Golden Hill Exploration Project

Golden Hill Exploration Project

Numerous high-grade, near-surface gold discoveries.
Early-stage initial mineral resource estimate released February 2019.


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Non-IFRS Financial Measures

This Interactive Data Centre includes measures that do have a standard meaning under International Financial Reporting Standards (“IFRS”) to serve as supplementary information that management believes may be useful to investors to explain Teranga’s financial results. These measures are intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Such non-IFRS measures include, “total cash costs”, “total cash costs per ounce sold”, “all-in sustaining costs” (“AISC”), “AISC (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs)”, “AISC per ounce”, “AISC (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs) per ounce”, “average realized gold price”, “earnings before interest, taxes, depreciation and amortization” (“EBITDA”), “free cash flow”, “adjusted net profit attributable to shareholders” and “adjusted basic earnings per share”. 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.

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. Teranga believes that the use of all-in sustaining costs is helpful to analysts, investors and other stakeholders of Teranga 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 costs per ounce sold” is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. Teranga 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 Teranga’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 Teranga’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 Teranga’s overall profitability.

Teranga also expands upon the WGC definition of all-in sustaining costs by presenting an additional measure of “all-in sustaining costs (excluding cash / (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 cash / (noncash) 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. The following tables reconcile these non-IFRS 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 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.

“Earnings before interest, taxes, depreciation and amortization” (“EBITDA”) is a non-IFRS financial measure, which excludes income tax, finance costs (before accretion expense), interest income and depreciation and amortization from net profits. 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.

“Free cash flow” is a non-IFRS financial measure. Teranga calculates free cash flow as net cash flow provided by operating activities less sustaining capital expenditures. Teranga believes this to be a useful indicator of our ability generate cash for growth initiatives. Other companies may calculate this measure differently.

Starting in 2018, Teranga adopted “adjusted net profit attributable to shareholders” and “adjusted basic earnings per share” as new non-IFRS financial measures. These non-IFRS financial measures are used by management and investors to measure the underlying operating performance of Teranga. 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.

Teranga calculates “adjusted net profit attributable to shareholders” as net profit attributable to shareholders adjusted to exclude specific items that are significant, but not reflective of the underlying operations of Teranga, including: the impact of unrealized and realized foreign exchange gains and losses, gains and losses on derivative instruments, accretion expense on long-term obligations, impairment provisions and reversals thereof, and other unusual or non-recurring items. During the second quarter of 2018, Teranga also excluded the impact of foreign exchange movements on deferred taxes and other non-cash fair value changes from adjusted net profit attributable to shareholders as management does not believe these factors to be reflective of the underlying performance of Teranga.

“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.

Accept Decline

The Golden Hill property is comprised of three adjacent exploration permits covering 468 km2 in southwest Burkina Faso, approximately 250 km northeast of Wahgnion. Golden Hill is considered particularly prospective as it is centrally located within the highly mineralized Houndé Greenstone Belt, which is host to several high-grade gold discoveries. Teranga's property straddles the same stratigraphy and structures that host the Houndé, Siou and Yaramoko deposits.

Early-stage Initial Resource (as at November 30, 2018):

  • Indicated mineral resources of 6.40Mt averaging 2.02 g/t gold for 415,000 ounces
  • Inferred mineral resources of 11.95Mt averaging 1.68 g/t gold for 644,000 ounces
  • Excellent along trend and to-depth continuity of gold mineralization at all prospects


Ongoing Drill Program Targets New Zones and Prospects

A 27,000-metre exploration program was completed at Golden Hill in Q1 2020. The principal objective of this program was to facilitate an update to the initial resource estimation and support a technical update in 2020 through the drilling of mineralization extensions at a number of deposits and prospects with the current resources, as well as initial drilling at a number of new targets. More than a dozen separate drill targets were identified for inclusion in this drilling evaluation program, including five that have not been previously drilled.

In January 2020, Teranga announced that the first 20,000 metres drilled as part of the current 27,000-metre program returned high-grade gold intercepts from near surface to depth at several existing targets and encouraging gold grades in numerous step-out holes. The campaign has also uncovered a new discovery: the Ma Jonction prospect, located between Ma Main and Ma North.

Preliminary Economic Assessment Work Continues

The Company has commenced initial studies and test work in support of a forthcoming preliminary economic analysis (“PEA”) at Golden Hill. Metallurgical test work has been underway at ALS (Perth) using a number of composites from the Ma suite, as well as separate composites for the Jackhammer, A, B and C-Zones and Peksou deposits.

Upon completion of this test work to determine the basis for an optimized flowsheet for all of these deposits, PEA level engineering in concert with ESIA baseline work will commence to determine an estimate of capital and operating costs that support an initial mine plan concept.  This work will provide the basis for the initial technical and economic assessment of the project.

Golden Hill also has a funding commitment in place. Subject to satisfaction of conditions precedent relating to the project’s initial technical and economic assessment, Teranga has secured $25 million in debt financing to advance the Golden Hill project through to feasibility stage development, which will include the next steps for drilling mentioned above, as well as feasibility stage engineering work.

The Ma Main deposit currently hosts the largest resource estimate and is also the most extensively drilled of those being evaluated currently at Golden Hill. Ma Main has a current strike length of approximately 1.5 kilometres. The lesser drilled Ma East prospect ties on directly to Ma Main and adds a further 1.2 kilometres of strike extent to this continuous mineralized system. Gold mineralization at Ma is hosted by strike-extensive, favorably altered, pyritic, silicified and brecciated shear systems within a sequence of mafic volcanics intruded by at least two distinct phases of granitic intrusive bodies. The primary gold mineralization at Ma is hosted within two extensive brecciated fault zones (BZ-1 and BZ-2) that demonstrate excellent continuity throughout the areas drilled to date. Of further note is the favorable geometry of both BZ-1 and BZ-2 which are spatially proximal, generally parallel and have moderate dip orientations which are advantageous for a future mining scenario. As drilling has progressed, additional mineralized zones have been intersected, predominantly in the hanging wall of BZ-1, which further enhances the upside potential at this advanced prospect. In addition, within this developing structural complex we recognize other prospective areas displaying similar favorable structural orientation and geochemical anomalism to the south.

At Ma North, diamond drill results continue to confirm that a third well-mineralized breccia zone (BZ-3) exists within the Ma structural complex where previous drilling had identified BZ-1 and BZ-2. Drilling at Ma North is still at an early-stage and predominantly at shallow depths when compared to more advanced areas of the Ma Structural Complex. Early-stage hole-to-hole correlation is demonstrating excellent continuity of mineralization. Additional drilling is planned to further evaluate Ma North both along trend and to depth where the breccia-hosted mineralization remains open to expansion.

Recent drilling has identified a new prospect within the Ma Structural Complex referred to as the Ma Jonction prospect. Ma Jonction is defined by a series of predominantly NE trending mineralized structures which are located midway between the generally NW-SE trending Ma Main and Ma North deposits. Initial trenching and drilling results have been positive and further evaluation will be directed here towards expanding the mineralization observed both along trend and further to depth.

In addition, more recent drilling has identified and partially outlined, by trenching and drilling, another very interesting structural zone within the Ma Structural Complex referred to as Ma South which is comprised of at least seven distinct and inter-related structures displaying favorable-looking shearing, alteration, veining and brecciation.

Ma Structural Complex Deposits and Prospects

To-date, the Company has drill tested the E-W trending C-Zone deposit over a strike length of approximately 850 metres. C-Zone remains open to depth and appears to intersect with the southeastern portion of the Peksou deposit, which may enhance its strike extent to the east.

Gold mineralization is localized in a discrete, mafic volcanic hosted shear zone system that displays alteration, veining and brecciation characteristics similar to those observed at the nearby Ma Main deposit. The correlation of gold mineralized zones between drill holes has been excellent along the drilled strike extent.

Recent drilling evaluation at C-zone has identified an N-S trending set of cross-structures that display favorable alteration, veining and brecciation as well as localized occurrences of visible gold. Drilling evaluation continues at this newly recognized mineralized structural orientation within the C-zone deposit.

A-Zone and B-Zone Prospects

C-Zone Deposit

Diamond drilling at the Peksou prospect now covers a 600-metre strike extent and locally to vertical depths approaching 100 metres. Gold mineralization at Peksou is hosted within both mafic volcanic and granodiorite intrusive units where two distinct styles of alteration have been noted – one hematite dominant and the second sericite dominant. With multiple favourable results from the latest drill phase, confidence in the interpretation has improved considerably and correlation of mineralized zones, both hole-to-hole and section-to-section, is greatly enhanced.

Peksou Deposit

Nahiri Prospect

At Jackhammer Hill, the gold mineralized zones identified so far include a series of southeast dipping horizons hosted within an altered and sheared diorite intrusive unit. Drilling has been directed along an approximate 1,350-metre strike extent, predominantly to vertical depths of 50 to 75 metres and locally to vertical depths of approximately 125 metres. A 200-metre long central portion of the mineralization includes a number of previously announced high-grade intervals hosting visible gold in the drill core.

Next, drilling will focus on increasing both lateral and depth extensions of the mineralized zones including the high-grade central portion of the prospect.

Jackhammer Hill Deposit

Other Zones