Mitigating our Impact

Disclaimer

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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.

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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

  • Sabodala Gold Operations
  • Wahgnion Gold Operations

$4 Million
Livelihood Restoration

650
Households

Niakafiri Resettlement


Includes the Sabodala and Medina Sabodala Villages

Following in-depth stakeholder consultations, the Niakafiri resettlement of approximately 650 households has commenced and is expected to be completed in 2020. 

The new settlement provides many upgrades to residential homes, including family rooms, kitchens and improved ventilated double pit latrines. All residential plots will be fenced with brick walls for privacy. The village will also contain a full water supply system and all houses are being equipped with electrical wiring to take advantage of the power line installed by the Government of Senegal, which connects the new village to the public grid.

The village infrastructure is extensive and includes roads that ensure good traffic flow and drainage, four schools, three mosques, three health care facilities, a gathering place for youth, a women’s centre, a radio station, market and commercial buildings as well as a municipal office, sub-prefecture and community meeting hall.

The Gora Fund


SGO's 2018 Contribution to Gora Fund: $0.2M

The Gora Fund supported the community affected by the loss of revenues as we developed and mined the Gora satellite deposit at SGO between 2015 and 2018. The Gora Fund, designed to assist in developing new sustainable economic activities, was active throughout the year by investing in community development initiatives such as the Gora bus. Although mining at the Gora pit ended in the second quarter of 2018, the Gora Fund will continue to support the local communities until the end of 2020.

Pictured: The Gora Fund was used to purchase a 64-seat transport bus; the keys to the bus were presented to the president of the fund management committee.

 

 

$1.7 Million
2018 Spend

101
Environmental
Inspections

Improving Our Environmental Performance

SGO Environmental Management System Audit

The Progressive Rehabilitation of Gora

 


After mining ended in July 2018, the Gora deposit was partially backfilled and secured and nearly 8,400 seedlings were planted over a 13-hectare area. Through consultations with the community and all levels of government, a technical committee was established in August 2018 for the coordination of the rehabilitation and closure plan of Gora.

$17 Million
Livelihood Restoration

489
Households

Wahgnion Resettlement

Multi Phase Resettlement

The development of WGO requires the relocation of 489 households over multiple phases and is scheduled to be completed in 2023. Additionally, the project will require livelihood restoration for an incremental 388 households of landowners and land users, encompassing nearly 2,000 hectares of land.

The houses and supporting community structures being built reflect in-depth consultations through the negotiation committee, comprised of affected community members, local authorities and Teranga representatives. The community will enjoy new public facilities including several primary schools on the various resettlement sites and a mosque.

Houses will be equipped with casing for electrical wiring for the option to connect to the existing power line to Niankorodougou and Zegnedougou. Water supply is offered on the various resettlement sites, including foot-pumps and additional cattle drinking facilities. All roads within the village respect legal specifications allowing for proper traffic flow, and water drainage will be installed to improve sanitation.

10
Irrigated Parameters Pilot Projects

2,700 kilograms
Vegetables Produced from
Three Market Gardens

112 tonnes
Fertilizer Distributed to
135 Households

WGO Livelihood Restoration

Compensation Through Livelihood Restoration

Livelihood restoration projects are part of our compensation framework for the resettlement of communities.

A key objective of the projects is to replace or develop sources of income for the communities affected, diversify their income sources, and to maintain or improve their livelihood.

Our livelihood restoration and land intensification practices associated with land takes typically start with agricultural projects that aim to increase the amount of produce yielded, improve agricultural techniques and skill sets, and broaden the types of produce grown for harvest
Livelihood Restoration: Areas of Focus
  • Development of irrigated agriculture
  • Cattle management and crop production
  • Donation of fertilizer
  • Replacement land quality
  • Establishment of vet clinics and animal training programs
  • Animal husbandry
  • Poultry program for vulnerable community members
  • Training and support to launch small businesses
  • Creation of new income-generating activities for women

Revenue Generating Activities for Women


Many of Teranga's livelihood restoration programs focus on women. Teranga is working with nearly 800 women on programs relating to:
  • Collection and commercialization of shea butter
  • Enhancement of vegetables through drying, grinding and other methods
  • Production of Soumbala, a food condiment used widely across West Africa
  • High yield rice cultivation

$0.4 Million
2018 Spend

193
Environmental Inspections