Teranga Gold Corporation: December Quarter Production Update

Teranga Gold Corporation (TGZ.TO) reported that due to delayed access to high grade zones, production for the quarter ended December will be impacted. As a result, the Company expects production to be between 130,000 and 135,000 ounces of gold and total cash costs of $875-$925 per ounce compared to previous guidance of $850-$875 per ounce for CY2011.

Production for the quarter and calendar year ended December 31, 2011 were budgeted at 45,000 ounces and 140,000 ounces of gold, respectively. The previous higher production estimate for the quarter was based on the projection that mining activity would move into higher grade zones in the pit in November and particularly December. It said: "The delay in accessing the higher grade area is due to lower than planned drill and loading availability for the quarter. Management has focused on the issues and has ordered three new drill rigs; two are scheduled to be on site this month with a third arriving in the first quarter next year. In addition, focus has been put on increasing the capital spare inventory to improve availability in both the mine and the mill.

Access to the higher grade ore scheduled for December is now expected to occur later in the month than anticipated, resulting in 8,000 to 12,000 ounces at an estimated 2.5-2.8 grams per tonne of ore being stockpiled rather than processed before the end of the quarter. The high grade stockpiles are expected to be processed in the first quarter of next year.

As a result, the company intends to deliver into the hedge book at its contractually scheduled rate and not to accelerate deliveries during the December quarter. The company expects the hedge position to be at 174,500 ounces at year end. The company intends to manage hedge deliveries to ensure it is sufficiently funded to complete the mill expansion and its ongoing aggressive mine license and regional exploration programs.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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