Golden Hill

Golden Hill

One of West Africa’s most exciting and rapidly advancing gold exploration projects.
Uniquely situated on the Houndé belt in Burkina Faso.
Numerous high-grade, near-surface and deeper gold discoveries indicate district-scale potential.

Disclaimer

Please note that you are about to enter a website directly or indirectly maintained by a third party (the "External Site") and that you do so at your own risk.

Teranga Gold Corporation (“Teranga”) has no control over the External Site, any data or other content contained therein or any additional linked websites. The link to the External Site is provided for convenience purposes only.

By clicking “Accept” you acknowledge and agree that neither Teranga nor the third-party provider of the External Site (the “Provider”) is responsible, or accepts or assumes any responsibility or liability whatsoever for, the content, the data or the technical operation of the External Site. Further, by entering the External Site, you also acknowledge and agree that you completely and irrevocably waive any and all rights and claims against Teranga and the Provider and further acknowledge and agree that in no event shall Teranga or the Provider, its officers, employees, directors and agents be liable for any (i) indirect, consequential, incidental, special, compensatory or punitive damages, (ii) damages for loss of income, loss of business profits, business interruption, loss of data or business information, loss of or damage to property, (iii) claims of third parties, or (iv) other pecuniary loss, arising out of or related to this disclaimer or the External Site.

By entering the External Site, you further acknowledge and agree that the disclaimer of warranties and limitations of liability set out in this disclaimer shall apply regardless of the causes, circumstances or form of action giving rise to the loss, damage, claim or liability. The waiver and release specifically includes, without limitation, any and all rights and claims pertaining to the processing of personal data, including, but not limited to, any rights under any applicable data protection statute(s).

If in any jurisdiction, any part of this disclaimer is held to be unenforceable by a court of competent jurisdiction, such part of this disclaimer shall be restricted or eliminated to the minimum extent and the remaining disclaimer shall otherwise remain in full force and effect.

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

415Koz
Indicated
Mineral Resources(1)

644Koz
Inferred
Mineral Resources(1)

Current
Drill Program
Targets
12+ Prospects

Quick Facts: Golden Hill Advanced Exploration Project

Location
Located in southwestern Burkina Faso within the Houndé Greenstone Belt

Geology
Shear-hosted mineralized zones within a package of mafic volcanics and
mixed intrusive units within a dominant north-easterly trending structural corridor

Ownership
100%

Land Area
The Golden Hill project includes three exploration permits covering
468 square kilometres in close proximity and along strike to other
deposits within the Houndé Greenstone Belt

2019 Exploration Budget
$7 million

Metres Drilled
As of October 31, 2019, more than 680 holes have been drilled
totaling more than 74,250 metres

Overview of Golden Hill

Teranga acquired Golden Hill as an early-stage exploration project in 2016 as part of its acquisition of Gryphon Minerals.

Formerly part of a joint venture, Golden Hill is now 100% wholly-owned by Teranga. Located within the central part of the highly mineralized Houndé Greenstone Belt, Golden Hill is surrounded by an area known for gold discoveries, including the Siou, Houndé (contiguous with Golden Hill) and high-grade Yaramoko deposits

Exploration is advancing rapidly. In just over two years, Golden Hill has produced a series of excellent grade, near-surface and deeper drill results at a variety of Prospects. Currently there are multiple Prospects, the majority of which are located within 10 kilometres from a central point on the property.

Rotating between core and reverse circulation drills, the 2019 drill program is targeting the Ma Structural Complex (Main, North, South, East, Far North and Jonction), Peksou, Peksou North, Copper, Gogoba West, Gogoba North, Pourey, A, B and C-Zones. The Company plans to expand the Golden Hill drilling program by adding a Reverse Circulation drill and a second Diamond Core drill in Q4 2019.

Teranga has completed ~ 680 drill holes totaling more than  74,250 metres (as of October 31, 2019). Based on encouraging drill results to date, confidence continues to increase that Golden Hill may be Teranga’s third gold mine. For a detailed geologic summary and a cumulative table of exploration drill results, please refer to the Exploration section.

Early-Stage Initial Mineral Resource

Following an 18-month exploration and drilling program, Teranga announced an early-stage initial mineral resource estimate for Golden Hill's most advanced Prospects (Ma Main, Ma North, Peksou, C-Zone, A-B Zone, Jackhammer Hill and Nahiri), with indicated mineral resources of 6.40Mt averaging 2.02 g/t gold for 415,000 ounces and inferred mineral resources of 11.95Mt averaging 1.68 g/t gold for 644,000 ounces (as at November 30, 2018).

Next Steps

On July 26, 2019, Teranga announced an extensive drilling and exploration program for the second half of 2019. The program has a budget estimated to be at least $5 million, and will be financed by the Golden Hill tranche of the Taurus debt facility. This $25-million tranche is intended to advance the project through the feasibility stage of development.

The 27,000-metre exploration program is designed as a combined reverse circulation and diamond core drilling program. Currently, more than a dozen separate drill targets have been identified for inclusion in this drilling evaluation program, including five that have not been previously drilled. In addition to the drilling component, approximately 15,000 metres of auger drilling and 10,000 metres of excavator trenching are also planned for this exploration campaign.

The Company is continuing with further drilling evaluations and technical studies in support of a preliminary economic assessment (PEA), specifically, optimization of the metallurgical response in the multiple deposits and initial baseline environmental and social studies as the basis for an eventual environmental and social impact assessment.

The goal is to complete the PEA during the first half of 2020 supported by a resource update following completion of the 2019 drilling program (27,000 metres). The PEA will form the foundation supporting a Mining Lease Application concurrent with the PEA.

(1) Golden Hill’s Mineral Resource estimate as at November 30, 2018. For more information regarding Golden Hill’s Mineral Resource and related notes, please refer to the press release dated February 21, 2019 available on the Company’s website at www.terangagold.com and SEDAR at www.sedar.com.