ANNUAL GENERAL & SPECIAL MEETING OF SHAREHOLDERS ALAN R. HILL, CHAIRMAN RICHARD YOUNG, PRESIDENT & CEO MAY 1, 2014

Transcription

1 ANNUAL GENERAL & SPECIAL MEETING OF SHAREHOLDERS ALAN R. HILL, CHAIRMAN RICHARD YOUNG, PRESIDENT & CEO MAY 1,

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 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. 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. 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 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. This presentation is dated as of May 1, All references to the Company 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 HISTORICAL GOLD PRICE Source: Thomson Reuters 3

4 2013: A YEAR OF ACHIEVEMENTS OVERVIEW Met or exceeded production and cost guidance Optimized mill to design capacity Strengthened balance sheet Established a long-term fiscal and investment agreement with Senegalese Government Acquisition of Oromin Joint Venture Group (OJVG) Published Teranga Development Strategy (TDS) Strengthened Board of Directors 4

5 HIGHLY PROSPECTIVE LAND PACKAGE Regional Land Package ~70km of strike along emerging gold belt SENEGAL Moz MALI +40 Moz YATELA IAMGOLD SADIOLA IAMGOLD Mine License Acquisition of OJVG provides base case ~10 years of stable 250,000 oz / year Best quartile costs SABODALA TERANGA MAKABINGUI BASSARI LOULO RANDGOLD YALEA RANDGOLD Cash flow to methodically explore belt MASSAWA RANDGOLD GOUNKOTO RANDGOLD TABAKOTO SEGALA ENDEAVOUR YALEA RANDGOLD BOTO IAMGOLD MEDINANDI CENTRAL AFRICA 5

6 ACHIEVED GUIDANCE IN 2013 AND ON TRACK FOR Guidance Actual Guidance Actual Guidance Actual Production (koz) On track Cash Costs 1 ($/oz) $ $627 $ $641 $ On track AISC 2 ($/oz) N/A $1,200 $1,000-1,100 $1,033 $ On track Met or exceeded guidance for last two years See Endnotes #1, #2 6

7 2014 FINANCIAL RESULTS Revenues, operating cash flow and earnings below prior year -Spot gold prices 28% lower Year end cash balance: $42.3M (including $7.3M in bullion receivables) -After payment of $11M of acquisition related costs $135M Franco-Nevada stream agreement (completed in Q1 2014) -$105M used to purchase Bendon s interest in OJVG -$30M used to reduce $60M debt balance by half Additional ~$30M paid in transaction and ongoing operating costs in 2013 and Q

8 FINANCING EXECUTING ON GROWTH INITIATIVES ONE-TIME PAYMENTS (2014) C$30M EQUITY RAISE FY 2014 Q Remaining Debt payments Retire debt facility $30M $5M $25M Fleet lease facility $13M $3.2M $9.8M Government waiver (OJVG & Gora) $14M $14M Deal related costs $7.3M $7.3M - Payment to Badr (13% of OJVG) $7.5M $7.5M - ~$70M $23M ~$47M 1. Increase reserve development expenditures to expedite the conversion of resources to reserves on our mine licenses 2. Accelerate heap leach testing and related activities 3. Execute on mill optimization opportunities that increase our milling rate Protecting shareholder value 8

9 COMBINED BASE CASE MINE PLAN Increased flexibility Doubles: reserves, resources, mine life Optimize production Focus: only gold, only in Senegal Maximizing free cash flows See Appendix and Endnotes #3 and #4 9

10 SHORT AND MEDIUM-TERM ( ) LONG-TERM (2015+) Integrate OJVG and Sabodala operations Develop and produce from the Masato deposit Increase free cash flow through higher production and lower material Exploration discoveries through systematic identification and evaluation of targets on: 1. Expanded Sabodala Mine License (246km 2 ) 2. Regional land package (1,055km 2 ) movement Adding profitable ounces: 1. Conversion of M&I and Inferred 2. Evaluate heap leach processing option 3. Optimize mill throughput 4. Optimize mine planning and grade 10

11 2014 EXPLORATION PROGRAM $10M initial budget YATELA IAMGOLD Substantial potential on Mine License for reserve additions SENEGAL Moz MALI +40 Moz SADIOLA IAMGOLD Significant opportunity on regional package Mali years ahead of Senegal, >40 Moz discovered Senegal Moz discovered with minimal work Excellent data base and many targets to evaluate and systematically drill out SABODALA TERANGA MASSAWA RANDGOLD MAKABINGUI BASSARI GOUNKOTO RANDGOLD LOULO RANDGOLD YALEA RANDGOLD TABAKOTO SEGALA ENDEAVOUR YALEA RANDGOLD BOTO IAMGOLD MEDINANDI CENTRAL AFRICA 11

12 COMBINED SABODALA & OJVG New mine plan production ~250,000 oz / year, lowest (best) quartile of all-in sustaining costs (AISC) Focused on maximizing free cash flow Objective: Debt-free by year end Create value longer term through large discoveries on regional land package 12

13 CORPORATE SOCIAL RESPONSIBILITY COMPLETION OF TERANGA DEVELOPMENT STRATEGY (TDS) Identified priority areas: 1. Sustainable Economic Growth 2. Agriculture and Food Security 3. Youth Education and Training terangagold.com/english/corporateresponsibility/overview 13

14 IN PARTNERSHIP WITH SENEGAL (PRESIDENT MACKY SALL S RECENT SITE VISIT) 14

15 IN PARTNERSHIP WITH SENEGAL (PRESIDENT MACKY SALL S RECENT SITE VISIT) 15

16 IN PARTNERSHIP WITH SENEGAL (PRESIDENT MACKY SALL S RECENT SITE VISIT) 16

17 IN PARTNERSHIP WITH SENEGAL (PRESIDENT MACKY SALL S RECENT SITE VISIT) 17

18 SAFETY CONTINUOUSLY IMPROVING SAFETY RECORD Focused on continuous improvement Lost Time Injury (LTI) frequency is well below the international benchmarking standards terangagold.com/english/corporateresponsibility/overview 18

19 INVESTMENT SUMMARY Strong performance in 2013 Operation performing well, on track in 2014 Large land package full of opportunity Strengthened balance sheet Objective: Debt free by year end Focused on free cash flow generation 19

20 THANK YOU FOR YOUR TIME 20

21 ENDNOTES 1. Total cash costs in 2012 were restated to $556/oz due the adoption of IFRIC 20 for capitalization of a portion of production phase stripping costs. 2. Beginning in the second quarter of 2013, the Company adopted an all-in sustaining costs (AISC) measure and all-in costs measure consistent with the guidance issued by the World Gold Council ( WGC ) on June 27, The Company did not issue guidance for this measure in Badr s 13 percent carried interest in the OJVG was acquired for cash consideration of $7.5 million plus contingent consideration based on increases in OJVG reserves and higher gold prices. 4. Sabodala Standalone Mine Plan, Oct. 2013, Base Case Sabodala Combined Life of Mine Plan (NI Technical Report, March 13, 2014). 21

22 APPENDIX 22

23 TRACK RECORD OF SAFE OPERATIONS SAFETY STATISTICS Hours Worked 3,057,907 3,474,890 2,879,685 LTI MTI FAI Incidents High Potential Incidents COMMENTS Teranga is dedicated to excellence in safety and aims its OHS indicators to exceed global benchmarking standards Teranga is committed to creating and sustaining a healthy and safe work environment Sabodala s Lost Time Injury (LTI) frequency is well below the international benchmarking standards - Sabodala 0.97 vs. International Standard 4.19 Per million hours work We actively report and look at improvement of all incidents no matter how small Sabodala continues to operate at a standard equal to best practice international standards We use internationally researched methodology to investigate high potential incidents (HPI s) 23

24 FRANCO-NEVADA STREAM AGREEMENT Franco-Nevada provided an upfront cash payment of $135M in exchange for a fixed and floating stream on future production to 2019: 22,500 ounces per year and thereafter: 6% of gold production Franco-Nevada to pay 20% of spot gold price on each ounce delivered (the 6% stream is equivalent to a 4.8% NSR royalty) Higher stream in first six years - Allowed us to retire half of our debt facility - Accelerate and repay balance of facility in Provides certainty to Franco-Nevada as mine plan evolves Repaying debt more rapidly has clear benefits to the Company and shareholders - Removing onerous financial covenants - Reduced balance sheet risk - Enables earlier initiation of return of capital 24

25 SENEGAL INVESTMENT AGREEMENT AND FISCAL REGIME IN PARTNERSHIP WITH SENEGAL The Senegalese Government has stated the importance of the mining industry in Senegal Partnership and trust between Senegalese Government and Canadian & Senegalese Management teams built on transparency - Committed to growing domestic gold production as quickly as possible - Signing the Definitive Global Agreement (May 2013) provided a clear and transparent framework that allowed investor confidence - Agreement provides a price and formula to acquire Government s additional option on satellite deposits and to incorporate these into the existing mine license and fiscal regime - Ensuring full access to exploration targets currently occupied by artisanal miners - Supporting drilling of the Niakafiri deposit on the Mine License - Extending the mine license by five years to 2022 and five key exploration licenses by 18 months FISCAL REGIME 5% government royalty 25% corporate income tax after tax holiday ends in May % Government of Senegal free-carried interest From 2009 to the end of 2013 Teranga has: - Invested more than $500M in Senegal - Paid $70M in royalties, dividends, and other government payments The agreement made the Franco-Nevada investment possible and paved the way for the consolidation of the OJVG 25

26 BASE CASE LOM PLAN (NI Technical Report Filed March 13, 2014) LOM AVG Ore Mined Mt Sabodala Phase 3 Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Sabodala Phase 4 Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Masato Phase 1 Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Masato Phase 2 Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Gora Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Golouma Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Kerekounda Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Niakafiri Ore Grade g/t Waste Mt Contained Oz Moz Ore Mined Mt Total Ore Grade g/t Waste Mt Contained Oz Moz Stockpile Ore Balance Mt Stockpile Grade g/t Contained Oz Moz Ore Milled Mt Head Grade g/t Oxide % 13% 23% 6% 50% 34% 6% 26% 15% 0% 1% 0% 0% 0% 0% 0% 0% 36% 50% Rec. oz Moz Source: Base Case Sabodala Combined Life of Mine Plan (NI Technical Report, March 13, 2014) 26

27 BASE CASE CAPITAL & OPERATING COSTS (NI Technical Report Filed March 13, 2014) Capital Expenditures Sustaining Capex Unit LOM AVG Mining USDM Processing USDM Admin & Other Sustaining USDM Community Relations USDM Total Sustaining Capex USDM Capital Projects & Development USDM OJVG & Gora Development USDM Government Waiver Payments USDM Other Projects & Development USDM Total Projects and Development USDM Combined Total (USDM) USDM Operating Costs Activity Unit LOM AVG Mining USD/t mined Processing USD/t milled General & Admin. USDM Mining USDM 1, Processing USDM 1, General & Admin USDM Refining & Freight USDM Byproduct Credits USDM (5) (0) (0) (0) (0) (0) (1) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Total Operating Costs USDM 2, Deferred Stripping Adjustment (2) USDM (3) (1) (3) Inventory Adjustment USDM 62 (26) (17) (52) (30) (17) (17) (22) (28) (48) Royalty USDM Total Cash Costs (1) USDM 2, Total Cash Costs (1) USD/oz ,085 1, ,307 1,512 1,533 1,535 1,535 1,589 1,935 Capex USDM Capitalized Deferred Stripping USDM Capitalized Reserve Development USDM Corporate Admin USDM All-In Sustaining Cash Costs (1) USDM 2, All-In Sustaining Cash Costs (1) USD/oz 1, ,226 1, ,371 1,595 1,604 1,593 1,590 1,626 1,980 (1) 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. (2) Excludes any deferred stripping adjustment beyond 2014 as required by IFRIC20 Source: Base Case Sabodala Combined Life of Mine Plan (NI Technical Report, March 13, 2014) 27

28 OUTLOOK 2014 Operating Results Year ended December Actuals 2014 Guidance Range Ore mined ( 000t) 4,540 5,300-6,000 Waste mined - operating ( 000t) 15,172 18,200-19,000 Waste mined - capitalized ( 000t) 15, ,000 Total mined ( 000t) 34,778 24,000-26,000 Grade mined (g/t) Strip ratio (w aste/ore) Ore milled ( 000t) 3,152 3,400-3,600 Head grade (g/t) Recovery rate % Gold produced 1 (oz) 207, , ,000 Total cash cost (incl. royalties) 2,3 $/oz sold All-in sustaining costs 2,3 $/oz sold 1, Mining ($/t mined) Milling ($/t milled) G&A ($/t milled) Gold sold to Franco-Nevada 1 (oz) - 22,500 Exploration and evaluation expense (Regional Land Package) ($ millions) Administration expenses and Social community costs (excluding depreciation) ($ millions) Mine production costs ($ millions) Capital expenditures Mine site sustaining ($ millions) Capitalized reserve development (Mine License) ($ millions) Project development costs Government payments ($ millions) Development ($ millions) Mobile equipment and other ($ millions) Total project development costs ($ millions) Capitalized deferred stripping 2 ($ millions) Total capital expenditures ($ millions) ,500 ounces of production are to be sold to Franco Nevada at 20% of the spot gold price. 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 M easures at the end of this report. 3 Total cash costs per ounce sold for 2012 were restated to comply with the Company s adoption of IFRIC 20 - Stripping Costs in the Production Phase of a Surface M ine, in line with the Company s accounting policies and industry standards. 4 All-in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding Corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures (including project development costs) as defined by the World Gold Council. Key assumptions: Gold spot price/ounce - US$1,250, Light fuel oil - US$1.15/litre, Heavy fuel oil - US$0.98/litre, US/Euro exchange rate - $1.325 Other important assumptions include: any political events are not expected to impact operations, including movement of people, supplies and gold shipments; grades and recoveries will remain consistent with the life-of-mine plan to achieve the forecast gold production; and no unplanned delays in or interruption of scheduled production. 28

29 HISTORIC RESULTS AND GUIDANCE 2009A 2010A 2011A 2012A 2013A 2014F Ore Mined (000t) 2,637 2,915 3,973 5,915 4,540 5,300-6,000 Waste Mined - operating (000t) 9,144 13,199 21,818 12,265 15,172 18,200-19,000 Waste Mined - capitalized 1 (000t) 10,696 15, ,000 Total Mined (000t) 11,781 16,114 25,791 28,877 34,778 24,000-26,000 Grade Mined (g/t) Ounces Mined (oz) 186, , , , ,718 Ore Milled (000t) 1,806 2,285 2,444 2,439 3,152 3,400-3,600 Head Grade (g/t) Recovery (%) Production (oz) 166, , , , , , ,000 Mining ($/t) Milling ($/t) G&A ($/t) Spot Sales Price ($/oz) 1,006 1,252 1,548 1,677 1,368 Avg Realized Price ($/oz) 902 1,072 1,236 1,422 1,246 Total Cash Costs ($/oz) All-in Sustaining Costs 2 ($/oz) 1,200 1, The Company adopted IFRIC 20 on January 1, 2013 and restated the 2012 comparative amounts 2 All-in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding Corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures as defined by the World Gold Council 29

30 COMBINED RESERVES AND RESOURCES Note: Please see 2013 Financial Report and MD&A, 2013 for Resource and Reserve estimate assumptions 30

31 COMBINED RESERVES AND RESOURCES Note: Please see 2013 Financial Report and MD&A, 2013 for Resource and Reserve estimate assumptions 31

32 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 information compiled by Mr. Chawrun. Mr. Chawrun is 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 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 document of the matters based on his compiled information in the form and context in which it appears. The technical information contained in this document relating to a mineral resource estimates is based on 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 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 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this document of the matters based on her compiled information in the form and context in which it appears in this document. 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 and a competent person as defined in the 2012 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 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ms. Martin is a Qualified Person under National Instrument 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 document. Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 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 There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves. 32