Teranga Enters into Joint Venture on Afema Land Package in Cote d’Ivoire

1,400 km2 land package includes historical gold resource on gold belts hosting world-class discoveries

Teranga Gold Corporation (“Teranga” or the “Company”) (TSX:TGZ) has entered into a memorandum of understanding with Sodim Limited (“Sodim”), a private investment company, to establish a joint venture for the exploration and development of the Afema land package in Côte d’Ivoire (the “Afema JV”).

The Afema JV land package is located in southeast Côte d’Ivoire and covers more than 1,400 km2, consisting of the Afema mining license (“Afema ML”) and three exploration permits – Ayame, Mafere and Aboisso (collectively, the “Afema Permits”). The Afema ML has a historical near-surface oxide and sulphide resource within an area hosting several gold mineralized structures on extensions from prolific Ghanaian gold belts.

Under the terms of the memorandum of understanding, Teranga can earn a 70% interest in the Afema JV through the completion of a three-year $11 million exploration and community relations work program on the Afema ML and Afema Permits and the delivery of a positive feasibility study pursuant to the Afema JV.  Teranga will sole fund and manage the exploration programs and feasibility studies under the Afema JV.  Upon Teranga’s delivery of a positive feasibility study, Sodim can elect to maintain its 30% participating interest or convert its holdings to a 3% net smelter royalty.  Sodim will receive $2.5 million upon signing of the memorandum of understanding, with progressive payments of up to $7.5 million with the delivery of a positive feasibility study.

Teranga’s first priority will be to conduct a detailed review and update of the previous drill results and technical studies for the Afema ML project completed by Taurus Gold Limited (BVI) (“TGL”), the previous owner of the Afema land package, in order to deliver an optimized project that maximizes the value of the Afema ML.  In parallel, a comprehensive exploration program will begin on the prospective Afema Permits.

“Teranga won the joint venture rights to this highly sought-after land package following a competitive auction process,” said Richard Young, President and Chief Executive Officer. “The addition of the Afema JV assets to our growth pipeline is an important step towards delivering organically on our vision of becoming a multi-asset, mid-tier West African gold producer. We are excited to partner with Sodim to advance this highly prospective land package.”

Afema ML Historical Resource Estimate

A number of economic and technical studies have been prepared on the Afema project prior to Teranga’s entry into the Afema JV with Sodim. The most recent study, which included a mineral resource estimate for the Afema ML, was issued by RockRidge Consulting Services Geologists for and on behalf of TGL and is dated as of June 27, 2016 (the “June 2016 Historical Estimate”).  The June 2016 Historical Estimate includes an Indicated oxide resource estimate of 110Koz (comprised of 2.7Mt at an average grade of 1.26 g/t Au) and Inferred oxide resources of 122Koz (comprised of 3.0Mt at an average grade of 1.26 g/t Au). In addition, it includes an Indicated transitional resource estimate of 59Koz (comprised of 1.3Mt at an average grade of 1.39 g/t Au) and an Inferred transitional resource of 28Koz (comprised of 0.8Mt at an average grade of 1.11 g/t Au). Finally, the June 2016 Historical Estimate provides a sulphide resource estimate as follows: 865Koz Indicated ounces (comprised of 17.3Mt at an average grade of 1.55 g/t Au) and 806Koz Inferred ounces (comprised of 17.8Mt at an average grade of 1.40 g/t Au).  This historical estimate is reported as using a cut-off grade of 0.5 g/t Au.

RockRidge further states that it reviewed the geological and grade continuity to supplement the review of data quality in order to confirm the CIM mineral resource classification categories used.  As well, the June 2016 Historical Estimate states the following with respect to the basis of the mineral resource estimate:

  • mineralized volumes were received for oxide, transitional and sulphide modelled volumes;
  • gold grades were determined using Ordinary Kriging and Inverse distance squared interpolation (depending on data density) into a 3-Dimensional block model constrained by mineralization wireframes;
  • the block models comprised sub-celled block dimensions of 5m x 5m x 1m and 5m x 5m x 2m (depending on data sampling interval);
  • mineralized wireframes were truncated to the topographic surface reflecting the mining that had previously occurred on the property;
  • gold values were investigated for outlier values and put though two statistical capping/cutting routines;
  • Datamine Studio 3 was the modelling package; and
  • relationship between geology and preliminary mining and economic factors was taken into account at all times.

Teranga considers the June 2016 Historical Estimate to be a “historical estimate” as defined under NI 43-101 and relevant as the most recent resource estimate on the Afema project.  Further drilling, resource modelling and updates to key economic assumptions would be required to upgrade or verify these historical estimates as current mineral resources and accordingly they should be relied upon only as a historical resource estimate. A Qualified Person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves and Teranga is not treating the historical estimate as current mineral resources or mineral reserves.