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MINING | Teranga Gold
TERANGA GOLD Multi-jurisdictional West African gold producer reaches for mid-tier status
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MINING | Teranga Gold
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Teranga Gold went to IPO in 2010 under the guidance of Alan Hill and Richard Young - two veterans from the formative years of the world’s largest gold mining company, Barrick Gold. The pair have worked together for 30 years, striking up a symbiotic relationship since their days at Barrick, with Hill providing the technical and operational graft and Young the financial and strategic know-how. Back in 2010, the experienced pair were looking to build a new gold company in a high growth region of the world, and West Africa contained all the ingredients they were searching for. Thus, Teranga was born with a view to leveraging its initial asset, the Sabodala Gold Mine in Senegal, into something much bigger. With Hill in the role of chairman at Teranga and Young as President and CEO, the company laid out ambitious plans to become a mid-tier, multi-jurisdictional gold producer in West Africa. Sabodala first commenced production in 2009, although Teranga spent the next few years optimising the mine’s output before expanding the company’s presence into Burkina Faso with the acquisition of Gryphon Minerals in 2016. This was swiftly followed by
MINING | Teranga Gold Teranga’s entry into Ivory Coast via two joint
form the basis of Teranga’s modus operandi
ventures, the first in 2016 and the second in
in West Africa. In fact, this attitude has been
2017.
fossilised into the business through its name Teranga – which means hospitality and
This expansion of the company’s organic
friendliness in Wolof, the main local language
growth pipeline demonstrates Teranga’s
of Senegal.
position as a multi-jurisdictional company in one of the highest growth regions in the
Senegal is the company’s original host
world for gold mining and is paving the way
country in the region and hosts a section
for its evolution to mid-tier status.
of the West African Birimian gold belt, a sweeping geological formation that has
Over the last two decades, West Africa has
provided a steady stream of world-class
transformed into one of the premier regions
gold deposits across multiple jurisdictions,
for gold exploration and extraction in the
including the Sabodala mine.
world, with many great geological formations, modern mining codes and increasingly
Sabodala is located approximately 650 km
receptive governments – an enticing prospect
Southeast of the capital city Dakar and is the
for foreign investors and mining firms.
largest-scale gold mine and mill in Senegal, although the industry is still in its nascency
“It’s been one of the fastest growing regions
and the Senegalese government recently
for gold production over the last quarter
revealed aims to become one of Africa’s top
century,” says Young. “West Africa has
seven exporters of gold by 2035.
gone from almost no production to having a production profile that is close to North
At the outset, Sabodala was producing
America, which I never thought would’ve
around 130,000 ounces (oz) of gold per
occurred when I started in this industry.”
annum, however, Teranga was intent on boosting its production profile and following
This unprecedented growth in the West
the expansion of its processing plant in 2012,
African gold mining sector has been driven by
has averaged annual production of more
a willingness to see industrial development
than 200,000 oz.
by leaders and governments, along with a clear but fair caveat that the rules are
The company also completed a mill
followed, and the benefits of responsible
optimisation project in 2015 and the results
mining shared equally.
were tangible in the company’s subsequent
What’s in a name? With this in mind, it was quickly decided that corporate social responsibility (CSR) would
output figures. “The Sabodala mine had a record year last year, following on a record year in the previous year,” confirms Young.
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MINING | Teranga Gold
“West Africa has been one of the fastest growing regions for gold production over the last quarter of a century.� Richard Young, president and CEO
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MINING | Teranga Gold During FY 2017 Sabodala produced 233,000 oz of gold, almost double its original output figures, and while the operation has matured Teranga’s unit mining and processing costs have fallen to the lowest in company history. “These [improvements] are a reflection of the investment we’ve made in training programmes for our Senegalese nationals. We’ve moved from 10-15% of our workforce being ex-pats at the time of IPO to between 5-6% today and really benefitted from the investment made in our employees.” Furthermore, the optimisation of operations at Sabodala has allowed Teranga to increase its free cash flow, which has played an integral role in Teranga’s broader expansion plans. Since 2013 the company has finalised four deals in the region, an impressive achievement given the downturn in gold prices at that time. Young hopes that of these four deals – two acquisitions and two JVs – in Burkina Faso and Ivory Coast, at least three (if not all four) can be advanced into producing mines. This, along with the optimised performance of the Sabodala mine, should comfortably take the company into mid-tier production status. “We are very pleased with these transactions,” says Young. “They set us up very well for the future, not only as gold prices rise but as we see an increase rise in our production profile in tandem.”
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A benchmark for responsible mining Although Teranga has been highly focused on attaining that coveted mid-tier status over the last few years, that hasn’t diminished the company’s philosophy with regards to setting the benchmark for responsible gold mining in West Africa. “The board has given us a very clear mission and that is to share the benefits of responsible mining with all of our stakeholders. From a shareholder perspective, that means our ability to operate and grow our business without issue, and for the local and regional communities, it is about ensuring they are better off after we leave.” Having been active in Senegal for over eight years, Teranga has established a broad range of CSR programmes, which is typified by the growth of its CSR group in the country. In 2010 the company had two individuals on the team, today there is about 50. “To start off with, we addressed historic stakeholder grievances,” reveals Young. “Then we began engaging with the local and regional communities to understand what their vision was and how we could participate in that.” After liaising with the local and regional communities over an extended period, Teranga was able to identify some clear priority areas, with the most pressing concerns being agriculture and food security.
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MINING | Teranga Gold
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“That’s an area where we think we’ve done a tremendous job. This is a region which has a distinct rainy season, but when that ends there is absolutely no precipitation, meaning it’s a very short growing season. “So, we installed pumps with drip irrigation and have created 12 market gardens to date, which has allowed the women in this region to create sustainable livelihoods.” The market gardens have given nearly 1,000 women vital food security and economic assurance, while improving the health of families in the region that didn’t previously have access to fresh fruits and vegetables.
MINING | Teranga Gold
“In terms of sustainable economic development, we think all of the things we are doing are going to help sustain this region long after we are gone.�
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MINING | Teranga Gold
Richard Young, president and CEO Teranga has also focused on youth and
are going to help sustain this region long
education, giving over 200 students from
after we are gone.”
local communities the opportunity to attend colleges and universities in Dakar
Development pipeline
and crucially covering the fees associated
Teranga’s social sustainability outlook is also
with those courses.
being implemented across its development stage projects in the other West African
In addition, Teranga offers training
countries where it operates. This been
programmes at site to those in the region,
epitomised by the company’s decision to
bringing in casual labour, teaching trades
change the name of a project in Burkina Faso,
and key skills that can be used locally,
on the request of the community.
regionally or at national level. The company received the Banfora Gold “In terms of sustainable economic
Project as part of its acquisition of Gryphon
development, we are also really focused
Minerals in 2016, however Banfora is actually
on small business enterprises and looking
the name of a large town about 90 km away
to help grow those enterprises in the
from the mine site and so the name did not
region. We think all of these programmes
give the local community the pride in the mine that they were looking for.
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Consequently, the project was renamed Wahgnion, which means ‘together we will succeed’. Since then Teranga has made swift progress in advancing the mine through the development stages. A feasibility study was completed in late 2017, full construction work began in Q1 2018 and financing has recently been concluded. Teranga secured US$165 million in funding from Taurus Funds Management for the Wahgnion project, a sum that Young describes as pivotal to the company’s financing plans. Another significant development within the company came with the de-listing of the stock on the ASX in December 2017. When the company first listed, it did so out of an Australian outfit. But being a Canadianheadquartered company, the stock largely migrated back to the world’s largest mining and resource exchange (the TSX) and liquidity declined materially on the ASX. Therefore, the significant cost of the dual listing no longer made sense anymore and
MINING | Teranga Gold
“With one producing mine, a second one on target to come on line next year and Golden Hill, we have an attractive organic growth pipeline.�
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MINING | Teranga Gold
the decision was made. Overall, Teranga’s
“We’ll have an updated reserve out mid-
shareholders have been overwhelmingly
year, which we believe will show increased
supportive of its growth strategy, particularly
reserves and better economics for Wahgnion.
prominent board member David Mimran.
On this project we are just getting started,” proclaims Young.
“David is our largest shareholder with 22% of the company. He’s also on our board and
Wahgnion currently has a nine-year mine
is the largest private employer in two of the
life but the company hopes to extend this to
countries in which we operate. He believes
between 11 and 13 years with this updated
in our vision and is helping us execute that
reserve.
vision.” The company also has an advanced The future looks bright for Teranga with the
exploration project, Golden Hill, situated
Wahgnion project on track to pour first gold
on the prolific Hounde belt in Burkina Faso.
next year, which will increase the overall
Work at Golden Hill is advancing rapidly and
production profile by 50% and potentially
Teranga is investing $8 million in Golden Hill
double the company’s free cash flow
drill programmes in 2018.
generation.
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Teranga plans to release an initial resource
“Golden Hill is moving forward faster than
for the project’s most advanced prospects by
we could have ever anticipated and beyond
year end. Preliminary metallurgical test work
that, we’ve done two joint ventures in Ivory
programmes are underway and base line
Coast which we are really excited about. With
environmental studies are planned for later
one producing mine, a second one on target
this year.
to come online next year and Golden Hill, an advanced exploration project, we have an
“Taurus also provided an additional $25
attractive organic growth pipeline.”
million to take our Golden Hill exploration project through to feasibility, assuming that
With all this in mind, Teranga will certainly
the drill results continue to be as positive as
become a mid-tier gold producer in West
they’ve been. We’re very pleased with their
Africa, and with responsible mining at the
confidence in the project.
core of its philosophy, the firm is creating a positive legacy wherever it goes in the region.
TSX:TGZ
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Published by Anderson Murray Media Ltd
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