Could you provide some background information on Teranga Gold?

Teranga completed its initial public offering in 2010.  At that time, we had one producing gold mine, Sabodala, in Senegal, which produced just over 100,000 ounces per year and had a reserve base of 1.4 million ounces. Since then, we acquired a property adjacent to Sabodala and we have twice expanded our mill capacity. As a result, Sabodala has been producing more than 200,000 ounces since 2012 and we expect that to continue for at least the next five years with reserves of 2.7 million ounces.

Beyond Senegal, over the last two years we have made advancements towards achieving our vision of becoming a multi-asset mid-tier West African gold producer.  We acquired one publicly listed company and entered into two additional joint ventures expanding our presence beyond Senegal to also include Burkina Faso and Côte d’Ivoire. Our second gold mine, Wahgnion, which is located in Burkina Faso, is currently under construction and first pour is expected by the end of 2019.  

How did Sabodala perform last year?

Sabodala had record production in 2017 with 233,000 ounces gold, and generated free cash flow of US$40 million. Over the next five years Sabodala is expected to produce more than one million ounces of gold and generate ~US$250 million in free cash flow to help fund our organic growth opportunities in Burkina Faso and Côte d’Ivoire.

What is the impact of Sabodala on local employment?

We have approximately 1,100 employees at Sabodala; close to 95% are Senegalese and over half are from local and regional communities. Additionally, we employ casual labor only from the local communities. We teach local community members different skills such as brickwork and ironwork; skills they can use locally or further afield.  Our mission is to share the benefits of responsible mining with all of our stakeholders – for the local community this means ensuring that the community is better off after we leave than before we came. Our conviction to responsible mining has been recognized globally with numerous international awards, including the 2017 PDAC Environmental and Social Responsibility Award.   

Could you tell us about the Wahgnion growth project?

We acquired Wahgnion through our acquisition of Gryphon Minerals in 2016.   In September 2017 we released a feasibility study for Wahgnion with 1.2 million ounces, a 9-year mine life, all-in sustaining costs per ounce of US$850 and an IRR of 15%.  At the time we emphasized that we were just getting started as this initial technical report included only four of more than a dozen targets. Through an infill drilling program completed late last year, we expect the mine life to increase to 12 or 13 years with the updated reserves to be reported in the coming months.  Overall, we expect we will ultimately mine between two and three million ounces over the life of Wahgnion with annual production expected to be between 120,000 and 150,000 ounces and all-in sustaining costs per ounce to be about US$850.

Could you also tell us about the US$15 million exploration campaign in West Africa?

The focus of our 2018 exploration program is on Burkina Faso and Côte d’Ivoire.  We have a budget of over US$3 million for our earlier stage Côte d’Ivoire properties but the main focus of our resources will be on our most advanced exploration property, Golden Hill, located on the Houndé Greenstone Belt, in Burkina Faso, where several mines have already been built.  Drilling across the entire Golden Hill property over the last 18 months supports increasing confidence that this project could represent Teranga’s third gold mine in West Africa, moving Teranga into mid-tier producer status.  Work at Golden Hill is moving rapidly. We invested US$7 million in 2017 and another US$8 million in project drill programs in 2018. Our plan is to announce an initial resource estimate for the most advanced Golden Hill prospects by year-end. Preliminary metallurgical test work programs are underway with base line environmental studies to follow later this year. Upon satisfaction of certain conditions precedent relating to the project’s initial preliminary economic assessment, we have secured US$25 million in debt financing to advance the Golden Hill project through to feasibility.

What role can West Africa play in bringing more gold to the market?

While world gold production is expected to decline in the coming years, West Africa continues to be one of the fastest growing regions for gold production in the world. There are few regions with this much activity. West Africa produces half of the continent’s gold and is closing in on North America production levels.  This remarkable progress over the past 25 years is due to the mining-friendly governments and prospective, underexplored geology in the region. There have been about a dozen projects built over the last five years and, with one exception, they are coming in on time and on budget. They are bitesize but profitable.

Many view Côte d’Ivoire and Burkina Faso as the most mining-friendly jurisdictions in West Africa. Côte d’Ivoire is seen as the most prospective jurisdiction in Africa, in large part because it has the most significant portion – 35% – of the West African Birimian Greenstone Belt.   

What will be the highlights for Teranga in 2018?

News will continue to flow steadily in 2018. Already in the first half of 2018, we have announced that we beat 2017 guidance and had a strong Q1 2018 at Sabodala.  In addition, we completed a US$190 million financing for Wahgnion construction and for Golden Hill through feasibility – we have had several encouraging updates on our advanced exploration project, Golden Hill in 2018. We also commenced major construction at Wahgnion and announced a 33% increase to Wahgnion’s M&I resources. 

For the balance of the year, we will continue to have more drilling updates as well as an initial resource estimation on our advanced exploration project, Golden Hill. We will also be announcing new reserves and issuing an updated technical report for Wahgnion, our second mine, and providing updates on our exploration and development programs in Côte d’Ivoire.

Moreover, we are looking for strong production and free cash flow at Sabodala to help our organic growth. All in all, 2018 should be another positive year for Teranga. We are well on track to becoming the next mid-tier gold producer in West Africa with a portfolio of projects that could see us organically grow annual production to more than 500,000 ounces of gold.