TORONTO, ONTARIO -- (Marketwired) -- 04/02/13 -- Teranga (TSX: TGZ)(ASX: TGZ) is pleased to announce the signing of a long-term comprehensive Agreement in Principle ("Agreement") with the Republic of Senegal. The Agreement sets out a predictable and stable fiscal operating environment for the Company's future investment in exploration, acquisitions and development to increase reserves and production. The Agreement benefits all stakeholders, including the Company's shareholders, employees, the local and regional communities and the people of Senegal. The changes made to the fiscal regime bring Senegal in line with fiscal regimes of West Africa and other mining jurisdictions. The Agreement gives the Company the ability to invest with certainty in regards to the fiscal and operating parameters as it moves ahead on its vision to increase reserves and production.
"This comprehensive Agreement and partnership with the Republic of Senegal encourages us to invest and develop to increase our reserves and production in Senegal for the long-term. Our ability to leverage off our existing mill and infrastructure should allow us to increase reserves, production, earnings, cash flow and free cash flow in the coming years," said Alan R Hill, Chairman of Teranga.
The Republic of Senegal has agreed to support Teranga in its plan for further development, notably:
-- To a price and formula to allow for the acquisition of the Republic's additional participation option on deposits not on the Company's Mine License and to incorporate these into the Company's existing Mine License and fiscal regime;-- To support drilling of the Niakafiri deposit on the Mine License;-- To notably extend the term of its renewable Mine License by five years to 2022 and extend five key exploration licences by a further 18 months beyond current expiry periods;-- To commit to work with the Company to ensure full access to exploration targets currently occupied by artisanal miners;-- To settle all outstanding tax assessments in a fair and equitable manner; and-- To settle the Special Contribution Tax of 5% in return for the fiscal changes to our stability agreement noted below.
"I am delighted with the long-term Agreement which has been signed in the mutual interests of both parties between the Republic of Senegal and Teranga. This Agreement will contribute to the economic and social development of Senegal as well as being particularly beneficial to the local population and to the region of Kedougou. The mining industry is of great importance to Senegal. My wish is that the Agreement with Teranga Gold will serve to reinforce the climate for foreign investment in Senegal so as to make our country a favoured destination for investment, and always in a spirit of 'win-win'," said President Macky Sall of Senegal.
In return, Teranga has agreed to adapt its stability agreement with the Republic of Senegal as follows:
-- To increase the royalty rate on production from 3% to bring it in line with the West African average of 5%, effective January 1, 2013;-- To begin paying a portion of accrued dividends to the Republic of Senegal in respect of its 10% minority interest; and-- To agree to a price and formula to acquire the Republic's additional participation option on deposits not on the Company's Mine License and to process that material through Teranga's Sabodala mill.