1 Teranga Gold Delivers Strong Q2 Production Led by Wahgnion; Increases 2020 Gold Production Guidance to 375,000-400,000 Ounces (All amounts are in U.S. dollars unless otherwise stated) Toronto: August 7, 2020 – Teranga Gold Corporation ("Teranga" or the "Company") (TSX:TGZ; OTCQX:TGCDF) today reported financial, operating and development results for the three and six months ended June 30, 2020. “It’s been a good year so far despite the challenges and cost of maintaining operations during a pandemic,” said Richard Young, President and Chief Executive Officer. “Following the recent pre-feasibility study results for the integrated Sabodala-Massawa complex and Wahgnion’s updated mine plan, Teranga now has a flagship top-tier gold asset and a solid second operation. Our quality asset base is the foundation of the Company’s transformation into a mid-tier gold producer.” Mr. Young added, “We are significantly increasing 2020 production guidance while our five-year production guidance for the period 2021 to 2025 is expected to average 533,000 ounces of gold per year 2 at all-in sustaining costs of $785 per ounce 1 , establishing Teranga as one of the lowest cost producers globally with significant cash flows, particularly at current gold prices.” “As expected, Wahgnion’s strong results for the quarter offset softer production at Sabodala where we mined at lower grade areas and diverted equipment and resources to commence mining at Sofia, the first of the Massawa higher grade deposits,” stated Paul Chawrun, Chief Operating Officer. “As demonstrated in the new Sabodala-Massawa mine plan, we are shifting our focus to ramp up mining at Massawa in the third quarter, and processing higher grade free-milling ore from Sofia through the Sabodala plant.” News Release SECOND QUARTER 2020 HIGHLIGHTS Three months ended June 30, 2020 compared to three months ended June 30, 2019 • 40% increase in consolidated gold production to 89,011 ounces, driven by a strong second quarter operations at Wahgnion. • 96% increase in revenue to $164.2 million. • 209% increase in gross profit to $56.4 million. • Increase in consolidated net profit attributable to shareholders to $2.4 million, or $0.01 per share, compared to a net loss of $7.6 million or $0.07 per share. • Increase in adjusted net profit attributable to shareholders 1 to $27.7 million, or $0.17 per share, compared to $2.9 million or $0.03 per share. • 135% increase in EBITDA 1 and 137% increase in adjusted EBITDA 1 . • 187% increase in operating cash flows before changes in working capital, excluding inventories. • 121% increase in operating cash flows. • Unsold gold bullion inventory of $36.3 million (using a period-end spot gold price) due to a lengthened time-frame between shipments related to the coronavirus pandemic. • 2020 production guidance updated to 375,000 to 400,000 ounces of gold from earlier guidance of 345,000 to 355,000 ounces. • New five-year production and cost guidance (2021 – 2025): Companywide production is expected to average 533,000 ounces of gold per year 2 at all-in sustaining cost of $785 per ounce 1 .
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Teranga Gold Delivers Strong Q2 Production Led by Wahgnion;
Increases 2020 Gold Production Guidance to 375,000-400,000 Ounces
(All amounts are in U.S. dollars unless otherwise stated)
Toronto: August 7, 2020 – Teranga Gold Corporation ("Teranga" or the "Company") (TSX:TGZ;
OTCQX:TGCDF) today reported financial, operating and development results for the three and six months
ended June 30, 2020.
“It’s been a good year so far despite the challenges and cost of maintaining operations during a pandemic,”
said Richard Young, President and Chief Executive Officer. “Following the recent pre-feasibility study
results for the integrated Sabodala-Massawa complex and Wahgnion’s updated mine plan, Teranga now
has a flagship top-tier gold asset and a solid second operation. Our quality asset base is the foundation of
the Company’s transformation into a mid-tier gold producer.”
Mr. Young added, “We are significantly increasing 2020 production guidance while our five-year production
guidance for the period 2021 to 2025 is expected to average 533,000 ounces of gold per year2 at all-in
sustaining costs of $785 per ounce1, establishing Teranga as one of the lowest cost producers globally with
significant cash flows, particularly at current gold prices.”
“As expected, Wahgnion’s strong results for the quarter offset softer production at Sabodala where we
mined at lower grade areas and diverted equipment and resources to commence mining at Sofia, the first
of the Massawa higher grade deposits,” stated Paul Chawrun, Chief Operating Officer. “As demonstrated
in the new Sabodala-Massawa mine plan, we are shifting our focus to ramp up mining at Massawa in the
third quarter, and processing higher grade free-milling ore from Sofia through the Sabodala plant.”
News Release
SECOND QUARTER 2020 HIGHLIGHTS Three months ended June 30, 2020 compared to three months ended June 30, 2019
• 40% increase in consolidated gold production to 89,011 ounces, driven by a strong second quarter operations at Wahgnion.
• 96% increase in revenue to $164.2 million.
• 209% increase in gross profit to $56.4 million.
• Increase in consolidated net profit attributable to shareholders to $2.4 million, or $0.01 per share, compared to a net loss of $7.6 million or $0.07 per share.
• Increase in adjusted net profit attributable to shareholders1 to $27.7 million, or $0.17 per share, compared to $2.9 million or $0.03 per share.
• 135% increase in EBITDA1 and 137% increase in adjusted EBITDA1.
• 187% increase in operating cash flows before changes in working capital, excluding inventories.
• 121% increase in operating cash flows.
• Unsold gold bullion inventory of $36.3 million (using a period-end spot gold price) due to a lengthened time-frame between shipments related to the coronavirus pandemic.
• 2020 production guidance updated to 375,000 to 400,000 ounces of gold from earlier guidance of 345,000 to 355,000 ounces.
• New five-year production and cost guidance (2021 – 2025): Companywide production is expected to average 533,000 ounces of gold per year2 at all-in sustaining cost of $785 per ounce1.
movements and amortized advanced royalty costs)1,3 ($/oz sold) 988
804
23 % 1,040
783
33 %
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Consolidated Financial Performance
• Revenue of $164.2 million was 96% higher than the prior year period due to a 47% increase in
ounces sold and 30% increase in average realized prices1. The higher gold sales were due to
Wahgnion, which achieved commercial production on November 1, 2019.
• Gross profit of $56.4 million was 209% higher than the prior year period mainly due to $34.9 million
contribution from Wahgnion.
• Consolidated net profit attributable to shareholders was $2.4 million ($0.01 earnings per share) for
the second quarter 2020 compared to net loss attributable to shareholders of $7.6 million ($0.07
loss per share) in the prior year period. The increase was mainly due to higher gross profit of $38.2
million and a non-cash impairment reversal of $31.7 million, partially offset by non-cash losses on
changes in fair values of share warrant liabilities, gold offtake payment liabilities, call-rights and
contingent consideration of $42.1 million, higher share-based compensation expense of $5.1
million, higher expensed finance costs of $4.7 million and higher income tax expense of $4.7
million.
• Adjusted net profit attributable to shareholders1 was $27.7 million ($0.17 per share) for the second
quarter 2020 compared to $2.9 million ($0.03 per share) in the comparative period. The increase
was mainly due to higher gross profit partially offset by higher share-based compensation expense,
expensed finance costs, exploration and evaluation expenditures and sustainability expenses.
• Operating cash flows before changes in working capital, excluding inventories, increased by 187%
to $55.3 million mainly due to higher revenues net of mine operation expenses, partially offset by
a build-up of supplies inventories as a result of the COVID-19 pandemic.
• Cash flows related to operating activities increased year-over-year by $23.2 million to $42.5 million
due to higher revenues and gross profit, increase in advances received from a customer of $7.0
million, lower tax payments of $9.4 million and a build-up of stockpile inventory at Wahgnion in
preparation for operations in the prior year period, partially offset by a $15.0 million advance waiver
payment to the government of Senegal, higher royalty payments of $5.7 million, increased
payments to suppliers and build-up of supplies inventories as a result of the COVID-19 pandemic
• EBITDA1 increased by 135% to $52.8 million from $22.5 million mainly due to higher revenues of
$80.6 million and a non-cash impairment reversal of $31.7 million, partially offset by non-cash
losses on changes in fair values of share warrant liabilities, gold offtake payment liabilities, call-
rights and contingent consideration of $42.1 million and higher mine operation expenses of $32.6
million.
• Adjusted EBITDA1 increased by 137% to $74.8 million from $31.6 million mainly due to higher revenues of $80.6 million, partially offset by higher mine operation expenses (excluding incremental COVID-19 costs) of $27.7 million and higher share-based compensation expense of $5.1 million, exploration and evaluation expenditures of $2.3 million and sustainability expenses of $2.3 million.
• Cash and cash equivalents totalled $49.4 million, an increase of $9.4 million from the first quarter 2020 balance of $40.0 million. The increase was mainly due to higher revenues and gross profit, advances received from a customer of $8.6 million, lower tax payments of $9.4 million and lower build-up of inventories at Wahgnion in preparation for operations in the prior year period, partially offset by capital expenditures of $23.8 million, interest payments of $8.9 million and higher suppliers and royalty payments.
• On May 28, 2020, the Company completed a restructuring transaction to terminate 25,500 ounces of gold forward sales contracts originally settling in the second and third quarters 2020 at forward
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prices averaging $1,326 per ounce (the "Restructuring") and crystallized losses on 25,500 ounces of gold forward sales contracts at $1,714 per ounce. Concurrently, the Company deferred settlement of the Restructuring to the fourth quarter 2020 and first quarter 2021 by entering into 25,500 ounces of collars, with a floor price of $1,500 per ounce and ceiling price of $1,962 per ounce. The total crystallized loss amount of $10.3 million is repayable in three monthly installments beginning November 2020 and ending January 2021 and has been recognized as a realized loss and derivative financial liability. This Restructuring has allowed the Company to realize higher gold prices on its gold sales during the second quarter, and by crystallizing the loss at $1,714 per ounce, mitigated further mark-to-market losses as gold prices rose above $1,714 per ounce. Using the ceiling price on the collars of $1,962 per ounce, this represents approximate savings of $6 million.
• The Company and Franco-Nevada are in advanced discussions to amend the gold stream arrangement to a proposed fixed delivery schedule of 783.33 ounces per month, up to October 31, 2031 based on the Sabodala standalone life of mine plan.
Consolidated Operating Highlights
• Gold production for the second quarter 2020 was 89,011 ounces, 40% higher than prior year period.
• Consolidated cost of sales per ounce was $1,142, an increase of 12% compared to the prior year period mainly due to lower grades processed, as well as, lower capitalized deferred stripping costs between periods, partially offset by lower mine production costs, net inventory movements and lower depreciation and amortization expense at Sabodala.
• Consolidated total cash costs per ounce1 were $750, an increase of 10% compared to the prior year period due to lower grades processed, as well as, lower capitalized deferred stripping costs between periods, partially offset by lower mine production costs and net inventory movements at Sabodala.
• Consolidated all-in sustaining costs (excluding cash/(non-cash) inventory movements and amortized advanced royalty costs) per ounce1 were $988, an increase of 23% mainly due to lower grades processed at Sabodala, higher capital expenditures and higher share-based compensation expense.
• The Company’s 2020 guidance has been updated to include mining and processing of high-grade ore from the first of the Massawa deposits, Sofia, which commenced mining activities in mid-July, as well as increases in total material movement for mining and processing at Wahgnion resulting from better than expected performance of the Wahgnion processing plant, when compared to its original design. The Company now expects to produce between 375,000 and 400,000 ounces of gold in 2020, an increase of 30,000 to 45,000 when compared to the Company's original guidance.
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REVIEW OF OPERATIONS
Sabodala Gold Operations
Three months ended June 30, Six months ended June 30,
Teranga will host a conference call and audio webcast today at 8:30 a.m. ET, during which management
will review the highlights for the three and six months ended June 30, 2020. Those wishing to listen can
access the live conference call and webcast as follows:
Date & Time: Friday, August 7, 2020 at 8:30 a.m. ET Telephone: Toll-free +1-877-291-4570 Local or International +1-647-788-4919
Please allow 10 minutes to be connected to the conference call.
Webcast: Available on Teranga’s website at is www.terangagold.com/Q12020
Replay: The conference call replay will be accessible for two weeks after the call by dialling +1-416-621-4642 or toll-free at +1-800-585-8367 and entering the conference ID 7526159.
Note: The slide presentation will be available for download at www.terangagold.com for simultaneous viewing during the call.
ENDNOTES
(1) This is a non-IFRS financial measure and does not have a standard meaning under IFRS. Please refer
to the sections titled, “Non-IFRS Financial Measures” and “Reconciliation of Non-IFRS Financial
Measures” in the Company's Management's Discussion and Analysis for the three and six months
ended June 30, 2020.
(2) This production target is based on proven and probable minerals reserves for the Sabodala-Massawa
Project and the Wahgnion Gold Operation as at December 31, 2019 as disclosed on the Company’s
website at www.terangagold.com and on SEDAR at www.sedar.com. The estimated reserves
underpinning this production target have been prepared by a competent and qualified person or
persons (see Competent and Qualified Persons Statement in Management’s Discussion and Analysis
for the three and six months ended June 30, 2020).
(3) Comparative amounts have been restated to reflect all-in sustaining costs per ounce and all-in
sustaining costs (excluding cash/(non-cash) inventory movements and amortized advanced royalty
costs) per ounce of Sabodala on a standalone basis, exclusive of resettlement capital expenditures
related to the Niakafiri deposit.
(4) During the three months ended June 30, 2020, gold ounces produced from Sabodala and Wahgnion
were 45,826 ounces and 43,185 ounces, respectively (2019: 63,436 ounces and nil, respectively).
During the six months ended June 30, 2020, gold ounces produced from Sabodala and Wahgnion were
85,832 ounces and 94,491 ounces, respectively (2019: 135,382 ounces and nil, respectively).
(5) During the three months ended June 30, 2020, gold ounces sold from Sabodala and Wahgnion were
44,677 ounces and 49,752 ounces, respectively (2019: 64,322 ounces and nil, respectively). During