Blending (soft material processed twice as quickly) • With blended material, able to achieve production objectives 6
- 7. OPERATING HIGHLIGHTS Q2 2012 • Unit processing cost • $22.90/t milled H2 2012 • Higher throughput expected Production / cost – guidance maintained • 210,000 – 225,000 oz’s at cash costs of $600 - $650/oz 7
- 8. FINANCIAL HIGHLIGHTS Q2 2012 • Revenue of $62M • 15% higher than Q2 2011 • Higher realized gold prices • All ounces sold in spot market • $1,608/oz – average realized price • Profit of $12.6M • Compared to a loss of $14.4M Q2 2011 • 2012 capital expenditure forecast to be $60M • $15M remains to be spent in 2012 • Completion expansion, capitalized exploration, mobile equipment 8
- 9. FINANCIAL HIGHLIGHTS Cash and cash equivalents: • $35.6M at June 30, 2012 • In Q2, all ounces sold at spot gold prices • In H2, more production can be sold at higher spot gold prices, increasing operating cash flow • $60M, 2-Year Loan Facility: • Amendment of existing Facility Agreement • Provides cash cushion, flexibility to grow business • Gold forward sales program declined by 52,105 oz’s to 122,395 oz’s • Year end balance expected to be 66,000 oz’s, hedge-free by August, 2013 9
- 10. GOVERNMENT RELATIONS 5% Contribution Tax • Fiscal stability provision written into Sabodala Mining Concession • New President – supportive of mining industry • Previously served as President of National Assembly, Prime Minister, and Minister of Mines • Potential tax exposure $2.8M to June 30, 2012; ~$10M for 2012 • Teranga to work in Partnership with the Government to help address some of Senegal’s immediate financial needs 10
- 11. MINE LICENSE (ML) EXPLORATION FOCUSED • $20M to be spent in 2012, expand pit reserves ON GROWTH • Pit optimization in Feb 2012, defined $1,550/oz pit shell, containing over 2 Moz (Sabodala current reserves at ~1Moz) FOCUSED ON: • Focus on Main Flat Extension (MFE) and Lower Flat Zone (LFZ) – principle gold hosts in Sabodala deposit GROWING • 23,800m drilled during Q2 at Sabodala – primarily MFE RESERVES • Objective: Increase reserves at the Sabodala Pit *At grades of between 1.5 to 2.0 gpt to gold inventory (1) Proximate Statement: This “exploration target” is not a Mineral Resource. While management has confidence in its projections based on exploration work done to date, the potential quantity and grade disclosed herein is conceptual in nature, and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource. 11
- 12. MINE LICENSE EXPLORATION Main Flat Extension / Lower Flat Zone (“MFE/LFZ”) – program: • Drilling focused on Sabodala Pit • Extend MFE zone down dip to the northwest (1) • Convert inferred resources north of current ultimate pit • Additional deep drilling to develop LFZ mineable resource to depth • Test for extensions of the LFZ to the east • Drill program this year designed to take ultimate pit 150m deeper to ~480m depth • Add upwards of 500,000 – 1,000,000 oz’s(1,2) (1) Potential to expand existing gold mineralization to between 40 and 50 M tonnes at grades of between 1.5 to 2.0 gpt Au for a total inventory of 2.5 to 3.5 Moz (2) This exploration target is not a Mineral Resource. The potential quality and grade is conceptual in nature and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource. Full drill results are posted at terangagold.com 12
- 13. MINE LICENSE EXPLORATION Main Flat Extension / Lower Flat Zone (“MFE/LFZ”) – program: • In-fill drilling under main haulage ramp on the north end ongoing; high grade intercepts down dip at depth • 31m at 6.0 gpt from 385m • Vertical drilling from the north end of the pit • 95m at 1.3 gpt from 358m • Other recent MFE drill results include: • 20m at 3.2 gpt • 9m at 5.4 gpt Full drill results are posted at terangagold.com 13
- 14. MINE LICENSE EXPLORATION – MASATO 2011 • Confirmed strike length of 500m and dip extent of 200m Q1 2012 • Confirmed strike length to 1,600m and dip extent to 300m, (still remains open in both directions) 2012 Objectives • Infilling 200m x 500m zone identified in 2011 in preparation for resource estimate • Further definition drilling on the high grade pod of gold mineralization • Locate southern extension of Masato on our ML • Expect continued positive drilling results to lead to defining a resource by year end Q2 2012 • 6,310m drilled Full drill results are posted at terangagold.com 14
- 15. MINE LICENSE EXPLORATION • Q2 – 34,000m, $7M FOCUSED ON GROWTH • YTD – 60,000m, $14.2M FOCUSED ON: • 2012 Budget – ~90,000m, $20M (RR/DD drilling) • Approximately 15% more metres than original budget GROWING RESERVES • Minimum 7 drill rigs testing targets • 7 drill rigs currently operating • 5 DD rigs • 2 RC rigs • Expect to reach 2.5 – 3.5 Moz, 0.5 – 1 Moz from pit alone 15
- 16. 1. MINE LICENSE EXPLORATION (ML) 2. REGIONAL EXPLORATION (RLP) 33km2 1,450km2 35 km radius 16
- 17. REGIONAL EXPLORATION • ~1,450km2 Regional Land Package • ~40 drill targets to be drill tested in 2012/2013 • All truckable to mill • Further 20 targets to be evaluated with surface sampling or trenching 17
- 18. Q2 2012 – REGIONAL EXPLORATION • 3 rigs • RAB – 41,000m • RC – 18,000m • RC focused on Toumboumba, Tourokhoto, Saiensoutou, Jam, KB, and IP anomalies at Gora • Several RAB programs completed • 2012 Budget of $20M • $5.3M spent during Q2 (including $0.5M for Gora) • $13.9M year to date 18
- 19. TOUMBOUMBA – NEWEST TARGET Q2 2012 • Potential for near surface oxide deposit on main Toumboumba mineralized zone • In April, commenced RC program on a 25m x 25m grid • 129 holes, 12,000m completed • Three principal shear veins hosted in granite • Numerous high grade intersections including 3m at 38 gpt • At minimum, potential for economic mill feed Full drill results are posted at terangagold.com 19
- 20. • 27 hole RC program, 14,000m, commenced in December 2011, completed during Q1 2012 TOUROKHOTO • Marougou area most promising, southeast of Sabodala Ore Body Tourokhoto Main Trend Central area • Wide-spaced drilling, best results include: • 14m at 3.25 gpt • 12m at 13.2 gpt • 8m at 3.6 gpt • Trend of minimum 1,200m, NE direction, westerly dip • Represents discovery of new prospect • Open to north and south • New drill program to infill and extend the zone along strike will commence in Q4 Full drill results are posted at terangagold.com 20
- 21. DIEGOUN NORTH – “THE DONUT” Cinnamon – northern portion of Donut • 14 RC holes, 2,500m • Results to date include: Sabodala Ore Body • 8m at 1.9 gpt • 15m at 0.5 gpt • 6m at 2.8 gpt Jam – southern portion of Donut • 15 RC holes, 2,900m, 9 DD holes, 2,100m • Results returned wide, but low grade mineralized intersections • Large-scale, gold-bearing, hydrothermal alteration system Donut • Massive 28km2 target, continue to evaluate during wet Full drill results are posted at terangagold.com season, determine appropriate follow-up program 21
- 22. FOCUSED ON DELIVERING • Increasing production • Reducing costs • Executing on our vision to grow the company 22
- 24. COMPETENT PERSONS STATEMENT The information in this presentation relating to the reserve estimate associated with the Sabodala and Niakafiri pits as well as the Stockpiles is based on information compiled by Ms. Julia Martin, PEng, MAusIMM (CP) who is a full time employee of AMC Mining Consultants Canada and has sufficient experience which is relevant to the style of mineralisation 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. Martin is a Qualified Person in accordance with NI 43-101 and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The technical information in this presentation that relates to mineral resource estimates within the Mining License is based on information compiled by Mr. Bruce Van Brunt, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr. Van Brunt is a full time employee of Teranga and not independent. Mr. Van Brunt has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a "Competent Person" as defined in the 2004 Edition of the “Australasian Code of Reporting of exploration Results, Mineral Resources and Ore Reserves”. Mr. Van Brunt is a "Qualified Person" in accordance with National Instrument 43-101 and he consents to the inclusion of this information in the form and context in which it appears in this announcement. The technical information in this presentation that relates to the exploration results and targets within the regional exploration program are based on information compiled by Mr. Martin Pawlitschek, who is a member of the Australian Institute of Geoscientists. Mr. Pawlitschek is our full time employee and is not “independent” within the meaning of National Instrument 43-101. Mr. Pawlitschek 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 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Pawlitschek is a “Qualified Person” in accordance with NI 43-101 and he consents to the inclusion of this information in the form and context in which it appears in this presentation. 24