Gmp conf feb2013 final


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Gmp conf feb2013 final

  2. 2. CAUTIONARY STATEMENTThis presentation contains forward looking information, within the meaning of applicable Canadian securities legislation, and forward looking statements, within themeaning 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 andfinancial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Whereverpossible, 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 usedto identify such forward looking information. Although the forward looking information contained in this presentation reflect management’s current beliefs based uponinformation currently available to management and based upon what management believes to be reasonable assumptions, Teranga cannot be certain that actualresults will be consistent with such forward looking information. A number of factors could cause actual results, performance or achievements to differ materially fromthe results expressed or implied in the forward looking information, including those listed in the “Risk Factors” section of Teranga’s Annual Information Form, datedMarch 28, 2012 (the “AIF”). These factors should be considered carefully and prospective investors should not place undue reliance on the forward lookinginformation. Forward looking information necessarily involves significant known and unknown risks, assumptions and uncertainties that may cause Teranga’s actualresults, performance, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward looking information. AlthoughTeranga has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in the forwardlooking 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 noassurance that the forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in suchstatements. Accordingly, prospective investors should not place undue reliance on such forward looking information. Teranga expressly disclaims any intention orobligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance withapplicable securities law.Forward looking information and other information contained herein concerning mineral exploration and management’s general expectations concerning the mineralexploration industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research andindustry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherentlyimprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of anymisstatements regarding any industry data presented herein, mineral exploration involves risks and uncertainties and industry data is subject to change based onvarious 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 inits projections based on exploration work done to date, the potential quantity and grade disclosed herein is conceptual in nature, and there has been insufficientexploration 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 notbeen lodged with the Australian Securities and Investment Commission. 2
  3. 3. CAPITALIZATION SUMMARYTicker symbol: TGZ: TSX/ASX FOCUSED ON GROWTHShares outstanding(1): 245.6M THROUGH:Stock options outstanding: 17.1MShare price (as at Jan. 25, 2013): C$2.31 GROWINGMarket capitalization : (as at Jan. 25, 2013) C$567M RESERVESCash position(2): US$45.0M GROWING PRODUCTIONProject finance outstanding(3) US$60M FINANCIALMining fleet loan facility(4): US$10.5M STRENGTHHedge balance (as at Jan. 29, 2013): 38,105oz.(1) As part of the demerger Mineral Deposits Ltd. retained 40M TGZ shares and received C$50M from the IPO proceeds(2) Includes cash, cash equivalents and $5.3M bullion receivable as at December 31, 2012. Numbers unaudited.(3) 2-Year Project Finance Facility with Macquarie Bank – repaid on or before June 30, 2014(4) Outstanding under the mining fleet finance loan facility with Société Générale as at December 31, 2012 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.Phase 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 • 3% gross production royalty • 25% income tax (after tax holiday expires in 2015) • Employment and regional development opportunitiesSovereign Long Term Credit Ratings • One of only seven African countries rated by Moody’s and S&P • Moody’s: B1 • S&P: B+ 5
  6. 6. TERANGA IS MINING RESPONSIBLYAND SHARING THE BENEFITS• Corporate Social Responsibility is fundamental to the success of our 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 operate• A key component of our vision is to set the benchmark for responsible mining in Senegal 6
  7. 7. SABODALA GOLD OPERATION ISPRODUCING CONSISTANTLYGold 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 increases 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 and pit delineation 7
  8. 8. 2012 ANNUAL GUIDANCE MET WITHRECORD PRODUCTION & PROFITSIncreased Gold Production • FY‘12 214,310oz. – Company record and 63% higher than calendar year 2011 and within guidanceReduced Total Cash Costs • FY‘12 cash costs of $627/oz. – 20% lower than calendar year 2011 and within guidanceReduced Gold Hedge Book • Gold hedges reduced to 38,105oz. as at Jan. 29, 2013 • Expect position to be fully extinguished by Aug’13Increased Cash and Cash Equivalents(1) • $45.0M at FYE’12 as compared to $24.6M at FYE’11(1) Includes cash, cash equivalents and $5.3M bullion receivable (unaudited). 8
  9. 9. CONTINUING TO STRENGTHEN THEASSET BASE AND THE TEAMCapital Expenditure • 2012 - $83M including mill expansion and ML exploration • 2013 - $25M-$35M planned Capex in addition to $45M - $50M for Gora development • Capitalized deferred stripping - $35M - $40MLarger Gold Inventory Base • Sabodala: M&I increased to 2.09 Moz. • Gora: M&I increased to 0.37 Moz. at 5.0gpt • Niakafiri: M&I increased to 0.39 Moz. • Mine Licence: Total inferred resources rose to 1.48Moz.Added Depth to Management Team in Q4‘12 • Mark English: VP, Sabodala Gold Operations • Paul Chawrun: VP, Technical Services • Navin Dyal: VP & CFO 9
  10. 10. MOST ADVANCED SATELLITEDEPOSIT - GORAOpen Pit • 26km from mill • Technical Study and ESIA complete – initiating permitting Q1’13 • M&I of 374,000 oz. at 5.0gpt • Proven & Probable reserves of 285,000oz. at 4.2gpt. (2.1M tonnes of ore) • Estimated 4 year mine life • Stripping ratio of 19:1Economics • Capital cost est. $45M-$50M Source – Typical section of Gora looking South West, 2012. • Est. total cash cost to average $675-$700/oz. • NPV (5%) at $1500/oz. of $105 million • IRR 69% 10
  11. 11. FOCUSED ON GROWINGPRODUCTION AND CASH MARGINS Production Profile (000oz.)(1) Cash Margin ($/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 Rate of margin expansion is a function of increasing Gora Production ML Production production through regional exploration success * After eliminating hedge position • 2012 Production Results: 214,310oz. at cash costs of $627/oz. • Jan. 29th, 2013 hedge position 38,105oz., management expects to be hedge free Aug. 2013(1) Assumes increased production from regional exploration success(2) Assumes $1600/oz. gold price and cash cost of $675/oz. after the elimination of the gold hedge position 11
  12. 12. 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 21/22 (2) M+I Resources are inclusive of reserves (3) Includes Sabodala, Niakafiri, Niakafiri West, Soukhoto, Diadiako, Majiva, Masato and Gora 12
  13. 13. FOCUSED ON GROWING RESERVES2013 Exploration Program(1)Mine Licence Exploration (ML) $5-10M13,000m RAB 32,400m RC 13,100m DDRegional Exploration (RLP) $10-15M82,000m RAB 32,600m RC 14,500m DDTOTAL ~$20M2012 Exploration Program(2)Mine Licence Exploration $26M104,400m (RC/DD)Regional Exploration(3) $20M62,500 RAB 42,300 RC 2,400 DDTOTAL $46M(1) Additional funding allocated on a priority basis for prospects with clear potential for reserve definition(2) Full drill results are posted at Includes ~$3M for Gora exploration 13
  14. 14. MINE LICENCE MAKES UP ~3% OFTERANGA’S TOTAL LAND PACKAGEMine Licence Exploration (ML) Regional Land Package (RLP) 33km2 1,200km2 14
  15. 15. 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 15
  17. 17. 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 • Expanding cash margins • 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) 17
  18. 18. APPENDICES 18
  19. 19. OPERATING STATISTICS Dec-12 Sep-12 Jun-12 Mar-12 Dec-11 Quarter Quarter Quarter Quarter QuarterOre mined (‘000t) 2,038 655 2,105 1,117 1,715Waste mined (‘000t) 5,274 6,242 5,130 6,316 4,736Total mined (‘000t) 7,312 6,897 7,235 7,433 6,451Grade mined (g/t) 2.04 1.92 2.25 1.38 1.50Ounces mined (oz) 133,549 40,516 152,603 49,517 82,710Strip ratio w aste/ore 2.6 9.5 2.4 5.7 2.8Ore processed (‘000t) 725 650 491 573 604Head grade (g/t) 3.40 3.11 3.22 2.52 2.10Gold recovery (%) 90.7 84.6 89.6 90.0 89.8 (1)Gold produced (oz) 71,804 55,107 45,495 41,904 36,695Gold sold (oz) 71,604 62,439 38,503 35,268 34,665Average price received $/oz 1,296 1,290 1,608 1,712 1,482Total cash costs per ounce sold (2) $/oz 623 594 645 673 809(including royalties) (1) Gold produced includes change in gold in circuit inventory plus gold recovered during the period. (2) Total cash costs per ounce sold for 2011 were restated to comply with the Company’s new accounting policy for measuring and recording ore stockpile costs, as well as reporting total cash costs after inventory movement, in line with the Company’s accounting policies and industry standards. 19
  20. 20. 2013 GUIDANCE Year ending Decem ber 31, 2012 2013 Actuals Guidance Range • Mining and processing more tonnes atOperating resultsOre mined (‘000t) 5,915 4,000 - 4,500 lower grade to maintain ~200,000oz.Waste mined (‘000t) 22,962 31,000 - 32,000Total mined (‘000t) 28,877 35,000 - 36,500 ProductionGrade mined (g/t) 1.98 1.40 - 1.60Strip ratio w aste/ore 3.9 7.00 - 7.75Ore milled (‘000t) 2,439 3,300 - 3,400Head grade (g/t) 3.08 2.00 - 2.15 • Gross costs have increased but unitRecovery rateGold produced % (oz) 88.7 214,310 89.0 190,000 - - 91.0 210,000 costs are expected to declineGold sold (oz) 207,814 190,000 - 210,000Total cash cost (incl. royalties) (1)(2) $/oz sold 627 650 - 700Mining (cost/t mined) 2.71 2.50 - 2.70Milling (cost/t milled) 20.39 19.00 - 20.00G&A (cost/t milled) 6.16 5.00 - 6.00Capital ExpendituresMine site $ millions 20.00 - 25.00Capitalized reserve development $ millions 5.00 - 10.00Gora development costs $ millions 45.00 - 50.00 Mobile equipment $ millions 30.00 - 35.00 Site development $ millions 15.00 - 20.00Capitalized deferred stripping(2) $ millions 35.00 - 40.00Exploration (expensed) $ millions 10.00 - 15.00Adm inistration expense $ millions 15.00 - 20.00Hedge deliveries (oz) 59,789(1) Total cash cost per ounce is a non-IFRS financial measure with no standard meaning under IFRS(2) For 2013, reflects impact of new IFRS standard for deferred stripping 20
  21. 21. RESOURCE ESTIMATES – YE 2012 Measured Indicated Measured and IndicatedDeposit Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au (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 2.09Sutuba - - - 0.50 1.27 0.02 0.50 1.27 0.02Niakafiri 0.30 1.74 0.02 10.50 1.10 0.37 10.70 1.12 0.39Gora 0.49 5.27 0.08 1.84 4.93 0.29 2.32 5.00 0.37Total 28.85 1.32 1.22 44.31 1.16 1.65 73.05 1.22 2.87 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 1.67Note: Please see page 26 for Competent Persons Statement relating to this reserves estimate. 21
  22. 22. RESERVE ESTIMATES – YE 2012 Proven Probable Proven and ProbableDeposit Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au (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 0.758Sutuba - - - 0.37 1.4 0.017 0.37 1.40 0.017Niakafiri 0.23 1.69 0.013 7.58 1.12 0.274 7.81 1.14 0.287Gora 0.57 4.07 0.074 1.53 4.27 0.21 2.1 4.22 0.284Stockpiles 7.32 1.02 0.24 - - - 7.32 1.02 0.24Total 14.67 1.36 0.642 20.56 1.43 0.944 35.23 1.40 1.586Note: Please see page 26 for Competent Persons Statement relating to this reserves estimate. 22
  23. 23. 2013 PLANNED MINE LICENCEEXPLORATION PROGRAMTarget RAB RC DD (metres) (metres) (metres)Sabodala Pit 3,000 9,000 1,500Niakafiri - 1,500 2,800Niakafiri West 5,000 5,000 3,000Niakafiri East - 1,000 -Dinkokhono - 6,600 -Dinkokhono North - 800 800Sutuba South - 2,000 1,000Masato North - 1,500 -Sambaya Hill - 2,500 2,500Soukhoto 5,000 2,500 1,500 23
  24. 24. 2013 PLANNED REGIONALEXPLORATION PROGRAMTarget RAB RC DD (metres) (metres) (metres)Goumbou gamba 6,000 3,600 1,200Diabougou 16,000 5,000 2,000Soreto North 22,000 3,000 2,000Soreto 9,500 4,000 6,300Ninyenko 5,500 3,000 2,000Saiensoutou East 15,000 7,500 -Tourokhoto Main 8,000 2,500 -Tourokhoto Marougou - 4,000 1,000 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 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 STATEMENTJulia Martin, P.Eng., MAusIMM (CP), with AMC Mining Consultants (Canada) Ltd., who is independent of Teranga, is a “qualified person” asdefined in NI 43-101 and 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 has reviewed and accepts responsibility for the reserve estimate disclosed above. Ms Martinhas consented to the inclusion of this information in the form and context in which it appears in this Quarterly Report.The technical information contained in this Quarterly Report relating to the mineral resources is based on information compiled by Ms. PattiNakai-Lajoie, who is a member of the Association of Professional Geoscientists of Ontario. She is a Qualified Person under National Instrument43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion of this information in the form and context inwhich it appears in this Quarterly Report. Ms.Nakai-Lajoie is a full-time employee of Teranga and not considered to be independent of Teranga.The technical information contained in this Quarterly Report relating to the regional exploration is based on information compiled by Mr. MartinPawlitschek, who is a member of the Australian Institute of Geoscientist. He is qualified as a Competent Person as defined in the 2004 Edition ofthe “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” and is a ”qualified person” as defined in NI 43-101. Mr. Pawlitschek has consented to the inclusion of this information in the form and context in which it appears in this Quarterly Report. Mr.Pawlitschek is a full-time employee of Teranga and not considered to be independent of Teranga. Generally Ms. is used in reporting, and isconsistent with other sections of the document. 26
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