Teranga Gold Corporation: ASX Quarterly Report-For the Three Months Ended September 30, 2011

Teranga Gold Corporation (TSX:TGZ)(ASX:TGZ) - 

SABODALA GOLD OPERATION

KEY POINTS



--  Sabodala gold mine produced 27,082 ounces of gold during the quarter,
    which was one percent higher than plan - tonnes mined and processed were
    on budget. 
    
    
--  Exploration at the Sabodala Pit confirms the potential for higher grades
    in an expanded pit to depth and to the north - drilling intersected
    significant widths of high grade mineralization, including hole SBDH141D
    of 131 metres at 3.45 grams per tonne ("gpt") and SBDH143D of 87 metres
    at 3.11 gpt included in four mineralized zones, on the Main Flat
    Extension just outside the current pit design - the new high grade zones
    remain open down plunge and to the northwest. 
    
    
--  Exploration drilling at Masato confirms the extension of the Masato
    deposit from the neighbouring property onto the Sabodala Mining Licence
    - including hole SMRC051D of 49 metres at 3.59 gpt in two mineralized
    zones and hole SMRC055D of 64 metres at 2.45 gpt in three mineralized
    zones - with significant potential for further upside as the deposit
    remains open at depth and along strike. 
    
    
--  Sabodala is on track to produce 140,000 of gold for the year at
    approximately $850 to $875 per ounce.



OPERATIONAL OVERVIEW

Sabodala Gold Operation



--  Gold production for the three months ended September 30, 2011 was one
    percent higher than plan at 27,082 ounces. 
    
    
--  Tonnes mined and processed were on budget for the September quarter. 
    
    
--  For calendar 2011, Sabodala is on track to produce 140,000 ounces of
    gold at total cash costs of approximately $850 to $875 per ounce, 13
    percent higher than budget. Half of the increase in our total cash cost
    guidance for calendar 2011 relates to higher costs at the mine site
    (fuel, labour, maintenance and royalty costs), while the other half
    relates to an understatement of costs related to the opening inventory
    balance. 
    
    
--  Gold sold for the three months ended September 30, 2011 totalled 27,574
    ounces at a total cash cost of $1,156 per ounce sold. Total cash costs
    were higher than previous quarters and budget due to planned lower
    production, as mining occurred in a lower grade area of the pit during
    the rainy season, and due to unplanned higher fuel and higher labour
    costs. 
    
    
--  Gold production for the December quarter is estimated at 45,000 ounces
    of gold at total cash cost of approximately $775 per ounce as mining
    moves into a higher grade area of the pit. 
    
    
--  For 2012, Sabodala is expected to produce 220,000 ounces of gold at
    total cash costs of $625 to $675 per ounce. The higher production and
    lower cash costs compared to 2011 are due to the completion of the mill
    expansion allowing for higher throughput resulting in higher production
    and lower mining cost per ounce. 
    
    
--  The plant expansion is expected to be completed on schedule in the first
    quarter of calendar 2012.  
    
    
--  The estimated capital cost for the plant expansion is expected to total
    approximately $60 million, which is $4.0 million higher than budget
    mainly due to project scope changes, an increase in price for structural
    steel fabrication and higher foreign currency costs. 
    
    
--  On June 30, 2011,the Company entered into an equipment supply contract
    for the purchase of mining equipment totalling $14.4 million, which will
    be used primarily for the development of the Gora deposit. The purchase
    of this mining equipment will be largely financed by expansion of the
    mobile equipment loan with Societe Generale. On September 21, 2011, the
    Company signed a commitment letter confirming the terms and conditions
    of the lease facility. The Facility Documents should be finalized by no
    later than November 15, 2011. 
    
    
--  During the quarter ended September 30, 2011, 16,615 ounces were
    delivered into gold hedge contracts at $846 per ounce, representing 60
    percent of gold sales for the quarter, and 10,959 ounces of gold were
    sold into the spot market at an average price of $1,673 per ounce
    resulting in an average realized price for the quarter of $1,174 per
    ounce. 
    
    
--  Accelerated deliveries into gold hedge contracts during the quarter
    ended September 30, 2011 reduced the balance outstanding to 181,885
    ounces of gold. The Company's objective is to eliminate the hedge book
    entirely as quickly and prudently as possible. 
    
    
--  Exploration results in 2011 support management's belief of the potential
    to expand proven and probable reserves from 1.5 million ounces of gold
    to 3 million ounces of gold, at similar or better grade to the current
    reserve (1.5 gpt) from the Sabodala Mining License ("ML") over the next
    12 to 18 months. 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, therefore it is
    uncertain if further exploration will result in the targets being
    delineated as a mineral resource. 
    
    
--  The larger reserve base is expected to result from the success of
    deepening the Sabodala pit to the north along the Main Flat Extension,
    extension of the Masato pit onto the ML, conversion of Niakafiri
    resources to reserves as well as adding reserves below these three large
    open pits.  
    
    
--  On the ML alone, this would increase the mine life to approximately 15
    years at a run rate of about 200,000 ounces of gold produced annually
    and provide a solid production base to build on through the Regional
    Exploration Program.
    

Production Statistics                                                       
                                                                            
----------------------------------------------------------------------------
                                    September 2011    June 2011   March 2011
                                           Quarter      Quarter      Quarter
----------------------------------------------------------------------------
Ore mined                  ('000t)           1,008          759          491
----------------------------------------------------------------------------
Waste mined                ('000t)           5,085        5,538        6,460
----------------------------------------------------------------------------
Total mined                ('000t)           6,093        6,297        6,951
----------------------------------------------------------------------------
Strip ratio              waste/ore             5.0          7.3         13.2
----------------------------------------------------------------------------
Ore processed              ('000t)             582          650          608
----------------------------------------------------------------------------
Head grade                   (g/t)            1.64         1.81         1.93
----------------------------------------------------------------------------
Gold recovery                  (%)            88.3         89.2         89.8
----------------------------------------------------------------------------
Gold produced (1)             (oz)          27,082       33,388       34,296
----------------------------------------------------------------------------
Gold sold                     (oz)          27,574       35,407       39,490
----------------------------------------------------------------------------
Average price received      US$/oz           1,174        1,083        1,199
----------------------------------------------------------------------------
Total cash costs per                                                        
 ounce sold                 US$/oz           1,156          879          655
----------------------------------------------------------------------------
                                                                            
Notes:                                                                      
(1) Gold produced is change in gold circuit inventory plus gold recovered   
    during the period                                                       



Mine License ("ML") Exploration

Highlights of drilling during the September quarter on the Sabodala ML include
the intersection 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, as well as the successful intersection and extension of the Masato
deposit down dip 200 metres onto the ML.


During the September quarter Reverse Circulation ("RC") and Diamond drilling
("DD") on the ML totalled 13,000 metres from 5 drills. There are 7 drills
operating on the ML at the present time (6 DD and 1 RC) and pending rig
availability this number may increase to expedite resource expansion and reserve
definition drilling through the December quarter and into 2012.


For full drill results from our ML exploration program please see the Company's
website at
http://www.terangagold.com/English/Investors/NewsReleases/NewsReleaseDetails/2011/SupplementalInformation-DrillResultsSeptember302011/default.aspx.


Main Flat Extension ("MFE")

Drilling targeting the MFE immediately adjacent to the current ultimate pit, at
a depth of 300 metres (about 50 metres below the current design pit bottom and
accessible to open pit mining), confirms the continuation of the mineralized
zone with further drilling planned. The MFE remains open down plunge and to the
northwest.


In the September quarter a total of 5,400 metres of drilling was completed on
the MFE. Recent results include drill hole SBDH141D which appears to have cut a
structural intersection in part of the hole resulting in long intervals of high
grades totalling 131 metres at 3.45 gpt. Hole SBDH143D establishes continuity of
mineralization cut by SBDH141D with a strong intercept of 87 metres at 3.11 gpt
located just north of the current ultimate pit limit. In total all six holes
drilled to date have intersected these high grade zones.


The goal of the MFE program is to add 250,000 ounces to the open pit mineable
reserves, as well as potentially a similar amount to underground reserves, in
2012.


Corridor and Ayoub's Target Area

Limited drilling of 1,700 metres was completed in the September quarter within
the Corridor along the Ayoub's portion of the target area. The system, although
low grade, is continuous and is showing Sabodala style albitic alteration to the
north where the target remains open down dip and along strike. The position of
the Ayoub's mineralization in the Corridor lends itself to sharing stripping for
including deeper MFE mineralization into the ultimate pit. Recent results
include drill hole SBDH084D with 15 metres at 1.34 gpt as well as drill hole
SBDH091D with 20 metres at 2.1 gpt.


Underground Mining Desktop Analysis

Teranga commissioned an engineering firm to undertake a desktop study to
identify potentially suitable underground mining methods and provide stoping
cost estimates for the resources outside the 2010 Sabodala ultimate pit. Results
of the study are positive with approximately 200,000 ounces of material
currently classified as Inferred outside of the 2010 ultimate pit now identified
as potentially mineable underground. The study was based on the 2009 Sabodala
resource model. 


Since the study was commissioned, Teranga has completed drilling identifying
Sabodala mineralization extending more than 300 metres below the deepest zones
included in the 2009 model and this desktop study. Presently, 260,000 ounces at
3.1 gpt grade has been classified as Measured and Indicated outside the ultimate
pit in 2.6 million tonnes. Another 240,000 ounces of Inferred material grading
3.4 gpt has been classified as Inferred outside the ultimate pit in 2.2 million
tonnes.


Management plans to continue advancing the level of engineering on underground
mining with a goal of adding 250,000 to 500,000 ounces of underground reserves
at a grade of 3 - 4 gpt to the Sabodala project in 2012. While management has
confidence in its projections based on exploration work done to date, the
potential quantity and grade disclosed above is conceptual in nature, and there
has been insufficient exploration to define a mineral resource, therefore it is
uncertain if further exploration will result in the underground targets being
delineated as a mineral resource.


Masato

In the September quarter a total of 6,100 metres of drilling was completed at
Masato. This drilling has confirmed a mineralized strike length of 500 metres
and a dip extent of 200 metres on the ML. Recent results include drill hole
SMRC051D with 37 metres at 4.5 gpt as well as drill hole SMRC089D with 44 metres
at 2.0 gpt. The Masato deposit remains open to depth and along strike and is
currently being tested in both directions by three drills.


Management is confident that continued positive drilling results will translate
to definition of mineable reserves at Masato on the ML in 2012.


Regional Exploration

There are currently 27 targets that have been identified on the Company's
1,455km2 Regional Land Package, all within trucking distance of the mill. In
total 9 of the 27 targets have been drilled, the balance are expected to be
drill tested through the end of 2011 and 2012. 


By the end of the September quarter the Company completed approximately 140,000
metres of Rotary Air Blast (RAB) drilling, 56,000 metres of RC and 22,000 metres
of DD drilling. There are currently 11 drill rigs on the Regional Land Package.
The 11 drill rigs are expected to remain throughout the December quarter at a
total estimated drilling cost of approximately $25 million for the year. 


For full drill results from our regional exploration program please see the
Company's website at
http://www.terangagold.com/English/Investors/NewsReleases/NewsReleaseDetails/2011/SupplementalInformation-DrillResultsSeptember302011/default.aspx.


Gora

High-grade drill intersections continue to expand the potential footprint of the
deposit, while a completed Induced Polarization ("IP") survey has revealed
additional anomalies along strike of the current resource which are targeted for
follow-up drilling. The Company is running a number of processes in parallel to
efficiently develop Gora as quickly as possible, including the ongoing
exploration program, permitting and feasibility level economic analysis with the
objective of having production as early as late 2012.


Toumboumba 

Toumboumba, located 10km from the Sabodala mill, is the Company's latest
discovery with potential to become the second regional deposit processed through
the Sabodala Mill. 


The new discovery, located on the Sabodala North West permit, is largely covered
by a laterite plateau with little to no outcrop. The RAB program, which began in
April, and was expanded to encompass the entire structural domain that may host
similar styles of mineralization to the Gora deposit, has been completed with
1,150 RAB holes for 49,000 metres drilled. 


Results to date have identified a series of north-south trending targets that
are related to quartz veining and alteration hosted within a granitic intrusive
body. As results are received additional target trends are being identified,
expanding the exploration potential at Toumboumba. 


Majiva

The Makana permit hosts the Majiva target, one of several prospects located
along a twelve kilometre strike length between Majiva and Niakafiri on the ML.
To date, a 5 kilometre strike length of gold-mineralized structure has been
identified at Majiva. 


Rainy season access to the eastern parts of Makana was prepared during
September. One combination DD/RC rig will be re-located shortly to continue the
Majiva drill testing program. An additional RC rig has been mobilized and will
also be deployed to Makana. 


Interpretation of an IP survey indicates several zones of coincident resistivity
highs and chargeability highs. A similar survey completed on the Sabodala ML in
2007 mapped the important silica-carbonate-pyrite alteration zones, along the
major shear structures. The Sabodala deposit itself sits immediately to the
north of such a trend. Similarly the best mineralisation at Majiva sits at the
termination of such a trend. Review of the Majiva IP interpretation highlighted
analogous targets and the drill testing of these will be integrated into the
continuation of the RC drilling program.


CORPORATE

Teranga Gold Corporation ("Teranga or the Company") is a Canadian-based gold
company listed on the Toronto Stock Exchange (TSX:TGZ) and Australian Securities
Exchange (ASX:TGZ). Teranga is principally engaged in the production and sale of
gold, as well as related activities such as exploration and mine development. 


Finance

At September 30, 2011:



--  Cash and cash equivalents - US$25.7 million 
--  Project Finance Facility - nil(1) 
--  Mining Fleet Lease Facility - US$17.3million 
--  Hedge Facility = 181,855 oz remaining to be delivered at an average
    price of US$830/oz. 



(1) All debt owing under the Macquarie Project Facility was fully repaid as of
September 30, 2010, however, the Company remains under covenant restrictions
pursuant to the gold hedging commitments. 




Corporate Directory                                                         
Directors                                                                   
Alan Hill, Chairman and CEO                                                 
Richard Young, President and CFO                                            
Christopher Lattanzi, Non-Executive Director                                
Oliver Lennox-King, Non-Executive Director                                  
Alan Thomas, Non-Executive Director                                         
Frank Wheatley, Non-Executive Director                                      
                                                                            
Senior Management                                                           
Alan Hill, Chairman and CEO                                                 
Richard Young, President and CFO                                            
Yani Roditis, Vice President, Operations                                    
Kathy Sipos, Vice President, Investor Relations                             
David Savarie, Vice President, Legal & Corporate Secretary                  
Mark English, General Manager, SGO                                          
Martin Pawlitschek, Regional Exploration Manager, SGO                       
Bruce Van Brunt, Business Development Manager, SGO                          
Macoumba Diop, Government Relations, SGO                                    
                                                                            
Registered Office                                                           
121 King Street West, Suite 2600                                            
Toronto, Ontario, M5H 3T9, Canada                                           
T: [phone]                                                          
F: [phone]                                                          
E: [e-mail]                                           
W: http://www.terangagold.com/                                              
                                                                            
Senegal Office                                                              
2K Plaza                                                                    
Allees Meridient President                                                  
Almadies                                                                    
BP 38385                                                                    
Dakar Yoff Senegal                                                          
T: [phone] F: [phone]                                     
                                                                            
Auditor                                                                     
Deloitte &Touche LLP                                                        
                                                                            
Share Registries                                                            
Canada: Computershare Trust Company of Canada                               
T: [phone]                                                          
Australia: Computershare Investor Services Pty Ltd                          
T: 1300 850 505                                                             
                                                                            
Stock Exchange Listings                                                     
Toronto Stock Exchange, TSX code: TGZ                                       
Australian Securities Exchange, ASX code: TGZ                               
                                   
Issued Capital                     
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Issued shares           245,618,000
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Stock options            15,405,556
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Stock Options - Exercise Profile   
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Exercise Price (C$)         Options
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$3.00                    15,405,556
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About TERANGA 

Teranga Gold Corporation is a Canadian-based gold company listed on the Toronto
Stock Exchange (TSX:TGZ) and Australian Securities Exchange (ASX:TGZ). Teranga
is principally engaged in the production and sale of gold, as well as related
activities such as exploration and mine development. 


Teranga was created to acquire the Sabodala gold mine and a large regional
exploration land package, located in Senegal, West Africa, from Mineral Deposits
Limited. Management believes the mine operation, together with the Company's
prospective 1,488 km2 land package, provides the basis for growth in reserves,
production, earnings and cash flow as new discoveries are made and processed
through the Company's existing mill. 


The Sabodala Gold Operation, which came into operation in 2009, is located 650
kilometres east of the capital Dakar within the West African Birimian geological
belt in Senegal, and about 90 kilometres from major gold mines and discoveries
in Mali.  


The Company's mission is to create value for all of its stakeholders through
responsible mining. Its vision is to explore, discover and develop gold mines in
West Africa, in accordance with the highest international standards, and to be a
catalyst for sustainable economic, environmental and community development. All
of its actions from exploration, through development, operations and closure
will be based on the best available techniques.


Forward Looking Statements

Certain information contained in this report, including any information on
Teranga's plans or anticipated future results, future financial or operating
performance and other statements that express management's expectations or
estimates of future performance constitute forward-looking statements. Such
statements are based on a number of estimates and assumptions that, while
considered reasonable by management at the time, are subject to significant
business, economic and competitive uncertainties. Teranga cautions that such
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual financial results, performance or achievements of Teranga
to be materially different from the company's estimated future results,
performance or achievements expressed or implied by those forward-looking
statements. These factors include the inherent risks involved in exploration,
development and operations of mineral properties, changes in economic
conditions, changes in the worldwide price of gold, silver fuel, electricity and
other key inputs, changes in mine plans and other factors, such as project
execution delays, many of which are beyond the control of Teranga.


Nothing in this report should be construed as either an offer to sell or a
solicitation to buy or sell Teranga securities.


Competent Persons Statement

The technical information contained in this release relating to exploration
activities 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 and is also a registered professional geologist in the State of
Washington, USA. He is qualified as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves" and as defined in NI43-101. Mr. Van Brunt has
consented to the inclusion of this information in the form and context in which
it appears in this release. Mr. Van Brunt is a full-time employee of Teranga and
is therefore not independent.


The technical information contained in this release relating to the regional
exploration is based on information compiled by Mr. Martin Pawlitschek, who is
qualified as a Competent Person as defined in the 2004 Edition of the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" and as defined in NI43-101. Mr. Pawlitschek has consented to the
inclusion of this information in the form and context in which it appears in
this release. Pawlitschek is a full-time employee of Teranga is therefore not
independent.