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Teranga denver september presentation 09162011


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Teranga denver september presentation 09162011

  2. 2. 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 regarding Teranga GoldCorporation’s (“Teranga” or the “Company”) future growth, results of operations (including, without limitation, future production and capitalexpenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and thesuccess 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 orresults “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 currentlyavailable to management and based upon what management believes to be reasonable assumptions, Teranga cannot be certain that actual results willbe consistent with such forward looking information. A number of factors could cause actual results, performance or achievements to differ materiallyfrom the results expressed or implied in the forward looking information, including those listed in the “Risk Factors” section of the prospectus ofTeranga, dated November 11, 2010 (the “Prospectus”). These factors should be considered carefully and prospective investors should not place unduereliance on the forward looking information. Forward looking information necessarily involves significant known and unknown risks, assumptions anduncertainties that may cause Teranga’s actual results, performance, prospects and opportunities in future periods to differ materially from thoseexpressed or implied by such forward looking information. Although Teranga has attempted to identify important risks and factors that could causeactual actions, events or results to differ materially from those described in the forward looking information, there may be other factors and risks thatcause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the forward looking information willprove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, prospectiveinvestors should not place undue reliance on such forward looking information. Teranga expressly disclaims any intention or obligation to update orrevise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicablesecurities law.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 industry sources aswell as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes tobe reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performancecharacteristics. While management is not aware of any misstatements regarding any industry data presented herein, mineral exploration involves risksand 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 impliedassessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably mined in the future. 2
  3. 3. CAPITALIZATION SUMMARY FOCUSEDTicker symbol: TGZ: TSX/ASX ON GROWTHShares outstanding(1): 245.6 million FOCUSED ON:Stock options outstanding: 14.4 million GROWINGShare price (as at September 12, 2011): C$2.28 RESERVESMarket capitalization: C$560 million GROWING PRODUCTIONCash position(2)(3): US$65.9 million FINANCIALDebt position(2)(4): US$20.1 million STRENGTHNet cash position(2): US$45.8 million(1) As part of the demerger Mineral Deposits Ltd. retained 40 million TGZ shares and received C$50 millionfrom the IPO proceeds.(2) As at June 30, 2011(3) Includes short-term investments and restricted cash(4) US$23.6 MM drawn under the mining fleet finance lease facility with Societe Generale. 3
  4. 4. ASSETSLarge exploration land package in Senegal, W.A. • 1,488km2 virtually unexplored land surrounding operating mill • An emerging world class gold districtOperating mine / mill • Proven performance • Only gold mining operation in the countryStrong balance sheet • Able to self-fund exploration & developmentExperienced management team • Proven track record 4
  5. 5. SABODALA GOLD(SENEGAL)Sabodala is the only large scale goldmine in SenegalSenegal • Mining Code passed in 2003 • Successful democracy • Stable political environment • Population of ~13.7M • Mining friendly regime • Government holds 10% free-carried interest in Sabodala and 3% royalty • Tax-free holiday that ends May 2015 • Rated # 1 in Africa and #5 in the World in the World Bank’s “Doing Business” Report 5
  6. 6. SABODALA GOLD(OPERATIONS)First gold pour in March 2009 • Approx. cost of $330MMill expansion from 2 MM tpa to ~4 MMtpa underway • Est. 140,000 oz Au production 2011 expanding to >200,000 oz Au • Expected to be completed early 2012 at a cost of $56 MMWell developed infrastructure • Located 650 km east of the capital Dakar and 96 km north of the town Kedougou – paved road within 56 km of mine site • 30 MW heavy fuel oil power plant located on site (36 MW with mill expansion) 6
  7. 7. HIGHLIGHTSAddressing Investor concerns on IPO• Short mine life FOCUSED  Increased reserves and provided reserve ON ADDING RESERVES guidance  Committed to take Gora from exploration into development  Ramped up exploration program  Expect more discoveries on the Regional Land Package • High cash costs  Increased production and lowered cash cost guidance for 2011 and 2012  Redesigned pit • Hedge book  Delivery has been accelerated 7
  8. 8. GROWTH STRATEGYFOCUSED ON GROWING RESERVES1.5Moz currently to … • Objective: 10-15+ year mine life • Growth through exploration – extensive exploration program on 1,455km2 Regional Land Package of virtually unexplored prolific land • Growth through regional opportunities – primary focus SenegalFOCUSED ON GROWING PRODUCTION140,000oz currently to … • Leveraging off our existing mill – land package all truckable • Doubling mill capacity – could increase furtherFOCUSED ON FINANCIAL STRENGTHMaintaining strong balance sheet to self-fund exploration… • Eliminating hedge book – quickly but prudently • Margin expansion (eliminate hedge and lower costs) • Significant free cash flow to self-fund exploration strategy • Manageable capex requirements 8
  9. 9. Production Profile (‘000 ozs)FOCUSED ON 500GROWING PRODUCTION 450 400Calendar Year 2011 350 • Est. production 140,000 oz at 300 $750 - $775/oz • CapEx $75M (primarily for mill expansion, mobile 250 equipment and capitalized Mine License exploration) 200Calendar Year 2012 150 • Est. production 220,000 oz at 100 $575-$625/oz 50 • CapEx ~ $25M (primarily for exploration)(1) 0 2011 2012 2013 2014Calendar Year 2013 Production Exploration Success • Targeting 300,000 oz at $600 - $700/oz Assumes increased production from regional exploration success(1) Excludes capital cost to develop regional deposits. 9
  10. 10. Cash Margin – Expansion ($/oz) (1)FOCUSED ON 1000FINANCIAL STRENGTH 900Maintain strong balance sheet to 800self-fund exploration and development 700 • IPO recapitalization of balance sheet – net cash position US$45.8M(2) 600 • Eliminating hedge book – quickly but 500 prudently – YE 2011~ 150,00oz at ~ $829/oz(3) 400 • Margin expansion + increased production profile = significant free cash flow to self-fund300 exploration and development strategy 200 • Manageable capex requirements 2011 2012 2013 2014 Rate of margin expansion is a function of increasing production through regional exploration success(1) Assumes $1500/oz gold price and cash cost of $600/oz (2) As at June 30, 2011 (3) Non-Deferred Hedge Schedule Appendix page 39 10
  11. 11. 11
  12. 12. FOCUSED ON Kedougou-Kenieba Inlier – A Birimian Greenstone BeltGROWING RESERVES Gold Reserves and Resources(1)2,4002,1001,8001,5001,200 2,254 (@1.33 g/t) 900 1,51 (@1.47 g/t) 600 774 300 (@1.06 g/t) 0 Proven and Probable Measured and Inferred(1)(2) Indicated(1)(2)(3)(1) See Appendix page 38 (2) M+I resources are inclusive of reserves (3) As at June 30, 2010, see Sabodala Technical Report 12
  13. 13. FOCUSED ONGROWING RESERVESExploration Program (Calendar 2011)1. Mine License Exploration: $8 MM (~60,000m) (YTD 30,000m)* 5 Drill Rigs2. Regional Exploration: $25 MM (~80-90,000) (YTD 50,000m)* 12 Drill Rigs TOTAL: +$33 MM (140-150,000m) (+180,000m RAB) 17 drill rigs* Majority of assays are pending 13
  14. 14. 1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION Budget: $25M Budget: $8M 1,455km2 33km2 GOR A 35 km radius 14
  15. 15. 1. SABODALA MINELICENSE EXPLORATION• $8 MM exploration program is underway on the Sabodala Mine License• 10 targets identified for follow up• Potential to expand proven and probable reserves from 1.5 Moz gold to 2 to 3 Moz gold over the next 12 to 24 months increasing the mine life to ~ 10 to 15 years 15
  16. 16. 1. SABODALA MINE LICENSE EXPLORATION “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 16
  17. 17. SABODALA MINE LICENSE EXPLORATION – “THE CORRIDOR” Sabodala Structural Trend (“The Corridor”) • Northerly trending extension of Sabodala pit • Mineralization traced more than 200m north of the existing pit along trend • Open to north and west • Drilling intersected wide widths of alteration similar Mylonite to Sabodala and Niakafiri Shear Zone Ayoub’s • Drilling 20m centres Thrust • 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 2011Sabodala Pit 17
  18. 18. SABODALA MINE LICENSE EXPLORATION – MASATO / SAMBAYA HILL TARGET MASATO / SAMBAYA HILL • Masato structural trend (1.6 Moz on Oromin JV) strikes across onto our mine 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 Sabodala Pit Masato Down Dip length, 20 drill holes totaling 6,150 metres of drilling Sambaya Hill • First drill hole SMRC055 • 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 Masato Extensions • Multiple mineralized zones have been identified with high grade intervals apparent from aqua regia assays conducted on site • Expect to define new resources in calendar 2011 • Sambaya Hill – Trend defined by an IP and geochemical anomaly 18
  19. 19. 1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION Budget: $25M Budget: $8M 1,455km2 33km2 GOR A 35 km radius 19
  20. 20. 2. REGIONALEXPLORATION• 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 ($25M) currently underway• 50,000m of DD and RC and 98,000m of RAB drilling completed June 30, 2011• 12 drill rigs are currently on the Regional Land Package (2 more rigs are expected in Sept.)• All targets in trucking distance of the existing mill 20
  22. 22. 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 • 800m strike length auriferous quartz vein, outcropping • Deposit open in all directions • 4 active drill rigs (3 DD, 1 RC/DD) • Induced polarization (“IP”) survey has been completed over the Gora deposit and has identified gold anomalies along strike and parallel to Gora – follow-up testing required • 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 22
  23. 23. GORA – HIGH-GRADE QUARTZ VEIN SYSTEM 1. Drilling completed to date – 144 RC and DD holes, 24,705m • Current phase of 25,000m to test to vertical depth of 130m 2. Step-out program commenced • Minimum 2,400m DD • 9 hole program expanded to 11, 8 holes completed and confirmed presence of mineralized structure in all 8 • True widths of up to 12 metres • All assays pending but confirmed presence of mineralized structure 3. Exploration of immediate North and South – 6,200m program • RC program, late July to Sept (depending on rig availability and performance) 4. Further 10,000m of RC, 5,000m DD • Test strike extent of Gora mineralized trend and nearby parallel IP anomalies • Commencement of program likely early October (depending on rig availability) 23
  24. 24. • Ongoing exploration, permitting, and feasibility• Expect to bring resource to reserve by end of calendar 2011 with the goal of processing high-grade ore as soon as late 2012Selected latest results include:JUNE 13, 2011 - PRESS RELEASE JULY 11, 2011 - PRESS RELEASE RECENT RESULTS5m@33.7 g/t from 111m (Vein 1) 2m@20.6 g/t from 88m 1m@9.5 g/t from 23m2m@61.3 g/t from 126 m (Vein 1) 2m@27.3 g/t from 108m 1m@3.6 g/t from 79m3m@26.7 g/t from 154 m (Vein 1) 2m@20.7 g/t from 79m 1m@5.8 g/t from 28m3m@47.7 g/t from 164 m (Vein 5) 4m@23.2 g/t from 132m1m@33.0 g/t from 156m (Vein 4) 3m@24.1 g/t from 155m4m@10.7 g/t from 145m (Vein 2) 4m@34.1 g/t from 155m1m@51.8 g/t from 112m (Vein 2)9m@3.2 g/t from 87m (Vein 1) 24
  25. 25. TOUMBOUMBA – NEWEST TARGET • Latest discovery, potential to become second regional deposit through the mill • Located 10 km NW from Sabodala mill • Alteration hosted mostly in granite (laterite cover) • RAB drilling program commenced in April • Expanded to encompass entire structural domain • To date, 1,113 holes, 47,584m on a 100 x 50m grid • Significant widths of ore mineralization were encountered in western portion of anomaly, RAB holes grading >0.5 g/t • Targets identified by RAB program are the subject of the current RC program • To date, 47 RC holes, 8,748m completed • Continues to return wide auriferous zones • Oxide mineralization of up to 50m in depth • At minimum, potential for heap leaching • Production could be fast tracked without displacing material from Sabodala mill • Deeper drilled required 25
  26. 26. TOUMBOUMBA – NEWEST TARGETJUNE 13, 2011 - PRESS RELEASE JULY 11, 2011 - PRESS RELEASE RECENT RESULTSEARLY RAB RESULTS RAB RESULTS RAB RESULTS3m@6.13 g/t, including 1m@15.44 g/t 2m@6.65 g/t from 16m 4m@3.31 g/t from 26m3m@11.99 g/t, including 1m@25.2 g/t 4m@6.06 g/t from 8m 2m@2.79 g/t from 20m6m@18.85 g/t, including 4m@27.7 g/t 2m@32.87 g/t from 38m 2m@3.57 g/t from 12m 3m@6.34 g/t from 30mJUNE 13, 2011 - PRESS RELEASE JULY 11, 2011 - PRESS RELEASEEARLY RC RESULTS RC RESULTS10m@2.35 g/t, including 2m@9.69 g/t 6m@1.91 g/t from 17m including 1m@8.07 g/t8m@5.45 g/t, including 2m@17.75 g/t 3m@17.15 g/t from 39m including 1m@50 g/t 6m@2.68 g/t from 56m including 1m@8.79 g/t 3m@11.85 g/t from 36m including 1m@30.5 g/t 26
  27. 27. TOUMBOUMBA –NEWEST TARGETRECENT RESULTS – AQUA REGIA11m@5.18g/t from 37m including1m@37.6g/t and4m@6.23g/t from 52m including1m@21.8g/t from SNWRC0166m@1.24g/t f rom 125m fromSNWRC0174m@4.46g/t f rom 21m fromSNWRC02311m@1.29g/t f rom 52m fromSNWRC0273m@4.24g/t f rom 180m fromSNWRC029 27
  28. 28. DIEGOUN NORTH – “THE DONUT” • 7km x 4 Km complex of gold anomalism • Contrasting rock types, porphyries, granites, dolerite & sediments Sabodala Ore Body • Rock samples to 80 g/t Au • RAB drilling has defined gold mineralization in bedrock • 19,000m RAB drill program completed at Cinnamon, 663 holes • 143 holes returned auriferous intersections above 0.5 g/t • First pass RC program at Jam and Honey; 51 holes completed for just under 8,800m (40 holes anomalous levels of gold > 0.5 g/t) • Recognition of a well-developed, auriferous north-east trending structure 28
  29. 29. TOUROKHOTO • >5Km long, up to 1Km wide gold anomaly defined by termite sampling • Parallels NE trending shears of the MTZ Sabodala Ore Body • 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 • 23,416m RAB drill program completed with a total 1,006 holes • Identified eight coherent zones of gold anomalism • Early scout DD completed in Q1 identified significant structural zones which host auriferous alteration zones • Targets up to 700m in strike length • Follow up geophysical, RC and DD testing required 29
  30. 30. 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 30
  31. 31. EXPLORATION TEAM / ON SITE ASSAY LABMapping Trenches at Dembala Berola Part of team at Exploration Office Mapping at MakanaNiang, Database and GIS Management Field Work Sounkounkou On Site Assay LabStructural Mapping Geochem Sampling Team at Makana RC Drilling at Bransan 31
  32. 32. FOCUSED ONGROWTHKedougou-Kenieba Inlier – A Birimian Greenstone BeltAn emerging world class gold district. 32
  33. 33. CORPORATESOCIAL RESPONSIBILITYCSR is fundamental to our business strategy. Weare committed to making a positive difference inthe communities in which we live and work. Ouraim is to share the benefits of mining with ouremployees and the community and contribute toeconomic and social development. 33
  34. 34. CORPORATESOCIAL RESPONSIBILITY• Teranga financed the construction of Khossanto College• In partnership with the regional hydraulic department, providing financial and project management support to the upgrade water supply – resulting in a positive impact on health and sanitation• The Company-funded Sabodala Village Clinic – treating 1,378 cases of Malaria (which untreated can lead to mortality); 7,235 patients were treated at the Clinic, representing a $30,000 investment in community health• The Sabodala Mine provides direct contract employment and skill development to over 1,100 persons, with an additional 120 persons benefiting from casual employment each month. A further 3,600 persons are estimated to be indirectly employed through the provision of goods and services to the mine through our partners and suppliers• Teranga is committed to the professional development of its local workforce through continuous training and skill development 34
  35. 35. SUMMARY –FOCUSED ONGROWTH1. Experienced Management Team2. Largest land position in Senegal3. Only mill in Senegal4. Planned mill expansion5. Extensive exploration program – ~17 drill rigs6. Strong Balance sheet – increasing free cash flow with margin expansion 35
  37. 37. APPENDICESCompetent Persons StatementThe scientific and technical information contained in this release relating to exploration activities within the mining license is based on informationcompiled by Mr. Bruce Van Brunt, who is a Fellow with 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 Code forReporting of Exploration Results, Mineral Resources and Ore Reserves" and as defined in NI43- 101. Mr. Van Brunt has consented to the inclusionof this information in the form and context in which it appears in this release. Mr. Van Brunt is a full-time employee of Teranga and not independentof Teranga within the meaning of NI43-101.The scientific and technical information contained in this release relating to the regional exploration is based on information compiled byMr. Martin Pawlitschek, who is a member of the Australian Institute of Geoscientists. Mr. Pawlitschek is qualified as a Competent Person as definedin the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as a Qualified Personas defined in NI43-101. Mr. Pawlitschek has consented to the inclusion of this information in the form and context in which it appears in thisrelease. Mr. Pawlitschek is a full-time employee of Teranga and not independent of Teranga within the meaning of NI43-101. 37
  38. 38. 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 281Total 31,973 1.47 1,512Measured & Indicated Sabodala 41,892 1.39 1,869 Niakafiri 10,741 1.12 386Total 52,633 1.33 2,254(1)Inferred Resources Sabodala 7,310 1.22 287 Niakafiri 7,248 .88 205 Niakafiri West 7,144 .82 188 Soukhoto 566 1.32 24 Gora(2) 387 5.6 70Total 22,655 1.06 774(1)(1) See the Sabodala Technical Report ; #’s as at June 30, 2010(2) Gora inferred resource updated to 543,000 tonnes at 6.08 g/t containing 106,000 ozs. Please see May 2, 2011 Press Release for further information. 38
  39. 39. NON-DEFERRED HEDGE SCHEDULEDelivery Date Price US$/oz Ounces17-Nov-2011 846.00 18,50017-Feb-2012 846.00 28,00017-May-2012 846.00 28,00015-Aug-2012 846.00 27,50021-Nov-2012 832.92 25,00020-Feb-2013 832.92 25,00017-May-2013 790.66 25,00021-Aug-2013 791.50 16,000Total 193,000 39
  40. 40. MANAGEMENT & BOARDAlan R. Hill • Mining engineer with over 20 years experience globally in project evaluations, acquisitions and mine development as Executive VP of Barrick GoldExecutive Chairman & CEO • 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 & CFO • Former VP and CFO of Gabriel Resources (2005 – 2010)Christopher R. Lattanzi • Mining engineer with over 20 years experience in property valuation, scoping, feasibility studies and 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)Oliver Lennox-King • Over 30 years experience in the mineral resource industry with a wide range of experience in financing, research and marketingDirector • Non-Executive Chairman of Fronteer Gold and director of CGX Energy • Instrumental in the formation of Southern Cross Resources (1997), former President of Tiomin Resources (1992 – 1997) • MDL Director not standing for re-electionAlan R. Thomas • Director/Trustee and CFO of Labrador Iron Ore Royalty • Former Director of Gabriel Resources (2006 – 2010), CFO of ShawCor (2000 – 2006), and CFO of NorandaDirector (1987 – 1998)Frank Wheatley • 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, particularlyDirector in the areas of public financing, project debt financing, permitting of large scale mining projects, and strategic mergers and acquisitions in the international minerals industry • Currently the Executive Director, Corporate Affairs and Strategy of Talison Lithium Limited • 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 40