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Press release from Marketwire

Teranga Gold Corporation: March Quarter Report

Thursday, May 10, 2012

Teranga Gold Corporation: March Quarter Report05:00 EDT Thursday, May 10, 2012TORONTO, ONTARIO--(Marketwire - May 10, 2012) - Teranga Gold Corporation (TSX:TGZ)(ASX:TGZ)For a full explanation of Operating, Financial and Exploration results please see the Interim Condensed Consolidated Financial Statements and Management's Discussion & Analysis at www.terangagold.com.Operating Highlights Teranga achieved record first quarter production of 41,904 ounces of gold at a total cash cost of $673 per ounce sold. New mill and downstream plant commissioned in late April 2012 - balance of facilities expected to be completed by end of second quarter. Exploration at the Sabodala Pit continues to confirm the potential for an expanded pit to the north and to depth - Recent drill results reveal 43 metres at 2.4 gpt and 17 metres at 1.8 gpt within the same hole.Gold production for the first quarter was 41,904 ounces, 22 percent higher than the same quarter of 2011. The increase in production was mainly due to higher grade ore stockpiled at the end of December 2011 and processed in the first quarter of 2012. Gold sold for the quarter totaled 35,268 ounces at a total cash cost of $673 per ounce sold compared to 39,490 ounces sold at a total cash cost of $639 per ounce in the same period last year. At the end of the quarter, gold in circuit and gold bullion inventory increased to 13,262 ounces, an increase of 7,000 ounces over year-end balance. The new mill and downstream processing plant were commissioned in late April. All that remains is the completion of a secondary crusher and new stockpile/reclaim facilities scheduled for the end of the second quarter 2012, which will bring the mills to full capacity. Total tonnes mined for the quarter were 7 percent higher compared to the same period last year due to improved productivity and efficiency in the mining operation. Total tonnes milled were 6 percent lower than the year earlier period due to harder ore processed. The Company expects similar production in the second quarter and reiterates its guidance for the year of 210,000-225,000 ounces at cash costs between $600-$650/oz.(1) (1)This production target is based on existing proven and probable reserves only."With the Mill expansion complete at the end of the second quarter, we will see a significant increase in production and reduction in our cash costs per ounce.I am particularly encouraged by the continued high grades and significant widths of mineralization seen in our recent drill results on the Mine License which we are optimistic can double our gold inventory on the Mine License alone and without the need for permitting will be additive to our production profile," said Alan R. Hill, Chairman and CEO.Exploration at the Sabodala Pit continues to confirm the potential for an expanded pit to the north and to depth - Recent drill results reveal 43 metres at 2.4 gpt and 17 metres at 1.8 gpt within the same hole.The aggressive investment in drilling during 2011 has resulted in significant advances in understanding the structural controls on gold mineralization on the Mine License ("ML"). During the first quarter, Reverse Circulation ("RC") and Diamond drilling ("DD") on the ML totalled 25,000 metres at cost of $7.1 million. On the ML, a minimum of 8 drill rigs are expected to be testing targets at an estimated cost of $20 million in 2012. There are 10 drills operating at the present time (8 DD and 2 RC). Pending rig availability this number may be maintained in order to expedite reserve definition drilling and resource expansion in 2012. There are currently 40 drill targets that have been identified on the Company's 1,465km² Regional Land Package ("RLP"), all within trucking distance of the mill. All 40 targets are expected to be drill tested in 2012-2013. A further 20 targets have been evaluated with surface sampling or trenching. During the first quarter, the Company completed approximately 31,500 metres of Rotary Air Blast ("RAB") drilling, 26,000 metres of RC and 2,400 metres of DD drilling on the RLP. There were 4 drill rigs on the RLP during the first quarter. RC drilling during the quarter focused on Tourokhoto, Saiensoutou, Jam, KB and testing of IP anomalies at Gora. In addition, several RAB programs where completed. RLP exploration expenditures for the first quarter totalled $8.5 million (including $1.6 million for Gora). The exploration budget for the Regional Exploration Program is estimated at $20 million for 2012. Financial highlights(US$000's)3 months ended March 31, 20123 months ended March 31, 2011Restated1Revenue60,52655,067Cost of sales(31,905)(35,638)Gross profit28,62119,429Other income8266Share based compensation(1,755)(3,925)Finance costs(938)(929)Exploration and evaluation expenditures(7,176)(3,029)Administration expenses(3,349)(2,768)Net foreign exchange losses(369)(204)Realized and unrealized losses on gold hedge contracts(17,483)(2,704)Realized and unrealized gains on oil hedge contracts6152,043(Loss)/Profit before tax(1,826)8,179Income tax-(12)(Loss)/Profit for the period(1,826)8,167Profit attributable to non-controlling interest9571,710(Loss)/Profit attributable to shareholders of Teranga(2,783)6,457(1) The three months ended March 31, 2011 were restated to comply with the Company' new accounting policy for measuring and recording ore stockpile costs and calculation of units of production depreciation. The Company has also changed the presentation of the realized gains and losses on the gold and oil hedge contracts which are now classified below gross profit instead of disclosing it as part of the revenue and cost of sales. Loss for the Period First quarter loss was $1.8 million, compared to a profit of $8.2 million for the same quarter of 2011. The decrease in profit was due to the impact of unrealized gold hedge losses, partially offset by an increase in gross profit due to higher revenues and lower cost of sales. Revenue Gold revenue in the first quarter totaled $60.5 million, an increase of 10 percent or $5.5 million, compared to the same period last year. The increase was due to higher realized gold prices by 23 percent, partially offset by fewer ounces sold. Cost of Sales3 months ended3 months endedMarch 31, 2012March 31, 2011Mine production costs32,57124,913Depreciation and amortization8,94610,506Royalties1,8221,582Rehabilitation4139Inventory movements(11,438)(1,502)Total cost of sales31,90535,638Cost of sales for the first quarter were $31.9 million compared to $35.6 million for the same quarter of 2011. Lower cost of sales were due to fewer ounces sold, partially offset by higher mining and processing costs. Mine production costs totaled $32.6 million for the first quarter compared to $25 million for the same prior year period. Mine production costs increased due to higher tonnes mined as well as higher fuel, labour, reagents and blasting costs due to transitioning to a new explosives contractor in the year earlier quarter. Depreciation and amortization for the first quarter totaled $8.9 million or $254 per ounce sold in comparison with $10.5 million or $266 per ounce sold for the same period last year. The decrease is due to fewer ounces sold in the 2012 quarter compared to the year earlier period. Depreciation and amortization expense for the remainder of 2012 is expected to decrease to approximately $200 per ounce sold due to the increase in production with the completion of the mill expansion. Royalties for the first three months of 2012 increased to $1.8 million compared to $1.6 million in the same quarter of 2011 due to higher gold spot prices, partially offset by fewer ounces sold. Royalties are calculated based on three percent of the average spot price of gold rather than the average price realized by the Company. Administrative Expenses Administrative expenses for the first quarter totaled $3.3 million comparing to $2.8 million in the same prior year period. The increase in administrative expenses was due to higher employee costs, higher legal fees and costs relating to Dakar office which was established in the second quarter of 2011. Administration expense, which includes costs of the corporate and Dakar offices as well as community and social responsibility expenses are expected to total approximately $3.5 million per quarter or $14 million for 2012.Share Based Compensation During the first quarter a total of 1,870,000 common share options were granted to directors and employees and 278,888 share options were cancelled due to employee terminations during the same period. During the three months ended March 31, 2011 a total of 725,000 common share options were granted to employees and consultants of the Company and a total of 160,000 options were cancelled. No share options were exercised during the three months ended March 31, 2012 or 2011. Realized and Unrealized Loss on Gold Hedge Contracts The realized and unrealized loss on gold hedge contracts totaled $17.5 million for the first quarter compared to $2.7 million for the same prior year period. The increase in realized and unrealized losses is due to an increase in the spot price of gold from December 31, 2011 of $103 per ounce of gold. The total mark-to-market loss of the remaining 174,500 ounces of gold under gold hedge contracts recorded as a financial derivative liability increased to $147 million at quarter end as the average forward price of the remaining contracts at $826 per ounce is marked to the quarter end spot price of $1,669 per ounce. Realized and Unrealized Gain on Oil Hedge Contracts The realized and unrealized gain on oil hedge contracts totaled $0.6 million for the first quarter compared to $2 million for the same quarter of 2011. The higher realized and unrealized gain on oil hedge contracts is due to a decrease in financial derivative asset from the settlement of 80,000 barrels in the previous year. The Company's oil hedge contracts are based on West Texas Intermediate spot oil prices; however site fuel costs are based on Brent crude spot oil prices. During 2011 and continuing into the first quarter of 2012, a historic gap in spot prices developed between the two exchanges, resulting in our oil hedges being less effective. The difference in the average spot prices of $15.4 per barrel for the first quarter of 2012 negatively impacted our cash cost per ounce. Exploration and Evaluation Expenditures Exploration and evaluation expenditures totaled $7.2 million for the first quarter of 2012 compared to $3 million in the same period last year reflecting regional exploration costs incurred during the period related to drill programs as well as target identification work underway. Exploration and evaluation expenditures for 2012 are expected to total approximately $20 million. Review of Operating ResultsKey Statistics3 months ended March 31, 20123 months ended March 31, 2011Restated(2)Operating resultsOre mined('000t)1,117491Waste mined('000t)6,3166,460Total mined('000t)7,4336,951Strip ratiowaste/ore5.713.2Ore milled('000t)573608Head grade(g/t)2.521.93Recovery rate%90.089.8Gold produced (1)(oz)41,90434,296Gold sold(oz)35,26839,490Average price received$/oz1,7121,199Total cash cost (incl. royalties)$/oz sold673639Mining (cost/t mined)2.51.7Milling (cost/t milled)17.215.3G&A (cost/t milled)5.64.7Note (1) : Gold produced is change in gold in circuit inventory plus gold recovered during the period.Note (2): Total cash costs per ounce sold for 3 months ended March 31, 2011 were restated to comply with the Company's new accounting policy for measuring and recording ore stockpile costs, as well as reporting total cash costs after inventory movement, in line with the Company's accounting policies and with industry standards.Mining Total tonnes mined for the first quarter were 7 percent higher compared to the same quarter of 2011 due to improved productivity and efficiency in the mining operation. Drilling and loading availabilities benefited from the addition of three new blast hole drill rigs and the use of two new haul trucks which arrived for the development of Gora but are being utilized in the pit prior to the commencement of Gora. The implementation of better maintenance practices resulted in improved loading and hauling efficiencies due to improved availability of the mobile equipment fleet. Unit mining costs for the first quarter were on plan but higher compared to the same quarter of 2011 mainly due to higher fuel, blasting and labour costs during the period. The blasting costs were higher due to transitioning to a new explosives contractor in March 2011. Milling Mill throughput for the first quarter was 6 percent lower than the same quarter of 2011 mainly due to harder ore in 2012 compared to softer material that was available during the first quarter of 2011. Unit processing costs for the first quarter were 13 percent higher compared to the same quarter of 2011 but lower than plan due to higher than budgeted throughput. The increase in unit processing costs over the same period last year reflects the impact of higher reagent costs as well as lower throughput rates. General and Administration General and administration costs of $3.2 million for the first quarter are similar to the same period last year. NON-IFRS FINANCIAL MEASURES The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain Teranga's financial results.3 months ended March 31, 20123 months ended March 31, 2011RestatedGold producedoz41,90434,296Gold soldoz35,26839,490Cost of sales($'000)31,90535,638Less: depreciation and amortization($'000)(8,946)(10,506)Less: realized oil hedge gain($'000)(661)(490)Add: non-cash inventory movement($'000)1,460201Less: other adjustments($'000)(37)376Total cash cost of sales($'000)23,72125,219Total cash cost of sales per ounce soldU.S.$/oz673639Total Cash Costs Total cash costs for the first quarter of 2012 were $23.7 million compared to $25.2 million in the same quarter last year. Total cash costs were $673 per ounce sold in the first quarter, up 5 percent compared to $639 per ounce in the first quarter 2011. The increase in cash cost per ounce sold is due to higher operating costs and fewer ounces sold. Outlook With the completion of the Sabodala mill expansion, production for 2012 is expected to increase to between 210,000 to 225,000 ounces, an increase of 65 percent over 2011, while the total cash cost per ounce sold is expected to decline to between $600 to $650 per ounce in line with previous guidance. This production target is based on proven and probable reserves only. The regional exploration budget for calendar 2012 is expected to total approximately $20 million. In total, between capitalized mine site exploration and regional exploration expenditures, the Company expects to spend approximately $40 million in calendar 2012. Capital expenditures for 2012 are expected to total approximately $30 million, primarily for the completion of the mill expansion and additional mining equipment. In addition, $20 million has been budgeted for capitalized ML exploration costs.Liquidity and Capital Resources At March 31, 2012, the Company had cash and cash equivalents including restricted cash of $14.8 million. Management believes that the cash and cash equivalents on hand, together with expected future cash flows from operations and our ability to modify hedge deliveries as required from time to time, is sufficient to support the Company's minimum liquidity requirements. To provide additional financial flexibility, the Company reached an agreement with Macquarie Bank Limited to defer 28,000 ounces that were due for delivery in February until later in the year. In addition, in April the Company modified the hedge delivery contract dates in 2012 to match the anticipated production schedule while maintaining the original amount of ounces to be delivered during 2012 of 108,500 ounces. As a result, the yearend balance of ounces under contract is expected to decline to 66,000 ounces. The deferral of scheduled first quarter deliveries into hedge contracts allowed the Company to sell all of its first quarter gold production at higher spot gold prices, allowing the Company to rebuild its cash balance. Once the mill expansion is complete and fully commissioned, the production rate is expected to rise and cash costs of production are expected to fall improving cash margins. The improved cash margins combined with expected higher production should allow the Company to increase its cash balance through the year.However, the Company also continues to evaluate its capital structure and, in order to provide more operating flexibility, and to potentially fund capital expenditures, it is considering the merits of potentially raising some debt. Such incurrence of debt may be in the form of one or more borrowings of bank or other similar loans, or one or more issuances of debt in the capital markets. There can, however, be no assurance that the Company will be successful in raising debt on terms it consider reasonable. The Company's total planned capital expenditures for the calendar 2012, with a focus on completion of the plant expansion at the Sabodala mine site, capitalized exploration costs, as well as construction of the new tailings disposal facility, are expected to total $50 million, with approximately $25 million to be spent for the remainder of the year.Plant Expansion The new mill and downstream processing plant were commissioned in late April. All that remains is the completion of a secondary crusher and new stockpile/reclaim facilities scheduled for the end of the second quarter 2012, which will bring the mills to full capacity.Mine License Exploration Highlights of drilling during the first quarter on the ML include the intersections of significant widths of high grade mineralization outside the Sabodala ultimate pit limit as part of the Main Flat Extension drill program which is expected to lead to an expansion of the final pit design and increased reserves. Results also included continued intersection and extension of the Masato deposit down dip 300 metres onto the ML and 1,600 metres along strike with potentially underground mineable high-grade ore, as well as extension of the Main Flat down dip to the west on southern sections at Sabodala. The aggressive investment in drilling during 2011 has resulted in significant advances in understanding the structural controls on gold mineralization on the ML. During the first quarter of 2012, Reverse Circulation ("RC") and Diamond drilling ("DD") on the ML totalled 25,000 metres at cost of $7.1 million. A minimum of 8 drill rigs are expected to be testing targets at an estimated cost of $20 million in 2012. There are 10 drills operating on the ML at the present time (8 DD and 2 RC). Pending rig availability this number may be maintained in order to expedite reserve definition drilling and resource expansion in 2012. Main Flat Extension ("MFE") The MFE is one of the principal gold hosts in the Sabodala deposit. Drilling targeting the MFE immediately adjacent to the current ultimate pit, as well as the Lower Flat Zone ("LFZ") located below and to the north of the MFE, confirms the continuation of the mineralized zone with further drilling planned. The MFE and LFZ remain open down plunge and to the northwest. The drill program for the MFE for 2012 is designed to convert inferred resources north of the current ultimate pit to reserves; extend the MFE zone measured and indicated resource down dip to the west; additional deep drilling is required to develop the LFZ minable resource to depth; test for extensions of the LFZ to the east; and test for parallel zones beneath the Sabodala pit. The goal of the MFE/LFZ programs is to add 500,000 to 1,000,000 ounces of gold to the open pit mineable gold inventory at an average grade between 1.5 - 2.0 gpt by mid-year 2013.(2)During the first quarter, 9,500 metres of drilling were completed at Sabodala primarily on the MFE but also testing down dip potential of the Main Flat to the west of the current ultimate pit limit; both areas have returned good results. The latest results from March quarter 2012 include:Hole IDFrom (metres)Intersection**SBDH158D*325 metres12 m @ 7.5 g/tSBDH159D141 metres14 m @ 3.5 g/tSBDH161D*365 metres29 m @ 3.6 g/tSBDH162D353 metres11 m @ 4.2 g/tSBDH163*64 metres7 m @ 2.9 g/t123 metres43 m @ 1.8 g/t177 metres19 m @ 2.5 g/tSBDH219DD544 metres17 m @ 3.1 g/tSBDH222384 metres25 m @ 2.0 g/t457 metres17 m @ 2.3 g/tSBDH172*255 metres29 m @ 1.4 g/tSBDH241119 metres43 m @ 2.4 g/t* Previously released**True widths to be determined(2) This "exploration target" is not a Mineral Resource. While management has confidence in its projections based on exploration work done to date, the potential quantity and grade disclosed herein is conceptual in nature, and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will results in the determination of a Mineral Resource.Corridor and Ayoub's Target Area Drilling along the Corridor northeast of the Sabodala pit intersected mineralization along the Ayoub's portion of the target area. The system, although low grade, is continuous and shows Sabodala style alteration. The position of the Ayoub's mineralization in the Corridor lends itself to sharing stripping for including deeper MFE mineralization into the ultimate pit. In the first quarter of 2012 4,800 metres of drilling was completed, while no additional drilling is currently planned. Masato Drilling in 2011 confirmed a mineralized strike length of 500 metres and a dip extent of 200 metres on the ML. In the first quarter of 2012 the deposit extents have been expanded to 300 metres down dip and a strike length of 1,600 metres. The Masato deposit remains open to depth and along strike and is currently being tested in both directions by one drill. The objectives for Masato for 2012 include in-filling the 200 metre by 500 metre zone identified in the first pass 2011 drill program in preparation for a resource estimate, further definition drilling on the high-grade pod of gold mineralization located on the north end of the deposit, as well as to locate the southern extension of Masato that strikes towards the ML. In the first quarter, 10,000 metres of drilling were completed. Assays are presently being compiled and geologic interpretation is in progress. Management expects that continued positive drilling results will lead to the defining of a resource at Masato on the ML in 2012. Niakafiri A drill program is planned at the Niakafiri deposit immediately below the current open pit reserve where the deposit remains open at depth. Drilling is planned to begin in the second half of 2012 pending community discussions. Expectations are to increase reserves and resources in 2012. Niakafiri West and Soukhoto A significant drill program is also planned across the Niakafiri West and Soukhoto deposits to both in-fill and extend the current resources that are separated by 500 metres of undrilled strike length. Gold mineralization in both deposits is hosted in multiple shallow dipping zones with more steeply dipping high-grade zones located in crossing structures. The drill program is expected to run throughout 2012 with a resource updated expected at year end. Soukhoto drilling is scheduled to begin in the second quarter. Dinkokhono In the first quarter, Dinkokhono, located 1 kilometre north of the Niakafiri deposit and 1 kilometre south of the Sambaya Hill anomaly on the Niakafiri shear system, received 600 metres of drilling. Previous drilling identified low-grade mineralization within the Niakafiri shear from surface to a depth of 100 metres. Re-interpretation of the Dinkokhono structural controls on gold mineralization and the discovery of the Mamasato deposit on the neighbouring property less than 1 km to the east have contributed to a new approach to drilling this target. The program is expected to test for north-west and north-east high-grade crossing structures in known mineralized zones and is intended to test for the extension of the Mamasato deposit onto the ML. Pending results and given the total meterage already drilled historically, management believes that this program could potentially add resources in the third quarter of 2012 and possibly to open pit mineable reserves at year end.Regional Exploration There are currently 40 drill targets that have been identified on the Company's 1,465km² Regional Land Package ("RLP"), all within trucking distance of the mill. All 40 targets are expected to be drill tested in 2012-2013. A further 20 targets have been evaluated with surface sampling or trenching. During the first quarter, the Company completed approximately 31,500 metres of Rotary Air Blast ("RAB") drilling, 26,000 metres of RC and 2,400 metres of DD drilling. There were 4 drill rigs on the RLP during the first quarter. RC drilling during the quarter focused on Tourokhoto, Saiensoutou, Jam, KB and testing of IP anomalies at Gora. In addition, several RAB programs where completed. RLP exploration expenditures for the first quarter totalled $8.5 million (including $1.6 million for Gora). The exploration budget for the Regional Exploration Program is estimated at $20 million for 2012. For full drill results from our regional exploration program please see the Company's website. Gora During the first quarter of 2012, exploration drilling in the Gora project area was limited to 14 RC-holes for 2,100 metres, which were part of a scout drill testing program of various anomalies identified from an earlier IP survey. No significant intersections where returned from this program. Diadiako The north-east extension of the mineralised trend was mapped out by a program of RAB drilling during the last quarter of 2011. This trend was tested by a program of fifteen RC holes for a total of 2,800 metres. The program identified a continuation of the structural system drilled during 2011 with albite-silica-pyrite alteration in mafic rock. The best gold intersections (cut off >0.2 g/t Au, Aqua Regia Digest/AAS finish) from this program were:Hole IDFrom (metres)Intersection*BSRC07095 metres1 m @ 1.9 g/tBSRC07266 metres5 m @ 0.8 g/tBSRC074152 metres1 m @ 1.0 g/t*True widths to be determinedToumboumba (Sabodala NW) Toumboumba is a shear vein system hosted in the Falombou granite and has potential for a small, shallow, oxide deposit, located 10km to the north-west of the Sabodala mill. The prospect consists of 18 close north-south to north, north-east trending gold anomalous zones identified from RAB drilling during 2011. Interpretation and geological modelling during the first quarter 2012 outlined potential for a modest, near surface oxide deposit on the main Toumboumba mineralised zone. In April 2012, a program of 10,000 metres of RC drilling on a nominal 25 metre by 25 metre grid pattern commenced. This program will evaluate the resource on the main south-western mineralized zone. The drilling to date has confirmed the presence of a shallow east dipping system of stacked veins and alteration zones hosted within the Falombou granite. High grade mineralised intervals are well correlated to quartz veins, within envelopes of silica-albite-hematite-pyrite alteration. Numerous high grade mineralized intersections have been obtained. Grades of up to 4 metres at 33.9 grams per tonne ("gpt") gold have been encountered in some holes. The Company is encouraged by these latest results and is looking forward to advancing this prospect. Majiva Central/North (Makana Permit) RC and DD drilling during 2011 identified three areas of mineralisation on the southern continuation of the same structure that hosts the Masato deposit to the north. These are referred to as Majiva Advanced Targets 1 to 3. At Advanced Target 1, 3D modelling and sectional volume estimates at a 0.2 gpt gold cut-off allowed the definition of an inferred resource of 45,000 ounces at a grade of 0.6 gpt gold. The mineralisation is similar to that encountered at Masato and Niakafiri, consisting of carbonate-sericite-fuchsite-quartz-pyrite altered, sheared mafic volcanic. Better grades are developed in areas of higher quartz vein content. Tourokhoto An RC program at Tourokhoto was completed during the first quarter 2012. A total of 50 holes for 10,000 metres were completed during this period. The results received confirmed several zones of sub-parallel mineralisation with results of up to 2 metres at 4.5 gpt gold and wider zones at lower grade. A large number of samples are still pending analysis. Saiensoutou A program of 14 RC holes for a total of 2,800 metres were completed over the southern portion of this prospect. The best results obtained were:Hole IDFrom (metres)Intersection*SARC000649 metres9 m @ 1.5 g/tSARC000142 metres8 m @ 0.7 g/t*True widths to be determinedThe northern part of the anomaly will undergo additional RAB drilling to better define the gold bearing structures responsible for the two kilometre trend of surface gold anomalism. This will likely lead to a second RC program later in 2012. Diegoun North ("the Donut")Cinnamon A program of 14 RC holes for 2,500 metres were completed testing gold anomalies identified in the bedrock by previous RAB drilling. Only some of the samples have been assayed, with one hole returning encouraging results at the >0.2 gpt gold level:Hole IDFrom (metres)Intersection*DBRC02271 metre5 m @ 0.6 g/t13 metres10 m @ 0.3 g/t101 metres10 m @ 0.5 g/t115 metres8 m @ 1.9 g/t*True widths to be determinedThe remainder of the results are expected to become available during the coming quarter. Jam A further 14 RC holes for 2,700 metres and nine DD holes for 2,100 metres were completed at Jam. This program was designed to test two north-west trending structures defined in this area as well as follow up on previous anomalous RC holes with hole orientations at different angles. The intersections relate to albite-carbonate-silica-pyrite altered felsic intrusive rocks and it is evident from the work completed to date that the Jam area is a large scale, gold-bearing, hydrothermal alteration system. An additional 13,000 metres of RAB drilling have been completed in the Jam area. This work was designed to complete coverage over the main north east trending structural trends between Cinnamon and Jam (JC corridor) and on a second grid with north-east south-west oriented lines, to better evaluate the presence of mineralisation on north-west trends. The Company awaits final assay results for all drilling to date, to define the next step in the program. KB Also on the Sounkounkou permit, 8 RC holes were drilled for 1,200 metres to complete the first pass testing of the gold mineralised structure defined by RAB and trenching along the contact of a sheared gabbro and metasediments. Assays from this program are pending. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OFTERANGA GOLD CORPORATIONSTATEMENTS OF COMPREHENSIVE INCOME / LOSSFor the three months ended March 31, 2012 and 2011(Unaudited and in US$'000 except per share amounts)3 months ended3 months endedMarch 31, 2012March 31, 2011RestatedRevenue60,52655,067Cost of sales(31,905)(35,638)Gross profit28,62119,429Other income8266Share based compensation(1,755)(3,925)Finance costs(938)(929)Exploration and evaluation expenditures(7,176)(3,029)Administration expenses(3,349)(2,768)Net foreign exchange losses(369)(204)Realized and unrealized losses on gold hedge contracts(17,483)(2,704)Realized and unrealized gains on oil hedge contracts6152,043(30,447)(11,250)(Loss)/profit before income tax(1,826)8,179Income tax expense-(12)(Loss)/profit for the period(1,826)8,167(Loss)/profit attributable to:Shareholders(2,783)6,457Non-controlling interests9571,710(Loss)/profit for the period(1,826)8,167Other comprehensive (loss)/income:Exchange differences arising on translation of Terangacorporate entity(63)2,449Change in fair value of available for sale financial asset, net oftax(3,927)1,538Other comprehensive (loss)/income for the period(3,990)3,987Total comprehensive (loss)/income for the period(5,816)12,154Total comprehensive (loss)/income attributable to:Shareholders(6,773)10,444Non-controlling interests9571,710Total comprehensive (loss)/income for the period(5,816)12,154(Loss)/earnings per share from operations attributableto the shareholders of the Company during the period- basic (loss)/earnings per share(0.01)0.03- diluted (loss)/earnings per share(0.01)0.03INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OFTERANGA GOLD CORPORATIONSTATEMENTS OF FINANCIAL POSITIONAs at March 31, 2012 and December 31, 2011(Unaudited and in US$'000)March 31, 2012December 31, 2011RestatedCurrent assetsCash and cash equivalents11,4297,470Short-term investments-593Restricted cash3,3523,004Trade and other receivables10,99520,447Inventories53,69248,365Financial derivative assets2,7732,288Other assets3,40312,751Available for sale financial assets16,31319,800Total current assets101,957114,718Non-current assetsInventories40,32031,942Financial derivative assets-532Property, plant and equipment255,085238,510Mine development expenditure96,67589,825Intangible assets9401,085Total non-current assets393,020361,894Total assets494,977476,612Current liabilitiesTrade and other payables47,83843,238Borrowings18,21516,468Financial derivative liabilities111,12279,241Provisions1,9961,954Total current liabilities179,171140,901Non-current liabilitiesFinancial derivative liabilities35,92050,318Provisions9,3479,215Borrowings5,9317,509Total non-current liabilities51,19867,042Total liabilities230,369207,943EquityIssued capital305,412305,412Foreign currency translation reserve(998)(935)Equity-settled share based compensation reserve14,35412,599Investment revaluation reserve(5,246)(1,319)Accumulated losses(46,158)(43,375)Equity attributable to shareholders267,364272,382Non-controlling interests(2,756)(3,713)Total equity264,608268,669Total equity and liabilities494,977476,612INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OFTERANGA GOLD CORPORATIONSTATEMENTS OF CHANGES IN EQUITY For the months ended 2012 and 2011 (Unaudited and in US$'000) 3 months ended3 months endedMarch 31, 2012March 31, 2011RestatedIssued capitalAt January 1305,412305,502At March 31305,412305,502Foreign currency translation reserveAt January 1(935)1,011Exchange difference arising on translation of Teranga corporate entity(63)2,449At March 31(998)3,460Equity-settled share based compensation reserveAt January 112,5991,733Equity-settled share based compensation reserve1,7554,090At March 3114,3545,823Investment revaluation reserveAt January 1(1,319)(940)Change in fair value of available for sale financial asset(3,927)1,538At March 31(5,246)598Accumulated lossesAt January 1(43,375)(34,332)(Loss)/profit attributable to shareholders(2,783)6,457At March 31(46,158)(27,875)Non-controlling interestsAt January 1(3,713)(7,637)Non-controlling interest - portion of profit9571,710At March 31(2,756)(5,927)Total equity at March 31264,608281,581INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OFTERANGA GOLD CORPORATIONSTATEMENTS OF CASH FLOWFor the three months ended March 31, 2012 and 2011(Unaudited and in US$'000)3 months ended3 months endedMarch 31, 2012March 31, 2011RestatedCash flows related to operating activities(Loss)/profit for the period(1,826)8,167Depreciation6,8787,910Amortization of capitalized mine development costs2,1032,873Amortization of intangibles147144Amortization of borrowing costs10779Unwinding of discount23-Share based compensation1,7553,925Net change in unrealized losses/(gains) on gold hedge17,483(4,829)Net change in unrealized losses/(gains) on oil hedge47(1,551)Income tax paid-12Changes in working capital2,1683,283Net cash provided by operating activities28,88520,013Cash flows related to investing activitiesIncrease in restricted cash(348)-Redemption of short-term investments592-Purchase of short-term investments-(31,080)Payments for purchase of property, plant and equipment(15,491)(6,460)Payments made on mine development(8,953)(2,009)Payments for purchase of intangibles(2)(306)Net cash used in investing activities(24,202)(39,855)Cash flows related to financing activitiesProceeds from issuance of capital stock, net of issue costs-(401)Repayment of borrowings(2,800)(1,750)Draw down from finance lease facility, net of financing cost paid2,862-Interest paid on borrowings(279)(197)Net cash used by financing activities(217)(2,348)Effect of exchange rates on cash holdings in foreign currencies(507)1,030Net increase / (decrease) in cash and cash equivalents held3,959(21,160)Cash and cash equivalents at the beginning of financial period7,47075,833Cash and cash equivalents at the end of financial period11,42954,673CORPORATE DIRECTORYDirectorsAlan Hill, Chairman and CEORichard Young, President and CFOChristopher Lattanzi, Non-Executive DirectorOliver Lennox-King, Non-Executive DirectorAlan Thomas, Non-Executive DirectorFrank Wheatley, Non-Executive DirectorSenior ManagementAlan Hill, Chairman and CEORichard Young, President and CFOYani Roditis, Vice President, OperationsKathy Sipos, Vice President, Investor & Stakeholder RelationsDavid Savarie, Vice President, General Counsel & Corporate SecretaryMacoumba Diop, General Manager and Government Relations Manager, SGOMark English, Operations Manager, SGOMartin Pawlitschek, Regional Exploration Manager, SMCBruce Van Brunt, Business Development Manager, SGORegistered Office121 King Street West, Suite 2600Toronto, Ontario, M5H 3T9, CanadaT:+1 416-594-0000F: +1 416-594-0088E: generalmailbox@terangagold.comW: http://www.terangagold.com/Senegal Office2K PlazaSuite B4, 1er Etagesis la Route due Meridien PresidentDakar AlmadiesT: +221 338 693 181F: +221 338 603 683AuditorDeloitte & Touche LLPShare RegistriesCanada: Computershare Trust Company of CanadaT: +1 800 564 6253Australia: Computershare Investor Services Pty LtdT: 1 300 850 505Stock Exchange ListingsToronto Stock Exchange, TSX symbol: TGZAustralian Securities Exchange, ASX symbol: TGZFORWARD LOOKING STATEMENTSCertain information included in this management discussion and analysis, including any information as to the Company's strategy, projects, exploration programs, joint venture ownership positions, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute "forward-looking statements". The words "believe", "expect", "will", "intend", "anticipate", "project", "plan", "estimate", "on track" and similar expressions identify forward looking statements. Such forward- looking statements are necessarily based upon a number of estimates, assumptions, opinions and analysis made by management in light of its experience that, while considered reasonable, may turn out to be incorrect and involve known and unknown risks, uncertainties and other factors, in each case that may cause the actual financial results, performance or achievements of the Company to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. Such forward-looking statements are not guarantees of future performance. These assumptions, risks, uncertainties and other factors include, but are not limited to: assumptions regarding general business and economic conditions; conditions in financial markets and the future financial performance of the company; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; the supply and demand for, deliveries of, and the level and volatility of the worldwide price of gold or certain other commodities (such as silver, fuel and electricity); fluctuations in currency markets, including changes in U.S. dollar and CFA Franc interest rates; risks arising from holding derivative instruments; adverse changes in our credit rating; level of indebtedness and liquidity; ability to successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves; changes in costs and estimates associated with our projects; the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based; contests over title to properties, particularly title to undeveloped properties; the risks involved in the exploration, development and mining business, as well as other risks and uncertainties which are more fully described in the Company's A.I.F. and in other Company filings with securities and regulatory authorities which are available at www.sedar.com. Accordingly, readers should not place undue reliance on such forward looking statements. Teranga expressly disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.COMPETENT PERSONS STATEMENTThe technical information in this quarterly report that relates to mineral resource estimates within the Mining License is based on information compiled by Mr. Bruce Van Brunt, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr. Van Brunt is a full time employee of Teranga and not independent. Mr. Van Brunt has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a "Competent Person" as defined in the 2004 Edition of the "Australasian Code of Reporting of exploration Results, Mineral Resources and Ore Reserves". Mr. Van Brunt is a "Qualified Person" in accordance with National Instrument 43-101 and he consents to the inclusion of this information in the form and context in which it appears in this announcement.The technical information in this quarterly report that relates to the exploration results and targets within the regional exploration program are based on information compiled by Mr. Martin Pawlitschek, who is a member of the Australian Institute of Geoscientists. Mr. Pawlitschek is our full time employee and is not "independent" within the meaning of National Instrument 43-101. Mr. Pawlitschek has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Pawlitschek is a "Qualified Person" in accordance with NI 43-101 and he consents to the inclusion of this information in the form and context in which it appears in this offering memorandum.FOR FURTHER INFORMATION PLEASE CONTACT: Kathy SiposTeranga Gold CorporationVice President of Investor & Stakeholder Relations+1 416-594-0000ksipos@terangagold.comwww.terangagold.com