TORONTO, ONTARIO--(Marketwired - April 2, 2013) - Teranga (TSX:TGZ)(ASX:TGZ) is pleased to announce the signing of a long-term comprehensive Agreement in Principle ("Agreement") with the Republic of Senegal. 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, including the Company's shareholders, employees, the local and regional communities and the people of Senegal. The changes made to the fiscal regime bring Senegal in line with fiscal regimes of West Africa and other mining jurisdictions. The Agreement gives the Company the ability to invest with certainty in regards to the fiscal and operating parameters as it moves ahead on its vision to increase reserves and production.
"This comprehensive Agreement and partnership with the Republic of Senegal encourages us to invest and develop to increase our reserves and production in Senegal for the long-term. Our ability to leverage off our existing mill and infrastructure should allow us to increase reserves, production, earnings, cash flow and free cash flow in the coming years," said Alan R Hill, Chairman of Teranga.
The Republic of Senegal has agreed to support Teranga 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 notably 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 settle the Special Contribution Tax of 5% in return for the fiscal changes to our stability agreement noted below.
"I am delighted with the long-term Agreement which has been signed in the mutual interests of both parties between the Republic of Senegal and Teranga. This Agreement will contribute to the economic and social development of Senegal as well as being particularly beneficial to the local population and to the region of Kedougou. The mining industry is of great importance to Senegal. My wish is that the Agreement with Teranga Gold will serve to reinforce the climate for foreign investment in Senegal so as to make our country a favoured destination for investment, and always in a spirit of 'win-win'," said President Macky Sall of Senegal.
In return, Teranga has agreed to adapt its stability agreement with the Republic of Senegal as follows:
- To increase the royalty rate on production from 3% to bring it in line with the West African average of 5%, effective January 1, 2013;
- To begin paying a portion of accrued dividends to the Republic of Senegal in respect of its 10% minority interest; and
- To agree to a price and formula to acquire the Republic's additional participation option on deposits not on the Company's Mine License and to process that material through Teranga's Sabodala mill.
"In light of market conditions, we have lowered our exploration budget for 2013 and other discretionary expenditures including minimizing 2013 development expenditures at Gora, our first satellite deposit, which is expected to be brought into production in 2014. With these changes, at current gold prices, even after the additional costs related to this Agreement of $10 million, we expect to generate free cash flow which will further improve our financial strength during this period while fully extinguishing our hedge book by midyear," said Richard Young, President and CEO of Teranga.
Teranga and the Republic of Senegal intend to embed the Agreement into the Company's mining and exploration licenses over the next 60 days.
The Company will host two conference calls to discuss the Agreement in Principle signed with the Republic of Senegal. In order to address both the ASX and TSX markets, the company will host a call today on Tuesday, April 2, 2013 at 8:30am EST (11:30pm EDT Sydney) and again at 6:00pm EST (9:00am EDT Wednesday, April 3, 2013 Sydney).
To participate on the conference calls, please see the dial-in details below:
- Toronto: 416-340-8018
- North America toll-free: 1-866-223-7781
- International: +1-416-340-8018
Replay Archive for Tuesday, April 2, 2013 at 8:30am EST (11:30pm EDT Sydney):
- 1-905-694-9451 or toll-free 1-800-408-3053, passcode: 3359384
Replay Archive for Tuesday, April 2, 2013 at 6:00pm EST (9:00am EDT Wednesday, April 3, 2013 Sydney):
- 1-905-694-9451 or toll-free 1-800-408-3053, passcode: 7609719
Teranga 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.
The Company's mission is to create value for all of its stakeholders through responsible mining. Its vision is to explore, discover and develop gold mines in West Africa, in accordance with the highest international standards, and to be a catalyst for sustainable economic, environmental and community development. All of its actions from exploration, through development, operations and closure will be based on the best available techniques.
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 all disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action. The words "poised", "gives", "expect", "its vision", "plan", "support", "assist", "commit to", "will not", "intend", "intends to" and similar expressions identify forward looking statements. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. Teranga cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. There is no guarantee that definitive amendments to the Company's mining and exploration licenses will be agreed to in accordance with the terms of this news release. The risks and uncertainties that may affect forward-looking statements include, among others: economic market conditions; and other risks detailed from time to time in Teranga's filings with Canadian provincial securities regulators. 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.