(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 and financial results for
the three and twelve months ended December 31, 2018. The Company
also provided an update on the development of its second mine,
Wahgnion Gold Operations (“Wahgnion”).
“In 2018, we significantly advanced our vision
of building a multi-asset mid-tier gold producer in West Africa,”
said Richard Young, President and Chief Executive Officer. “By the
end of 2019, we will have two long-life mines in two jurisdictions
capable of producing between 300,000 and 350,000 ounces of gold per
year and a third project, Golden Hill, potentially moving towards
feasibility stage development. As well, we have very prospective
land positions in Côte d’Ivoire that could represent the next phase
of Teranga’s longer-term growth.”
OPERATING HIGHLIGHTS
- Fourth quarter 2018 gold production totalled 59,442 ounces, at
cost of sales, total cash costs(1) and all-in sustaining costs(1)
marginally higher than the prior year quarter due to lower gold
production
- Record full-year gold production of 245,230 ounces, exceeding
the high end of Teranga’s increased 2018 production guidance range
of 235,000-240,000 ounces
- FY2018 ounce metrics improved year-over-year and beat guidance:
- cost of sales of $937 per ounce (2018 guidance range $950 -
$1,025 per ounce)
- total cash costs(1) of $660 per ounce (2018 guidance range $700
- $750 per ounce)
- all-in sustaining costs (excluding non-cash inventory movements
and amortized advanced royalties)(1) of $940 per ounce (2018
guidance range $950 - $1,025 per ounce)
FINANCIAL HIGHLIGHTS
- Fourth quarter net loss attributable to shareholders of $10.6
million ($0.10 loss per share) and adjusted net profit attributable
to shareholders(2) of $1.2 million ($0.01 per share) both declined
year-over-year largely as a result of lower gold production and
lower gross profit, higher losses on gold forward sales contracts,
and a non-cash financing expense due to adoption of a new
accounting standard during the year. (The non-cash financing
expense is excluded from adjusted net profit attributable to
shareholders(2).)
- Full-year net profit attributable to shareholders of $11.8
million ($0.11 per share) and adjusted net profit attributable to
shareholders(2) of $18.1 million ($0.17 per share) were both lower
than the prior year largely due to higher income taxes and a
non-cash financing expense due to adoption of a new accounting
standard during the year that more than offset higher production
and gross profit. (The non-cash financing expense is excluded from
adjusted net profit attributable to shareholders(2).)
- FY2018 EBITDA(1) increased by 17% to $111.9 million, mainly due
to higher gross profit and gains on gold hedges
- FY2018 Operating cash flow increased by 29% to $92.1 million,
mainly due to higher revenues and lower income taxes paid
- Cash and cash equivalents declined to $46.6 million at December
31, 2018, as construction activities continued to ramp up during
the quarter at the Company’s second mine, Wahgnion
ORGANIC GROWTH
- Wahgnion: Development of Teranga’s second mine tracking
well for completion
- Achieved major construction project milestones in 2018
- On track for first gold pour and ramp up to nameplate
production in Q4 2019
- Increased open-pit mineral reserves by ~40% to 1.6 million
ounces
- Increased mine life to 13 years and improved first five years’
production and cost profile
- Filed updated NI 43-101
- Golden Hill: The Company’s most advanced exploration
project
- Announced early-stage initial resource estimate (effective
November 30, 2018) comprised of 6.4 million tonnes at 2.02 g/t gold
in the indicated category for 415,000 ounces and 11.95 million
tonnes at 1.68 g/t of gold in the inferred category for 644,000
ounces of gold
- Initiated metallurgical test work to support future advanced
engineering studies
- Increased ownership in Golden Hill to 100%
- Signed joint venture agreement on property immediately north of
Golden Hill
- Côte d’Ivoire Exploration
- Commenced resource modelling, metallurgical test work and
exploration work on Afema
- Advanced Miminvest properties including an initial drill
program on the Guitry property
“At our flagship Sabodala operation, the mine
continued to significantly outperform the reserve model in 2018,
resulting in record production and costs well below the lower end
of our guidance range for the year,” said Paul Chawrun, Chief
Operating Officer. “With Wahgnion well on track, we are preparing a
new mine plan for 2019 to mine more material than was planned for
in the October 2018 technical report to accommodate the possibility
of an earlier-than-planned commissioning and ramp up of the
plant. And, at Golden Hill, we look forward to building upon
the recently announced high grade initial resource.”
LOOKING AHEAD TO 2019
- First pour and ramp up at Wahgnion expected in Q4 2019
- With two operating gold mines, the Company’s production and
cost guidance for 2019 is as follows:
|
|
Gold
Production |
Cost of
Sales/oz |
All-in
Sustaining Costs/oz(1)* |
|
Sabodala |
215koz-230koz |
$1,050
- $1,125 |
$825 -
$900 |
|
Wahgnion |
30koz-40koz |
$1,175 - $1,250 |
$750 - $825 |
|
Consolidated |
245koz-270koz |
$1,050 - $1,125 |
$900 - $1,000 |
|
*All-in sustaining costs (excluding non-cash inventory
movements and amortized advanced royalties). All-in
sustaining costs for Sabodala includes sustaining capital
expenditures but excludes growth capital related to the Sabodala
village resettlement. Consolidated all-in sustaining costs
adds corporate administration and share-based compensation expense
to mine site figures. |
- Growth capital spending guidance for 2019
- Wahgnion construction: $115 - $120 million
- Wahgnion pre-operating: ~ $30 million
- Sabodala village resettlement: $15 - $20 million
- Build on Golden Hill’s initial resource and complete an
internal technical and economic assessment
- Continue to explore highly prospective properties in Côte
d’Ivoire
OPERATING & FINANCIAL
HIGHLIGHTS
|
|
Three months ended December
31, |
Twelve months ended December
31, |
Operating
Data |
|
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
Gold Produced |
(oz) |
59,442 |
|
67,934 |
|
(13 |
%) |
245,230 |
|
233,267 |
|
5 |
% |
Gold Sold |
(oz) |
61,696 |
|
68,944 |
|
(11 |
%) |
246,073 |
|
231,078 |
|
6 |
% |
Average realized gold price1 |
($ per
oz) |
1,232 |
|
1,279 |
|
(4 |
%) |
1,271 |
|
1,261 |
|
1 |
% |
Cost of sales per ounce |
($ per
oz sold) |
962 |
|
930 |
|
3 |
% |
937 |
|
961 |
|
(3 |
%) |
Total cash costs1 |
($ per
oz sold) |
692 |
|
689 |
|
1 |
% |
660 |
|
721 |
|
(8 |
%) |
All-in sustaining costs (excluding non-cash inventory
movements and amortized advanced royalty costs)1 |
($ per oz sold) |
998 |
|
860 |
|
16 |
% |
940 |
|
943 |
|
(0 |
%) |
|
|
Three months ended December 31, |
Twelve months
ended December 31, |
Financial Data |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
Revenue |
($000s) |
76,140 |
|
88,280 |
|
(14 |
%) |
312,628 |
|
291,683 |
|
7 |
% |
Cost of
sales |
($000s) |
(59,374 |
) |
(64,149 |
) |
(7 |
%) |
(230,517 |
) |
(222,113 |
) |
4 |
% |
Gross
profit |
($000s) |
16,766 |
|
24,131 |
|
(31 |
%) |
82,111 |
|
69,570 |
|
18 |
% |
Net
(loss)/profit attributable to shareholders of Teranga |
($000s) |
(10,639 |
) |
5,758 |
|
N/A |
11,794 |
|
31,932 |
|
(63 |
%) |
Per share |
($) |
(0.10 |
) |
0.05 |
|
N/A |
0.11 |
|
0.30 |
|
(63 |
%) |
Adjusted
net profit attributable to shareholders of Teranga2 |
($000s) |
1,229 |
|
8,717 |
|
(86 |
%) |
18,075 |
|
30,106 |
|
(40 |
%) |
Per share2 |
($) |
0.01 |
|
0.08 |
|
(86 |
%) |
0.17 |
|
0.28 |
|
(40 |
%) |
EBITDA1 |
($000s) |
12,516 |
|
26,630 |
|
(53 |
%) |
111,855 |
|
95,335 |
|
17 |
% |
Operating
cash flow before changes in working capital other
than inventories |
($000s) |
25,384 |
|
24,708 |
|
3 |
% |
96,649 |
|
82,610 |
|
17 |
% |
Operating cash flow |
($000s) |
41,784 |
|
32,452 |
|
29 |
% |
92,060 |
|
71,379 |
|
29 |
% |
Sustaining capital expenditures (excluding deferred
stripping) |
($000s) |
5,727 |
|
3,985 |
|
44 |
% |
18,846 |
|
25,382 |
|
(26 |
%) |
Capitalized deferred stripping - sustaining |
($000s) |
13,526 |
|
7,655 |
|
77 |
% |
45,978 |
|
29,428 |
|
56 |
% |
Growth
capital expenditures |
($000s) |
53,174 |
|
10,509 |
|
406 |
% |
137,334 |
|
24,623 |
|
458 |
% |
Cash and
cash equivalents, as at |
($000s) |
|
|
|
|
|
|
46,615 |
|
87,671 |
|
(47 |
%) |
CONSOLIDATED FINANCIAL
STATEMENTS
A copy of Teranga’s consolidated financial
statements and management’s discussion & analysis for the three
and twelve months ended December 31, 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.
Q4 & YEAR-END 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 fourth quarter and year-ended December 31,
2018, as well as review the initial resource at Golden Hill and
discuss next steps with the project. Those wishing to listen
can access the live conference call and webcast as follows:
Date &
Time: |
Friday, February 22,
2019 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
http://www.terangagold.com/q42018. |
|
|
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 7383035#. |
|
|
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. All-in sustaining costs quoted for individual mines
exclude inventory movements, amortization of advanced royalties,
allocations of corporate overheads or share-based compensation
expense. All-in sustaining costs quoted on a consolidated
basis, exclude inventory movements and amortization of advanced
royalties but include corporate administration expense and
share-based compensation expense. Please refer to Non-IFRS
Financial Measures in the Company's Management's Discussion and
Analysis for the three and twelve months ended December 31,
2018. |
|
|
(2) |
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
(loss)/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. Commencing the
second quarter 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.Adjusted net profit attributable to
shareholders and adjusted basic net earnings per share are
calculated as follows: |
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
(US$000s) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net
(loss)/profit attributable to shareholders |
(10,639 |
) |
5,758 |
|
11,794 |
|
31,932 |
|
|
|
|
|
|
|
|
|
|
Adjustments (net of tax) for: |
|
|
|
|
|
|
|
|
Loss/(gains) on derivative instruments |
7,149 |
|
3,488 |
|
(9,299 |
) |
(1,832 |
) |
Accretion
expense |
2,077 |
|
340 |
|
9,646 |
|
778 |
|
Acquisition |
- |
|
- |
|
- |
|
52 |
|
Net
foreign exchange losses |
422 |
|
497 |
|
3,008 |
|
4,536 |
|
Impact of
foreign exchange on deferred taxes |
1,847 |
|
(1,366 |
) |
4,379 |
|
(5,360 |
) |
Change in
fair value of share warrant liability |
137 |
|
- |
|
(1,136 |
) |
- |
|
Change in
fair value of gold offtake payment liability |
236 |
|
- |
|
(317 |
) |
- |
|
Adjusted net profit attributable to
shareholders |
1,229 |
|
8,717 |
|
18,075 |
|
30,106 |
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per share |
(0.10 |
) |
0.05 |
|
0.11 |
|
0.30 |
|
Adjusted basic earnings per share |
0.01 |
|
0.08 |
|
0.17 |
|
0.28 |
|
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 2019 gold production, cost guidance and anticipated
timing for first gold pour and ramp up to nameplate production at
Wahgnion. Although the forward-looking information contained
in this press release reflects 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 approximately 6,400 km2 of land located on
prospective gold belts. Since its initial public offering in
2010, Teranga has produced more than 1.6 million ounces of gold at
its Sabodala operation in Senegal. Focused on diversification
and growth, the Company is advancing construction of its second
producing gold mine, Wahgnion, which is located in Burkina Faso, as
well as carrying out exploration programs in three West African
countries: Burkina Faso, Côte d’Ivoire and
Senegal. The Company had more than 4.0 million ounces of gold
reserves as of June 30, 2018. Teranga applies a rigorous
capital allocation framework for its investment decisions and is
focused on funding future organic growth plans
responsibly.
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 |