Nordgold: Profitable Growth in the Challenging Market Environment
Oleg Pelevin, Head of Strategy NORD LI (LSE) March 2015
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Disclaimer Information contained in this presentation concerns Nord - - PowerPoint PPT Presentation
Nordgold: Profitable Growth in the Challenging Market Environment Oleg Pelevin, Head of Strategy NORD LI (LSE) March 2015 1 Disclaimer Information contained in this presentation concerns Nord Gold N.V., a company organized and existing under
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Information contained in this presentation concerns Nord Gold N.V., a company organized and existing under the laws of Netherlands (the “Company”, and together with its subsidiaries, the “Group”), and is for general information purposes only. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy
These materials may contain forward-looking statements regarding future events or the future financial performance of the Group. One can identify forward looking statements by terms such as “expect”, “believe”, “estimate”, “anticipate”, “intend”, “will”, “could”, “may”, or “might”, the negative of such terms or other similar
expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may
results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Group operates may differ materially from those described in or suggested by the forward-looking statements contained in these materials. In addition, even if the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Group operates are consistent with the forward-looking statements contained in these materials, those results or developments may not be indicative of results or developments in future periods. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in the states where the Group operates, changes in the world [gold] market, as well as many other risks specifically related to the Group and its operations. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in these materials. None of the Company nor any of its shareholders, directors, officers or any other person accepts any liability whatsoever for any loss howsoever arising from any use of the contents of this presentation or otherwise arising in connection therewith. The presentation and the information contained herein does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United
the securities of the Company may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company does not intend to conduct a public offering of any securities in the United States
2014 Key Highlights
Leading emerging markets gold producer with
Guinea
Diversified asset portfolio: operating 9 producing
mines, 2 development projects and 4 advanced exploration projects
Large JORC resource base, exceeding 34.7 Moz
gold-equivalent (1), and reserves at 12.6 Moz with life
Low-cost producer, with FY2014 AISC declined 19%
YoY to US$887/oz put us among lowest-cost global gold producers
World class board and management team, with a
commitment to high standards of corporate governance
Commitment to a solid dividend plan, as Nordgold
pays quarterly dividends with payout ratio at 30%
London Stock Exchange listed GDR (ticker: NORD)
with 11.8% free float
(1) Total resources (measured, indicated and inferred) including silver resources (2) Normalised EBITDA is presented / used, before year-end adjustments
985koz Gold Production, FY14 TCC US$675/oz AISC US$887/oz TCC & AISC, 2014 US$487M(2) 40% EBITDA & Margin, 2014 17% Production CAGR 2012 – 2014
Russia Kazakhstan Guinea Burkina Faso
34% 8% 20% 38%
2014 Revenue by Geography
Operating Mines Developing Assets Exploration Areas
Actual production in 2014
Suzdal 77 Koz Taparko 112 Koz Lefa 205 Koz Bissa 251 Koz Aprelkovo 32 Koz Neryungri 66 Koz Gross 220E+ Koz Berezitovy 123 Koz Buryatzoloto 120 Koz Montagne d’Or Exploration Assets Bouly 140E+ Koz Pistol Bay
35% 8% 21% 37%
200 400 600 800 1,000 1,200 2008 2009 2010 2011 2012 2013 2014
(1) Taparko, Berezitovy and Buryatzoloto production included as of acquisition in November 2008 (2) Figures shown on a 100% consolidated basis. Includes 5.3 koz gold equivalent (“GE”) of silver production (3) Includes production from acquisition of LEFA (Guinea) as of August 2010 and 4.2 koz GE of silver production (4) Includes 7.1 koz GE of silver production (5) Includes 5.2 koz GE of silver production (6) Includes 6.9 koz GE of silver production (7) Includes 6.4 koz GE of silver production
Guinea Russia Kazakhstan Burkina Faso
193 koz (1) 534 koz (2) 589 koz (3) 754 koz (4) 717 koz (5) 924 koz (6) 985 koz (7)
779 779 841 864 887 899 949 954 973 1,002 1,023 1,026 1,053 1,101 1,105 1,118 1,225 1,228 1,246
Source: Company information (1) Including stock-piles / product inventory write-down (2) Maintenance, Capitalized stripping, Exploration capex
* Based on 9m 2014 data
2014 Objectives Positive Free Cash Flow Generation at All Operating Mines Reduce Leverage Through Effective Debt Management Pay Dividends to Shareholders Continuation of Growth 2014 Achievements 2015 Strategy
reduction program in place at all mines
AISC of US$887/oz, representing a 19% improvement YoY
positive FCF in Q3 & Q4 2014, FY2014 consolidated FCF reached US$180.7m
2014 of USc1.33/GDR, bringing total 2014 dividend to USc10.31/GDR
2014 is set on March 5, 2015 and payment
and improved liquidity and debt profile through refinancing in March 2014
2014 at US$627.3 m, and cash position at US$317.1 m
program in progress
Gross ongoing since Q1 2014
Bouly on track to be completed in Q1 2015
Montagne d’Or expected in Q1 2015 ♦ Continue to improve efficiency ♦ Further upside for FCF generation in 2015 ♦ Dividend payout ratio
attributable to shareholders ♦ Start construction of Bouly or Gross ♦ Continue to invest in the pipeline ♦ Continue to reduce leverage with target level Net debt/LTM EBITDA at 1.0x
Development projects Advanced exploration projects Early exploration projects
Delineated resources / reserves Feasibility underway or completed Trial production ongoing at Gross Significant drilling performed Scoping underway Potential resource identified Target delineation
Uryakh
Russia
Prognoz(1)
Russia
Kaya
Burkina Faso
Zinigma
Burkina Faso
Tanzaka
Burkina Faso
Vitimkan
Russia
Nerchinsk
Russia
Yeou
Burkina Faso
Lefa Corridor
Guinea
Brownfield / Satellite Greenfield / Standalone
Production in 1-3 years Production in 3-6 years
Wayin
Burkina Faso
Production in 6-8 years
Goengo
Burkina Faso
Montagne d’Or
French Guiana
Banora Corridor
Guinea
Bouly
Burkina Faso
Gross
Russia
13.3Moz resources 4.6Moz reserves
(1) JV with a partner (50/50)
engineering and overall study report
Location Location Burkina-Faso, 5 km east from Bissa mine Infrastructure Bissa infrastructure is available to support Bouly Project parameters Mine type Open pit, Heap leach Resources 1 Moz at 0.75 g/t Indicated & Inferred Reserve potential 2-3 Moz at 0.75 g/t for open pit Development stage Feasibility study Possible start-up year 2016 Scoping study Completed in Q2 2014
Development Highlights Bouly Landscape
probable future fresh rock mining (phase II)
geochemical anomalies were tested as well, potentially increasing reserves of oxide ore for phase I
Life of mine (phase I) 8 years Production 145 koz* Total Cash Cost US$630/oz* Capex $140 million Payback period 2 years All-in sustaining costs US$825/oz Processing capacity 7.5 Mtpa Metallurgical recovery 75% (conservative estimate) Strip ratio 0.8 t/t
Development Highlights Bouly Long Section
* - first three years
25% at long term gold price of US$1,100/oz
Location Location Russia, Yakutia Infrastructure 5 km from Neryungri operating mine, access by all-season road Project parameters Mine type Open pit, Heap leach M + I + I resources 13.3 Moz at 0.56 g/t P&P reserves 4.6 Moz at 0.73 g/t Mining rate 12 Mtpa Recovery 82,5% for 150 days cycle Average production 220 koz Life of mine 17 years Capital to start production US$260 million All-in sustaining costs US$700-750/oz
Gross 2014 Pilot Stage Ore Processing Development Highlights
Gross main technical challenges to overcome…
sharp slowdown of the process at low temperatures
leach pads
… and solutions suggested
required for life of mine volume of ore processing instead of three of similar size
recovery and eliminate seasonality
electric power and heat
consistently high recoveries in excess of 80% Gross Deposit Landscape
Irrigation period, days Recovery Au, %
2014 Pilot Stage -40 mm Ore Recovery Dynamics 10 20 30 40 50 60 70 80 90 100 10 20 30 40 50 60 70 80 90 100 110 120
Actual Expected
Location Location French Guiana, 115km from port of St Laurent Infrastructure Airstrip, all-season road, camp Project parameters Ownership Nordgold has the right to earn 50,01% Mine Type Open pit Resources 4.0 Moz at 1.1 g/t Inferred Reserve Potential 2-4 Moz Development Stage Preliminary Economic Assessment Scoping Study Will be done in Q1 2015 Bankable Feasibility Study Will be completed in 2016
Project Highlights
Deposit Cross Section and Notable Intervals 47m at 4.0g/t 50m at 4.6g/t 18m at 1.9g/t 12m at 5.6 g/t 8m at 4.2g/t
Location Location Arctic Canada, Nunavut Territory, on the coast of Hudson Bay Infrastructure Accessible by air or by sea with about 5- month navigation period. Village, port, airstrip and all season road on site. Project parameters Mine type Open pit, high grade Development Stage Advanced exploration, 2014 drilling program underway Resources No NI or JORC compliant resource yet
Deal and Project Highlights
2014 Pistol Bay drilling program
good gravity recovery
and some existing infrastructure on site Project Location Map
Nikolai Zelenski Chief Executive Officer
Head of Strategy of Nordgold since its
formation in late 2007
Joined OAO Severstal in 2004 and
worked at Strategy of Severstal Mining division
Previously Consultant at American
Appraisal
Joined Nordgold in February 2013 Previously: Aureus Mining, (COO),
Ashanti Goldfields, IMC consulting
PhD in Mining Engineering Appointed Acting CFO of Nordgold in May,
2014
Joined Nordgold in July 2013 as Head of
Corporate Reporting
Previously Head of Corporate Reporting in
SIBUR and in various roles at Deloitte and Arthur Andersen
Martin White Technical Director Oleg Pelevin Head of Strategy
CEO of Nordgold since its formation in
late 2007
At OAO Severstal since 2004. Held the
position of Head of Strategy at Severstal Mining division
Previously at McKinsey & Company,
Mining Industry Practice
Dmitry Guzeev Chief Financial Officer
Joined Nordgold in August 2013 Over 10 years of experience in
processing plant
Previously: Vice-President and Head of
Metallurgy of Gold Fields International
Member of the Australian Institute of
Mining and Metallurgy and Canadian Institute of Metallurgists
Joined Nordgold in June 2013 and has
mining industry
Previously COO of Alacer Gold and in
various roles at Gold Fields International
Member of the Australian Institute of
Mining and Metallurgy
Philip Engelbrecht Director of Metallurgy Louw Smith Chief Operating Officer
a good supplement to stable dividend payments
and strong growth profile, while the structure of the minority shareholder base improve
freefloat
according to the Dutch legislation
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83 21 13 15 9 14 9 2 2 41 37 29 28 27 26 17 6 Polyus Polymetal Nordgold Randgold IAMGOLD Acacia Petropavlovsk (1) Highland Semafo Reserves Resources
150
2014 Production (koz Au Eq.) H1 2014 All In Sustaining Cost ($/oz Au Eq.) Reserves & Resources (moz Au Eq.)
1,696 1,431 1,147 985 844 750 625 259 234 Polyus Polymetal Randgold Nordgold IAMGOLD Acacia Petropavlovsk (1) Highland Semafo 899 905 938 1,034 1,118 n/a n/a n/a n/a Nordgold Polyus Polymetal IAMGOLD Acacia Petropavlovsk Randgold Semafo Highland
Source: Company information (1) Excludes IRC
485 346 244 186 131 120 117 115 105 Randgold Semafo Polymetal Highland Petropavlovsk (1) Polyus Acacia Nordgold IAMGOLD
EV / 2015E EBITDA (x) EV / Reserves ($/oz Au Eq.)
Market data as of 25 February 2015 Source: Company information, Bloomberg (1) Excludes IRC (2) 2015E EBITDA as per Sberbank forecast
6,339 5,883 3,542 3,306 2,117 1,955 1,641 1,487 1,074 Randgold Polyus Polymetal Semafo Acacia Petropavlovsk (1) Highland Nordgold IAMGOLD 14.6 9.4 6.9 5.2 5.0 4.9 3.3 3.3 3.2 Randgold Polyus Polymetal Semafo Acacia Petropavlovsk IAMGOLD Nordgold (2) Highland
EV / 2014 Production ($/oz Au Eq.)
Market data as of 18 February 2015. Source: FactSet, Company fillings. .
Nordgold’s Dividend Yield Among the Highest in the Industry (FY2014E) Focus on Stable and Regular Dividend Payments Nordgold pays quarterly dividends. Current
Nordgold paid FY 2014 dividends of US$10.31
Nordgold’s yield is higher than many of its
Source: Bloomberg market data as of 25 February 2015, Sberbank forecast
Nordgold Investor Relations
Valentina Bogomolova, CFA Head of IR Luna Arena, Herikerbergweg 238 1101 CM Amsterdam Zuidoost The Netherlands M +7 916 474 59 96 E va.bogomolova@nordgold.com W www.nordgold.com