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Teranga Gold 1Q results boosted by first full quarter of output from Wahgnion

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(Kitco News) - Teranga Gold Corp. (TSX: TGZ) posted a profit on higher production in the first quarter, which was the first full quarter of output from the new Wahgnion mine, the company announced Thursday.

The profit would have been even higher but some gold remained unsold at quarter-end due to coronavirus-related delays in gold shipments in late March. Temporary shipping delays were subsequently addressed during the first two weeks of April, resulting in all of the gold bullion being sold, the company said.

Wahgnion is located in Burkina Faso and achieved commercial production at the beginning of November, giving Teranga two mines in West Africa. As a result, Teranga reported a rise in first-quarter output to 91,312 ounces from 71,946 in the same period of 2019. The company’s Sabodala and Wahgnion mines have operated without interruptions during the COVID-19 pandemic, the company said.

“We continued to be very pleased with the performance of the Wahgnion plant during the first quarter, its first full quarter of commercial production,” said Paul Chawrun, chief operating officer. “Mill throughput continues to exceed the plant design and gold production at 51,306 ounces was above plan. Wahgnion delivered what will be its strongest quarter of the year, offsetting an expected soft quarter from Sabodala as we progress through a lower-grade phase of the mine plan.”

The company listed an adjusted net profit of $7 million, or 6 cents per share, for the first quarter, compared to $2.2 million, or 2 cents, in the same period a year ago. The net profit was $16.2 million, or 13 cents, compared to net loss of $2.7 million, or 3 cents, in the same period last year.

Revenue rose 46% year-on-year to $134.1 million from $92.1 million. Still, this was negatively impacted by an increase in unsold bullion inventory to $38 million, using a period-end spot gold price, as of March 31 due to shipping delays.

“While approximately 23,600 ounces of gold bullion inventory remained unsold at March 31, 2020, COVID-19 related shipping delays have since been addressed, and gold bullion is being shipped and sold on a regular basis,” said Richard Young, president and chief executive officer.

Barring any unforeseen impacts due to the pandemic, the company expects to meet its 2020 production guidance, he said.

“This was Teranga’s first full quarter with two operating mines and we are pleased to report strong revenues, profits and quarterly production,” said the CEO.

Teranga reported that the average realized gold price rose to $1,560 an ounce from $1,307 in the year-ago period. Consolidated all-in sustaining costs – excluding cash/(non-cash) inventory movements and amortized advanced royalty costs – rose to $1,097 per ounce from $764, which the company attributed mainly due to lower grades processed at Sabodala, unsold gold bullion at the end of the quarter and higher share-based compensation expense.

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