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Teranga Gold Corporation: September Quarter Report

Oct 30, 2014

 

TORONTO, ONTARIO--(Marketwired - Oct. 30, 2014) - Teranga Gold Corporation (TSX:TGZ)(ASX:TGZ) -

(All amounts are in US$000's unless otherwise stated)

For a full explanation of Financial, Operating, Exploration and Development results please see the Interim Condensed Consolidated Financial Statements as at and for the period ended September 30, 2014 and the associated Management's Discussion & Analysis at www.terangagold.com.

  • Gold revenue for the three months ended September 30, 2014 increased 12 percent to $56.7 million compared to the same prior year period, gold sales increased 18 percent to 44,573 ounces of gold.

  • Gold production for the three months ended September 30, 2014 increased 32 percent to 48,598 ounces of gold compared to the same prior year period.

  • Total cash costs were $781 per ounce sold1 and all-in sustaining costs were $954 per ounce sold1 for the three months ended September 30, 2014.

  • Based on year to date production, and the deferral at Sabodala of approximately 10,300 ounces (87,000 tonnes at over 3.5 gpt) into 2015, the Company is lowering its 2014 annual production guidance by about 5,000 ounces to approximately 215,000 ounces2. Total cash costs are now expected to average about $725 per ounce, and all-in sustaining costs are expected to average about $900 per ounce, both $25 per ounce higher than the top end of the original guidance ranges1.

  • The Company expects a strong fourth quarter with higher production of about 75,000 ounces and lower costs resulting from higher grades mined at Sabodala and from higher production from Masato.

  • Consolidated profit attributable to shareholders for the third quarter of 2014 was $2.4 million ($0.01 per share), compared to a consolidated loss of $0.4 million ($0.00 loss per share) in the same prior year period.

  • Mining of the Masato deposit commenced on schedule during the third quarter of 2014, the first of the Oromin Joint Venture Group ("OJVG") deposits to be mined.

  • Infill drilling results from the Masato high grade zone confirm interpretation of the resource model and provide additional confidence in the nature of high-grade mineralization.

  • Technical analysis on mill optimization was completed during the quarter, showing an expected increase of 5 to 10 percent in throughput.

  • Preliminary heap leach test results during the quarter are in line with Company's initial expectations, with potential to contribute between 10 and 20 percent of annual production.

  • Cash balance at September 30, 2014 was $28.0 million, including restricted cash.

  • The Company remains on track to retire the balance of the debt facility outstanding by December 31, 2014.

  • Exploration programs are expected to ramp up in the fourth quarter after the rainy season to follow up on encouraging results on both the mine license and regional land package.

  • Optimization of the 2015 mine plan is expected to result in an improvement of $40 to $60 million compared to the technical report filed in the first quarter of the year.
1 Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce are prior to an inventory write-down to net realizable value. Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS Financial Measures at the end of this report.
2 This production target is based on existing proven and probable reserves only from both the Sabodala mining license and OJVG mining license as disclosed in the Company's Management's Discussion and Analysis for the year ended December 31, 2013. The estimated ore reserves underpinning this production guidance have been prepared by competent persons in accordance with the requirements of the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code"). This production guidance also assumes an amendment to OJVG mining license to reflect processing of OJVG ore through the Sabodala mill. See competent persons statement at the end of this report.

"We expect to finish the year on a strong note with higher fourth quarter production of about 75,000 ounces and lower costs allowing us to meet one of our key objectives which is to be debt free by year end. The optimization of the 2015 mine plan completed during the quarter is expected to improve our 2015 cash flow by $40 to $60 million, which should allow us to build up our cash balances," said Richard Young , President and CEO. "Overall, operationally, things are running well, and] we are very pleased to have started mining Masato on schedule as having multiple pits will provide us with greater operating flexibility. We are also making very positive strides on our growth initiatives which we believe will add significant value."

Review of Financial Results
(US$000's, except where indicated) Three months ended September 30 Nine months ended September 30
Financial Data 2014 2013 2014 2013
Revenue 56,711 50,564 184,035 239,625
Profit (loss) attributable to shareholders of Teranga 2,422 (442 ) (5,639 ) 51,737
Per share 0.01 (0.00 ) (0.02 ) 0.20
Operating cash flow 13,822 16,692 18,332 61,170
Capital expenditures 5,252 17,165 14,808 65,331
Free cash flow1 8,570 (473 ) 3,524 (4,161 )
Cash and cash equivalents (including bullion receivables and restricted cash) 28,025 36,156 28,025 36,156
Net cash (debt)2 6,726 (40,283 ) 6,726 (40,283 )
Total assets 709,423 617,495 709,423 617,495
Total non-current liabilities 127,102 69,333 127,102 69,333
Note: Results include the consolidation of 100% of the OJVG's operating results, cash flows and net assets from January 15, 2014.
1 Free cash flow is defined as operating cash flow less capital expenditures.
2 Net cash (debt) is defined as total borrowings and financial derivative liabilities less cash and cash equivalents, bullion receivables and restricted cash.
Review of Operating Results
Three months ended September 30 Nine months ended September 30
Operating Results 2014 2013 2014 2013
Ore mined ('000t) 1,272 537 3,508 2,548
Waste mined - operating ('000t) 4,201 3,321 15,585 8,518
Waste mined - capitalized ('000t) 524 4,853 1,479 14,645
Total mined ('000t) 5,997 8,711 20,572 25,711
Grade mined (g/t) 1.71 1.08 1.58 1.63
Ounces mined (oz) 69,805 18,721 178,858 133,378
Strip ratio waste/ore 3.7 15.2 4.9 9.1
Ore milled ('000t) 903 887 2,613 2,292
Head grade (g/t) 1.89 1.41 1.87 2.28
Recovery rate % 88.5 91.6 89.4 92.0
Gold produced 1 (oz) 48,598 36,874 140,545 154,836
Gold sold (oz) 44,573 37,665 142,625 161,845
Average realized price $/oz 1,269 1,339 1,286 1,245
Total cash cost (incl. royalties) 2 $/oz sold 781 748 760 621
All-in sustaining costs 2 $/oz sold 954 1,289 934 1,086
Mining ($/t mined) 3.12 2.48 2.93 2.57
Milling ($/t milled) 15.96 17.56 18.39 20.97
G&A ($/t milled) 4.46 4.60 4.74 5.59
1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.
2 Total cash costs per ounce and all-in sustaining costs per ounce are prior to non-cash inventory write-downs to net realizable value and are non-IFRS financial measures that do not have a standard meaning under IFRS. Please refer to Non-IFRS Performance Measures at the end of this report.
Three months ended September 30, 2014 Masato Sabodala Total
Ore mined ('000t) 215 1,057 1,272
Waste mined ('000t) 603 4,122 4,725
Total mined ('000t) 818 5,179 5,997
Grade mined (g/t) 1.18 1.81 1.71
Ounces mined (oz) 8,142 61,663 69,805
Review of Cost of Sales
(US$000's) Three months ended September 30 Nine months ended September 30
Cost of Sales 2014 2013 2014 2013
Mine production costs - gross 37,230 39,265 121,287 127,197
Capitalized deferred stripping (1,749 ) (13,327 ) (4,710 ) (41,820 )
35,481 25,938 116,577 85,377
Depreciation and amortization - deferred stripping assets 6,915 1,966 19,385 5,780
Depreciation and amortization - property, plant & equipment and mine development expenditures 9,310 11,596 28,617 45,420
Royalties 2,789 2,507 8,692 11,865
Rehabilitation - 4 - 6
Inventory movements (3,346 ) (2,247 ) (16,343 ) 3,393
Inventory movements - non-cash (2,805 ) (2,393 ) (4,486 ) (5,863 )
Total cost of sales before write-down to net realizable value 48,344 37,371 152,442 145,978
(Reversal) write-down to net realizable value (250 ) - 8,861 -
(Reversal) write-down to net realizable value - depreciation (121 ) - 4,191 -
(371 ) - 13,052 -
Total cost of sales 47,973 37,371 165,494 145,978

OPERATIONAL HIGHLIGHTS

  • Gold production for the quarter was higher than the same prior year quarter, but weaker than expected. The Company experienced about a 5,000 ounce discrepancy between predicted gold production based on the daily production report assays and reconciled gold poured and gold in circuit production at quarter end. Management is investigating the source of the discrepancy. Based on an initial assessment, it would appear that there is a bias in the assays by the independent lab on site that began in the third quarter and further investigation is underway. In addition, Management is reviewing the impact that processing Masato material may have had on moisture content and gold in circuit which independently or in combination could account for this discrepancy.

  • Total cash costs per ounce for the quarter, excluding the reversal of non-cash inventory write-downs to net realized value ("NRV"), were marginally higher than the same prior year quarter mainly due to lower capitalized deferred stripping, partly offset by higher gold production.

  • All-in sustaining costs for the quarter, excluding the reversal of non-cash inventory write-downs to NRV, were 26 percent lower than the same prior year quarter due to lower capital expenditures in the current year period.

  • Total tonnes mined for the quarter were 31 percent lower compared to the same prior year quarter as mining activities were mainly focused on the lower benches of phase 3 of the Sabodala pit which has an overall reduced stripping ratio. During the current quarter, mining began on schedule at Masato, the first of the OJVG deposits to be developed, with over 800,000 tonnes mined.

  • Steps taken to improve grade control in the quarter included hiring a new mine manager, additional leadership in the production geology department, improved blast hole sampling and statistical controls, increased Reverse Circulation ("RC") infill drilling and reducing to 5 metre benches when necessary. As a result of these steps taken, mine performance significantly improved compared to the second quarter. Overall high-grade ounces mined during the quarter were greater than the reserve model predicted, however the average grade of this ore mined, which was modeled at approximately 3.5 gpt was about 2.8 gpt, and impacted production for the quarter.

  • Mining for the balance of the year is taking place in the high grade areas of the Sabodala pit and the upper benches of Masato. Access to the lowest benches of Phase 3 Sabodala which were originally scheduled for mining during the fourth quarter, have been deferred into 2015 due to bench access constraints. In total, approximately 10,300 high-grade ounces (87,000 tonnes at over 3.5 gpt) originally part of the 2014 mine plan are now expected to be mined and processed during first quarter 2015. As a result of this deferral, gold production will be impacted by about an approximately net 8,000 ounces for the year as this high-grade material is displaced by low-grade feed to the mill.

  • Total tonnes mined are expected to increase in the fourth quarter to over 9 million tonnes, with approximately two thirds mined from Masato and the remainder from Sabodala. The change in the mine plan at Masato is due to better grade and tonnage than originally expected combined with fewer ore tonnes mined at Sabodala due to the access constraints anticipated on the lower benches of Phase 3. Overall for the year, total material moved is expected to increase from 26 million tonnes to almost 30 million tonnes.

  • Total mining costs for the quarter were 13 percent lower than the same prior year quarter due to decreased material movement and lower costs for light fuel oil (LFO) from lower market fuel prices. However unit mining costs for the quarter were 26 percent higher due to fewer tonnes mined. The higher unit costs in 2014 are due to the fact mining is mainly concentrated on the lower benches of phase 3 of the Sabodala pit with limited space resulting in lower productivity.

  • Ore tonnes milled for the quarter were marginally higher than the same prior year quarter due to the introduction of softer oxide ore from Masato in the second half of September. Ore tonnes milled are expected to increase in the fourth quarter to over 1 million tonnes mainly as a result of blending the softer, finer oxide ore from Masato with harder Sabodala ore to achieve higher mill throughput. No major downtime is scheduled for the balance of the year.

  • Processed grade for the quarter was 34 percent higher than the same prior year quarter mainly due to higher ore grades mined but was lower than planned as described earlier. The reported grade mined may also be understated if the reported gold in circuit is understated. As mentioned earlier, a review is underway.

  • Total processing costs were 7 percent lower than the same prior year quarter and unit processing costs for the quarter were 9 percent lower than the same prior year quarter, mainly due to lower maintenance activities in the current quarter.

  • Total mine site general and administrative costs for the quarter were 3 percent lower than the prior year quarter and unit costs were 3 percent lower than the prior year quarter mainly due to lower insurance costs and higher throughput.

FINANCIAL HIGHLIGHTS

  • Gold revenue for the quarter was 12 percent higher than the same prior year quarter. The increase in gold revenue was due to 18 percent higher gold sales volume, partially offset by 5 percent lower realized gold prices during the quarter.

  • During the quarter, the Company recorded profit attributable to shareholders of $2.4 million ($0.01 per share), compared to a loss attributable to shareholders of $0.4 million ($0.00 loss per share) in the same prior year period. The increase in profit and earnings per share over the prior year quarter were primarily due to higher revenues in the current year quarter.

  • During the three months ended September 30, 2014, the Company recorded a $0.4 million reversal of a portion of the non-cash write-down on long-term low-grade ore stockpile inventory that had been previously recorded during the second quarter 2014. Higher grades mined during the third quarter resulted in a decrease in the per ounce cost of inventory (including applicable overhead, depreciation and amortization). Higher or lower per ounce inventory costs have a greater impact on low-grade stockpile values because of the higher future processing costs required to produce an ounce of gold.

  • The non-cash write-down recorded during the second quarter 2014 represent the portion of historic costs that would not be recoverable based on the Company's long-term forecasts of future processing and overhead costs at a gold price of $1,300 per ounce. Fluctuations in the mine plan result in wide fluctuations in the per ounce cost of our long-term ore stockpiles. During periods where lower grades are mined, per ounce costs rise, while during those periods when higher grades are mined, per ounce costs fall. As mining takes place in areas of Sabodala and Masato containing higher grades, a portion, if not all, of these non-cash write-offs are expected to reverse, including a portion during the fourth quarter. Conversely, should long-term gold prices decline or future costs rise, there is a potential for further NRV adjustments.

  • Cash flow provided by operations was $13.8 million for the quarter compared to cash flow provided by operations of $16.7 million in the same prior year quarter. The decrease in operating cash flow compared to the prior year quarter was primarily due the impact of delivering a portion of current period production to Franco-Nevada at 20 percent of gold spot prices, partially offset by higher revenues.

  • The decrease in capital expenditures for the quarter was mainly due to lower capitalized deferred stripping in the current quarter.

  • The Company's cash balance at September 30, 2014 was $28.0 million, including restricted cash. Cash and cash equivalents were similar to the balance reported at June 30, 2014, as cash flow provided by operations of $13.8 million was offset by debt and interest repayments totaling $8.9 million and capital expenditures of $5.3 million.

  • For the year to date, the Company has made a total of $44.2 million in one-time payments. This includes $24.6 million in debt repayments, $3.1 million in payments to the Republic of Senegal and one-time payments related to the acquisition of the OJVG, including $9.0 million for transaction, legal and office closure costs and $7.5 million to acquire Badr's share of the OJVG. For the balance of the year, the Company expects to make a further $20.0 million in one-time payments, including about $18.0 million in debt repayments and about $2.0 million in payments to the Republic of Senegal. In total, the Company will have made approximately $65.0 million in one-time payments during 2014. Approximately $15.0 million in one-time payments to the Republic of Senegal, are now expected to be paid in 2015. The one-time payments described herein, exclude $30.0 million in debt retired in the first quarter as part of the Franco-Nevada transaction.

OUTLOOK 2014

  • Based on the deferral of Sabodala high-grade ounces into 2015 and year to date production, the Company is lowering its 2014 annual production guidance to approximately 215,000 ounces, from the Company's previous guidance update when it guided to the bottom end of its original guidance range of 220,000 to 240,000 ounces. The lower production forecast is a result of a deferral of mining approximately 10,300 ounces (87,000 tonnes at over 3.5 gpt) at Sabodala into 2015 due to access constraints, as well as, the negative mill reconciliation of approximately 5,000 ounces during the third quarter. This is partly offset by higher expected tonnage and ore grades mined at Masato, as well as, higher overall throughput in the mill. Over and above normal operating risks, the primary risk to not achieving this revised production target is lower ore grades in the highest grade material to be mined at Sabodala and Masato. Over the final two months of the year, more than half of the planned mill feed is expected to be greater than 3 gpt.

  • Total exploration and evaluation expenditures for the Sabodala and OJVG mine licenses as well as the Regional Land Package (including capitalized reserve development) are now expected to total approximately $10.0 million for 2014. During the second quarter, the Company indicated that expenditures may increase to $12.0 million, for additional drilling, to expedite the conversion of resources to reserves on the mine licenses. This additional drilling is expected to take place in the fourth quarter, however, as a result of cost reductions on exploration overhead, we now expect total exploration expenditures to fall back in line with the original budget for the year.

  • Administrative and Corporate Social Responsibility ("CSR") expenses are expected to be $15.0 to $16.0 million, in line with guidance. These include corporate office costs, Dakar and regional office costs and CSR costs, but exclude corporate depreciation, transaction costs and other non-recurring costs.

  • Capitalized expenditures, including sustaining mine site expenditures, project development expenditures for growth initiatives, capitalized deferred stripping, reserve development expenditures and payments to the Republic of Senegal are now expected to be approximately $20.0 million. A change in the accounting treatment for the advanced royalty payment to the Republic of Senegal results in the reclassification of approximately $10.0 million of capital expenditures to prepayment of operating expenditures.

  • As a result of the revised production guidance and changes to the mine plan that result in an additional 16 percent increase in material movement and a 4 percent increase in throughput increasing cash cost guidance to approximately $725 per ounce, $25 per ounce higher than the top end of the Company's original guidance. The Company expects all-in sustaining costs of about $900 per ounce, $25 per ounce higher than the top end of the original guidance range of $800 to $875 per ounce1.

  • Total depreciation and amortization for the year is expected to be between $285 and $315 per ounce sold in line with guidance, comprised of $125 to $140 per ounce sold related to depreciation on Sabodala plant, equipment and mine development assets, $40 to $45 per ounce sold related to assets acquired with the OJVG and $120 to $130 per ounce sold for depreciation of deferred stripping assets. At the end of 2014, the balance of the deferred stripping asset related to Sabodala is expected to be approximately $32.0 million, which will be amortized over the mining of phase 4 of the Sabodala pit.

BUSINESS AND PROJECT DEVELOPMENT

2015 Mine Plan

  • During the quarter, the Company's technical team completed optimization work to improve on the 2015 mine plan included in the Company's technical report filed in the first quarter of this year. The goal is to increase the amount of free cash flow generated next year by reducing the amount of material moved at Masato, which in turn frees up required mobile equipment for the operation of Gora, thereby reducing 2015 capital expenditures. Overall, an improvement in the range of $40 to $60 million2 is targeted as compared to the previous plan, including the benefit of the deferral of ore containing approximately 10,300 ounces (over 3.5 gpt) from the Sabodala mine plan that was originally scheduled to be mined in 2014.

1 Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce are prior to an inventory write-down to net realizable value. Total cash costs per ounce, all-in sustaining costs per ounce and total depreciation and amortization per ounce non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS Financial Measures at the end of this report.

2 Based on US$/EUR exchange rate of 1.325 and LFO of $1.15 per litre

Mill Enhancements

  • The average hourly mill throughput rate when the crusher is in operation is approximately 430 tonnes per operating hour (tpoh) or 3.5 million tonnes per annum (mtpa). However, the mill has experienced periods of sustained operation where the mill throughput has exceeded 480 tpoh. These situations have typically occurred when both the primary and secondary crushed ore stockpile levels were full. Analysis of plant data shows that there is a correlation between the crusher downtime and mill throughput, which in turn is directly related to the inventory level of the crushed stockpiles.

  • The study to quantify and optimize the relationship between an increase in crusher availability to the SAG and Ball Mill system (SABC), as well as, other design enhancements within the crushing and grinding system was completed during the third quarter, and supported the Company's initial expectations. A related study to install a second crushing system was also completed in the third quarter.

  • The overall mill throughput increases will be accomplished by adjustments to the design of the SAG, Ball Mills and crusher systems that collectively will provide for an integrated increase in total plant throughput by 5 to 10 percent.

  • These upgrades are expected to be operational over a span of approximately 18 months, with continual improvements earlier from the sustaining capital initiatives. Using scoping and prefeasibility study level (PFS) engineering cost estimate level of accuracy, the total estimated capital cost for all the initiatives are expected to range from $12.0-15.0 million with an IRR of 30 to 60 percent.2

2 Key Assumptions: gold spot price/ounce - US$1,250, recovery rate - 90%

Heap Leach Project

  • The LOM plan shows a significant amount of both oxide and sulphide low grade reserves that are mined during the operating period but not processed until the end of the mine life. Significant potential also exists along an 8km mineralized structural trend covering both the Sabodala and OJVG mine leases which could add to the known reserves with near surface, oxidized ore.

  • The potential benefit to extracting value from this ore earlier by feeding it through a heap leach process is being evaluated. The program is spilt into two phases, Phase 1 tests the oxide material and Phase 2 is to test the fresh material.

  • The Company is encouraged by the results of the Phase 1 program to date. Preliminary results to date have indicated key variables (recovery rates, agglomeration and cyanide consumption of the oxide ore zones) are in line with the Company's initial expectations.

  • The hard transition oxide ore, (representing approximately 40 percent) is being tested at a top size of 12.5 mm crush with 8 kg/t of cement addition that passed percolation tests representing a lift height to 16 metres. Preliminary results from the column leach tests indicate recovery of 80 percent and 0.6 kg/t cyanide consumption after 53 days.

  • The soft transition ore (representing approximately 50 percent) has variable characteristics throughout the deposits and will require further optimization as the engineering progresses to the next stage. These samples are currently being tested at 25mm top size crush with a range of 8-20 kg/t cement that passed percolation tests representing a lift height from 8-16 metres. Preliminary results from the column tests indicate gold recovery ranging from 70-80 percent and 0.4-0.6 kg/t cyanide consumption after 53 days.

  • Additional testwork is ongoing for the saprolite ore (representing approximately 10 percent).

  • A bulk sample comprising some of the 9Mt of low grade fresh ROM stockpile will be prepared for testwork in the fourth quarter and into 2015.

  • The Company is targeting production from heap leach commencing in 2017, with the quantities and scale of operation to be defined upon the completion of Phase 2 and completion of drilling of potential low-grade heap leach material on the combined mine licenses. At this point, the Company anticipates that heap leach could account for 10 to 20 percent of annual production once it is fully operational.

Gora Development

  • The high-grade Gora deposit will be operated as a satellite deposit to the Sabodala mine requiring limited local infrastructure and development. Ore will be hauled to the Sabodala processing plant by a dedicated fleet of trucks and processed on a priority basis, displacing lower grade feed as required.

  • The environmental approval for the Gora project, the final phase of the permitting process, has been validated by the technical committee charged with its review. The environmental assessment report is now in the public communication phase which we expect to be completed during the fourth quarter.

  • Anticipating a successful conclusion to the public communication phase of the Gora environmental process, Management expects the permit process to be completed in the fourth quarter 2014. However, construction permits required to initiate construction for the access road are expected to be granted shortly. Planning and engineering for the access road is ongoing. Selection of contractors is expected within the next few weeks, with mobilization and initiation of construction by late 2014.

OJVG Mine License Reserve Development

  • The OJVG mine license covers 213km2. As we have integrated the OJVG geological database into a combined LOM plan, a number of areas have been revealed as potential sources for reserve additions within the mining lease. These targets have been selected based on potential for discovery and inclusion into open pit reserves.

Masato

  • Development of the Masato deposit is complete and mining commenced on schedule during the quarter.

  • An advanced exploration program began at Masato during the second quarter and continued into the current quarter to, among other objectives, test the continuity of portions of the high-grade sub- domains, which were removed from the Masato reserve base after the acquisition of the OJVG earlier this year.

  • The overall program consisted of drilling and trenching to confirm interpretation of domains and high-grade sub-domains, infill gaps and upgrading Inferred Resources, determining optimal RC grade control drill spacing, and obtaining additional geotechnical data for pit slope analysis. Overall, the program confirms our interpretation of the resource model and provides additional confidence in the continuity of high-grade mineralization within the deposit.

  • All drill hole assay data for the 2014 Masato exploration program, including drill hole locations and a location map, will be available on the Company's website at www.terangagold.com under "Exploration".

  • The Company is in the process of updating the Masato resources and reserves, which is expected in the fourth quarter. The updated results will incorporate the results of the exploration program this year including interpreting the infill drill results from the high-grade sub-domains compared to the previously interpreted high-grade sub-domains.

Golouma

  • Infill drilling commenced during the quarter for potential conversion of inferred resources and to evaluate the mineralization potential of structural features along strike and to the northwest of the existing reserves. Seven diamond drill holes were completed before the annual rainy season impeded access. The remainder of the 25 hole program is expected to be completed in the fourth quarter, as well as, follow up on near surface mineralization encountered in several of the seven holes completed in the quarter.

Masato Northeast

  • Detailed mapping and trenching programs were initiated on the Masato Northeast prospect which is situated 1km northeast along strike of the Masato deposit. The prospect overlies a 2.5km long structural splay of the main Masato structural trend. Grab samples collected along the structure have yielded gold values of 5.7 gpt Au, 16.1 gpt Au and 25.2 gpt Au. A diamond drilling programme to test these trench results is expected to commence in the fourth quarter.

Kerekounda

  • Both RC and Diamond Drill Hole ("DDH") drilling is planned to determine the extent of mineralization further along strike of the existing reserves. This program is expected to commence in fourth quarter.

Niakafiri SE and Maki Medina

  • Both RC and DDH drilling is planned for potential conversion of inferred resources, geotechnical holes for pit wall determination and exploratory holes to the north toward the Niakafiri deposit to evaluate the extension along strike. Pending results of the heap leach test work, additional drilling to determine near surface oxide resources may also be evaluated. Due to the positive results for the heap leach testwork, work in these areas is expected to commence in the fourth quarter 2014, but may be deferred into 2015 to coincide with drilling near Sabodala village on the Niakafiri reserves.

Regional Exploration

  • The Company currently has 9 exploration permits encompassing approximately 1,055km2 of land surrounding the Sabodala and OJVG mine licenses (246km2 exploitation permits).

Ninienko

  • An extensive mapping and a trenching program, over 1,500 metres, was conducted during second and third quarter 2014 at the Ninienko prospect and is ongoing. This work outlined a 500 metre-plus wide zone with gold mineralization occurring in flat lying, near surface (0-2 metres) quartz vein and felsic breccia units developed over a strike length of 1,500 metres.

  • An isopach plan of the mineralized quartz vein and felsic breccia systems is in progress, and will be used to develop a plan for DDH and a possible RC drill program. Due to the limitation of surface trenching and mapping used to develop the flat lying mineralized zone at surface, additional trenching and mapping will also be undertaken in prospective zones near to the area to expand on the currently defined zone and to further develop an understanding of the source of mineralization zones for potential drill targets at depth. A detailed geochemical soil sampling program has been planned for the fourth quarter which will follow up and test co-incident gold-molybdenum-copper and potassium anomalies identified by earlier regional termite mound sampling programs. A diamond drill program will commence once this work has been completed, likely to be scheduled for early 2015.

Soreto

  • Following up on a small 5 DDH program at the Soreto prospect in 2013, a program totaling 15 DDH for 2014 was completed during the quarter. These were located along two fence lines placed 150 metres on either side of the 2013 fence that intersected gold values including 3 metres at 2.1 gpt, 7 metres at 1.38 gpt and 1 metre at 12.2 gpt. At least three continuous shear zones were intercepted along strike. These featured shallow dipping (25 - 35º) altered shear zones with felsic dyke, sheared and brecciated silicified metasediments containing quartz-carbonate veins with disseminated pyrite and visible gold in places. The shear zones coincide with the major NNE regional shear structure with an associated 6km long geochemical soil anomaly and when projected to surface, align with the surface workings from artisanal mining.

The significant intercepts for the holes are shown in the table below.

Intersections, > 0.5g/t Au with max 2m internal dilution
HOLEID UTM29N East UTM29N North Azi Dip Downhole Depth (m) Intercept Values (core length @ g/t Au)
HKDD0008 185,469 1,487,713 305 -55.0 15.0 1m @ 7.64 g/t
37.0 1m @ 1.51 g/t
77.0 1m @ 3.07 g/t
HKDD0009 185,406 1,487,358 305 -55.0 75.0 2m @ 2.52 g/t
HKDD0010 185,272 1,487,454 305 -55.0 96.0 3m @ 1.47 g/t
HKDD0011 185,298 1,487,807 305 -55.0 57.5 2.5m @ 2.78 g/t
including 59.5 0.5m @ 11.45 g/t
178.0 1m @ 1.27 g/t
HKDD0014 185,173 1,487,903 305 -55.0 25.0 0.5m @ 1.97 g/t
HKDD0015 185,497 1,487,473 295 -55.0 108.0 2m @ 2.71 g/t
131.0 3m @ 1.63 g/t
HKDD0018 184,897 1,486,763 305 -55.0 37.0 2m @ 1.00 g/t
HKDD0019 184,819 1,488,367 305 -55.0 81.5 2.5m @ 6.41 g/t
including 82.5 0.5m @ 19.30 g/t
121.0 2m @ 1.20 g/t
HKDD0020 184,646 1,488,488 305 -55.0 47.0 1m @ 2.20 g/t
HKDD0022 184,473 1,488,608 305 -55.0 147.0 1m @ 1.33 g/t

1. True widths are unknown.

2. Intercept gold values are determined from uncapped assays.

  • Further infill drilling is being planned for the fourth quarter to further extend these mineralized shear zones along strike and infill drill to 50 metre spacing between the fence lines.

Gora Northeast Extension and Zone ABC

  • Trenching and mapping programs are being planned for the fourth quarter to investigate potentially gold mineralized extensions of the Gora gold deposit into the Zone ABC prospect which has significant gold soil anomalies co-incident with regional structural trends.
Quarterly Operating and Financial Results
(US$000's, except where indicated) 2014 2013 2012
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
Revenue 56,711 57,522 69,802 58,302 50,564 75,246 113,815 122,970
Average realized gold price ($/oz) 1,269 1,295 1,293 1,249 1,339 1,379 1,090 1,296
Cost of sales 47,973 62,236 55,285 50,527 37,371 52,636 55,971 57,250
Net earnings (loss) 2,422 (12,018 ) 3,957 (4,220 ) (442 ) 7,196 44,983 54,228
Net earnings (loss) per share ($) 0.01 (0.04 ) 0.01 (0.01 ) (0.00 ) 0.03 0.18 0.22
Operating cash flow 13,822 (9,793 ) 14,303 13,137 16,692 20,838 23,640 59,670
Ore mined ('000t) 1,272 974 1,262 1,993 537 698 1,312 2,038
Waste mined - operating ('000t) 4,201 5,233 6,151 6,655 3,321 2,683 2,513 4,362
Waste mined - capitalized ('000t) 524 458 497 420 4,853 4,770 5,023 912
Total mined ('000t) 5,997 6,665 7,910 9,068 8,711 8,151 8,848 7,312
Grade Mined (g/t) 1.71 1.39 1.61 1.61 1.08 1.59 1.87 2.04
Ounces Mined (oz) 69,805 43,601 65,452 103,340 18,721 35,728 78,929 133,549
Strip ratio (waste/ore) 3.7 5.8 5.3 3.6 15.2 10.7 5.7 2.6
Ore processed ('000t) 903 817 893 860 887 709 696 725
Head grade (g/t) 1.89 1.69 2.01 2.11 1.41 2.36 3.31 3.40
Gold recovery (%) 88.5 89.8 90.1 89.7 91.6 92.3 92.1 90.7
Gold produced1 (oz) 48,598 39,857 52,090 52,368 36,874 49,661 68,301 71,804
Gold sold (oz) 44,573 44,285 53,767 46,561 37,665 54,513 69,667 71,604
Total cash costs per ounce sold2 (including
Royalties) 781 815 696 711 748 642 535 532
All-in sustaining costs per ounce sold2
(including Royalties) 954 1,060 813 850 1,289 1,185 898 1,004
Mining ($/t mined) 3.1 2.9 2.8 2.6 2.5 2.6 2.6 3.1
Milling ($/t mined) 16.0 21.3 18.2 18.0 17.6 23.8 22.5 19.9
G&A ($/t mined) 4.5 4.9 4.8 4.8 4.6 6.3 6.2 6.4
1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.
2 Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS Performance Measures at the end of this report.

Non-IFRS Financial Measures

The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company's financial results. Refer to the Non-IFRS Financial Performance Measures at the end of this report for further details.

(US$000's, except w here indicated) Three months ended September 30 Nine months ended September 30
Cash costs per ounce sold 2014 2013 2014 2013
Gold produced1 48,598 36,874 140,545 154,836
Gold sold 44,573 37,665 142,625 161,845
Cash costs per ounce sold
Cost of sales 47,973 37,371 165,494 145,978
Less: depreciation and amortization (16,225 ) (13,562 ) (48,002 ) (51,200 )
Less: realized oil hedge gain - - - (487 )
Add: non-cash inventory movement 2,805 2,393 4,486 5,863
Less: inventory reversal (write-down) to net realizable value 371 - (13,052 ) -
Less: other adjustments (94 ) 1,962 (591 ) 317
Total cash costs 34,830 28,164 108,335 100,471
Total cash costs per ounce sold 781 748 760 621
All-in sustaining costs
Total cash costs 34,830 28,164 108,335 100,471
Administration expenses2 2,449 3,207 10,071 9,897
Capitalized deferred stripping 1,749 13,327 4,710 41,820
Capitalized reserve development 2,293 158 2,524 2,995
Mine site capital 1,210 3,680 7,571 20,516
All-in sustaining costs 42,532 48,536 133,212 175,699
All-in sustaining costs per ounce sold 954 1,289 934 1,086
All-in costs
All-in sustaining costs 42,532 48,536 133,212 175,699
Social community costs not related to current operations 580 745 1,482 1,453
Exploration and evaluation expenditures 672 849 2,399 4,362
All-in costs 43,783 50,130 137,093 181,513
All-in costs per ounce sold 982 1,331 961 1,122
Depreciation and amortization 16,225 13,562 48,002 51,200
Non - cash inventory movement (2,805 ) (2,393 ) (4,486 ) (5,863 )
Total depreciation and amortization 13,420 11,169 43,516 45,337
Total depreciation and amortization per ounce sold 301 297 305 280
1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.
2 Administration expenses include share based compensation and exclude Corporate depreciation expense and social community costs not related to current operations.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF COMPREHENSIVE INCOME / LOSS
(Unaudited and in US$000's except per share amounts)
Three months ended September 30 Nine months ended September 30
2014 2013 2014 2013
Revenue 56,711 50,564 184,035 239,625
Cost of sales (47,973 ) (37,371 ) (165,494 ) (145,978 )
Gross profit 8,738 13,193 18,541 93,647
Exploration and evaluation expenditures (672 ) (849 ) (2,399 ) (4,362 )
Administration expenses (3,190 ) (3,839 ) (11,217 ) (11,526 )
Share-based compensation (325 ) (394 ) (986 ) (677 )
Finance costs (2,640 ) (3,441 ) (7,404 ) (8,998 )
Gains on gold hedge contracts - - - 5,308
Gains on oil hedge contracts - - - 31
Net foreign exchange gains/(losses) 1,342 (300 ) 1,342 (784 )
Gain/(loss) on available for sale financial asset - 452 - (4,003 )
Share of income from equity investment in OJVG - 41 - 41
Other income/(expense) 36 (4,792 ) (1,997 ) (8,474 )
(5,449 ) (13,122 ) (22,661 ) (33,444 )
Net profit/(loss) 3,289 71 (4,120 ) 60,203
Profit/(loss) attributable to:
Shareholders 2,422 (442 ) (5,639 ) 51,737
Non-controlling interests 867 513 1,519 8,466
Net profit/(loss) for the period 3,289 71 (4,120 ) 60,203
Other comprehensive income/(loss):
Items that may be reclassified subsequently to profit/loss for the period
Change in fair value of available for sale financial asset, net of tax (1 ) - 3 (6,418 )
Reclassification to income/(loss), net of tax - - - 962
Other comprehensive (loss)/income for the period (1 ) - 3 (5,456 )
Total comprehensive income/(loss) for the period 3,288 71 (4,117 ) 54,747
Total comprehensive income/(loss) attributable to:
Shareholders 2,421 (442 ) (5,636 ) 46,281
Non-controlling interests 867 513 1,519 8,466
Total comprehensive income/(loss) for the period 3,288 71 (4,117 ) 54,747
Earnings (loss) per share from operations attributable to the shareholders of the Company during the period
- basic earnings/(loss) per share 0.01 (0.00 ) (0.02 ) 0.20
- diluted earnings/(loss) per share 0.01 (0.00 ) (0.02 ) 0.20
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF FINANCIAL POSITION
(Unaudited and in US$000's)
As at September 30, 2014 As at December 31, 2013
Current assets
Cash and cash equivalents 13,025 14,961
Restricted cash 15,000 20,000
Trade and other receivables 2,265 7,999
Inventories 60,209 67,432
Other assets 7,424 5,762
Total current assets 97,923 116,154
Non-current assets
Inventories 78,068 63,740
Equity investment - 47,627
Property, plant and equipment 203,640 219,540
Mine development expenditures 266,547 176,391
Other non-current assets 8,054 947
Goodwill 55,191 -
Total non-current assets 611,500 508,245
Total assets 709,423 624,399
Current liabilities
Trade and other payables 50,483 56,891
Borrowings 21,299 70,423
Deferred revenue 21,870 -
Provisions 2,719 1,751
Total current liabilities 96,371 129,065
Non-current liabilities
Borrowings - 3,946
Deferred revenue 95,745 -
Provisions 14,923 14,336
Other non-current liabilities 16,434 10,959
Total non-current liabilities 127,102 29,241
Total liabilities 223,473 158,306
Equity
Issued capital 367,851 342,470
Foreign currency translation reserve (998 ) (998 )
Other components of equity 16,205 15,776
Retained earnings 91,102 96,741
Equity attributable to shareholders 474,160 453,989
Non-controlling interests 11,790 12,104
Total equity 485,950 466,093
Total equity and liabilities 709,423 624,399
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in US$000's)
Nine months ended September 30
2014 2013
Issued capital
Beginning of period 342,470 305,412
Shares issued from public and private offerings 27,274 23,487
Less: Share issue costs (1,893 ) (180 )
End of period 367,851 328,719
Foreign currency translation reserve
Beginning of period (998 ) (998 )
End of period (998 ) (998 )
Other components of equity
Beginning of period 15,776 21,814
Equity-settled share-based compensation reserve 426 1,417
Investment revaluation reserve on change in fair value of available for sale financial asset, net of tax 3 (5,456 )
Stock options to Oromin Explorations Ltd. ("Oromin") employees - 585
End of period 16,205 18,360
Retained earnings
Beginning of period 96,741 49,225
(Loss)/profit attributable to shareholders (5,639 ) 51,737
End of period 91,102 100,962
Non-controlling interest
Beginning of period 12,104 11,857
Non-controlling interest - portion of profit for the period 1,519 8,466
Non-controlling interest - acquisition of Oromin - 11,005
Dividends accrued (1,833 ) (7,672 )
End of period 11,790 23,656
Total shareholders' equity as at September 30 485,950 470,699
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
STATEMENTS OF CASH FLOW
(Unaudited and in US$000's)
Three months ended September 30 Nine months ended September 30
2014 2013 2014 2013
Cash flows related to operating activities
Profit/(loss) for the period 3,289 71 (4,120 ) 60,203
Depreciation of property, plant and equipment 6,383 9,635 18,787 35,869
Depreciation of capitalized mine development costs 9,842 4,024 29,215 15,548
Inventory movements - non-cash (2,805 ) (2,393 ) (4,486 ) (5,863 )
Inventory write-down to net realizable value - depreciation (121 ) - 4,191 -
Amortization of intangibles 150 249 555 770
Amortization of deferred financing costs 830 902 2,434 1,770
Inventory write-down to net realizable value (250 ) - 8,861 -
Unwinding of discounts 690 25 897 74
Share-based compensation 325 394 986 677
Deferred gold revenue recognized (5,715 ) - (17,385 ) -
Net change in gains on gold forward sales contracts - - - (42,955 )
Net change in losses on oil contracts - - - 456
Buyback of gold forward sales contracts - - - (8,593 )
(Gain)/Loss on available for sale financial asset - (452 ) - 4,003
Loss on disposal of property, plant and equipment - - - 99
(Increase) / decrease in inventories (2,440 ) (834 ) (15,782 ) 3,692
Changes in working capital other than inventory 3,644 5,071 (5,821 ) (4,580 )
Net cash provided by operating activities 13,822 16,692 18,332 61,170
Cash flows related to investing activities
Decrease in restricted cash - - 5,000 -
Acquisition of Oromin Joint Venture Group ("OJVG") - - (112,500 ) -
Expenditures for property, plant and equipment (1,472 ) (2,391 ) (2,755 ) (13,531 )
Expenditures for mine development (3,780 ) (14,738 ) (12,053 ) (51,691 )
Acquisition of intangibles - (36 ) - (109 )
Proceeds on disposal of property, plant and equipment - - - 35
Net cash used in investing activities (5,252 ) (17,165 ) (122,308 ) (65,296 )
Cash flows related to financing activities
Net proceeds from equity offering - - 25,485 -
Proceeds from Franco-Nevada gold stream - - 135,000 -
Repayment of borrowings (8,194 ) (9,088 ) (54,582 ) (9,088 )
Draw down from equipment finance facility, net of financing costs paid - - - 13,843
Financing costs paid - (1,200 ) (1,000 ) (1,200 )
Interest paid on borrowings (732 ) (1,474 ) (2,864 ) (4,687 )
Dividend payment to government of Senegal - - - (2,700 )
Net cash (used in) / provided by financing activities (8,926 ) (11,762 ) 102,039 (3,832 )
Effect of exchange rates on cash holdings in foreign currencies - (44 ) 1 431
Net decrease in cash and cash equivalents (356 ) (12,279 ) (1,936 ) (7,527 )
Cash and cash equivalents at the beginning of period 13,381 44,474 14,961 39,722
Cash and cash equivalents at the end of period 13,025 32,195 13,025 32,195

CORPORATE DIRECTORY

Directors
Alan Hill, Chairman
Richard Young, President and CEO
Jendayi Frazer, Non-Executive Director
Edward Goldenberg, Non-Executive Director
Christopher Lattanzi, Non-Executive Director
Alan Thomas, Non-Executive Director
Frank Wheatley, Non-Executive Director
Senior Management
Richard Young, President and CEO
Mark English, Vice President, Sabodala Operations
Paul Chawrun, Vice President, Technical Services
Navin Dyal, Vice President and CFO
David Savarie, Vice President, General Counsel & Corporate Secretary
Kathy Sipos, Vice President, Investor & Stakeholder Relations
Aziz Sy, General Manager, SGO & Vice President, Development Senegal
Registered Office
121 King Street West, Suite 2600
Toronto, Ontario, M5H 3T9, Canada
T: +1 416 594 0000
F: +1 416 594 0088
E: investor@terangagold.com
W: www.terangagold.com
Senegal Office
2K Plaza
Suite B4, 1er Etage
sis la Route due Meridien President
Dakar Almadies
T: +221 338 693 181
F: +221 338 603 683
Auditor
Ernst & Young 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 symbol: TGZ
Australian Securities Exchange, ASX symbol: TGZ
Issued Capital
As of October 30, 2014
Issued shares 352,801,091
Stock options 23,009,933
Exercise Price (C$) Options
$3.00 15,218,333
$1.09 - $2.17 7,791,600

FORWARD-LOOKING STATEMENTS

This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Teranga, or developments in Teranga's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, all disclosure regarding possible events, conditions or results of operations, future economic conditions and courses of action, the proposed plans with respect to mine plan, anticipated fourth quarter results and consolidation of the Sabodala Gold Project and OJVG Golouma Gold Project, mineral reserve and mineral resource estimates, anticipated life of mine operating and financial results, the approval of the Gora ESIA and permitting and the completion of construction related thereto. Such statements are based upon assumptions, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments that management believe to be reasonable and relevant. These assumptions include, among other things, the ability to obtain any requisite Senegalese governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic conditions and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. 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, as well as other risks and uncertainties which are more fully described in the Company's Annual Information Form dated March 31, 2014, and in other company filings with securities and regulatory authorities which are available at www.sedar.com. Teranga does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. 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 contained in this document relating to the mineral reserve estimates for Sabodala, the stockpiles, Masato, Golouma and Kerekounda is based on, and fairly represents, information compiled by Mr. William Paul Chawrun , P. Eng who is a member of the Professional Engineers Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Chawrun is a full-time employee of Teranga and is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has consented to the inclusion in this Report of the matters based on his compiled information in the form and context in which it appears in this Report.

The technical information contained in this document relating to the mineral reserve estimates for Gora and Niakafiri is based on, and fairly represents, information and supporting documentation prepared by Julia Martin , P.Eng. who is a member of the Professional Engineers of Ontario and a Member of AusIMM (CP). Ms. Martin is a full time employee with AMC Mining Consultants (Canada) Ltd., is independent of Teranga, is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity she 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". Ms. Martin is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Martin has reviewed and accepts responsibility for the Mineral Reserve estimates for Gora and Niakafiri disclosed in this document and has consented to the inclusion of the matters based on her information in the form and context in which it appears in this Report.

The technical information contained in this Report relating to mineral resource estimates for Niakafiri, Gora, Niakafiri West, Soukhoto, and Diadiako is based on, and fairly represents, information compiled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie , P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she 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". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.

The technical information contained in this Report relating to mineral resource estimates for Sabodala, Masato, Golouma, Kerekounda, and Somigol Other are based on, and fairly represents, information compiled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie , P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.

Teranga's exploration programs are being managed by Peter Mann , FAusIMM. Mr. Mann is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Mr. Mann has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which 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. Mann is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. The technical information contained in this news release relating 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 samples are prepared at site and assayed in the SGS laboratory located at the site. Analysis for diamond drilling is sent for fire assay analysis at ALS Johannesburg, South Africa. Mr. Mann has consented to the inclusion in this news release of the matters based on his compiled information in the form and context in which it appears herein.

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"). CIM definitions of the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", are substantially similar to the JORC Code corresponding definitions of the terms "ore reserve", "proved ore reserve", "probable ore reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the JORC Code would not be materially different if prepared in accordance with the CIM definitions applicable under NI 43-101. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.

NON-IFRS FINANCIAL PERFORMANCE MEASURES

The Company provides some non-IFRS 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 and an "all-in costs" measure consistent with the guidance issued by the World Gold Council ("WGC") on June 27, 2013. The Company believes that the use of all-in sustaining costs and all-in costs will be 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. These new measures will also be 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. The "all-in costs" includes additional costs which reflect the varying costs of producing gold over the life-cycle of a mine.

"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 earnings 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. The WGC definition of all-in costs adds to all-in sustaining costs including capital expenditures attributable to projects or mine expansions, exploration and study costs attributable to growth projects, and community and permitting costs not related to current operations. Both all-in sustaining and all-in costs exclude income tax payments, interest costs, costs related to business acquisitions and items needed to normalize earnings. 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.

"Total cash costs", "all-in sustaining costs" and "all-in 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. The following tables reconcile these non-GAAP measures to the most directly comparable IFRS measure.

"Average realized price" is a financial measure with no standard meaning under IFRS. Management uses this measure to better understand the price realized in each reporting period for gold and silver sales. Average realized price excludes from revenues unrealized gains and losses on non-hedge derivative contracts. 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.

"Total depreciation and amortization per ounce sold" is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. 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.

ABOUT TERANGA

Teranga 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's mission is to create value for all of its stakeholders through responsible mining. Its vision is to explore, discover and develop gold mines in West Africa, in accordance with the highest international standards, and to be a catalyst for sustainable economic, environmental and community development. All of its actions from exploration, through development, operations and closure will be based on the best available techniques.

THIRD QUARTER CONFERENCE CALL & WEBCAST

The Company will host a conference call and webcast on October 31, 2014 at 8:30 a.m. EDT Toronto (Sydney 11:30 p.m. AEDT).

Telephone
Toronto: 416-340-2216
North America toll-free: 1-866-223-7781
International: 1-416-340-2216
Live Webcast
The webcast can be accessed directly at:
www.gowebcasting.com/5930 and on Teranga's website at www.terangagold.com

The conference call replay will be available for two weeks after the call by dialing 1-905-694-9451 or toll-free 1-800-408-3053 and entering the Passcode: 8085369.

 
Contact Information:
Teranga Gold Corporation
Kathy Sipos
Vice-President, Investor & Stakeholder Relations
+1 416-594-0000
ksipos@terangagold.com
www.terangagold.com