Q2 & H1 2019 Highlights TSX:TGZ / OTCQX:TGCDF August 1 ...Aug 01, 2019 · Q2 Highlights Field...

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


$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


Q2 H1

15

$47.4

$22.5

Q2 2018 Q2 2019

EBITDA*($ millions)


$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


• $8.3M loss from gold derivative instruments



Q2 Net Profit (Loss) Attributable to Shareholders & EPS

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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


50%Decrease

54%Decrease



• $7.3M losses from gold derivative instruments

• $2.4M accretion expense


• $0.9M impact of foreign exchange on

deferred taxes


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



• $8.3M losses from derivative instruments

• $5.0M accretion expense


• $0.4M impact of foreign exchange on

deferred taxes


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

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$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

• 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


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

E: [email protected]

W: terangagold.com

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Q2 & H1 2019 Highlights TSX:TGZ / OTCQX:TGCDF August 1 ...Aug 01, 2019 · Q2 Highlights Field...

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