Transcript of "June 2011-2-investor-presentation-06222011"
Producing and Exploring June 2011
Cautionary StatementThis presentation contains forward looking information, within the meaning of applicable Canadian securities legislation, and forward lookingstatements, within the meaning of applicable United States securities legislation, which reflects management‟s expectations regardingTeranga Gold Corporation‟s (“Teranga” or the “Company”) future growth, results of operations (including, without limitation, future productionand capital expenditures), performance (both operational and financial) and business prospects (including the timing and development ofnew deposits and the success of exploration activities) and opportunities. Wherever possible, words such as “plans”, “expects”, “does notexpect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions orstatements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, have been used toidentify such forward looking information. Although the forward looking information contained in this presentation reflect management‟scurrent beliefs based upon information currently available to management and based upon what management believes to be reasonableassumptions, Teranga cannot be certain that actual results will be consistent with such forward looking information. A number of factorscould cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward lookinginformation, 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 causeTeranga‟s actual results, performance, prospects and opportunities in future periods to differ materially from those expressed or implied bysuch 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 causeactions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the forward looking informationwill 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. The forward looking information is stated as ofthe date of the Prospectus and, except as required under applicable laws, Teranga assumes no obligation to update or revise suchinformation to reflect new events or circumstances.Forward looking information and other information contained herein concerning mineral exploration and management‟s general expectationsconcerning the mineral exploration industry are based on estimates prepared by management using data from publicly available industrysources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry whichmanagement 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 datapresented 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 involvethe implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably mined inthe future. 2
Capitalization SummaryTicker symbol: TGZ: TSX/ASXShares outstanding (1): 245.6 millionStock options outstanding: 14.4 millionShare price (as at June 1, 2011): [C$2.61] Sabodala 18.7 MM Gold shares ofMarket capitalization: [C$641million] (Mauritius) Oromin Limited (13.8%) 40 MMCash position(2): US$93.8 million(3) 20%Debt position (2)(4): US$21.5 million 90% Interest in Sabodala Gold ProjectNet cash position (2): US$72.3 million (10% free-carried interest held by Govt. of Senegal)(1) As part of the demerger Mineral Deposits Ltd. retained 40 million TGZ shares and received C$50 million from the IPO proceeds.(2) As at March 31,2011 3(3) Includes short-term investments and restricted cash (4) US$23.6 MM drawn under the mining fleet finance lease facility with Societe Generale.
Sabodala Gold (Senegal)• Sabodala is the only large scale gold mine in Senegal• Senegal – Mining Code passed in November 2003 – Successful democracy – Stable political environment – Estimated population of 13.7 million – Mining friendly regime – Government holds 10% free-carried interest in Sabodala and 3% royalty – Tax-free holiday that ends May 2015 5
Sabodala Gold Operations• First gold pour in March 2009 – Approx. cost of $330M• Mill expansion from 2 MM tpa to ~4 MM tpa underway – Est. 140,000 oz Au production 2011 expanding to >200,000 oz Au – Expected to be completed early 2012 at a cost of US$56 MM• Well developed infrastructure – Located 650 km east of the capital Dakar and 96 km north of the town Kedougou – 30 MW heavy fuel oil power plant located on site (36 MW with mill expansion) – Auxiliary water source 6
Sabodala Gold Production Production Statistics 3 m onths ended March 31, 6 m onths ended March 2011 31, 2011 Ore mined („000t) 491 1,457 Waste mined („000t) 6,460 10,618 Total mined („000t) 6,951 12,075 Strip ratio w aste/ore 13.2 7.3 Ore processed („000t) 608 1,195 Head grade (g/t) 1.93 2.01 Gold recovered (oz) 34,296 70,170 Gold produced (1) (oz) 36,402 70,050 Gold sold (oz) 39,490 72,946 Average price received $/oz 1,199 1,180 Total cash cost (incl. royalties) $/oz 655 713 Mining (cost/t mined) 1.7 2.1 Milling (cost/t milled) 15.3 15.6 G&A (cost/t milled) 4.7 4.9 (1) Gold produced is gold poured and does not include gold-in-circuit at period end. Calendar Year 2011 •Est. production 140,000 oz at $750 - $775/oz •CapEx $59.5M Calendar Year 2012 •Est. production 220,000 oz at $575-$625/oz •CapEx ~ $25M 7
Highlights During the first full quarter, the Company: Increased reserves and provided reserve guidance Increase production and lowered cash cost guidance for 2011 and 2012 Redesigned pit Committed to take Gora from exploration into development Ramped up exploration program Expect consistent news flow Expect more discoveries on the Regional Land Package Focused on adding reserves 8
West Africa: Prolific, Under Explored Gold Belt 9
Kedougou-Kenieba Inlier – A Birimian Greenstone Belt Gold Reserves and Resources(1) 2,100 Reserve/Resource (000s oz) 1,800 2,254 1,500 (@1.33 g/t) 1,200 1,51 900 (@1.47 g/t) 600 774 300 (@1.06 g/t) 0 (3) Proven and Measured and Inferred (2)(3) Probable Indicated(1) See Appendix page 27(2) M+I resources are inclusive of reserves(3) As at June 30, 2010, see Sabodala Technical Report 10
Exploration ProgramExploration Program (Calendar 2011) SSC1. Mine License Exploration: $8 MM (~60,000m) (YTD 15,000m)*2. Regional Exploration: $17 MM (~80-90,000) ( YTD 14,400m)*TOTAL: US$25 MM (140-150,000m)* Majority of assays are pending 11
1. Mine License Exploration 2. Regional Exploration Budget: $8 M Budget: $17M 35 KM radius GORA 12
1. Sabodala Mine License Exploration• US$8 MM exploration program is underway on the Sabodala Mine License(1)• 10 targets identified for follow up• Potential to expand proven and probable reserves from 1.51 Moz gold to 2 to 3 Moz gold over the next 12 to 24 months increasing the mine life to ~ 10 to 15 years “The Corridor”: • Continuation of the main Sabodala structural trend to the north Sambaya Hill: • Confluence of Niakafiri Shear Zone with Main Flat from Sabodala and Masato Shear Masato Extension: • Continuation of Masato deposit Niakafiri, Niakafiri West & Soukhoto: • Down-dip extension of Niakafiri, strike extension of Niakafiri West and Soukhoto 13 (1) to be completed by June 30, 2011
Sabodala Mine License – „The Corridor‟ SABODALA STRUCTURAL TREND (“The Corridor”)(1) •Northerly trending extension of Sabodala pit •Mineralization traced more than 100m north of the existing pit along trend Mylonite Ayoub’s Shear Zone Thrust •Open to north and west •Drilling intersected wide widths of alteration similar to Sabodala and Niakafiri •Drilling 20m centres •Plan is to conduct 10,800 metres of RC and Diamond drilling to test target at depth and along strike •Expect resources defined to be converted to reserves in 2011 Sabodala Pit(1) Please note that the target “Sabodala Structural Corridor”, was previously identified as 3 separate targets in the September 27, 2010 Sabodala Technical Report butnow has been consolidated to 1 target which therefore brings the total Mining Lease targets to 10. 14
Sabodala Mine License – Masato / Sambaya Hill Target MASATO / SAMBAYA HILL •Masato structural trend (1.6 Moz on Oromin JV) strikes across onto SGO license •Plan to conduct 5,000 metres of RC and Diamond drilling to define structural trend and test structure at depth •Initially being tested over a 500 metre strike length, 20 drill Sabodala Pit holes totaling 6,150 metres of drilling Masato Down Dip •First drill hole SMRC055 Sambaya Hill • 11m of 1.08 g/t from 234m down hole • 20m of 3.53 g/t from 267m down hole • Will be extended with core as part of program •Multiple mineralized zones have been identified with high grade intervals apparent from aqua regia assays conducted Masato Extensions on site •Expect to define new resources in calendar 2011 • Sambaya Hill - Trend defined by an IP and geochemical anomaly 15
1. Mine License Exploration 2. Regional Exploration Budget: $8 M Budget: $17M 35 KM radius GORA 16
2. Regional Exploration• From 2007 – 2009, no significant drilling was done on the 1,455 km2 Regional Land Package due to cash constraints• There are 27 drill targets identified to drill by end of year; drilling program (US$17M) 35 KM radius currently underway “The Donut”• 14,400m of DD and RC and 34,600m of RAB drilling completed March 31, 2011 Gora GORA• 10 drill rigs are currently on the Regional Land Package• All targets in trucking distance of the existing mill Tourokhoto Toumboumba 17
Gora – High-Grade Quartz Vein System •Most advanced target: moving from exploration to development •Inferred resource of 106,000 oz @ 6 g/t Au •22 km from Sabodala mill •Increased exploration budget for 2011 •800m strike length auriferous quartz vein, outcropping •Deposit open in all directions •4 active drill rigs (3 DD, 1 RC/DD) •2011 drill program: • Significant increase in mineralized envelopes relative to 2010 RC drill program • Now understood to be a stacked vein system (vs. single-vein) • Vein 1 extended (currently 8.8 g/t Au) • Vein 2 now more continuous (3.0 g/t Au) • Vein 3 now important mineralized body • Vein 5 discovered just below Vein 1 • Excellent potential for bulk style mineralization • Based on positive drill results, drill program has been expanded by an additional 4,500m • 6,000m RC, 4,000m DD remain to be drilled to complete current phase, scheduled for late summer 2011 18
Gora – High-Grade Quartz Vein System•Selected latest results include: • 5m @ 33.7 g/t from 111m (Vein 1) • 2m @ 61.3 g/t from 126m (Vein 1) • 3m @ 26.7 g/t from 154m (Vein 1) • 3m @ 47.7 g/t from 164 m (Vein 5) • 1m @ 33.0 g/t from 156m (Vein 4) • 4m @ 10.7 g/t from 145m (Vein 2) • 1m @ 51.8 g/t from 112m (Vein 2) • 9m @ 3.2 g/t from 87m (Vein 1)•Current program designed to a vertical depth of 120m and 130m along strike•Step out exploration drilling beyond described above to test key structural intersections has commenced with a minimum2,400m DD drill program•Induced polarization (“IP”) survey is has commenced over the Gora deposit ensuring significant coverage along the structures•Expect to bring resource to reserve by end of calendar 2011 with the goal of processing high-grade ore as soon as late 2012 19
Toumboumba •Newest target drilled, promising early results •Located 10 km NW from Sabodala mill •Alteration hosted mostly in granite •26,000m RAB drilling completed in April/May including: • 6m @ 18.85 g/t, including 4m @ 27.7 g/t • 10m @ 2.35 g/t, including 2m @ 9.69 g/t • 8m @ 5.45 g/t, including 2m @ 17.75 g/t •Significant widths of ore mineralization were encountered in western portion of anomaly, RAB holes grading >0.5 g/t •Oxide mineralization of up to 50m in depth •If heap leachable, production could be fast tracked without displacing material from Sabodala mill •Early RC drilling follow-up (8 holes) •Aqua regia results for 4 holes including: • 3m @ 6.13 g/t, including 1m @ 15.44 g/t • 3m @ 11.99 g/t, including 1m @ 25.2 g/t 20
Diegoun North – “THE DONUT” Sabodala Ore Body •7km x 4 Km complex of gold anomalism •Contrasting rock types, porphyries, granites, dolerite & sediments •Rock samples to 80 g/t Au •RAB drilling has defined gold mineralization in bedrock CINNAMON •5000m of RC allocated, early RC planned over RAB anomalies JAM JAM HONEYHONEY •19,000m RAB drill program commenced at Cinnamon – 11,000m completed •10,000m first pass RC drilling with 17 RC holes (2,300m) •Several intervals of anomalous gold identified: widths up to 40m 21
Tourokhoto •>5Km long, up to 1Km wide gold anomaly defined by termite sampling •Parallels NE trending shears of the MTZ •3 Moz Massawa deposit hosted on MTZ about 25Km south •>240 ppb Au contours coincide with areas where MTZ shears are intersected by later NE fault structures •Rock sampling returned up to 10 g/t Au from sparse outcrop •Wide zones of sheared sediments and quartz-feldspar porphyries observed •Quartz tourmaline Veining observed •Commenced 23,000m RAB drill program over 5km gold geochemical anomaly •13,000m of RAB drilling completed to date •Program will define bedrock gold bearing zones •Program will provide targets for follow up DD and RC drilling •Commenced 1,600m, 5-hole DD program •Identified significant gold-bearing structure and alteration •Follow-up continues 22
Goundamekho - Extensive Surface Gold Workings on Structures • 35 RC holes for 4,200m completed • Multiple gold bearing structures warrant follow-up drilling Gold from Trenches 75g nugget from artisan workings 23
Exploration Team / On Site Assay LabMapping Trenches at Dembala Berola Part of team at Exploration Office Mapping at Makana Niang, Database and GIS Management Field Work Sounkounkou On site assay lab Structural Mapping Geochem Sampling Team at Makana RC Drilling at Bransan 24
Kedougou-Kenieba Inlier – A Birimian Greenstone Belt An emerging world class gold district. 25
Summary World-class asset in its early stages 1. Experienced Management Team 2. Senegal West Africa – 1,488km2 land position • Largest land position in Senegal 3. Operating mine and mill 4. Planned mill expansion • from 2Mtpa to ~4Mtpa • increasing gold production (Est. 2011: 140,000 oz; Est. 2012: 220,000 oz) 5. Aggressive exploration program • US$25M to be spent in calendar 2011 • ~15 drill rigs 26
AppendicesCompetent Persons StatementThe technical information contained in this release relating to exploration activities within the mining license is based on information compiledby Mr. Bruce Van Brunt, who is a member of The Australasian Institute of Mining and Metallurgy and is also a registered professionalgeologist in the State of Washington, USA. He is qualified as a Competent Person as defined in the 2004 Edition of the “Australasian Codefor Reporting of Exploration Results, Mineral Resources and Ore Reserves” and as a Qualified Person as defined in NI43-101. Mr. Van Bruntis a full-time employee of Teranga. The technical information contained in this release relating to the regional exploration is based oninformation compiled by Mr. Martin Pawlitschek, who is a geologist and a member of the Australian Institute of Geoscientists. Mr.Pawlitschek is also qualified as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves” and as a Qualified Person as defined in NI43-101. Mr. Pawlitschek is a full-time employee ofTeranga.The latest grade estimates as presented have been classified as a combination of Measured, Indicated and Inferred Mineral Resources inaccordance with CIM Definitions (2005) resource reporting classification guidelines and reconciled to the JORC Code (2004).Mssrs. Van Brunt and Pawlitschek have consented to the inclusion of the technical information in the form and context in which it appears inthis presentation. Mssrs Van Brunt and Pawlitschek have reviewed and verified the data contained in this presentation, including sampling,analytical and test data underlying the estimates provided. Verification of the data included numerous site visits, database validation ofhistorical drill results and review of sampling and assaying protocols.
Sabodala Gold Project: Reserves & Resources Ore Grade Contained Gold (000 tonnes) (g/t Au) (000 oz Au) Proven & Probable Sabodala 24,350 1.57 1,231 Niakafiri 7,623 1.15 281 Total 31,973 1.47 1,512 Measured & Indicated Sabodala 41,892 1.39 1,869 Niakafiri 10,741 1.12 386 Total 52,633 1.33 2,254(1) Inferred Resources Sabodala 7,310 1.22 287 Niakifiri 7,248 0.88 205 Niakifiri West 7,144 0.82 188 Soukhoto 566 1.32 24 Gora 387 5.60 70 Total 22,655 1.06 774(1)(1) See the Sabodala Technical Report ; #‟s as at June 30, 2010 29
Non-Deferred Hedge Schedule Delivery Date Price US$/oz Ounces 18-May-2011 846.00 10,000 17-Aug-2011 846.00 18,500 17-Nov-2011 846.00 18,500 17-Feb-2012 846.00 28,000 17-May-2012 846.00 28,000 15-Aug-2012 846.00 27,500 21-Nov-2012 832.92 25,000 20-Feb-2013 832.92 25,000 17-May-2013 790.66 25,000 21-Aug-2013 791.50 16,000 Total 833.00 221,500Note: See page 40 of the Prospectus 30
Management & Board • Mining engineer with over 20 years experience globally in project evaluations, acquisitions and mine development as Executive VP of Barrick GoldAlan R. Hill • Currently a Director of Gold FieldsExecutive Chairman & CEO • Former President and CEO of Gabriel Resources (2005 – 2009) and non-Executive Chairman of Alamos Gold (2004 – 2007) • Over 10 years experience in mining finance, development, corporate development, and investorRichard S. Young relations with Barrick GoldPresident & CFO • Former VP and CFO of Gabriel Resources (2005 – 2010) • Mining engineer with over 20 years experience in property valuation, scoping, feasibility studies andChristopher R. Lattanzi project monitoring on a global basisDirector • Currently a Director of Argonaut Gold and Spanish Mountain Gold • Founding member and former president of Micon International (1988 – 2005) • Over 30 years experience in the mineral resource industry with a wide range of experience in financing, research and marketingOliver Lennox-King • Non-Executive Chairman of Fronteer Gold and director of CGX EnergyDirector • Instrumental in the formation of Southern Cross Resources (1997), former President of Tiomin Resources (1992 – 1997) • MDL Director not standing for re-election • Director/Trustee and CFO of Labrador Iron Ore RoyaltyAlan R. Thomas • Former Director of Gabriel Resources (2006 – 2010), CFO of ShawCor (2000 – 2006), and CFO ofDirector Noranda (1987 – 1998) • Over 25 years experience as a director and senior officer of, and legal counsel to, a number of Canadian public mining companies and has extensive legal and business experience in the mineral industry, particularly in the areas of public financing, project debt financing, permitting of large scale mining projects, and strategic mergers and acquisitions in the international minerals industryFrank Wheatley • Currently the Executive Director, Corporate Affairs and Strategy of Talison Lithium LimitedDirector • Currently a director of Lithic Resources Ltd. and Portal Resources Ltd. • Former Vice-President and General Counsel of Gabriel Resources Ltd. (2000 - 2009) • Former Vice President, Legal Affairs of Eldorado Gold Corporation 31
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