Teranga Gold

Teranga Gold

Website: www.terangagold.com
Primary ticker: TSX:TGZ; OTCQX: TGCDF
Stage of development: Exploration, Development, Production
Commodity: Gold
Project to promote: Sabodala-Massawa Gold Complex, Wahgnion Gold Mine and Golden Hill Exploration Project
Project location: Burkina Faso, Senegal, Côte d’Ivoire

Live financials

Cash: USD$49M (30 June 2020)
Debt: USD$416M (30 June 2020)

Major shareholders:
Tablo Corporation – 21%
Barrick Gold Corporation – 11%
BlackRock- 10%
Van Eck Associates – 9%
Dimensional Fund Advisors, L.P – 3%
Management Ownership – 23%

Teranga Gold (TSX:TGZ/OTCQX:TGCDF) is a Canadian-based gold producer and has two operating gold mines in West Africa. The flagship Sabodala mine has produced approximately 2Moz of a gold since Teranga’s December 2010 IPO. Wahgnion, the Company’s newest mine, has delivered mill throughput above design capacity and production above plan since achieving commercial production in November 2019.

Teranga is integrating Sabodala with the recently acquired high-grade Massawa Gold Project. Processing Massawa ore through the nearby Sabodala mill is expected to commence in Q4 2020. Once combined, Sabodala-Massawa is expected to significantly increase Teranga’s reserves, production and cash flow starting in 2020.

Teranga has budgeted $35M in 2020 to explore and drill the attractive portfolio of early to advanced-stage exploration assets and near-mine exploration targets at its two operations.

Management Profile

Richard Young, President & CEO

Richard Young is the President and Chief Executive Officer of Teranga Gold. Mr. Young is on the board of the World Gold Council. He culminates 25-years of extensive experience in the gold industry. A Chartered Professional Accountant, Mr. Young joined Barrick Gold Corporation (ABX-T) in 1991 and served in a series of positions of increasing responsibility in finance, corporate development, investor relations and mine development.

Prior to joining Teranga in 2010, Mr. Young served as Vice President and Chief Financial Officer of Gabriel Resources Ltd. for five years. Mr. Young holds a Bachelor of Economics from the University of Western Ontario as well as a Graduate Diploma in Public Accountancy from McGill University.

What is your rationale for attending 121 Mining Investment?

Teranga has grown significantly and is a different company than it was when it started attending 121 events 3-4 years ago. Attending 121 mining investments provides Teranga with the opportunity to update investors on its achievements, future growth plans, as well as its repositioning as a low-cost, mid-tier producer, focusing principally on upcoming plans to transform its flagship Sabodala operation into a top tier gold complex with the integration of the recently acquired Massawa project.

What recent news would you like to highlight to investors attending?

21 Aug – Teranga Gold Files Technical Report for Sabodala-Massawa Gold Complex.

7 Aug – Teranga Gold Delivers Strong Q2 Production Led by Wahgnion; Increases 2020 Gold Production Guidance to 375,000-400,000 Ounces.

6 Aug – Teranga Gold Update to Wahgnion Gold Operation Mine Plan Increases Average Annual Production by 25%.

26 July – Teranga Gold Announces Positive Pre-Feasibility Study Results for Top-Tier Sabodala-Massawa Gold Complex.

What are your key goals for the next 3, 6 and 12 months?

3 Months:

Begin processing Massawa ore through the Sabodala mill in August.

Update 2020 guidance to include addition of Massawa and changes to Wahgnion mine plan.

File technical report in support of mine license application for Golden Hill.

6 Months:

Continue resource definition drilling at several of the Massawa deposits in support of a definitive feasibility study to be released in 2021.

12 Months:

Continue Wahgnion exploration program with aim to increase reserves and extend mine life toward our goal of 15 years.

Continue resource expansion drill program at Golden Hill.

Report early-stage trenching and drilling campaigns at the Woulo Woulo and Niamienlessa prospects at Afema.

What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

The current challenge we face is the COVID-19 pandemic. We are working with the employees at Sabodala, Wahgnion and our various exploration sites to ensure continuity of operations while admittance to sites is being restricted. To minimize the impact of any potential supply chain disruptions, we have been building an inventory of critical supplies since January with supplies continuing to arrive at both sites. Gold continues to be sent to the refineries.

What do you think makes your company such a compelling investment?

Teranga is approaching mid-tier status and is expected to generate significant free cash flow in the coming years. While Teranga’s share price has increased significantly over the last two years, it still does not fully reflect our prospective growth opportunities and expectations for increased production and cash flow.

Analyst Insight – provided by Independent Investment Research

Teranga Gold is a TSX-listed Canadian-based gold producer, with a diversified pipeline of West African assets in production, development and exploration on more than 5,000 sq km of acreage within prospective gold belts.  

The company’s key producing asset, Sabodala, is the only large-scale gold mine to come into operation in Senegal. In Burkina Faso, the company’s second mine at Wahgnion, achieved commercial production during November 2019.  

For calendar 2019, Teranga achieved record consolidated gold production of 288,768 ounces, exceeding the top end of its full-year production guidance at both Sabodala in Senegal and at Wahgnion in Burkina Faso. Annual production increased by 18% over the 245,230 ounces of gold produced in 2018. 

Wahgnion achieved commercial production effective November 1, 2019 and surpassed the high-end of its production guidance of 30,000-40,000 ounces with a total of 47,492 ounces of gold. Sabodala topped its 2019 anticipated production guidance of 215,000-230,000 ounces with a total of 241,276 ounces of gold produced. 

Prior to announcing its acquisition of the Massawa gold project from Barrick Gold, which closed during Q1 2020, the company had been targeting 2020 gold production of between 300,000 and 350,000 ounces, based on the latest technical reports filed for each of its Sabodala and Wahgnion gold mines. However, with production of Massawa’s free-milling ore expected to commence at Sabodala’s existing carbon-in-leach plant during Q4 2020, 2020 production guidance has been updated to 375,000 to 400,000 ounces of gold. 

New five-year production and cost guidance (from 2021 – 2025) is estimated to average 533,000 ounces of gold annually at all-in sustaining cost (AISC) of $785 per ounce. 

The historical mineral reserves base of the Massawa project is 2.6Moz from 20.9Mt at 3.94 g/t Au and is one of the highest-grade undeveloped open-pit gold reserves in Africa. This will augment Sabodala’s mineral reserves base of 2.4Moz from 55.7Mt at 1.35 g/t Au. Massawa’s reserves are located within 30 km of the Sabodala plant, thereby reducing initial phase 1 and phase 2 capital costs included in the Massawa Feasibility Study. 

Teranga has budgeted $35M in 2020 to explore and drill the attractive portfolio of early to advanced-stage exploration assets and near-mine exploration targets at its two operations.