Teranga Gold Corporation

TSX : TGZ
ASX : TGZ


Teranga Gold Corporation

January 28, 2014 18:05 ET

Teranga Gold Corporation: ASX Fourth Quarter Report for the Three Months Ended December 31, 2013

TORONTO, ONTARIO--(Marketwired - Jan. 28, 2014) - Teranga Gold Corporation (TSX:TGZ) (ASX:TGZ) -

SABODALA GOLD OPERATION

KEY HIGHLIGHTS

  • Gold production for 2013 totalled 207,204 ounces, the higher end of our guidance of 190,000 to 210,000 ounces
  • Total cash costs1 for 2013 were $641 per ounce, better than our guidance of $650 to $700 per ounce and all-in sustaining costs were $1,033 per ounce, at the lower end of our guidance of $1,000 to $1,100 per ounce
  • Fourth quarter 2013 gold production and sales were 52,368 ounces and 46,561 ounces, respectively
  • Fourth quarter 2013 total cash costs were $711 per ounce sold while all-in sustaining costs were $850 per ounce sold
  • Cash and bullion receivable increased to $42.3 million
  • Completes acquisition of remainder of interest in neighbouring property - Oromin Joint Venture Group Ltd. (OJVG) - by way of stream transaction with Franco-Nevada to fund the completion of the acquisition and the retiring of $30 million of $60 million bank debt facility
  • Gold production for 2014 is expected in the range of 220,000 to 240,000 ounce2 sat total cash costs of $650 to $700 per ounce and all-in sustaining costs of $800 to $875 per ounce
  • Proven and Probable open pit Reserves on a combined basis with OJVG increased by 120 percent to 2.8 million ounces, Measured and Indicated Resources increased by 123 percent to 6.2 million ounces, and Inferred Resources increased by 42 percent to 2.6 million ounces3

OPERATIONAL OVERVIEW

Sabodala Gold Operation

(All amounts are in US$ unless otherwise stated)

  • Gold production for the three months ended December 31, 2013 was on plan at 52,368 ounces of gold and 27 percent lower than the same prior year period. Lower production was due to lower processed grades, partly offset by higher mill throughput.

  • Gold production for the year was at the higher end of guidance of 190,000 - 210,000 ounces, at 207,204 ounces, 3 percent lower than the same prior year period, mainly due to lower processed grades, partly offset by higher mill throughput.

  • During the three months ended December 31, 2013, 46,561 ounces were sold at an average realized gold price of $1,249 per ounce. During the same prior year period, 71,604 ounces were sold at an average realized gold price of $1,296 per ounce including 33,606 ounces delivered into gold hedge contracts at an average price of $833 per ounce and 37,998 ounces sold at an average spot price of $1,705 per ounce.

  • Total cash costs for the three months ended December 31, 2013 totalled $711 per ounce sold, 34 percent higher than the same prior year period. Higher total cash costs per ounce were due to an increase in material mined and milled during the quarter compared to the year earlier period. Total cash costs have been adjusted for the adoption of IFRIC 20 for capitalization of a portion of production phase stripping costs.

  • Total cash costs for the year were below guidance of $650 - $700 per ounce, at $641 per ounce, compared to $556 per ounce in the same prior year period. The increase in total cash costs was mainly due to an increase in material processed and higher royalty costs in 2013 compared to 2012.

  • All-in sustaining costs for the three months ended December 31, 2013 were $850 per ounce sold compared to $1,004 per ounce sold in the same prior year period. The decrease compared to the prior year was primarily due to lower capital expenditures and administration expenses in the current year period, partly offset by higher total cash costs.

  • All-in sustaining costs for 2013 were at the low end of guidance, of $1,000 - $1,100 per ounce, at $1,033 per ounce, 14 percent lower than the same prior year period. Lower all- in sustaining costs were mainly due to lower capital expenditures, as result of the completion of the mill expansion in 2012, and a reduction in reserve development expenditures in 2013, partly offset by higher total cash costs and capitalized deferred stripping.

  • Total tonnes mined for the three months ended December 31, 2013 were 24 percent higher compared to the same prior year period. The increase in total tonnes mined was mainly due to improved haul truck productivities as a result of shorter ore and waste haul distances. During the quarter, mining activities were focused on the upper benches of phase 3 of the Sabodala pit, while in the same prior year period mining took place in a high grade ore zone on lower benches of phase 2.

  • Unit mining costs for the fourth quarter of 2013 were $2.65 per tonne, a decrease of 15 percent compared to the same prior year period. The lower unit costs were primarily due to shorter ore and waste haul distances as noted above, partially offset by higher maintenance costs.

  • Ore tonnes milled for the three months ended December 31, 2013 were 19 percent higher than the same prior year period due to improvements made to reduce the frequency and duration of unplanned downtime and an increase in throughput in the crushing circuit to match mill capacity. These improvements were primarily accomplished during two planned major shutdowns in January and May with a third taking place in October. As a result of the work completed, mill throughput achieved annualized design capacity of 3.5 million tonnes of primarily hard ore in the second half of 2013.

  • Processed grade for the three months ended December 31, 2013 was 38 percent lower than the same prior year period, as planned. Mill feed during the fourth quarter 2013 was sourced from phase 3 of the Sabodala pit at grades closer to reserve grade. While in the year earlier period, mill feed was sourced from a high grade zone on the lower benches of phase 2 of the Sabodala pit.

  • Unit processing costs for the three month period ended December 31, 2013 were 10 percent lower than the same prior year period at $17.96 per tonne, mainly due to an increase in throughput.

1 Total cash costs per ounce and all-in sustaining costs per ounce of gold sold are non-IFRS measures which do not have standard meanings under IFRS. Please refer to Non- IFRS Performance Measures at the end of this Report.
2 This production guidance is based on existing proven and probable reserves only from both the Sabodala mining licence and OJVG mining license as disclosed in Table 2 on page 6 of this Report. The estimated ore reserves underpinning this production guidance have been prepared by a competent person in accordance with the requirements of the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code"). This production guidance also assumes an amendment to OJVG mining license to reflect processing of OJVG ore through the Sabodala mill.
3 See table 1 and 2 on page 6 of this Report for detailed breakdown of this resource and reserve estimates.
PRODUCTION STATISTICS
Dec-13 Sep-13 Jun-13 Mar-13 Dec-12
Quarter Quarter Quarter Quarter Quarter
Ore mined ('000t ) 1,993 537 698 1,312 2,038
Waste mined - operating ('000t ) 6,655 3,321 2,683 2,513 4,362
Waste mined - capitalized ('000t ) 420 4,853 4,770 5,023 912
Total mined ('000t ) 9,068 8,711 8,151 8,848 7,312
Grade Mined (g/t ) 1.61 1.08 1.59 1.87 2.04
Ounces Mined (oz ) 103,340 18,721 35,728 78,929 133,549
Strip ratio waste/ore 3.6 15.2 10.7 5.7 2.6
Ore processed ('000t ) 860 887 709 696 725
Head grade (g/t ) 2.11 1.41 2.36 3.31 3.40
Gold recovery ( %) 90 % 92 % 92 % 92 % 91 %
Gold produced1 (oz ) 52,368 36,874 49,661 68,301 71,804
Gold sold (oz ) 46,561 37,665 54,513 69,667 71,604
Average price received $/oz 1,249 1,339 1,379 1,090 1,296
Total cash costs per ounce sold2,3,4 (including Royalties) $/oz 711 748 642 535 532
All-in sustaining costs per ounce sold2,4 (including Royalties) $/oz 850 1,289 1,185 898 1,004
Mining ($/t mined ) 2.65 2.48 2.64 2.61 3.11
Milling ($/t milled ) 17.96 17.56 23.77 22.47 19.88
G&A ($/t milled ) 4.84 4.60 6.25 6.17 6.35
1 Gold produced includes change in gold in circuit inventory plus gold recovered during the period.
2 Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to non-IFRS Performance Measures at the end of this report.
3 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.
4 All-in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding Corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures (including project development costs) as defined by the World Gold Council.
OUTLOOK 2014
The following table outlines Teranga's estimated 2014 summary production and cost guidance:
Year ended December 31
2013 Actuals 2014 Guidance Range
Operating Results
Ore mined ('000t) 4,540 5,300 - 6,000
Waste mined - operating ('000t) 15,172 18,200 - 19,000
Waste mined - capitalized ('000t) 15,066 500 - 1,000
Total mined ('000t) 34,778 24,000 - 26,000
Grade mined (g/t) 1.62 1.60 - 1.70
Strip ratio waste/ore 6.7 3.25 - 3.50
Ore milled ('000t) 3,152 3,400 - 3,600
Head grade (g/t) 2.24 2.20 - 2.40
Recovery rate % 91.4 90.0 - 91.0
Gold produced1 (oz) 207,204 220,000 - 240,000
Total cash cost (incl. royalties)2,3,4 $/oz sold 641 650 - 700
All-in sustaining costs2,4 $/oz sold 1,033 800 - 875
Mining ($/t mined) 2.59 2.75 - 2.95
Milling ($/t milled) 20.15 18.00 - 19.00
G&A ($/t milled) 5.38 4.75 - 5.25
Gold sold to Franco-Nevada1 (oz) - 22,500
Exploration and evaluation expense (Regional Land Package) ($ millions) 5.4 4.0 - 6.0
Administration expenses and Social community costs ($ millions) 13.6 15.0 - 16.0
Mine production costs ($ millions) 170.8 155.0 - 165.0
Capital expenditures ($ millions)
Mine site sustaining 9.9 7.0 - 8.0
Capitalized reserve development (Mine License) 3.5 4.0 - 6.0
Project development costs
Government waiver payments 3.5 12.0 - 14.0
Development 0.5 3.0 - 5.0
Mobile equipment and other 8.3 -
Total project development costs 12.4 15.0 - 19.0
Capitalized deferred stripping3 43.3 2.0 - 3.0
Total capital expenditures 69.1 28.0 - 33.0
1 22,500 ounces of production are to be sold to Franco Nevada at 20% of the spot gold price.
2 Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to non-IFRS Performance Measures at the end of this report.
3 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.
4 All-in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding Corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures (including project development costs) as defined by the World Gold Council.
Key assumptions: Gold spot price/ounce - US$1,250, Light fuel oil - US$1.15/litre, Heavy fuel oil - US$0.98/litre, US/Euro exchange rate - $1.325

The Company's 2014 operating budget has been designed to maximize free cash flow. Mining activity in 2014 is expected to focus on completing phase 3 of the Sabodala pit, as phase 4 of the Sabodala mine plan has been deferred to minimize material moved. Mining equipment freed up from the deferral of Sabodala phase 4 is anticipated to be used to begin mining activities at the Masato deposit in the fourth quarter of the year.

The higher processing rate in 2014 is a result of improvements made in the first half of 2013 to the crushing circuit and in line with throughput rates in the second half of 2013.

Total cash costs per ounce for 2014 are expected to be similar to 2013 while all-in sustaining costs per ounce are expected to be lower than 2013, mainly due to lower capital expenditures.

Exploration and evaluation expense in 2014 is expected to total approximately $5 million. The exploration program in 2014 will focus on the conversion of resources to reserves and extensions of existing deposits along strike on the two mine licenses, as well as, the continuation of a systematic regional exploration program designed to identify satellite and standalone deposits.

Administrative and Corporate Social Responsibility expenses are expected to total $15 - $16 million, similar to 2013. Lower administrative costs at the corporate office are expected to be offset by higher social commitments related to the acquisition of the OJVG and additional staffing in the Dakar office. The 2014 plan has been designed to provide the necessary support for operations and development and includes corporate office costs, Dakar office costs and corporate responsibility costs, but excludes corporate depreciation, transaction costs and other non-recurring costs.

Capitalized expenditures, including sustaining mine site expenditures, project development expenditures capitalized deferred stripping, reserve development expenditures and payments to the Government of Senegal are expected to total $28 - $33 million.

FINANCE

At December 31, 2013:

Cash and cash equivalents - $42.3 million (including $20.0 million in restricted cash and $7.3 million in bullion receivables)

Project finance facility (balance outstanding) - $60.0 million (reduced to $30.0 million as at the date of this report)

Mining fleet lease facility (balance outstanding) - $17.0 million

The stream transaction with Franco-Nevada to fund the acquisition of Bendon's stake in the OJVG and retire half of the project finance facility was completed on January 15, 2014. As a result, $30 million of the project finance facility was retired. The balance of $30 million is scheduled to be retired by the end of 2014. In addition, the restricted cash balance decreased to $15 million.

STRATEGY AND MINE PLAN

ACQUISITION OF THE OROMIN JOINT VENTURE GROUP ("OJVG")

On October 4, 2013, the Company completed the acquisition of all of the issued and outstanding common shares of Oromin Explorations Ltd. ("Oromin") that it did not already own (Oromin being one of the three joint venture partners holding 43.5% of the OJVG).

In total, the Company issued 71,183,091 Teranga shares to acquire all of the Oromin shares for net consideration of $37.8 million, including the fair value of Oromin stock options replaced by 7,911,600 Teranga stock options. As a result, Teranga's total number of issued and outstanding shares increased to 316,801,091.

On January 15, 2014, the Company completed the transaction announced on December 12, 2013 to acquire the balance of the OJVG that it did not already own. The Company acquired Bendon's 43.5% participating stake in the OJVG for $105.0 million financed through a stream transaction with Franco- Nevada. The stream agreement requires Teranga to deliver 22,500 ounces annually over the first six years followed by 6% of production thereafter. Franco-Nevada's purchase price per ounce is set at 20% of the spot price of gold.

The Company also acquired Badr's 13% carried interest for $7.5 million and further contingent consideration based on higher realized gold prices and increases to OJVG reserves through 2020.

The acquisition of Bendon and Badr's interests in the OJVG increases Teranga's ownership to 100% and consolidates the Sabodala region, increasing the size of Teranga's interests in mine license from 33km2 to 241km2 and more than doubling the Company's reserve base after taking into account the 1.45 million of probable open pit reserves of the OJVG identified in its NI 43-101 Technical Report.4

Acquisition related costs of approximately $11.0 million have been paid during the year ended December 31, 2013.

OROMIN TECHNICAL INTEGRATION

The acquisition of Oromin in August 2013 provided access to the OJVG technical data. Since then, management has been evaluating and integrating the geological and technical databases to develop updated resources and reserves to establish a combined life of mine (LOM) plan that will be supported by a NI 43-101 compliant technical report, targeted for March 2014.

The ongoing technical work for the OJVG integrated mine plan has included:

  • A comprehensive review of the Golouma, Masato and Kerekounda ore bodies including re-logging and re-assay of key drill intercepts, QA/QC checks and detailed interpretation to update these resource models;

  • Economic Lerchs-Grossman (LG) pit optimization and detailed pit designs to reflect the current gold price;

  • Preliminary Life of Mine (LOM) mine planning schedules for optimized cash flow analysis, detailed dilution analysis, pit designs, mine operating and capital estimates;

  • An updated tailings deposition and water balance model;

  • Ongoing analysis of the metallurgical test results for ore characterization studies of select areas within the Masato and Golouma ore bodies to increase understanding from Feasibility Study level and optimize feed and gold recovery to the Sabodala mill; and

  • Environmental and social impact reviews for a reduced footprint using the Sabodala operations.

In addition to development of an integrated LOM, the OJVG technical team was engaged with the Teranga technical teams both at site in Senegal and the corporate offices.

4 See the OJVG Golouma Gold Project - Updated Feasibility Report, January 31, 2013, available at http://www.sedar.com/.

MINE LICENSE (ML) RESERVE DEVELOPMENT

There were no drill programs conducted on the Sabodala ML during the fourth quarter. The drill program at Sabodala was completed in the first quarter of 2013. The 2014 drill program will be integrated into the combined Sabodala/OJVG reserve delineation program.

GORA DEVELOPMENT

Gora, hosting 0.29 million ounces of proven and probable reserves (see Table 2) at 4.74g/t is planned to be operated as a satellite to the Sabodala mine requiring limited local infrastructure and development. Ore will be hauled to the Sabodala processing plant by a dedicated fleet of trucks and processed on a priority basis, displacing Sabodala feed as required.

A technical report and an environmental and social impact assessment (ESIA) have been provided to the Senegalese government, and the permit approval process is ongoing.

Management expects the permit process to be completed in 2014 and construction to be initiated in 2015 based on the new integrated mine plan with the OJVG.

REGIONAL EXPLORATION

Since the acquisition of Oromin, the exploration team has spent the majority of its time working on the detailed due diligence review and remodeling of the Golouma and Masato deposits on the OJVG property5, this has continued through the fourth quarter. In addition, the team along with the OJVG technical team have conducted detailed reviews to evaluate potential for increasing the other OJVG resources. The conclusions have been integrated into the scope for the 2014 exploration program.

On the regional land package which is 1,055km2, the exploration team focused on site mapping, trenching, interpretation and site investigation for several high potential targets for follow up drill programs in 2014. These targets have been included as part of the scope for the 2014 exploration program.

RESERVES AND RESOURCES

Mineral Resources at December 31, 2013 are presented in Table 1 below. Total open pit proven and probable mineral reserves at December 31, 2013 are set forth in Table 2 below. The reported Mineral Resources are inclusive of the Mineral Reserves.

The proven and probable mineral reserves were based on the Measured and Indicated resources that fall within the designed open pits. The basis for the resources and reserves is consistent with the Canadian Securities Administrators NI 43-101 regulations. The design for the open pit limits, related phasing and long term planning for the Sabodala open pit was carried out to maximize the economics under current market conditions by removing high cost (high strip) gold ounces in the Sabodala pit.

The Sabodala pit design is consistent with the reserves reported for the third quarter 2013 results which are based on a $1,000 pit shell for Phase 4. For all reserves reported, the cut off grades were established using an estimated gold price of $1,250 per ounce. Mining phases in the Sabodala pit have been determined similarly to the previous designs, where the mine sequencing is based on accessing the high grade Main Flat Extension (MFE) through successive phases to balance waste stripping and optimize cash flows.

Dilution and ore recovery estimates for the Sabodala reserves were based on a comparison of the resource model with actual production performance over a 24 month span using a 5 metre minimum mining width and 10 metre bench height.

The Niakafiri pit design remains unchanged from December 2012. The Gora pit design has been adjusted to reflect an LG pit shell at $1,200 per ounce and an updated dilution analysis.

The Masato, Golouma and Kerekounda pit designs have been based on a $1,250 per ounce pit shell. Geotechnical studies conducted previously by the OJVG were reviewed by independent consultants and were determined to be acceptable. Detailed dilution analyses were conducted on each of these deposits, ore cut-off grades were established using an estimated gold price of $1,250 per ounce.

As a result of the work we have conducted, overall reported open pit reserves for the OJVG deposits have increased by about 90,000 ounces as compared to the last technical report issued by the OJVG in January 2013. An increase in open pit reserves was identified at the Golouma's and Kerekounda deposits, which was partially offset by a decrease at Masato. Analyses of high grade zones within the Masato ore body continue to be evaluated. Due to the manner of the interpretation of structural controls defining these high grade zones, management has determined that further work and possible infill drilling is necessary to accurately define these trends within the mineralised envelopes. For purposes of this updated reserve estimate, the Company has applied a conservative interpretation method resulting in approximately 300,000 ounces of high grade mineralization being excluded from Masato reserves.

Management expects its LOM Plan detailing annual production rates and operating and capital costs to be released with the Company's year end results in February and remains on track to file a NI 43-101 technical report in March 2014.

(5) The OJVG interest in the Golouma mining license is held through its 90% equity ownership in Societe des Mines de Golouma S.A. (SOMIGOL), the holder of the Golouma license.
Table 1 Mineral Resources Summary as at December 31, 2013
Measured Indicated Measured and Indicated
Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au
(Mt) (g/t) (Moz) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
Sabodala 24.28 1.32 1.03 22.95 1.29 0.95 47.23 1.31 1.98
Gora 0.49 5.27 0.08 1.84 4.93 0.29 2.32 5.00 0.37
Niakafiri 0.30 1.74 0.02 10.50 1.10 0.37 10.70 1.12 0.39
ML Other
Subtotal ML 25.07 1.40 1.13 35.29 1.42 1.61 60.25 1.42 2.74
Masato 43.93 1.11 1.57 43.93 1.11 1.57
Golouma 12.04 2.69 1.04 12.04 2.69 1.04
Kerekounda 2.20 3.77 0.27 2.20 3.77 0.27
Somigol Other 18.72 0.93 0.56 18.72 0.93 0.56
Subtotal Somigol 0.00 0.00 0.00 76.89 1.39 3.44 76.89 1.39 3.44
Total 25.07 0.00 1.13 112.18 1.40 5.05 137.14 1.40 6.18
Inferred Resources
Area Tonnes Au Au
(Mt) g/t Moz
Sabodala 17.88 0.94 0.54
Gora 0.21 3.38 0.02
Niakafiri 7.20 0.88 0.21
ML Other 13.20 0.91 0.38
Subtotal ML 38.49 0.93 1.15
Masato 25.59 1.13 0.93
Golouma 2.46 2.01 0.16
Kerekounda 0.34 4.21 0.05
Somigol Other 12.87 0.84 0.35
Subtotal Somigol 41.26 1.12 1.48
Total 79.75 1.03 2.64
Notes for Resources Estimate:
1) CIM definitions were followed for Mineral Resources.
2) Mineral Resources for Sabodala include Sutuba.
3) Mineral Resource cut-off grades for Sabodala, Masato, Golouma, Kerekounda and Somigol Other are 0.2 g/t Au for oxide and 0.35 g/t Au for fresh.
4) Mineral Resource cut-off grades for Niakafiri are 0.3 g/t Au for oxide and 0.5 g/t Au for fresh.
5) Mineral Resource cut-off grade for Gora is 0.5 g/t Au for oxide and fresh.
6) Mineral Resource cut-off grade for Niakafiri West and Soukhoto is 0.3 g/t Au for oxide and fresh.
7) Mineral Resource cut-off grade for Diadiako and Majiva is 0.2 g/t Au for oxide and fresh.
8) Measured Resources include stockpiles which total 8.60 Mt at 0.86 g/t Au for 0.24 Mozs.
9) High grade assays were capped at grades ranging from 10 g/t to 30 g/t Au at Sabodala, 20 g/t to 70 g/t Au at Gora, from 2 g/t to 30 g/t Au at Masato, from 5 g/t to 70 g/t for Golouma, from 11 g/t to 50 g/t at Kerekounda, and from 0.8 g/t to 110 g/t at Somigol Other.
10) The figures above are "Total" Mineral Resources and include Mineral Reserves.
11) Sum of individual amounts may not equal due to rounding.
Table 2 Mineral Reserves Summary as at December 31, 2013
Proven Probable Proven and Probable
Tonnes Grade Au Tonnes Grade Au Tonnes Grade Au
(Mt) (g/t) (Moz) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
Sabodala 3.45 1.64 0.18 5.53 1.58 0.28 8.98 1.60 0.46
Gora 0.50 4.58 0.07 1.39 4.80 0.21 1.89 4.74 0.29
Niakafiri 0.23 1.69 0.01 7.58 1.12 0.27 7.81 1.14 0.29
Stockpiles 8.60 0.86 0.24 8.60 0.86 0.24
Subtotal ML 12.78 1.23 0.51 14.50 1.65 0.77 27.28 1.45 1.27
Masato 25.24 1.21 0.98 25.24 1.21 0.98
Golouma 6.47 2.24 0.46 6.47 2.24 0.46
Kerekounda 0.88 3.26 0.09 0.88 3.26 0.09
Subtotal Somigol 0.00 0.00 0.00 32.59 1.47 1.54 32.59 1.47 1.54
Total 12.78 1.23 0.51 47.09 1.52 2.31 59.87 1.46 2.81
Notes for Reserves Estimate:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserve cut off grades for Sabodala are 0.40 g/t Au for oxide and 0.5 g/t Au for fresh based on a $1,250/oz gold price and metallurgical recoveries between 90% and 93%.
3. Mineral Reserve cut off grades for Niakafiri are 0.35 g/t Au for oxide and 0.5 g/t Au for fresh based on a $1,350/oz gold price and metallurgical recoveries between 90% and 92%.
4. Mineral Reserve cut off grade for Gora is 0.76 g/t Au for oxide and fresh based on $1,200/oz gold price and metallurgical recovery of 95%.
5. Mineral Reserve cut off grade for Masato, Golouma, Kerekounda are 0.4 g/t Au for oxide and 0.5 g/t for fresh based on $1,250/oz gold price and metallurgical between 90% and 93%.
6. Sum of individual amounts may not equal due to rounding.
7. The Niakafiri deposit is adjacent to the Sabodala village and relocation of at least some portion of the village will be required which will necessitate a negotiated resettlement program with the affected community members.
8. The Gora deposit is intended to be merged into the Sabodala mining license which the State of Senegal has agreed to in principal subject to completion and receipt of an approved environmental and social impact assessment which is ongoing.
9. The SOMIGOL deposits lie adjacent to the Sabodala mining license and it is intended that these licenses be merged which the State of Senegal has agreed to in principal under the terms of its previously announced global investment agreement in May of 2013. Any additional specific permits are anticipated to be minor given both licenses are already fully approved including environmental and social impact assessments.
10. There are no other known political, legal or environmental risks that could materially affect the potential development of the identified mineral resources or mineral reserves other than as already set out in the Company's Annual Information Form dated March 28, 2013 - see RISK FACTORS beginning on page 62.

NON-IFRS Financial Performance Measures

The Company has included non-IFRS measures in this Report: "total cash cost per ounce of gold sold" and "all-in sustaining costs per ounce". The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers.

Teranga reports total cash costs on a sales basis. Total cash costs per gold ounce include production costs such as mining, processing, refining and site administration, net of silver sales, divided by gold ounces sold to arrive at total cash costs per gold ounce sold. Production costs are exclusive of depreciation and depletion. Other companies may calculate this measure differently.

All in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding corporate depreciation expense and social community costs not related to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures (including project development costs) as defined by the World Gold Council. Other companies may calculate this measure differently.

Competent Persons Statement

The technical information contained in this document relating to the mineral reserve estimates for Sabodala, the stockpiles, Masato, Golouma and Kerekounda is based on information compiled by Mr. William Paul Chawrun, P.Eng who isa member of the Professional Engineers Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Chawrun is a full-time employee of Teranga and is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has consented to the inclusion in this Report of the matters based on his compiled information in the form and context in which it appears in this Report.

The technical information contained in this Report relating to mineral resource estimates is based on information compiled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.

The technical information contained in this document relating to the mineral reserve estimates for Gora and Niakafiri is based on, and fairly represents, information and supporting documentation prepared by Julia Martin, P.Eng. who is a member of the Professional Engineers of Ontario and a Member of AusIMM (CP). Ms. Martin is 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 2012 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Martin has reviewed and accepts responsibility for the Mineral Reserve estimates for Gora and Niakafiri disclosed in this document and has consented to the inclusion of the matters based on her information in the form and context in which it appears in this Report.

Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). CIM definitions of the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", are substantially similar to the JORC Code corresponding definitions of the terms "ore reserve", "proved ore reserve", "probable ore reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the JORC Code would not be materially different if prepared in accordance with the CIM definitions applicable under NI 43-101. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.

CORPORATE DIRECTORY

Directors

Alan Hill, Executive Chairman

Richard Young, President and CEO

Christopher Lattanzi, Non-Executive Director

Edward Goldenberg, Non-Executive Director

Alan Thomas, Non-Executive Director

Frank Wheatley, 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

Aziz Sy, Vice President, Development Senegal

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 Méridien Président

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

As of December 31, 2013
Issued shares 316,801,091
Stock options 23,737,850
Stock Options - Exercise Profile
Exercise Price (C$) Options
$3.00 15,826,250
$0.65 - $1.30 7,911,600

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, future economic conditions and courses of action, the proposed plans with respect to mine plan and consolidation of the Sabodala Gold Project and OJVG Golouma Gold Project, mineral reserve and mineral resource estimates, anticipated 2014 production of 220,000 to 240,000 ounces of gold at an estimated total cash cost of $650 to $700 and all-in sustaining costs of $800 -$875 per ounce of gold, targeted date for a NI 43-101 compliant technical report, amendment to the OJVG mining license, the approval of the Gora ESIA and permitting and the completion of construction related thereto. Such 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. These assumptions include, among other things, the ability to obtain any requisite Senegalese governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, 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, 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 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. 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 report should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities.

About TERANGA

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.

Teranga'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.

Contact Information