Terranga Gold Corporation

ENTERING A NEW CHAPTER DIRECTED BY AN AMBITIOUS STRATEGY AND ORGANIC GROWTH

TERANGA GOLD

2 | Africa Outlook issue 77

MINING

Golden Opportunity Well on its way to becoming a mid-tier, multi-jurisdictional gold producer in West Africa, Teranga Gold is entering an exciting new chapter directed by an ambitious strategy and pipeline of assets that has the potential for tremendous organic growth Project Manager: Donovan Smith

Africa Outlook issue 77 | 3

Owner Representation Project Management Construction Support Commissioning Management Audit / Review / Due Diligence Scoping

We work together to develop your mineral project into a mining asset.

Contact us for more information. www.metifex.com.au

Project Data Sheet

Project :

Wahgnion Gold Project

Client :

Teranga Gold Corporation

Project Scope :

2.3 Mtpa Greenfield CIL Gold Project Mine services area, process facilities, tails management facility, power station, camp and on-site infrastructure Off-site infrastructure Community resettlement infrastructure

Services : Owner Representative Services for the Project Scope Delivery strategy and oversight Metallurgical coordination from testwork through to start-up Project set-up, reporting and management Project services, controls, procurement, and contracts Establishment and management of on-site Owner scope Commissioning readiness and management Ramp up support Highlights :

Project delivered LTI free 5.3 Million site manhours Commissioned 2 months ahead of Schedule On budget

Contact :

T : +61 7 3391 8888 E : metifex@metifex.com.au

6 Arne Street, Woolloongabba, Brisbane, 4102, Queensland, Australia www.metifex.com.au

TERANGA GOLD

G

old. From the richly endowed coffins of the Ancient Egyptian era to the treasure of leprechauns cited in Irish mythology, this precious metal has become the posterchild of global riches, beauty and rarity.

Fast forward to the present day, and gold’s intrinsic value remains unwavering.

Acting as a reliable counterweight for investors, the price of gold rose to a six-year high earlier this year in the face of a weakening dollar, global political tensions and falling bond yields. The majority of analysts remain bullish about gold’s performance in the near term. The World Gold Council, for example, has forecast demand for the highly sought-after metal to

PROJECT SNAPSHOT

SABODALA GOLD OPERATIONS LOCATION: Southeast Senegal GEOLOGY: West African Birimian Greenstone Belt FIRST GOLD POUR: 2009 PROVEN AND PROBABLE GOLD RESERVES: 2.4 million ounces (as at December 31, 2018) MEASURED AND INDICATED GOLD RESOURCES: 4.1 million ounces (as at December 31, 2018) FORECAST MINE LIFE: 11 years AVERAGE ANNUAL PRODUCTION: 213,000 ounces (first five years of mine profile 2018-2022) AVERAGE ANNUAL ALL-IN SUSTAINING COSTS: $885 per ounce (first five-year life of mine profile 2018-2022)

6 | Africa Outlook issue 77

remain robust, driven by the expectation that investors and central banks will continue their net purchasing trends regardless of fluctuations in the consumer market.

Against this prosperous global context, the current climate is bright for gold mining companies in West Africa.

The continent has roughly 30 percent of the world’s remaining mineral resources; its world-class iron ore, bauxite, diamond, phosphate, uranium and gold deposits have helped to elevate the region’s economy in recent years.

“We wanted to get involved in Africa, in particular in the western regions of the continent,” Richard Young, President and CEO of Teranga Gold states, highlighting his and company Chairman Alan Hill’s strategy back in

2009. “West Africa has modern mining codes, mining-friendly governments and relatively unexplored regions that are geologically similar to the prolific gold belts found in Quebec and West Australia.”

These cornerstones provided the foundation for Teranga Gold to embark on its vision of building a mid-tier gold producer in West Africa.

Since its IPO back in December 2010, the company’s now 2,000-strong workforce have led this dynamic Canadian company to operate successfully in the West African gold mining space, benefiting from the region’s prolific resources, while sharing the benefits of responsible mining within the countries Teranga Gold operates.

M

etifex provides consulting and owners representation services for mining companies, project developers and project financers in the mining industry. Metifex works with these groups to define, scope, manage, coordinate, control, review and audit projects in a variety of ways ranging from individual consulting services, supplementation, or a complete management team depending on the group’s needs.

From project initiation, definition, project delivery, commissioning and through to production, Metifex can assist with the following services;

Metifex was incorporated in 2006 to specifically provide services to the mining industry for owners. Metifex comprises a team of experienced personnel covering executive and principal level skill sets in key technical and project management disciplines. The Metifex team has wide and varied expertise and individually have undertaken various roles in project development at all phases of study from concept to full feasibility then ultimately through to project delivery, commissioning and production. Partnerships with several consultants in the industry enhance the capabilities of Metifex across a range of process technologies and delivery services.

• Project management: Owner representation, strategy, planning, project controls, coordination, scheduling.

Metifex is able to adapt to client specific requirements.

Every project has its own points of differentiation, which need to be identified and understood and Metifex works with their clients to determine these aspects and plan accordingly. Metifex has the experience and quality people that projects require to enable development and delivery of a considered plan that manages risks, seeks opportunities and truly adds value.

T +61 7 3391 8888

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• Project definition: Study management, project conceptualisation, options establishment/review, scoping, optimisation.

• Review/audit: Due diligence, asset evaluation, strategy review, project review, technical review, operational performance.

• Metallurgical: Testwork, scoping, coordination.

• Engineering: Scoping, review, optimisation, value analysis.

• Procurement/contracts: EPC/EPCM coordination, long lead/key equipment, logistics, consultants.

• Construction site support: System development, set-up, support, review, status, monitoring.

• Pre-operations readiness: Strategy, timeline, supply/consumables, coordination, status review, training support.

• Commissioning management: Support, coordination, operations interface.

• Ramp up: Support, performance testing, training support.

Metifex assists projects across a variety of commodities including gold, copper, lead/zinc, coal and industrial minerals in locations ranging from Africa, Europe, Asia, Australia, and to the Americas. The company continues with its founding philosophy of assisting their clients to develop their mineral project into a mining asset.

E metifex@metifex.com.au

|

www.metifex.com.au

PW commenced mobilisation to Wahgnion site in January 2018 and the following works were completed within the contract schedule: • • • •

Tailings Management Facility and Decant Water Harvest Dam River pump station pocket and access Earthworks and drainage to: • • • • •

Process Plant Area Mine Services Area Power Station Resettlement Village 1 Resettlement Village 2

• Local, plant and mine roads including rehabilitation of 50km of public road accessing the lease • Batching and placing of 2,000m3 of concrete for miscellaneous buildings, culverts and assorted civil structures Most of the material for the civils works was generated from mining adjacent pits and PW are continuing pit development in association with Wahgnion Gold Operations.

Tel: +233 30518112 pwm@pwmil.com www.pwmil.com

TERANGA GOLD

PROJECT SNAPSHOT

WAHGNION GOLD MINE LOCATION: Southwest Burkina Faso GEOLOGY: Paleoproterozoic Birimian Senoufo Belt FIRST GOLD POUR: 2019 PROVEN AND PROBABLE GOLD RESERVES: 1.6 million ounces (as at December 31, 2018) MEASURED AND INDICATED GOLD RESOURCES: 2.4 million ounces (as at December 31, 2018) FORECAST MINE LIFE: 13 years AVERAGE ANNUAL PRODUCTION: 132,000 ounces (first five years of life of mine profile 2020-2024) AVERAGE ANNUAL ALL-IN SUSTAINING COSTS PER OUNCE: $761 (first five years of life of mine profile 2020-2024)

10 | Africa Outlook issue 77

PAVING THE WAY FOR NEW GROWTH The company began operating a decade ago at its Sabodala Gold Operations situated in southeast Senegal, close to the country’s border with Mali.

This is where Teranga Gold’s vision of gaining a foothold on the continent came to fruition. Teranga established a now thriving multi-pit mine backed by a central mill and carbon-in-leach processing plant. The mine license covers 291 square kilometres with an additional 629 square kilometre exploration land package.

Sabodala was the first industrial gold processing facility to operate in Senegal, and to this day remains the largest gold operation in the country.

“Sabodala has produced 1.8 million ounces of gold to date,” Young reveals.

“And, it is by no means nearing the end of its life. Rather, our recently updated feasibility study estimates that the gold mine still has 2.4 million ounces in mineral reserves.”

Following two on-site mill expansions in 2012 and 2016, the Sabodala plant is now able to process up to 4.5 million tonnes per annum, nearly double its initial capacity. The result is reliable, stable cash flows that have

powered the development of a more expansive growth pipeline.

In March 2018, Young revealed to Africa Outlook that Teranga was poised to capitalise on an organic growth pipeline that had the potential to take it to mid-tier producer status over the next five years. Fast forward 18 months and it seems now that this landmark transition is in full swing, owed to the recent commissioning of its second mine, Wahgnion Gold Operations.

A MULTI-JURISDICTION GOLD MINER Located in Burkina Faso, Wahgnion Gold Operations (formerly known as the Banfora gold project) was initially purchased by Teranga Gold through its acquisition of Gryphon Minerals Limited in June 2016. With this acquisition, the company increased its total proven and probable reserve base by 35 percent to 3.7 million ounces at that time.

Teranga has continued to move swiftly in the three years since, coming to realise the mine’s true potential in the process. “By way of background, when we initially acquired Gryphon, Wahgnion had a proven reserve of roughly 800,000 ounces,” Young explains.

MINING

A selection of images from Teranga Gold’s Wahgnion Gold Mine in the southwest of Burkina Faso. The mine achieved its first gold pour in 2019, with a forecast life of 13 years

Africa Outlook issue 77 | 11

TERANGA GOLD

HMR Engineering HMR Engineering Pty Ltd (HMR) provided specialist services and tools to Teranga Gold (Teranga), for the installation of the SAG and ball mill at the Wahgnion Gold Project. HMR was engaged through EPC firm Lycopodium and worked collaboratively with all parties to complete the installation of both mills.

HMR’s collaborative working relationship with Teranga and its construction contractors resulted in safe project completion, on time, within budget and meeting all OEM quality standards - hence ensuring warranty of equipment was maintained.

Richard Young, CEO

“However, through modest drill programmes we increased that estimate first to 1.1 million ounces and then again more recently to 1.6 million ounces.”

With debt financing in place, Teranga began construction of Wahgnion in spring 2018. Mining began in parallel, and first pour was achieved in August 2019, two months ahead of the original schedule. Currently, Wahgnion’s four initial deposits are not drilled off, and there are more than a dozen additional target areas in the local vicinity, all within trucking distance to the mill.

Young continues: “Wahgnion’s current mine life is estimated to be 13 years, which by industry standards is considered long for a gold mine, and we estimate that it will ultimately reach somewhere between 15 and 20 years with continued exploration success.”

While Wahgnion’s plant capacity is lower than the capacity at Sabodala, Wahgnion is a much lower cost operation. Looking at the figures, Sabodala is expected to produce an average of 213,000 ounces of gold per year over the course of a five-year period ending 12 | Africa Outlook issue 77

2022, generating total free cash flow of $230 million in the process.

Wahgnion, meanwhile, is forecast to produce an average of 132,000 ounces of gold per year and, with its lower cost profile, is expected to generate a total of $311 million in free cash flow between 2020 and 2024. Young adds. “While company-wide production increases by about 50 percent with Wahgnion coming online, free cash flow more than doubles. It’s a quality operation that has a lot of potential for growth.”

POWERED BY PARTNERS AND PEOPLE As our conversation progresses to the mine’s construction and completion, Young turns his attention to Teranga’s large network of suppliers and contractors – partners that have been key in championing Wahgnion’s success. Not only was Wahgnion’s associated infrastructure completed under budget and ahead of the original construction schedule, but over 5.3 million hours were worked without any lost time injuries.

HMR provided a site project manager and site technical support in the form of an experienced installation crew who supervised the mill installation personnel while working with and engaging in upskilling of the local labour workforce. During the project, HMR was also engaged to assist with technical problems and additional work scopes, which highlights HMR’s capacity and capability to go above and beyond for our clients.

HMR has performed mill installations in Burkina Faso and several other African countries, and we enjoyed being a part of the Wahgnion Gold Project and working with local support companies and personnel.

Our global workforce of over 50 personnel ensures that we are able to offer experienced installation, maintenance and technical consulting services in multiple countries for primarily crushing, grinding and power transmission equipment and systems.

For more information, please contact: Projects Team - Australia T +61 8 6460 4615 E solutions@hmr-engineering.com

www.hmr-engineering.com

HMR Engineering has been undertaking SAG and Ball Mill Installations in Africa since 2013. Our professional and knowledgeable staff will deliver your installation safely, on time and on budget.

We strive to deliver our services in a flexible manner, with communication with our Clients and other service providers being key to our installation success.

2019 Teranga GoldWahgnion Gold Project

SERVICES • Construction Services o Mill installation o General mechanical • On Site Fabrication o Steel erection o Lube systems o Tanks • Asset management and consulting o Ongoing operational support Please contact us for a customised quote and further details on what we can offer that will suit your upcoming project.

PROJECTS TEAM Australia T: +61 8 6460 4615 E: solutions@hmr-engineering.com www.hmr-engineering.com

2013 Endeavour MiningAgbaou Gold Project

2017 Endeavour MiningHounde Gold Project

2018 Endeavour MiningITY CIL Project

TERANGA GOLD

Lycopodium In November 2016, Teranga engaged Lycopodium to complete a Feasibility Study for the Wahgnion Gold project process plant and infrastructure portions, with a scope of work that included detailed technical and economic assessments of the feasibility of developing a 2.0 to 2.7 Mtpa (average LOM throughput rate of 2.5 Mtpa) gold mining operation.

The Plant design is based on a conventional carbon-in-leach (CIL) gold process flowsheet consisting of primary crushing, semi autogenous grinding and ball milling, with a pebble crusher, CIL gold extraction, elution, electrowinning, and gold smelting to produce doré on site.

“There’s no question that such achievements would not be possible without these relationships,” Young affirms, highlighting the likes of Lycopodium, Metifex, HMR Engineering, ECG Engineering, Summa NK Contracting Company, PW Mining, Haald Engineering and others.

“They make a real difference to our company, and for that we are particularly grateful.”

Suppliers and partners are not alone on this front; Teranga is also very appreciative of the role of local governments and communities in supporting its vision, ensuring that the relations between country and company remain mutually beneficial.

Testament to its contribution to the country, the company provides the evidence of its most recent employment statistics. In 2018, 95 percent of its Sabodala workforce was Senegalese with the majority of employees sourced from the surrounding communities.

“Sabodala is a rural operation, based 14 | Africa Outlook issue 77

roughly 650 kilometres east of Dakar, and providing employment to local people is something that we focus on,” Young explains.

“With this comes a certain level of responsibility. For example, many of our truck drivers had never driven a car before we hired them. As a result, we have a number of ongoing training programmes, helping to upskill local people in line with best practices.”

At Wahgnion, Teranga Gold is taking a similar approach. Approximately 92 percent of its workforce is Burkinabe, with 30 percent directly employed from locally impacted communities.

Certain Wahgnion staff have benefited from internships at Sabodala, where they trained on machinery and learned critical processes, bringing back their newly found expertise to Wahgnion.

“Our hiring practices are paramount to us,” Young affirms. “We spend a lot of time developing human resources in Africa. It’s all about having the right people.”

In 2017, Teranga awarded Lycopodium a contract to provide EPCM services for the process design, engineering design, procurement, construction management and commissioning of the process plant for Wahgnion.

Engineering design was also completed for support infrastructure including the accommodation village.’

The EPCM for the treatment plant was successfully completed by Lycopodium in August 2019.

“We are very excited to report that construction is complete and that we have achieved first gold pour at Wahgnion, two months ahead of schedule. This moves us a step closer to reaching our goal of becoming a mid-tier gold producer in West Africa,” said Richard Young, President and Chief Executive Officer.

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Coupled with our reputation in precious and base metals, we have now grown to be a widely recognised services provider to the iron ore, battery metals and industrial minerals industries.

Our demonstrated commitment and proven ability to safely deliver projects on schedule and on budget, quickly ramping up to meet project performance targets, is the cornerstone of our success and repeat client base.

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E minerals@lycopodium.com.au P +61 8 6210 5222 www.lycopodium.com.au

TERANGA GOLD PROACTIVE IMPACT INVESTMENT Employment is just one element of Teranga’s focus on social responsibility. Likewise, impact investment is at the forefront of the organisation’s portfolio, driven by four key pillars – good governance, mitigating the impact, sharing the benefits, and people and culture – and a simple mission of ensuring that each area in which it operates is better off after it leaves.

“The entire industry does a very good job when it comes to social responsibility and sustainability,” Young states. “But it’s a real point of emphasis here at Teranga. From the board-level down, we take a grassroots approach.

Improvements to food security, water and healthcare are three priorities of the local communities. We have taken it upon ourselves to take significant steps to address these concerns while still establishing sustainable

ECG Engineering ECG Engineering is an expert provider of electrical engineering solutions to a range of industries across the African continent, with particular strengths in mining, utilities and materials handling.

Its stated mission is to provide engineering innovation and integrity in partnership, with the ultimate aim “to be an engineering partner that exceeds client expectations through innovation and the highest standards of service and support”.

Headquartered in Australia, ECG has a long and established presence working for clients in Africa, with an emphasis in the mining and utilities sectors.

www.ecg-engineering.com.au

income-generating opportunities, training programmes and support for education.”

In partnership with the near-mine communities, Teranga has put in place local market gardens and drilled boreholes.

“The boreholes and market gardens make a world of difference,” Young states. “They offer access to clean, potable drinking water, they can alleviate food security issues and worries, and they lead to an improvement in overall general health. About 25 percent of the food grown is consumed, leaving a significant amount to be sold. This puts money into the pockets of local families and boosts the wellbeing of the wider region.”

Beyond market gardens, the company assists local farmers with maintenance activities and vaccination of livestock. Teranga also has many programmes focused on youth and education, income generating activities for women, and other projects 16 | Africa Outlook issue 77

MINING

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Africa Outlook issue 77 | 17

TERANGA GOLD

Summa We, Summa N.K. Contracting Co., Ltd. were founded in 1986. Since then, company’s expertise have developed towards an international standard, which can be proved by our consistently qualified performance.

Among all of our clients, we’ve become well known as a ‘committed builder’ as we provide the most cost effective and high quality services, in order to achieve our clients’ highest satisfaction.

The category of our services provided shall be dedicated but not limited to: • Fabrication and erection work • Piping and insulation work • Machine installation

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chosen by the communities. Through the two resettlements currently in progress, both at Sabodala and at Wahgnion, Teranga is also building new and improving existing infrastructure.

“In general, social responsibility and sustainability, and specifically

PROJECT SNAPSHOT

GOLDEN HILL LOCATION: Southwest Burkina Faso GEOLOGY: Houndé Belt LAND AREA: Three permits over 468 km2 2019 EXPLORATION BUDGET: $7 million NUMBER OF DRILL TARGETS IDENTIFIED: 11

18 | Africa Outlook issue 77

providing tangible benefits to the local communities, is something that drives us as a company,” Young adds.

FOCUSED ON GROWTH With the 2016 acquisition of Gryphon Minerals, Teranga also acquired the Golden Hill project, which is now an advanced exploration project, comprising three exploration permits spanning 468 square kilometres on the world-renowned Houndé Belt.

“We are moving Golden Hill to the feasibility stage of development with the outlook that this will become our third mine in West Africa,” Young states. “The benefit of having a sequential pipeline of assets is the ability to self-fund our growth. With the addition of Wahgnion, we will have free cash flow from two operational gold mines to assist with our organic growth.”

Looking ahead, Young also points to a number of early-stage exploration projects underway in Côte d’Ivoire

that Teranga is planning to finance more aggressively with new drill programmes, metallurgical testing and environmental work.

“In addition to being excited about Teranga Gold’s growth prospects, we are optimistic about the industry as a whole and the direction it is heading,” he adds. “Mining companies are looking to make a sustainable difference and are extremely well placed to do that. I’m confident that we can do the same as we strive to achieve our vision to become a mid-tier, multi-jurisdictional West African gold producer.”

TERANGA GOLD Tel: +1 416 594 0000 investor@terangagold.com www.terangagold.com

MINING

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Africa Outlook issue 77 | 19

TERANGA GOLD 77 King Street West, Suite 2110 Toronto, ON, Canada M5K 2A1 Tel: +1 416 594 0000 investor@terangagold.com www.terangagold.com PRODUCED BY AFRICA OUTLOOK MAGAZINE