Could you elaborate on the advantages of integrating the high-grade Massawa gold project with your flagship Sabodala operation?
The Sabodala-Massawa complex is the successful combination of existing mine infrastructure and one of the highest grade undeveloped open pit gold projects in Africa. Sabodala is a mature operation where we have been mining for over a decade, and in the last three years alone, has outperformed the reserve model by 37%. Recently acquired Massawa is within trucking distance of our established Sabodala plant. The combination of Sabodala and Massawa, supported by a capable workforce, created the opportunity for synergies rarely seen in today’s mining industry that have the ability to transform Sabodala into a top-tier gold asset. The pre-feasibility study points to a 5-year production profile of 384,000 oz/y at all-in sustaining costs of less than US$700/oz - among the lowest in the industry.
It has been a year since the first gold was produced at your second mine, Wahgnion. Can you comment on performance to date?
Wahgnion has exceeded our expectations from the beginning, from development through to construction and production. We are very proud that Wahgnion was built safely, ahead of schedule, and under budget and has been outperforming the reserve model since the beginning of this year as we moved beyond the areas of historical artisanal activity. Since achieving commercial production, the mill has been operating well above design capacity. Due to the higher mill throughput, Wahgnion’s annual average production increased by approximately 25% to 150,000 oz/y over the next five years, resulting in a corresponding decrease in its mine life from 13 years to 10 years. We have restarted the exploration program on over a dozen targets within trucking distance of Wahgnion’s mill with the goal of increasing the mine life.
The construction of the Wahgnion mine involved a resettlement program. Could you briefly walk us through this process?
Acknowledging that resettlements are sensitive because many in the community had spent their entire lives in their homes, we made sure to offer improved living conditions. We upgraded housing and infrastructure as well as a comprehensive livelihood restoration program. For example, we hired an agronomist to help improve crop yields by introducing modern farming methods and different crops to make the newly allocated land more productive. Our goal is to ensure that the communities we impact are better off after we have left than before we arrived. We are halfway through the resettlement action plan. The community was actively involved in the design of the new houses and livelihood restoration programs. Nearly 40% of Wahgnion’s workforce comes from the local communities around the mine, and their strong support has allowed us to make a smooth transition from exploration into construction, and now into operation.
Could you elaborate on Teranga’s exploration updates at its main projects, including Golden Hill?
2021 production is projected to be more than 500,000 oz; however, we have several opportunities to potentially increase resources and production through four significant exploration programs currently underway. In total, we are spending about US$35 million in 2020, including US$10 million to increase our resources and reserves at Sabodala-Massawa, and US$5 million at Wahgnion. We also have an advanced exploration project in Burkina Faso called Golden Hill that we have been drilling for several years. We will announce an updated resource for Golden Hill in October as part of our mine license application process. Previously, I would have said Golden Hill was set to become our third mine, but our Afema property is showing to be equally promising. Both of these projects could become mines for us in the future.
What can you comment on Ivory Coast’s potential for gold discoveries?
Approximately 35% of the Birimian Greenstone Belt is located within Ivory Coast, a country that has been called out by top mining executives as the number one jurisdiction in Africa for gold exploration. Teranga has an attractive pipeline of assets, including three exploration properties in country, including Afema, where we just announced a new discovery and two other early-stage properties we intend to begin drilling later this year.
How are higher gold prices influencing producers’ long-term planning?
Back in 2015, the board deliberated on whether we should return money to shareholders, or reinvest in the business and grow beyond our one asset, Sabodala. The view was that we were better off to reinvest based on a view that the sector had underinvested during the bull market and that, ultimately, grades and production will decline. Since 2016, we have acquired Gryphon Minerals, which gave us Wahgnion and Golden Hill, we entered into two joint ventures in Ivory Coast and acquired Massawa. Another reason underlying the board’s decision in 2015 was the believe that gold prices would increase in the coming years.
Do you have a final message for our audience?
While West African companies have traded at a discount in the past, the prospective region is well-known for being mining friendly, and Teranga’s stock has been one of the top 30 performing stocks on the TSX over the last three years. With an attractive portfolio of assets, the future continues to shine bright for Teranga.
