TORONTO, ONTARIO--(Marketwire - Nov. 8, 2012) - Teranga Gold Corporation (TSX:TGZ)(ASX:TGZ) -
For a full explanation of Financial, Operating and Exploration results please see the Interim Condensed Consolidated Financial Statements as at and for the period ended September 30, 2012 and the associated Management's Discussion & Analysis at www.terangagold.com.
Highlights
- Record third quarter profit of $21.3 million ($0.09 per share), compared to a loss of $24.8 million ($0.10 loss per share) in the same prior year period, an increase of $46.1 million.
- Third quarter 2012 production totalled 55,107 ounces of gold, also a Company record, and a 103 percent increase over the same quarter in 2011.
- Third quarter 2012 total cash costs of $594 per ounce were 36 percent lower than the same quarter in 2011.1
- The Company remains on track to meet its full year production guidance of 210,000 to 225,000 ounces at total cash costs of $600 to $650 per ounce.
- During the third quarter 2012, the Company delivered 29,000 ounces of production into forward sales contracts, reducing the balance outstanding to 93,395 ounces. The balance is expected to decline to 66,000 ounces at year end and be fully extinguished by August 2013.
- Exploration at the Sabodala deposit Increases Measured and Indicated Resources to 2.0 million ounces, an increase of approximately 670,000 ounces or 43 percent, before production (approximately 500,000 ounces net of production).
- Measured and Indicated Resources at Gora also increased to 374,000 ounces, an increase of approximately 160,000 ounces or 74 percent.
- Initial Inferred Resources at Masato declared at approximately 700,000 ounces.
- The Company's liquidity continues to improve, even as it extinguishes its hedge book and lowers its payables balance, with $30.6 million in cash, cash equivalents, and bullion receivable together with 4,150 ounces in bullion inventory at September 30, 2012 rising to $39.5 million, including $31.2 in cash and cash equivalents, at November 1, 2012.
"During the third quarter we continued to build out our corporate and site management teams adding depth which I believe will serve us well as we execute on our growth plans. One of the keys to our success is the creation of a Technical Services Group in our Corporate Office lead by Paul Chawrun. I am also very pleased for Richard Young who has stepped into the CEO role, we have worked together for over 20 years, and I am very much looking forward to continuing to grow this Company with him over the coming years", said Alan R. Hill, Executive Chairman.
1 Total cash costs per ounce sold is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. For a definition of this metric, please see page 8 of this press release.
Operating Highlights
- Gold production for the third quarter of 2012 was 55,107 ounces, 103 percent higher than the same prior year period due to higher grade ore processed combined with higher mill throughput as a result of the completion of the mill expansion.
- Gold sold for the three months ended September 30, 2012 totalled 62,439 ounces compared to 27,574 ounces sold in the same prior year period, an increase of 126 percent. Ounces sold during the third quarter of 2012 were higher than produced due to the drawdown of gold in circuit from the previous quarter when the mill had reduced ability to pour gold during the tie-ins for the mill expansion. As a result, at September 30, 2012, gold in circuit and gold bullion inventory decreased by 7,337 ounces to 13,046 ounces.
- Total cash costs for the three months ended September 30, 2012 were $594 per ounce sold compared to $928 per ounce in the same prior year period, a reduction of 36 percent. Total cash costs and depreciation per ounce
sold were $810 per ounce for the three months ended September 30, 2012 compared to $1,168 per ounce in the same prior year period.2
- Total tonnes mined for the three months ended September 30, 2012 were more than 10 percent higher compared to the same prior year period due to increased fleet capacity and improved productivity in the mining operation.
- Ore tonnes milled for the three months ended September 30, 2012 were 12 percent higher than the same prior year period mainly due to an increase in mill capacity as a result of the completion of the mill expansion. Throughput for the fourth quarter is expected to increase with commissioning now complete and the end of the wet season which will allow for better flow rates in the crushing circuit.
- The Company remains on track to produce between 210,000 - 225,000 ounces in 2012, an increase of approximately 65 percent over 2011, while total cash costs are expected to decline approximately 20 percent to between $600 to $650 per ounce, in line with guidance for the year. As a result of the delay in completion and commissioning of the mill expansion production is expected to be at the lower end of the range of our production guidance for the year. Production for October was 22,735 ounces, during a month in which we transitioned from the wet to dry season, keeping us on track to meet our production guidance for the full year.
"Gross profit increased 298 percent for the third quarter and 130 percent year to date due to the improved operating performance at Sabodala; resulting in a swing from a loss position a year ago to profitability," said Richard Young, President and CEO.
Exploration Highlights
Exploration at the Sabodala deposit increases Measured and Indicated Resources to 2.0 million ounces, an increase of approximately 670,000 ounces or 43 percent, before production (approximately 500,000 ounces net of production)
- The 2012 drill program is designed to deepen the ultimate pit and, if successful, to add upwards of 500,000 to 1 million ounces by mid-2013, based on drilling intercepts to date, at grades between 1.5 gpt and 2 gpt.3 Recent results in the third quarter of 2012 advanced the mineralized extents at Sabodala to the NE, SE, SW and to depth in the north, with the key in-pit drilling to extend the high grade intercepts of a year ago still to come.
- Measured Resources at the Sabodala pit total 27.1 million tonnes grading 1.25 gpt and Indicated Resources total 31.5 million tonnes grading 0.96 gpt. Inferred Resources total 12.4 million tonnes grading 0.87 gpt.
- As a result of the mine planning work completed in the first quarter of 2012, we have focused the majority of the drilling effort this year into expanding the Sabodala open pit reserves. During the third quarter of 2012, Reverse Circulation ("RC") and Diamond Drilling ("DD") on the Mine License ("ML") totalled 22,000 metres at a cost of $7.0 million. Year to date, a total of $20 million has been spent on just over 85,000 metres of drilling. Based on the results to date, the budget for the ML has been increased from $20 million to $25 million to continue with the resource expansion and conversion program at the Sabodala pit.
| Measured and Indicated Resources at Gora also increased to 374,000 ounces, an increase of approximately 160,000 ounces or 74 percent. |
- The feasibility study is scheduled to be completed in the fourth quarter 2012 for submission before year end as part of the Environmental and Social Impact Assessment.
- Optimization work during the third quarter increased Measured and Indicated Resources to 373,717 ounces of gold, an increase of approximately 160,000 ounces or 74 percent over the previous estimate.
- Measured Resources at the Gora deposit total 0.487 million tonnes grading 5.27 gpt and Indicated Resources total 1.84 million tonnes grading 4.93 gpt. Inferred Resources total 0.21 million tonnes grading 3.38 gpt. The increase in resources reflects the inclusion of all outstanding assays and continued refinement of the resource model.
2 Total cash costs per ounce sold and total cash costs and depreciation per ounce sold are common financial performance measures in the gold mining industry but have no standard meaning under IFRS. For a definition of these metrics, please see page 8 of this press release.
3 This exploration target is not a Mineral Resource. The potential quality and grade is conceptual in nature and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.
| Operational and Financial Highlights |
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Three months ended September 30, |
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Nine months ended September 30, |
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2012 |
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2011 |
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2012 |
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2011 |
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restated |
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restated |
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| Operating results |
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| Ore mined |
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('000t) |
655 |
|
1,008 |
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3,877 |
|
2,258 |
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| Waste mined |
|
('000t) |
6,242 |
|
5,085 |
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17,688 |
|
17,082 |
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| Total mined |
|
('000t) |
6,897 |
|
6,093 |
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21,565 |
|
19,340 |
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| Strip ratio |
|
waste/ore |
9.5 |
|
5.0 |
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4.6 |
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7.6 |
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| Ore milled |
|
('000t) |
650 |
|
582 |
|
1,713 |
|
1,840 |
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| Head grade |
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(g/t) |
3.11 |
|
1.64 |
|
2.94 |
|
1.79 |
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| Recovery rate |
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% |
84.6 |
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88.3 |
|
87.7 |
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89.4 |
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| Gold produced (1) |
|
(oz) |
55,107 |
|
27,082 |
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142,506 |
|
94,766 |
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| Gold sold |
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(oz) |
62,439 |
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27,574 |
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136,210 |
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102,471 |
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| Average realized price received |
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$/oz |
1,290 |
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1,174 |
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1,489 |
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1,152 |
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| Total cash cost (incl. royalties)(2) |
|
$/oz sold |
594 |
|
928 |
|
629 |
|
773 |
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| Total depreciation per ounce |
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$/oz sold |
216 |
|
241 |
|
210 |
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253 |
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| Total production cost per ounce |
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$/oz sold |
810 |
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1,169 |
|
839 |
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1,026 |
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| Mining (cost/t mined) |
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2.7 |
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2.6 |
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2.6 |
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2.2 |
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| Milling (cost/t milled) |
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21.9 |
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18.0 |
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20.6 |
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16.6 |
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| G&A (cost/t milled) |
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5.8 |
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6.6 |
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6.0 |
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5.6 |
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| Financial results (US$000) |
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| Revenue |
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105,014 |
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46,678 |
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227,550 |
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155,811 |
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| Cost of sales |
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(51,033 |
) |
(33,133 |
) |
(116,021 |
) |
(107,288 |
) |
| Gross profit |
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53,981 |
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13,545 |
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111,529 |
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48,523 |
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| Exploration and evaluation |
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| expenditures |
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(2,041 |
) |
(8,845 |
) |
(13,958 |
) |
(20,199 |
) |
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| Losses on gold hedge contracts |
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(18,981 |
) |
(25,756 |
) |
(24,299 |
) |
(44,663 |
) |
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| Profit/(Loss) attributable to shareholders |
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|
21,336 |
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(24,808 |
) |
31,143 |
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(32,764 |
) |
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As at September 30, |
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| Financial position (US$000) |
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2012 |
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2011 |
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Cash and cash equivalents (3) |
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|
14,767 |
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25,788 |
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Net assets |
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|
315,250 |
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299,272 |
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Borrowings |
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75,038 |
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17,306 |
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| Note (1): Gold produced includes change in gold in circuit inventory plus gold recovered during the period. |
| Note (2): Total cash costs per ounce sold for three and nine months ended September 30, 2011 were restated to comply with the Company's new accounting policies for measuring and recording ore stockpile costs, and reporting total cash costs after inventory movement, in line with the Company's accounting policies and industry standards. |
| Note (3): Cash and cash equivalents include short term investments over 90 days and restricted cash. |