RE:CONCERNS OF ANOTHER MISSilovetoshortem1 wrote: Company Profile Teranga Gold Corporation is a mid-tier gold producer with operations and significant exploration potential in Senegal. It was created after Teranga acquired the Sabodala gold mine and the 1,055 km2 regional exploration package through a demerger from Mineral Deposits Limited in 2010. Teranga acquired 100% of the Oromin Joint Venture Group (OJVG) in Q4/13 and released an updated integrated mine plan. The company is focused on expediting the conversion of resources to reserves, assessing the feasibility of a concurrent heap-leach operation, and identifying opportunities to increase the milling rate from its nameplate capacity of 3.5 Mtpa. Business Mix (Based on revenues unless otherwise noted) 100% Gold Comparable Companies (TSX unless otherwise noted) AGI,AUQ,BTO,DPM,CG,DGC,OSK,P,SMF Recent Update Text as of 30OCT14 . Teranga reported Q3/14 adj. EPS of $0.01, below our estimate and consensus of $0.02 due to a 21% top-line miss, partially offset by lower cost of goods sold. . Production of 48.6 koz Au for the quarter missed our estimate by 13% mainly due to a lower processed head grade and lower gold recovery. TGZ states that overall high-grade ounces mined were greater than the reserve model predicted, but that the average grade of the high-grade ore mined was 2.8 g/t Au compared to the block model at 3.5 g/t Au. Total cash costs of $781/oz in Q3/14 were 4% higher than expected. . Teranga has revised its 2014 production guidance lower and now sees 2014 production of approximately 215 koz Au at a total cash cost of $725/oz (AISC of $900/oz) compared to initial guidance for the year of 220-240 koz Au at a total cash cost of $650-$700/oz (AISC of $800-$875/oz). We see a risk of the company missing its revised guidance if mined gold grades continue to come in below plan or if the negative mill reconciliation continues and now model 2014 production of 202 koz Au at a total cash cost of $752/oz. . The company is moving ahead with an optimization project to increase mill throughput by 5%-10% and plans to implement changes to the milling circuit over the next 18 months for capex of $12M-$15M. . We rate Teranga Sector Perform with a C$0.40 one-year target price.
