Teranga Gold Announces Record Free Cash Flow for 2014

19.02.2015  |  Marketwired

TORONTO, ONTARIO--(Marketwired - Feb 18, 2015) - Teranga Gold Corp. ("Teranga" or the "Company") (TSX:TGZ)(ASX:TGZ) is pleased to report its financial results for the fourth quarter and full year ended December 31, 2014. All financial information is in US dollars unless otherwise noted.

"During 2014 we made significant progress in executing against our key objectives, namely to maximize free cash flow and profitability, to strengthen our balance sheet and to grow organically," stated Richard Young, President and Chief Executive Officer of Teranga. "With the significant improvement in our costs and efficiencies, we generated free cash flow of $189 per ounce, which is in line with the top senior gold companies."

"Just as importantly, our balance sheet strengthened significantly over the last 12 months," stated Navin Dyal, Vice President and Chief Financial Officer of Teranga. "As of today we are now debt-free, a stand-out achievement in our sector particularly given the declining gold price environment."

Added Mr. Young, "Last year was a successful one for Teranga and 2015 is starting off on an equally positive note. Roadwork has begun on our new high-grade Gora deposit and we are focused on having this new mine up and running by the fourth quarter. With 6.1 million ounces of measured and indicated gold resources, together with the growth opportunities we see from our large mine license and regional land package, we believe we are just scratching the surface of our potential."

Key Highlights

For a full explanation of Financial, Operating, Exploration and Development results please see the Audited Consolidated Financial Statements and Management's Discussion & Analysis for 2014 at www.terangagold.com.

• Consolidated profit attributable to shareholders increased to $27.7 million ($0.08 per share) for the fourth quarter, while full year profit attributable to shareholders totaled $17.8 million ($0.05 per share)
  
  
• Free cash flow increased to $26.6 million for the fourth quarter and $39.1 million for the full year
  
  
• The Company is now debt free having retired the outstanding balance of its loan facility on December 31, 2014 and fully repaid the outstanding balance of its finance facility subsequent to year-end
  
  
• Construction began on the high-grade Gora satellite deposit on February 14^th - production expected in the fourth quarter
  
  
• The Company expects to generate positive free cash flow in 2015 based on 2015 production in the range of 200,000 to 230,000 ounces(2) at total cash costs of $650 to $700 per ounce³ and all-in sustaining costs (including all new project development costs) of $900 to $975 per ounce³
  
  

¹Free cash flow is defined as operating cash flow (excluding one-time transaction costs related to the acquisition of the OJVG) less capital expenditures.

²This production guidance is based on existing proven and probable reserves only from both the Sabodala mining licence and OJVG mining license as disclosed in Table 2 on page 8 of this Report. The estimated ore reserves underpinning this production guidance have been prepared by a competent person in accordance with the requirements of the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code"). Please refer to the Competent Persons Statement on pages 22-23 of this Report.

³Total cash costs per ounce and all-in sustaining costs per ounce of gold sold are non-IFRS measures which do not have standard meanings under IFRS. Please refer to Non-IFRS Performance Measures at the end of this Report.

Review of Financial Results

Review of Operating Results

Review of Cost of Sales

DECEMBER QUARTER FINANCIAL HIGHLIGHTS

• Gold revenue for the three months ended December 31, 2014 was $76.6 million compared to gold revenue of $58.3 million for the same prior year period. The increase in gold revenue was due to 37 percent higher gold sales volume, partially offset by 4 percent lower realized gold prices during the fourth quarter of 2014.
  
  
• During the fourth quarter of 2014, 63,711 ounces were sold at an average realized gold price of $1,199 per ounce. During the fourth quarter of 2013, 46,561 ounces were sold at an average realized price of $1,249 per ounce.
  
  
• Consolidated profit for the three months ended December 31, 2014 was $27.7 million ($0.08 per share), compared to a loss of $2.4 million ($0.01 loss per share) in the same prior year period. The increases in profit and earnings per share over the prior year quarter were primarily due to higher revenues in the current year quarter, and a reversal of non-cash inventory write-down to net realizable value ("NRV") totaling $16.0 million recorded in the second and third quarters of 2014.
  
  
• During the three months ended December 31, 2014, the Company recorded a $16.0 million reversal of the non-cash write-down on long-term low-grade ore stockpile inventory that had been previously recorded during the second and third quarters of 2014. The non-cash write down was adjusted for the impact of a change in the accounting for deferred stripping costs made during the fourth quarter. Higher ore grades and ounces mined during the fourth quarter resulted in a decrease in the per ounce ending cost of low-grade ore stockpiles (including applicable overhead, depreciation and amortization).
  
  
• Operating cash flow for the three months ended December 31, 2014 provided cash of $30.7 million compared to $13.1 million cash provided in the prior year. The increase in cash flow provided by operations compared to the prior year quarter was primarily due to higher gold sales.
  
  
• Capital expenditures of $4.1 million for the three months ended December 31, 2014 were similar to capital expenditures recorded in the same prior year period.
  
  

DECEMBER QUARTER OPERATIONAL HIGHLIGHTS

• Gold production during the fourth quarter of 2014 of 71,278 ounces increased by 47 percent and 36 percent versus the third quarter of 2014 and the fourth quarter of 2013, respectively. Production was higher in the last three months of 2014 due to higher processed grade and improved mill throughput. Production was slightly lower than fourth quarter guidance primarily due to marginally lower recovery rates than planned.
  
  
• Total cash costs for the three months ended December 31, 2014 totalled $598 per ounce sold, 16 percent lower than the same prior year period. Lower total cash costs per ounce in the current year, excluding the reversal of non-cash inventory write-downs to NRV, were mainly due to lower mining and processing costs and higher gold production in the current year quarter.
  
  
• All-in sustaining costs for the three months ended December 31, 2014 were $711 per ounce sold compared to $850 per ounce sold in the same prior year period. All-in sustaining costs for the current year, excluding the reversal of non-cash inventory write-downs to NRV, were lower due to a decline in total cash costs and lower capital expenditures.
  
  
• Total tonnes mined for the three months ended December 31, 2014 were 4 percent lower year-over-year. Mining activities in the current period were mainly focused on the upper benches of Masato and the lower benches of phase 3 of the Sabodala pit, while in the same prior year period, mining was focused on the upper benches of phase 3 of the Sabodala pit which resulted in shorter ore and waste haul distances.
  
  
• Access to the lowest benches of phase 3 of the Sabodala pit, which was originally scheduled for mining during the fourth quarter 2014, have been deferred into 2015 due to bench access constraints. In total, approximately 10,300 high-grade ounces (91,000 tonnes at over 3.5 gpt) originally part of the 2014 mine plan are expected to be mined and processed during first and second quarters of 2015. As a result of this deferral, gold production in 2014 was impacted by about an approximately net 8,000 ounces for the year as this high-grade material was displaced by low-grade feed to the mill.
  
  
• Total mining costs for the three months ended December 31, 2014 were 6 percent lower than the same prior year period mainly due to lower material movement and higher productivity at Masato due to mining softer material. Unit mining costs for the three months ended December 31, 2014 were $2.58 per tonne, a decrease of 3 percent compared to the same prior year period.
  
  
• Ore tonnes milled for the three months ended December 31, 2014 were 17 percent higher than the same prior year period. The Company set a quarterly record for total tonnes milled during the fourth quarter of 2014. As anticipated, the introduction of softer oxide ore from Masato has had a positive impact on crushing and milling rates. In the same prior year period, mill feed was sourced from phase 3 of the Sabodala pit containing harder ore.
  
  
• Processed grade for the three months ended December 31, 2014 was 16 percent higher than the same prior year period. Mill feed during the fourth quarter 2014 included significant high grade ore that was sourced from the upper benches of Masato and the lower benches of the Sabodala pit. In the prior year period, mill feed was sourced from phase 3 of the Sabodala pit at grades closer to average reserve grade.
  
  
• Total processing costs for the three months ended December 31, 2014 were 9 percent lower than the same prior year period, mainly due to timing of maintenance activities and lower consumption of grinding media with the softer ore from Masato. Unit processing costs for the three months ended December 31, 2014 were 23 percent lower than the prior year period due to lower total processing costs and higher tonnes milled.
  
  
• Total mine site general and administrative costs for the three months ended December 31, 2014 were 1 percent lower than the prior year period mainly due to lower insurance premiums. Unit general and administration costs for the three months ended December 31, 2014 were 12 percent lower than the prior year period due to lower general and administrative costs and higher tonnes milled.
  
  

FULL YEAR FINANCIAL HIGHLIGHTS

• Gold revenue for the twelve months ended December 31, 2014 was $260.6 million compared to gold revenue of $297.9 million for the same prior year period. The decrease in gold revenue was mainly due to lower spot gold prices in the current year.
  
  
• Consolidated profit for the twelve months ended December 31, 2014 was $17.8 million ($0.05 per share), compared to profit of $50.3 million ($0.19 per share) in the same prior year period. The decrease in profit in the current year was primarily due to lower revenue, higher cost of sales, partially offset by lower transaction costs related to the acquisition of the OJVG.
  
  
• For the year ended December 31, 2014, operating cash provided $49.0 million compared to $74.3 million in the prior year. The decrease was primarily due to lower revenues, including the impact of delivering a portion of current period production to Franco-Nevada at 20 percent of gold spot prices. For the year ended December 31, 2013, operating cash flow included a use of cash to buy-back-back the remaining "out of the money" gold forward sales contracts and the delivery of 45,289 ounces into the hedge book at $806 per ounce.
  
  
• Capital expenditures were $18.9 million for the twelve months ended December 31, 2014, compared to $69.1 million in the same prior year period. The decrease was due to lower sustaining and development capital expenditures and lower capitalized deferred stripping costs in the current year.
  
  

FULL YEAR OPERATIONAL HIGHLIGHTS

• Gold production for the year increased marginally from the year earlier to 211,823 ounces and was the second highest production total in Company history. However, production fell short of the revised guidance estimate of 215,000 ounces primarily due to lower than planned recovery rates in the fourth quarter.
  
  
• Total cash costs per ounce for the year ended December 31, 2014 of $710 per ounce were marginally above the higher end of guidance of $650 to $700 per ounce. This compares to $641 per ounce in 2013. The increase in total cash costs was mainly due to lower capitalized deferred stripping, partly offset by lower mining and processing costs compared to the prior year.
  
  
• All-in sustaining costs per ounce for the year ended December 31, 2014 were $865 per ounce, within the original guidance range of $800 to $875 per ounce and 16 percent lower than the prior year. Lower all-in sustaining costs were mainly due to lower capital expenditures in the current year period.
  
  
• Total tonnes mined for the year ended December 31, 2014 were 16 percent lower compared to the same prior year period. Mining activities in the current year were initially focused on the lower benches of phase 3 of the Sabodala pit. Commencing in September, mining began on schedule at Masato, the first of the OJVG deposits to be developed. Total tonnes mined in 2014 were about 4 million tonnes higher than the original plan, mainly due to a redesign of phase 3 of the Sabodala pit as a result of mining in a peripheral area to the ore body which added 1.3 million waste tonnes that was originally scheduled for mining in phase 4 of the Sabodala pit in 2016; combined with higher tonnes mined at Masato due to better grade and ore tonnes than originally expected. In the prior year, mining activities were mainly focused on the upper benches of phase 3 of the Sabodala pit.
  
  
• Total mining costs for the year ended December 31, 2014 were 8 percent lower than the same prior year period due to decreased material movement. However, unit mining costs for the year ended December 31, 2014 were 9 percent higher than the same prior year period due to fewer tonnes mined. In 2014, mining was mainly concentrated on the lower benches of phase 3 of the Sabodala mine pit with limited space resulting in lower productivity and higher costs, which was partially offset by higher productivity at Masato from mining softer material.
  
  
• Ore tonnes milled for the twelve months ended December 31, 2014 were 15 percent higher than the same prior year period. As anticipated, the introduction of softer oxide ore from Masato has had a positive impact on crushing and milling rates. In the same prior year period, mill feed was sourced from phase 3 of the Sabodala pit containing harder ore.
  
  
• Processed grade for the year ended December 31, 2014 was 9 percent lower than the same prior year period, as mill feed for the first nine months of 2014 was sourced from ore from phase 3 of the Sabodala pit at grades closer to average reserve grade. In the prior year, mill feed was primarily sourced from phase 3 of the Sabodala pit at higher grades.
  
  
• Total processing costs for the twelve months ended December 31, 2014 were 2 percent lower than the same prior year period, mainly due to timing of maintenance activities and lower consumption of grinding media with the softer ore from Masato. Unit processing costs for the twelve months ended December 31, 2014 were 15 percent lower than the prior year period due to lower total processing costs and higher tonnes milled.
  
  
• Total mine site general and administrative costs for the twelve months ended December 31, 2014 were 5 percent lower than the prior year period mainly due to lower insurance premiums. Unit general and administration costs for the twelve months ended December 31, 2014 were 14 percent lower than the prior year period due to lower general and administrative costs and higher tonnes milled.
  
  

LIQUIDITY AND CAPITAL RESOURCES

• The Company's cash position at December 31, 2014 was $35.8 million. For 2014, the Company had identified approximately $80.0 million in one-time payments, including the retirement of $42.8 million of $47.0 million combined balance outstanding under the Loan Facility and the Equipment Facility, $8.0 million in advance dividends, $9.0 million in remaining legal and office closure costs related to the acquisition of the OJVG, $7.5 million to acquire Badr's share of the OJVG and $15.0 million in government payments.
  
  
• For the year ended December 31, 2014, the Company has made a total of $63.0 million in one-time payments. This includes $42.8 million in debt repayments (including the final payment for the $60.0 million Macquarie Loan Facility), $3.7 million in payments to the Republic of Senegal and one-time payments related to the acquisition of the OJVG, including $9.0 million for transaction, legal and office closure costs and $7.5 million to acquire Badr's share of the OJVG. Approximately $23.0 million in one-time payments to the Republic of Senegal, are now expected to be paid over 2015 and 2016. The one-time payments described herein, excludes $30.0 million in debt retired in the first quarter 2014 as part of the Franco-Nevada transaction.
  
  
• Subsequent to the year ended December 31, 2014, the Company fully repaid the outstanding balance of its finance facility with Macquarie Bank Limited ("Equipment Facility"), resulting in the Company being debt free. Notwithstanding, the Company is working to put a standby facility in place to provide additional financial flexibility to ensure sufficient liquidity is maintained by the Company.
  
  

ADDITIONAL MATTERS

• In order to allow non-executive directors and employees to participate in the long-term success of the Company and to promote alignment of interests between directors/employees and shareholders, the Company introduced a new Deferred Share Unit Plan ("DSU Plan") for non-executive directors and a new Restricted Share Unit Plan ("RSU Plan") for employees during the second quarter 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. For employees, 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 based on the Company's achievement of performance-based criteria.
  
  
• During the twelve months ended December 31, 2014, the Company granted 2,343,487 RSUs at a price of C$0.72 per unit. At December 31, 2014 there were no units vested, 436,532 units were forfeited and 298,884 units were cancelled. The Company granted 545,000 DSUs during the twelve months ended December 31, 2014 at a price of C$0.72 per unit. At December 31, 2014 there were no units vested and no units were cancelled.
  
  
• In January 2015, SGO received a tax assessment from the Senegalese tax authorities claiming withholding tax on interest paid to an offshore bank of approximately $3.0 million. The Company believes that the amount in dispute is without merit and that the issue will be resolved with no or an immaterial amount of tax due.
  
  
• Approximately $18.0 million of the SGO 2011 tax assessment of approximately $24.0 million has been resolved and approximately $6.0 million remains in dispute. We believe that the remaining amount in dispute is without merit and that these issues will be resolved with no or an immaterial amount of tax due.
  
  

• The Company's mine plans are designed to maximize free cash flow. In 2015, the Company expects to generate free cash flow at $1,200 per ounce gold after funding its organic growth initiatives. Mining activity in 2015 will continue in the Masato pit, as well as completing phase 3 of the Sabodala pit. Development of Gora is expected to be complete during the third quarter, with mining expected by late in the third quarter and production from Gora commencing in the fourth quarter of the year.
  
  
• The Company expects to produce between 200,000 and 230,000 ounces of gold in 2015. The quarterly production profile in 2015 is expected to look similar to the 2014 quarterly production profile with higher production in the fourth quarter once Gora ore is processed through the mill. In total, the second half of 2015 is expected to account for approximately 55 percent of total gold production as Gora comes into production. The Gora development schedule is aggressive but Management believes it is achievable. The delay in the Gora permitting process has delayed road construction which was to start at the beginning of the year but began on February 14th. The delay in the start date of road construction may negatively impact the timing of commencement of mining at Gora resulting in production at the lower end of our 2015 production guidance range. The final phase in the ESIA process, a public hearing to announce the outcome of the technical and public enquiry processes occurred on February 18th. Environmental approval and the occupational haul road permit are now expected in the ordinary course and are not expected to impact a fourth quarter production commencement for the Gora deposit.
  
  
• The Company's tax exempt status ends on May 2, 2015. From this point forward, the Company will be subject to a 25 percent income tax rate as well as customs duties and non-refundable value-added tax on certain expenditures. Any income tax incurred in 2015 will not be paid until 2016 and the other taxes are built into our unit cost guidance.
  
  
• Total mine production costs for 2015 are expected to fall in the range of $147.0 to $155.0 million, similar to 2014 (net of capitalized deferred stripping). The increase in taxes and duties for consumables of about $5.5 million is expected to be offset by the decline in costs for light fuel oil ("LFO"), heavy fuel oil ("HFO") and weaker local and Euro denominated costs relative to the US dollar. A $0.10 variance from the current HFO/LFO assumptions would result in approximately a $5.0 million change to mine production costs or about $20 per ounce. A 10 percent variance from the current Euro/USD exchange rate assumption would result in approximately a $9.0 million change to mine production costs or about $40 per ounce. The Government of Senegal sets the price of petroleum products monthly. In late December 2014, these prices were reduced on average 15 percent, the first reduction in 2014. The Company's 2015 assumptions for LFO and HFO reflect these most recent price reductions and do not reflect any potential further reductions that the Government of Senegal may choose to enact.
  
  
• Administrative and corporate social responsibility ("CSR") costs relate to the corporate office, the Dakar and regional office and the Company's corporate social responsibility initiatives, and exclude corporate depreciation, transaction costs and other non-recurring costs. For 2015, these costs are estimated to be between $15.0 million and $16.0 million, including approximately $3.5 million for CSR activities.
  
  
• Sustaining capital expenditures for the mine site are expected to be between $6.0 and $8.0 million, capitalized deferred stripping costs are expected to total $8.0 to $10.0 million and reserve development expenditures are expected to total $6.0 to $8.0 million. Project development expenditures for growth initiatives including the cost to develop the Gora and Kerekounda deposits and costs to optimize the mill are expected to total $29.0 to $32.0 million. Of the total $49.0 to $58.0 million in total capital expenditures for 2015, $5.0 to $6.0 million relating to the mill optimization may be deferred pending the Company's upcoming exploration and heap leach results to ensure the best allocation of capital for the Company.
  
  
• Total cash costs per ounce for 2015 are expected to be between $650 and $700 per ounce, in line with 2014. All-in sustaining costs are expected to be between $900 and $975 per ounce, higher than 2014 due to an increase in development spending on new deposits and expansion of the mill of approximately $125 per ounce.
  
  
• Total depreciation and amortization for the year is expected to be between $260 and $275 per ounce sold, $215 to $225 per ounce sold of which is related to depreciation on plant, equipment and mine development assets, and $45 to $50 per ounce of which is for depreciation of deferred stripping assets.
  
  
• In 2015, the majority of the capital to be spent on the Company's exploration program will be focused on organic growth through (i) the conversion of resources to reserves; and (ii) extensions of existing deposits along strike on the Sabodala and OJVG mine licenses. As well, a modest amount of capital has been budgeted for the continuation of a systematic regional exploration program designed to identify high-grade satellite and standalone deposits.
  
  
• The Company identified a number of risk factors to which it is subject in its revised Annual Information Form filed for the year ended December 31, 2013. These various financial and operational risks and uncertainties continue to be relevant to an understanding of our business, and could have a significant impact on profitability and levels of operating cash flow. Refer to Risks and Uncertainties at the end of this report for additional risks.
  
  

MANAGEMENT CHANGE

• Kathy Sipos, Vice President, Investor and Stakeholder Relations has left the Company to pursue a career change. As an integral part of the Teranga team since the initial public offering, Ms. Sipos was instrumental in the development of the investor relations program and established the Company's CSR platform including the development of the Teranga development strategy ("TDS").
  
  
• The TDS sets out Teranga's plan to ensure our actions and investments are oriented towards the long-term, sustainable development of the region surrounding our Sabodala Gold Operation. It further underscores our commitment to a company-wide culture of CSR. Under Ms. Sipos' leadership, the TDS has provided the foundation for a number of innovative partnerships with government agencies and several international and local non-government organizations to provide a range of programs in education, skills training, agriculture, health and education for the benefit of the communities and region in which we operate.
  
  
• Richard Young, President and CEO and Trish Moran, Investor Relations will be assuming Ms. Sipos' investor relations responsibilities, while the CSR team will oversee our programs until a replacement is found.
  
  

BUSINESS AND PROJECT DEVELOPMENT

Reserves and Resources

• Mineral Resources at December 31, 2014 are presented in Table 1. Total open pit Proven and Probable Mineral Reserves at December 31, 2014 are set forth in Table 2. The reported Mineral Resources are inclusive of the Mineral Reserves.
  
  
• The Proven and Probable Mineral Reserves were based on the Measured and Indicated Resources that fall within the designed open pits. The basis for the resources and reserves is consistent with the Canadian Securities Administrators National Instrument 43-101 Standards for Disclosure for Mineral Projects ("NI 43-101") regulations.
  
  
• The Sabodala pit design, which remains unchanged and is consistent with the Mineral Reserves reported previously, is based on a $1,000 per ounce gold price pit shell for Phase 4. A re-evaluation of the final pit limits of Sabodala Phase 4 will be completed prior to mining and will use updated economic parameters at that time. Currently, the plan to mine Phase 4 in Sabodala is estimated to begin in 2016.
  
  
• The Niakafiri and Gora pit designs remain unchanged from December 2012.
  
  
• The Masato pit design has been updated and is based on an updated resource model, using a $1,200 gold price with mine operating costs reflecting current conditions.
  
  
• The Golouma and Kerekounda pit designs remain unchanged from December 2013. Resource models are expected to be updated based on drill programs recently completed, with subsequent pit designs and revised reserves estimates expected later in 2015. These have been based on a $1,250 per ounce pit shell, however, when comparing to adjusted cut-off grades to match current operating costs, minimal adjustments were required to match a $1,200 per ounce pit shell.
  
  

Masato Resource Model Update

• Drill hole assays and surface trenching results from the 2014 advanced exploration program were incorporated into an updated Masato mineral resource model during the fourth quarter 2014. A total of 2,900 metres in 22 diamond drill holes ("DDH") and 6,000 metres in 98 reverse circulation ("RC") holes were completed in 2014.
  
  
• DDH drilling confirmed the interpretation of mineralized zones and infilled gaps to upgrade resource classification of Inferred Resources.
  
  
• RC holes were drilled at 10 metre spacing in 2 separate test block areas in oxide ore to test the continuity of portions of the high-grade sub-domains. Results confirm the nature of high grade mineralization in these areas, as well as overall shallower dipping zones than was previously interpreted.
  
  
• Due to the complex nature of mineralization, a total of 11 mineralization models were generated following non-linear trending structures. Mineral resources were estimated using locally varying anisotropies respecting local trends. Oxide densities were revised to reflect the gradational density difference associated with increasing depth from surface. Fresh rock densities were revised and averaged for mineralized and non-mineralized areas.
  
  
• A comparison of the reserve model against actual mined in 2014 indicates 2 percent higher tonnes, 5 percent higher grade and 8 percent higher ounces mined. This can be attributed to a shallower higher grade mineralization trend in oxides in areas delineated with wider spaced drilling.
  
  
• Overall, 72,000 ounces were added at Masato during 2014 including 16,000 ounces in the high-grade test blocks drilled. Due to the complexity of the high grade zones revealed from the 10 metre test block areas, extension of high grade intercepts will need to be continually updated as mining advances with 10 metre spacing from the RC grade control process. As a result, the high grade added in the updated model was in the near surface areas in Phase 1 where 10 metre spacing drilling occurred.
  

For clarity, the mineral Resource estimates disclosed above with respect to Niakafiri, Gora and ML Other (which includes Niakafiri, Niakafiri West, Soukhoto and Diadiako) were prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Refer to Teranga Gold Corp.'s ASX Quarterly December 31, 2013 report filed on January 30, 2014 for further details. All material assumptions and technical parameters previously disclosed continue to be applicable and have not materially changed. See Competent Person Statements on pages 22 and 23 for further details.

For clarity, the mineral Reserve estimates disclosed above with respect to Niakafiri and Gora was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Refer to Teranga Gold Corp.'s ASX Quarterly December 31, 2013 report filed on January 30, 2014 for further details. All material assumptions and technical parameters previously disclosed continue to be applicable and have not materially changed. See Competent Person Statements on pages 22 and 23 for further details.

Masato Development and OJVG Integration

• Development of the Masato deposit is complete and mining commenced during the third quarter of 2014. First ore delivery was completed in third quarter 2014, with a gradual ramping up of production rates throughout fourth quarter 2014. The heavily oxidized upper ore zones did not create significant materials handling issues in the plant and the total blend of oxide with fresh Sabodala ore was increased throughout fourth quarter 2014. The gold recovery from Masato met expectations, demonstrated by the metallurgical accounting for the year as well as results from an individual bulk test in the plant. The softer oxidized ore from Masato provided for an increase in mill throughput and lower overall plant unit operating costs.

Base-Case Life of Mine

• During the first quarter 2014, the Company filed a National Instrument - Standards of Disclosures for Mineral Projects ("NI 43-101") technical report which included an integrated life of mine ("LOM") plan for the combined operations of Sabodala and the OJVG. The integrated LOM plan had been designed to maximize free cash flow in the prevailing gold price environment. The sequence of the pits can be optimized, as well as the sequencing of phases within the pits, based not only on grade, but also on strip ratio, ore hardness, and the capital required to maximize free cash flows in different gold price environments. As a result, the integrated LOM annual production profile represented an optimized cash flow for 2014 and a balance of gold production and cash flow generated in the subsequent five years. Based on the current reserve base on $1,200 per ounce gold the Company has the flexibility to reduce material movement and capital costs which reduces production by about 5 percent but expects to generate free cash flow over the period 2015-2017.(1) At the same time, as gold prices increase, the Company has the ability to increase material movement and gold production. One of the strategic alternatives available to the Company, should materially lower gold prices arise, is to supplement higher grade feed to the mill with low-grade ore stockpiles on hand thus significantly reducing or eliminating material movement costs.
  
  
• With expectations for additional reserves based on drilling in Niakafiri, Masato, Golouma, Kerekounda and further discoveries on the land acquired from the OJVG, further mine plan optimization work will continue. As a result, the integrated LOM production schedule represents a "base case" scenario with flexibility to improve cash flows in subsequent years.
  
  

¹This forecast financial information is based on the following material assumptions: Gold price: $1,200 per ounce; average annual gold production (2015-2017) of approximately 240,000 ounces; and total mine production costs assum ed for the 2015 Outlook. The production guidance is based on existing proven and probable reserves only from both the Sabodala mining license and OJVG mining license as disclosed in Table 2 on page 11 of this Report.

Mill Enhancements

• A study to quantify and optimize the relationship between an increase in crusher availability to the SAG and Ball Mill system, as well as other design enhancements within the crushing and grinding system was completed during the third quarter 2014.
  
  
• Improvements to the SAG mill as part of sustaining capital include adjustments made to mill liners along with installation of a discharge head and trommel screen to improve throughput. Increased throughput in the ball mills will result from new gear boxes which will increase power to the ball mills thereby increasing throughput.
  
  
• The largest capital component of the mill upgrade will consist of adding a second primary jaw crusher to operate in parallel with the existing unit. This will (i) increase availability to the live storage for the mill circuit, and (ii) provide the ability to reduce the top size primary crusher feed. Basic engineering was initiated in the fourth quarter of 2014 to finalize design, layout, material quantities, procurement packages and an execution plan for construction.
  
  
• The parallel crusher construction is expected to be operational over a span of approximately 18 months, with continual improvement realized earlier on from the sustaining capital initiatives. The Company has budgeted approximately $6.0 million in 2015, however, detailed engineering is ongoing to determine the final cost estimate. A decision to proceed to construction will depend on the Company's upcoming exploration and heap leach results to ensure the best allocation of capital for the Company. Simulations have demonstrated that production potential exists beyond 480 tonnes per operating hour with these new configurations once commissioning has been completed after installation.
  
  

Heap Leach Project

• The LOM plan shows a significant amount of both oxide and sulphide low grade reserves that are mined during the operating period but not processed until the end of the mine life. There also exists significant potential along an 8km mineralized structural trend covering both mine leases to increase the known reserves with near surface, oxidized ore.
  
  
• The potential benefit to accelerating value from this ore earlier by feeding it through a heap leach process was evaluated during 2014. Phase 1 of the testwork (various stages of the soft and hard oxidized transition zones) has been completed. Based on positive results of this testwork, Phase 2 (analysis of hard ore on the ROM stockpile) has been initiated.
  
  
• The ongoing testwork is being completed by Klappes, Cassidy and Associates at their facilities in Reno, Nevada, who are experienced in testing and designing heap leach facilities throughout the world, including West Africa.
  
  
• Key milestones for the project are as follows:
  
  
  • Complete Phase 1 testwork, economic analysis and initiate engineering design to pre-feasibility study ("PFS") level - completed fourth quarter of 2014;
    
    
  • Complete additional follow up optimization testwork and, initiate Phase 2 testwork on the ROM stockpiles - ongoing through to first half of 2015;
    
    
  • Initiate design concepts and proceed with PFS level engineering design study - initiated in first quarter of 2015; and
    
    
  • Initiate advanced level engineering design, initiate targeted resource drilling and environmental studies to support an environmental and social impact assessment ("ESIA") submission - second half of 2015.
    
    
• The Company is encouraged by the Phase 1 test results. Key variables (recovery rates, agglomeration and cyanide consumption of the oxide ore zones) are in line with the Company's initial expectations.
  
  
• The hard transition oxide ore, (representing approximately 40 percent) is being tested at a top size of 12.5 mm crush with 8 kg/t of cement addition that passed percolation tests representing a lift height to 16 metres. Preliminary results from the column leach tests indicate an average recovery of approximately 75 to 80 percent. The optimal cyanide consumption versus maximum leach will be determined in the PFS and is expected to be in the range of 0.5-0.7 kg/t cyanide consumption after approximately 40 to 70 days of leach time.
  
  
• Additional testwork is ongoing for the saprolite ore (representing approximately 10 percent) and for several bulk samples representing ~11Mt of low grade ROM stockpile.
  
  
• The Company is targeting production from heap leach commencing in 2017, with the quantities and scale of operation to be defined upon the completion of Phase 2 and completion of drilling of potential low-grade heap leach material on the combined mine licenses. At this point, the Company anticipates that heap leach could account for an incremental 10 to 20 percent of annual production once fully operational.
  
  

Gora Development

• The high-grade Gora deposit will be operated as a satellite deposit to the Sabodala mine, requiring limited local infrastructure and development. Ore will be hauled to the Sabodala processing plant by a dedicated fleet of trucks and processed on a priority basis, displacing lower grade feed as required.
  
  
• Technical approval of the Gora ESIA was completed in the fall of 2014 and the public enquiry process was completed in late January 2015. As a result, the Company received approval to begin access road construction in mid-February 2015. The final phase in the ESIA process, a public hearing to announce the outcome of the technical and public enquiry processes, occurred on February 18th. Environmental approval and the occupational haul road permit are now expected in the ordinary course.
  
  
• Due to excess equipment available from the lower material movement rates, mine operations has initiated construction with a complement of contractors required to complete the road during the second quarter of 2015. Infrastructure to support mine operations, a small water retention structure and pit preparations are expected to commence during the second quarter 2015 with ore to be stockpiled and delivered to the plant by a contractor in the fourth quarter 2015.
  
  

Sabodala Mine License Reserve Development

• The Sabodala combined mine license covers 246km². In addition to the mine related infrastructure, it contains the Sabodala, Masato, Niakafiri, Niakafiri West, Soukhoto and Dinkokhono deposits on the former Sabodala 33km² license area, and the Masato, Golouma and Kerekounda deposits on the OJVG mine license area of 213km². As we have integrated the OJVG geological database into a combined LOM plan, a number of areas have been revealed as potential sources for reserve additions within the mining lease. These targets have been selected based on potential for discovery and inclusion into open pit reserves.
  
  
• In total, the combined mine license includes 5.7 million ounces of Measured and Indicated Resources and a further 2.35 million ounces of Inferred Resources.(2) A significant multiyear reserve development program is under way to add high-grade mill feed and low-grade heap leach feed to the open pit reserve base, which should allow the Company to further increase production toward its phase 1 organic growth target of 250,000 to 350,000 ounces of annual production. In addition, exploration programs are underway on the combined mine license to make new discoveries that may further enhance both the phase 1 and phase 2 organic growth targets.
  
  

² Analysis to determine underground potential for a portion of the reported resources is planned to be completed by the Company this year

Niakafiri

• In 2013, further surface mapping was completed at Niakafiri in conjunction with the re-logging of several DDH, which were incorporated into the geological model for the Niakafiri deposit. Further exploration work, including additional drilling, is targeted for 2015 following discussions with the Sabodala village.
  
  
• In addition to the potential expansion of hard ore reserves at Niakafiri, the Company is exploring for potential softer ore that may be conducive to heap leach, with emphasis on the mineralized trend to the north and south of the current reserves at Niakafiri.
  
  

Masato

• An advanced exploration program began at Masato during the second quarter of 2014 and continued into the third quarter 2014 to inter alia test the continuity of portions of the high-grade sub-domains, which were removed from the Masato reserve base after the acquisition of OJVG in 2014.
  
  
• The overall program consisted of drilling and trenching to confirm interpretation of domains and high-grade sub-domains, infill gaps and upgrading Inferred Resources, determining optimal RC grade control drill spacing and obtaining additional geotechnical data for pit slope analysis. Overall, the program confirms the Company's interpretation of the resource model and provides additional confidence in the nature of the high-grade mineralization within the deposit.
  
  
• Surface trenching and RC drilling revealed additional ore zones not modelled in the supergene enriched laterite ore near surface during mining of the uppermost benches in the third quarter 2014. RC drilling in advance of mining in 10 metre spacing of the ore zones will be ongoing as part of a comprehensive grade control program for mine operations.
  
  
• All drill hole assay data for the 2014 Masato exploration program, including drill hole locations and a location map, are available on the Company's website at www.terangagold.com under "Exploration".
  
  

Golouma NW Extension

• Infill drilling was undertaken for potential conversion of inferred resources outside of the existing pit limits to the northwest of the current Golouma orebody to evaluate the mineralization potential of structural features along strike to the existing reserves. By the end of the fourth quarter of 2014, 26 diamond drill holes, totaling 3,100 metres were completed. Encouraging gold values were reported from several holes. The presence of two gold mineralized shear structures (north south shear and northwest shear) within metavolcanic units located to the north and northwest of the existing reserves has been confirmed, with continued mineralization to the north where these features intersect. An updated resource model and subsequent reserves evaluation will be completed based on the drilling completed in the fourth quarter of 2014. Additional drilling is ongoing to test mineralization potential to the north and infill drilling along the northwest shear.

Masato Northeast

• Detailed mapping and trenching (4,300 metres) were completed on the Masato Northeast prospect which is situated 1km northeast along strike of the Masato deposit. The prospect overlies a sequence of mafic volcanics within which there is a 2.5 km long structural splay off the main Masato structural trend. Trenching has defined a north-northeast trending shear zone with distinctive quartz-carbonate-sericite alteration features. Assay results received to date indicate elevated gold values are developed along the length of the shear structure. A 10-hole DDH drilling program is ongoing to test the gold mineralized zones at depth in sections of the shear. Additional drilling in addition to this program is expected to continue through the first half of 2015, with potential for a yearlong campaign pending initial results.

Kerekounda

• An 11-hole, 1,200 metres DDH drilling program was completed in the fourth quarter 2014 with the aim of determining the extent of mineralization further along strike of the existing reserves to the south of the existing reserves pit. Assay results are awaited and pending results, an updated resource model with subsequent reserves evaluation will be completed in the first half of 2015.

Niakafiri SE and Maki Medina

• Both RC and DDH drilling is planned for potential conversion of inferred resources, geotechnical holes for pit wall determination and exploratory holes to the north toward the Niakafiri deposit to evaluate extension along strike. Additional drilling to determine near surface oxide resources will also be evaluated. Due to the positive results for the heap leach tests, work in these areas is expected to commence in the first quarter 2015, but may be deferred later into 2015 to coincide with drilling near Sabodala village on the Niakafiri reserves.

Regional Exploration

• The Company currently has 9 exploration permits encompassing approximately 1,055km² of land surrounding the Sabodala and OJVG mine licenses (246km² exploitation permits). Over the past four years, with the initiation of a regional exploration program on this significant land package, a tremendous amount of exploration data has been systematically collected and interpreted to implement methodical and cost-effective follow-up programs. Targets are in various stages of advancement and are prioritized for follow-up work and drilling. Early geophysical and geochemical analysis of these areas has led to the demarcation of at least 50 anomalies, targets and prospects and the Company expects that several of these areas will ultimately be developed into mineable deposits. The Company has identified some key targets that, though early stage, display significant potential. However, due to the sheer size of the land position, the process of advancing an anomaly through to a mineable deposit takes time using a disciplined screening process to maximize the potential for success.

Ninienko

• An extensive mapping and trenching program covering 1,500 metres which was conducted during the second and third quarters of 2014 at the Ninienko prospect, is ongoing. This work outlined a 500 metre-plus wide zone with gold mineralization occurring in flat-lying, near surface (0-2 metres) quartz vein and felsic breccia units developed over a strike length of 1,500 metres.
  
  
• An isopach plan of the mineralized quartz vein and felsic breccia systems is in progress, and will be used to develop a plan for DDH and a possible RC drill program. Due to the limitation of surface trenching and mapping used to develop the flat lying mineralized zone at surface, additional trenching and mapping will also be undertaken in prospective zones near to the area to expand on the currently defined zone and to further develop an understanding of the source of mineralization zones for potential drill targets at depth.
  
  
• A detailed geochemical soil sampling program commenced in the fourth quarter of 2014 to follow up and test co-incident gold-molybdenum-copper and potassium anomalies identified by an earlier regional termite mound sampling program. The sampling program has led to the discovery of two separate shear zones both following the north-northeast regional scale structural trend, which is host to other gold deposits in the region. The shear zones are characterized by quartz-carbonate alteration zones 10-20 metres in width with quartz veining and gossan development. These zones and other gold soil anomalies will be tested by a trenching program in 2015. A DDH program will follow later in 2015.
  
  

Soreto

• Following up on a small 5-hole DDH program at the Soreto prospect in 2013, a 15-hole DDH program for 2014 was primarily completed during the fourth quarter of 2014, with the remainder during early 2015. These were located along two fence lines placed 150 metres on either side of the 2013 fence that intersected reasonable gold values. At least three continuous shear zones were intercepted along strike. These featured west dipping (25 - 35º) altered shear zones with felsic dyke, sheared and brecciated silicified metasediments containing quartz-carbonate veins with disseminated pyrite and visible gold in places. The shear zones coincide with the major north-northeast regional shear structure with an associated 6km long geochemical soil anomaly and when projected to surface, align with the surface workings from artisanal mining.
  
  
• Further infill drilling (13 DDHs) was undertaken in the fourth quarter 2014 to further extend these mineralized shear zones along strike and infill drill to 50 metre spacing between the fence lines. The Company is awaiting assay results from the infill drilling program.
  
  

Gora Northeast Extension and Zone ABC

• Trenching and mapping programs are being planned for the first quarter of 2015 to investigate potential gold mineralized extensions of the Gora gold deposit into the Zone ABC prospect, which has significant gold soil anomalies co-incident with regional structural trends.

KD Prospect

• Mapping and outcrop sampling programs were undertaken on KD during the fourth quarter 2014. The programs are investigating and following gold in soil anomalies identified in regional termite mound sampling surveys. The anomalies coincide with northeast and northwest trending regional scale structures. Rock chip sampling of outcrop within a northwest trending shear zone in metasediments yielded a number of elevated gold values including 40 gpt and 83 gpt gold. Trenching programs to follow up on these anomalies have been planned for the first quarter 2015.

KC Prospect

• Approximately 3,200 metres of trenching was completed across a mineralized structural trend with intense quartz veining and brecciated felsic intrusives developed over a strike length of approximately 1,800 metres. Sampling of the trenches yielded elevated gold values in the overburden of up to 18.45 gpt over 0.4 metres and 6.27 gpt over 0.6 metres. The quartz vein and breccia zone yielded elevated gold values in the range of 1.95 gpt over 0.3 metres true width and 1.41 gpt over 0.2 metres true width with limited continuity along strike. Due to limited mineralization in the in situ rock, it was determined that follow up drilling was not likely to produce results and resources were best allocated to higher prospective targets.
  
  
• A follow-up soil sampling and trenching program is planned in first quarter 2015 to evaluate a large soil anomaly (peak values of 2.64 gpt and 2.38 gpt) located 800 metres to the west of workings which may account for the elevated gold anomalies identified in overburden in the trenches. A limited trenching program to test a coincident IP resistivity and chargeability high in the eastern portion of the prospect will also be undertaken in the first quarter of 2015.
  

Renewal of Heremakono Exploration Permit

• The Heremakono exploration permit is host to a series of exploration targets, most notably Ninienko, Soreto, and Soreto North. This permit was originally awarded in October of 2005 and, absent an extraordinary request for an extension, would have expired in October 2014. A lack of safe and secure access to certain exploration permits was an issue raised with the Government of Senegal and the State agreed to grant extraordinary extensions upon the expiry of their customary 9 year terms to address the Company's concerns. During the fourth quarter 2014, the renewal of this significant exploration permit was granted, extending its term to October 25, 2016.

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. Refer to the Non-IFRS Financial Performance Measures at the end of this report for further details.

CORPORATE DIRECTORY

Directors
Alan Hill, Chairman
Richard Young, President and CEO
Jendayi Frazer, Non-Executive Director
Edward Goldenberg, Non-Executive Director
Christopher Lattanzi, Non-Executive Director
Alan Thomas, Non-Executive Director
Frank Wheatley, Non-Executive Director

Senior Management
Richard Young, President and CEO
Mark English, Vice President, Sabodala Operations
Paul Chawrun, Vice President, Technical Services
Navin Dyal, Vice President and CFO
David Savarie, Vice President, General Counsel & Corporate Secretary
Aziz Sy, General Manager, SGO & Vice President, Development Senegal

Registered Office
121 King Street West, Suite 2600
Toronto, Ontario, M5H 3T9, Canada
T: +1 416 594 0000
F: +1 416 594 0088
E: investor@terangagold.com
W: www.terangagold.com

Senegal Office
2K Plaza
Suite B4, 1er Etage
sis la Route due Meridien President
Dakar Almadies
T: +221 338 693 181
F: +221 338 603 683

Auditor
Ernst & Young LLP

Share Registries
Canada: Computershare Trust Company of Canada
T: +1 800 564 6253
Australia: Computershare Investor Services Pty Ltd
T: +1 300 850 505

Stock Exchange Listings
Toronto Stock Exchange, TSX symbol: TGZ
Australian Securities Exchange, ASX symbol: TGZ

FORWARD LOOKING STATEMENTS

This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Teranga, or developments in Teranga's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, all disclosure regarding possible events, conditions or results of operations, future economic conditions and courses of action, the proposed plans with respect to mine plan, anticipated 2015 results and consolidation of the Sabodala Gold Project and OJVG Golouma Gold Project, mineral reserve and mineral resource estimates, anticipated life of mine operating and financial results, the approval of the Gora ESIA and permitting and the completion of construction related thereto. Such 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. These assumptions include, among other things, the ability to obtain any requisite Senegalese governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic conditions and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks involved in exploration and development of mineral properties, including government approvals and permitting, changes in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Teranga, as well as other risks and uncertainties which are more fully described in the Company's Annual Information Form dated March 31, 2014 (as revised April 24, 2014), and in other company filings with securities and regulatory authorities which are available at www.sedar.com. Teranga does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities.

COMPETENT PERSONS STATEMENT

The technical information contained in this document relating to the mineral reserve estimates for Sabodala, the ore stockpiles, Masato, Golouma and Kerekounda is based on, and fairly represents, information compiled by Mr. William Paul Chawrun, P. Eng who is a member of the Professional Engineers Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Chawrun is a full-time employee of Teranga and is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun has consented to the inclusion in this Report of the matters based on his compiled information in the form and context in which it appears in this Report.

The technical information contained in this document relating to the mineral reserve estimates for Gora and Niakafiri is based on, and fairly represents, information and supporting documentation prepared by Julia Martin, P.Eng. who is a member of the Professional Engineers of Ontario and a Member of AusIMM (CP). Ms. Martin is a full time employee with AMC Mining Consultants (Canada) Ltd., is independent of Teranga, is a "qualified person" as defined in NI 43-101 and a "competent person" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin 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 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Martin is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Martin has reviewed and accepts responsibility for the Mineral Reserve estimates for Gora and Niakafiri disclosed in this document and has consented to the inclusion of the matters based on her information in the form and context in which it appears in this Report

The technical information contained in this Report relating to mineral resource estimates for Niakafiri, Gora, Niakafiri West, Soukhoto, and Diadiako 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 National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.

The technical information contained in this Report relating to mineral resource estimates for Sabodala, Masato, Golouma, Kerekounda, and Somigol Other are 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 National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.

Teranga's exploration programs are being managed by Peter Mann, FAusIMM. Mr. Mann is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Mr. Mann has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Mann is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. The technical information contained in this news release relating exploration results are based on, and fairly represents, information compiled by Mr. Mann. Mr. Mann has verified and approved the data disclosed in this release, including the sampling, analytical and test data underlying the information. The RC samples are prepared at site and assayed in the SGS laboratory located at the site. Analysis for diamond drilling is sent for fire assay analysis at ALS Johannesburg, South Africa. Mr. Mann has consented to the inclusion in this news release of the matters based on his compiled information in the form and context in which it appears herein.

Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). CIM definitions of the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral 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.

NON-IFRS FINANCIAL PERFORMANCE 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 and an "all-in 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 and all-in costs will be helpful to analysts, investors and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. These new measures will also be helpful to governments and local communities in understanding the economics of gold mining. The "all-in sustaining costs" is an extension of existing "cash cost" metrics and incorporate costs related to sustaining production. The "all-in costs" includes additional costs which reflect the varying costs of producing gold over the life-cycle of a mine.

"Total cash cost per ounce sold" is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. The Company reports total cash costs on a sales basis. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure, along with sales, is considered to be a key indicator of a Company's ability to generate operating earnings and cash flow from its mining operations.

Total cash costs figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is considered the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measure of other companies.

The WGC definition of all-in sustaining costs seeks to extend the definition of total cash costs by adding corporate general and administrative costs, reclamation and remediation costs (including accretion and amortization), exploration and study costs (capital and expensed), capitalized stripping costs and sustaining capital expenditures and represents the total costs of producing gold from current operations. The WGC definition of all-in costs adds to all-in sustaining costs including capital expenditures attributable to projects or mine expansions, exploration and study costs attributable to growth projects, and community and permitting costs not related to current operations. Both all-in sustaining and all- in costs exclude income tax payments, interest costs, costs related to business acquisitions and items needed to normalize earnings. Consequently, this measure is not representative of all of the Company's cash expenditures. In addition, the calculation of all-in sustaining costs and all-in costs does not include depreciation expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company's overall profitability.

"Total cash costs", "all-in sustaining costs" and "all-in costs" are intended to provide additional information only and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. The following tables reconcile these non-GAAP measures to the most directly comparable IFRS measure.

"Average realized price" is a financial measure with no standard meaning under IFRS. Management uses this measure to better understand the price realized in each reporting period for gold and silver sales. Average realized price excludes from revenues unrealized gains and losses on non-hedge derivative contracts. The average realized price is intended to provide additional information only and does not have any standardized definition under IFRS; it should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate this measure differently.

"Total depreciation and amortization per ounce sold" is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

ABOUT TERANGA

Teranga is a Canadian-based gold company listed on the Toronto Stock Exchange (TSX:TGZ) and 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 in Senegal, West Africa.

Teranga's mission is to create value for all of its stakeholders through responsible mining. Its vision is to explore, discover and develop gold mines in Senegal, in accordance with the highest international standards, and to be a catalyst for sustainable economic, environmental and community development. All of its actions from exploration, through development, operations and closure will be based on the best available techniques.

Senegal, which is located in West Africa, has a stable democracy, a progressive mining code and is a member of the West African Economic and Monetary Union. The Senegalese government views mining as a pillar of growth and supports mining companies by offering attractive royalty and ownership structures. Teranga operates the only gold mine and mill in Senegal.