2016 Annual Report
Letter to Shareholders 2
Management’s Discussion and Analysis 5
Management’s Responsibility for Financial Reporting 37
Independent Auditors’ Report 38
Consolidated Financial Statements 39
Notes to the Consolidated Financial Statements 43
ASX Corporate Governance Statement 82
ASX Listing Rules – Additional Disclosures 91
Mineral Reserves and Resources 95
Corporate Directory ibc
This annual report contains certain statements that constitute forward-looking information. Please
refer to the cautionary note regarding Forward-Looking Statements on page 35. All amounts are in
U.S. dollars unless otherwise stated.
BUILDING
the Next Multi-Asset Mid-Tier West African Gold Producer
LETTER TO SHAREHOLDERS
For our shareholders, 2016 will mark a watershed year in the
history of Teranga with the acquisitions of Gryphon Minerals
and a large prospective land package in Côte d’Ivoire, providing
diversification, scale and growth.
Today, Teranga has a robust portfolio of assets and added optionality that
offer both near and longer-term growth prospects in the production,
development, and exploration stages in three of the top mining
jurisdictions in West Africa. Over the last 25 years, West Africa has been
one of the fastest-growing regions for gold production in the world.
FLAGSHIP PRODUCING ASSET IN SENEGAL PROVIDES CASH
FLOW & STRONG FOUNDATION FOR GROWTH
Last year was a great year at Sabodala, Teranga’s prize gold mine in
Senegal, with record production of nearly 217,000 gold ounces, all-time
high mill throughput, and record low unit costs.
To further optimize and de-risk Sabodala, several measures were
undertaken. In early September, we completed a large-scale mill
optimization, which has increased throughput by 15% and reduced unit
milling costs. The project came in well ahead of schedule and notably
below budget. New grade control procedures and the build-up of a
high-grade ore stockpile were also key measures taken to reduce
operational risk.
With a mine life that currently extends to 2029, Sabodala provides
strong free cash flow generation to help fund our exploration and
growth initiatives.
DIVERSIFYING OUR ASSET BASE
To create further shareholder value, in 2016, the company undertook
significant steps towards achieving our vision of becoming a diversified
mid-tier West African gold producer. These steps have opened up doors
to significant growth opportunities.
The first transaction was an exploration agreement we entered into in
June 2016 with Miminvest SA, a company controlled by Teranga’s
cornerstone investor, David Mimran. The exploration agreement covers
a large land package in Côte d’Ivoire, including five exploration permits.
Considered by many to be the top region for gold exploration in Africa,
we are very excited about our prospects in Côte d’Ivoire.
2016
ACHIEVEMENTS
4 Record high production
and record low unit costs
4 Optimized and
implemented measures
to de-risk Sabodala
4 Completed exploration
agreement in Côte d’Ivoire
4 Completed acquisition
of Gryphon Minerals,
providing opportunities
for asset diversification,
scale and growth
2016 Annual Report 2
The second transaction we completed last year was the all-share
acquisition of Gryphon Minerals, which brought with it three exciting
assets in Burkina Faso: the fully permitted Banfora gold project and two
prospective exploration properties, Golden Hill and Gourma.
FULLY PERMITTED DEVELOPMENT PROJECT
To accelerate the development timeline of Gryphon Minerals’ premier
asset, the Banfora gold project, prior to the close of the acquisition in
October, Teranga invested over $3 million by way of a private placement
to confirm and expand reserves and to begin optimization of Gryphon’s
previous feasibility study. The technical work for what is potentially the
company’s second operating gold mine is well underway and will be
targeting completion by mid-year, keeping with the original timeline that
was outlined in June 2016 at the time the acquisition was announced.
Assuming the Banfora feasibility study yields positive results with
attractive project economics, we will seek the Board’s approval regarding
construction and financing with the goal of commencing construction in
the second half of 2017, which would put us on track for first gold pour in
the first half of 2019.
EXPLORING HIGHLY PROSPECTIVE PROPERTIES ACROSS
WEST AFRICA
On the exploration front, we made a number of changes during 2016,
including the addition of Teranga’s first vice president of exploration as
well as several seasoned professionals from Gryphon Minerals.
One of the highlights of Teranga’s 2016 exploration program occurred in
December when we commenced drilling at the Niakafiri deposit, which
we consider to be the most prospective area on the Sabodala mine
license. Drilling at the Niakafiri deposit is a primary focus in 2017. We
already have more than 300,000 ounces in proven and probable reserves
at Niakafiri and our drilling to-date has been very encouraging. Overall,
we expect this drill program will add to reserves, fill gaps in production,
and extend Sabodala’s mine life beyond 2029.
We are also very excited about Golden Hill, which is located on the
Houndé greenstone belt in close proximity to other high-grade deposits
in Burkina Faso. Previous exploration work has defined a number of
robust, high-quality prospects that we have prioritized for more advanced
follow-up in 2017.
Work has also commenced at both Gourma, Teranga’s exploration
property in Eastern Burkina Faso and in Côte d’Ivoire at the Guitry
property. With a budget of $12 to $15 million, and many prospects, we
expect to have a steady stream of exploration updates throughout 2017.
2016 Annual Report 3
BUILDING THE NEXT DIVERSIFIED MID-TIER WEST AFRICAN
GOLD PRODUCER
Our focus is clear: create value for our shareholders. And while 2016 was
a good year for the company, 2017 is setting up to be an exceptional year
for three key reasons. First, we expect to have strong operating results
at Sabodala. Second, we are focused on completing a positive feasibility
study for Banfora and moving into construction of Teranga’s second
producing asset. And, third, with the exploration opportunities we have,
it could very well be the year of the drill bit.
The company’s balance sheet is strong with enough capital to fund our
current comprehensive exploration program and construction readiness
activities at Banfora. To augment our cash balance, in November 2016
Teranga completed an equity offering concurrent with a non-brokered
private placement with our supportive cornerstone investor, Tablo
Corporation, for total net proceeds of approximately $48 million. As at
December 31, 2016, we had $95 million in cash on our balance sheet.
POSITIONED FOR A BREAKTHROUGH IN 2017
When you look at Sabodala, the company’s producing asset in Senegal,
as well as the pipeline of assets, including the Banfora gold project and
prospective exploration properties on world-class gold belts across
West Africa, it is clear that Teranga is on the cusp of being a diversified
multi-asset mid-tier gold producer. Management and the board
understand West Africa well and the company has a strong globally
recognized social license. We are very proud that, in March 2017,
Teranga received the Environmental and Social Responsibility award by
the Prospectors and Developers Association of Canada for outstanding
leadership and commitment to making lasting contributions to the
communities surrounding Sabodala.
On behalf of Teranga’s board of directors and management, we would
like to express our sincere thanks to the entire team for their continued
loyalty throughout 2016. It was a great year and we are excited about
2017. With your ongoing hard work and dedication, we can continue to
grow the company and create value for all stakeholders.
ALAN R. HILL RICHARD YOUNG
Chairman President & Chief Executive Officer
2017
OUTLOOK
Production - Sabodala
• 2017 outlook: 205-225Koz
• Generate free cash flow
Development - Banfora
• Complete positive
feasibility study
• Obtain board approval to
proceed with development
• Announce funding and
start of construction
Exploration
• Senegal
• Burkina Faso
• Côte d’Ivoire
2016 Annual Report 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 AND 2015
This Management’s Discussion and Analysis (“MD&A”) provides a discussion and analysis of the financial conditions
and results of operations to enable a reader to assess material changes in the financial condition and results of
operations as at and for the twelve months ended December 31, 2016 and 2015. The MD&A should be read in
conjunction with the audited consolidated financial statements and notes thereto (“Statements”) of Teranga Gold
Corporation (“Teranga” or the “Company”) as at and for the twelve months ended December 31, 2016 and 2015. The
Company’s Statements and MD&A are presented in United States dollars, unless otherwise specified, and have been
prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board (“IASB”). Additional information about Teranga, including the Company’s Amended and
Restated Annual Information Form for the year ended December 31, 2015, as well as all other public filings, is available
on the Company’s website (www.terangagold.com) and on the SEDAR website (www.sedar.com).
This report is dated as of February 23, 2017. 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 both the Toronto and Australian stock exchanges (TSX/ASX:
TGZ), engaged in the exploration, development and production of gold in West Africa. Since 2010, the Company has
produced more than 1.2 million ounces of gold at its flagship Sabodala operations in Senegal, West Africa. The
Company also has a number of development and exploration projects in West Africa, including the recently acquired
Banfora gold project in Burkina Faso, and five exploration properties in Côte d'Ivoire.
In the second quarter 2016, Teranga entered into an exploration agreement with Miminvest SA (“Miminvest), a privately-
held company controlled by Mr. David Mimran, a director and cornerstone investor of Teranga, relating to the
exploration, development and production of minerals in Côte d'Ivoire. Groupe Mimran, a company controlled by the
Mimran family, has been operating in Côte d'Ivoire since 1963 and owns the largest flour producer in the country.
On October 13, 2016, Teranga acquired Gryphon Minerals Limited (“Gryphon”). Gryphon’s key asset is the Banfora
gold project, a permitted, open pit gold project located in Burkina Faso, West Africa. A National Instrument 43-101 (“NI
43-101”) technical report is expected to be completed for Banfora by mid-2017.
Vision
Teranga’s vision is to become a multi-jurisdictional West African gold producer with a portfolio of assets offering
diversified production with strong margins and sustainable free cash flows.
Mission
Our mission is to create value for all of our stakeholders through responsible mining.
Strategy
Our strategy is to maximize shareholder value. We are focused on increasing long-term sustainable cash flows through
(i) reserve growth, (ii) production growth and (iii) cost reduction.
(i) Reserve Growth: Our reserve growth strategy focuses on leveraging our core competencies to advance our
production pipeline, including resource to reserve conversion, exploration discoveries, and acquisitions in West Africa.
We seek to achieve these by maintaining a strong balance sheet and leveraging our operating, development and
community relations expertise to enhance our gold asset portfolio, such as the recently acquired Banfora gold project
in Burkina Faso and the exploration properties acquired in Côte d’Ivoire.
(ii) Production Growth: Our production growth strategy focuses on optimizing our production pipeline to increase
annual production ounces and extend our overall life of mine. At Sabodala, our recently completed mill optimization
project is expected to increase throughput and reduce unit milling costs. With the completion of the Banfora gold project
NI 43-101, expected by mid-2017, we will be able to fully assess Banfora’s potential in further developing our production
pipeline. Over the longer-term, we will seek to add to our pipeline through exploration discoveries and by
opportunistically securing new prospects. All of our capital projects are evaluated using minimum after-tax internal
rates of return to govern our capital allocation and investment decisions.
(iii) Cost Reduction: Our cost reduction strategy is to reduce our all-in sustaining costs per ounce1 relative to the life
of mine through continued focus on productivity improvements, cost reductions and increased regional scale in the
areas of procurement, overheads and operational flexibility as we advance our production pipeline.
FINANCIAL AND OPERATING HIGHLIGHTS
Fourth Quarter Financial and Operating Highlights
Gold revenue decreased compared to the same prior year period due to lower sales volumes, partly offset by higher
average realized gold prices.
Gold production for the fourth quarter was 43,987 ounces, representing a decrease of 14 percent compared to the
prior year period. The lower fourth quarter production was in line with the full year mine plan.
Cost of sales for the fourth quarter declined by 13 percent primarily due to lower mine operation expenses,
depreciation and royalty expenses. Cost of sales per ounce for the fourth quarter 2016 was $925 which was slightly
lower than $931 in the prior year period.
Total cash costs per ounce1 during the quarter were $704, which was higher compared to the prior year period as a
result of processing lower grade material.
All-in sustaining costs per ounce1 for the fourth quarter were $1,049, which was 8 percent higher than the prior year
period due to an increase in total cash costs per ounce1 and lower production.
Consolidated net loss attributable to shareholders for the three months ended December 31, 2016 was $1.3 million
($0.00 loss per share), compared to consolidated net loss of $71.8 million ($0.19 loss per share) in the prior year
period. The Company recorded a non-cash impairment charge on long-lived assets and goodwill of $77.9 million
(net of tax effects) in 2015. In the 2016 period, the loss attributable to shareholders was mainly due to higher deferred
income tax expense.
1 This is a non-IFRS performance measure. Please refer to the reconciliation of non-IFRS measures at the end of this MD&A.
Financial Data20162015Change20162015ChangeRevenue($000's) 55,774 58,235 (4%) 268,850 224,620 20%Cost of sales($000's) (43,022) (49,266)(13%) (181,528) (174,884)4%Profit/(loss) attributable to shareholders of Teranga ($000's) (1,286) (71,824)(98%) 23,109 (50,543)N/A Per share($) (0.00) (0.19)(99%) 0.06 (0.14)N/AEBITDA1($000's) 17,553 16,071 9% 99,173 83,470 19%Operating cash flow($000's) (13,627) 9,755 N/A 44,729 30,434 47%Sustaining capital expenditures (before deferred stripping)($000's) 7,531 9,592 (21%) 33,012 33,135 0%Capitalized deferred stripping - sustaining($000's) 4,822 2,715 78% 18,491 14,547 27%Growth capital expenditures($000's) 1,641 - N/A 1,641 - N/AOperating Data20162015Change20162015ChangeGold Produced(oz)43,987 51,292 (14%) 216,735 182,282 19%Gold Sold(oz)46,523 52,939 (12%) 217,652 193,218 13%Average realized gold price1($ per oz)1,197 1,099 9% 1,234 1,161 6%Cost of sales per ounce ($ per oz sold)925 931 (1%) 834 905 (8%)Total cash costs1($ per oz sold)704 672 5% 622 643 (3%)All-in sustaining costs1($ per oz sold)1,049 973 8% 929 967 (4%)1 This is a non-IFRS financial measure and does not have a standard meaning under IFRS. Please refer to Non-IFRS Performance Measures at the end of this MD&A. Twelve months ended December 31,Three months ended December 31,Three months ended December 31,Twelve months ended December 31,
In the fourth quarter of 2016, operating cash outflows were $13.6 million, compared with operating cash inflows of
$9.8 million in the prior year period. The change in operating cash flow during the fourth quarter of 2016 was primarily
due to $17.2 million in royalty payments and $6.7 million in spending on Gryphon operating expenditures.
During the fourth quarter 2016, the Company completed a public offering of 34,655,000 common shares, at a price
of C$1.05, and completed a non-brokered private placement of 29,500,000 common shares, at a price of C$1.05.
The Company received net proceeds of C$64.9 million ($48.4 million), after deduction of underwriter fees and
expenses.
As at December 31, 2016 the Company had cash and cash equivalents of $95.2 million, compared to $44.4 million
as at December 31, 2015.
The Company successfully completed the acquisition of Gryphon on October 13, 2016 and commenced the Banfora
gold project feasibility study.
Completed the Sabodala mill optimization – under budget and ahead of schedule.
Advanced our exploration programs in Senegal, Burkina Faso and Côte d’Ivoire.
Extended industry-leading health and safety record to more than 3 years without a lost time injury.
Received awards for our corporate social responsibility program from the United Nations Global Compact Network
Canada and from the Prospectors & Developers Association of Canada
Outlook 2017
The following table outlines the Company’s estimated 2017 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 A
Cost of sales per ounce sold
Total cash cost per ounce sold B
All-in sustaining costs C
Cash / (non-cash) inventory movements and amortized
advanced royalty costs C
All-in sustaining costs (excluding cash / (non-cash) inventory
movements and amortized advanced royalty costs) C
Mining
Mining long haul
Milling
General and Administration
Mine Production Costs
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
90.0 – 91.0
200,000 – 215,000
Not applicable
600 - 650
900 – 975
(‘000t)
(‘000t)
(‘000t)
(g/t)
waste/ore
(‘000t)
(g/t)
%
(oz)
$/oz sold
$/oz sold
$/oz sold
$/oz sold
Not Applicable
$/oz sold
Not Applicable
($/t mined)
($/t hauled)
($/t milled)
($/t milled)
2.20 – 2.40
4.00 – 4.50
11.00 – 12.00
4.25 – 4.50
$ millions
145.0 – 155.0
Corporate Administration Expense
$ millions
8.0 – 9.0
Regional Administration Costs
$ millions
2.0
Community Social Responsibility Expense
$ millions
3.0 – 3.5
Exploration & Evaluation (Expensed)
$ millions
5.0
Sustaining Capital Expenditures
Mine site sustaining
Capitalized reserve development
Site development costs
Total Sustaining Capital Expenditures D
Growth Capital Expenditures (Banfora)
Feasibility study
Capitalized reserve development
Construction readiness
Total Growth Capital Expenditures
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
8.0 – 10.0
7.0
17.0 – 20.0
32.0 – 37.0
Not Applicable
Not Applicable
Not Applicable
Not Applicable
2016
Actual
2,132
33,512
35,644
2.66
15.7
4,025
1.81
92.6
216,735
834
622
929
42
971
2.33
3.41
10.70
4.46
148.6
9.0
2.1
3.6
4.8
7.4
7.1
18.5
33.0
0.3
0.3
1.0
1.6
2017
Guidance
2,000 – 2,500
35,000 – 37,000
37,000 – 39,500
2.50 – 3.00
15.5 – 17.5
4,000 – 4,300
1.70 – 1.90
90.0 – 91.5
205,000 – 225,000
950 – 1,025
725 – 775
1,000 – 1,075
(100)
900 – 975
2.25 – 2.50
2.50 – 3.50
11.00 – 12.00
4.25 – 4.50
155.0 – 165.0
10.0 – 11.0
3.0
3.5 – 4.0
6.0 – 7.0
10.0 – 15.0
3.0 – 4.0
2.0
15.0 – 21.0
3.0
3.0 – 4.0
5.0 – 8.0
11.0 – 15.0
Notes to Guidance Table Above:
A. 22,500 ounces of gold production are to be sold to Franco-Nevada Corporation at 20% of the spot gold price.
B. Total cash cost per ounce sold is a non-IFRS financial measure and does not have a standard meaning under IFRS.
C. All-in sustaining costs per ounce is a non-IFRS financial measure and does not have a standard meaning under IFRS. All-in sustaining costs
per ounce sold include total cash costs per ounce, administration expenses, share based compensation and sustaining capital expenditures as
defined by the World Gold Council. All-in sustaining costs also include cash / (non-cash) inventory movements and non-cash amortization of
advanced royalties.
D. Excludes capitalized deferred stripping costs, included in mine production costs.
This forecast financial information is based on the following material assumptions for 2017: gold price: $1,200 per ounce; light fuel oil price
$0.81/L; heavy fuel oil price $0.46/L; Euro:USD exchange rate of 1:1.10
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.
2017 Guidance Analysis
The Company’s mine plans are designed to maximize sustainable free cash flows1 over the mine life. Mining activities
in 2017 will continue to focus on the higher grade and higher strip ratio deposits, including Gora and the anticipated
completion of the Golouma South deposit by the end of the third quarter. Production at Kerekounda commenced in
December 2016 and is expected to continue throughout 2017. The Golouma West deposit is expected to commence
development and then proceed to production during the first quarter 2017 for the duration of the year. Total tonnes
mined are expected to increase from 35.6 million tonnes mined in 2016 to between 37.0 and 39.5 million tonnes in
2017. We anticipate a higher mining rate together with a greater availability of shovels for 2017 as compared to 2016.
Ore tonnes and grade mined are expected to be similar to 2016.
Mill throughput is expected to increase with the benefit of a full year of the mill optimization to between 4.0 and 4.3
million tonnes compared to 4.0 million tonnes in 2016. Mill grades are expected to be similar to 2016 at between 1.7
and 1.9 grams per tonne as higher grade material is supplemented with lower grade stockpiled material.
The Company expects to produce between 205,000 and 225,000 ounces of gold in 2017. The quarterly profile is
expected to be reasonably consistent through the year. The Company has built up a high-grade stockpile to offset
lower than planned grades or throughput during the year.
Total production costs at Sabodala are expected in the range of $155 to $165 million in 2017, which exceeds the prior
year due to expectations for increased material mined and processed and higher fuel and consumables costs.
Overall, our 2017 guidance is in line with the NI 43-101 technical report dated March 2016 for Sabodala (the “Technical
Report”) with the exception of marginally higher costs reflecting higher fuel prices and the impact of non-refundable
taxes which were not included in the Technical Report.
Administrative costs are expected to increase by up to $2.0 million to a range of $10.0 to $11.0 million reflecting the
Company’s expansion beyond Senegal to Burkina Faso and Côte d’Ivoire. In addition, regional office costs, including
the Dakar and Ouagadougou offices, and the addition of Gryphon Minerals’ office in Perth, Australia, which is expected
to be retained to accommodate activities related to the potential development of the Banfora gold project, are expected
to total approximately $3.0 million.
Corporate social responsibility costs are expected to rise by up to $0.4 million to between $3.5 and $4.0 million reflecting
the additional activities and commitments in Burkina Faso related to the Banfora gold project.
Sustaining capital expenditures in 2017 for the Sabodala mine are expected to decrease to between $15.0 and $21.0
million, excluding deferred stripping, due to the completion of the mill optimization project in 2016. This amount is
marginally higher than the Technical Report amount for 2017, as a decision to bring forward drill rig replacements has
been made due to the higher operating costs of the existing fleet incurred in 2016, combined with reserve development
costs which were not included in the Technical Report. New project development costs for the Banfora gold project
pre-investment decision are expected to total $11.0 to $15.0 million. Banfora capital costs include the completion of
the feasibility study, camp upgrades, certain site costs to prepare for construction and the cost to maintain the camp,
as well as a reserve development program.
Cost of sales per ounce are expected to be in the range of $950 to $1,025. Total cash costs per ounce1are expected
to be in the range of $725 to $775.
All-in sustaining costs (excluding non-cash inventory movements and amortized advanced royalty costs) is expected
to be $900 to $975 per ounce1.
1 This is a non-IFRS performance measure. Please refer to the reconciliation of non-IFRS measures at the end of this MD&A.
Sensitivity
REVIEW OF OPERATING RESULTS
2017HypotheticalImpact on totalImpact onAssumptionChangecash costsprofit (pre-tax)Gold revenue $1,200/oz $100/oz n/a $20.7M Gold price effect on royalties $1,200/oz $100/oz $5/oz $1.2M HFO price $0.46/litre $0.10/litre $14/oz $3.2M LFO price $0.81/litre $0.10/litre $10/oz $2.2M EUR exchange rate 1.10:1 10%$29/oz$6.6MOperating Results 20162015Change20162015ChangeOre mined(‘000t) 533 1,859 (71%) 2,132 7,748 (72%)Waste mined - operating(‘000t) 7,506 4,612 63% 27,186 18,382 48%Waste mined - capitalized(‘000t) 1,689 726 133% 6,326 5,501 15%Total mined(‘000t) 9,728 7,197 35% 35,644 31,631 13%Grade mined(g/t) 2.89 1.37 111% 2.66 1.22 119%Ounces mined(oz) 49,483 82,057 (40%) 182,394 303,023 (40%)Strip ratiowaste/ore 17.25 2.9 501% 15.7 3.1 410%Ore milled(‘000t) 1,034 919 13% 4,025 3,421 18%Head grade(g/t) 1.45 1.86 (22%) 1.81 1.79 1%Recovery rate% 91.5 93.4 (2%) 92.6 92.3 0% Gold produced1(oz) 43,987 51,292 (14%) 216,735 182,282 19%Gold sold(oz) 46,523 52,939 (12%) 217,652 193,218 13% Average realized price2$/oz 1,197 1,099 9% 1,234 1,161 6% Cost of sales per ounce$/oz sold 925 931 (1%) 834 905 (8%) Total cash costs2$/oz sold 704 672 5% 622 643 (3%) All-in sustaining costs2$/oz sold 1,049 973 8% 929 967 (4%)Mining($/t mined) 2.38 2.83 (16%) 2.33 2.42 (4%)Mining long haul($/t hauled) 2.78 5.33 (48%) 3.41 5.35 (36%)Milling ($/t milled) 10.55 13.27 (20%) 10.70 14.01 (24%)G&A ($/t milled) 4.61 4.99 (8%) 4.46 4.82 (7%)Three months ended December 31,Twelve months ended December 31,1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.2 Total cash costs per ounce and all-in sustaining costs per ounce are non-IFRS financial measures that do not have a standard meaning under IFRS. Please refer to Non-IFRS Performance Measures at the end of this MD&A.GoraGoloumaKerekoundaMasatoGoraGoloumaKerekoundaOre mined(‘000t) 171 258 104 455 747 826 104 Waste mined - operating(‘000t) 3,576 3,283 647 166 14,000 12,373 647 Waste mined - capitalized(‘000t) 1,689 - - - 6,326 - - Total mined(‘000t) 5,436 3,541 751 621 21,073 13,199 751 Grade mined(g/t) 3.15 3.15 1.80 1.16 2.83 3.44 1.80 Ounces mined(oz) 17,301 26,160 6,022 16,969 67,948 91,455 6,022 Twelve months ended December 31, 2016 Three months ended December 31, 2016MasatoGoraMasatoGoraSabodalaOre mined(‘000t) 1,632 227 6,981 294 473 Waste mined - operating(‘000t) 1,292 3,320 13,130 4,748 504 Waste mined - capitalized(‘000t) - 726 4,038 1,439 24 Total mined(‘000t) 2,924 4,273 24,149 6,481 1,001 Grade mined(g/t) 1.17 2.80 1.14 2.42 1.83 Ounces mined(oz) 61,655 20,401 252,587 22,814 27,622 Twelve months ended December 31, 2015Three months ended December 31, 2015
Sabodala Gold Operations
Fourth Quarter 2016
Mining
Mining activities in the fourth quarter were focused on Gora Phases 2 and 3, Golouma South, as well as the
early stages of mining operations at Kerekounda. Total tonnes mined were 35 percent higher than the prior
year period, as the 2016 mine plan called for an increase in material movement.
Ore tonnes mined in the fourth quarter were 71 percent lower than the prior year period, while the average
grade mined increased by 111 percent compared to the prior year period. In 2016, overall mining shifted to
higher grade, higher strip ratio deposits from lower grade, lower strip ratio deposits in the prior year.
At both Golouma South and Kerekounda, ore tonnes, grade and ounces mined continue to reconcile above
the respective reserve models. At Gora, ore grades are reconciling to the reserve model in benches below
historical artisanal workings.
As planned, the Company amassed a high grade ore stockpile to help smooth out quarterly production
fluctuations and act as a buffer in the event of lower than planned grades or throughput.
Processing
Ore tonnes milled for the fourth quarter increased by 13 percent, representing a record for the Company as
throughput rates increased following the commissioning of a second crushing circuit. In the prior year period,
material handling issues affected throughput rates during the rainy season early in the quarter.
Head grade for the fourth quarter was 22 percent lower than the prior year period. Mill feed for the quarter
was primarily sourced from lower grade stockpiles and supplemented with high grade feed from Golouma
South, Gora and Kerekounda. In the prior year period, mill feed was from high grade ore sourced mainly from
Masato and Gora.
Costs – site operations
Total mining costs for the fourth quarter were $23.1 million, 13 percent higher than the prior year period
primarily due to a 35 percent increase in material movement. On a unit cost basis, mining costs for the three
months were 16 percent lower than the prior year period mainly due to higher mined volumes, lower fuel costs
and the positive contribution from an ongoing company-wide business performance improvement initiative.
Total long-haul costs for the fourth quarter were $1.1 million, $0.4 million higher than the prior year period
mainly due to an increase in ore tonnes hauled from satellite deposits.
Total processing costs for the fourth quarter decreased to $10.9 million, 11 percent lower than the prior year
period due to lower fuel prices despite a 13 percent increase in throughput. Accordingly, unit processing costs
for the fourth quarter were 20 percent lower than the prior year period.
Total mine site general and administrative costs for the fourth quarter totaled $4.8 million, 4 percent higher
than the prior year period mainly due to higher labour and non-refundable value-added tax (“VAT”) costs. On
a unit basis, general and administrative costs decreased by 8 percent over the prior year period due to higher
tonnes milled.
Full Year 2016
Gold production in 2016 was a record 216,735 ounces, exceeding the higher end of the Company’s full year
production guidance. Production increased by 19 percent versus the prior year period. Prior year production
was lower than planned due to material handling issues during the third quarter and the impact of artisanal
miners in the fourth quarter at Gora.
Cost of sales per ounce in 2016 was $834, which was 8 percent lower than the prior year mainly due to higher
production.
For 2016, total cash costs per ounce1 were $622, below the mid-point of the Company’s guidance range of
$600 to $650 per ounce and slightly lower than the prior year, due to higher production, which was partially
offset by a marginal increase in gross mine site costs from mining and processing more material.
All-in sustaining costs per ounce1 in 2016 were $929, below the mid-point of the Company’s guidance range
of $900 to $975 per ounce and slightly lower than the prior year mainly due to lower total cash costs per
ounce1.
Mining
Total tonnes mined for the full year were 13 percent higher than the prior year due to an increase in the
utilization of the mobile equipment fleet in keeping with the 2016 mine plan. Mining activities for 2016 were
mainly focused on the lower benches of the Masato deposit, which were completed during the first quarter
and the Gora and Golouma South deposits, which have been active throughout the year. Mining activities
commenced at Kerekounda in December. In the prior year period, mining was focused on the upper benches
of Masato, completion of phase 3 of the Sabodala pit and commencement of operations at Gora during the
third quarter of 2015.
Ore tonnes mined for 2016 were 72 percent lower than the prior year, while ore grades mined were 119
percent higher, as mining was shifted to higher grade deposits at Gora, Golouma South and Kerekounda.
Processing
Ore tonnes milled for the full year were 18 percent higher than the prior year. Mill throughput for 2016
represents the highest in Company history. The higher throughput rates reflect the benefits of the mill
optimization project, which included installation of the second crusher, which was commissioned a quarter
ahead of schedule and 12 percent lower than budget.
In 2016, head grades were similar to the prior year. High grade material mined in 2016 was supplemented
with material from the lower grade stockpiles built up over the past several years.
Costs – site operations
Total mining costs for the full year were $83.2 million, 9 percent higher than the prior year mainly due to a 13
percent increase in material movement partially offset by lower fuel prices. On a unit basis, mining costs for
2016 were 4 percent lower than the prior year mainly due to higher material movement. Total long-haul costs
for the full year were $4.0 million, $3.2 million higher than the prior year period, mainly due to an increase in
ore tonnes hauled in the current year from satellite deposits.
Total processing costs for 2016 were $43.1 million, 10 percent lower than the prior year, despite an 18 percent
increase in mill throughput, due in large part to lower fuel prices. As a result, unit processing costs decreased
by 24 percent compared to the prior year.
Total mine site general and administrative costs for 2016 were $18.0 million, 9 percent higher than the prior
year mainly due to increased labour and non-refundable VAT costs. On a unit basis, mine site general and
administrative costs decreased by 7 percent over the prior year mainly due to an increase in tonnes milled.
1 This is a non-IFRS performance measure. Please refer to the reconciliation of non-IFRS measures at the end of this MD&A.
REVIEW OF FINANCIAL RESULTS
(US$000's, except where indicated)20162015% Change20162015% Change Revenue 55,774 58,235 (4%) 268,850 224,620 20% Mine operation expenses (33,465) (36,303)(8%) (137,486) (126,792)8% Depreciation and amortization (9,557) (12,963)(26%) (44,042) (48,092)(8%)Cost of sales (43,022) (49,266)(13%) (181,528) (174,884)4%Gross profit 12,752 8,969 42% 87,322 49,736 76% Exploration and evaluation expenditures (1,101) (743)48% (4,760) (2,525)89% Administration expenses (3,557) (2,901)23% (8,973) (10,835)(17%) Corporate social responsibility expenses1 (779) (916)(15%) (3,613) (2,853)27% Share-based compensation 538 (9)N/A (4,405) (1,761)150% Finance costs (908) (973)(7%) (4,363) (3,159)38% Impairment charge - (90,000)N/A - (90,000)N/A Net foreign exchange (losses)/gains 314 (253)N/A (2,589) 1,901 N/A Other (expenses)/income (188) (669)(72%) (7,401) 1,381 N/A Profit/(loss) before income tax 7,071 (87,495)N/A 51,218 (58,115)N/A Income tax (expense)/recovery (8,563) 8,012 N/A (23,327) 2,502 N/A Net profit/(loss) (1,492) (79,483)(98%) 27,891 (55,613)N/A Loss/(profit) attributable to non-controlling interests 206 7,659 (97%) (4,782) 5,070 N/A Profit/(loss) attributable to shareholders of Teranga (1,286) (71,824)(98%) 23,109 (50,543)N/A Basic earnings/(loss) per share (0.00) (0.19)(99%) 0.06 (0.14)N/AThree months ended December 31,Twelve months ended December 31,1 In 2016 in order to better align cost presentation with industry peers, the Company has reclassified regional administration costs directly relating to cost of sales activities from administration expenses to cost of sales and corporate social responsibility costs to a separate line in the financial statements for the current and prior period. (US$000's)Mine operation expenses20162015% Change20162015% ChangeMine production costs 39,923 38,074 5% 148,624 142,131 5%Royalties 3,276 3,868 (15%) 16,904 13,288 27%Regional administration costs 699 736 (5%) 2,105 2,531 (17%)Capitalized deferred stripping (4,775) (2,715)76% (18,492) (14,547)27%Inventory movements (5,658) (3,660)55% (11,655) (16,611)(30%)Total mine operation expenses 33,465 36,303 (8%) 137,486 126,792 8%Twelve months ended December 31,Three months ended December 31,(US$000's)Depreciation and amortization expenses20162015% Change20162015% ChangeDepreciation and amortization 9,992 10,865 (8%) 39,987 42,008 (5%)Inventory movements - depreciation (60) 2,307 N/A 5,566 7,458 (25%)Capitalized deferred stripping - depreciation (375) (209)79% (1,511) (1,374)10%Total depreciation and amortization expenses 9,557 12,963 (26%) 44,042 48,092 (8%)Three months ended December 31,Twelve months ended December 31,
Review of financial results for the three months ended December 31, 2016 and 2015
Revenue
Revenue for the three months ended December 31, 2016 decreased by 4 percent over the prior year period due to
lower sales volumes from lower production in the current period partially offset by higher gold prices. The fourth quarter
gain on gold derivative contracts has been classified within other income (expense).
Mine operation expenses
For the three months ended December 31, 2016, mine operation expenses decreased by 8 percent over the prior year
period to $33.5 million primarily due to higher capitalization of deferred stripping costs and inventory movements, and
lower royalties expense, partly offset by higher mine production costs.
Mine production costs of $39.9 million were 5 percent higher than the prior year period. See Review of Operating
Results section for additional information.
During the current quarter, $4.8 million in deferred stripping costs were capitalized compared to $2.7 million capitalized
in the prior year period, mainly due to a higher a strip ratio at Gora in the current year period. Costs capitalized are
amortized to expense as the deposit is mined.
Inventory movements resulted in a $5.7 million reduction to mine operating expenses in the current period compared
to a reduction of $3.7 million in the prior year period, mainly as a result of higher cost ounces being accumulated on
the stockpile during the fourth quarter of 2016, compared to the same period in 2015.
For the three months ended December 31, 2016, $3.3 million of royalties were expensed compared to $3.9 million in
the prior year period. The decrease was primarily due to lower revenues in the current quarter, lower amortization of
advanced royalties related to production from the former Oromin Joint Venture Group (“OJVG”) deposits and lower
royalties related to Gora.
Depreciation and amortization expenses
Depreciation and amortization expense for the three months ended December 31, 2016 was $9.6 million, $3.4 million
less than the prior year period due to a 14 percent decrease in gold ounces produced. Approximately 70 percent of
the Sabodala mine’s fixed assets are depreciated using the units of production method of depreciation.
Administration expense
Administration expense for the three months ended December 31, 2016 was $3.6 million, $0.7 million higher compared
to the prior year period. Higher administration expense in the current quarter is mainly due to higher year end accruals
for audit fees and annual employee incentives. The increases were partially offset by savings in legal fees.
Share-based compensation
Share-based compensation expense for the three months ended December 31, 2016 was in a credit position of $0.5
million, compared to a nominal expense in the prior year period. This was primarily due to a lower share price for the
Company at the end of the current quarter, which reduced the expense charge for both restricted share units and fixed
bonus units for the current year period.
Exploration and evaluation
Exploration and evaluation expenditures for the three months ended December 31, 2016 were $1.1 million, $0.4 million
higher than the prior year period. The Company continues to take a systematic and disciplined approach to exploration.
Please see the Regional Business and Project Development and Exploration sections for additional information.
Spot price per ounce of gold20162015% ChangeAverage$1,221$1,10610%Low$1,126$1,0497%High$1,313$1,18411%Average Realized$1,197$1,0999%Three months ended December 31,
Finance costs
Finance costs for the three months ended December 31, 2016 were $0.9 million, representing a slight decrease
compared to the prior year period, mainly due to slightly lower interest and deferred financing costs on borrowings.
Impairment charge
During the fourth quarter 2015, the Company recorded a non-cash 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 the Company’s long-term gold price assumptions. There was no similar impairment issue in the fourth
quarter of 2016.
Other income (expense)
Other expenses for the three months ended December 31, 2016 were $0.2 million compared with $0.7 million in the
prior year period. Other expenses in the current quarter included, Gryphon related acquisition costs of $0.4 million and
costs associated with maintaining the Gryphon office of $0.4 million. This was partially offset by a $0.5 million gain on
derivative instruments.
Income tax expense
For the three months ended December 31, 2016, the Company recorded income tax expense of $8.6 million, comprised
of current income tax expense of $6.3 million and deferred income tax expense of $2.3 million. In the same prior year
period, the Company recorded a recovery of income taxes of $8.0 million, comprised of recoveries of deferred income
taxes of $14.2 million, including a recovery of deferred income taxes of $12.1 million related to a non-cash impairment
charge on long-lived assets and goodwill, net of current income tax expense of $6.2 million. In the 2016 period, current
income tax expense was similar to the prior year period, while deferred income tax expense recorded in the current
year period reflects a reduction in temporary differences between the tax basis of assets and liabilities and their carrying
amounts.
Net profit
Consolidated net loss attributable to shareholders for the three months ended December 31, 2016 was $1.3 million
($0.00 loss per share), compared to consolidated net loss of $71.8 million ($0.19 loss per share) in the prior year period.
The Company recorded a non-cash impairment charge on long-lived assets and goodwill of $77.9 million (net of tax
effects) in 2015. In the 2016 period, the loss attributed to shareholders was mainly due to higher deferred income tax
expense.
Review of financial results for the twelve months ended December 31, 2016 and 2015
Revenue
Revenue for the twelve months ended December 31, 2016 increased by $44.2 million over the prior year period due to
increased sales volume and higher average realized gold prices. Gains and losses on gold derivative contracts have
been classified within other income (expense).
Mine operation expenses
For the twelve months ended December 31, 2016, mine operation expenses increased by 8 percent over the prior year
period to $137.5 million, primarily due to higher mine production costs, higher royalty expense and lower inventory
movements, partly offset by higher capitalized deferred stripping costs.
Mine production costs in the current year of $148.6 million were $6.5 million higher than the prior year period. See
Review of Operating Results section for additional information.
For the twelve months ended December 31, 2016, $16.9 million of royalties were expensed compared to $13.3 million
Spot price per ounce of gold20162015% ChangeAverage$1,251$1,1608%Low$1,077$1,0493%High$1,366$1,2965%Average Realized$1,234$1,1616%Twelve months ended December 31,
in the prior year. The increase was primarily due to higher revenue in the current year, higher amortization of advanced
royalties related to production from the former OJVG deposits and royalties related to Gora.
In the twelve months ended December 31, 2016, $18.5 million of deferred stripping costs were capitalized relating to
Gora which is amortized as the deposit is mined. The prior year amount of $14.5 million relates mainly to the
capitalization of stripping costs at the Masato and Gora deposits.
Inventory movements in the twelve months ended December 31, 2016 resulted in a net decrease to mine operation
expenses of $11.7 million compared to a reduction of $16.6 million in the prior year, mainly as a result of higher cost
ounces being accumulated on the stockpile during the 2016, partly offset by a drawdown of stockpile inventory.
Depreciation and amortization expenses
Depreciation and amortization expense for the twelve months ended December 31, 2016 was $44.0 million, $4.1 million
lower than the prior year period. Depreciation expense in 2016 reflects a lower amortization base for property, plant
and equipment and mine development assets which was attributable to an impairment charge recognized on the
Company’s assets at the end of 2015. This was partially offset by increased production and corresponding depreciation
rates.
Administration expense
Administration expense for the twelve months ended December 31, 2016 was $9.0 million, $1.8 million lower than the
prior year period. Lower administration expense in the current period is mainly due to lower corporate office and legal
and consulting costs.
Share-based compensation
Share-based compensation expense for the twelve months ended December 31, 2016 was $4.4 million, $2.6 million
higher than the prior year period due to expenses related to new grants of share-based awards issued during 2015 and
2016, and significant increases in the Company’s share price during the full year period.
The Company grants Deferred Share Units (“DSUs”) to non-executive directors and Restricted Share Unit (“RSUs”) to
employees to allow participation in the long-term success of the Company and to promote alignment of interests
between directors, employees and shareholders. The following table summarizes share-based awards to directors and
employees of the Company.
As of December 31, 2016, 18,945,527 common share stock options were issued and outstanding of which 14,720,236
are vested and 4,187,791 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 management’s best
estimate of outcome of achieving desired results. Under IFRS, the accelerated method of amortization is applied to
new grants of stock options and fixed bonus plan units, which results in approximately 75 percent of the expense related
to stock options and fixed bonus units being recorded in the first year of grant.
Grant UnitsGrant Price1OutstandingTotal Vested2RSUs 6,140,338C$0.677,667,5884,455,201DSUs675,000C$0.671,920,0001,747,500Fixed Bonus Plan Units137,500C$0.671,797,5001,567,2812 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. RSUs vest over a three year period, with 50 percent of the award vesting upon achievement of two predetermined operational criteria, and 50 percent vesting with the passage of time. Both DSUs and RSUs and are payable in cash. The Company used the December 31, 2016 closing share price of C$0.82 to value the vested DSUs and RSUs. 1 Grant price determined using a volume weighted average trading price of the Company’s shares for the 5-day period ended on the grant date.Twelve months ended December 31,As of December 31, 2016Balance as at December 31, 201515,539,165 C$2.42 Exercised(247,347) C$0.65 Granted 14,141,841 C$0.68 Forfeited(488,132) C$0.74Balance as at December 31, 201618,945,527 C$2.10Number of OptionsWeighted Average Exercise Price1 The exercise price of new common share stock options granted during the first quarter was determined using a volume weighted average trading price of the Company’s shares for the 5-day period ending on the grant date.
Corporate social responsibility expense
Corporate social responsibility expense for the twelve months ended December 31, 2016 was $3.6 million, $0.8 million
higher than the prior year period mainly due to activities related to social commitments, including a road construction
project in 2016.
Exploration and evaluation
Exploration and evaluation expenditures for the twelve months ended December 31, 2016 were $4.8 million, $2.2
million higher than the prior year period. The Company continues to take a systematic and disciplined approach to
exploration. Please see the Regional Exploration section for additional information.
Finance costs
Finance costs for the twelve months ended December 31, 2016 were $4.4 million, $1.2 million higher than the prior
year period mainly due to higher interest and deferred financing costs on borrowings and higher bank charges.
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. There was no similar impairment charge in 2016.
Net foreign exchange gains (losses)
Net foreign exchange losses of $2.6 million were realized by the Company in the twelve months ended December 31,
2016 primarily due to realized and unrealized foreign exchange losses recorded during the first and third quarters 2016
as the Euro and CFA Franc appreciated relative to the US dollar. Net foreign exchange gains of $1.9 million were
realized for the twelve months ended December 31, 2015 primarily due to gains on Euro denominated payments due
to strengthening of the US dollar relative to the Euro since the start of 2015.
Other income (expense)
Other expense for the twelve months ended December 31, 2016 was $7.4 million compared with other income of $1.4
million in the prior year. Other expense in the current period included $2.2 million in losses on gold derivative contracts,
$1.7 million in Gryphon acquisition related costs, $1.3 million for business and other taxes, $1.0 million related to
registration fees to merge the Sabodala and Golouma mining concessions as part of the acquisition of the OJVG, as
well as, miscellaneous non-recurring costs incurred during the period. Other income in the prior year related to realized
gains on gold forward contracts.
Income tax expense
Effective May 2, 2015, following 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 twelve months ended December 31, 2016, the Company recorded income tax expense of $23.3 million,
comprised of current income tax expense of $19.9 million and deferred income tax expense of $3.4 million. In the prior
year period, the Company recorded recoveries of income taxes of $2.5 million, comprised of recoveries of deferred
income taxes of $11.2 million, including a recovery of deferred income taxes of $12.1 million related to a non-cash
impairment charge on long-lived assets and goodwill, net of current income tax expense of $8.7 million. Higher current
income tax expense for 2016 is mainly due to a full year of taxable profit in 2016, compared to 2015, with the end of
the Company’s tax holiday in Senegal on May 2, 2015, as well as higher gross profit.
Net profit
Consolidated net profit attributable to shareholders for the twelve months ended December 31, 2016 was $23.1 million
($0.06 per share), compared to consolidated net loss of $50.5 million ($0.14 loss per share) in the prior year period.
The Company recorded a non-cash impairment charge of $77.9 million (net of tax effects) in the prior year. In 2016,
higher gross profit from higher revenues was partly offset by higher income taxes, other expenses, foreign exchange
losses, share-based compensation expense, and exploration and evaluation expenditures.
REVIEW OF QUARTERLY FINANCIAL RESULTS
Our revenues over the last several quarters reflect the variation in quarterly production and fluctuations in gold price.
Cost of sales are driven by production volumes and are also influenced by fuel costs, foreign currency movements and
operational efficiencies. Operating cash flow levels fluctuate 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 of $77.9 million (net of tax
effects).
Operating cash flows during the first three quarters of 2016 were higher mainly due to higher gold production and sales.
Operating cash outflows during the fourth quarter 2016 was negative mainly due to royalty payments of $17.2 million
made during the quarter, representing all of the 2015 and first three quarters of 2016 royalty expense. Normally,
royalties related to the prior year are paid in the third quarter of the following year. The Company has now moved to
paying royalties one quarter in arrears.
BUSINESS AND PROJECT DEVELOPMENT
BURKINA FASO
Acquisition of Gryphon Minerals Limited
In June 2016, Teranga announced that it had entered into an agreement to acquire Gryphon in an all share transaction.
On July 19, 2016, the Company acquired a 5 percent interest in Gryphon by way of a placement (the “Gryphon
Placement”). Through the Gryphon Placement, Teranga subscribed for 21.2 million fully paid ordinary shares of
Gryphon for total consideration of approximately $3.3 million. As a result of the Gryphon Placement, Teranga owned
approximately 5 percent of Gryphon’s issued shares as at September 30, 2016. Following the Gryphon Placement,
Gryphon commenced a resource conversion drill program, plant re-design studies required to complete a fully optimized
and de-risked feasibility study in the first half of 2017, and an update to the relocation action plan and tailings storage
facility design required as a result of the decision to move forward with a carbon-in-leach plant.
On October 13, 2016, Teranga completed the acquisition (the “Acquisition”) of Gryphon, by way of a scheme of
arrangement (the “Scheme”) under the Australian Corporations Act 2001 (Cth).
Pursuant to the Scheme, shareholders of Gryphon received an aggregate of 70,638,853 Teranga common shares held
on the Toronto Stock Exchange or chess depository interests (“CDIs”) listed on the Australian Securities Exchange
(“ASX”) (based on their election) on the basis of 0.169 Teranga common share or CDI for each Gryphon common share
not already held by the Company.
Gryphon’s key asset is the Banfora gold project ("Banfora"), a permitted, open pit gold project located in Burkina Faso,
West Africa, a mining-friendly jurisdiction.
Banfora Gold Project Update
Preparation of the feasibility study has progressed during the fourth quarter with a focus towards the delivery of a NI
43-101 compliant resource and reserve estimate, revised plant design, construction execution plan and updated capital
and operating costs. The new study is expected to leverage Teranga’s extensive operational and construction
experience in West Africa to optimize the study along with independent technical consultants. The completed feasibility
study is expected by mid-year 2017 at which point a construction decision will be made. An infill exploration program
for the Stinger deposit began in the fourth quarter and, together with a number of additional prospective areas on the
(US$000's, except where indicated)Q4 2016Q3 2016Q2 2016Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Revenue 55,764 60,316 73,562 79,198 58,235 37,830 60,064 68,491 Average realized gold price ($/oz) 1,197 1,333 1,261 1,169 1,099 1,112 1,198 1,217 Cost of sales 43,022 37,748 48,227 52,531 49,266 33,018 43,827 48,773 Net earnings (loss)1 (1,286) 10,437 6,146 7,812 (71,824) 1,567 6,725 12,988 Net earnings (loss) per share ($)1 (0.00) 0.03 0.02 0.02 (0.19) 0.00 0.02 0.04 Operating cash flow (13,627) 13,255 20,958 24,143 9,755 (8,221) 12,269 16,631 201620151 The first quarter 2015 includes the impact of restating the deferred income tax expenses related to temporary timing differences.
Banfora property, is expected to continue to be explored in 2017. In parallel, the strategic review and execution plan
for the relocation action plan and livelihood restoration plan has begun.
SENEGAL
Mill Optimization
Commissioning of the additional crusher and screening station was completed in third quarter 2016 allowing for steady
state crush feed to the SAG mill throughout the fourth quarter. Sustained throughput rates on a daily basis were
achieved in excess of 520-580 tonnes per hour with a fresh/oxide blend throughout fourth quarter, achieving the desired
outcome of a 15 percent improvement to the original throughput capability of the plant.
With the major capital project now complete, further optimization has shifted focus to improving the grind size
throughput rate and gold recovery relationship as the varying ore blends are processed. Specific projects to assist with
this include optimal power application to the ball mill motors, a revised gearbox design (installed in fourth quarter),
improvements in reliability and throughput rate of the recycle (pebble) crusher and general semi autogenous ball-mill-
crushing operating and data analytic improvements.
CÔTE D’IVOIRE
Exploration Agreement with Miminvest
During the second quarter 2016, the Company entered into an exploration agreement with Miminvest SA (“Miminvest”)
to identify and acquire gold exploration stage mining opportunities in Côte d'Ivoire (the “Exploration Agreement”).
Miminvest is a company established to invest in gold and natural resources in West Africa and is controlled by the
Mimran family and Mr. David Mimran. It holds four existing exploration permits, representing 1,838 km2 in Côte d'Ivoire.
Mr. David Mimran, in addition to being CEO of Miminvest, is CEO of Grands Moulins d’Abidjan and Grands Moulins de
Dakar, one of the largest producers of flour and agri-food in West Africa and is also a director and the largest
shareholder of Teranga.
Under the terms of the Exploration Agreement, a separate entity was created and is wholly owned and funded by
Teranga. Miminvest will transfer into the entity its permits giving Teranga a 100 percent ownership interest and in
exchange Miminvest retains a net smelter royalty interest of 3 percent and will provide ongoing in-country strategic
advice. Teranga reimbursed Miminvest for all direct and reasonable costs associated with exploration work related to
all permits included within the Exploration Agreement. Furthermore, the entity will pursue additional exploration projects
in Côte d'Ivoire outside of the existing Miminvest permits. One additional permit was added in the fourth quarter bringing
the total permits held to five.
The Exploration Agreement represents an opportunity to increase Teranga’s optionality and expand the Company’s
footprint in West Africa with Mr. David Mimran, a strong local partner with whom we have worked closely. The combined
Teranga and Gryphon technical team has significant expertise, a track record of success and in-depth knowledge of
the geology of Côte d’Ivoire, making this a logical next step in our West Africa growth plan.
EXPLORATION
Senegal Exploration Highlights
On the Sabodala mine lease, drilling evaluation of the Goumbati West deposit continues to yield encouraging gold
results over what is now a confirmed strike length of approximately 1.5 kilometres which warrants additional work. In
addition, the Niakafiri drilling program to upgrade resource classifications and confirm model interpretations
commenced on the Dinkokono-Niakafiri Main and Niakafiri Southeast deposits.
Within the regional permits, additional core drilling provided encouraging results at the Doughnut Jam prospect and the
Marougou Main deposit which warrant additional work. On the Sounkounkou KB prospect, trenching across
geochemical soil anomalies identified two broad mineralized zones with potential for additional exploration.
Sabodala Mine Lease Reserve Development
Goumbati West Deposit
During the fourth quarter of 2016, positive results were received from the Goumbati West deposit core-drilling program
which now warrants additional work. The deposit comprises, a NNE trending gold in quartz vein system comprised of
several Zones (A, B, C and D) located approximately 10 kilometres from the Sabodala Plant. Drilling evaluation remains
at an early stage and continues to target shallow, near-surface oxide mineralization along strike and to depths where
mineralization is transitioning into fresher material.
The Goumbati West quartz vein system displays very good hole-to-hole and section-to-section continuity and remains
open to further expansion along trend both north and south as well as to depth. With recent drilling success of Zone D
representing a 520-metre strike length along trend to the north of Zones A and B, the Goumbati West quartz vein
system comprises a minimum strike extent of approximately 1,500 metres. Fifty-nine drill holes totaling 5,600 metres
were drilled during fourth quarter 2016, along the trend to the north (Zone D) testing both gold-in-soil geochemical
anomalies and coincident trench results located between Goumbati West and the Kobokoto South prospect. Positive
drilling results also continue to be received from the Goumbati West Zone C area, which covers an extensive gold-in-
soil geochemical anomaly located immediately west of previously drill defined Goumbati West Zones A and B,
suggesting a sub-parallel quartz vein system is present.
In the first half 2017, results from the fourth quarter 2016 program, and ongoing drilling in first quarter 2017, will be
used to upgrade the initial mineral resource estimate.
Niakafiri Deposit
A two-phase drilling program commenced at the Niakafiri deposit in fourth quarter 2016. Phase 1 involved drilling the
eastern side of the deposit. Phase 2 drilling of primarily the western side of the deposit began in February 2017.
Community resettlement negotiations will take place alongside the drill program. The objective of the drill program is
to upgrade the resource classifications, test mineralization extents and confirm model interpretations. The Niakafiri
deposit area is located 3 kilometres to the southeast of the Sabodala Plant.
Other Mine Lease Prospects
Elsewhere on Sabodala’s mine lease, in addition to ongoing first quarter 2017 drilling at the Niakafiri and Goumbati
West deposits, drilling programs are planned to follow-up on successful initial drilling at Maleko, test for along-trend
gold mineralization at the Niakafiri South extension target and evaluate positive trenching results at the Torosita
Prospect.
Senegal Regional Exploration
Several regional exploration targets continued to return favourable trenching and drilling results, as described below.
Marougou Main Deposit
The Marougou Main deposit is located approximately 10 kilometres east of the Gora open pit, which is located
approximately 25 kilometres north of the Sabodala Plant. The NNE trending Marougou Main deposit is comprised of a
series of shallow to moderately dipping, sub-parallel gold mineralized horizons within a sequence of steeply dipping,
alternating fine and coarse bedded sediments for which an initial resource estimate has been calculated. A limited
resource expansion drilling program commenced at Marougou Main during fourth quarter 2016, focusing primarily on
defining strike extension correlation and depth continuity of the sub-parallel gold horizons. Initial results from the eleven
hole, 650 metre drill program have been encouraging. The remaining assay results are expected in first quarter 2017,
which may warrant further follow up trenching and drilling programs.
Other Regional Prospects
On the Sounkounkou Permit systematic exploration of the various targets and prospects throughout the Doughnut area
continue to provide considerable encouragement, all of which are expected to lead to follow-up trenching and drilling
campaigns on a number of fronts in the first half 2017. At the Jam prospect, the initial six holes have yielded
encouraging results and trenching programs on the Honey prospect continue to outline extensions to several broad
zones of gold mineralization, requiring additional follow-up work. More recent exploration trenching conducted over
geochemical gold-in-soil anomalies at the KB prospect have identified two broad mineralized zones with potential
warranting follow up evaluation in first quarter 2017.
Elsewhere, Marougou Main is proximal to several other prospects, Tourokhoto, Marougou North, Marougou South and
Dembala Hill, where trenching and drilling exploration programs are planned for the first half of 2017.
A more detailed geologic summary of the fourth quarter 2016 exploration results is available on the Company’s website
at www.terangagold.com under “Exploration”.
Burkina Faso Exploration Highlights
Banfora Mine License Reserve Development
As a part of the resource/reserve definition program, drilling began at the Stinger deposit in November 2016 following
completion of similar drill efforts at Samavogo, Fourkoura and Nogbele deposits in the third quarter of 2016. In total,
fourteen holes comprising 1,800 metres were completed prior to program end in mid-December 2016. The Stinger
deposit drill program recommenced early in the first quarter of 2017.
In addition, follow-up drilling, based on positive third quarter 2016 drilling results from both the Samavogo deposit and
the Tahiti Zone at the Nogbele deposit, is planned for first quarter 2017.
Banfora Regional Exploration
An auger drilling program began at both the Kafina West and the Ouahiri prospects in November 2016. These two
prospects are rated high priority based on the Company’s current understanding of the numerous prospects throughout
the Banfora regional ground. Prior to close of drilling in mid-December 2016 a total of 251 holes comprising 1,270
metres of auger drilling were completed at Kafina West, and 65 holes totalling 430 metres were finished at Ouahiri.
The Ouahiri program re-commenced early in first quarter 2017.
In addition, both core and reverse circulation drilling are expected to commence during first quarter 2017 at a number
of Regional prospects including Kafina West, Ouahiri, Hillside, Muddhi and, Pettite Colline. Auger drilling is expected
to also continue on various prospect areas as an early-stage screening tool.
Golden Hill
A short field exploration campaign began at Golden Hill in November 2016 and concluded in mid-December 2016. The
purpose of this program was to rotary air blast (“RAB”) drill two prospects, Nahiri and Pourey-Peksou, and to commence
geologic and detailed structural mapping at the Ma and Ma West prospects in preparation for drilling evaluations to
begin early in 2017. In total, 99 RAB holes were completed consisting of 1,320 metres of drilling at both Pourey-Peksou
and Nahiri. The results of the mapping program identified favourable structural trends hosting gold mineralization and
will be utilized in designing the upcoming drilling program at Ma and Ma West which began in late January 2017.
Field activities in 2017 are expected to be directed at many of the high priority prospects throughout Golden Hill
including Ma, Ma Breccia, Ma East, Nahiri, Pourey-Peksou, Zones A-B-C, Jackhammer Hill and Didro. Field activities
are expected to include detailed soil sampling, detailed geologic and structural mapping, induced polarization
geophysics, auger drilling, RAB drilling, reverse circulation drilling and diamond core drilling.
Côte d’Ivoire Exploration Highlights
Teranga holds, by way of joint venture, five greenfield exploration tenements totalling nearly (1,838 km2) in Côte d’Ivoire.
As a follow-up to initial field investigations, including stream sediment and orientation soil sampling, a high precision
bulk leach extractable gold (“BLEG”) drainage survey is planned across much of the current land package at an average
density of one sample per 5 km2. The detailed BLEG surveys, scheduled for the first half 2017, is expected to include
acquisition of remote sensing data and undertaking reconnaissance scale geological mapping ahead of drawing up
other work plans based off the drainage sampling results.
At one of the current tenements, Guitry, the initial stream sediment and orientation soil sampling results warranted a
follow-up grid soil program. Results from the grid-sampling program have partially outlined a large gold-in-soil geochem
anomaly. In first quarter 2017, the plan is to expand this grid coverage to include closer-spaced sample points and a
hand-pitting program.
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, and the focus remains on proactive, people-based safety management which uses a documented
systematic approach. In 2015, Management focused efforts on improving loss prevention controls and integrating these
into the daily life of all who conduct their task at the operations and intensified internal auditing with regards to safety
management systems. In 2016, there has been a focus on pro-active reporting through a documented Task Observation
Process and departmental self-inspections on site and applying a broader scope to risk management through enterprise
risk evaluation and management. For 2017, the focus remains on the people through quality reporting and close out
of incidents and actions within an allocated time frame using an appointed investigation team on site. As well, there will
be a focus on adopting the safety culture from Sabodala to the newly acquired Banfora gold project.
Creating and sustaining a healthy and safe work environment for all stakeholders is never compromised. The Company
incurred zero lost time injuries (“LTI”) in the last three consecutive years that trend has continued into 2017 as of the
date of this report. As of year-end 2016, the Company achieved 1,213 consecutive days without an LTI.
CORPORATE SOCIAL RESPONSIBILITY
Teranga’s Corporate Social Responsibility (“CSR”) program continues to set the industry standard for socially
responsible mining in Senegal, with strong emphasis on long-term economic and social development partnerships with
the communities around its mine and across the country. In recognition of its success in effective partnerships with its
communities, Teranga received a number of notable CSR awards in 2016 including the Canadian UN Sustainable
Development Goals (SDG) Award and the Prospectors & Developers Association of Canada Environmental and Social
Responsibility Award.
In 2016 Teranga continued to increase its footprint in the areas of impact mitigation and benefits sharing within its
regional communities. At Gora, a community fund management committee was created in partnership with local
leaders from six villages to oversee the funding and execution of community programs. Created by Teranga, this
project-specific fund was established to support alternative livelihoods, employment generation and other long-term
benefits for the Gora communities, which previously relied on artisanal mining activity. In its first year, the fund
supported the provision of a fully equipped tractor, several grain mills, a hotel and a market garden to the targeted
communities.
Teranga Gold continued to execute on its regional Teranga Development Strategy in 2016 with the completion of the
Kedougou Region decentralization development plans created in close collaboration with the Government of Senegal.
On the partnerships front, Teranga continued to sponsor SODEFITEX, the largest in-country textile producer, in its
support of 500 cotton farmers as part of the large scale cotton textile industry “White Gold for Life” program launched
by Teranga in partnership with the government and local companies. Teranga’s partnership with the Fondation Paul
Gérin Lajoie for the vocational training of 50 youths in Tambacounda and Kédougou Regions was in its second year in
2016, with the first class scheduled to graduate in early 2017. On the local procurement front, Teranga’s Kédougou
regional procurement program focused on training and capacity building of 20 regional companies as well as the
continued delivery of several SGO procurement contracts.
Teranga progressed its local CSR communications platform in 2016 through the creation of a Sabodala community
website and a revised responsibility report format in order to further improve communication and transparency with its
local and national stakeholders.
Following the acquisition of Gryphon Minerals, Teranga retained global resettlement consultants, rePlan Inc., in late
2016 in order to progress resettlement planning activities in conjunction with the resettlement of 430 households within
the Banfora, Burkina Faso project area. Comprehensive community development planning and livelihood restoration
activities are planned at Banfora in 2017 as part of the resettlement action plan.
MARKET REVIEW – IMPACT OF KEY ECONOMIC TRENDS
Gold Price
The price of gold is the largest factor in determining our profitability and cash flow from operations. During 2016, the
average London PM Fix price of gold was $1,251 per ounce, with gold trading between a range of $1,077 and $1,366
per ounce. This compares to an average of $1,160 per ounce during 2015, with a low of $1,049 per ounce and a high
of $1,296 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. In 2016, the Company had entered into gold forward
contracts and zero cost collars to manage its exposures. Management may consider entering into derivative contracts
should the price and terms be deemed acceptable.
The U.S. Presidential election and the United Kingdom’s likely withdrawal from the European Union, led to higher
geopolitical risk and currency volatility. Upcoming elections in France, Germany, and Netherlands, could add to this
uncertainty. During periods of market instability, investors often seek out safe haven investments like gold. Reduced
gold demand in India and China in 2016 negatively affected global demand figures, however, some forecasts have
suggested this trend may reverse in 2017. Gold mine supply decreased by approximately 0.5 percent in 2016, the first
annual decline since 2008. Gold mine supply is forecasted to decline further in 20171, as free cash flow is being
allocated to balance sheet recapitalization rather than investment in exploration and new projects1. Overall, we believe
demand and supply fundamentals for gold continue to support higher long term prices.
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 of maximizing shareholder value
through effective management of our Sabodala mine along with our development and exploration programs.
Oil Price
Fuel costs related to 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 totaled approximately $27 million in 2016
or approximately 18 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 generator engines provide power for the operations. In 2016, the operations consumed
approximately 30 million litres of heavy fuel oil (“HFO”). This equates to costs of approximately $0.12 per kilowatt hour,
which is less than the cost of grid electricity in industrialized Senegal. Sabodala’s mobile fleet runs on light fuel oil
(“LFO”) and the operations consumed approximately 20 million litres of LFO in 2016. We source our HFO and LFO
from an international fuel supplier with a local distribution network in Senegal.
Our main benchmark for fuel prices is Brent crude oil, which increased by 34 percent in 2016. Both crude oil and
natural gas prices varied significantly during the year. Oil prices fell to very low prices early in 2016 but subsequently
increased by year end. U.S. domestic oil production has increased significantly over the last few years, leaving oil
exporters competing for new customers. Saudi Arabia, Nigeria, and Algeria for example, now have to compete heavily
to supply Asian markets, with prices being lowered as a result. In November 2016, the Organization of the Petroleum
Exporting Countries (“OPEC”) agreed to limit production for six months starting in 2017. Although this may strengthen
prices in the short term, some analysts believe the production caps will only have limited value in regulating prices as
Iraq and North America continue to increase production.
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 prices in Senegal relative to market oil prices by 20 to
30 percent. Furthermore, 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, the prices paid by the Company for HFO and LFO in 2016 were
lower than prices paid in the prior year, notwithstanding the increase in market fuel prices in 2016 from the beginning
of the year. The Company will be assessing the fuel market in Burkina Faso in conjunction with the feasibility study for
the Banfora gold project.
The Company does not have any oil hedges in place. Management may consider entering into oil hedge contracts
should the price and terms be deemed acceptable.
Currency
A significant portion of operating costs and capital expenditures of the Sabodala mine’s operations are denominated in
currencies other than U.S. 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, financial markets have suffered from a series of global political events in 2016. Currency volatility is likely to
remain high given the uncertainty of the policy decisions of the new U.S. administration and the impact of the United
Kingdom’s exist from the European Union. The Euro entered December 2016 around 1.06 to the U.S. Dollar, slightly
above a multi-year low surrounding the new U.S. administration. Euro exchange rates were volatile throughout the
year despite modest economic growth.
All of the Company’s current 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. The Company
had previously hedged a portion of its exposure to the Euro using forward contracts, and currently does not have any
currency hedges in place. With the Company’s projects in Burkina Faso and Côte d'Ivoire, the Company’s operating
1 Source: Zacks Equity Research
costs and capital will also have portions denominated in currencies other than the U.S. dollar. Management will
regularly assess currency exposures and may consider entering into hedge programs should the price and terms be
acceptable.
FINANCIAL CONDITION REVIEW
Summary Balance Sheet
Balance Sheet Review
Cash
The Company’s cash and cash equivalents balance at December 31, 2016 was $95.2 million, $50.8 million higher than
the balance at the start of the year, primarily due to cash flow provided by operations of $44.7 million and cash flows
from financing activities of $54.3 million. The cash inflows were reduced by capital expenditures and investments
totalling $48.1 million during 2016.
Trade and Other Receivables
The trade and other receivables balance of $9.9 million includes $7.8 million in VAT recoverable which is expected to
be refunded over in 2017. 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.
Other Assets
Other assets increased by $67.3 million to $515.8 million in 2016. The increase was attributed to the acquisition of
Gryphon for $54.1 million recorded as mine development expenditures and $13.2 million of sustaining capital
expenditures related to the Company’s Sabodala mine operations. In 2016, the Company completed the mill
optimization project at Sabodala.
Available for Sale Financial Assets
Through its wholly owned Gryphon subsidiary, the Company now holds 13.5 million shares of Tawana Resources NL.
As at December 31, 2016, these shares are valued at $1.2 million.
As at December 31, 2016As at December 31, 2015Balance SheetCash and cash equivalents 95,188 44,436 Trade and other receivables 9,882 15,701 Inventories 171,232 164,427 Deferred tax assets 20,084 23,098 Other assets 515,820 448,554 Available for sale financial assets 1,171 - Total assets 813,377 696,216 Trade and other payables 47,409 62,545 Borrowings 13,844 13,450 Provisions 34,473 30,824 Deferred revenue 68,815 91,345 Other liabilities 31,903 19,783 Total liabilities 196,444 217,947 Total equity 616,933 478,269
Trade and Other Payables
As at December 31, 2016 the trade and other payables balance decreased by $15.1 million to $47.4 million. The
decrease was primarily the result of a reduction in year-end trade payables and settlement of royalties payable to the
Republic of Senegal.
Deferred Revenue
During the twelve months ended December 31, 2016, the Company delivered 22,500 ounces of gold to Franco-Nevada
and recorded revenue of $28.1 million, consisting of $5.2 million received in cash proceeds, $0.4 million in accounts
receivable and $22.5 million recorded as a reduction of deferred revenue.
Other Liabilities
The increase in other liabilities in 2016 was a result of higher current tax liabilities of $11.1 million and higher deferred
income tax liabilities of $1.2 million. The increase to deferred income tax liabilities was due to the acquisition of
Gryphon.
Liquidity and Cash Flow
Cash Flow
Sources and Uses of Cash
(US$000's)Cash Flow 2016201520162015 Operating (13,627) 9,755 44,729 30,434 Investing (5,673) (12,307) (48,129) (47,682) Financing 55,566 17,109 54,276 25,873 Effect of exchange rates on cash holdings in foreign currencies 1,051 - (124) 1 Change in cash and cash equivalents during the period 37,317 14,557 50,752 8,626 Cash and cash equivalents - beginning of period 57,871 29,879 44,436 35,810 Cash and cash equivalents - end of period 95,188 44,436 95,188 44,436 Three months ended December 31,Twelve months ended December 31,Cash Flow - Sources and Uses (US$000's)Cash Flow Prior to Acquistion and Equity OfferingsNet cash acquired from GryphonExpenditures related to GryphonNet Proceeds from Equity OfferingsConsolidated Cash Flow Operating 51,411 (6,682) 44,729 - Acquisition costs incurred by Teranga (1,474) - Operating expenditures incurred by Gryphon (5,208) Investing (51,503) 5,015 (1,641) (48,129) - Cash acquired from Gryphon 8,321 - Investment in Gryphon common shares (3,306) - Expenditures for mine development - growth (1,607) - Expenditures for property, plant and equipment - growth (34) Financing (1,614) 55,890 54,276 - Proceeds from Equity Offering and Private Placement 48,349 - Proceeds from Private Placement 7,541 Effect of exchange rates on cash holdings in foreign currencies (124) (124)Change in cash and cash equivalents during the period (1,830) 5,015 (8,323) 55,890 50,752 Cash and cash equivalents - beginning of period 44,436 Cash and cash equivalents - end of period 95,188 Twelve months ended December 31, 2016
Operating Cash Flow
Cash used by operations for the three months ended December 31, 2016 was $13.6 million compared to a source of
cash of $9.8 million in the prior year period. The decrease in operating cash flow was mainly due to acquisition costs
and operating expenditures related to Gryphon of $6.7 million and the payment of royalties to the Republic of Senegal
during the fourth quarter 2016. During the fourth quarter of 2016, the Company paid $17.2 million in royalty payments
to the Republic of Senegal to settle the remaining 2015 royalties owed and royalties owed related to the first three
quarters of 2016. An additional $1.6 million of royalty payments was settled through an offset of VAT receivables owing
from the Republic of Senegal. The Company has now moved to payment of government royalties one quarter in
arrears.
Cash provided by operations for the twelve months ended December 31, 2016 was $44.7 million compared to $30.4
million in the prior year period. The increase in operating cash flow was primarily due to higher profit and lower VAT
payments made during the year, partly offset by acquisition costs and operating expenditures as a result of the
acquisition of Gryphon Minerals and higher royalty payments.
Investing Cash Flow
Net cash used in investing activities for the three months ended December 31, 2016 was $5.7 million, $6.6 million lower
than the prior year period, mainly due to an increase in cash with the acquisition of Gryphon Minerals.
Net cash used in investing activities in 2016 was $48.1 million, $0.4 million higher than the prior year period. Higher
capital expenditures in 2016, related to project costs for the mill optimization project and deferred stripping costs, were
mostly offset by lower development capital and an increase in cash with the acquisition of Gryphon Minerals.
Financing Cash Flow
Net cash generated from financing activities for the three months ended December 31, 2016 was $55.6 million, related
to proceeds received from equity offerings during the quarter. Please see Liquidity and Capital Resources Outlook
section for further details. The comparative prior year period provided cash of $17.1 million as a result of an equity
issuance.
(US$000's)Changes in working capital other than inventory2016201520162015(Increase)/decrease in trade and other receivables 4,360 (5,678) (715) (13,766)(Increase)/decrease in other assets (728) (512) 6,224 1,251 (Decrease)/increase in trade and other payables (21,789) 6,887 (22,171) (5,466)(Decrease)/increase in provisions 48 1 (568) (294) Increase in current income taxes payable 6,324 6,468 12,817 9,176 Net change in working capital other than inventory (11,785) 7,166 (4,413) (9,099)Three months ended December 31,Twelve months ended December 31,(US$000's)Investing activities2016201520162015Sustaining CapitalMine site capex - sustaining 2,444 1,074 7,362 4,361 Mine site capex - project 362 5,384 11,188 8,831 Development capital 1,802 2,282 7,324 15,119 Capitalized reserve development (mine site exploration) 2,923 852 7,138 4,824 Sustaining Capital Expenditures, before Deferred Stripping 7,531 9,592 33,012 33,135 Capitalized deferred stripping 4,822 2,715 18,491 14,547 Total Sustaining Capital Expenditures 12,353 12,307 51,503 47,682 Growth CapitalFeasibility 325 - 325 - Reserve development 337 - 337 - Construction readiness 979 - 979 - Total Growth Capital Expenditures 1,641 - 1,641 - Gryphon Minerals Limited opening balance sheet cash balance (8,321) - (8,321) - Investment in Gryphon common shares - - 3,306 - Investing Activities 5,673 12,307 48,129 47,682 Three months ended December 31,Twelve months ended December 31,
Net cash generated from financing activities for the twelve months ended December 31, 2016 was $54.3 million, related
to proceeds received from equity offerings during the fourth quarter. Please see Liquidity and Capital Resources
Outlook section for further details. Financing activities in the prior year period included proceeds of $17.3 million from
an equity issuance, $15.0 million from the drawdown of the Revolver Facility less financing costs paid of $2.0 million,
and $4.2 million in a repayment of borrowings.
LIQUIDITY AND CAPITAL RESOURCES OUTLOOK
In June 2016, the Company completed an extension of its $30.0 million Revolver Facility with Société Générale. The
Revolver Facility matures on September 30, 2019, with the available amount decreasing to $15.0 million on June 30,
2018. The Revolver Facility carries an interest rate of LIBOR plus 4.65 percent with any unused facility amounts subject
to a commitment fee of 1.6 percent. 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 EBITDA1 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.
On October 13, 2016, Tablo Corporation (“Tablo”) exercised its pre-emptive participation right, pursuant to a Voting
and Investor Rights Agreement with Teranga dated October 14, 2015, to subscribe for 9,671,625 Teranga common
shares. The issuance price to Tablo was C$1.0322 per share, being the 5-day volume weighted average price of
Teranga common shares as of close of business on October 12, 2016. The Teranga common shares issued to Tablo
is subject to a customary four month hold period.
On November 21, 2016, the Company completed an equity offering (the “Offering”) of 34,655,000 common shares, at
a price of C$1.05 per share for gross proceeds of approximately C$36.4 million. Concurrent with the closing of the
Offering, the Company completed a non-brokered private placement with Tablo (the “Private Placement”), a company
controlled by Mr. David Mimran, of 29,500,000 common shares at a price of C$1.05 per share for gross proceeds of
approximately C$31.0 million. Net proceeds of the Offering and the Private Placement were C$64.9 million (US$48.4
million) after deduction of underwriter fees and expenses totaling approximately C$2.5 million (US$1.8 million). The
net proceeds are being used for construction readiness activities at the Banfora gold project, funding of exploration
activities associated with the Banfora, Golden Hill, and Gourma gold projects in Burkina Faso and for general corporate
purposes.
Teranga’s primary source of liquidity comes from the Company’s cash balance of $95.2 million as at December 31,
2016, which includes the funds received from Tablo and the Offering. Additional sources of liquidity for the Company
in 2017 are expected to come from Sabodala cash flows, $15.0 million in undrawn funds from an existing $30.0 million
revolving credit facility and $10.3 million of VAT receivables and VAT certificates received as at December 31, 2016.
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;
expected sustaining and growth capital expenditure requirements; and
the gold price.
Our cash position is highly dependent on the key factors noted above, and we expect we will generate sufficient cash
flow from operations combined with our Revolver Facility to fund our current and short-term initiatives. Using a $1,200
per ounce gold, the Company expects to generate sustainable free cash flows from Sabodala in 2017.
The Banfora gold project is currently in the early stages of pre-construction activities and therefore has yet to generate
any revenues. The Company is currently assessing various alternatives of financing construction of the project which
may include debt or equity or a combination thereof. The Company’s current cash balance and the cash flows from
Sabodala will be key contributors to the development of the Banfora gold project. Funding under any facility will be
subject to customary conditions precedent for a financing of the type. Although the Company has been successful in
the past in financing its activities, there is no certainty any project debt or equity offering will be successfully completed.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
FINANCIAL INSTRUMENTS
The Company manages its exposure to 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.
In February 2016, after an increase in the gold spot price, the Company entered into gold forward contracts with Société
Générale to deliver 28,000 ounces with settlement dates from March to August 2016 at an average price of $1,201 per
ounce. There were no outstanding hedge forward contracts as at December 31, 2016.
At the end of February 2016, the Company entered into zero cost collars with Macquarie Bank. The agreements
provide a guaranteed floor price of $1,150 per ounce and also provide exposure to the gold price up to an average of
$1,312 per ounce. These agreements covered 15,000 ounces of production between October and December 2016.
There were no outstanding zero cost collars as at December 31, 2016.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
As at December 31, 2016, the Company had the following payments due on contractual obligations and commitments:
Sabodala Gold Operations (“SGO”), Sabodala Mining Company (“SMC”) and the Oromin Joint Venture Group
Ltd. (“OJVG”) Operating Commitments
The Company has the following operating commitments in respect of the SGO, SMC and the former 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 $10.0 million related to the waiver of the right for the Republic of Senegal to acquire an additional equity
interest in the OJVG. The initial payment is to be used to finance social projects in the mine site region, which are
determined by the Republic of Senegal and will be paid either directly to suppliers for the completion of specific
projects or to specified ministries of the Republic of Senegal. An additional payment will become payable when
the actual cumulative production from the OJVG, net of mining royalties, multiplied by the Company’s weighted
average gold prices, multiplied by 1 percent, exceeds the initial payments.
Payments Due By Period (US$ millions)Total< 1 year1-3 years4-5 years>5 yearsRevolving Line of Credit (i) 15.0 - 15.0 - - Franco-Nevada gold stream (ii) 68.8 21.6 47.2 - - Exploration commitments (iii) 10.8 3.4 7.4 - - Purchase obligations for supplies and services (iv) 2.4 2.4 - - - Capital commitments (v) 3.1 3.1 - - - Total 100.1 30.5 69.6 - - (iv) Purchase obligations for supplies and services - includes commitments related to maintenance and explosives services contracts.(v) Capital commitments - Purchase obligations for capital expenditures include only those items where binding commitments have been entered into.(i) In 2015, the Company secured a $30.0 million Revolver Facility of which $15.0 million was drawn at December 31, 2016.(ii) On January 15, 2014, the Company completed a gold stream transaction with Franco-Nevada Corporation. The Company is required to deliver 22,500 ounces annually over the first six years followed by 6 percent of production from the Company’s existing properties, including those of the OJVG, thereafter, in exchange for a deposit of $135.0 million. The commitment estimate assumes a gold price of $1,200 per ounce. (iii) Reflects the exploration permits, licenses and drilling contracts committed to by the Company. The exploration commitments represent the amounts the Company is required to spend to remain eligible for the renewal of permits beyond the current validity period, for permits on which management intends to continue exploration activities. The Company may elect to allow certain permits to expire and are not required to spend the committed amount per respective permit. The Company will not incur any penalties for not meeting the financial requirement for additional validity period tenure.
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.
In addition to the Company’s corporate social responsibility spending, Teranga has agreed to establish a social
development fund which includes making a payment of $15.0 million to the Republic of Senegal at the end of the
mine operational life. As at December 31, 2016 $8.0 million was accrued which is the discounted value of the
$15.0 million future payment.
With the recommencement of drilling activities on the western side of the Niakafiri deposit, the Company is required
to make a dividend prepayment of $2.7 million to the Republic of Senegal.
$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.
On May 1, 2016 SGO entered into a commitment with local communities around its Gora deposit to provide annual
social assistance funding in the amount of $150 thousand for the initial year, and $200 thousand for each
successive year over a five year period, which is the anticipated operating life of the Gora deposit.
$112 thousand is payable annually as institutional support for the exploration licenses.
CONTINGENT LIABILITIES
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. During the twelve months ended December 31, 2016, the Company paid $19.3 million in
royalty payments to the Republic of Senegal to settle 2015 royalties owed and royalties owed related to the first three
quarters of 2016. An additional $1.6 million of royalty payments were settled through an offset of VAT receivables
owing from the Republic of Senegal. The Company has now moved to payment of government royalties one quarter
in arrears. At December 31, 2016, $2.6 million of government royalties related to the fourth quarter 2016 were accrued.
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. As at December 31, 2016, $1.9 million remains accrued
as a current liability.
OJVG advanced royalty payment
Pursuant to the completion of the acquisition of the OJVG, 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. 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. Prior to 2016, a total of $6.5 million was paid. During the twelve months ended
December 31 2016, $1.2 million was paid and the remaining $2.3 million has been accrued and is expected to be paid
during 2017. 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.
Mining permit surface taxes
In Burkina Faso, surface taxes are payable by mining companies that hold prospecting permits and mining. Prior to
the acquisition of Gryphon, an accrued liability of $1.4 million in regards to surface taxes was owing. During the period
from acquisition by Teranga to December 31 2016, $0.2 million was paid in relation to the mining license on which the
Banfora gold project is situated. As at December 31, 2016, $1.4 million has been accrued for surface taxes, with
payment expected during 2017.
Outstanding tax assessments
In April 2016, the Company received a withdrawal of the 2011 tax assessment for all but $1.0 million, which remains in
dispute. No amounts were accrued relating to this matter.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 non-current assets
Non-current assets are tested for impairment if there is an indicator of impairment. 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.
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 stripping activities in the production phase of surface mining.
Deferred stripping is defined as 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.
Determination of purchase price allocation
Business combinations require the Company to determine the identifiable asset and liability in fair values and the
allocation of the purchase consideration over the fair value of the assets and liabilities. This requires management to
make judgements and estimates to determine the fair value, including the amount of mineral reserves and resources
acquired, future metal prices, future operating costs, capital expenditure requirements and discount rates.
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.
Beginning in the second quarter of 2013, we adopted an “all-in sustaining costs” measure consistent with the guidance
issued by the World Gold Council (“WGC”) on June 27, 2013. The Company believes that the use of all-in sustaining
costs is 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. This measure is 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.
“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. All-in sustaining costs exclude income tax payments, interest
costs, costs related to business acquisitions and items needed to normalize earnings. Consequently, this measure is
not representative of all of the Company’s cash expenditures. In addition, the calculation of all-in sustaining costs and
all-in costs does not include depreciation expense as it does not reflect the impact of expenditures incurred in prior
periods. Therefore, it is not indicative of the Company’s overall profitability.
The Company also expands upon the WGC definition of all-in sustaining costs by presenting an additional measure of
“all-in sustaining costs (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs)”.
This measure excludes cash and non-cash inventory movements and amortized advanced royalty costs which
management does not believe to be true cash costs and are not fully indicative of performance for the period.
“Total cash costs per ounce”, “all-in sustaining costs per ounce” and “all-in sustaining costs (excluding cash / (non-
cash) inventory movements and amortized advanced royalty 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-IFRS measures to the most directly comparable IFRS measure.
In this MD&A, the Company has amended its “total cash costs per ounce” and “all in sustaining costs per ounce” figures
from those previously disclosed by removing adjustments which management does not believe to be significant.
“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.
“Earnings before interest, taxes, depreciation and amortization” (“EBITDA”) is a non-IFRS financial measure, which
excludes income tax, finance costs (before unwinding of discounts), interest income, depreciation and amortization,
and non-cash impairment charges from net earnings. EBITDA is intended to provide additional information to investors
and analysts 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. Management believes that EBITDA is a
valuable indicator of our ability to generate liquidity by producing operating cash flow to: fund working capital needs,
service debt obligations, and fund capital expenditures.
“Free cash flow” is a non-IFRS financial measure. The Company calculates free cash flow as net cash flow provided
by operating activities less sustaining capital expenditures. The Company believes this to be a useful indicator of our
ability generate cash for growth initiatives. Other companies may calculate this measure differently.
RECONCILIATION OF NON-IFRS MEASURES
1. The reconciliation cash costs per ounce, cost of sales per ounce, all-in sustaining costs, and all-in sustaining costs
(excluding cash / (non-cash) inventory movements and amortized advanced royalty costs follows below.
2. Free cash flow is a non-IFRS performance measure that does not have a standard meaning under IFRS. Teranga
defines free cash flow net cash flow provided by operating activities less sustaining capital expenditures.
(US$000's, except where indicated)2016201520162015Gold produced1 (oz) 43,987 51,292 216,735 182,282 Gold sold (oz) 46,523 52,939 217,652 193,218 Cash costs per ounce soldMine operation expenses 33,465 36,303 137,486 126,792 Less: Regional administration costs (699) (736) (2,105) (2,531)Total cash costs 32,766 35,567 135,381 124,261 Total cash costs per ounce sold 704 672 622 643 Cost of sales per ounce soldCost of sales 43,022 49,266 181,528 174,884 Total cost of sales per ounce sold 925 931 834 905 All-in sustaining costsTotal cash costs 32,766 35,567 135,381 124,261 Administration expenses2 4,232 3,618 10,991 13,111 Share-based compensation (538) 9 4,405 1,761 Capitalized deferred stripping 4,822 2,715 18,491 14,547 Capitalized reserve development 2,923 852 7,138 4,824 Mine site sustaining capital 4,608 8,740 25,874 28,311 All-in sustaining costs 48,813 51,501 202,280 186,815 All-in sustaining costs per ounce sold 1,049 973 929 967 All-in sustaining costs (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs) All-in sustaining costs 48,813 51,501 202,280 186,815 Amortization of advanced royalties (357) (787) (2,557) (1,892)Inventory movements - cash 5,658 3,660 11,655 16,611 All-in sustaining costs (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs) 54,114 54,374 211,378 201,534 All-in sustaining costs (excluding cash / (non-cash) inventory movements and amortized advanced royalty costs) per ounce 1,163 1,027 971 1,043 Three months ended December 31,Twelve months ended December 31,1 Gold produced represents change in gold in circuit inventory plus gold recovered during the period.2 Administration expenses include share based compensation and exclude Corporate depreciation expense.
3. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as follows:
OUTSTANDING SHARE DATA
The Company’s fully diluted share capital as at December 31, 2016, is as follows:
TRANSACTIONS WITH RELATED PARTIES
During the three and twelve months ended December 31, 2016, there were transactions totalling $68 thousand and
$97 thousand, respectively, between the Company and a director-related entity. No loans were made to directors or
director-related entities during the period.
The Company entered into an exploration agreement with a related party, Miminvest, to identify and acquire gold
exploration stage mining opportunities in Côte d'Ivoire. Miminvest is a company established to invest in gold and natural
resources in West Africa and is controlled by the Mimran family and Mr. David Mimran, a director and the largest
shareholder of Teranga. Miminvest holds five existing exploration permits, representing 1,838 km2 in Côte d'Ivoire.
Under the terms of the exploration agreement, a separate entity was created and is owned and funded by Teranga.
Miminvest transferred its permits into the entity and in exchange retains a net smelter royalty interest of 3 percent and
will provide ongoing in-country strategic advice. Furthermore, the entity will pursue additional exploration projects in
Côte d'Ivoire outside of the existing Miminvest permits. As at December 31, 2016, Teranga owed Miminvest $0.5
million for all direct and reasonable costs associated with exploration work related to the transferred permits. The entire
amount was paid in the first quarter of 2017.
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.
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.
(US$000's)2016201520162015 Profit for the period (1,492) (79,483) 27,891 (55,613) Add: finance costs 551 369 2,366 1,907 Add: impairment charge - 90,000 - 90,000 Less: finance income (25) 6 (51) (43) Add: income tax expense 8,563 (8,012) 23,327 (2,502) Add: depreciation and amortization 9,956 13,191 45,640 49,721 Earnings before interest, taxes, depreciation and amortization 17,553 16,071 99,173 83,470 Three months ended December 31, 2016Twelve months ended December 31,OutstandingOrdinary shares as at December 31, 2016536,713,915Stock options granted at an exercise price of C$3.00 per option11,627,500Stock options granted at an exercise price of C$0.64 per option3,516,821Stock options granted at an exercise price of C$0.67 per option3,687,051Stock options granted at an exercise price of C$1.07 per option91,125Stock options granted at an exercise price of C$1.26 per option23,030Fully diluted share capital555,659,442
The Company’s CEO and CFO certify that, as at December 31, 2016, 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 reporting and the preparation of financial statements for external purposes in accordance with the issuer’s
GAAP.
The control framework the Company’s CEO and CFO used to design the Company’s ICFR is The Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) framework issed on May 14, 2013. There is no
material weakness relating to the design of ICFR. As at December 31, 2016, the Company has certified compliance
with the COSO framework. Based on this evaluation, management concluded that the Company’s ICFR and DC&P
were effective.
The Company has limited the scope of the design of ICFR and DC&P to exclude the controls, policies and procedures
of the entities acquired as part of the Gryphon Minerals Limited acquisition. The balance sheet and operating results
of the entities are included in the consolidated financial statements of Teranga for the year ended December 31, 2016,
following the acquisition on October 13, 2016. The scope limitation is in accordance with Section 3.3 of NI 52-109,
Certification of Disclosure in Issuer’s Annual and Interim Filings, which allows an issuer to limit its design of ICFR and
DC&P to exclude the controls, policies and procedures of a company acquired not more than 365 days before the end
of the financial period to which the certificate relates.
RISKS AND UNCERTAINTIES
The Company identified a number of risk factors to which it is subject to in its Amended and Restated Annual Information
Form filed for the year ended December 31, 2015. 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 for
additional financing, uncertainty in the estimation of mineral reserves and mineral resources, the inherent danger of
mining, infrastructure risk, hedging activities, insured and uninsured risks, 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.
FORWARD-LOOKING STATEMENTS
This MD&A contains certain statements that constitute forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"), which reflects management's expectations regarding Teranga's future
growth, results of operations (including, without limitation, future production and capital expenditures), performance
(both operational and financial) and business prospects (including the timing and development of new deposits and the
success of exploration activities) and opportunities. Wherever possible, words such as "plans", "expects", "does not
expect", "budget", "scheduled", "trends", "indications", "potential", "estimates", "predicts", "forecasts", "anticipate" or
"does not anticipate", "believe", "intend", "ability to" and similar expressions or statements that certain actions, events
or results "may", "could", "would", "might", "will", or are "likely" to be taken, occur or be achieved, have been used to
identify such forward looking information. Forward-looking statements include, without limitation, all disclosure
regarding possible events, conditions or results of operations, future economic conditions and anticipated courses of
action. Although the forward-looking statements contained in this MD&A reflect management's current beliefs based
upon information currently available to management and based upon what management believes to be reasonable
assumptions, Teranga cannot be certain that actual results will be consistent with such forward looking statements.
Such forward-looking statements are based upon assumptions, opinions and analysis made by management in light of
its experience, current conditions and its expectations of future developments that management believe to be
reasonable and relevant but that may prove to be incorrect. These assumptions include, among other things, the ability
to obtain any requisite governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold
price, exchange rates, fuel and energy costs, future economic conditions, anticipated future estimates of free cash flow,
and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements.
The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks
involved in exploration and development of mineral properties, including government approvals and permitting, changes
in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other
factors, such as project execution delays, many of which are beyond the control of Teranga, as well as other risks and
uncertainties which are more fully described in Teranga's Amended and Restated 2015 Annual Information Form
dated November 15, 2016, and in other filings of Teranga with securities and regulatory authorities which are available
at www.sedar.com. Teranga does not undertake any obligation to update forward-looking statements should
assumptions related to these plans, estimates, projections, beliefs and opinions change. Nothing in this report should
be construed as either an offer to sell or a solicitation to buy or sell Teranga securities. All references to Teranga include
its subsidiaries unless the context requires otherwise.
TERANGA GOLD COMPETENT PERSONS STATEMENT
The technical information contained in this MD&A relating to the open pit 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 not "independent" within the meaning of 43-101. However, he 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” (the “JORC Code”). 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 JORC Code. Mr. Chawrun has consented to the
inclusion in this MD&A of the matters based on his compiled information in the form and context in which it appears in
this MD&A.
The technical information contained in this MD&A relating to mineral resource estimates is based on, and fairly
represents, information compiled by Ms. Patti Nakai-Lajoie. Ms. Nakai-Lajoie, P. Geo., is a Member of the Association
of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional
Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga
and is not "independent" within the meaning of NI 43-101. However, she is a "qualified person" as defined in NI 43-
101 and a “competent person” as defined in the JORC Code. Ms. Nakai-Lajoie has sufficient experience relevant to
the style of mineralization and type of deposit under consideration and to the activity she is undertaking to qualify as a
Competent Person as defined in the JORC Code. Resources remain 2004 JORC Compliant and not updated to the
JORC Code on the basis that information has not materially changed since it was last reported. Ms. Nakai-Lajoie has
consented to the inclusion in this MD&A of the matters based on her compiled information in the form and context in
which it appears in this MD&A.
The information in this MD&A that relates to Mineral Reserve estimates has been extracted from the Technical Report
dated March 22, 2016 (“Technical Report”). The information in this MD&A that refers to Mineral Resource estimates is
derived from the Company’s Third Quarter Results press release dated October 28, 2016 (“Q3 Results”). The Technical
Report and the Q3 Results are available to be viewed on the company website at: www.terangagold.com
Teranga's exploration programs are being managed by Peter Mann, M.Sc. Geology, Minerals Exploration who is a
Professional Fellow Member of the Australasian Institute of Mining and Metallurgy (Reg. 990534). The technical
information contained in this MD&A 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 reverse circulation (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 is a full time employee of Teranga and is not "independent" within the meaning
of NI 43-101. However, he is a "qualified person" as defined in NI 43-101 and a “competent person” as defined in the
JORC Code. 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
JORC Code. Mr. Mann 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 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 Standards on Mineral Resources and Mineral
Reserves (the “CIM Standards”), adopted by the Canadian Institute of Mining, Metallurgy, and Petroleum (“CIM”) and
its council, as may be amended from time to time by CIM. CIM definitions of the terms "mineral reserve", "proven
mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource", are substantially similar to the JORC Code corresponding definitions of the
terms "ore reserve", "proved ore reserve", "probable ore reserve", "mineral resource", "measured mineral resource",
"indicated 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.
Teranga confirms that it is not aware of any new information or data that materially affects the information included in
the Technical Report or fourth quarter 2016 results, market announcements and, in the case of estimates of Mineral
Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The Company confirms that the form and context
in which the Competent Person’s findings are presented have not been materially modified from the original market
announcement.
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
President and Chief Executive Officer
Navin Dyal
Chief Financial Officer
2016 Annual Report 37
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, 2016 and 2015, 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 statement s present fairly, in all material respects, the financial posit ion
of Teranga Gold Corporation as at December 31, 2016 and 2015 and its financial performance and its cash flows
for the years then ended in accordance with International Financial Reporting Standards.
February 22, 2017
Toronto, Canada
A member firm of Ernst & Young Global Limited
2016 Annual Report 38
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
Revenue
Mine operation expenses
Depreciation and amortization
Cost of sales
Gross Profit
Note
7
8
9
For the years ended December 31,
2016
2015
268,850 224,620
(137,486) (126,792)
(44,042) (48,092)
(181,528) (174,884)
87,322
49,736
Exploration and evaluation expenditures
(4,760) (2,525)
Administration expenses
10
(8,973) (10,835)
Corporate social responsibility expenses
(3,613) (2,853)
Share-based compensation
Finance costs
Impairment charge
Net foreign exchange (losses)/gains
Other (expenses)/income
Profit/(loss) before income tax
Income tax (expense)/recovery
Net profit/(loss)
Net profit/(loss) attributable to:
Shareholders
Non-controlling interests
Net profit/(loss) for the year
35
11
18
(4,405) (1,761)
(4,363) (3,159)
-
(90,000)
(2,589) 1,901
12
(7,401) 1,381
(36,104) (107,851)
51,218
(58,115)
13
(23,327) 2,502
27,891
(55,613)
23,109
(50,543)
4,782
(5,070)
27,891
(55,613)
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
Other comprehensive loss for the year
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to:
Shareholders
Non-controlling interests
(250) -
(250) -
(55,613)
27,641
22,859
(50,543)
4,782
(5,070)
Total comprehensive income/(loss) for the year
27,641
(55,613)
Earnings/(loss) per share from operations attributable to the
shareholders of the Company during the year
- basic earnings/(loss) per share
- diluted earnings/(loss) per share
27
27
0.06 (0.14)
0.06 (0.14)
The accompanying notes are an integral part of these consolidated financial statements
2016 Annual Report 39
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(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
Available for sale financial assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Mine development expenditures
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current income tax liabilities
Deferred revenue
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred revenue
Provisions
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Issued capital
Foreign currency translation reserve
Other components of equity
Retained earnings
Equity attributable to shareholders
Non-controlling interests
Total equity
Total equity and liabilities
Note
33b
14
15
17
16
15
19
20
21
17
22
24
25
23
24
25
21
22
As at December 31,
2016
2015
95,188
9,882
49,987
8,330
44,436
15,701
57,529
9,381
1,171 -
164,558
127,047
121,245
185,404
314,522
20,084
7,564
648,819
813,377
47,409
19,834
21,353
4,979
93,575
13,844
47,462
29,494
106,898
193,426
237,046
23,098
8,701
569,169
696,216
62,545
8,685
19,155
2,588
92,973
13,450
72,190
28,236
1,185 -
10,884
102,869
196,444
11,098
124,974
217,947
496,326
385,174
(998) (998)
17,514
90,903
603,745
13,188
616,933
813,377
16,905
67,794
468,875
9,394
478,269
696,216
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board of Directors
Alan Hill
Director
2016 Annual Report 40
Alan Thomas
Director
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Note
26
35
26
Issued capital
Beginning of year
Shares issued from public and private offerings
Issued on exercise of stock options
Less: Share issue costs
End of year
Foreign currency translation reserve
Beginning of year
End of year
Other components of equity
Beginning of year
Equity-settled share-based compensation expense
Value of compensation cost associated with exercised options
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
Non-controlling interest - acquisition of Gryphon
6
End of year
Total equity as at December 31
The accompanying notes are an integral part of these consolidated financial statements
For the years ended December 31,
2016
385,174
112,788
198
(1,834)
496,326
(998)
(998)
16,905
918
(59)
(250)
17,514
67,794
23,109
90,903
9,394
4,782
(988)
13,188
616,933
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
2016 Annual Report 41
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Note
19
20
9
9
11
35
24
21
33a
33c
33c
6
6
26
26
23
23
Cash flows 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
Unwinding of discounts
Share-based compensation
Deferred gold revenue recognized
Deferred income tax expense/(recovery)
Loss on disposal of property, plant and equipment
Interest on borrowings
Increase in inventories
Changes in non-cash working capital other than
inventories
Net cash provided by operating activities
Cash flows related to investing activities
Expenditures for property, plant and equipment
Expenditures for mine development
Acquisition of intangibles
Net cash from Gryphon acquisition
Investment in Gryphon common shares
Net cash used in investing activities
Cash flows related to financing activities
Net proceeds from equity offering
Proceeds from stock options exercised
Repayment of borrowings
Draw-down from revolving credit facility
Financing costs paid
Interest paid on borrowings
Net cash provided by financing activities
Effect of exchange rates on cash holdings in
foreign currencies
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
Taxes paid
The accompanying notes are an integral part of these consolidated financial statements
2016 Annual Report 42
For the years ended December 31,
2016
27,891
-
21,103
19,159
5,566
(1,511)
2,557
-
80
690
975
4,405
(22,530)
3,365
32
(1,307)
(11,333)
(4,413)
44,729
(17,965)
(34,532)
(647)
8,321
(3,306)
(48,129)
55,890
139
-
-
(296)
(1,457)
54,276
(124)
50,752
44,436
95,188
8,688
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
(459)
(14,164)
(9,099)
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
-
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(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 Securities 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 its exploration permits which are in the process of
consolidation and renewal.
As part of the Company’s strategy to become a multi-jurisdictional gold producer with diversified production and cash
flow, Teranga entered into two transactions in 2016.
In second quarter 2016, Teranga entered into an agreement with Miminvest SA (“Miminvest”), a privately-held company
controlled by Mr. David Mimran, a director of Teranga, relating to the exploration, development and production of
minerals in Côte d'Ivoire.
On October 13, 2016, Teranga acquired Gryphon Minerals Limited (“Gryphon”) in an all share transaction. Gryphon’s
key asset is the Banfora gold project, a permitted, open pit gold project located in Burkina Faso, West Africa.
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 22, 2017.
Certain comparative amounts 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 also the Company’s presentation currency.
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
2016 Annual Report 43
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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 32 for a
material 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. Business Combination
Businesses combinations are accounted for using the acquisition method.
The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of
the fair values at the acquisition date, the day on which the Company obtains control, of the assets transferred to the
Company, the liabilities assumed by the Company to former owners of the acquiree and the equity interests issued by
the Company in exchange of control over the acquiree. The Company accounts for acquisition-related costs as
expenses in the periods in which the costs are incurred and the services are received.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value,
except as follows:
Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are
recognized and measured in accordance with International Accounting Standards (“IAS”) 12 Income Taxes and
IAS 19 Employee Benefits, respectively.
Assets or disposal groups that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations are measured in accordance with that standard.
Liabilities or equity instruments related to share-based remuneration of the acquiree or share-based
remuneration of the Company entered into to replace such arrangements of the acquiree are measured in
accordance with IFRS 2 Share-based Payment.
2016 Annual Report 44
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
In cases where the sum of the consideration transferred, the amount of non-controlling interest in the acquiree and the
fair value of equity interests in the acquiree held previously by the Company exceeds the net value of identifiable assets
and liabilities at the acquisition date, goodwill is measured at the excess amount. A gain is recorded through the
consolidated statements of income if the cost of the acquisition is less than the fair values of the identifiable net assets
acquired.
c. 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.
d. 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.
e.
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.
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.
f. 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.
2016 Annual Report 45
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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.
g. 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 (i.e. the technical feasibility and commercial viability of
extracting a mineral resource is considered to have occurred), 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 related to these 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.
h. 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.
i.
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.
2016 Annual Report 46
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
j. 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.
When there is goodwill, it 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.
As at December 31, 2016, the Company does not have any goodwill. There is no goodwill recognized in the preliminary
purchase price allocation of the Gryphon acquisition.
k.
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.
l. 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.
m. 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.
2016 Annual Report 47
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
n. 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 24.
o. 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.
p. 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.
q.
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.
2016 Annual Report 48
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
r. 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.
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.
2016 Annual Report 49
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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.
s. Available for sale Investments
Investments may be classified as an available for sale investment based on their highly liquid nature and because such
marketable securities represent the investment of cash that is available for current operations. Changes in market
value, excluding other-than-temporary impairments, are recorded through other comprehensive income.
t. 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 is
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.
2016 Annual Report 50
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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.
Fixed Bonus Plan Units (FBUs)
The Company operates a cash-settled, share-based compensation plan for certain management and employees.
The fair value of the FBUs 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 Black-Scholes valuation.
u. 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.
v. 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.
2016 Annual Report 51
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(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 Oromin Joint Venture Group (“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 twelve months and the
remaining amount is recorded within other non-current assets. The advanced royalty balance will be expensed through
net profit based on actual production from the properties.
w. 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.
4. NEW STANDARDS AND INTERPRETATIONS
a. Standards, amendments and interpretations to existing standards that have been adopted by the
Company
IAS 1, Presentation of Financial Statements (“IAS 1”)
On January 1, 2016, the Company implemented certain amendments to IAS 1 which clarify guidance on the concepts
of materiality and aggregation of items in the financial statements, the use and presentation of subtotals in the
statements of net income or loss and comprehensive income or loss, and which provide additional flexibility in the
structure and disclosures of the financial statements to enhance understandability. The implementation of amendments
to IAS 1 had no impact to the Company’s 2016 consolidated financial statements.
b. Standards, amendments and interpretations to existing standards that are not yet effective and have
not been early adopted by the Company
the date of
At
financial statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not been early adopted
by the Company.
these consolidated
Management anticipates that all of the pronouncements will be adopted in the Company's accounting policies for the
first period beginning after the effective date of the pronouncement. Information on new standards, amendments and
interpretations that are expected to be relevant to the Company's consolidated financial statements is provided below.
Certain other new standards and interpretations have been issued but are not expected to have a material impact on
the Company's consolidated financial statements.
IFRS 9, Financial Instruments (“IFRS 9”)
In November 2009 and October 2010, the IASB issued the first phase of IFRS 9, Financial Instruments. In November
2013, the IASB issued a new general hedge accounting standard, which forms part of IFRS 9. The final version of IFRS
9 was issued in July 2014 and includes a third measurement category for financial assets (fair value through other
comprehensive income) and a single, forward-looking ‘expected loss’ impairment model. 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.
IFRS 15, Revenue from Contracts with Customers (“IFRS 15”)
The IASB has issued IFRS 15, Revenue from Contracts with Customers, which will replace IAS 11, Construction
Contracts, and IAS 18, Revenue. The mandatory effective date of IFRS 15 is January 1, 2018 with early adoption
2016 Annual Report 52
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
permitted. IFRS 15 establishes a principle-based model to be applied to all contracts with customers in determining
how and when revenue is recognized. IFRS 15 also requires entities to provide additional disclosures. The Company
is currently evaluating the impact of adopting IFRS 15 in its consolidated financial statements in future periods.
IFRS 16, Leases (“IFRS 16”)
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. At this point, the Company believes IFRS 16 will have minimal
impact on the consolidated financial statements.
5. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 non-current assets
Non-current assets are tested for impairment if there is an indicator of impairment. 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
2016 Annual Report 53
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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.
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 stripping activities in the production phase of surface mining.
Deferred stripping is defined as 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 its estimates, the
ability to realize any deferred tax assets or discharge deferred tax liabilities on the Company’s 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.
Determination of purchase price allocation
Business combinations require the Company to determine the identifiable asset and liability in fair values and the
allocation of the purchase consideration over the fair value of the assets and liabilities. This requires management to
make judgements and estimates to determine the fair value, including the amount of mineral reserves and resources
acquired, future metal prices, future operating costs, capital expenditure requirements and discount rates.
2016 Annual Report 54
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
6. ACQUISITION
a. Acquisition of Gryphon
On October 13, 2016, Teranga completed the acquisition (the “Acquisition”) of Gryphon Minerals Limited, by way of a
scheme of arrangement (the “Scheme”) under the Australian Corporations Act 2001 (Cth).
Pursuant to the Scheme, shareholders of Gryphon received an aggregate of 70,638,853 Teranga common shares or
chess depository interests (CDIs) listed on the ASX (based on their election) on the basis of 0.169 Teranga common
share or CDI for each Gryphon common share not already held by the Company. Each share was valued at C$1.032.
Gryphon’s key asset is the 90 percent-owned Banfora gold project located in Burkina Faso, West Africa.
Management has determined that the acquisition of Gryphon was a business combination in accordance with the
definition in IFRS 3, Business Combinations, and has accounted for the transaction in accordance with this standard.
Accordingly, 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 Gryphon’s identifiable assets and liabilities. Expected future cash flows were based on estimates of
projected future revenues, production costs and capital expenditures. The purchase price allocation is preliminary due
to the complexity of determining tax values for the purposes of calculating the deferred income taxes, continuing analysis
of the salvage value of property, plant, and equipment and further work will be required to confirm the fair values of
certain acquired assets and liabilities. The finalization of the purchase price allocation will be completed within 12 months
of the acquisition date.
Since the date of acquisition to December 31, 2016, Gryphon has not recorded any revenue and incurred $1.2 million
of expenditures and income tax expense of $0.4 million which are included in the consolidated statement of
comprehensive income.
The following table presents the purchase price and the preliminary allocation of the purchase price to the assets and
liabilities acquired. No goodwill has been recognized in the preliminary purchase price allocation.
Purchase Cost
Shares issued to Gryphon shareholders
Replacement share appreciation rights ("SARs") to Gryphon
employees
Total Acquisition Cost
Fair value of previously held interest
Cash acquired with Gryphon
Consideration, net of cash acquired
Summary of Preliminary Purchase Price Allocation
Assets
Current assets
Non-current assets (excluding mine development)
Mine development costs
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets acquired, before non-controlling interest
Non-controlling interest
Net assets acquired
55,064
19
55,083
3,366
58,449
(8,321)
50,128
8,878
2,687
54,074
65,639
7,343
835
8,178
57,461
988
58,449
2016 Annual Report 55
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(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 December 31,
268,515
2016
2015
224,342
335 278
268,850 224,620
For the year ended December 31, 2016, 217,652 ounces of gold were sold including 22,500 ounces delivered to Franco
Nevada Corporation (“Franco-Nevada”) at an average realized price of $1,234 per ounce (2015: 193,218 ounces were
sold, including 24,375 ounces delivered to Franco Nevada at an average price of $1,161 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 24.
The Company delivered all of its production to three customers in 2016 and four customers in 2015 as follows:
Customer 1
Customer 2
Customer 3
Customer 4
Total revenue
8. MINE OPERATION EXPENSES
Mine production costs
Royalties(i)
Regional administration costs
Capitalized deferred stripping
Inventory movements
Total Mine Operation Expenses
(i)
For the years ended December 31,
2016
2015
198,368
41,301
42,320 151,520
28,162
28,315
- 3,484
268,850 224,620
For the years ended December 31,
2016
2015
148,624
142,131
16,904
13,288
2,105
2,531
(18,492) (14,547)
(11,655) (16,611)
137,486
126,792
Includes $1.0 million (2015: $0.3 million) of royalties to Axmin Inc. on account of their 1.5 percent net smelter royalty on the
Gora deposit.
9. DEPRECIATION AND AMORTIZATION
Depreciation and amortization
Inventory movements - depreciation
For the years ended December 31,
2016
2015
39,987
42,008
5,566
7,458
Capitalized deferred stripping - depreciation
(1,511) (1,374)
Total Depreciation and Amortization
44,042
48,092
2016 Annual Report 56
10. ADMINISTRATION EXPENSES
Corporate office
Audit fees
Legal and other
Depreciation
Corporate Administration
11. FINANCE COSTS
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
For the years ended December 31,
2016
2015
7,418
7,721
380 468
1,088
2,391
87 255
8,973
10,835
Interest and deferred financing costs on borrowings
1,997
1,252
Unwinding of discounts 975 951
For the years ended December 31,
2016
2015
Stocking fees
Bank charges
Other
Total finance costs
12. OTHER (INCOME)/EXPENSES
Acquisition (i)
Gains on sale of exploration rights(ii)
Losses/(gains) on derivative instruments (iii)
Government of Senegal payments (iv )
Business process consulting
Business and other taxes (v )
Gryphon corporate office (v i)
712 619
516 243
163 94
4,363
3,159
For the years ended December 31,
2016
2015
1,652
-
-
(500)
2,155
(2,581)
1,033
1,973
886 -
1,339
-
407 -
Interest income and other income and expenses
(71) (273)
Total other expenses / (income)
7,401
(1,381)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Includes costs for legal, advisory and consulting related to the acquisition of Gryphon Minerals.
A settlement agreement was reached with a joint venture partner whereby Teranga relinquished its interest in the
Garaboureya exploration permit in exchange for cash consideration of $0.5 million.
In February 2016, the Company entered into gold forward contracts with Société Générale to deliver 28,000 ounces with
settlement dates from March to August 2016 at an average price of $1,201 per ounce. In February 2016, the Company also
entered into zero cost collars with Macquarie Bank, which provided a floor price of $1,150 per ounce and provide exposure
to the gold price of up to $1,312. These agreements covered 15,000 ounces of production between October and December
2016. During the year ended December 31, 2016, losses of $2.2 million were realized (2015: $2.6 million gain was realized
on 28,000 ounces of gold forward sales contracts). As at December 31, 2016, there were no gold derivative contracts
outstanding.
During the first quarter of 2016, the Company paid $1.0 million in prescribed fees (land registry and notary), related to the
OJVG acquisition, to register its expanded Sabodala mining license area granted in July of 2015 which incorporated the
Gora deposit area (45km), the former Sabodala mining license area (33km), and the Golouma mining license area (212km).
In 2015, the Company made payments to the Government of Senegal related to registration duties as a result of 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.
Business taxes are calculated based on the gross value of fixed assets of the preceding year. In 2016, the Company paid
$1.2 million in business tax. Other taxes of $0.1 million include tax on insurance premiums.
These expenditures relate to the transitional costs incurred since the acquisition date to maintain the regional Gryphon office
located in Perth, Australia.
2016 Annual Report 57
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
13. INCOME TAX EXPENSE/ (RECOVERY)
Current income tax is calculated using local tax rates on taxable income which is estimated in accordance with local
statutory requirements. Where denominated in foreign currency, the tax basis of all assets and non-current
intercompany loans recorded using historical exchange rates are translated to the functional currency using the period
end exchange rate. As the CFA Franc moves against the US dollar, the Company’s deferred tax balances will fluctuate
due to changes in foreign exchange rates. The 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, 2016, the Company recorded an income tax expense of $23.3 million, comprised of
current income tax expense of $19.9 million and a deferred income tax expense of $3.4 million (2015: $2.5 million
recovery, comprised of current income tax expense of $8.7 million and a deferred income tax recovery of $11.2 million).
Current income tax expense
Deferred tax expense / (recovery)
For the years ended December 31,
2016
2015
19,962
8,717
3,365
(11,219)
Total income tax expense / (recovery)
23,327
(2,502)
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:
Income (loss) before income taxes
Statutory tax rates
For the years ended December 31,
2016
2015
51,219 (58,115)
26.5%
26.5%
Income tax expense (recovery) computed at statutory tax rates
13,573 (15,401)
Impact of foreign tax rates
Non-deductible items
Income (loss) not subject to tax
Foreign tax credits
Impairment of goodwill
Tax Settlement
Change in foreign exchange rates
Recognition of exploration expenditures
Unrecognized deferred tax assets
Other
Provision for income taxes
1,071
1,845
1,302
1,781
- (8,660)
(66) (721)
- 10,444
- 1,878
1,286
5,046
37 (1,778)
5,531
3,064
593
-
23,327 (2,502)
2016 Annual Report 58
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
14. TRADE AND OTHER RECEIVABLES
Current
Trade receivables (i)
Value added tax ("VAT") recoverable (ii)
Other receivables (iii)
Total trade and other receivables
As at December 31, 2016
As at December 31, 2015
426 625
7,819 13,187
1,637 1,889
9,882 15,701
(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 services and is recoverable on the majority
of purchases in Senegal. Non-recoverable value added tax is expensed to net profit. In February 2016, the Company
received an exemption for the payment and collection of refundable VAT. This exemption is governed by an amendment to
the Company’s mining convention and expires on May 2, 2022. The balance at end of December 31, 2016 primarily relates
to VAT amounts paid prior to February 2016.
Other receivables primarily include receivables from suppliers for services, materials and utilities used at the Sabodala gold
mine, a $0.1 million receivable related to the sale of exploration rights (2015: $0.4 million) and $0.1 million of Canadian
sales tax refunds as at December 31, 2016 (2015: $0.1 million).
15. INVENTORIES
Current
Gold bullion
Gold in circuit
Ore stockpile
Total gold inventories
Diesel fuel
Materials and supplies
Goods in transit
Total other inventories
Total current inventories
Non-current
Ore stockpile
Total inventories
As at December 31, 2016
As at December 31, 2015
1,563 1,948
5,600 4,075
9,452 18,845
16,615
24,868
1,509 1,881
29,978
28,981
1,885 1,799
33,372
32,661
49,987
57,529
121,245
106,898
171,232
164,427
16. AVAILABLE FOR SALE FINANCIAL ASSETS
Balance at January 1, 2016
Tawana Resources shares acquired
Change in fair value of available for sale financial asset during period
Foreign exchange loss
Balance at December 31, 2016
Amount
-
1,481
(247)
(63)
1,171
In conjunction with the acquisition of Gryphon, the Company holds 13,505,000 shares of Tawana Resources NL
(“Tawana Resources”). The Tawana Resources shares are classified as available for sale financial assets and are
revalued to prevailing market prices at period end.
2016 Annual Report 59
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
17. OTHER ASSETS
Current
Prepayments (i)
Security deposit (ii)
Advanced royalty (iii)
Financial derivative assets
VAT certificates held (iv )
Total other current assets
Non-current
Advanced royalty (iii)
Intangible assets
Total other non-current assets
Total other assets
As at December 31, 2016
As at December 31, 2015
3,110 4,129
- 1,500
2,702 3,338
- 41
2,518 373
8,330
9,381
6,609 8,530
955 171
7,564
15,894
8,701
18,082
(i)
(ii)
(iii)
(iv)
As at December 31, 2016, prepayments include $2.7 million (2015 - $3.2 million) of advances to vendors and contractors
and $0.4 million for insurance (2015 - $0.9 million).
The security deposit represented security for payment under a maintenance contract. As part of the contract renewal
completed in June 2016, the security deposit requirement was removed and replaced with trade credit insurance. As a
result, the balance of $1.5 million, which was previously restricted, was classified within cash and cash equivalents.
As at December 31, 2016, the Company has recorded $2.7 million in other current assets and $6.6 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, 2016, the Company expensed $2.6 million as amortization of OJVG and Gora advanced royalties
(2015: $1.9 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 22.
At December 31, 2016, the Company held $2.5 million of VAT refunds in the form of VAT certificates. These certificates are
highly liquid and 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.
18. IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS
In 2016, no impairment charges or reversal of previously impaired assets were recorded.
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 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 FLVCD.
The following impairment losses were recognized:
Property, plant and equipment
Mine development expenditures
Goodwill
Gross Impairment Charge
Deferred income tax impact
Net Impairment Charge
2015
19,352
28,872
41,776
90,000
(12,056)
77,944
With the exception of goodwill charges, 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
2016 Annual Report 60
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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.
19. PROPERTY, PLANT AND EQUIPMENT
Buildings and
property
improvements
Plant and
equipment
Office
furniture and
equipment
Motor
vehicles
Mobile
equipment
Capital work
in progress
Subtotal
Banfora
Expenditures
Total
Cost
Balance as at January 1, 2015
45,035
261,200 2,231
3,031
83,173 4,727
399,397
-
399,397
Additions
Disposals
Other
Transfer
33 8,732
24 -
2,474
25,842 37,105
-
37,105
-
(394) (30) -
(1) -
(425) -
(425)
-
34 -
-
-
-
34
-
34
6,035
6,882
253
788
-
(13,958) - -
-
Balance as at December 31, 2015
51,103
276,454 2,478
3,819
85,646 16,611 436,111
-
436,111
Acquisition of Gryphon
Additions
Disposals
14 724
34 -
-
17,146 17,918
16 17,934
-
-
-
(117) (173) -
(290) (43) (333)
989
Transfer to Mine development expenditures
Transfer(i)
-
-
-
-
-
(5,786) (5,786)
(4,068) 17,656 253
3,552
6,649
(24,042) -
(5,786)
-
Balance as at December 31, 2016
47,049
294,834 2,765
7,254
92,122 3,929
447,953
962
448,915
Accumulated depreciation and
impairment charges
Balance as at January 1, 2015
21,446
119,600 1,798
2,340
55,780 -
200,964
-
200,964
Disposals
Impairment charges
Depreciation expense
-
(315) (19) -
-
-
(334) -
(334)
3,111
16,241 -
-
-
-
19,352
-
19,352
1,892
12,269 231
376
7,935
-
22,703
-
22,703
Balance as at December 31, 2015
26,449
147,795 2,010
2,716
63,715 -
242,685
-
242,685
Disposals
Depreciation expense
-
-
-
(84) (173) -
(257) (20) (277)
1,886
10,131 267
964
7,723
-
20,971
132
21,103
Balance as at December 31, 2016
28,335
157,926 2,277
3,596
71,265 -
263,399
112
263,511
Net book value
Balance as at December 31, 2015
24,654
128,659 468
1,103
21,931 16,611 193,426
-
193,426
Balance as at December 31, 2016
18,714
136,908 488
3,658
20,857 3,929
184,554
850
185,404
(i) Transfers to correct distribution of previously allocated work in progress to the appropriate sub-asset classes within property, plant
and equipment.
Additions made to property, plant and equipment during the year ended December 31, 2016 relate primarily to
expenditures for the mill optimization project and sustaining capital.
Depreciation of property, plant and equipment was $21.1 million for the year ended December 31, 2016 (2015: $22.7
million).
In 2015, as part of an impairment review of asset carrying values, a charge of $19.4 million was recorded in relation to
Property, Plant and Equipment (see note 18).
2016 Annual Report 61
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
20. MINE DEVELOPMENT EXPENDITURES
Mine reserve
development costs
Deferred stripping
assets
Acquisition of
Gryphon
Total
Cost
Balance as at January 1, 2015
Additions incurred during the period
295,945
89,829 - 385,774
8,804 15,921 - 24,725
Balance as at December 31, 2015
304,749
105,750
- 410,499
Acquisition of Gryphon
- - 54,074 54,074
Additions incurred during the period
15,406 20,002 1,367 36,775
Transfer from Property, plant and equipment
5,786 - - 5,786
Balance as at December 31, 2016
325,941
125,752
55,441 507,134
Accumulated depreciation and impairment
charges
Balance as at January 1, 2015
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 December 31, 2015
109,974
63,479 - 173,453
Depreciation expense
15,751 3,408 - 19,159
Balance as at December 31, 2016
125,725
66,887 - 192,612
Carrying amount
Balance as at December 31, 2015
Balance as at December 31, 2016
194,775
42,271 - 237,046
200,216
58,865 55,441 314,522
Capitalized mine development additions
Deferred stripping costs
Capitalized mine development - Gora
Capitalized mine development - Golouma
Capitalized mine development - Kerekounda
Capitalized reserve development - sustaining
Capitalized reserve development - growth
Other
Total capitalized mine development additions
As at December 31, 2016
As at December 31, 2015
20,002
-
2,296
3,035
8,441
1,367
1,634
36,775
15,921
1,863
1,272
-
4,855
-
814
24,725
Mine development expenditures are related to the Sabodala deposit, Gora satellite deposit, and development costs for
the former OJVG deposits. The acquisition of Gryphon resulted in additional development costs related to the Nogbele
and Dierisso exploration permits in Burkina Faso.
Depreciation of capitalized mine development of $19.2 million was expensed as cost of sales for the year ended
December 31, 2016 (2015: $19.5 million).
As part of an 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.
2016 Annual Report 62
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
21. DEFERRED INCOME TAX ASSETS/(LIABILITIES)
The deferred income tax assets balance reported on the balance sheet is comprised of the following temporary
differences:
Deferred income tax assets
Unrealized foreign exchange
As at December 31, 2016
As at December 31, 2015
20,173
17,718
Mining and property plant and equipment
- 5,449
Deferred income tax liabilities
Mining and property, plant, and equipment
(21) -
Other
(68) (69)
Net deferred tax assets
20,084
23,098
The deferred income tax liabilities balance reported on the balance sheet and relating to the Banfora gold project is
comprised of the following temporary differences:
Deferred income tax liabilities
Unrealized foreign exchange
As at December 31, 2016
As at December 31, 2015
114 -
Mining and property plant and equipment
1,071 -
Deferred income tax liabilities
1,185 -
Unrecognized Deferred Tax Assets
Deferred income tax assets such as tax loss carry-forwards, property, plant and equipment, share issuance costs are
recognized as assets to the extent that the realization of the related tax benefit through future taxable profits is probable.
For the years ended December 31
2016
2015
Deferred income tax assets not recognized
Share issuance and transaction costs
710 468
Loss carry forwards
19,121
15,051
Property, plant and equipment
809 769
Other
1,588 818
Deferred income tax assets not recognized
22,228
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 $372,279 at December 31, 2016.
As at December 31, 2016, the tax losses not recognized by the Company and their associated expiry dates are as
follows:
Tax losses - gross
Canada
Mauritius
Ivory Coast
Australia
Expiry Date
2016
2015
For the years ended December 31,
2030 - 2036 69,035
54,594
2017 - 2020 1,973 3,980
2021 5
-
Indefinitely 1,764 -
72,777
58,574
2016 Annual Report 63
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
22. TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Sundry creditors and accrued expenses
Government royalties (ii)
Amounts payable to Republic of Senegal (iii) (iv ) (v ii)
Contingent consideration (v i)
As at December 31, 2016
As at December 31, 2015
14,593
22,903
17,618
14,900
2,637 11,054
11,927
13,155
634 533
Total current trade and other payables
47,409
62,545
Non-Current
Amounts payable to Republic of Senegal (v )
Contingent consideration (v i)
7,954 7,565
2,930 3,533
Total other non-current liabilities
10,884
11,098
Total trade and other payables
58,293
73,643
(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, which was 1,640 million XOF (2015: 6,635 million XOF). During the fourth quarter of 2016, the Company
transitioned to the payment of government royalties one quarter in arrears. During the year ended December 31, 2016,
royalty payments totalling $21.0 million for 2015 and the first nine months of 2016 were made to the Republic of Senegal
(2015: $11.0 million paid for 2014 royalties).
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, 2016, $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, 2016, $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 of the Sabodala mine. It is recorded at its net present value of $8.0
million.
The Company acquired Badr’s 13 percent carried interest in the former OJVG for cash consideration of $7.5 million and
further contingent consideration which will be based on realized gold prices and increases to the former 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, 2016, $0.6 million has been recorded as a current liability and $2.9 million has been recorded as a non-
current liability and is recorded at its net present value (2015: $0.5 million in current liabilities and $3.5 million in non-current
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
former OJVG. As at December 31, 2016, $2.3 million remains to be paid and has been accrued as a current liability.
23. BORROWINGS
Non-Current
Revolving credit facility
Deferred financing costs
Total borrowings
2016 Annual Report 64
As at December 31, 2016
As at December 31, 2015
15,000
15,000
(1,156) (1,550)
13,844
13,450
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
a. Senior Secured Revolving Credit Facility
In June 2016, the Company completed an extension of its $30.0 million Revolver Facility with Société Générale
(“Revolver Facility”). The Revolver Facility matures on September 30, 2019, with the available amount decreasing to
$15.0 million on June 30, 2018. The Revolver Facility carries an interest rate of LIBOR plus 4.65 percent with any
unused facility amounts subject to a commitment fee of 1.6 percent. As at December 31, 2016, $15.0 million was drawn
on the Revolver Facility.
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 during the year.
24. DEFERRED REVENUE
Balance as at January 1, 2015
Amortization of deferred revenue
Balance as at December 31, 2015
Amortization of deferred revenue
Balance as at December 31, 2016
Current
Non-Current
Total deferred revenue
Amount
113,998
(22,653)
91,345
(22,530)
68,815
As at December 31, 2016
As at December 31, 2015
21,353
19,155
47,462
72,190
68,815
91,345
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 in Senegal, thereafter, in exchange for a deposit of $135.0 million.
For ounces of gold delivered to Franco-Nevada under the streaming transaction, Franco-Nevada pays the Company
cash at 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 is 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.
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, 2016, the Company delivered 22,500 ounces of gold to Franco-Nevada (2015:
24,375 ounces) and recorded revenue of $28.1 million, consisting of $5.2 million received in cash proceeds, $0.4 million
in accounts receivable and $22.5 million recorded as a reduction of deferred revenue. (2015: 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).
2016 Annual Report 65
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
25. PROVISIONS
Current
Employee benefits (i)
Cash settled share-based compensation (iii)
As at December 31, 2016
As at December 31, 2015
2,227 1,847
2,752 741
Total current provisions
4,979 2,588
Non-Current
Mine restoration and rehabilitation (ii)
Employee benefits (i)
Cash settled share-based compensation (iii)
27,414
26,962
891 837
1,189 437
Total non-current provisions
29,494
28,236
Total provisions
34,473
30,824
(i)
(ii)
(iii)
The current provisions for employee benefits include $1.2 million accrued vacation and $1.0 million long service leave
entitlements for the period ended December 31, 2016 (2015 - $1.0 million and $0.7 million). The non-current provisions for
employee benefits include $0.9 million accrued vacation (2015 - $0.8 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 believes 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 an undiscounted provision of $26.5 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 discount rate used in the calculation of the provision as at December 31, 2016 was 0.8 percent
(2015: 1.1 percent).
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 35 for further details.
26. ISSUED CAPITAL
Balance as at January 1, 2015
352,801,091
367,837
Number of shares
Amount
Private placement issuance
Less: Share issue costs
Balance as at January 1, 2016
Issued to Gryphon shareholders (i)
39,200,000 17,454
- (117)
392,001,091
385,174
70,638,853 55,064
Private placement issuance - October 13
9,671,625 7,541
Equity offering issuance - November 21
34,655,000 27,108
Private placement issuance - November 21
29,500,000 23,075
Stock option exercised
Less: Share issue costs
247,347
198
- (1,834)
Balance as at December 31, 2016
536,713,916
496,326
(i)
Refer to Note 6 for details of the Gryphon acquisition.
In 2015, 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 (“Tablo”), a Mimran family company, was issued 39,200,000 common
shares of Teranga at a price of C$0.58 per common share for gross proceeds of $17.5 million.
On October 13, 2016, Tablo exercised its pre-emptive participation right, pursuant to a Voting and Investor Rights
Agreement with Teranga dated October 14, 2015, to subscribe for 9,671,625 Teranga common shares (the “Private
2016 Annual Report 66
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
Placement”). The issuance price to Tablo was C$1.0322 per share, being the 5-day volume weighted average price of
Teranga common shares as of close of business on October 12, 2016. The Teranga common shares issued to Tablo
were subject to a customary four month hold period.
On November 21, 2016, the Company completed a previously announced equity offering (the “Offering”) to a syndicate
of underwriters on a bought deal basis to purchase 32,500,000 common shares, with an additional 2,155,000 common
shares from a partially exercised over-allotment option, at a price of C$1.05 per share for gross proceeds of
approximately C$36.4 million. Concurrently, the Company completed a non-brokered private placement with Tablo, to
purchase 29,500,000 shares at the same price of C$1.05 per share for gross proceeds of approximately C$31.0 million.
Net proceeds were C$64.9 million ($48.4 million) after consideration of underwriter fees and expenses totaling
approximately C$2.5 million ($1.8 million).
The Company is authorized to issue an unlimited number of common shares with no par value. Holders of common
shares are entitled to one vote for each common share on all matters to be voted on by shareholders at meetings of
the Company’s shareholders. All dividends which the Board of Directors may declare shall be declared and paid in
equal amounts per share on all common shares at the time outstanding. There are no pre-emptive, redemption or
conversion rights attached to the common shares. All common shares, when issued, are and will be issued as fully paid
and non-assessable shares without liability for further calls or to assessment.
27. EARNINGS PER SHARE (EPS)
Basic EPS (US$)
Diluted EPS (US$)
Basic EPS:
For the years ended December 31,
2016
2015
0.06 (0.14)
0.06 (0.14)
Net profit/(loss) used in the calculation of basic EPS
Weighted average number of common shares for the purposes of
basic EPS (‘000)
Effect of dilutive share options ('000)
Weighted average number of common shares outstanding for the
purpose of diluted EPS (‘000)
23,109 (50,543)
416,747 360,211
1,248
-
417,995 360,211
The determination of weighted average number of common shares for the purpose of diluted EPS excludes 11.6 million
and 15.5 million shares relating to share options that were anti-dilutive for the years ended December 31, 2016 and
December 31, 2015, respectively.
28. COMMITMENTS FOR EXPENDITURES
As at December 31, 2016, the Company had the following payments due on contractual obligations and commitments:
Paym ents Due By Period (US$ m illions)
Revolving Line of Credit (i)
Franco-Nevada gold stream (ii)
Exploration commitments (iii)
Total
< 1 year
1-3 years
4-5 years
>5 years
15.0
- 15.0
-
-
68.8 21.6 47.2
-
-
10.8 3.4 7.4
-
-
Purchase obligations for supplies and services (iv)
2.4 2.4
-
-
-
Capital commitments (v)
Total
3.1 3.1
-
-
-
100.1 30.5 69.6
-
-
(i)
(ii)
(iii)
In 2015, the Company secured a $30.0 million Revolver Facility of which $15.0 million was drawn at December 31, 2016.
On January 15, 2014, the Company completed a gold stream transaction with Franco-Nevada Corporation. The Company
is required to deliver 22,500 ounces annually over the first six years followed by 6 percent of production from the Company’s
existing properties, including those of the OJVG, thereafter, in exchange for a deposit of $135.0 million. The commitment
estimate assumes a gold price of $1,200 per ounce.
Reflects the exploration permits, licenses and drilling contracts committed to by the Company. The exploration
commitments represent the amounts the Company is required to spend to remain eligible for the renewal of permits beyond
the current validity period, for permits on which management intends to continue exploration activities. The Company may
2016 Annual Report 67
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
(iv)
(v)
elect to allow certain permits to expire and is not required to spend the committed amount per respective permit. The
Company will not incur any penalties for not meeting the financial requirement for additional validity period tenure.
Purchase obligations for supplies and services - includes commitments related to maintenance and explosives services
contracts.
Capital commitments - Purchase obligations for capital expenditures include only those items where binding commitments
have been entered into.
Sabodala Gold Operations (“SGO”), Sabodala Mining Company (“SMC”) and the Oromin Joint Venture Group
(“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.
•
In addition to the Company’s corporate social responsibility spending, Teranga has agreed to establish a social
development fund which includes making a payment of $15.0 million to the Republic of Senegal at the end of
the mine operational life. As at December 31, $8.0 million was accrued which is the discounted value of the
$15.0 million future payment.
• With the recommencement of drilling activities at Niakafiri, the Company is required to make a dividend
prepayment of $2.7 million to the Republic of Senegal. Refer to Note 39.
•
•
$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, beginning April 2014.
• On May 1, 2016 SGO entered into a commitment with local communities around its Gora deposit to provide
annual social assistance funding in the amount of $150 thousand for the initial year, and $200 thousand for
each successive year over a five year period, which is the anticipated operating life of the Gora deposit.
•
$112 thousand is payable annually as institutional support for the exploration licenses.
2016 Annual Report 68
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
29. CONTINGENT ASSET
On October 28, 2015, Gryphon entered into an option agreement (the “Agreement”) with Kanosak (Barbados) Ltd
(“Kanosak”), a subsidiary of Algold Resources Ltd. (“Algold”) and Algold whereby Kanosak had the right to acquire the
Tijirit and Akjoujt exploration licenses (the “Licenses”). In consideration of granting the Agreement, 1,666,666 common
shares of Algold were issued to Gryphon and were subsequently sold.
In March 2016, Gryphon received notice that Kanosak had exercised its option to acquire 100% of Gryphon’s interest
in the Licenses. Gryphon received a further 8,700,000 shares in Algold bringing the total number of shares held to
10,366,666, which have been subsequently sold.
Pursuant to the Agreement, Gryphon is also entitled to the following milestone payment:
a. C$1.5 million, payable at the option of Algold either in cash or Algold common shares upon the earlier of:
i.
the date that is 90 days after Algold announces that there is an NI 43-101 compliant mineral resource (of
any one or more categories of measured, indicated or inferred) of 500,000 ounces on a gold equivalent
ounces basis at any of the Licenses or combination thereof; and
ii.
the later of the following two dates:
(1) the date which falls on the 15 month anniversary of the Agreement; and
(2) the date on which Algold receives, from the Mauritanian authorities, the documents evidencing the
renewal of the licenses with respect to the tenements subject to the Agreement.
30. CONTINGENT LIABILITIES
Settled and outstanding tax assessments
In April 2016, the Company received a withdrawal of the 2011 tax assessment for all but $1.0 million, which remains in
dispute. No amounts were accrued relating to this matter.
2016 Annual Report 69
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
31. 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
Sabodala Mining Com pany(i)
Dembala Berola
Massakounda
Bransan
Heremakono(ii)
Sounkounkou(ii)
Bransan Sud
Sabodala Ouest
Saiansoutou
Boss Gold Sarl(iii)
Boutouanou
Diabatou
Foutouri
Kankandi
Tyara
Tyabo
Boss Minerals Sarl(iii)
Baniri
Intiedougou
Mougue
Gryphon Minerals Burkina Faso Sarl(iv )
Dierisso
Nianka
Nogbele
Zeguedougou
Teranga Exploration (Ivory Coast) Sarl(v )
Dianra
Guitry
Mahapleu
Tissalé
Sangaredougou
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold exploration
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration - Jointly Controlled
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Gold Exploration
Interest
2016
%
100
100
100
100
100
100
100
100
51
51
51
51
51
51
51
51
51
100
100
100
100
100
100
100
100
100
(i)
(ii)
(iii)
As at December 31, 2016, 3 of the 8 exploration permits held by Sabodala Mining Company were current. SMC has filed
applications with the relevant Senegalese authorities to consolidate and renew its exploration permits, including those which
have expired.
The joint venture partner of the exploration license has elected to take a 1.5 percent net smelter 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.
Interests in Boss Gold Sarl and Boss Minerals Sarl were inherited as part of the acquisition of Gryphon on October 13,
2016. Teranga is the operator of the ventures and has the right to earn a further 19% interest upon delivery of a bankable
feasibility study regarding a potential deposit within any of the permits comprising the joint ventures. At that point, Boss
2016 Annual Report 70
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
must participate on a pro-rata basis for all costs associated with the development of the project or default to 1.5 percent net
smelter royalty interest. In addition, upon attaining a 70 percent equity interest, Teranga has the option to acquire a further
10 percent interest in the joint venture upon payment of AUD$2.5 million dollars within 60 days of delivery of the relevant
feasibility study.
Sanembaore Sarl holds a one percent net smelter royalty on Banfora production.
A 3 percent net smelter royalty is owing to Miminvest SA pursuant to the terms of an exploration agreement.
(iv)
(v)
32. CONTROLLED ENTITIES
The significant mining and exploration entities of Teranga are listed below.
Controlled entities consolidated
Teranga Gold B.V.I. Corporation
Sabodala Gold (Mauritius) Limited
Teranga Gold (Australia) Pty Ltd. (formerly Gryphon Minerals Ltd)
Teranga Gold (Ivory Coast) Corporation
Subsidiaries of Sabodala Gold (Mauritius) Limited:
Sabodala Mining Company SARL
Sabodala Gold Operations SA
Subsidiaries of Teranga Gold (Australia) Pty Ltd.
Gryphon Minerals Burkina Faso Pty Ltd.
Gryphon Minerals West Africa Pty Ltd.
Boss Minerals Pty Ltd.
Askia Gold Pty Ltd.
Subsidiary of Gryphon Minerals Burkina Faso Pty Ltd.
Loumana Holdings Ltd.
Subsidiary of Gryphon Minerals West Africa Pty Ltd.
Gryphon Minerals Burkina Faso Sarl
Subsidiary of Boss Minerals Pty Ltd
Boss Minerals Sarl
Subsidiary of Askia Gold Pty Ltd.
Boss Gold Sarl
Subsidiary of Loumana Holdings Ltd.
Société Minière Gryphon SA
Subsidiary of Teranga Gold (Ivory Coast) Corporation
Teranga Exploration (Ivory Coast) Sarl
Country of Incorporation
Percentage owned
2016
British Virgin Islands
100
Mauritius
Australia
Canada
100
100
100
Senegal
Senegal
100
90
Australia
Australia
Australia
Australia
100
100
51
51
Mauritius
100
Burkina Faso
100
Burkina Faso
100
Burkina Faso
100
Burkina Faso
89.8
Ivory Coast
100
2016 Annual Report 71
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
33. CASH FLOW INFORMATION
a. Change in working capital
Changes in working capital other than inventory
Increase in trade and other receivables
Decrease in other assets
Decrease in trade and other payables
Decrease in provisions
Increase in current income taxes payable
Net change in working capital other than inventory
b. Cash balance subject to liquidity covenant
For the years ended December 31,
2016
(715)
6,224
(22,171)
(568)
12,817
(4,413)
2015
(13,766)
1,251
(5,466)
(294)
9,176
(9,099)
As part of the streaming transaction with Franco-Nevada, the Company is required to maintain a minimum consolidated
cash balance of $15.0 million.
c.
Investing activities
For the year ended December 31, 2016, expenditures for property, plant and equipment consists of $17.9 million related
to the Sabodala gold mine (2015: $24.0 million) and $34 thousand related to the Banfora gold project (2015: $nil). For
the year ended December 31, 2016, expenditures for mine development consists of $32.9 million related to the
Sabodala gold mine (2015: $23.5 million) and $1.6 million related to the Banfora gold project (2015: $nil).
34. 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, 2016 and 2015, 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, as at December 31, 2016 and
2015:
Financial assets:
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Financial derivative assets
Other assets
Available-for-sale financial assets
Financial liabilities:
Other financial liabilities at amortized cost
Trade and other payables
Current income tax liabilities
Borrowings
2016 Annual Report 72
As at December 31, 2016
As at December 31, 2015
95,188
9,882
-
44,436
15,701
41
1,171 -
62,234
19,834
13,844
74,821
8,685
13,450
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
The Company’s financial assets (excluding those acquired in the Gryphon acquisition) have been pledged as collateral
for the Senior Secured Revolving Credit Facility.
b. Commodity market risk
Market risk represents the potential loss that can be caused by a change in the market value of financial instruments.
The Company’s exposure to market risk is determined by a number of factors, including foreign exchange rates and
commodity prices.
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)
8,646
13,819 59,745 64,861
Financial Assets
Financial Liabilities
December 31, 2016
December 31, 2015
December 31, 2016
December 31, 2015
EUR
CAD
AUD
Other
11,149
663 709
1,433
3,248
590
6,272 1,532
402 43 2,485 484
1
1 27
644
Foreign currency sensitivity analysis
The Company is mainly exposed to CFA Franc, EUR, CAD and AUD. Based on the Company’s currency exposures
relating to foreign currency denominated monetary items, a 10% appreciation of the US dollar against the applicable
foreign currencies would have resulted in the following gains/(losses) at December 31, 2016:
Financial Assets
Financial Liabilities
As at December 31,
2016
As at December 31,
2015
As at December 31,
2016
As at December 31,
2015
10% Strengthening of
functional currency
CFA Franc (XOF) Impact
Gain or (loss)
(865) (1,382) 5,975 6,486
EUR Impact
Gain or (loss)
CAD Impact
Gain or (loss)
AUD Impact
Gain or (loss)
(1,115) (66) 71
143
(325) (59) 627
153
(40) (4) 249
48
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, 2016 and 2015:
2016 Annual Report 73
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
As at of December 31, 2016
As at of December 31, 2015
95,188 44,436
13,844 13,450
The Company’s interest rate on its borrowings is calculated at LIBOR plus 4.65 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 December 31,
2016
As at December 31,
2015
As at December 31,
2016
As at December 31,
2015
Profit or (loss)
331
190
(75) (38)
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.
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. The Company’s current balances
held in Burkina Faso and Côte d'Ivoire are not currently significant.
f. 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.
2016 Annual Report 74
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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 demand
Due one to three
months
Due between three
months to one year
Due one to five
years
Due over five
years
Financial Liabilities
December 31, 2016
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Fixed interest rate instruments
Fixed interest rate instruments
Total
December 31, 2015
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Fixed interest rate instruments
Fixed interest rate instruments
Total
-
5.51%
3.08%
7.50%
5.00%
-
5.34%
3.08%
7.50%
5.00%
34,491 - 22,471 7,793 -
-
- -
15,000
-
1,850
- -
- -
-
634
-
3,207 -
-
- -
- 15,000
36,341 634
22,471 26,000
15,000
41,316 2,764 16,976 7,793 -
-
- -
15,000
-
-
925
925
- -
-
534
-
3,840 -
-
- -
- 15,000
41,316 4,223 17,901 26,633
15,000
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.
g. 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:
Financial assets
Financial derivative assets
Financial liabilities
Borrowings
As at December 31, 2016
As at December 31, 2015
Carrying amount
Fair value
Carrying amount
Fair value
- - 41
41
13,844
12,914
13,450
13,824
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.
2016 Annual Report 75
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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 December 31, 2016
As at December 31, 2015
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Financial Assets
Cash and cash equivalents
95,188
-
- 44,436
-
-
Available-for-sale financial assets
1,171
-
-
-
-
-
Total
96,359
-
- 44,436
-
-
Financial Liabilities
Borrowings
Cash settled share-based compensation
-
3,777
Total
3,777
13,844
35. SHARE BASED COMPENSATION
13,844
-
-
13,450
-
164
164
1,063
1,063.00
13,450
115
115
The share-based compensation expense for the year ended December 31, 2016 totaled $4.4 million (2015: $1.8
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 upon 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, 2016 and 2015, a total of 4,141,841 and 3,855,000 common share stock options,
respectively, were granted to officers and employees. The exercise price of new stock options granted current year
was determined using a volume weighted average trading price of the Company’s shares for the 5-day period ended
on the grant date.
In 2015, 7,746,600 common share stock options related to the acquisition of Oromin expired with no options exercised
prior to the expiry.
2016 Annual Report 76
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
The following stock options were outstanding as at December 31, 2016:
Option series
Number
Grant date
Expiry date
Exercise price (C$)
FV at grant date
(C$)
Granted on November 26, 2010
Granted on December 3, 2010
Granted on February 9, 2011
Granted on April 27, 2011
Granted on June 14, 2011
Granted on August 13, 2011
Granted on December 20, 2011
Granted on February 24, 2012
Granted on February 24, 2012
Granted on June 5, 2012
Granted on September 27, 2012
Granted on October 9, 2012
Granted on October 31, 2012
Granted on October 31, 2012
Granted on December 3, 2012
Granted on February 23, 2013
Granted on May 14, 2013
Granted on June 3, 2013
Granted on May 1, 2014
Granted on March 31, 2015
Granted on March 31, 2015
Granted on March 31, 2016
Granted on August 2, 2016
Granted on September 12, 2016
5,320,000
1,200,000
675,000
25,000
317,500
360,000
1,075,000
500,000
225,000
50,000
600,000
600,000
80,000
140,000
200,000
50,000
40,000
120,000
50,000
2,250,000
1,266,821
3,687,051
91,125
23,030
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
31-Mar-15
31-Mar-15
31-Mar-16
02-Aug-16
12-Sep-16
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
31-Mar-20
31-Mar-20
31-Mar-21
11-Aug-21
12-Sep-21
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
0.67
1.07
1.26
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
0.35
0.30
0.35
0.64
0.57
As at December 31, 2016, approximately 34.7 million (2015: 23.7 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 18,945,527 common share stock options issued and outstanding as at December 31, 2016, 4,225,291 are
unvested of which 4,187,791 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, 2016, 11,627,500 and 7,318,027 share options had a contractual life of ten years and five years
at issuance, respectively.
2016 Annual Report 77
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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:
Grant date share price
Weighted average fair value of awards
Exercise price(i)
Range of risk-free interest rate
Volatility of the expected market price of share(ii)
Expected life of options (years)
Dividend yield
Forfeiture rate
For the years ended December 31,
2016
C$0.73-C$1.27
C$0.36
C$0.67-$1.26
0.52%-0.60%
67%-71%
3.0
0%
5%
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%
(i)
(ii)
Represents the 5-day volume-weighted average price of the Company's shares on the Toronto Stock Exchange for the
period ending on the grant date.
For the twelve months ended December 31, 2016, volatility was determined using the 3-year average historical volatility of
the Company’s share price. For the twelve months ended December 31, 2015, 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, due to a lack of sufficient historical information for the Company.
Movements in share options during the year
The following reconciled the share options outstanding at the beginning and end of the year:
Number of options
Weighted average
exercise price
Balance as at January 1, 2015
Granted during the period
Forfeited during the period
Expired during the period
Balance as at December 31, 2015
Granted during the period
Forfeited during the period
Exercised during the period(i)
Balance as at December 31, 2016
Number of options exercisable - December 31, 2015
Number of options exercisable - December 31, 2016
21,470,489
3,855,000
(2,039,724)
(7,746,600)
15,539,165
4,141,841
(488,132)
(247,347)
18,945,527
12,670,177
14,720,236
C$2.54
C$0.64
C$3.00
C$1.73
C$2.42
C$0.68
C$0.74
C$0.65
C$2.10
(i)
The weighted average share price at the time of the option exercises was C$1.12.
b. Fixed Bonus Plan
The Fixed Bonus Plan authorizes the Directors to grant Fixed Bonus Plan Units (“Units”) to officers and employees of
the Company and its subsidiaries in lieu of participating in the Stock Option Plan. Each Unit entitles the holder upon
exercise to receive a cash payment equal to the closing price of a common share of Teranga on the 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.
2016 Annual Report 78
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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, 2016, a total of 1,797,500 Units were outstanding (2015: 1,660,000 Units). During the year ended
December 31, 2016, 137,500 Units were granted to one employee and no Units were forfeited or exercised.
As at December 31, 2016, there were 1,797,500 Units outstanding that were granted on August 8, 2012, March 31,
2015, and March 31, 2016 with expiry dates ranging from March 31, 2020 through to February 24, 2022. Of the
1,797,500 Units outstanding as at December 31, 2016, 1,360,000 Units have an exercise price of C$3.00, 300,000
Units have exercise price of C$0.64 and 137,500 Units have an exercise price of C$0.67. The total outstanding Units
have fair values of C$0.14 per Unit at December 31, 2016. The total fair value of the Units at December 31, 2016 is
$0.2 million (December 31, 2015: $0.1 million).
The estimated fair values of the Units are amortized over the period in which the Units vest. Of the 1,797,500 Units
issued, 1,567,281 Units were vested at December 31, 2016 with the remaining Units to be fully vested by March 31,
2019.
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 vested aw ards
Exercise price (i)
Range of risk-free interest rate
Volatility of the expected market price of share (ii)
Expected life of options (years)
Dividend yield
Forfeiture rate
For the years ended Decem ber 31,
2016
C$0.82
C$0.14
C$0.64 - C$3.00
0.73%-1.11%
65.49%
2.0-4.0
0%
5%-50%
2015
C$0.49
C$0.10
C$0.64 - C$3.00
0.48%-0.73%
66.71%-68.3%
2.0-5.0
0%
5%-50%
(i)
(ii)
Represents the 5-day volume-weighted average price of the Company's shares on the Toronto Stock Exchange for the
period ending on the grant date.
For the twelve months ended December 31, 2016, volatility was determined using the 3-year average historical volatility of
the Company’s share price. For the twelve months ended December 31, 2015, 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, due to a lack of sufficient historical information for the Company.
c. RSUs
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 2016, 6,140,338 RSUs were granted at a price of C$0.67 per unit and 1,029,223 RSUs
were forfeited (2015: 3,055,000 RSUs granted, 479,410 forfeited). As of December 31, 2016 a total of 7,667,588 RSU’s
were outstanding of which 4,455,201 units were vested. As at December 31, 2016, $1.7 million of current RSU liability
and $1.0 million of non-current RSU liability have been recorded in the consolidated financial statement of financial
position (2015: $0.4 million and $0.3 million in current and non-current RSU liability respectively).
2016 Annual Report 79
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
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 675,000 DSUs during the year ended December 31, 2016 at a price of C$0.67 per unit. Of the
1,920,000 DSUs outstanding at December 31, 2016, 1,747,500 DSUs were vested and no units were cancelled. As at
December 31, 2016, $1.1 million of current DSU liability has been recorded in the consolidated financial statement of
financial position (2015: $0.4 million).
36. SEGMENT REPORTING
The Company has one reportable operating segment as defined under IFRS 8 Operating Segments.
Geographical information
The Company has one operating mine in the Republic of Senegal. With the acquisition of Gryphon, the Company now
has a development project in Burkina Faso.
The following table discloses the Company’s revenue by location:
For the years ended December 31
2016
2015
Republic of Senegal – Sabodala revenue from gold and silver sales 268,850
224,620
Republic of Senegal – Sabodala interest income
27
43
Canada
Total
24
-
268,901
224,663
The following is an analysis of the Company’s non-current assets by location:
Republic of Senegal - Sabodala
Burkina Faso - Banfora
Other
Total
As at December 31, 2016
As at December 31, 2015
584,616
562,169
56,509
-
7,694 7,000
648,819
569,169
2016 Annual Report 80
Consolidated Financial Statements of Teranga Gold Corporation
December 31, 2016
(in $000’s of United States dollars, except per share amounts)
37. KEY MANAGEMENT PERSONNEL COMPENSATION
The Company considers key members of management to include the President and CEO and officers.
The remuneration of the key members of management includes 6 members during the year ended December 31, 2016
and 5 members during the year ended December 31, 2015. The remuneration during the years ended December 31,
2016 and 2015 is as follows:
Salary and
Fees
Short term benefits
Non-Cash
Benefits
Cash Bonus (i)
Cash settled share
based payments -
value vested during
the period
Equity settled share
based payments - value
vested during the
period
RSUs
Options
Total
1,586
13
71
711 312
2,693
For the year ended
December 31, 2016
Compensation
For the year ended
December 31, 2015
Compensation
1,405
10
611
276 460
2,762
(i) The amount is based on the cash payment made during the year.
38. RELATED PARTY TRANSACTIONS
a. Transactions with key management personnel
During the year ended December 31, 2016, there were transactions totaling $0.1 million between the Company and
director-related entities.
b. Exploration agreement with Miminvest SA
The Company entered into an exploration agreement with a related party, Miminvest SA (“Miminvest”), to identify and
acquire gold exploration stage mining opportunities in Côte d'Ivoire. Miminvest is a company established to invest in
gold and natural resources in West Africa and is controlled by the Mimran family and Mr. David Mimran, a director and
the largest shareholder of Teranga. Miminvest holds five existing exploration permits, representing 1,838 km2 in Côte
d'Ivoire.
Under the terms of the exploration agreement, a separate entity was created and is wholly owned and funded by
Teranga. Miminvest transferred into the entity its permits and in exchange retain a net smelter royalty interest of 3
percent and will provide ongoing in-country strategic advice. As at December 31, 2016, Teranga owed Miminvest $0.5
million for all direct and reasonable costs associated with exploration work related to the transferred permits. The entire
amount was paid in the first quarter of 2017. Furthermore, the entity will pursue additional exploration projects in Côte
d'Ivoire outside of the existing Miminvest permits.
39. SUBSEQUENT EVENTS
On May 31, 2013, the Company signed an agreement with the Republic of Senegal 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 dividend prepayment of $2.7 million, with a further dividend prepayment of $2.7 million required with the
recommencement of drilling activities on the western side of the Niakafiri deposit, which occurred on February 7, 2017.
A total of $7.8 million was accrued at December 31, 2016 (see note 22).
2016 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
The Board is elected by the shareholders of Teranga and is responsible for the stewardship of Teranga and has adopted
a formal written mandate setting out the Board's stewardship responsibilities, including:
• adopting a strategic planning process;
• understanding and monitoring the political, cultural, legal and business environments in which Teranga
operates;
• risk identification and ensuring that procedures are in place for the management of those risks;
• review and approve annual operating plans and budgets;
• corporate social responsibility, ethics and integrity;
• succession planning, including the appointment, training and supervision of management;
• delegations and general approval guidelines for management;
• monitoring financial reporting and management;
• monitoring internal control and management information systems;
• corporate disclosure and communications;
• adopting measures for receiving feedback from stakeholders; and
• adopting key corporate policies designed to ensure that Teranga, its directors, officers and employees comply
with all applicable laws, rules and regulations and conduct their business ethically and with honesty and integrity.
Day-to-day Management
The Board delegates responsibility for the day to day 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; (vi) Corporate Social Responsibility Committee; and (vii) Risk Committee. The Board will
change the Board committee structure and authorize and appoint other committees as it considers appropriate.
2016 Annual Report 82
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.
The Corporate Governance and Nominating Committee reviews the adequacy of the Board Mandate on an annual
basis and recommends any proposed changes to the Board for consideration. The Board has delegated responsibility
to this Committee for developing Teranga’s approach to corporate governance, including recommending modifications
to these Corporate Governance Guidelines for consideration by the Board.
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 of a majority of directors determined by the Board to
be independent, except for the Corporate Social Responsibility Committee and the Risk Committee, which will be
comprised of a majority of independent directors. In addition, all members of the Audit Committee will be financially
literate and if required by applicable laws, rules and regulations, at least one 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) the establishment of policies and procedures designed to identify and mitigate risks
associated with the Company’s compensation policies and practices; (d) succession planning, including the
appointment, training and evaluation of senior management; and (e) compensation of directors.
The responsibilities of the Finance Committee include assisting the Board in fulfilling its oversight responsibilities with
respect to: (a) Teranga’s financial policies and strategies, including capital structure; (b) Teranga’s financial risk
management practices; and (c) proposed issues of securities and utilization of financial instruments.
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, and
environmental responsibility; (f) ensuring Teranga implements best-in-class property development and operating
2016 Annual Report 83
practices; (g) monitoring safety, environmental performance; and (h) monitoring compliance with applicable laws related
to safety and environmental responsibility.
The responsibilities of the Corporate Social Responsibility Committee include assisting the Board in fulfilling its
oversight responsibilities with respect to: (a) 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;
(b) monitoring corporate social responsibility performance; and (c) monitoring compliance with applicable laws related
to corporate social responsibility.
The responsibilities of the Risk Committee include assisting the Board in fulfilling its oversight responsibilities with
respect to: (i) Teranga’s enterprise risk management systems, policies and procedures; (ii) implementation of
appropriate standards for identifying monitoring and mitigating such risks; and (iii) ensuring risk management systems
are utilized to support strategic plans and objectives for Teranga.
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, in the Committee’s discretion, presents its conclusions and recommends any compensation
changes to the Board for consideration.
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.
As noted above, the Board has expanded its governance disclosure to confirm and reflect the importance of a diversity
of perspectives and backgrounds within its executive management team, paying specific attention to the 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 nine members of the Board of Directors, one is female
2016 Annual Report 84
•
two of the most seven senior management positions in the corporate office are held by women including one of
four vice presidents;
• within the corporate office, excluding executive officers, approximately 70% 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 2015 Responsibility Report. An
update to the Responsibility Report will be available on the Company’s website later this year.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Election by Shareholders
The members of the Board are selected each year by the shareholders of Teranga at the annual general meeting of
shareholders. The Board proposes individual nominees to the shareholders for election to the Board at each such
meeting. Between annual meetings of shareholders, the Board may appoint directors to serve until the next such
meeting in accordance with Teranga’s articles and by-laws.
Selection of Chairman of the Board
The Chairman of the Board is appointed by the 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.
The primary responsibility of the lead director is to seek to ensure that appropriate structures and procedures are in
place so that the board of directors may function independently and to lead the process by which the independent
directors seek to ensure that the board of directors represents and protects the interests of all shareholders. In addition,
the lead independent director reviews, comments and is given the 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.
Director Selection Criteria
The Corporate Governance and Nominating Committee is required under its charter to annually review the
characteristics, qualities, skills and experience which form the criteria for candidates to be considered for nomination
to 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, honesty, integrity, ethical behavior, fairness and
responsibility and be committed to representing the long-term interests of the shareholders. They must also have a
genuine interest in Teranga, the ability to be objective at all times about what is in the best interests of Teranga, have
2016 Annual Report 85
independent opinions on all issues and be both willing and able to state them in a constructive manner and be able to
devote sufficient time to discharge their duties and responsibilities effectively. The Committee is mandated to identify
qualified candidates for nomination as directors and to make recommendations to the Board. Directors are encouraged
to identify potential candidates.
Board Size
The Board has the ability to increase or decrease its size within the limits set out in Teranga's articles and by-laws. The
Board will determine its size with regard to the best interests of Teranga. The Board believes that the size of the Board
should be sufficient to provide a diversity of expertise and opinions and to allow effective committee organization, yet
small enough to enable efficient meetings and decision-making and maximize full Board attendance. The Board will
review its size if a change is recommended by the Committee.
Term Limits for Directors
The Board has determined that fixed term limits for directors should not be established 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.
Employees are responsible for their conduct which is expected to comply with Company policies and procedures
including those related to health & safety, social & environmental, equal opportunity, human rights, disclosure and
2016 Annual Report 86
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.
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 at 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 the recommendations included under Principal 5.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
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 both financial and operational, public
announcements and the posting of all press releases (TSX and ASX) on the Company website immediately after their
2016 Annual Report 87
public disclosure. Shareholders can elect to receive email notification of announcements by requesting addition to the
Company’s email distribution list.
Shareholders are encouraged to attend the Annual General Meeting and to listen to regular conference calls which are
scheduled and disclosed publicly. Replays of conference calls are available for a limited time. Details of such replays
are outlined on the original conference call scheduling 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 process 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.
Management will identify the principal risks of Teranga’s business and the Board will oversee management’s
implementation of appropriate systems to effectively monitor, manage and mitigate the impact of such risks through
the Risk Committee. In addition, the Board will delegate to the Compensation Committee the responsibility for assessing
and implementing risk management policies and procedures directly connected to Teranga’s compensation practices.
Similarly, the Board will delegate the responsibility of assessing and implementing risk management policies and
procedures directly connected to environmental risk management to the Risk Committee or the Technical, Safety, and
Environmental Committee as it deems necessary. 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, the Audit Committee is charged with reviewing and making recommendations to
the Board regarding financial risk exposure and the management policies and procedures to monitor and control such
exposures.
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:
•
•
•
•
•
•
establishing a standing committee of the Board specifically mandated to oversee risk;
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.
2016 Annual Report 88
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Teranga operates in the international gold mining industry, which is a highly competitive market for executives and
Teranga has designed its compensation program to ensure it is able to both attract and retain qualified and experienced
executives with the skills and experience required to execute its strategy.
Composition of the Compensation Committee
The Compensation Committee is comprised of three 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 has been established by the Board to assist the Board in fulfilling its oversight
responsibilities relating to executive 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 in 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 executive compensation philosophy, policies and practices
for Chief Executive Officer, the executive officers and the directors:
•
•
•
•
•
properly reflect their respective duties and responsibilities;
are competitive in attracting, retaining and motivating people of the highest quality;
align the interests of the directors, the CEO and the executive officers with Shareholders as a whole;
are based on established corporate and individual performance objectives; and
do not encourage the taking of inappropriate or excessive risks.
Evaluation of Performance – annually review and evaluate the performance of the CEO and the executive officers and,
in light of pre-established performance objectives, report its conclusions to the Board;
Performance Objectives – annually review the performance objectives for the CEO and the executive officers and, in
the Committee’s discretion, recommend any changes to the Board for consideration;
Chief Executive Officer Compensation – annually review the compensation for the CEO and, in the Committee’s
discretion, recommend any changes to the Board for consideration;
Executive Officers Compensation – annually review the CEO’s recommendations for the executive officers’
compensation and, in the Committee’s discretion, recommend any changes to the Board for consideration;
Succession Planning – annually review Teranga’s succession plan for the CEO and the executive officers, including
appointment, training and evaluation;
Directors’ Compensation – annually review directors’ compensation and, in the Committee’s discretion, recommend
any changes to the Board for consideration; and
Mitigation of Compensation Risk – annually consider the risks associated with Teranga’s compensation policies and
practices, and ensure appropriate risk mitigation measures are adopted.
2016 Annual Report 89
Role of the Chief Executive Officer
The CEO’s role in executive compensation matters includes making recommendations to the Compensation Committee
regarding the Corporation’s annual business plan and objectives, which provide the basis for establishing both
corporate objectives and individual performance objectives 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 with the CEO the basis for his recommendations. While the Compensation
Committee takes the CEO’s recommendations into consideration, the Compensation Committee formulates its own
recommendations based upon corporate and executive performance, consultation with the independent compensation
consultant engaged by the Compensation Committee, review of comparator company practices, and a variety of other
quantitative and qualitative factors in making its recommendations to the Board. Finally, the Compensation Committee
retains the right to exercise its sole discretion in making recommendations to the Board.
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 median levels for the competitive market, while short and longer term incentives are
structured to provide above-market total compensation for high levels of corporate and personal performance. The
Compensation Committee believes it is necessary to adopt this compensation philosophy in order to attract and retain
qualified executive officers with the skills and experience necessary to execute Teranga’s strategy.
The achievement of corporate and individual performance is rewarded through short term cash incentives while long-
term equity incentives align executives with long-term shareholder value creation. The Board seeks to set company
performance goals that reach across all aspects of the business and to tie individual goals to the area of the executive
officer’s primary responsibility.
The Compensation Committee does not anticipate making any significant changes to its compensation philosophy,
policies and practices at this stage of the Company’s development. The Compensation Committee will continue to
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.
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 exceeding individual performance goals, as well as contributing to
achieving Company performance goals. The Committee also conducts an independent review of current market
standards regarding executive compensation, as well as an assessment of Teranga’s executive compensation relative
to peer industry participants. The Company’s executive compensation program is designed to be competitive with those
offered by publicly traded mining companies comparable to Teranga in terms of size, assets, production and region of
operation.
Further detailed information on director and executive management compensation for the 2016 financial year will be
disclosed in the Company’s Management Information Circular to be filed with the TSX and ASX in April of 2017.
2016 Annual Report 90
ASX LISTING RULES: ADDITIONAL DISCLOSURES
SUBSTANTIAL SHAREHOLDERS
As at March 27, 2017, there were two substantial shareholders of Teranga beyond 5%. The details are as follows:
Shareholder
Tablo Corporation
Van Eck Associates Corporation
Number of Shares
103,281,500
71,620,412
% of Issued Capital
19.2
13.3
DISTRIBUTION SCHEDULE OF COMMON SHARES AND CDI HOLDERS (as at March 27, 2017)
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 and over
Rounding
Total
Total
Holders
2,014
1,492
449
491
47
3
CDIs
Units
721,057
3,626,190
3,197,437
13,372,929
12,729,292
24,906,975
% of Issued
Capital
1.23
Total
Holders
86
6.19
5.46
22.84
21.74
42.54
0.00
69
31
27
7
4
Common Shares
Units
40,771
171,175
229,972
728,010
1,872,000
533,685,804
% of Issued
Capital
0.01
0.03
0.04
0.14
0.35
99.43
0.00
4,496
58,553,880
100.00
224
536,727,732
100.00
DISTRIBUTION SCHEDULE OF OUTSTANDING OPTIONS (as at February 28, 2017)(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
10
15
6
8
5
2
1
1
1
Options
319,823
1,330,112
1,143,718
3,029,856
3,241,616
2,450,000
1,675,000
2,200,000
3,200,000
% of Options
Outstanding
1.72
7.15
6.15
16.30
17.44
13.18
9.01
11.83
17.21
49
18,590,125
100.00
(1) As of the date hereof, 18,590,125 incentive stock options (“Options”) are outstanding to the Company’s directors,
officers, employees, and consultants. Total Options outstanding represent approximately 3.4% 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.
2016 Annual Report 91
UNMARKETABLE PARCELS OF SECURITIES, ESCROW AND ON-MARKET BUYBACK
As at March 27, 2017, there were 1,523 CDI holders with an unmarketable parcel of securities (less than $500 based
on a market price of $0.82 per unit) totaling 338,657 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.
TGZ TOP 20 REGISTERED HOLDERS OF CDIs (as at March 27, 2017)
Rank Registered Holder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
ABN Amro Clearing Sydney Nominees Pty Ltd
Mr Anthony Platt
Home Capital Finance Pty Ltd
JBwere (NZ) Nominees Limited <32198 A/C>
Ms Sarah June McAlpine
BNP Paribas Noms Pty Ltd
Symorgh Investments Pty Ltd
Toad Facilities Pty Ltd
National Nominees Limited
Dr Steven G Rodwell
Parkview Super Nominees Pty Ltd
PG Howarth Pty Ltd
Mr Benjamin Chun Ming Seeto + Mrs Shirley Seeto
Symorgh Investments Pty Ltd
Kane Diamonds & Pearls Pty Ltd
Mr Simon James Sydney Bolster + Ms Roslyn Pamela O'Sullivan
Senegal Nominees Surl
Top 20 Registered Holders
Total Remaining Holders Balance
Total CDIs on Issue
Number
of CDIs
11,935,942
10,944,381
2,026,652
910,322
568,145
563,022
500,000
499,327
479,202
422,500
420,000
414,669
376,440
360,000
354,374
352,000
344,136
332,057
305,045
268,416
% of Issued
CDIs
20.38
18.69
3.46
1.55
0.97
0.96
0.85
0.85
0.82
0.72
0.72
0.71
0.64
0.61
0.61
0.60
0.59
0.57
0.52
0.46
32,376,630
26,177,250
58,553,880
55.29
44.71
100.00
2016 Annual Report 92
TGZ TOP 20 REGISTERED HOLDERS OF COMMON SHARES (as at March 27, 2017)
Rank Registered Holder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
CDS & Co
Chess Depositary Nominee Pty Limited
Cede & Co
Kingsdale Shareholder Services Inc TR Unexchanged Oromin Explorations
Zivvo Pty Ltd
Taif Telecom Trading Sarl
Taif Telecom Trading Sarl
Libah Investments Ltd
Tarcoola Limited
Etrade Clearing
CPK Nominees Pty Ltd
John Rigas
Mary Altis
Leppard Investments Limited
WMP Cribbs DDS + Brenda Lee Cribbs Ten Com
Leo Patrick Quinn + Tonya Maria Quinn Ten Com
The Hampshire Foundation
Seneschal (Wa) Pty Ltd
Mario Sanchez
Janney Montgomery Scott LLC
Number
of Shares
467,759,927
% of Issued
Shares
87.15
58,553,880
5,794,575
1,577,422
673,258
263,292
263,292
221,165
173,338
142,455
135,200
86,856
51,668
49,499
47,520
40,098
40,000
33,800
30,000
28,800
10.91
1.08
0.29
0.13
0.05
0.05
0.04
0.03
0.03
0.03
0.02
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Top Registered Holders Balance
Remaining Holders Balance
Shares on Issue
535,966,045
761,687
536,727,732
99.86
0.14
100.00
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 536,727,732 as at March 27, 2017.
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
February 28, 2017, 18,590,125 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
On November 30, 2010, Teranga
its
conditional listing approval from ASX which was
subject to a number of conditions (“Listing Conditions”).
Teranga received a waiver from ASX Listing Rule
10.14 to the extent necessary to permit Teranga to
issue options to Messrs. Hill, Young, 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:
2016 Annual Report 93
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 2016 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 which
were materially amended during 2016. 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. Subject to limited
exceptions1 (for example the 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:
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) for all non-exempt takeover bids, meet a minimum
requirement of more than 50 percent of the outstanding
securities subject to the bid;
c) keep the bid open for at least 105 days plus an
additional 10 day extension
tender
requirement and all other conditions are met; and
if minimum
d) deliver the circular and extend the offer to each
the ultimate
shareholder of
the company, with
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
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
Perth Office
288 Churchill Avenue
Subiaco, Western Australia 6008
Tel: + 61-8-9287-4333
Fax: + 61-8-9287-4334
1 On February 25, 2016, the Canadian Securities Regulators announced material changes to
Canada’s takeover bid rules which took 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.
2016 Annual Report 94
MINERAL RESERVES AND RESOURCES
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.
OPEN PIT AND UNDERGROUND MINERAL RESERVE SUMMARY (AS AT DECEMBER 31, 2015)
Deposit
Proven
Grade
(g/t)
Tonnes
(Mt)
Au
(Moz)
Tonnes
(Mt)
Probable
Grade
(g/t)
Au
(Moz)
Proven and Probable
Grade
(g/t)
Au
(Moz)
Tonnes
(Mt)
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
1.57
0.31
4.06
5.95
-
-
-
-
-
-
-
-
5.95
-
-
-
-
0.00
5.95
Stockpiles
Total Including Stockpile
15.27
21.23
1.57
4.94
1.23
1.52
-
-
-
-
-
-
-
-
1.52
-
-
-
-
0.00
1.52
0.79
0.99
0.08
0.05
0.16
0.29
-
-
-
-
-
-
-
-
0.29
-
-
-
-
-
0.29
0.39
0.68
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
0.00
38.11
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
1.60
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
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
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
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
In accordance with ASX Listing Rule 5.21.4, there has been no material changes to these mineral reserve estimates since
December 31, 2015, except for the depletion of reserves during 2016. All material assumptions and technical parameters
previously disclosed continue to be applicable. The Company plans to update its mineral reserve and resource estimates
in 2017.
Notes for 2015 Mineral Reserve Summary:
CIM definitions were followed for Mineral Reserves.
1.
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.
5.
6.
Underground reserves cut-off grades ranged from 2.3-2.6 g/t based on $1,200/oz gold price
Sum of individual amounts may not equal due to rounding.
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. In accordance with ASX Listing Rule 5.21.4, there has been no material changes to these mineral reserve
estimates since December 31, 2015, except for the depletion of reserves during 2016. All material assumptions and technical parameters previously
disclosed continue to be applicable. The Company plans to update its mineral reserve and resource estimates in 2017. Please refer to Teranga’s
December 2015 Quarterly Report for further information including required additional disclosures under the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves”. See also the Competent Person Statements on pages 36.
2016 Annual Report 95
OPEN PIT AND UNDERGROUND MINERAL RESOURCE SUMMARY (AS AT DECEMBER 31, 2015)
Measured
Indicated
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
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
Tonnes Grade
(g/t Au)
('000s)
1.59
6,488
3.65
1,631
2.01
8,119
6.11
1,083
5.14
315
5.89
1,398
0.98
7,222
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
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
770
4,439
73
4,512
1,590
59
1,649
54,377
5,985
60,362
0.98
1.16
2.75
1.24
2.98
4.09
3.25
4.28
4.88
4.45
1.22
2.71
1.30
0.81
0.81
0.98
2.60
1.01
1.80
9.15
2.07
1.59
3.84
1.81
228
844
103
947
653
280
933
173
78
251
83
10
93
20
20
140
6
146
92
18
110
2,777
738
3,516
12,131
28,511
1,163
29,674
6,800
2,134
8,934
1,255
499
1,755
2,112
109
2,221
770
770
4,439
73
4,512
1,590
59
1,649
79,388
5,985
85,373
1.12
1.08
2.75
1.15
2.98
4.09
3.25
4.28
4.88
4.45
1.22
2.71
1.30
0.81
0.81
0.98
2.60
1.01
1.80
9.15
2.07
1.45
3.84
1.62
438
994
103
1,097
653
280
933
173
78
251
83
10
93
20
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
In accordance with ASX Listing Rule 5.21.4, there has been no material changes to these mineral resource estimates since
December 31, 2015. All material assumptions and technical parameters previously disclosed continue to be applicable. The
Company plans to update its mineral reserve and resource estimates in 2017.
Notes for 2015 Mineral Resource Summary:
CIM definitions were followed for Mineral Resources.
Underground Mineral Resources are estimated at a cut-off grade of 2.00 g/t Au.
1.
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.
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.
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.
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.
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. In accordance with ASX Listing Rule 5.21.4, there has been no material changes to
these mineral resource estimates since December 31, 2015. All material assumptions and technical parameters previously disclosed continue to be
applicable. The Company plans to update its mineral reserve and resource estimates in 2017. Please refer to Teranga’s December 2015 Quarterly Report
for further information including required additional disclosures under the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. See also the Competent Person Statements on pages 36.
2016 Annual Report 96
CORPORATE DIRECTORY
BOARD OF DIRECTORS
Alan R. Hill
Chairman
Richard Young
President and Chief Executive Officer
William Biggar
Non-Executive Director
Jendayi Frazer
Non-Executive Director
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
SENIOR MANAGEMENT
Richard Young
President and Chief Executive Officer
Paul Chawrun
Chief Operating Officer
Navin Dyal
Chief Financial Officer
David Savarie
Vice President, General Counsel and
Corporate Secretary
Sepanta Dorri
Vice President, Corporate and Stakeholder
Development
David Mallo
Vice President, Exploration
Trish Moran
Head of Investor Relations
Registered Corporate Office
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
Email:investor@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: + 221-338-642-525
Fax: + 224-338-642-526
Perth Office
288 Churchill Avenue
Subiaco, Western Australia 6008
Tel: + 61-8-9287-4333
Fax: + 61-8-9287-4334
Ouagadougou Office
Avenue Gèrard Kango Ouedraogo
Ouaga 2000
01 BP 1334
Ouagadougou, Burkina Faso
Tel: + 226-2537-5199
Auditor
Ernst & Young LLP
Chartered Accountants
Toronto, Ontario, Canada
Legal Counsel
Stikeman Elliott LLP
Toronto, Ontario, Canada
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
536,727,732 (as at March 27, 2017)
www.terangagold.com
2016 Annual Report