Teranga Gold: ASX First Quarter Report for the Three Months Ended March 31, 2013

Teranga Gold: ASX First Quarter Report for the Three Months Ended March 31, 2013 
TORONTO, ONTARIO -- (Marketwired) -- 04/29/13 -- Teranga Gold
Corporation (TSX:TGZ)(ASX:TGZ) - 
KEY POINTS 


 
--  Production increased 63% to 68,301 ounces of gold 
--  Total cash costs decreased 18% to $535 per ounce 
--  100% hedge free as hedge book is eliminated 
--  Cash and bullion receivable balance increased 28% to $57.4 million 
--  Agreement with the Republic of Senegal secures basis to increase
    reserves and production in Senegal 
--  Finalized $50 million Equipment Finance Facility 
--  Reduced discretionary spending 

 
OPERATIONAL OVERVIEW 
Sabodala Gold Operation 
(All amounts are in US$ unless otherwise stated) 


 
--  Gold production for the three months ended March 31, 2013 increased 63
    percent to 68,301 ounces of gold compared to the same prior year period
    due to the processing of higher grade ore combined with higher mill
    throughput as a result of the completion of the mill expansion. 
    
--  Gold sold for the three months ended March 31, 2013 increased 98 percent
    to 69,667 ounces compared to the same prior year period. Ounces sold
    during the first quarter were slightly higher than production for the
    period due to a draw-down of gold in circuit inventory. At March 31,
    2013, gold in circuit and gold bullion inventory amounted to 11,883
    ounces. 
    
--  Total cash costs for the three months ended March 31, 2013 decreased 18
    percent to $535 per ounce sold compared to the same prior year period.
    While gross mine site costs increased 35 percent due to higher mining
    and processing rates, the decrease in total cash costs per ounce was
    mainly due to higher gold ounces sold and capitalization of production
    phase stripping costs. Total cash costs have been adjusted for the
    adoption of IFRIC 20 for capitalization of a portion of production phase
    stripping costs. 
    
--  Total tonnes mined for the three months ended March 31, 2013 were 19
    percent higher compared to the same prior year period due to the
    increase in hauling and drilling capacity of the mining fleet during
    2012 and first quarter 2013.  
    
--  Ore tonnes mined were 17 percent higher compared to the p
rior year
    period while grades mined were 36 percent higher resulting in an
    increase in ounces mined of about 60 percent. 
    
--  Mining rates are expected to decrease by about 5 percent in the second
    quarter through the balance of the year despite the commissioning of 3
    haul trucks and 1 shovel as the Company lowers its mining rate to
    maximize free cash flow in 2013 but maintain production guidance. 
    
--  Ore tonnes milled for the three months ended March 31, 2013 were 21
    percent higher than the same prior year period due to an increase in
    mill capacity as a result of the completion of the mill expansion in the
    second quarter of 2012.  
    
--  Transfer chute design upgrades and the addition of more durable liners
    in the high wear points through the plant commenced with a comprehensive
    planned shutdown in January 2013, with further work to continue during
    planned shutdowns in both the second and third quarters 2013. These
    changes are anticipated to help reduce the frequency and duration of
    unplanned downtime allowing the design targets to be achieved. Crusher
    operating time is the key to meeting design target throughput rates. 
    
--  During the first quarter of 2013, the average realized gold price was
    $1,090 per ounce with 45,289 ounces delivered into gold hedge contracts
    at an average price of $806 per ounce and 24,378 ounces sold at an
    average spot price of $1,619 per ounce. During the same prior year
    period, 35,268 ounces were sold at an average price of $1,712 per ounce.
    
--  As of April 15, 2013, the Company is 100 percent hedge free after having
    bought back the remaining "out of the money" gold forward sales
    contracts. 
    
--  During the first quarter of 2013, the Company entered into a new $50
    million finance lease facility with Macquarie Bank Limited
    ("Macquarie"). The lease facility replaces the finance lease facility
    previously in place with Societe Generale ("SocGen"), which was assigned
    and novated to Macquarie. The proceeds will be put towards additional
    equipment for the Sabodala pit as well as the new equipment required for
    the Gora deposit that is currently being permitted. In total, $22.7
    million was outstanding at March 31, 2013, including $10.5 million
    novated from SocGen during the quarter. A further $4.3 million will be
    drawn down in the second quarter when final delivery of Sabodala
    equipment is received. The balance of $23 million will be reserved for
    future drawn downs for purchases of mining equipment, as required. 

 
PRODUCTION STATISTICS  


 
----------------------------------------------------------------------------
                             Mar-13    Dec-12    Sep-12    Jun-12    Mar-12 
                                                                            
                            Quarter   Quarter   Quarter   Quarter   Quarter 
----------------------------------------------------------------------------
Ore mined          ('000t)    1,312     2,038       655     2,105     1,117 
                           -------------------------------------------------
Waste mined        ('000t)    7,536     5,274     6,242     5,130     6,316 
                           -------------------------------------------------
Total mined        ('000t)    8,848     7,312     6,897     7,235     7,433 
                           -------------------------------------------------
Grade Mined        (g/t)       1.87      2.04      1.92      2.25      1.38 
                           -------------------------------------------------
Ounces Mined       (oz)      78,929   133,549    40,516   152,603    49,516 
                           -------------------------------------------------
Strip ratio        waste/                                                   
                   ore          5.7       2.6       9.5       2.4       5.7 
                           -------------------------------------------------
Ore processed      ('000t)      696       725       650       491       573 
                           -------------------------------------------------
Head grade         (g/t)       3.31      3.40      3.11      3.22      2.52 
                           -------------------------------------------------
Gold recovery      (%)           92%       91%       85%       90%       90%
                           -------------------------------------------------
Gold produced (1)  (oz)      68,301    71,804    55,107    45,495    41,904 
                           -------------------------------------------------
Gold sold          (oz)      69,667    71,604    62,439    38,503    35,268 
                           -------------------------------------------------
Average price                                                               
 received          $/oz       1,090     1,296     1,290     1,608     1,712 
                           -------------------------------------------------
Total cash costs                                                            
 per ounce sold(2)                                                          
 (including                                                                 
 Royalties)        $/oz         535       532       509       592       650 
----------------------------------------------------------------------------
(1) Gold produced includes change in gold in circuit inventory plus gold   
 recovered during the period.                                               
(2) Total cash costs per ounce sold for 2012 were restated to comply with   
 the Company's adoption of IFRIC 20 - Stripping Costs in the Production     
 Phase of a Surface Mine, in line with the Company's accounting policies and
 industry standards.                                                        
----------------------------------------------------------------------------

 
OUTLOOK 2013   


 
----------------------------------------------------------------------------
                                      For the year ended December 31, 2013  
                                    ----------------------------------------
                                        Revised Guidance   Original Guidance
Operating results                                                           
  Production (oz)                      190,000 - 210,000   190,000 - 210,000
  Total cash costs (incl.                                                   
   royalties)(1),(2) ($/oz sold)               650 - 700           650 - 700
                                                                            
Exploration and evaluation expense                                          
 (Regional Land Package) ($                                                 
 millions)                                           3.0         10.0 - 15.0
                                                                            
Administration expenses ($ millions)                13.0         15.0 - 20.0
                                                                            
Capital expenditures ($ millions)                                           
  Mine site                                         20.0         20.0 - 25.0
  Capitalized reserve development                                           
   (Mine License)                                    5.0          5.0 - 10.0
  Gora development costs                                                    
    Mobile equipment                                 5.0         30.0 - 35.0
    Site development                                 5.0         15.0 - 20.0
                                    ----------------------------------------
  Total Gora development costs                      10.0         45.0 - 50.0
  Capitalized deferred stripping(2)                 35.0         35.0 - 40.0
                                    ----------------------------------------
Total capital expenditures                          70.0       105.0 - 125.0
----------------------------------------------------------------------------
(1) Total cash cost per ounce is a non-IFRS financial measures with standard
 meaning under IFRS.                                                        
(2) Includes the impact of adopting IFRIC 20 - Stripping Costs in the       
 Production Phase of a Surface Mine.                                        
----------------------------------------------------------------------------

 
First quarter results benefited from continuation of mining a high
grade zone in phase two, as a result, the Company remains on track to
produce between 190,000 - 210,000 ounces of gold in 2013. Total cash
costs guidance for 2013 remains unchanged at $650 to $700 per ounce
despite the increase in the royalty rate from 3% to 5% of sales
effective January 1, 2013.  
In light of market conditions, we have lowered discretionary
expenditures in a number of key areas including operations,
exploration and administration, as well as, sustaining and
development capital. 
Reserve development expenditures on the Mine License have been
reduced while exploration drilling on the Regional Land Package is
being minimized. The Agreement in Principle signed with the
Government of Senegal in early April provides for the extension of
five key regional exploration licenses which allows the Company to
defer regional exploration activity. Exploration expense for 2013 is
now expected to total $3 million, a decrease from our original
guidance range of $10 to $15 million, while capitalized reserve
development costs are now expected at the lower end of our original
guidance range of $5 to $10 million. 
General and administrative expenses have been reduced to $13 million
from the original guidance range of $15 to $20 million, but still
provide for the necessary support of operations and development. 
Sustaining and development capital expenditures have been reduced by
extending the timeline for the development of the Company's first
satellite deposit at Gora, where permits are expected in 2013 and
production in the first half of 2014. Mine site capital expenditures
are expected at the lower end of our original guidance range of $20
to $25 million, even after reflecting the additional costs related to
the Agreement in Principle signed with the Republic of Senegal.
Development expenditures at Gora in 2013 will be minimized to $5 to
$10 million from a previous expected range of $45 to $50 million, of
which $23 million was to be financed via the new mobile equipment
loan. Capitalized deferred stripping at the Sabodala pit is now
expected at the bottom end of the original range of $35 to $40
million.  
With these changes, at a gold price of $1,400 per ounce, we expect to
generate free cash flow in 2013 which will further improve our
financial strength during this period. 
FINANCE 
At March 31, 2013: 
Cash and cash equivalents - $51.0 million 
Trade Receivables (bullion) - $6.4 million  
Project Finance Facility (balance outstanding) - $60.0 million  
Mining Fleet Lease Facility (balance outstanding) - $22.7 million  
Hedge Facility - as of April 15, 2013, the forward sales contracts
were completely eliminated 
Appointment of new Auditors 
The Company has appointed Ernst & Young LLP as the Company's new
auditors. 
AGREEMENT WITH THE REPUBLIC OF SENEGAL 
The Company signed a long-term comprehensive Agreement in Principle
("Agreement") with the Republic of Senegal in early April. The
Agreement sets out a predictable and stable fiscal operating
environment for the Company's future investment in exploration,
acquisitions and development to increase reserves and production. The
Agreement benefits all stakeholders and gives the Company the ability
to invest with certainty in regards to the fiscal and operating
parameters. The agreement is expected to be finalized during the
second quarter of 2013. 
The Republic of Senegal has agreed to support the Company in its plan
for further development, notably: 


 
--  To a price and formula to allow for the acquisition of the Republic's
    additional participation option on deposits not on the Company's Mine
    License and to incorporate these into the Company's existing Mine
    License and fiscal regime; 
    
--  To support drilling of the Niakafiri deposit on the Mine License; 
    
--  To extend the term of its renewable Mine License by five years to 2022
    and extend five key exploration licences by a further 18 months beyond
    current expiry periods; 
    
--  To commit to work with the Company to ensure full access to exploration
    targets currently occupied by artisanal miners; 
    
--  To settle all outstanding tax assessments in a fair and equitable
    manner; and 
    
--  To resolve the Special Contribution Tax of 5% in return for the fiscal
    changes to our stability agreement noted below. 

 
The Company has agreed to the following: 


 
--  To increase the royalty rate on production from 3% to 5% effective
    January 1, 2013; 
    
--  The Company will make a payment of $5.4 million related to accrued
    dividends to the Republic of Senegal in respect of its existing 10%
    minority interest. The payment is to be made upon the completion of
    embedding the Agreement into the Company's mining and exploration
    concessions.  
    
--  The Company will make a payment of $4.2 million related to the waiver of
    the right for the Republic of Senegal to acquire an additional interest
    in the Gora project. The payment is to be made upon receipt of all
    required approvals authorizing the processing of all ore through the
    Sabodala plant. 

 
MINE LICENSE (ML) RESERVE DEVELOPMENT 
The Sabodala Mine License covers 33km2 and, in addition to the mine
related infrastructure, contains the Sabodala, Masato, Niakafiri,
Niakafiri West, Soukhoto and Dinkokhono deposits. 
During the first quarter 2013, Reverse Circulation ("RC") and Diamond
Drilling ("DD") on the ML totalled about 10,000 metres at a cost of
$1.4 million. 
The overall objective of the ML exploration program is to extend the
life of mine, at a production rate of about 200,000 ounces per year,
to the year 2020 to 2025, which would result in a 10 to 15 year mine
life since the IPO in 2010. 
Sabodala - Main Flat Extension (MFE) / Lower Flat Zone (LFZ) 
In first quarter 2013, more than 3,000 metres of drilling was
completed at Sabodala to further define the ore body. Drilling
targeted the MFE immediately adjacent to the current ultimate pit, as
well as additional mineralization located below the MFE, to confirm
the continuation of these zones. The targeted zones are positioned
between 150 metres and 350 metres below the surface. The MFE remains
open down plunge and to the northwest.  
Drilling during the first quarter was primarily from within the pit
and along the perimeter to the east and west of the current pit to
upgrade and increase mineral resources. Drilling confirmed
continuation of these zones. The 2013 drill program for Sabodala was
largely completed at the end of first quarter 2013. 
Waste dump condemnation drilling to the SE of the Sabodala open pit
encountered a zone of mineralization within the general trend of the
NW Shear projected to the SE near the base of Sambaya Hill. Drilling
continued in this area during the first quarter, following up on
results received in 2012. Further analysis and modeling of results is
planned during the second quarter 2013. 
Niakafiri West, Soukhoto and Dinkokhono 
A large resource definition program is planned for 2013 for the
Niakafiri, Niakafiri West, Dinkokhono and Soukhoto deposits in 2013,
pending ongoing community discussions. In conjunction with our
Agreement with the Republic of Senegal, Management expects to
complete these discussions and commence drilling in the second
quarter of 2013.  
Masato North 
The Masato North target area is located along the possible northeast
trending splay of the Sabodala Shear zone, to the north of Masato.
Drilling intersected a strongly altered shear zone containing
sericite, albite and sulphides. A total of 870 metres in 6 holes were
drilled in the first quarter 2013 and results are pending. 
REGIONAL EXPLORATION 
There are currently 50 anomalies and drill targets that have been
identified on the Company's approximately 1,200 km2 RLP, all within
trucking distance of the mill. During first quarter 2013, the primary
focus for the regional exploration program was on the
Tourokhoto-Marougou and Goumbou Gamba prospects geological mapping
and trench sampling programmes were undertaken on the Ninyenko and
Soreto prospects within the Heremakono Permit. 
Tourokhoto-Marougou 
A program of approximately 4,300 metres of RC drilling was completed
in the first quarter to follow up on the mineralization intersected
at Tourokhoto-Marougou in 2012. Three mineralized zones ranging in
strike length from 0.5 km to 1.3 km and with varying widths have been
outlined. Geological and resource modeling is ongoing. The previous
drilling program identified significant mineralization on three RC
lines spaced over a total strike length of 1,200 metres. The
follow-up program was designed to determine if this mineralization is
continuous between and along strike of these widely spaced lines. 
Goumbou Gamba 
A 1,600 metre RC drill programme was completed in the first quarter
at Goumbou Gamba. The programme was implemented to test the strike
and down dip extensions of gold mineralization identified over a 2 km
strike length in earlier Rotary Air Blast ("RAB") and RC drill
campaigns. 
Results indicate that gold grades are of a low tenor and are widely
dispersed within the shear zone. Geological modeling is ongoing. 
Soreto 
Geological mapping and rock chip sampling was undertaken at Soreto. A
4 km long surface gold anomaly associated with a major NNW regional
shear structure was identified. A limited diamond drill-hole program
has been designed to test the mineralization at depth. 
Ninyenko 
Geological mapping and trench sampling at Ninyenko has confirmed the
existence of a near surface flat lying gold bearing brecciated shear
zone with pervasive quartz- hematite-potassic alteration. Gold
mineralization has been identified in prospect trenches covering an
area 1.3 km long by 0.6 km wide. Channel sampling of the mineralized
zone gave elevated gold values. Trenching and mapping is planned to
locate extensions to the gold mineralization.  


 
CORPORATE DIRECTORY                                                         
                                                                            
Directors                                                                   
Alan Hill, Executive Chairman                                               
Richard Young, President and CEO                                            
Christopher Lattanzi, Non-Executive Director                                
Oliver Lennox-King, Non-Executive Director                                  
Alan Thomas, Non-Executive Director                                         
Frank Wheatley, Non-Executive Director                                      
Jeff Williams, Non-Executive Director                                       
                                                                            
Senior Management                                                           
Alan Hill, Executive Chairman                                               
Richard Young, President and CEO                                            
Mark English, Vice President, Sabodala Operations                           
Paul Chawrun, Vice President, Technical Services                            
Navin Dyal, Vice President and CFO                                          
David Savarie, Vice President, General Counsel & Corporate Secretary        
Kathy Sipos, Vice President, Investor & Stakeholder Relations               
Macoumba Diop, General Manager and Government Relations Manager, SGO        
                                                                            
Registered Office                                                           
121 King Street West, Suite 2600                                            
Toronto, Ontario, M5H 3T9, Canada                                           
T: +1 416-594-0000                                                          
F: +1 416-594-0088                                                          
E: investor@terangagold.com                                                 
W: www.terangagold.com                                                      
                                                                            
Senegal Office                                                              
2K Plaza                                                                    
Suite B4, 1er Etage                                                         
sis Route du Meridien President                                             
Dakar Almadies                                                              
T: +221 338 693 181                                                         
F: +221 338 603 683                                                         
                                                                            
Auditor                                                                     
Ernst & Young LLP                                                           
                                                                            
Share Registries                                                            
Canada: Computershare Trust Company of Canada                               
T: +1 800 564 6253                                                          
Australia: Computershare Investor Services Pty Ltd                          
T: 1 300 850 505                                                            
                                                                            
Stock Exchange Listings                                                     
Toronto Stock Exchange, TSX code: TGZ                                       
Australian Securities Exchange, ASX code: TGZ                               
                                                                            
Issued Capital                
                              
                              
------------------------------
Issued shares      245,618,000
------------------------------
Stock options       17,139,167
------------------------------
                              
Stock Options - Exercise Profile   
                                   
Exercise Price (C$)         Options
-----------------------------------
$3.00                    17,139,167
-----------------------------------

 
ABOUT TERANGA 
Teranga Gold Corporation is a Canadian-based gold company listed on
the Toronto Stock Exchange (TSX:TGZ) and Australian Securities
Exchange (ASX:TGZ). Teranga is principally engaged in the production
and sale of gold, as well as related activities such as exploration
and mine development.  
Teranga was created to acquire the Sabodala gold mine and a large
regional exploration land package, located in Senegal, West Africa,
within the West African Birimian geological belt. Management believes
the mine operation, together with the Company's prospective 1,200 km2
land package, provides the basis for growth in reserves, production,
earnings and cash flow as new discoveries are made and processed
through the Company's existing mill. The Company is focused on growth
- growth in reserves, growth in production - while building a strong
balance sheet to facilitate its actions. 
Forward-Looking Statements 
This news release contains certain statements that constitute
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or
achievements of Teranga, or developments in Teranga's business or in
its industry, to differ materially from the anticipated results,
performance, achievements or developments expressed or implied by
such forward-looking statements. Forward-looking statements include,
without limitation, all disclosure regarding possible events,
conditions or results of operations that are based on assumptions
about future economic conditions and courses of action. Teranga
cautions you not to place undue reliance upon any such
forward-looking statements, which speak only as of the date they are
made. The risks and uncertainties that may affect forward-looking
statements include, among others: the inherent risks involved in
exploration and development of mineral properties, changes in
economic conditions, changes in the worldwide price of gold and other
key inputs, changes in mine plans and other factors, such as project
execution delays, many of which are beyond the control of Teranga, as
well as other risks and uncertainties which are more fully described
in the Company's Annual Information Form dated March 27, 2013, and in
other company filings with securities and regulatory authorities
which are available at www.sedar.com. Forward-looking statements are
based on management's current plans, estimates, projections, beliefs
and opinions, and, except as required by law, Teranga does not
undertake any obligation to update forward-looking statements should
assumptions related to these plans, estimates, projections, beliefs
and opinions change. Nothing in this news release should be construed
as either an offer to sell or a solicitation to buy or sell Teranga
securities. 
Competent Persons Statement 
The technical information contained in this Report relating to the
mineral reserve estimates within the Sabodala, Sutuba, Niakafiri and
Gora deposits and the Stockpiles, is based on information compiled by
Julia Martin, P.Eng., MAusIMM (CP), a full time employee with AMC
Mining Consultants (Canada) Ltd., is independent of Teranga, is a
"qualified person" as defined in NI 43-101 and a "competent person"
as defined in the 2004 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Ms. Martin has sufficient experience relevant to the style
of mineralization and type of deposit under consideration and to the
activity she is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves". Ms
Martin has reviewed and accepts responsibility for the reserve
estimates disclosed above. Ms Martin has consented to the inclusion
in the report of the matters based on her information in the form and
context in which it appears in this Report.  
The technical information contained in this Report relating to the
mineral resources is based on information compiled by Ms. Patti
Nakai-Lajoie, who is a Member of the Association of Professional
Geoscientists of Ontario. Ms. Patti Nakai-Lajoie is full time
employee of Teranga and is not "independent" within the meaning of
National Instrument 43-101. Ms. Patti Nakai-Lajoie has sufficient
experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity which she is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Ms. Patti Nakai-Lajoie
is a "Qualified Person" under National Instrument 43-101 Standards of
Disclosure for Mineral Projects, and she consents to the inclusion in
the report of the matters based on her information in the form and
context in which it appears in this Report.  
The technical information contained in this Report relating to
exploration results is based on information compiled by Mr. Martin
Pawlitschek, who is a Member of the Australian Institute of
Geoscientists. Mr. Pawlitschek is a consultant of Teranga and is not
"independent" within the meaning of National Instrument 43-101. Mr.
Pawlitschek has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves". Mr.
Pawlitschek is a "Qualified Person" in accordance with NI 43-101 and
he consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears in this
Report. 
Contacts:
Teranga Gold Corporation
Kathy Sipos
Vice-President of Investor & Stakeholder Relations
+1 416-594-0000
ksipos@terangagold.com
www.terangagold.com