Reserves & Resources

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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.

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Sabodala: Open-Pit and Underground Mineral Reserves

As of December 31, 2018

Deposits Proven Probable Proven and Probable
Tonnes (Mt) Grade (g/t) Au (Moz) Tonnes (Mt) Grade (g/t) Au (Moz) Tonnes (Mt) Grade (g/t) Au (Moz)
Masato


18.48 1.10 0.65 18.48 1.10 0.65
Niakafiri East 4.57 1.32 0.19 9.74 1.12 0.35 14.30 1.18 0.54
Sabodala 1.98
1.60
0.10
3.05 1.37 0.13 5.03 1.46 0.24
Golouma West 3.53 2.01 0.23 3.53 2.01 0.23
Goumbati West and Kobokoto


1.42 1.31 0.06 1.42 1.31 0.06
Maki Medina


0.87 1.30 0.04 0.87 1.30 0.04
Niakafiri West


1.17 1.07 0.04 1.17 1.07 0.04
Kerekounda


0.15 4.41 0.02 0.15 4.41 0.02
Subtotal Open-Pit 6.55 1.41 0.30 38.40 1.23 1.52 44.95 1.26 1.82
Stockpiles 8.56 0.88 0.24


8.56 0.88 0.24
Total Open-Pit with Stockpiles (OP) 15.11 1.11 0.54 38.40 1.23 1.52 53.51 1.20 2.06
Golouma West 1


0.62 6.07 0.12 0.62 6.07 0.12
Kerekounda


0.61 4.95 0.10 0.61 4.95 0.10
Golouma West 2


0.45 4.39 0.06 0.45 4.39 0.06
Golouma South


0.47 4.28 0.06 0.47 4.28 0.06
Subtotal Underground (UG)


2.15 5.01 0.35 2.15 5.01 0.35
TOTAL OPEN-PIT & UNDERGROUND 15.11 1.11 0.54 40.55 1.43 1.87 55.66 1.35 2.41

Notes for Mineral Reserves Summary

  1. CIM definitions were followed for Mineral Reserves.
  2. Mineral Reserve cut-off grades range from 0.39 g/t to 0.46 g/t Au for oxide and 0.45 g/t to 0.51 g/t Au for fresh rock based on a $1,250/oz gold price.
  3. Underground Mineral Reserve cut-off grades range from 2.3 g/t to 2.6 g/t Au based on a $1,200/oz gold price.
  4. Mineral Reserves account for mining dilution and mining ore loss.
  5. Proven Mineral Reserves are based on Measured Mineral Resources only.
  6. Probable Mineral Reserves are based on Indicated Mineral Resources only.
  7. Sum of individual amounts may not equal due to rounding.
  8. The Niakafiri East and West deposits are adjacent to the Sabodala village where the relocation of the affected community members is ongoing.  
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Sabodala: Open-Pit and Underground Mineral Resources

As of December 31, 2018

Deposit Domain Measured Indicated Measured and Indicated Inferred
Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au
('000s) (g/t Au) ('000s) ('000s) (g/t Au) ('000s) ('000s) (g/t Au) ('000s) ('000s) (g/t Au) ('000s)
Sabodala Open-Pit 9,309 1.28 384 6,215 1.60 319 15,523 1.41 703 2,483 1.24 99
Underground


1,631 3.65  191 1,631 3.65 191 460 3.60 53
Combined 9,309 1.28 384 7,846 2.02 510 17,155 1.62 895 2,943 1.61 152
Masato Open-Pit 3,137 0.69 70 22,212 1.16 829 25,349 1.10 899


Underground


1,163 2.75 103 1,163 2.75 103 1,984 2.85 182
Combined 3,137 0.69 70 23,375 1.24 932 26,511 1.18 1,002 1,984 2.85 182
Gora Open-Pit 148 7.51 36 148 7.51 36
Underground


274 4.92 43 274 4.92 43 56 4.87 9
Combined 148 7.51 36 274 4.92 43 422 5.83 79 56 4.87 9
Golouma Open-Pit 352 1.23 14 4,771 2.86 439 5,123 2.75 453 57 2.75 5
Underground


2,138 4.09 281 2,138 4.09 281 851 3.66 100
Combined 352 1.23 14 6,909 3.24 720 7,260 3.14 734 908 3.60 105
Kerekounda Open-Pit 21 3.60 2 732 4.45 98 754 4.41 100 5 1.17 0
Underground


499 4.88 78 499 4.88 78 235 5.70 43
Combined 21 3.60 2 1,232 4.45 176 1,253 4.44 179 239 5.61 43
Maki Medina Open-Pit 2,112 1.22 83 2,112 1.22 83 114 0.81 3
Underground


109 2.71 10 109 2.71 10 85 2.54 7
Combined


2,221 1.30 93 2,221 1.30 93 199 1.55 10
Niakafiri East Open-Pit  4,776
1.37
210
14,140 1.14 516 18,916 1,19 726 4,515 0.93 135
Underground


224 2,72 20 224 2.72 70 514 2.70 45
Combined 4,776
1.37
210
14,364 1.16 536 19,140 1.21 746 5,030 1.11 180
Niakafiri West Open-Pit


3,061 1.02 100 3,061 1.02 100 673 0.86 19
Underground


74 2.67 6 74 2.67 6 71 2.84 6
Combined


3,135 1.06 107 3,135 1.06 107 744 1.05 25
Goumbati West - Kobokoto Open-Pit


2,678 1.35 116 2,678 1.35 116 498 0.81 13
Underground


131 3.25 14 131 3.25 14 79 2.90 7
Combined


2,809 1.44 130 2,809 1.44 130 577 1.09 20
Golouma North Open-Pit


170 1.32 7 170 1.32 7 295 1.42 14
Underground


14 2.64 1 14 2.64 1 19 2.93 2
Combined


184 1.42 8 184 1.42 8 314 1.51 15
Diadiako Open-Pit








178 1.27 7
Underground








663 2.89 61
Combined








841 2.54 69
Kinemba Open-Pit


24 1.06 1 24 1.06 1 91 0.95 3
Underground








56 2.52 5
Combined


24 1.06 1 24 1.06 1 147 1.55 7
Koulouqwinde Open-Pit  41
2.15 3



41
2.15
3
195 1.51 9
Underground








60 2.67 5
Combined 41
2.15
3



41
2.15
3
255 1.78 15
Kourouloulou Open-Pit


96 11.51 36 96 11.51 36 22 6.71 5
Underground


59 9.15 18 59 9.15 18 86 13.58 38
Combined


156 10.61 53 156 10.61 53 108 12.18 42
Kouroundi Open-Pit


67 0.93 2 67 0.93 2 42 0.74 1
Underground











Combined


67 0.93 2 67 0.93 2 42 0.74 1
Koutouniokolla Open-Pit








85 1.58 4
Underground








22 2.54 2
Combined








108 1.78 6
Mamasato Open-Pit


560 1.45 26 560 1.45 26 305 1.25 12
Underground








42 2.32 3
Combined


560 1.45 26 560 1.45 26 347 1.38 15
Marougou Open-Pit








1,198 1.41 54
Underground











Combined








1,198 1.41 54
Sekoto Open-Pit








485 0.89 14
Underground








25 2.11 2
Combined








510 0.95 16
Soukhoto Open-Pit








550 1.46 26
Underground











Combined








550 1.46 26
Total Open-Pit 17,783 1.26 719 56,839 1.41 2,573 74,622 1.37 3,292 11,793 1.12 424
Underground


6,316 3.76 765 6,316 3.76 765 5,308 3.34 570
Combined 17,783 1.15 719 63,155 1.64 3,338 80,938 1.56 4,057 17,101 1.81 993

Notes for Mineral Resources Summary

  1. CIM definitions were followed for Mineral Resources.
  2. Open-pit oxide Mineral Resources are estimated at a cut-off grade of 0.35 g/t Au, except for Gora and Marougou at 0.48 g/t Au.
  3. Open-pit transition and fresh rock Mineral Resources are estimated at a cut-off grade of 0.40 g/t Au, except for Gora and Marougou at 0.55 g/t Au.
  4. Underground Mineral Resources are estimated at a cut-off grade of 2.00 g/t Au.
  5. Measured Resources at Sabodala include stockpiles which total 4.9 Mt at 0.75 g/t Au for 118,000 oz.
  6. Measured Resources at Masato include stockpiles which total 3.1 Mt at 0.69 g/t Au for 70,000 oz.
  7. Measured Resources at Gora include stockpiles which total 0.1 Mt at 7.51 g/t Au for 36,000 oz.
  8. Measured Resources at Golouma include stockpiles which total 0.4 Mt at 1.23 g/t Au for 14,000 oz.
  9. Measured Resources at Kerekounda include stockpiles which total 0.02 Mt at 3.60 g/t Au for 2,000 oz.
  10. Measured Resources at Koulouqwinde include stockpiles which total 0.03 Mt at 2.15 g/t Au for 3,000 oz.
  11. High grade assays were capped at grades ranging from 1.5 g/t Au to 110 g/t Au.
  12. The figures above are "Total" Mineral Resources and include Mineral Reserves.
  13. Open-pit shells were used to constrain open-pit resources.
  14. Mineral Resources are estimated using a gold price of US$1,450 per ounce.
  15. Sum of individual amounts may not equal due to rounding.
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Wahgnion: Open-Pit Mineral Reserves

As at May 31, 2018

Deposit Proven Reserves Probable Reserves Proven and Probable Reserves
MTonnes Grade
(Au g/t)
Moz Au MTonnes Grade
(Au g/t)
Moz Au MTonnes Grade
(Au g/t)
Moz Au
Nogbele N/Nangolo 1.39 1.30 0.06 12.49 1.54 0.62 13.88 1.51 0.68
Nogbele S 0.42 1.80 0.02 2.93 1.34 0.13 3.35 1.39 0.15
Samavogo


5.19 1.98 0.33 5.19 1.98 0.33
Stinger 0.15 2.06 0.01 5.60 1.65 0.30 5.75 1.66 0.31
Fourkoura 0.49 1.71 0.03 2.41 1.57 0.12 2.90 1.60 0.15
Total 2.44 1.51 0.12 28.63 1.62 1.49 31.07 1.61 1.61

Notes for Mineral Reserves Summary

  1. CIM definitions were followed for Mineral Reserves.
  2. Mineral Reserve cut-off grades range from 0.38 g/t to 0.48 g/t Au for oxide and 0.53 g/t to 0.64 g/t Au for fresh rock.
  3. Mineral Reserve is based on a $1,250/oz gold price.
  4. Mineral Reserves account for mining dilution and mining ore loss.
  5. A minimum mining width of 2.5 metres was used.
  6. Proven Mineral Reserves are based on Measured Mineral Resources only.
  7. Probable Mineral Reserves are based on Indicated Mineral Resources only.
  8. Sum of individual amounts may not equal due to rounding.
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Wahgnion: Open-Pit Mineral Resources

As at May 31, 2018


Measured Resources Indicated Resources Measured + Indicated Resources Inferred Resources
Deposit Mtonnes

Grade
(Au g/t)

Moz MTonnes Grade
(Au g/t)
Moz MTonnes Grade
(Au g/t)
Moz MTonnes Grade (Au g/t) Moz
Nogbele N/Nangolo 1.62 1.26 0.07 22.50 1.40 1.02 24.12 1.39 1.08 2.65 1.27 0.11
Samavogo 0.00 0.00 0.00 8.06 1.91 0.49 8.06 1.91 0.49 1.46 1.65 0.08
Stinger 0.16 2.15 0.01 8.30 1.56 0.42 8.46 1.58 0.43 0.57 1.56 0.03
Nogbele S 0.46 1.81 0.03 4.71 1.29 0.19 5.18 1.33 0.22 0.33 1.14 0.01
Fourkoura 0.59 1.63 0.03 4.10 1.42 0.19 4.69 1.45 0.22 0.24 1.53 0.01
Total 2.83 1.48 0.13 47.67 1.51 2.31 50.50 1.51 2.44 5.25 1.41 0.24

Notes for Mineral Resources Estimate

  1. CIM definitions were followed for Mineral Resources.
  2. Mineral Resources are reported at cut-off grades ranging from 0.320 g/t Au to 0.403 g/t Au in oxide, and at cut-off grades ranging from 0.388 g/t Au to 0.541 g/t Au in transition and primary rock.
  3. High grade assays were capped at grades ranging from 5 to 48 g/t Au.
  4. Mineral Resources are estimated using a long-term gold price of US$1,500 per ounce, adjusted to match existing industry standards.
  5. A minimum thickness of two metres was applied.
  6. Mineral Resources are inclusive of Mineral Reserves.
  7. Mineral Resources are constrained by resource pit shells.
  8. Totals may not add due to rounding.
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Golden Hill: Open-Pit Mineral Resources


Measured Resources Indicated Resources Measured + Indicated Resources Inferred Resources
Deposit Tonnage
(000 t)

Grade
(Au g/t)

Contained Metal
(000 oz Au)
Tonnage
(000 t)
Grade
(Au g/t)
Contained Metal
(000 oz Au)
Tonnage
(000 t)
Grade
(Au g/t)
Contained Metal
(000 oz Au)
Tonnage
(000 t)
Grade (Au g/t) Contained Metal
(000 oz Au)
Ma 0 0.00 0 5,789 2.03 378 5,789 2.03 378 4,082 1.71 225
Jackhammer Hill 0 0.00 0 610 1.87 37 610 1.87 37 692 1.50 33
Peksou/C-Zone 0 0.00 0.0 0 0.00 0.0 0 0.00 0.0 3,839 2.13 263
Nahiri 0 0.00 0.0 0 0.00 0.0 0 0.00 0.0 1,659 0.85 45
A and B-Zones 0 0.00 0.0 0 0.00 0.0 0 0.00 0.0 1,675 1.45 78
Total Golden Hill 0 0.00 0 6,399 2.02 415 6,399 2.02 415 11,947 1.68 644

Notes for Mineral Resource Estimate (effective November 30, 2018)

  1. CIM (2014) definitions were followed for Mineral Resources
  2. Mineral Resources are reported at cut-off grades ranging from 0.345 g/t Au to 0.361 g/t Au in oxide, 0.394 g/t Au to 0.411 g/t Au in transition, and 0.440 g/t Au to 0.457 g/t Au in primary rock.
  3. The effective date for all deposits is November 30, 2018.
  4. High grade assays were capped at grades ranging from 15 g/t Au to 25 g/t Au.
  5. Mineral Resources are estimated using a long-term gold price of US$1,450 per ounce.
  6. A minimum thickness of two metres was applied.
  7. Mineral Resources are constrained by preliminary pit shells.
  8. Totals may not add due to rounding.
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