(All amounts are in U.S. dollars unless otherwise
stated)
Teranga Gold Corporation ("Teranga" or the "Company") (TSX:TGZ;
OTCQX:TGCDF) today reported its operating, financial and
development results for the three and six months ended June 30,
2018.
“There is a lot of positive momentum across our
operating mine, development and exploration properties,” said Paul
Chawrun, Chief Operating Officer. “In Senegal, we achieved record
second quarter and half year production at Sabodala and increased
our full year 2018 production guidance to at least 230,000 ounces
of gold. In Burkina Faso, construction of our second mine at
Wahgnion is on track for first pour before the end of next year and
we continue to see positive exploration results at Golden Hill, our
most advanced exploration property.”
“We are on the road to achieving our vision of
becoming a multi-asset, mid-tier gold producer in West Africa,”
added Richard Young, President and CEO. “By the end of 2019,
we expect to increase our annualized gold production by about 50%
to between 300,000 and 350,000 ounces, diversifying our production
base and adding significant scale with a second long-life mine –
Wahgnion. Additionally, we are prioritizing Golden Hill within our
exploration portfolio given it has the potential to be our third
mine and move us into the mid-tier producer category.”
Operating & Financial
Highlights
|
|
Three months ended June 30, |
Six months ended June 30, |
Operating Data |
|
2018 |
2017 |
Change |
2018 |
2017 |
Change |
Gold
produced |
(oz) |
65,381 |
57,557 |
14 |
% |
129,412 |
114,460 |
13 |
% |
Gold
sold |
(oz) |
66,256 |
57,167 |
16 |
% |
131,490 |
114,438 |
15 |
% |
Average
realized gold price1 |
($ per
oz) |
1,301 |
1,260 |
3 |
% |
1,313 |
1,243 |
6 |
% |
Cost of
sales per ounce |
($ per
oz sold) |
906 |
950 |
(5 |
%) |
909 |
950 |
(4 |
%) |
Total
cash costs1 |
($ per
oz sold) |
629 |
710 |
(11 |
%) |
644 |
716 |
(10 |
%) |
All-in
sustaining costs (excluding non-cash inventory movements and
amortized advanced royalty costs)1 |
($ per
oz sold) |
847 |
933 |
(9 |
%) |
867 |
934 |
(7 |
%) |
|
|
Three months ended June 30, |
Six months ended June 30, |
Financial Data |
|
2018 |
|
2017 |
|
Change |
2018 |
|
2017 |
|
Change |
Revenue |
($000's) |
86,050 |
|
72,040 |
|
19% |
|
172,292 |
|
142,362 |
|
21% |
|
Cost of
sales |
($000's) |
(59,997 |
) |
(54,281 |
) |
11% |
|
(119,467 |
) |
(108,739 |
) |
10% |
|
Gross
profit |
($000's) |
26,053 |
|
17,759 |
|
47% |
|
52,825 |
|
33,623 |
|
57% |
|
Net
profit attributable to shareholders of Teranga |
($000's) |
11,586 |
|
9,640 |
|
20% |
|
14,567 |
|
15,803 |
|
(8%) |
|
Per share |
($) |
0.11 |
|
0.09 |
|
20% |
|
0.14 |
|
0.15 |
|
(8%) |
|
Adjusted net profit attributable to shareholders of Teranga1 |
($000's) |
6,192 |
|
9,723 |
|
(36%) |
|
16,095 |
|
16,195 |
|
(1%) |
|
Per share1 |
($) |
0.06 |
|
0.09 |
|
(36%) |
|
0.15 |
|
0.15 |
|
(1%) |
|
EBITDA1 |
($000's) |
44,949 |
|
23,827 |
|
89% |
|
69,314 |
|
45,701 |
|
52% |
|
Operating cash flow excluding changes in working capital other than
inventories |
($000's) |
26,105 |
|
22,191 |
|
18% |
|
50,971 |
|
46,018 |
|
11% |
|
Operating cash flow |
($000's) |
19,181 |
|
7,434 |
|
158% |
|
32,900 |
|
28,692 |
|
15% |
|
Sustaining capital expenditures (excluding deferred stripping) |
($000's) |
4,150 |
|
9,611 |
|
(57%) |
|
7,307 |
|
14,928 |
|
(51%) |
|
Capitalized deferred stripping - sustaining |
($000's) |
8,157 |
|
4,704 |
|
73% |
|
18,254 |
|
16,304 |
|
12% |
|
Growth
capital expenditures |
($000's) |
22,830 |
|
6,932 |
|
229% |
|
44,849 |
|
9,130 |
|
391% |
|
- Record second quarter and half year production resulted in an
increase in full year 2018 production guidance to at least 230,000
ounces (original guidance 210,000 to 225,000 ounces).
- Per ounce metrics, including cost of sales, total cash costs1,
all-in sustaining costs1 and all-in sustaining costs (excluding
non-cash inventory movements and amortized advanced royalty costs)1
were all lower than the prior year quarter and below the full year
guidance ranges, mainly due to higher grades mined and
processed.
- For the three and six months ended June 30, 2018, net profit
attributable to Teranga shareholders benefited from realized and
unrealized gains on gold forward sales contracts and an increase in
gross profit as a result of higher revenue, partially offset by an
increase in income tax expense and a non-cash adjustment as a
result of the adoption of IFRS 15.
- Cash and cash equivalents totalled $91.7 million, up $31.4
million from the first quarter 2018 balance of $60.3
million.
- During the second quarter, the Company drew down $70 million
under a secured development facility with Taurus Funds Management
Pty Ltd. and fully repaid its $15 million revolving credit
facility.
Organic Growth Highlights
Wahgnion M&I Resources Increased
Significantly
- Wahgnion’s M&I resources increased by 33% from 1.8 million
ounces to 2.4 million ounces.
- The Company is targeting a conversion rate of more than 50% of
the 600,000 ounces of additional mineral resources into
reserves.
Wahgnion Construction is on Track and
Progressing Well
- Completed plant design.
- Detailed engineering is on schedule to support site
construction.
- The development of site infrastructure is moving forward on
schedule.
- Major plant construction commenced with pouring of structural
concrete.
Golden Hill: The Company’s Most Advanced
Exploration Property
- The number of prospects at Golden Hill now stands at nine, a
twofold increase from one year ago.
- Positive drill results during the quarter progressing towards
an initial resource estimate by year-end.
- Teranga has secured $25 million3 for the future advancement of
Golden Hill to a feasibility study.
Key Milestones in 2018
Teranga’s operations, development and
exploration teams are expecting to deliver on a number of key
milestones through the remainder of 2018. They include:
- Sabodala: Achieve increased 2018 production
guidance of at least 230,000 ounces of gold and generate strong
free cash flows2; advance Niakafiri resettlement to pave way for
drilling in 2019.
- Wahgnion: Update mineral reserve estimate,
mine plan and NI 43-101 technical report in Q3 2018.
- Golden Hill: Provide further exploration
updates and issue an initial resource estimation by year-end.
- Côte d’Ivoire: Provide updates on exploration
and development activities.
Consolidated Financial
Statements
A copy of Teranga’s consolidated financial
statements and management’s discussion & analysis for the three
and six months ended June 30, 2018 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.
Q2 2018 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 quarter. Those wishing to listen can
access the live conference call and webcast as follows:
Date &
Time: |
Thursday, August 2, 2018
at 8:30 a.m. ET |
Telephone: |
Toll-free
+1-877-291-4570 |
|
Local of International
+1-647-788-4919 |
|
|
|
Please allow 10 minutes to
be connected to the conference call. |
Webcast: |
The webcast can be
accessed on Teranga’s website at www.terangagold.com/q22018. |
Replay: |
The conference call replay
will be available 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 3675279. |
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.
Starting in 2018, the Company adopted “adjusted
net profit attributable to shareholders” and “adjusted basic
earnings per share” as new non-IFRS financial measures. These
non-IFRS financial measures are used by management and investors to
measure the underlying operating performance of the Company.
Presenting these measures from period to period is expected to help
management and investors evaluate earnings trends more readily in
comparison with results from prior periods.
The Company calculates “adjusted net profit
attributable to shareholders” as net profit attributable to
shareholders adjusted to exclude specific items that are
significant, but not reflective of the underlying operations of the
Company, including: the impact of unrealized and realized foreign
exchange gains and losses, gains and losses on derivative
instruments, accretion expense on long-term obligations, impairment
provisions and reversals thereof, and other unusual or
non-recurring items. During the second quarter of 2018, the
Company also excluded the impact of foreign exchange movements on
deferred taxes and other non-cash fair value changes from adjusted
net profit attributable to shareholders as management does not
believe these factors to be reflective of the underlying
performance of the Company.
“Adjusted basic earnings per share” is
calculated using the weighted average number of shares outstanding
under the basic method of earnings per share as determined under
IFRS.
|
Three months ended June 30, |
Six months ended June 30, |
(US$000's) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net
profit attributable to shareholders |
11,586 |
|
9,640 |
|
14,567 |
|
15,803 |
|
|
|
|
|
|
Adjustments (net of tax) for: |
|
|
|
|
Gains on
derivative instruments |
(10,942 |
) |
- |
|
(7,881 |
) |
- |
|
Accretion
expense |
2,465 |
|
141 |
|
5,004 |
|
293 |
|
Acquisition |
- |
|
32 |
|
- |
|
52 |
|
Net
foreign exchange (gains) losses |
(124 |
) |
2,024 |
|
1,945 |
|
2,937 |
|
Impact of
foreign exchange on deferred taxes |
3,218 |
|
(2,114 |
) |
2,471 |
|
(2,890 |
) |
Change in
fair value of share warrant liability |
(11 |
) |
- |
|
(11 |
) |
- |
|
Adjusted net profit attributable to
shareholders |
6,192 |
|
9,723 |
|
16,095 |
|
16,195 |
|
Basic earnings per share |
0.11 |
|
0.09 |
|
0.14 |
|
0.15 |
|
Adjusted basic earnings per share |
0.06 |
|
0.09 |
|
0.15 |
|
0.15 |
|
For complete details of the Company’s Non-IFRS
Performance Measures, please see the Non-IFRS Performance Measures
section in Management’s Discussion & Analysis for the three and
six months ended June 30, 2018 available on the Company’s website
at www.terangagold.com.
(2) The free cash flow estimates are
based on the updated life of mine plan and reserve estimate for the
Sabodala project as set out in the technical report of Teranga for
the Sabodala Project, Senegal, West Africa dated August 30, 2017
(see in particular section 21 - Capital and Operating Costs).
(3) The $25 million tranche from the
Taurus Facility is to fund the completion of a feasibility study on
Golden Hill and is available for drawdown upon delivery of a
positive initial preliminary economic assessment to the
satisfaction of the lenders.
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 presentation include
forecasting 2018 gold production of at least 230,000 ounces.
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, 2018, 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 more than 6,400 km2 of land located on
prospective gold belts. Since its initial public offering in
2010, Teranga has produced more than 1.5 million ounces of gold
from its operations in Senegal, which as of June 30,
2017 had a reserve base of 2.7 million ounces of gold.
Focused on diversification and growth, the Company is advancing its
Wahgnion Gold Project in Burkina Faso towards delivering its second
producing gold mine, as well as carrying out extensive exploration
programs in three West African countries: Burkina
Faso, Côte d’Ivoire and Senegal. The Company had nearly
4.0 million ounces of gold reserves from its combined Sabodala Gold
operations and Wahgnion Gold Project as of June 30,
2017. Teranga applies a rigorous capital allocation framework
for its investment decisions to execute on its growth strategy
relying on a combination of cash on the balance sheet, free cash
flow from operations and debt.
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
|
Trish Moran |
President &
CEO |
Head of Investor
Relations |
T: +1 416-594-0000 | E:
ryoung@terangagold.com |
T: +1 416-607-4507 | E:
tmoran@terangagold.com |