European gold forum april 2013

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European gold forum april 2013

  1. 1. PRODUCINGANDEXPLORINGEUROPEAN GOLD FORUMAPRIL 2013 1
  2. 2. FORWARD LOOKING STATEMENTSThis presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-lookingstatements”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance orachievements of Teranga, or developments in Teranga’s business or in its industry, to differ materially from the anticipated results, performance, achievements ordevelopments expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, all disclosure regarding possibleevents, conditions or results of operations that are based on assumptions about future economic conditions and courses of action. Teranga cautions you not to placeundue 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, 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 beyondthe 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, andin other company filings with securities and regulatory authorities which are available at www.sedar.com. Forward-looking statements are based on managementscurrent plans, estimates, projections, beliefs and opinions, and, except as required by law, Teranga does not undertake any obligation to update forward-lookingstatements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Nothing in this presentation should be construed aseither an offer to sell or a solicitation to buy or sell Teranga securities.This presentation is dated as of April 5, 2013. 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” andsimilar words. 2
  3. 3. CAPITALIZATION SUMMARYTicker symbol TGZ: TSX/ASX FOCUSEDShares outstanding (1,2) 245.6M ON GROWTH THROUGH:Share price (as at April 5, 2013) C$1.12Market capitalization (as at April 5, 2013) C$275MProfit 2012 US$79.9M GROWING ($0.33/share) RESERVESCash position (3) US$45M GROWINGHedge balance (as at Jan. 29, 2013) 38,105oz. PRODUCTION (4) FINANCIALProject finance outstanding US$60M STRENGTHMining fleet loan facility (5) US$22.7M 1 As part of the demerger Mineral Deposits Ltd. retained 40M TGZ shares and received C$50M from the IPO proceeds 2 Stock options outstanding 17.2M. 3 Includes cash, cash equivalents and $5.3M bullion receivable as at December 31, 2012. 4 2-Year Project Finance Facility with Macquarie Bank – repaid on or before June 30, 2014 5 Outstanding under the new mining fleet finance loan facility with Macquarie Bank as at March 31, 2013 3
  4. 4. OUR VISIONTo become a preeminent gold producer in West Africa while settingthe benchmark for responsible mining in SenegalPhase 1: Become a mid-tier gold producer in Senegal with 250,000 to 350,000 oz. of annual gold production leveraging off existing infrastructure • 2011 production of 131,461oz. • 2012 production of 214,310oz. at cash costs of $627/oz. • 2013 forecast production of 190,000 – 210,000oz. at cash costs of $650-$700/oz. • 2014 forecast production of 200,00 – 250,000oz. pending the timing of Gora productionPhase 2: Increase annual gold production to 400,000 to 500,000 oz. with mill expansion as reserves increase 4
  5. 5. SABODALA IS SENEGAL’S ONLYLARGE-SCALE GOLD MINEPopulation of ~ 12.8MDemocratic Government • Smooth process and power transition in 2012 elections • Peaceful democracy since independence from France in 1960 • Use of the eight-country West African CFA France currency fully guaranteed by the French treasury and pegged to the Euro (WAEMU) • Sabodala is the only large-scale gold mine in SenegalGovernment has vested interest in Sabodala’s success given: • 10% free-carried interest • 5% gross production royalty effective Jan. 1, 2013 • 25% income tax (after tax holiday expires in 2015) • Employment and regional development opportunities 5
  6. 6. NEW AGREEMENT PROVIDES FORLONG-TERM PARTNERSHIP THROUGH:• Price and formula to acquire Government’s additional option on satellite deposits and to incorporate these into the existing ML and fiscal regime• Supporting drilling of the Niakafiri deposit on the ML• Extending the ML by five years to 2022 and five key exploration licences by 18 months• Ensuring full access to exploration targets currently occupied by artisanal miners• Settling all outstanding tax assessments• Settling the Special Contribution Tax of 5% through an increase in royalties to 5% and accelerated dividend payments 6
  7. 7. TERANGA IS MINING RESPONSIBLYAND SHARING THE BENEFITSCorporate Social Responsibility is fundamental to the success ofour business• Health, safety, education and sustainability are all priorities• Developing schools, health clinics, and improving access to potable water• Have engaged a renowned Canadian group to assist in putting together a comprehensive Regional Development Plan in partnership with the local, regional, and national government• Committed to improving the livelihoods of those in the communities in which we operateA key component of our vision is to set the benchmark forresponsible mining in Senegal 7
  8. 8. SABODALA GOLD OPERATION ISPRODUCING CONSISTENTLYGold Production Since 2009 • First gold pour in March ‘09 with over $500M invested to dateWell Developed Infrastructure • Located 650 km east of the capital Dakar and ~100 km north of the town Kedougou – paved road within 56 km of mine site • 36 MW heavy fuel oil power plant located on siteCompleted Mill Expansion • New ball mill and downstream plant, secondary crusher and new stockpile/reclaim facility commissioned • Expands annual production base to ~200,000 oz. • Mill capacity increased to ~3.5Mtpa of fresh (hard) ore or ~6Mtpa of oxide (soft) oreModest Incremental Sustaining Capital Going Forward • US$125M – $150M LOM • Includes Gora, community relocations, further mobile equipment expenditure, pit delineation and additional tailings facilities 8
  9. 9. OPERATIONAL RESULTS AND 2013GUIDANCE 2011 2012 2013 Guidance Units % Change (2) Actuals Actuals Ranges (1)Total Mined (Mt) 25.8 28.9 35.0 – 36.5 +24%Ore Milled (Mt) 2.4 2.4 3.3 – 3.4 +37%Gold Produced (koz.) 131.5 214.3 190 - 210 -7%Total Cash Cost $/oz. sold 782 627 650 – 700 +8%(incl. royalties)Mine ProductionCosts $ millions 126.1 145.8 170 – 180 +20%Mining Costs $/t mined 2.3 2.7 2.5 – 2.7 -4%Milling Costs $/t milled 16.8 20.4 19 – 20 -4%G&A Costs $/t mined 5.8 6.2 5–6 -11%1 Discretionary costs under review.2 Percent change calculated from mid-point of range. 9
  10. 10. 2013 - REDUCTION IN CAPEX AND EXPLORATION EXPENDITURES 2011 2012 2013 Guidance Units % Change (2) Actuals Actuals Ranges (1)Mine Site Capex ($ millions) 62.1 52.9 20 – 25 -58%Capitalized Reserve ($ millions) 14.4 26.1 ~5 -82%Development (ML)Exploration Expense ($ millions) 31.7 16.7 ~5 -70%(RLP)Development of Gora ($ millions) - 4.3 < ~10 +133%Administration Expense ($ millions) 13.4 17.9 15 – 20 -2%Profit for the Period ($ millions) -16.0 79.9 - -Cash Balance at End of ($ millions) 24.6 45.0 - -Period (3)Gold Hedge (koz.) 174.5 59.8 0 -100%Outstanding (4) 1 Discretionary costs under review. 2 Percent change calculated from mid-point of range. 3 Includes cash, cash equivalents and bullion receivable: $5.3M FYE 2012 and $17.1M at FYE 2011. 4 Hedge book to be extinguished in Q2 2013. 10
  11. 11. GORA – OUR MOST ADVANCEDSATELLITE DEPOSITEconomics • Capital cost est. $45M - $50M • Est. total cash cost to average $675 - $700/oz. • NPV (5%) at $1500/oz. of $105 million • IRR 69%Open Pit • 26km from mill • Technical Study and ESIA complete – permitting underway • M&I of 374,000 oz. at 5.0gpt • Proven & Probable reserves of 285,000oz. at 4.2gpt. (2.1M tonnes of ore) Source – Teranga Gold Corporation: Typical section of Gora looking South West, 2012. • Estimated 4-year mine life • Stripping ratio of 19:1Timing • Development to start in Q4 2013 with majority of capital expenditure in 2014 in order to support 2013 free cash flow • Estimated production start in H1 2014 11
  12. 12. FOCUSED ON GROWINGPRODUCTION AND CASH MARGINS Production Profile (000oz.) (1) Cash Margin ($/oz.) (2) 300,000 1000 250,000 800 200,000 600 150,000 400 100,000 200 50,000 - 0 2011 2012 2013 2014 2015 2011 2012 2013* 2014 2015 Gora Production ML Production Rate of margin expansion is a function of increasing production through regional exploration success * After eliminating hedge position • 2012 Production Results: 214,310oz. at cash costs of $627/oz. • 2013 Production Estimated: 190,000 – 210,000oz. at cash costs of $650 - 700/oz. • Hedge position 59,789oz. at 2012 YE, management expects to be hedge free by June 20131 Assumes increased production from regional exploration success2 Assumes $1600/oz. gold price and cash cost of $675/oz. after the elimination of the gold hedge position 12
  13. 13. FOCUSED ON GROWING RESERVES Reserves and Resources (1,2,3) December 31, 2012 3.50 3.00 2.50 2.87 2.00Moz. 1.50 1.67 1.59 1.00 0.50 0.00 Proven and Measured and Inferred Resources Probable Reserves Indicated Resources 1 See pages 23/24 2 M+I Resources are inclusive of reserves 3 Includes Sabodala, Niakafiri, Niakafiri West, Soukhoto, Diadiako, Majiva, Masato and Gora 13
  14. 14. FOCUSED ON GROWING RESERVES2013 Exploration Program (1)Mine Licence Exploration (ML) ~$5MRegional Exploration (RLP) ~$5MTOTAL ~$10M2012 Exploration Program (2)Mine Licence Exploration $26M104,400m (RC/DD)Regional Exploration(3) $20M62,500 RAB 42,300 RC 2,400 DDTOTAL $46M1 Additional funding allocated on a priority basis for prospects with clear potential for reserve definition2 Full drill results are posted at terangagold.com3 Includes ~$3M for Gora exploration 14
  15. 15. MINE LICENCE MAKES UP ~3% OFTERANGA’S TOTAL LAND PACKAGEMine Licence Exploration (ML) Regional Land Package (RLP) 33km2 1,200km2 15
  16. 16. POTENTIAL TO EXPAND THE MLGOLD MINERALIZATION INVENTORY • Potential to expand gold inventory on ML with the 33km2 objective of increasing mine life to the year 2020/25 SABODALA PIT – MAIN FLAT EXTENSION / LOWER FLAT ZONE SAMBAYA HILL SUTUBA DINKOKHONO NIAKAFIRI / NIAKAFIRI WEST / SOUKHOTO 16
  17. 17. PROPERTIES IN VARYING STAGESOF ASSESSMENT WITHIN RLP 1,200km2 NINYENKO SORETO / DIABOUGOU SAIENSOUTOU TOUROKHOTO (Main and Marougou) 35km from Mill GOUMBOU GAMBA GORA 17
  18. 18. FOCUS IS ON CONTINUED GROWTHFocused on Growing Reserves • To secure a reserve life to year 2020/25 • Growth through exploration • Growth through regional opportunities (JV’s, acquisitions)Focused on Growing Production • Phase 1: 250,000 – 350,000oz. annual production by leveraging existing mill and land package • Phase 2: 400,000 – 500,000oz. annual production, will require another mill expansionFocused on Building Financial Strength • Eliminating hedge book • Maximizing cash margins • Producing free cash flow • Increasing cash balance • Use free cash flow to self-fund growth strategy • Focusing on the ounces that provide the best returns • Increase earning and cash flow per share (minimize dilution) 18
  19. 19. APPENDICES 19
  20. 20. INITIAL “1% PER OUNCE” PAYMENTEXAMPLE FOR GORAReserves per feasibility study 285,000Recovery rate 95%Recovered reserves 270,750Less government royalties 13,538Recovered ounces to shareholders 257,213Average realized gold price last 12 months $ 1,650Reserve payment percentage 1.00%Reserve payment dollars per ounce $ 16.50Payment due on production maximum $10 million $ 4,244,006Additional payments required when:1. Gold price increases2. Reserves/production increases3. Excess above $10 million cap 20
  21. 21. OPERATING STATISTICS Tw elve m onths ended Decem ber 31, 2012 2011 restatedOperating resultsOre mined (‘000t) 5,914 3,973Waste mined (‘000t) 22,964 21,818Total mined (‘000t) 28,878 25,791Grade mined (g/t) 1.98 1.39Ounces mined (oz) 376,185 177,362Strip ratio w aste/ore 3.9 5.5Ore milled (‘000t) 2,439 2,444Head grade (g/t) 3.08 1.87Recovery rate % 88.7 89.5 (1)Gold produced (oz) 214,310 131,461Gold sold (oz) 207,814 137,136Average price received $/oz 1,422 1,236Total cash cost (incl. royalties) (2) $/oz sold 627 782Mining (cost/t mined) 2.7 2.3Milling (cost/t milled) 20.4 16.8G&A (cost/t milled) 6.2 5.8 1 Gold produced includes change in gold in circuit inventory plus gold recovered during the period. 2 Cash cost per ounce is a non-IFRS financial measure with no standard meaning under IFRS. 21
  22. 22. 2013 GUIDANCE* Year ending December 31, 2012 2013 Actuals Guidance RangeOperating results • Mining and processing more Ore mined (‘000t) 5,915 4,000 - 4,500 Waste mined (‘000t) 22,962 31,000 - 32,000 tonnes at lower grade to Total mined (‘000t) 28,877 35,000 - 36,500 Grade mined (g/t) 1.98 1.40 - 1.60 maintain ~200,000oz. Strip ratio waste/ore 3.9 7.00 - 7.75 Ore milled (‘000t) 2,439 3,300 - 3,400 production Head grade (g/t) 3.08 2.00 - 2.15 Recovery rate % 88.7 89.0 - 91.0 Gold produced (oz) 214,310 190,000 - 210,000 • Gross costs have increased Gold sold Total cash cost (incl. royalties)(1)(2) (oz) $/oz sold 207,814 627 190,000 650 - - 210,000 700 but unit costs are expected to Total production cost (1) $/oz sold 850 950 - 1,000 decline Mining (cost/t mined) 2.71 2.50 - 2.70 Milling (cost/t milled) 20.39 19.00 - 20.00 G&A (cost/t milled) 6.16 5.00 - 6.00Mine production costs $ millions 145.8 170.0 - 180.0*Discretionary costs under review.1 Total cash cost per ounce and total production cost per ounce are non-IFRS financial measures with no standard meaning under IFRS. Fordefinitions of these metrics, please see page 26 of the Management Discussion and Analysis.2 For 2013, reflects the impact of adoption of a new IFRS standard for deferred stripping. Please see page 25 of the Management Discussion andAnalysis. 22
  23. 23. RESERVES & RESOURCES (1,2)• Reserves remain similar to that of 2011 net of production• Focused on growing our reserves and are confident that we will add reserves on the ML• M&I resources increased 34% to 2.9Moz. Proven Probable Proven and Probable Deposit Tonne Tonne Tonne Grade Au Grade Au Grade Au s s s (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Sabodala 6.55 1.5 0.315 11.07 1.24 0.443 17.62 1.34 0.758 Sutuba - - - 0.37 1.40 0.017 0.37 1.40 0.017 Niakafiri 0.23 1.69 0.013 7.58 1.12 0.274 7.81 1.14 0.287 Gora 0.57 4.07 0.074 1.53 4.27 0.21 2.1 4.22 0.284 Stockpiles 7.32 1.02 0.24 - - - 7.32 1.02 0.24 Total 14.67 1.36 0.642 20.56 1.43 0.944 35.23 1.40 1.586 Measured and Measured Indicated Indicated Deposit Tonne Grad Tonne Grad Tonnes Grade Au Au Au s e s e (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Sabodala 28.06 1.24 1.12 31.47 0.96 0.97 59.53 1.09 2.09 Sutuba - - - 0.50 1.27 0.02 0.50 1.27 0.02 Niakafiri 0.30 1.74 0.02 10.50 1.10 0.37 10.70 1.12 0.39 Gora 0.49 5.27 0.08 1.84 4.93 0.29 2.32 5.00 0.37 Total 28.85 1.32 1.22 44.31 1.16 1.65 73.05 1.22 2.871 Please see page 26 for Competent Persons Statement relating to this reserves estimate.2 Based on assays received as of August 2012. 23
  24. 24. RESERVES & RESOURCES (1,2) InferredArea Tonnes Grade Au (Mt) g/t (Moz)Sabodala 12.36 0.87 0.35Niakifiri 7.20 0.88 0.21Niakifiri West 7.10 0.82 0.19Soukhoto 0.60 1.32 0.02Gora 0.21 3.38 0.02Diadiako 2.90 1.27 0.12Majiva 2.60 0.64 0.05Masato 19.18 1.15 0.71Total 52.15 1.00 1.671 Please see page 26 for Competent Persons Statement relating to this reserves estimate.2 Based on assays received as of August 2012. 24
  25. 25. MANAGEMENTAlan R. Hill • Mining engineer with over 20 years experience globally in project evaluations, acquisitions and mine development as Executive VP of Barrick GoldExecutive Chairman • Currently a Director of Gold Fields • Former President and CEO of Gabriel Resources (2005 – 2009) and non-Executive Chairman of Alamos Gold (2004 – 2007)Richard S. Young • Over 10 years experience in mining finance, development, corporate development, and investor relations with Barrick GoldPresident & CEO • Former VP and CFO of Gabriel Resources (2005 – 2010)Mark English • 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 andVP, Sabodala Operations development, inclusive of greenfield start-ups • Joined Mineral Deposits Ltd. in June 2006Paul Chawrun • Mining Engineer and geologist with over 24 years experience • Former EVP Corporate Development for Chieftain MetalsVP, Technical Services • Former Director, Technical Services Detour GoldNavin Dyal • Over 13 years in finance, most recently 7 years with Barrick Gold (2005 - 2012) • Former Director of Finance, Global Copper Business Unit – Barrick GoldVP & CFO • Chartered Accountant – Four years at major public accounting firmDavid Savarie • Over 10 years experience in the legal industry • Former Deputy General Counsel and Corporate Secretary of Gabriel ResourcesVP, General Counsel & Corporate • Previously in private practice at Miller Thomson LLPSecretaryKathy Sipos • 10 years experience in Corporate Communications and Investor Relations with Barrick Gold (1996 – 2006) • Former VP of Corporate Communications and Investor Relations of Gabriel Resources (2006 – 2009)VP, Investor & Stakeholder RelationsMacoumba Diop • Geological Engineer, Master of Science in Finance with over 12 years experience in the mining industry • Previously spent 11 years in a consulting business and mineral project marketing and developmentGeneral Manager & Government • Joined SGO in July 2011.Relations Manager 25
  26. 26. COMPETENT PERSONS STATEMENTThe technical information contained in this presentation relating to the mineral reserve estimates within the Sabodala, Sutuba, Niakafiri and Gora deposits and theStockpiles, is based on information compiled by Julia Martin, P.Eng., MAusIMM (CP), a full time employee with AMC Mining Consultants (Canada) Ltd., is independent ofTeranga, is a “qualified person” as defined in NI 43-101 and a “competent person” as defined in the 2004 Edition of the “Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves”. Ms. Martin has sufficient experience relevant to the style of mineralization and type of deposit under consideration and tothe activity she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves”. Ms Martin has reviewed and accepts responsibility for the reserve estimates disclosed above. Ms Martin has consented to the inclusion inthe report of the matters based on her information in the form and context in which it appears in this presentation.The technical information contained in this presentation relating to the mineral resources is based on information compiled by Ms. Patti Nakai-Lajoie, who is a Member ofthe Association of Professional Geoscientists of Ontario. Ms. Patti Nakai-Lajoie is full time employee of Teranga and is not “independent” within the meaning of NationalInstrument 43-101. Ms. Patti Nakai-Lajoie has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to theactivity 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, MineralResources and Ore Reserves”. Ms. Patti Nakai-Lajoie is a “Qualified Person” under National Instrument 43-101 Standards of Disclosure for Mineral Projects and sheconsents to the inclusion in the report of the matters based on her information in the form and context in which it appears in this presentation.The technical information contained in this presentation relating to exploration results is based on information compiled by Mr. Martin Pawlitschek, who is a Member of theAustralian Institute of Geoscientists. Mr. Pawlitschek is a consultant of Teranga and is not “independent” within the meaning of National Instrument 43-101. Mr.Pawlitschek 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 toqualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr.Pawlitschek is a “Qualified Person” in accordance with NI 43-101 and he consents to the inclusion in the report of the matters based on his information in the form andcontext in which it appears in this presentation. 26

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