Resource World Magazine

64 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 8 Teranga Gold expanding in West Africa by Peter Kennedy W ith a focus on West Africa, Teranga Gold Corp. [TGZ-TSX] has positioned itself as a growth story in a challenging pre- cious metals environment. In an interview with Resource World, CEO Richard Young attributed the company's success to a strategy that put responsible mining at the core of the decision mak- ing progress at its flagship Sabodala gold mine in Senegal. By spending $10 million on social programs, including educa- tion, health, water and sanitation, Teranga has not only gained the respect of its peers by winning the PDAC's 2017 Environmental & Social Responsibility Award, it also paved the way for an entry into neighbouring West Africa countries such as Burkina Faso and Ivory Coast (Côte d'Ivoire). "Our growth would not be possible without the strong [Corporate Social Responsibility] CSR programs that we have got in place," Young said. A native of Windsor, Ontario, Young said the focus on CRS stems from his years at Barrick Gold Corp. [ABX-TSX, NYSE], where he worked in investor relations and mine development from 1991 to 2003. "I think under former Barrick Chairman Peter Munk's leader- ship there was a real focus on the Corporate Social Responsibility, even before it was called CSR. He said Munk recognized the need for having strong employee relations, having a loyal work force, being supportive to the community at the local regional and national level. It was a view that Munk shared with Alan Hill, a former Barrick Executive Vice-President, who is now working alongside Young as Chairman of Teranga. "It is very important to the success of our industry,'' he said. Young said the emphasis on CSR has helped to build the company up in a difficult period for gold producers. "It is a challenging market. It is not a market that is paying for growth,'' he said. Recognizing that markets can quickly change, Teranga is taking a long term approach with the aim of building the company into a mid-tier gold producer with annual produc- tion in the 500,000-ounce range. Foundation for that growth is the Sabodalo gold mine, expected to produce up to 225,000 ounces of gold this year at an AISC between US $900 and US $975/oz. With Sabodala on target to achieve the upper end of its pro- duction targets, Teranga is working to develop the Banfora gold mine in Burkina Faso. Based a feasibility study announced in September 2017, Banfora is estimated to contain an initial reserve of 1.2 million ounces. "[Banfora] will diversify our production base and add signifi- cant scale by increasing our consolidated annual gold production by 50% to between 300,000 and 350,000 ounces," said Young. The company expects to improve the project's economics by completing an infill drill program of 75,000 metres aimed at con- verting inferred resources to reserves later this year. A reserve update is expected to be announced in the first half of 2018. The company also has high hopes for its Golden Hill Project in Burkina Faso on the Hounde Greenstone Belt. Teranga can earn an 80% interest in the project from Boss Resources Ltd. [BOE-ASX] by delivering a feasibility study and paying AUD $2.5 million. Teranga says early stage drilling yielded high-grade, near- surface and deeper gold mineralization. Highlights from a Ma prospect discovery include 12 metres of 12.28 g/t gold, including 4 metres of 34.04 g/t. In the coming weeks, the company hopes to write a mandate letter for Banfora Project financing, allowing the company to move forward with construction without the need for equity. Teranga has estimated that Banfora will cost about $230 million to build. "We will be signing for a $150 million facility,'' Young said. Teranga is in a strong position to move forward at Banfora with $80 million in cash and $4 million in marketable securities. Based on a gold price of US $1,250/oz, Sabodala is expected to generate just under $100 million over the next two years. The next priority is to complete a preliminary economic assess- ment at Golden Hill. Young is backed by David Mimran who owns just under 20% of Teranga through his private company Tablo Corp. "He is very supportive of this growth initiative that we are on," Young said. Teranga's expansion goals are expected to propel the company to a record year of gold production in 2017. "We think that ulti- mately the market will reward us,'' Young said. "We think gold stocks are in a tough spot right now, even though the overall [mainstream] equity market is doing well." n Open pit mining operations at Teranga Gold's Sabadola gold mine in Senegal, West Africa. Photo courtesy Teranga Gold Corp. MINING

• Cover