1 PRODUCING AND EXPLORING DENVER GOLD FORUM SEPTEMBER 2011
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PRODUCING AND EXPLORING DENVER GOLD FORUM SEPTEMBER 2011
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CAUTIONARY STATEMENT This presentation contains forward looking information, within the meaning of applicable Canadian securities legislation, and forward looking statements, within the meaning of applicable United States securities legislation, which reflects management’s expectations regarding Teranga Gold Corporation’s (“Teranga” or the “Company”) future growth, results of operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Wherever possible, words such as “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, have been used to identify such forward looking information. Although the forward looking information contained in this presentation reflect management’s current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, Teranga cannot be certain that actual results will be consistent with such forward looking information. A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward looking information, including those listed in the “Risk Factors” section of the prospectus of Teranga, dated November 11, 2010 (the “Prospectus”). These factors should be considered carefully and prospective investors should not place undue reliance on the forward looking information. Forward looking information necessarily involves significant known and unknown risks, assumptions and uncertainties that may cause Teranga’s actual results, performance, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward looking information. Although Teranga has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in the forward looking information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, prospective investors should not place undue reliance on such forward looking information. Teranga expressly disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities law. Forward looking information and other information contained herein concerning mineral exploration and management’s general expectations concerning the mineral exploration industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of any misstatements regarding any industry data presented herein, mineral exploration involves risks and uncertainties and industry data is subject to change based on various factors. In addition, please note that statements relating to “reserves” or “resources” are deemed to be forward looking information as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably mined in the future.
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CAPITALIZATION SUMMARY
Ticker symbol: TGZ: TSX/ASX
Shares outstanding(1): 245.6 million
Stock options outstanding: 14.4 million
Share price (as at September 12, 2011): C$2.28
Market capitalization: C$560 million
Cash position(2)(3): US$65.9 million
Debt position(2)(4): US$20.1 million
Net cash position(2): US$45.8 million
(1) As part of the demerger Mineral Deposits Ltd. retained 40 million TGZ shares and received C$50 million from the IPO proceeds. (2) As at June 30, 2011 (3) Includes short-term investments and restricted cash (4) US$23.6 MM drawn under the mining fleet finance lease facility with Societe Generale.
FOCUSED ON GROWTH
FOCUSED ON:
GROWING RESERVES
GROWING PRODUCTION
FINANCIAL STRENGTH
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ASSETS Large exploration land package in Senegal, W.A.
• 1,488km2 virtually unexplored land surrounding operating mill
• An emerging world class gold district Operating mine / mill
• Proven performance • Only gold mining operation in the country
Strong balance sheet
• Able to self-fund exploration & development Experienced management team
• Proven track record
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Sabodala is the only large scale gold mine in Senegal
Senegal • Mining Code passed in 2003 • Successful democracy • Stable political environment • Population of ~13.7M • Mining friendly regime • Government holds 10% free-carried
interest in Sabodala and 3% royalty • Tax-free holiday that ends May 2015 • Rated # 1 in Africa and #5 in the
World in the World Bank’s “Doing Business” Report
SABODALA GOLD (SENEGAL)
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First gold pour in March 2009 • Approx. cost of $330M
Mill expansion from 2 MM tpa to ~4 MM tpa underway
• Est. 140,000 oz Au production 2011 expanding to >200,000 oz Au
• Expected to be completed early 2012 at a cost of $56 MM
Well developed infrastructure
• Located 650 km east of the capital Dakar and 96 km north of the town Kedougou – paved road within 56 km of mine site
• 30 MW heavy fuel oil power plant located on site (36 MW with mill expansion)
SABODALA GOLD (OPERATIONS)
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Addressing Investor concerns on IPO • Short mine life
Increased reserves and provided reserve guidance
Committed to take Gora from exploration into development
Ramped up exploration program Expect more discoveries on the
Regional Land Package • High cash costs
Increased production and lowered cash cost guidance for 2011 and 2012
Redesigned pit • Hedge book
Delivery has been accelerated
FOCUSED ON ADDING RESERVES
HIGHLIGHTS
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FOCUSED ON GROWING RESERVES 1.5Moz currently to …
• Objective: 10-15+ year mine life • Growth through exploration – extensive exploration program
on 1,455km2 Regional Land Package of virtually unexplored prolific land
• Growth through regional opportunities – primary focus Senegal
FOCUSED ON GROWING PRODUCTION 140,000oz currently to …
• Leveraging off our existing mill – land package all truckable • Doubling mill capacity – could increase further
FOCUSED ON FINANCIAL STRENGTH Maintaining strong balance sheet to self-fund exploration…
• Eliminating hedge book – quickly but prudently • Margin expansion (eliminate hedge and lower costs) • Significant free cash flow to self-fund exploration strategy • Manageable capex requirements
GROWTH STRATEGY
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FOCUSED ON GROWING PRODUCTION Calendar Year 2011
• Est. production 140,000 oz at $750 - $775/oz
• CapEx $75M (primarily for mill expansion, mobile equipment and capitalized Mine License exploration)
Calendar Year 2012
• Est. production 220,000 oz at $575-$625/oz
• CapEx ~ $25M (primarily for exploration)(1)
Calendar Year 2013
• Targeting 300,000 oz at $600 - $700/oz
(1) Excludes capital cost to develop regional deposits.
Assumes increased production from regional exploration success
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50
100
150
200
250
300
350
400
450
500
2011 2012 2013 2014
Production Profile (‘000 ozs)
Production Exploration Success
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FOCUSED ON FINANCIAL STRENGTH Maintain strong balance sheet to self-fund exploration and development
• IPO recapitalization of balance sheet – net cash position US$45.8M(2)
• Eliminating hedge book – quickly but prudently – YE 2011~ 150,00oz at ~ $829/oz(3)
• Margin expansion + increased production profile = significant free cash flow to self-fund exploration and development strategy
• Manageable capex requirements
(1) Assumes $1500/oz gold price and cash cost of $600/oz (2) As at June 30, 2011 (3) Non-Deferred Hedge Schedule Appendix page 39
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300
400
500
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800
900
1000
2011 2012 2013 2014
Cash Margin – Expansion ($/oz) (1)
Rate of margin expansion is a function of increasing production through regional exploration success
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FOCUSED ON GROWING RESERVES
1,51 (@1.47 g/t)
2,254 (@1.33 g/t)
774 (@1.06 g/t)
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300
600
900
1,200
1,500
1,800
2,100
2,400
Proven and Probable Measured andIndicated(1)(2)(3)
Inferred(1)(2)
Gold Reserves and Resources(1)
(1) See Appendix page 38 (2) M+I resources are inclusive of reserves (3) As at June 30, 2010, see Sabodala Technical Report
Kedougou-Kenieba Inlier – A Birimian Greenstone Belt
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Exploration Program (Calendar 2011) 1. Mine License Exploration: $8 MM (~60,000m) (YTD 30,000m)* 5 Drill Rigs 2. Regional Exploration: $25 MM (~80-90,000) (YTD 50,000m)* 12 Drill Rigs TOTAL: +$33 MM (140-150,000m) (+180,000m RAB) 17 drill rigs
* Majority of assays are pending
FOCUSED ON GROWING RESERVES
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GORA
35 km radius
1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION
Budget: $25M 1,455km2 Budget: $8M
33km2
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1. SABODALA MINE LICENSE EXPLORATION • $8 MM exploration program is underway
on the Sabodala Mine License • 10 targets identified for follow up • Potential to expand proven and probable
reserves from 1.5 Moz gold to 2 to 3 Moz gold over the next 12 to 24 months increasing the mine life to ~ 10 to 15 years
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“THE CORRIDOR” Continuation of the main Sabodala
structural trend to the north
SAMBAYA HILL Confluence of Niakafiri Shear Zone
with Main Flat from Sabodala and Masato Shear
MASATO EXTENSION Continuation of Masato deposit
NIAKAFIRI, NIAKAFIRI WEST & SOUKHOTO
Down-dip extension of Niakafiri, strike extension of Niakafiri West
and Soukhoto
1. SABODALA MINE LICENSE EXPLORATION
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SABODALA MINE LICENSE EXPLORATION – “THE CORRIDOR”
Sabodala Structural Trend (“The Corridor”) • Northerly trending extension of Sabodala pit • Mineralization traced more than 200m north
of the existing pit along trend • Open to north and west • Drilling intersected wide widths of alteration similar
to Sabodala and Niakafiri • Drilling 20m centres • Plan is to conduct 10,800 metres of RC and Diamond
drilling to test target at depth and along strike • Expect resources defined to be converted
to reserves in 2011
Mylonite Shear Zone Ayoub’s
Thrust
Sabodala Pit
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Sabodala Pit
Masato Extensions
Sambaya Hill
Masato Down Dip
SABODALA MINE LICENSE EXPLORATION – MASATO / SAMBAYA HILL TARGET
MASATO / SAMBAYA HILL • Masato structural trend (1.6 Moz on Oromin JV)
strikes across onto our mine license • Plan to conduct 5,000 metres of RC and Diamond
drilling to define structural trend and test structure at depth
• Initially being tested over a 500 metre strike length, 20 drill holes totaling 6,150 metres of drilling
• First drill hole SMRC055 • 11m of 1.08 g/t from 234m down hole • 20m of 3.53 g/t from 267m down hole • Will be extended with core as part of
program • Multiple mineralized zones have been identified
with high grade intervals apparent from aqua regia assays conducted on site
• Expect to define new resources in calendar 2011 • Sambaya Hill – Trend defined by an IP and
geochemical anomaly
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GORA
35 km radius
1. MINE LICENSE EXPLORATION 2. REGIONAL EXPLORATION
Budget: $25M 1,455km2 Budget: $8M
33km2
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2. REGIONAL EXPLORATION
• From 2007 – 2009, no significant drilling was done on the 1,455 km2 Regional Land Package due to cash constraints
• There are 27 drill targets identified to drill by end of year; drilling program ($25M) currently underway
• 50,000m of DD and RC and 98,000m of RAB drilling completed June 30, 2011
• 12 drill rigs are currently on the Regional Land Package (2 more rigs are expected in Sept.)
• All targets in trucking distance of the existing mill
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“THE DONUT”
GORA
TOUROKHOTO
TOUMBOUMBA
1. REGIONAL EXPLORATION
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GORA – HIGH-GRADE QUARTZ VEIN SYSTEM • Most advanced target: moving from exploration to
development • Inferred resource of 106,000 oz @ 6 g/t Au • 22 km from Sabodala mill • 800m strike length auriferous quartz vein,
outcropping • Deposit open in all directions • 4 active drill rigs (3 DD, 1 RC/DD) • Induced polarization (“IP”) survey has been
completed over the Gora deposit and has identified gold anomalies along strike and parallel to Gora – follow-up testing required
• Now understood to be a stacked vein system (vs. single-vein)
• Vein 1 extended (currently 8.8 g/t Au) • Vein 2 now more continuous (3.0 g/t Au) • Vein 3 now important mineralized body • Vein 5 discovered just below Vein 1
• Excellent potential for bulk style mineralization
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GORA – HIGH-GRADE QUARTZ VEIN SYSTEM 1. Drilling completed to date – 144 RC and DD holes,
24,705m • Current phase of 25,000m to test to vertical depth of
130m 2. Step-out program commenced
• Minimum 2,400m DD • 9 hole program expanded to 11, 8 holes completed
and confirmed presence of mineralized structure in all 8
• True widths of up to 12 metres • All assays pending but confirmed presence of
mineralized structure 3. Exploration of immediate North and South –
6,200m program • RC program, late July to Sept (depending on
rig availability and performance) 4. Further 10,000m of RC, 5,000m DD
• Test strike extent of Gora mineralized trend and nearby parallel IP anomalies
• Commencement of program likely early October (depending on rig availability)
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Selected latest results include:
JUNE 13, 2011 - PRESS RELEASE JULY 11, 2011 - PRESS RELEASE RECENT RESULTS
[email protected] g/t from 111m (Vein 1) [email protected] g/t from 88m [email protected] g/t from 23m
[email protected] g/t from 126 m (Vein 1) [email protected] g/t from 108m [email protected] g/t from 79m
[email protected] g/t from 154 m (Vein 1) [email protected] g/t from 79m [email protected] g/t from 28m
[email protected] g/t from 164 m (Vein 5) [email protected] g/t from 132m
[email protected] g/t from 156m (Vein 4) [email protected] g/t from 155m
[email protected] g/t from 145m (Vein 2) [email protected] g/t from 155m
[email protected] g/t from 112m (Vein 2)
[email protected] g/t from 87m (Vein 1)
• Ongoing exploration, permitting, and feasibility • Expect to bring resource to reserve by end of calendar 2011 with the
goal of processing high-grade ore as soon as late 2012
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TOUMBOUMBA – NEWEST TARGET • Latest discovery, potential to become second
regional deposit through the mill • Located 10 km NW from Sabodala mill • Alteration hosted mostly in granite (laterite
cover) • RAB drilling program commenced in April
• Expanded to encompass entire structural domain
• To date, 1,113 holes, 47,584m on a 100 x 50m grid
• Significant widths of ore mineralization were encountered in western portion of anomaly, RAB holes grading >0.5 g/t
• Targets identified by RAB program are the subject of the current RC program
• To date, 47 RC holes, 8,748m completed • Continues to return wide auriferous zones
• Oxide mineralization of up to 50m in depth • At minimum, potential for heap leaching
• Production could be fast tracked without displacing material from Sabodala mill
• Deeper drilled required
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TOUMBOUMBA – NEWEST TARGET
JUNE 13, 2011 - PRESS RELEASE EARLY RAB RESULTS
JULY 11, 2011 - PRESS RELEASE RAB RESULTS
RECENT RESULTS RAB RESULTS
[email protected] g/t, including [email protected] g/t [email protected] g/t from 16m [email protected] g/t from 26m
[email protected] g/t, including [email protected] g/t [email protected] g/t from 8m [email protected] g/t from 20m
[email protected] g/t, including [email protected] g/t [email protected] g/t from 38m
[email protected] g/t from 12m
[email protected] g/t from 30m
JUNE 13, 2011 - PRESS RELEASE EARLY RC RESULTS
JULY 11, 2011 - PRESS RELEASE RC RESULTS
[email protected] g/t, including [email protected] g/t [email protected] g/t from 17m including [email protected] g/t
[email protected] g/t, including [email protected] g/t [email protected] g/t from 39m including 1m@50 g/t
[email protected] g/t from 56m including [email protected] g/t
[email protected] g/t from 36m including [email protected] g/t
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TOUMBOUMBA – NEWEST TARGET
RECENT RESULTS – AQUA REGIA
[email protected]/t from 37m including [email protected]/t and [email protected]/t from 52m including [email protected]/t from SNWRC016
[email protected]/t f rom 125m from SNWRC017
[email protected]/t f rom 21m from SNWRC023
[email protected]/t f rom 52m from SNWRC027
[email protected]/t f rom 180m from SNWRC029
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DIEGOUN NORTH – “THE DONUT” • 7km x 4 Km complex of gold anomalism • Contrasting rock types, porphyries, granites,
dolerite & sediments • Rock samples to 80 g/t Au • RAB drilling has defined gold mineralization in bedrock
• 19,000m RAB drill program completed at Cinnamon, 663 holes
• 143 holes returned auriferous intersections above 0.5 g/t
• First pass RC program at Jam and Honey; 51 holes completed for just under 8,800m (40 holes anomalous levels of gold > 0.5 g/t)
• Recognition of a well-developed, auriferous north-east trending structure
Sabodala Ore Body
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• >5Km long, up to 1Km wide gold anomaly defined by termite sampling
• Parallels NE trending shears of the MTZ • 3 Moz Massawa deposit hosted on MTZ about
25Km south • >240 ppb Au contours coincide with areas where MTZ
shears are intersected by later NE fault structures • Rock sampling returned up to 10 g/t Au from
sparse outcrop • Wide zones of sheared sediments and
quartz-feldspar porphyries observed • Quartz tourmaline veining observed • 23,416m RAB drill program completed with a
total 1,006 holes • Identified eight coherent zones of gold anomalism • Early scout DD completed in Q1 identified significant
structural zones which host auriferous alteration zones
• Targets up to 700m in strike length • Follow up geophysical, RC and DD testing required
TOUROKHOTO
Sabodala Ore Body
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GOUNDAMEKHO – EXTENSIVE SURFACE GOLD WORKINGS ON STRUCTURES
• 35 RC holes for 4,200m completed • Multiple gold bearing structures
warrant follow-up drilling
Gold from trenches
75g nugget from artisan workings
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EXPLORATION TEAM / ON SITE ASSAY LAB
Mapping Trenches at Dembala Berola
Niang, Database and GIS Management
Structural Mapping
Part of team at Exploration Office
Field Work Sounkounkou
Geochem Sampling Team at Makana
Mapping at Makana
On Site Assay Lab
RC Drilling at Bransan
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FOCUSED ON GROWTH Kedougou-Kenieba Inlier – A Birimian Greenstone Belt An emerging world class gold district.
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CORPORATE SOCIAL RESPONSIBILITY CSR is fundamental to our business strategy. We are committed to making a positive difference in the communities in which we live and work. Our aim is to share the benefits of mining with our employees and the community and contribute to economic and social development.
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CORPORATE SOCIAL RESPONSIBILITY
• Teranga financed the construction of Khossanto College
• In partnership with the regional hydraulic department, providing financial and project
management support to the upgrade water supply – resulting in a positive impact on health and sanitation
• The Company-funded Sabodala Village Clinic – treating 1,378 cases of Malaria (which untreated can lead to mortality); 7,235 patients were treated at the Clinic, representing a $30,000 investment in community health
• The Sabodala Mine provides direct contract employment and skill development to over 1,100 persons, with an additional 120 persons benefiting from casual employment each month. A further 3,600 persons are estimated to be indirectly employed through the provision of goods and services to the mine through our partners and suppliers
• Teranga is committed to the professional development of its local workforce through continuous training and skill development
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SUMMARY – FOCUSED ON GROWTH
1. Experienced Management Team 2. Largest land position in Senegal 3. Only mill in Senegal 4. Planned mill expansion 5. Extensive exploration program
– ~17 drill rigs 6. Strong Balance sheet
– increasing free cash flow with margin expansion
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PRODUCING AND EXPLORING SEPTEMBER 2011
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APPENDICES Competent Persons Statement The scientific and technical information contained in this release relating to exploration activities within the mining license is based on information compiled by Mr. Bruce Van Brunt, who is a Fellow with The Australasian Institute of Mining and Metallurgy and is also a registered professional geologist in the State of Washington, USA. He is qualified as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as defined in NI43- 101. Mr. Van Brunt has consented to the inclusion of this information in the form and context in which it appears in this release. Mr. Van Brunt is a full-time employee of Teranga and not independent of Teranga within the meaning of NI43-101. The scientific and technical information contained in this release relating to the regional exploration is based on information compiled by Mr. Martin Pawlitschek, who is a member of the Australian Institute of Geoscientists. Mr. Pawlitschek is qualified as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as a Qualified Person as defined in NI43-101. Mr. Pawlitschek has consented to the inclusion of this information in the form and context in which it appears in this release. Mr. Pawlitschek is a full-time employee of Teranga and not independent of Teranga within the meaning of NI43-101.
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SABODALA GOLD PROJECT: RESERVES & RESOURCES
Ore (000 tonnes)
Grade (g/t Au)
Contained Gold (000 oz Au)
Proven & Probable Sabodala 24,350 1.57 1,231 Niakafiri 7,623 1.15 281
Total 31,973 1.47 1,512
Measured & Indicated Sabodala 41,892 1.39 1,869 Niakafiri 10,741 1.12 386
Total 52,633 1.33 2,254(1)
Inferred Resources Sabodala 7,310 1.22 287 Niakafiri 7,248 .88 205 Niakafiri West 7,144 .82 188 Soukhoto 566 1.32 24 Gora(2) 387 5.6 70
Total 22,655 1.06 774(1)
(1) See the Sabodala Technical Report ; #’s as at June 30, 2010 (2) Gora inferred resource updated to 543,000 tonnes at 6.08 g/t containing 106,000 ozs. Please see May 2, 2011 Press Release for further information.
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NON-DEFERRED HEDGE SCHEDULE
Delivery Date Price US$/oz Ounces
17-Nov-2011 846.00 18,500
17-Feb-2012 846.00 28,000
17-May-2012 846.00 28,000
15-Aug-2012 846.00 27,500
21-Nov-2012 832.92 25,000
20-Feb-2013 832.92 25,000
17-May-2013 790.66 25,000
21-Aug-2013 791.50 16,000
Total 193,000
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MANAGEMENT & BOARD Alan R. Hill Executive Chairman & CEO
• Mining engineer with over 20 years experience globally in project evaluations, acquisitions and mine development as Executive VP of Barrick Gold
• Currently a Director of Gold Fields • Former President and CEO of Gabriel Resources (2005 – 2009) and non-Executive Chairman of Alamos Gold
(2004 – 2007)
Richard S. Young President & CFO
• Over 10 years experience in mining finance, development, corporate development, and investor relations with Barrick Gold
• Former VP and CFO of Gabriel Resources (2005 – 2010)
Christopher R. Lattanzi Director
• Mining engineer with over 20 years experience in property valuation, scoping, feasibility studies and project monitoring on a global basis
• Currently a Director of Argonaut Gold and Spanish Mountain Gold • Founding member and former president of Micon International (1988 – 2005)
Oliver Lennox-King Director
• Over 30 years experience in the mineral resource industry with a wide range of experience in financing, research and marketing
• Non-Executive Chairman of Fronteer Gold and director of CGX Energy • Instrumental in the formation of Southern Cross Resources (1997), former President of
Tiomin Resources (1992 – 1997) • MDL Director not standing for re-election
Alan R. Thomas Director
• Director/Trustee and CFO of Labrador Iron Ore Royalty • Former Director of Gabriel Resources (2006 – 2010), CFO of ShawCor (2000 – 2006), and CFO of Noranda
(1987 – 1998)
Frank Wheatley Director
• Over 25 years experience as a director and senior officer of, and legal counsel to, a number of Canadian public mining companies and has extensive legal and business experience in the mineral industry, particularly in the areas of public financing, project debt financing, permitting of large scale mining projects, and strategic mergers and acquisitions in the international minerals industry
• Currently the Executive Director, Corporate Affairs and Strategy of Talison Lithium Limited • Currently a director of Lithic Resources Ltd. and Portal Resources Ltd. • Former Vice-President and General Counsel of Gabriel Resources Ltd. (2000 - 2009) • Former Vice President, Legal Affairs of Eldorado Gold Corporation