Wahgnion

Wahgnion Gold Operations

Construction is underway in Burkina Faso to build our second producing gold mine.
First gold pour is expected by the end of 2019.
Expected to increase company-wide annualized production by 50%.

Disclaimer

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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

1.61 Moz
Proven & Probable
Gold Reserves(1)

2.4 Moz
Measured & Indicated
Gold Resources(1)

13-Year
Mine Life

Quick Facts: Wahgnion Gold Mine

Location
Located in southwest Burkina Faso
510 km southwest of Ouagadougou (capital city)

Land Area
89 km2 mine license and
933 km2 exploration land package

Geology
Paleoproterozoic Birimian Senoufo Belt

Ownership
90% Teranga / 10% Government of
Burkina Faso free carried interest

Plant (under construction)
2.2 Mtpa - 2.5 Mtpa carbon-in-leach

Proposed Mining Method
Similar to Sabodala, Wahgnion will have multiple deposits feeding into a central mill and owner-operated conventional truck and shovel open-pit mining

First Gold Pour
Expected by Q4 2019

Mining License
Expires in 2026 and is renewable for successive 5-year terms

Rapidly Advancing Development of Our Second Mine

2018

Key Highlights
Secured $165 million debt financing for Wahgnion and commenced major plant construction.
Updated technical report filed in September 2018 reflects successful infill drill program, increasing mineral resource estimate by 33% and mineral reserve estimate by ~40%.

CSR Achievement
Launched community development initiatives

Gold Reserves
1.61 Moz

Gold Resources
2.4Moz

2017

Key Highlights
Following completion of reserve and resource confirmation program, feasibility study for initial four deposits filed in October 2017.
Commenced early works construction.

CSR Achievement
Commenced multi-year phased resettlement

Gold Reserves
1.16Moz

Gold Resources
1.83Moz

2016

Key Highlights
Acquired Wahgnion Development Project as part of Teranga’s all-share purchase of Gryphon Minerals in October 2016.
Launched program to validate historical drilling and optimize previous feasibility study.

CSR Achievement
Initiated consultation for resettlement action plan on Wahgnion land package

Project Update

Construction of Teranga’s second gold mine is on budget and on track for first pour by the end of 2019.

In October 2018, Teranga filed an updated technical report for the project, which included a 40% increase in mineral reserves of 450,000 ounces to 1.61 million ounces of gold contained in 31.1 million tonnes at a grade of 1.61 g/t Au. Updated measured and indicated resources of 50.5 million tonnes at a grade of 1.51 g/t for 2.4 million contained ounces of gold represented a 33% increase from the previous feasibility study completed in September 2017.

Mine Plan

The mine plan for Wahgnion focuses on open-pit mining of four initial gold deposits within the mine lease. The Nogbele, Fourkoura and Stinger deposits fall into the Nogbele land tenement while the Samavogo deposit is in the Dierisso tenement.

The Wahgnion processing plant is adjacent to the Nogbele deposit, which contains approximately 50% of total mineral reserves. The Fourkoura, Stinger, and Samavogo deposits are located within 25 km of the plant.

Plant design is based on a conventional carbon-in-leach (CIL) gold process flowsheet consisting of primary crushing, semiautogenous grinding and ball milling, with a pebble crusher, CIL gold extraction, elution, electrowinning, and gold smelting to produce doré on site.

Throughput is designed to range between 2.2 Mtpa and 2.5 Mtpa, depending on the blend of soft and hard ore. The average predicted plant gold recovery is 92%, with soft (oxide) material recoveries from some zones reaching as high as 95%.

For more information on Wahgnion, please view the latest NI 43-101 technical report for Wahgnion filed in October 2018.

5-Year Life of Mine Profile(2)(3)

2019 to 2024

Average Annual
Gold Production

132 koz

Average Annual
All-in Sustaining Costs(4)

$761/oz

Total
Free Cash Flow(4)

$311M

Life of Mine Profile(2)(3)

2019 to 2031

Average Annual
Gold Production

114 koz

Average Annual
All-in Sustaining Costs(4)

$904/oz

Total
Free Cash Flow(4)

$479M

(1) Wahgnion’s Mineral Reserve and Mineral Resource estimates as per as at May 31, 2018. For more information regarding Wahgnion’s Mineral Reserves and Resources and related notes, please refer to the NI 43-101 compliant technical report for the Wahgnion Gold Operations dated October 31, 2018 available on the Company’s website at www.terangagold.com and SEDAR at www.sedar.com.

(2) This production target is based on proven and probable ore reserves only for Teranga’s Wahgnion Project as at May 31, 2018. For more information regarding the Wahgnion’s Mineral Reserves and Resources and related notes, please refer to the NI 43-101 compliant technical report for the Wahgnion Gold Operations dated October 31, 2018 available on the Company’s website at www.terangagold.com and SEDAR at www.sedar.com.

(3) LOM assumptions include:
Gold Price $1,250 per ounce
Heavy Fuel Oil (HFO): Wahgnion - $0.59 per litre;
Light Fuel Oil (LFO): Wahgnion - $1.04 per litre ($0.88 per litre during construction period)
Euro to USD Exchange Rate: $1.10

(4) This is a non-IFRS financial measure and does not have a standard meaning under IFRS. Please refer to the section regarding Non-IFRS Performance Measures within the website’s Legal Disclaimer by clicking here.