Banfora Project Feasibility Study

Transcription

1 The Next Multi-Jurisdictional West African Gold Producer Banfora Project Feasibility Study September 7, 2017

2 Forward-Looking Statements This presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"), which reflects management's expectations regarding Teranga's 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 anticipates, potential, belief, believe, expected, expects, estimates, plans, anticipated, ability and similar expressions or statements that certain actions, events or results may, should, work to or "will" have been used to identify such forward looking information. Forward-looking statements include, without limitation, all disclosure regarding possible events, conditions or results of operations, future economic conditions and anticipated courses of action. Although the forward-looking statements contained in this news release 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 statements. Such forward-looking 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 but that may prove to be incorrect. These assumptions include, among other things, the ability to obtain any requisite governmental approvals, the accuracy of mineral reserves and mineral resources estimates, gold price, exchange rates, fuel and energy costs, future economic conditions, community resettlement within anticipated timeline, anticipated future estimates of free cash flow, and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements. The forward-looking statements and forward-looking information in this news release include without limitation, statements regarding (i) potential upside and improved economics from the Banfora Project; (ii) anticipated rates of conversion of inferred resources into reserves; (iii) objective to increase the mine life beyond the initial 9 years by first gold pour in 2019; (iv) anticipated financing plan; and (v) expected reserve update in the first half of In addition, all of the results of the Banfora Project Feasibility Study constitute forward-looking statements and forward-looking information. The forward-looking statements include metal price assumptions, fuel price and foreign exchange rates, cash flow forecasts, projected capital and operating costs, metal recoveries, mine life and production rates, and the financial results of the Banfora Project Feasibility Study. These include statements regarding (i) IRR of 15% after tax; (ii) NPV of $90 million at a 5% discount rate after tax, (iii) estimated all-in sustaining costs; (iv) capital cost estimates (pre-production capital of $232 million, excluding $12 million in construction readiness activities spent prior to major construction), (v) proposed mining plans and methods, and (vi) a mine life estimate of 9 years. Readers are cautioned that actual results may vary from those presented. 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 Teranga's Annual Information Form dated March 30, 2017, and in other filings of Teranga with securities and regulatory authorities which are available at 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. All references to Teranga include its subsidiaries unless the context requires otherwise. This presentation is as of September 7, All references to Teranga include its subsidiaries unless the context requires otherwise. This presentation contains references to Teranga using the words we, us, our and similar words and the reader is referred to using the words you, your and similar words. All dollar amounts stated are denominated in U.S. dollars unless specified otherwise. 2

3 Richard Young President & Chief Executive Officer 3

4 Burkina Faso: One of the Fastest Growing Regions for Gold Mining-Friendly Region Sees Decade of Accelerated Growth 11 gold mines* have been built in the last ten years Avocet Iamgold Gourma JV 2 gold mines coming on line in the next months Komet 1.4 million ounces of gold produced in Burkina Faso in 2016, representing an increase of 1300% over ten years Endeavour Nordgold Nordgold Teranga Acquired Three Excellent Assets in Burkina Faso 90% ownership of the Banfora Project Two prospective exploration joint ventures: Golden Hill and Gourma Semafo Roxgold Endeavour (Production Q4 17) Burkina Faso MNG Gold Semafo (H Commissioning) Banfora Project Benefits from Fiscal Stability Guarantees Golden Hill JV Under Teranga s mining convention, certain tax rates are stabilized for the Banfora Project Banfora Project tax rate will be 17.5% Banfora Gold Project Operating Gold Mine/ Development Project Teranga Gold *Includes decommissioned Kalsaka/Sega 4

5 Positive Banfora Project Feasibility Study Has Significant Upside Potential the Feasibility Study Targeting Conversion of 25%-50% of Inferred Resources Detailed modeling has identified significant potential for conversion of inferred resources at depth and along strike Infill drill program underway expected to be completed by year end targeting H resource and reserve update Longer-Term Upside Potential on Land Package Approximately a dozen targets located within trucking distance of the proposed mill site Drill program is ongoing 1.8Moz g/t 1.2Moz g/t g/t M&I Resources* P&P Reserves Inferred Resources *M&I Resources are inclusive of reserves. 5

6 Second Long-Life Gold Mine Increases Consolidated Production Profile by ~50% Banfora Project Financial Highlights 9-year LOM free cash flow from operations*: $409 million (5) AISC*: 10% lower in first 5 years and 5% lower LOM Teranga Consolidated Production Profile (koz) (1),(6),(7) Conversion of resources to reserves 300 koz Sabodala Banfora Refer to Endnotes (1), (5), (6) and (7) on the second last slide * Refer to Non-IFRS Measures on slide 35. 6

7 Solid Economics Leveraged to Today s Strong Gold Prices Gold Price Sensitivity $1,200 $1,250 $1,300 $1,350 After-tax NPV 0% $134M $176M $219M $249M After-tax NPV 5% $58M $90M $122M $145M After-tax IRR 11% 15% 18% 20% 7

8 Well-Positioned to Go Forward with Banfora Project $80M (2) Cash & cash equivalents as at June 30, $80M (3) Anticipated cash flow from Sabodala in (refer to technical report filed on August 30, 2017) Up to $150M Indicative term sheets for project debt Banfora Project Pre-Production Capex: $232 million (4) Refer to Endnotes (2), (3) and (4) on the second last slide 8

9 Paul Chawrun Chief Operating Officer 9

10 Overview of Permitted Banfora Project Senegal Ideally Situated on a Prolific Gold Belt Permitted mining license that covers 89 km 2 Mali Burkina Faso Niger Exploration licenses covering +1,000 km 2 Burkina Faso s second major city, Bobo-Dioulasso, has an international airport and is easily accessible from Banfora Project Situated within the prolific mafic volcanic greenstone belt that hosts similar deposits including Tongon in Côte d Ivoire Four Deposits Included in Feasibility Study Tongon Côte d Ivoire Bobo-Dioulasso Banfora Ghana Togo Benin Nogbele, Stinger, Samavogo and Fourkoura Banfora Project Samavogo Nogbele Stinger Fourkoura Proposed Plant Site 10

11 De-Risking and Optimizing the Project Over the Last 12 Months Drilling Campaign Four initial deposits Infill and confirmation drilling with more than 1,000 holes drilled since July 2016 Metallurgical Test Work & Flowsheet Optimization Trade-Off Studies & Optimization Plant production rates & mill sizing Tailings design options Power source options Mine equipment selection Construction housing Community Relations Resettlement action plan Livelihood restoration Feasibility Study (Technical Report) Full reconstruct of resource models, reserves estimate & detailed LOM plan Process design criteria & flowsheet, capital & operating cost estimates Revised water balance & tailings design Revised closure plan, site investigation Construction schedule Early Works Site infrastructure Vendor packages EPCM tender process July 2016 August

12 Pre-Production Capital Costs Pre-Production Capital Costs Millions Indirect project construction $19.6 Capital Cost Estimates Prepared by Lycopodium Lycopodium has extensive experience building mines in Burkina Faso and other countries in West Africa Contractor, vendor, labour productivity and construction logistics are well-known to Lycopodium as they are completing a similar project at nearby Houndé Owners team included in capital estimate Low Risk Standard Design Straightforward flowsheet Many design similarities to Sabodala Processing plant $46.6 Reagents and plant services $12.2 Infrastructure $52.9 Mining infrastructure & equipment $30.2 EPCM costs $16.3 Owners project costs $30.5 Subtotal $208.2 Contingency $24.0 Total (a), (b), (c) $232.3 (a) Sum of individual amounts may not equal due to rounding. (b) Excludes cost to mine and stockpile 764 Kt at 2.25 g/t or 55Koz (strip ratio of 9:1) prior to mill production which has been included in mining operating costs. (c) Excludes $12 million used for construction readiness activities spent prior to major construction 12

13 Robust LOM Physicals and Cash Flows Physicals Near surface, lode vein orebodies with mostly visual control that outcrop at surface Overall strip ratio averages approximately 7:1 Average recovery rate of 92% LOM Unit Costs Similar to Sabodala and competitive with peers LOM AISC* and Cash Flows All-in sustaining costs* per ounce below $850 9-year LOM free cash flow from operations* of $409 million (5) Net cash flow is estimated at $176 million (5) Refer to Endnotes (1), (4) and (5) on the second last slide *Refer to Non-IFRS measures on slide 35. **Sum of individual amounts may not equal due to rounding. Total LOM Average Ore mined Mt Waste mined Mt Total material mined Mt Ore milled Mt Mill head grade g/t Gold produced (1) Koz 1, Mining $/t mined Processing $/t milled General & administrative $/t milled Sustaining capital $M AISC* $/oz Income taxes, W/C and other $M 29 3 Free cash flow from operations* $M Pre-production capital (4) $M Net Cash Flow (5) $M

14 Significant Advantages to Modeling Banfora on Sabodala Mine Samavogo Pits Matches Teranga s Strength & Experience Similarities between Sabodala design and proposed design at Banfora will help to ensure a smooth build and operation Conventional open pit mining techniques Same type of ore recovery Teranga team has developed an expertise for operating in a multi-pit, central mill type of operation and is using the operating flexibility this brings to its advantage Deposits Located Close to Proposed Plant Site Largest deposit, Nogbele is adjacent to proposed plant site other deposits within close proximity Fourkoura 6 km Stinger 15 km Samavogo 25 km Selected trucks have the added flexibility to haul ore directly to plant Banfora Project: Proposed Mine Site Plan Nogbele Pits Camp Process Plant Water Harvesting Dam Tailings Storage Facility Fourkoura Pits Stinger Pits 14

15 ... And Numerous Benefits to Replicating Sabodala Flow Sheet Banfora Project: Simplified Flow Sheet Trash Screen Primary Crushing Ore Storage Emergency Pebble Crushing Grinding Reclaim Sag Mill Cyclones Ball Mill Elution Electrowinning Intensive Cyanidation Cyanide Leach & Adsorption Carbon Regeneration Kiln Gold Room Plant Water Storage Thickening Tailings Storage Raw Water Supply 15

16 Upside Expected in Near-Term with Targeted Infill Drill Program Extensive Infill Drill Program Currently Underway Infill drill program is targeting inferred resources located near to the current reserve pits Objective is to increase drill hole density within the existing inferred resources $1,200 Reserves Pit Limit Target Area Along Strike Target Area at Depth $1,450 Resource Pit Limit More than 50% of a planned 65,000 metre drill program has been completed to date Aiming for a Conversion Rate of 25%-50% of Inferred Given demonstrated continuity of mineralization of the inferred resources, 25%-50% of inferred resources is targeted to be converted to indicated Near-Term Upside Expected to Improve Economics Reserves update expected in H

17 Drill-Ready Targets Underlie Multi-Year Regional Exploration Program Proposed Plant Site Reserve Deposits Exploration Targets Kondandougoug Prospective Banfora Land Package ~12 targets identified by Gryphon team prior to acquisition Targets are within trucking distance of proposed plant site Bagu Sud Korindougou Samavogo North Targets Have Potential to Become Resources Kafina West: +/- 1,000 metre, NE-trending soil + auger anomaly with recent results of g/t Au and g/t Au Konatvogo: +/- 2,000 metre, NW-trending soil and auger anomaly between the Fourkoura and Nogbele deposits. Rock chips up to 21.6 g/t Au from altered shear-hosted quartz veining. Scout RC drill results up to g/t Au Kafina West Bazogo Ouahiri Bassongoro Raul Raul Nogbele Konatvogo Fourkoura Petit Colline Sud Hillside Stinger Muddhi Samavogo 17

18 Resettlement Action Plan (RAP) Progressing Well with Community Support Working in Partnership with the Local Communities Resettlement sites approved, physical planning underway Compensation agreements near finalization Employment opportunities and sustainable development initiatives will provide further socio-economic growth RAP managed by ERM, global specialists in social assessment, planning, housing and resettlement Multi-Year Resettlement Minimizes Upfront Capital Spend & Enhances Mining Footprint Flexibility First phase of construction to begin in Q RAP encompasses all 500 households to be resettled over 5 years Phased resettlement approach allows for optimization and changes in mine plan 18

19 Major Construction Readiness Activities Leading up to Plant Construction Site Infrastructure Front End Engineering Initial Site Civils Commence Plant Construction in Q Procurement 19

20 Richard Young President & Chief Executive Officer 20

21 Checking Off the Boxes Production Exploration Development Tracking to 2017 outlook: 205, ,000oz (6) Filed updated NI in August 2017 Annual production of +200,000oz until 2022 (6) Total free cash flow of $230M from (3) Burkina Faso 2 gold discoveries 2 new prospects Senegal Côte d Ivoire Completed positive Banfora project feasibility study Announced construction decision Refer to Endnotes (3) and (6) on the second last slide 21 21

22 Q&A

23 Pro Forma Production Signals Material Re-Rating Opportunity Estimated 2019 Production (koz) (*) EV / Estimated 2019 Production (US$/oz)(*)(**) P / NAV (x)(**) Centamin Eldorado Gold Tahoe OceanaGold Pretium Alamos Gold SEMAFO Westgold Torex Resolute St. Barbara Brio Gold Regis Leagold SSR Mining Teranga Perseus Saracen Golden Star Alacer Klondex Asanko Guyana DPM TMAC Argonaut Mandalay Richmont Roxgold Silver Lake Primero Alio Gold Premier ~ * Production is broker consensus as per Bloomberg; Leagold production as per Los Filos PEA ** As per Capital IQ as at September 5, 2017 Premier Alamos Gold Pretium OceanaGold Torex Regis TMAC Centamin Richmont Guyana Saracen Eldorado Gold SSR Mining St. Barbara Klondex Roxgold Tahoe Alacer DPM Argonaut SEMAFO Asanko Leagold Resolute Alio Gold Westgold Golden Star Silver Lake Perseus Primero Teranga Mandalay Brio Gold $6,530 $5,320 $4,847 $4,492 $4,422 $4,422 $3,870 $3,556 $3,549 $3,259 $2,929 $2,814 $2,795 $2,772 $2,610 $2,585 $2,571 $2,183 $1,927 $1,880 $1,855 $1,540 $1,384 $1,378 $1,333 $1,124 $1,051 $903 $898 $890 $766 $758 $536 Regis Centamin OceanaGold Richmont Golden Star Saracen Klondex Alamos Gold SSR Mining St. Barbara Premier SEMAFO Argonaut Guyana Roxgold Torex TMAC Mandalay Resolute Tahoe DPM Westgold Teranga Pretium Perseus Alacer Alio Gold Leagold Eldorado Gold Asanko Silver Lake Brio Gold Primero 0.1x 0.3x 1.3x 1.3x 1.2x 1.2x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 0.9x 0.9x 0.9x 0.8x 0.8x 0.8x 0.7x 0.7x 0.7x 0.7x 0.7x 0.7x 0.7x 0.6x 0.6x 0.6x 0.6x 0.5x 0.5x 0.5x 0.5x 23

24 Building a Profitable Multi-Asset Mid-Tier West African Gold Producer ADVANCING TO CONSTRUCTION OF PERMITTED BANFORA GOLD PROJECT IN BURKINA FASO EXPLORATION OPPORTUNITIES ON WORLD-CLASS GOLD BELTS STRONG BALANCE SHEET & SUPPORTIVE CORNERSTONE INVESTOR STRONG SOCIAL LICENSE & AWARD-WINNING CSR PRODUCING ASSET IN SENEGAL PROVIDES FOUNDATION FOR GROWTH PROVEN & EXPERIENCED LEADERSHIP TEAM 24

25 Appendices 25

26 Life of Mine Assumptions $1,250 Gold Price $1.10 Euro to USD Fx $0.59 per litre Heavy Fuel Oil $1.04 per litre* Light Fuel Oil *$0.88 per litre during construction 26

27 Open Pit Mineral Resources Summary (as at June 30, 2017) Deposit Mtonnes Measured Resources Indicated Resources Measured + Indicated Resources Inferred Resources Grade (Au g/t) Moz MTonnes Grade (Au g/t) Moz MTonnes Grade (Au g/t) Moz MTonnes Grade (Au g/t) Nogbele Fourkoura Samavogo Stinger Total Notes for Mineral Resources Estimate Moz 1. CIM definitions were followed for Mineral Resources. 2. Open pit oxide Mineral Resources are estimated at cut-off grades ranging from 0.35 g/t Au to 0.45 g/t Au. 3. Open pit transition and fresh rock Mineral Resources are estimated at cut-off grades ranging from 0.45 g/t Au to 0.55 g/t Au. 5. High grade assays were capped at grades ranging from 2.5 g/t Au to 48.0 g/t Au. 6. Mineral Resources are inclusive of Mineral Reserves. 7. Open pit shells were used to constrain open pit resources. 8. Mineral Resources are estimated using a gold price of $1,450 per ounce. 9. Sum of individual amounts may not equal due to rounding. 27

28 Open Pit Mineral Reserves Summary (as at June 30, 2017) Deposit MTonnes Proven Reserves Probable Reserves 2P Reserves Grade (Au g/t) Moz MTonnes Grade (Au g/t) Moz MTonnes Grade (Au g/t) Nogbele Fourkoura Samavogo Stinger Total Moz Notes for Mineral Reserves Estimate 1. CIM definitions were followed for Mineral Reserves. 2. Mineral Reserve cut-off grades range from 0.39 g/t to 0.53 g/t Au for oxide and 0.51 g/t to 0.64 g/t Au for fresh rock based on a $1,200/oz gold price. 3. Dry bulk density was estimated in the Mineral Resource models; values for ore range from 1.61 t/m 3 to 2.22 t/m 3 for oxide and 2.50 t/m 3 to 2.80 t/m 3 for fresh rock. 4. Mineral Reserves account for mining dilution and mining ore loss. 5. A minimum mining width of 2.5 m was used. 6. Proven Mineral Reserves are based on Measured Mineral Resources only. 7. Probable Mineral Reserves are based on Indicated Mineral Resources and diluting material. 8. Sum of individual amounts may not equal due to rounding. 28

29 Life of Mine Production Plan 7 Total LOM Average Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Ore mined Mt Waste mined Mt Ore milled Mt Mill head grade g/t Contained gold Koz 1, Recovered gold Koz 1,

30 Life of Mine Pre-production Capital Costs ($M) Indirect project construction 19.6 Processing plant 46.6 Reagents and plant services 12.2 Infrastructure 52.9 Mining infrastructure and equipment 30.2 EPCM costs 16.3 Owners project costs 30.5 Subtotal Contingency 24.0 Total (a), (b), (c) (a) (b) (c) Sum of individual amounts may not equal due to rounding. Excludes cost to mine and stockpile 764 Kt at 2.25 g/t or 55Koz (strip ratio of 9:1) prior to mill production which has been included in mining operating costs. Excludes $12 million used for construction readiness activities spent prior to major construction. 30

31 Life of Mine Sustaining Capital Costs LOM Sustaining Capital ($M) Mining fleet replacement and mine sustaining 30.1 Processing sustaining 13.5 General and administration sustaining and other 3.8 Tailings storage facility 26.9 Deferred resettlement action plan costs 30.5 Total

32 Life of Mine Cash Flow (a), (b), (c), (5) Total LOM 2024 Average Yr -1 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Gold produced Koz 1, Gold price $/oz 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 Gold sales $M 1, Cash costs $M (716) (81) (7) (46) (81) (80) (81) (79) (78) (83) (79) (77) (27) Royalties and gov't payments (e) $M (85) (10) (6) (10) (10) (10) (8) (10) (9) (8) (8) (6) Sustaining capital $M (105) (15) (12) (13) (18) (14) (12) (14) (7) (6) (9) (0) AISC (d) $M (906) (105) (7) (63) (104) (107) (106) (99) (102) (99) (92) (95) (33) AISC (d) $/oz , Income taxes, W/C and other (f) $M (29) (3) (1) (4) (2) (2) (2) (4) (3) (8) (4) (2) (1) 5 Free cash flow from operations (d) $M (8) Pre-production capital $M (232) (120) (112) (0) Net cash flow $M 176 (128) (85) NPV 5% $M 90 IRR 15% (a) This LOM production plan assumes plant construction will commence in Q With plant construction moved to Q2 2018, this LOM production plan is anticipated to shift by several months. (b) Sum of individual amounts may not equal due to rounding. (c) All figures are on a 100% basis. (d) See Non-IFRS Performance Measures on slide 35 of this presentation. (e) Includes royalties, business taxes, mortmain taxes, and surface taxes. (f) Includes income taxes, refundable VAT movements, government social fund, and rehabilitation and equipment residual value. Excludes all project financing costs and allocation of corporate overhead costs. Refer to Endnote (5) on the second last slide 32

33 Feasibility Study Technical Report Contributions and Qualified Persons The mineral resource and mineral reserve estimates in this presentation have been classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum's "CIM Definition Standards - For Mineral Resources and Mineral Reserves" 2014, as required by National Instrument Standards of Disclosure for Mineral Projects ( NI ). Roscoe Postle Associates Inc., an independent consultant prepared the resource and reserve estimates and the report with the assistance of a number of independent experts or firms. Lycopodium Limited (ASX:LYL), an Australian headquartered engineering and project management consultancy that has successfully completed the construction of a dozen gold development projects in West Africa since 2009, completed the process design, capital estimate and execution plan for the process facilities and associated infrastructure. Knight Piésold Consulting completed the tailings management facility design, surface geotechnical engineering and site water balance, ECG Engineering completed the Power Supply solution, BBA/Aurifex completed the metallurgical test work supporting the process design, and MBS Environmental completed the ESIA summary and Closure Plan. 33

34 Competent & Qualified Persons Statement The technical information contained in this document relating to the open pit mineral reserve estimates is based on, and fairly represents, information compiled by Glen Ehasoo, P. Eng., who is a member of the Association of Professional Engineers and Geoscientists of British Columbia, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Ehasoo is independent of Teranga and is a "Qualified Person" as defined in National Instrument and a "competent person" as defined in the 2012 Edition of the JORC Code. Mr. Ehasoo 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Ehasoo has verified the technical data in this news release related to mineral reserves estimation, and has reviewed and approved the information in this news release relevant to mineral reserves estimation. The technical information contained in this document relating to open pit mineral resource estimates is based on, and fairly represents, information compiled by Mr. David Ross. Mr. Ross, 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. Mr. Ross is independent of Teranga and is a "Qualified Person" as defined in National Instrument Mr. Ross has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which 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. Ross has verified the technical data in this news release related to mineral resources estimation, and has reviewed and approved the information in this news release relevant to mineral resource estimation. 34

35 Non-IFRS Performance Measures The Company has included non-ifrs measures in this document, including total cash cost per ounce of gold sold, all-in sustaining costs per ounce and free cash flow from operations. The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-ifrs measures are 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. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers. 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 World Gold Council ( 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. All-in sustaining cost excludes 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 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. Life of mine total cash costs and all-in sustaining costs figures used in this press release are before cash/non-cash inventory movements and exclude any allocation of corporate overheads. Other companies may calculate this measure differently. The Company calculates free cash flow from operations as net cash flow provided by operating activities less sustaining capital expenditures. The Company believes this to be a useful indicator of its ability to generate cash for growth initiatives. Other companies may calculate this measure differently. For more information regarding these measures, please refer to the Company s Management s Discussion and Analysis accessible on the Company s website at 35

36 Endnotes 1. Production targets are based only on proven and probable ore reserves for the Banfora Project. 2. Teranga s consolidated cash and cash equivalents as of June 30, This forecasted financial information is based on the updated life of mine plan and reserve estimate for the Sabodala project as disclosed in a technical report pursuant to NI dated August 30, Pre-production capital costs of $232 million excludes $12 million in construction readiness activities spent prior to major construction. 5. LOM assumptions include: Gold Price of $1,250 per ounce Heavy Fuel Oil (HFO): $0.59 per litre Light Fuel Oil (LFO): $1.04 per litre ($0.88 per litre during the construction period) Euro to USD Exchange Rate: $ This production target is based on proven and probable reserves only from the Sabodala project as at June 30, 2017 as disclosed on the Company s website at and on SEDAR at The estimated ore reserves underpinning this production target have been prepared by a competent person or persons (see Competent Persons Statements in the Company s Management s Discussion & Analysis for the three and six months ended June 30, 2017 available on the Company s website at 7. This LOM production plan assumes plant construction to commence in Q With plant construction moved to Q2 2018, LOM production plan may shift by several months. 36

37 Trish Moran Head of Investor Relations TSX: TGZ T: E: W: terangagold.com 121 King Street West, Suite 2600 Toronto, ON M5H 3T9