(Unaudited)TORONTO, Feb. 21, 2020 (GLOBE NEWSWIRE) — Teranga Gold Corporation (“Teranga” or the “Company”) (TSX:TGZ; OTCQX:TGCDF) today reported its operating, financial and development results for the three and twelve months ended December 31, 2019.“2019 was a year of significant achievement for Teranga and, as a result, we are a much stronger company and offer a significantly improved value proposition to our shareholders than just 12 months ago. Our second gold mine – Wahgnion – is now in commercial production, and we are preparing to complete our transformational acquisition of Massawa, a high-grade, top tier asset that neighbours our Sabodala mine in Senegal,” said Richard Young, President and CEO. “With the advancements made in 2019, the course is set for an exciting year ahead as we start repositioning Teranga as a low cost, mid-tier gold producer.”Paul Chawrun, Chief Operating Officer, noted, “Operationally, Sabodala has never been stronger and is well-positioned to start processing feed from the Massawa deposits in the second half of the year. Wahgnion is off to a very good start, and plant throughput is above nameplate capacity. Reconciliation to reserves is largely in-line, save for some artisanal mining near surface in both active pits. With our two gold producing assets running smoothly, our attention in 2020 is turning to the exploration of the properties in our growth pipeline.”FINANCIAL & OPERATING HIGHLIGHTS
Three and twelve months ended December 31, 2019 compared to three and twelve months ended December 31, 2018 Q4 2019 FINANCIAL & OPERATING HIGHLIGHTS
Three months ended December 31, 2019 compared to three months ended December 31, 2018Consolidated Financial PerformanceRevenues, gross profit, earnings, cash flow, EBITDA⁽¹⁾ and per ounce costs were all negatively impacted for the fourth quarter and full year by the large amount of unsold gold at year-end due to an earlier than normal cut-off for shipments.  In total, just over 20,000 ounces of gold bullion inventory remain unsold at year-end. The value of the gold bullion inventory totalled $31.2 million at the year-end spot gold price of $1,515 per ounce.Consolidated net loss attributable to shareholders was $13.4 million ($0.12 loss per share) for the fourth quarter 2019 compared to $10.6 million ($0.10 loss per share) in the prior year period.  Higher gross profit and lower net losses on derivative financial instruments was more than offset by non-cash losses on changes in fair values of share warrant liabilities and gold offtake payment liability, higher finance costs, share-based compensation expenses and net foreign exchange losses totalling $14.1 million.Adjusted net loss attributable to shareholders⁽¹⁾ was $6.3 million ($0.06 loss per share) for the fourth quarter 2019 compared to adjusted net profit attributable to shareholders⁽¹⁾ of $1.2 million ($0.01 earnings per share) in the comparative period.  Higher gross profit was more than offset by higher income tax expense (excluding the impact of foreign exchange on deferred taxes), finance costs, share-based compensation expenses, net foreign exchange losses and business and other taxes.EBITDA⁽¹⁾ increased to $24.2 million from $14.6 million mainly due to higher revenues of $30.2 million, partially offset by higher mine operation expenses of $14.1 million, net foreign exchange losses of $2.5 million and share-based compensation expense of $2.9 million.Adjusted EBITDA⁽¹⁾ increased to $32.5 million from $21.8 million mainly due to higher gross profit as a result of higher gold ounces sold and higher average realized prices⁽¹⁾, partially offset by higher share-based compensation expense.Cash flow related to operating activities decreased 49% year-over-year to $21.5 million due to the timing of gold shipments and an increase of supplies inventory at Wahgnion of $3.4 million. Using a period-end gold spot price of $1,515 per ounce, the 20,000 ounces of unsold bullion inventory would have increased cash flow by $31.2 million.Cash and cash equivalents totalled $29.7 million, an increase of $1.8 million from the third quarter 2019 balance of $27.9 million.  The marginal increase was mainly due to net cash flows of $13.0 million from the Sabodala mine, drawdowns of $11.7 million from the secured development finance facility with Taurus Funds Management Pty Ltd. and net drawdowns of $0.6 million from the equipment finance facility with Caterpillar Financial Services Corporation which was largely offset by $27.2 million in cash capital expenditures related to the construction of Wahgnion.Consolidated cost of sales per ounce was $1,122, an increase of 17% compared to the prior year period mainly due to higher mine production costs and depreciation at Wahgnion and lower capitalized deferred stripping costs, partially offset by net inventory movements and higher gold ounces sold between periods.  Full year consolidated cost of sales per ounce was $1,029, below the low-end of the Company’s 2019 guidance range.Consolidated total cash costs per ounce⁽¹⁾ were $779, an increase of 12% compared to the prior year period mainly due to higher mine production costs with Wahgnion and lower capitalized deferred stripping costs, partially offset by net inventory movements and higher gold ounces sold between periods, despite 20,000 ounces of gold bullion inventory unsold at year-end.Consolidated all-in sustaining costs (excluding cash/(non-cash) inventory movements and amortized advanced royalty costs) per ounce⁽¹⁾ were $1,080, an increase of 15% as a result of higher consolidated total cash costs⁽¹⁾, higher share-based compensation expense and higher capital expenditures, partially offset by higher gold ounces sold, despite 20,000 ounces of gold bullion inventory unsold at year-end.  Full year consolidated all-in sustaining costs (excluding cash/(non-cash) inventory movements and amortized advanced royalty costs) per ounce⁽¹⁾ were $917, near the low-end of the Company’s 2019 guidance range, despite the unsold gold bullion inventory at year-end.Sabodala Gold Operations (Senegal)Fourth quarter and full year gold production at Sabodala were 54,539 ounces and 241,276 ounces, respectively, surpassing Sabodala’s 2019 production guidance of 215,000 to 230,000 ounces.Total cost of sales per ounce sold increased by 14% to $1,099 per ounce in the fourth quarter 2019 compared with the fourth quarter 2018 primarily due to lower gold ounces sold, higher depreciation and amortization expense and lower capitalized deferred stripping costs between periods, partially offset by net inventory movements and lower mine production costs in the fourth quarter 2019.  In total, 9,000 ounces of gold bullion inventory was unsold at year-end due to an earlier than normal cut-off for shipping.All-in sustaining costs (excluding cash/(non-cash) inventory movements and amortized advanced royalty costs) per ounce⁽¹⁾ were $940 in the fourth quarter 2019, an increase of 12% compared to the prior year period mainly as a result of lower gold ounces sold, partially offset by lower cash costs⁽¹⁾ and lower capital expenditures between periods.Sabodala generated net cash flow of $13.0 million, increasing the full year net cash flow to $81.5 million, an increase of 80% over the prior year period.Wahgnion Gold Operations (Burkina Faso)Wahgnion achieved commercial production effective November 1, 2019. Fourth quarter gold production at Wahgnion was 36,872 ounces, including 8,344 ounces of pre-commercial gold production.Wahgnion surpassed the high end of its full year production guidance of 30,000 to 40,000 ounces with a total of 47,492 ounces of gold produced, including 18,964 ounces of pre-commercial gold production.Total cost of sales per ounce sold was $1,170 per ounce, below the lower end of 2019 guidance.Total cash cost per ounce⁽¹⁾ sold for the quarter was $861 per ounce.All-in sustaining costs (excluding non-cash inventory movements) per ounce sold⁽¹⁾ of $938 was above full year guidance. Had the large amount of unsold gold bullion inventory been sold before year-end, all-in sustaining costs (excluding non-cash inventory movements) per ounce⁽¹⁾ would have been $780 per ounce, which was within the guidance range. In total, 11,000 ounces or nearly 40% of commercial production were unsold at year-end.  Being the new gold producer in Burkina Faso, the last shipment date we could secure was in mid-December, which meant that a large portion of December’s production was not shipped and sold at year-end.GROWTH HIGHLIGHTSOn December 9, 2019, the Company entered into a definitive agreement pursuant to which it will acquire a 90% interest in Massawa from a wholly-owned subsidiary of Barrick Gold Corporation and its joint venture partner, Compagnie Sénégalaise de Transports Transatlantiques Afrique de l’Ouest SA, with the Government of Senegal holding the remaining 10% interest in Massawa (the “Massawa Acquisition”).  Massawa is one of the highest-grade undeveloped open-pit gold projects in Africa. It is located within trucking distance of Teranga’s flagship Sabodala mine in Senegal, creating the opportunity for significant capital and operating synergies.  Upon completion of the Massawa Acquisition, the Sabodala-Massawa Complex is expected to transform Sabodala into a top tier asset.On February 13, 2020, the Company obtained certain key approvals and acknowledgement from the Government of Senegal required in order to proceed to close the Massawa Acquisition.  The approvals included a formal consent to Teranga’s plans to integrate Massawa into Sabodala, as well as a formal intent of the Government of Senegal to waive its equity participation right to elect, on its behalf or on behalf of the private sector, to purchase up to an additional 25% equity interest in Massawa at market value.  With these approvals in place, the Company currently anticipates issuance of the Massawa exploitation license and residual exploration license imminently.At Golden Hill, the Company’s most advanced exploration project located in Burkina Faso, a 27,000-metre drill program was initiated during the second half of 2019 to increase the resource base.  Initial environmental and social studies have started and engineering has commenced to support the application for a mine license in 2020.  During the quarter, the Company drew down $2.0 million from the Golden Hill Tranche of the Taurus Facility to fund the exploration program. In total, $4.5 million has been drawn from the Golden Hill Tranche of the Taurus Facility to fund the exploration program.On January 22, 2020, the Company announced results from its drilling program at Golden Hill which has returned high-grade gold intercepts from near surface to depth at several existing targets and encouraging gold grades in numerous step-out holes. The campaign has also uncovered a new discovery at Golden Hill – the Ma Jonction prospect, located between Ma Main and Ma North.REVIEW OF OPERATIONSSabodala Gold Operations MiningTotal tonnes mined were 15% lower in the fourth quarter 2019 compared with the prior year period due to prioritization of higher grade, lower stripping mining areas of Golouma West and Kerekounda.Ore tonnes mined were 114% higher in fourth quarter 2019 compared with fourth quarter 2018 due primarily to the commencement of mining near surface ore at Maki Medina and the prioritization of higher grade, lower stripping mining areas within Golouma West.  Ore grade mined was 19% lower in fourth quarter 2019 compared with the prior year period due primarily to the completion of the relatively high grade Kerekounda and Koulouqwinde pits in the fourth and first quarters of 2019, respectively.Reconciliation to reserves remained positive for fourth quarter 2019, with total ounces mined exceeding reserves model estimations due to ongoing dilution control, ore recovery processes and conservative resource modelling.ProcessingOre tonnes milled in the fourth quarter 2019 were slightly lower compared with the prior year period due to a higher proportion of harder fresh ore.Head grade decreased by 5% in the fourth quarter 2019 due primarily to mill feed from the high grade Gora deposit in the prior year period.Gold production decreased by 8% to 54,539 ounces in the fourth quarter 2019 compared with the prior year period due to lower average head grades, recovery rates and ore tonnes milled between periods.Wahgnion Gold OperationsMiningIn the fourth quarter 2019, mining capacity consisted of an owner-operated fleet, supplemented by two mining contractor fleets.  Mining activities were focused primarily on the Nogbele pit and the lower benches of the Nangolo pit.  A total of 6.1 million tonnes were mined during the quarter at a strip ratio of 5.8. Overall tonnes mined was in line with the plan. At the end of the fourth quarter, one of the remaining two contractor mining fleet was demobilized and the process of transitioning to a fully owner-operated fleet is expected to continue into 2020.Reconciliation to reserves is showing positive results for the Nangolo pit at depth with the overall reconciliation slightly positive.  While still very early, the overall reconciliation in the Nogbele pit is slightly negative to reserves to 2019 year-end, however, continues to improve as mining activities progress at depth below artisanal workings in the upper oxide zones, with an overall positive reconciliation for January 2020.ProcessingRamp-up of the processing plant continued during the fourth quarter 2019, with production stabilizing at above nameplate capacity.  On November 1, 2019, the processing plant achieved the design criteria and commercial production was declared.  The crusher feed blend comprised 74% oxide ore and 26% fresh hard rock.  Modifications made to the crushing circuit combined with a drier ore feed, due to the end of the rainy season, increased crusher throughput.  Mill throughput for fourth quarter 2019 was above plan at 0.7 million tonnes due to earlier than planned commissioning of the processing plant, higher portion of oxide ore processed and an increase from the nameplate design. Gold production for the quarter was 36,872 ounces at an average head grade of 1.73 g/t.The Company’s 2020 guidance does not include production from Massawa’s high-grade Sofia deposit. Following the anticipated closing of the Massawa Acquisition, guidance for 2020 production is expected to increase with the commencement of mining and processing of high-grade ore from the first of the Massawa deposits – Sofia – in H2 2020. Teranga’s 2020 production and cost guidance will be updated in the third quarter to incorporate mining and processing of Sofia ore.A comprehensive table of Teranga’s full-year guidance for 2020 is expected to be available shortly in the management’s discussion & analysis for the three and twelve months ended December 31, 2019. A summary of 2020 guidance is as follows:2020 GOALS & MILESTONESSabodala-Massawa Complex
• Expect to produce 215,000 ounces of gold before the addition of ore from Massawa’s Sofia deposit, expected in H2 2020
• Close the Massawa Acquisition, expected in Q1 2020
• Prepare for mining to commence at the high-grade Sofia deposit
• Release pre-feasibility study for the combined complex within six months after the transaction close
• Commence exploring for additional refractory and oxide depositsWahgnion Gold Mine
• Expect to produce 130,000-140,000 ounces of gold in first full year of production
• Relaunch resource drilling programGolden Hill Exploration Project
• Exploration program with a $10 million budget to expand the resource base
• Complete engineering, environmental, and social work to support the preliminary economic assessment required for a mine license application in Q3 2020Exploration Projects in Côte d’Ivoire
• Increase the exploration budget to $6 to $8 million for the Afema and Miminvest exploration properties.CONSOLIDATED FINANCIAL STATEMENTSTeranga’s audited consolidated financial statements and management’s discussion & analysis for the three and twelve months ended December 31, 2019 are expected to be available shortly on the Company’s website at www.terangagold.com, on SEDAR at www.sedar.com, and on the OTC Markets’ website at www.otcmarkets.com.CONFERENCE CALL & WEBCASTTeranga will host a conference call and audio webcast today at 8:30 a.m. ET, during which management will review the highlights for the three and twelve months ended December 31, 2019. Those wishing to listen can access the live conference call and webcast as follows:APPENDICESPlease see the following pages for the unaudited consolidated financial statements, 2019 performance and 2020 outlook.   
Bay Street News