INDEX
Letter to Shareholders
Management’s Discussion and Analysis
Overview of the Business
Financial and Operating Highlights
Outlook 2016
Review of Operating Results
Review of Financial Results
Review of Quarterly Financial Results
Business and Project Development
Financial Condition Review
Off-Balance Sheet Arrangements
Financial Instruments
Contractual Obligations and Commitments
Contingent Liabilities
Critical Accounting Policies and Estimates
Non-IFRS Financial Measures
Outstanding Share Data
Transactions with Related Parties
CEO/CFO Certification
Risks and Uncertainties
Management’s Responsibility for Financial Reporting
Independent Auditors’ Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
ASX Corporate Governance Statement
ASX Listing Rules – Additional Disclosures
Corporate Directory
1
4
4
5
7
9
13
16
17
29
31
31
32
33
33
35
38
38
38
38
41
42
43
47
82
89
97
MESSAGE FROM THE CHAIRMAN
AND THE PRESIDENT & CEO
The year 2015 was a mixed one for Teranga. On the one hand, we made tremendous progress and had many
achievements, including:
replacing reserves and significantly improving Teranga’s life of mine plan to 13.5 years with all-in sustaining costs
of less than $900 per ounce over the life of mine
advancing organic growth initiatives
surpassing 2.5 years without a lost time injury
reducing operating costs by $20 million
strengthening the balance sheet and improving liquidity
However, on the other hand, for all of our accomplishments, missing our annual gold production guidance was a great
disappointment. While the factors underlying the production shortfall were mostly beyond our control and the vast
majority of the shortfall was deferred to 2016, we have taken steps to build a buffer and prevent a recurrence. As well,
changes have been made to strengthen the management team at both site and corporate head office levels.
Furthermore, we will continue to operate with a strong mandate for safety first. It has been more than two and half
years since our last recorded lost time injury at the mine and we are proud of this record. It speaks to the quality of our
workforce and the high standards at which our mine operates.
We are pleased to report that 2016 is off to a strong start benefitting from the high-grade ore deferred from the previous
year and from high throughput rates.
STRENGTHENING THE BALANCE SHEET AND IMPROVING LIQUIDITY
Maintaining a strong balance sheet is vital to prospering against a backdrop of fluctuating gold prices. We ended the
year with a strong cash balance of $44.4 million, providing us with the capital to expand our exploration budget and to
self-fund several high-return organic growth initiatives.
Even amidst lower gold production in 2015, we continued to make significant strides in strengthening our balance sheet
and improving our liquidity. We paid off all remaining debt in the first quarter, secured a $30 million revolving credit
facility in the second quarter, of which $15 million remained undrawn at year end, and in the fall, completed a $17.5
million cornerstone investment with Mr. David Mimran, who is also our newest board member.
This private placement, which was completed at a premium to market, further strengthened our balance sheet and
ability to fund organic growth. But more importantly, Mr. Mimran and his family bring in-depth knowledge and
experience of West Africa having operated there for six decades. They are the largest private employer in Senegal
and one of the largest producers of flour, sugar and agri-foods in West Africa.
PURSUING HIGH-RETURN ORGANIC GROWTH INITIATIVES
Growing organically by leveraging our solid infrastructure is one of our key strategies. Currently, there are two such
projects on the table. The first is the $20 million optimization of our plant, the only large scale commercial gold plant in
Senegal. By adding a second crusher, we anticipate increasing throughput of fresh ore by up to 15% and reducing our
costs by a further 5%. This project was initiated in mid-2015 and is on schedule to be commissioned in the fourth
quarter of 2016.
The second organic growth initiative is heap leaching low-grade oxide and transitional ore. The pre-feasibility
engineering study has been completed and confirmed the technical and economic viability of this initiative. A final
decision to proceed is conditional upon converting additional resources to reserves and final project economics that
exceed our minimum mine site return threshold for capital investments of 20%. If given the green light, heap leaching
could account for incremental annual production of between 10% and 20% in the life of mine schedule.
2015 ANNUAL REPORT 1
ENTERING THE NEXT PHASE OF EXPLORATION
Following the initial public offering of Teranga in 2010, we had a reserve base of 1.5 million ounces, which equated to
a mine life of 8 years. After producing over one million ounces in the 5 years since then, we have increased reserves
by 80 percent through exploration and acquisition. As a result, at the end of 2015, we had 2.6 million ounces in reserves,
with a 13.5-year mine life, at an average grade of 1.38 grams per tonne, including our low grade stockpiles that have
already been mined. The average grade of ore to be mined stands at 1.59 grams per tonne, higher than most senior
gold producers.
As we enter 2016, exploration is a key focus. We have strengthened our exploration team and increased the budget,
using our solid balance sheet to channel additional capital into resource identification. Our land package, which is
situated on a gold belt in West Africa, straddles the border between Senegal and Mali and is arguably one of the best
in the world. It is similar to the Canadian greenstone belts of Northern Ontario and Quebec, which have been very
prolific over the last century.
With the only large-scale commercial gold plant in Senegal, we are in the unique position of having the ability to process
our own regional discoveries and also the option to enter into strategic agreements or joint ventures to process
discoveries made by others.
OPERATING FLEXIBILITY, LOWER COSTS AND INCREASED CASH FLOW UNDERPIN UPDATED LIFE OF MINE
In 2015, mining and milling costs were reduced dramatically thanks to a continuous company-wide focus on cost
savings and productivity improvements combined with lower fuel and exchange rates. The result was a savings in cash
costs of more than $100 per ounce.
As a result of the dramatic change in our cost structure, together with the conversion of resources to reserves, work
commenced in the fourth quarter on the preparation of an updated and optimized life of mine plan. A NI 43-101 technical
report confirming the results of this work was filed in March 2016. With a significantly lower cost structure, all-in
sustaining costs are expected to be below $900 per ounce over our 13.5-year mine life. This is more than $200 per
ounce lower than the costs included in our prior technical report.
The second key tenet of our new life of mine plan is operating flexibility. Pit sequencing has been designed to maximize
cash flow generation while also providing the flexibility for potential design changes as economic conditions shift. The
current proven and probable reserve summary supports an average annual production profile of more than 200,000
ounces per year through 2024 and life of mine cash flow of $549 million at $1,200 per ounce.
MAINTAINING OUR SOCIAL LICENSE AND LEADING SUSTAINABLE REGIONAL DEVELOPMENT
The sustained growth and fruition of our Corporate Social Responsibility efforts remains essential to Teranga’s lasting
success in Senegal.
We continue to nurture the long-term development of Kedougou, the region around our mine, in collaboration with the
Canadian Cooperation – a group of 30 Canadian development organizations, including the Government of Canada.
Twenty projects are currently underway through this framework, such as our partnership with the Paul Gérin-Lajoie
Foundation to support youth education and training. This vocational skill development and entrepreneurship program
was implemented with support of the Canadian Department of Foreign Affairs, Trade and Development to train and
integrate into the labour market 50 Senegalese youths from nearby regions.
Furthermore, we continue to make social investments into priority areas such as local agriculture and food security, as
well as sustainable economic growth. Donations of agricultural equipment such as tractors and the launch of a local
procurement pilot program are just some of the initiatives undertaken in 2015. On a larger scale, we continue to make
headway with the revival of Senegal’s cotton textile industry with the White Gold for Life project. Currently in the test
phase, this venture involves 500 cotton producers, in-country textile producers, and the Office of the Emerging Senegal
Plan launched by the country President in support of national economic development. The revival of the cotton textile
industry in-country has the potential to create long-term sustainable jobs and income sources, as well attract farmers
back to agriculture.
2015 ANNUAL REPORT 2
STRONG VALUE PROPOSITION
Teranga presents a strong investment case when evaluating a commodity company:
situated on an emerging world-class gold belt in a stable jurisdiction
large, long-life, low-cost reserve and resource base
strong life of mine cash flows
significant organic growth potential
a strong balance sheet
These attributes, together with the increase in our net asset value based on our updated and significantly improved life
of mine cash flows, create a compelling investment opportunity for new and existing Teranga shareholders.
On behalf of the Board, we would like to take this opportunity to thank each and every one of our employees for their
hard work and their achievements last year relating to cost management, growth and responsible mining. We look
forward to the year ahead.
ALAN R. HILL
Chairman
RICHARD YOUNG
President & Chief Executive Officer
2015 ANNUAL REPORT 3
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 2015 AND 2014
the
the audited consolidated
This Management’s Discussion and Analysis (“MD&A”)
provides a discussion and analysis of
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, 2015 and 2014. The MD&A should be read in
conjunction with
financial
statements and notes thereto (“Statements”) of Teranga
Gold Corporation (“Teranga” or the “Company”) as at and for
the twelve months ended December 31, 2015 and 2014. The
Company’s Statements and MD&A are presented in United
States dollars, unless otherwise specified, and have been
International Financial
prepared
Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board
(“IASB”). Additional
information about Teranga, including the Company’s Annual
Information Form for the year ended December 31, 2014, as
well as all other public filings, is available on the Company’s
website at www.terangagold.com and on the SEDAR
website (www.sedar.com).
in accordance with
This report is dated as of February 25, 2016. 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 listed on the
Toronto and Australian stock exchanges under the symbol
“TGZ”. Operating in West Africa, we are engaged in the
production and sale of gold, as well as related activities such
as exploration and development.
Vision
Our vision is to become a pre-eminent mid-tier gold producer
in Senegal and greater West Africa.
Mission
Our mission is to create value for all of our stakeholders
through responsible mining.
Strategy
To increase long-term sustainable free cash flows within our
operations in Senegal, we have a three-pronged growth
focus, based on achieving: (i) reserve growth; (ii) production
growth; and (iii) margin expansion.
Ultimately we believe we can expand our operations in
Senegal and West Africa where we can leverage our
existing asset base, people, operating experience, social
license and other aspects of our business.
(i) Reserve Growth
The first component of our strategy focuses on leveraging
our existing asset base by increasing reserves through:
• Converting resources to reserves: As of December
31, 2015, we had measured and
indicated
resources totaling 4.4 million ounces, including 2.6
million ounces in reserves.
• Making large-scale discoveries: We are currently
exploring our ~1,000km2 regional land package
which surrounds our Sabodala gold mine. We
believe there is a reasonable basis for new large-
scale discoveries given the history of exploration
success in the surrounding area. Our land
package is located on the same geographical gold
belt that runs through Mali and Senegal where
more
than 50 million ounces have been
discovered, including three world-class discoveries
(+5 million ounces).
• Acquiring existing deposits in Senegal and Greater
West Africa: We will seek
leverage our
advantage in Senegal as the only gold producer
related
full-scale operating mill and
with a
infrastructure, as well as our people, regional
operating experience and social license within
Greater West Africa.
to
(ii) Production Growth
The second component of our strategy is focused on
maximizing grade to the mill and increasing process
capacity through high return initiatives that leverage our
large-scale mill and related infrastructure.
To this end, we have initiated a mill optimization project,
which is expected to increase throughput by up to 10 percent
and reduce processing costs by approximately 5 percent.
The project is targeted for completion in the fourth quarter of
2016.
In addition, we recently completed an optimized pre-
feasibility engineering study for heap leaching low grade
oxide ore, which concludes the technical viability for
processing Teranga’s low-grade oxide and transitional ore.
A decision to proceed will require the conversion of
additional oxide resources to reserves and finalized project
economics that exceed our 20 percent minimum internal rate
of return (“IRR”) hurdle rate.
We evaluate all growth initiatives, including organic and
inorganic opportunities, as well as new capital projects using
an after-tax IRR target to govern our capital allocation and
investment decisions. For incremental mine site organic
growth projects we set 20 percent as the minimum after tax
IRR threshold.
2015 ANNUAL REPORT 4
(iii) Margin Expansion
through productivity
The third component of our strategy is to improve cash
margins
improvements and cost
savings. The positive impact of the business process
initiatives underway on our mining, milling and cash costs
has been building momentum and, while costs will fluctuate
from quarter to quarter, we believe cash margins will
continue to improve materially from these business process
activities over the long-term.
Acquisition
On October 4, 2013, we completed the acquisition of Oromin
Exploration Ltd. (“Oromin”). Oromin held a 43.5 percent
participating interest in the Oromin Joint Venture Group
(“OJVG”). The OJVG held a fully participating 90 percent
interest in Societe des Mines de Golouma S.A. (“Somigol”),
an operating company incorporated under the laws of
Senegal, and the remaining 10 percent carried interest is
held by the Government of Senegal.
FINANCIAL AND OPERATING HIGHLIGHTS
On January 15, 2014, we acquired the balance of the OJVG
that we did not already own: Bendon International Ltd.’s
(“Bendon”) 43.5 percent participating interest and Badr
Investment Ltd.’s (“Badr”) 13 percent carried interest.
The acquisition of Bendon and Badr’s interests in the OJVG
increased our ownership to 100 percent and allowed us to
consolidate the Sabodala region, increasing the size of our
mine license land holding from 33km2 to 246km2 by
combining the two permitted mine licenses and more than
doubling our reserve base. In July 2015, our mine license
land holding increased to 291km2, with the inclusion of Gora
in the mine license perimetre.
With the integration of the OJVG license area and its various
satellite deposits into Sabodala’s mine plan, this transaction
has resulted in significant capital and operating cost
synergies,
the Sabodala mill and related
infrastructure within a similar footprint.
leveraging
(US$000's, except w here indicated)
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
Operating Data
Gold Produced (ounces)
Gold Sold (ounces)
Average realized gold price
Total cash costs ($ per ounce sold)1
2015
2014
2015
2014
2013
51,292 71,278
182,282
211,823
207,204
52,939 63,711
193,218
206,336
208,406
1,099 1,199
1,161
1,259
1,246
668 598
642
710
641
All-in sustaining costs ($ per ounce sold)1
Total depreciation and amortization ($ per ounce sold)1,2
969 711
249 240
965
256
865
298
1,033
306
Financial Data
Revenue
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
2015
2014
2015
2014
2013
58,235 76,553
224,620
260,588
297,927
Profit (loss) attributable to shareholders of Teranga2
(71,824)
27,693
(50,543)
17,776
50,280
Per share2
Operating cash flow
Capital expenditures
Free cash flow 3
(0.19)
0.08
(0.14)
0.05
0.19
9,755 30,677
30,434
49,009
74,307
12,307 4,105
47,682
18,913
69,056
(2,552)
26,572
(17,248)
39,096
16,251
Free cash flow per ounce sold3
(48)
417
(89)
189
78
Cash and cash equivalents (including restricted cash)
44,436 35,810
44,436
35,810
34,961
Net cash (debt)4
Total assets3
Total non-current liabilities
30,986 31,864
30,986
31,864 (32,068)
696,216 726,323
124,974 128,112
696,216
124,974
726,323
128,112
628,643
29,241
No te: Results include the co nso lidatio n o f 100% o f the OJVG's o perating results, cash flo ws and net assets fro m January 15, 2014.
1 To tal cash co sts per o unce, all-in sustaining co sts per o unce and to tal depreciatio n and amo rtizatio n per o unce are no n-IFRS financial measures that do no t have a standard meaning under IFRS. P rio r
year amo unts include adjustments to net realizable value. P lease refer to No n-IFRS P erfo rmance M easures at the end o f this repo rt.
2 In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f equipment directly related to deferred stripping activity. The impact o f this adjustment has been
applied retro spectively fro m January 1, 2012. The twelve mo nths ended December 31, 2015 includes the impact o f restating the deferred inco me tax expenses related to tempo rary timing differences.
3 Free cash flo w and free cash flo w per o unce are defined as o perating cash flo w (excluding o ne-time transactio n co sts related to the acquisitio n o f the OJVG) less capital expenditures.
4 Net cash is defined as to tal bo rro wings less cash and cash equivalents fo r 2014 and 2015. Fo r 2013, net debt is defined as to tal bo rro wings and financial derivative liabilities less cash and cash equivalents,
bullio n receivables and restricted cash.
2015 ANNUAL REPORT 5
•
•
The decrease in operating cash flow was primarily due
lower gold sales and an increase in value added tax
(“VAT”) recoverable balances, partly offset by lower
mine production costs.
In February 2016, the Company received an exemption
for the payment and collection of refundable VAT. This
exemption is governed by an amendment to our mining
convention and is enforceable for the next 6 years,
expiring on May 2, 2022. The December 31, 2015
balance of $13.2 million is expected to be refunded over
the balance of 2016.
• Capital expenditures were higher due to higher project
costs related to the mill optimization and development
capital for Gora as well, higher capitalized deferred
stripping costs.
• During the fourth quarter, we completed a non-brokered
CDN$22,736,000 (US$17,454,000) private placement
with Mr. David Mimran, the CEO of Grands Moulins
d'Abidjan and Grands Moulins de Dakar, one of the
largest producers of flour and agri-food in West Africa.
The capital proceeds further strengthen Teranga's
balance sheet and support future growth.
Fourth Quarter Financial and Operating Highlights
• Gold production for the fourth quarter was 51,292
ounces, representing a decrease of 28 percent versus
the prior year period, and was below the Company’s
fourth quarter plan by 18,000 ounces, or 26 percent.
The fourth quarter production shortfall was attributable
to (i) 13,500 ounces of additional artisanal activity at
Gora; and (ii) 4,500 ounces related to a localized rock
fall in December, which delayed access into Masato.
• During the fourth quarter, 52,939 ounces were sold at
an average realized gold price of $1,099 per ounce
compared to 63,711 ounces sold at an average realized
price of $1,199 per ounce in the prior year period.
•
For the fourth quarter, total cash costs rose to $668 per
ounce, or by 12 percent compared to the prior year
period (excluding the reversal of non-cash inventory
write-downs to Net Realizable Value (“NRV”)) as a
result of lower gold production partly offset by lower
mine site production costs.
• All-in sustaining costs per ounce for the fourth quarter
were $969, or 36 percent higher than the prior year
period (excluding the reversal of non-cash inventory
write-downs to NRV) due to an increase in total cash
costs and total capital expenditures related to the mill
optimization project. All-in sustaining costs for the
fourth quarter include approximately $145 per ounce of
to
development capital expenditures, compared
approximately $6 per ounce in the prior year period.
• Gold revenue decreased compared to the same prior
year period due to lower sales volumes and lower
realized gold prices during the fourth quarter of 2015.
• During the fourth quarter, we recorded a non-cash
impairment charge of $77.9 million (net of tax effects)
on long-lived assets and recorded goodwill. The
impairment charge was triggered primarily by the effect
of changes in the Company’s long-term gold price
assumptions.
($0.19
loss per share), compared
• Consolidated net loss attributable to shareholders for
the three months ended December 31, 2015 was $71.8
million
to
consolidated net profit of $27.7 million ($0.08 per share)
in the prior year quarter. The decrease in profit in the
current quarter is primarily due to the non-cash
impairment charge on long-lived assets and recorded
goodwill of $77.9 million (net of tax effects). For the
three months ended December 31, 2015, net loss
attributable to shareholders before the effects of the
impairment charge was $1.7 million ($0.00 loss per
share)1, mainly due to lower gold prices and lower
production. In the fourth quarter 2014, net profit
included a reversal of non-cash inventory write-down to
net realizable value totaling $16.0 million.
1 Net loss attributable to shareholders before the effects of the impairment
charge is a Non-IFRS performance measure. Please see Non-IFRS
Performance Measures at the end of this Report.
2015 ANNUAL REPORT 6
OUTLOOK 2016
The following table outlines the Company’s estimated 2016 summary production and cost guidance:
Year Ended December 31
Operating Results
Ore mined
Waste mined
Total mined
Grade mined
Strip ratio
Ore milled
Head grade
Recovery rate
Gold produced 1
Total cash costs (incl. royalties) 2
All-in sustaining cash costs 2
Mining
Mining long haul
Milling
G&A
Mine Production Costs
Capital Expenditures
Mine site sustaining
Capitalized reserve development
Project development costs
Total Capital Expenditures 3
Exploration (Expensed)
Administration & CSR Expense
Notes:
2015
Actual
7,748
23,883
31,631
1.22
3.10
3,421
1.79
92.3
182,282
642
965
2.42
5.35
14.01
4.82
142.1
4.4
4.8
23.9
33.1
2.5
16.0
2016
Guidance
2,000 - 2,500
34,500 - 36,000
36,500 - 38,500
2.75 - 3.25
13.00 - 15.00
3,700 - 3,900
1.80 - 2.00
90 – 91
200,000 - 215,000
600 – 650
900 – 975
2.20 - 2.40
4.00 - 4.50
11.00 - 12.00
4.25 - 4.50
145 – 155
8 – 10
5
17 – 20
30 – 35
3
15 – 16
(‘000t)
(‘000t)
(‘000t)
(g/t)
waste/ore
(‘000t)
(g/t)
%
(oz)
$/oz sold
$/oz sold
($/t mined)
($/t hauled)
($/t milled)
($/t milled)
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
1 22,500 ounces of gold production are to be sold to Franco Nevada at 20% 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 standard meanings under IFRS. 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 & development capital expenditures as
defined by the World Gold Council.
3 Excludes capitalized deferred stripping costs, included in mine production costs.
This forecast financial information is based on the following material assumptions for 2016: gold price: $1,100 per ounce; Brent oil:$40/barrel; Euro:USD
exchange rate of 1.1:1
Other important assumptions: 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.
2015 ANNUAL REPORT 7
2016 Guidance Analysis
The Company’s mine plans are designed to maximize
sustainable free cash flow. Mining activity in 2016 will focus
on completing phase 1 of Masato through the first quarter of
the year, and then the mobile equipment will move to
Golouma, where development has just been completed and
production has commenced. Development of Kerekounda is
expected to commence in the third quarter with waste
stripping continuing for the remainder of the year, while
mining at Gora will continue throughout the year.
Total tonnes mined are expected to increase from 31.6
million tonnes mined in 2015 to between 36.5 and 38.5
million tonnes in 2016. Ore tonnes mined are expected to
decrease from 7.7 million tonnes to between 2.0 and 2.5
million tonnes. While ore tonnage is lower in 2016, both
grade and strip ratio are higher, reflecting the concentration
of mining at the higher grade Gora and Golouma pits.
Mill throughput and grade are expected to increase in 2016.
Since the end of the 2015 rainy season, mill throughput is
back to quarterly name plate capacity of one million tonnes
and with the anticipated completion of the mill optimization
in the fourth quarter 2016, mill throughput rates are expected
to rise to the 3.7 to 3.9 million tonne range for the year. In
2016, the majority of ore expected to be processed during
the rainy season is more competent as compared to 2015,
when the majority of the material processed was softer,
which created material handling issues during the wet
season.
The Company expects to produce between 200,000 and
215,000 ounces of gold in 2016. The quarterly production
profile in 2016 is expected to be more consistent than
previous years, with the exception of lower production during
the third quarter due to the rainy season. The 2016
production plan also reflects a build-up of higher grade
stockpiles of approximately 40,000 contained ounces, which
is expected to provide a buffer against any future operating
shortfall.
Total mine production costs for 2016 are expected to be in
the range of $145 to $155 million, slightly higher than 2015
due to the increase in tonnes mined and processed. While
total mine production costs are expected to increase, costs
on a unit basis are expected to be better than 2015, as the
company benefits from a further improvement in fuel prices
and its ongoing business improvement programs.
Administrative and corporate social responsibility (“CSR”)
costs relate to the corporate office, the Dakar and regional
offices and the Company’s corporate social responsibility
initiatives, and exclude corporate depreciation and other
costs. For 2016, these costs are estimated to be between
$15 and $16 million, including approximately $3 million for
CSR activities, similar to 2015.
costs, and
Sustaining capital expenditures for the mine site are
expected to be between $8 and $10 million, excluding
capitalized deferred
reserve
stripping
development expenditures are expected to be $5 million.
Project development expenditures for growth initiatives,
including the cost to develop the Golouma and Kerekounda
deposits and costs to complete the mill optimization project,
are expected to be between $17 and $20 million. The mill
optimization project is expected to be commissioned in the
fourth quarter.
Total cash costs per ounce for 2016 are expected to be
between $600 and $650 per ounce, and all-in sustaining
costs are expected to be between $900 and $975 per ounce,
both in line with 2015.
In 2016, the Company’s exploration program will be focused
on organic growth through (i) the conversion of resources to
reserves; (ii) extensions of existing deposits along strike on
the Sabodala and OJVG mine licenses; and (iii) a systematic
regional exploration program designed to identify high grade
satellite and standalone deposits.
The Company identified a number of risk factors to which it
is subject in its revised Annual Information Form filed for the
year ended December 31, 2014. 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. Refer to Risks and Uncertainties at the end of this
report for additional risks.
Sensitivity
Gold revenue
Gold total cash costs
Gold price effect on royalties
HFO price
LFO price
EUR exchange rate
2016
Hypothetical
Im pact on total
Im pact on
Assum ption
Change
cash costs
profit (pre-tax)
$1,100/oz
$100/oz
n/a
$21.5M
$1,100/oz
$0.32/litre
$0.68/litre
1.10:1
$100/oz
$0.10/litre
$0.10/litre
10%
$5/oz
$14/oz
$10/oz
$31/oz
$1.1M
$3.0M
$2.1M
$6.7M
2015 ANNUAL REPORT 8
REVIEW OF OPERATING RESULTS
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
2015
2014
Change
2015
2014
Change
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
(‘000t)
(‘000t)
(‘000t)
(‘000t)
(g/t)
(oz)
1,859 2,666
(30%)
7,748 6,174
4,612 5,594
(18%)
18,382 21,179
726 490
48% 5,501 1,969
7,197 8,750
(18%)
31,631 29,321
1.37 1.47
(7%)
1.22 1.54
82,057 126,334
(35%)
303,023 305,192
w aste/ore 2.9 2.3
26% 3.1 3.7
(‘000t)
919 1,009
(9%)
3,421 3,622
(g/t)
%
(oz)
(oz)
1.86 2.44
(24%)
1.79 2.03
93.4 90.1
4% 92.3 89.7
51,292 71,278
(28%)
182,282 211,823
52,939 63,711
(17%)
193,218 206,336
Average realized price
$/oz
1,099 1,199
(8%)
1,161 1,259
Total cash costs (incl. royalties)2
$/oz sold
668 598
12% 642 710
All-in sustaining costs2
$/oz sold
969 711
36% 965 865
Mining
($/t mined)
2.83 2.58
10% 2.42 2.83
Mining long haul
($/t hauled)
5.33
-
NA 5.35
-
Milling
G&A
($/t milled)
($/t milled)
13.27 13.91
4.99 4.27
(5%)
14.01 17.15
17% 4.82 4.61
25%
(13%)
179%
8%
(21%)
(1%)
(16%)
(6%)
(12%)
3%
(14%)
(6%)
(8%)
(10%)
12%
(14%)
NA
(18%)
5%
1 Go ld pro duced represents change in go ld in circuit invento ry plus go ld reco vered during the perio d.
2 To tal cash co sts per o unce and all-in sustaining co sts per o unce are no n-IFRS financial measures that do no t have a standard meaning under IFRS. P lease refer to No n-
IFRS P erfo rmance M easures at the end o f this repo rt.
Three m onths ended Decem ber 31, 2015 Tw elve m onths ended Decem ber 31, 2015
Masato
Gora
Masato
Sabodala
Gora
Ore mined
(‘000t)
1,632 227 6,981 473 294
Waste mined - operating
(‘000t)
1,292 3,320 13,130 504 4,748
Waste mined - capitalized
(‘000t)
- 726 4,038 24 1,439
Total mined
Grade mined
Ounces mined
(‘000t)
2,925 4,272 24,149 1,001 6,481
(g/t)
(oz)
1.17 2.80 1.14 1.83 2.42
61,655 20,401 252,587 27,622 22,814
Ore mined
Waste mined - operating
Waste mined - capitalized
Total mined
Grade mined
Ounces mined
Three m onths ended Decem ber 31, 2014
Sabodala
Masato
Tw elve m onths ended Decem ber 31, 2014
Sabodala
Masato
(‘000t)
(‘000t)
(‘000t)
(‘000t)
(g/t)
(oz)
1,788 878
2,003
4,171
3,789 1,805
4,392
16,786
490
- 490
1,479
6,067 2,683
6,885
22,436
1.28 1.86
73,875 52,459
1.27
82,017
1.66
223,175
2015 ANNUAL REPORT 9
Fourth Quarter 2015 Operating Results
Mining
Mining activities in the fourth quarter were focused on
completing the first two phases of Masato, as well as the
upper benches of Gora. In the prior year period, mining was
mainly focused on mining the upper benches of Masato and
the lower benches of Sabodala Phase 3.
Fourth quarter ore tonnes mined of 1.9 million tonnes and
ore grades mined of 1.37 grams per tonne were 30 percent
and 7 per cent lower, respectively, than the prior year period
and 24 percent and 8 percent lower, respectively, than fourth
quarter plan due to the following:
i. More artisanal voids than expected at Gora: Artisanal
miners removed an additional 8,600 contained ounces
in Phase 1, representing significantly more in this area
than the total 12,000 ounces which the company had
already estimated to have been removed from Phase 1
reserves. Overall, artisanal miners removed about 60
percent of the ounces to a depth of 45 metres from
surface. By the end of December, mining activities had
progressed below the artisanal workings in Phase 1 at
Gora with ore tonnes and grades reconciling well to the
reserve model. Accordingly, the Company does not
expect any additional impact from artisanal mining in
Phase 1. Appropriate adjustments have been made to
Phase 2 and 3 to account for additional artisanal
activities. Lower mining rates in areas of the artisanal
workings caused a delay in accessing the final bench in
the fourth quarter plan, resulting in the deferral of
approximately 35,000 ore tonnes at over 6 grams per
tonne into 2016 where mining was completed on
January 8th.
ii. Localized rock fall at Masato: Due to the proximity of
the localized rock fall at the interface between oxide and
fresh material near the Masato phase 1 access ramp,
activity in this pit was limited during most of December
while the area stabilized and remediation work was
completed, delaying access to a high grade area. As a
result, approximately 120,000 ore tonnes of high grade
mill feed were deferred. The balance of phase 1 is
expected to be mined early in the first quarter 2016.
Since mining commenced at Masato in September
2014, higher grade ounces mined are about 2,000
ounces higher than the reserve model with more ore
tonnes partially offset by lower ore grades. Including
lower grade ore, mining at Masato is about 4,000
ounces ahead of the reserve model at marginally better
grade.
Processing
For the three months, ore tonnes milled were 0.9 million
tonnes, or 9 percent lower than the prior year period, which
was a record quarter for the Company in terms of total
tonnes milled. The rainy season continued to cause material
handling issues with the material from Masato, impacting
October’s throughput rates by approximately 25 percent. By
the beginning of November throughput rates had returned to
quarterly name-plate capacity of approximately one million
tonnes.
Head grade for the three months was 1.86 grams per tonne,
or 24 percent lower than the prior year period, mainly due to
the delays in accessing high grade areas of both the Gora
and Masato pits. In addition, 93,000 ore tonnes of 2.7
grams per tonne material mined in late December were
stockpiled and processed in 2016. As a result of the access
delays and high grade stockpiles that were not processed,
mill feed for the quarter included a significantly greater
proportion of low-grade material. In the prior year period,
head grade was higher due to mill feed sourced from the
upper benches of Masato, which contained higher ore
grades, and the lower benches of Sabodala phase 3.
Costs – site operations
The Company is focused on expanding cash margins by
improving productivity and reducing operating costs. Both
the mine and mill areas continue to make significant strides
in lowering unit operating costs.
to a decline
Total mining costs for the three months were $20.4 million,
or 10 percent lower than the prior year period. The
fuel
improvement was mainly due
consumption related to less material movement, favourable
currency variance, and lower emulsion prices offset by the
impact of poor ground conditions at Masato, which
negatively impacted drill and haul productivity, and costs
related to remediation of the localized rock fall in December.
On a unit basis, mining costs for the three months were 10
percent higher than the prior year mainly due to less material
movement.
in
Total processing costs for the quarter decreased to $12.2
million, 13 percent lower than the prior year period due to
cost savings associated with a reduction of power, grinding
and
favourable
variances for fuel, reagent and currency. Accordingly, unit
processing costs for the fourth quarter were 5 percent better
than the prior year period.
reagent consumption
together with
Total mine site general and administrative costs for the
fourth quarter were $4.6 million, an increase of 7 percent
over the prior year period mainly due to higher labour costs.
Accordingly, general and administrative costs on a unit basis
increased by 17 percent over the prior year period due to the
year-over-year increase in costs together with a reduction in
tonnes milled.
2015 ANNUAL REPORT 10
Full Year 2015 Operating Results
Reconciliation of 46,000 Ounce
Production Shortfall in 2015
15,000
13,000
13,500
5,500
8,000 *
182,282
4,500
240,000
230,000
220,000
210,000
200,000
190,000
)
u
A
z
O
(
180,000
170,000
160,000
150,000
FY'15 Actual
Gora Artisanal
Impact
Localized Rock
Fall at Masato
FY'15 Guidance
(Lower End)
Masato Rainy
Season Impact
Gora Mine Plan
Change
FY'15 Guidance
(Upper End)
Lost
Deferred
* The net loss of 2,400 ounces for the year includes a loss of 8,000 recoverable ounces related to artisanal mining at Gora partially offset by a
net gain in ounces from Masato and Sabodala of 5,600 recoverable ounces.
Gold production for the full year was 182,282 ounces, or 14
percent lower in 2015 versus 2014, and was below the
Company’s guidance by 18,000 ounces, or 9 percent. The
fourth quarter production shortfall was attributable to (i)
13,500 ounces of additional artisanal activity; and (ii) 4,500
ounces related to a localized rock fall in December, which
delayed access into Masato.
The Company’s original guidance of between 200,000 and
230,000 ounces was revised to the bottom end of the range
in the third quarter due to the heavy rainy season, which
caused material handling issues at the mill and decreased
throughput, as well as, a change in the Gora mine plan that
resulted in the deferral of three high grade benches into
2016. Overall for the year, 43,600 ounces represent a
deferral to 2016 and 2,400 ounces represent a production
loss related to the net ounces lost compared to the reserve
model due to artisanal mining, which was partially offset by
a net gain in ounces from Masato and Sabodala.
In 2015, total cash costs of $642 per ounce were 10 percent
lower than in 2014 (excluding the reversal of non-cash
inventory write-downs to NRV) and were below the bottom
end of the Company’s guidance range of $650 to $700 per
ounce. This decrease in total cash costs per ounce was
mainly due to lower mine site production costs, partially
offset by lower gold production.
All-in sustaining costs of $965 per ounce were within the
Company’s guidance range of $900 to $975 per ounce and
were 12 percent higher in 2015 compared to 2014
(excluding the reversal of non-cash inventory write-downs to
in development capital
NRV) due
expenditures. All-in sustaining costs
include
in 2015
approximately $124 per ounce of development capital
increase
to an
expenditures, the majority of which was related to the mill
optimization project and
the development of Gora,
compared to approximately $19 per ounce in 2014.
In 2015, all unit costs were below the Company’s guidance
range. This is due to a sharp focus on cost management,
which resulted in more than $20 million (or $100 per ounce)
cost savings and the lowest unit costs in the Company’s
history. Cost savings related to improvements to the
load/haul cycle, a reduction of overall energy costs and
consumables used in the mill, as well as favourable
variances in both currency and fuel prices.
Mining
In 2015 the Company mined a total of 31.6 million tonnes
from three pits:
i.
24.1 million
throughout the year;
tonnes were mined at Masato
ii. 6.5 million tonnes were mined at Gora, the
Company's first satellite deposit, which as planned
came into production by the third quarter; and
iii. 1.0 million tonnes were mined at Sabodala, where
the final benches of phase 3 were completed
during the first half of the year.
In 2014, a total of 29.3 million tonnes were mined with 22.4
million tonnes from the lower benches of Phase 3 in the
Sabodala pit and 6.9 million tonnes from Masato, which went
into production in September 2014.
In order to improve 2016 and 2017 cash flows, the mine
plans for both Masato and Gora were optimized during 2015,
with the result that both ore and waste mined increased at
2015 ANNUAL REPORT 11
Masato and more waste and less ore were mined at Gora.
The impact of the localized rock fall at Masato in December
and the negative impact of artisanal voids on mining rates at
Gora resulted in approximately 1.4 million tonnes less
material being moved than the revised plan.
While total ore tonnes mined in 2015 increased to 7.7 million
tonnes, an increase of 25 percent compared to 2014, ore
grades mined were lower. The decline in ore grade was
mainly due to the lower-grade ore at Masato and the mining
deferral of high grade ore at both Masato and Gora into
2016. In the prior year periods, mining was mainly focused
on higher grade areas of the Sabodala pit. As a result of
changes made to the Gora mine plan during the third quarter
to enlarge phase 1 of the pit in order to optimize operating
efficiencies and the slower rate of mining through artisanal
voids, three benches containing approximately 100,000
tonnes of ore at over 6 grams per tonne were deferred to
2016.
Processing
Ore tonnes milled for the twelve months were 3.4 million
tonnes, a decrease of 6 percent compared to the prior year
and 8 percent lower than plan due to lower throughput during
this year’s protracted and heavy rainy season, which caused
material handling issues due to increased plasticity of the
Masato ore when wet. The material handling issues during
the third quarter reduced production by 13,000 recovered
ounces. Together with the impact of delays in mining at Gora
and Masato, approximately 248,000 tonnes at an average
grade of 3.00 grams per tonne, which were scheduled to be
processed during the fourth quarter, were deferred to 2016.
In the prior year period, mill feed was comprised of mainly
fresh ore from the Sabodala pit until the fourth quarter when
mining began at Masato.
Head grade in 2015 was 1.79 grams per tonne, a decrease
of 12 percent versus 2014 due to the deferral of high grade
feed into 2016.
Costs – site operations
Total mining costs for 2015 were $76.5 million, or 8 percent
lower than in 2014 mainly due to shorter haul distances,
mine optimization to improve productivity, favourable fuel
and currency movements, and improved drill and haul
productivities. These savings were partially offset by an
increase
in grade control drilling costs and higher
maintenance costs. Unit mining costs in 2015 at $2.42, were
the lowest in the Company’s history and 14 percent better
than the prior year due to a reduction in costs and higher
tonnes mined.
In 2015,
total processing costs were $47.9 million,
representing an improvement of 23 percent over the prior
year due to cost savings associated with a reduction of
power, grinding and reagent consumption together with
favourable variances for currency, fuel and reagents.
Accordingly, the Company reported record unit processing
costs of $14.01 for 2015, representing an 18 percent
improvement over 2014.
Total mine site general and administrative costs for 2015
were $16.5 million, slightly less than the prior year as higher
labour costs were offset by favourable fuel and currency
rates. On a unit basis, general and administration costs
were $4.82, or 5 percent higher in 2015 than in 2014 due to
a reduction in total ore tonnes milled during the year.
2015 ANNUAL REPORT 12
REVIEW OF FINANCIAL RESULTS
(US$000's, except w here indicated)
2015
2014 % Change
2015
2014 % Change
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
Revenue
Cost of sales1
Gross profit
58,235
76,553
(48,515) (37,738)
38,815
9,720
Exploration and evaluation expenditures
(743) (373)
Administration & corporate social responsibility expenses
(4,568) (4,404)
Share-based compensation
(9)
75
(24%)
29%
(75%)
99%
4%
N/A
224,620
260,588
(172,261) (207,984)
52,604
52,359
(2,525) (2,772)
(16,311) (15,621)
(1,761) (911)
(14%)
(17%)
(%)
(9%)
4%
93%
(973) (2,080)
(53%)
(3,159) (9,484)
(67%)
Finance costs
Impairment charge
Net foreign exchange gains (losses)
Other income (expense)
Profit (loss) before incom e tax
Income tax recovery (expense)
Profit (loss) for the period
(90,000)
-
(253)
671
(669)
15
(87,495)
32,719
8,012 (1,536)
(79,483)
31,183
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(90,000)
-
1,901
2,013
1,381 (1,982)
(58,115)
23,847
2,502 (1,536)
(55,613)
22,311
5,070 (4,535)
(50,543)
(0.14)
17,776
0.05
N/A
(6%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Loss (profit) attributable to non-controlling interests
7,659 (3,490)
Profit (loss) attributable to shareholders of Teranga (71,824)
(0.19)
Basic earnings (loss) per share
27,693
0.08
1 In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f equipment directly related to deferred stripping activity. The impact o f this
adjustment has been applied retro spectively fro m January 1, 2012. The twelve mo nths ended December 31, 2015 includes the impact o f restating the deferred inco me tax expenses related to
tempo rary timing differences.
No te: Results include the co nso lidatio n o f 100% o f the OJVG's o perating results, cash flo ws and net assets fro m January 15, 2014.
Review of financial results for the three months ended
December 31, 2015 and 2014
Revenue
Revenue for the three months ended December 31, 2015
was $58.2 million compared to gold revenue of $76.6 million
for the same period in the prior year. The decrease in gold
revenue of $18.4 million was due to lower sales volume from
lower production and lower average realized gold prices in
the current period. Gains on gold forward sales contracts
which were entered into during the fourth quarter 2015 have
been classified within other income.
Three m onths ended Decem ber 31,
Royalties
Spot price per ounce of gold
Average
Low
High
2015
$1,106
$1,049
$1,184
2014 % Change
$1,201
$1,142
$1,250
(8%)
(8%)
(5%)
Cost of Sales
(US$000's)
Cost of Sales
Mine production costs - gross
Capitalized deferred stripping
Three m onths ended Decem ber 31,
2015
2014 % Change
38,074 41,123
(2,715) (1,266)
35,150 40,046
(12%)
570 7,205
(92%)
10,280 11,988
3,082 3,843
(7%)
115%
N/A
(14%)
(20%)
101%
(37%)
N/A
(86%)
Capitalized deferred stripping - non-cash1
(209)
189
Depreciation and amortization - deferred stripping
assets1
Depreciation and amortization - property, plant &
equipment and mine development expenditures
Amortization of advanced royalties
787 391
Inventory movements
Inventory movements - non-cash1
(3,661) (5,802)
2,307 (3,907)
(1,354) (9,709)
Total cost of sales before adjustm ents to net
realizable value
48,515 53,764
(10%)
Adjustments to net realizable value1
- (10,865)
Adjustments to net realizable value - non-cash1
- (5,161)
Total cost of sales
- (16,026)
48,515 37,738
N/A
N/A
N/A
29%
1 In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f
equipment directly related to deferred stripping activity. The impact o f this adjustment has been applied
retro spectively fro m January 1, 2012.
For the three months ended December 31, 2015, total cost
of sales, before adjustments to net realizable value,
decreased by 10 percent to $48.5 million from $53.8 million
in the prior period due to lower mine production costs,
depreciation and amortization and higher capitalized
deferred stripping costs, partly offset by lower inventory
movements.
2015 ANNUAL REPORT 13
Mine production costs (before capitalized deferred stripping)
of $38.1 million were lower than the prior year period by $3.0
million, or 7 percent, due to a reduction in mining and
processing costs. See Fourth Quarter 2015 Operating
Results section for additional information.
the
During
fourth quarter 2015, depreciation and
amortization declined by $8.3 million, or 43 percent, to $10.9
million from $19.2 million in the prior year period mainly due
to lower depreciation of deferred stripping assets.
During the fourth quarter 2015, royalties of $3.9 million were
$0.4 million lower than the prior year period, mainly due to
lower revenue in the current quarter, partly offset by higher
amortization of advanced royalties related to production
from the OJVG and royalties related to Gora. See
Contingent Liabilities section for additional information.
During the fourth quarter 2015, cost of sales were reduced
by inventory movements of $1.4 million compared to $9.7
million in the prior year period. Lower mine production costs
incurred in the current quarter resulted in a decrease in the
cost per ounce of inventory stockpiles on hand despite an
increase in ounces stockpiled of approximately 15,000
ounces.
During the three months ended December 31, 2014, the
Company recorded a $16.0 million reversal of non-cash
inventory write-downs on long-term low-grade ore stockpile
inventory that had been previously recorded during the
second and third quarters of 2014. Higher ore grades and
ounces mined during the fourth quarter 2014 resulted in a
decrease in the per ounce ending cost of low-grade ore
stockpiles (including applicable overhead, depreciation and
amortization).
Impairment charge
During the fourth quarter 2015, the Company recorded a
non-cash impairment charge related to long-lived assets and
recorded goodwill. The impairment charge was triggered
primarily by the effect of changes in the Company’s long-
term gold price assumptions. For additional information,
please see Critical Accounting Policies and Estimates
section.
Income tax recovery (expense)
Effective May 2, 2015, following the expiry of certain tax
exemptions provided under the Sabodala mining license, the
Company became subject to a 25 percent corporate income
tax rate calculated on profits recorded in Senegal, as well as
customs duties, non-refundable value-added tax on certain
expenditures, and other Senegalese taxes. For the three
months ended December 31, 2015, the Company recorded
a recovery of income taxes of $8.0 million, comprised of
recoveries of deferred income taxes of $14.2 million net of
current income tax expense of $6.2 million. Recoveries of
deferred income taxes recorded during the quarter relate to
temporary differences created by the impairment charge
recorded against property plant and equipment and mine
development expenditures which continue to have tax basis
2 Net loss attributable to shareholders before the effects of the impairment
charge is a Non-IFRS performance measure. Please see Non-IFRS
Performance Measures at the end of this Report.
the Senegal
at
recognized in 2015 will be paid in 2016.
level. Current
income
tax expense
Net profit (loss)
Consolidated net loss attributable to shareholders for the
three months ended December 31, 2015 was $71.8 million
($0.19 loss per share), compared to consolidated net profit
of $27.7 million ($0.08 per share) in the prior year quarter.
The decrease in profit in the current quarter is primarily due
to the non-cash impairment charge to long-lived assets and
recorded goodwill of $77.9 million (net of tax effects). For
the three months ended December 31, 2015 net loss
attributable to shareholders before the effects of the
impairment charge was $1.7 million ($0.00 loss per share) 2,
mainly due to lower gold prices and lower production. In the
fourth quarter 2014, net profit included a reversal of non-
cash inventory write-down to net realizable value totaling
$16.0 million.
Review of financial results for the twelve months ended
December 31, 2015 and 2014
Revenue
Revenue for the twelve months ended December 31, 2015
declined by $36.0 million or 14 percent over the same prior
year period primarily due to lower realized gold prices and
lower production levels in the current year. Gains on gold
forward sales contracts which were entered into during 2015
have been classified within other income.
Spot price per ounce of gold
Average
Low
High
Tw elve m onths ended Decem ber 31,
2015
$1,160
$1,049
$1,296
2014 % Change
$1,266
$1,142
$1,385
(8%)
(8%)
(6%)
Cost of Sales
(US$000's)
Cost of Sales
Mine production costs - gross
Capitalized deferred stripping
Tw elve m onths ended Decem ber 31,
2015
2014
% Change
142,131 162,410
(14,547) (5,976)
Capitalized deferred stripping - non-cash1
(1,374) (658)
126,210 155,776
Depreciation and amortization - deferred stripping
assets1
Depreciation and amortization - property, plant &
equipment and mine development expenditures
Royalties
5,687 28,911
(80%)
36,229 40,605
11,396 12,486
Amortization of advanced royalties
1,892 440
Inventory movements
Inventory movements - non-cash1
Total cost of sales
(16,611) (22,145)
7,458 (8,089)
(9,153) (30,234)
172,261 207,984
1 In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f
equipment directly related to deferred stripping activity. The impact o f this adjustment has been applied
retro spectively fro m January 1, 2012.
(12%)
143%
109%
(19%)
(11%)
(9%)
330%
(25%)
N/A
(70%)
(17%)
For the twelve months ended December 31, 2015, total cost
of sales decreased by 17 percent to $172.3 million from
lower mine production costs,
$208.0 million due
depreciation and amortization, and higher capitalized
to
2015 ANNUAL REPORT 14
deferred stripping costs, partly offset by lower inventory
movements.
December 31, 2015 over the prior year due to grants of
share-based awards issued in the first quarter of 2015.
Mine production costs (before capitalized deferred stripping)
of $142.1 million were lower than the prior year period by
$20.3 million or 12 percent due to a reduction in mining and
processing costs. Please see Full Year 2015 Operating
Results section for additional information.
During the twelve months ended December 31, 2015,
700,000 Deferred Share Units (“DSUs”) were granted at a
price of C$0.64 per unit. Of the total 1,245,000 DSUs
outstanding at December 31, 2015, 545,000 units were
vested and no units were cancelled.
Depreciation and amortization of $41.9 million, was $27.6
million or 40 percent lower than the prior year period
primarily due to lower depreciation of deferred stripping
balances in the current year as ore is primarily sourced from
Masato and Gora which have minimal balances of deferred
stripping assets to be amortized. Capitalized deferred
stripping costs related to the Sabodala pit will be amortized
once phase 4 mining commences. Approximately 80
percent of fixed assets are depreciated using the units of
production method of depreciation.
Royalties increased to $13.3 million compared to $12.9
million in the prior year period, due to higher amortization of
advanced royalties related to production from the OJVG and
royalties related to Gora, partly offset by lower royalties from
lower revenue in the current year. Please see Contingent
Liabilities section for additional information.
During the current year, cost of sales were reduced by
inventory movements of $9.2 million compared to $30.2
million in the prior year period. Lower mine production costs
incurred in the current year resulted in a decrease in the cost
per ounce of inventory on hand despite an increase in
ounces in inventory of approximately 68,000 ounces. As at
December 31, 2015, inventory contained over 350,000
ounces of recoverable gold.
Exploration and evaluation
Exploration and evaluation expenditures for the twelve
months ended December 31, 2015 were $2.5 million, similar
to the prior year period. The Company is taking a systematic
and disciplined approach to exploration. On the mine
license, the emphasis is on reserve development drilling
whereas on the regional land package, the focus is on lower
cost soil geochemistry and trench mapping with selective
drilling to delineate exploration targets. Drilling has been
minimized in the current gold price environment. Please see
Regional Exploration section for additional information.
Administration and corporate social responsibility costs
During the twelve months ended December 31, 2015
administration and CSR costs increased to $16.3 million
from $15.6 million in the prior year period. The $0.7 increase
primarily relates to increase in Dakar office expenditures,
legal and audit related fees and higher social commitments
related to the advancement of the Company’s regional
development strategy and incorporation of the OJVG
commitments, partly offset by
lower corporate office
expenditures due to favourable currency exchange rates
and lower depreciation expense on corporate office assets.
Share-based compensation
Share-based compensation expense increased by $0.9
million to $1.8 million for the twelve months ended
During the twelve months of 2015, 3,055,000 Restricted
Share Units (“RSU’s”) were granted at a price of $0.64 per
unit and 479,410 RSUs were forfeited. Of the 3,704,182
RSU’s outstanding at December 31, 2015, none were
vested.
A total of 300,000 Fixed Bonus Plan Units (“FBUs”) were
granted to one employee at an exercise price of C$0.64 per
unit during the twelve months ended December 31, 2015.
No FBUs were forfeited or exercised during the period.
FBUs granted are fair valued at the end of each reporting
period using the Black-Scholes option pricing model. Of the
1,660,000 FBUs outstanding at December 31, 2015,
1,585,000 FBUs were vested and no units were forfeited or
exercised during the period. FBUs granted are fair valued
at the end of each reporting period using the Black-Scholes
option pricing model.
As of December 31, 2015, 15,539,165 common share stock
options were issued and outstanding, of which 12,670,177
are vested and 2,831,488 vest over a three-year period and
37,500 vest based on achievement of certain milestones.
The fair value of options that vest upon achievement of
milestones will be recognized based on management’s best
estimate of outcome of achieving desired results. The
exercise price of new stock options granted during the
current year was determined using a volume weighted
average trading price of the Company’s shares for the 5-day
period ended March 31, 2015. Under IFRS, the accelerated
method of amortization is applied to new grants of stock
options and fixed bonus plan units, which results in about 70
percent of the cost of the stock options and fixed bonus plan
units recorded in the first year of grant.
Num ber of
Options
Weighted
Average
Exercise Price
Balance as at January 1, 2014
23,737,850
C$2.58
C$3.00
130,000
(2,397,361)
C$2.83 - C$3.00
Granted
Forfeited
Balance as at December 31, 2014
21,470,489
Expired 1
Granted
Forfeited
(7,746,600)
3,855,000
(2,039,724)
Balance as at December 31, 2015
15,539,165
C$2.54
C$1.73
C$0.64
C$3.00
C$2.42
1 7,746,600 common share stock options which expired related to
the Company’s acquisition of Oromin.
Finance costs
Finance costs decreased by 67 percent to $3.2 million for
the twelve months ended December 31, 2015 from $9.5
million in the twelve months of 2014 primarily due to lower
interest expense as a result of lower total debt levels
2015 ANNUAL REPORT 15
compared to the prior year. In August 2015, the Company
drew $15.0 million on its $30.0 million Revolver Facility with
Société Générale (“Revolver Facility”) incurring $0.6 million
of interest expense and fees and $0.4 million of amortization
of deferred financing costs.
Net foreign exchange gain
Net foreign exchange gains of $1.9 million were realized for
the twelve months ended December 31, 2015 primarily due
to
to gains on Euro denominated payments due
strengthening of the US dollar relative to the Euro since the
start of the year.
Impairment charge
During the fourth quarter 2015, the Company recorded an
impairment charge of $77.9 million (net of tax effects) related
to long-lived assets and recorded goodwill. The impairment
charge was triggered primarily by the effect of changes in
long-term gold prices. For additional information, please see
Critical Accounting Policies and Estimates section.
Other income (expense)
Other income for the twelve months ended December 31,
2015 was $1.4 million compared to other expense of $2.0
million in the prior year period. During 2015, gains on gold
forward sales contracts and the sale of an exploration permit
were partly offset by expenses related to government taxes.
REVIEW OF QUARTERLY FINANCIAL RESULTS
In the prior year, expenses were recorded in connection with
the acquisition of the OJVG.
Income tax recovery (expense)
For the twelve months ended December 31, 2015, the
Company recorded recoveries of income taxes of $2.5
million, comprised of recoveries of deferred income taxes of
$11.2 million net of current income tax expense of $8.7
million. Recoveries of deferred income taxes recorded
during the year mainly relate to temporary differences
created by the impairment charge recorded against property
plant and equipment and mine development expenditures
which continue to have tax basis at the Senegal level.
Current income tax expense recognized in 2015 will be paid
in 2016.
Net profit (loss)
Consolidated net loss attributable to shareholders for the
twelve months ended December 31, 2015 was $50.5 million
($0.14 loss per share) compared to net income of $17.8
million ($0.05 per share) in the prior year period. The
decrease in profit in the current year is due to a non-cash
impairment charge to long-lived assets and recorded
goodwill of $77.9 million (net of tax effects). Net profit
attributable to shareholders before the effects of the
impairment charge was $19.6 million ($0.05 per share).3
(US$000's, except w here indicated)
2015
2014
Revenue
58,235
37,830 60,064 68,491 76,553 56,711 57,522 69,802
Average realized gold price ($/oz)
1,099
1,112 1,198 1,217 1,199 1,269 1,295 1,293
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Cost of sales1
Net earnings (loss)1
Net earnings (loss) per share ($)1
Operating cash flow
48,515
32,497 43,094 48,155 37,738 52,358 62,820 55,068
(71,824)
1,568 6,726 12,988 27,693 (1,524)
(12,543)
4,152
(0.19)
9,755 (8,221)
0.00 0.02 0.04 0.08 (0.00)
(0.04)
12,269 16,631 30,677 13,822 (9,793)
0.01
14,303
1In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f equipment directly related to deferred stripping activity. The impact o f this
adjustment has been applied retro spectively fro m January 1, 2012. The nine mo nths ended September 30, 2015 includes the impact o f restating the deferred inco me tax expenses related to
tempo rary timing differences.
Our revenues over the last several quarters reflect a trend
of spot gold prices that have fluctuated around recent low
levels in the current metal commodity cycle while production
costs have been declining. This trend has translated into
fluctuating net earnings and operating cash flow levels
depending on the price of gold and production levels each
quarter.
Net loss recorded during the fourth quarter 2015 includes a
non-cash impairment charge. Net earnings recorded during
the fourth quarter 2014 were higher than other quarters
mainly due to a reversal of non-cash inventory write-downs,
which reduced cost of sales during the period. These write-
downs were previously recorded during the second and third
quarters 2014, which resulted in the respective net losses
realized during those periods.
Operating cash flows during the second quarters of 2015
and 2014 include the payment of royalties. Operating cash
flows trended lower during certain prior year quarters as a
result of transaction costs related to the acquisition of the
OJVG. Commencing in first quarter 2014, operating cash
flows reflect the impact of delivering a portion of quarterly
gold production to Franco-Nevada at 20 percent of gold spot
prices.
3 Net profit attributable to shareholders before the effects of the
impairment charge is a Non-IFRS performance measure. Please
see Non-IFRS Performance Measures at the end of this Report.
2015 ANNUAL REPORT 16
BUSINESS AND PROJECT DEVELOPMENT
Gora Development
Mining at the satellite Gora pit commenced in July 2015. All
required infrastructure, including a 26 kilometre access road,
was completed within the scheduled timeframe and came in
$3.5 million under the estimated budget of $19.0 million4.
Mill Optimization
A mill optimization project was launched in mid-2015, which
will add a second primary jaw crusher, screen and conveyor
assembly to tie into our existing facility when it is completed
in the fourth quarter of 2016.
Upon completion, the mill optimization is expected to
increase throughput by more than 10 percent on an
annualized basis based on existing ore hardness; however,
there may be potential to increase throughput further based
on simulations of the new design configurations. In addition
to higher production, unit processing costs are expected to
decrease by approximately 5 percent.
A number of key milestones were accomplished during the
fourth quarter. The project entered into the construction
phase and remains on schedule for completion in the third
quarter with commissioning and full ramp up during the
fourth quarter of 2016. To date, the project remains on
budget.
Approximately $7.3 million of the $20 million budgeted was
spent in 2015, with the remainder of costs expected to be
incurred in 2016.
Heap Leach Project
In the fourth quarter, the Company completed the pre-
feasibility study (“PFS”), which concluded that heap leaching
is technically viable for processing its low-grade ore.
The PFS capital costs, which are currently being finalized,
are based on the optimized Phase 2 trade off studies and
subsequent design criteria. The estimated capital cost of the
heap leach project is expected to be in the range of $50
million.
A decision to proceed will require the conversion of
additional oxide resources to reserves and finalized project
economics that exceed our 20 percent minimum hurdle rate.
If a decision is made to go ahead with the heap leaching
project, it is estimated that it will take approximately 24
months to permit and construct. Based on current
assumptions, we estimate that heap leach could account for
an incremental 10 to 20 percent of annual production once
fully operational.
Reserves and Resources
Mineral Resources at December 31, 2015 are presented in
table 1. Total open pit and underground Proven and
Probable Mineral Reserves5 at December 31, 2015 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 and underground designs. The basis for
the resources and reserves is consistent with the Canadian
Instrument 43-101
Securities Administrators National
Standards for Disclosure for Mineral Projects (“NI 43-101”)
regulations.
All of the open pit designs were updated based on a Lerchs-
Grossman (“LG”) pit shell using Whittle 4X software. The
key input parameters were based on a gold price of $1,100
per ounce (with exception of Sabodala at $1,000 per ounce),
extrapolated mine and plant operating costs from current
operating data and wall angles based on rock mass
from
classifications
observation coupled with analysis of diamond drill hole data.
The net result is lower total ounces in open pit reserves from
the previous designs but an improved cash flow over the life
of mine plan with the removal of low margin areas of the
open pit reserve pit shells at a gold price of $1,100 per
ounce.
the existing database
that use
The Sabodala pit has been mined out through Phases 1-3,
with the latter phase completed by mid-year in 2015. While
the previous pit design was maintained using a $1,000 per
ounce gold price, a re-evaluation of the final pit limits of
Sabodala Phase 4 will be completed prior to mining and will
use updated economic parameters at that time. Currently,
the plan to mine Phase 4 in Sabodala is estimated to begin
in 2017.
Mining of the initial phases of the Masato pit began in late
2014, with completion expected in first quarter 2016. The
final phase of the Masato pit (Phase 3) remains largely
unchanged from the original design and is expected to begin
in 2018.
The previously named Niakafiri pit has been changed to
Niakafiri Main. It has been redesigned and is based on an
updated resource model that re-interpreted the previous drill
hole data, updated economics for the pit shells using current
economic parameters and pit wall angles consistent with
similar rock types on the property.
Newly defined reserves have been added at Niakafiri SE,
Niakafiri SW and Maki Medina orebodies as a result of
drilling in 2015. Additional drilling is planned in 2016 to
potentially further delineate additional open pit reserves on
these orebodies.
Mining in the satellite Gora pit started in July 2015. The pit
design remains largely unchanged from December 2012,
however, it has been adjusted to show year end 2015 mining
progress as well an additional 22.8 thousand tonnes at 8.19
grams per tonne (6,000 mined ounces) have been removed
4 Pending decision on dyke construction 2016.
5 The term “Mineral Reserves” is being used with the same
meaning as “Ore Reserves”, defined in the 2012 JORC Code.
2015 ANNUAL REPORT 17
to estimate the impact of increased artisanal activity
encountered during 2015.
The previously defined Golouma pit was renamed to reflect
the two areas of the orebody: Golouma West and Golouma
South.
Golouma South will be mined in 2016 and has begun early
pre-stripping. Minor adjustments were made from the
previous Golouma South to account for slightly shallower
slope angles in the oxide zones, but steeper angles in the
fresh zones. A small amount of artisanal activity was
encountered near surface, accounting for the removal of 6.7
thousand tonnes at 2.96 grams per tonne (650 mined
ounces) from the reserves.
Significant changes were made to the Golouma West pit
design. A portion of the orebody was removed totaling 1.78
million tonnes of ore at 2.09 grams per tonne (119,900
ounces) but also removing 41.9 million tonnes of waste for
an incremental strip ratio of 23.6. This smaller pit results in
an improved cash flow at $1,100 per ounce gold. This pit is
planned to be mined in 2021, and additional considerations
will be made to the final pit design based on economic
conditions at that time.
The Kerekounda pit design remains largely unchanged from
the previous design, with minor modifications to the wall
angles in the oxide zone and final pit boundaries based on
the updated LG shell.
Underground Reserves
RPA Inc. (RPA) completed the underground mine design for
the estimation of Mineral Reserves.
The mining method chosen for the reserves estimate is a
modified cut and fill. Due to the irregular geometry of these
deposits, this allows for maximum recovery of ore, good
mining selectivity, and a minimal amount of mining
equipment. The ventilation will be a push system, with air
being directed down the ventilation raise and exhausting at
the portal. Two types of backfill material are proposed,
Cemented Rock Fill and Unconsolidated Rock Fill.
Groundwater and mine water will be collected in sumps and
pumped to surface discharging into the pits.
The deposits will be mined two at a time in order to meet the
current mine life schedule. Kerekounda and Golouma South
will be mined first starting in 2021. Once they are exhausted,
the Golouma West deposits will be mined. The objective of
scheduling the deposits to be mined in this sequence is to
have eight years of continuous production from the
underground with some lag in the schedule to allow
infrastructure to be moved from the first set of deposits to
the second set. Each deposit is scheduled on a 500 tonnes
per day production target, providing 1,000 tonnes per day
combined at peak production.
Capital and operating costs were estimated by
first
principles and using budgetary quotes from vendors and
contractors. Refining, royalty, processing, and general and
administrative costs were provided by Teranga.
Table 1: Open Pit and Underground Mineral Resources Summary (as at December 31, 2015)
Deposit
Domain
Sabodala
Gora
Niakafiri Main
Niakafiri West
Soukhoto
Diadiako
Subtotal
Sabodala ML
Masato
Golouma
Kerekounda
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Tonnes
('000s)
13,742
Measured
Grade
(g/t Au)
1.13
Au
('000s)
497
13,742
466
466
4,909
1.13
4.55
4.55
1.33
497
68
68
210
Tonnes
('000s)
6,488
1,631
8,119
1,083
315
1,398
7,222
Indicated
Grade
(g/t Au)
1.59
3.65
2.01
6.11
5.14
5.89
0.98
Au
('000s)
332
191
524
213
52
265
228
Measured and Indicated
Grade
(g/t Au)
1.28
3.65
1.45
5.64
5.14
5.56
1.12
Tonnes
('000s)
20,230
1,631
21,861
1,549
315
1,864
12,131
Au
('000s)
829
191
1,021
281
52
333
438
4,909
1.33
210
7,222
0.98
228
12,131
1.12
438
19,117
1.26
19,117
5,894
1.26
0.79
5,894
0.79
776
776
150
150
14,793
1,947
16,740
22,617
1,163
23,780
6,800
2,134
8,934
1,255
1.62
3.89
1.89
1.16
2.75
1.24
2.98
4.09
3.25
4.28
773
243
1,016
844
103
947
653
280
933
173
33,910
1,947
35,857
28,511
1,163
29,674
6,800
2,134
8,934
1,255
1.42
3.89
1.55
1.08
2.75
1.15
2.98
4.09
3.25
4.28
1,548
243
1,792
994
103
1,097
653
280
933
173
Tonnes
('000s)
2,525
460
2,985
53
59
113
2,472
184
2,656
2,566
90
2,656
550
Inferred
Grade
(g/t Au)
1.23
3.60
1.60
4.95
4.83
4.88
1.09
2.51
1.19
1.29
2.82
1.34
1.46
550
178
663
841
8,344
1,456
9,800
1,984
1,984
88
854
942
1.46
1.27
2.89
2.54
1.25
3.14
1.53
2.85
2.85
2.46
3.66
3.55
Au
('000s)
100
53
153
8
9
18
87
15
102
107
8
115
26
26
7
61
69
335
147
482
182
182
7
100
107
2015 ANNUAL REPORT 18
Deposit
Domain
Measured
Grade
(g/t Au)
Tonnes
('000s)
Au
('000s)
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Maki Medina
Niakafiri SW
Niakafiri SE
Kinemba
Kobokoto
Koulouqwinde
Kourouloulou
Kouroundi
Koutouniokolla
Mamasato
Sekoto
Subtotal
Somigol ML
Total Sabodala
+ Somigol
Tonnes
('000s)
499
1,755
2,112
109
2,221
770
770
4,439
73
4,512
24
24
842
842
96
59
156
67
67
560
560
Indicated
Grade
(g/t Au)
4.88
4.45
1.22
2.71
1.30
0.81
Au
('000s)
78
251
83
10
93
20
Measured and Indicated
Grade
(g/t Au)
4.88
4.45
1.22
2.71
1.30
0.81
Tonnes
('000s)
499
1,755
2,112
109
2,221
770
Au
('000s)
78
251
83
10
93
20
Tonnes
('000s)
235
235
114
85
199
30
Inferred
Grade
(g/t Au)
5.70
5.70
0.81
2.54
1.55
0.67
Au
('000s)
43
43
3
7
10
1
0.81
0.98
2.60
1.01
1.06
1.06
1.02
1.02
11.51
9.15
10.61
0.93
0.93
1.45
1.45
1.58
3.81
1.78
1.59
3.84
1.81
20
140
6
146
1
1
28
28
36
18
53
2
2
26
26
770
4,439
73
4,512
24
24
842
842
96
59
156
67
67
560
560
2,005
495
2,500
2,777
738
3,516
45,478
4,038
49,516
79,388
5,985
85,373
0.81
0.98
2.60
1.01
1.06
1.06
1.02
1.02
11.51
9.15
10.61
0.93
0.93
1.45
1.45
1.47
3.81
1.66
1.45
3.84
1.62
20
140
6
146
1
1
28
28
36
18
53
2
2
26
26
2,155
495
2,650
3,703
738
4,441
30
162
16
177
91
56
147
335
335
230
60
290
22
86
108
42
42
85
22
108
305
42
347
485
25
510
1,989
3,465
5,454
10,333
4,921
15,254
0.67
0.96
2.64
1.11
0.95
2.52
1.55
0.86
0.86
1.42
2.67
1.68
6.71
13.58
12.18
0.74
0.74
1.58
2.54
1.78
1.25
2.32
1.38
0.89
2.11
0.95
1.16
3.48
2.63
1.23
3.38
1.92
1
5
1
6
3
5
7
9
9
11
5
16
5
38
42
1
1
4
2
6
12
3
15
14
2
16
74
387
462
409
534
944
5,894
0.79
5,894
25,011
0.79
1.15
25,011
1.15
150
150
926
926
39,584
4,038
43,622
54,377
5,985
60,362
Notes for Mineral Resources Summary:
1. CIM definitions were followed for Mineral Resources.
2. Open pit oxide Mineral Resources are estimated at a cut-off grade of 0.35 g/t Au, except for Gora at 0.48 g/t Au.
3. Open pit transition and fresh rock Mineral Resources are estimated at a cut-off grade of 0.40 g/t Au, except for Gora at 0.55 g/t Au.
4. Underground Mineral Resources are estimated at a cut-off grade of 2.00 g/t Au.
5. Measured Resources at Sabodala include stockpiles which total 9.2 Mt at 0.77 g/t Au for 229,000 oz.
6. Measured Resources at Gora include stockpiles which total 0.1 Mt at 1.30 g/t Au for 6,000 oz.
7. Measured Resources at Masato include stockpiles which total 5.9 Mt at 0.79 g/t Au for 150,000 oz.
8. High grade assays were capped at grades ranging from 1.5 g/t Au to 110 g/t Au.
9. The figures above are “Total” Mineral Resources and include Mineral Reserves.
10. Open pit shells were used to constrain open pit resources.
11. Mineral Resources are estimated using a gold price of US$1,450 per ounce.
12. Sum of individual amounts may not equal due to rounding.
There have been no revisions to the resource models for 2015, except for adjustments due to mining depletion and minor revisions to Niakafiri
Main, Niakafiri SW, Maki Medina and Diadiako. For estimating 2015 Mineral Resources, Teranga has implemented a new reporting procedure,
which includes the use of open pit shells to constrain open pit resources and reporting underground resources separately.
For reporting of open pit Mineral Resources, open pit shells were produced for each of the resource models using Whittle open pit optimization
software. Only classified blocks greater than or equal to the open pit cut-off grades and within the open pit shells were reported. This is in
compliance with the CIM (2014) resource definition requirement of “reasonable prospects for eventual economic extraction”.
2015 ANNUAL REPORT 19
For reporting of underground Mineral Resources, only classified blocks greater than or equal to the underground cut-off grade outside of the
open pit shells were reported. This is in compliance with CIM (2014) resource definition requirements. In addition, Deswik Stope Optimizer
software was used to generate wireframe models to constrain blocks satisfying minimum size and continuity criteria, which were used for
reporting Sabodala underground Mineral Resources.
The significant change between the Mineral Resources reported for 2014 and 2015 is due to this new reporting procedure, where the 2015
year end Mineral Resources have been constrained using open pit shells along with revised gold cut-off grades for both open pit and
underground resources. Previously classified Mineral Resources that do not satisfy the revised reporting criteria for 2015 have been excluded,
however, remain in the block models as mineralized material.
The above measured and indicated resource and inferred resource estimates were first disclosed in Teranga’s December 31, 2015 Quarterly
Report filed on January 29, 2016 in accordance with ASX Listing Rules. These reserve estimates have not changed in any manner since that
time and all material assumptions and technical parameters previously disclosed continue to be applicable and have not materially
changed. Please refer to Teranga’s December Quarterly Report for further including required additional disclosures under the 2012 Edition of
the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. See also Competent Person Statements
on pages 39 and 40.
Table 2: Open Pit and Underground Mineral Reserves Summary (as at December 31, 2015)
Deposits
Subtotal ML
Sabodala
Gora
Niakafiri Main
Masato
Golouma West
Golouma South
Kerekounda
Maki Medina
Niakafiri SE
Niakafiri SW
Subtotal SOMIGOL
Subtotal Open Pit
Golouma West 1
Golouma West 2
Golouma South
Kerekounda
Subtotal Underground
Total
Tonnes
(Mt)
1.57
0.31
4.06
5.95
-
-
-
-
-
-
-
-
5.95
-
-
-
-
0.00
5.95
Proven
Grade
(g/t)
1.57
4.94
1.23
1.52
-
-
-
-
-
-
-
-
1.52
-
-
-
-
0.00
1.52
Stockpiles
Total Including Stockpile
15.27
21.23
0.79
0.99
Notes for Mineral Reserves Summary:
Au
(Moz)
0.08
0.05
0.16
0.29
-
-
-
-
-
-
-
-
0.29
-
-
-
-
-
0.29
0.39
0.68
Tonnes
(Mt)
2.33
1.15
3.41
6.88
21.41
3.23
1.27
0.79
0.90
1.12
0.37
29.08
35.96
0.62
0.45
0.47
0.61
2.15
38.11
Probable
Grade
(g/t)
1.36
4.74
0.94
1.71
1.06
1.96
3.09
3.44
1.17
1.09
0.92
1.32
1.39
6.07
4.39
4.28
4.95
5.01
1.60
0.00
38.11
0.00
1.60
Au
(Moz)
0.10
0.17
0.10
0.38
0.73
0.20
0.13
0.09
0.03
0.04
0.01
1.23
1.61
0.12
0.06
0.06
0.10
0.35
1.96
0.00
1.96
Proven and Probable
Tonnes
(Mt)
3.90
1.46
7.47
12.83
21.41
3.23
1.27
0.79
0.90
1.12
0.37
29.08
41.92
0.62
0.45
0.47
0.61
2.15
44.07
15.27
59.34
Grade
(g/t)
1.44
4.78
1.10
1.62
1.06
1.96
3.09
3.44
1.17
1.09
0.92
1.32
1.41
6.07
4.39
4.28
4.95
5.01
1.59
0.79
1.38
Au
(Moz)
0.18
0.22
0.26
0.67
0.73
0.20
0.13
0.09
0.03
0.04
0.01
1.23
1.90
0.12
0.06
0.06
0.10
0.35
2.25
0.39
2.63
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserve cut off grades for range from are 0.35 g/t to 0.63 g/t Au for oxide and 0.42 g/t to 0.73 g/t Au for fresh based on a
$1,100/oz gold price
3. Mineral Reserve cut off grades for Sabodala 0.45 g/t for oxide and 0.55 g/t for fresh based on a $1,100/oz gold price
4. Underground reserves cut-off grades ranged from 2.3-2.6 g/t based on $1,200/oz gold price
5. Sum of individual amounts may not equal due to rounding.
6. The Niakafiri Main deposit is adjacent to the Sabodala village and relocation of at least some portion of the village will be required which
will necessitate a negotiated resettlement program with the affected community members.
The above proven and probable ore reserve estimates were first disclosed in Teranga’s December 31, 2015 Quarterly Report filed on January
29, 2016 in accordance with ASX Listing Rules. These reserve estimates have not changed in any manner since that time and all material
assumptions and technical parameters previously disclosed continue to be applicable and have not materially changed. Please refer to
Teranga’s December Quarterly Report for further including required additional disclosures under the 2012 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. See also Competent Person Statements on pages 39 and 40.
2015 ANNUAL REPORT 20
Life of Mine Schedule
Table 3 represents a life of mine schedule developed from
the proven and probable reserves listed in table 2. The pit
sequencing schedule is based on blending the material
movement capability 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. Pit sequencing emphasized the best cash flow for
the first five years of mining (2016 to 2020) due to the low
gold price environment, with flexibility for potential design
changes as economic conditions change. A lower annual
material movement (not exceeding 40 million tonnes per
annum) utilizing the existing fleet provided for an optimal
cash flow in the current economic conditions.
Open pit mining methods similar to current operations at the
Sabodala and Masato deposits 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 to determine mine operating parameters.
Underground mining was assumed to commence in 2021,
while the Niakafiri Main pit was deferred to 2023. Additional
drilling for the purpose of converting resources to reserves
at Niakafiri Main is expected to commence in 2016. The life
of mine plan will be re-evaluated once drilling is completed
at Niakafiri Main with the potential to move development
forward based on conversion of resources to reserves and a
positive decision on heap leaching.
Based on the detailed annual capital and operating costs
summaries (Tables 4 and 5), all-in sustaining costs are
expected to be in the $900 per ounce range over the five-
year period from 2016 to 2020, as well as over the 13.5 year
mine life. Over the 13.5 year life of mine, the Franco-Nevada
stream is expected to add a further $73 per ounce to costs
resulting in free cash flow per ounce of over $100 per ounce,
after income tax and minority dividends at $1,100 per ounce
gold.
2015 ANNUAL REPORT 21
Table 3: Life of Mine (2016 to 2029)
Unit
LOM
2016-2020
AVG
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Sabodala
Masato
Gora
Kerekounda
Golouma
Niakafiri1
Maki Medina
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Ore Grade
Contained Oz
Waste
Ore Mined
Underground
Ore Grade
Contained Oz
Ore Mined
Ore Grade
Summary
Contained Oz
Waste
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
Mt
g/t
Moz
Mt
g/t
Moz
Mt
Mt
Mt
3.9
1.44
0.18
31.0
21.4
1.06
0.73
110.2
1.5
4.78
0.22
32.2
0.8
3.44
0.09
18.2
4.5
2.28
0.33
49.6
9.0
1.09
0.31
26.6
0.9
1.17
0.03
2.9
2.1
5.01
0.35
44.1
1.59
2.25
270.7
314.7
0.3
1.11
0.01
11.1
0.7
5.15
0.12
14.1
0.5
3.39
0.06
13.0
0.5
1.10
0.02
0.2
0.7
4.00
0.08
17.9
0.0
0.99
0.00
3.6
1.2
3.08
0.12
14.8
3.1
1.94
0.20
36.3
39.5
2.3
2.91
0.22
36.4
38.7
13.7
0.82
0.36
1.6
3.74
0.19
38.2
39.8
11.1
0.84
0.30
1.5
1.33
0.07
15.0
0.7
0.74
0.02
16.2
0.1
7.90
0.02
0.2
0.3
3.74
0.03
1.6
0.9
1.17
0.03
2.9
3.4
1.51
0.17
35.9
39.3
10.1
0.76
0.25
2.0
1.58
0.10
5.0
0.4
0.70
0.01
5.8
0.9
1.98
0.06
18.4
1.5
1.05
0.05
6.2
1.1
0.86
0.03
19.4
2.8
0.93
0.09
27.2
5.0
1.00
0.16
21.5
4.3
1.02
0.14
11.6
6.7
1.27
0.27
8.2
2.4
1.99
0.15
16.4
0.1
2.24
0.00
0.0
4.0
1.10
0.14
12.5
3.5
1.10
0.12
7.9
0.1
5.00
0.02
3.0
1.09
0.10
27.2
30.2
7.9
0.68
0.17
0.3
4.95
0.05
5.3
1.22
0.21
21.5
26.8
8.7
0.67
0.19
0.3
4.63
0.05
8.6
1.20
0.33
24.2
32.8
12.9
0.66
0.27
0.3
4.33
0.04
10.4
1.29
0.43
16.1
26.5
18.9
0.68
0.41
0.1
4.39
0.01
0.1
4.39
0.01
0.1
14.5
0.66
0.31
0.2
5.55
0.03
0.2
5.55
0.03
0.2
10.2
0.66
0.22
0.4
5.36
0.06
0.4
5.36
0.06
0.4
6.2
0.66
0.13
0.4
5.52
0.07
0.4
5.52
0.07
0.4
2.1
0.66
0.04
0.2
4.76
0.02
0.2
4.76
0.02
0.2
4.7
1.42
0.22
35.4
40.1
10.4
0.73
0.24
3.5
1.63
0.19
35.8
39.4
9.4
0.70
0.21
Movement
Stockpile
Ore Balance
Stockpile Grade g/t
Contained Oz
Moz
Ore Milled
Head Grade
Oxide
Produced Oz
Mt
g/t
%
Moz
59.3
1.38
21%
2.376
4.3
1.66
27%
0.207
3.9
1.93
37%
0.215
4.2
1.85
25%
0.229
4.5
1.56
26%
0.202
4.5
1.54
31%
0.200
4.5
1.46
19%
0.190
4.5
0.99
28%
0.128
4.4
1.35
16%
0.173
4.5
1.73
29%
0.225
4.4
2.06
0%
0.263
4.4
0.82
17%
0.104
4.4
0.85
19%
0.109
4.4
1.06
18%
0.135
4.4
1.09
18%
0.139
2.3
0.94
18%
0.063
Notes:
1The schedule summarized Niakafiri from “Niakafiri Main” and “Niakafiri SE”. The portion of Niakafiri SE to be mined lies outside of the Sabodala Village area and assumes relocation is not required.
Sum of individual amounts may not equal due to rounding.
The estimated ore reserves underpinning the production targets (as defined in the ASX Listing Rules) set out in Appendix 1 above, have been prepared by Mr. Paul Chawrun, who is a Competent Person, in accordance
with the requirements of the 2012 JORC Code.
This production guidance is based on existing proven and probable ore reserves from the Sabodala mining license as at December 31, 2015
Stockpile balances at January 1, 2016 included 15.3 Mt at 0.79 g/t for 0.39 million contained ounces
2015 ANNUAL REPORT 22
Table 4: Life of Mine Capital Expenditures
Sustaining Capex
Unit
LOM
2016-2020
AVG
2016
2017
2018
2019
2020
2021
2022
2023 2024 2025 2026
2027
2028
2029
Open Pit Mining
USDM
29.9
3.7
4.9
3.5
4.0
1.5 4.7 6.0 3.0 1.5 0.8
- - - - -
Underground Mining
USDM
-
-
-
-
- - - - - - - - - - - -
Processing
USDM
18.9
2.1
2.4
2.0
2.0
2.0 2.0 2.0 2.0 1.0 1.0 1.0 0.5 0.5 0.5
-
Admin & Other Sustaining
USDM
8.8
1.3
2.8
1.0
1.0 1.0 0.5 0.5
0.5 0.3
0.3
0.3
0.3
0.3
0.3
-
Community Relations
USDM
25.0
0.2
1.0
-
-
-
-
2.0
15.0
7.0
- -
-
-
- -
Total Sustaining Capex
USDM
82.5
7.2
11.0 6.5
7.0 4.5 7.2 10.5 20.5 9.8 2.1 1.3 0.8 0.8 0.8 -
Capital Projects & Development
OJVG & Gora Development
USDM
4.3
0.9 3.3
0.8
0.3 - - - - - - - - - - -
Underground Equipment & Development USDM
102.1
4.9
-
-
-
-
24.4 23.4 8.9 2.4 0.8 8.5 18.2 10.4 4.1 0.9
Other Projects & Development
USDM
21.8
2.9
11.3 1.9
1.4 - - 7.2
- - - - - - - -
Total Projects & Development
USDM
128.2 8.7
14.6
2.7
1.7 - 24.4 30.6 8.9 2.4
0.8 8.5 18.2 10.4 4.1 0.9
Combined Total (USDM)
USDM
210.8 15.9
25.7 9.2
8.7 4.5 31.6 41.1 29.4 12.2 2.9 9.8 18.9 11.1 4.9 0.9
2015 ANNUAL REPORT 23
Open Pit Mining
Underground
Mining
Processing
General & Admin.
Mining
Underground
Mining
Processing
General & Admin
Refining & Freight
Byproduct Credits
Total Operating
Costs
Deferred Stripping
Adjustment
Royalties1
Capex
Capitalized
Deferred Stripping
Capitalized
Reserve
Development
Corporate Admin
Table 5: Life of Mine Operating Costs
Activity
Unit
LOM
2016-2020
AVG
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
USD/t
mined
USD/t
milled
USD/t
milled
USD/t
milled
2.25
2.25
2.24
2.27
2.25
2.20
2.29
2.19
2.31
2.17
2.36
-
-
-
-
-
72.23
-
-
-
-
-
-
76.30
74.94
73.32
77.25
79.72
76.46
66.49
64.35
78.11
10.33
10.16
10.83
10.02
10.00
9.93
10.09
9.97
10.14
9.95
10.84
10.63
10.60
10.61
10.61
10.60
2.56
3.39
3.81
3.47
3.29
3.28
3.15
3.12
3.06
3.08
2.01
1.88
1.43
1.23
1.00
1.81
USDM
702
USDM
155
USDM
USDM
USDM
USDM
613
144
12
(4)
88
-
44
14
1
(0)
86
-
42
14
1
(0)
91
-
43
14
1
(0)
89
-
45
14
1
(0)
87
-
44
14
1
(0)
89
-
45
14
1
(0)
66
7
44
14
1
(0)
61
22
45
13
1
(0)
71
26
44
13
1
(0)
62
20
48
8
1
(0)
USDM
1,622
147
142
148
148
146
148
132
141
154
139
USDM
(129)
(13)
(26)
USDM
145
Total Cash Costs2
USDM
1,639
Total Cash Costs2
USD/oz
690
USDM
211
USDM
129
13
146
706
16
13
13
130
602
26
26
USDM
-
-
-
(6)
16
158
691
9
6
-
-
12
161
798
9
-
-
-
(35)
(35)
(25)
12
159
792
5
-
-
11
124
655
32
35
8
104
810
41
35
10
127
730
29
25
-
-
-
(1)
14
167
741
12
1
-
-
7
47
8
1
(0)
63
-
6
-
13
47
6
1
(0)
66
-
7
-
24
47
5
1
(0)
77
-
8
-
25
47
4
1
(0)
76
-
8
-
12
25
4
0
(0)
41
-
4
69
73
85
85
45
660
668
629
607
711
10
19
11
-
-
6
-
-
6
-
-
5
5
-
-
4
1
-
-
4
-
16
154
587
3
-
-
6
USDM
130
14
16
14
14
14
12
10
10
10
92
20
19
11
22
22
92
22
85
98
94
73
101
914
887
908
882
173
843
621
819
177
187
191
189
163
190
203
183
190
912
196
1,072
1,103
1,483
2,108
USDM
USDM
USD/oz
USD/oz
All-In Sustaining
Cash Costs2
All-In Sustaining
Cash Costs2
Franco Nevada
Stream
Franco Nevada
Stream
All-In Sustaining
Cash Costs2 plus
stream
All-In Sustaining
Cash Costs2 plus
stream
Notes:
1 Royalties include Government of Senegal royalties on total production and the NSR royalty due to Axmin on Gora production.
2 Refer to the section titled Non-IFRS Financial Measures on page 35 of this document concerning the definition of total cash costs and all-in sustaining costs for the Life of Mine.
This production guidance is based on existing proven and probable reserves only from both the Sabodala mining license as disclosed in the Reserves and Resources section of this
Report.
Key assumptions: Gold spot price/ounce - US$1,200, Light fuel oil - US$0.72/litre, Heavy fuel oil - US$0.43/litre, US/Euro exchange rate - $1.10
USD/oz
USDM
1,006
1,004
2,281
1,541
1,015
1,161
1,129
216
108
897
208
671
788
812
107
955
960
198
104
178
214
900
201
914
870
990
729
209
102
205
198
203
678
846
748
109
806
50
10
58
58
13
58
58
58
94
58
58
58
58
15
58
53
91
8
8
4
6
6
7
2015 ANNUAL REPORT 24
Sabodala Mine License Reserve Development
The Sabodala combined mine license covers 291km2. The
objective of this multi-year development program is to add
higher grade material earmarked for the mill and to add
lower grade to potentially a heap leach pad.
All drill hole assay data for the Company’s reserve
development programs, including drill hole locations and
location maps, are available on the Company’s website at
www.terangagold.com under “Exploration”.
Golouma NW Extension
Additional follow-up work on the “red” shear is being
evaluated. Allowance has been made for possible infill
drilling in 2016. Infill drilling in the northwest trending shear
successfully confirmed geological and grade continuity. The
resource model is planned to be updated later this year.
Maki Medina
During the fourth quarter, 200 metres of a 1,000-metre
trenching program investigating a 300-metre long soil
anomaly to the south of the main mineralized zone was
completed. Initial sampling results indicate that the gold
mineralization extends to the south. It is envisaged that a
diamond drilling program will be undertaken in the second
quarter of 2016 to test the depth extension of this southern
extension to the Maki Medina Main zone. An updated
resource model was completed in the fourth quarter.
Maki Medina East Anomaly
During the fourth quarter, trenches totalling 2,500 metres
were excavated on the prospect to follow up on drilling and
trench results. The trenching program tested soil anomalies
across a 640 metre north-south strike direction and
successfully identified a number of drill targets. The updated
results indicate mineralization is associated with narrow
quartz veins and breccia zones. Seven diamond drill holes
totalling 800 metres were drilled along 150 metres of the
gold mineralized zone with all assay results returned.
Review of the trenching and drill data for the Maki Medina
East zone will continue with potential follow up work in the
first quarter of 2016.
Niakafiri Southwest
During the third quarter, a 14-hole diamond drilling program
was completed. A total of 1,000 metres was drilled with all
assay results returned.
Drilling did not intersect additional mineralization along
strike, but infilled gaps between wide spaced drill holes to
confirm geology and grade continuity. An updated resource
model was completed in the fourth quarter.
Golouma South
During the third quarter, a 14-hole 1,000 metre diamond
drilling program was completed to confirm the geological
interpretation, test the extent of artisanal voids, infill gaps
and confirm grades in oxide. Results confirm the geological
interpretation and location of mineralization, and an updated
resource model was completed in the fourth quarter.
Rotary air blast condemnation drilling of ground proposed for
mine infrastructure and future waste dump footprint has
located several gold mineralized zones north of the deposit
which may have economic potential. A trenching program to
evaluate these zones commenced in the fourth quarter and
will be followed by a limited diamond drilling program. Two
diamond drill holes were drilled in the fourth quarter with
significant intercepts being recorded. The trenching and
drilling evaluation program is ongoing.
Soukhoto
Eight infill diamond drill holes were completed in the third
quarter to better define geological interpretation and local
structural trends that were previously interpreted from
reverse circulation (“RC”) drilling. Results returned from
seven holes indicate mineralization is associated with quartz
veining located in oxide, and possibly associated with
different
trends, perhaps subsidiary
structures related to the Niakafiri shear zone to the east.
local structural
Further drilling will be evaluated pending follow-up data
interpretation.
Goumbati West
Four diamond drill holes totalling 400 metres were drilled
over a 150 metre strike length of the shear structure during
the fourth quarter. Assay results from two of the four holes
yielded encouraging gold assay results. Further follow-up
trenching and drilling will be undertaken in the first quarter
of 2016.
Goumbati East
Four diamond drill holes totalling 400 metres were drilled to
test the shear zones. Multiple shear zones, some 20 metres
in width, with quartz-carbonate veining and sulphides were
intersected in the holes. Favourable assay results were
received during the quarter. Further trenching and diamond
drilling is planned for the first quarter 2016.
Kouroundi
A 6 hole 800 metre drilling program began in the fourth
quarter. Two of the six holes drilled yielded favourable assay
results. Further drilling and the re-interpretation of historical
data is planned for the first quarter of 2016 to confirm the
presence of strike extensions to the NW of the main ore
body.
Regional Exploration
We currently have eight exploration permits encompassing
approximately 1,000km² of land surrounding the Sabodala
mine license.
During the fourth quarter, a settlement agreement was
reached with a joint venture partner where by Teranga would
the
receive cash consideration of $0.5 million
relinquishment of its interest in the Garaboureya exploration
permit.
for
For the fourth quarter 2015, we have been focused on six
regional targets including Soreto, KD, KC, Nienienko Area
targets, Marougou and the KA prospect.
All drill hole assay data for the Company’s regional
exploration programs, including drill hole locations and
location maps, are available on the Company’s website at
www.terangagold.com under “Exploration”.
2015 ANNUAL REPORT 25
Soreto
During 2015 trenching programs were undertaken along
strike of the gold mineralization defined by the diamond drill
programs and soil anomalies. To date a total of 1,800 metres
of trenching has been completed. Initial trenching results
have defined gold mineralized zones including 9 metres
grading 2.16 grams per tonne gold and 4 metres grading
4.24 grams per tonne gold. Further drilling on the prospect
will be determined by the trench sampling results.
KD Prospect
A reconnaissance trenching across a 600 metre long gold
soil anomaly paralleling a regional NNE trending regional
scale structure located a gold mineralized zone with grades
of 7.3 grams per tonne gold over 2 metres and 15.8 grams
per tonne over 2 metres. Follow up trenching of this zone is
planned for the first quarter of 2016.
Nienienko Prospects
An isopach plan of the mineralized quartz vein and felsic
breccia systems is in progress, and will be used to develop
a plan for diamond drilling and a possible RC drill program.
Due to the limitation of surface trenching and mapping used
to develop the flat lying mineralized zone at surface,
additional trenching and mapping is being undertaken in
prospective zones near to the area to expand on the
currently defined zone and
further develop an
understanding of the source of mineralization zones for
potential drill targets at depth. A diamond drill program will
be considered once this work has been completed and is
likely to be scheduled for early 2016.
to
KA Prospect
Trenching undertaken in the fourth quarter 2015 has
identified a flat lying gold mineralized zone at the contact
between a quarts-feldspar porphyry intrusive and siltstone-
shale unit. The contact zone is often found to be brecciated
with multiple variably orientated, quartz vein stringers and
sulphide box works. Horizontal channel sampling across the
zone yielded 0.8 grams per tonne over 28 metres containing
a high of 9 metres grading 1.4 grams per tonne. Vertical
channel sampling across the same zone yielded a high of
6.1 grams per tonne over 0.5 metres.
A 9-hole diamond drill program of approximately 500 metres
commenced in the fourth quarter 2015 with four holes
completed. The program will initially determine the thickness
of the flat lying gold mineralized zone and test its continuity
over a 100 metre strike length. Assay results received are
confirming the presence of gold mineralization along strike.
The remaining holes will be drilled in the first quarter of 2016.
Marougou Prospect
The Marougou prospect
soil anomaly previously
investigated by a series of RAB and RC drilling is currently
being reassessed by means of a limited diamond drill
program which will provide structural information on the
orientation of the mineralized zones which is open to
interpretation. Nine drill holes totaling 1,000 metres were
planned of which 3 were sited to twin 3 RC holes previously
drilled in 2013. The three twin holes were drilled during the
fourth quarter 2015 and assay results were received for two
of the three holes. The remaining holes will be drilled in the
first quarter of 2016.
Niakafiri Resettlement
In August 2015, Teranga and the Government of Senegal
launched resettlement discussions related to the nearby
village of Sabodala, adjacent to the Niakafiri deposit.
Teranga has retained global resettlement consultants rePlan
Inc. to ensure the resettlement process will follow the
highest international standards, as well as all Senegalese
laws and regulations. The company expects formal
negotiations with community and regional stakeholders to
commence in due course following which a drill program is
planned. The objective of the drill program is to convert
some of the existing resources (438,000 ounces included
within Measured and Indicated resources, and 102,000
ounces in Inferred resources) into reserves.
Health and Safety
Health and safety remains a constant and overriding priority
at Sabodala. 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 Operational Health and Safety (OHS) program
matured in 2014, the focus remains on proactive, people-
based safety management which uses a documented
systematic approach. In 2015, Management focused efforts
on improving loss prevention and controls and integrating
these into the daily life of all who conduct their task at the
operations. Intensified internal auditing with regards to
safety management systems, the focus in 2016 will be on
pro-active
through a documented Task
Observation Process as well as ensuring departmental self-
inspections on site and applying a broader scope to risk
management
risk evaluation and
management.
through Enterprise
reporting
Creating and sustaining a healthy and safe work
environment for all stakeholders is never compromised. The
Company incurred zero lost time injuries (“LTI”) in 2014 and
2015 and that trend as continued into 2016 as of the date of
this report. As of year-end, the Company achieved 810
consecutive days without an LTI.
Corporate Social Responsibility
A key component of the Company’s vision is to set the
benchmark for responsible gold mining in Senegal. As the
first gold mine in Senegal, Teranga has a unique opportunity
to set the industry standard for socially responsible mining
in the country and to maximize the economic and social
development outcomes for the communities around its mine
and across the country.
In 2015, Teranga Gold continued to implement its regional
Teranga Development Strategy, working closely with the
participants in the Canadian Cooperation roundtable on the
development of the Kedougou Region (and the participants’
individual social development plans). These development
plans have been established in close collaboration with the
Government of Senegal in support of its goal to decentralize
regional development activities. Teranga provided additional
regional support in 2015 through the launch of two major
2015 ANNUAL REPORT 26
partnerships: 1) Paul-Gerin Lajoie Foundation tasked to train
50 youths in the Kedougou and Tambacounda regions in
various technical and professional fields, and 2) the
progression of the test phase for the revival of the cotton
textile industry in Senegal, from the growing of cotton to
sewing and sale of finished product. This is a large scale
venture involving 500 cotton producers and the largest in-
country textile producers, as well as senior government
departments such as the Senegal Emerging Plan launched
by the President to boost the development of the country.
Following the completion of the test phase in 2016, a
detailed business plan will be launched by the local
participants for full scale implementation. The successful
revival of the cotton textile industry in-country has the
potential to create sustainable jobs and income sources as
well as re-attracting farmers to agriculture, taking them away
from artisanal mining.
farms, water supply with
In 2015, Teranga continued its commitment towards annual
community investments targeting agriculture and food
security, youth and training and sustainable economic
growth through many different programs including the seven
market gardens, pilot
the
installation of a third solar system in Faloumbo, donation of
school material for the villages of the Khossanto and
Sabodala communes and the malaria spray program. New
projects included the provision of fully equipped tractors to
the communes surrounding the mine site as well as the
donation of 12 lawn-tractors to the surrounding mine
villages. In 2015, Teranga also launched a high-school
bursary for the 30 best students in the villages around the
mine to promote education, literacy and girls education.
launched
In 2015 Teranga
the pilot phase of a
comprehensive Kedougou regional procurement program,
working closely with
the company’s procurement
department to identify additional opportunities for local
procurement.
focus on
procurement specific training, capacity building, and the
conclusion of several fixed contracts with Teranga, all aimed
at providing long-term support and stability to local SMEs in
allowing them to establish sustainable regional businesses.
this program will
In 2016
Teranga’s CSR performance is fully reported in its 2014
in
annual Responsibility Report which
accordance with the Global Reporting Initiative (“GRI”) G4
Guidelines, and is accessible on the Company’s website at
www.terangagold.com.
to
responsible mining defines the Company and drives its way
of doing business.
is prepared
commitment
Teranga’s
Market Review – Impact of Key Economic Trends
Source: Thomson Reuters
The price of gold is the largest factor in determining our
profitability and cash flow from operations. During 2015, the
average London PM Fix price of gold was $1,160 per ounce,
with gold trading between a range of $1,049 and $1,296 per
ounce. This compares to an average of $1,266 per ounce
during 2014, with a low of $1,142 per ounce and a high of
$1,385 per ounce.
The price of gold is subject to volatile price movements over
short periods of time and is affected by numerous industry
and macro-economic factors that are beyond our control
including, but not limited to, currency exchange rate
fluctuations 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 2015 year marked another turbulent year which saw
gold prices fall significantly. In early June, the Chinese stock
market bubble burst, nearly one third of the value of A-
shares on the Shanghai Stock Exchange was lost within a
month. With the fragility of the Chinese economy, the
demand for gold is expected to increase in China. For the
first time since 2006, the US Federal Reserve raised interest
rates by 25 basis points in December 2015. The overall
impact of this announcement on gold prices is as yet
uncertain, as the US economy is still in recovery. Finally
global gold mine production is expected to decline slightly in
in 2015, as
2016
contribution from projects that had been commissioned in
previous years fades, while fresh capital investment will
remain limited at current price levels.
levels recorded
the record
from
While the gold market is affected by fundamental global
economic 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.
2015 ANNUAL REPORT 27
Source: Thomson Reuters
Source: Thomson Reuters
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 $33.2 million in 2015 or
approximately 23 percent of gross mine production 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 2015, the operations consumed
approximately 27 million litres of HFO. This equates to
approximately $0.19/kwhr, which is less than the cost of grid
electricity in industrialized Senegal. Sabodala’s mobile fleet
runs on LFO and we consumed approximately 17 million
litres of LFO in 2015. We source our HFO and LFO from an
international fuel supplier with a local distribution network in
Senegal. For 2016, HFO and LFO consumption are
expected to be higher than 2015, with planned increases in
mining and milling rates.
Our main benchmark for fuel prices is Brent crude oil, which
dropped by 32 percent in 2015. Oversupply in the oil market
has had a negative effect on oil prices throughout the year
and OPEC looks set to maintain a Saudi endorsed policy of
sustained production in 2016. As well, the issue of
oversupply may be further compounded as Iran and Iraq
both aim to ramp up production in 2016, with other major
producers such as Russia intensifying the competition. The
government in Senegal sets prices for various types of fuels
consumed in the country, and they review these prices every
4 weeks. Price stabilization levies are applied in times of low
market prices. In December 2015, we successfully
negotiated the removal of these levies, which were inflating
our cost of fuel in Senegal relative to market oil prices by 20
to 30 percent. Further, in January 2016, the Government of
Senegal reduced the regulated price for both HFO and LFO
by an additional 12 to 17 percent. As a result, lower market
crude oil prices are expected to translate into lower HFO and
LFO prices for the Company in 2016.
The Company had previously hedged a portion of its
exposure to fuel costs using crude oil forward contracts, and
currently doesn’t have any oil hedges in place. Management
may enter into further oil hedge contracts should the price
and terms be deemed acceptable.
A significant portion of operating costs and capital
expenditures of Sabodala gold mine operations are
denominated in currencies other than US dollars. Historical
accounts payables records demonstrate that the Company
has between 40 and 50 percent Euro currency exposure via
the West African CFA Franc, which is pegged directly to the
Euro currency.
Overall, the Euro declined 10 percent against the US Dollar
in 2015. Exchange rates were quite volatile throughout the
year and the European economy remained weak relative to
the US economy. The different tendencies in interest rate
policies contributed to the depreciation of the Euro in 2015,
and this trend may continue into 2016. Generally, as the US
dollar strengthens, the Euro currency and other currencies
weaken, and vice versa. A decline in the Euro has a positive
impact on our US dollar reported site costs, holding other
variables constant.
All of the Company’s production comes from its operation in
Senegal, therefore costs will continue to be exposed to
foreign exchange rate movements. The Company monitors
currency exposure on an ongoing basis. In November, 2015
the
currency hedges were put
Company’s exposure
to
fluctuations in the Euro-USD exchange rate. These hedges
will provide some protection against a strengthening Euro
and stabilize cash costs. A total of 2.25 million Euro were
hedged from December 2015 through February 2016 at a
fixed exchange rate of 1.0656 Euro to the US Dollar which
is more favourable than market rates in December and early
2016.
to manage
in costs due
increases
in place
to
2015 ANNUAL REPORT 28
Year ended Decem ber 31
Goodwill
FINANCIAL CONDITION REVIEW
SUMMARY BALANCE SHEET
(US$000's)
Balance Sheet
Cash and cash equivalents
Trade and other receivables
Inventories
Goodw ill
Deferred tax assets
Other assets
Total assets
Trade and other payables
Borrow ings
Provisions
Deferred revenue
Other liabilities
Total liabilities
Total equity
Balance Sheet Review
Cash
2015
2014
44,436 35,810
15,701 1,562
164,427 157,696
- 41,776
23,098 11,879
448,554 476,064
696,216 724,787
62,545 53,909
13,450 3,946
30,824 18,640
91,345 113,998
19,783 18,399
217,947 208,892
478,269 515,895
The Company’s cash balance at December 31, 2015 was
$44.4 million, $8.6 million higher than the balance at the start
of the year, primarily due to cash flow provided by operations
of $30.4 million and financing activities of $25.9 million partly
offset by capital expenditures of $47.7 million. As at
December 31, 2015, $15.0 million was drawn from the $30
million Revolver Credit Facility.
the VAT
receivable from the Republic of Senegal, the Company’s pro
forma cash balance at December 31, 2015 was $57.6
million.
Including
Trade and Other Receivables
The trade and other receivables balance of $15.7 million
includes $13.2 million in VAT recoverable. In February 2016,
the Company received an exemption for the payment and
collection of refundable VAT. This exemption is governed by
an amendment to our mining convention and is enforceable
for the next 6 years, expiring on May 2, 2022. The December
31, 2015 balance of $13.2 million is expected to be refunded
over the balance of 2016.
As a result of analysis performed on the asset carrying
values for the year ended December 31, 2015 it was
determined that an impairment charge be recorded in the
current year which fully impaired the $41.8 million recorded
value of goodwill.
Deferred Taxes
The deferred tax asset of $23.1 million on the balance sheet
as at December 31, 2015 includes $11.2 million of deferred
tax recovery recorded in the current year. The increase in
deferred tax assets is primarily due to the recognition of
$48.2 million in impairment losses against the mine
development expenditures and property plant and
equipment resulting in an additional deferred tax asset of
$12.1 million.
Borrowings
During the third quarter 2015, the Company drew down
$15.0 million on the Revolver Facility to be used for general
corporate purposes and working capital needs. Closing
costs of $2.0 million including legal, security registration and
advisory fees were capitalized of which $0.4 million of these
costs were amortized and $0.6 million of interest and fees
expensed for the year.
The outstanding balance under the equipment facility with
Macquarie Bank was retired in the first quarter 2015.
Provisions
In the fourth quarter 2015, an updated end of mine
rehabilitation study was performed by a third party which
resulted in revised estimates of expected future cash flows.
As a result, the Company recorded an increase in the
rehabilitation asset estimate of $10.1 million as at December
31, 2015 increasing assets with corresponding increase in
the ARO.
Deferred Revenue
In connection with the gold stream transaction with Franco-
Nevada, the Company received $135.0 million on January
15, 2014, which was recorded as deferred revenue. The
Company is required to deliver to Franco-Nevada 22,500
ounces annually from 2014 to 2019 followed by 6 percent of
production from our existing properties.
During the twelve months ended December 31, 2015, the
Company delivered 24,375 ounces of gold to Franco-
Nevada and recorded revenue of $28.3 million, consisting of
$5.3 million received in cash proceeds, $0.4 million in
accounts receivable and $22.6 million recorded as a
reduction of deferred revenue.
2015 ANNUAL REPORT 29
Liquidity and Cash Flow
Cash Flow
(US$000's)
Cash Flow
Operating
Investing
Financing
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
2015
2014
2015
2014
9,755 30,677
30,434
49,009
(12,307)
10,895 (47,682) (111,413)
17,109 (18,787)
25,873
83,252
Effect on exchange rates on holdings in foreign currencies
-
- 1
1
Change in cash and cash equivalents during the period
14,557 22,785
8,626
20,849
Cash and cash equivalents - beginning of period
Cash and cash equivalents - end of period
29,879 13,025
44,436 35,810
35,810
44,436
14,961
35,810
Free cash flow 1
Free cash flow per ounce sold1
(2,552)
(48)
26,572 (17,248)
417 (89)
39,096
189
1 Free cash flo w and free cash flo w per o unce are defined as o perating cash flo w (excluding o ne-time transactio n co sts related to
the acquisitio n o f the OJVG) less capital expenditures.
Operating Cash Flow
(US$000's)
Three m onths ended Decem ber 31,
Tw elve m onths ended Decem ber 31,
Changes in w orking capital other than inventory
2015
2014
2015
2014
(Increase)/decrease in trade and other receivables
(5,678)
703 (13,766)
6,915
(Increase)/decrease in other assets
(512) (864)
1,251 (293)
Increase/(decrease) in trade and other payables
6,887 3,713 (5,466) (9,584)
Increase/(decrease) in provisions
1 581 (294)
1,225
Increase in current income taxes payable
6,167
- 8,717
-
Net change in w orking capital other than inventory
6,865 4,133 (9,558) (1,737)
Cash provided by operations for the fourth quarter 2015 was
$9.8 million, compared to $30.7 million in the prior year
period. The decrease in operating cash flow was primarily
due lower gold sales and an increase in VAT recoverable
balances, partly offset by lower mine production costs.
For the twelve months ended December 31, 2015, operating
cash provided $30.4 million compared to $49.0 million in the
prior year. The decrease in operating cash flow was
primarily due lower gold sales and an increase in VAT
recoverable balances of $13.2 million, partly offset by lower
mine production costs and gains from gold hedge contracts.
Investing Cash Flow
(US$000's, except w here indicated)
Three m onths ended Decem ber 31, Tw elve m onths ended Decem ber 31,
Investing activities
Mine site capex - sustaining
Mine site capex - project
Development capital (Gora)
2015
2014
2015
2014
1,074 933 4,361 4,991
5,384
- 8,831 391
2,282 410 15,119 3,535
Capitalized reserve development (mine site exploration)
852 1,496 4,824 4,021
Capitalized deferred stripping
Capital Expenditures
Acquisition of the OJVG
Decrease in restricted cash
Investing activities
2,715 1,266 14,547 5,976
12,307 4,105 47,682 18,913
-
- - 112,500
- (15,000)
- (20,000)
12,307 (10,895)
47,682 111,413
Net cash used in investing activities for the fourth quarter
was $12.3 million compared to net cash provided by
investing activities of $10.9 million in the prior year period.
The increase in investing cash flows was primarily due to
the mill
higher capitalized project costs
related
to
optimization as well as higher capitalized deferred stripping
costs. In the prior year period, capital expenditures were
offset by a $15.0 million decrease in the restricted cash
balance.
2015 ANNUAL REPORT 30
Net cash used in investing activities for the year ended
December 31, 2015 was $47.7 million compared with $111.4
million in the prior year. The increase in cash flows related
to capital expenditures in the current year was due to higher
project and development capital and capitalized deferred
stripping. In the prior year period, cash flow used in investing
activities included $112.5 million to acquire the OJVG,
partially offset by a $20.0 million decrease in the restricted
cash balance.
Financing Cash Flow
Net cash flow provided by financing activities for the fourth
quarter was $17.1 million, compared to net cash used in
financing activities of $18.8 million in the prior year period.
Financing cash flows in the current quarter include proceeds
from an equity issuance of $17.3 million, partly offset by
interest and finance costs paid on borrowings. Financing
cash flows in the prior year quarter include the repayment of
borrowings of $18.2 million.
Net cash flow provided by financing activities for the year
ended December 31, 2015 was $25.9 million compared to
$83.3 million in the prior year period. Financing cash flows
in 2015 include proceeds from an equity issuance of $17.3
million, drawdown of $15.0 million from the revolving credit
facility partly offset by closing costs incurred to secure the
facility, and repayment of borrowings. Financing cash flows
in 2014 include proceeds of $135.0 million received from the
Franco-Nevada gold stream transaction and net proceeds of
$25.4 million from an equity offering, partially offset by the
repayment of borrowings of $72.8 million and interest and
financing costs paid on borrowings of $4.3 million.
Liquidity and Capital Resources Outlook
During the fourth quarter, the Company completed a non-
brokered CDN$22,736,000
(US$17,454,000) private
placement with Mr. David Mimran, the CEO of Grands
Moulins d'Abidjan and Grands Moulins de Dakar, one of the
largest producers of flour and agri-food in West Africa.
Pursuant to the terms of the Offering, Tablo Corporation, a
Mimran family company, has been issued 39,200,000
common shares of Teranga at a price of CDN$0.58 per
Common Share.
The Mimran family has a longstanding history of operating
successfully and responsibly in Africa. It is anticipated that
David Mimran’s participation as a cornerstone investor and
Teranga board member will enhance Teranga’s strategic
and operating knowledge in Senegal and West Africa, and
further strengthen its balance sheet to accelerate its longer-
term growth strategy beyond the current life-of-mine plan.
During the third quarter, the Company closed a previously
announced $30.0 million Revolver Facility with Société
Générale and will be used for general corporate purposes
and working capital needs. The Revolver Facility carries an
interest rate of LIBOR plus 5.0 percent and matures on June
30, 2017, with any unused facility subject to a commitment
fee of 1.75 percent. In August, the Company drew down
$15.0 million from the Revolver Facility for working capital
needs. The Revolver Facility is subject to covenants that
require the Company to maintain a current ratio of not less
than 1.10:1; total debt to EBITDA of not greater than 2:1;
historic debt coverage ratio of greater than 2.5:1 and a
tangible net worth of not less than $300 million. The
Company was compliant with all covenants for the year.
Our primary sources of liquidity are the Company’s cash
position at December 31, 2015, which was $44.4 million,
cash flow from operations and the Revolver Facility.
Including the VAT recoverable, on a pro forma basis, the
Company’s cash balance at December 31, 2015 would be
approximately $57.6 million.
The key factors impacting our financial position and the
Company’s liquidity include the following:
•
The Company’s ability to generate free cash flow from
operating activities (please refer to the 2016 Outlook on
page 7);
• Expected capital expenditure requirements (please
refer to the 2016 Outlook on page 7); and
•
The gold price.
Notwithstanding, our cash position is highly dependent on
the key factors noted above, and while we expect we will
generate sufficient cash flow from operations combined with
our new Revolver Facility to fund our current growth
initiatives, we may explore other value preservation
alternatives that provide additional financial flexibility to
ensure that we maintain sufficient liquidity. Such alternatives
may include hedging strategies for gold, fuel and currencies.
Using a $1,100 per ounce gold price, the Company expects
to generate free cash flow in 2016.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
FINANCIAL INSTRUMENTS
The Company manages our exposure
financial
risks, including liquidity risk, credit risk, currency risk, market
risk, interest rate risk and price risk through a risk mitigation
strategy. The Company generally does not acquire or issue
derivative financial instruments for trading or speculation.
to
On October 13, 2015, after an increase in the gold spot
price, the company entered into gold forward contracts with
Société Générale to deliver 13,000 ounces through the
remainder of fourth quarter 2015 at a price of $1,154 per
ounce. These contracts were financially settled during the
quarter and gains on these contracts were recorded in Other
Income on the consolidated statement of income. As at
December 31, 2015, there were no gold forward contracts
outstanding.
On November 26, 2015, currency hedges were put in place
to help manage the Company’s exposure to increases in
costs due to fluctuations in the Euro-USD exchange rate.
These hedges will provide some protection against a
strengthening Euro and stabilize cash costs. A total of 1.5
million Euro are under open contracts through February
2016 at a fixed exchange rate of 1.0656 Euro to the US
Dollar which resulted in unrealized hedge gains of $40
thousand
three months ended
December 31, 2015.
recorded during
the
In February 2016, after an increase in the gold spot price,
the Company entered into gold forward contracts with
2015 ANNUAL REPORT 31
Société Générale to deliver 27,000 ounces with settlement
dates from March to August 2016 at an average price of
$1,201 per ounce.
CONTRACTUAL OBLIGATIONS AND COMMITTMENTS
As at December 31, 2015, the Company had the following payments due on contractual obligations and commitments:
Paym ents Due By Period (US$ m illions)
Revolving Line of Credit1
Franco-Nevada gold stream2
Exploration commitments3
Total
< 1 year
1-3 years
4-5 years
>5 years
15.0
- 15.0
-
-
114.0 19.1 64.8 30.1
-
12.4 7.7 4.7
-
-
Purchase obligations from supplies and consumables4
2.2 2.2
- -
-
Capital Commitments5
Total
10.7 10.7
- -
-
154.3 39.7 84.5 30.1
-
1 In July 2015, the Co mpany secured a $ 30.0 millio n Revo lver Facility o f which it drew $ 15 millio n.
2 On January 15, 2014, the Co mpany co mpleted a go ld stream transactio n with Franco -Nevada. The Co mpany is required to deliver 22,500 o unces annually o ver the first
six years fo llo wed by 6 percent o f pro ductio n fro m the Co mpany’ s existing pro perties, including tho se o f the OJVG, thereafter, in exchange fo r a depo sit o f $ 135.0
millio n. The co mmitment estimate assumes a go ld price o f $ 1,200 per o unce.
3 Reflects the explo ratio n permits, licenses and drilling co ntracts co mmitted to by the Co mpany. The “ explo ratio n co mmitments” o nly represent the amo unts the
Co mpany is required to spend to remain eligible fo r the renewal o f permits beyo nd the current validity perio d. The Co mpany may elect to allo w certain permits to expire
and are no t required to spend the “ co mmitted” amo unt per respective permit. The Co mpany will no t incur any penalties fo r no t meeting the financial requirement fo r
additio nal validity perio d tenure.
4 P urchase Obligatio ns fo r Supplies and Co nsumables - Includes co mmitments related to new purchase o bligatio ns primarily to secure a supply o f reagents, liners, and
grinding balls used in o ur pro ductio n pro cess
5 Capital Co mmitments - P urchase o bligatio ns fo r capital expenditures include o nly tho se items where binding co mmitments have been entered into .
Sabodala Gold Operations (“SGO”), Sabodala Mining
Company (“SMC”) and the OJVG (“OJVG”) Operating
Commitments
The Company has the following operating commitments in
respect of the SGO, SMC and the OJVG:
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 for SGO.
Pursuant to the completion of the acquisition of the OJVG,
the Company is required to make initial payments totaling
$10.0 million related to the waiver of the right for the
Republic of Senegal to acquire an additional equity interest
in the exploration licenses converted to mine licenses when
the ore is processed through the Sabodala mill. The initial
payment is to be used to finance social projects in the mine
site region, which are determined by the Republic of
Senegal and will be paid either directly to suppliers for the
completion of specific projects or to specified ministries of
the Republic of Senegal. An additional payment will become
payable when the actual cumulative production from the
OJVG, net of mining royalties, multiplied by the Company’s
weighted average gold prices, multiplied by 1 percent,
exceeds the initial payments.
Pursuant to the Company’s Mining Concession, $1.2 million
is payable annually
for community projects and
infrastructure to support local communities surrounding the
Company’s operations and social development of local
authorities in the surrounding Kedougou region.
$350 thousand is payable annually for training of Directorate
of Mines and Geology officers and Mines Ministry and $30
thousand is payable annually for logistical support of the
territorial administration of the region for SGO.
$250 thousand is payable annually for a forestry protocol to
the Ministry of Environment for the period of 5 years.
$925 thousand is payable annually for additional reserves
until 2016 ($3.7 million in total for the period from 2013 to
2016).
$112 thousand is payable annually as institutional support
for the exploration licenses.
$200 thousand is payable annually to a maximum of $1.0
million over 5 years for community projects located around
the Gora deposit.
2015 ANNUAL REPORT 32
CONTINGENT LIABILITIES
Government of Senegal payments
(US$000's)
Cash paym ents m ade
Contingent liabilities
Accrued liabilities
Royalty payments
Reserve payment
Three months ended
December 31, 2015
Tw elve months ended
December 31, 2015
As at December 31,
2015
As at December 31,
2015
- 11,012
- 11,054
- -
- 1,850
Social development fund payment
- -
- 15,000
Accrued dividend payment
- -
2,700 7,793
Gora project advanced royalty payment
- 4,200
- -
OJVG Advanced royalty payment
2,064
2,064
4,954
20,166
- 3,489
2,700 39,186
Royalty payments
Government royalties are accrued based on the mine head
value of the gold and related substances produced at a rate
of 5 percent of sales payable on an annual basis. Beginning
in 2015, we had anticipated transitioning to quarterly
payments of royalties, however with the weaker gold price,
that transition has been deferred. For the twelve months
ended December 31, 2015, a payment of $11.0 million for
2014 royalties was paid to the Republic of Senegal.
Reserve payment
A reserve payment is payable to the Republic of Senegal,
calculated on the basis of $6.50 for each ounce of new
reserves until December 31, 2012 and 1 percent of the
trailing twelve-month gold price for each ounce of new
reserve beyond December 31, 2012 on the Sabodala mine
license.
Social development fund payment
In addition to its CSR spending, we have agreed to establish
a social development fund which involves making a payment
of $15.0 million to the Republic of Senegal at the end of the
mine operational life. As at December 31, we have recorded
$7.6 million which is the discounted value of the $15.0 million
future payment.
Accrued dividends
In connection with the Global Agreement signed with the
Republic of Senegal in 2013, we have agreed to advance
approximately $13.2 million of accrued dividends in respect
of its 10 percent minority interest between 2013 and 2015.
In 2013, we made a payment of $2.7 million with a further
payment of $2.7 million required once drilling activities
recommence at Niakafiri. As at December 31, $7.8 million
has been accrued but payment has been deferred due to the
weak gold prices.
Gora and OJVG advanced royalty payments
During the first quarter of 2015, the Company received the
environmental and construction approvals to develop Gora.
A payment of $4.2 million was made in the second quarter
of 2015 related to the waiver of the right for the Republic of
Senegal to acquire an additional equity interest in the Gora
project.
Pursuant to the completion of the acquisition of the OJVG,
the Company is required to make initial payments totaling
$10.0 million related to the waiver of the right for the
Republic of Senegal to acquire an additional equity interest
in the OJVG. The initial payment is to be used to finance
social projects in the mine site region, which are determined
by the Republic of Senegal and will be paid either directly to
suppliers for the completion of specific projects or to
specified ministries of the Republic of Senegal. During the
twelve months ended December 31 2015, $5.0 million was
paid and the remaining $3.5 million has been accrued and is
expected to be paid during 2016. An additional payment will
become payable when the actual cumulative production
from the OJVG, net of mining royalties, multiplied by our
weighted average realized gold prices, multiplied by 1
percent, exceeds the initial payments.
Outstanding tax assessments
Management anticipates both the 2011 tax assessment of
$6 million and the January 2015 tax assessment of $3 million
to be settled in the near term with no liabilities owing by
SGO.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Certain accounting estimates have been identified as being
“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
different conditions or using different assumptions and
estimates. The following is a summary of significant updates
to these estimates.
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 Administrators’ National
Instrument 43-101
Standards for Disclosure for Mineral Projects requirements,
2015 ANNUAL REPORT 33
to be made regarding
which is similar to the Australasian standards. The estimated
quantities of economically recoverable reserves are based
upon interpretations of geological models and require
assumptions
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 performance. Changes in
reported reserve estimates can impact the carrying value of
property, plant and equipment, mine development
restoration and
expenditures, provision
rehabilitation, the recognition of deferred tax assets, as well
as the amount of depreciation and amortization charged to
net profit within
the consolidated statements of
comprehensive income.
for mine
Functional currency
The functional currency of each of Company’s entities is
determined based on 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
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 (“UOP”)
Management makes estimates of recovered ounces of gold
in determining the depreciation and amortization of mine
assets, including mine development expenditures, buildings
and property
improvements and certain 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 economically 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 contained ounces of gold milled.
Mine restoration and rehabilitation provision
Management assesses the Company’s 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 currently provided. The provision
at
the reporting 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.
Impairment of goodwill and non-current assets
In accordance with our accounting policies and processes,
goodwill and non-current assets are evaluated annually in
November to determine whether there are any indications of
impairment. As a result of the analysis performed on the
asset carrying values for the year ended December 31, 2015
impairment losses of $77.9 million (net of tax effects) were
recognized in the Consolidated Financial Statements of
Comprehensive Income. The key trigger for the impairment
test was primarily the effect of changes in the future estimate
of gold prices.
The following impairment losses were recognized:
2015
Property, plant and equipment
19,352
Mine development expenditures
28,872
Goodw ill
Gross Im pairm ent Charge
Deferred income tax impact
41,776
90,000
(12,056)
Net Im pairm ent Charge
77,944
The impairment charge was used first to reduce the carrying
value of the goodwill which arose during the purchase of the
OJVG and then pro-rata against the remaining assets of the
cash generating Unit (“CGU”) based on carrying values of
property, plant and equipment and mine development
expenditures, provided that the impairment did not reduce
the carrying amount of any asset below its fair value less
cost to sell (“FVLCD”).
Key assumptions
This assessment requires
the use of estimates and
assumptions such as long-term commodity prices, discount
rates, exchange
requirements,
exploration potential and operating performance.
future capital
rates,
The determination of FVLCD is most sensitive to the
following key assumptions:
• Commodity prices
• Discount rates
• Exchange rates
Commodity prices: Forecast commodity prices are based on
management’s estimates and long-term views of global
supply and demand, building on past experience of the
industry and consistent with external sources. These prices
were adjusted to arrive at appropriate consistent price
assumptions for
the different qualities and type of
commodities, or, where appropriate, contracted prices
were applied. These prices are reviewed at least annually.
Estimated long–term gold prices that have been used to
estimate future revenues for both the current year and the
prior year, are as follows:
Assumption
2015
2016
2017
2018+
Gold price
($ per ounce) - 2015
Gold price
($ per ounce) – 2014
$1,100
$1,100
$1,150
$1,200
$1,200
$1,300
$1,300
$1,300
Discount rates: In calculating the FVLCD, a real pre-tax
discount rate of 10.5 percent was applied to the pre-tax
cash flows expressed in real terms (7.5 percent post-tax).
This discount rate is derived from the Company’s post-tax
weighted average cost of capital (“WACC”), with appropriate
adjustments made to reflect the risks specific to the CGU
and to determine the pre-tax rate. The WACC takes into
2015 ANNUAL REPORT 34
account both debt and equity. The cost of equity is derived
from the expected return on investment by the Company’s
investors. The cost of debt is based on its interest-bearing
borrowings the Company is obliged to service.
Exchange rates: Foreign exchange rates are estimated with
reference to external market forecasts and updated at least
annually. Estimated Euro:USD exchange rates that have
been used to estimate future costs for both the current year
and the prior year, are as follows.
Assumption
Euro:USD
exchange rate
- 2015
Euro:USD
exchange rate
– 2014
2015
2016
2017
2018
2019+
1.08:1
1.08:1
1.10:1
1.15:1
1.20:1
1.20:1
1.20:1
1.20:1
1.20:1
1.20:1
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 determined 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 generating 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.
Any variation in the key assumptions above would either
result in further impairment or lead to a reversal of
impairment.
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.
the
When a mine development project moves
production 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.
that
depreciation/amortization commences.
is also at
this point
into
It
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 excess waste material moved above the average strip
ratio to provide access to further quantities of ore that will be
mined
future periods, which are estimated by
management.
in
Taxes
Management is required to make estimations regarding the
tax basis of assets and liabilities and related income tax
assets and liabilities and the measurement of income tax
expense and indirect taxes. A number of these estimates
require management to make estimates of future taxable
profit or loss, and if actual results are significantly different
than our estimates, the ability to realize any deferred tax
assets or discharge deferred
liabilities on our
consolidated statement of financial position could be
impacted.
tax
Contingencies
Contingencies can be either possible assets or possible
liabilities arising from past events which, by their nature, will
only be resolved when one or more future events not wholly
within our control occur or fail to occur. The assessment of
such contingencies inherently involves the exercise of
significant judgment and estimates of the outcome of future
events. In assessing loss contingencies related to legal
proceedings that are pending against us or unasserted
claims, that may result in such proceedings or regulatory or
government actions that may negatively impact our business
or operations, the Company with assistance from its legal
counsel evaluates the perceived merits of any legal
proceedings or unasserted claims or actions as well as the
perceived merits of the nature and amount of relief sought
or expected to be sought, when determining the amount, if
any, to recognize as a contingent liability or assessing the
impact on the carrying value of assets. Contingent assets
are not recognized in the consolidated financial statements.
NON-IFRS FINANCIAL MEASURES
The Company provides some non-IFRS measures as
supplementary information that management believes may
be useful to investors to explain the Company’s financial
results.
“Net profit (loss) before the effects of the impairment charge”
is a non-IFRS measure which excludes the impairment
charge on long-lived assets and recorded goodwill. The
Company excludes this item from net profit to provide a
measure which allows the Company and investors to
evaluate the operating results of the of the Company and its
ability to generate operating cash flows to fund working
capital requirements and future capital expenditures. The
impairment charge, net of tax effects and adjusting for non-
controlling interest, is added back to net profit (loss)
attributable to shareholders.
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
Council (“WGC”) on June 27, 2013. The Company believes
2015 ANNUAL REPORT 35
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 addition 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
comparable to other similarly titled measure 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
definition of all-in costs adds to all-in sustaining costs
including capital expenditures attributable to projects or
mine expansions, 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.
Finally, Life of Mine total cash costs and Life of Mine all-in
sustaining costs used in this document are before stockpile
inventory value adjustments and government waiver
accruals. 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
standard 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 considered in isolation or as a substitute for
measures of performance 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.
2015 ANNUAL REPORT 36
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$000's, except w here indicated)
Three m onths ended Decem ber 31, Tw elve m onths ended Decem ber 31,
Cash costs per ounce sold
Gold produced1 (oz)
Gold sold (oz)
Cash costs per ounce sold
Cost of sales2
Less: depreciation and amortization2
Add: non-cash inventory movement2
Add: non-cash capitalized deferred stripping2
Less: inventory reversal (w rite-dow n) to net realizable
value2
Less: other adjustments
Total cash costs
2015
2014
2015
2014
51,292
71,278 182,282
211,823
52,939
63,711 193,218
206,336
48,515
37,739 172,261
207,984
(10,850) (19,193) (41,916) (69,516)
(2,307)
3,907 (7,458)
8,089
209 (188)
1,374
658
- 16,026
- -
(185) (172) (294) (763)
35,382
38,119 123,969
146,453
Total cash costs per ounce sold
668
598 642
710
All-in sustaining costs
Total cash costs
Administration expenses3
Capitalized deferred stripping
35,382
38,119 123,969
146,453
3,628
3,094 14,873
13,165
2,715
1,266 14,548
5,977
Capitalized reserve development
852
1,496 4,824
4,020
Mine site capital
All-in sustaining costs
8,740
1,343 28,313
8,919
51,317
45,318 186,526
178,534
All-in sustaining costs per ounce sold
969
711 965
865
All-in costs
All-in sustaining costs
51,317
45,318 186,526
178,534
Social community costs not related to current operations
916
1,061 2,852
2,543
Exploration and evaluation expenditures
743
373 2,525
2,772
All-in costs
52,975
46,752 191,904
183,849
All-in costs per ounce sold
1,000
734 993
891
Depreciation and amortization2
Non - cash inventory movement2
10,850
19,193 41,915
69,516
2,307 (3,907)
7,458 (8,089)
Total depreciation and am ortization
Total depreciation and am ortization per ounce sold2
13,157
249
15,286 49,373
240 256
61,427
298
1 Go ld pro duced represents change in go ld in circuit invento ry plus go ld reco vered during the perio d.
2 In 2014, the Co mpany reassessed the acco unting fo r deferred stripping assets to include amo rtizatio n o f equipment directly related to deferred stripping activity. The impact o f
this adjustment has been applied retro spectively fro m January 1, 2012.
3 A dministratio n expenses include share based co mpensatio n and exclude Co rpo rate depreciatio n expense and so cial co mmunity co sts no t related to current o peratio ns.
2015 ANNUAL REPORT 37
OUTSTANDING SHARE DATA
The Company’s fully diluted share capital as at the report
date was:
statements for external purposes in accordance with the
issuer’s GAAP.
Outstanding
Ordinary shares
Common Shares Issued1
Stock options granted at an exercise
price of C$3.00 per option
Stock options granted at an exercise
price of C$0.64 per option
Fully diluted share capital
Decem ber 31, 2015
352,801,091
39,200,000
11,684,165
3,855,000
407,540,256
1 39,200,000 co mmo n shares were issued to Tablo Co rpo ratio n o n
Octo ber 14, 2015
TRANSACTIONS WITH RELATED PARTIES
During the year ended December 31, 2015, there were
transactions totaling $168 thousand 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 individuals 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.
We bought 100 percent of Oromin in 2013, which holds a
43.5 percent participating interest in the OJVG.
During the first quarter of 2014, we acquired the remaining
interest in the OJVG that we did not already own.
CEO/CFO CERTIFICATION
The Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) are responsible for establishing
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 at December
31, 2015, 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 during 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
financial
the preparation of
reporting and
The control framework the Company’s CEO and CFO used
to design the Company’s ICFR is The Committee of
Sponsoring Organizations of the Treadway Commission
(“COSO”) framework established in 1992. 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, 2015 which
has materially affected, or is reasonably likely to materially
affect the Company’s ICFR.
On May 14, 2013, COSO issued an updated Internal Control
– Integrated Framework (“2013 COSO Framework”) which
superseded the 1992 COSO Framework The Company
performed an assessment identifying differences between
the two COSO frameworks and will develop and execute the
transition plan in 2016. At present, management does not
expect implementation of the 2013 COSO Framework to
have a material effect on the Company’s ICFR. The
Company is planning to certify compliance with the 2013
COSO framework in the fourth quarter of 2016.
Until transition to the 2013 COSO framework is complete,
we will continue to use the 1992 framework in connection
with our assessment of internal control over financial
reporting.
RISKS AND UNCERTAINTIES
The Company identified a number of risk factors to which it
are subject to in its Annual Information Form filed for the year
ended December 31, 2014. 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,
production estimates, need
financing,
uncertainty in the estimation of mineral reserves and mineral
resources, the inherent danger of mining, infrastructure risk,
risks,
hedging
environmental risks and regulations, government regulation,
ability to obtain and renew licenses and permits, foreign
operations risks, title to properties, competition, dependence
on key personnel, currency, repatriation of earnings and
stock exchange price fluctuations.
for additional
uninsured
activities,
insured
and
FORWARD LOOKING STATEMENTS
laws (“forward-looking statements”).
This document contains certain statements that constitute
forward-looking information within the meaning of applicable
Such
securities
forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the
actual results, performance or achievements of Teranga, or
developments in Teranga’s business or in its industry, to
differ materially from the anticipated results, performance,
achievements or developments expressed or implied by
such
Forward-looking
limitation, all disclosure
statements
results of
regarding possible events, conditions or
forward-looking statements.
include, without
2015 ANNUAL REPORT 38
its expectations of
future developments
operations, future economic conditions and courses of
action, the proposed plans with respect to mine plan,
anticipated 2015 results, mineral reserve and mineral
resource estimates, anticipated life of mine operating and
financial results, and the completion of construction of the
Gora deposit related thereto. Such statements are based
upon assumptions, opinions and analysis made by
management in light of its experience, current conditions
and
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
September 1, 2015, 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, estimates, 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.
COMPETENT PERSONS STATEMENT
The technical information contained in this document
relating to the mineral reserve estimates for Sabodala, the
stockpiles, Masato, Golouma and Kerekounda is based on,
and fairly represents, information compiled by Mr. William
Paul Chawrun, P. Eng who is a member of the Professional
Engineers Ontario, which is currently included as a
"Recognized Overseas Professional Organization" 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 relevant
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
relating to mineral resource estimates for Niakafiri, Gora,
Niakafiri West, Soukhoto, and Diadiako is based on, and
fairly represents, information compiled by Ms. Nakai-
included as a
Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a Member of the
Association of Professional Geoscientists of Ontario, which
is currently
"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 Instrument 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.
included as a
The technical information contained in this document
relating to mineral resource estimates for Sabodala, Masato,
Golouma, Kerekounda, and Somigol Other are based on,
and fairly represents, information compiled by Ms. Nakai-
Lajoie. Ms. Patti Nakai-Lajoie, P. Geo., is a Member of the
Association of Professional Geoscientists of Ontario, which
is currently
"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 Instrument 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's exploration programs are being managed by
Peter Mann, FAusIMM. Mr. Mann is a full time employee of
Teranga and is not "independent" within the meaning of
National
Instrument 43-101. Mr. Mann has sufficient
experience which is relevant to the style of mineralization
and type of deposit under consideration and to the activity
which 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. Mann is a "Qualified Person" under
National Instrument 43-101 Standards of Disclosure for
Mineral Projects. The technical information contained in this
news release relating exploration results are based on, and
fairly represents, information compiled by Mr. Mann. Mr.
Mann has verified and approved the data disclosed in this
release, including the sampling, analytical and test data
underlying the information. The RC samples are prepared at
site and assayed in the SGS laboratory located at the site.
Analysis for diamond drilling is sent for fire assay analysis at
ALS Johannesburg, South Africa. Mr. Mann has consented
to the inclusion in this news release of the matters based on
2015 ANNUAL REPORT 39
his compiled information in the form and context in which it
appears herein.
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 mineral reserve", "probable mineral
reserve", "mineral resource", "measured mineral resource",
"indicated mineral
"inferred mineral
resource" and
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 mineral 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 definitions
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.
2015 ANNUAL REPORT 40
MANAGEMENT’S RESPONSIBILITY
FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of the Company have been prepared by management in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board. Management acknowledges responsibility 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 consolidated 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.
Richard Young Navin Dyal
President and Chief Executive Officer Vice President and Chief Financial Officer
2015 ANNUAL REPORT 41
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Teranga Gold Corporation
We have audited the accompanying consolidated financial statements of Teranga Gold Corporation, which
comprise the consolidated statements of financial position as at December 31, 2015 and 2014, and the
consolidated statements of comprehensive income, changes in equity and cash flows for the years 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 preparation 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 audits. We
conducted our audits 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 procedures
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 accounting 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, 2015 and 2014 and its financial performance and its cash flows for
the years then ended in accordance with International Financial Reporting Standards.
February 24, 2016
Toronto, Canada
A member firm of Ernst & Yo ung Glo bal Limited
2015 ANNUAL REPORT 42
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Revenue
Cost of sales
Gross profit
Exploration and evaluation expenditures
Administration and corporate social responsibility
expenses
Share-based compensation
Finance costs
Impairment charge
Net foreign exchange gains
Other income/(expenses)
Profit/(loss) before incom e tax
Income tax recovery/(expense)
Net profit/(loss)
Net profit/(loss) attributable to:
Shareholders
Non-controlling interests
Note
7
8
For the years ended Decem ber 31,
2015
2014
224,620
260,588
(172,261) (207,984)
52,359
52,604
(2,525) (2,772)
9
32
10
16
(16,311) (15,621)
(1,761) (911)
(3,159) (9,484)
(90,000) -
1,901
2,013
11
1,381
(1,982)
(110,474) (28,757)
(58,115) 23,847
12
2,502
(1,536)
(55,613) 22,311
(50,543) 17,776
(5,070) 4,535
Net profit/(loss) for the year
(55,613) 22,311
Other comprehensive income/(loss):
Items that may be reclassified subsequently to profit
for the year
Change in fair value of available for sale financial
asset, net of tax
- (1)
Other com prehensive loss for the year
Total com prehensive incom e/(loss) for the year
- (1)
(55,613) 22,310
Total comprehensive income/(loss) attributable to:
Shareholders
Non-controlling interests
(50,543) 17,775
(5,070) 4,535
Total com prehensive incom e/(loss) for the year
(55,613) 22,310
Earnings/(loss) per share from operations
attributable to the shareholders of the Com pany
during the year
- basic earnings/(loss) per share
- diluted earnings/(loss) per share
25
25
(0.14) 0.05
(0.14) 0.05
The accompanying notes are an integral part of these consolidated financial statements
2015 ANNUAL REPORT 43
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Mine development expenditures
Deferred income tax assets
Other non-current assets
Goodw ill
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrow ings
Current income tax liabilities
Deferred revenue
Provisions
Total current liabilities
Non-current liabilities
Borrow ings
Deferred revenue
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Issued capital
As at Decem ber 31, 2015
As at Decem ber 31, 2014
44,436
15,701
57,529
9,381
127,047
106,898
193,426
237,046
23,098
8,701
-
569,169
696,216
62,545
-
35,810
1,562
66,639
8,995
113,006
91,057
198,433
260,719
11,879
7,917
41,776
611,781
724,787
53,909
3,946
8,685
-
19,155
2,588
92,973
13,450
72,190
28,236
11,098
124,974
217,947
385,174
21,814
1,936
81,605
-
92,184
16,704
18,399
127,287
208,892
367,837
Note
30b
13
14
15
14
17
18
19
15
6
20
21
12
22
23
21
22
23
20
24
Foreign currency translation reserve
Other components of equity
Retained earnings
Equity attributable to shareholders
Non-controlling interests
Total equity
Total equity and liabilities
(998)
(998)
16,905
67,794
468,875
9,394
478,269
696,216
16,255
118,337
501,431
14,464
515,895
724,787
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board of Directors
Alan Hill
Director
Alan Thomas
Director
2015 ANNUAL REPORT 44
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Issued capital
Beginning of year
Shares issued from public and private offerings
Less: Share issue costs
End of year
Foreign currency translation reserve
24
24
Beginning of year
End of year
Other com ponents of equity
Beginning of year
Equity-settled share-based compensation reserve
Investment revaluation reserve on change in fair value of
available for sale financial asset, net of tax
End of year
Retained earnings
Beginning of year
Profit/(loss) attributable to shareholders
End of year
Non-controlling interest
Beginning of year
Non-controlling interest - portion of profit/(loss) for the period
Dividends accrued
End of year
Total equity as at Decem ber 31
The accompanying notes are an integral part of these consolidated financial statements
For the years ended Decem ber 31,
2015
367,837
17,454
(117)
385,174
(998)
(998)
16,255
650
-
16,905
118,337
(50,543)
67,794
14,464
(5,070)
-
9,394
478,269
2014
342,470
27,274
(1,907)
367,837
(998)
(998)
15,776
480
(1)
16,255
100,561
17,776
118,337
12,528
4,535
(2,599)
14,464
515,895
2015 ANNUAL REPORT 45
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Note
16
17
18
8
8
8
Cash flow s related to operating activities
Net profit/(loss) for the year
Impairment charge
Depreciation of property, plant and equipment
Depreciation of capitalized mine development costs
Inventory movements - non-cash
Capitalized deferred stripping - non-cash
Amortization of advanced royalties
Gain on sale of exploration rights
Amortization of intangibles
Amortization of deferred financing costs
10
Unw inding of discounts 10
32
Share-based compensation
22
Deferred gold revenue recognized
Deferred income tax expense
12
Property, plant and equipment w ritten off
Increase in inventories
Changes in non-cash w orking capital other than
inventories
Net cash provided by operating activities
30a
Cash flow s related to investing activities
Decrease in restricted cash
Acquisition of Oromin Joint Venture Group ("OJVG")
Expenditures for property, plant and equipment
Expenditures for mine development
Acquisition of intangibles
Net cash used in investing activities
Cash flow s related to financing activities
Net proceeds from equity offering
Proceeds from Franco-Nevada gold stream
Repayment of borrow ings
Draw dow n from revolving credit facility
Financing costs paid
Interest paid on borrow ings
Net cash provided by financing activities
Effect of exchange rates on cash holdings in
foreign currencies
24
22
21
21
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year
For the years ended Decem ber 31,
2015
(55,613)
90,000
22,703
19,526
7,458
(1,374)
1,892
(400)
247
793
951
1,761
(22,653)
(11,219)
84
(14,164)
(9,558)
30,434
-
-
(23,962)
(23,545)
(175)
(47,682)
17,337
-
(4,192)
15,000
(2,025)
(247)
25,873
1
8,626
35,810
44,436
2014
22,311
-
25,806
44,062
(8,089)
(658)
440
-
714
3,275
1,132
911
(21,002)
1,536
1
(19,693)
(1,737)
49,009
20,000
(112,500)
(3,567)
(15,346)
-
(111,413)
25,367
135,000
(72,775)
-
(1,000)
(3,340)
83,252
1
20,849
14,961
35,810
The accompanying notes are an integral part of these consolidated financial statements
2015 ANNUAL REPORT 46
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. GENERAL INFORMATION
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 exploration and mine development.
Teranga operates the Sabodala gold mine and is currently exploring eight exploration permits covering approximately
1,000km2 in Senegal, comprising the regional land package that is surrounding the Company’s Sabodala gold mine.
On October 4, 2013, Teranga completed the acquisition of Oromin Exploration Ltd. (“Oromin”). Oromin held a 43.5
percent participating interest in the Oromin Joint Venture Group (“OJVG”). The OJVG held a fully participating 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 carried 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 by acquiring Bendon
International Ltd.’s (“Bendon”) 43.5 percent participating interest and Badr Investment Ltd.’s (“Badr”) 13 percent carried
interest.
The acquisition of Bendon and Badr’s interests in the OJVG increased our ownership to 100 percent and allowed us to
consolidate the Sabodala region, increasing the size of our mine license land holding from 33km2 to 246km2 by
combining the two permitted mine licenses and more than doubling our reserve base. In July 2015, our mine license
land holding increased to 291km2, with the inclusion of Gora in the mine license perimeter.
The address of the Company’s principal office is 121 King Street West, Suite 2600, Toronto, Ontario, Canada M5H
3T9.
2. BASIS OF PREPARATION
a. Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“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
approved by the Board of Directors on February 24, 2016.
Certain comparatives have been restated to conform to the current year’s 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 share based payments that are fair valued at the date of grant and cash settled share based payments
that are fair valued at the date of grant and each period end 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.
2015 ANNUAL REPORT 47
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
d. Critical accounting judgments and key sources of estimation uncertainty
The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of expenses and 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.
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 5 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
Corporation and its subsidiaries as defined in IFRS 10 “Consolidated Financial Statements”. Refer to Note 29 for a
listing of the Company’s controlled subsidiaries.
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
group, 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
business combination.
Total comprehensive profit/(loss) is attributed to non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
b. Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated 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.
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 remaining maturity of 90 days or less at the date of acquisition.
When applicable, bank overdrafts are shown within borrowings in current liabilities in the consolidated statement of
financial position.
d.
Inventories
Gold bullion, gold in circuit and ore in stockpiles are physically measured or estimated and valued at the lower of cost
and net realizable value. Cost represents the weighted average cost and includes direct costs and an appropriate
portion of overhead costs, depreciation and amortization on property, plant and equipment used in the production
process and depreciation and amortization of capitalized stripping costs. As ore is removed from inventory, costs are
relieved based on the average cost per ounce in the stockpile.
2015 ANNUAL REPORT 48
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
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.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion,
if any, and applicable costs to sell.
Materials and supplies are valued at the lower of cost and net realizable value. Any provision for obsolescence is
determined by reference to specific inventory items identified. A regular and ongoing review is undertaken to establish
the extent of surplus items and a provision is made for any potential loss upon disposal.
e. Property, Plant and Equipment
Property, plant and equipment are measured on the historical cost basis less accumulated depreciation and impairment
losses, if any.
The cost of property, plant and equipment constructed by the Company includes the cost of materials, direct labour
and borrowing 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 respective 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 contained ounces of gold milled. Mining
assets include buildings and property improvements, and plant and equipment.
The Company uses the straight-line method when depreciating office furniture and equipment, motor vehicles and
mobile equipment.
Depreciation for each class of property, plant, and equipment is calculated using the following method:
Class of Property, Plant and Equipm ent
Buildings and property improvements
Plant and equipment
Office furniture and equipment
Motor vehicles
Mobile equipment
Method
UOP
UOP
Straight-line
Straight-line
Straight-line
Years
n/a
n/a
3 - 8 years
5 years
5 – 8 years
The assets’ residual values, depreciation method and useful lives are reviewed and adjusted, if appropriate, at each
reporting date.
Capital work in progress is not depreciated.
f.
Intangible Assets
Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. 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.
2015 ANNUAL REPORT 49
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
g. Goodwill
Under the acquisition method of accounting, the costs of business combinations are allocated to the assets acquired
and liabilities assumed based on the estimated fair value at the date of acquisition. The excess of the fair value of
consideration paid over the fair value of the identifiable net assets acquired is recorded as goodwill, which is assigned
to the cash-generating unit (“CGU”) or group of CGUs that are expected to benefit from the synergies of the business
combination.
Goodwill is tested for impairment annually effective on November 1st unless there is an indication that goodwill is
impaired and, if there is such an indication, goodwill will be tested for impairment at that time. For the purposes of
impairment testing, goodwill is allocated to the Company’s CGUs. The recoverable amount of a CGU is the higher of
Value in Use (“VIU”) and Fair Value Less Costs of Disposal (“FVLCD”). A goodwill impairment charge is recognized for
any excess of the carrying amount of the unit over its recoverable amount. Goodwill impairment charges are not
reversible.
h.
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 FVLCD and the VIU. Where the asset does not generate cash inflows that are independent
from other assets, the Company estimates the recoverable amount of the CGU to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGU
or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis
can be identified.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of
the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized immediately in net profit
within the statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised
estimate of its recoverable amount but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognized for the asset or CGU in
prior years. A reversal of an impairment loss is recognized immediately in net profit within the statement of
comprehensive income.
i. Borrowing Costs
Borrowing costs directly attributable to the acquisition, 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 borrowing costs are recognized in net profit within the statement of comprehensive income in the period in
which they are incurred.
j. 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 they are capable of being measured reliably.
Liabilities recognized in respect of employee benefits are measured using the remuneration rate expected to apply at
the time of settlement.
k. Deferred Revenue
Deferred revenue consists of payments received by the Company for future commitments to deliver payable gold at
contracted prices. As deliveries are made, the Company will record a portion of the deferred revenue as sales. Refer
to Note 22.
2015 ANNUAL REPORT 50
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
l. 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 present value of the consideration required to settle
the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
m. Restoration and Rehabilitation
A provision for restoration and rehabilitation is recognized when there is a present obligation as a result of exploration,
development and production activities undertaken, it is probable that an outflow of economic benefits will be required
to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations
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 at each reporting period and any changes in the estimate are reflected in the present value of the
restoration provision at each reporting date.
n.
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 Company’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 basis 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.
o. Financial Instruments
Investments are recognized and derecognized 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.
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 comprehensive income.
2015 ANNUAL REPORT 51
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Loans and receivables
Trade and other receivables and loans 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 rate method less impairment.
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 have 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.
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.
The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss
through the use of an allowance account. Subsequent recoveries 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 previously recognized impairment loss is reversed through profit or 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.
Derecognition of financial assets
The Company derecognizes 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 resulting gain or loss is recognized in net profit within the
statement 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 expected 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
contractual 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 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 amortized cost using the effective interest rate method, with interest
expense recognized on an effective yield basis.
2015 ANNUAL REPORT 52
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
p. Share-based Payments
Stock option plan
The Company operates an equity-settled, share-based compensation plan for remuneration of its directors,
management and employees.
The fair value of the options granted is measured using the Black-Scholes option pricing 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 consolidated statements of
comprehensive income.
Restricted share units (RSUs)
The Company grants cash-settled awards in the form of RSUs to officers and certain employees of the Company.
Under the Company’s RSU plan, each RSU granted has a value equal to the value of one Teranga common share. A
portion of the RSUs vest equally over a three-year period and are settled in cash upon vesting. The RSU plan also
includes a portion of RSUs that vest equally based on the Company’s achievement of performance-based criteria over
a three-year period.
RSUs are measured at fair value using the market value of the underlying shares at the date of the award grant. At
each reporting period, the awards are re-valued based on the period-end share price with a corresponding charge to
share-based compensation expense. RSUs that vest based on the achievement of performance conditions are
revalued based on the current best estimate of the outcome of the performance condition at the reporting period. The
cost of the award is recorded on a straight-line basis over the vesting period and is recorded within non-current liabilities
on the consolidated statements of financial position, except for the portion that will vest within twelve months which are
recorded within current liabilities. The expense for the award is recorded on a straight-line basis over the vesting period
and is recorded within share-based compensation on the consolidated statements of comprehensive income.
Deferred share units (DSUs)
The Company grants cash-settled awards in the form of DSUs to directors of the Company.
Under the Company’s DSU plan, each DSU granted has a value equal to the value of one Teranga common share.
Directors have the option to elect to receive their Director compensation in the form of DSUs. These DSUs vest as
they are granted. All remaining DSUs that are granted vest on the first anniversary of the grant date.
DSUs are measured at fair value using the market value of the underlying shares at the date of the grant of the award.
At each reporting period, the awards are revalued based on the period-end share price with a corresponding charge to
share-based compensation expense. The cost of the award is recorded on a straight-line basis over the vesting period
and is recorded within current liabilities on the consolidated statements of financial position. The expense for the award
is recorded on a straight-line basis over the vesting period and is recorded within share-based compensation on the
consolidated statements of comprehensive income.
q. Fixed Bonus Plan Units
The Company operates a cash-settled, share-based compensation plan for certain management and employees.
The fair value of the Fixed Bonus Plan Units (“Units”) granted is measured using the Black-Scholes option pricing
model, taking into consideration 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.
Share-based compensation relating to the Fixed Bonus Plan is charged to the consolidated statements of
comprehensive income and revalued at the end of each reporting period based on the period end share price.
2015 ANNUAL REPORT 53
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
r. Revenue
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 benefits 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 consolidated statements of comprehensive income.
s. Exploration and Evaluation Expenditures and Mine Development Expenditures
Exploration and evaluation expenditures in relation to each separate area of interest are expensed in net profit within
the consolidated statements of comprehensive income. Upon the determination of the technical feasibility and
commercial viability of a project, further costs to develop the asset are recognized as mine development expenditures.
The development phase is determined to have commenced when 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
development and exploitation of the area, or alternatively by sale of the property.
Mine development expenditure 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. Upon reaching commercial production, these capitalized costs will be amortized using the
units-of-production method over the estimated proven and probable reserves.
t. Earnings per Share
Basic earnings per share is determined by dividing the profit or loss attributable to equity holders of the Company by
the weighted average number of ordinary common shares outstanding during the financial period.
Diluted earnings or loss per share is calculated by dividing the profit or loss attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares. The dilutive effect of stock options is determined using the treasury
stock method.
u. Royalties
Royalties
Royalties, whether paid to the Government of Senegal or to third party interests, are based on gold sales and the
liability is accrued as revenues are recognized. Royalties are separately reported as expenses and not deducted from
revenue.
2015 ANNUAL REPORT 54
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Advanced royalties
The Company is required to make payments related to the waiver of the right for the Republic of Senegal to acquire an
additional equity interest in the exploration licenses converted to mine licenses when the ore is processed through the
Sabodala mill. The former OJVG and Gora properties are subject to advanced royalties. The initial payment is accrued
as a current and non-current liability and the advanced royalty is recorded within other current assets based on
expected production from the properties over the next year and the remaining is recorded within other non-current
assets. The advanced royalty balance will be recorded within and expensed through net profit based on actual
production from the properties.
v. Deferred Stripping Activity
The cost of stripping activity in the production phase of surface mining will be recognized as an asset, only if, all of the
following are met:
it is probable that the future economic benefit (improved access to the ore body) associated with the stripping
activity will flow to the entity;
the entity can identify the component of the ore body (mining phases) for which access has been improved; and
the costs relating to the stripping activity associated with that component can be measured reliably.
Once the cost associated with the stripping activity is deferred to asset, the cost or revalued amount will be amortized
on a units of production basis in the subsequent period.
4. NEW STANDARDS AND INTERPRETATIONS
a.
IFRS 15 – Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts
with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer.
The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue.
The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements
under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after
January 1, 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plans
to adopt the new standard on the required effective date.
b.
IFRS 9 – Financial Instruments
On July 24, 2014, the IASB issued the final version of IFRS 9, “Financial instruments” and replaced IAS 39, “Financial
Instruments: Recognition and Measurement”. IFRS 9 replaces the multiple rules in IAS 39 with a single approach to
determine whether a financial asset is measured at amortized 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
characteristics of the financial assets. This standard also requires a single impairment method to be used, replacing
the multiple impairment methods in IAS 39. The adoption date for IFRS 9 is January 1, 2018. The Company is currently
evaluating the impact of IFRS 9 on its consolidated financial statements.
c.
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16 which supersedes IAS 17 Leases and related interpretations. The new
standard provides a single lessee accounting model which eliminates the distinction between operating and finance
leases, by requiring lessees to recognize assets and liabilities for all leases unless the underlying asset has a low value
or the lease term is 12 months or less. Lessor accounting remains largely unchanged and the distinction between
operating and finance leases is retained. The Company does not anticipate early adoption and plans to adopt the
standard on its effective date of January 1, 2019. The Company is in the process of reviewing the standard to determine
the impact on the consolidated financial statements.
2015 ANNUAL REPORT 55
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
d. Amendments
The Group applied, for the first time, certain standards and amendments which are effective for annual periods
beginning on or after 1 January 2015. However, they do not impact the annual consolidated financial statements of
the Company and, hence, have not been disclosed.
5. 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
Company’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated
financial 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 information compiled by qualified persons as defined in
accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards for Disclosure for
Mineral Projects requirements, which is similar to the Australasian standards. The estimated quantities of economically
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 performance. Changes in reported reserve estimates can
impact the carrying value of property, plant and equipment, mine development expenditures, 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 consolidated statements of comprehensive income.
Units of production
Management estimates recovered ounces of gold in determining the depreciation and amortization of mining assets,
including buildings and property
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 economically 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 units of production calculations are
based on contained ounces of gold milled.
improvements and certain plant and equipment. This
results
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 currently provided. The provision at the
reporting 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.
Impairment of goodwill and non-current assets
Goodwill and non-current assets are tested for impairment if there is an indicator of impairment and, in the case of
goodwill, annually in November. 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 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 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 CGUs as being all sources of mill feed through a central mill, which is the lowest level for which cash
inflows are largely independent of other assets.
2015 ANNUAL REPORT 56
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
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 production 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/amortization
commences.
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
excess waste material moved above the average strip ratio to provide access to further quantities of ore that will be
mined in future periods, which are estimated by management.
Taxes
Management is required to make estimations regarding the tax basis of assets and liabilities and related income tax
assets and liabilities and the measurement of income tax expense and indirect taxes. This requires management to
make estimates of future taxable profit or loss, and if actual results are significantly different than our estimates, the
ability to realize any deferred tax assets or discharge deferred tax liabilities on our consolidated statement of financial
position could be impacted.
Contingencies
Contingencies can be either possible assets or possible liabilities arising from past events which, by their nature, will
only be resolved when one or more future events not wholly within the Company’s control occur or fail to occur. The
assessment of such contingencies inherently involves the exercise of significant judgment and estimates of the outcome
of future events. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted
claims, that may result in such proceedings or regulatory or government actions that may negatively impact the
Company’s business or operations, the Company with assistance from its legal counsel evaluates the perceived merits
of any legal proceedings or unasserted claims or actions as well as the perceived merits of the nature and amount of
relief sought or expected to be sought, when determining the amount, if any, to recognize as a contingent liability or
assessing the impact on the carrying value of assets. Contingent assets are not recognized in the consolidated financial
statements.
6. ACQUISITION
a. Acquisition of the OJVG
On January 15, 2014, the Company acquired the balance of the OJVG that it did not already own from Bendon and
Badr.
The Company acquired Bendon’s 43.5 percent participating interest in the OJVG for cash consideration of $105.0
million. Badr’s 13 percent carried interest in the OJVG was acquired for cash consideration of $7.5 million and further
contingent consideration that will be based on realized gold prices and increases to the OJVG’s mineral reserves
through 2020. Upon finalization of the allocation of the purchase price, $3.8 million of contingent consideration was
accrued as a non-current liability based on management’s best estimate of future additions to the OJVG’s mineral
reserves.
2015 ANNUAL REPORT 57
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
The Company determined that the combined transactions represented a single business combination with Teranga as
the acquirer. From January 15, 2014, 100 percent of the OJVG’s results were consolidated into the Company’s
operating results, cash flows and net assets.
In accordance with business combination 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. The Company used
a discounted cash flow model to determine the fair value of the OJVG’s identifiable assets and liabilities, with the
remainder allocated to goodwill. Expected future cash flows were based on estimates of projected future revenue,
expected future production costs and capital expenditures. The Company finalized the purchase price allocation during
the third quarter of 2014.
Purchase price allocation
The following tables present the purchase price and the final allocation of the purchase price to the net identifiable
assets acquired and liabilities assumed.
Consideration transferred - Acquisition of OJVG
Total acquisition cost - Bendon
Total acquisition cost - Badr
Fair value of existing 43.5% interest in OJVG - Oromin
Consideration transferred
Cash acquired w ith OJVG
Consideration, net of cash acquired
Sum m ary of Final Purchase Price Allocation
Total consideration
Assets
Current assets
Deferred income tax assets
Mine development expenditures
Total assets
Liabilities
Current liabilities
Total liabilities
Net identifiable assets acquired
Goodw ill as at Decem ber 31, 2014
Impairment
Goodw ill as at Decem ber 31, 2015
105,000
11,314
47,059
163,373
(32)
163,341
163,373
127
13,415
109,207
122,749
1,152
1,152
121,597
41,776
(41,776)
-
During the second quarter 2015, upon completion of local tax filings, it was determined that goodwill on the acquisition
had no tax basis and as such a temporary deferred tax difference exists with respect to OJVG mineral property assets.
As a result, the purchase price equation above has been restated to recognize a deferred tax asset of $13.4 million in
relation to the deferred mineral property expenditures and a corresponding reduction in goodwill and deferred tax
liabilities.
Pursuant to the Company’s annual goodwill impairment test, the recoverable amount of the Company’s CGU was
determined to not exceed the carrying value as at November 1, 2015 and an impairment charge has been recorded in
the current year which fully impairs the recorded value of goodwill. See Note 16.
2015 ANNUAL REPORT 58
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
7. REVENUE
Gold sales - spot price
Silver sales
Total revenue
For the years ended Decem ber 31,
224,342
2015
2014
259,859
278
729
224,620
260,588
For the year ended December 31, 2015, 193,218 ounces of gold were sold including 24,375 ounces delivered to Franco
Nevada Corporation (“Franco-Nevada”) at an average realized price of $1,161 per ounce (2014: 206,336 ounces were
sold, including 20,625 ounces delivered to Franco Nevada at an average price of $1,259 per ounce).
The Company realized cash proceeds from the sale of gold to Franco-Nevada equivalent to 20 percent of the spot gold
price. Refer to Note 22.
For the year ended December 31, 2015, the Company delivered all of its production to four customers with associated
revenues of $151.8 million, $41.0 million, $28.3 million and $3.5 million, respectively (2014: two customers, $234.3
million and $26.3 million, respectively).
8. COST OF SALES
Mine production costs
For the years ended Decem ber 31,
2015
2014
142,131
162,410
Capitalized deferred stripping - cash
(14,547) (5,976)
Capitalized deferred stripping - non-cash
Depreciation and amortization - deferred stripping assets
(1,374) (658)
28,911
5,687
Depreciation and amortization - property, plant and
equipment and mine development expenditures
Royalties(i)
Amortization of advanced royalties
Inventory movements - cash
Inventory movements - non-cash
Total cost of sales
36,229 40,605
11,396
12,486
1,892
440
(16,611) (22,145)
(8,089)
7,458
172,261
207,984
(i)
Includes $0.3 million (2014: nil) of royalties to Axmin Inc. on account of their 1.5 percent net smelter royalty on the Gora
deposit.
9. ADMINISTRATION AND CORPORATE SOCIAL RESPONSIBILITY EXPENSES
Corporate office
Dakar office
Audit fees
Legal and other
Depreciation
For the years ended Decem ber 31,
2015
2014
8,174
8,247
1,414
1,012
637
379
2,886
2,615
347
825
Total adm inistration expenses
13,458
13,078
Corporate social responsibility expenses
Total adm inistration and corporate social
responsibility expenses
2,853
2,543
16,311
15,621
2015 ANNUAL REPORT 59
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
10. FINANCE COSTS
Interest on borrow ings
459
3,572
Amortization of deferred financing costs
793
3,275
Unw inding of discounts 951
1,132
For the years ended Decem ber 31,
2015
2014
Political risk insurance
Stocking fees
Bank charges
Other
Total finance costs
11. OTHER (INCOME)/EXPENSES
Acquisition and related costs (i)
Gain on sale of exploration rights(ii)
Gains on derivative instruments (iii)
Government of Senegal payments(iv)
Interest and other income
- 195
619
819
243
305
94
186
3,159
9,484
For the years ended Decem ber 31,
2015
2014
- 2,065
(500)
(2,581) -
1,973
-
(273) (83)
Total other (incom e)/expenses
(1,381) 1,982
(i)
(ii)
(iii)
(iv)
Includes legal, advisory, consulting and other costs.
A settlement agreement was reached with a joint venture partner whereby Teranga will receive cash consideration totalling
$0.5 million for the relinquishment of its interest in the Garaboureya exploration permit.
During the year ended December 31, 2015, a gain of $2.5 million was realized on 28,000 ounces of gold forward sales
contracts put in place to take advantage of spikes in the price of gold. As at December 31, 2015, there were no gold forward
contracts outstanding, however, in February 2016, after an increase in the gold spot price, the Company entered into gold
forward contracts with Société Générale to deliver 27,000 ounces with settlement dates from March to August 2016 at an
average price of $1,201 per ounce.
Government of Senegal payments relate to registration duties related to the merger of the Golouma mining concession
with the Company’s existing Sabodala concession, net of a present value adjustment related to the social development
fund, which reflects a change in the expected payment date from 2023 to 2029.
12. INCOME TAX EXPENSE/(RECOVERY)
On May 2, 2015, the Company’s tax holiday in Senegal ended and the Company has recorded a current income tax
expense on taxable income earned in its Senegalese entities for the period of May 2, 2015 to December 31, 2015 at a
rate of 25 percent. Current income tax is calculated using local tax rates on taxable income which is estimated in
accordance with local statutory requirements and is denominated in the Senegalese currency (CFA Franc). As a result,
the tax basis of all assets and non-current intercompany loans are recorded using historical exchange rates and
translated to the functional currency using the period end exchange rate, and the Company’s deferred tax balances will
fluctuate due to changes in foreign exchange rates. The consolidated effective tax rate is also affected by non-
deductible expenses and tax losses not benefitted in jurisdictions outside of Senegal.
For the year ended December 31, 2015, the Company recorded an income tax recovery of $2.5 million, comprised of
current income tax expense of $8.7 million and a deferred income tax recovery of $11.2 million.
Current income tax expense
8,717
-
Deferred tax expense / (recovery)
(11,219) 1,536
Total incom e tax expense / (recovery)
(2,502) 1,536
2015 ANNUAL REPORT 60
For the years ended Decem ber 31
2015
2014
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
The Company's provision for income taxes differs from the amount computed by applying the combined Canadian
federal and provincial income tax rates to income before income taxes as a result of the following:
(Loss) Income before income taxes
(58,115) 23,847
Statutory tax rates
26.5%
26.5%
Income tax expense computed at statutory tax rates
(15,401) 6,320
For the years ended Decem ber 31
2015
2014
Impact of foreign tax rates
Non-deductible items
Income not subject to tax
Tax credits
Impairment of goodw ill
Withholding tax and other
1,845
-
1,781
316
(8,660) (9,413)
(721) -
10,444
-
1,878
-
Change in foreign exchange rates
5,046
-
Recognition of exploration expenditures
(1,778) -
Unrecognized deferred tax assets
3,064
4,313
Provision for incom e taxes
(2,502) 1,536
13. TRADE AND OTHER RECEIVABLES
Current
Trade receivables (i)
Value added tax ("VAT") recoverable (ii)
Other receivables (iii)
As at Decem ber 31, 2015
As at Decem ber 31, 2014
625
16
13,187
-
1,889
1,546
Total trade and other receivables
15,701
1,562
(i)
(ii)
(iii)
Trade receivables relate to gold and silver shipments made prior to year end that were settled after year end.
Value added tax (“VAT”) is levied at a rate of 18 percent on supply of goods and service and is recoverable on the
majority of purchases in Senegal. Non-recoverable value added tax is expensed to net profit. The Company was
previously exempt from VAT during the tax holiday in Senegal. See subsequent events Note 36.
Other receivables primarily include receivables from suppliers for services, materials and utilities used at the Sabodala
gold mine, a $0.4 million receivable related to the sale of exploration rights (2014: $nil) and $0.1 million of Canadian sales
tax refunds as at December 31, 2015 (2014: $0.5 million).
2015 ANNUAL REPORT 61
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
14. 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
15. OTHER ASSETS
Current
Prepayments (i)
Security deposit (ii)
Advanced royalty (iii)
Financial derivative assets
VAT certificates received (iv)
Available for sale financial assets
Total other current assets
Non-current
Advanced royalty (iii)
Intangible assets
Total other non-current assets
Total other assets
As at Decem ber 31, 2015
As at Decem ber 31, 2014
1,948
6,025
4,075
7,088
18,845
18,463
24,868
31,576
1,881
2,535
28,981
31,178
1,799
1,350
32,661
35,063
57,529
66,639
106,898
91,057
164,427
157,696
As at Decem ber 31, 2015
As at Decem ber 31, 2014
4,129
5,607
1,500
1,500
3,338
1,885
41
-
373
-
- 3
9,381
8,995
8,530
7,675
171
242
8,701
18,082
7,917
16,912
(i)
(ii)
(iii)
(iv)
As at December 31, 2015, prepayments include $3.2 million (2014 - $3.0 million) of advances to vendors and contractors
and $0.9 million for insurance (2014 - $1.3 million).
The security deposit represents security for payment under the maintenance contract.
As at December 31, 2015, the Company has recorded $3.3 million in other current assets and $8.5 million in other non-
current assets as advanced royalty payments to the Government of Senegal. In total, the Company had recorded $10.0
million related to the OJVG in 2014 and $4.2 million related to the Gora deposit in the first quarter of 2015. The advanced
royalties are expensed to net profit based on actual production from the former OJVG and Gora deposits. During the year
ended December 31, 2015, the Company expensed $1.9 million as amortization of OJVG and Gora advanced royalties
(2014: $0.4 million). The advanced royalty recorded within other current assets is based on the expected production from
the OJVG and Gora deposits over the next year and the remaining balance is recorded within other non-current assets.
Refer to Note 20.
At December 31, 2015, the Company received VAT refunds in the form of VAT certificates. These certificates are convertible
into cash at local banks or may be issued directly to the Company’s suppliers to reduce future VAT collections or other taxes
payable by the Company. See subsequent events Note 36.
16. IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS
In accordance with our accounting policies and processes, goodwill is evaluated annually in November for impairment.
In addition, at each reporting period, the Company assesses whether there is an indicator of impairment with respect
to the other long-lived assets. When there is an indicator of impairment, a formal estimate of the recoverable amount
is made which is considered to be the higher of the fair value less costs of disposal (“FVLCD”) and value in use (“VIU”).
An impairment loss is recognized when the carrying amount exceeds the recoverable amount.
2015 ANNUAL REPORT 62
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
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 determined 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 generating 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.
Summary of Impairments
As a result of the analysis performed on the asset carrying values for the year ended December 31, 2015 impairment
losses of $77.9 million (net of tax effects) were recognized in the Consolidated Statements of Comprehensive Income.
The key trigger for the impairment test was primarily the effect of changes in the future estimate of gold prices. The
impairment charge was used first to reduce the carrying value of the goodwill which arose during the purchase of the
OJVG and then pro-rata against the remaining assets of the cash generating unit (“CGU”) based on carrying values of
property, plant and equipment and mine development expenditures, provided that the impairment did not reduce the
carrying amount of any asset below its fair value less cost to sell (“FVLCD”).
The following impairment losses were recognized:
Property, plant and equipment
Mine development expenditures
Goodw ill
Gross Im pairm ent Charge
Deferred income tax impact
Net Im pairm ent Charge
Key Assumptions
2015
19,352
28,872
41,776
90,000
(12,056)
77,944
This assessment requires the use of estimates and assumptions such as long-term commodity prices, discount rates,
exchange rates, future capital requirements, exploration potential and operating performance.
The determination of FVLCD is most sensitive to the following key assumptions:
• Commodity prices
• Discount rates
• Exchange rates
Commodity prices: Forecast commodity prices are based on management’s estimates and long-term views of global
supply and demand, building on past experience of the industry and consistent with external sources. These prices
were adjusted to arrive at appropriate consistent price assumptions. These prices are reviewed at least annually.
Estimated long–term gold prices that have been used to estimate future revenues for both the current year and the
prior year, are as follows:
Assumption
Gold price ($ per ounce) - 2015
Gold price ($ per ounce) – 2014
2015
2016
2017
2018+
1,100
1,100
1,150
1,200
1,200
1,300
1,300
1,300
Discount rates: In calculating the FVLCD, a real pre-tax discount rate of 10.5 percent was applied to the pre-tax cash
flows expressed in real terms (7.5% post-tax). This discount rate is derived from the Company’s pre-tax weighted
average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU in order to
determine the pre-tax rate. The WACC takes into account both the cost of debt and equity. The cost of equity is derived
from the expected return on investment by the Company’s investors. The cost of debt is based on its interest-bearing
borrowings the Company is obliged to service.
2015 ANNUAL REPORT 63
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Exchange rates: Foreign exchange rates are estimated with reference to external market forecasts and updated at
least annually. Estimated Euro/USD exchange rates that have been used to estimate future costs for both the current
year and the prior year, are as follows.
Assumption
Euro:USD exchange rate - 2015
Euro:USD exchange rate – 2014
2015
1.08:1
1.20:1
2016
1.08:1
1.20:1
2017
1.10:1
1.20:1
2018
1.15:1
1.20:1
2019+
1.20:1
1.20:1
Any variation in the key assumptions above would either result in further impairment or lead to a reversal of impairment.
Impairment losses booked will be tested in future periods for possible reversal when an event or change in circumstance
indicates the impairment may have reversed. If it has been determined that the impairment has reversed, the carrying
amount of the asset must be increased to its recoverable amount to a maximum of the carrying value that would have
been determined had no impairment loss been recognized in prior periods.
17. PROPERTY, PLANT AND EQUIPMENT
Cost
Balance as at January 1, 2014
Additions
Disposals
Other
Transfer
Balance as at Decem ber 31, 2014
Additions
Disposals
Other
Transfer
Buildings and
property
im provem ents
Plant and
equipm ent
Office
furniture
and
equipm ent
Motor
vehicles
Mobile
equipm ent
Capital w ork
in progress
Total
45,035 256,928 2,191 3,031 83,014 4,503 394,702
- 1,231 - - 159 3,661 5,051
- - - (5)
- - (5)
- - - - (351)
- 3,392 45 - - (3,437) -
- (351)
45,035 261,200 2,231 3,031 83,173 4,727 399,397
33 8,732 24 - 2,474 25,842 37,105
- (425)
- (394)
- 34 - - - - 34
6,035 6,882 253 788 - (13,958) -
- (1)
(30)
Balance as at Decem ber 31, 2015
51,103 276,454 2,478 3,819 85,646 16,611 436,111
Accum ulated depreciation and
im pairm ent charges
Balance as at January 1, 2014
Disposals
Depreciation expense
Balance as at Decem ber 31, 2014
Disposals
Impairment charges
Depreciation expense
- - (4)
19,216 106,085 1,444 2,001 46,416 - 175,162
- - - (4)
2,230 13,515 358 339 9,364 - 25,806
- (315)
21,446 119,600 1,798 2,340 55,780 - 200,964
- - - (334)
3,111 16,241 - - - - 19,352
1,892 12,269 231 376 7,935 - 22,703
(19)
Balance as at Decem ber 31, 2015
26,449 147,795 2,010 2,716 63,715 - 242,685
Net book value
Balance as at Decem ber 31, 2014
23,589 141,600 433 691 27,393 4,727 198,433
Balance as at Decem ber 31, 2015
24,654 128,659 468 1,103 21,931 16,611 193,426
Additions made to property, plant and equipment during the year ended December 31, 2015 relate mainly to
infrastructure, road development and additional mining equipment for Gora and expenditures for the mill optimization
project.
Depreciation of property, plant and equipment was $22.7 million for the year ended December 31, 2015 (2014: $25.8
million).
As part of the annual impairment review of asset carrying values, a charge of $19.4 million was recorded in relation to
Property, Plant and Equipment as at December 31, 2015. Refer to Note 16 for assumptions used in the impairment
calculation.
2015 ANNUAL REPORT 64
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
18. MINE DEVELOPMENT EXPENDITURES
Developm ent and
exploration costs
Deferred stripping
assets
Total
Cost
Balance as at January 1, 2014
179,402 83,196 262,598
Acquisition of OJVG
109,207 -
109,207
Additions incurred during the period
7,336 6,633 13,969
Balance as at Decem ber 31, 2014
Additions incurred during the period
Balance as at Decem ber 31, 2015
295,945 89,829 385,774
8,804 15,921 24,725
304,749 105,750 410,499
Accum ulated depreciation and im pairm ent
charges
Balance as at January 1, 2014
57,445 23,548 80,993
Depreciation expense
15,151 28,911 44,062
Balance as at Decem ber 31, 2014
72,596 52,459 125,055
Depreciation expense
Impairment charges
13,840 5,686 19,526
23,538 5,334 28,872
Balance as at Decem ber 31, 2015
109,974 63,479 173,453
Carrying am ount
Balance as at Decem ber 31, 2014
Balance as at Decem ber 31, 2015
223,349 37,370 260,719
194,775 42,271 237,046
Capitalized m ine developm ent additions
Deferred stripping costs
Capitalized mine development - Gora
Capitalized mine development - Golouma
Capitalized reserve development
Other
Total capitalized m ine developm ent additions
As at Decem ber 31, 2015 As at Decem ber 31, 2014
15,921 6,634
1,863 37
1,272 -
4,855 4,020
814 3,278
24,725 13,969
Mine development expenditures represent development costs in relation to the Sabodala deposit, Gora satellite deposit
and development costs for the former OJVG deposits.
Acquisition of the OJVG represents the fair value of the mine development expenditures acquired through the
acquisition of Oromin and the remaining interests in the OJVG.
The OJVG’s projects (Masato, Golouma, and Kerekounda) were considered to be in the development stage when they
were acquired on January 15, 2014, the effective date of the OJVG acquisition. The Masato project was advanced to
the production stage in September 2014.
Depreciation of capitalized mine development of $19.5 million was expensed as cost of sales for year ended December
31, 2015 (2014: $44.1 million).
As part of the annual impairment review of asset carrying values, a charge of $28.9 million was recorded in relation to
Mine Development Expenditures as at December 31, 2015. Refer to Note 16 for assumptions used in the impairment
calculation.
2015 ANNUAL REPORT 65
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
19. DEFERRED INCOME TAX ASSETS/(LIABILITIES)
The deferred income tax assets/(liabilities) balance reported on the balance sheet is comprised of the following
temporary differences:
Deferred tax assets
Unrealized foreign exchange
17,718
-
Mining and Property, plant, and equipment
5,449
12,202
AS at Decem ber 31, 2015
AS at Decem ber 31, 2014
Deferred tax liabilities
Other
(69) (323)
Net deferred tax assets
23,098
11,879
Unrecognized Deferred Tax Assets
Deferred income tax assets such as tax loss carry-forwards, property, plant and equipment, share issuance costs and
transaction costs are recognized as assets to the extent that the realization of the related tax benefit through future
taxable profits is probable.
Deferred income tax assets not recognized
Share issuance and transaction costs
Loss carry forw ards
Property, plant and equipment
Other
Deferred incom e tax assets not recognized
For the years ended Decem ber 31
2015
468
15,051
769
818
17,106
Deferred income tax liabilities have not been recognized for the withholding tax and other taxes on the unremitted
earnings of certain subsidiaries as these amounts will not be distributed in the foreseeable future. Unremitted earnings
totalled $329,456 at December 31, 2015.
As at December 31, 2015, the tax losses not recognized by the Company and their associated expiry dates are as
follows:
Tax losses - gross
Canada
Mauritius
Expiry Date
2015
2014
For the years ended Decem ber 31
2030 - 2035
54,594
44,760
2016 - 2020
3,980
3,794
58,574
48,554
Tax benefit at tax rate of 26.5%
15,522
12,867
Impact of foreign tax rates
(471) (582)
Total tax loss assets not recognized
15,051
12,285
2015 ANNUAL REPORT 66
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
20. TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Sundry creditors and accrued expenses
Government royalties (ii)
Amounts payable to Republic of Senegal (iii) (iv) (vii)
Contingent consideration (vi)
As at Decem ber 31, 2015
As at Decem ber 31, 2014
22,903 19,436
14,900 8,493
11,054 12,296
13,155 13,684
533 -
Total current trade and other payables
62,545 53,909
Non-Current
Amounts payable to Republic of Senegal (v)
Contingent consideration (vi)
Total other non-current liabilities
Total trade and other payables
7,565 14,311
3,533 4,088
11,098 18,399
73,643 72,308
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Trade payables are comprised of obligations by the Company to suppliers of goods and services. Terms are generally 30
to 60 days.
Government royalties are accrued based on the mine head value of the gold and related substances produced at a rate of
5 percent of sales (6,635 million XOF). Beginning in 2015, we had anticipated transitioning to quarterly payments of
royalties, however with the weaker gold price, that transition has been deferred. During the year ended December 31, 2015,
a payment of $11.0 million for 2014 royalties was paid to the Republic of Senegal.
A reserve payment is payable to the Republic of Senegal based on $6.50 for each ounce of new reserves until December
31, 2012. As at December 31, 2015, $1.9 million remains accrued as a current liability.
The Company has agreed to advance accrued dividends to the Republic of Senegal in relation to its interest in Sabodala
Gold Operations. For the year ended December 31, 2015, $7.8 million has been accrued based on net sales revenue for
each of the twelve months ended December 31, 2013 and December 31, 2014. No additional amounts are owing beyond
2014.
The Company agreed to establish a social development fund which involves making a payment of $15.0 million to the
Republic of Senegal at the end of the operational life. It is recorded at its net present value of $7.6 million. Due to a change
in the expected payment date from 2023 to 2029, the Company recorded a recovery of $2.8 million within Other
(Income)/Expenses.
The Company acquired Badr’s 13 percent carried interest in the OJVG for cash consideration of $7.5 million and further
contingent consideration which will be based on realized gold prices and increases to the OJVG’s mining reserves through
2020, of which $3.8 million was accrued upon finalization of the purchase price allocation in 2014. As at December 31,
2015, $0.5 million has been recorded as a current liability and $3.5 million has been recorded as a non-current liability and
is recorded at its net present value (2014: $4.0 million in non-current contingent liabilities).
Pursuant to the completion of the acquisition of the OJVG in 2014, the Company is required to make initial payments totalling
$10.0 million related to the waiver of the right for the Republic of Senegal to acquire an additional equity interest in the
OJVG. As at December 31, 2015, $3.5 million remains to be paid and has been accrued as a current liability.
21. BORROWINGS
Current
Equipment finance facility
Deferred financing costs
Total current borrow ings
Non-Current
Revolving credit facility
Deferred financing costs
As at Decem ber 31, 2015
As at Decem ber 31, 2014
-
4,192
-
(246)
-
3,946
15,000 -
(1,550) -
Total non-current borrow ings
13,450 -
Total borrow ings
13,450 3,946
2015 ANNUAL REPORT 67
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
a. Macquarie Equipment Finance Facility
On February 18, 2015, the Company retired the outstanding $4.2 million balance of its equipment finance facility with
Macquarie ("Equipment Facility").
b. Senior Secured Revolving Credit Facility
During the third quarter, the Company closed a previously announced $30.0 million Revolver Facility with Société
Générale which will be used for general corporate purposes and working capital needs. The Revolver Facility carries
an interest rate of LIBOR plus 5.0 percent and matures on June 30, 2017, with any unused facility subject to a
commitment fee of 1.75 percent. In August, the Company drew down $15.0 million from the Revolver Facility for
working capital needs. The Revolver Facility is subject to covenants that require the Company to maintain a current
ratio of not less than 1.10:1; total debt to EBITDA of not greater than 2:1; historic debt coverage ratio of greater than
2.5:1 and a tangible net worth of not less than $300 million. The Company was compliant with all covenants for the
year.
22. DEFERRED REVENUE
On January 15, 2014, the Company completed a streaming transaction with Franco-Nevada. The Company is required
to deliver 22,500 ounces annually of gold over the first six years followed by 6 percent of production from the Company’s
existing properties, including those of the OJVG, thereafter, in exchange for a deposit of $135.0 million.
For ounces of gold delivered to Franco-Nevada under the streaming transaction, Franco-Nevada will pay in cash the
prevailing spot price of gold at the date of delivery on 20 percent of the ounces delivered. For the remaining 80 percent
of the ounces delivered to Franco-Nevada, the deferred revenue balance will be drawn down based on the prevailing
spot price for gold. Once the deferred revenue has been drawn down to $nil, the Company will record sales of 20
percent of spot price, equal to the cash payments, for 6 percent of ounces produced.
The initial term of the contract is 40 years and the deposit bears no interest. For accounting purposes, the agreement
is considered a contract for the future delivery of gold ounces at the contracted price. The up-front $135.0 million
payment is accounted for as a prepayment of yet-to-be delivered ounces under the contract and is recorded as deferred
revenue.
During the year ended December 31, 2015, the Company delivered 24,375 ounces of gold to Franco-Nevada (2014:
20,625 ounces) and recorded revenue of $28.3 million, consisting of $5.6 million received in cash proceeds and $22.7
million recorded as a reduction of deferred revenue. (2014: revenue of $26.3 million, consisting of $5.3 million received
in cash proceeds and $21.0 million recorded as a reduction of deferred revenue).
Due to the timing of shipment schedules near 2014 year end, the delivery of 1,875 ounces of gold for the month of
December 2014 was not received by Franco-Nevada until early January 2015. The transaction with Franco-Nevada
permits for the delivery of payable gold for up to five business days following the month end.
Balance as at January 1, 2014
Deposit received
Amortization of deferred revenue
Balance as at Decem ber 31, 2014
Amortization of deferred revenue
Balance as at Decem ber 31, 2015
Current
Non-Current
Total deferred revenue
Am ount
-
135,000
(21,002)
113,998
(22,653)
91,345
As at Decem ber 31, 2015
As at Decem ber 31, 2014
19,155 21,814
72,190 92,184
91,345
113,998
2015 ANNUAL REPORT 68
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
23. PROVISIONS
Current
Employee benefits (i)
As at Decem ber 31, 2015
As at Decem ber 31, 2014
1,847 1,654
Cash settled share-based compensation (iii)
741 282
Total current provisions
2,588 1,936
Non-Current
Mine restoration and rehabilitation (ii)
26,962 15,726
Employee benefits (i)
837 711
Cash settled share-based compensation (iii)
437 267
Total non-current provisions
28,236 16,704
Total provisions
30,824 18,640
(i)
(ii)
(iii)
The current provisions for employee benefits include $1.0 million accrued vacation and $0.7 million long service leave
entitlements for the period ended December 31, 2015 (2014 - $1.0 million and $0.7 million). The non-current provisions for
employee benefits include $0.8 million accrued vacation (2014 - $0.7 million).
The rehabilitation provision represents the present value of rehabilitation costs relating to the mine which are expected to
be incurred up to 2029, the current end of mine estimate. The provision has been created based on estimates and
assumptions which management believe are a reasonable basis to estimate future liability. The estimates are reviewed
regularly to take into account any material changes to the rehabilitation work required. In 2015 an updated study was
performed by a third party which resulted in a discounted provision of $27.0 million. Actual rehabilitation costs will ultimately
depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the
relevant time. The increase in the rehabilitation provision of $11.2 million compared to the prior year reflects a $1.1 million
impact from the expanded mining activities in 2015 (2014 - $1.4 million) with respect to the Masato and Gora pits as well
as $10.1 million to align with the updated study (2014 – nil). $0.1 million unwinding of the net present value discount (2014
- $0.2 million) was offset by $0.1 million in rehabilitation costs incurred during the year (2014 – nil).
The provision for cash settled share-based compensation represents the amortization of the fair value of the fixed bonus
plan units and the amortization of the fair value of the RSUs and DSUs. Please see Note 32 for further details.
24. ISSUED CAPITAL
Num ber of shares
Am ount
Balance as at January 1, 2014
316,801,091
342,470
Equity offering issuance
Less: Share issue costs
36,000,000
27,274
- (1,907)
Balance as at January 1, 2015
352,801,091
367,837
Equity offering issuance
Less: Share issue costs
39,200,000
17,454
- (117)
Balance as at Decem ber 31, 2015
392,001,091
385,174
During the year, the Company completed a non-brokered private placement with Mr. David Mimran, the CEO of Grands
Moulins d'Abidjan and Grands Moulins de Dakar, one of the largest producers of flour and agri-food in West Africa.
Pursuant to the terms of the Offering, Tablo Corporation, a Mimran family company, has been issued 39,200,000
common shares of Teranga at a price of CDN$0.58 per common share for gross proceeds of $17.5 million.
On May 1, 2014, the Company closed on an offering of 36,000,000 common shares at a price of C$0.83 per share for
gross proceeds of $27.3 million. Net proceeds were $25.4 million after consideration of underwriter fees and expenses
totaling approximately $1.9 million.
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
2015 ANNUAL REPORT 69
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
conversion rights attached to the common shares. All common shares, when issued, are and will be issued as fully paid
and non-assessable shares without liability for further calls or to assessment.
25. EARNINGS PER SHARE (EPS)
Basic EPS (US$)
Diluted EPS (US$)
Basic EPS:
For the years ended Decem ber 31,
2015
2014
(0.14)
0.05
(0.14)
0.05
Net profit/(loss) used in the calculation of basic EPS
Weighted average number of common shares for the
purposes of basic EPS (‘000)
Weighted average number of common shares outstanding
for the purpose of diluted EPS (‘000)
(50,543)
17,776
360,211
340,867
360,211
340,867
The determination of weighted average number of common shares for the purpose of diluted EPS excludes 15.5 million
and 21.5 million shares relating to share options that were anti-dilutive for the years ended December 31, 2015 and
December 31, 2014, respectively.
26. COMMITMENTS FOR EXPENDITURES
a. Capital Expenditure Commitments
During the year ended December 31, 2015, the Company entered into various capital purchase obligations related to
the mill optimization and other projects. As at December 31, 2015, total future purchase obligations related to these
projects were approximately $10.7 million.
b. Sabodala Gold Operations (“SGO”), Sabodala Mining Company (“SMC”) and the OJVG (“OJVG”)
Operating Commitments
The Company has the following operating commitments in respect of the SGO, SMC and the OJVG:
• 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 for SGO.
• Pursuant to the completion of the acquisition of the OJVG, the Company is required to make initial payments
totaling $10.0 million related to the waiver of the right for the Republic of Senegal to acquire an additional
equity interest in the exploration licenses converted to mine licenses when the ore is processed through the
Sabodala mill. The initial payment is to be used to finance social projects in the mine site region, which are
determined by the Republic of Senegal and will be paid either directly to suppliers for the completion of specific
projects or to specified ministries of the Republic of Senegal. An additional payment will become payable
when the actual cumulative production from the OJVG, net of mining royalties, multiplied by the Company’s
weighted average gold prices, multiplied by 1 percent, exceeds the initial payments.
• Pursuant to the Company’s Mining Concession, $1.2 million is payable annually for community projects and
infrastructure to support local communities surrounding the Company’s operations and social development of
local authorities in the surrounding Kedougou region.
•
•
•
•
$350 thousand is payable annually for training of Directorate of Mines and Geology officers and Mines Ministry
and $30 thousand is payable annually for logistical support of the territorial administration of the region for
SGO.
$250 thousand is payable annually for a forestry protocol to the Ministry of Environment for the period of 5
years.
$925 thousand is payable annually for additional reserves until 2016 ($3.7 million in total for the period from
2013 to 2016).
$112 thousand is payable annually as institutional support for the exploration licenses.
2015 ANNUAL REPORT 70
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
•
$200 thousand is payable annually to a maximum of $1.0 million over 5 years for community projects located
around the Gora deposit.
27. CONTINGENT LIABILITIES
a. Settled and outstanding tax assessments
Management anticipates both the 2011 tax assessment of $6 million and the January 2015 tax assessment of $3 million
to be settled in the near term with no liabilities owing by SGO.
b. Government Payments
In connection with the Global Agreement, the Company has agreed to advance approximately $13.2 million of accrued
dividends in respect of its 10 percent minority interest between 2013 and 2015. In 2013, the Company made a payment
of $2.7 million with a further payment of $2.7 million required once drilling activities recommence at Niakafiri. As at
December 31, 2015, $7.8 million has been accrued however payment has been deferred due to weak gold prices.
28. EXPLORATION LICENSES AND JOINTLY CONTROLLED OPERATIONS AND ASSETS
The Company has exploration licenses and is an investee in the following jointly controlled operations and assets:
Nam e of venture
Principal activity
Dembala Berola
Massakounda
Bransan
Heremakono
Sounkounkou
Bransan Sud
Sabodala Ouest
Saiansoutou
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Interest
2015
%
100
100
100
100 (i)
100 (i)
100
100
100
(i)
The joint venture partner of the exploration license has elected to take a 1.5 percent net smelter royalty (the “Royalty”) on
all currently identified targets including the Gora project in exchange for its fully participatory 20 percent interest. The joint
venture partner retains a 20 percent participatory right for any new exploration targets identified or to elect the Royalty.
2015 ANNUAL REPORT 71
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
29. CONTROLLED ENTITIES
Controlled entities consolidated
Teranga Gold B.V.I. Corporation
Sabodala Gold (Mauritius) Limited
SGML (Capital) Limited
Oromin Explorations Limited (i)
Sabodala Holding Limited (i)
Subsidiaries of Sabodala Gold (Mauritius) Limited:
Sabodala Mining Company SARL
Sabodala Gold Operations SA
Subsidiaries of Oromin Explorations Limited:
Sabodala Holding Limited (i)
Oromin Joint Venture Group Limited (i)
Subsidiaries of Teranga Gold B.V.I. Corporation:
Oromin Joint Venture Group Limited (i)
Country of
Incorporation
Percentage ow ned
2015
British Virgin Islands
100
Mauritius
Mauritius
Canada
100
100
100
British Virgin Islands
100
Senegal
Senegal
100
90
British Virgin Islands
100
British Virgin Islands
43.5
British Virgin Islands
56.5
(i)
The Company is in the process of reorganizing its existing corporate structure for the purposes of simplification. The
reorganization is underway and expected to be completed during the first half of 2016.
30. CASH FLOW INFORMATION
a. Change in working capital
Net change in w orking capital other than inventory
For the years ended Decem ber 31,
Changes in w orking capital other than inventory
(Increase)/decrease in trade and other receivables
Decrease/(increase) in other assets
Decrease in trade and other payables
Increase/(decrease) in provisions
Increase in current income taxes payable
Net change in w orking capital other than inventory
b. Cash balance subject to liquidity covenant
2015
(13,766)
1,251
(5,466)
(294)
8,717
(9,558)
2014
6,915
(293)
(9,584)
1,225
-
(1,737)
As part of the streaming transaction with Franco-Nevada, the Company is required to maintain a minimum consolidated
cash balance of $15.0 million.
31. FINANCIAL INSTRUMENTS
The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:
a. Categories of financial instruments
As at December 31, 2015 and 2014, the Company’s financial instruments consisted of cash and cash equivalents,
trade and other receivables, trade and other payables and borrowings.
The following table illustrates the classification of the Company’s financial instruments, other than cash and cash
equivalents, as at December 31, 2015 and 2014:
2015 ANNUAL REPORT 72
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Financial assets:
Loans and receivables
Trade and other receivables
Financial derivative assets
Financial liabilities:
Other financial liabilities at amortized cost
Trade and other payables
Current income tax liabilities
Borrow ings
b. Commodity market risk
As at Decem ber 31, 2015
As at Decem ber 31, 2014
15,701
1,562
41 -
74,821
72,857
8,685 -
13,450
3,946
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 also exposed to movements in the gold price.
c. Foreign currency risk management
The Company has certain financial instruments denominated in CFA Franc, EUR, CAD, AUD and other currencies.
Consequently, the Company is exposed to the risk that the exchange 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.
The carrying amounts of the Company’s foreign currency denominated monetary assets and liabilities are as follows:
CFA Franc (XOF)
13,819 6,422
64,861 47,498
Financial Assets
Financial Liabilities
Decem ber 31, 2015 Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2014
EUR
CAD
AUD
Other
663 7,687
1,433 1,184
590 1,043
1,532 1,027
43 298
484 270
1 176
644 763
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 currency denominated monetary items and adjusts their translation at year end for a 10 percent change in the
functional currency rates. A negative number indicates a decrease in profit or equity where the functional currency
strengthens by 10 percent against the relevant currency for monetary assets and a positive number indicates an
increase in profit or equity where the functional currency strengthens 10 percent against the relevant currency for
monetary liabilities. For a 10 percent weakening of the USD against the relevant currency, there would be an equal and
opposite impact on profit or equity.
2015 ANNUAL REPORT 73
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Financial Assets
Financial Liabilities
As at Decem ber 31,
2015
As at Decem ber 31,
2014
As at Decem ber 31,
2015
As at Decem ber 31,
2014
10% Strengthening of
functional currency
CFA Franc (XOF) Im pact
Gain or (loss)
(1,382) (642) 6,486 4,750
EUR Im pact
Gain or (loss)
CAD Im pact
Gain or (loss)
AUD Im pact
Gain or (loss)
(66) (769) 143 118
(59) (104) 153 103
(4) (30) 48 27
d.
Interest rate risk management
Interest rate risk is the risk that the value of a financial instrument 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 Company’s financial instruments which are exposed to interest
rate risk as at December 31, 2015 and 2014:
Financial assets
Cash and cash equivalents
Financial liabilities
Borrow ings
As at of Decem ber 31, 2015 As at of Decem ber 31, 2014
44,436 35,810
13,450 3,946
The Company’s interest rate on its borrowings is calculated at LIBOR plus 5.0 percent margin on the Senior Secured
Revolving Credit Facility.
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:
Financial Assets
Financial Liabilities
As at Decem ber 31,
2015
As at Decem ber 31,
2014
As at Decem ber 31,
2015
As at Decem ber 31,
2014
Profit or (loss)
190
151
(38) (112)
e. 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
jurisdictions. 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.
2015 ANNUAL REPORT 74
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
The Company does not have significant credit risk exposure on accounts receivable as gold sales are executed with
either AAA rated banking institutions or established gold metal merchants with access to significant credit lines. Gold
production is sold into the spot market and proceeds from the sale are deposited into the Company’s bank account.
The Company is exposed to the credit risk of Senegalese and French banks that disburse cash on behalf of its Senegal
subsidiaries. The Company manages its Senegalese and French bank credit risk by centralizing custody, control and
management of its surplus cash resources at the corporate office and only transferring money to its subsidiary based
on immediate cash requirements, thereby mitigating exposure to Senegalese 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 monitoring 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 requirements to ensure it has sufficient cash to meet operational
needs while maintaining sufficient headroom in its accounts so that the Company does not breach any of its covenants.
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 Governments of Canada.
Liquidity tables
The following tables detail the Company’s remaining contractual 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 will be required to pay. The table includes both interest and principal cash flows.
Weighted
average effective
interest rate %
Due on dem and
Due one to three
m onths
Due betw een
three m onths to
one year
Due one to five
years
Financial Liabilities
Decem ber 31, 2015
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Fixed interest rate instruments
Total
Decem ber 31, 2014
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Variable interest rate instruments
Total
-
5.34%
3.08%
7.50%
-
7.77%
3.08%
7.50%
41,316 2,764 16,976 7,793
- - - 15,000
- 925 925 -
- 534 - 3,840
41,316 4,223 17,901 26,633
27,927 - 17,262 11,306
- 3,194 998 -
- - 925 925
- - - 4,474
27,927 3,194 19,185 16,705
Management considers that the Company has adequate current assets and forecasted cash flow from operations to
manage liquidity risk arising from settlement of current and non-current liabilities.
h. Fair value of financial instruments
The Company’s trade and other receivables, and trade and other payables are carried at amortized cost, which
approximates fair value. Cash and cash equivalents and available-for-sale financial assets are measured at fair value.
Borrowings are based on discounted future cash flows using discount rates that reflect current market conditions for
this financial instrument with similar terms and risks. Such fair value estimates are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions. Potential transaction costs have also not
been considered in estimating fair value.
Financial instruments carried at amortized cost on the consolidated statement of financial position are as follows:
2015 ANNUAL REPORT 75
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Financial asets
Financial derivative assets
Financial liabilities
Borrow ings
As at Decem ber 31, 2015
As at Decem ber 31, 2014
Carrying am ount
Fair value
Carrying am ount
Fair value
41 41
-
-
13,450 15,000 3,946 4,192
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction
between 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 financial 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 active
markets are not available, the Company maximizes the use of observable inputs within valuation 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 statement of
financial position and the level of the inputs used to determine those fair values in the context of the hierarchy as defined
above:
As at Decem ber 31, 2015
As at Decem ber 31, 2014
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Financial Assets
Cash and cash equivalents
Total
Financial Liabilities
Borrow ings
Cash settled share-based compensation
Total
44,436
- - 35,810
-
44,436
- - 35,810
-
-
-
-
13,450
1,063
14,513
-
115
115
-
-
-
3,946
-
3,946
-
-
-
-
-
32. SHARE BASED COMPENSATION
The share-based compensation expense for the year ended December 31, 2015 totaled $1.8 million (2014: $0.9
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 Company and its subsidiaries.
The vesting of options is determined by the Board of Directors at the date of grant. The term of options granted under
the Plan is at the discretion of the board of directors, provided 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
payable 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, 2015 and 2014, a total of 3,855,000 and 130,000 common share stock options,
respectively, were granted to directors and employees. The exercise price of new stock options granted during the
current year was determined using a volume weighted average trading price of the Company’s shares for the 5-day
period ended March 31, 2015.
During the years ended December 31, 2015 and 2014, no stock options were exercised and a total of 2,039,724 and
2,397,361 options were forfeited, respectively. As at December 31, 2015, there were 15,539,165 options outstanding
2015 ANNUAL REPORT 76
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
out of which 12,670,177 options were vested and 2,868,988 are unvested. During the years ended December 31, 2014
and 2015 no stock options were exercised.
In 2015, 7,746,600 common share stock options related to the acquisition of Oromin expired with no options exercised
prior to the expiry.
The following stock options were outstanding as at December 31, 2015:
Option series
Num ber
Grant date
Expiry date Exercise price (C$)
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
5,320,000
1,200,000
675,000
25,000
317,500
360,000
Granted on December 20, 2011
1,075,000
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 May 14, 2013
Granted on June 3, 2013
Granted on May 1, 2014
Granted on June 4, 2014
Granted on March 31, 2015
Granted on March 31, 2015
540,000
225,000
50,000
600,000
600,000
80,000
140,000
200,000
50,000
40,000
120,000
50,000
16,665
2,250,000
1,605,000
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
14-May-13
03-Jun-13
01-May-14
04-Jun-14
31-Mar-15
31-Mar-15
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
14-May-23
03-Jun-23
01-May-24
04-Jun-24
31-Mar-20
31-Mar-20
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
3.00
0.64
0.64
FV at grant
date (C$)
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
0.06
0.04
0.10
0.02
0.35
0.30
As at December 31, 2015, approximately 23.7 million (2014: 13.8 million) options were available for issuance under
the Plan.
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
“measurement date”), the entire fair value of the vesting options is recognized immediately on the measurement date.
Of the 15,539,165 common share stock options issued and outstanding as at December 31, 2015, 2,868,988 are
unvested of which 2,831,488 vest over a three-year period and 37,500 vest based on achievement of certain
milestones. 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, 2015, 11,684,165 and 3,855,000 share options had a contractual life of ten years and five years
at issuance, respectively.
Fair value of stock options granted
The fair value at the grant date was calculated using the Black-Scholes option pricing model with the following
assumptions:
2015 ANNUAL REPORT 77
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
Grant date share price
Weighted average fair value of aw ards
Exercise price
Range of risk-free interest rate
Volatility of the expected market price of share
Expected life of options (years)
Dividend yield
Forfeiture rate
For the years ended Decem ber 31,
2015
C$0.64
C$0.33
C$0.64
0.55%-0.77%
66.71%-67.28%
3.5-5.0
0%
5%-50%
2014
C$0.60-C$0.68
C$0.05
C$3.00
1.05%-1.28%
67.28%-68.30%
2.0-3.5
0%
5%-50%
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 share options during the year
The following reconciled the share options outstanding at the beginning and end of the year:
Balance as at January 1, 2014
Granted during the period
Forfeited during the period
Balance as at Decem ber 31, 2014
Granted during the period
Forfeited during the period
Expired during the period
Balance as at Decem ber 31, 2015
Number of options exercisable - December 31, 2014
Number of options exercisable - December 31, 2015
Num ber of options
Weighted average exercise
price
23,737,850
130,000
(2,397,361)
21,470,489
3,855,000
(2,039,724)
(7,746,600)
15,539,165
20,057,774
12,670,177
C$2.58
C$3.00
C$2.83-C$3.00
C$2.54
C$0.64
C$3.00
C$1.73
C$2.42
There were no options exercised during the years ended December 31, 2015 and December 31, 2014.
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 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 Toronto Stock
Exchange (“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.
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 common 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 Directors at the date of grant. The term of Units granted under
the Fixed Bonus Plan is at the discretion of the board of directors, provided that such term cannot exceed ten years
from the date that the Units are granted.
As at December 31, 2015, a total of 1,660,000 Units were outstanding (2014: 1,360,000 Units). During the twelve
months ended December 31, 2015, 300,000 Units were granted to one employee and no Units were forfeited or
exercised.
2015 ANNUAL REPORT 78
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
As at December 31, 2015, there were 1,660,000 Units outstanding that were granted on August 8, 2012 and March 31,
2015 with expiry dates ranging from March 31, 2020 through to February 24, 2022. Of the 1,660,000 Units outstanding
as at December 31, 2015, 1,360,000 Units have an exercise price of C$3.00 and 300,000 Units have exercise price of
C$0.64. The total outstanding Units have fair values at December 31, 2015 in the range of C$0.01 to C$0.23 per Unit.
The total fair value of the Units at December 31, 2015 is $0.1 million (December 31, 2014: $0.1 million).
The estimated fair values of the Units were amortized over the period in which the Units vest. Of the 1,660,000 Units
issued, 830,000 Units vested upon issuance, 340,000 Units vested on December 31, 2012, 340,000 Units vested on
December 31, 2013, 75,000 Units vested on December 31, 2015, and 75,000 Units vest on December 31, 2016.
Fair value of Units granted
The fair value of units granted was calculated using Black-Scholes option pricing model with the following assumptions:
Share price at the end of the period
Weighted average fair value of aw ards
Exercise price
Range of risk-free interest rate
Volatility of the expected market price of share
Expected life of options (years)
Dividend yield
Forfeiture rate
c. RSUs
For the years ended Decem ber 31,
2015
C$0.49
C$0.02-C$0.41
C$0.64 - C$3.00
0.48%-0.73%
66.71%-68.3%
2.0-5.0
0%
5%-50%
2014
C$0.46
C$0.01-C$0.09
C$3.00
1.00%-1.34%
66.71%-68.3%
2.0-5.0
0%
5%-50%
The Company introduced a RSU Plan for employees during the second quarter of 2014. RSUs are not convertible into
Company stock and simply represent a right to receive an amount of cash (subject to withholdings), on vesting, equal
to the product of i) the number of RSUs held, and ii) the volume weighted average trading price of the Company’s
shares for the five trading days prior to such date. RSUs will generally vest as to 50 percent in thirds over a three-year
period and as to the other 50 percent, in thirds upon satisfaction of annual production and cost targets.
During the twelve months of 2015, 3,055,000 RSUs were granted at a price of $0.64 per unit and 479,410 RSUs were
forfeited (2014: 2,343,487 RSUs granted, 436,532 forfeited). Of the 3,704,182 RSU’s outstanding at December 31,
2015, none were vested. As at December 31, 2015, $0.4 million of current RSU liability and $0.3 million of non-current
RSU liability have been recorded in the consolidated financial statement of financial position (2014: $0.1 million and
$0.2 million in current and non-current RSU liability respectively).
d. DSUs
The Company introduced a DSU Plan for non-executive directors during the second quarter of 2014. DSUs represent
a right for a non-executive director to receive an amount of cash (subject to withholdings), on ceasing to be a director
of the Company, equal to the product of (i) the number of DSUs held, and (ii) the volume weighted average trading
price of the Company’s shares for the five trading days prior to such date.
The Company granted 700,000 DSUs during the year ended December 31, 2015 at a price of C$0.64 per unit. Of the
1,245,000 DSUs outstanding at December 31, 2015, 545,000 DSUs were vested and no units were cancelled. As at
December 31, 2015, $0.4 million of current DSU liability has been recorded in the consolidated financial statement of
financial position (2014: $0.2 million).
2015 ANNUAL REPORT 79
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
33. SEGMENT REPORTING
The Company has one reportable operating segment under IFRS 8 Operating Segments.
Geographical information
The Company operates in Senegal (West Africa).
The following table discloses the Company’s revenue by geographical location:
For the years ended Decem ber 31
2015
2014
Republic of Senegal – revenue from gold and silver sales
224,620
260,588
Republic of Senegal – interest income
43
53
Canada
Total
(43) 30
224,620
260,671
The following is an analysis of the Company’s non-current assets by geographical location:
Republic of Senegal
Canada
Total
As at Decem ber 31, 2015 As at Decem ber 31, 2014
562,169
568,124
7,000
43,657
569,169
611,781
34. KEY MANAGEMENT PERSONNEL COMPENSATION
The Company considers key members of management to include the President and CEO, Vice Presidents, and the
General Manager, SGO & Vice President, Development Senegal.
The remuneration of the key members of management includes 7 members during the year ended December 31, 2015
and 8 members during the year ended December 31, 2014. The remuneration during the years ended December 31,
2015 and 2014 is as follows:
Salary and
Fees
Short term benefits
Non-Cash
Benefits
Cash Bonus
Cash settled share
based paym ents -
value vested
during the period
Equity settled share
based paym ents -
value vested during
the period
Options
Options
Total
For the year ended
Decem ber 31, 2015
Compensation
For the year ended
Decem ber 31, 2014
1,851
129
785 52
295
3,112
Compensation
2,326
125
935 82
250
3,718
2015 ANNUAL REPORT 80
CONSOLIDATED FINANCIAL STATEMENTS OF
TERANGA GOLD CORPORATION
DECEMBER 31, 2015
(in $000’s of United States dollars, except per share amounts)
35. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2015, there were transactions totaling $0.2 million between the Company and
director-related entities.
36. SUBSEQUENT EVENTS
a. Tax Assessment
Management anticipates both the 2011 tax assessment of $6 million and the January 2015 tax assessment of $3 million
to be settled in the near term with no liabilities owing by SGO.
b. Gold hedges
In February 2016, the Company entered into gold forward contracts with Société Générale to deliver 27,000 ounces
with settlement dates from March to August 2016 at an average price of $1,201 per ounce.
c. VAT exemption and VAT refunds
In February 2016, the Company received an exemption for the payment and collection of refundable VAT. This
exemption is governed by an amendment to our mining convention and is enforceable for the next 6 years, expiring on
May 2, 2022. The December 31, 2015 balance of $13.2 million is expected to be refunded over the balance of 2016.
2015 ANNUAL REPORT 81
ASX 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. This statement is of corporate governance
practises current as of the date thereof. Governance
information on Teranga is available on the Company’s
website at: www.terangagold.com.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
Board Mandate
• adopting measures
stakeholders; and
for
receiving
feedback
from
• 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
management 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 standing
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
Responsibility Committee. The Board will change the Board
committee structure and authorize and appoint other
committees as it considers appropriate.
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:
The Board may from time to time delegates 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.
• 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;
• delegations and general approval guidelines for
management;
• monitoring financial reporting and management;
• monitoring internal control and management
information systems;
• corporate disclosure and communications;
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
recommending
modifications to these Corporate Governance Guidelines for
consideration by the Board.
governance,
including
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
comprised entirely of directors determined by the Board to be
independent, except for the Corporate Social Responsibility
Committee which will be comprised of a majority of
independent directors. In addition, all members of the Audit
2015 ANNUAL REPORT 82
Committee will be financially literate and if required by
applicable laws, rules and regulations, at least one member
will be a financial expert. Membership and independence of
all committee members will be publicly disclosed.
After receipt of recommendations from the Corporate
Governance 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)
ensuring 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 evaluation
of the Chief Executive Officer (the “CEO”) and the Chief
Financial Officer (the “CFO”), and determination of the
compensation for the CEO, the CFO 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
assisting the Board in fulfilling its oversight responsibilities
with respect
financial policies and
strategies, including capital structure; (b) Teranga’s financial
risk management practices; and (c) proposed issues of
securities and utilization of financial instruments.
to: (a) Teranga’s
The responsibilities of the Technical, Safety and Environment
Committee 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) material technical commercial arrangements
regarding EPCM activities; (d) operating and production
plans for proposed and existing operating mines; (e) due
diligence in the development, implementation and monitoring
of systems and programs for management, and compliance
with applicable law related to health, safety, environment and
social responsibility; (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, and environmental responsibility.
The responsibilities of the Corporate Social Responsibility
Committee is to assist the Board in the due diligence of 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 CEO, the CFO and the
senior executives and,
the Committee’s discretion,
presents its conclusions and recommends any compensation
changes to the Board for consideration.
in
Diversity
While the Board of Directors has not adopted a specific
diversity policy at this time it has approved amendments to
both its Corporate Governance Guidelines as well as
Corporate Governance and Nominating Committee (the
“Committee”) Charter in 2014 to address the importance of
the identification and nomination of women directors, as well
as other characteristics,
to ensure an appropriate
representation of diversity of background and perspective at
the Board level.
The Corporate Governance Guidelines as well as the
Committee Charter were expanded to confirm and highlight
the
importance Teranga places on maintaining an
appropriate level of diversity. While the primary objectives of
the Committee are to ensure consideration of individuals who
are highly qualified, based on their talents, experience,
functional expertise and personal skills, character and
qualities, the Committee will balance these objectives with
the need to identify and promote individuals who are
reflective of diversity for nomination for election to the Board.
In particular, the Committee will consider the level of
representation of women and other diverse candidates on the
Board when making recommendations for nominees to the
Board.
2015 ANNUAL REPORT 83
team, paying specific attention
As noted above, the Board has expanded its governance
disclosure to confirm and reflect the importance of a diversity
its executive
of perspectives and backgrounds within
management
the
to
representation of women. The Company has always
maintained at least one woman within its relatively small
executive management team and is committed to maintaining
this minimum level of representation and expanding upon it
depending on the suitability. The Board and management
recognize the value brought by a diversity of perspectives
and background within the management team and have
made specific amendments to its governance practices to
ensure the level of women’s representation is a key factor
when the composition of the executive management team is
being considered.
Given an established Board and executive management
team in place with representation of women at both levels
Teranga has not adopted any specific targets with respect to
the representation of women. However it will continue to
promote its objectives through the initiatives set out in its
Corporate Governance Guidelines with a view to identifying
and fostering the development of a suitable pool of
candidates for nomination or appointment over time. The
Committee Charter has also been amended to require an
annual review of succession plans for the Chairman, CEO
and the executive management team of the Company
specifically taking into account the level of women and other
diverse candidates in each of these roles.
With respect to Teranga’s current organization:
•
•
of the 8 members of the Board of Directors, one is
female
2 of the most 5 senior management positions in the
corporate office are held by women including 1 of 4 vice
presidents;
• within the Corporate office, excluding executive officers,
approximately 50% of staff are female; and
• within the general workforce in Senegal, approximately
9% of employees, including expatriate personnel and
contractors are female.
The identity of all Board members is disclosed within this
Annual Report. Further details of Teranga’s workforce both
in its head office and on-site in Senegal can be found in the
Our People section of the 2014 Responsibility Report. An
update to the Responsibility Report will be available on the
Company’s website later this year.
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 other
directors after considering the recommendation of the
Corporate Governance 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 Chief Executive Officer
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 a
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 independent directors
and assumes other responsibilities that the independent
directors as a whole have designated.
that
the board of directors may
The primary responsibility of the lead director is to seek to
ensure that appropriate structures and procedures are in
place so
function
independently and to lead the process by which the
independent directors seek to ensure that the board of
directors represents and protects
interests of all
shareholders. In addition, the lead independent director
reviews, comments and is given the opportunity 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.
the
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Director Selection Criteria
Election by Shareholders
The members of the Board are selected each year by the
shareholders of Teranga at the annual general meeting of
The Corporate Governance and Nominating Committee is
the
required under
characteristics, qualities, skills and experience which form
the criteria for candidates to be considered for nomination to
to annually
its charter
review
2015 ANNUAL REPORT 84
ethical
fairness
integrity,
behavior,
the Board. The objective 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,
and
honesty,
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
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
encouraged to identify potential candidates.
to discharge
time
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 at this time. 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 expected to provide an increasing contribution to the
Board. Teranga is entering only its sixth year of operations
and believes the continuity of the five (5) directors who have
been members of the Board since Teranga’s initial public
offering (Mssrs Hill, Lattanzi, Thomas, Wheatley and Young)
is a resource to the Company as it continues to work towards
executing on its vision of expansion and consolidation in
Senegal through a prudent allocation of capital. The Board
does not believe that an arbitrary term limit for Board
members is the most effective way of ensuring overall Board
effectiveness. At the same time, the Board recognizes the
value of some turnover 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
compensated 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
mandated to undertake an annual assessment of the overall
performance 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 effectiveness of the Board in discharging its duties
and responsibilities and to contribute to a process of
continuing improvement.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE
DECISION MAKING
The Company has implemented a set of core values
designed to act as guidelines for the standards of integrity
and performance for the Board, Management, employees,
and other members of the Company. The Company’s mission
and vision are disclosed on the Company’s website.
those related
Employees are responsible for their conduct which is
expected to comply with Company policies and procedures
including
to health & safety, social &
environmental, equal opportunity, human rights, disclosure
and trading in Company securities. Induction programs and
on-going 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 CEO is responsible for investigating any reports of
unethical practices and reporting the outcomes to the
Chairman of the Board and/or the Chairman of the Audit
Committee, as appropriate.
2015 ANNUAL REPORT 85
The Company has created a formal Code of Conduct and
Ethics which described 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, color, 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.”
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
oversight responsibilities to shareholders with respect to
financial reporting, risk management, and external and
internal audit processes. Information with respect to the Audit
Committee is 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
website (on the “Corporate Governance” page under the
section titled "Teranga”) and sets out a policy that is
consistent with
included under
Principal 5.
recommendations
the
PRINCIPLE 6: RESPECT THE RIGHTS OF
SHAREHOLDERS
both
The Company regularly engages with its shareholders and
conducts regular analyst briefings. These activities are
supported by the publication of the Annual Report, Quarterly
Reports
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.
operational,
financial
and
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
announcement. 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
Principal 6 with respect to promoting effective communication
with shareholders and the effective use of electronic
communication.
PRINCIPLE 7: RECOGNIZE AND MANAGE RISK
The Board will adopt a 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
management’s implementation of appropriate systems to
effectively monitor, manage and mitigate the impact of such
risks. Pursuant to its duty to oversee the implementation of
effective risk management policies and procedures, the
2015 ANNUAL REPORT 86
implementing
for assessing and
Board will delegate to the Compensation Committee the
risk
responsibility
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 management to the Technical, Safety,
and Environmental Committee. The Board will work in
conjunction with each Committee, respectively, to oversee
the implementation 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
Section 4.2 thereof, the Audit Committee is charged with
reviewing 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’ business operations and has
defined 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
is comprised of
The Compensation Committee
three
independent 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.
Role of the Compensation Committee
The Compensation Committee is established by the Board to
assist the Board in fulfilling its oversight responsibilities
relating 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 established a Compensation Committee on
incorporation. Accordingly, the Compensation Committee
has remained an active standing committee since 2010 and
has fulfilled its responsibilities (described below) on an
annual basis.
The Compensation Committee’s primary responsibilities
include:
Compensation Philosophy, Policies and Practices – ensure
compensation philosophy, policies and practices for the
directors, the 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;
2015 ANNUAL REPORT 87
Chief Executive Officer Compensation – annually review the
the Committee’s
compensation
discretion, recommend any changes to the Board for
consideration;
the CEO and,
for
in
Executive Officers Compensation – annually review the
the executive officers’
for
CEO’s
compensation and,
the Committee’s discretion,
recommend any changes to the Board for consideration;
recommendations
in
review Teranga’s
Succession Planning – annually
succession plan for the CEO and the executive officers,
including appointment, training and evaluation;
Directors’ Compensation – annually
compensation and,
recommend any changes to the Board for consideration;
review directors’
the Committee’s discretion,
in
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
the Company’s annual business plan and
regarding
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 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
recommendations to the Board, exercises its sole discretion
in making 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 performance and contribution to executing Teranga’s
long-term strategy to maximize shareholder value. Teranga’s
compensation 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
it
Committee believes
this
compensation philosophy in order to attract and retain
qualified executive officers with the skills and experience
necessary to execute Teranga’s strategy.
is necessary
to adopt
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
individual 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.
to
At this point the Compensation Committee does not
anticipate making any significant changes
its
compensation philosophy, policies and practices for the 2016
financial year, but expects
review best practice
developments in this regard to ensure that current practices
do not create undue risk to Teranga and to continue to ensure
the alignment of compensation packages with the objective
of enhancing shareholder value through an increased share
price.
to
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
recommended to the Board, at the Committee’s discretion,
based upon an executive officer’s success in meeting or
individual performance goals, as well as
exceeding
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
industry participants. The Company’s
relative
executive compensation program
to be
competitive with those offered by publicly traded mining
companies comparable to Teranga in terms of size, assets,
production and region of operation.
is designed
to peer
Further detailed information on director and executive
management compensation for the 2015 financial year will be
Information
the Company’s Management
disclosed
Circular to be filed with the TSX and ASX in May of 2016.
in
2015 ANNUAL REPORT 88
ASX LISTING RULES: ADDITIONAL DISCLOSURES
SUBSTANTIAL SHAREHOLDERS
As at December 31, 2015 there were two substantial shareholders of Teranga beyond 5%. The details are as follows:
Shareholder
Tablo Corporation
Van Eck Associates Corporation
Number of Shares
45,033,500
21,671,298
% of Issued Capital
11.49
5.53
DISTRIBUTION SCHEDULE OF COMMON SHARES AND CDI HOLDERS (as at February 29, 2016)
Range
CDIs
Units
Total
Holders
0 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
1,000,000,000 - 9,999,999,999
Rounding
Total
990
679
218
231
28
0
334,392
1,672,724
1,606,993
6,494,993
38,870,469
0
2,146
48,979,571
% of
Issued
Capital
0.68
3.42
3.28
13.26
79.36
0.00
0.00
100.00
Common Shares
Total
Holders
Units
5,354
17
37,654
14
73,670
10
15
455,452
10 391,428,960
0
0
66
392,001,090
% of
Issued
Capital
0.00
0.01
0.02
0.12
99.85
0.00
0.00
100.00
DISTRIBUTION SCHEDULE OF OUTSTANDING OPTIONS (as at March 31, 2016)(1)
Range
0 - 50,000
50,001 - 100,000
100,001 - 250,000
250,001 - 500,000
500,001 - 1,000,000
1,000,001 - 1,500,000
1,500,001 - 2,000,000
2,000,001 - 2,500,000
2,500,001 - 3,000,000
Total
Total
Holders
14
12
6
10
4
1
0
1
1
49
Options
510,000
1,080,000
1,032,500
3,490,000
3,060,000
1,400,000
-
2,200,000
2,750,000
15,522,500
% of Options
Outstanding
3.29
6.96
6.65
22.48
19.71
9.02
0.00
14.17
17.72
100.00
(1) As of the date hereof, 15,522,500 incentive stock options (“Options”) are outstanding to the Company’s directors,
officers, employees, and consultants. Total Options outstanding represent approximately 4% of Issued Capital on a
fully diluted basis and are held by 49 option holders. No individual held more than 20% of these unquoted equity
securities.
UNMARKETABLE PARCELS OF SECURITIES, ESCROW AND ON-MARKET BUYBACK
As at February 29, 2016, there were 941 CDI holders with an unmarketable parcel of securities (less than $500 based
on a market price of $0.57 per unit) totaling 288,366 units.
Currently, Teranga only has one class of securities (common shares), none of which are the subject of escrow. There
is no current on-market buy-back.
2015 ANNUAL REPORT 89
TGZ TOP 20 HOLDERS OF CDIs (as at February 29, 2016)
Rank Holder
Citicorp Nominees Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Zero Nominees Pty Ltd
Mr Anthony Platt
Toad Facilities Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Parkview Super Nominees Pty Ltd
P G Howarth Pty Ltd
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11. Mrs Penelope Margaret Ackland + Mr Martin Clyde Ackland
12.
13. Gecko Resources Pty Ltd
14. Mrs Penelope Jane Bligh
15.
Bnp Paribas Noms Pty Ltd
16. Warbont Nominees Pty Ltd
17. Mr Gregory John Bligh
18.
Roada Pty Ltd
19. Mr Roland Wai-Kue Lee
20.
Bell Potter Nominees Ltd
Senegal Nominees Surl
Total Top 20 Holders Balance
Total Remaining Holders Balance
Total CDIs on Issue
TGZ TOP 20 HOLDERS OF COMMON SHARES (as at February 29, 2016)
Rank Shareholder
1.
2.
3.
4.
5.
CDS & Co
Chess Depositary Nominee Pty Limited
Tablo Corporation
Cede & Co
Kingsdale Shareholder Services Inc
Unexchanged Oromin Explorations
Taif Telecom Trading Sarl
Taif Telecom Trading Sarl
Libah Investments Ltd
Tarcoola Limited
Etrade Clearing
John Rigas
Leppard Investments Limited
6.
7.
8.
9.
10.
11.
12.
13. WM P Cribbs DDS + Brenda Lee Cribbs Ten Com
14.
15. Mario Sanchez
16.
17.
18. Mr Wolfgang Karl Feldhus
19. Walter Bruce Butler
20.
Janney Montgomery Scott LLC
Tombstone Enterprises LLC
The Hampshire Foundation
Norman Haimila
Total Top 20 Holders Balance
Total Remaining Holders Balance
Total Shares on Issue
Number of CDIs
11,542,690
8,425,979
7,380,970
5,615,988
791,468
560,000
420,000
400,790
360,000
354,374
271,695
268,416
244,191
227,957
190,687
190,000
153,227
150,000
148,507
148,000
37,844,939
11,134,632
48,979,571
% of Issued CDIs
23.57
17.20
15.07
11.47
1.62
1.14
0.86
0.82
0.74
0.72
0.55
0.55
0.50
0.47
0.39
0.39
0.31
0.31
0.30
0.30
77.27
22.73
100.00
Number of Shares
288,919,497
48,979,571
45,033,500
5,779,322
% of Issued Shares
75.19
12.49
10.00
1.47
1,653,528
263,292
263,292
221,165
173,338
142,455
86,856
49,499
47,520
40,000
30,000
28,800
26,057
25,452
25,320
20,400
391,808,864
192,226
392,001,090
0.42
0.07
0.07
0.06
0.04
0.04
0.02
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
99.95
0.05
100.00
2015 ANNUAL REPORT 90
SHARE CLASSES AND VOTING RIGHTS
There is only a single share class being common
shares of Teranga Gold Corporation. The total amount
of outstanding common shares of Teranga Gold
Corporation is 392,001,090.
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 shareholders 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, redemption 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. As each CDI represents a beneficial
interest in one common share, CDI holders need to
provide confirmation of their voting instructions to
CHESS Depositary Nominees Pty Ltd (CDN), as
registered holder of the underlying common shares, in
order to vote at shareholder meetings. Alternatively, if
a holder of CDIs wishes to attend and vote at
shareholder meetings, they may instruct CDN to
appoint the CDI holder (or a person nominated by the
CDI holder) as the holders proxy for the purposes of
attending and voting at shareholder meetings. As of
March 31, 2016, 15,522,500 incentive stock options
are outstanding to the Company’s directors, officers,
employees, and consultants. Holders of options are not
entitled to vote.
ISSUANCE OF OPTIONS TO DIRECTORS
received
its
On November 30, 2010, Teranga
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, 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 2015 fiscal period to
any members of the Board.
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
to
substantial holdings and takeovers.
in Teranga
in relation
Limitations on the Acquisition of Teranga Securities
Imposed By Canada
In Canada, acquisitions of securities by takeover bid
are regulated 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 issued share
capital of the company constitutes a takeover bid.
the
Subject
purchase at not more than a market price of up to 5
percent of outstanding 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:
limited exceptions1 (for example
to
(a) provide shareholders with a takeover bid circular
describing the terms of the offer and if securities of the
offeror form part of the consideration, including
prospectus level disclosure about the offeror and its
business;
(b) keep the bid open for at least 35 days; and
the company, with
(c) deliver the circular and extend the offer to each
the ultimate
shareholder of
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.
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
1
On February 25, 2016, the Canadian Securities Regulators announced material changes to
Canada’s takeover bid rules to take effect on May 9, 2016. The changes include: (i) a
requirement all non-exempt takeover bids meet a minimum tender requirement of more than 50
percent of the outstanding securities subject to the bid (previously there was no minimum tender
amount); and (ii) that bids remain open for a minimum period of 105 days (from prior 35 days)
plus an additional 10 day extension if minimum tender requirement and all other conditions are
met.
2015 ANNUAL REPORT 91
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
Computershare Trust Company of Canada,
100 University, Avenue, 8th Floor,
Toronto, Ontario, Canada, M5J 2Y1
Tel: + 1-800-564-6253
Australia: Computershare Investor Services
The Registrar,
Computershare Investor Services Pty Limited
GPO Box 2975,
Melbourne VIC 3001, Australia
Tel: + 1-300-850-505
REGISTERED OFFICE IN AUSTRALIA
Level 1, 28 Ord Street
West Perth WA 6005, Australia
2015 ANNUAL REPORT 92
RESERVE AND RESOURCE COMPARISON (2014 to 2015)
The mineral Reserve and Resource tables below are sourced from the Company’s NI 43-101 Technical Report on The Sabodala
Project, Sénégal, West Africa (the “Technical Report”) available on the Company’s website at www.terangagold.com.
Mineral Reserves (as at December 31, 2014)
Deposit
Sabodala
Gora
Niakafiri
Stockpiles
Subtotal ML
Masato
Golouma
Kerekounda
Subtotal Somigol
Total
Tonnes
(Mt)
1.98
0.48
0.23
11.30
13.99
Proven
Grade
(g/t)
1.52
4.66
1.69
0.82
1.07
Au
(Moz)
0.10
0.07
0.01
0.30
0.48
13.99
1.07
0.48
Probable
Grade
(g/t)
1.48
4.79
1.12
Tonnes
(Mt)
2.48
1.35
7.58
11.41
26.93
6.47
0.88
34.28
45.69
1.63
1.13
2.24
3.26
1.39
1.454
Au
(Moz)
0.12
0.21
0.27
0.60
0.98
0.46
0.09
1.53
2.12
Proven and Probable
Grade
(g/t)
1.50
4.76
1.14
0.82
1.32
1.13
2.24
3.26
1.39
1.36
Tonnes
(Mt)
4.45
1.83
7.81
11.30
25.40
26.93
6.47
0.88
34.28
59.68
Au
(Moz)
0.21
0.28
0.29
0.30
1.09
0.98
0.46
0.09
1.53
2.62
Notes for 2014 Reserves Summary:
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.
3. 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.
4. 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.
5. Mineral Reserve cut off grades for Masato are 0.4 g/t Au for oxide and 0.5 g/t for fresh based on $1,200/oz gold price and
metallurgical between 90 percent and 93 percent.
6. Mineral reserve cut off grades for 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 between 90 percent and 93 percent.
7. Sum of individual amounts may not equal due to rounding.
8. The Niakafiri deposit is adjacent to the Sabodala village and relocation of at least some portion of the village will be required
which will necessitate a negotiated resettlement program with the affected community members.
9. 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.
10. There are no other known political, legal or environmental risks that could materially 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 31, 2014 (revised April 24, 2014). Refer to RISK FACTORS beginning on page 60.
For clarity, the mineral Reserve estimates disclosed above with respect to Niakafiri and Gora was 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. Refer to Teranga Gold Corporation’s ASX Quarterly December 31, 2013 report filed on
January 30, 2014 for further details. All material assumptions and technical parameters previously disclosed continue to be applicable
and have not materially changed. See Competent Person Statements on pages 33 and 34 for further details.
2015 ANNUAL REPORT 93
Open Pit and Underground Mineral Reserves (as at December 31, 2015)
Deposit
Sabodala
Gora
Niakafiri Main
Subtotal ML
Proven
Grade
(g/t)
1.57
4.94
1.23
1.52
Tonnes
(Mt)
1.57
0.31
4.06
5.95
Probable
Grade
(g/t)
Tonnes
(Mt)
2.33
1.15
3.41
6.88
1.36
4.74
0.94
1.71
Au
(Moz)
0.10
0.17
0.10
0.38
Proven and Probable
Au
Grade
(Moz)
(g/t)
Tonnes
(Mt)
3.90
1.46
7.47
12.83
1.44
4.78
1.10
1.62
0.18
0.22
0.26
0.67
Au
(Moz)
0.08
0.05
0.16
0.29
Masato
Golouma West
Golouma South
Kerekounda
Maki Medina
Niakafiri SE
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Niakafiri SW
Subtotal SOMIGOL
Subtotal Open Pit
-
-
5.95
-
-
1.52
-
-
0.29
-
-
-
-
-
-
-
-
-
-
-
-
Golouma West 1
Golouma West 2
Golouma South
Kerekounda
Subtotal
Underground
Total
21.41
1.06
0.73
21.41
1.06
0.73
3.23
1.27
0.79
0.90
1.12
0.37
29.08
35.96
0.62
0.45
0.47
0.61
1.96
3.09
3.44
0.20
0.13
0.09
3.23
1.27
0.79
1.96
3.09
3.44
0.20
0.13
0.09
1.17
0.03
0.90
1.17
0.03
1.09
0.04
1.12
1.09
0.04
0.92
1.32
1.39
0.01
1.23
1.61
0.37
29.08
41.92
0.92
1.32
1.41
0.01
1.23
1.90
6.07
0.12
0.62
6.07
0.12
4.39
0.06
0.45
4.39
0.06
4.28
0.06
0.47
4.28
0.06
4.95
0.10
0.61
4.95
0.10
0.00
5.95
0.00
1.52
-
0.29
2.15
38.11
5.01
1.60
0.35
1.96
2.15
44.07
5.01
1.59
0.35
2.25
Comments on Material Differences
Reduction from mine activities during 2015
Reduction from mine activities during 2015
30 koz reduction of marginal mineralization at
$1100 gold price
Reduction from mine activities during 2015 and
revised economics at $1100 gold price
120 koz reduction of marginal mineralization at
$1100 gold price
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
New reserves from resources conversion - see
Technical Report
Stockpiles
15.27
0.79
0.39
0.00
0.00
0.00
15.27
0.79
0.39
Increased from mine activities in 2015
Total Including
Stockpile
21.23
0.99
0.68
38.11
1.60
1.96
59.34
1.38
2.63
Notes for 2015 Mineral Reserves Summary:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserve cut off grades for range from are 0.35 g/t to 0.63 g/t Au for oxide and 0.42 g/t to 0.73 g/t Au for fresh based on a $1,100/oz gold
price
3. Mineral Reserve cut off grades for Sabodala 0.45 g/t for oxide and 0.55 g/t for fresh based on a $1,100/oz gold price
4. Underground reserves cut-off grades ranged from 2.3-2.6 g/t based on $1,200/oz gold price
5. Sum of individual amounts may not equal due to rounding.
6. The Niakafiri Main deposit is adjacent to the Sabodala village and relocation of at least some portion of the village will be required which will necessitate
a negotiated resettlement program with the affected community members.
The above proven and probable ore reserve estimates were first disclosed in Teranga’s December 31, 2015 Quarterly Report filed on January 29, 2016
in accordance with ASX Listing Rules. These reserve estimates have not changed in any manner since that time and all material assumptions and
technical parameters previously disclosed continue to be applicable and have not materially changed. Please refer to Teranga’s December Quarterly
Report for further including required additional disclosures under the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”. See also Competent Person Statements on pages 36 and 37.
2015 ANNUAL REPORT 94
Mineral Resources (as at December 31, 2014)
Measured
Indicated
Measured and Indicated
Inferred
Deposit
Tonnes
Grade
Au
Tonnes
Grade
Au
Tonnes
Grade
Au
Tonnes
Grade
('000s)
(g/t Au)
('000s)
('000s)
(g/t Au)
('000s)
('000s)
(g/t Au)
('000s)
('000s)
(g/t Au)
23,734
487
300
1,545
1.21
5.27
1.74
0.96
924
82
17
48
Sabodala
Gora
Niakafiri
Masato
Golouma
Kerekounda
Maki Medina
Niakafiri SW
Niakafiri SE
Others
Total
26,066
1.28
1,071
19,550
1,837
10,500
50,262
12,043
2,196
4,472
1,659
9,305
3,285
115,109
1.23
4.93
1.10
1.04
2.69
3.77
0.96
0.60
0.80
1.43
1.35
772
291
371
1,674
1,042
267
138
32
238
151
4,976
43,284
2,324
10,800
51,807
12,043
2,196
4,472
1,659
9,305
3,285
141,175
1.22
5.00
1.12
1.03
2.69
3.77
0.96
0.60
0.80
1.43
1.33
1,696
374
388
1,722
1,042
267
138
32
238
151
6,048
18,420
210
7,200
19,183
2,464
342
275
2,565
1,474
19,152
71,285
0.93
3.38
0.88
1.15
2.01
4.21
0.99
0.59
0.65
0.96
1.03
Au
('000s)
549
23
210
707
159
46
9
49
31
591
2,374
Notes for 2014 Mineral Resources Summary:
1. CIM definitions were followed for Mineral Resources.
2. 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.
3. Mineral Resource cut-off grades for Niakafiri are 0.3 g/t Au for oxide and 0.5 g/t Au for fresh.
4. Mineral Resource cut-off grade for Gora is 0.5 g/t Au for oxide and fresh.
5. Mineral Resource cut-off grade for Niakafiri West and Soukhoto is 0.3 g/t Au for oxide and fresh.
6. Mineral Resource cut-off grade for Diadiako is 0.2 g/t Au for oxide and fresh.
7. Measured Resources include stockpiles which total 11.30 Mt at 0.82 g/t Au for 0.30 Mozs.
8. High grade assays were capped at grades ranging from 10 g/t to 30 g/t Au at Sabodala, 20 g/t to 70 g/t Au at Gora, from 4 g/t to
25 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. The figures above are “Total” Mineral Resources and include Mineral Reserves.
10. Neither underground Mineral Resources nor Mineral Reserves have been generated by the Company, therefore global Mineral
Resources have been reported at the determined cut-off grades. A detailed underground analysis will be undertaken to follow-
up on the underground resource potential; however, this is not a priority in the near term.
11. Sum of individual amounts may not equal due to rounding.
For clarity, the mineral Resource estimates disclosed above with respect to Niakafiri, Gora and ML Other (which includes Niakafiri,
Niakafiri West, Soukhoto and Diadiako) 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. Refer to
Teranga Gold Corporation’s ASX Quarterly December 31, 2013 report filed on January 30, 2014 for further details. All material
assumptions and technical parameters previously disclosed continue to be applicable and have not materially changed. See
Competent Person Statements on pages 33 and 34 for further details.
2015 ANNUAL REPORT 95
Open Pit and Underground Mineral Resources (as at December 31, 2015)
Deposit
Domain
Sabodala
Gora
Niakafiri
Masato
Golouma
Kerekounda
Maki
Medina
Niakafiri
SW
Niakafiri
SE
Others
Total
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Open Pit
Underground
Combined
Measured
Tonnes Grade
(g/t Au)
('000s)
1.13
13,742
Au
('000s)
497
13,742
466
466
4,909
4,909
5,894
1.13
4.55
4.55
1.33
1.33
0.79
497
68
68
210
210
150
5,894
0.79
150
25,011
1.15
926
25,011
1.15
926
Comments on
Material
Differences
Mining depletion
Mining depletion
Remodeling of
mineralization
Mining depletion
Infill drilling
included in
Mineral
Resource update
Infill drilling
included in Mineral
Resource update
Indicated
Grade
(g/t Au)
1.59
3.65
2.01
6.11
5.14
5.89
0.98
Au
('000s)
332
191
524
213
52
265
228
Measured and Indicated
Au
Grade
Tonnes
('000s)
(g/t Au)
('000s)
829
1.28
20,230
191
3.65
1,631
1,021
1.45
21,861
281
5.64
1,549
52
5.14
315
333
5.56
1,864
438
1.12
12,131
0.98
1.16
2.75
1.24
2.98
4.09
3.25
4.28
4.88
4.45
1.22
2.71
228
844
103
947
653
280
933
173
78
251
83
10
12,131
28,511
1,163
29,674
6,800
2,134
8,934
1,255
499
1,755
2,112
109
1.12
1.08
2.75
1.15
2.98
4.09
3.25
4.28
4.88
4.45
1.22
2.71
438
994
103
1,097
653
280
933
173
78
251
83
10
Tonnes
('000s)
6,488
1,631
8,119
1,083
315
1,398
7,222
7,222
22,617
1,163
23,780
6,800
2,134
8,934
1,255
499
1,755
2,112
109
2,221
770
1.30
0.81
93
20
2,221
770
1.30
0.81
93
20
770
4,439
73
4,512
1,590
59
1,649
54,377
5,985
60,362
0.81
0.98
2.60
1.01
1.80
9.15
2.07
1.59
3.84
1.81
20
140
6
146
92
18
110
2,777
738
3,516
770
4,439
73
4,512
1,590
59
1,649
79,388
5,985
85,373
0.81
0.98
2.60
1.01
1.80
9.15
2.07
1.45
3.84
1.62
20
140
6
146
92
18
110
3,703
738
4,441
Inferred
Tonnes Grade
(g/t Au)
('000s)
1.23
2,525
3.60
460
1.60
2,985
4.95
53
4.83
59
4.88
113
1.09
2,472
2.51
184
1.19
2,656
Au
('000s)
100
53
153
8
9
18
87
15
102
1,984
1,984
88
854
942
235
235
114
85
199
30
30
162
16
177
4,890
1,045
5,935
10,333
4,921
15,254
2.85
2.85
2.46
3.66
3.55
5.70
5.70
0.81
2.54
1.55
0.67
0.67
0.96
2.64
1.11
1.26
3.68
1.69
1.23
3.38
1.92
182
182
7
100
107
43
43
3
7
10
1
1
5
1
6
198
124
322
409
534
944
Notes for 2015 Mineral Resources Summary:
CIM definitions were followed for Mineral Resources.
Open pit oxide Mineral Resources are estimated at a cut-off grade of 0.35 g/t Au, except for Gora at 0.48 g/t Au.
Open pit transition and fresh rock Mineral Resources are estimated at a cut-off grade of 0.40 g/t Au, except for Gora at 0.55 g/t Au.
Underground Mineral Resources are estimated at a cut-off grade of 2.00 g/t Au.
Measured Resources at Sabodala include stockpiles which total 9.2 Mt at 0.77 g/t Au for 229,000 oz.
Measured Resources at Gora include stockpiles which total 0.1 Mt at 1.30 g/t Au for 6,000 oz.
Measured Resources at Masato include stockpiles which total 5.9 Mt at 0.79 g/t Au for 150,000 oz.
High grade assays were capped at grades ranging from 1.5 g/t Au to 110 g/t Au.
The figures above are “Total” Mineral Resources and include Mineral Reserves.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Open pit shells were used to constrain open pit resources.
11. Mineral Resources are estimated using a gold price of US$1,450 per ounce.
12. Sum of individual amounts may not equal due to rounding.
There have been no revisions to the resource models for 2015, except for adjustments due to mining depletion and minor revisions to Niakafiri Main, Niakafiri SW, Maki Medina
and Diadiako. For estimating 2015 Mineral Resources, Teranga has implemented a new reporting procedure, which includes the use of open pit shells to constrain open pit
resources and reporting underground resources separately. For reporting of open pit Mineral Resources, open pit shells were produced for each of the resource models using
Whittle open pit optimization software. Only classified blocks greater than or equal to the open pit cut-off grades and within the open pit shells were reported. This is in compliance
with the CIM (2014) resource definition requirement of “reasonable prospects for eventual economic extraction”. For reporting of underground Mineral Resources, only classified
blocks greater than or equal to the underground cut-off grade outside of the open pit shells were reported. This is in compliance with CIM (2014) resource definition requirements.
In addition, Deswik Stope Optimizer software was used to generate wireframe models to constrain blocks satisfying minimum size and continuity criteria, which were used for
reporting Sabodala underground Mineral Resources.
The above measured and indicated resource and inferred resource estimates were first disclosed in Teranga’s December 31, 2015 Quarterly Report filed on January 29, 2016
in accordance with ASX Listing Rules. These reserve estimates have not changed in any manner since that time and all material assumptions and technical parameters
previously disclosed continue to be applicable and have not materially changed. Please refer to Teranga’s December Quarterly Report for further including required additional
disclosures under the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. See also Competent Person
Statements on pages 36 and 37.
The significant change between the Mineral Resources reported for 2014 and 2015 is due to this new reporting procedure, where the 2015 year end Mineral Resources have
been constrained using open pit shells along with revised gold cut-off grades for both open pit and underground resources. Previously classified Mineral Resources that do not
satisfy the revised reporting criteria for 2015, have been excluded, however, they remain in the block models as unclassified mineralized material.
2015 ANNUAL REPORT 96
CORPORATE DIRECTORY
BOARD OF DIRECTORS
CORPORATE HEAD OFFICE
Alan R. Hill
Chairman
Richard Young
President and Chief Executive Officer
Edward Goldenberg
Non-Executive Director
Christopher R. Lattanzi
Non-Executive Director
David Mimran
Non-Executive Director
Alan R. Thomas
Non-Executive Director
Frank D. Wheatley
Non-Executive Director
Jendayi Frazer
Non-Executive Director
SENIOR MANAGEMENT
Teranga Gold Corporation
Suite 2600-121 King Street West
Toronto, Ontario, Canada M5H 3T9
Tel: + 1-416-594-0000
Fax: + 1-416-594-0088
www.terangagold.com
Investor Relations
Trish Moran
Email: tmoran@terangagold.com
Tel: + 1-416-607-4507
Senegal Office
2K Plaza Suite B4, 1er Etage
Sis Route du Méridien Président, Almadies
BP 38385 Dakar Yoff
Tel: + 221-33-864-2525
Fax: + 221-33-864-2526
Auditor
Ernst & Young LLP
Chartered Accountants
Toronto, Ontario, Canada
Legal Counsel
Stikeman Elliott LLP
Toronto, Ontario, Canada
Richard Young
President and Chief Executive Officer
Paul Chawrun
Vice President, Operations and Technical Services
Navin Dyal
Vice President and Chief Financial Officer
David Savarie
Vice President, General Counsel and
Corporate Secretary
Sepanta Dorri
Vice President, Corporate and Stakeholder
Development
Aziz Sy
General Manager, Senegal
Registrar and Transfer Agent
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)
Stock Exchange Listings
Toronto Stock Exchange: TGZ
Australian Securities Exchange: TGZ
Common Shares Issued and Outstanding
392,001,091 (as at December 31, 2015)
2015 ANNUAL REPORT 97