"As we eliminate the hedge book by mid-year, we anticipate that the increased cash margins and cash flows will provide us with a stronger balance sheet that should be able to fund our organic growth through our extensive exploration program, while at the same time minimizing shareholder dilution," said Richard Young, President and CEO.
-- Capital expenditures for 2012, excluding reserve development expenditures, were $52.9 million, higher than the revised guidance of $50 million, and $9.2 million lower than the fifteen months ended December 31, 2011. Capitalized reserve development costs for the year were $30.4 million, higher than the revised guidance of $25 million, and $16.0 million higher than the fifteen months ended December 31, 2011. The increase over 2011 was the result of a focus on expanding resources within the Sabodala pit and converting resources to reserves.-- Total cash costs for 2012 were within guidance, of $600 - $650 per ounce, at $627 per ounce sold compared to $782 per ounce for the twelve months ended December 31, 2011, a reduction of 20 percent. The decrease in cash costs were mainly due to higher ounces produced.-- Total production costs, comprised of total cash costs including total depreciation and amortization, for the year were $850 per ounce sold, down from $1,031 per ounce sold for the twelve months ended December 31, 2011.-- Realized gold price for 2012 was $1,422 per ounce sold compared to $1,236 per ounce sold for the twelve months ended December 31, 2011. The higher realized gold price for 2012 reflects a lower percentage of gold delivered into forward sales contracts due to the buyback of 52,105 ounces during the second quarter of 2012, as well as higher gold prices in 2012.
-- Total tonnes mined for 2012 were 12 percent higher than the twelve months ended December 31, 2011 and 4 percent higher than planned. Ore tonnes mined were lower than plan but at better grades resulting in similar ounces mined compared to plan.-- Mill throughput for the twelve months ended December 31, 2012 was similar to the same prior year period as an increase in the milling capacity with the completion of the mill expansion in the third quarter 2012, was offset by lower throughput rates from harder ore processed in 2012 compared to the softer material that was available in 2011. Compared to budget, mill throughput for 2012 was approximately 20 percent lower than plan due to delays in commissioning the crushing circuit as part of the mill expansion.-- In the third quarter of 2012, the Company added depth to its management team to focus on growth. Alan Hill was appointed Executive Chairman, formerly Chairman and Chief Executive Officer and Richard Young was appointed President and Chief Executive Officer, formerly President and Chief Financial Officer. Mark English was also promoted to Vice President, Sabodala Operations, formerly Manager, Sabodala Gold Operations. In addition, Navin Dyal and Paul Chawrun were appointed Vice President and Chief Financial Officer and Vice President, Technical Services, respectively.
-- The Sabodala Pit optimization work completed in the first quarter of 2012, based on the high grade drill results from the fourth quarter of 2011, defined a projected pit shell that included the Lower Flat Zone ("LFZ") at depth.-- Conversion of a large portion of these resources to open pit reserves will likely require higher gold prices as the orientation of both the Main Flat Extension ("MFE") and LFZ appear to be more steeply dipping than originally anticipated, negatively affecting the economics of an enlarged pit shell.-- The 2013 drill program for Sabodala is expected to be completed in the first quarter of 2013. At that time Management will assess the economics of both a larger open pit as well as evaluate an underground development option in the LFZ.-- Drilling in 2012 successfully extended the Masato mineralized limits to the south and down dip onto Teranga's mine licence ("ML") defining approximately 700,000 ounces of Inferred Resource.-- In 2012, we drilled 104,400 metres at a cost of $26 million on the ML. The original ML budget was $20 million but was expanded during the year to follow up on positive drill results at Sabodala.-- Within the regional land package ("RLP") we completed 62,500 metres of RAB drilling, 42,300 metres of RC and 2,400 metres of diamond drilling on 25 of our anomalies and targets, at a cost of $20 million, including Gora.-- The program for 2013 has been budgeted and will focus on fast-tracking work on our current priority targets at Nienyenko, Soreto, Diabougou, Tourokhoto-Marougou and Saiensoutou. Other targets will be followed up as work progresses on the RLP. A minimum budget of $20 million is allocated for the combined exploration programs on the RLP and ML. Additional funding is available and will be allocated on a priority basis for prospects with clear potential for reserves definition.