TECHNICAL PRESENTATION MARCH 2014

Transcription

1 TECHNICAL PRESENTATION MARCH

2 FORWARD LOOKING STATEMENTS This presentation 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 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, targeted date for a NI compliant technical report, amendment to the OJVG mining license, 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 27, 2013, 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 March 19, 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 US dollars unless specified otherwise 2

3 TERANGA GOLD CAPITALIZATION SUMMARY OPERATIONS Ticker symbols/share price: TSX:TGZ / C$0.99² ASX:TGZ / A$1.02² Domicile: Canada Basic shares outstanding: 317M Options outstanding: 24M¹ Market capitalization: $284M² Cash & equivalents: $42M 4 Project finance outstanding: $30M³ Mining fleet loan facility: $17M 4 Note: *all amounts in US$ unless specified otherwise, ¹average strike of C$2.58, including 15.8M at C$3; ²at 3/17/14; ³at 1/28/14 as per ASX report, reduced from $60M, 4 at 12/31/13 3

4 INVESTMENT SUMMARY Excellent performance in Mill expansion, elimination of out-of-the-money hedges, agreement with Senegalese Government - Transformative acquisition of OJVG now complete, more than doubling reserves and resources New mine plan forecasts average production of about 250koz per year in lowest (best) quartile of all-in sustaining costs (AISC) Corporate strategy focused on maximizing free cash flow - Operations expected to generate significant free cash flow - Disciplined capital allocation strategy Potential to add profitable ounces to production profile - Heap-leaching of lower grade oxide ore - Near-plant exploration - Highly prospective regional exploration program on 70km gold belt Consistently meeting operational targets Senegal is a politically stable jurisdiction with a competitive mining fiscal regime Trading at a discount to peer group valuations 4

5 POTENTIAL TO ADD PROFITABLE OUNCES SHORT AND MEDIUM TERM ( ) LONG TERM (2015-) Integrate OJVG and Sabodala operations Increase free cash flow through higher production and lower material movement Increase reserves through conversion of M&I and Inferred Evaluate heap leach processing option (permit and build if economics are attractive) Optimize mill throughput Systematic identification and evaluation of targets on - Expanded Sabodala mine license (246km 2 ) - Regional land package (1,055km 2 ) Objective - Millable reserve growth - Heap leach reserve growth - Satellite deposit discovery - Standalone deposit discovery Optimize mine planning and grade Maximize free-cash flow 5

6 2014 GUIDANCE Year ended December Actuals 2014 Guidance Range Operating Results Total mined ( 000t) 34,778 24,000-26,000 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) 2,3,4 $/oz sold All-in sustaining costs 2,4 $/oz sold 1, Mining ($/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) 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 - $

7 ACQUISITION LEADS TO IMMEDIATE IMPROVEMENT IN CASH FLOW GENERATION Notes: ¹See appendix for details of gold stream agreement; ²Plus contingent consideration based on increases in OJVG reserves and higher gold prices Source: Base Case Sabodala Combined Life of Mine Plan (NI Technical Report, March 13, 2014) 7

8 BASE CASE LOM SCHEDULE Source: Base Case Sabodala Combined Life of Mine Plan (NI Technical Report, March 13, 2014) 8

9 RESERVES ORIENTATION Approximate Haul Distance to Gora Sabodala Mill: Masato - Masato- 2.5 km Sabodala Mill - Kerekounda- 8 km - Golouma- 8.5 km - Gora- 25 km Sabodala 2km Haulage costs of ~$0.15/Tkm (at current fuel prices) Naikafiri Kerekounda Golouma 9

10 BASE CASE LOM PLAN 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) 10

11 BASE CASE CAPITAL AND OPERATING COSTS 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) 11

12 MASATO RECONCILIATION Discrete high grade zones were removed in Teranga resource model resulting in a reduced grade and a decrease of ~300koz of resource impacts cash flow Infill drilling planned for 2014 to increase confidence of high grade zones and inferred resource conversion High potential to increase ounces and grade at Masato 12

13 2014 TECHNICAL DELIVERABLES Issue Technical Report- March 2014 Masato high grade zone confirmation- Q1-Q Identify potential high grade zones for drilling near surface for 2014 mine plan - Review drill logs and geotechnical interpretations - Drill infill holes to confirm high grade zones Masato Production Execution Plan- H Amend and update OJVG ESIA - Complete mine development - Infill drilling to convert inferred resources Heap Leach Testing- FY Geological drilling along 4km strike to increase oxide resource near surface - Continued engineering test work building on PEA Exploration - Mine lease - Regional 13

14 EXPLORATION STRATEGY Systematic identification and evaluation of targets on each of: 1. Expanded Sabodala Mine Licence, 246km 2 -(including recently acquired 212km 2 OJVG mine license) 2. Regional Land Package 1,055km 2 Prospects categorized into economic objectives: 1. Millable reserve growth on Mine leases 2. Heap leachable reserve growth on mine leases 3. Satellite deposit discovery surface mineable 4. Standalone deposit discovery surface mineable Strategy: Optimize geologic resource discovery through economic objectives 14

15 2014 EXPLORATION PROGRAM $10M Budget: - Mapping: 50km - Trenching: 6,500m - RAB drilling: 5,000m - RC drilling: 3,000m - Diamond drilling: 22,000m 1. Millable reserve growth (Masato, Goloumas) Budget allocation: - 50% Mine License - 50% Regional Exploration Land Package Oromin s personnel fully integrated into Teranga s exploration team - Provides continuity of knowledge specific to OJVG deposits Acquisition of adjoining OJVG increases reserves to 2.8 Moz - >10 years of Sabodala mill production - Adds prospective land package 2. Heap leachable reserve growth (Niakafiri structure, Maki Madina) 15

16 EXPLORATION: EARLY DAYS IN NEW GOLD CAMP Neighbouring Shear Zone on shared Kedougou-Kenieba Greenstone Belt is host to 7 large deposits 1,055km 2 land package covers > 70km of strike length on an offsetting Regional Scale Structure 4. Standalone deposit discoveries (Ninienko and Soreto, Garaboureya) 3. Satellite deposit discoveries (KC, Zone ABC, Gora) Systematic exploration has identified > 50 exploration targets to date 16

17 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. 17