Teranga hoping to wipe out net debt of $350m by end of 2021 if gold prices hold

Massawa gold mine, Senegal

TERANGA Gold forecast it would be net cash by the end of 2021 assuming gold prices held their current levels.

“At current gold prices, we expect to generate significant cash flows over the next 18 months, which will materially improve our balance sheet,” said Richard Young, president and CEO of Teranga Gold in a production update.

“At the end of the second quarter, we had over $350m in net debt and we expect to be firmly in a net cash position by the end of next year.”

Forecast gold production for 2020 is 375,000 to 400,000 ounces of gold, partly owing to Massawa mine that Teranga bought for $430m in cash and shares from Barrick Gold last year. Massawa is being incorporated into Teranga’s existing Sabodala mine.

Beginning in 2021, Teranga’s company-wide production for the next five years is expected to average 533,000 oz at an all-in sustaining cost (AISC) of $785/oz which Young said was “… one of the lowest cost profiles in the industry”.

Teranga expects to meet its 2020 production guidance for Sabodala-Massawa of 225,000 oz to 235,000 oz of gold. The new mine plan for the combined complex indicates that average annual production for the first five years will be 384,000 oz of gold at an AISC of $671/oz starting in 2021. Sabodala-Massawa is situated in Senegal.

Teranga’s other mine, Wahgnion mine in Burkina Faso, was on track to achieve updated 2020 production guidance of 150,000 to 165,000 oz.

In August, the company released a new mine plan for Wahgnion, which increased average annual production by 25% to 149,000 oz of gold annually per year at an AISC of $920/oz for five years from 2021.