Teranga Gold Corporation: Asx First Quarter Report-For the Three Months Ended March 31, 2012
TORONTO, ONTARIO -- (Marketwire) -- 04/30/12 -- Teranga Gold Corporation (TSX: TGZ)(ASX: TGZ) -
KEY POINTS
-- Teranga achieved record first quarter producing 41,904 ounces of gold at
a total cash cost of $673 per ounce sold.
-- New mill and downstream processing plant commissioned - balance of
facilities expected to be complete by end of second quarter - Company
confirms annual production guidance of 210,000 to 225,000 ounces of gold
at a cash cost of $600 to $650 per ounce(1).
-- Exploration at the Sabodala Pit continues to confirm the potential for
an expanded pit to the north and to depth.
OPERATIONAL OVERVIEW
Sabodala Gold Operation
(All amounts are in US$ unless otherwise stated)
-- Gold production for the three months ended March 31, 2012 was 41,904
ounces, 22 percent higher than the same period last year. The increase
in production during the first quarter 2012 was mainly due to higher
grade ore stockpiled at the end of December 2011 and processed in the
first quarter.
-- Gold sold for the three months ended March 31, 2012 totaled 35,268
ounces at a total cash cost of $673 per ounce sold compared to 39,490
ounces sold at a total cash cost of $639 per ounce in the same period
last year. Ounces sold during the first quarter were lower than ounces
produced due to the reduced ability to pour gold during the tie-ins for
the mill expansion. As of March 31, 2012, gold in circuit and gold
bullion inventory increased to 13,262 ounces.
-- Total tonnes mined for the three months ended March 31, 2012 were 7
percent higher compared to the same period last year due to improved
productivity and efficiency in the mining operation. Drilling and
loading availabilities benefited from the addition of three new blast
hole drill rigs and two new haul trucks which arrived for the
development of Gora. The implementation of better maintenance practices
resulted in improved loading and hauling efficiencies due to improved
availability of the mobile equipment fleet.
-- Mill throughput for the three months ended March 31, 2012 was 6 percent
lower than the same period last year mainly due to the better blend of
softer material that was available during the first quarter of 2011.
-- The new mill and downstream processing plant were commissioned in late
April. All that remains is the completion of a secondary crusher and new
stockpile/reclaim facilities scheduled for the end of the second quarter
2012, which will bring the mills to full capacity.
-- With the completion of the mill expansion, production for 2012 is
expected to increase to between 210,000 to 225,000 ounces, an increase
of 65 percent over 2011, while the total cash cost is expected to
decline to between $600 to $650 per ounce(1) in line with previous
guidance.
-- During the three months ended March 31, 2012, all 35,268 ounces of gold
sales were sold into the spot market at an average price of $1,712.
During the same quarter last year the average realized price was $1,199
per ounce resulting from 14,000 ounces being delivered into gold hedge
contracts at $845 per ounce and 25,490 ounces being sold into the spot
market at an average price of $1,393 per ounce.
-- To provide additional financial flexibility, the Company reached an
agreement with Macquarie Bank Limited to defer 28,000 ounces that were
due for delivery in February 2012 until later in the year. In addition,
the Company modified hedge delivery contract dates in 2012 to match the
anticipated production schedule while maintaining the original amount of
ounces to be delivered during 2012 of 108,500 ounces. As a result, the
yearend balance of ounces under contract is expected to decline to
66,000 ounces.
CORPORATE
Teranga Gold Corporation ("Teranga or the Company") is a Canadian-based gold company listed on the Toronto Stock Exchange (TSX: TGZ) and Australian Securities Exchange (ASX: TGZ). Teranga is principally engaged in the production and sale of gold, as well as related activities such as exploration and mine development.
Finance
At March 31, 2012:
-- Cash and cash equivalents - $14.8 million
-- Project Finance Facility - nil(1)
-- Mining Fleet Lease Facility - $24.4 million
-- Hedge Facility = 174,500 oz remaining to be delivered at an average
price of $826/oz.
(1)All debt owing under the Macquarie Project Facility was fully repaid as of September 30, 2010, however, the Company remains under covenant restrictions pursuant to the gold hedging commitments.
Production Statistics
March December September June March
2012 2011 2011 2011 2011
Quarter Quarter Quarter Quarter Quarter
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Ore mined ('000t) 1,117 1,715 1,008 759 491
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Waste mined ('000t) 6,316 4,736 5,085 5,538 6,460
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Total mined ('000t) 7,433 6,451 6,093 6,297 6,951
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Strip ratio waste/ore 5.7 2.8 5.0 7.3 13.2
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Ore processed ('000t) 573 604 582 650 608
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Head grade (g/t) 2.52 2.10 1.64 1.81 1.93
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Gold recovery (%) 90.0 89.8 88.3 89.2 89.8
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Gold produced(1) (oz) 41,904 36,695 27,082 33,388 34,296
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Gold sold (oz) 35,268 34,665 27,574 35,407 39,490
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Average price received $/oz 1,712 1,482 1,174 1,083 1,199
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Total cash costs per
ounce sold(2) $/oz 673 809 928 802 639
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Notes:
(1) Gold produced is 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 with
industry standards.
Mine License ("ML") Exploration
Exploration results in 2011, as well as in the first quarter of 2012, support management's belief of the potential to expand upon existing gold mineralization by an additional 20 to 30 million tonnes at grades between 1.5 and 2.0 grams per tonne ("gpt") for a total inventory of 2.5 to 3.5 million ounces from the Company's 33km2 Sabodala ML over the next 9 to 15 months(2). This would increase the mine life to approximately 15 years at a production rate of about 200,000 ounces of gold produced annually and provide a solid production base to build on through the Regional Exploration Program(3).
The larger gold inventory base is expected to result from the success of deepening the Sabodala pit to the north along the Main Flat Extension ("MFE"), extension of the Masato pit onto the ML, and conversion of Niakafiri resources to reserves.
The aggressive investment in drilling during 2011 has resulted in significant advances in understanding the structural controls on gold mineralization on the ML. During the first quarter of 2012, Reverse Circulation ("RC") and Diamond drilling ("DD") on the ML totalled 25,000 metres at cost of $7.1 million. A minimum of 8 drill rigs are expected to be testing targets at an estimated cost of $20 million in 2012. There are 10 drills operating on the ML at the present time (8 DD and 2 RC) pending rig availability this number may be maintained in order to expedite reserve definition drilling and resource expansion in 2012.
Main Flat Extension ("MFE")
During the first quarter, 9,500 metres of drilling were completed at Sabodala primarily on the MFE but also testing down dip potential of the Main Flat to the west of the current ultimate pit limit; both areas have returned good results. The latest results from March quarter include:
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Hole ID From (metres) Intersection(ii)
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SBDH158D(i) 325 metres 12 m @ 7.5 g/t
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SBDH159D 141 metres 14 m @ 3.5 g/t
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SBDH161D(i) 365 metres 29 m @ 3.9 g/t
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SBDH162D 353 metres 11 m @ 4.1 g/t
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SBDH163(i) 64 metres 7 m @ 2.9 g/t
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123 metres 43 m @ 1.8 g/t
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177 metres 19 m @ 2.5 g/t
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SBDH219DD 544 metres 17 m @ 3.1 g/t
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SBDH222 384 metres 25 m @ 2.0 g/t
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457 metres 17 m @ 2.3 g/t
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SBDH172(i) 255 metres 29 m @ 1.4 g/t
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SBDH241 119 metres 43 m @ 2.4 g/t
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(i) Previously released
(ii) True widths to be determined
Masato
The objectives for Masato for 2012 include in-filling the 200 metre by 500 metre zone identified in the first pass 2011 drill program in preparation for a resource estimate, further definition drilling on the high-grade pod of gold mineralization located on the north end of the deposit, as well as, to locate the southern extension of Masato that strikes towards the ML. In the first quarter, 10,000 metres of drilling were completed at Masato. Assays are presently being compiled and geologic interpretation is in progress. Management expects that continued positive drilling results will lead to the defining of a resource at Masato on the ML in 2012.
Dinkokhono
In the first quarter, Dinkokhono, located 1 kilometre north of the Niakafiri deposit and 1 kilometre south of the Sambaya Hill anomaly on the Niakafiri shear system, received 600 metres of drilling. Previous drilling identified low-grade mineralization within the Niakafiri shear from surface to a depth of 100 metres. Re-interpretation of the Dinkokhono structural controls on gold mineralization and the discovery of the Mamasato deposit on the neighbouring property less than 1 kilometre to the east have contributed to a new approach to drilling this target. The program is expected to test for north-west and north-east high-grade crossing structures in known mineralized zones and is intended to test for the extension of the Mamasato deposit onto the Teranga ML. Pending results and given the total meterage already drilled historically, management believes that this program could potentially add resources in the third quarter of 2012 and possibly to open pit mineable reserves at year end.
Regional Exploration
There are currently 40 drill targets that have been identified on the Company's 1,465km2 Regional Land Package ("RLP"), all within trucking distance of the mill. All 40 targets are expected to be drill tested in 2012-2013. A further 20 targets have been evaluated with surface sampling or trenching.
During the first quarter, the Company completed approximately 31,500 metres of Rotary Air Blast ("RAB") drilling, 26,000 metres of RC and 2,400 metres of DD drilling. There were 4 drill rigs on the RLP during the first quarter. RC drilling during the quarter focused on Tourokhoto, Saiensoutou, Jam, KB and testing of IP anomalies at Gora. In addition, several RAB programs where completed. RLP exploration expenditures for the first quarter totalled $8.5 million (including $1.6 million for Gora). The exploration budget for the Regional Exploration Program is estimated at $20 million for 2012.
For full drill results from our regional exploration program please see the Company's website.
Toumboumba (Sabodala NW)
Toumboumba is a shear vein system hosted in the Falombou granite and has potential for a small, shallow, oxide deposit, located 10km to the north west of the Sabodala mill. The prospect consists of 18 close north-south to north north-east trending gold anomalous zones identified from RAB drilling during 2011.
Interpretation and geological modelling during the first quarter 2012 outlined potential for a modest, near surface oxide deposit on the main Toumboumba mineralised zone. In April 2012 a program of 10,000 metres of RC drilling on a nominal 25 metre by 25 metre grid pattern commenced. This program will evaluate the resource on the main south-western mineralized zone. A total of 35 holes for 3,200 metres have been completed. Samples from this program are being analysed. The drilling to date has confirmed the presence of a shallow east dipping system of stacked veins and alteration zones hosted within the Falombou granite. High grade mineralised intervals are well correlated to quartz veins, within envelopes of silica-albite-hematite-pyrite alteration. Numerous high grade mineralized intersections have been obtained. Grades of up to 4 metres at 33.9 gpt gold have been encountered in some holes. The Company is encouraged by these latest results and is looking forward to advancing this prospect.
Tourokhoto
An RC program at Tourokhoto was completed during the first quarter 2012. A total of 50 holes for 10,000 metres were completed during this period. The results received confirmed several zones of sub-parallel mineralisation with results of up to 2 metres at 4.5 gpt gold and wider zones at lower grade. A large number of samples are still pending analysis.
Saiensoutou
A program of 14 RC holes for a total of 2,800 metres were completed over the southern portion of this prospect. The best results obtained were:
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Hole ID From (metres) Intersection(i)
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SARC0006 49 metres 9 m @ 1.5 g/t
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SARC0001 42 metres 8 m @ 0.7 g/t
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(i) True widths to be determined
The northern part of the anomaly will undergo additional RAB drilling to better define the gold bearing structures responsible for the two kilometre trend of surface gold anomalism. This will likely lead to a second RC program later in the year.
Diegoun North ("the Donut")
Cinnamon
A program of 14 RC holes for 2,500 metres were completed testing gold anomalies identified in the bedrock by previous RAB drilling. Only some of the samples have been assayed, with one hole returning encouraging results at the greater than 0.2 gpt gold level:
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Hole ID From (metres) Intersection(i)
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DBRC0227 1 metre 5 m @ 0.6 g/t
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13 metres 10 m @ 0.3 g/t
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101 metres 10 m @ 0.5 g/t
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115 metres 8 m @ 1.9 g/t
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(i) True widths to be determined
The remainder of the results are expected to become available during the coming quarter.
Jam
A further 14 RC holes for 2,700 metres and nine DD holes for 2,100 metres were completed at Jam. This program was designed to test two north-west trending structures defined in this area as well as follow up on previous anomalous RC holes with hole orientations at different angles.
The intersections relate to albite-carbonate-silica-pyrite altered felsic intrusive rocks and it is evident from the work completed to date that the Jam area is a large scale, gold-bearing, hydrothermal alteration system.
An additional 13,000 metres of RAB drilling have been completed in the Jam area. This work was designed to complete coverage over the main north east trending structural trends between Cinnamon and Jam (JC corridor) and on a second grid with north-east south-west oriented lines, to better evaluate the presence of mineralisation on north-west trends. The Company awaits final assay results for all drilling to date, to define the next step in the program.
KB
Also on the Sounkounkou permit, 8 RC holes were drilled for 1,200 metres to complete the first pass testing of the gold mineralised structure defined by RAB and trenching along the contact of a sheared gabbro and metasediments. Assays from this program are pending.
For full drill results from our ML and Regional exploration program please see the Company's website.
Corporate Directory
Directors
Alan Hill, Chairman and CEO
Richard Young, President and CFO
Christopher Lattanzi, Non-Executive Director
Oliver Lennox-King, Non-Executive Director
Alan Thomas, Non-Executive Director
Frank Wheatley, Non-Executive Director
Senior Management
Alan Hill, Chairman and CEO
Richard Young, President and CFO
Yani Roditis, Vice President, Operations
Kathy Sipos, Vice President, Investor & Stakeholder Relations
David Savarie, Vice President, General Counsel & Corporate Secretary
Macoumba Diop, General Manager & Government Relations Manager, SGO
Mark English, Operations Manager, SGO
Martin Pawlitschek, Regional Exploration Manager, SMC
Bruce Van Brunt, Business Development Manager, SGO
Registered Office
121 King Street West, Suite 2600
Toronto, Ontario, M5H 3T9, Canada
T: +1 416-594-0000
F: +1 416-594-0088
E: generalmailbox@terangagold.com
W: http://www.terangagold.com/
Senegal Office
2K Plaza
Allees Meridient President
Almadies
BP 38385
Dakar Yoff Senegal
T: +221 338 693 181 F: +221 338 603 683
Auditor
Deloitte &Touche LLP
Share Registries
Canada: Computershare Trust Company of Canada
T: +1 800 564 6253
Australia: Computershare Investor Services Pty Ltd
T: 1 300 850 505
Stock Exchange Listings
Toronto Stock Exchange, TSX code: TGZ
Australian Securities Exchange, ASX code: TGZ
Issued Capital
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Issued shares 245,618,000
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Stock options 19,208,334
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Stock Options - Exercise Profile
---------------------------------
Exercise Price (C$) Options
---------------------------------
$3.00 19,208,334
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About TERANGA
Teranga Gold Corporation is a Canadian-based gold company listed on the Toronto Stock Exchange (TSX: TGZ) and Australian Securities Exchange (ASX: TGZ). Teranga is principally engaged in the production and sale of gold, as well as related activities such as exploration and mine development.
Teranga was created to acquire the Sabodala gold mine and a large regional exploration land package, located in Senegal, West Africa, within the West African Birimian geological belt. Management believes the mine operation, together with the Company's prospective 1,488 km2 land package, provides the basis for growth in reserves, production, earnings and cash flow as new discoveries are made and processed through the Company's existing mill. The Company is focused on growth - growth in reserves, growth in production - while building a strong balance sheet to facilitate its actions.
Forward Looking Statements
Certain information contained in this report, including any information on Teranga's plans or anticipated future results, future financial or operating performance and other statements that express management's expectations or estimates of future performance constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Teranga cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Teranga to be materially different from the company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration, development and operations of mineral properties, changes in economic conditions, changes in the worldwide price of gold, silver, fuel, electricity and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Teranga.
Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities.
Competent Persons Statement
The technical information in this quarterly report that relates to mineral resource estimates within the Mining License is based on information compiled by Mr. Bruce Van Brunt, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr. Van Brunt is a full time employee of Teranga and not independent. Mr. Van Brunt has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a "Competent Person" as defined in the 2004 Edition of the "Australian Code of Reporting of exploration Results, Mineral Resources and Ore Reserves". Mr. Van Brunt is a "Qualified Person" in accordance with National Instrument 43-101 and he consents to the inclusion of this information in the form and context in which it appears in this announcement.
The technical information in this quarterly report that relates to the exploration results and targets within the regional exploration program are based on information compiled by Mr. Martin Pawlitschek, who is a member of the Australian Institute of Geoscientists. Mr. Pawlitschek is our full time employee and is not "independent" within the meaning of National Instrument 43-101. Mr. Pawlitschek has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify 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 of this information in the form and context in which it appears in this offering memorandum.
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(2) While management has confidence in its production projections based on
exploration work completed to date, this exploration target is not a
Mineral Resource. The potential quality and grade is conceptual in
nature and there has been insufficient exploration to define a Mineral
Resource. It is uncertain if further exploration will result in the
determination of a Mineral Resource.
(3) This exploration/production target is not a Mineral Resource. The
potential quality and grade is conceptual in nature and there has been
insufficient exploration to define a Mineral Resource. It is uncertain
if further exploration will result in the determination of a Mineral
Resource. Reaching this level of production is based on achieving
success associated with the exploration target set out above and
reflects existing mill capacity as well as Management's confidence in
upside potential of exploration results on the ML based on drilling
results to date.
Contacts:
Teranga Gold Corporation
Kathy Sipos
Vice-President of Investor & Stakeholder Relations
+1 416-594-0000
ksipos@terangagold.com
www.terangagold.com