FOCUSED
2013 ANNUAL REPORT
Teranga Gold Corporation operates the only gold mine and mill
in Senegal, West Africa. Base case gold production is expected to
average about 250,000 ounces of annual gold production at all-in
sustaining costs in the lowest (best) quartile of industry costs to
generate strong free cash flows. Beyond the Company’s base
case mine plan are significant opportunities for organic growth
through further exploration discoveries on its large mine license
and highly prospective regional exploration package – located
on an emerging gold belt.
AFRICA
SENEGAL
Contents
Message from the Chairman and the President & CEO
Financial Strength / Why Invest
4
8
10 Growing Our Reserves
12 Growing Production and Operations
14 Our People
16 Corporate Information
Massakounda
Permit
50
K
M F
R
O
M
T
H
E
M
I
L
L
Heremakono
Permit
Bransan Permit
Sounkounkou
Permit
Bransan South Permit
Mine License
Sabodala West Permit
Saiansoutou
Permit
Dembala Berola
Permit
Garaboureya
Permit
Mauritania
Dakar
SENEGAL
The Gambia
Mali
Our vision is to become a pre-eminent
gold producer in Senegal, while setting the
benchmark for responsible mining.
teranga gold corporation
Massakounda
Permit
50
K
M F
R
O
M
T
H
E
M
I
L
L
Heremakono
Permit
Saiansoutou
Permit
Dembala Berola
Permit
Bransan Permit
Bransan South Permit
Mine License
Sabodala West Permit
Sounkounkou
Permit
SABODALA
OJVG
Garaboureya
Permit
GolD InvenTory
2.8Moz Proven & Probable Open Pit Reserves
6.2Moz Measured & Indicated Resources (includes reserves)
2.6Moz Inferred Resources
Mine License – 246km2; Regional Land Package – 1,055km2
FoCUSeD on
DelIverInG
The Company emerged from 2013 stronger than ever,
having more than doubled its reserve and resource base
which is expected to lead to higher gold production at
lower (best) quartile costs resulting in higher free cash
flows in 2014 and beyond.
What we delivered in 2013:
✓ We met or exceeded our production and cost guidance for the year;
✓ We resolved outstanding items to bring the expanded mill to design capacity;
✓ We eliminated our inherited out-of-the-money hedge contracts;
✓ We strengthened our balance sheet by reducing our debt balance by half;
✓ We established a long-term fiscal and investment agreement with the
Senegalese Government; and
✓ We completed the acquisition of our neighbour, the Oromin Joint Venture Group
(“OJVG”) – more than doubling our reserve and resource base, increasing
production and lowering costs to increase free cash flow in 2014 and beyond.
What we will focus on delivering in 2014:
•
•
•
Integrate the OJVG into our mining operations;
Increase free cash flow through higher production and lower costs;
Further strengthen our balance sheet by eliminating our $30M debt facility and
repaying most of the mobile equipment loan balance;
• Bring the Masato deposit located on the OJVG Mine License into production;
• Evaluate the heap leach processing option;
•
Increase reserves through conversion of Measured and Indicated and Inferred Resources;
• Continue to optimize mine plan, grade, mill throughput;
•
Produce 220,000–240,000 ounces at a cash cost of $650–$700 per ounce
and all-in sustaining cost of $800–$875 per ounce;
• Roll out our regional development strategy to all stakeholders; and
• Continue to work in partnership with the Government of Senegal.
2
teranga gold corporation2013 annual report FoCUSeD on
GeneraTInG
Free
CaSh Flow
Integrating
Our Operations
Our mine plan focuses on maximizing free
cash flow rather than maximizing produc-
tion. Having multiple deposits allows us
to sequence our mine plan according to
which option provides the highest free
cash flow. With this flexibility we will
sequence production based on ore type
and grade, on strip ratio (waste:ore), and
on development capital to maximize free
cash flow in any gold price environment.
We have a solid production profile of
about 250,000 ounces per annum with
all-in sustaining costs in the lowest
(best) quartile as the capital to build
the facilities has largely been spent.
As a result, this positions us to generate
significant free cash flows in 2014
and beyond.
3
teranga gold corporation2013 annual report MeSSaGe
FroM
The
ChaIrMan
anD The
PreSIDenT
& Ceo
ALAn R. HILL
CHAIRMAn
RICHARD YOUnG
PRESIDEnT & CEO
Dear Fellow Shareholders,
• We resolved the outstanding items to bring the
We have emerged from 2013 stronger than ever.
As a result of our recently completed acquisition,
we have more than doubled our open pit reserve
and resource base. We expect 2014 and beyond
will bring higher gold production at lower costs
resulting in higher free cash flows. Operationally,
we have delivered on plan and strengthened our
balance sheet, and will continue to do so as this
year progresses. We believe the best years for
Teranga lay ahead.
Before we explain why we feel we are in a posi-
tion of strength and how we got here, we would
like to reflect on the year that just passed. There
is no question that 2013 was one of the most
difficult years we can remember. The industry
faced strong headwinds with the commodity
price declining 28 percent, its first annual de-
crease after 12 straight annual increases. Gold
equities followed suit and Teranga was no excep-
tion. We also worked our way through a proxy
battle and, despite these challenges, we contin-
ued to successfully execute on the plans we laid
out to you, our shareholders.
We were pleased with our results despite the
challenges we faced:
• We met or exceeded our production and cost
guidance for the year
expanded mill to design capacity
• We eliminated our inherited out-of-the-money
hedge contracts
• We strengthened our balance sheet by reduc-
ing our debt by half
• We established a long-term fiscal and invest-
ment agreement with the Senegalese
Government which:
• Reinforced our long-term commitment to the
country and demonstrated Senegal’s willing-
ness to work with foreign investors in a fair
and transparent manner
• And last but certainly not least, we completed
the long-awaited acquisition of our neighbor,
the Oromin Joint Venture Group (OJVG);
• This is a transformational transaction that is
accretive on every front – more than doubling
our reserve and resource base and increasing
production and lowering costs to increase
free cash flows in 2014 and beyond
The only objective that has yet to bear fruit is our
exploration program but with such a large land
position – 70km of strike along an emerging gold
belt – it takes time. Franco-Nevada invested
$135 million in our Company to allow us to com-
plete the acquisition of one of the OJVG partners
and strengthen our balance sheet because they
believe, as we do, that this highly prospective land
package with so many gold showings will lead to
major gold discoveries. We are very confident that
it is not a matter of “if” but rather “when” we have
exploration success. The acquisition of the OJVG
provides us the time to methodically explore this
belt in a cost effective manner because we now
have about 10 years of strong, stable production
of about 250,000 ounces of annual gold produc-
tion at best quartile costs as a base case which we
will now work to build on.
Operationally our mine is performing very well,
and with the mill expansion completed in 2012
we ramped up to design capacity through the
course of last year. As such, we met our produc-
tion and cost guidance for 2013, producing
207,204 ounces which was at the higher end of
our guidance of 190,000 to 210,000 ounces at
cash costs of $641 per ounce, which is better
than our guidance of $650 to $700 per ounce.
All-in sustaining costs totalled $1,033 per ounce,
at the lower end of our guidance of $1,000 to
$1,100 per ounce.
For 2014 we forecast production of 220,000 to
240,000 ounces at cash costs of $650 to $700
per ounce and all-in sustaining costs of $800 to
$875 per ounce, which are among the lowest in
the industry. Shareholders are benefiting imme-
diately from the acquisition of the OJVG with
higher production, lower costs and stronger free
cash flows in 2014.
4
teranga gold corporation2013 annual report OuR mISSION
OuR VISION
Our mission is to share the benefits of
responsible mining with all our stakeholders.
We strive to act as a responsible corporate
citizen by building projects together with
the communities near our operations and
by committing to using best available
techniques as we carry out our actions.
We aim to achieve benefits for all parties
involved and to contribute to the sustainability
and improved livelihoods for the
communities in which we operate.
• PhASE 1: BEcOmE A PRE-EmINENT
• SET ThE BENchmARk IN SENEGAL fOR
GOLD PRODucER in Senegal with 250,000
to 350,000 ounces of annual gold
production leveraging off our existing
mill and infrastructure
• PhASE 2: INcREASE ANNuAL GOLD PRODucTION
to 400,000 to 500,000 ounces with
a second mill expansion
RESPONSIBLE mINING, improving the
standard of living for those in the
communities in which we operate
and provide the communities with
the ability to become truly independent
and sustainable for decades to come,
even after the closure of our mining
operations
As commodity prices declined in early 2013,
we focused on cutting all discretionary spending.
By minimizing expenditures we maximized cash
flow and as such strengthened our balance
sheet: in so doing we demonstrated the flexibility
we have with your operations in times of uncer-
tainty. We earned $0.18 cents per share, down
from $0.38 cents per share in 2012 due to the
significant decline in the gold price in 2013 and
the expensing of the cost of the acquisition of the
OJVG. We ended the year with $42.3 million in
cash, including $7.3 million in bullion receiv-
ables after paying about $11 million in costs
related to the acquisition of the OJVG.
We remain bullish on the gold price as we believe
fundamentals are strong. However, we remain
mindful of the risks of short-term volatility and
the need to ensure that shareholder value is pro-
tected through this period by eliminating the
balance of our debt outstanding this year and
building up our cash balance.
The completion of the acquisition of the OJVG
gives us increased flexibility and the ability to
optimize production in the pursuit of maximizing
free cash flows. This does not mean the develop-
ment of the highest grade ounces first. Rather it
means we will sequence our open pit develop-
ment with an eye on free cash flow taking several
factors into consideration of which grade is only
one consideration. We must also consider ore
type (hardness), strip ratio (which is how much
waste material we need to move to extract the
ore), and capital (how much development capital
we need to access the pit and mine the ore).
Having multiple deposits allows us to sequence
pit development not based upon which plan pro-
vides the highest grade but rather upon which
plan produces the highest free cash flow.
With the OJVG acquisition behind us, and subse-
quent significant increase in our mine life, we are
able to focus on the future – short, medium and
long-term. We would like to start off by saying our
efforts will be concentrated only in Senegal and
only on gold. In the short-term (2014-2015) we
plan to integrate the OJVG with our operations
and increase free cash flow through higher pro-
duction and lower material movement. The free
cash flow we generate this year will be used in
part to retire the balance of the debt facility out-
standing and to increase reserves through the
conversion of resources to reserves. In the medi-
um-term (2014-2016) we plan to evaluate the
heap leach processing option, plus we will
continue to look for ways to optimize both mill
throughput and mine planning and grade. Look-
ing further out (2015 onward) we will be looking
for exploration discoveries.
have sufficient cash balances to execute on our
business plan. We will only invest in Senegal,
and any investment we make must be accretive
to shareholders based on a set of strict param-
eters – specifically, it must have a return that is
higher than our hurdle rate and has a quick pay-
back period. All potential investments, including
those investments within the Company, will be
evaluated on this basis. We will remain disci-
plined in our allocation of capital.
On the social front, one of our biggest achieve-
ments is the completion of the Teranga
Development Strategy (TDS), which is available
on our website. The three priority areas identified
in the TDS came out of extensive roundtable dis-
cussions with our local, regional and national
stakeholders and include the following: 1) sus-
tainable economic growth; 2) agriculture and
food security; and 3) youth and training. All of
our corporate social responsibility initiatives will
fall into these key areas. We have worked very
hard to understand the needs of the local, re-
gional, and national Governments, as well as the
needs of all stakeholders in our area of influence,
and we believe we will be able to make a mean-
ingful impact while together developing this
region in a sustainable manner.
As we move into a period of high cash flow
generation we will look to return capital to
shareholders once we have retired our debt and
We are pleased to report that in 2013 our health
and safety record improved, a record that was
already commendable with our lost-time-injury-
5
teranga gold corporation2013 annual report frequency rate remaining far below industry
benchmarks. Regardless of our performance in
this area, we will continue to be pro-active and
focus our efforts on continual improvement.
Looking at our Board of Directors, consistent with
the Company’s long-term succession planning,
Alan will transition from Executive to Non-Execu-
tive Chairman as of April 30th, 2014. This
transition follows the successful completion of
the acquisition of the OJVG which was made pos-
sible by the establishment of a global agreement
with the Government of Senegal, completed in
the first half of 2013. Since our IPO we have built
a strong operating and corporate team that has
met its operating guidance over the last two years
and in addition we have embarked on a world
class corporate social responsibility program.
Alan will remain active in the development of the
overall strategy and monitoring of the operations
and exploration efforts.
Furthermore, we are very pleased to announce
that we have strengthened our Board of Direc-
tors with the addition of Dr. Jendayi Frazer, who
brings incredible African experience. Dr. Frazer
served as U.S. Ambassador to South Africa; she
worked in the Bush administration as the U.S.
Assistant Secretary of State for Africa; and is
currently a professor at Carnegie Mellon Univer-
sity. It is critical that we continue to strengthen
our relationships with all of our Senegalese part-
ners in order to execute on our mission and
vision. Dr. Frazer’s knowledge and experience
in African affairs is a welcome addition to round
out the Board.
In closing, we know 2013 was a tough year for all
shareholders. We also believe that by delivering
on our mission and vision we have emerged from
2013 stronger than ever and that we are now
very well positioned to generate strong free cash
flows, to strengthen our balance sheet, and to
focus on organic growth through our highly pro-
spective land package in Senegal – as well as
being well positioned to benefit from a recovery
in gold prices.
As 2014 begins, our share price has reacted
positively to our transformational transaction
but we expect it will continue to take some time
for our share price to move to fair value as the
investment community gains a better under-
standing of the higher production base, best
quartile costs and strong free cash flows we ex-
pect to generate based on our base case mine
6
plan. Beyond that we have significant opportuni-
ties for organic growth and we believe that
through the course of 2014 our share price will
reflect the value that we have and expect to cre-
ate. We are proud of what we have accomplished
in 2013 and strongly believe that the best days
for Teranga are yet to come. We would like to
thank all of our employees for their dedication
and commitment to our strong results in 2013
and would like to thank you, our shareholders,
for your continued support.
Alan R. Hill
Chairman
Richard Young
President & CEO
teranga gold corporation2013 annual reportteranga gold corporation 7
teranga gold corporation2013 annual reportteranga gold corporation FInanCIal
STrenGTh
Value Creation
• Sequencing open pit development to
produce about 250,000 ounces at best
quartile costs to maximize free cash
flow generation.
• Potential organic growth through exploration
discoveries and processing optimization,
including mill optimization and heap leach
option, to further enhance free cash flows.
• Major capital expenditures completed –
state-of-the-art mill has been expanded
that can be leveraged to maximize cash
flows at any gold price.
Disciplined
Allocation of Capital
We are focused on only gold, and only
in Senegal. Projects will need to have
returns that exceed our hurdle rate
and have quick paybacks.
8
teranga gold corporation2013 annual report
why
InveST
✓ Transformative acquisition of our neighbour (“OJVG”) now complete –
more than doubling reserves and resources
✓ new mine plan forecasts average production of about 250,000 ounces
per year in the lowest (best) quartile of all-in sustaining costs
✓ Operations expected to generate significant free cash flow
✓ Disciplined capital allocation strategy
✓ Potential to add profitable ounces to production profile
• Heap leaching of lower-grade oxide ore
• near-mill exploration
• Highly prospective regional exploration program on 70km gold belt
✓ Consistently meeting operational targets
✓ Senegal is a politically stable jurisdiction with a competitive
mining fiscal regime
✓ Company trading at a discount to peer group, fair value of existing
asset base as well as future prospects
9
teranga gold corporation2013 annual report
GrowInG
oUr reServeS
Mauritania
Dakar
SENEGAL
Mali
The Gambia
Focused on Adding
Profitable Reserve Ounces
With the recent acquisition of our
neighbouring property, the Oromin Joint
Venture Group, we have more than
doubled our reserve and resource base.
We believe there are tremendous
opportunities for exploration success on
our large land holdings located on the
Birimian Greenstone Belt where several
large, world class deposits have been
discovered across the border in Mali.
Senegal remains an underexplored
jurisdiction and Teranga has significant
advantages as the “first mover”.
Our 246km2 Mine License provides great
potential for both near-term reserve and
production growth opportunities through
increasing millable reserves on existing
deposits, as well as the potential for
additional processing capacity through
heap leaching lower-grade material.
Our 1,055km2 Regional Land Package
covers more than 70km of strike length on
an emerging gold belt. We are focused on
identifying both flat-lying, near-surface
standalone deposits, as well as smaller
high-grade satellite deposits that are within
trucking distance of the Sabodala mill.
We are systematically identifying and
evaluating targets and plan to spend
$10 million in 2014, split equally on the
Mine License and Regional Land Package.
BEfORE
OJVG
AfTER
OJVG
AcquISITION AcquISITION
(Moz)
reserves
(g/t)
reserve grade
M&I resources
(Moz)
Mine license size (km2)
Share count
(M)
(oz/share)
resource
1.27
1.45
2.77
33
246
0.011
2.81
1.47
6.19
246
317
0.020
chANGE
120%
1%
123%
645%
22%
73%
10
teranga gold corporation2013 annual report
SySTEmATIcALLy IDENTIfyING
AND EVALuATING TARGETS ON
OuR ExISTING LAND PAckAGE
wITh ThE fOLLOwING
PRIORITy OBJEcTIVES:
1
2
3
4
millable Reserve Growth
on mine Licenses
(Masato, Goloumas)
heap Leachable Reserve
Growth on mine Licenses
(Niakafiri Structure,
Maki Medina)
Satellite Deposit
Discovery – Surface
mineable
(KC, Zone ABC, Gora)
Standalone Deposit
Discovery – Surface
mineable
(Ninienko and Soreto,
Garaboureya)
SABODALA MILL
MAJOR GOLD DEPOSITS
TERANGA RESOURCES
TERANGA PROSPECTS
INTERPRETED STRUCTURES
MINE LICENSE
EXPLORATION PERMIT
BIRIMIAN GREENSTONE BELT
SARAYA GRANITES
TABAKOTO SEGALA ENDEAVOUR
YATELA IAMGOLD
SENEGAL
SADIOLA IAMGOLD
mALI
5
0
K
M
F
R
O
M
T
H
E
M
I
L
L
4
4
3
3
SABODALA TERANGA
1
1
2
MAKABINGU BASSARI
MASSAWA RANDGOLD
4
LOULO
RANDGOLD
YALEA
RANDGOLD
GOUNKOTO
RANDGOLD
YALEA
RANDGOLD
MEDINANDI CENTRAL AFRICAN
BOTO IAMGOLD
11
teranga gold corporation2013 annual report
GrowInG ProDUCTIon
anD oPeraTIonS
• The transformative acquisition of
• Minimize waste stripping at
the OJVG is now complete
• More than double reserves,
resources and mine life
• Increases annual production to
~250,000 ounces from ~200,000
ounces for almost a decade (base
case scenario)
Sabodala, resulting in increased
2014 free cash flow
• Consolidates the region, reinforces
leverage as “first mover”, increases
growth potential from enlarged
acreage position
• Mine License increases from 33km2
• no significant incremental capital
to 246km2
expenditures
• Integrating operations in 2014
• Lower unit cash costs
• Greater free cash flow generation
• Allows for optimal sequencing of
deposits based on grade, ore
hardness, distance to mill and
capital requirements
• Evaluate heap leach processing option
• Continue to optimize mill throughput,
mine planning and grade
1,400
1,200
1,000
800
600
400
200
0
COSTS
($/oz)
2011
2012
2013
2014
2015
2016
2017
2018
2019
PRODUCTION
ALL-IN SUSTAINING COSTS
CASH COSTS
300
250
200
150
100
50
0
PROD.
(koz)
12
teranga gold corporation2013 annual report 13
teranga gold corporation2013 annual report oUr PeoPle
Our Company’s success
is and will be a direct
reflection of the strength
of our people.
We believe that our most important
assets are the men and women that work
together to make our vision a reality. As
such, we are committed to investing in
our workforce and instilling a culture of
performance in order to achieve our
goals. In 2013, we successfully achieved
our operational targets, and even more
importantly, we did so while exceeding
international health and safety bench-
marks. Our workforce is dedicated to
sustaining a healthy and safe work
environment and we all take a proactive
approach. Irrespective of how well we
fare, we always strive to do even better.
As the first gold producer in Senegal, we
have committed to leading the develop-
ment of the mining industry in the region
in which we operate and sharing the ben-
efits of mining responsibly with our local
communities. Growing skill capacity
in-country is a large part of this commit-
ment and through various initiatives we
continue to invest in training and
development for the Senegalese work-
force. For example, we have developed a
learning and development centre on site,
demonstrating our commitment to
providing skill development and progres-
sion opportunities for our employees. We
also foster a mentorship approach in our
workforce and we continue to provide
scholarships for students within our area
of influence as well as internship
opportunities for students in mining-
related studies.
Youth and training was recently identi-
fied as one of the three priority areas
of Teranga’s Development Strategy
(“TDS”) and we strongly believe that
our CSR initiatives focusing on educa-
tion, training, and skills development
will result in sustainable economic
growth and prosperity locally, regionally
and nationally.
14
teranga gold corporation2013 annual report
Our commitment to re-
sponsible mining defines
who we are as a company
and drives our way of
doing business.
We believe that being the first operating
gold mine in the country means we have
a responsibility and an opportunity
to set the industry standard for socially
responsible mining. Our industry is one
that can give back, and it is our objective
to contribute to the development of
the region in which we operate most
specifically in the areas of health, water
sanitation, food security and education.
If we are successful in these areas, the
ultimate result is sustainable economic
growth. During 2013, we had some
significant achievements, most notably
the completion of the TDS which focuses
on the sustainable development of the
region in which we operate. This Strategy
was the culmination of an 18-month
extensive consultation process with
affected communities, the regional
governments and other stakeholders and
focused on delivering positive outcomes
in the areas of sustainable economic
growth, agriculture and food security,
and youth education and training. This
collaborative plan sets out a strategy that
will guide our future actions as we strive
to work with the communities and
sustainably develop the region around
our operations. We also oversaw the
creation of a viable standalone market
garden, the first of its kind in Senegal,
done in partnership with the community.
This initiative made us especially proud
as the participants were extremely
grateful for the opportunity to have food
security for the first time, and to gener-
ate a wage in a safe environment while
keeping their children in school. These
and many more actions are discussed in
greater detail in our responsibility
report. Our TDS, successes to date and
overall approach give us great optimism
that long-term sustainable benefits can
be assured for our surrounding commu-
nities and Senegal at large.
15
teranga gold corporation2013 annual report
CorPoraTe InForMaTIon
DIreCTorS
CorPoraTe heaD oFFICe
reGISTrar anD TranSFer aGenT
Teranga Gold Corporation
Suite 2600-121 King Street West
Toronto, Ontario, Canada M5H 3T9
Tel: + 1-416-594-0000
Fax: + 1-416-594-0088
Email: investor@terangagold.com
www.terangagold.com
Contact:
Kathy Sipos
Vice President, Investor and Stakeholder Relations
Tel: + 1-416-594-0000
Email: ksipos@terangagold.com
SeneGal oFFICe
2K Plaza
Suite B4, 1er Etage
Sis Route du Méridien Président
Dakar Almadies
Tel: + 221-338-693-181
Fax: + 221-338-603-683
aUDITor
ernst & young llP – 2013
Chartered Accountants
Toronto, Ontario, Canada
SolICITorSolICITorS
Stikeman elliott llP
Toronto, Ontario, Canada
Canada: Computershare
Trust Company of Canada
100 University Avenue, 8th Floor,
Toronto, Ontario, Canada M5J 2Y1
Tel: + 1-800-564-6253
australia: Computershare
Investor Services Pty ltd.
GPO Box 2975, Melbourne
VIC 3001, Australia
Tel: + 1-300-850-505
(investors within Australia)
Tel: + 61-3-9415-4000 (investors)
Share CaPITal
Common Shares
Issued and Outstanding: 316,801,091
(as at March 31, 2014)
SToCK exChanGe lISTInGS
Toronto Stock Exchange
Australian Stock Exchange
Symbol: TGZ
annUal MeeTInG
The Annual General & Special Meeting
of Shareholders will be held on Thursday,
May 1, 2014 at 9:30 a.m. Offices of
Stikeman Elliott LLP
Main Board Room 53rd Floor,
199 Bay Street, Toronto, Ontario, Canada
alan r. hill 5,6
Chairman
richard young
President and CEO
Christopher r. lattanzi 1,3,5
alan r. Thomas 1,2,3,4
Frank D. wheatley 1,2,3,4
edward Goldenberg 4,5,6
Jendayi Frazer* 2,6
1. Audit Committee
2. Corporate Governance and
Nominating Committee
3. Compensation Committee
4. Finance Committee
5. Technical, Safety & Environmental Committee
6. Corporate Social Responsibility Committee
* Appointed March 11, 2014
SenIor ManaGeMenT
richard young
President and CEO
Mark english
Vice President, Sabodala Operations
Paul Chawrun
Vice President, Technical Services
navin Dyal
Vice President and CFO
David Savarie
Vice President, General Counsel and
Corporate Secretary
Kathy Sipos
Vice President, Investor and Stakeholder Relations
aziz Sy
Vice President, Development, Senegal
Macoumba Diop
General Manager and Government Relations
Manager, SGO
© Copyright 2014 Teranga Gold Corporation Design and Typesetting: Clear Space, clearspace.ca Printing: Exodus Graphics Corp.
FOCUSED ON:
DELIVERING
GENERATING FREE
CASH FLOW
2013 AnnuAl report
Financial
statements
inDeX
Overview of the Business
Financial and Operating Highlights
Outlook 2014
Review of annual Financial Results
Review of annual Operating Results
1
2
3
4
7
Review of Quarterly Financial and Operating Results 8
strategy and Development
Reserves and Resources
Integrated Life-of-Mine Schedule
Sabodala and OJVG Mine License
Regional Exploration
Health and Safety
Corporate Social Responsibility
Market Review – Impact of Key Economic Trends
Financial condition Review
contractual Obligations and commitments
contingent liabilities
critical accounting Policies and estimates
adoption of new accounting standards
non-iFRs Financial measures
Outstanding share Data
transactions with Related Parties
ceO/cFO certification
Risks and Uncertainties
amendments to corporate Governance Practices
corporate Directory
10
11
13
18
18
19
19
19
21
23
24
24
26
27
28
29
29
30
30
84
1
manaGement’s DiscUssiOn
anD analysis
For the twelve months ended December 31, 2013
and 2012
This Management’s Discussion and Analysis (“MD&A”)
provides a discussion and analysis of the financial conditions
and results of operations to enable a reader to assess material
changes in the financial condition and results of operations as
at and for the twelve months ended December 31, 2013 and
2012. The MD&A should be read in conjunction with the
audited consolidated financial statements and notes thereto
(“Statements”) of Teranga Gold Corporation (“Teranga”
or the “Company”) as at and for the twelve months ended
December 31, 2013 and 2012. The Company’s Statements
and MD&A are presented in United States dollars, unless
otherwise specified, and have been prepared in accordance
with International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board
(“IASB”). Additional information about Teranga, includ-
ing the Company’s Annual Information Form for the twelve
months ended December 31, 2012, as well as all other public
filings, is available on the Company’s website at www.teran-
gagold.com and on the SEDAR website (www.sedar.com).
This report is dated as of February 20, 2014. All references
to the Company include its subsidiaries unless the context
requires otherwise.
The MD&A contains references to Teranga using the words
“we”, “us”, “our” and similar words and the reader is referred
to using the words “you”, “your” and similar words.
OVeRVieW OF tHe BUsiness
Teranga is a Canadian-based gold company which operates
the Sabodala gold mine and is currently exploring 9 explora-
tion licenses covering 1,055km2 in Senegal, comprising the
Regional Land Package, surrounding the Sabodala gold mine.
On October 4, 2013, Teranga completed the acquisition of
Oromin Exploration Ltd. (“Oromin”). Oromin held a 43.5 per-
cent participating interest in the Oromin Joint Venture Group
(“OJVG”). The OJVG held a 90 percent interest in Societe des
Mines de Golouma S.A. (“Somigol”), an operating company
under the laws of Senegal, and the remaining 10 percent
interest is held by the Government of Senegal.
On January 15, 2014, the Company acquired the balance
of the OJVG that it did not already own. The Company
acquired Bendon International Ltd. (“Bendon”) 43.5 percent
participating interest and Badr Investment Ltd. (“Badr”)
13 percent carried interest.
The acquisition of Bendon and Badr’s interests in the OJVG
increased Teranga’s ownership to 100 percent and consoli-
dates the Sabodala region, increasing the size of Teranga’s
land holding from 33km2 to 246km2 by combining the two
permitted Mine Licenses and more than doubling the Com-
pany’s reserve base.
The OJVG held a 15-year renewable mining lease in respect
of the Golouma Gold Concession, which is located contigu-
ous to the Sabodala Mine License. This transaction provides
for capital and operating cost synergies as the OJVG satellite
deposits are integrated into Sabodala’s mine plan, utilizing the
Sabodala mill and related infrastructure.
Management believes that the combination of the Sabodala
gold mine and mill and its Regional Land Package, combined
with the OJVG, all within trucking distance to the Sabo-
dala mill, provides the basis for annual production of about
250,000 ounces per year at low all-in sustaining costs that
will enable Teranga to generate positive free cash flows. The
Company has significant potential to add profitable ounces
to its production profile in Senegal, a politically stable and
mining-friendly jurisdiction.
Our mission is to share the benefits of responsible mining
with all our stakeholders. We strive to act as a responsible
corporate citizen by building projects together with the
communities near our operations and by committing to using
best available techniques as we carry out our actions. We
aim to achieve benefits for all parties involved and to
contribute to the sustainability and improved livelihoods for
the communities in which we operate.
Our Vision is to become a pre-eminent gold producer in
Senegal while setting the benchmark for responsible mining.
Phase 1: Become a pre-eminent gold producer in Senegal
with 250,000 to 350,000 ounces of annual gold production
leveraging off the Company’s existing mill and infrastructure.
Phase 2: Increase annual gold production to 400,000 to
500,000 ounces.
2013 AnnuAl RepoRt 2
Financial anD OPeRatinG HiGHliGHts
(Us$000s, except where indicated)
Financial Data
Revenue
Profit (loss) attributable to
shareholders of Teranga
Per share
Operating cash flow
Capital expenditures
Free cash flow1
Cash and cash equivalents (including
restricted cash and bullion receivables)
Net debt2
Total assets
Total non-current financial liabilities
Operating Data
Gold Produced (ounces)
Gold Sold (ounces)
Average realized price ($ per ounce)
Total cash costs ($ per ounce sold)3
All-in sustaining costs ($ per ounce sold)3
Total depreciation and amortization
three months ended
December 31
year ended
Fifteen months
December 31 ended December 31
2013
58,302
(4,220)
(0.01)
13,137
3,725
9,412
42,301
32,068
2012
122,970
54,228
0.22
59,670
28,521
31,149
44,974
75,182
2013
2012
2011
297,927
350,520
236,873
47,516
0.18
74,307
69,056
5,251
42,301
32,068
624,399
29,241
92,600
0.38
104,982
115,785
(10,803)
44,974
75,182
564,541
68,505
(16,040)
(0.07)
5,132
76,392
(71,260)
24,549
95,748
476,612
67,042
three months ended
year ended December 31
2013
52,368
46,561
1,249
711
850
2012
71,804
71,604
1,296
532
1,004
2013
207,204
208,406
1,246
641
1,033
2012
214,310
207,814
1,422
556
1,200
2011
131,461
137,136
1,236
782
1,126
($ per ounce sold)3
375
253
301
225
249
Note: December 31, 2012 values were restated due to the adoption of IFRIC 20. Refer to Adoption of New Accounting Standards.
Note: Results include the consolidation of 72.6 percent of Oromin’s operating results, cash flows and net assets from August 6, 2013 and 100 percent from October 4, 2013.
1 Free cash flow is defined as operating cash flow less capital expenditures.
2 Net debt is defined as total borrowings and financial derivative liabilities less cash and cash equivalents, restricted cash and bullion receivables.
3
Total cash costs per ounce, all-in sustaining costs and total depreciation and amortization per ounce are non-IFRS financial measures and do not have a standard meaning.
Please refer to Non-IFRS Performance Measures at the end of this report.
FOURtH QUaRteR Financial anD
OPeRatinG HiGHliGHts
• Gold revenue for the three months ended December 31,
2013 was $58.3 million. The decrease in gold revenue
compared to the prior-year quarter was due to lower gold
sales from lower production and lower spot gold prices
during the fourth quarter of 2013.
• The decrease in profit and earnings per share over the
prior-year quarter were primarily due to higher transac-
tion costs related to the acquisitions of Oromin and the
remainder of the OJVG during the fourth quarter of 2013
and lower gross profit.
• The decrease in operating cash flow compared to the prior-
year quarter was mainly due to a lower gross profit and a
decrease in net working capital inflows during the fourth
quarter of 2013.
• The decrease in capital expenditures over the prior-year
quarter was mainly due to lower sustaining and develop-
ment expenditures and lower capitalized reserve develop-
ment expenditures in the fourth quarter of 2013.
• Lower production in the current-year quarter was mainly
due to lower processed grades, partly offset by higher
mill throughput.
• During the fourth quarter of 2013, 46,561 ounces were
sold at an average gold price of $1,249 per ounce com-
pared to 71,604 ounces sold at an average price of $1,296
per ounce in the same prior-year period, including 33,606
ounces being delivered into gold hedge contracts at an
average price of $833 per ounce.
• Total cash costs for the three months ended December 31,
2013 totalled $711 per ounce sold. Higher total cash costs
per ounce were due to an increase in material mined and
milled during the quarter compared to the year-earlier
period. Total cash costs have been adjusted for the adop-
tion of IFRIC 20 for capitalization of a portion of production
phase stripping costs.
teranga gold corporation / management’s discussion & analysis
• All-in sustaining costs for the three months ended De-
cember 31, 2013 were $850 per ounce sold compared
to $1,004 per ounce sold in the same prior-year period.
The decrease compared to the prior-year was due to lower
capital expenditures and administration expenses in the
current-year period, partly offset by higher total cash costs.
• The Company’s cash balance at December 31, 2013 was
$42.3 million, including $20.0 million in restricted cash
and $7.3 million in bullion receivables. The Company’s
cash balance is after payments of $11.0 million for
expenses related to the acquisitions of Oromin and
the OJVG.
3
OUtlOOk 2014
Operating Results
Ore mined
Waste mined – operating
Waste mined – capitalized
Total mined
Grade mined
Strip ratio
Ore milled
Head grade
Recovery rate
Gold produced1
Total cash cost (incl. royalties)2,3
All-in sustaining costs2,3
Mining
Milling
G&A
Gold sold to Franco-Nevada1
exploration and evaluation expense (Regional land Package)
• The increase in depreciation expense per ounce compared
to the prior-year quarter was mainly due to higher deprecia-
tion basis in the current-year period.
year ended December 31
2013 actuals
2014 Guidance Range
(’000t)
(’000t)
(’000t)
(’000t)
(g/t)
(waste/ore)
(’000t)
(g/t)
%
(oz)
$/oz sold
$/oz sold
($/t mined)
($/t milled)
($/t milled)
(oz)
($ millions)
4,540
15,172
15,066
34,778
1.62
6.7
3,152
2.24
91.4
207,204
641
1,033
2.59
20.15
5.38
–
5.4
5,300–6,000
18,200–19,000
500–1,000
24,000–26,000
1.60–1.70
3.25–3.50
3,400–3,600
2.20–2.40
90.0–91.0
220,000–240,000
650–700
800–875
2.75–2.95
18.00–19.00
4.75–5.25
22,500
4.0–6.0
administration expenses and social community costs (excluding depreciation)
($ millions)
13.6
15.0–16.0
mine production costs
($ millions)
170.8
155.0–165.0
capital expenditures
Mine site sustaining
Capitalized reserve development (Mine license)
Project development costs
Government payments
Development
Mobile equipment and other
Total project development costs
Capitalized deferred stripping2
total capital expenditures
($ millions)
($ millions)
($ millions)
($ millions)
($ millions)
($ millions)
($ millions)
($ millions)
9.9
3.5
3.5
0.5
8.4
12.4
43.3
69.1
7.0–8.0
4.0–6.0
12.0–14.0
3.0–5.0
–
15.0–19.0
2.0–3.0
28.0–33.0
1 22,500 ounces of production are to be sold to Franco-Nevada at 20 percent of the spot gold price.
2
Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS
Performance Measures at the end of this report.
3
4
Total cash costs per ounce sold for 2012 were restated to comply with the Company’s adoption of IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine, in line
with the Company’s accounting policies and industry standards.
All-in sustaining costs per ounce sold include total cash costs per ounce, administration expenses (excluding Corporate depreciation expense and social community costs not related
to current operations), capitalized deferred stripping, capitalized reserve development and mine site sustaining capital expenditures (including project development costs) as
defined by the World Gold Council.
Key assumptions: gold spot price/ounce – US$1,250, light fuel oil – US$1.15/litre, heavy fuel oil – US$0.98/litre, US/euro exchange rate – $1.325
Other important assumptions include: any political events are not expected to impact operations, including movement of people, supplies and gold shipments; grades and recoveries
will remain consistent with the life-of-mine plan to achieve the forecast gold production; and no unplanned delays in or interruption of scheduled production.
2013 AnnuAl RepoRt
4
2014 Guidance Analysis
The Company’s 2014 operating budget has been designed
to maximize free cash flow. Mining activity in 2014 is ex-
pected to focus on completing phase 3 of the Sabodala pit,
as phase 4 of the Sabodala mine plan has been deferred to
minimize material moved. Mining equipment freed up from
the deferral of Sabodala phase 4 is anticipated to be used
to begin mining activities at the Masato deposit in the fourth
quarter of the year.
The higher processing rate in 2014 is a result of improve-
ments made in the first half of 2013 to the crushing
circuit and in line with throughput rates in the second half
of 2013.
Total cash costs per ounce for 2014 are expected to be
similar to 2013 while all-in sustaining costs per ounce are
expected to be lower than 2013, mainly due to lower capital
expenditures and deferred stripping costs.
Exploration and evaluation expenditures for 2014 are
expected to total approximately $10 million for both the
Mine License and Regional Land Package combined.
The exploration program in 2014 will focus on the conversion
of resources to reserves and extensions of existing deposits
along strike on the Sabodala and OJVG Mine Licenses, as well
as the continuation of a systematic regional exploration pro-
gram designed to identify satellite and standalone deposits.
Administrative and Corporate Social Responsibility expenses
are expected to total $15–$16 million, similar to 2013. Lower
administrative costs at the corporate office are expected to be
offset by higher social commitments related to the acquisition
of the OJVG and additional staffing in the Dakar office. The
2014 plan has been designed to provide the necessary sup-
port for operations and development and includes corporate
office costs, Dakar office costs and corporate responsibility
costs, but excludes corporate depreciation, transaction costs
and other non-recurring costs.
Capitalized expenditures, including sustaining mine site
expenditures, project development expenditures, capitalized
deferred stripping, reserve development expenditures and
payments to the Government of Senegal are expected to total
$28–$33 million.
Sensitivity
Gold revenue
Gold total cash costs
Gold price effect on royalties
HFO price
LFO price
EUR exchange rate
2014
assumption
Hypothetical
change
impact on total
cash costs
impact on
profit
1,250/oz
$
100/oz
n/a
$
22M
1,250/oz
0.98/litre
1.15/litre
1.325:1
$
$
$
100/oz
0.10/litre
0.10/litre
10%
$
$
$
$
5/oz
12/oz
7/oz
40/oz
$
$
$
$
1.2M
2.8M
1.6M
10M
$
$
$
$
ReVieW OF annUal Financial ResUlts
(Us$000s, except where indicated)
year ended December 31
Financial Results
Revenue
Cost of sales
Gross Profit
Exploration and evaluation expenditures
Administration expenses
Share-based compensation
Finance costs
Gains (losses) on gold hedge contracts
Gains (losses) on oil hedge contracts
Net foreign exchange losses
Loss on available for sale financial asset
Gain on equity investment
Other expense
Profit/(loss) before income tax
Income tax benefit
Profit for the period
Profit attributable to non-controlling interest
Profit attributable to shareholders of teranga
Basic earnings per share
2013
297,927
(196,505)
101,422
(5,405)
(14,717)
(813)
(12,148)
5,308
31
(1,233)
(4,003)
52
(11,895)
56,599
–
56,599
(9,083)
47,516
0.18
2012
350,520
(165,238)
185,282
(16,657)
(15,573)
(4,694)
(7,362)
(15,274)
(427)
(2,574)
(11,917)
–
(2,749)
108,055
115
108,170
(15,570)
92,600
0.38
Note: Results include the consolidation of 72.6 percent of Oromin’s operating results, cash flows and net assets from August 6, 2013 and 100 percent from October 4, 2013.
teranga gold corporation / management’s discussion & analysis
5
Revenue
Gold revenue for the twelve months ended December 31,
2013 was $297.9 million compared to gold revenue of
$350.5 million for the same prior-year period. The decrease
in gold revenue was due to lower spot gold prices in the
current year. Revenues exclude the impact of realized losses
on ounces delivered into forward sales contracts which are
classified within gains and losses on gold hedge contracts.
For the twelve months ended December 31, 2013, the
average spot price of gold was $1,411 per ounce, trading
between $1,192 and $1,694 per ounce. This compares to
an average of $1,669 per ounce for the twelve months
ended December 31, 2012, with a low of $1,540 per ounce
and a high of $1,792 per ounce.
cOst OF sales
(Us$000s)
cost of sales
Mine production costs – gross
Capitalized deferred stripping
Depreciation and amortization
Royalties
Rehabilitation
Inventory movements – cash
Inventory movements – non-cash
total cost of sales
2013
170,752
(43,264)
127,488
77,902
14,755
6
(8,552)
(15,094)
(23,646)
196,505
year ended December 31
2012
145,832
(32,535)
113,297
55,645
10,491
36
(5,409)
(8,822)
(14,231)
165,238
For the twelve months ended December 31, 2013, mine
production costs, before capitalized deferred stripping, were
$170.8 million compared with $145.8 million in the prior
year. Higher mine production costs in 2013 were mainly due
to higher costs related to material movement in mining com-
bined with higher processing activity (see Review of Annual
Operating Results section).
Depreciation and amortization for the twelve months ended
December 31, 2013 totalled $77.9 million compared to
$55.6 million in the prior-year period. Depreciation was
higher for the twelve months ended December 31, 2013 due
to an increase in the depreciation basis with the commission-
ing of the mill expansion during the third quarter of 2012.
Approximately 77 percent of the Company’s fixed assets
are depreciated using the units-of-production (“UOP”)
method of depreciation during the current-year period
(approximately 80 percent in the prior-year period).
For the twelve months ended December 31, 2013, royalties
of $14.8 million were $4.3 million higher than the prior-year
period due to an increase in the royalty rate on sales from
3 percent to 5 percent, effective January 1, 2013.
Inventory movements for the twelve months ended
December 31, 2013 resulted in a decrease to cost of sales
of $23.6 million compared to a decrease to cost of sales of
$14.2 million for the twelve months in the prior-year period.
For the twelve months ended December 31, 2013, higher
costs were absorbed into inventory as a result of higher mine
production costs over fewer ounces mined during the current
period compared to the prior-year period.
Exploration and Evaluation
Exploration and evaluation expenditures for the twelve
months ended December 31, 2013 totalled $5.4 million,
$11.3 million lower than the prior-year period, reflecting the
Company’s decision to minimize drilling on the Regional Land
Package in the current gold price environment to maximize
cash flow.
Administration
Administration expenses for the twelve months ended
December 31, 2013 were $14.7 million or $0.9 million lower
than the prior year. Lower costs in 2013 reflect lower corpo-
rate office, professional, consulting and legal costs, partially
offset by higher social community costs and depreciation
expense for IT infrastructure.
Share-Based Compensation
During the twelve months ended December 31, 2013, a total
of 820,000 common share stock options were granted to
directors, officers, and employees, all at an exercise price
of C$3.00 per share, and 2,132,917 common share stock
options were cancelled during the twelve months ended
December 31, 2013. No stock options were exercised during
the year.
2013 AnnuAl RepoRt
6
In connection with the acquisition of Oromin during 2013,
Teranga issued 7,911,600 replacement stock options. See
Outstanding Share Data for further details.
Of the 23,737,850 common share stock options issued and
outstanding as at December 31, 2013, 15,651,250 vest
over a three-year period, 7,911,600 are already vested and
175,000 vest based on achievement of certain milestones.
The fair value of options that vest upon achievement of
milestones will be recognized based on our best estimate of
outcome of achieving our results.
Finance Costs
Finance costs for the twelve months ended December 31,
2013 of $12.1 million reflect interest costs related to the
outstanding bank and mobile equipment loans, amortization
of capitalized deferred financing costs, political risk insur-
ance relating to the project finance facility and bank charges.
Finance costs were $4.7 million higher for the twelve months
ended December 31, 2013 than the same prior-year period
due to higher debt balances and interest costs on borrowings.
Finance costs in 2014 are expected to be lower than 2013
with the retirement of half of the loan facility with Macquarie
Bank Limited (“Macquarie”) for $30.0 million in January
2014 and repayment of balance in 2014.
Other Expense
(Us$000s)
Other expense
Acquisition costs
Legal & advisory services
Financial advisory services
Other
Non-recurring legal and other costs
Interest income
total
Gold Hedge Contracts
During the second quarter 2013, the Company bought
back the remaining “out of the money” gold forward sales
contracts at a cost of $8.6 million. The gain on gold hedge
contracts totalled $5.3 million for the twelve months ended
December 31, 2013, resulting from a decrease in the spot
price of gold from December 31, 2012.
Oil Hedge Contracts
The oil hedge contracts were completed at March 31, 2013.
The gain on settlement of oil hedge contracts totalled $0.5 mil-
lion for the quarter ended March 31, 2013 and resulted from
an increase in the spot oil price over December 31, 2012.
Net Foreign Exchange Gains and Losses
The Company generated foreign exchange losses of
$1.2 million for the twelve months ended December 31, 2013
and $2.6 million for the same prior-year period, primarily
related to realized losses from the Sabodala gold mine operat-
ing costs recorded in the local currency and translated into
the U.S. dollar functional currency.
Impairment of Available for Sale Financial Assets
For the twelve months ended December 31, 2013, a non-
cash impairment loss of $4.0 million was recognized on
the Oromin shares based on further declines in Oromin’s
share price, relative to a previous impairment loss that was
recorded as at December 31, 2012. This compares to a non-
cash impairment loss of $11.9 million for the twelve months
ended December 31, 2012.
year ended December 31
2013
4,667
5,685
668
11,020
927
(52)
11,895
2012
2,151
634
–
2,785
–
(36)
2,749
Other expenses were $11.9 million for the twelve months
ended December 31, 2013. This compares to other expenses
of $2.7 million for the twelve months in the prior-year period.
The increase in the current year is primarily related to costs
associated with the acquisitions of Oromin and OJVG. The
Company made payments of $11.0 million in 2013 for transac-
tion costs related to the acquisitions of Oromin and the OJVG.
adoption of iFRic 20
2012 comparative amounts have been restated to reflect the
Company’s adoption of IFRIC 20 – Stripping Costs in the Pro-
duction Phase of a Surface Mine. Refer to Adoption of New
Accounting Standards.
all-in sustaining costs Per Ounce
Beginning in the second quarter of 2013, the Company
adopted an “all-in sustaining costs” measure and “all-in costs”
measure consistent with the guidance issued by the World
Gold Council (“WGC”) on June 27, 2013. For additional infor-
mation, please refer to Non-IFRS Financial Measures.
teranga gold corporation / management’s discussion & analysis
7
ReVieW OF annUal OPeRatinG ResUlts
Operating Results
Ore mined
Waste mined – operating
Waste mined – capitalized
Total mined
Grade mined
Ounces mined
Strip ratio
Ore milled
Head grade
Recovery rate
Gold produced1
Gold sold
Average price received
Total cash cost (incl. royalties)2
All-in sustaining costs2
Mining
Milling
G&A
three months ended December 31
year ended December 31
2013
1,993
6,655
420
9,068
1.61
103,340
3.6
860
2.11
89.7
52,368
46,561
1,249
711
850
2.65
17.96
4.84
2012
2,038
4,362
912
7,312
2.04
133,549
2.6
725
3.40
90.7
71,804
71,604
1,296
532
1,004
3.11
19.88
6.35
2013
4,540
15,172
15,066
34,778
1.62
236,718
6.7
3,152
2.24
91.4
207,204
208,406
1,246
641
1,033
2.59
20.15
5.38
2012
5,916
12,265
10,696
28,877
1.98
376,184
3.9
2,439
3.08
88.7
214,310
207,814
1,422
556
1,200
2.71
20.39
6.12
(’000t)
(’000t)
(’000t)
(’000t)
(g/t)
(oz)
waste/ore
(’000t)
(g/t)
%
(oz)
(oz)
$/oz
$/oz sold
$/oz sold
($/t mined)
($/t milled)
($/t milled)
1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.
2
Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS. Please refer to Non-IFRS
Performance Measures at the end of this report.
Mining
Total tonnes mined for the twelve months ended
December 31, 2013 were 20 percent higher compared
to the same prior-year period. The increase in total tonnes
mined was mainly due to improved haul truck productivities
as a result of shorter ore and waste haul distances as well
as improved loading efficiencies.
During the year, mining activities were mainly focused on
the upper benches of phase 3 of the Sabodala pit, while
in the prior-year period, and into the first quarter of 2013,
mining primarily took place in a high-grade ore zone on lower
benches of phase 2.
The improved loading efficiencies were the result of the new
PC3000 shovel purchased in the second quarter 2013,
which replaces the less-efficient wheel loaders and the
smaller PC2000 shovel.
In the current gold price environment, the Company con-
tinues to focus on optimizing waste stripping to match ore
delivery to the mill.
Processing
Ore tonnes milled for the year ended December 31, 2013
were 29 percent higher than the same prior-year period due
to improvements made to reduce the frequency and duration
of unplanned downtime and an increase in throughput in the
crushing circuit to match mill capacity. These improvements
were primarily accomplished during two planned major
shutdowns in January and May with a third taking place in
October. As a result of the work completed, mill throughput
achieved annualized design capacity of 3.5 million tonnes of
primarily hard ore in the second half of 2013.
Processed grade for the year ended December 31, 2013
was 27 percent lower than the same prior-year period,
as planned. Mill feed during the second quarter of 2013
onwards was sourced from a combination of lower-grade
stockpile material and ore from phase 3 of the Sabodala pit
at grades closer to reserve grade. In the year-earlier period,
leading into the first quarter 2013, mill feed was sourced from
a high-grade zone on the lower benches of phase 2 of the
Sabodala pit.
Unit mining costs for the twelve months ended December 31,
2013 were 4 percent lower than the same prior-year period
mainly due to improved truck and loading productivities. Total
mining costs were 15 percent higher than the same prior-year
period due to increased material movement.
Gold production for the year was at the higher end of guid-
ance of 190,000–210,000 ounces, at 207,204 ounces,
3 percent lower than the same prior-year period, mainly due
to lower processed grades, partly offset by higher mill
throughput.
2013 AnnuAl RepoRt
8
Unit processing costs for the year ended December 31, 2013
were in line with the prior-year period at $20.15 per tonne,
due to an increase in throughput partly offset by higher
processing costs. Total processing costs for the year ended
December 31, 2013 were 28 percent higher than the same
prior-year period, mainly due to higher overall throughput in
the crushing circuit from mid-June onwards which resulted
in an increase in consumption of heavy fuel oil (“HFO”) and
cyanide as a result of higher tonnes milled and higher main-
tenance costs associated with the planned January, May and
October shutdowns. These increases were partly offset by
lower consumption of grinding media due to better manage-
ment of recycled product.
Unit general and administration costs for the year ended
December 31, 2013 were 12 percent lower than the same
prior-year period mainly due to the increase in tonnes milled.
Total general and administrative costs for the year ended De-
cember 31, 2013 of $17.2 million were 3 percent higher than
the prior-year mainly due to higher spending on communica-
tions and training and development costs, partially offset by
lower insurance premiums.
Total cash costs for the year were below guidance of $650–
$700 per ounce, at $641 per ounce, compared to $556 per
ounce in the same prior-year period. The increase in total cash
costs was mainly due to an increase in material processed and
higher royalty costs in 2013 compared to 2012.
All-in sustaining costs for 2013 were at the low end of guid-
ance of $1,000–$1,100 per ounce, at $1,033 per ounce,
14 percent lower than the same prior-year period. Lower all-in
sustaining costs were mainly due to lower capital expen-
ditures, a result of the completion of the mill expansion in
2012, and a reduction in reserve development expenditures
in 2013, partly offset by higher total cash costs and capital-
ized deferred stripping.
ReVieW OF QUaRteRly Financial
anD OPeRatinG ResUlts
Quarterly Financial Results
Revenue
Gold revenue for the three months ended December 31,
2013 was $58.3 million compared to gold revenue of
$123.0 million for the same prior-year period. The decrease
in gold revenue for the fourth quarter 2013 was driven by
lower gold sales and lower spot gold prices. Gold sold during
the fourth quarter 2013 was lower than production due to
an increase in gold in circuit and gold bullion inventory at
the end of the period. Fourth quarter revenues from 2012
exclude the impact of realized losses on ounces delivered
into forward sales contracts which are classified within gains
and losses on gold hedge contracts.
During the fourth quarter of 2013, the average spot price
of gold was $1,274 per ounce, with gold trading between a
range of $1,195 and $1,361 per ounce based on the London
PM Fix gold price. This compares to an average of $1,722 per
ounce during the prior-year quarter, with a low of $1,651 and
a high of $1,792 per ounce.
Cost of Sales
Cost of sales for the three months ended December 31, 2013
totalled $50.5 million compared with cost of sales of
$57.3 million for the three months ended December 31, 2012.
For the three months ended December 31, 2013, mine
production costs, before capitalized deferred stripping,
were $43.6 million compared to $42.8 million in the same
prior-year period. Higher mine production costs in 2013
due to higher costs related to material movement in mining
combined and higher processing activity were partly offset by
lower costs for consumables.
Depreciation and amortization for the three months ended
December 31, 2013 totalled $26.7 million compared with
$20.5 million in the same prior-year period. Depreciation was
higher in the fourth quarter of 2013 due to an increase in the
depreciation basis with the commissioning of the mill expan-
sion at the end of 2012.
For the three months ended December 31, 2013, royal-
ties were $2.9 million, $0.8 million lower than the prior-year
period due to lower gold sales and spot gold prices in the
current-year period, partially offset by an increase in the
royalty rate on sales from 3 percent to 5 percent, effective
January 1, 2013.
Inventory movements for the three months ended
December 31, 2013 resulted in a decrease to cost of sales
of $21.2 million compared to a decrease to cost of sales
of $6.6 million for the three months in the prior-year period.
For the three months ended December 31, 2013, higher
costs were absorbed into inventory as a result of higher mine
production costs over fewer ounces mined during the current
period compared to the prior-year period.
Exploration and Evaluation
Exploration and evaluation expenditures for the three months
ended December 31, 2013 totalled $1.0 million, $1.7 million
lower than the same prior-year period, reflecting the Company’s
decision to minimize drilling on the Regional Land Package in
the current gold price environment to maximize cash flow.
Administration
Administration expenses for the three months ended
December 31, 2013, which include costs of the corporate and
Dakar office, were $3.2 million or $1.8 million lower than the
prior-year period, mainly due to lower corporate office costs.
teranga gold corporation / management’s discussion & analysis
9
Share-Based Compensation
During the three months ended December 31, 2013, there
were no common share stock options granted and 179,583
common share stock options were cancelled during the three
months ended December 31, 2013. No stock options were
exercised during the quarter.
Finance Costs
Finance costs for the three months ended December 31,
2013 of $3.2 million was $0.5 million higher than the same
prior-year period mainly due to higher debt balances and
interest costs on borrowings.
Net Foreign Exchange Gains and Losses
The Company generated foreign exchange losses of
$0.4 million for the three months ended December 31, 2013
and $1.5 million in the prior-year period, primarily related
to realized losses from the Sabodala gold mine operating
costs recorded in the local currency and translated into the
U.S. dollar functional currency.
Other Expense
Other expenses were $3.4 million for the three months ended
December 31, 2013 compared to other expenses of $0.7 mil-
lion for the three months in the same prior-year period. The
increase in the current year is related to costs associated with
the acquisitions of Oromin and the OJVG.
Quarterly Operational Results
Mining
Total tonnes mined for the three months ended December 31,
2013 were 24 percent higher compared to the same prior-year
period. The increase in total tonnes mined was mainly
due to improved productivities and shorter ore and waste
haul distances.
During the quarter, mining activities were focused on the
upper benches of phase 3 of the Sabodala pit, while in the
same prior-year period mining took place in a high-grade ore
zone on lower benches of phase 2.
Ore tonnes mined for the three months ended December 31,
2013 were 2 percent lower compared to the same prior-year
period and ore grades mined were lower than the same prior-
year period, in line with plan. This resulted in 23 percent fewer
ounces mined for the three months ended December 31, 2013
as mining activities were concentrated on waste stripping ac-
tivities in phase 3 of the mine plan. Conversely, mining activi-
ties during the prior-year period took place in lower benches of
phase 2 and included a substantial amount of high-grade ore.
Unit mining costs for the fourth quarter of 2013 were $2.65 per
tonne, a decrease of 15 percent compared to the same prior-
year period. Total mining costs were 5 percent higher than the
same prior-year period due to higher material movement.
Processing
Ore tonnes milled for the three months ended December 31,
2013 were 19 percent higher than the same prior-year period
due to improvements made to reduce the frequency and du-
ration of unplanned downtime and an increase in throughput
in the crushing circuit to match mill capacity.
Processed grade for the three months ended December 31,
2013 was 38 percent lower than the same prior-year period,
as planned. Mill feed during the fourth quarter 2013 was
sourced from phase 3 of the Sabodala pit at grades closer
to reserve grade. In the year earlier period, mill feed was
sourced from a high-grade zone on the lower benches
of phase 2 of the Sabodala pit.
Gold production for the three months ended December 31,
2013 was on plan at 52,368 ounces of gold and 27 percent
lower than the same prior-year period. Lower production was
due to lower processed grades, partly offset by higher mill
throughput.
Unit processing costs for the three months ended
December 31, 2013 were 10 percent lower than the same
prior-year period at $17.96 per tonne, mainly due to an
increase in throughput. Total processing costs for the three
months ended December 31, 2013 were 7 percent higher
than the same prior-year period mainly due to an increase
in material processed.
Unit general and administration costs for the three months
ended December 31, 2013 were 24 percent lower than
the same prior-year period mainly due to the increase in
tonnes milled. Total general and administrative costs for
the three months ended December 31, 2013 of $4.1 million
were 16 percent lower than the prior year due to lower
insurance premiums.
Total cash costs for the three months ended December 31,
2013 totalled $711 per ounce sold, 34 percent higher
than the same prior-year period. Higher total cash costs
per ounce were due to an increase in material mined and
milled during the quarter compared to the year-earlier
period. Total cash costs have been adjusted for the adoption
of IFRIC 20 for capitalization of a portion of production phase
stripping costs.
All-in sustaining costs for the three months ended
December 31, 2013 were $850 per ounce sold compared
to $1,004 per ounce sold in the same prior-year period.
The decrease compared to the prior-year was due to lower
capital expenditures and administration expenses in the
current-year period, partly offset by higher total cash costs.
2013 AnnuAl RepoRt 10
Quarterly Financial and Operating information
(Us$000s, except where indicated)
2013
2012
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Revenue
Average realized gold price ($/oz)
Cost of sales
Net earnings (loss)
Net earnings (loss) per share ($)
Operating cash flow
58,302
1,249
50,527
(4,220)
(0.01)
13,137
50,564
1,339
37,371
(442)
(0.00)
16,692
75,246
1,379
52,636
7,196
0.03
20,838
113,815
1,090
55,971
44,983
0.18
23,640
122,970
1,296
57,250
54,228
0.22
59,670
105,014
1,290
45,814
26,033
0.11
13,976
62,010
1,608
31,057
14,413
0.06
(4,590)
60,526
1,712
31,117
(2,074)
(0.01)
35,927
stRateGy anD DeVelOPment
strategy
Company Performance in 2013
During 2013, the price of gold decreased 28 percent, its
first annual decrease in 13 years. In light of this gold price
weakness, Teranga quickly took steps in early 2013 to reduce
discretionary spending while maintaining its production guid-
ance. The Company’s exploration team was consolidated
into one exploration facility and the organizational design was
revised for increased efficiencies. Additionally, the Company’s
technical team designed a new mine plan on a standalone
basis, resulting in less material movement, lower reserves and
production but higher free cash flows at current gold prices.
Despite the challenges faced, the Company was able to
deliver on its plans and this included the following:
• Met or exceeded production and cost guidance for the year;
flow for 2014 and a balance of gold production and cash flow
generated in the subsequent five years. There are opportuni-
ties to increase gold production in years 2015-2018 based on
current reserves. With expectations for additional reserves,
including infill drilling of the high-grade zone at Masato, fur-
ther mine plan optimization work is required. As a result, this
LOM production schedule represents a “base case” scenario
with flexibility to improve gold production and/or cash flows in
subsequent years.
With the OJVG acquisition now complete the Company can
clearly outline its short-, medium- and long-term objectives.
In the short term (2014-2015):
i. Integrate OJVG and Sabodala operations;
ii. Increase free cash flow through higher production and
lower material movement, in part to retire the balance of
the debt facility outstanding; and
• Resolved the outstanding items to bring the expanded mill
to design capacity;
iii. Increase reserves through the conversion of Measured,
Indicated and Inferred Resources.
• Eliminated the inherited out-of-the-money hedge contracts;
In the medium term (2014-2016):
• Established a long-term fiscal and investment agreement
with the Senegalese Government, which
i. Evaluate the heap leach processing option (permit and
build if the returns meet Teranga’s hurdle rate);
– Reinforced Teranga’s long-term commitment to the
ii. Continue to look for ways to improve mill throughput; and
country; and
iii. Optimize mine planning and grade.
– Demonstrated Senegal’s willingness to work with foreign
investors in a fair and transparent manner; and
In the long term (2015 onward):
• Completed the acquisition of the OJVG and prepared an
initial integrated life-of-mine (“LOM”) plan.
Strategy for 2014 and Beyond
The 2014 budget and integrated LOM plan for the combined
operations have been designed to maximize free cash in the
current gold price environment. The sequence of the pits
can be optimized, as well as the sequencing of phases within
the pits, based not only on grade, but also on strip ratio, ore
hardness, and the capital required to maximize free cash
flows in different gold price environments. As a result, this
LOM annual production profile represents an optimized cash
i. Remain disciplined about investments in exploration
with a commitment to a modest, multi-year exploration
program; and
ii. Look to make exploration discoveries on the regional
exploration land package by continuing to systematically
work through the many targets and prospects.
The Company expects to create value for shareholders by
maximizing free cash flows in the short term by integrating
the OJVG allowing for annual production of approximately
250,000 ounces at lower quartile all-in sustaining costs of
about $900 per ounce and a high conversion of EBITDA into
free cash flow.
teranga gold corporation / management’s discussion & analysis
11
In the longer term, the Company expects to create sharehold-
er value by leveraging the existing processing infrastructure,
while adding profitable reserves and potentially expanding
its processing capacity. All capital projects will be evaluated
based on a disciplined capital allocation strategy based on ro-
bust hurdle rates and quick payback periods. The Company
is focused on only gold and only in Senegal.
Once the loan facility with Macquarie has been extinguished
and there is sufficient cash to execute on the business plan,
the Company will look to returning capital to shareholders
when appropriate.
acquisition of Oromin
On August 6, 2013, the Company acquired 78,985,388 com-
mon shares of Oromin, representing approximately 57.5 per-
cent of the Oromin shares that the Company did not already
own. Together with the 18,699,500 Oromin shares owned by
the Company and a further 2,091,013 shares obtained, this
represented a total of 99,775,901 Oromin shares or approxi-
mately 72.6 percent of the outstanding Oromin shares.
Former shareholders of Oromin were entitled to receive 0.6
of a common share of Teranga for each Oromin share. Total
consideration paid of $24.1 million consisted of the issuance
of 48,645,840 Teranga common shares at a price of $0.48
per share for consideration of $23.5 million and the fair value
of Oromin stock options replaced by 7,911,600 Teranga stock
options for consideration of $0.6 million. Share issue costs
totalled $0.2 million.
On October 4, 2013, the Company completed the acquisition
of all of the issued and outstanding common shares of Oro-
min that it did not already own (Oromin being one of the three
joint venture partners holding 43.5 percent of the OJVG),
issuing 22,537,251 additional Teranga common shares at a
price of $0.61 per share for consideration of $13.8 million.
In total, the Company issued 71,183,091 Teranga shares
to acquire all of the Oromin shares for net consideration of
$37.8 million, including the fair value of Oromin stock options
replaced by 7,911,600 Teranga stock options. As a result,
Teranga’s total number of issued and outstanding shares
increased to 316,801,091.
Franco-nevada Gold stream and acquisition
of the OJVG
On January 15, 2014, the Company completed a
$135.0 million stream transaction with Franco-Nevada Corpo-
ration (“Franco-Nevada”) to fund the acquisition of Bendon’s
interest in the OJVG for $105.0 million and retire half of
the project finance facility with Macquarie of $30.0 million.
As a result of the two transactions, Teranga is required to
deliver to Franco-Nevada 22,500 ounces annually over the
first six years followed by 6 percent of production from the
Company’s existing properties, including those of the OJVG,
thereafter. Franco-Nevada’s purchase price per ounce is set
at 20 percent of the spot price of gold.
The Company also acquired Badr’s 13 percent carried
interest for $7.5 million and further contingent consideration
based on higher realized gold prices and increases to OJVG
reserves through 2020.
The acquisition of Bendon and Badr’s interests in the OJVG
increased Teranga’s ownership to 100 percent and consoli-
dates the Sabodala region, increasing the size of Teranga’s
interests in Mine License from 33km2 to 246km2 and more
than doubling the Company’s reserve base.
Acquisition-related costs of approximately $11.0 million for
Oromin and the OJVG have been paid during the year ended
December 31, 2013.
Following the acquisition of Bendon’s interests in the OJVG
subsequent to year-end, the legal claim filed by Bendon was
dismissed.
Reserves and Resources
Mineral Resources at December 31, 2013 are presented in
Table 1. Total open pit Proven and Probable Mineral Reserves
at December 31, 2013 are set forth in Table 2. The reported
Mineral Resources are inclusive of the Mineral Reserves.
The Proven and Probable Mineral Reserves were based on
the Measured and Indicated Resources that fall within the
designed open pits. The basis for the resources and reserves
is consistent with the Canadian Securities Administrators
National Instrument 43-101 Standards for Disclosure for
Mineral Projects (“NI 43-101”) regulations. The design for the
open pit limits, related phasing and long-term planning for the
Sabodala open pit was carried out to maximize the econom-
ics under current market conditions by removing high-cost
(high-strip) gold ounces in the Sabodala pit.
The Sabodala pit design is consistent with the Mineral Re-
serves reported for the third quarter 2013 results which are
based on a $1,000 per ounce gold price pit shell for phase 4.
The cut off grades were established using an estimated gold
price of $1,250 per ounce. Mining phases in the Sabodala
pit have been determined similarly to the previous designs,
where the mine sequencing is based on accessing the high-
grade Main Flat Extension (“MFE”) through successive
phases to balance waste stripping and optimize cash flows.
Dilution and ore recovery estimates for the Sabodala Mineral
Reserves were based on a comparison of the resource
model with actual production performance over a 24-month
span using a 5 metre minimum mining width and 10 metre
bench height.
2013 AnnuAl RepoRt 12
The Niakafiri pit design remains unchanged from December
2012. The Gora pit design has been adjusted to reflect a pit
shell at $1,200 per ounce and an updated dilution analysis.
The Masato, Golouma and Kerekounda pit designs have been
based on a $1,250 per ounce pit shell. Geotechnical studies
conducted previously by the OJVG were reviewed by inde-
pendent consultants and were determined to be acceptable.
Detailed dilution analyses were conducted on each of these
deposits, and ore cut-off grades were established using an
estimated gold price of $1,250 per ounce.
As a result of the work we have conducted, overall reported
open pit Mineral Reserves for the OJVG deposits have
increased by approximately 90,000 ounces as compared to
the last technical report issued by the OJVG in January 2013.
An increase in open pit Mineral Reserves was identified at
the Golouma and Kerekounda deposits, which was partially
offset by a decrease at Masato. Analyses of high-grade zones
within the Masato ore body continue to be evaluated. Due to
the manner of the interpretation of structural controls defining
these high-grade zones, management has determined that
further work and infill drilling is necessary to accurately define
these trends within the mineralized envelopes. For purposes
of this updated reserve estimate, the Company has applied a
conservative interpretation method resulting in approximately
300,000 ounces of high-grade mineralization being excluded
from Masato Mineral Reserves.
The following Mineral Reserves and Mineral Resources
tables at December 31, 2013 are inclusive of 100 percent of
the OJVG Mineral Reserves and Mineral Resources. On Janu-
ary 15, 2014, the Company acquired the balance of the OJVG
that it did not already own.
table 1: mineral Resources summary as at December 31, 2013
measured
indicated
measured and indicated
Sabodala
Gora
Niakafiri
ML Other
subtotal ml
Masato
Golouma
Kerekounda
Somigol Other
tonnes
(mt)
24.28
0.49
0.30
Grade
(g/t)
1.32
5.27
1.74
au
(moz)
1.03
0.08
0.02
tonnes
(mt)
22.95
1.84
10.50
25.07
1.40
1.13
35.29
43.93
12.04
2.20
18.72
76.89
112.18
subtotal somigol
total
0.00
25.07
0.00
1.40
0.00
1.13
inferred Resources
area
Sabodala
Gora
Niakafiri
ML Other
subtotal ml
Masato
Golouma
Kerekounda
Somigol Other
subtotal somigol
total
Grade
(g/t)
1.29
4.93
1.10
1.42
1.11
2.69
3.77
0.93
1.39
1.40
au
(moz)
0.95
0.29
0.37
1.61
1.57
1.04
0.27
0.56
3.44
5.05
tonnes
(mt)
47.23
2.32
10.70
60.25
43.93
12.04
2.20
18.72
76.89
137.14
tonnes
(mt)
17.88
0.21
7.20
10.60
35.89
25.59
2.46
0.34
12.87
41.26
77.16
Grade
(g/t)
1.31
5.00
1.12
1.42
1.11
2.69
3.77
0.93
1.39
1.40
au
(g/t)
0.94
3.38
0.88
0.97
0.95
1.13
2.01
4.21
0.84
1.12
1.04
au
(moz)
1.98
0.37
0.39
2.74
1.57
1.04
0.27
0.56
3.44
6.18
au
(moz)
0.54
0.02
0.21
0.33
1.11
0.93
0.16
0.05
0.35
1.49
2.59
Notes for Mineral Resources Estimate:
1) CIM definitions were followed for Mineral Resources.
2) Mineral Resources for Sabodala include Sutuba.
3)
Mineral Resource cut-off grades for Sabodala, Masato, Golouma, Kerekounda
and Somigol Other are 0.2 g/t Au for oxide and 0.35 g/t Au for fresh.
Mineral Resource cut-off grades for Niakafiri are 0.3 g/t Au for oxide and 0.5 g/t
Au for fresh.
4)
5) Mineral Resource cut-off grade for Gora is 0.5 g/t Au for oxide and fresh.
6)
Mineral Resource cut-off grade for Niakafiri West and Soukhoto is 0.3 g/t Au for
oxide and fresh.
7) Mineral Resource cut-off grade for Diadiako is 0.2 g/t Au for oxide and fresh.
Measured Resources include stockpiles which total 8.60 Mt at 0.86 g/t Au
8)
for 0.24 Mozs.
High-grade assays were capped at grades ranging from 10 g/t to 30 g/t Au at
Sabodala, from 20 g/t to 70 g/t Au at Gora, from 2 g/t to 30 g/t Au at Masato,
from 5 g/t to 70 g/t for Golouma, from 11 g/t to 50 g/t at Kerekounda, and from
0.8 g/t to 110 g/t at Somigol Other.
9)
10) Inferred resources at Majiva have been removed, as the Makana permit has been
allowed to lapse.
11) The figures above are “Total” Mineral Resources and include Mineral Reserves.
12) Sum of individual amounts may not equal due to rounding.
teranga gold corporation / management’s discussion & analysis
For clarity, the Resource estimates disclosed above with
respect to Niakafiri, Gora and ML Other (which includes
Niakafiri, Niakafiri West, Soukhoto and Diadiako) were pre-
pared and first disclosed under the JORC Code 2004.
It has not been updated since to comply with JORC Code
2012 on the basis that the information has not materially
changed since it was last reported. See Competent Person
Statement on page 31 for further details.
table 2: mineral Reserves summary as at December 31, 2013
13
tonnes
(mt)
3.45
0.50
0.23
8.60
12.78
Proven
Grade
(g/t)
1.64
4.58
1.69
0.86
1.23
Sabodala
Gora
Niakafiri
Stockpiles
subtotal ml
Masato
Golouma
Kerekounda
(moz)
0.18
0.07
0.01
0.24
0.51
subtotal somigol
total
0.00
12.78
0.00
1.23
0.00
0.51
Notes for Reserves Estimate:
1) CIM definitions were followed for Mineral Reserves.
2)
Mineral Reserve cut-off grades for Sabodala are 0.40 g/t Au for oxide and 0.5 g/t
Au for fresh based on a $1,250/oz gold price and metallurgical recoveries between
90 percent and 93 percent.
Mineral Reserve cut-off grades for Niakafiri are 0.35 g/t Au for oxide and 0.5 g/t
Au for fresh based on a $1,350/oz gold price and metallurgical recoveries between
90 percent and 92 percent.
Mineral Reserve cut-off grade for Gora is 0.76 g/t Au for oxide and fresh based on
$1,200/oz gold price and metallurgical recovery of 95 percent.
Mineral Reserve cut-off grade for Masato, Golouma and Kerekounda are 0.4 g/t
Au for oxide and 0.5 g/t for fresh based on $1,250/oz gold price and metallurgical
recovery between 90 percent and 93 percent.
Sum of individual amounts may not equal due to rounding.
The Niakafiri deposit is adjacent to the Sabodala village and relocation of at least
3)
4)
5)
6)
7)
For clarity, the Reserve estimates disclosed above with respect
to Niakafiri and Gora were prepared and first disclosed under
the JORC Code 2004. It has not been updated since to comply
with JORC Code 2012 on the basis that the information has not
materially changed since it was last reported. See Competent
Person Statement on page 31 for further details.
OJVG technical integration
The acquisition of Oromin in August 2013 provided access to
the OJVG technical data. Since then, management has been
evaluating and integrating the geological and technical data-
bases to develop updated resources and reserves to establish
a combined LOM plan that will be supported by a NI 43-101
compliant technical report, targeted for March 2014.
The ongoing technical work for the OJVG integrated mine plan
has included:
• A comprehensive review of the Golouma, Masato and Ker-
ekounda ore bodies including re-logging and re-assay of key
drill intercepts, QA/QC checks and detailed interpretation to
update these resource models;
Probable
Proven and Probable
au
tonnes
Grade
au
tonnes
Grade
(mt)
5.53
1.39
7.58
14.50
25.24
6.47
0.88
32.59
47.09
(g/t)
1.58
4.80
1.12
1.65
1.21
2.24
3.26
1.47
1.52
(moz)
0.28
0.21
0.27
0.77
0.98
0.46
0.09
1.54
2.31
(mt)
8.98
1.89
7.81
8.60
27.28
25.24
6.47
0.88
32.59
59.87
(g/t)
1.60
4.74
1.14
0.86
1.45
1.21
2.24
3.26
1.47
1.46
au
(moz)
0.46
0.29
0.29
0.24
1.27
0.98
0.46
0.09
1.54
2.81
8)
9)
some portion of the village will be required which will necessitate a negotiated
resettlement program with the affected community members.
The Gora deposit is intended to be merged into the Sabodala mining license which
the State of Senegal has agreed to in principal subject to completion and receipt of an
approved environmental and social impact assessment which is ongoing.
The SOMIGOL deposits lie adjacent to the Sabodala mining license and it is
intended that these licenses be merged which the State of Senegal has agreed to in
principal under the terms of its previously announced global investment agree-
ment in May of 2013. Any additional specific permits are anticipated to be minor
given both licenses are already fully approved including environmental and social
impact assessments.
10) There are no other known political, legal or environmental risks that could materi-
ally affect the potential development of the identified mineral resources or mineral
reserves other than as already set out in the Company’s Annual Information Form
dated March 28, 2013 – see RISK FACTORS beginning on page 62.
• Economic Lerchs-Grossman (“LG”) pit optimization and
detailed pit designs to reflect the current gold price;
• Preliminary Life-of-Mine (“LOM”) mine planning schedules
for optimized cash flow analysis, detailed dilution analysis,
pit designs, mine operating and capital estimates;
• An updated tailings deposition and water balance model;
• Ongoing analysis of the metallurgical test results for ore
characterization studies of select areas within the Masato
and Golouma ore bodies to increase understanding from
Feasibility Study level and optimize feed and gold recovery
to the Sabodala mill; and
• Environmental and social impact reviews for a reduced
footprint using the Sabodala operations.
In addition to development of an integrated LOM, the OJVG
technical team was engaged with the Teranga technical teams
both at site in Senegal and the corporate offices.
integrated lOm schedule
Table 3 represents a LOM schedule developed from the proven
and probable reserves listed in Table 2. The pit sequencing
2013 AnnuAl RepoRt
14
schedule is based on blending the material movement capabil-
ity with the mine mobile fleet and the availability of high-grade
ore within the various ore bodies. This schedule represents one
of a number of possibilities that can be adjusted as economic
conditions change. Open pit mining methods similar to current
operations at the Sabodala deposit were applied by providing
the highest grade available for plant feed and stockpiling lower-
grade ore for processing at the end of mine life. A detailed
mine dilution and ore recovery analysis was applied for the
Masato, Golouma and Kerekounda deposits to determine mine
operating parameters.
Capital and operating cost estimates for the LOM are provided
in Table 4 and Table 5, respectively. Sustaining capital esti-
mates for mining were based on the major component and
replacement schedule for the existing mobile equipment fleet,
while the capital development costs for Gora and the OJVG
deposit were based on additional mine mobile equipment
and infrastructure for new pit development. Sustaining capital
estimates are based on the existing schedules for the plant
operations, including an additional tailings lift forecasted in
approximately three years. Operating costs for the mine were
calibrated to 2013 costs at Sabodala and then adjusted for
percentage of oxide ore and average weighted haul distance to
the various ore body locations.
table 3: life of mine
2014-2019
aVG
lOm
Sabodala Phase 3
Sabodala Phase 4
Masato Phase 1
Masato Phase 2
Gora
Golouma
Kerekounda
Niakafiri
Total
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Ore Mined
Ore Grade
Waste
Contained Oz
Stockpile Ore Balance
Stockpile Grade
Contained Oz
4.8
1.68
16.5
0.26
4.1
1.51
29.6
0.20
13.5
1.09
32.3
0.47
11.8
1.37
101.3
0.52
1.9
4.74
38.1
0.29
6.5
2.24
89.8
0.46
0.9
3.26
18.0
0.09
7.8
1.14
22.6
0.29
51.3
1.57
348.0
2.58
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Mt
Moz
Mt
g/t
Moz
2014
4.8
1.68
16.5
0.26
–
–
–
–
0.9
0.91
3.4
0.03
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
–
–
–
–
–
–
–
–
12.6
1.10
28.9
0.44
–
–
–
–
0.2
3.80
5.1
0.03
–
–
–
–
–
–
–
–
–
–
–
–
12.8
1.15
33.9
0.47
19.7
0.77
0.48
–
–
–
–
0.5
1.01
13.1
0.02
–
–
–
–
–
–
–
–
0.7
4.15
12.0
0.10
1.0
2.89
16.1
0.09
0.1
1.50
7.4
0.01
–
–
–
–
2.3
2.84
48.6
0.21
18.0
0.71
0.41
–
–
–
–
1.7
1.53
11.9
0.09
–
–
–
–
–
–
–
–
0.3
6.55
9.7
0.06
0.5
2.61
15.7
0.04
0.8
3.53
10.6
0.09
–
–
–
–
3.3
2.60
47.8
0.27
17.4
0.71
0.40
–
–
–
–
1.9
1.61
4.6
0.10
–
–
–
–
–
–
–
–
0.4
3.75
9.6
0.05
0.8
2.26
17.0
0.06
–
–
–
–
4.6
1.14
12.9
0.17
7.7
1.51
44.1
0.37
21.2
0.70
0.47
0.3
0.60
29.9
0.01
2.5
0.98
38.6
0.08
9.0
1.50
32.7
0.43
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
6.99
1.7
0.05
2.5
2.01
35.0
0.16
–
–
–
–
3.2
1.14
9.7
0.12
5.9
1.74
46.4
0.33
23.1
0.69
0.51
4.0
2.27
15%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.7
2.07
6.0
0.11
2.1
1.82
35.9
0.12
21.4
0.69
0.47
3.8
1.32
0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.5
0.98
38.6
0.08
20.0
0.69
0.44
3.8
0.89
1%
9.0
1.50
32.7
0.43
25.2
0.73
0.60
3.8
2.29
0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21.4
0.70
0.48
3.8
0.93
0%
17.6
0.70
0.39
3.8
0.71
0%
13.8
0.69
0.31
3.8
0.71
0%
10.0
0.67
0.22
3.8
0.74
0%
6.2
0.65
0.13
3.8
0.71
0%
2.2
0.66
0.05
4.0
0.64
36%
0.0
–
0.00
2.2
0.62
50%
0.265
0.145
0.097
0.254
0.102
0.078
0.078
0.081
0.078
0.075
0.040
6.3
1.61
40.1
0.33
5.7
1.56
19.9
0.29
10.9
0.79
0.27
Ore Milled
Head Grade
Oxide
Rec. oz
Mt
g/t
Percent
moz
59.9
1.46
13%
2.553
3.9
2.24
23%
0.254
3.4
2.25
6%
0.227
4.0
2.05
50%
0.242
4.0
2.21
34%
0.260
3.8
2.35
6%
0.261
4.0
2.31
26%
0.271
teranga gold corporation / management’s discussion & analysis
15
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
6.99
1.7
0.05
2.5
2.01
35.0
0.16
–
–
–
–
3.2
1.14
9.7
0.12
5.9
1.74
46.4
0.33
23.1
0.69
0.51
–
–
–
–
–
–
–
–
–
–
–
–
0.3
0.60
29.9
0.01
–
–
–
–
1.7
2.07
6.0
0.11
–
–
–
–
–
–
–
–
2.1
1.82
35.9
0.12
21.4
0.69
0.47
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.5
0.98
38.6
0.08
9.0
1.50
32.7
0.43
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.5
0.98
38.6
0.08
20.0
0.69
0.44
9.0
1.50
32.7
0.43
25.2
0.73
0.60
Oxide
Percent
59.9
1.46
13%
3.9
2.24
23%
Rec. oz
moz
2.553
0.254
0.227
0.242
0.260
0.261
0.271
4.0
2.27
15%
0.265
3.8
1.32
0%
0.145
3.8
0.89
1%
0.097
3.8
2.29
0%
0.254
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21.4
0.70
0.48
3.8
0.93
0%
0.102
17.6
0.70
0.39
3.8
0.71
0%
0.078
13.8
0.69
0.31
3.8
0.71
0%
0.078
10.0
0.67
0.22
3.8
0.74
0%
0.081
6.2
0.65
0.13
3.8
0.71
0%
0.078
2.2
0.66
0.05
4.0
0.64
36%
0.075
0.0
–
0.00
2.2
0.62
50%
0.040
table 3: life of mine
Sabodala Phase 3
Sabodala Phase 4
Masato Phase 1
Masato Phase 2
Gora
Golouma
Kerekounda
Niakafiri
Total
Contained Oz
Moz
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Ore Mined
Ore Grade
Waste
Contained Oz
Moz
Contained Oz
Moz
Contained Oz
Moz
Contained Oz
Moz
Contained Oz
Moz
Contained Oz
Moz
Contained Oz
Moz
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Mt
g/t
Mt
Moz
Mt
g/t
Moz
Mt
g/t
Ore Mined
Ore Grade
Waste
Contained Oz
Stockpile Ore Balance
Stockpile Grade
Contained Oz
Ore Milled
Head Grade
101.3
0.52
lOm
4.8
1.68
16.5
0.26
4.1
1.51
29.6
0.20
13.5
1.09
32.3
0.47
11.8
1.37
1.9
4.74
38.1
0.29
6.5
2.24
89.8
0.46
0.9
3.26
18.0
0.09
7.8
1.14
22.6
0.29
51.3
1.57
348.0
2.58
2014-2019
aVG
2014
4.8
1.68
16.5
0.26
0.9
0.91
3.4
0.03
12.6
1.10
28.9
0.44
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
3.80
5.1
0.03
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.5
1.01
13.1
0.02
1.7
1.53
11.9
0.09
–
–
–
–
–
–
–
–
–
–
–
–
0.7
4.15
12.0
0.10
1.0
2.89
16.1
0.09
0.1
1.50
7.4
0.01
–
–
–
–
2.3
2.84
48.6
0.21
18.0
0.71
0.41
4.0
2.21
34%
–
–
–
–
–
–
–
–
–
–
–
–
0.3
6.55
9.7
0.06
0.5
2.61
15.7
0.04
0.8
3.53
10.6
0.09
–
–
–
–
3.3
2.60
47.8
0.27
17.4
0.71
0.40
3.8
2.35
6%
–
–
–
–
1.9
1.61
4.6
0.10
–
–
–
–
–
–
–
–
0.4
3.75
9.6
0.05
0.8
2.26
17.0
0.06
–
–
–
–
4.6
1.14
12.9
0.17
7.7
1.51
44.1
0.37
21.2
0.70
0.47
4.0
2.31
26%
6.3
1.61
40.1
0.33
5.7
1.56
19.9
0.29
10.9
0.79
0.27
3.4
2.25
6%
12.8
1.15
33.9
0.47
19.7
0.77
0.48
4.0
2.05
50%
2013 AnnuAl RepoRt
16
The estimated ore reserves underpinning the production
targets (as defined in the ASX Listing Rules), set out in Table
3 above, have been prepared by Mr. Paul Chawrun, who
is a Competent Person, in accordance with the require-
ments of the JORC Code 2012 with respect to the Sabodala,
Stockpiles, Masato, Golouma and Kerekounda ore reserve
estimates and the JORC Code 2004 with respect to the Gora
and Niakafiri ore reserve estimates.
This production guidance is based on existing proven and
probable ore reserves from both the Sabodala mining license
and Somigol (90 percent owned by the OJVG) mining license
as disclosed in Table 2 above. This production guidance also
assumes an amendment to the Somigol mining license to
reflect processing of Somigol ore through the Sabodala mill.
Key assumptions: gold spot price/ounce – US$1,250,
light fuel oil – US$1.00/litre, heavy fuel oil – US$0.98/litre,
US/euro exchange rate – $1.325
table 4: capital expenditures
sustaining capex
Mining
Processing
Admin. & Other Sustaining
Community Relations
total sustaining capex
capital Projects & Development
OJVG & Gora Development
Government Waiver Payments
Other Projects & Development
total Projects and Development
combined total (UsDm)
table 5: Operating cost
activity
Mining
Processing
General & Admin.
Mining
Processing
General & Admin.
Refining & Freight
Byproduct Credits
total Operating costs
Deferred Stripping Adjustment2
Inventory Adjustment
Royalty
total cash costs1
total cash costs1
Capex
Capitalized Deferred Stripping
Capitalized Reserve Development
Corporate Admin.
2014-2019
lOm
Unit
USDM
USDM
USDM
USDM
UsDm
UsDm
USDM
USDM
USDM
UsDm
UsDm
2014-2019
lOm
Unit
USD/t mined
USD/t milled
USDM
USDM
USDM
USDM
USDM
USDM
UsDm
USDM
USDM
USDM
UsDm
2.55
17.78
165
1,014
1,072
165
13
(5)
(3)
62
154
2,472
UsD/oz
968
USDM
USDM
USDM
USDM
173
3
9
142
all-in sustaining cash costs1
UsDm
2,799
all-in sustaining cash costs1
UsD/oz
1,096
25.5
29.5
11.3
25.0
aVG
3.6
2.2
1.0
4.2
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
3.5
3.0
1.0
3.5
2.0
1.0
–
–
3.5
2.0
1.0
8.3
3.5
2.0
1.0
8.3
3.5
2.0
1.0
8.3
4.0
2.0
1.0
–
3.5
2.0
1.0
0.5
2.0
1.0
–
–
–
2.0
0.8
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.3
–
91.3
10.9
7.5
6.5
14.8
14.8
14.8
7.0
6.5
3.5
2.8
2.5
2.5
2.5
2.5
2.3
62.1
16.9
3.0
82.0
173.2
10.3
2.8
0.5
13.7
24.6
7.0
10.0
–
17.0
24.5
42.0
4.2
–
46.2
52.7
12.2
–
3.0
15.2
30.0
–
–
–
–
14.8
0.9
2.7
–
3.6
18.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.0
6.5
3.5
2.8
2.5
2.5
2.5
2.5
2.3
0.8
–
0.5
0.3
–
0.8
–
–
–
–
–
4
–
73
4
0
(0)
77
–
37
4
1
–
–
2
–
–
–
–
–
–
–
–
–
–
–
2
–
46
2
0
(0)
48
–
35
3
86
–
–
–
2
216
176
186
191
2019
2.55
16.98
14
134
68
14
1
(0)
(22)
17
211
796
7
–
–
14
232
875
2020
2.50
17.59
14
95
67
14
1
(0)
(28)
9
157
7
–
–
14
178
2021
2.53
17.86
14
104
68
14
1
(0)
(48)
6
144
4
–
–
14
161
2022
2.66
18.01
10
112
68
10
1
(0)
–
16
15
221
873
3
–
–
8
232
915
2023
2024
2025
2026
2027
2028
2029
18.26
18.26
18.26
18.26
18.26
18.26
18.26
–
6
–
69
6
1
(0)
76
–
51
6
3
–
–
4
–
6
–
70
6
0
(0)
76
–
37
5
3
–
–
4
–
6
–
69
6
0
(0)
76
–
39
5
3
–
–
3
–
6
–
69
6
0
(0)
76
–
39
5
3
–
–
2
–
6
–
69
6
0
(0)
76
–
39
5
2
–
–
2
1,085
1,479
1,307
1,512
1,533
1,535
1,535
1,589
1,935
133
118
119
119
119
119
1,226
1,659
1,371
1,595
1,604
1,593
1,590
1,626
1,980
140
124
124
123
123
121
88
aVG
2.53
17.26
15
117
67
15
1
(0)
2014
2.85
18.50
18
71
65
18
1
(0)
2015
2.39
16.01
16
112
64
16
1
(0)
2016
2.51
17.35
15
128
70
15
1
(0)
213
2017
2.54
18.01
14
130
68
14
1
(0)
213
2018
2.49
16.93
14
129
68
14
1
(1)
212
2,259
200
154
193
(1)
(26)
15
190
745
25
1
2
14
231
906
(3)
(17)
12
146
675
25
3
5
16
194
838
–
–
–
–
–
–
–
(52)
15
156
645
53
–
4
15
227
941
(30)
16
200
768
30
–
–
14
244
937
(17)
16
213
814
15
–
–
14
242
925
(17)
17
212
781
18
–
–
14
245
901
1
Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS.
Please refer to non-IFRS Performance Measures at the end of this report.
2 Excludes any deferred stripping adjustment beyond 2014 as required by IFRIC 20.
teranga gold corporation / management’s discussion & analysis
17
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
3.5
3.0
1.0
3.5
2.0
1.0
–
–
3.5
2.0
1.0
8.3
3.5
2.0
1.0
8.3
3.5
2.0
1.0
8.3
4.0
2.0
1.0
–
3.5
2.0
1.0
0.5
2.0
1.0
–
–
–
2.0
0.8
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.5
–
–
2.0
0.3
–
91.3
10.9
7.5
6.5
14.8
14.8
14.8
7.0
6.5
3.5
2.8
2.5
2.5
2.5
2.5
2.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.5
0.3
–
0.8
–
–
–
–
7.0
6.5
3.5
2.8
2.5
2.5
2.5
2.5
2.3
0.8
–
–
–
–
–
–
–
–
–
–
2019
2.55
16.98
14
134
68
14
1
(0)
216
2020
2.50
17.59
14
95
67
14
1
(0)
176
–
–
–
–
–
–
2021
2.53
17.86
14
104
68
14
1
(0)
186
–
(48)
6
144
2022
2.66
18.01
10
112
68
10
1
(0)
191
–
16
15
221
873
3
–
–
8
232
915
2023
2024
2025
2026
2027
2028
2029
–
–
–
–
–
–
–
18.26
6
18.26
6
18.26
6
18.26
6
18.26
6
18.26
4
18.26
2
–
–
–
–
–
–
–
69
6
1
(0)
76
–
51
6
70
6
0
(0)
76
–
37
5
69
6
0
(0)
76
–
39
5
69
6
0
(0)
76
–
39
5
69
6
0
(0)
76
–
39
5
73
4
0
(0)
77
–
37
4
133
118
119
119
119
119
46
2
0
(0)
48
–
35
3
86
1,307
1,512
1,533
1,535
1,535
1,589
1,935
3
–
–
4
3
–
–
4
3
–
–
3
3
–
–
2
2
–
–
2
1
–
–
2
–
–
–
2
140
124
124
123
123
121
88
1,371
1,595
1,604
1,593
1,590
1,626
1,980
(22)
17
211
796
7
–
–
14
232
875
(28)
9
157
1,085
1,479
7
–
–
14
178
4
–
–
14
161
1,226
1,659
table 4: capital expenditures
2014-2019
sustaining capex
Mining
Processing
Admin. & Other Sustaining
Community Relations
total sustaining capex
capital Projects & Development
OJVG & Gora Development
Government Waiver Payments
Other Projects & Development
total Projects and Development
combined total (UsDm)
table 5: Operating cost
activity
Mining
Processing
General & Admin.
Mining
Processing
General & Admin.
Refining & Freight
Byproduct Credits
total Operating costs
Deferred Stripping Adjustment2
Inventory Adjustment
Royalty
total cash costs1
total cash costs1
Capex
Capitalized Deferred Stripping
Capitalized Reserve Development
Corporate Admin.
2014-2019
Unit
USD/t mined
USD/t milled
Unit
USDM
USDM
USDM
USDM
UsDm
UsDm
USDM
USDM
USDM
UsDm
UsDm
USDM
USDM
USDM
USDM
USDM
USDM
UsDm
USDM
USDM
USDM
UsDm
UsD/oz
USDM
USDM
USDM
USDM
lOm
25.5
29.5
11.3
25.0
62.1
16.9
3.0
82.0
173.2
lOm
2.55
17.78
165
1,014
1,072
165
13
(5)
(3)
62
154
2,472
968
173
3
9
142
all-in sustaining cash costs1
UsDm
2,799
all-in sustaining cash costs1
UsD/oz
1,096
aVG
3.6
2.2
1.0
4.2
10.3
2.8
0.5
13.7
24.6
aVG
2.53
17.26
15
117
67
15
1
(0)
(1)
(26)
15
190
745
25
1
2
14
231
906
7.0
10.0
–
17.0
24.5
42.0
4.2
–
46.2
52.7
12.2
–
3.0
15.2
30.0
–
–
–
–
14.8
0.9
2.7
–
3.6
18.4
2014
2.85
18.50
18
71
65
18
1
(0)
(3)
(17)
12
146
675
25
3
5
16
194
838
2015
2.39
16.01
16
112
64
16
1
(0)
(52)
15
156
645
53
–
4
15
227
941
2016
2.51
17.35
15
128
70
15
1
(0)
(30)
16
200
768
30
–
–
14
244
937
2017
2.54
18.01
14
130
68
14
1
(0)
(17)
16
213
814
15
–
–
14
242
925
2018
2.49
16.93
14
129
68
14
1
(1)
(17)
17
212
781
18
–
–
14
245
901
2,259
200
154
193
213
213
212
1
Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures and do not have a standard meaning under IFRS.
Please refer to non-IFRS Performance Measures at the end of this report.
2 Excludes any deferred stripping adjustment beyond 2014 as required by IFRIC 20.
2013 AnnuAl RepoRt
18
Gora Development
Gora, hosting 0.29 million ounces of proven and probable
reserves (see Table 2) at 4.74 g/t, is planned to be operated
as a satellite to the Sabodala mine requiring limited local infra-
structure and development. Ore will be hauled to the Sabodala
processing plant by a dedicated fleet of trucks and processed
on a priority basis, displacing lower-grade feed as required.
OJVG mine license
The OJVG Mine License covers 213km2. As we have inte-
grated the OJVG geological database into a combined LOM
plan, a number of areas have been revealed as potential
sources for reserves addition within the mining lease. These
targets have been selected based on potential for discovery
and inclusion into open pit reserves.
A technical report and an environmental and social impact
assessment (“ESIA”) have been provided to the Senegalese
Government, and the permit approval process is ongoing.
Management expects the permit process to be completed in
2014 and construction to be initiated in 2015 based on the
new integrated LOM plan with the OJVG.
sabodala mine license Reserve Development
The Sabodala Mine License (“ML”) covers 33km2 and, in
addition to the mine-related infrastructure, contains the
Sabodala, Masato, Niakafiri, Niakafiri West, Soukhoto and
Dinkokhono deposits.
The drill program on the ML was completed during the first
quarter 2013 with 11,700 metres drilled. The 2014 drill
program will be integrated into the combined Sabodala/OJVG
reserve delineation program.
Sabodala
The drill program at Sabodala was completed in the first
quarter of 2013, with results returned by mid-April 2013.
Drilling targeted the MFE immediately adjacent to the current
ultimate pit, as well as additional mineralization located below
the MFE, to upgrade and increase mineral resources. Drilling
successfully confirmed continuation of these zones, and
updated resource and reserve models were generated.
Waste dump condemnation drilling to the southeast of the
Sabodala pit was completed in the first quarter of 2013.
Niakafiri
The timing of a planned drill program at the Niakafiri deposit
along strike is under review in light of both the decrease in
gold prices and the acquisition of the OJVG, which has led to
a re-evaluation of priorities.
Additional surface mapping was carried out at Niakafiri
in conjunction with the re-logging of several diamond drill
holes with a view to updating the geological model for the
Niakafiri deposit.
Masato North
A preliminary drill program consisting of six holes was com-
pleted to test the northern extent of the Niakafiri Shear Zone,
adjacent to the ML boundary. Narrow mineralized low-grade
zones were intersected, with future analysis planned.
The high-grade “cores” in Masato that were not included in
the current reserves estimate will be targeted in 2014 so that
the mineralization characteristics can be better understood
and then modelled.
Additional areas targeted include additions to the measured
resources at the Golouma and Kerekounda deposits for
potential to extend the currently designed pit shells, and to
explore near surface oxide targets along a 4km long mineral-
ized trend that includes the existing resources of Niakafiri,
Niakafiri SE and Maki Medina.
Regional exploration
The Company currently has nine exploration permits en-
compassing approximately 1,055km² of land surrounding
the Sabodala and OJVG Mine Licenses (246km2 exploitation
permits). Over the past three years, with the initiation of a
regional exploration program on this significant land package,
a tremendous amount of exploration data has been system-
atically collected and interpreted to prudently implement
follow-up programs. Targets are therefore in various stages of
advancement and are then prioritized for follow-up work and
drilling. Early geophysical and geochemical analysis of these
areas has led to the demarcation of at least 50 anomalies,
targets and prospects and the Company expects that several
of these areas will ultimately be developed into mineable
deposits. The Company has identified some key targets that,
though early stage, display significant potential. However, due
to the sheer size of the land position, the process of advanc-
ing an anomaly through to a mineable deposit takes time with
a systematic approach to maximize potential for success.
The exploration team uses a disciplined screening process
to optimize the potential for success in exploring the
myriad of high-potential anomalies located within the
Regional Land Package.
The Ninienko, Soreto/Diabougou and Garaboureya pros-
pects all demonstrate significant surface mineralization and
geochemical and geophysical markers within consistent
geological zones for gold mineralization providing potential
for significant discoveries. These prospects along with other
smaller potentially satellite deposits are planned to undergo
various stages of trenching, reverse circulation (“RC”) and
diamond drilling hole (“DDH”) programs.
teranga gold corporation / management’s discussion & analysis Health and safety
Health and safety is a constant and overriding priority at Sabo-
dala. It comes first in all regards and everyone is continuously
reminded to consider safety first. Each daily meeting begins
with a safety report and every site report whether it is daily,
weekly, monthly or annually begins with safety. The Company
is emphatic about keeping health and safety top of mind. The
Operational Health and Safety (“OHS”) program has matured
in 2013. Pivotal to the yearly results were the intensive train-
ing and rigorous application of the OHS management plans.
The focus is still placed on proactive, people-based safety
management which uses a documented systematic approach.
2014 will focus on management of change and vertical
integration of prevention tools. As the Company continues to
develop the OHS programs there will be a strong focus for
these programs to penetrate into the workforce.
corporate social Responsibility
A key component of the Company’s vision is to set the bench-
mark for responsible gold mining in Senegal. As the first gold
mine in Senegal, the Company has a unique opportunity to
set the industry standard for socially responsible mining in
the country maximizing the economic and social develop-
ment outcomes for the communities around its mine, as well
as across Senegal.
In the areas influenced by our mining operations, the Com-
pany’s efforts continue to focus on maximizing the long-term
benefits of the mining operation to the people in the region
and generally fall into one of four main categories: Health and
Safety; Water and Sanitation; Education: and Food secu-
rity. The Company’s annual program for health promotion
continued with the anti-malaria spray programs in the villages
around the mine site as well as a vaccination program for the
local community of Khossanto. In addition, the Company fi-
nanced the construction of a pediatric facility for the hospital
in the regional capital of Kedougou approximately 50 kilo-
metres from the mine, which should be operational in 2014.
Teranga continually participates in the extension and rehabili-
tation of water infrastructure in and around the operations. A
major initiative in 2013 was the completion of a water supply
system providing potable water to the two villages closest
to the Sabodala mine. Regarding education, during 2013,
the Company supported various projects including funding
the bursaries for students in the regional capital of Kedou-
gou to attend international schools in addition to supporting
Kedougou students studying in the Country’s capital, Dakar.
At the local level, the Company refurbished and improved
school facilities in three villages and provided uniforms to
the Sabodala High School. As part of our food security and
livelihood program, the Company’s focus in 2013 was on
financing income-generating activities. Teranga extended its
local poultry farming program established in 2012 and sup-
19
ported several regional women associations that are working
on the development of income-generating activities and food
security. The Company hired an agronomist to help with the
development and implemented of four market gardens, four
fruit tree orchards and four pilot farms as part of our compen-
sation framework for resettlement.
At the beginning of 2014, the Company completed a com-
prehensive regional development strategy. The Teranga
Development Strategy which took a collaborative approach,
and was based on two years of round table discussion with
various stakeholders, including local, regional and national
representatives, sets out a long-term vision for the Com-
pany’s presence in Senegal, and provides intended Company
actions that are expected to maximize the benefits for the
communities in its area of influence.
market Review – impact of key economic trends
Gold Price ($/oz)
London PM Fix
$1,800
$1,660
$1,520
$1,380
$1,240
$1,100
3
1
-
n
a
J
3
1
-
r
a
M
3
1
-
y
a
M
3
1
-
l
u
J
3
1
-
p
e
S
3
1
-
v
o
N
4
1
-
n
a
J
Source: http://www.lbma.org.uk
The price of gold is the largest factor in determining our
profitability and cash flow from operations. During 2013, the
average market price of gold was $1,411 per ounce, with gold
trading between a range of $1,192 and $1,694 per ounce
based on the London PM Fix gold price. This compares to
an average of $1,669 per ounce during 2012, with a low of
$1,540 per ounce and a high of $1,792 per ounce.
The price of gold is subject to volatile price movements over
short periods of time and is affected by numerous industry
and macroeconomic factors that are beyond our control
including, but not limited to, currency exchange rate fluctua-
tions and the relative strength of the U.S. dollar, the supply
of and demand for gold and macroeconomic factors such as
the level of interest rates and inflation expectations. The 2013
year marked the first decline in the annual average gold price
in 12 years. Throughout 2013 encouraging comments from
the U.S. Federal Reserve on the economic outlook, including
rising employment and increasing equity markets, led many to
believe that the very accommodative monetary policy would
be tightened. This led many market participants, particularly
in the U.S., to reduce gold holdings, mostly through invest-
2013 AnnuAl RepoRt
20
ment vehicles such as Exchange Traded Funds (“ETFs”),
in favour of higher-yielding assets such as equities. Gold ETF
holdings decreased by 880 tonnes or 33 percent, a clear
indicator that the investment appeal for gold had decreased
in an apparently stronger global economic environment.
Conversely, consumer demand for gold for jewelry, bars and
coins was notably strong. The Chinese have continued to
maintain a strong interest in physical gold as lower prices
encourage further buying. This persistent interest has proven
integral in supporting the gold price from further declines as
India’s role as a large consumer has been slightly diminished
as the Indian Government attempts to moderate gold demand
through increased taxes on gold and other imports. Some
market participants believe that the policy may be eased,
with a strengthening rupee either a few months before or
after the May election and possibly sooner with the end-of-
February budget. This should provide a boost to the gold
price, however, full-year imports are still expected to be lower
than either 2012 or 2011.
While the gold market is affected by fundamental global eco-
nomic changes, we are also aware that the market is strongly
impacted by expectations, both positive and negative. We
appreciate that institutional commentary can affect such
expectations. As such, the priority of Teranga is to execute
on our strategy with effective management of the Sabodala
operations and exploration programs.
Crude Oil Prices
WTI vs. Brent (USD/bbl)
$135
$121
$107
$93
$79
$65
2
1
-
n
a
J
2
1
-
e
n
u
J
2
1
-
t
p
e
S
3
1
-
n
a
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3
1
-
e
n
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J
3
1
-
t
p
e
S
4
1
-
n
a
J
WTI
WTI ’12/13 avg
Brent
Brent ’12/13 avg
Source: http://www.eia.gov/
Fuel costs for power generation and operation of the mobile
fleet are the single largest cost to the Sabodala mine. Fuel
purchased to operate the power plant and mobile equipment
fleet totalled approximately $50 million in 2013 or approxi-
mately 30 percent of operating costs.
The Sabodala operation is located in remote southeastern
Senegal and it is necessary to generate our own power. Six, 6
megawatt Wartsila (diesel generator engines) provide power
for the operations. In 2013, the operations consumed approx-
imately 29 million litres of HFO. This equates to approximately
$0.22/kWhr, which is less than the cost of grid electricity in
industrialized Senegal.
Sabodala consumes Brent crude oil and we forecast that in
2014 we will consume approximately 45 million litres of oil, less
than in 2013 in line with lower material movement in the mine.
Since the start of 2014, signs of potentially slowing economic
growth in the U.S., China and emerging markets raised
concerns about fuel demand while forecasts of excess supply
in 2014 weighed on oil prices. The forecasters expect Brent
prices to weaken as regional supply recovers, led by Iran and
Libya. However, the risk of supply disruptions in the Middle
East and elsewhere remains, which could drive crude oil
prices higher.
The Company had previously hedged a portion of its expo-
sure to fuel costs using crude oil forward contracts. These
contracts matured quarterly through to March 31, 2013.
Management may enter into further oil hedge contracts
should the price and terms be deemed acceptable.
EUR/USD Exchange Rate
0.80
0.78
0.76
0.74
0.72
0.70
3
1
-
n
a
J
3
1
-
r
a
M
3
1
-
y
a
M
3
1
-
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3
1
-
p
e
S
3
1
-
v
o
N
4
1
-
n
a
J
Source: http://www.oanda.com/
A significant portion of operating costs and capital expendi-
tures of Sabodala gold mine operations are denominated in
currencies other than U.S. dollars. Historical accounts pay-
ables records demonstrate that the Company has an approxi-
mate 70 percent Euro currency exposure via West African
CFA Franc, which is pegged directly with the Euro currency.
The Euro currency gained 4.3 percent against the U.S. dol-
lar in 2013. For most of the year, currency trading revolved
around the U.S. Federal Reserve’s (“Fed’s”) anticipated tight-
ening of monetary policy, which grew more likely as U.S.
economic data improved. At its December meeting, the
Fed said it would reduce its monthly asset purchases to
$75 billion in January from $85 billion. Then at its January
2014 meeting, the Fed reduced its purchases by a further
$10 billion to $65 billion. However, a $20 billion reduction
in monthly bond purchases still leaves the U.S. central bank
with an expanding balance sheet, which had contrasted with
the shrinking balance sheet of the European Central Bank
(“ECB”), thus favouring the Euro currency. In early Febru-
teranga gold corporation / management’s discussion & analysis
21
ary 2014, the Euro currency fell after weaker-than-forecast
inflation data. With the ECB’s main interest rate at a record
low of 0.25 percent, some market participants are expecting
the ECB to start buying bonds to loosen monetary conditions,
which may put downward pressure on the Euro currency.
Financial cOnDitiOn ReVieW
sUmmaRy Balance sHeet
Generally, as the U.S. dollar strengthens, the Euro currency
and other currencies weaken, and as the U.S. dollar weak-
ens, the Euro currency strengthens. All of the Company’s
production comes from its operations in Senegal therefore
costs will continue to be exposed to foreign exchange rate
movements. The Company continues to monitor currency
exposure on an ongoing basis and will implement a hedging
strategy if deemed appropriate.
(Us$000s)
Balance sheet
Cash and cash equivalents1
Trade and other receivables
Inventories
Other assets
total assets
Trade and other payables
Borrowings
Other liabilities
total liabilities
total equity
2013
34,961
7,999
131,172
450,267
624,399
56,891
74,369
27,046
158,306
466,093
year ended December 31
2012
39,722
6,482
107,669
410,668
564,541
44,823
68,608
63,800
177,231
387,310
1
Includes restricted cash of $20.0 million at December 31, 2013.
Balance sheet Review
Assets
The Company’s cash balance at December 31, 2013 was
$35.0 million, including $20.0 million in restricted cash. The
Company also had $7.3 million in gold bullion receivable at
the end of the period.
Inventory costs have increased by $23.5 million in part due
to an increase in bullion inventory to 8,750 ounces at De-
cember 31, 2013. Costs for inventory in stockpiles and gold
in circuit increased mainly as a result of higher total mining
costs during the current year.
Trade and Other Payables
Trade and other payables include royalties and other amounts
owed to the Government of Senegal. The increase over the
prior-year period is mainly due to accrued costs related to the
acquisition of Oromin and the OJVG.
Borrowings
During the first quarter of 2013, the Company entered into
a new $50.0 million finance lease facility with Macquarie
(“Equipment Facility”). The lease facility replaces the finance
lease facility previously in place with Sociéte Generalé, which
was assigned and novated to Macquarie. The proceeds have
been put towards additional equipment for the Sabodala pit.
During the fourth quarter of 2013, the Company cancelled
the undrawn commitment from the Equipment Facility.
During the third quarter of 2013, the Company amended its
existing $60.0 million loan facility agreement with Macquarie
(“Loan Facility”). The amended agreement had extended the
final repayment date of its existing loan facility agreement by
one year to June 30, 2015. The Company was required to
maintain a restricted cash balance of up to $20.0 million and
$40.0 million of the loan facility was to have been repaid in
five equal quarterly instalments beginning on June 30, 2014.
The final $20.0 million was scheduled to be repaid with the
final instalment on June 30, 2015. As at December 31, 2013,
the Company was not permitted to withdraw any portion of
the $20.0 million restricted cash balance as the Project Life
Ratio was less than the required 2.2:1. In addition, the Com-
pany was not in compliance with all of its financial covenants:
as a result, the entire $60.0 million Loan Facility was classi-
fied within current borrowings.
Subsequent to year-end on January 15, 2014, the Company
amended the Loan Facility and retired half of the balance
of $30.0 million. The remaining balance of $30.0 million is
scheduled to be repaid in three quarterly instalments of
$5.0 million beginning on March 31, 2014. The final
$15.0 million will be repaid on December 31, 2014.
The amended Loan Facility agreement replaced the
restricted cash requirement with a minimum liquidity
threshold of $15.0 million and removes the Project Life
Ratio financial covenant.
2013 AnnuAl RepoRt
22
Other Liabilities
Other liabilities at December 31, 2013 are comprised of provi-
sions for expenditures at the end of the mine’s operational
life, including expenditures for mine restoration and social
funding. The reduction from the prior year is due to the elimi-
nation of gold forward sales contracts in the first half of 2013.
liQUiDity anD casH FlOW
cash Flow
(Us$000s)
cash Flow
Operating
Investing
Financing
Effect on exchange rates on holdings in foreign currencies
Change in cash and cash equivalents during period
cash and cash equivalents – beginning of period
cash and cash equivalents – end of period
Restricted cash
cash and cash equivalents, including restricted cash
Operating Cash Flow
(Us$000s)
changes in working capital
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
net change in working capital
2013
74,307
(89,018)
(10,481)
431
(24,761)
39,722
14,961
20,000
34,961
2013
(1,613)
1,108
5,505
(188)
4,812
year ended December 31
2012
104,983
(111,993)
39,678
(415)
32,252
7,470
39,722
–
39,722
year ended December 31
2012
13,965
5,915
5,660
1,030
26,570
Operating cash flow for the year ended December 31, 2013
provided cash of $74.3 million compared to $105.0 million
cash provided in the prior year. The decrease in operating
cash flow was mainly due lower revenue and gross profit in
the current year. In the prior-year period, the settlement of a
large gold shipment made at the end of 2011 was received at
the beginning of 2012.
Investing Cash Flow
(Us$000s)
capital expenditures
Mine site & development capital
Capitalized reserve development
Capitalized deferred stripping
total capital expenditures
2013
22,267
3,524
43,264
69,056
year ended December 31
2012
57,166
26,086
32,533
115,785
Net cash used in investing activities for the year ended De-
cember 31, 2013 was $89.0 million compared to $112.0 mil-
lion in the prior-year period. The decrease was due to lower
development capital as the mill expansion was completed in
2012 and lower capitalized reserve development expendi-
tures in the current year, partially offset by higher capitalized
deferred stripping costs and an increase in restricted cash of
$20.0 million.
Financing Cash Flow
Net cash used by financing activities for the year ended
December 31, 2013 was $10.5 million compared to net cash
provided by financing activities of $39.7 million for the year
ended December 31, 2012. Net cash used by financing
activities for the year ended December 31, 2013 includes
proceeds of $12.8 million received from the finance lease
facility with Macquarie, repayment of borrowings of $12.3 mil-
lion and interest paid on borrowings of $7.1 million. Financing
cash flows in 2012 includes proceeds from the loan facility of
$58.0 million, net of deferred financing costs, and proceeds
from the finance lease facility of $2.9 million, partially offset
by repayments of the finance lease facility of $16.8 million
and interest paid on borrowings of $4.1 million.
teranga gold corporation / management’s discussion & analysis
23
liquidity and capital Resources Outlook
The Company’s cash position at December 31, 2013 was
$42.3 million, including bullion receivable and restricted
cash of $20 million. At $1,250 per ounce gold, the Company
expects to generate sufficient cash flow to retire the balance
of the Loan Facility and the majority of the mobile equipment
loan. However, the Company’s cash position is highly depen-
dent on the gold price. The Company is continually reviewing
operating, development and exploration expenditures in order
to ensure adequate liquidity and flexibility exists to support
debt repayments. While our objective is to repay the outstand-
ing balance of the Loan Facility in 2014, the Company may
look to extend the repayment terms beyond 2014, should
lower gold prices materialize, or review other alternatives to
ensure sufficient liquidity is maintained by the Company.
OFF-Balance-sHeet aRRanGements
The Company has no off-balance-sheet arrangements.
Financial instRUments
The Company manages its exposure to financial risks, includ-
ing liquidity risk, credit risk, currency risk, market risk, inter-
est rate risk and price risk through a risk mitigation strategy.
Teranga does not acquire or issue derivative financial instru-
ments for trading or speculation.
The Company had established gold forward sales contracts
and oil energy swaps to manage exposure to commodity price
risk as a condition of the Project Finance Facility provided by
Macquarie Bank Limited.
Earlier in the year, the Company bought back the remaining
“out of the money” gold forward sales contracts at a cost of
$8.6 million and the oil hedge contracts were completed at
March 31, 2013.
cOntRactUal OBliGatiOns
anD cOmmitments
Working capital Requirements
The Company’s working capital requirements primarily relate
to the mining costs of extracting ore from the Sabodala gold
mine and then the costs involved in processing the ore to
remove the gold, before the gold itself is sold.
As at December 31, 2013, the Company had the following
payments due on contractual obligations and commitments:
Payments Due by Period (Us$ millions)
Mining Fleet Lease Facility1
2-year Loan Facility2
Exploration commitments3
Government of Senegal payments4
Oromin office premises lease agreement5
total
total
17.0
60.0
11.2
27.0
1.0
116.2
< 1 year
1–3 years
4–5 years
>5 years
12.8
60.0
–
6.1
0.2
79.1
4.2
–
11.2
5.9
0.7
22.0
–
–
–
–
0.1
0.1
–
–
–
15.0
–
15.0
1
2
3
4
5
During the first quarter of 2013, the Company entered into a $50 million finance lease facility with Macquarie. The facility bears interest of LIBOR plus 7.5 percent and is
repayable quarterly over the next two years.
Reflects a 2-year Loan Facility concluded with Macquarie in June 2012. The Loan Facility bears interest of LIBOR plus a margin of 10 percent. During the third quarter, the Loan
Facility was amended and extended the final repayment date by one year to June 30, 2015. Subsequent to year-end, $30 million of the Loan Facility was retired. $15 million of the
outstanding balance will be repaid in three equal quarterly instalments beginning on March 31, 2014 and the remaining $15 million will be repaid on December 31, 2014.
Reflects the exploration permits, licenses and drilling contracts committed to by the Company. The “exploration commitments” only represent the amounts the Company is
required to spend to remain eligible for the renewal of permits beyond the current validity period. The Company may elect to allow certain permits to expire and is not required to
spend the “committed” amount per respective permit. The Company will not incur any penalties for not meeting the financial requirement for additional validity period tenure.
Includes a payment of $2.8 million calculated on the basis of $6.50 for each ounce of new reserves until December 31, 2012, an expected payment of $1.2 million for the settle-
ment of tax adjustments related to three outstanding tax assessments, a social fund payment of $15.0 million to be made to the Government of Senegal and an estimated payment
of $8.0 million of accrued dividends.
Pursuant to Oromin’s lease agreement which was extended in July 2012, the Company holds a lease on its office premises in Vancouver, Canada, which terminates May 31, 2018.
The Company is in the process of pursing a tenant to sub-lease the property for the duration of the lease.
sabodala Operating commitments
The Company faces the following operating commitments
in respect of the Sabodala gold operation:
$425 thousand per year is payable for social development of
local authorities in the surrounding Tambacounda region
during the term of the Mining Concession.
Pursuant to the Company’s Mining Concession, a royalty of
5 percent is payable to the Republic of Senegal based on
the value of gold shipments, evaluated at the spot price on
the shipment date.
$30 thousand per year is payable for logistical support of the
territorial administration of the region from date of notification
of the Mining Concession.
$200 thousand per year of production is payable for training of
Directorate of Mines and Geology officers and Mines Ministry.
2013 AnnuAl RepoRt
24
OJVG Operating commitments
The Company faces the following operating commitments
in respect of the OJVG project:
estimated based on a gold price of $1,600 per ounce. For the
year ended December 31, 2013, approximately $5.2 million
has been accrued based on net sales revenue.
$450 thousand per year is payable for social development of
local authorities in the surrounding Kedougou Region during
the term of the Mining Concession. This payment increases
to $800 thousand once the mine is in production.
$150 thousand per year is payable for logistical support of
the territorial administration of the region from date of notifi-
cation of the Mining Concession.
Oromin Operating commitments
Pursuant to Oromin’s lease agreement which was extended
in July 2013, the Company holds a lease on its office prem-
ises in Vancouver, Canada, which terminates May 31, 2018.
The Company is committed to lease payments with annual
amounts payable of approximately $235 thousand. The
Company is in the process of pursuing a tenant to sub-lease
the property for the duration of the lease.
cOntinGent liaBilities
During the second quarter of 2013, the Company signed a
definitive global agreement with the Republic of Senegal. A
component of the agreement relates to the settlement of out-
standing tax assessments and special contribution payment.
settled and Outstanding tax assessments
During the second quarter of 2013, the Company made a pay-
ment of $1.4 million in full settlement of the Sabodala Mining
Company SARL (“SMC”) tax assessment received in January
2013. The Company also made a payment of $1.2 million in
partial settlement of the Sabodala Gold Operations SA (“SGO”)
tax assessment received in December 2012. The final pay-
ment for the tax settlement of $1.2 million has been accrued
and is expected to be paid in 2014.
Approximately $18 million of the SGO 2011 tax assessment of
approximately $24 million has been resolved and approximate-
ly $6 million remains in dispute. We believe that the remaining
amount in dispute is without merit and that these issues will be
resolved with no or an immaterial amount of tax due.
Government Payments
During the second quarter of 2013, the Company made a
payment of $2.7 million related to accrued dividends to the
Republic of Senegal in respect of its existing 10 percent
minority interest. A payment of $2.7 million will be required
once drilling activities recommence at Niakafiri. The Com-
pany has also agreed to advance an estimated $8.0 million
of accrued dividends to be paid in 2014 and 2015 which was
The Company is required to make a payment of approxi-
mately $4.2 million related to the waiver of the right for the
Republic of Senegal to acquire an additional equity interest in
the Gora project. The payment is expected to be made upon
receipt of all required approvals authorizing the processing of
all Gora project ore through the Sabodala plant.
The Company has agreed to establish a social development
fund targeted at $15.0 million, payable to the Republic of
Senegal at the end of the operational life. The payment, after
applying a discount rate, has been recorded as a liability as at
December 31, 2013.
With the completion of the acquisition of the OJVG in January
2014, the Company is required to make a payment of
$10.0 million related to the waiver of the right for the Republic
of Senegal to acquire an additional equity interest in the
Somigol project. The payment is expected to be made upon
receipt of all permits required to integrate the Somigol project
into the SGO mining concession.
OJVG tax assessment
In 2012, the OJVG received a tax assessment from the Sen-
egalese tax authorities claiming withholding tax on payments
made to third parties during 2009 to 2012 and $1.3 million
was accrued during this period. During the third quarter of
2013, OJVG received a revised tax assessment for approxi-
mately $0.7 million, including penalties, and accordingly
reversed $0.6 million of the original accrual. During the fourth
quarter of 2013, the tax dispute was resolved and a payment
of $0.2 million was made in full settlement.
cRitical accOUntinG POlicies
anD estimates
Certain accounting estimates have been identified as be-
ing “critical” to the presentation of our financial condition
and results of operations because they require us to make
subjective and/or complex judgments about matters that are
inherently uncertain; or there is a reasonable likelihood that
materially different amounts could be reported under differ-
ent conditions or using different assumptions and estimates.
The following is a summary of significant estimates.
non-current asset impairment test
In the fourth quarter 2013, the Company identified an indica-
tor of impairment of the Sabodala Gold Operations based on
continued lower market gold prices which led to lower share
prices of gold equities, including our share price. The Com-
teranga gold corporation / management’s discussion & analysis 25
pany conducted an impairment assessment during the quar-
ter and determined that the estimated fair value of Sabodala
Gold Operations exceeded its carrying value. Consequently,
no impairment charge was recorded for the quarter and year
ended December 31, 2013.
For the impairment assessment, the price of gold was esti-
mated at $1,250 per ounce for 2014 and $1,300 per ounce
for 2015 and beyond. The fair value of Sabodala Gold Opera-
tions is sensitive to the gold price and as such a decline in
the long-term gold price below these estimates may result in
an impairment charge being recorded in the future.
investment in the OJVG
At December 31, 2013, the Company has determined that
its investment in the OJVG qualifies as an interest in a joint
arrangement as a contractual arrangement exists between
the owners of OJVG resulting in joint control. The joint ar-
rangement qualifies as a joint venture and the Company has
applied the equity method of accounting for its interest. For
accounting purposes, the Company has accounted for a 50
percent ownership interest in the OJVG as no recognition of
Badr’s interest in the equity of OJVG would have been made
until the commencement of commercial production and the
repayment of capital and accrued interest to the Company
and Bendon.
On January 15, 2014, the Company acquired the balance
of the OJVG that it did not already own. The acquisition
of Bendon’s and Badr’s interests in the OJVG increases
Teranga’s ownership to 100 percent.
Fair Value of Derivative instruments
Management assesses the fair value of the Company’s
derivatives in accordance with the accounting policy stated
in Note 4 to the Annual Consolidated Financial Statements.
Fair values have been determined based on well-established
valuation models and market conditions existing at the report-
ing date. These calculations require the use of estimates and
assumptions. Changes in assumptions concerning interest
rates, gold prices and volatilities could have significant impact
on comprehensive income due to the change in the fair value
attributed to the Company’s derivatives. When these assump-
tions change or become known in the future, such differenc-
es will impact asset and liability carrying values in the period
in which they change or become known.
Ore Reserves
Management makes estimates of the Company’s ore reserves
based upon information compiled by qualified persons as
defined in accordance with the Canadian Securities Adminis-
trators’ National Instrument 43-101 Standards for Disclosure
for Mineral Projects requirements, which is similar to the
Australasian standards. The estimated quantities of economi-
cally recoverable reserves are based upon interpretations
of geological models and require assumptions to be made
regarding factors such as estimates of short- and long-term
exchange rates, estimates of short- and long-term commodity
prices, future capital requirements and future operating per-
formance. Changes in reported reserve estimates can impact
the carrying value of property, plant and equipment, provision
for rehabilitation obligations, the recognition of deferred tax
assets, as well as the amount of depreciation and amortiza-
tion charged to the income statement.
Units of Production (“UOP”)
Management makes estimates of recoverable reserves
in determining the depreciation and amortization of mine
assets. This results in a depreciation/amortization charge
proportional to the depletion of the anticipated remaining
life-of-mine production. Each item’s life, which is assessed
annually, has regard to both its physical life limitations and to
present assessments of economically recoverable reserves of
the mine property at which the asset is located. The calcula-
tions require the use of estimates and assumptions, including
the amount of recoverable reserve and estimates of future
capital expenditure. The Company’s UOP calculation is based
on life-of-mine gold production. As the Company updates
its estimate regarding the expected UOP over the life of the
mine amortization under the UOP basis will change. The
Company uses the UOP method when depreciating mining
assets which results in a depreciation charge based on the
recovered ounces of gold.
straight-line Depreciation
The Company uses the straight-line method when depreci-
ating other equipment, office furniture, motor vehicles and
finance lease equipment.
mine Restoration and Rehabilitation Provision
Management assesses the Company’s mine rehabilitation
provision annually. Significant estimates and assumptions are
made in determining the provisions for mine rehabilitation as
there are numerous factors that will affect the ultimate liability
payable. These factors include estimates of the extent and
cost of rehabilitation activities, technological changes, regula-
tory change, cost increases, and changes in discount rates.
Those uncertainties may result in future actual expenditures
differing from the amounts currently provided. The provision
at the balance date represents management’s best estimate
of the present value of the future rehabilitation costs required.
Changes to estimated future costs are recognized in the
statement of financial position by adjusting the rehabilitation
asset and liability.
2013 AnnuAl RepoRt 26
impairment of assets
Management assesses its cash-generating unit at each
reporting period to determine whether any indication of
impairment exists. Where an indicator of impairment exists, a
formal estimate of the recoverable amount is made which is
considered to be the higher of the fair value less costs to sell
and value in use. This assessment requires the use of esti-
mates and assumptions such as long-term commodity prices,
discount rates, future capital requirements, exploration poten-
tial and operating performance. Fair value is determined as
the amount that would be obtained from the sale of the asset
in an arm’s length transaction between knowledgeable and
willing parties. Fair value for mineral assets is generally de-
termined as the present value of estimated future cash flows
arising from the continued use of the asset, which includes
estimates such as the cost of future expansion plans and
eventual disposal, using assumptions that an independent
market participant may take into account. Cash flows are
discounted by an appropriate discount rate to determine the
net present value. Management has assessed its cash-gen-
erating unit as being all sources of mill feed through a central
mill, which is the lowest level for which cash flows are largely
independent of other assets.
Production start Date
Management assesses the stage of each mine development
project to determine when a mine moves into the production
stage. The criteria used to assess the start date of a mine are
determined based on the unique nature of each mine de-
velopment project. The Company considers various relevant
criteria to assess when the mine is substantially complete,
ready for its intended use and moves into the production
phase. Some of the criteria include, but are not limited to, the
following:
• the level of capital expenditure compared to construction
cost estimates;
• completion of a reasonable period of testing of the mine
plant and equipment;
• ability to produce metal in saleable form; and
• ability to sustain ongoing production of metal.
When a mine development project moves into the produc-
tion stage, the capitalization of certain mine construction
costs ceases and costs are either regarded as inventory or
expensed, except for capitalizable costs related to mining
asset additions or improvements or mineable reserve
development. It is also at this point that depreciation/amorti-
zation commences.
Fair Value of stock Options
Management assesses the fair value of stock options granted
in accordance with the accounting policy stated in Note 4(q)
to the Company’s Annual Consolidated Financial Statements.
The fair value of the options granted is measured using
the Black-Scholes model, taking into account the terms
and conditions upon which the options are granted. The
calculation requires the use of estimates and assumptions.
As there were no historical data available for determination
of the fair value of the stock options granted, the Company
developed its assumptions based on information available in
the mining industry using comparable companies operating
in the gold sector.
Functional currency
The functional currency of each of Company’s entities is
measured using the currency of the primary economic
environment in which that entity operates. The functional
currency of all of the entities within the group is U.S. dollars.
Functional currency of each entity was determined based on
the currency that mainly influences sales prices for goods
and services, labour, material and other costs.
stripping costs in the Production Phase of
a surface mine
Management assesses the costs associated with the stripping
activity in the production phase of surface mining: the use-
able ore that can be used to produce inventory and improved
access to further quantities of material that will be mined in
future periods, which are estimated by management.
aDOPtiOn OF neW accOUntinG
stanDaRDs
stripping costs in the Production Phase of
a surface mine
In October 2011, the IASB issued IFRIC 20 Stripping Costs in
the Production Phase of a Surface Mine. IFRIC 20 provides
guidance on the accounting for the costs of stripping activity
in the production phase of surface mining when two benefits
accrue to the entity from the stripping activity: useable ore
that can be used to produce inventory and improved access
to further quantities of material that will be mined in future
periods. The Company adopted IFRIC 20 on January 1, 2013
and restated the 2012 comparative amounts. The impact
of adopting IFRIC 20 to the December 31, 2012 balances
included an increase to mine development expenditures of
$29.6 million, a decrease to inventory of $15.5 million and a
decrease to cost of sales of $14.1 million.
teranga gold corporation / management’s discussion & analysis 27
nOn-iFRs Financial measURes
The Company provides some non-IFRS measures as supple-
mentary information that management believes may be use-
ful to investors to explain the Company’s financial results.
Beginning in the second quarter of 2013, we adopted an “all-
in sustaining costs” measure and an “all-in costs” measure
consistent with the guidance issued by the World Gold Coun-
cil (“WGC”) on June 27, 2013. The Company believes that the
use of all-in sustaining costs and all-in costs will be helpful
to analysts, investors and other stakeholders of the Company
in assessing its operating performance, its ability to generate
free cash flow from current operations and its overall value.
These new measures will also be helpful to governments
and local communities in understanding the economics of
gold mining. The “all-in sustaining costs” is an extension of
existing “cash cost” metrics and incorporate costs related to
sustaining production. The “all-in costs” includes additional
costs which reflect the varying costs of producing gold over
the life-cycle of a mine.
“Total cash cost per ounce sold” is a common financial
performance measure in the gold mining industry but has
no standard meaning under IFRS. The Company reports
total cash costs on a sales basis. We believe that, in addi-
tion to conventional measures prepared in accordance with
IFRS, certain investors use this information to evaluate the
Company’s performance and ability to generate cash flow.
Accordingly, it is intended to provide additional information
and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with
IFRS. The measure, along with sales, is considered to be a
key indicator of a Company’s ability to generate operating
earnings and cash flow from its mining operations.
Total cash costs figures are calculated in accordance with
a standard developed by The Gold Institute, which was a
worldwide association of suppliers of gold and gold products
and included leading North American gold producers. The
Gold Institute ceased operations in 2002, but the standard
is considered the accepted standard of reporting cash cost
of production in North America. Adoption of the standard is
voluntary and the cost measures presented may not be com-
parable to other similarly titled measures of other companies.
The WGC definition of all-in sustaining costs seeks to extend
the definition of total cash costs by adding corporate general
and administrative costs, reclamation and remediation costs
(including accretion and amortization), exploration and study
costs (capital and expensed), capitalized stripping costs and
sustaining capital expenditures and represents the total costs
of producing gold from current operations. The WGC defini-
tion of all-in costs adds to all-in sustaining costs including
capital expenditures attributable to projects or mine expan-
sions, exploration and study costs attributable to growth
projects, and community and permitting costs not related
to current operations. Both all-in sustaining and all-in costs
exclude income tax payments, interest costs, costs related
to business acquisitions and items needed to normalize
earnings. Consequently, this measure is not representative
of all of the Company’s cash expenditures. In addition, the
calculation of all-in sustaining costs and all-in costs does not
include depreciation expense as it does not reflect the impact
of expenditures incurred in prior periods. Therefore, it is not
indicative of the Company’s overall profitability.
“Total cash costs”, “all-in sustaining costs” and “all-in costs”
are intended to provide additional information only and do
not have any standardized definition under IFRS and should
not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS. The
measures are not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other
companies may calculate these measures differently. The
following tables reconcile these non-GAAP measures to the
most directly comparable IFRS measure.
“Average realized price” is a financial measure with no stan-
dard meaning under IFRS. Management uses this measure to
better understand the price realized in each reporting period
for gold and silver sales. Average realized price excludes
from revenues unrealized gains and losses on non-hedge
derivative contracts. The average realized price is intended
to provide additional information only and does not have any
standardized definition under IFRS; it should not be consid-
ered in isolation or as a substitute for measures of perfor-
mance prepared in accordance with IFRS. Other companies
may calculate this measure differently.
“Total depreciation and amortization per ounce sold” is a
common financial performance measure in the gold mining
industry but has no standard meaning under IFRS. It is
intended to provide additional information and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
2013 AnnuAl RepoRt
28
total cash costs per ounce sold, all-in sustaining costs per ounce sold, all-in costs per ounce sold and total depreciation
per ounce sold are calculated as follows:
(Us$000s, except where indicated)
three months ended December 31
year ended December 31
cash costs per ounce sold
Gold produced1
Gold sold
cash costs per ounce sold
Cost of sales
Less: depreciation and amortization
Less: realized oil hedge gain
Add: non-cash inventory movement
Less: other adjustments
total cash costs
total cash costs per ounce sold
all-in sustaining costs
Total cash costs
Administration expenses2
Capitalized deferred stripping
Capitalized reserve development
Mine site capital
all-in sustaining costs
all-in sustaining costs per ounce sold
all-in costs
All-in sustaining costs
Social community costs not related to current operations
Exploration and evaluation expenditures
all-in costs
all-in costs per ounce sold
Depreciation and amortization
Non-cash inventory movement
total depreciation and amortization
total depreciation and amortization per ounce sold
2013
52,368
46,561
50,527
(26,702)
–
9,231
41
33,097
711
33,097
2,753
1,444
529
1,752
39,575
850
39,575
311
1,043
40,929
879
26,702
(9,231)
17,471
375
2012
71,804
71,604
57,250
(20,534)
(365)
2,448
(737)
38,062
532
38,062
5,332
3,268
5,671
19,582
71,915
1,004
71,915
471
2,699
75,085
1,049
20,534
(2,448)
18,086
253
2013
207,204
208,406
196,505
(77,902)
(487)
15,094
358
133,568
641
133,568
12,650
43,264
3,524
22,267
215,274
1,033
215,274
1,763
5,405
222,442
1,067
77,902
(15,094)
62,808
301
2012
214,310
207,814
165,238
(55,645)
(1,936)
8,822
(893)
115,586
556
115,585
17,996
32,535
26,086
57,166
249,367
1,200
249,367
1,558
16,657
267,582
1,288
55,645
(8,822)
46,823
225
1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.
2 Administration expenses include share-based compensation and exclude Corporate depreciation expense and social community costs not related to current operations.
OUtstanDinG sHaRe Data
The Company’s fully diluted share capital as at the report date was:
Outstanding
Ordinary shares
Issued to Oromin shareholders
Stock options granted at an exercise price of $3.00 per option
Replacement stock options issued to Oromin employees on change of control
Fully diluted share capital
February 20, 2014
245,618,000
71,183,091
316,801,091
15,826,250
7,911,600
340,538,941
teranga gold corporation / management’s discussion & analysis
During the third and fourth quarters of 2013, the Company
issued 48,645,840 and 22,537,251 common shares, re-
spectively, as share consideration for the acquisition of all
of the remaining Oromin common shares not already owned.
As a result, the Company now has 316,801,091 common
shares outstanding.
The Company issued 7,911,600 replacement stock options as
consideration for the acquisition of Oromin common shares.
All options expire 18 months from the grant date of August 6,
2013. The fair value of the replacement options at the grant
date was calculated using the Black-Scholes option pricing
model with the following assumptions:
29
Grant date share price
Exercise price
Risk-free interest rate
Volatility of expected market price of shares
Expected life of options
Dividend yield
Forfeiture rate
august 6, 2013
C$0.28
C$0.65–C$1.30
0.78%–1.53%
72.62%–94.09%
0.92–4.04
0%
0%
tRansactiOns WitH RelateD PaRties
At December 31, 2013, the Company has a receivable of
$0.4 million due from the OJVG for project management fees.
During the year ended December 31, 2013, there were
transactions of $0.3 million between the Company and a
director-related entity.
shareholdings
Teranga’s 90 percent shareholding in SGO, the company
operating the Sabodala gold mine, is held 89.5 percent
through Mauritius holding company Sabodala Gold Mauritius
Limited (“SGML”), and the remaining 0.5 percent by individu-
als nominated by SGML to be at the board of directors in
order to meet the minimum shareholding requirements under
Senegalese law. On death or resignation, a share individually
held would be transferred to another representative of SGML
or added to its current 89.5 percent shareholding according
to the circumstances at the time.
The Company bought 100 percent of Oromin in 2013, which
holds a 43.5 percent participating interest in the OJVG.
Subsequent to year-end, the Company acquired the remain-
ing interests in the OJVG that it did not already own.
ceO/cFO ceRtiFicatiOn
The Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) are responsible for establish-
ing and maintaining disclosure controls and procedures
(“DC&P”) and internal control over financial reporting
(“ICFR”), as those terms are defined in National Instrument
52-109 Certification of Disclosure in Issuers’ Annual and
Interim Filings, for the Company.
The Company’s CEO and CFO certify that, as December 31,
2013, the Company’s DC&P have been designed to provide
reasonable assurance that material information relating to the
Company is made known to them by others, particularly dur-
ing the period in which the interim filings are being prepared;
and information required to be disclosed by the Company
in its annual filings, interim filings or other reports filed or
submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods
specified in securities legislation. They also certify that the
Company’s ICFR have been designed to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes
in accordance with the issuer’s GAAP.
The control framework the Company’s CEO and CFO used to
design the Company’s ICFR is The Committee of Sponsor-
ing Organizations of the Treadway Commission (“COSO”).
There is no material weakness relating to the design of ICFR.
There has been no change in the Company’s design of the
ICFR that occurred during the year ended December 31,
2013 which has materially affected, or is reasonably likely to
materially affect, the Company’s ICFR.
The Company has limited the scope of the design of ICFR
and DC&P to exclude the controls, policies and procedures
of (i) Oromin, the balance sheet and operating results of
which are included in the consolidated financial statements
of Teranga for the year ended December 31, 2013 following
its acquisition on August 6, 2013 and October 4, 2013; and
(ii) the OJVG, the operating results and equity investment of
which are included in the consolidated financial statements of
Teranga for the year ended December 31, 2013. The scope
limitation is in accordance with Section 3.3 of NI 52-109,
Certification of Disclosure in Issuer’s Annual and Interim
Filings, which allows an issuer to limit its design of ICFR and
DC&P to exclude the controls, policies and procedures of a
company acquired not more than 365 days before the end of
the financial period to which the certificate relates.
2013 AnnuAl RepoRt
30
Oromin Summary Balance Sheet
(Us$000s)
Balance sheet
Cash and cash equivalents
Trade and other receivables
Other assets
Investment in OJVG
total assets
Trade and other payables
Intercompany payables
total liabilities
total equity
year ended December 31
2013
48
144
30
7,231
7,452
2,063
6,356
8,419
(967)
Risks anD UnceRtainties
The Company identified a number of risk factors to which
it is subject to in its Annual Information Form filed for the
year ended December 31, 2012. These various financial and
operational risks and uncertainties continue to be relevant
to an understanding of our business, and could have a
significant impact on profitability and levels of operating cash
flow. These risks and uncertainties include, but are not limited
to: fluctuations in metal prices (principally the price of gold),
capital and operating cost estimates, borrowing risks, produc-
tion estimates, need for additional financing, uncertainty in
the estimation of mineral reserves and mineral resources, the
inherent danger of mining, infrastructure risk, hedging activi-
ties, insured and uninsured risks, environmental risks and
regulations, government regulation, ability to obtain and renew
licenses and permits, foreign operations risks, title to proper-
ties, competition, dependence on key personnel, currency,
repatriation of earnings and stock exchange price fluctuations.
amenDments tO cORPORate
GOVeRnance PRactices
adoption of advance notice By-law
On July 18, 2013, at the Company’s annual and special
meeting, the Company’s shareholders confirmed and rati-
fied Board approved amendment to its by-laws to add an
advance notice requirement (the “Advance Notice By-Law”),
which requires advance notice to be given to the Company in
circumstances where nominations of persons for election as a
director of the Company are made by shareholders other than
pursuant to: (i) a requisition of a meeting made pursuant to
the provisions of the Canada Business Corporations Act (the
“CBCA”); or (ii) a shareholder proposal made pursuant to the
provisions of the CBCA. Among other things, the Advance
Notice By-Law fixes a deadline by which shareholders must
submit a notice of director nominations to the Company prior
to any annual and special meeting of shareholders where
directors are to be elected and sets forth the information that
a shareholder must include in the notice for it to be valid.
In the case of an annual meeting of shareholders, notice to
the Company must be given not less than 30 nor more than
65 days prior to the date of the annual meeting, however, in
the event the meeting is to be held on a date that is less than
50 days after the date on which the first public announce-
ment of the date of the annual meeting was made, notice
may be made not later than the close of business on the 10th
day following such public announcement.
majority Voting Policy
On July 18, 2013, at the Company’s annual and special
meeting, the Company’s shareholders confirmed and ratified
a Board-approved majority voting policy (the “Majority Voting
Policy”) with respect to the election of directors in uncon-
tested elections. In the event that a nominee receives more
“withheld” than “for” votes in an uncontested election, he or
she will be expected to submit to the Board his or her res-
ignation, to take effect upon acceptance by the Board. The
Board, on the recommendation of the corporate governance
and nominating committee, will consider the resignation and
make its decision to accept or reject such resignation and an-
nounce its decision in a news release within 90 days after the
shareholder meeting at which the candidacy of the director
was considered.
The full text of the Advance Notice By-Law and the Majority
Voting Policy are available on SEDAR at www.sedar.com.
teranga gold corporation / management’s discussion & analysis
31
FORWaRD-lOOkinG statements
cOmPetent PeRsOns statement
This news release contains certain statements that constitute
forward-looking information within the meaning of ap-
plicable securities laws (“ forward-looking statements”). Such
forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Teranga, or develop-
ments in Teranga’s business or in its industry, to differ materi-
ally from the anticipated results, performance, achievements
or developments expressed or implied by such forward-looking
statements. Forward-looking statements include, without
limitation, all disclosure regarding possible events, condi-
tions or results of operations, future economic conditions and
courses of action, the proposed plans with respect to mine plan
and consolidation of the Sabodala Gold Project and OJVG
Golouma Gold Project, mineral reserve and mineral resource
estimates, anticipated life-of-mine operating and financial
results, targeted date for a NI 43-101 compliant technical
report, amendment to the OJVG mining license, the approval
of the Gora ESIA and permitting and the completion of
construction related thereto. Such statements are based upon
assumptions, opinions and analysis made by management
in light of its experience, current conditions and its expecta-
tions of future developments that management believe to be
reasonable and relevant. These assumptions include, among
other things, the ability to obtain any requisite Senegalese
Governmental approvals, the accuracy of mineral reserve
and mineral resource estimates, gold price, exchange rates,
fuel and energy costs, future economic conditions and courses
of action. Teranga cautions you not to place undue reliance
upon any such forward-looking statements, which speak only
as of the date they are made. 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 the
Company’s Annual Information Form dated March 27, 2013,
and in other company filings 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, esti-
mates, projections, beliefs and opinions change. Nothing in
this report should be construed as either an offer to sell or a
solicitation to buy or sell Teranga securities.
The technical information contained in this document relating
to the mineral reserve estimates for Sabodala, the stockpiles,
Masato, Golouma and Kerekounda is based on information
compiled by Mr. William Paul Chawrun, P. Eng who is a
member of the Professional Engineers Ontario, which is cur-
rently included as a “Recognized Overseas Professional Orga-
nization” in a list promulgated by the ASX from time to time.
Mr. Chawrun is a full-time employee of Teranga and is a
“qualified person” as defined in NI 43-101 and a “competent
person” as defined in the 2012 Edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Mr. Chawrun has sufficient experience rel-
evant to the style of mineralization and type of deposit under
consideration and to the activity he is undertaking to qualify
as a Competent Person as defined in the 2012 Edition of
the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr. Chawrun has
consented to the inclusion in this Report of the matters based
on his compiled information in the form and context in which
it appears in this Report.
The technical information contained in this document relat-
ing to the mineral reserve estimates for Gora and Niakafiri is
based on, and fairly represents, information and supporting
documentation prepared by Julia Martin, P.Eng. who is a
member of the Professional Engineers of Ontario and a Mem-
ber of AusIMM (CP). Ms. Martin is a full-time employee
with AMC Mining Consultants (Canada) Ltd., is indepen-
dent of Teranga, is a “qualified person” as defined in NI
43-101 and a “competent person” as defined in the 2004 Edi-
tion of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves”. Ms. Martin
has sufficient experience relevant to the style of mineralization
and type of deposit under consideration and to the activity she
is undertaking to qualify as a Competent Person as defined
in the 2004 Edition of the “Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves”.
Ms. Martin is a “Qualified Person” under National Instru-
ment 43-101 Standards of Disclosure for Mineral Projects.
Ms. Martin has reviewed and accepts responsibility for the
Mineral Reserve estimates for Gora and Niakafiri disclosed
in this document and has consented to the inclusion of the
matters based on her information in the form and context in
which it appears in this Report.
2013 AnnuAl RepoRt Teranga’s disclosure of mineral reserve and mineral resource
information is governed by NI 43-101 under the guidelines
set out in the Canadian Institute of Mining, Metallurgy and
Petroleum (the “CIM”) Standards on Mineral Resources and
Mineral Reserves, adopted by the CIM Council, as may be
amended from time to time by the CIM (“CIM Standards”).
CIM definitions of the terms “mineral reserve”, “proven min-
eral reserve”, “probable mineral reserve”, “mineral resource”,
“measured mineral resource”, “ indicated mineral resource”
and “ inferred mineral resource”, are substantially similar to
the JORC Code corresponding definitions of the terms “ore
reserve”, “proved ore reserve”, “probable ore reserve”, “mineral
resource”, “measured mineral resource”, “ indicated min-
eral resource” and “ inferred mineral resource”, respectively.
Estimates of mineral resources and mineral reserves prepared
in accordance with the JORC Code would not be materially
different if prepared in accordance with the CIM defini-
tions applicable under NI 43-101. There can be no assurance
that those portions of mineral resources that are not mineral
reserves will ultimately be converted into mineral reserves.
32
The technical information contained in this Report relating to
mineral resource estimates for Niakafiri, Gora, Niakafiri West,
Soukhoto, and Diadiako is based on information compiled
by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a
Member of the Association of Professional Geoscientists of On-
tario, which is currently included as a “Recognized Overseas
Professional Organization” in a list promulgated by the ASX
from time to time. Ms. Nakai-Lajoie is a full-time employee
of Teranga and is not “ independent” within the meaning of
National Instrument 43-101. Ms. Nakai-Lajoie has sufficient
experience which is relevant to the style of mineralization and
type of deposit under consideration and to the activity which
she is undertaking to qualify as a Competent Person as defined
in the 2004 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”. Ms.
Nakai-Lajoie is a “Qualified Person” under National Instru-
ment 43-101 Standards of Disclosure for Mineral Projects. Ms.
Nakai-Lajoie has consented to the inclusion in this Report of
the matters based on her compiled information in the form and
context in which it appears in this Report.
The technical information contained in this Report relating to
mineral resource estimates for Sabodala, Masato, Golouma,
Kerekounda, and Somgol Other are based on information com-
piled by Ms. Nakai-Lajoie. Ms. Patti Nakai-Lajoie, P. Geo.,
is a Member of the Association of Professional Geoscientists of
Ontario, which is currently included as a “Recognized Overseas
Professional Organization” in a list promulgated by the ASX
from time to time. Ms. Nakai-Lajoie is a full-time employee
of Teranga and is not “ independent” within the meaning of
National Instrument 43-101. Ms. Nakai-Lajoie has sufficient
experience which is relevant to the style of mineralization and
type of deposit under consideration and to the activity which
she is undertaking to qualify as a Competent Person as defined
in the 2012 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”. Ms.
Nakai-Lajoie is a “Qualified Person” under National Instru-
ment 43-101 Standards of Disclosure for Mineral Projects. Ms.
Nakai-Lajoie has consented to the inclusion in this Report of
the matters based on her compiled information in the form and
context in which it appears in this Report.
teranga gold corporation / management’s discussion & analysis 33
manaGement’s ResPOnsiBility
FOR Financial RePORtinG
The accompanying consolidated financial statements of the Company have been prepared by management in accordance with Interna-
tional Financial Reporting Standards as issued by the International Accounting Standards Board. Management acknowledges respon-
sibility for the preparation and presentation of the consolidated financial statements, including responsibility for significant accounting
judgments and estimates and, where relevant, the choice of accounting principles. Management maintains an appropriate system of
internal controls to provide reasonable assurance that transactions are authorized, assets safeguarded, and proper records maintained.
The Audit Committee of the Board of Directors has met with the Company’s independent auditors to review the scope and results of the
annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consoli-
dated financial statements to the Board for approval.
The Company’s independent auditors, Ernst & Young LLP, have conducted an audit in accordance with generally accepted auditing
standards, and their report follows.
Alan Hill
Executive Chairman
Richard Young
President and Chief Executive Officer
Navin Dyal
Chief Financial Officer
2013 AnnuAl RepoRt
34 TERANGA GOLD CORPORATION
inDePenDent aUDitOR’s
RePORt
To the Shareholders of Teranga Gold Corporation
We have audited the accompanying consolidated financial statements of Teranga Gold Corporation, which comprise the consolidated
statement of financial position as at December 31, 2013, and the consolidated statements of comprehensive income, changes in equity
and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
management’s Responsibility for the consolidated Financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the prepa-
ration of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit pro-
cedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of account-
ing estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Teranga Gold
Corporation as at December 31, 2013 and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Restated comparative information
The consolidated financial statements of Teranga Gold Corporation for the year ended December 31, 2012 (prior to the restatement
of the comparative information described in Note 4 – “Change in Accounting Policies” to the consolidated financial statements) were
audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on February 20, 2013.
As part of our audit of the consolidated financial statements of Teranga Gold Corporation for the year ended December 31, 2013, we
also audited the adjustments described in Note 4 that were applied to restate the consolidated financial statements for the year ended
December 31, 2012. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit,
review, or apply any procedures to the consolidated financial statements of Teranga Gold Corporation for the year ended December 31,
2012 other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the
consolidated financial statements for the year ended December 31, 2012 taken as a whole.
February 20, 2014
Toronto, Canada
Chartered Accountants
Licensed Public Accountants
cOnsOliDateD statements OF cOmPReHensiVe incOme
December 31, 2013
(in $000s of United States dollars, except per share amounts)
For the year ended December 31
35
Revenue
Cost of sales
Gross profit
Exploration and evaluation expenditures
Administration expenses
Share-based compensation
Finance costs
Gains/(losses) on gold hedge contracts
Gains/(losses) on oil hedge contracts
Net foreign exchange losses
Loss on available for sale financial asset
Share of income from equity investment in OJVG
Other expenses
Profit before income tax
Income tax benefit
net profit
Profit attributable to:
Shareholders
Non-controlling interests
Profit for the year
Other comprehensive income/(loss):
Items that may be reclassified subsequently to profit/loss for the period
Exchange differences arising on translation of Teranga
corporate entity
Change in fair value of available for sale financial asset, net of tax
Gains (losses), net of tax
Reclassification to income, net of tax
Other comprehensive income/(loss) for the year
total comprehensive income for the year
Total comprehensive income attributable to:
Shareholders
Non-controlling interests
total comprehensive income for the year
Earnings per share from operations attributable to the shareholders
of the Company during the year
- basic earnings per share
- diluted earnings per share
note
8
9
10
36
11
27
18
12
13
28
27
29
29
The accompanying notes are an integral part of these consolidated financial statements.
2013
297,927
(196,505)
101,422
(5,405)
(14,717)
(813)
(12,148)
5,308
31
(1,233)
(4,003)
52
(11,895)
(44,823)
56,599
–
56,599
47,516
9,083
56,599
–
–
(5,456)
(5,456)
51,143
42,060
9,083
51,143
0.18
0.18
2012
(Restated) note 4
350,520
(165,238)
185,282
(16,657)
(15,573)
(4,694)
(7,362)
(15,274)
(427)
(2,574)
(11,917)
–
(2,749)
(77,227)
108,055
115
108,170
92,600
15,570
108,170
(63)
–
6,775
6,712
114,882
99,312
15,570
114,882
0.38
0.38
2013 AnnuAl RepoRt
36 TERANGA GOLD CORPORATION
cOnsOliDateD statements OF Financial POsitiOn
December 31, 2013
(in $000s of United States dollars, except per share amounts)
current assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Inventories
Derivative assets
Other assets
Available for sale financial assets
total current assets
non-current assets
Inventories
Equity investment
Property, plant and equipment
Mine development expenditures
Intangible assets
total non-current assets
total assets
current liabilities
Trade and other payables
Borrowings
Derivative liabilities
Provisions
total current liabilities
non-current liabilities
Borrowings
Provisions
Other non-current liabilities
total non-current liabilities
total liabilities
equity
Issued capital
Foreign currency translation reserve
Other components of equity
Investment revaluation reserve
Retained earnings
equity attributable to shareholders
Non-controlling interests
total equity
total equity and liabilities
note
34(b)
14
15
16
17
27
15
18
19
20
21
22
23
24
25
23
25
22
26
28
as at December 31, 2013
as at December 31, 2012
(Restated) note 4
14,961
20,000
7,999
67,432
–
5,756
6
39,722
–
6,482
74,969
456
6,836
15,010
116,154
143,475
63,740
47,627
222,487
173,444
947
508,245
624,399
56,891
70,423
–
1,751
129,065
3,946
14,336
10,959
29,241
158,306
342,470
(998)
15,776
–
96,741
453,989
12,104
466,093
624,399
32,700
–
247,898
138,609
1,859
421,066
564,541
44,823
10,415
51,548
1,940
108,726
58,193
10,312
–
68,505
177,231
305,412
(998)
16,358
5,456
49,225
375,453
11,857
387,310
564,541
The accompanying notes are an integral part of these consolidated financial statements.
approved by the Board of Directors
alan Hill
Director
alan thomas
Director
cOnsOliDateD statements OF cHanGes in eQUity
December 31, 2013
(in $000s of United States dollars, except per share amounts)
note
7
7
28
7
7
27
4
issued capital
Beginning of year
Shares issued from public offerings
Less: Share issue costs
End of year
Foreign currency translation reserve
Beginning of year
Exchange difference arising on translation of Teranga corporate entity
End of year
Other components of equity
Beginning of year
Equity-settled share-based compensation reserve
Stock options to Oromin Explorations Ltd. (“Oromin”) employees
Acquisition of non-controlling interest in Oromin
End of year
investment revaluation reserve
Beginning of year
Change in fair value of available for sale financial asset, net of tax
Impairment
End of year
Retained earnings
Beginning of year
Profit attributable to shareholders
End of year
non-controlling interest
Beginning of year
Non-controlling interest – portion of profit for the period
Dividends paid and accrued
End of year
total shareholders’ equity at December 31
The accompanying notes are an integral part of these consolidated financial statements.
37
For the year ended December 31
2013
2012
(Restated) note 4
305,412
37,264
(206)
342,470
(998)
–
(998)
16,358
1,605
585
(2,772)
15,776
5,456
(5,456)
–
–
49,225
47,516
96,741
11,857
9,083
(8,836)
12,104
466,093
305,412
–
–
305,412
(935)
(63)
(998)
12,599
3,759
–
–
16,358
(1,319)
5,456
1,319
5,456
(43,375)
92,600
49,225
(3,713)
15,570
–
11,857
387,310
2013 AnnuAl RepoRt
38 TERANGA GOLD CORPORATION
cOnsOliDateD statements OF casH FlOWs
December 31, 2013
(in $000s of United States dollars, except per share amounts)
note
19
20
21
11
36
24
27
34
19
20
21
23
23
31(b)
cash flows related to operating activities
Profit for the year
Depreciation of property, plant and equipment
Depreciation of capitalized mine development costs
Amortization of intangibles
Amortization of deferred financing costs
Unwinding of discount on mine restoration and rehabilitation provision
Share-based compensation
Net change in gains on gold forward sales contracts
Net change in losses on oil contracts
Buyback of gold forward sales contracts
Loss on available for sale financial asset
Loss/(gain) on disposal of property, plant and equipment
Increase in inventories
Changes in working capital other than inventory
net cash provided by operating activities
cash flows related to investing activities
(Increase)/decrease in restricted cash
Redemption of short-term investments
Expenditures for property, plant and equipment
Expenditures for mine development
Acquisition of intangibles
Proceeds on disposal of property, plant and equipment
net cash used in investing activities
cash flows related to financing activities
Loan facility, net of financing costs paid
Repayment of borrowings
Drawdown from finance lease facility, net of financing costs paid
Interest paid on borrowings
Dividend payment to Government of Senegal
net cash provided by (used in) financing activities
Effect of exchange rates on cash holdings in foreign currencies
net (decrease) increase in cash and cash equivalents
cash and cash equivalents at the beginning of year
cash and cash equivalents at the end of year
The accompanying notes are an integral part of these consolidated financial statements.
For the year ended December 31
2013
2012
(Restated) note 4
56,599
48,185
30,091
1,021
3,120
156
813
(42,955)
456
(8,593)
4,003
102
(23,503)
4,812
74,307
(20,000)
–
(17,344)
(51,603)
(109)
38
(89,018)
(1,200)
(12,282)
12,755
(7,054)
(2,700)
(10,481)
431
(24,761)
39,722
14,961
108,170
41,999
14,127
650
877
53
3,759
(39,010)
2,364
(39,000)
11,917
(131)
(27,363)
26,570
104,982
3,004
593
(51,451)
(62,910)
(1,424)
195
(111,993)
57,695
(16,799)
2,857
(4,075)
–
39,678
(415)
32,252
7,470
39,722
nOtes tO tHe cOnsOliDateD Financial statements
December 31, 2013
(in $000s of United States dollars, except per share amounts)
1. GeneRal inFORmatiOn
2. Basis OF PRePaRatiOn
39
Teranga Gold Corporation (“Teranga” or the “Company”) is
a Canadian-based gold company listed on the Toronto Stock
Exchange (TSX: TGZ) and the Australian Stock Exchange
(ASX: TGZ). Teranga is principally engaged in the production
and sale of gold, as well as related activities such as explora-
tion and mine development. The Company was incorporated
in Canada on October 1, 2010.
Teranga operates the Sabodala gold mine and is currently
exploring nine exploration licenses covering 1,055km2 in
Senegal, comprising the Regional Land Package, surrounding
the Sabodala gold mine.
On October 4, 2013, Teranga completed the acquisition of
Oromin Explorations Ltd. (“Oromin”). Oromin held a 43.5
percent participating interest in the Oromin Joint Venture
Group (“OJVG”) which holds 90 percent of Societe des Mines
de Golouma S.A. (“Somigol”). Refer to Note 18.
On January 15, 2014, the Company acquired the balance
of the OJVG that it did not already own. The Company ac-
quired Bendon International Ltd.’s (“Bendon”) 43.5 percent
participating interest and Badr Investment Ltd.’s (“Badr”)
13 percent carried interest.
The acquisition of Bendon’s and Badr’s interests in the OJVG
increased Teranga’s ownership to 100 percent and consoli-
dates the Sabodala region, increasing the size of Teranga’s
land holding from 33km2 to 246km2 by combining the
two permitted Mine Licenses and more than doubling the
Company’s reserve base.
The OJVG holds a 15-year renewable mining lease in respect
of the Golouma Gold Concession, which is located contiguous
to the Sabodala Mine License.
The address of the Company’s principal office is 121 King
Street West, Suite 2600, Toronto, Ontario, Canada M5H 3T9.
a. statement of compliance
These consolidated financial statements have been prepared
in accordance with International Financial Reporting Stan-
dards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries and were ap-
proved by the Board of Directors on February 20, 2014.
Certain comparatives have been restated to conform to the
current-year presentation.
b. Basis of Presentation
All amounts in the consolidated financial statements and
notes thereto are presented in United States dollars unless
otherwise stated. The consolidated financial statements have
been prepared on the basis of historical cost, except for
equity-settled and cash-settled share-based payments that
are fair valued at the date of grant and certain other financial
assets and liabilities that are measured at fair value.
c. Functional and Presentation currency
The functional currency of each of the Company’s entities
is measured using the currency of the primary economic
environment in which that entity operates. The functional
currency of all entities within the group is the United States
dollar, which is the Company’s presentation currency.
d. critical accounting Judgments and key sources
of estimation Uncertainty
The preparation of consolidated financial statements in con-
formity with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amount
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amount of expenses and other income during the
period. These judgments, estimates and assumptions are
based on management’s best knowledge of the relevant facts
and circumstances, having regard to prior experience. While
management believes that these judgments, estimates and
assumptions are reasonable, actual results may differ from the
amounts included in the consolidated financial statements.
2013 AnnuAl RepoRt
40
Judgments made by management in the application of IFRS
that have significant effects on the consolidated financial
statements and estimates with a significant risk of material
adjustments, where applicable, are contained in the relevant
notes to the financial statements. Refer to Note 6 for critical
judgments in applying the entity’s accounting policies, and
key sources of estimation uncertainty.
3. siGniFicant accOUntinG POlicies
a. Basis of consolidation
The consolidated financial statements are prepared by
consolidating the financial statements of Teranga Gold Cor-
poration and its subsidiaries; Teranga Gold (B.V.I.) Corpora-
tion, SGML (Capital) Limited, Oromin, and Sabodala Gold
(Mauritius) Limited and its subsidiaries as defined in IFRS 10
“Consolidated Financial Statements”.
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured
based on the fair values at the date of acquisition of assets
and liabilities incurred or assumed, and equity instruments is-
sued by the Company in exchange for control of the acquiree.
The goodwill arising, if any, is measured as the excess of the
sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the
acquirer’s previously held equity interest in the acquiree (if
any) over the fair value of net identifiable assets acquired and
the liabilities assumed. If the cost of acquisition is less than
the fair value of the net assets of the subsidiary acquired, the
difference is recognized in net profit within the statement of
comprehensive income.
The consolidated financial statements include the information
and results of each subsidiary from the date on which the
Company obtains control and until such time as the Company
ceases to control such entity.
In preparing the consolidated financial statements, all inter-
company balances and transactions between entities in the
Company, including any unrealized profits or losses, have
been eliminated.
Non-controlling interests in the net assets (excluding goodwill)
of consolidated subsidiaries are identified separately from the
Company’s equity therein. Non-controlling interests consist of
the fair value of net assets acquired at the date of the original
business combination and the non-controlling interests’ share
of changes in equity since the date of the combination.
b. Foreign currency transactions
Foreign currency transactions are translated into the function-
al currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are trans-
lated at the period-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange
rate at the date when fair values were determined.
Exchange differences are recognized in profit or loss in the
period in which they arise except for exchange differences
on monetary items receivable from or payable to a foreign
operation for which settlement is neither planned nor likely
to occur in the foreseeable future which form part of the net
investment in a foreign operation and which are recognized
in a foreign currency translation reserve within equity and
recognized in profit or loss on disposal of the net investment.
c. cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash, which are
subject to an insignificant risk of changes in value and have a
maturity of 90 days or less at the date of acquisition.
When applicable, bank overdrafts are shown within borrow-
ings in current liabilities in the consolidated statement of
financial position.
d. short-term investments
Short-term investments represent investments in guaranteed
investment certificates with maturity dates of more than 90
days at the date of acquisition. Short-term investments are
carried at amortized cost.
e. inventories
Gold bullion, gold in circuit and ore in stockpiles are physi-
cally measured or estimated and valued at the lower of cost
and net realizable value. Cost represents the weighted aver-
age cost and includes direct costs and an appropriate portion
of fixed and variable production overhead costs, including
depreciation and amortization on property, plant and equip-
ment used in the production process and depreciation and
amortization on capitalized stripping costs, incurred in con-
verting materials into finished goods. As ore is removed from
processing, costs are relieved based on the average cost per
ounce in the stockpile.
Total comprehensive profit/(loss) is attributed to non-con-
trolling interests even if this results in the non-controlling
interests having a deficit balance.
By-product metals inventory on hand obtained as a result of
the production process to extract gold are valued at the lower
of cost and net realizable value.
teranga gold corporation / notes to tHe consolidated financial statements 41
Net realizable value is the estimated selling price in the ordi-
nary course of business, less estimated costs of completion,
if any, and applicable variable selling expenses.
The assets’ residual values, depreciation method and use-
ful lives are reviewed and adjusted, if appropriate, at each
reporting date.
Materials and supplies are valued at the lower of cost and net
realizable value. Any provision for obsolescence is deter-
mined by reference to specific inventory items identified. A
regular and ongoing review is undertaken to establish the ex-
tent of surplus items and a provision is made for any potential
loss upon disposal.
Capital work in progress is not depreciated.
The gain or loss arising upon disposal or retirement of an item
of property, plant and equipment is determined as the differ-
ence between the sales proceeds and the carrying amount of
the asset and is recognized in net profit within the statement
of comprehensive income.
f. Property, Plant and equipment
Property, plant and equipment is measured on the historical
cost basis less depreciation and impairment losses.
The cost of property, plant and equipment constructed by
the Company includes the cost of materials, direct labour and
deferred financing costs where appropriate. Assets under
construction and assets purchased that are not ready for use
are capitalized under capital work in progress.
Subsequent costs are included in the asset’s carrying amount
or recognized as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can
be measured reliably. All other repairs and maintenance are
charged to net profit within the statement of comprehensive
income during the financial period in which they are incurred.
Depreciation
The depreciable amount of property, plant and equipment is
depreciated over their useful lives of the asset commencing
from the time the asset is ready for use. The Company uses
the units of production (“UOP”) method when depreciating
mining assets which results in a depreciation charge based
on the recovered ounces of gold. Mining assets include build-
ings and property improvements and plant and equipment.
The Company uses the straight-line method when depreci-
ating other equipment, office furniture, motor vehicles and
finance lease equipment.
Depreciation is calculated using the following method:
class of Property,
Plant and equipment
Buildings and property
improvements
method
years
UOP
n/a
Plant and equipment
UOP/Straight line 5.0–8.0 years
Office furniture and equipment
Straight line 3.0–6.7 years
Motor vehicles
Straight line
5.0 years
Plant equipment under
finance lease
Straight line 5.0–8.0 years
Assets Under Finance Lease
Assets held under finance leases are depreciated over
their expected useful lives on the same basis as similar
owned assets.
g. leased assets
Leases are classified as finance leases when the terms of the
lease transfer substantially all the risks and rewards incidental
to ownership of the leased asset to the lessee. All other
leases are classified as operating leases.
Finance leases are capitalized at the lease’s commencement
at the lower of the fair value of the leased property and the
present value of the minimum lease payments. The corre-
sponding liability to the lessor is included in the statement
of financial position as a finance lease obligation.
Lease payments are allocated between the liability and
finance charges so as to achieve a constant rate of interest
on the finance lease balance outstanding. Finance charges
are charged directly against income, unless they are directly
attributable to qualifying assets, in which case they are capi-
talized in accordance with the Company’s general policy on
deferred financing costs. Refer to Note 4(k).
Operating lease payments are recognized as an expense
on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset
are consumed.
h. mine Development
Mine development expenditures are recognized at cost
less accumulated amortization and any impairment losses.
Mine development expenditures include capitalized waste
stripping costs and evaluation expenditures that meet the
criteria for capitalization. Upon reaching commercial produc-
tion, these capitalized costs will be amortized using the UOP
method over the estimated proven and probable reserves.
2013 AnnuAl RepoRt
42
i. intangible assets
Intangible assets are recorded at cost less accumulated
amortization and any impairment losses. Amortization is
charged on a straight-line basis over their estimated useful
lives. The estimated useful life and amortization method is
reviewed at the end of each annual reporting period with any
changes in these accounting estimates being accounted for
on a prospective basis.
j. impairment of long-lived assets
At each reporting date, the Company reviews the carrying
amounts of its long-lived assets to determine whether there is
any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss, if any. The recoverable amount is the higher
of the fair value less costs to sell and the value in use. Where
the asset does not generate cash flows that are independent
from other assets, the Company estimates the recoverable
amount of the cash-generating unit to which the asset be-
longs. Where a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to indi-
vidual cash-generating units or otherwise they are allocated
to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
If the recoverable amount of an asset or cash-generating
unit is estimated to be less than its carrying amount, the car-
rying amount of the asset or cash-generating unit is reduced
to its recoverable amount. An impairment loss is recognized
immediately in net profit within the statement of comprehen-
sive income.
Where an impairment loss subsequently reverses, the carry-
ing amount of the asset or cash-generating unit is increased
to the revised estimate of its recoverable amount but only to
the extent that the increased carrying amount does not ex-
ceed the carrying amount that would have been determined
had no impairment loss been recognized for the asset or
cash-generating unit in prior years. A reversal of an impair-
ment loss is recognized immediately in net profit within the
statement of comprehensive income.
k. Deferred Financing costs
Deferred financing costs directly attributable to the acquisi-
tion, construction or production of assets that necessarily
take a substantial period of time to prepare for their intended
use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended
use or sale.
All other deferred financing costs are recognized in net profit
within the statement of comprehensive income in the period
in which they are incurred.
l. employee Benefits
A liability is recognized for benefits accruing to employees in
respect of wages and salaries, annual leave and long-term
service leave when it is probable that settlement will be
required and it is capable of being measured reliably.
Liabilities recognized in respect of employee benefits ex-
pected to be settled within twelve months are measured
at their nominal values using the remuneration rate expected
to apply at the time of settlement.
Liabilities recognized in respect of employee benefits which
are not expected to be settled within twelve months are
measured as the present value of the estimated future cash
outflows to be made by the Company in respect of services
provided by employees up to the reporting date.
m. Provisions
Provisions are recognized when the Company has a present
obligation, legal or constructive, as a result of past events
for which it is probable that the Company will be required to
settle the obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognized as a provision is the best estimate
of the consideration required to settle the present obliga-
tion at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the pres-
ent obligation, its carrying value is the present value of those
cash flows.
n. Restoration and Rehabilitation
A provision for restoration and rehabilitation is recognized
when there is a present obligation as a result of explora-
tion, development and production activities undertaken, that
it is probable that an outflow of economic benefits will be
required to settle the obligation, and the amount of the provi-
sion can be measured reliably. The estimated future obliga-
tions include the costs of removing facilities, abandoning sites
and restoring the affected areas.
The provision for future restoration costs is the best estimate
of the present value of the expenditure required to settle the
restoration obligation at the reporting date, based on current
legal or constructive obligation. Future restoration costs
are reviewed each reporting period and any changes in the
estimate are reflected in the present value of the restoration
provision at each reporting date.
teranga gold corporation / notes to tHe consolidated financial statements 43
o. income tax
Current Income Tax
Current income tax is calculated by reference to the amount
of income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. Current income tax
is calculated on the basis of the law enacted or substantively
enacted at the reporting date in the countries where the Com-
pany’s subsidiaries operate and generate taxable income.
Deferred Income Tax
Deferred income tax is recognized, in accordance with the
liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. The tax base of
an asset or liability is the amount attributed to that asset or
liability for tax purposes.
Deferred tax liabilities are recognized for all taxable temporary
differences. Deferred tax assets are recognized only to the
extent that it is probable that future taxable profit will be
available against which the temporary differences can be
utilized. However, deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the
time of the transaction affects neither the accounting nor the
taxable profit or loss.
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by
the reporting date and expected to apply when the related
deferred income tax asset is realized or the deferred income
tax liability is settled.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities
on a net basis.
Loans and Receivables
Trade and other receivables, loans, cash and cash equiva-
lents, short-term investments and other receivables that have
fixed or determinable payments that are not quoted in an
active market are classified as “loans and receivables”. Loans
and receivables are measured at amortized cost using the
effective interest method less impairment.
Interest income is recognized by applying the effective
interest method.
Available-for-sale Financial Assets
Certain shares held by the Company are classified as being
available-for-sale and are stated at fair value. Gains and loss-
es arising from changes in fair value are recognized directly
in the investment revaluation reserve with the exception of:
• significant and prolonged impairment losses;
• interest calculated using the effective interest method; and
• foreign exchange gains and losses on monetary assets;
all of which are recognized directly in profit or loss. Where
the investment is disposed of or is determined to be impaired,
the cumulative gain or loss previously recognized in the
investment revaluation reserve is included in profit or loss
for the period.
Effective Interest Method
The effective interest method is a method of calculating the
amortized cost of a financial asset or financial liability and of
allocating interest income over the relevant period. The effec-
tive interest rate is the rate that exactly discounts estimated
future cash receipts (including fees on points paid or re-
ceived that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through
the expected life of the financial asset or, where appropriate,
a shorter period.
p. Financial instruments
Investments are recognized and de-recognized on the trade
date where the purchase or sale of an investment is under
a contract whose terms require delivery of the investment
within the timeframe established by the market concerned,
and are initially measured at fair value, net of transaction
costs except for those financial assets classified as fair value
through profit and loss.
Impairment of Financial Assets
Financial assets are assessed for indicators of impairment
at each reporting date. Financial assets are impaired where
there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition
of the financial asset and that event has an impact on the
estimated future cash flows of the financial asset that can be
reliably estimated.
Fair Value Through Profit or Loss
Upon disposal of an investment, the difference in the net
disposal proceeds and the carrying amount is charged
or credited to net profit within the statement of comprehen-
sive income.
For financial assets carried at amortized cost, the amount of
the impairment is the difference between the asset’s carrying
amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
2013 AnnuAl RepoRt 44
The carrying amount of financial assets including uncol-
lectible trade receivables is reduced by the impairment loss
through the use of an allowance account. Subsequent recov-
eries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of
the allowance account are recognized in profit or loss.
With the exception of available-for-sale equity instruments, if,
in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the pre-
viously recognized impairment loss is reversed through profit
and loss to the extent the carrying amount of the investment
at the date the impairment is reversed does not exceed what
the amortized cost would have been had the impairment not
been recognized.
In respect of available-for-sale equity instruments, any
subsequent increase in fair value after an impairment loss is
recognized directly in Other comprehensive income.
De-recognition of Financial Assets
The Company de-recognizes a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity.
Derivative Financial Instruments
Derivatives are initially recognized at fair value at the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The re-
sulting gain or loss is recognized in net profit within the state-
ment of comprehensive income immediately as the Company
does not apply hedge accounting.
The fair value of derivatives is presented as a non-current
asset or a non-current liability, if the remaining maturity of
the instrument is more than twelve months and it is not ex-
pected to be realized or settled within twelve months and as
a current asset or liability when the remaining maturity of the
instrument is less than twelve months.
Debt and Equity Instruments
Debt and equity instruments are classified as either liabilities
or as equity in accordance with the substance of the contrac-
tual arrangement. An equity instrument is any contract that
evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the
Company are recorded at the proceeds received, net of direct
issue costs.
Financial Guarantee Contract Liabilities
Financial guarantee contract liabilities are measured initially
at their fair values and subsequently at the higher of:
• the amount of the obligation under the contract, as deter-
mined under IAS 37 “Provisions, Contingent Liabilities and
Contingent Assets”; and
• the amount initially recognized less, where appropriate,
cumulative amortization in accordance with the revenue
recognition policies described in Note 4(s).
Financial Liabilities
Financial liabilities are classified as either financial liabilities
“at fair value through profit or loss” or other financial liabilities.
Other Financial Liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at am-
ortized cost using the effective interest method, with interest
expense recognized on an effective yield basis.
q. share-based Payment
The Company operates an equity-settled, share-based
compensation plan for remuneration of its management and
employees.
The fair value of the options granted is measured using the
Black-Scholes model, taking into account the terms and
conditions upon which the options are granted. The fair value
of the options is adjusted by the estimate of the number of
options that are expected to vest as a result of non-market
conditions and is expensed over the vesting period using an
accelerated method of amortization.
Share-based compensation relating to stock options is charged
to net profit within the statement of comprehensive income.
r. Fixed Bonus Plan Units
The Company operates a cash-settled, share-based compen-
sation plan for remuneration of its management, directors,
employees and consultants.
The fair value of the Fixed Bonus Plan Units (“Units”) granted
is measured using the Black-Scholes model, taking into
account the terms and conditions upon which the Units
are granted. The fair value of the Units is adjusted by the
estimate of the number of Units that are expected to vest as
a result of non-market conditions and is expensed over the
vesting period using an accelerated method of amortization.
teranga gold corporation / notes to tHe consolidated financial statements 45
Share-based compensation relating to the Fixed Bonus
Plan is charged to the net profit within the statement of
comprehensive income and re-valued at the end of each
reporting period based on the period-end share price.
Refer to Note 36(b).
s. Revenue Recognition
Gold and Silver Bullion Sales
Revenue is recognized when persuasive evidence exists that
all of the following criteria are met:
• the shipment has been made;
• the significant risks and rewards of ownership of the
product have been transferred to the buyer;
• neither continuing managerial involvement to the degree
usually associated with ownership, nor effective control
over the gold or silver sold, has been retained;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefit associated with
the sale will flow to the Company; and
• the costs incurred or to be incurred in respect of the sale
can be measured reliably.
Interest Income
Interest income is recognized in other expenses within the
statement of comprehensive income.
t. exploration and evaluation expenses
Exploration and evaluation expenditures in relation to each
separate area of interest are expensed in net profit within the
statement of comprehensive income until the determination
of the technical feasibility and the commercial viability of the
project.
The technical feasibility and commercial viability of extracting
a mineral resource is considered to be determinable when
proven and probable reserves are determined to exist, the
rights of tenure are current and it is considered probable
that the costs will be recouped through successful develop-
ment and exploitation of the area, or alternatively by sale of
the property. Once the proven and probable reserves are
determined to exist, including when a technical feasibility
study is completed, subsequent exploration and development
expenses are capitalized as mine evaluation expenditures.
Exploration and evaluation assets comprise of costs incurred
to secure the mining concession, acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling
and associated activities and an allocation of depreciation
and amortization of assets used in exploration and evaluation
activities. General and administrative costs are only included in
exploration and evaluation costs where they are related directly
to the operational activities in a particular area of interest.
u. earnings per share
Basic earnings per share are determined by dividing the
profit/(loss) attributable to equity holders of the Company by
the weighted average number of ordinary common shares
outstanding during the financial period.
Diluted earnings per share is calculated by adjusting the
weighted average number of common shares outstanding to
assume conversion of all dilutive potential common shares.
v. Joint arrangements
A joint arrangement is defined as one over which two or
more parties have joint control, which is the contractually
agreed sharing of control over an arrangement. This exists
only when the decisions about the relevant activities (being
those that significantly affect the returns of the arrangement)
require the unanimous consent of the parties sharing control.
There are two types of joint arrangements: joint operations
and joint ventures.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the
assets and obligations for the liabilities relating to the arrange-
ment. In relation to the Company’s interests in joint opera-
tions, the Company recognizes the Company’s share of jointly
controlled assets (classified according to their nature), the
share of liabilities incurred (including those incurred jointly
with other venturers) and the Company’s share of expenses
incurred by or in respect of each joint venture.
A joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net
assets of the joint venture. The Company applies the equity
method of accounting for its interest in the joint venture.
w. Government Royalties
Royalties are accrued and charged against earnings when the
liability from production of the gold arises. Royalties are sepa-
rately reported as expenses and not deducted from revenue.
x. non-controlling interest
Non-controlling interests represent the fair value of net assets
in subsidiaries that are not held by the Company and are
presented in the equity section of the consolidated statement
of financial position. Profit for the period that is attributable
to non-controlling interests is calculated based on the owner-
ship of the minority shareholders in the subsidiary.
2013 AnnuAl RepoRt 46
4. cHanGe in accOUntinG POlicies
a. stripping costs in the Production Phase
of a surface mine
The Company adopted International Financial Reporting
Interpretation Committee 20 (“IFRIC 20”) Stripping Costs in
the Production Phase of a Surface Mine effective January 1,
2013. IRFIC 20 provides guidance on the accounting for the
costs of stripping activity in the production phase of surface
mining when two benefits accrue to the entity from the strip-
ping activity through either: useable ore that can be used to
produce inventory or improved access to further quantities of
material that will be mined in future periods.
The change in accounting policy has been applied retroac-
tively with restatement as of January 1, 2012 and there was
no impact on January 1, 2012 opening balances. The impact
on December 31, 2012 balances was an increase to mine
development expenditures of $29.6 million, a decrease to
inventory of $15.5 million and a decrease to cost of sales of
$14.1 million.
The impact of the change in accounting policy on the state-
ment of financial position as at December 31, 2012 and the
statement of comprehensive income and cash flows for the
year ended December 31, 2012 are set out below:
imPact On statement OF Financial POsitiOn
as previously reported
as at December 31, 2012
impact of change in
accounting policy
current assets
Inventories
total current assets
non-current assets
Inventories
Mine development expenditures
total non-current assets
total assets
equity
Accumulated income
equity attributable to shareholders
Non-controlling interests
total equity
total equity and liabilities
82,474
150,980
40,659
109,060
399,476
550,456
36,549
362,777
10,448
373,225
550,456
(7,505)
(7,505)
(7,959)
29,549
21,590
14,085
12,676
12,676
1,409
14,085
14,085
Restated
74,969
143,475
32,700
138,609
421,066
564,541
49,225
375,453
11,857
387,310
564,541
teranga gold corporation / notes to tHe consolidated financial statements
imPact On statement OF cOmPReHensiVe incOme
For the year ended December 31, 2012
as previously reported
impact of changes in
accounting policies
Cost of sales
Gross profit
Profit before income tax
Income tax benefit
Profit for the period
Profit attributable to:
Shareholders
Non-controlling interests
Profit for the period
total comprehensive income for the period
Total comprehensive income attributable to:
Shareholders
Non-controlling interests
total comprehensive income for the period
- basic earnings per share
- diluted earnings per share
(179,323)
171,197
93,970
115
94,085
79,924
14,161
94,085
100,797
86,636
14,161
100,797
0.33
0.33
14,085
14,085
14,085
14,085
12,676
1,409
14,085
14,085
12,676
1,409
14,085
0.05
0.05
imPact On statement OF casH FlOWs
For the year ended December 31, 2012
as previously reported
impact of changes in
accounting policies
cash flows related to operating activities
Profit for the period
Depreciation of capitalized mine development costs
Increase in inventories
Changes in working capital
net cash provided by (used in) operating activities
cash flows related to investing activities
Expenditures for mine development
net cash used in investing activities
net increase in cash and cash equivalents held
cash and cash equivalents at the beginning of period
cash and cash equivalents at the end of period
94,085
11,142
(42,826)
26,570
72,449
(30,377)
(79,460)
32,252
7,470
39,722
14,085
2,985
15,463
–
32,533
(32,533)
(32,533)
–
–
–
47
Restated
(165,238)
185,282
108,055
115
108,170
92,600
15,570
108,170
114,882
99,312
15,570
114,882
0.38
0.38
Restated
108,170
14,127
(27,363)
26,570
104,982
(62,910)
(111,993)
32,252
7,470
39,722
b. iFRs 10 – consolidated financial statements
IFRS 10, “Consolidated financial statements” (IFRS 10)
was issued by the IASB in May 2011 and replaced SIC 12,
“Consolidation – Special purpose entities” and parts of IAS 27,
“Consolidated and separate financial statements”. IFRS 10 was
effective for annual periods beginning on or after January 1,
2013 and the Company has adopted this standard. The Com-
pany has evaluated the impact of IFRS 10 and has determined
there was no impact on its consolidated financial statements.
c. iFRs 11 – Joint arrangements
IFRS 11, “Joint arrangements” (IFRS 11) was issued by the
IASB in May 2011 and superseded IAS 31, “Interest in joint
ventures” and SIC 13, “Jointly controlled entities – Non-
monetary contributions by venturers” by removing the option
to account for joint ventures using proportionate consolidation
and requiring equity accounting. IFRS 11 was effective for
annual periods beginning on or after January 1, 2013.
2013 AnnuAl RepoRt
48
As at January 1, 2013, the Company did not have any
joint arrangements. Through the acquisition of Oromin,
the Company obtained a 43.5 percent participating interest
in the OJVG which was determined to be a joint venture of
the Company in two transactions on August 6, 2013 and
October 4, 2013. Refer to Note 18.
d. iFRs 12 – Disclosure of interests in
Other entities
IFRS 12, “Disclosure of interests in other entities” (IFRS
12) was issued by the IASB in May 2011. IFRS 12 requires
enhanced disclosure of information about involvement
with consolidated and unconsolidated entities, including
structured entities commonly referred to as special purpose
vehicles, or variable interest entities. IFRS 12 was effective
for annual periods beginning on or after January 1, 2013 and
the Company has adopted this standard. The Company has
evaluated the impact of IFRS 12 and has applied the new
disclosure requirements for its consolidated annual financial
statements for the year ended December 31, 2013.
e. iFRs 13 – Fair value measurement
IFRS 13, “Fair value measurement” (IFRS 13) was issued by
the IASB in May 2011. This standard clarifies the definition
of fair value, required disclosures for fair value measurement,
and sets out a single framework for measuring fair value. IFRS
13 replaces the existing guidance on measuring and disclos-
ing fair value which is dispersed among several standards.
IFRS 13 was effective for annual periods beginning on or after
January 1, 2013 and the Company has adopted this standard.
Application of IFRS 13 has not materially impacted the fair
value measurements of the Company. Additional disclosures
where required, are provided in the individual note relating to
the assets and liabilities whose fair values were determined.
Refer to Note 36(h).
5. neW stanDaRDs anD inteRPReta-
tiOns nOt yet aDOPteD
a. iFRs 9 – Financial instruments
IFRS 9, “Financial instruments” (IFRS 9) was issued by the
IASB in November 2009 and will replace IAS 39, “Financial
Instruments: Recognition and Measurement” (IAS 39). IFRS
9 replaces the multiple rules in IAS 39 with a single approach
to determine whether a financial asset is measured at amor-
tized cost or fair value and a new mixed measurement model
for debt instruments having only two categories: amortized
cost and fair value. The approach in IFRS 9 is based on how
an entity manages its financial instruments in the context of
its business model and the contractual cash flow character-
istics of the financial assets. This standard also requires a
single impairment method to be used, replacing the multiple
impairment methods in IAS 39. In July 2013, the IASB tenta-
tively decided to defer the mandatory effective date of IFRS
9. The IASB agreed that the mandatory effective date should
no longer be annual periods beginning on or after January 1,
2015 but rather be left open pending the finalization of the
impairment and classification and measurement require-
ments. The Company is currently evaluating the impact of
IFRS 9 on its consolidated financial statements.
b. iFRic 21 – levies
In May 2013, the IASB issued IFRIC Interpretation 21 Levies,
which was developed by the IFRS Interpretations Committee
(the Committee). The interpretation clarifies that an entity rec-
ognizes a liability for a levy when the activity that triggers pay-
ment, as identified by the relevant legislation, occurs. It also
clarifies that a levy liability is accrued progressively only if the
activity that triggers payment occurs over a period of time,
in accordance with the relevant legislation. For a levy that is
triggered upon reaching a minimum threshold, the interpreta-
tion clarifies that no liability should be recognized before the
specified minimum threshold is reached.
The interpretation is applicable for annual periods beginning
on or after January 1, 2014. Early application is permitted.
The Company is currently evaluating the impact of IFRIC 21
on its consolidated financial statements.
6. cRitical accOUntinG JUDGments
anD key sOURces OF estimatiOn
UnceRtainty
The following are critical judgments and estimations that
management has made in the process of applying the Com-
pany’s accounting policies and that have the most significant
effect on the amounts recognized in the consolidated finan-
cial statements and that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year:
Ore Reserves
Management estimates its ore reserves based upon informa-
tion compiled by qualified persons as defined in accordance
with the Canadian Securities Administrators’ National Instru-
ment 43-101 Standards for Disclosure for Mineral Projects
requirements, which is similar to the Australasian standards.
The estimated quantities of economically recoverable re-
serves are based upon interpretations of geological models
and require assumptions to be made regarding factors such
as estimates of short- and long-term exchange rates, esti-
teranga gold corporation / notes to tHe consolidated financial statements 49
mates of short- and long-term commodity prices, future capi-
tal requirements and future operating performance. Changes
in reported reserve estimates can impact the carrying value
of property, plant and equipment, mine development expen-
ditures, provision for mine restoration and rehabilitation, the
recognition of deferred tax assets, as well as the amount of
depreciation and amortization charged to net profit within the
statement of comprehensive income.
Functional Currency
The functional currency of each of the Company’s entities
is measured using the currency of the primary economic
environment in which that entity operates. The functional
currency of all entities within the group is the United States
dollar, which was determined based on the currency that
mainly influences sales prices for goods and services, labour,
material and other costs and the currency in which funds
from financing activities are generated.
Units of Production
Management estimates recovered ounces of gold in deter-
mining the depreciation and amortization of mining assets,
including buildings and property improvement and plant and
equipment. This results in a depreciation/amortization charge
proportional to the recovery of the anticipated ounces of gold.
The life of the asset is assessed annually and considers its
physical life limitations and present assessments of economi-
cally recoverable reserves of the mine property at which the
asset is located. The calculations require the use of estimates
and assumptions, including the amount of recoverable
ounces of gold. The Company’s UOP calculations are based
on recovered ounces of gold.
Mine Restoration and Rehabilitation Provision
Management assesses its mine restoration and rehabilitation
provision each reporting period. Significant estimates and
assumptions are made in determining the provision for mine
rehabilitation as there are numerous factors that will affect the
ultimate liability payable. These factors include estimates of
the extent, the timing and the cost of rehabilitation activities,
technological changes, regulatory change, cost increases,
and changes in discount rates. Those uncertainties may
result in actual expenditures differing from the amounts cur-
rently provided. The provision at the reporting date represents
management’s best estimate of the present value of the fu-
ture rehabilitation costs required. Changes to estimated future
costs are recognized in the statement of financial position by
adjusting the rehabilitation asset and liability.
Impairment of Assets
Management assesses each cash-generating unit each
reporting period to determine whether any indication of
impairment exists. Where an indicator of impairment exists,
a formal estimate of the recoverable amount is made which
is considered to be the higher of the fair value less costs to
sell and value in use. These assessments require the use of
estimates and assumptions such as long-term commodity
prices, discount rates, future capital requirements, and op-
erating performance. Fair value is determined as the amount
that would be obtained from the sale of the asset in an arm’s
length transaction between knowledgeable and willing par-
ties. Fair value for mineral assets is generally determined as
the present value of estimated future cash flows arising from
the continued use of the asset. Cash flows are discounted
by an appropriate discount rate to determine the net present
value. Management has assessed its cash-generating units
as being all sources of mill feed through a central mill, which
is the lowest level for which cash flows are largely indepen-
dent of other assets.
Production Start Date
Management assesses the stage of each mine development
project to determine when a mine moves into the production
stage. The criteria used to assess the start date of a mine
are determined based on the unique nature of each mine
development project. The Company considers various
relevant criteria to assess when the mine is substantially
complete, ready for its intended use and moves into the
production phase. Some of the criteria include, but are not
limited to, the following:
• completion of a reasonable period of testing of the mine
plant and equipment;
• ability to produce metal in saleable form; and
• ability to sustain ongoing production of metal.
When a mine development project moves into the produc-
tion stage, the capitalization of certain mine construction
costs ceases and costs are either regarded as inventory or
expensed, except for capitalizable costs related to mining
asset additions or improvements or mineable reserve
development. It is also at this point that depreciation/amorti-
zation commences.
Fair Value of Derivative Financial Instruments
Management assesses the fair value of Teranga’s derivatives
in accordance with the accounting policy stated in Note 4(p)
to the consolidated financial statements. Fair values have
been determined based on well-established valuation models
2013 AnnuAl RepoRt 50
and market conditions existing at the reporting date. These
calculations require the use of estimates and assumptions.
Changes in assumptions concerning interest rates, gold
prices and volatilities could have a significant impact on the
fair valuation attributed to the Company’s derivatives. When
these assumptions change or become known in the future,
such differences will impact asset and liability carrying values
in the period in which they change or become known.
Former shareholders of Oromin were entitled to receive 0.6
of a common share of Teranga for each Oromin share. Total
consideration paid of $24.1 million consisted of the issuance
of 48,645,840 Teranga common shares at a price of $0.48
per share for consideration of $23.5 million and the fair value
of Oromin stock options replaced by 7,911,600 Teranga stock
options for consideration of $0.6 million. Share issue costs
totalled $0.2 million.
Fair Value of Stock Options
Management assesses the fair value of stock options granted
in accordance with the accounting policy stated in Note 4(q)
to the consolidated financial statements. The fair value of the
options granted is measured using the Black-Scholes model,
taking into account the terms and conditions upon which
the options are granted. The calculation requires the use of
estimates and assumptions. Due to lack of sufficient historical
information for the Company, volatility was determined using
the existing historical volatility information of the Company’s
share price combined with the industry average for compara-
ble-size mining companies.
Fair Value of Fixed Bonus Plan Units
Management assesses the fair value of Units granted in ac-
cordance with the accounting policy stated in Note 4(r) to the
consolidated financial statements. The fair value of the Units
granted is measured using the Black-Scholes model, taking
into account the terms and conditions upon which the Units
are granted. The calculation requires the use of estimates
and assumptions. Due to lack of sufficient historical informa-
tion for the Company, volatility was determined using the
existing historical volatility information of the Company’s share
price combined with the industry average for comparable-size
mining companies.
Stripping Costs in the Production Phase of a
Surface Mine
Management assesses the costs associated with the stripping
activity in the production phase of surface mining: the use-
able ore that can be used to produce inventory and improved
access to further quantities of material that will be mined in
future periods, which are estimated by management.
7. acQUisitiOn
a. acquisition of Oromin
On August 6, 2013, the Company acquired 78,985,388 com-
mon shares of Oromin, representing approximately 57.5 per-
cent of the Oromin shares that the Company did not already
own. Together with the 18,699,500 Oromin shares owned by
the Company and a further 2,091,013 shares obtained, this
represented a total of 99,775,901 Oromin shares or approxi-
mately 72.6 percent of the outstanding Oromin shares.
On October 4, 2013, the Company completed the acquisition
of all of the issued and outstanding common shares of Oro-
min that it did not already own (Oromin being one of the three
joint venture partners holding 43.5 percent of the OJVG),
issuing 22,537,251 additional Teranga common shares at a
price of $0.61 per share for consideration of $13.8 million.
In total, the Company issued 71,183,091 Teranga shares
to acquire all of the Oromin shares for net consideration of
$37.8 million, including the fair value of Oromin stock options
replaced by 7,911,600 Teranga stock options. As a result,
Teranga’s total number of issued and outstanding shares
increased to 316,801,091.
All stock options granted in connection with the acquisition
of Oromin expire 18 months from the grant date of August 6,
2013. The fair value of the Oromin options at the grant date
was calculated using the Black-Scholes option pricing model
with the following assumptions:
Grant date share price
Exercise price
Risk-free interest rate
Volatility of expected market price of shares
Expected life of options
Dividend yield
Forfeiture rate
august 6, 2013
C$0.28
C$0.65–C$1.30
0.78%–1.53%
72.62%–94.09%
0.92–4.04
0%
0%
The Company determined that this transaction represented a
business combination with Teranga identified as the acquirer.
The Company consolidated 100 percent of Oromin’s operating
results, cash flows and net assets from August 6, 2013 with
non-controlling interests of 27.4 percent until October 4, 2013.
In accordance with the acquisition method of accounting, the
acquisition cost has been allocated to the underlying assets
acquired and liabilities assumed, based upon their estimated
fair values at the date of acquisition. A discounted cash flow
model was used to determine the fair value of the equity
interest in the investment in OJVG. Expected future cash
flows are based on estimates of projected future revenues,
expected future production costs and capital expenditures.
The acquisition cost equaled the value of the net identifiable
assets acquired, including consideration of non-controlling
interest. Non-controlling interest has been measured based
teranga gold corporation / notes to tHe consolidated financial statements
51
on the non-controlling interest’s proportionate share of the
acquiree’s net identifiable assets.
The following tables present the purchase price and the
final allocation of the purchase price to the assets and liabili-
ties acquired.
Purchase cost – august 6, 2013
Fair value of shares issued to Oromin shareholders
Replacement stock options issued to Oromin employees
total acquisition cost
Fair value of previously held interest
Cash acquired with Oromin
consideration, net of cash acquired
summary of Final Purchase Price allocation
Assets
Current assets
Investment in OJVG
Total assets
Liabilities
Current liabilities
Borrowings
Total liabilities
Net assets acquired, before non-controlling interest
Non-controlling interest
net assets acquired
Purchase cost – October 4, 2013
Fair value of shares issued to Oromin shareholders
Carrying value of additional interest in Oromin
Difference recognized within shareholders’ equity
23,487
585
24,072
5,131
29,203
(367)
28,836
545
47,059
47,604
4,009
3,387
7,396
40,208
(11,005)
29,203
13,777
11,005
2,772
Acquisition-related costs of approximately $8.0 million have
been expensed during the year ended December 31, 2013
and are presented within Other expenses in the consolidated
statements of comprehensive income.
Since the date of acquisition, Oromin has recorded a loss
of $0.8 million included in net profit within the consolidated
statement of comprehensive income as of December 31,
2013. Had the acquisition been at the beginning of the re-
porting period (January 1, 2013), the amount of loss recorded
in the consolidated statement of comprehensive income
would be $1.9 million.
b. Franco-nevada Gold stream and acquisition
of the OJVG
On January 15, 2014, the Company completed a $135.0 mil-
lion stream transaction with Franco-Nevada to fund the ac-
quisition of Bendon’s interest in the OJVG for $105.0 million
and retire half of the project finance facility with Macquarie of
$30.0 million. As a result of the two transactions, Teranga is
required to deliver to Franco-Nevada 22,500 ounces annually
over the first six years followed by 6 percent of production
from the Company’s existing properties, including those of
the OJVG, thereafter. Franco-Nevada’s purchase price per
ounce is set at 20 percent of the spot price of gold.
The Company also acquired Badr’s 13 percent carried
interest for $7.5 million and further contingent consideration
based on higher gold prices and increases to OJVG reserves
through 2020.
The acquisition of Bendon’s and Badr’s interests in the OJVG
increased Teranga’s ownership to 100 percent.
Acquisition-related costs of approximately $2.6 million
incurred in 2013 have been expensed during the year ended
December 31, 2013 and are presented within Other expens-
es in the consolidated statements of comprehensive income.
The Company is in the process of determining the fair values
of the acquired assets and liabilities of OJVG and therefore
disclosure of the fair values of the net identifiable assets
arising from the acquisition cannot be made. The valuation
is expected to be completed in 2014.
Following the acquisition of Bendon’s interest in the OJVG
subsequent to year-end, the legal claim filed by Bendon
was dismissed.
8. ReVenUe
Gold sales at spot price
Silver sales
total revenue
For the year ended December 31
2013
297,326
601
297,927
2012
349,871
649
350,520
2013 AnnuAl RepoRt
52
For the year ended December 31, 2013, 208,406 ounces
of gold were sold at an average price of $1,427 per ounce
(2012: 207,814 ounces were sold at an average of $1,634
per ounce). Revenue excludes the impact of gold hedges as
losses on ounces delivered into gold hedge contracts which
are classified within gains (losses) on gold hedge contracts
(refer to Note 24).
Including the impact of gold hedge losses, for the year ended
December 31, 2013, 208,406 ounces of gold were sold at an
average realized price of $1,246 per ounce, including 45,289
ounces that were delivered into gold hedge contracts at $806
per ounce, representing 22 percent of gold sales for the year,
and 163,117 ounces were sold into the spot market at an
average price of $1,368 per ounce.
During the second quarter of 2013, the Company bought
back the remaining 14,500 ounces (2012 – 52,105 ounces)
“out of the money” gold forward sales contracts at a cost of
$8.6 million (2012 – $39 million).
Including the impact of gold hedge losses, for the year ended
December 31, 2012, 207,814 ounces of gold were sold at an
average realized price of $1,422 per ounce, including 62,606
ounces that were delivered into gold hedge contracts at $832
per ounce, representing 30 percent of gold sales for the year
and 145,208 ounces were sold into the spot market at an
average price of $1,677 per ounce.
Gold sales revenue to one customer for the year ended De-
cember 31, 2013 was $297 million (2012: $350 million).
9. cOst OF sales
Mine production costs
Capitalized deferred stripping
Depreciation and amortization
Royalties
Rehabilitation
Inventory movements – cash
Inventory movements – non-cash
total cost of sales
10. aDministRatiOn eXPenses
Corporate office
Dakar office
Social community costs
Audit fees
Legal & other
Depreciation
total administration expenses
11. Finance cOsts
Interest on borrowings
Amortization of borrowing costs
Unwinding of discount
Political risk insurance
Stocking fee
Bank charges
total finance costs
For the year ended December 31
2013
170,752
(43,264)
77,902
14,755
6
(8,552)
(15,094)
196,505
2012
145,832
(32,535)
55,645
10,491
36
(5,409)
(8,822)
165,238
For the year ended December 31
2013
7,712
1,189
1,763
451
2,466
1,136
2012
8,686
754
1,558
581
3,281
713
14,717
15,573
For the year ended December 31
2013
7,331
3,120
156
570
626
345
12,148
2012
4,516
877
53
898
578
440
7,362
teranga gold corporation / notes to tHe consolidated financial statements
12. OtHeR eXPense
Acquisition costs(i)
Non-recurring legal and other costs
Interest income
total other income and expense
(i) Includes costs for legal, advisory and consulting.
13. incOme taX
Current income tax expense
Deferred income tax benefit on reversal of temporary differences
total income tax benefit
53
For the year ended December 31
2013
11,020
927
(52)
11,895
2012
2,785
–
(36)
2,749
For the year ended December 31
2013
–
–
–
2012
(115)
–
(115)
The Company’s provision for income taxes differs from the
amount computed by applying the combined Canadian fed-
eral and provincial income tax rates to income (loss) before
income taxes as a result of the following:
Statutory tax rates
Income tax benefit computed at statutory rates
Non-deductible items
Income not subject to tax
Difference between deferred and current rate
Unrecognized deferred tax assets
Other
income tax benefit
For the year ended December 31
2013
26.5%
14,999
4,260
(24,069)
–
4,810
–
–
2012
26.5%
24,902
1,244
(37,528)
–
11,267
–
(115)
Deferred income tax assets are recognized for tax loss carry-
forwards, property, plant and equipment, share issuance
costs and transaction costs to the extent that the realization
of the related tax benefit through future taxable profits is
probable. The Company did not recognize deferred income
tax assets of $12,456 in respect of non-capital losses,
property, plant and equipment, share issuance costs and
transaction costs amounting to $48,793 that can be car-
ried forward against future taxable income. The non-capital
losses, property, plant and equipment, share issuance costs
and transaction costs amounting to $48,793 will expire in the
years 2015 to 2033.
Deferred income tax liabilities have not been recognized for
the withholding tax and other taxes that would be payable
on the unremitted earnings of certain subsidiaries. Such
amounts are permanently reinvested. Unremitted earnings
totalled $240,726 at December 31, 2013.
2013 AnnuAl RepoRt
54
14. tRaDe anD OtHeR ReceiVaBles
current
Trade receivable(i)
Other receivables(ii)
total trade and other receivables
as at December 31, 2013
as at December 31, 2012
7,376
623
7,999
5,268
1,214
6,482
(i) Trade receivable relates to gold and silver shipments made prior to period-end that were settled after year-end.
(ii)
Other receivables primarily include receivables from suppliers for services, materials and utilities used at the Sabodala gold mine that the Company provides to them
and $0.2 million sales tax refunds as at December 31, 2013 (2012: $0.1 million).
15. inVentORies
current
Gold bullion
Gold in circuit
Ore stockpile
total gold inventories
Diesel fuel
Materials and supplies
Goods in transit
total other inventories
total current inventories
non-current
Ore stockpile
total inventories
as at December 31, 2013
as at December 31, 2012
(Restated)
7,192
5,010
17,443
29,645
3,136
31,737
2,914
37,787
67,432
63,740
131,172
4,094
8,172
24,773
37,039
3,242
30,703
3,985
37,930
74,969
32,700
107,669
16. DeRiVatiVe assets
The Company had a hedge agreement with respect to the oil
price in order to manage its exposure to commodity risk. The
Company hedged 80,000 barrels per annum for four years
commencing April 1, 2009 at a flat forward price of $70 per
barrel (West Texas Intermediate price).
The hedge contracts were completed in the first quarter of
2013. The gain on settlement of oil hedge contracts totalled
$0.5 million for the year ended December 31, 2013 (2012:
$1.9 million). At December 31, 2012, 20,000 barrels were
hedged with a market value of $0.5 million at market price
of $92 per barrel.
17. OtHeR assets
current
Prepayments(i)
Security deposit(ii)
total other assets
as at December 31, 2013
as at December 31, 2012
4,256
1,500
5,756
5,336
1,500
6,836
(i)
As at December 31, 2013, prepayments include $2.9 million of advances to vendors and contractors and $1.4 million for insurance. As at December 2012, prepayments include
$4.3 million of advances to other vendors and contractors and $1.0 million for insurance.
(ii) The security deposit represents a security for payment under the mining fleet and maintenance contract.
teranga gold corporation / notes to tHe consolidated financial statements
55
18. inVestment in OROmin JOint VentURe GROUP ltD.
As part of the acquisition of the issued and outstanding com-
mon shares of Oromin, the Company obtained a 43.5 percent
participating interest in the OJVG. An additional 43.5 par-
ticipating interest in the OJVG was held by Bendon and the
remaining 13.0 percent non-participating interest in the OJVG
was held by Badr. The Company acquired these additional
interests subsequent to year-end. Refer to Note 7.
The OJVG has a 90 percent interest in Societe des Mines de
Golouma S.A. (“Somigol”), an operating company under the
laws of Senegal, and the remaining 10 percent interest is held
by the Government of Senegal. Somigol has a 15-year renew-
able mining license, extendable if future conditions are met.
Oromin had provided exploration and management services
to OJVG for which Oromin may recover a portion of its admin-
istration costs.
During the year ended and as of December 31, 2013, the
Company has determined that its investment in OJVG quali-
fies as an interest in a joint arrangement as a contractual
arrangement exists between the owners of OJVG resulting in
joint control. The Company has further determined that the
legal form, terms, and other facts and circumstances related
to the arrangement do not give the parties to the arrangement
the rights to the assets and obligations to the liabilities relat-
ing to the arrangement. The joint arrangement accordingly
qualifies as a joint venture and the Company has applied the
equity method of accounting for its interest.
equity investment table
Balance at august 6, 2013
Cash contribution
Equity pickup
Project administration fees recovery
Balance at December 31, 2013
47,059
775
52
(259)
47,627
Summary financial information for the equity accounted investment in OJVG. The balances have not been adjusted for the
percentage ownership held by the Company.
as at December 31, 2013
as at august 6, 2013
current assets
Cash and term deposits
Prepaids
Due from related party
total current assets
non-current assets
Resource properties
total assets
current liabilities
Trade and other payables
Due to Oromin
total current liabilities
non-current liabilities
Shareholder advances
Accrued Interest
total non-current liabilities
total liabilities
Interest expense
Net foreign exchange gains
Other Income
net loss
Less: interest related to shareholder advances
the company’s share of income from equity investment in OJVG
82
5
–
87
96,689
96,776
593
411
1,004
158,193
57,765
215,958
216,962
327
7
304
638
95,057
95,695
1,577
–
1,577
156,643
52,399
209,042
210,619
Period from august 6, 2013 to December 31, 2013
5,366
(80)
(24)
(5,262)
5,366
52
2013 AnnuAl RepoRt
56
The reconciliation of OJVG’s equity to the Company’s net interest in the joint venture as at August 6, 2013 and December 31,
2013 are as follows:
OJVG’s equity
Add: shareholder advances
Add: accrued interest on shareholder advances
Less: accumulated project administration cost recovery
the company’s net investment in OJVG
19. PROPeRty, Plant anD eQUiPment
as at December 31, 2013
as at august 6, 2013
(120,186)
158,193
57,765
(518)
95,254
47,627
(114,924)
156,643
52,399
–
94,118
47,059
cost
Balance at January 1, 2012
Additions
Capitalized mine rehabilitation
Disposals
Transfer
Balance at December 31, 2012
Additions
Capitalized mine rehabilitation
Disposals
Transfer
Buildings &
property
improvement
Plant and
equipment
Office
furniture
and
equipment
equipment
under
finance
lease
motor
vehicles
capital
work in
progress
total
(Restated)
32,216
–
–
–
12,237
190,397
–
109
(748)
85,922
1,279
–
–
–
525
2,481
–
–
(227)
832
42,095
–
–
–
322
56,558
51,342
–
–
(99,838)
325,026
51,342
109
(975)
–
44,453 275,680
1,804
3,086
42,417
–
–
–
581
–
4,694
(15)
17,671
–
–
(4)
398
–
–
(246)
189
–
–
(501)
–
8,062 375,502
18,175
18,175
–
4,694
–
(766)
44
(18,795)
Balance at December 31, 2013
45,034 298,030
2,198
3,029
41,916
7,442 397,649
accumulated depreciation
Balance at January 1, 2012
Disposals
Depreciation expense
Balance at December 31, 2012
Disposals
Depreciation expense
Balance at December 31, 2013
net book value
Balance at December 31, 2012
Balance at December 31, 2013
9,769
–
4,635
56,889
(719)
27,843
671
–
340
1,379
(192)
648
17,808
–
8,533
14,404
84,013
–
4,812
(3)
34,435
1,011
(2)
435
1,835
(220)
386
26,341
(402)
8,117
–
–
–
86,516
(911)
41,999
– 127,604
–
(627)
–
48,185
19,216 118,445
1,444
2,001
34,056
– 175,162
30,049 191,667
25,818 179,585
793
754
1,251
1,028
16,076
7,860
8,062 247,898
7,442 222,487
Additions made to property, plant and equipment during the
year ended December 31, 2013 relate mainly to additional
mining equipment acquired.
Depreciation of property, plant and equipment of $48.2 mil-
lion was expensed as cost of sales for the year ended Decem-
ber 31, 2013 (2012: $42.0 million).
teranga gold corporation / notes to tHe consolidated financial statements
20. mine DeVelOPment eXPenDitURe
cost
Balance at January 1, 2012
Expenditures incurred during the year
Balance at December 31, 2012
Additions incurred during the year
Balance at December 31, 2013
accumulated depreciation
Balance at January 1, 2012
Depreciation expense
Balance at December 31, 2012
Depreciation expense
Balance at December 31, 2013
carrying amount
Balance at December 31, 2012
Balance at December 31, 2013
57
amount
(Restated)
124,418
62,911
187,329
64,926
252,255
34,593
14,127
48,720
30,091
78,811
138,609
173,444
Development and exploration costs
Deferred stripping asset
total mine development expenditures incurred
as at December 31, 2013
as at December 31, 2012
176,456
75,799
252,255
154,795
32,534
187,329
Mine development expenditures represent development costs
in relation to the Sabodala gold mine and Gora satellite deposit.
For the year ended December 31, 2013, capitalized mine
development expenditures include $43.3 million of deferred
stripping costs, $16.6 million relating to payments made
and to be made to the Republic of Senegal (refer to Notes 22
and 31), capitalized reserve development of $3.5 million,
$0.5 million related to the Gora project that was advanced from
the exploration stage to the development stage effective Janu-
ary 1, 2012 after technical feasibility and commercial viability
studies had been completed, and other items of $1.0 million.
Depreciation of capitalized mine development of
$30.1 million was expensed as cost of sales for the year
ended December 31, 2013 (2012: $14.1 million) based
on $181.5 million of assets subject to depreciation and
amortization (2012: $121 million).
21. intanGiBle assets
cost
Balance at January 1, 2012
Additions
Balance at December 31, 2012
Additions
Balance at December 31, 2013
accumulated amortization
Balance at January 1, 2012
Amortization expense
Balance at December 31, 2012
Amortization expense
Balance at December 31, 2013
carrying amount
at December 31, 2012
at December 31, 2013
(i) Computer software costs relate to non-operating activities including software license fees using the straight-line depreciation method.
computer software(i)
1,915
1,424
3,339
109
3,448
830
650
1,480
1,021
2,501
1,859
947
2013 AnnuAl RepoRt
58
22. tRaDe anD OtHeR PayaBles
current
Unsecured liabilities:
Trade payables(i)
Sundry creditors and accrued expenses
Government royalties(ii)
Amounts payable to Republic of Senegal(iii), (iv), (v)
total current trade and other payables
Non-Current
Amounts payable to Republic of Senegal(iii), (vi)
total other non-current liabilities
total payables
as at December 31, 2013
as at December 31, 2012
21,410
11,865
16,296
7,320
56,891
10,959
10,959
67,850
16,446
12,370
10,927
5,080
44,823
–
–
44,823
(i) Trade payables comprise of obligations by the Company to suppliers of goods and services. Terms are generally 30 days.
(ii) Government royalties are payable annually based on the mine head value of the gold and related substances produced at a rate of 5 percent of sales in 2013, compared to a rate
of 3 percent of sales in 2012. During the second quarter of 2013, $10.0 million of 2012 royalties were paid to the Republic of Senegal.
(iii) An amount of $3.7 million is payable to the Republic of Senegal in four equal annual instalments based on $6.50 for each ounce of new reserve until December 31, 2012.
One payment was made during the second quarter of 2013 and of the remaining three payments, one has been presented as a current liability and the remaining two payments
have been presented as other non-current liabilities and recorded at a discounted value. Refer to Notes 20 and 31 for further details.
(iv) An accrual of $1.2 million remains at December 31, 2013 related to the tax settlement of the Sabodala Gold Operations SA (“SGO”) 2012 tax assessment. During the second
quarter of 2013, $2.6 million was paid in full settlement of the Sabodala Mining Company 2013 tax assessment and in partial settlement of the SGO 2012 tax assessment.
The remaining balance has been classified as a current liability. Refer to Notes 20 and 31 for further details.
(v) The Company has also agreed to advance accrued dividends, calculated based on a gold price of $1,600 per ounce. For the period ended December 31, 2013, approximately
$5.2 million has been accrued based on net sales revenue. Refer to Note 31 for further details.
(vi) The Company has agreed to make a payment of $15.0 million to the Republic of Senegal at the end of the operational life to establish a social development fund. The payment,
after applying a discount rate, has been accrued for the quarter ended December 31, 2013. Refer to Notes 20 and 31 for further details.
23. BORROWinGs
current
Loan facility
Finance lease liabilities
Transaction costs
total current borrowings
non-current
Loan facility
Finance lease liabilities
Transaction costs
total non-current borrowings
total borrowings
as at December 31, 2013
as at December 31, 2012
60,000
12,775
(2,352)
70,423
–
4,192
(246)
3,946
74,369
–
10,506
(91)
10,415
60,000
–
(1,807)
58,193
68,608
macquarie loan Facility
During the third quarter of 2013, the Company amended its
existing $60.0 million loan facility agreement with Macquarie
(“Loan Facility”). The amended agreement had extended the
final repayment date of its existing loan facility agreement by
one year to June 30, 2015. The Company was required to
maintain a restricted cash balance of up to $20.0 million and
$40.0 million of the loan facility was to have been repaid in
five equal quarterly instalments beginning on June 30, 2014.
The final $20.0 million was scheduled to be repaid with the
final instalment on June 30, 2015. As at December 31, 2013,
the Company was not permitted to withdraw any portion of
the $20.0 million restricted cash balance as the Project Life
Ratio was less than the required 2.2:1. In addition, the
Company was not in compliance with all of its financial
covenants; as a result, the entire $60.0 million project facility
was classified within current borrowings.
Subsequent to year-end on January 15, 2014, the Company
amended the Loan Facility and retired half of the balance
for $30.0 million. The remaining balance of $30.0 million
is scheduled to be repaid in three quarterly instalments
of $5.0 million beginning on March 31, 2014. The final
$15.0 million will be repaid on December 31, 2014. The
amended Loan Facility agreement reduces the restricted
cash requirement by $5.0 million to $15.0 million and
removes the Project Life Ratio financial covenant.
teranga gold corporation / notes to tHe consolidated financial statements
59
macquarie Finance lease Facility
During the first quarter of 2013, the Company entered into
a new $50.0 million finance lease facility with Macquarie
(“Equipment Facility”). The lease facility replaces the finance
lease facility previously in place with Sociéte Generalé, which
was assigned and novated to Macquarie. The proceeds have
been put towards additional equipment for the Sabodala pit.
During the fourth quarter of 2013, the Company cancelled
the undrawn commitment from the Equipment Facility.
The following table shows the minimum lease repayment
schedule.
No later than one year
Later than one year and not later than five years
total finance lease liabilities
Included in the financial statements as:
Current
Non-current
as at December 31, 2013
as at December 31, 2012
minimum future
lease payments
Present value of
minimum future
lease payments
minimum future
lease payments
Present value of
minimum future
lease payments
12,775
4,192
16,967
12,775
4,192
12,290
3,946
16,236
12,290
3,946
10,506
–
10,506
10,506
–
10,415
–
10,415
10,415
–
The finance loan relates to the Equipment Facility, with a
remaining lease term of fifteen months expiring March 2015.
Minimum future lease payments consist of five payments
over the term of the loan. Interest is calculated at LIBOR plus
a margin paid quarterly in arrears. Due to the variable nature
of the interest repayments the table above excludes all future
interest amounts.
sprott loan Facility
Prior to its acquisition by Teranga, Oromin entered into a
$5 million credit agreement with Sprott Resource Lending
Partnership (“Facility”). Under the Facility agreement,
the amount outstanding at August 6, 2013 of $3.7 million
became payable upon the acquisition and was repaid during
the third quarter of 2013.
24. DeRiVatiVe liaBilities
During the second quarter of 2013, the Company bought
back the remaining 14,500 ounces related to “out of the mon-
ey” gold forward sales contracts at a cost of $8.6 million. At
December 31, 2013, there is no remaining derivative liability.
At December 31, 2012, the hedge position comprised
59,789 ounces of forward sales at an average price of $803
per ounce. The mark-to-market gold hedge position at the
period-end spot price of $1,664 per ounce was in a liability
position of $51.5 million.
2013 AnnuAl RepoRt
60
25. PROVisiOns
current
Employee benefits(i)
total current provisions
non-current
Mine restoration and rehabilitation(ii)
Cash-settled share-based compensation(iii)
total non-current provisions
total provisions
as at December 31, 2013
as at December 31, 2012
1,751
1,751
14,227
109
14,336
16,087
1,940
1,940
9,377
935
10,312
12,252
(i)
(ii)
The provisions for employee benefits include $1.2 million accrued vacation and $0.6 million long service leave entitlements for the period ended December 31, 2013.
The provision for December 31, 2012 included $1.4 million accrued vacation and $0.5 million long service leave entitlements.
Mine restoration and rehabilitation provision represents a constructive obligation to rehabilitate the Sabodala gold mine based on the mining concession.
The majority of the reclamation activities will occur at the completion of active mining and processing (which as of December 31, 2013 was estimated based
on a mine closure in 2019) but a limited amount of concurrent rehabilitation will occur throughout the mine life.
Balance at January 1, 2012
Capitalized mine rehabilitation
Unwinding of discount
Balance at December 31, 2012
Capitalized mine rehabilitation
Unwinding of discount
Balance at December 31, 2013
amount
9,215
109
53
9,377
4,694
156
14,227
Note: The mine restoration and rehabilitation provision has increased by $4.7 million in 2013 primarily due to
change in discount rates and increase in cost estimates. The key assumptions applied for the determination of the mine
restoration and rehabilitation provision include a discount rate of 1.1 percent and an inflation rate of 2.0 percent.
(iii) The provision for cash-settled share-based compensation represents the amortization of the fair value of the fixed bonus plan units. Details of the fixed bonus plan are
disclosed in Note 36(b).
26. issUeD caPital
common shares issued and outstanding
Balance at January 1, 2012 and December 31, 2012
Issued to Oromin shareholders
Less: Share issue costs
Balance at December 31, 2013
number of shares
amount
245,618,000
71,183,091
–
316,801,091
305,412
37,264
(206)
342,470
On October 4, 2013, the Company completed the acquisi-
tion of all of the issued and outstanding common shares of
Oromin that it did not already own.
In total, the Company issued 71,183,091 Teranga shares
to acquire all of the Oromin shares for consideration of
$37.3 million. The fair value of Oromin stock options
replaced by 7,911,600 Teranga stock options totals an
additional $0.6 million of consideration. As a result,
Teranga’s total number of issued and outstanding shares
increased to 316,801,091.
The Company is authorized to issue an unlimited number of
Common Shares with no par value. Holders of Common Shares
are entitled to one vote for each Common Share on all matters
to be voted on by shareholders at meetings of the Company’s
shareholders. All dividends which the Board of Directors may
declare shall be declared and paid in equal amounts per share
on all Common Shares at the time outstanding. There are no
pre-emptive, redemption or conversion rights attached to the
Common Shares. All Common Shares, when issued, are and
will be issued as fully paid and non-assessable shares without
liability for further calls or to assessment.
teranga gold corporation / notes to tHe consolidated financial statements
61
27. aVailaBle FOR sale Financial assets
As part of the acquisition of the Sabodala gold mine and
Regional Land Package by way of Demerger from MDL,
Teranga acquired 18,699,500 common shares of Oromin,
classified as available for sale in accordance with IAS 39
“Financial Instruments: Recognition and Measurement”.
In the third quarter of 2013, the Company consolidated
the Oromin shares upon acquisition of all the issued and
outstanding shares of Oromin.
For the year ended December 31, 2013, as a result of change
in fair value of available for sale financial assets, a loss of
$5.4 million (2012: $6.8 million gain), net of tax of $nil (2012:
$nil) was recognized in Other Comprehensive Income/(Loss).
A further decline in Oromin’s share price of $4.0 million was
recognized as non-cash impairment losses (2012: $11.9 million).
The following table outlines the change in fair value of the
investment in Oromin:
Balance at January 1, 2012
Change in fair value of available for sale financial asset during period
Foreign exchange gain
Balance at December 31, 2012
Change in fair value of available for sale financial asset during period
Foreign exchange loss
Consolidation of Oromin upon acquisition of control
Balance at December 31, 2013
As part of the acquisition of Oromin, the Company acquired
Oromin’s investment of 1,197,906 shares of Lund Enterprise
Corp. (“Lund”) of $0.02 million with a market value at
August 6, 2013 of $0.015 per share. For the period ended
December 31, 2013, the Company recognized a non-cash
impairment loss of $0.01 million based on further declines
in Lund’s share price.
amount
19,800
(5,142)
352
15,010
(9,448)
(431)
(5,131)
–
28. FOReiGn cURRency tRanslatiOn
The foreign currency translation reserve represents historical
exchange differences of $0.9 million which arose upon trans-
lation from the functional currency of the Company’s corpo-
rate entity into United States dollars during 2011, which were
recorded directly to the foreign currency translation reserve
within the consolidated statement of changes in equity. The
remaining amount of $0.1 million represents foreign exchange
difference resulting from the change of functional currency
from Canadian to United States dollars as at January 1, 2012.
29. eaRninGs PeR sHaRe (ePs)
Basic EPS (US$)
Diluted EPS (US$)
Basic EPS:
Net profit used in the calculation of basic EPS
Weighted average number of common shares for the purpose of basic EPS (’000)
Weighted average number of common shares for the purpose of diluted EPS (’000)
For the year ended December 31
2013
0.18
0.18
47,516
270,705
270,705
2012
0.38
0.38
92,600
245,618
245,618
The determination of weighted average number of common
shares for the purpose of diluted earnings per share (“EPS”)
excludes 23.7 million and 17.1 million shares relating to share
options that were anti-dilutive for the periods ended Decem-
ber 31, 2013 and December 31, 2012, respectively.
2013 AnnuAl RepoRt
62
30. cOmmitments FOR eXPenDitURe
31. cOntinGent liaBilities
a. capital expenditure commitments
The Company has committed to spend a total of $100,000
over the next year in respect of the mining equipment
supply contract.
During the second quarter of 2013, the Company signed a
definitive global agreement with the Republic of Senegal. A
component of the agreement relates to the settlement of out-
standing tax assessments and special contribution payment.
b. sabodala Operating commitments
The Company has the following operating commitments in
respect of the Sabodala gold operation:
• Pursuant to the Company’s Mining Concession, a royalty of
5 percent (2012 – 3 percent) is payable to the Government
of Senegal based on the value of gold shipments, evaluated
at the spot price on the shipment date.
• $425,000 per annum on social development of local
authorities in the surrounding Tambacounda region during
the term of the Mining Concession.
• $30,000 per year for logistical support of the territorial
administration of the region from date of notification of the
Mining Concession.
• $200,000 per year on training of Directorate of Mines
and Geology officers and Mines Ministry.
c. OJVG Operating commitments
The Company faces the following operating commitments in
respect of the OJVG project:
• $450,000 per year is payable for social development of
local authorities in the surrounding Kedougou Region
during the term of the Mining Concession.
• $150,000 per year is payable for logistical support of the
territorial administration of the region from date of notifica-
tion of the Mining Concession.
d. Oromin Operating commitments
Pursuant to Oromin’s lease agreement which was extended
in July 2012, the Company holds a lease on its office prem-
ises in Vancouver, Canada, which terminates May 31, 2018.
The Company is committed to lease payments with annual
amounts payable of approximately $235,000.
Subsequent to the year-end, the Company signed an offer
to assign agreement to sub-lease the office premises in
Vancouver to a third party. The Company is committed to a
total payment of $188,000 representing the period through
to the end of the lease term. This payment is expected to
be made in the second quarter of 2014.
a. settled and Outstanding tax assessments
During the second quarter of 2013, the Company made a pay-
ment of $1.4 million in full settlement of the Sabodala Mining
Company SARL (“SMC”) tax assessment received in January
2013. The Company also made a payment of $1.2 million in
partial settlement of the Sabodala Gold Operations SA (“SGO”)
tax assessment received in December 2012. The final pay-
ment for the tax settlement of $1.2 million has been accrued
and is expected to be paid in early 2014.
Approximately $18 million of the SGO 2011 tax assessment of
approximately $24 million has been resolved and approxi-
mately $6 million remains in dispute. The Company believes
that the remaining amount in dispute is without merit and that
these issues will be resolved with no or an immaterial amount
of tax due.
b. Government Payments
During the second quarter of 2013, the Company made a
payment of $2.7 million related to accrued dividends to the
Republic of Senegal in respect of its existing 10 percent
minority interest. A payment of $2.7 million will be required
once drilling activities recommence at Niakafiri. The Com-
pany has also agreed to advance an estimated $8.0 million
of accrued dividends to be paid in 2014 and 2015 which was
estimated based on a gold price of $1,600 per ounce. For the
year ended December 31, 2013, approximately $5.2 million
has been accrued based on net sales revenue.
The Company is required to make a payment of approxi-
mately $4.2 million related to the waiver of the right for the
Republic of Senegal to acquire an additional equity interest in
the Gora project. The payment is expected to be made upon
receipt of all required approvals authorizing the processing of
all Gora project ore through the Sabodala plant.
The Company has agreed to establish a social development
fund targeted at $15.0 million, payable to the Republic of
Senegal at the end of the operational life. The payment, after
applying a discount rate, was accrued for the year ended
December 31, 2013.
The Company is required to make a payment of $10.0 million
related to the waiver of the right for the Republic of Senegal to
acquire an additional equity interest in the Satellite Deposits
integrated into the SGO Mining Concession. The payment is
expected to be made upon receipt of all permits required to
integrate the Somigol project into the SGO mining concession.
teranga gold corporation / notes to tHe consolidated financial statements 63
c. OJVG tax assessment
In 2012, OJVG received a tax assessment from the Senega-
lese tax authorities claiming withholding tax on payments
made to third parties during 2009 to 2012 and $1.3 million
was accrued during this period. During the third quarter of
2013, OJVG received a revised tax assessment for approxi-
mately $0.7 million, including penalties and accordingly
reversed $0.6 million of the original accrual. During the fourth
quarter of 2013, the tax dispute was resolved and a payment
of $0.2 million was made in full settlement.
32. eXPlORatiOn licenses anD JOintly cOntROlleD OPeRatiOns anD assets
The Company has exploration licenses and is a venturer in the following jointly controlled operations and assets:
name of venture
Dembala Berola
Massakounda
Senegal Nominees JV – Bransan
AXMIN JV – Sabodala NW(i)
AXMIN JV – Heremakono
AXMIN JV – Sounkounkou
Bransan Sud
Sabodala Ouest
Saiansoutou
Garaboureya North
(i) The permit for AXMIN JV – Sabodala NW expired and the Company has applied for an extension.
exploration commitments and contingent liabilities
Exploration commitments and contingent liabilities are disclosed in Notes 30 and 31.
33. cOntROlleD entities
Controlled entities consolidated
Teranga Gold B.V.I. Corporation(i)
Sabodala Gold (Mauritius) Limited(ii)
SGML (Capital) Limited
Oromin Explorations Limited(iv)
Subsidiaries of Sabodala Gold (Mauritius) Limited:
Sabodala Mining Company SARL(ii)
Sabodala Gold Operations SA(iii)
Principal activity
interest 2013 percent
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
100%
100%
70%
80%
80%
80%
100%
100%
100%
75%
country of
incorporation
Percentage owned
2011
British Virgin Islands
Mauritius
Mauritius
Canada
Senegal
Senegal
100%
100%
100%
100%
100%
90%
(i)
(ii)
Teranga Gold (B.V.I.) Corporation, a wholly owned subsidiary of Teranga Gold Corporation, was incorporated under the BVI Business Companies Act, 2004 on November 10,
2010. In connection with the Demerger Arrangement and pursuant to a deed of assignment of debt among Teranga Gold Corporation, Teranga Gold (B.V.I.) Corporation, MDL
Gold Limited, Sabodala Gold (Mauritius) Limited and Sabodala Gold Operations SA dated November 23, 2010, Teranga Gold (B.V.I.) Corporation took assignment of an
inter-corporate receivable of $234,300,000 owed by Sabodala Gold Operations SA to Sabodala Gold (Mauritius) Limited as assigned to MDL Gold Limited in consideration
for 1,000,000 ordinary shares of Teranga Gold (B.V.I.) Corporation registered in the name of Teranga Gold Corporation.
Pursuant to the Uniform Act (OHADA) governing the Company’s “SA” Senegalese subsidiaries, the Board of Directors must have at least three and no more than 12 directors
(other than in particular circumstances). Members of the board do not have to be shareholders; however, no more than one-third of the members of the board may be non-
shareholders. Teranga is the majority (90 percent) shareholder of SGO through its wholly owned subsidiary Sabodala Gold (Mauritius) Limited. A sufficient number of directors
representing SGML (the Mauritius holding company) were elected to the Board of Directors of SGO, in addition to the two resident directors with executive responsibility, to
ensure adequate representation at all board meetings, the minority shareholder (Republic of Senegal) being entitled to two board seats, one representing the State and the other
being held by a non-shareholder Senegalese public servant. To meet the requisite shareholder requirement for the Board of Directors of SGO, five of the current board members
(four of which are also directors of SGML) were issued one share each for a total of 0.5 percent in SGO with the other 89.5 percent issued to and held by the Mauritian parent
SGML. On death or resignation, a share individually held would be transferred to another representative of SGML or added to its current 89.5 percent shareholding according
to the circumstances at the time.
(iii) Under the terms of the Macquarie loan facility, SGML and SGO have pledged their shares in favour of Macquarie Bank Limited as security.
(iv)
On October 4, 2013, the Company completed the acquisition of all of the issued and outstanding common shares of Oromin that it did not already own, issuing 71,183,091
Teranga shares for net consideration of $37.8 million, including the fair value of Oromin stock options replaced by 7,911,600 Teranga stock options.
2013 AnnuAl RepoRt
64
34. casH FlOW inFORmatiOn
a. change in Working capital
changes in working capital
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
net change in working capital
b. cash Balances Restricted for Use
During the third quarter of 2013, the Company amended its
existing $60.0 million Loan Facility. The amended agree-
ment had extended the final repayment date of its existing
loan facility agreement by one year to June 30, 2015. The
Company was required to maintain a restricted cash balance
of up to $20.0 million. The Company is permitted to withdraw
a portion of the $20 million restricted cash balance, such that
the Project Life Ratio is no less than 2.2:1.
Subsequent to year-end on January 15, 2014, the Company
amended the Loan Facility and retired half of the balance
for $30.0 million. The remaining balance of $30.0 million
is scheduled to be repaid in three quarterly instalments of
$5.0 million beginning on March 31, 2014. The final
$15.0 million will be repaid on December 31, 2014. The
amended Loan Facility agreement reduces the restricted
cash requirement by $5.0 million to $15.0 million and re-
moves the Project Life Ratio financial covenant.
Borrowings
Cash and cash equivalents
Restricted Cash
net debt
For the year ended December 31
2013
(1,613)
1,108
5,505
(188)
4,812
2012
13,965
5,915
5,660
1,030
26,570
35. Financial instRUments
The Company’s risk exposures and the impact on the Com-
pany’s financial instruments are summarized below:
a. capital Risk management
The Company’s objectives when managing its capital are
to safeguard the Company’s ability to continue as a going
concern while maximizing the return to stakeholders through
optimization of the debt and equity balance.
The capital structure of the Company consists of cash and
cash equivalents, debt, and equity attributable to equity
holders of the parent, comprising issued capital, reserves
and accumulated income. The Company is not subject to
any externally imposed capital requirements. At $1,250 per
ounce gold, the Company expects to generate sufficient cash
flow to retire the balance of the Loan facility and the majority
of the mobile equipment loan. The Company’s cash posi-
tion is highly dependent on the gold price. The Company is
continually reviewing operating, development and exploration
expenditures in order to ensure adequate liquidity and flex-
ibility exists to support debt repayments.
The leverage ratio as at December 31, 2013 was as follows:
as at December 31, 2013
as at December 31, 2012
(74,369)
14,961
20,000
(39,408)
(68,608)
39,722
–
(28,886)
equity attributable to the shareholders
453,989
375,453
net debt to equity ratio
9%
8%
teranga gold corporation / notes to tHe consolidated financial statements
65
b. categories of Financial instruments
As at December 31, 2013 and 2012, the Company’s financial
instruments consisted of cash and cash equivalents, trade
and other receivables, trade and other payables, borrowings
and derivative financial assets and liabilities.
The following table illustrates the classification of the Compa-
ny’s financial instruments as at December 31, 2013 and 2012:
as at December 31, 2013
as at December 31, 2012
Financial assets:
Loans and receivables
Cash and cash equivalents
Restricted cash
Trade and other receivable
Assets at fair value through profit or loss
Financial derivative assets
Available-for-sale
Available-for-sale financial assets
Financial liabilities:
Other financial liabilities at amortized cost
Borrowings
Trade and other payables
Liabilities at fair value through profit and loss
Financial derivative liabilities
14,961
20,000
7,999
–
6
74,369
67,959
–
39,722
–
6,482
456
15,010
68,608
45,758
51,548
c. commodity market Risk
Market risk represents the potential loss that can be caused
by a change in the market value of financial instruments.
The Company’s exposure to market risk is determined by
a number of factors, including foreign exchange rates and
commodity prices. The Company is exposed to movements
in the gold price.
nated in CFA Franc, EUR, CAD, AUD and other currencies.
Consequently, the Company is exposed to the risk that the ex-
change rate of the USD relative to the CFA Franc, EUR, CAD,
AUD and other currencies may change in a manner which
has a material effect on the reported values of the Company’s
assets and liabilities which are denominated in the CFA
Franc, EUR, CAD, AUD and other currencies.
d. Foreign currency Risk management
The Company has certain financial instruments denomi-
The carrying amounts of the Company’s foreign currency
denominated monetary assets and monetary liabilities is as
follows:
CFA Franc (XOF)
EUR
CAD
Other
AUD
Financial assets
Financial liabilities
December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012
9,054
1,209
704
224
199
2,349
1,486
483
250
213
43,366
2,872
6,138
336
371
30,672
3,714
2,398
118
898
Foreign Currency Sensitivity Analysis
The Company is mainly exposed to CFA Franc, EUR, CAD
and AUD. Ten percent represents management’s assessment
of the reasonably possible change in foreign exchange rates.
Sensitivity analysis includes only outstanding foreign curren-
cy denominated monetary items and adjusts their translation
at period-end for a 10 percent change in the functional cur-
rency rates. A negative number indicates a decrease in profit
or equity where the functional currency strengthens 10 per-
cent against the relevant currency for monetary assets and
where the functional currency weakens against the relevant
currency for monetary liabilities. For a 10 percent weaken-
ing of USD against the relevant currency for monetary assets
and a 10 percent strengthening for monetary liabilities, there
would be an equal and opposite impact on net assets and
the balances would be positive.
2013 AnnuAl RepoRt
66
10% strengthening
cFa Franc (XOF) impact
Profit or loss
eUR impact
Profit or loss
caD impact
Profit or loss
aUD impact
Profit or loss
10% Weakening
cFa Franc (XOF) impact
Profit or loss
eUR impact
Profit or loss
caD impact
Profit or loss
aUD impact
Profit or loss
Financial assets
Financial liabilities
December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012
(905)
(235)
4,337
3,067
(121)
(149)
287
371
(70)
(48)
614
240
(20)
(21)
37
90
905
235
(4,337)
(3,067)
121
149
(287)
(371)
70
20
48
21
(614)
(240)
(37)
(90)
Foreign Currency Exchange Contracts
The Company has not entered into forward exchange con-
tracts to buy or sell specified amounts of foreign currencies
in the future at stipulated exchange rates.
e. interest Rate Risk management
Interest rate risk is the risk that the value of a financial instru-
ment will fluctuate because of changes in the market interest
rates. The Company has exposure to interest rate risk relating
to its bank balances and external borrowings.
The following table illustrates the classification of the Com-
pany’s financial instruments which are exposed to interest
rate risk as at December 31, 2013 and 2012:
Financial assets
Cash and cash equivalents
Restricted cash
total
Financial liabilities
Borrowings
total
as at December 31, 2013
as at December 31, 2012
14,961
20,000
34,961
74,369
(39,408)
39,722
–
39,722
68,608
(28,886)
The Company’s interest rate on its borrowings is calculated at
LIBOR plus 7.5 percent and 10 percent margin on the
Equipment Facility and Loan Facility, respectively.
Interest Rate Sensitivity Analysis
If interest rates had been higher or lower by 50 basis points
and all other variables were held constant, the profit and net
assets would increase or decrease by:
Profit or loss
Other equity
Financial assets
Financial liabilities
December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012
203
–
131
–
391
–
312
–
teranga gold corporation / notes to tHe consolidated financial statements
67
f. credit Risk management
The Company’s credit risk is primarily attributable to cash,
cash equivalents and derivative financial instruments. The
Company does not have any significant credit risk exposure
as cash and cash equivalents are held in low-risk jurisdic-
tions. The Company has adopted a strategy to minimize its
credit risk by substantially investing in sovereign debt issued
by Canadian government agencies, Canadian Provinces and
the Federal Government of Canada.
The Company does not have significant credit risk exposure
on accounts receivable as all gold sales are executed through
Macquarie Bank, a AAA-rated bank. Gold production is
sold into the spot market and deposited into the Company’s
bank account.
The Company is exposed to the credit risk of Senegal and
France banks that disburse cash on behalf of its Senegal
subsidiaries. The Company manages its Senegal and France
bank credit risk by centralizing custody, control and manage-
ment of its surplus cash resources in Canada at the corporate
office and only transferring money to its subsidiary based on
immediate cash requirements, thereby mitigating exposure to
Senegal banks.
g. liquidity Risk management
Liquidity risk is the risk that the Company will not be able to
meet its obligations as they fall due. The Company monitors
its risk of a shortage using projected cash flows and by moni-
toring the maturity of both its financial assets and liabilities.
Cash flow forecasting is performed in the operating entity of
the group and combined by the Company’s finance group.
The Company’s finance group monitors the liquidity require-
ments to ensure it has sufficient cash to meet operational
needs while maintaining sufficient headroom in its proceeds
account so that the Company does not breach any of its cov-
enants. Surplus cash held by the Corporate office is invested
in short-term investments issued by Canadian banks and in
sovereign debt issued by Canadian Agencies, Provinces and
the Federal Government of Canada.
Liquidity Tables
The following tables detail the Company’s remaining contrac-
tual maturity for its financial liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Company
can be required to pay. The table includes both interest and
principal cash flows.
Weighted average effective
interest rate percent
Due on demand
Due one to Due between three
three months months to one year
Due one
to five years
Financial liabilities
December 31, 2013
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Variable interest rate instruments
total
December 31, 2012
Non-interest bearing
Variable interest rate instruments
Variable interest rate instruments
Fixed interest rate instruments
Variable interest rate instruments
Derivatives(i)
total
Financial assets
December 31, 2013
Non-interest bearing
total
December 31, 2012
Non-interest bearing
Derivatives(ii)
total
–
7.77%
3.08%
9.13%
–
3.31%
4.46%
6.00%
10.31%
–
33,273
–
–
60,000
93,273
30,121
–
–
3,776
–
–
1,200
3,194
–
–
4,394
–
2,400
2,133
–
–
15,702
33,897
20,235
16,296
9,581
925
–
26,802
10,927
1,706
4,266
–
–
35,846
52,745
5,195
4,192
1,750
–
11,137
–
–
–
–
60,000
–
60,000
Weighted average effective
interest rate percent
Due on demand
Due one to Due between three
three months months to one year
Due one
to five years
–
–
–
7,999
7,999
6,482
–
6,482
–
–
–
456
456
–
–
–
–
–
–
–
–
–
–
(i) Expected to be settled through delivery of gold.
(ii) Expected to be settled in cash on a net basis.
2013 AnnuAl RepoRt
68
Management considers that the Company has adequate
current assets and forecasted cash flow from operations to
manage liquidity risks arising from settlement of current and
non-current liabilities.
h. Fair Value of Financial instruments
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an ordinary transaction be-
tween market participants at the measurement date. The fair
value hierarchy establishes three levels to classify the inputs
to valuation techniques used to measure fair value.
The Company values instruments carried at fair value using
quoted market prices, where available. Quoted market prices
(unadjusted) in active markets represent a Level 1 valuation.
When quoted market prices in markets are not available, the
Company maximizes the use of observable inputs within valu-
ation models. When all significant inputs are observable, the
valuation is classified as Level 2. Valuations that require the
significant use of unobservable inputs are considered Level
3. The fair value hierarchy gives the highest priority to Level 1
inputs and the lowest priority to Level 3 inputs.
The following table outlines financial assets and liabilities
measured at fair value in the consolidated financial state-
ments and the level of the inputs used to determine those fair
values in the context of the hierarchy as defined above:
December 31, 2013
Cash and cash equivalents
Restricted cash
Trade and other receivables
Available for sale financial assets
total
December 31, 2012
Cash and cash equivalents
Restricted cash
Trade and other receivables
Available for sale financial assets
Derivative financial assets
total
December 31, 2013
Trade and other payables
Borrowings
Derivative financial liabilities
total
December 31, 2012
Trade and other payables
Borrowings
Derivative financial liabilities
total
Financial assets
Quoted prices in
active markets for
identical assets
level 1
significant
other observable
inputs
level 2
significant
unobservable
inputs
level 3
14,961
20,000
7,999
6
42,966
39,722
–
6,482
15,010
–
61,214
–
–
–
–
–
–
–
–
–
456
456
–
–
–
–
–
–
–
–
–
–
–
Financial liabilities
Quoted prices in
active markets for
identical assets
level 1
significant
other observable
inputs
level 2
significant
unobservable
inputs
level 3
56,891
–
–
56,891
44,823
–
–
44,823
11,068
74,369
–
85,437
935
68,608
51,548
121,091
–
–
–
–
–
–
–
–
aggregate
Fair total
14,961
20,000
7,999
6
42,966
39,722
–
6,482
15,010
456
61,670
aggregate
Fair total
67,959
74,369
–
142,328
45,758
68,608
51,548
165,914
We do not offset financial assets with financial liabilities.
teranga gold corporation / notes to tHe consolidated financial statements
69
36. sHaRe-BaseD cOmPensatiOn
The share-based compensation expense for the year ended
December 31, 2013 totalled $0.8 million (2012: $4.7 million).
a. incentive stock Option Plan
The Incentive Stock Option Plan (the “Plan”) authorizes the
directors to grant options to purchase shares of the Company
to directors, officers, employees and consultants of the Com-
pany and its subsidiaries. The exercise price of the options is
determined by the Board of Directors at the date of grant but
in no event shall be less than the five-day weighted average
closing price of the common shares as reported on the TSX
for the period ended on the business day immediately pre-
ceding the day on which the option was granted.
The vesting of options is determined by the Board of Direc-
tors at the date of grant. The term of options granted under
the Plan is at the discretion of the Board of Directors, pro-
vided that such term cannot exceed ten years from the date
the option is granted.
Each employee share option is convertible into one ordinary
share of Teranga on exercise. No amounts are paid or pay-
able by the recipient on receipt of the option. The options
carry neither rights to dividends nor voting rights. Options
may be exercised at any time from the date of vesting to the
date of their expiry subject to the terms of the Plan.
During the years ended December 31, 2013 and 2012, a
total of 820,000 and 3,580,000 common share options,
respectively, were granted to directors and employees.
During the years ended December 31, 2013 and 2012,
a total of 2,132,917 and 4,058,055 options were forfeited,
respectively. No stock options were exercised during the
years ended December 31, 2013 and 2012.
In connection with the acquisition of Oromin during the third
quarter, Teranga issued 7,911,600 replacement stock options.
The following stock options were outstanding as at
December 31, 2013:
Option series
number
Grant date
expiry date
exercise
price (c$)
FV at
grant date (c$)
Granted on November 26, 2010
Granted on December 3, 2010
Granted on February 9, 2011
Granted on April 27, 2011
Granted on June 14, 2011
Granted on August 13, 2011
Granted on December 20, 2011
Granted on February 24, 2012
Granted on February 24, 2012
Granted on June 5, 2012
Granted on September 27, 2012
Granted on October 9, 2012
Granted on October 31, 2012
Granted on October 31, 2012
Granted on December 3, 2012
Granted on February 23, 2013
Granted on February 23, 2013
Granted on May 14, 2013
Granted on June 3, 2013
Granted on August 6, 2013
Granted on August 6, 2013
Granted on August 6, 2013
Granted on August 6, 2013
Granted on August 6, 2013
7,003,333
2,225,000
725,000
25,000
455,000
367,222
1,512,917
768,889
300,000
50,000
600,000
600,000
80,000
180,000
200,000
383,889
40,000
190,000
120,000
573,600
45,000
4,437,600
120,000
2,735,400
26-Nov-10
03-Dec-10
09-Feb-11
27-Apr-11
14-Jun-11
13-Aug-11
20-Dec-11
24-Feb-12
24-Feb-12
05-Jun-12
27-Sep-12
09-Oct-12
31-Oct-12
31-Oct-12
03-Dec-12
23-Feb-13
23-Feb-13
14-May-13
03-Jun-13
06-Aug-13
06-Aug-13
06-Aug-13
06-Aug-13
06-Aug-13
26-Nov-20
03-Dec-20
09-Feb-21
27-Apr-21
14-Jun-21
13-Aug-21
20-Dec-21
24-Feb-22
24-Feb-22
05-Jun-22
27-Sep-22
06-Oct-22
31-Oct-22
31-Oct-22
03-Dec-22
23-Feb-23
23-Feb-23
14-May-23
03-Jun-23
06-Feb-15
06-Feb-15
06-Feb-15
06-Feb-15
06-Feb-15
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
1.09
1.50
1.54
1.87
2.17
1.19
1.19
0.99
0.80
0.94
0.82
0.61
0.37
1.26
0.17
0.93
1.01
0.52
0.18
0.61
0.42
0.25
0.82
0.71
*
*
*
*
*
* As part of the Oromin acquisition, 7,911,600 replacement stock options were issued which vested immediately.
As at December 31, 2013, approximately 15.9 million (2012:
7.4 million) options were available for issuance under the Plan.
“measurement date”), the entire fair value of the vesting op-
tions is recognized immediately on the measurement date.
The estimated fair value of share options is amortized over
the period in which the options vest which is normally three
years. For those options which vest on single or multiple
dates, either on issuance or on meeting milestones (the
Of the 23,737,850 common share stock options issued and
outstanding as at December 31, 2013, 15,651,250 vest
over a three-year period, 7,911,600 vested immediately and
175,000 vest based on achievement of certain milestones.
2013 AnnuAl RepoRt
70
The fair value of options that vest upon achievement of
milestones will be recognized based on the best estimate of
outcome of achieving our results.
As at December 31, 2013, 15,826,250 share options had a
contractual life of 10 years at issuance and 7,911,600 share
options issued in connection with the acquisition of Oromin
have a remaining contractual life of 13 months.
Fair Value of Stock Options Granted
The fair value at the grant date was calculated using Black-
Scholes option pricing model with the following assumptions:
Grant date share price
Exercise price
Range of risk-free interest rate
Volatility of the expected market price of share
Expected life of options
Dividend yield
Forfeiture rate
For the year ended December 31
2013
2012
C$0.71–C$1.44
C$3.00
1.04%–1.20%
67.28%–68.30%
2.00–3.50
0%
5%–50%
C$2.10–C$2.58
C$3.00
0.99%–1.43%
43.7%–61.62%
1.25–5.00
0%
0%–30%
Due to lack of sufficient historical information for the Company,
volatility was determined using the existing historical volatility
information of the Company’s share price combined with the
industry average for comparable-size mining companies.
Movements in Shares Options During the Period
The following reconciled the share options outstanding at the
beginning and end of the period:
Balance at end of the year – January 1, 2012
Granted during the year
Forfeited during the year
Balance at end of the year – December 31, 2012
Granted during the year
Replacement stock options issued to Oromin employees on change of control
Forfeited during the year
Balance at end of the year – December 31, 2013
number of options exercisable – December 31, 2012
number of options exercisable – December 31, 2013
There were no options exercised during the years ended
December 31, 2013 and December 31, 2012.
b. Fixed Bonus Plan
The Fixed Bonus Plan authorizes the Directors to grant Fixed
Bonus Plan Units (“Units”) to officers and employees of
the Company and its subsidiaries in lieu of participating in
the Stock Option Plan. Each Unit entitles the holder upon
exercise to receive a cash payment equal to the closing price
of a common share of Teranga on the TSX on the business
day prior to the date of exercise, less the exercise price. Units
may be exercised at any time from the date of vesting to the
date of their expiry subject to the terms of the plan. Units are
not transferable or assignable.
number of options
17,617,222
3,580,000
(4,058,055)
17,139,167
820,000
7,911,600
(2,132,917)
23,737,850
10,736,662
20,640,532
Weighted average
exercise price
C$3.00
C$3.00
C$3.00
c$3.00
C$3.00
C$0.65–C$1.30
C$3.00
c$3.00
The exercise price of each Unit is determined by the Board
of Directors at the date of grant but in no event shall be less
than the five-day weighted average closing price of the com-
mon shares as reported on the TSX for the period ended on
the business day immediately preceding the day on which the
option was granted.
The vesting of the Units is determined by the Board of Direc-
tors at the date of grant. The term of Units granted under the
Fixed Bonus Plan is at the discretion of the Board of Direc-
tors, provided that such term cannot exceed 10 years from
the date that the Units are granted.
The Fixed Bonus Plan was introduced during the third quar-
ter of 2012. As at December 31, 2013, a total of 1,440,000
Units were outstanding (December 31, 2012: 1,440,000
Units). During the year ended December 31, 2013, no Units
were forfeited or exercised.
teranga gold corporation / notes to tHe consolidated financial statements
71
As at December 31, 2013, there were 1,440,000 Units
outstanding that were granted on August 8, 2012 with
expiry dates ranging from November 24, 2020 through to
February 24, 2022. The Units each have an exercise price
of C$3.00 and have fair values at December 31, 2013 in
the range of C$0.01 to C$0.11 per Unit. The total fair value
of the Units at December 31, 2013 was $0.1 million (Decem-
ber 31, 2012: $0.9 million).
The estimated fair values of the Units were amortized over
the period in which the Units vest. Of the 1,440,000 Units
issued, 50 percent vested upon issuance, 25 percent
vested on December 31, 2012 and 25 percent vested on
December 31, 2013.
Fair Value of Units Granted
The fair value was calculated using Black-Scholes pricing
model with the following assumptions:
Share price at the end of the period
Exercise price
Range of risk-free interest rate
Volatility of the expected market price of share
Expected life of options
Dividend yield
Forfeiture rate
For the year ended December 31
2013
2012
C$0.53
C$3.00
1.12%–1.95%
66.71%–68.30%
2.00–5.00
0%
5%–50%
C$2.26
C$3.00
1.13%–1.38%
43.70%–61.62%
1.25–5.00
0%
6%–30%
Due to lack of sufficient historical information for the Company,
volatility was determined using the existing historical volatility
information of the Company’s share price combined with the
industry average for comparable-size mining companies.
37. seGment RePORtinG
The Company has one reportable operating segment under
IFRS 8 operating segments relating to the gold activity.
Geographical information
The Company operates in two geographical areas, predomi-
nantly in Senegal (West Africa) and Mauritius.
The following table discloses the Company’s revenue by
geographical location:
For the year ended December 31
2013
297,927
51
–
1
297,979
2012
350,520
31
–
5
350,556
Republic of Senegal – revenue from gold and silver sales
Republic of Senegal – interest income
Mauritius
Canada
total
The following is an analysis of the Company’s non-current assets by geographical location:
Republic of Senegal
Mauritius
Canada
total
as at December 31, 2013
as at December 31, 2012
456,523
–
51,722
508,245
419,288
–
1,778
421,066
2013 AnnuAl RepoRt
72
38. key manaGement PeRsOnnel cOmPensatiOn
The Company considers key members of management to
include the Chairman, President and CEO, Vice Presidents
and the General Manager and Government Relations
Manager of SGO.
The remuneration of the key members of management includes
eight members during the twelve months ended December 31,
2013 and 9 members during the twelve months ended
December 31, 2012. The remuneration during the twelve
months ended December 31, 2013 and 2012 is as follows:
cash-
settled share-
equity
settled share-
based payments based payments
– value vested
during the period during the period
– value vested
cash Bonus
Options
Options
total
short-term benefits
salary
and Fees
non-cash
Benefits
For the year ended December 31, 2013
Compensation
For the year ended December 31, 2012
Compensation
2,839
2,668
267
130
–
1,076
108
898
1,110
4,324
1,881
6,652
39. RelateD PaRty tRansactiOns
40. aPPROVal OF tHe cOnsOliDateD
At December 31, 2013, the Company has a receivable of
$411 due from the OJVG for project management fees.
During the year ended December 31, 2013, there were
transactions of $0.3 million between the Company and a
director-related entity.
Financial statements
These consolidated financial statements were approved by
the Board of Directors on February 20, 2014.
teranga gold corporation / notes to tHe consolidated financial statements
73
asX listinG ReQUiRements
• delegations and general approval guidelines for
corporate Governance statement
The Board of Directors (the “Board”) of Teranga Gold
Corporation (“Teranga” or the “Company”) is committed to
adhering to the highest possible standards in its corporate
governance practices. The Board has approved Corporate
Governance Guidelines which, together with the Board
Mandate (as set out below), the position descriptions for the
Chairman of the Board and for the Chief Executive Officer,
and the charters of the committees of the Board, provide the
general framework for the governance of Teranga. The Board
believes that these guidelines will continue to evolve in order
to comply with all applicable regulatory and stock exchange
requirements relating to corporate governance and will be
modified as circumstances warrant.
This report describes the corporate governance principles
that the Company adheres to in accomplishing its business
objectives. Governance information on Teranga is available on
the Company’s website at: www.terangagold.com.
PRinciPle 1: lay sOliD FOUnDatiOn FOR
manaGement anD OVeRsiGHt
Board Mandate
The Board is elected by the shareholders of Teranga and is
responsible for the stewardship of Teranga and has adopted
a formal written mandate setting out the Board’s stewardship
responsibilities, including:
• adopting a strategic planning process;
• understanding and monitoring the political, cultural, legal
and business environments in which Teranga operates;
• risk identification and ensuring that procedures are in
place for the management of those risks;
• review and approve annual operating plans and budgets;
• corporate social responsibility, ethics and integrity;
• succession planning, including the appointment, training
and supervision of management;
management;
• monitoring financial reporting and management;
• monitoring internal control and management
information systems;
• corporate disclosure and communications;
• adopting measures for receiving feedback from
stakeholders; and
• adopting key corporate policies designed to ensure that
Teranga, its directors, officers and employees comply with
all applicable laws, rules and regulations and conduct their
business ethically and with honesty and integrity.
Day-to-day Management
The Board delegates responsibility for the day-to-day man-
agement of Teranga’s business and affairs to Teranga’s senior
officers and supervises such senior officers appropriately.
Committees of the Board
The Board has determined that there should be six stand-
ing Board committees: (i) Audit Committee; (ii) Corporate
Governance and Nominating Committee; (iii) Compensation
Committee; (iv) Finance Committee; (v) Technical, Safety, and
Environment Committee; and (vi) Corporate Social Responsi-
bility Committee. The Board will change the Board committee
structure and authorize and appoint other committees as it
considers appropriate.
The Board may, from time time, delegate certain matters it
is responsible for to Board committees. The Board, however,
retains its oversight function and ultimate responsibility for
these matters and all delegated responsibilities.
The Corporate Governance and Nominating Committee
reviews the adequacy of the Board Mandate on an annual
basis and recommends any proposed changes to the Board
for consideration. The Board has delegated responsibility
to this Committee for developing Teranga’s approach to
corporate governance, including recommending modifications
to these Corporate Governance Guidelines for consideration
by the Board.
2013 AnnuAl RepoRt 74
Committee Charters
The Board approves written charters for each committee of
the Board setting forth the purpose, authority, duties and
responsibilities of each committee, as set forth further below.
The charter for each committee is available on the Company’s
website at: www.terangagold.com.
The Board has determined that all committees will be com-
prised entirely of directors determined by the Board to be in-
dependent, except for the Technical, Safety, Environment and
Social Responsibility Committee which will be comprised of a
majority of independent directors. In addition, all members of
the Audit Committee will be financially literate and if required
by applicable laws, rules and regulations, at least one mem-
ber will be a financial expert. Membership and independence
of all committee members will be publicly disclosed.
After receipt of recommendations from the Corporate Gov-
ernance and Nominating Committee, the Board appoints
members of the committees annually, and as necessary to
fill vacancies, and appoints the chairman of each committee.
Members of the committees will hold office at the pleasure of
the Board.
Committee Responsibilities
The responsibilities of the Audit Committee include assisting
the Board in fulfilling its oversight responsibilities with respect
to: (a) financial reporting and disclosure requirements; (b) en-
suring that an effective risk management and financial control
framework has been implemented and tested by management
of Teranga; and (c) external and internal audit processes.
The responsibilities of the Corporate Governance and
Nominating Committee include assisting the Board in fulfilling
its oversight responsibilities with respect to: (a) developing
corporate governance guidelines and principles for Teranga;
(b) identifying individuals qualified to be nominated as
members of the Board; (c) the structure and composition of
Board committees; and (d) evaluating the performance and
effectiveness of the Board.
The responsibilities of the Compensation Committee include
assisting the Board in fulfilling its oversight responsibilities
with respect to: (a) the establishment of key human resources
and compensation policies, including all incentive- and
equity-based compensation plans; (b) the performance eval-
uation of the Chief Executive Officer and the Chief Financial
Officer, and determination of the compensation for the Chief
Executive Officer, the Chief Financial Officer and other senior
executives of Teranga; (c) succession planning, including the
appointment, training and evaluation of senior management;
and (d) compensation of directors.
The responsibilities of the Finance Committee include as-
sisting the Board in fulfilling its oversight responsibilities with
respect to: (a) Teranga’s financial policies and strategies,
including capital structure; (b) Teranga’s financial risk man-
agement practices; and (c) proposed issues of securities and
utilization of financial instruments.
The responsibilities of the Technical, Safety and Environ-
ment include assisting the Board in fulfilling its oversight
responsibilities with respect to: (a) technical matters relating
to exploration, development, permitting, construction and
operation of Teranga’s mining activities; (b) resources and
reserves on Teranga’s mineral resource properties; (c) mate-
rial technical commercial arrangements regarding EPCM
activities; (d) operating and production plans for proposed
and existing operating mines; (e) due diligence in the de-
velopment, implementation and monitoring of systems and
programs for management, and compliance with applicable
law related to health, safety, environment and social responsi-
bility; (f) ensuring Teranga implements best-in-class property
development and operating practices; (g) monitoring safety,
environment and social responsibility performance; and (h)
monitoring compliance with applicable laws related to safety,
environment and social responsibility.
The responsibilities of the Corporate Social Responsibil-
ity Committee is to assist the Board in the development,
implementation and monitoring of systems and programs for
management, and compliance with applicable law related to
corporate social responsibility, monitoring corporate social
responsibility performance, and monitoring compliance with
applicable laws related to corporate social responsibility.
Management Performance and Compensation
The Compensation Committee conducts an annual review
of the performance objectives for the Chief Executive Officer,
the Chief Financial Officer and the senior executives and,
in the Committee’s discretion, presents its conclusions and
recommends any compensation changes to the Board
for consideration.
teranga gold corporation 75
PRinciPle 2: stRUctURe tHe BOaRD
tO aDD ValUe
Election by Shareholders
The members of the Board are selected each year by the
shareholders of Teranga at the annual general meeting of
shareholders. The Board proposes individual nominees to
the shareholders for election to the Board at each such
meeting. Between annual meetings of shareholders, the
Board may appoint directors to serve until the next such
meeting in accordance with Teranga’s articles and by-laws.
Selection of Chairman of the Board
The Chairman of the Board is appointed by the Board after
considering the recommendation of the Corporate Gover-
nance and Nominating Committee. The Board adopts and
performs an annual review of the position description for the
Chairman of the Board.
Role of Chairman and CEO
The roles of each of the Chairman and the CEO of Teranga
are held by two different individuals. The Board has taken
the view that given the stage of development of the Company
and the unique skill set of the Chairman, it is important that
the Chairman be an active member of the executive team and
therefore, a non-independent member of the Board.
Independence; Lead Director
The Board is comprised of a majority of independent directors.
The independent directors select an independent director
to carry out the functions of a lead director. If Teranga has
an independent, non-executive Chairman of the Board, then
the role of the lead director is filled by the non-executive
Chairman of the Board. The lead director or non-executive
Chairman of the Board chairs regular meetings of the inde-
pendent directors and assumes other responsibilities that the
independent directors as a whole have designated.
The primary responsibility of the lead director is to seek to en-
sure that appropriate structures and procedures are in place
so that the Board of Directors may function independently
and to lead the process by which the independent directors
seek to ensure that the Board of Directors represents and
protects the interests of all shareholders. In addition, the lead
independent director reviews, comments and is given the op-
portunity to set agendas for meetings of the Board (full Board
or independent directors only), oversee the information made
available to directors by management and manages requests
from or other issues that independent directors may have.
Director Selection Criteria
The Corporate Governance and Nominating Committee is re-
quired under its charter to annually review the characteristics,
qualities, skills and experience which form the criteria for can-
didates to be considered for nomination to the Board. The ob-
jective of this review will be to maintain the composition of the
Board in a way that provides, in the judgment of the Board,
the best mix of skills and experience to provide for the overall
stewardship of Teranga. All directors are required to possess
fundamental qualities of intelligence, honesty, integrity, ethi-
cal behaviour, fairness and responsibility and be committed
to representing the long-term interests of the shareholders.
They must also have a genuine interest in Teranga, the ability
to be objective at all times about what is in the best interests
of Teranga, have independent opinions on all issues and be
both willing and able to state them in a constructive manner
and be able to devote sufficient time to discharge their duties
and responsibilities effectively. The Committee is mandated to
identify qualified candidates for nomination as directors and
to make recommendations to the Board. Directors are encour-
aged to identify potential candidates.
Board Size
The Board has the ability to increase or decrease its size
within the limits set out in Teranga’s articles and by-laws. The
Board will determine its size with regard to the best interests of
Teranga. The Board believes that the size of the Board should
be sufficient to provide a diversity of expertise and opinions
and to allow effective committee organization, yet small
enough to enable efficient meetings and decision-making and
maximize full Board attendance. The Board will review its size
if a change is recommended by the Committee.
Term Limits for Directors
The Board has determined that fixed term limits for directors
should not be established. The Board is of the view that
such a policy would have the effect of forcing directors off
the Board who have developed, over a period of service,
increased insight into Teranga and who, therefore, can be ex-
2013 AnnuAl RepoRt 76
pected to provide an increasing contribution to the Board. At
the same time, the Board recognizes the value of some turn-
over in Board membership to provide fresh ideas and views,
and the Corporate Governance and Nominating Committee
is mandated to annually consider recommending changes to
the composition of the Board.
Director Compensation
The Board has determined that the directors should be com-
pensated in a form and amount that is appropriate and which
is customary for comparative companies, having regard to
such matters as time commitment, responsibility and trends
in director compensation. The Compensation Committee is
mandated to review the compensation of the directors on
an annual basis. All compensation paid to directors will be
publicly disclosed.
Attendance at Meetings
Directors are expected to attend all Board and committee
meetings either in person or by conference call. A director
will notify the Chairman of the Board or of a committee or the
Corporate Secretary if the director will not be able to attend
or participate in a meeting. Teranga will publicly disclose the
directors’ attendance record on an annual basis.
Assessment of Board and Committee Performance
The Corporate Governance and Nominating Committee is man-
dated to undertake an annual assessment of the overall perfor-
mance and effectiveness of the Board and each committee of
the Board and report on such assessments to the Board. The
purpose of the assessments is to ensure the continued effec-
tiveness of the Board in discharging its duties and responsibili-
ties and to contribute to a process of continuing improvement.
PRinciPle 3: PROmOte etHical anD
ResPOnsiBle DecisiOn-makinG
Company securities. Induction programs and ongoing training
are required for each employee and contractor to ensure they
are aware and kept up to date of acceptable behaviour and
Company policies.
Procedures are in place to record and publicly report each
director’s shareholdings in the Company.
The Company Secretary is responsible for investigating any
reports of unethical practices and reporting the outcomes to
the Chairman and the CEO or to the Board, as appropriate.
The Company has created a formal Code of Conduct and
Ethics which describe the Company’s values, and can be
found in the Corporate Governance section of the Company’s
website. All details describing, prescribing and underpinning
ethical conduct are contained in the values and key policies
outlined therein.
In summary, Teranga’s Code of Conduct includes an equal
opportunity requirement mandating that “all employees are
to be recruited, and to pursue their careers, free from any
form of unwanted discrimination” and that “Teranga shall
not discriminate on the basis of age, colour, creed, disability,
ethnic origin, gender, marital status, national origin, political
belief, race, religion or sexual orientation, unless required for
occupational reasons as permitted by law.”
Diversity
Teranga does not have a separate diversity policy, nor does
it currently provide statistics on gender diversity within its
workforce, or its executive team. The identity of all Board
members is disclosed within this Annual Report.
With respect to Teranga’s current organization:
• of the seven members of the Board of Directors,
one is female;
The Company has implemented a set of core values designed
to act as guidelines for the standards of integrity and perfor-
mance for the Board, Management, employees, and other
members of the Company. The Company’s vision and values
are disclosed on the Company’s website.
• within the Corporate office, excluding executive officers,
approximately 75 percent of staff are female; and
• within the general workforce in Senegal, approximately
10 percent of employees, including expatriate personnel,
and contractors are female.
Employees are responsible for their conduct which is expect-
ed to comply with Company policies and procedures includ-
ing those related to health & safety, social & environmental,
equal opportunity, human rights, disclosure and trading in
Further details of Teranga’s workforce both in its head office
and on-site in Senegal can be found on page 18 of the 2013
Responsibility Report available on the Company’s website.
teranga gold corporation 77
Teranga will be considering the adoption of a diversity policy
with its Corporate Governance and Nominating Commit-
tee this year. Teranga has not yet set specific measurable
objectives for achieving gender diversity as further research
and study is required in this regard given the nature, location
and requirements of our mining operations abroad. Once the
Corporate Governance Committee and Nominating Com-
mittee has investigated the necessity of a diversity policy,
as well as what may be appropriate measurable objectives,
it shall update the market in this regard and will provide
reporting against such measures in its future Annual Reports.
While paramount importance is given to identifying the right
candidate for each key role within the Company, Teranga
recognizes the importance of gender diversity and as such is
focused on recruiting women into all available roles.
PRinciPle 4: saFeGUaRD inteGRity
in Financial RePORtinG
The primary function of the audit committee of the Board (the
“Audit Committee”) is to assist the Board in fulfilling its finan-
cial reporting and controls responsibilities to Shareholders’
Information with respect to the Audit Committee as contained
in the Company’s Annual Information Form.
Composition of the Audit Committee
The Audit Committee of the Company is currently comprised
of three independent members. All members of the Audit
Committee are financially literate in that they have the ability
to read and understand a set of financial statements that are
of the same breadth and level of complexity of accounting
issues as can be reasonably expected to be raised by the
Company’s financial statements.
Relevant Education and Experience
For summary details regarding the relevant education and
experience of each member of the Audit Committee relevant
to the performance of his duties as a member of the Audit
Committee, please refer to the Corporate Governance page of
the Company’s website: www.terangagold.com.
Audit Committee Oversight
At no time since the commencement of the Company’s most
recently completed financial year did the Board decline to
adopt a recommendation of the Audit Committee to nominate
or compensate an external auditor. The Audit Committee is
chaired by an independent director who is not the Chairman
of the Board.
PRinciPle 5: make timely anD BalanceD
DisclOsURe
Teranga’s Corporate Disclosure Policy is included on its web-
site (under the tab “About Teranga – Corporate Governance”)
and sets out a policy that is consistent with the recommenda-
tions included under Principle 5.
PRinciPle 6: ResPect tHe RiGHts
OF sHaReHOlDeRs
The Company regularly engages with its shareholders and con-
ducts regular analyst briefings. These activities are supported
by the publication of the Annual Report, Quarterly Reports
both financial and operational, public announcements and the
posting of all press releases (TSX and ASX) on the Company
website immediately after their public disclosure. Shareholders
can elect to receive email notification of announcements by
requesting addition to the Company’s mailing list.
Shareholders are encouraged to attend the Annual General
Meeting and to listen to regular conference calls which are
scheduled and disclosed publicly. Replays of conference calls
are available for a limited time. Details of such replays are
outlined on the original conference call scheduling announce-
ment. The external auditor attends the Annual General
Meeting and is available to answer questions in relation to the
audit of the financial statements.
Teranga does not have a distinct communications policy but
its Corporate Disclosure Policy (available on the Company
website) does address the matters recommended under
Principle 6 with respect to promoting effective communica-
tion with shareholders and the effective use of electronic
communication.
2013 AnnuAl RepoRt 78
PRinciPle 7: RecOGniZe anD manaGe Risk
The Board will adopt strategic planning processes to establish
objectives and goals for Teranga’s business and will review,
approve and modify as appropriate the strategies proposed by
senior management to achieve such objectives and goals. The
Board will review and approve, at least on an annual basis, a
strategic plan which takes into account, among other things,
the opportunities and risks of Teranga’s business and affairs.
The Board, in conjunction with management, will identify the
principal risks of Teranga’s business and oversee manage-
ment’s implementation of appropriate systems to effectively
monitor, manage and mitigate the impact of such risks. Pur-
suant to its duty to oversee the implementation of effective
risk management policies and procedures, the Board will del-
egate to the Compensation Committee the responsibility for
assessing and implementing risk management policies and
procedures directly connected to Teranga’s compensation
practices. Similarly, the Board will delegate the responsibility
of assessing and implementing risk management policies and
procedures directly connected to environmental risk manage-
ment to the Technical, Safety, Environmental and Social
Responsibility Committee. The Board will work in conjunction
with each Committee, respectively, to oversee the implemen-
tation of such policies and procedures.
Under applicable securities laws, Teranga’s CEO and CFO are
required to certify, on a quarterly basis, on the design and
effectiveness of disclosure controls and procedures as well as
internal controls over financial reporting, and to indicate any
identified weaknesses.
As per the Audit Committee Charter, specifically under Sec-
tion 4.2 thereof, the Audit Committee is charged with review-
ing and making recommendations to the Board regarding
Teranga’s risk management policies and procedures.
The Board recognizes the importance of managing the risks
associated with Teranga’s business operations and has de-
fined a set of processes to effectively manage risk within the
business. They include (but are not limited to) processes to:
• identify risks relevant to the business to determine what
can happen, when and how;
• assess identified risks to determine their potential severity
and impact on the business;
• evaluate risks;
• treatment plans for risks deemed unacceptable to
the business;
• communicate risk management activities and processes
to employees; and
• monitor and review risks, risk mitigation strategies
and actions as well as the risk management processes
and system.
PRinciPle 8: RemUneRate FaiRly
anD ResPOnsiBly
Teranga operates in the international gold mining industry,
which is a highly competitive market for executives and
Teranga has designed its compensation program to ensure
it is able to both attract and retain qualified and experienced
executives with the skills and experience required to execute
its strategy.
Composition of the Compensation Committee
The Compensation Committee is comprised of three indepen-
dent directors and while the Board determines its members,
the CEO is not involved in the selection process for this
Committee. The chair of the Compensation Committee is a
non-executive independent director.
teranga gold corporation 79
Role of the Compensation Committee
The Compensation Committee is established by the Board to
assist the Board in fulfilling its oversight responsibilities relat-
ing to compensation. The Compensation Committee helps to
ensure that Teranga has a compensation program that will
attract, retain, motivate and reward its executive officers for
their performance and contribution to achieving Teranga’s
long-term strategy.
The Board of Teranga established a Compensation Commit-
tee on incorporation. Accordingly, the Compensation Commit-
tee has been continually in place since January 2010.
The Compensation Committee’s primary responsibilities
include:
Compensation Philosophy, Policies and Practices – ensure
compensation philosophy, policies and practices for
the directors, the Chief Executive Officer (“CEO”) and the
executive officers:
• properly reflect their respective duties and responsibilities;
• are competitive in attracting, retaining and motivating
people of the highest quality;
• align the interests of the directors, the CEO and the
executive officers with shareholders as a whole;
• are based on established corporate and individual
performance objectives; and
• do not encourage the taking of inappropriate or
excessive risks.
Evaluation of Performance – annually review and evaluate
the performance of the CEO and the executive officers and,
in light of pre-established performance objectives, report its
conclusions to the Board;
Performance Objectives – annually review the performance
objectives for the CEO and the executive officers and, in
the Committee’s discretion, recommend any changes to the
Board for consideration;
Chief Executive Officer Compensation – annually review the
compensation for the CEO and, in the Committee’s discretion,
recommend any changes to the Board for consideration;
Executive Officers’ Compensation – annually review the CEO’s
recommendations for the executive officers’ compensation
and, in the Committee’s discretion, recommend any changes
to the Board for consideration;
Succession Planning – annually review Teranga’s succession
plan for the CEO and the executive officers, including ap-
pointment, training and evaluation;
Directors’ Compensation – annually review directors’ compen-
sation and, in the Committee’s discretion, recommend any
changes to the Board for consideration;
Mitigation of Compensation Risk – annually consider the
risks associated with Teranga’s compensation policies and
practices, and ensure appropriate risk mitigation measures
are adopted.
Role of the Chief Executive Officer
The CEO’s role in executive compensation matters includes
making recommendations to the Compensation Committee
regarding the Company’s annual business plan and objectives,
which provide the basis for establishing both corporate and
individual performance goals for all executive officers. The
CEO reviews the performance of the other executive officers,
and also makes recommendations with respect to adjustments
in base salary, awarding of annual performance incentives,
and awarding of long-term equity incentives to such executive
officers. The CEO is not involved in the selection process for
2013 AnnuAl RepoRt 80
the Compensation Committee, or in making recommendations
with respect to his own compensation package.
The Compensation Committee reviews the basis for the
recommendations of the CEO and, prior to making its recom-
mendations to the Board, exercises its sole discretion in mak-
ing any modifications to such recommendations.
Compensation Philosophy
The objective of Teranga’s compensation program is to attract,
retain, motivate and reward its executive officers for their per-
formance and contribution to executing Teranga’s long-term
strategy to maximize shareholder value. Teranga’s compensa-
tion policy revolves around a pay for performance philosophy
whereby fixed elements of pay, such as salary, are positioned
at market median levels for the comparator group, while short
and longer-term incentives are structured to provide above
market total compensation for high levels of corporate and
personal performance. The Compensation Committee believes
it is necessary to adopt this compensation philosophy in order
to attract and retain qualified executive officers with the skills
and experience necessary to execute Teranga’s strategy.
The Board seeks to compensate Teranga’s executive officers
by combining short and long-term cash and equity incentives.
It also seeks to reward the achievement of corporate and indi-
vidual performance objectives, and to align executive officers’
incentives with shareholder value creation. The Board also
seeks to set company performance goals that reach across
all business areas and to tie individual goals to the area of the
executive officer’s primary responsibility.
The Compensation Committee has reviewed emerging trends
in executive compensation which stress pay for performance,
short term cash conservation and minimizing shareholder
dilution. As a result, the Compensation Committee has recom-
mended to the Board the adoption of both a restricted share
unit plan (“RSU Plan”) as well as a deferred share unit plan
(“DSU Plan”) applicable for executive management and the
Board of Directors, respectively. RSU’s typically vest over
three years and are by their nature long-term incentives. The
Board of Directors believe the RSU Plan provides the least
risk to Teranga in terms of managing shorter term cash flows,
minimizing shareholder dilution while at the same time serving
as an effective long term incentive and retention plan for its
executive management team. The DSU Plan allows members
of the Board of Directors to defer compensation until earned
with respect to annual and committee retainer fees as well
as meeting fees and to receive deferred share units (“DSUs”)
instead which are then paid out to the director once he or
she ceases to be a member of the Board. The payout of the
DSUs is determined by multiplying the number of DSUs at
time of departure from the Board by the then five day volume
weighted average trading price of a Common Share on the TSX
for the five trading days prior to such date. Both of these plans
settle in cash and are therefore non-equity based. The Board
of Directors believes these compensation schemes, along with
existing Incentive Stock Option Plan, base salary and annual
cash bonus awards will ensure the appropriate alignment of
compensation packages with the overall objective of enhancing
shareholder value through an increased share price.
Management Performance and Compensation
The Compensation Committee conducts an annual review
of the performance objectives for the Company’s executive
management group. Compensation changes may be recom-
mended to the Board, at the Committee’s discretion, based
upon an executive officer’s success in meeting or exceed-
ing individual performance goals, as well as contributing to
achieving Company performance goals. The Committee also
conducts an independent review of current market standards
regarding executive compensation, as well as an assessment
of Teranga’s executive compensation relative to peer indus-
try participants. The Company’s executive compensation
program is designed to be competitive with those offered by
publicly traded mining companies comparable to Teranga in
terms of size, assets, production and region of operation.
Further detailed information on director and executive man-
agement compensation for the 2013 financial year will be
disclosed in the Company’s Management Information Circular
to be filed with the TSX and ASX prior to April 4, 2014.
teranga gold corporation asX listing Rule 4.10 – additional Disclosure
TGZ Top 20 Shareholders as at February 28, 2014
Rank shareholder
number of shares
% of issued capital
81
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
State Street Trust
Canaccord Genuity Corp.
Citicorp Nominees Pty Limited
CIBC: CIBC Mellon GSS
National Nominees Limited
JP Morgan Nominees (Australia) Limited
RBC Investor SVCS (Toronto)
HSBC Custody Nominees (Australia) Limited
CIBC World Markets Inc
Depository Trust Company
TD Waterhouse Canada Inc
Haywood Securities
Zero Nominees Pty Ltd
Citibank CDA – Client
Cormark Securities
Royal Bank of Canada
JP Morgan Nominees Australia Limited
GMP Securities L.P.
NBCN Inc
J.P. Morgan Clearing Corp.
total top Holders Balance
total Remaining Holders Balance
total securities on issue
Distribution Schedule of CDI holders – as at February 28, 2014
37,231,144
24,282,135
20,566,430
20,304,821
17,442,047
16,635,919
15,871,910
13,440,684
13,075,543
12,587,943
11,423,092
10,522,981
8,325,328
7,898,854
6,941,500
6,848,146
5,844,497
4,828,953
3,855,943
3,766,187
261,694,057
55,107,034
316,801,091
11.75
7.66
6.49
6.41
5.51
5.25
5.01
4.24
4.13
3.97
3.61
3.32
2.63
2.49
2.19
2.16
1.84
1.52
1.22
1.19
82.61
17.39
100.00
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–9,999,999,999
Rounding
total
total Holders
Units
% of issued capital
1,047
857
295
324
34
2,557
370,466
2,154,313
2,191,060
8,898,944
94,133,648
0.34
2.00
2.03
8.26
87.36
0.01
107,748,431
100.00
Unmarketable Parcels of securities, escrow and On-the-market Buyback
As at February 28, 2014, there were 625 security holders with an unmarketable parcel of securities (less than $500 based on
a market price of $1.13 per unit) totalling 76,376 units.
There are not currently any class of securities the subject of escrow.
There is no current on-the-market buy-back.
2013 AnnuAl RepoRt
82
substantial shareholders
As at the date of the Annual Report, there were seven substantial shareholders of Teranga.
The details of those shareholders are as follows:
name
State Street Trust
Canaccord Genuity Corp.
Citicorp Nominees Pty Limited
CIBC: CIBC Mellon GSS
National Nominees Limited
JP Morgan Nominees (Australia) Limited
RBC Investor SVCS (Toronto)
total
number of shares
% of issued capital
37,231,144
24,282,135
20,566,430
20,304,821
17,442,047
16,635,919
15,871,910
11.75
7.66
6.49
6.41
5.51
5.25
5.01
152,334,406
48.099
share classes and Voting Rights
There is only a single share class being common shares
and CDIs of Teranga Gold Corporation. The total amount of
outstanding common shares of Teranga Gold Corporation is
316,801,091.
As detailed in the Annual Report, Teranga is authorized to
issue an unlimited number of common shares with no par
value. Holders of common shares are entitled to one vote for
each common share on all matters to be voted on by share-
holders at meetings of Teranga’s shareholders. All dividends
which the Board of Directors may declare shall be declared
and paid in equal amounts per share on all common shares
at the time outstanding. There are no pre-emptive, redemp-
tion or conversion rights attaching to the common shares. All
common shares, when issued, are and will be issued as fully
paid and non-assessable shares without liability for further
calls or to assessment.
issuance of Options to Directors
On November 30, 2010, Teranga received its conditional
listing approval from ASX which was subject to a number of
conditions (“Listing Conditions”). Teranga received a waiver
from ASX Listing Rule 10.14 to the extent necessary to permit
Teranga to issue options to Messrs. Hill, Young, Lennox-King,
Lattanzi, Thomas and Wheatley pursuant to the terms and
conditions contained in Teranga’s incentive stock option plan
summarized in its IPO prospectus on the condition that:
(a) the options were issued within three years of the date of
admission to the official list of ASX; and
(b) details of any options that are subsequently issues are
published in each annual report of Teranga relevant to
the period in which they are issued.
No options were issued during the 2013 fiscal period to any
members of the Board.
teranga gold corporation
83
corporate status
Teranga Gold Corporation (ACN 146 848 508) (Teranga) is
a company incorporated under the laws of Canada, with
members’ liability limited.
not subject to chapters 6, 6a, 6B and 6c of the
corporations act 2001 (cth)
Teranga is not subject to chapters 6, 6A, 6B and 6C of
the Australian Corporations Act 2001 dealing with the
acquisition of shares in Teranga in relation to substantial
holdings and takeovers.
limitations on the acquisition of teranga securities
imposed by canada
In Canada, acquisitions of securities by takeover bid are regu-
lated by provincial securities legislation. Generally, under this
legislation, an offer to acquire securities from a shareholder
resident in a Canadian province which will result in the offeror
(including joint actors) holding 20 percent or more of the is-
sued share capital of the company constitutes a takeover bid.
Subject to limited exceptions (for example the purchase at
not more than a market price of up to 5 percent of outstand-
ing shares over 12 months, private offers to no more than 5
persons at no greater than 115 percent of market price and
purchases from treasury) an offeror must:
(a) provide shareholders with a takeover bid circular
Under federal corporate law, if a takeover bid is accepted by
the holders of not less than 90 percent of the outstanding
shares (excluding shares held at the date of the bid by or on
behalf of the offeror) the offeror is entitled and the remaining
shareholders can require the offeror to acquire the remaining
shares either on the same terms of the takeover bid or at fair
market value, as elected by the shareholder.
Canadian rules also provide an early warning system to notify
the market of significant accumulation of securities. Under
the system an acquirer must issue a press release and file
a report with provincial securities commission under the
initial acquisition (whether from market purchases, treasury
or otherwise) of 10 percent or more of the share capital
of a public company and thereafter upon acquisition of an
additional 2 percent.
The above is only a short summary of certain takeover bid
and related requirements and reference must be made to
applicable Canadian corporate and securities legislation,
including the requirements of the Toronto Stock Exchange, for
further details of takeover bid provisions and other regulated
transactions such as insider bids, related party transactions
and private placements, among others.
share Registries
canada: computershare trust company of canada
describing the terms of the offer and if securities of the of-
feror form part of the consideration, including prospectus
level disclosure about the offeror and its business;
Computershare Trust Company of Canada, 100 University
Avenue, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1
Tel: + 1-800-564-6253
(b) keep the bid open for at least 35 days; and
australia: computershare investor services Pty ltd.
(c) deliver the circular and extend the offer to each
shareholder of the company, with the ultimate purchase
of shares being pro rata amongst those shareholders who
have tendered their shares under the bid. Rules also
provide an early warning system to notify the market of
significant accumulations of securities.
The Registrar, Computershare Investor Services Pty Limited,
GPO Box 2975, Melbourne VIC 3001, Australia
Tel: + 1-300-850-505
2013 AnnuAl RepoRt 84 TERANGA GOLD CORPORATION
cORPORate DiRectORy
Directors
alan R. Hill
Chairman
Richard young
President and CEO
christopher lattanzi
Non-Executive Director
edward Goldenberg
Non-Executive Director
alan thomas
Non-Executive Director
Frank Wheatley
Non-Executive Director
Jendayi Frazer
Non-Executive Director
senior management
Richard young
President and CEO
mark english
Vice President, Sabodala Operations
Paul chawrun
Vice President, Technical Services
navin Dyal
Vice President and CFO
David savarie
Vice President, General Counsel
and Corporate Secretary
kathy sipos
Vice President, Investor and
Stakeholder Relations
aziz sy
Vice President, Development Senegal
macoumba Diop
General Manager and Government
Relations Manager, SGO
Registered Office
121 King Street West, Suite 2600
Toronto, Ontario, M5H 3T9, Canada
Tel: + 1-416-594-0000
Fax: + 1-416-594-0088
Email: investor@terangagold.com
www.terangagold.com
senegal Office
2K Plaza
Suite B4, 1er Etage
Sis la Route due Meridien President
Dakar Almadies
Tel: + 221-338-693-181
Fax: + 221-338-603-683
auditor
Ernst & Young LLP
share Registries
canada: computershare trust
company of canada
Tel: + 1-800-564-6253
australia: computershare investor
services Pty ltd.
Tel: + 1-300-850-505
stock exchange listings
Toronto Stock Exchange,
TSX symbol: TGZ
Australian Securities Exchange,
ASX symbol: TGZ
For further information please contact:
Kathy Sipos, Vice President, Investor
and Stakeholder Relations:
Tel: + 1-416-594-0000
Email: ksipos@terangagold.com
© Copyright 2014 Teranga Gold Corporation Design and Typesetting: Clear Space, clearspace.ca Printing: Exodus Graphics Corp.
teranga gold corporation teranga Gold corporation
Suite 2600-121 King Street West
Toronto, Ontario, Canada M5H 3T9
Tel: + 1-416-594-0000
Fax: + 1-416-594-0088
Email: investor@terangagold.com
www.terangagold.com