Teranga Gold Achieves Record Quarterly Production and Lower AISC in Q1; Well-Positioned to Meet Full Year 2019 Production and Cost Guidance
Expect to begin commissioning of the Wahgnion processing plant in Q3
and production ramp up in Q4 2019
(All amounts are in U.S. dollars unless otherwise stated)
TORONTO, May 03, 2019 (GLOBE NEWSWIRE) -- Teranga Gold Corporation ("Teranga" or the "Company") (TSX:TGZ; OTCQX:TGCDF) today reported financial and operating results for the three months ended March 31, 2019, and provided an update on the development progress of its second mine, Wahgnion.
First Quarter Highlights
(Q1 2019 vs Q1 2018)
- Record quarterly gold production of 71,946 ounces, an increase of 12%
- Per ounce cost metrics decreased by up to 9% and were below the respective full-year guidance ranges, including all-in sustaining costs (excluding non-cash inventory movements and amortized advanced royalty costs)1 of $806 per ounce
- Company is on track to meet full year production and cost guidance
- Benefitting from an advance gold prepayment of $11.8 million, operating cash flow before changes in working capital excluding inventories rose 6% to $26.3 million and operating cash flow increased by 261% to $49.6 million
- EBITDA1 increased by 37% to $36.9 million
- Net income attributable to shareholders decreased to a loss of $2.7 million, or $0.03 per share while adjusted net income attributable to shareholders1 was $2.2 million, or $0.2 per share. Net income and adjusted net income1 was negatively impacted by a pending tax assessment for $10 million
- Wahgnion construction is on budget and on track for Q3 commissioning
- Issued initial mineral resources estimate for Golden Hill, Teranga’s most advanced exploration project
“2019 is off to a strong start for Teranga across our portfolio, with record operational results from Sabodala, good construction progress at Wahgnion and an initial resource at Golden Hill,” said Richard Young, President & Chief Executive Officer. “Our 10-year-old cornerstone asset, Sabodala, set a record for quarterly production in the first quarter. With over 12 years of mine life remaining, Sabodala is delivering solid free cash flow1 to support our growth initiatives.”
Meanwhile, the construction schedule for the Company’s second mine, Wahgnion, located in southwest Burkina Faso, is on track and entering its final phases.
“I am pleased to report that we expect to begin commissioning the processing plant in the third quarter and production ramp up during the fourth quarter,” said Paul Chawrun, Chief Operating Officer. “Based on our progress to date, we expect Wahgnion will produce between 30,000 and 40,000 ounces2 of gold in 2019, which exceeds the original estimate of 18,000 ounces released in the October 2018 technical report.”
During the first five years of its mine life, Wahgnion is expected to increase Teranga’s current consolidated annual gold production by approximately 50%, or more than 130,000 ounces.2
“During the first quarter, we continued to make meaningful progress towards achieving our vision of building a multi-asset, mid-tier gold producer in West Africa,” added Mr. Young. “By year end, we will have two gold mines in operation capable of producing between 300,000 and 350,000 ounces in 2020 and generating strong free cash flows. As well, Golden Hill continues to show that it has the potential to be our third gold mine. In less than two years, we have advanced it from an early-stage exploration project to an initial mineral resource estimate. Going forward, our priority is to increase the mineral resources estimate and advance Golden Hill into the feasibility stage of development.”
Operating & Financial Highlights
| Three months ended March 31, | ||||||||
| Operating Data | 2019 | 2018 | Change | |||||
| Gold Produced | (oz) | 71,946 | 64,031 | 12 | % | |||
| Gold Sold | (oz) | 70,617 | 65,234 | 8 | % | |||
| Average realized gold price1 | ($ per oz) | 1,307 | 1,325 | (1 | %) | |||
| Cost of sales per ounce | ($ per oz sold) | 907 | 912 | (1 | %) | |||
| Total cash costs1 | ($ per oz sold) | 627 | 659 | (5 | %) | |||
| All-in sustaining costs (excluding non-cash inventory movements and amortized advanced royalty costs)1 | ($ per oz sold) | 806 | 888 | (9 | %) | |||
| Three months ended March 31, | ||||||||
| Financial Data | 2019 | 2018 | Change | |||||
| Revenue | ($000s) | 92,127 | 86,242 | 7 | % | |||
| Cost of sales | ($000s) | (64,054 | ) | (59,470 | ) | 8 | % | |
| Gross profit | ($000s) | 28,073 | 26,772 | 5 | % | |||
| Net (loss)/profit attributable to shareholders of Teranga | ($000s) | (2,719 | ) | 2,981 | N/A | |||
| Per share | ($) | (0.03 | ) | 0.03 | N/A | |||
| Adjusted net profit attributable to shareholders of Teranga1 | ($000s) | 2,230 | 9,061 | (75 | %) | |||
| Per share1 | ($) | 0.02 | 0.08 | (75 | %) | |||
| EBITDA1 | ($000s) | 36,881 | 26,924 | 37 | % | |||
| Operating cash flow before changes in working capital excluding inventories | ($000s) | 26,282 | 24,866 | 6 | % | |||
| Operating cash flow | ($000s) | 49,589 | 13,719 | 261 | % | |||
| Sustaining capital expenditures (excluding deferred stripping) | ($000s) | 5,350 | 3,157 | 69 | % | |||
| Capitalized deferred stripping - sustaining | ($000s) | 13,456 | 10,097 | 33 | % | |||
| Growth capital expenditures | ($000s) | 48,212 | 22,019 | 119 | % | |||
It was a strong quarter in terms of revenue, costs and expenses. However, net income and adjusted net income1 were negatively impacted by a pending tax assessment for the Sabodala mine and its Senegalese exploration entity relating to the 2015, 2016, and 2017 tax years. To date, management has been unable to resolve certain claims with the Senegalese tax authorities that relate to our corporate structure and the nature and treatment of intercompany transactions within the Sabodala group. While the Company does not agree with the Government of Senegal’s interpretation, management believes it is in the Company’s best interest to settle this tax assessment. As a result, the first quarter financial statements include an accrual for the estimated potential tax exposure of up to $10 million for this three-year period, of which $7.8 million was added to income tax expense and interest and penalties of $2.2 million was added to other expenses.
2019 News Flow and Upcoming Milestones
- Commence Production at Wahgnion, Teranga’s Second Gold Mine
- Complete project on time and within budget
- Produce 30,000 to 40,000 ounces of gold2
- Achieve positive free cash flow1
- Advance Teranga’s Golden Hill Project to Feasibility Stage
- Completed initial mineral resource estimate (announced February 21)
- Complete preliminary technical and economic assessments
- Advance Golden Hill to feasibility stage of development
- Advance Côte d’Ivoire Exploration
- Submit technical evaluation on Afema to government of Côte d’Ivoire (filed April 25)
- Validate and increase Afema historical resource
- Continue advancing Miminvest exploration properties
- Continue Strong Operational Performance at Sabodala
- Achieve 2019 outlook for production of 215,000 to 230,000 ounces3
- Deliver strong free cash flows1 to support growth initiatives
- Advance resettlement and livelihood restoration program related to Niakafiri deposit towards completion in H1 2020
Corporate Update
Teranga is pleased to announce that Leily Omoumi recently joined the Company as Vice President, Corporate Development and will play an integral role in the advancement of the Company's strategic direction. Ms. Omoumi strengthens the management team, with over 15 years of experience working in the mining industry and capital markets. She most recently served as a buy-side and sell-side analyst at two major Canadian banks. Prior to that, she was at Hatch Consulting, where she worked on the engineering design, analysis, feasibility, and commissioning of mining projects.
Q1 2019 Conference Call & Webcast
Teranga will host a conference call/audio webcast today at 8:30 a.m. ET, during which management will review the highlights for the first quarter ended March 31, 2019. Those wishing to listen can access the live conference call and webcast as follows:
| Date & Time: | Friday, May 3, 2019 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 www.terangagold.com/Q12019. |
| 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 1368305. |
| 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 months ended March 31, 2019 on pages 24-27. |
| (2) | This production target is based on proven and probable ore reserves only for Teranga’s Wahgnion Gold Operations 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) | This production target is based on proven and probable reserves only from Teranga’s Sabodala Project as of June 30, 2017. For more information regarding Teranga Gold’s Mineral Reserves and Resources and related notes, please refer to the NI 43-101 compliant technical report for the Sabodala Project dated August 30, 2017 available on the Company’s website at www.terangagold.com and on SEDAR at www.sedar.com. |
Consolidated Financial Statements
A copy of Teranga’s consolidated financial statements and management’s discussion & analysis for the three months ended March 31, 2019 are available on the Company’s website at www.terangagold.com, SEDAR at www.sedar.com and on the OTC Markets’ website at www.otcmarkets.com/terangagold.
Forward-Looking Statements
This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"), which reflects management's expectations regarding Teranga’s future growth opportunities, results of operations, performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and other opportunities. Wherever possible, words such as "plans", "expects", "does not expect", "scheduled", "trends", "indications", "potential", "estimates", "predicts", "anticipate" “to establish” or "does not anticipate", "believe", "intend", "ability to" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might", "will", or are "likely" to be taken, occur or be achieved, have been used to identify such forward looking information. Specific forward-looking statements in this press release include, but are not limited to, forecasting gold production of between 215,000 and 230,000 ounces of gold at Sabodala and between 30,000 and 40,000 ounces at Wahgnion in 2019, and the timeline for commissioning of the process plant at Wahgnion. Although the forward-looking information contained in this press release 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. Such forward-looking statements are based upon assumptions, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments that management believe to be reasonable and relevant but that may prove to be incorrect. These assumptions include, among other things, the closing and timing of financing, the ability to obtain any requisite governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic conditions, anticipated future estimates of free cash flow, and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements.
The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks involved in exploration and development of mineral properties, including government approvals and permitting, 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 Teranga's Annual Information Form dated March 29, 2019, and in other filings of Teranga with securities and regulatory authorities which are available at www.sedar.com. 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 document should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities. All references to Teranga include its subsidiaries unless the context requires otherwise.
About Teranga
Teranga is a multi-jurisdictional West African gold company focused on production and development as well as the exploration of approximately 6,400 km2 of land located on prospective gold belts. Since its initial public offering in 2010, Teranga has produced more than 1.7 million ounces of gold at its Sabodala operation in Senegal. Focused on diversification and growth, the Company is in the final construction phase of its second producing gold mine, Wahgnion, which is located in Burkina Faso, as well as carrying out exploration programs in three West African countries: Burkina Faso, Côte d’Ivoire and Senegal. The Company had more than 4.0 million ounces of gold reserves as of June 30, 2018. Teranga applies a rigorous capital allocation framework for its investment decisions and is focused on funding future organic growth plans responsibly.
Steadfast in its commitment to set the benchmark for responsible mining, Teranga operates in accordance with the highest international standards and aims to act as a catalyst for sustainable economic, environmental, and community development as it strives to create value for all of its stakeholders. Teranga is a member of the United Nations Global Compact and a leading member of the multi-stakeholder group responsible for the submission of the first Senegalese Extractive Industries Transparency Initiative revenue report.
Contact Information
| Richard Young President & CEO T: +1 416-594-0000 | E: ryoung@terangagold.com | Trish Moran Head of Investor Relations T: +1 416-607-4507 | E: tmoran@terangagold.com |
