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Q2 & H1 2019 Highlights
August 1, 2019TSX:TGZ / OTCQX:TGCDF
Building a
Multi-Asset Mid-Tier
West African Gold Producer
2
Forward-Looking Statements
All information included in this presentation, including any information as to Teranga’s future financial or operating performance and other statements that express management’s
expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of
applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing
information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”,
“potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”,
“will”, or are "likely" to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information.
Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
Although the forward-looking statements contained herein reflect management's current beliefs and reasonable assumptions based upon information available to management as
of the date hereof, Teranga cannot be certain that actual results will be consistent with such forward-looking information. Such assumptions include, among others, the ability to
obtain any requisite governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic
conditions, anticipated future estimates of free cash flow, and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements.
The risks and uncertainties that may affect forward-looking statements include, among others, the inherent risks involved in exploration and development of mineral properties,
including government approvals and permitting, changes in economic conditions, changes in the worldwide price of gold 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. For a more comprehensive discussion of the risks faced by Teranga, and which may
cause the actual financial results, performance or achievements of Teranga to be materially different from estimated future results, performance or achievements expressed or
implied by forward-looking information or forward-looking statements, please refer to Teranga’s latest Annual Information Form filed with Canadian securities regulatory authorities
at www.sedar.com or on Teranga’s website at www.terangagold.com. The risks described in the Annual Information Form (filed and viewable on www.sedar.com and on
Teranga’s website at www.terangagold.com) are hereby incorporated by reference herein. Teranga disclaims any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell
or a solicitation to buy or sell Teranga securities.
All references to Teranga 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” and similar words. All dollar amounts stated are denominated in U.S. dollars unless specified otherwise.
Richard YoungPresident & CEO
4
SabodalaGold Mine(Senegal)
WahgnionGold Mine(Burkina Faso)
Golden HillProject(Burkina Faso)
Miminvest &Afema JVs(Côte d’Ivoire)
Exploration & Resource Conversion
Increasing Production, EBITDA, Earnings & Cash Flow
Growth Pipeline
4
Annual production of 300-350koz Moving to feasibility
Paul ChawrunChief Operating Officer
Production(oz Au)
Tracking FY2019 Guidance for Sabodala With Record H1 Production
6
129,412 135,382
H1 2018 H1 2019 FY2019Sabodala Guidance
65,381 63,436
Q2 2018 Q2 2019
215,000 – 230, 000
ounces Au
7
Solid Operational Quarter
Niakafiri
GoloumaWest
Sabodala Phase 4
Kerekounda
Plant
Haul Road
Mineral Resources
Golouma Style High Grade Gold Trend
Masato Style Bulk Tonnage Gold Trend
Mining Concession
Exploration Permit
….
Mining
Moved 7 million tonnes of material
Material movement negatively affected by
performance of production drill fleet
Tonnes mined to return to budgeted rate for
H2 2019
Milling
Processed more than one million tonnes – a
7% increase
Gold recovery rate of 91%
Head grade of 2.01 g/t Au, a 7% decrease
versus Q2 2018 due to mining the high-grade
Gora deposit
Sabodala
Gold Mine
Senegal, West Africa
Mine License: 291 km2
Gora
(completed)
8
Grade Mined
Q2
Actual
FY
Guidance
2019 2.77 g/t 1.50 g/t – 2.00 g/t
Positive Grade Reconciliation to Reserves Continues
$12.25 $11.50
H1 2018 H1 2019
Unit Costs For FY 2019 Expected to be Within or Below Guidance Ranges
9
$2.81 $2.86
H1 2018 H1 2019
$2.83 $3.18
Q2 2018 Q2 2019
$629$679
Q2 2018 Q2 2019
$13.02$11.47
Q2 2018 Q2 2019
Mining Costs ($/t mined) Milling Costs ($/t milled)2019 Guidance: $2.50 - $2.75
Total Cash Costs* ($/oz Au)
2019 Guidance: $12 - $13 2019 Guidance: $725 - $775
*Refer to Appendix – Non-IFRS Performance Measures
$644 $651
H1 2018 H1 2019
12% Increase
2% Increase
12% Decrease
6% Decrease
8% Increase
1% Increase
10Reclaim Crusher Chute Overview, July 2019
Commissioning Underway at Wahgnion:
Project On Schedule & On Budget
5 million hours worked without a lost time injury
~91% of total commitment value spent to-date (excluding capitalized pre-operating costs)
Plant construction on schedule with virtually all facets complete
Commenced first phase of plant commissioning and operations handover late Q2
SAG and ball mill installation tests successfully complete
First two resettlement sites complete with successful relocation of families
MILL COMMISSIONING AND EVENTUAL FIRST POUR EXPECTED IN Q3 2019
For full details on Golden Hill, please visit www.terangagold.com
Golden Hill: Moving Towards a PEA
11
Geology
Tarkwaian Type Sediments
Volcano Sediments
Mixed Volcano Sediments & Volcanics
Basalt
Grantoid
Batholith
Golden Hill
Burkina Faso, West AfricaExploration licenses:468 km2
Q2 Highlights
Field activities included prospecting, geological structural mapping
and grid-based soil sampling (4,500 samples), with the goal of
identifying new exploration targets worthy of second stage evaluation
Auger drilling (235 holes for 880 m), excavator trenching (8 trenches
for 630 m), and limited core drilling (25 short holes for 1,671 m)
program completed late Q2
Magnetic and radio magnetic airborne geophysical survey completed
with encouraging data imagery worthy of follow-up evaluation
Extensive 27,000-metre RC & DD Drilling Program Planned for H2
11 separate drill targets identified for inclusion in this drilling
evaluation program, including 5 with no previous drilling
Additional 15,000 metres of auger drilling and
10,000 metres of excavator trenching planned
Focused on identifying additional structural trends
that could add resources
H2 2019 budget of at least $5 million
Navin DyalChief Financial Officer
Revenue
($ millions)
Ounces Sold Drive Lower Revenue in Q2 and Higher Revenue in H1
Three months ended June 30 Six months ended June 30
2019 2018 % Change Per ounce 2019 2018 % Change
$1,302 $1,301 0% Average realized gold price* $1,305 $1,313 (1%)
$1,309 $1,306 0% Average spot gold price $1,307 $1,318 (1%)
$1,270 $1,250 2% Low $1,270 $1,250 2%
$1,431 $1,351 6% High $1,431 $1,355 6%
$86.1$83.6
Q2 2018 Q2 2019
*Refer to Appendix – Non-IFRS Performance Measures
$172.3 $175.7
H1 2018 H1 2019
2% Increase
3%Decrease
13
Per Ounce Costs Well on Track to Meet Full Year Guidance
14
$/oz Au \ sold2019 2018 2019 2018
2019 Consolidated
Guidance (Except for Cash Costs)
Cost of sales $1,016 $906 $959 $909 $1,050 - $1,125
Total cash costs* (Sabodala only) $679 $629 $651 $644 $725 - $775
All-in sustaining costs* $939 $883 $956 $920 $1,000 - $1,100
Non-cash inventory movements
and amortized advanced royalty costs ($68) ($37) ($119) (53) ($100)
All-in sustaining costs (excluding non-cash
inventory movements and amortized
advanced royalty costs)*
$870 $847 $837 $867 $900 - $1,000
*Refer to Appendix – Non-IFRS Performance Measures
Q2 H1
15
$47.4
$22.5
Q2 2018 Q2 2019
EBITDA*($ millions)
*Refer to Appendix – Non-IFRS Performance Measures
$74.4
$61.6
H1 2018 H1 2019
EBITDA* Lower YoY Despite Sabodala’s Solid Operating Performance
17%Decrease
53% Decrease
$37.0$31.6
Q2 2018 Q2 2019
Adjusted EBITDA*($ millions)
$69.2 $71.7
H1 2018 H1 2019
4%Increase
14% DecreaseAdjusting for items not reflective
of underlying performance:
• $7.3M loss from gold derivative instruments
• $0.6M net foreign exchange losses
• $1.2M non-cash fair value changes
Adjusting for items not reflective
of underlying performance:
• $8.3M loss from gold derivative instruments
• $1.4M net foreign exchange losses
• $0.5M non-cash fair value changes
Q2 Net Profit (Loss) Attributable to Shareholders & EPS
16
Net Profit (Loss) Attributable to Shareholders($ millions)
$6.2
$2.9
Q2 2018 Q2 2019
Earnings per Share
(basic)
$0.06
$0.03
Q2 2018 Q2 2019
Adjusted Net Profit Attributable to Shareholders*($ millions)
Adjusted Earnings per Share*
(basic)
$11.6
($7.6)
Q2 2018 Q2 2019
$0.11
($0.07)
Q2 2018 Q2 2019
*Refer to Appendix – Non-IFRS Performance Measures
50%Decrease
54%Decrease
Adjusting for items not reflective
of underlying performance:
• $7.3M losses from gold derivative instruments
• $2.4M accretion expense
• $0.5M net foreign exchange losses
• $0.9M impact of foreign exchange on
deferred taxes
• $1.2M non-cash fair value changes
H1 Net Profit (Loss) Attributable to Shareholders & EPS
17
$16.1
$5.1
H1 2018 H1 2019
$0.15
$0.05
H1 2018 H1 2019
$14.6
($10.3)
H1 2018 H1 2019
$0.14
($0.10)
H1 2018 H1 2019*Refer to Appendix – Non-IFRS Performance Measures
Adjusting for items not reflective
of underlying performance:
• $8.3M losses from derivative instruments
• $5.0M accretion expense
• $1.2M net foreign exchange losses
• $0.4M impact of foreign exchange on
deferred taxes
• $0.5M non-cash fair value changes
Net Profit (Loss) Attributable to Shareholders($ millions)
Earnings per Share (Basic)
Adjusted Net Profit Attributable to Shareholders*($ millions)
Adjusted Earnings per Share* (Basic)
68% Decrease
67% Decrease
Operating Cash Flows Benefit From Advanced Gold Sales
18
$19.2 $19.3
Q2 2018 Q2 2019
$32.9
$68.9
H1 2018 H1 2019
$26.1
$19.3
Q2 2018 Q2 2019
$51.0$45.6
H1 2018 H1 2019
Operating Cash Flow Before Changes
in Working Capital Excluding Inventories($ millions)
Net Cash Provided by Operating Activities
($ millions)
109% Increase
11% Decrease
26%Decrease
Liquidity
19
As at June 30, 2019
Cash & Cash Equivalents$41.4M
Wahgnion Debt FacilityTotal drawdown: $136.8M
Remaining balance: $28.2M
Golden Hill Debt FacilityTotal drawdown: $24M
Remaining balance: $11M
Equipment FacilityTotal drawdown: $6.8M (incl. $0.4M repayment)
Remaining balance: $5.3M
WGO project capital spend
as at June 30, 2019
$207M
Q&A
• Complete project on
time and within budget
• Achieve 2019
production (30,000 to
40,000 ounces(1)) &
cost guidance
• Achieve positive free
cash flow*
• Achieve 2019
production (215,000 to
230,000 ounces(2)) &
cost guidance
• Deliver strong free
cash flows* to support
growth initiatives
• Advance resettlement
and livelihood
restoration program
related to Niakafiri
deposit towards
completion in H1 2020
21
• Undertake 27,000-
metre drilling and
exploration program
in H2
• Advance engineering,
environmental and
social work to support
the preliminary
economic
assessment required
for a mine license
application in 2020
• Validate and increase
the Afema historical
resource
• Continue exploring
Miminvest properties
2019 Milestones & Goals
Refer to Endnotes (1) and (2) in the Appendix
*Refer to Appendix – Non-IFRS Performance Measures
Appendix
Qualified Persons Statement
23
The technical information contained in this document relating to the Sabodala and Wahgnion open pit mineral reserve estimates is based on, and fairly represents, information compiled by Mr.
Stephen Ling, P. Eng who is a member of the Professional Engineers Ontario. Mr. Ling is a full time employee of Teranga and is not "independent" within the meaning of NI 43-101. Mr. Ling 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 to qualify as a "Qualified Person" under NI 43-
101 Standards of Disclosure for Mineral Projects. Mr. Ling has consented to the inclusion in this document of the matters based on his compiled information in the form and context in which it
appears in this document.
The technical information contained in this document relating to mineral resource estimates is based on, and fairly represents, information compiled by Ms. Patti Nakai-Lajoie. Ms. Nakai-Lajoie, P.
Geo., is a Member of the Association of Professional Geoscientists of Ontario. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of NI 43-101. Ms.
Nakai-Lajoie has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a "Qualified
Person" under NI 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this document of the matters based on her compiled information in the
form and context in which it appears in this document.
The technical information contained in this document relating to the Sabodala underground ore reserves estimates is based on, and fairly represents, information compiled by Jeff Sepp, P. Eng., of
Roscoe Postle Associates Inc. (“RPA”), who is a member of the Professional Engineers Ontario. Mr. Sepp is “independent” within the meaning of NI 43-101. Mr. Sepp has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a “Qualified Person” under NI 43-101 Standards of Disclosure
for Mineral Projects. Mr. Sepp has consented to the inclusion in this document of the matters based on his compiled information in the form and context in which it appears in this document.
Teranga's exploration programs were managed by Peter Mann, FAusIMM. Mr. Mann was a full time employee of Teranga, during the period of this resource update and is not "independent" within
the meaning of NI 43-101. Mr. Mann 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 to
qualify as a “Qualified Person” as under NI 43-101 Standards of Disclosure for Mineral Projects. The technical information contained in this document relating to exploration results are based on,
and fairly represents, information compiled by Mr. Mann. Mr. Mann has verified and approved the data disclosed in this release, including the sampling, analytical and test data underlying the
information. The RC and diamond core samples are assayed in the BIGS Global Laboratory in Ouagadougou, Burkina Faso. Mr. Mann has consented to the inclusion in this document of the
matters based on his compiled information in the form and context in which it appears in this document.
Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the
"CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). There can be no assurance that
those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.
Teranga confirms that it is not aware of any new information or data that materially affects the information included in the technical reports for the Sabodala Project (August 30, 2017) and the
Wahgnion Project (October 31, 2018) pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects (the “Technical Reports”), or second quarter 2019 results, market
announcements and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements
concerning the Technical Reports continue to apply and have not materially changed.
24
Non-IFRS Performance MeasuresThe Company provides some non-IFRS financial measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results. Beginning in the second quarter of 2013, we adopted an “all-in sustaining costs” measure consistent with the guidance
issued by the World Gold Council (“WGC”) on June 27, 2013, of which Teranga became a member on November 27, 2018. The Company believes that the use of all-in sustaining costs is helpful to analysts, investors and other stakeholders of the Company in assessing its operating performance, its ability to
generate free cash flow from current operations and its overall value. This measure is helpful to governments and local communities in understanding the economics of gold mining. The “all-in sustaining costs” is an extension of existing “cash cost” metrics and incorporate costs related to sustaining production.
“Total cash cost per ounce sold” is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. The Company reports total cash costs on a sales basis. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure, along
with sales, is considered to be a key indicator of a Company’s ability to generate operating profits and cash flow from its mining operations. Total cash costs figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold
products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is considered the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be
comparable to other similarly titled measure of other companies.
The WGC definition of all-in sustaining costs seeks to extend the definition of total cash costs by adding corporate general and administrative costs, reclamation and remediation costs (including accretion and amortization), exploration and study costs (capital and expensed), capitalized stripping costs and
sustaining capital expenditures and represents the total costs of producing gold from current operations. All-in sustaining costs exclude income tax payments, interest costs, costs related to business acquisitions and items needed to normalize profits. Consequently, this measure is not representative of all of the
Company’s cash expenditures. In addition, the calculation of all-in sustaining costs and all- in costs does not include depreciation expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company’s overall profitability. The Company also expands
upon the WGC definition of all-in sustaining costs by presenting an additional measure of “All-in sustaining costs (excluding non-cash inventory movements and amortized advanced royalty costs)”. This measure excludes cash and non-cash inventory movements and amortized advanced royalty costs which
management does not believe to be true cash costs and are not fully indicative of performance for the period.
“Total cash costs per ounce”, “all-in sustaining costs per ounce” and “all-in sustaining costs (excluding non-cash inventory movements and amortized advanced royalty costs)” are intended to provide additional information only and do not have any standardized definition under IFRS and should
not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.
“Average realized price” is a non-IFRS financial measure. Management uses this measure to better understand the price realized in each reporting period for gold and silver sales. Average realized price is calculated on revenue and ounces sold to all customers, except Franco-Nevada, as gold ounces sold to
Franco-Nevada is recognized in revenue at 20 percent of the prevailing gold spot price on the date of delivery and 80 percent at $1,250 per ounce. The average realized price is intended to provide additional information only and does not have any standardized definition under IFRS; it should not be considered
in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate this measure differently.
EBITDA is a non-IFRS financial measure, which excludes income tax and related expenses, finance costs (including accretion expense), interest income and depreciation and amortization from net (loss)/profit for the period. In 2019, Teranga amended the definition of EBITDA to exclude accretion expense to
improve comparability of this non-IFRS financial measure with its peers. The comparative 2018 EBITDA has been restated to conform to the new presentation. EBITDA is intended to provide additional information to investors and analysts and do not have any standardized definition under IFRS and should not
be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Management believes that EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow to: fund working capital needs, service debt obligations and fund capital
expenditures. Beginning second quarter 2019, the Company adopted adjusted EBITDA as a new non-IFRS financial measure. Management believes that adjusted EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow to: fund working capital needs, service debt
obligations and fund capital expenditures, after adjusting for factors not reflective of the underlying performance of the Company. Adjusted EBITDA is intended to provide additional information to investors and analysts and do not have any standardized definition under IFRS and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company calculates adjusted EBITDA as EBITDA adjusted to exclude unrealized and realized foreign exchange gains and losses, gains and losses on derivative instruments, non-cash fair value changes,
impairment provisions and reversals thereof, and other unusual or non-recurring items.
“Free cash flow” is a non-IFRS financial measure. The Company calculates free cash flow as net cash flow provided by operating activities less sustaining capital expenditures. The Company believes this to be a useful indicator of our ability generate cash for growth initiatives. Other companies may calculate
this measure differently.
"Adjusted net profit attributable to shareholders” and “adjusted basic earnings per share” are financial measures with no standard meaning under IFRS. These non-IFRS financial measures are used by management and investors to measure the underlying operating performance of the Company.
Presenting these measures from period to period is expected to help management and investors evaluate earnings trends more readily in comparison with results from prior periods. The Company calculates “adjusted net profit attributable to shareholders” as net (loss)/profit for the period attributable to
shareholders adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: the impact of unrealized and realized foreign exchange gains and losses, gains and losses on derivative instruments, accretion expense on long-term obligations, the
impact of foreign exchange movements on deferred taxes, non-cash fair value changes, impairment provisions and reversals thereof, and other unusual or non- recurring items.
“Adjusted basic earnings per share” is calculated using the weighted average number of shares outstanding under the basic method of earnings per share as determined under IFRS.
For more information and the reconciliation of these measures, please refer to the Company’s latest management’s discussion and analysis accessible on the Company’s website at www.terangagold.com.
Endnotes
25
1. This production target is based on proven and probable ore reserves only for Teranga’s Wahgnion Project as at May 31, 2018. For more information regarding the Wahgnion’s
Mineral Reserves and Resources and related notes, please refer to the NI 43-101 compliant technical report for the Wahgnion Gold Operations dated October 31, 2018 available on
the Company’s website at www.terangagold.com and SEDAR at www.sedar.com.
2. This production target is based on proven and probable reserves only from Teranga’s Sabodala Project as at December 30, 2018. For more information regarding Sabodala’s
Mineral Reserves and Resources and related notes, please refer to the amended and restated annual information form for the year ended December 31, 2018 accessible on the
Company’s website at www.terangagold.com and SEDAR at www.sedar.com.
Trish Moran
Vice President, Investor Relations &
Corporate Communications
77 King Street West, Suite 2110
Toronto, ON M5K 1A2
T: +1.416.607.4507
W: terangagold.com
TSX:TGZ / OTCQX: TGCDF