John tumazos very independent research march 2013

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John tumazos very independent research march 2013

  1. 1. PRODUCINGANDEXPLORINGMARCH 2013JOHN TUMAZOS VERYINDEPENDENT RESEARCH 1
  2. 2. FORWARD LOOKING STATEMENTSCertain information included in this presentation, including any information as to the Company’s strategy, projects, exploration programs, joint venture ownershippositions, plans, future financial or operating performance and other statements that express management’s expectations or estimates of future performance,constitute “forward-looking statements”. The words “believe”, “expect”, “will”, “intend”, ”anticipate”, “project”, ”plan”, “estimate”, “on track” and similar expressionsidentify forward looking statements. Such forward-looking statements are necessarily based upon a number of estimates, assumptions, opinions and analysis madeby management in light of its experience that, while considered reasonable, may turn out to be incorrect and involve known and unknown risks, uncertainties andother factors, in each case that may cause the actual financial results, performance or achievements of the Company to be materially different from the Company’sestimated future results, performance or achievements expressed or implied by those forward-looking statements. Such forward-looking statements are notguarantees of future performance. These assumptions, risks, uncertainties and other factors include, but are not limited to: assumptions regarding general businessand economic conditions; conditions in financial markets and the future financial performance of the company; the impact of global liquidity and credit availability onthe timing of cash flows and the values of assets and liabilities based on projected future cash flows; the supply and demand for, deliveries of, and the level andvolatility of the worldwide price of gold or certain other commodities (such as silver, fuel and electricity); fluctuations in currency markets, including changes in U.S.dollar and CFA Franc interest rates; risks arising from holding derivative instruments; adverse changes in our credit rating; level of indebtedness and liquidity; abilityto successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in the jurisdictions in which theCompany carries on business; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costsassociated with mining inputs and labour; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits anddiminishing quantities or grades of reserves; changes in costs and estimates associated with our projects; the accuracy of our reserve estimates (including withrespect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based; contests over title to properties,particularly title to undeveloped properties; the risks involved in the exploration, development and mining business, as well as other risks and uncertainties which aremore fully described in the Companys prospectus dated November 11, 2010 and in other Company filings with securities and regulatory authorities which areavailable at www.sedar.com. Accordingly, readers should not place undue reliance on such forward looking statements. 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 laws.This presentation is dated as of March 21, 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) 245.6M ON GROWTH THROUGH:Stock options outstanding 17.1MShare price (as at March 21, 2013) C$1.26Market capitalization (as at March 21, 2013) C$309M GROWING RESERVESCash position(2) US$45.0M GROWINGHedge balance (as at Jan. 29, 2013) 38,105oz. PRODUCTIONProject finance outstanding(3) US$60M FINANCIAL STRENGTHMining fleet loan facility(4) US$10.5M (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. (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. • 2014 forecast production of 200,00 – 250,000oz. depending on the timing of GoraPhase 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 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 and pit delineation 7
  8. 8. 2012 ANNUAL GUIDANCE MET WITHRECORD PRODUCTION & PROFITSIncreased Profit • FY‘12 $79.9M as compared to the FY’11 loss of $16.0MIncreased Cash Balance (1) • $45.0M at FYE’12 as compared to $24.6M at FYE’11Reduced Gold Hedge Book • Gold hedges reduced to 38,105oz. as at Jan. 29, 2013 • Expect position to be fully extinguished by Jun’13Increased Revenue • $350.5M for FY’12 – Company record and 48% higher than FY’11(1) Includes cash, cash equivalents and $5.3M bullion receivable . 8
  9. 9. 2012 ANNUAL GUIDANCE MET WITHRECORD PRODUCTION & PROFITSIncreased Gold Production • FY‘12 214,310oz. a Company record and 63% higher than calendar year 2011 and within guidanceReduced Total Cash Costs • FY‘12 $627/oz. and 20% lower than calendar year 2011 and within guidanceReduced Production Costs • FY‘12 $850/oz. and18% lower than calendar year 2011Reduced Capital Expenditure (1) • $52.9M in FY’12 and 17% lower than calendar year 2011Increased Capitalized Reserve Development Expenditure • $30.4M in FY’12, over double that of calendar year 2011(1) Excluding capitalized reserve development expenditure. 9
  10. 10. CONTINUING TO STRENGTHEN THEASSET BASE AND THE TEAMCapital Expenditure • 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 10
  11. 11. MOST ADVANCED SATELLITEDEPOSIT - GORAEconomics • Capital cost est. $45M-$50M • Est. total cash cost to average $675-$700/oz. • NPV (5%) at $1500/oz. of $105 million • IRR 69%Open Pit • 26km from mill • Technical Study and ESIA complete – initiating permitting Q1’13 • M&I of 374,000 oz. at 5.0gpt • Proven & Probable reserves of 285,000oz. at Source – Teranga Gold Corporation: Typical section of Gora looking South West, 2012. 4.2gpt. (2.1M tonnes of ore) • Estimated 4-year mine life • Stripping ratio of 19:1 • Estimated production start in 2014 11
  12. 12. FOCUSED ON GROWINGPRODUCTION AND CASH MARGINS Production Profile (000oz.)(1) Cash Margin ($/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 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 Jun. 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 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 22/23 (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) $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 terangagold.com(3) 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 • 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) 18
  19. 19. APPENDICES 19
  20. 20. OPERATING STATISTICS Three m onths ended Decem ber 31, Tw elve m onths ended Decem ber 31, 2012 2011 2012 2011 restated restatedOperating resultsOre mined (‘000t) 2,038 1,715 5,914 3,973Waste mined (‘000t) 5,274 4,736 22,964 21,818Total mined (‘000t) 7,312 6,451 28,878 25,791Grade mined (g/t) 2.04 1.50 1.98 1.39Ounces mined (oz) 133,549 82,710 376,185 177,362Strip ratio w aste/ore 2.6 2.8 3.9 5.5Ore milled (‘000t) 725 604 2,439 2,444Head grade (g/t) 3.40 2.10 3.08 1.87Recovery rate % 90.7 89.8 88.7 89.5Gold produced (1) (oz) 71,804 36,695 214,310 131,461Gold sold (oz) 71,604 34,665 207,814 137,136Average price received $/oz 1,296 1,482 1,422 1,236Total cash cost (incl. royalties) (2) $/oz sold 623 809 627 782Mining (cost/t mined) 3.1 2.5 2.7 2.3Milling (cost/t milled) 19.9 17.3 20.4 16.8G&A (cost/t milled) 6.4 6.2 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. 20
  21. 21. 2013 GUIDANCE Year ending December 31, 2012 2013 Actuals Guidance RangeOperating results Ore mined (‘000t) 5,915 4,000 - 4,500 • Mining and processing more Waste mined Total mined (‘000t) (‘000t) 22,962 28,877 31,000 35,000 - - 32,000 36,500 tonnes at lower grade to maintain Grade mined Strip ratio (g/t) waste/ore 1.98 3.9 1.40 7.00 - - 1.60 7.75 ~200,000oz. production Ore milled (‘000t) 2,439 3,300 - 3,400 Head grade (g/t) 3.08 2.00 - 2.15 Recovery rate Gold produced % (oz) 88.7 214,310 89.0 190,000 - - 91.0 210,000 • Gross costs have increased but Gold sold Total cash cost (incl. royalties)(1)(2) (oz) $/oz sold 207,814 627 190,000 650 - - 210,000 700 unit costs are expected to decline Total production cost (1) $/oz sold 850 950 - 1,000 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 - 180.0Capital Expenditures Mine site $ millions 52.9 20.0 - 25.0 Capitalized reserve development $ millions 26.1 5.0 - 10.0 Gora development costs Mobile equipment $ millions - 30.0 - 35.0 Site development $ millions 4.3 15.0 - 20.0 Total Gora development costs $ millions 4.3 45.0 - 50.0 Capitalized deferred stripping(2) $ millions N/A 35.0 - 40.0Total Capital Expenditures $ millions 83.3 105.0 - 125.0 Exploration (expensed) $ millions 16.7 10.0 - 15.0 Administration expense $ millions 17.9 15.0 - 20.0 Hedge close-outs / deliveries (oz) 136,395 59,7891 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. 21
  22. 22. 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 2.87(1) Please see page 25 for Competent Persons Statement relating to this reserves estimate.(2) Based on assays received as of August 2012. 22
  23. 23. 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 1.67(1) Please see page 25 for Competent Persons Statement relating to this reserves estimate.(2) Based on assays received as of August 2012. 23
  24. 24. 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 24
  25. 25. 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. 25

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