"While West African companies have traded at a discount in the past, the prospective region is now well-known for being mining friendly, and Teranga’s stock has been one of the top 30 performing stocks on the TSX over the last three years."

Richard Young

PRESIDENT AND CEO, TERANGA GOLD CORPORATION

October 21, 2020

Could you elaborate on the advantages of integrating the high-grade Massawa gold project with your flagship Sabodala operation?

The Sabodala-Massawa complex is the successful combination of existing mine infrastructure and one of the highest grade undeveloped open pit gold projects in Africa. Sabodala is a mature operation where we have been mining for over a decade and, in the last three years alone, has outperformed the reserve model by 37%. Recently acquired Massawa is within trucking distance of our established Sabodala plant, related facilities and equipment. The combination of Sabodala and Massawa, supported by a capable workforce, created the opportunity for synergies rarely seen in today’s mining industry that have the ability to transform Sabodala into a top-tier gold asset. The pre-feasibility study points to a five-year production profile of 384,000 ounces per year (oz/y) at all-in sustaining costs of less than US$700/oz - among the lowest in the industry.

It has been a year since the first gold was produced at your second mine, Wahgnion. Can you comment on performance to date?

Wahgnion has exceeded our expectations from development through to construction and production. We are very proud that Wahgnion was built safely, ahead of schedule and under budget. It has been outperforming the reserve model since the beginning of this year as we moved beyond the areas of historical artisanal activity. Since achieving commercial production, the mill has been operating well above design capacity.  Due to the higher mill throughput, Wahgnion’s annual average production increased by approximately 25% to 150,000 oz/y over the next five years resulting in a corresponding decrease in its mine life from 13 years to 10 years. We have restarted the exploration program on over a dozen targets within trucking distance of Wahgnion’s mill with the goal of increasing the mine life.

The construction of the Wahgnion mine involved a resettlement program. Could you briefly talk us through this process?

Acknowledging that resettlements are sensitive because many in the community had spent their entire lives in their homes, we made sure to offer improved living conditions. We upgraded housing and infrastructure as well as offering a comprehensive livelihood restoration program. For example, we hired an agronomist to help improve crop yields by introducing modern farming methods and different crops to make the newly allocated land more productive. Our goal is to ensure that the communities we impact are better off after we have left than before we arrived. At this point, we are halfway through the resettlement action plan. The community was actively involved in the design of the new houses and livelihood restoration programs. Nearly 40% of Wahgnion’s workforce comes from the local communities around the mine, and their strong support has allowed us to make a smooth transition from exploration to construction and now to operation.

Could you elaborate on Teranga’s exploration updates at its main projects, including Golden Hill?

Our 2021 production is projected to be more than 500,000 oz; however, we have several opportunities to potentially increase resources and production through four significant exploration programs currently underway. In total, we are spending about US$35 million in 2020, including US$10 million to increase our resources and reserves at Sabodala-Massawa, and US$5 million at Wahgnion.  We also have an advanced exploration project in Burkina Faso called Golden Hill that we have been drilling for several years. We will announce an updated resource for Golden Hill in October as part of our mine license application process. Previously, I would have said Golden Hill was set to become our third mine, but our Afema property is showing to be equally promising. Both of these projects could become mines for us in the future.

What is Côte d’Ivoire’s potential for gold discoveries?

Approximately 35% of the Birimian Greenstone Belt is located within the borders of Côte d’Ivoire, a country that has been called out by top mining executives as the number one jurisdiction in Africa for gold exploration. The ground is very prospective and underexplored and, while it is still early days, Côte d’Ivoire has a record of around 100 million oz of gold discovered to date and several companies who have achieved considerable success. Teranga has an attractive pipeline of assets, with three exploration properties, including Afema, where we just announced a new discovery, and two other early-stage properties we intend to begin drilling later this year.

How are higher gold prices influencing producers’ long-term planning?

Back in 2015, the Board deliberated on whether we should return money to shareholders or reinvest in the business and grow beyond our one asset, Sabodala.  The view was that we were better off to reinvest based on a view that the sector had underinvested during the bull market and that, ultimately, grades and production will decline. Since 2016, we have acquired Gryphon Minerals, which gave us Wahgnion and Golden Hill and we have entered into two joint ventures in Côte d’Ivoire and acquired Massawa.

Another reason underlying the board’s decision in 2015 was the believe that gold prices would increase in the coming years.  Even before the current pandemic, gold prices started to move up in 2019, with the growth in government debt trading at negative yields. The underlying reason is demographics: the developed world's population is aging, which will have a significant impact on economies and stock markets longer term. For long-term money managers, pension funds, and insurance companies, gold stands out as one of the few assets that could hold value for decades to come.

Do you have a final message for our audience?

While West African companies have traded at a discount in the past, the prospective region is well-known for being mining friendly, and Teranga’s stock has been one of the top 30 performing stocks on the TSX over the last three years.  With an attractive portfolio of assets, the future continues to shine bright for Teranga.

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