PRODUCING AND EXPLORING 2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS

Transcription

1 PRODUCING AND EXPLORING 2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS 1

2 2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS Alan R. Hill Richard Young Chairman & CEO President & CFO FOCUSED ON GROWTH FOCUSED ON: GROWING RESERVES GROWING PRODUCTION FINANCIAL STRENGTH 2

3 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 the prospectus of Teranga, dated November 11, 2010 (the Prospectus ). 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. 3

4 TERANGA YEAR ONE 2011 prepared us for increasing production and lowering costs and increasing cash margins as we move forward Continue to self-fund extensive exploration program Very encouraging drill results on Mine License Goal: double gold inventory on Mine License alone Promising results on Regional Exploration Program FOCUSED ON GROWTH FOCUSED ON: GROWING RESERVES GROWING PRODUCTION FINANCIAL STRENGTH 4

5 OPERATING HIGHLIGHTS Fiscal 2011 (1) 147,728 oz s produced 153,728 oz s sold at cash cost of $872/oz Calendar ,461 oz s produced 137,136 oz s sold at cash cost of $900/oz In line with revised guidance Costs affected by higher fuel, labour and maintenance costs (1) Fiscal year is from October 1, 2010 to December 31, 2011, a 15 month year. Teranga has converted from a June 30 to calendar year end. 5

6 FINANCIAL HIGHLIGHTS Revenue for the fiscal 2011: $187M 47% of oz s delivered into the forward sales contracts at $846/oz 53% of oz s delivered into the spot market at an average priced of $1,537/oz $1,213/oz average realized price 6

7 FINANCIAL HIGHLIGHTS Net loss for the fiscal 2011: $15.8M or $0.09/share Affected by deliveries into hedge book, high exploration costs, and stock based compensation expense Capital expenditure: For the fiscal year: $76.4M Primarily for mill expansion, mobile equipment, and capitalized mine site exploration 7

8 FINANCIAL HIGHLIGHTS Cash position*: $11M at December 31, 2011 $26.5M at January 31, 2012 Sufficient cash + expected future cash flows support liquidity requirements Additional flexibility deferred delivery of 28,000 oz s due in Q1 to second half 12 Rebuild cash balance Maintain cash balance of ~$20M Consider revolving finance facility *Cash, cash equivalents and short term investments including restricted cash 8

9 FINANCIAL HIGHLIGHTS Plant expansion: Doubling mill capacity to ~4 Mtpa The new mill will be commissioned in the second week of April Expected total cost of $62M $15M remaining to be spent in

10 FINANCIAL HIGHLIGHTS Gold Sales Contracts: Unrealized non-cash gain of $1.8M for the 15 months ended December 31, ,500 oz s remain under hedge contract Expect to have 66,000 oz s remaining at year end (final delivery August 2013) Objective to eliminate hedge position as quickly but prudently as possible 10

11 FINANCIAL HIGHLIGHTS Mobile equipment loan facility: December quarter expansion of mobile equipment loan with Société Générale additional $12.8M Final payment on September 30, 2013 Currently drawn down to $24.4M 11

12 FOCUSED ON BUILDING FINANCIAL STRENGTH Outlook Cash Margin ($/oz) (2,3) 210, ,000 oz s at cash costs of $600 - $650/oz (1) Rising production, lowering costs 400 Margin expansion + increased production profile = significant free cash flow to self-fund exploration and development strategy * 2014 Manageable capex requirements in 2012: $30M* Rate of margin expansion is a function of increasing production through regional exploration success *After eliminating hedge position (1) This production target is based on existing proven and probable reserves only. (2) Assumes $1600/oz gold price and cash cost of $625/oz (3) Non-Deferred Hedge Schedule page 39 *Excluding Mine License exploration costs 12

13 2011 OPERATIONAL HIGHLIGHTS Changes made to reduce operating risks: Automated controls for better blending to increase throughput Second access ramp to the pit Revised drilling, blasting, and maintenance contracts in order to increase mining rate Improvements to employee compensation FOCUSED ON GROWTH FOCUSED ON: GROWING RESERVES GROWING PRODUCTION FINANCIAL STRENGTH 13

14 FOCUSED ON GROWING RESERVES Kedougou-Kenieba Inlier A Birimian Greenstone Belt 2.50 Reserves and Resources (1,2) December 31, M oz Proven and Probable Reserves Measured and Indicated Resources Inferred Resources (1) See page 38 (2) M+I Resources are inclusive of reserves 14

15 FOCUSED ON GROWING RESERVES 2012 Exploration Program 1. Mine License Exploration: $20M (77,000m) 2. Regional Exploration: $20M (90,000m) TOTAL: $40M (167,000m) 2011 Exploration Program: $46M (+140,000m RAB) Full drill results are posted at terangagold.com 15

16 1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION 33km 2 1,500km 2 35 km radius 16

17 1. SABODALA MINE LICENSE EXPLORATION $20M exploration program underway on the Sabodala Mine License Potential to expand gold inventory on the ML from 1.55M oz to M oz (1,2,3) over 12 to 18 months increasing the mine life to ~ 10 to 15 years From: Deepening the Sabodala pit to the north along the Main Flat Extension Continuation of the Masato deposit Conversion of Niakafiri resources to reserves (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 3.5M oz (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. (3) See Key Assumptions on page 37 17

18 2011 MINE LICENSE EXPLORATION HIGHLIGHTS Intersection of significant widths of high grade mineralization outside the Sabodala ultimate pit limit as part of MFE drill program Discovery of multiple high-grade zones in the LFZ just below the MFE area Successful intersection and extension of the Masato deposit down dip onto our Mine License and 200m down dip and 500m along strike with potentially underground mineable high-grade ore FOCUSED ON GROWTH FOCUSED ON: GROWING RESERVES 18

19 2012 MINE LICENSE EXPLORATION Minimum 6 drill rigs FOCUSED ON GROWTH $20M FOCUSED ON: 77,000m of diamond and RC drilling GROWING RESERVES 19

20 MINE LICENSE EXPLORATION SABODALA Main Flat Extension ( MFE ) principal gold hosts of Sabodala deposit MFE program is designed to test the continuity of this structure to the north beginning with infilling holes Significant widths of high grade mineralization: SBDH141D 131m at 3.45 gpt SBDH143D 87m at 3.11 gpt SBDH147D 49m at 2.2 gpt SBDH157D 53m at 4.5 gpt SBDH160DD 70m at 3.0 gpt SBDH161D 85m at 3.0 gpt Lower Flat Zone ( LFZ ) deeper zone below MFE Drilling confirms multiple flat zones immediately below Sabodala ultimate pit: SBDH160DD 27m at 3.6 gpt SBDH161D 11m at 7.2 gpt SBDH170DD 34m at 6.3 gpt SBDH171DD 46m at 9.8 gpt Full drill results are posted at terangagold.com (1) MFE - open pit mineable gold inventory at an average grade between gpt, LFZ potentially a similar amount to lower/underground at an average grade between 3.0 and 4.0 gpt, in

21 LONG SECTION OF SABODALA GOLD DEPOSIT 21

22 MINE LICENSE EXPLORATION SABODALA PIT INCREASED OBJECTIVES: FOCUSED ON GROWTH Sabodala pit (MFE/LFZ) objective over next 18 months Previous open pit objective To add 250, ,000 oz s FOCUSED ON: GROWING RESERVES New open pit objective To add 500,000 1,000,000 oz s Larger pit Add to underground gold inventory 22

23 MINE LICENSE EXPLORATION MASATO Masato structural trend strikes across onto our Mine License Main Flat Extension Sabodala Pit Sambaya Hill Masato Down Dip Oromin Joint Venture has identified open pit reserves of 0.5M oz about 2km from our mill Tracking the deposit as it crosses onto our property Multiple mineralized zones have been identified with high grade intervals apparent Masato Extensions Confirmed strike length of 500m, a dip extent of 200m, and a band of about 40m of solid grade mineralization 2km of strike length still to be tested Recent results from Masato Down Dip include: 37m at 4.5 gpt 44m at 2.0 gpt Full drill results are posted at terangagold.com 23

24 MINE LICENSE EXPLORATION NIAKAFIRI Niakafiri area has ~300,000 oz s in reserves in a mineralized envelope of about ~800,000 oz s Deposit remains open below 200m level Potential 2H 2012 drilling with intentions of adding to reserves Ongoing community discussions Full drill results are posted at terangagold.com 24

25 1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION 33km 2 1,500km 2 35 km radius 25

26 2. REGIONAL EXPLORATION From , no significant drilling was done on the 1,455km 2 Regional Land Package due to cash constraints There are ~40 drill targets identified; $32M spent in 2011 and $20M planned for 2012 Addition of Garaboureya North exploration permit, land package increases to ~1,500km 2 26

27 GORA Current reserves of 114,000 oz s at 5 gpt Most advanced target: moving from exploration to development Objective of having production in early 2013 permitting dependent 22km from Sabodala mill, truckable High grade-drill intersections continue to expand the potential footprint of the deposit Trace of blind veins from RC holes Projected to surface high correlation with IP trends. Full drill results are posted at terangagold.com 27

28 TOUMBOUMBA NEWEST TARGET Latest discovery, potential to become second regional deposit through the mill Located 10km NW from Sabodala mill High grade, lower grade halo, and oxide material Easily processing at minimum, potential for heap leaching Alteration hosted mostly in granite (laterite cover) Oxide mineralization of up to 60m in depth RAB results: 6m at gpt 4m at 3.31 gpt 8m at 5.46 gpt RC results: 1m at 5.20 gpt 2m at gpt 4m at 6.32 gpt Full drill results are posted at terangagold.com 28

29 DIEGOUN NORTH THE DONUT 7km x 4km complex of gold anomalism Contrasting rock types, porphyries, granites, Sabodala Ore Body dolerite & sediments Rock samples to 80 gpt Au RAB drilling has defined gold mineralization in bedrock Full drill results are posted at terangagold.com Honey and Jam First pass RC program at Honey and Jam; 51 holes completed for just under 8,800m (51 holes anomalous levels of gold > 0.1 gpt; 40 holes were >0.5 gpt) Recognition of a well-developed, auriferous NE trending structure 2012 drilling to focus on understanding ore-grade structural controls and orientations 29

30 TOUROKHOTO Sabodala Ore Body >5km long, up to 1 km wide gold anomaly defined by termite sampling, similar geology as Loulo across the border (12M oz resource) Drilling to date has identified a substantial, mineralization system Potential to host-ore grade shoots within First pass drill program is designed to test for large, near surface open-pitable resource Parallels NE trending shears of the MTZ 3M oz Massawa deposit hosted on MTZ about 25km south Full drill results are posted at terangagold.com 30

31 OUR VISION To become a preeminent gold producer in West Africa while setting the benchmark for responsible mining Phase 1: Become a mid-tier gold producer in Senegal with 250,000 to 350,000 ounces (1) of annual gold production with existing infrastructure Phase 2: Increase annual gold production to 400,000 to 500,000 ounces (1) (1) See page 37 and 38 31

32 CORPORATE SOCIAL RESPONSIBILITY CSR is fundamental to the success of our business Healthy, safety, education, sustainability Developing schools, health clinics, and improving access to potable water Engaged a renowned Canadian group to assist us in putting together a comprehensive regional development plan Along with local, regional, and national government Improve the livelihoods of those in the communities in which we operate A key component of our vision is to set the benchmark in Senegal for responsible mining Mining Responsibly and Sharing the Benefits 32

33 YEAR GOLD PRICE FOCUSED ON GROWTH FOCUSED ON: $/oz GROWING RESERVES GROWING PRODUCTION FINANCIAL STRENGTH 33

34 SUMMARY FOCUSED ON GROWTH 1. Only mill in Senegal expansion almost complete 2. Largest land position in Senegal 3. Rising production, declining costs 4. Building a stronger balance sheet increasing production and free cash flow with margin expansion 5. Extensive exploration program 6. Experienced management team 34

35 PRODUCING AND EXPLORING 2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS 35

36 APPENDICES 36

37 KEY ASSUMPTIONS Basis for M oz gold inventory from Mine License Expand upon existing gold mineralization by an additional 20M to 30M tonnes at grades of between 1.5 and 2.0 gpt for a total inventory of 2.5 to 3.5M oz from the Sabodala Mining License ( ML ) over the next 12 to 18 months. The larger gold inventory base is expected to result from the success of deepening the Sabodala pit to the north along the MFE/LFZ, extension of the Masato pit onto the ML, potential conversion of Niakafiri resources to reserves as well as adding to the gold mineralization inventory below these three large open pits. This exploration target is not a Mineral Resource. 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. The goal of the MFE/LFZ programs is to add 500,000 to 1,000,000 ounces of gold to the open pit mineable gold inventory at an average grade between gpt, as well as adding underground gold inventory at an average grade between 3.0 and 4.0 gpt. Rationale: Recent drilling confirms extension of mineralization to the north of the existing pit Potential for identification of additional ounces through infill drilling within area of existing resources under the ML Minimum 5 drill rigs and exploration budget of US$20M dedicated to ML alone in 2012 Program to continue to test similar geophysical anomalies and identified structures within the ML 37

38 SABODALA GOLD PROJECT: RESERVES & RESOURCES (DECEMBER 31, 2011) M Grade M oz tonnes g/t Au Au Proven and Probable Sabodala Niakafiri Stockpile Subtotal Sutuba Gora Sabodala - additional Total Measured and Indicated Sabodala Niakafiri Gora Sutuba Total Inferred Sabodala Niakafiri Niakafiri West Soukhoto Gora Diadiako Majiva Toumboumba Total

39 NON-DEFERRED HEDGE SCHEDULE DELIVERY DATE PRICE U.S.$/OZ OUNCES 17-May , Aug , Nov , Feb , May , Aug ,000 TOTAL ,500 39

40 MANAGEMENT Alan R. Hill Executive Chairman & CEO Richard S. Young President & CFO Yani Roditis Vice President, Operations Kathy Sipos Vice President, Investor & Stakeholder Relations David Savarie Vice President, General Counsel & Corporate Secretary Mark English General Manager Bruce Van Brunt Business Development Manager Martin Pawlitschek Regional Exploration Manager Mining engineer with over 20 years experience globally in project evaluations, acquisitions and mine development as Executive VP of Barrick Gold Currently a Director of Gold Fields Former President and CEO of Gabriel Resources ( ) and non-executive Chairman of Alamos Gold ( ) Over 10 years experience in mining finance, development, corporate development, and investor relations with Barrick Gold Former VP and CFO of Gabriel Resources ( ) Over 10 years experience in mine development and operations with Barrick Gold ( ) Former Chief Operating Officer of Gabriel Resources ( ) 10 years experience in Corporate Communications and Investor Relations with Barrick Gold ( ) Former VP of Corporate Communications and Investor Relations of Gabriel Resources ( ) Over 10 years experience in the legal industry Former Deputy General Counsel and Corporate Secretary of Gabriel Resources Previously in private practice at Miller Thomson LLP Over 24 years experience in the gold mining industry Previously worked for several companies in Australia, East and West Africa being involved in operating mines and development, inclusive of greenfield start-ups Joined Mineral Deposits Ltd. in June 2006 Mining engineer and geologist with over 20 years experience Previously worked in a number of technical capacities with Placer Dome and Echo Bay Mines Joined Mineral Deposits Ltd. in March 2006 Geologist with over 15 years experience in the mining industry Previously spent 11 years at BHP and a number of smaller exploration companies, working in Australia, South East Asia and Africa Joined Mineral Deposits Ltd. in July

41 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 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 information in this presentation relating to the reserve estimate for Sutuba, Gora and the additional reserves from the Sabodala pit as well as information in this presentation relating to exploration results and targets on the Sabodala Mining License are 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 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 of Report of exploration Results, Mineral Resources and Ore Reserves and as defined in NI Mr. Van Brunt consents to the inclusion of this information in the form and context in which it appears in this presentation. The information in this presentation relating 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 a full time employee of Teranga and not independent. 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 of Report of exploration Results, Mineral Resources and Ore Reserves and as defined in NI Mr. Pawlitschek consents to the inclusion of this information in the form and context in which it appears in this presentation. 41