Q FINANCIAL & OPERATING HIGHLIGHTS. July 30, 2015

Transcription

1 Q FINANCIAL & OPERATING HIGHLIGHTS July 30, 2015

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, ability to 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, anticipated future estimates of free cash flow, and courses of action. Teranga cautions you not to place unduereliance uponany 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, 2015, 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 the date on the front cover. 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 RICHARD YOUNG PRESIDENT & CEO

4 SOLID Q2 RESULTS & A STRONG DEBT-FREE BALANCE SHEET Improving Net Cash (Debt) (1) vs. Declining Gold Price Average Solid second quarter 2015 financial results with lower costs, higher margins and net profit, increased operating cash flow $1,669 $1,411 $1,266 $1, days without a lost-time injury $32M $38M Debt-free balance sheet supported by $30M revolver provides financial flexibility and liquidity ($32M) ($75M) Q Refer to Endnote (1) on slide 22 4

5 STRATEGY FOCUSED ON LONG-TERM SUSTAINABLE FREE CASH FLOW Grow Reserve Base Increase Production 5

6 MARGIN EXPANSION DESPITE $100 DECLINE IN GOLD PRICE Achieved year-to-date cost savings of $14 million compared to budget for the first half of 2015 $1,295/oz Cash Margin Interest expense is down sharply with elimination of debt earlier in the year $235/oz $250/oz $1,192/oz Potential for additional efficiencies and cost savings in coming quarters Average Realized Gold Price *cash margin = average realized gold price/oz all-in sustaining costs 6

7 INCREASING PRODUCTION IN Q4 WITH GORA Q2 production increased due to higher processed grades, throughput and mill recovery rates Gold Production (ounces) 7% 24% 91,947 98,034 High-grade Gora deposit expected to be a strong contributor to production and free cash flow in Q4 39,857 49, Assuming all goes as expected with Gora, the expectation is for production to be in upper half of 2015 guidance range H H

8 PURSUING GROWTH INITIATIVES TO INCREASE FUTURE PRODUCTION Gora Mill Optimization Target Capacity: 4.1Mt Heap Leaching Target Capacity: Mt H H E Expected production of 50K-75K ounces of gold per year Up to 10% increase in throughput & 5% cost reduction Increase annual production by 10-20% 8

9 FOCUSED ON GROWING RESERVES (2) Currently focused mainly on converting resources to reserves with work ongoing at Golouma NW, Maki Medina, and Niakafiri Commencing work in Q3 to add high-grade ounces from resources previously classified by Oromin as underground reserves Opportunities for a major discovery given position on greenstone belt with proven and prolific geology Refer to endnote (2) on slide 22 9

10 REAFFIRMING GUIDANCE Units 2015 Guidance (5) Total material mined ( 000t) 28,500-30,500 Ore mined ( 000t) 6,500-7,500 Grade mined (g/t) Ore milled ( 000t) 3,600-3,800 Head grade (g/t) Gold produced (3) ( 000 oz) Total cash costs (4) (including royalties) $/oz sold All-in sustaining costs (4) $/oz sold * Mine production costs (net of capitalized deferred stripping) $ millions Capital expenditures $ millions Assumptions High-grade Gora deposit comes into production Q Gora and mill optimization development cost of approximately $125 per ounce included in all-in sustaining costs Levers / Sensitivities 2015 cash costs expected to be in range of $650-$700 with the following sensitivities: 10% change in currency $40/oz $0.10/litre change in fuel $20/oz 3-year Outlook ( ) Production expected to average 230K 240K ounces per annum (9) Approximately 12.5Mt reduction in material movement plus lower operating and capital costs offset lower production rate from a free cash flow perspective 2015 Guidance Update Production expected in top half of range Costs expected at lower end of range *All-in sustaining costs exclude Franco-Nevada stream impact of approximately $100/oz as stream is treated as deferred revenue Refer to Endnotes (3) (4) (5) (9) on slide 22 10

11 NAVIN DYAL VICE PRESIDENT & CFO

12 REVENUE REFLECTS HIGHER GOLD SALES OFFSET BY LOWER GOLD PRICES Total Revenue Total Revenue 1% $128.6M $127.3M $57.5M $60.1M H H Three months ended June 30 Six months ended June 30 Price per ounce of gold % Change % Change Average realized $1,198 $1,295 (7%) $1,208 $1,294 (7%) Average spot price $1,192 $1,288 (7%) $1,206 $1,291 (7%) Low $1,165 $1,243 (6%) $1,147 $1,221 (6%) High $1,225 $1,326 (8%) $1,296 $1,385 (6%) 12

13 ACHIEVING CONTINUED PRODUCTIVITY & COST IMPROVEMENTS $2.90 Mining Costs ($/t mined) 17% $2.40 $21.29 Milling Costs ($/t milled) 42% $12.37 Total Cash Costs Including Royalties (4) ($/oz) $815 26% $602 22% $2.85 $2.22 $ % $13.45 $750 19% $606 H H H H H H Refer to Endnote (4) on slide 22 13

14 AISC IMPROVES DESPITE HIGHER DEVELOPMENT CAPITAL All-in Sustaining Costs (4) (per ounce) All-in Sustaining Costs (4) (per ounce) $1,060 11% 4% $948 $925 $891 Q all-in sustaining costs include development capital of $147 per ounce related to development of Gora deposit $815 $602 $750 $606 H H Cash Costs/oz (4) Refer to Endnote (4) on slide 22 14

15 SIGNIFICANT INCREASE IN NET PROFIT & EPS Net Profit (10) Earnings per Share 153% 150% Margin expansion offsets sharp decline of $100 per ounce in the price of gold $6.7M $0.02 Fully taxable in Senegal following end of 7-year tax holiday ($12.6M) ($0.04) 2015 taxes will be paid to government of Senegal in % $19.7M 300% $0.06 ($8.4M) H H ($0.03) H H Refer to Endnote (10) on slide 22

16 PRODUCTION FROM GORA EXPECTED TO FURTHER INCREASE CASH FLOWS Growing Cash Flow From Operations $22M $12.3M Free Cash Flow (6) ($554K) Free Cash Flow per Ounce of Gold Sold (6) ($11) ($9.7M) ($16.6M) 97% 97% ($376) 58% 542% $28.9M 70% $64 $40 $4.5M $4.0M $6.8M H H H H H H Refer to Endnote (6) on slide 22 16

17 AMPLE LIQUIDITY & FINANCIAL FLEXIBILITY New $30 million revolving credit facility Cash has increased by $2.5 million since year-end to $38 million Inventory of 310,000 ounces in low-grade ore stockpile $34 million in working capital Zero debt 17

18 RICHARD YOUNG PRESIDENT & CEO

19 CREATING SHAREHOLDER VALUE Maximizing Strengthening Successfully free cash flow and profitability our balance sheet pursuing growth 19

20 Q&A

21 COMPETENT AND QUALIFIED PERSONS STATEMENT The technical information contained in this presentation relating to mine plans and associated costs is based on, and fairly represents, information compiled by Mr. William Paul Chawrun, P. Eng who is a member of the Professional Engineers of 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 in this presentation. 21

22 ENDNOTES In U.S. dollar amounts unless stated otherwise 1. Net cash (debt) is defined as total borrowings and financial derivative liabilities less cash and cash equivalents, bullion receivable and restricted cash. 2. Mineral Reserves and Mineral Resources estimates as at December 31, 2014 as per Company disclosure. For more information regarding Teranga Gold s Mineral Reserves and Resources, please refer to the Company s 2014 Annual MD&A available on the Company s website at 3. The production guidance is based on existing proven and probable reserves only from both the Sabodala mining license and Golouma mining license as disclosed in the Company s December 31, 2014 Annual MD&A. 4. 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 the Non-IFRS Financial Measures section in the Company s 2015 second quarter Management Discussion & Analysis available on the Company s website at All-in sustaining costs include: total cash costs, administrative expenses (including share based compensation, and excluding corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development, and mine site sustaining & development capital expenditures as defined by the World Gold Council. 5. Key assumptions: Gold spot price/ounce - US$1,200, Light fuel oil - US$0.95/litre, Heavy fuel oil - US$0.76/litre, US/Euro exchange rate - $1.20, USD/CAD exchange rate - $0.85.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; income tax rate for Teranga s 25% in Senegal, royalty rate is 5%, the Company s tax holiday ending May 2015, and no unplanned delays in or interruption of scheduled production. 6. Free cash flow ( FCF ) is defined as operating cash flow less capital expenditures and includes the impact of the Franco-Nevada stream. For 2013 and 2014, FCF is before the OJVG transaction costs ,500 ounces of production are to be sold to Franco Nevada at 20% of the spot gold price. Due to the timing of shipment schedules near year end, the delivery of 1,875 ounces of gold for the month of December was not received by Franco-Nevada until early January The transaction with Franco-Nevada permits for the delivery of payable gold for up to five business days following a month end. 8. Over the past several years more than twelve million ounces of measured and indicated resources have been identified within the south eastern Senegal region, including the Massawa, Golouma, Makabingui and Mako projects, along with the Company s own Sabodala gold mine. With exploration work completed to date and the prior exploration success seen in the area Management believes there is a reasonable basis for an exploration target that would substantiate the annual production targets set by the second and third phases of our vision. However, the potential quantity and grade of an exploration target is conceptual in nature. There has been insufficient exploration to determine a mineral resource of the size required to achieve the production target we have established and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realized. 9. This production guidance assumes the conversion of a material portion of existing resources into reserves, the successful completion of drilling potential low grade heap leach material from the combined mine license, and the completion of a pre-feasibility study confirming the economics and scale of operations of this proposed project. 10. In 2014, the Company reassessed the accounting for deferred stripping assets to include amortization of equipment directly related to deferred stripping activity. The impact of this adjustment has been applied retrospectively from January 1, The six months ended June 30, 2015 includes the impact of restating the deferred income tax expenses related to temporary timing differences. 22