Teranga Gold Corporation, listed on the TSX, has reported record gold production of 233 267 ounces in 2017, exceeding the high end of its annual production guidance range of 205 000 to 225 000 ounces. Teranga owns the Sabodala gold mine in Senegal, which has been producing since 2010.
Due to higher production and gold prices, the company ended the year with a strong cash position of approximately U$88 million, an increase of US$15 million from September 30, 2017.
The company’s strong financial position supports its ability to finance its next mine, Banfora, which has been renamed Wahgnion to reflect the wishes of the local community. Early works activities at Wahgnion are underway in the lead-up to closing a project debt facility and the commencement of mill construction, both anticipated to occur in the second quarter of 2018.
Wahgnion is located in the south-west of Burkina Faso. The project was acquired in October 2016 as part of Teranga’ acquisition of ASX-listed Gryphon Minerals. Teranga announced the positive results of a Feasibility Study (FS) on the project in September last year. Based on initial gold reserves of 1,2 Moz, the FS base case demonstrated solid project economics with a 15 % IRR at US$1 250/oz gold for a 2,4 Mt/a CIL processing facility modelled on the Sabodala plant. The FS estimated the pre-production capex at US$232 million.
“Our operational focus on generating free cash flow at Sabodala is paying off,” said Richard Young, Teranga’s President and CEO. “With record mill throughput and positive reconciliation to ore reserve estimates, Sabodala achieved record gold production for the second consecutive year and exceeded 2017 production guidance. Our five-year profile for Sabodala estimates free cash flow of US$230 million between 2018 and 2022, including approximately US$90 million in free cash flow over the next two years.”
The company is forecasting gold production at Sabodala of between 210 000 and 225 000 ounces of gold in 2018. This compares favourably to the 2018 production estimate of 213 000 ounces outlined in the 2017 Sabodala 43-101 technical report filed on August 30, 2017.
Located 65 km east of Dakar, Sabodala – a conventional open-pit/CIL operation – is currently the
only commercial-scale gold mine in Senegal but others are on the way, notably Toro Gold’s Mako project.
Added Young, “We are excited about 2018. Our expectations are for another year of strong production and cash flow at Sabodala as well as continued organic growth. Our top priority is to close the financing and proceed with construction of Wahgnion. In addition, we are aggressively advancing exploration programmes at both Golden Hill in Burkina Faso and Afema in Côte d’Ivoire. With a long-life mine that provides solid annual gold production and free cash flow, a second mine in development and a pipeline of quality organic growth assets, we are well-positioned to deliver on our vision of becoming the next multi-asset mid-tier gold producer in West Africa.”
The processing plant at the Sabodala gold mine in Senegal (photo: Teranga).