The company had completed its US$380 million acquisition of the high-grade Massawa project from Barrick Gold and its Senegalese joint venture partner earlier this year and embarked on integrating the asset with its nearby Sabodala operation.

Teranga said mining activity had begun at the Sofia deposit, the first of the Massawa deposits to be mined, and processing Massawa's free-milling, high-grade ore through the Sabodala plant was "scheduled to begin shortly".

The PFS outlined average annual production of 260,000oz, starting this year, low all-in sustaining costs of $749/oz and net cash flows after a minority interest of more than $2.2 billion over a 16.5-year mine life, using a $1,600/oz gold price.

It said Sabodala-Massawa's reserve base increased to 4.8 million ounces at a $1,250/oz gold price.

"The PFS announced today confirms that the Massawa acquisition is truly transformational for Teranga and repositions the company as a leading mid-tier gold producer with one of the lowest all-in sustaining cost profiles in the industry," president and CEO Richard Young said.

"The integration of Sabodala and Massawa is perhaps the best example in mining of the ‘greater than the sum of its parts' concept."

COO Paul Chawrun said building a separate processing stream for the refractory ores would add higher than anticipated capital costs but offered many advantages throughout the life of mine.

Early processing of high-grade refractory ore had benefits including enhanced project economics, he said.

"Furthermore, we believe in the great potential of this project and are conducting an aggressive drilling campaign for both refractory and free-milling ore, with a goal to sustain Sabodala-Massawa's gold production between 350,000-400,000 ounces per year beyond 2026," he said.

Development capex was put at $409 million over the life of mine.

Teranga aims to release a DFS for Sabodala-Massawa in 2021.

The company also said it planned to issue a revised life of mine production schedule this quarter for its new Wahgnion gold mine in Burkina Faso, where "the plant is exceeding initial performance expectations" following a strong first full quarter in March.

Teranga (TSX: TGZ) was added to the S&P/TSX Composite Index in June.

Its share price has nearly tripled from about C$5 a year ago to reach a 12-month peak of $14.74 on Friday.

Teranga closed up 3.8% to $14.64 to capitalise it at $2.45 billion (US$1.8 billion).