At the start of August, West Africa-focused Teranga Gold reported record Q2 and H1 gold production from its Sabodala Gold Mine in Senegal. Approximately 65,000 ounces (oz) of gold were produced at the site between April and June, building on similar output from the previous quarter to total 129,000 oz of gold produced in the first six months of the year. With a second mine – the Wahgnion Project in Burkina Faso – set to achieve first pour by the end of 2019 and the Golden Hill asset not too far behind, TSX-listed Teranga is within touching distance of evolving into a mid-tier West African gold producer.
For president and CEO Richard Young, the key feature of Teranga’s impressive recent quarterly performances at Sabodala is that the company is consistently outperforming its reserve model.
“We are getting more high grade ounces out of the mine than anticipated compared to our technical report and that is leading to better results,” he says. “This will be the third year that we have outperformed our original guidance.”
The company’s management team is also highly focused on the development of the Wahgnion Project in Burkina Faso and remains on track for first gold pour by the end of 2019. The company acquired the asset through its all-share purchase of Gryphon Minerals in 2016.
In June, Teranga announced an updated mineral resource estimate for Wahgnion of 50.5 million tonnes (Mt) at a grade of 1.51 g/t for 2.4 million contained ounces of gold – a 33% increase on the resource estimated in the feasibility study released in September last year.
The company expects to release an updated mineral reserve estimate and related NI 43-101 technical report for Wahgnion during Q3.
A multi-asset company
“Our entire senior management group come from large companies, so we are used to having to balance both operational and development stage projects concurrently – like we are doing with Sabodala and Wahgnion. We have a team with a lot of experience in this area.”
Teranga’s most advanced exploration stage asset – Golden Hill in Burkina Faso – is also moving forward at a rapid pace after approximately two years of drilling and encouraging results.
“We started drilling in Q1 2017 and are targeting an initial resource 24 months later. The plan is to prepare a preliminary economic assessment (PEA) by the end of this year or early next,” Young explains.
“If successful, the PEA will allow us to draw down on the $25 million financing facility that we put in place to allow us to move Golden Hill through feasibility study.”
Golden Hill is an exciting prospect for Teranga given that if advanced into a producing mine, it would propel Teranga into that coveted mid-tier gold producer status – a key long-term aim of the company.
Meanwhile, the company’s aim for 2018 is to meet its revised gold production guidance of at least 230,000 oz, and Young is confident that this target is well within the company’s grasp.
“If we continue at the same rate, this will be the third year in a row we have outperformed our guidance, and if we produce more than 233,000 oz, it will mark the third consecutive year of record production.
“Hopefully, shareholders and potential investors can see that we are a company that is delivering.”
Sharing the benefits
Some mining firms would judge a year of record gold output as a success in its own right, but for Teranga success is not possible without mining responsibly and sharing the benefits of responsible mining with its stakeholders.
The company’s approach to sustainable mining was honoured last year at the annual PDAC Convention in Toronto, when it was awarded the 2017 Environmental & Social Responsibility Award for its work in the communities surrounding the Sabodala project.
This year, the company received further affirmation of its sustainable approach from Senegal’s Minister of Mines on a recent visit to Sabodala.
“Senegal’s new Minister of Mines in Senegal came on board at the beginning of the year and her first task was to visit Sabodala for a mine tour and talk to the community,” stated Young. “When I first met her, she said to me ‘you are the model. We are thrilled with the way you operate Sabodala. This is the model for all the mining companies in our country’.”
This high praise from the Senegalese government is indicative of Teranga’s original stance on the eve of its initial public offering eight years ago. Chairman Alan Hill was adamant that in order to grow the business in West Africa, Teranga would have to lead with CSR and gain the trust of governments and communities in the region.
“If you look at that eight-year period since our IPO, we’ve been able to operate without incident in Senegal. We have a great relationship with our workforce and with our local, regional, national stakeholders and these relationships are paying huge dividends,” believes Young.
One of the first things that Teranga did after taking over the Sabodala mine was to hold an 18-month roundtable with its local, regional and national stakeholders to identify their priorities. They fell into three baskets: Agriculture and food security, youth and training and sustainable economic activities.
“Our team continues to focus on those three baskets. We spend over $1 million a year on local CSR activities and these are all driven from the ground up. The communities determine the projects and our role is simply to assist with the execution.”
In youth and education, Teranga has supported a number of schools throughout the district by offering a vital bursary for students to attend high schools, which are often too expensive to attend without a form of grant.
Meanwhile, the company’s 12 market gardens have provided increased food security and economic assurance to nearly 1,000 women in the Sabodala region. Now that this operation has matured, Teranga is working with local entrepreneurs to find additional ways to create sustainable business activities for members of the local communities.
Building a reputation
Teranga’s sustainability initiatives throughout its time in Senegal also had a direct impact on the company’s ability to make acquisitions and move into new jurisdictions.
Young explains how, with respect to its acquisition of Gryphon Minerals, the government of Burkina Faso reached out to the Canadian and Senegalese governments to ascertain if Teranga was a responsible steward of the land it would be mining. Both governments had very positive things to say about Teranga because of the strong CSR work it had already done in Senegal.
The company is currently focused on mitigating the impact that the Wahgnion development will have on the local communities and is negotiating the delicate matter of relocating up to 500 households over a period of five years.
“It’s about working with the local communities to identify the types of home they want to live in and where they want to move. Being an agricultural region, we will provide replacement land and are working with farmers on methods that will allow them to increase their crop yield.”
On the employment side, Teranga is also working with local government authorities who identify candidates with the correct skills to match available roles within the company. “We have about 300 people hired in Burkina Faso and that number is going to grow to about 1,000 as we move through construction,” reveals Young.
The next order of business for Teranga’s CSR team is to commence various training programmes at Wahgnion for local staff, ahead of long-term employment in the company, while continuing to prioritise actions based on feedback from the communities.
Teranga’s president and CEO believes that the world is looking more closely at sustainable development and the mining industry is elevating living standards in many developing countries.
“Mining projects hire local people well-paying, skilled jobs and teach them on the ground skills, which they can transport. Creating an educated workforce helps countries evolve over time.”
With responsible mining at the core of its philosophy, Teranga is helping to drive sustainable socio-economic development across West Africa as it advances to mid-tier status in the gold production industry.