Disclaimer Information contained in this presentation concerns Nord - - PowerPoint PPT Presentation

disclaimer
SMART_READER_LITE
LIVE PREVIEW

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


slide-1
SLIDE 1

Nordgold: Profitable Growth in the Challenging Market Environment

Oleg Pelevin, Head of Strategy NORD LI (LSE) March 2015

1

slide-2
SLIDE 2

2 2

Disclaimer

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

  • r completeness.

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

  • expressions. These forward-looking statements include matters that are not historical facts and statements regarding the Group’s intentions, beliefs or current

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

  • r may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Groups’ actual

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

  • States. The securities of the Company have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”). Accordingly,

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

slide-3
SLIDE 3

3 3

2014 Key Highlights

 Leading emerging markets gold producer with

  • perations in Russia, Kazakhstan, Burkina Faso and

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

  • f approximately 13 years

 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

Nordgold at a Glance

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

slide-4
SLIDE 4

4 4

Operating Mines Developing Assets Exploration Areas

Nordgold: Diversified Asset Base

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

slide-5
SLIDE 5

5 5

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

Peer-leading Track Record of Growth

Dynamic growth 6 out of 7 years

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)

slide-6
SLIDE 6

6 6

Nordgold is a Low Cost Producer Compared to Peers

2014 All In Sustaining Cost ($/oz Au Eq.)

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

  • In June 2013 the World Gold Council published guidance on AISC metrics which is proposed to be

applied starting from January 2014. The general approach is: AISC = EBITDA-based TCC(1) + Sustaining CAPEX(2)

  • Nordgold’s AISC was US$887/oz in FY2014, which is one of the lowest compared to peers

* Based on 9m 2014 data

slide-7
SLIDE 7

7 7

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

 Comprehensive cost

reduction program in place at all mines

 FY 2014 Consolidated

AISC of US$887/oz, representing a 19% improvement YoY

 All mines generated

positive FCF in Q3 & Q4 2014, FY2014 consolidated FCF reached US$180.7m

 Interim dividend for Q4

2014 of USc1.33/GDR, bringing total 2014 dividend to USc10.31/GDR

 The record date for Q4

2014 is set on March 5, 2015 and payment

  • n March 20, 2015

 Reduced cost of debt

and improved liquidity and debt profile through refinancing in March 2014

 Net debt on 31 Dec

2014 at US$627.3 m, and cash position at US$317.1 m

 Bond buy-back

program in progress

 Pilot stage operation at

Gross ongoing since Q1 2014

 Feasibility Study at

Bouly on track to be completed in Q1 2015

 Resource update at

Montagne d’Or expected in Q1 2015 ♦ Continue to improve efficiency ♦ Further upside for FCF generation in 2015 ♦ Dividend payout ratio

  • f 30% of net profit

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

Proven Strategy in a Lower Price Environment

slide-8
SLIDE 8

8 8

Robust Pipeline to Underpin Future Growth

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

Nordgold pipeline is robust and balanced with early stage and advanced projects

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)

slide-9
SLIDE 9

9 9

Bouly – Ready to Start Construction

In-house Preliminary Economic Assessment (PEA) completed in Q2 2014 and showed robust project economics We made a decision to progress the project towards a Feasibility Study (FS) Lycopodium was awarded the contract to be the lead consultant for FS and responsible for metallurgy/processing,

engineering and overall study report

Knight Piésold is responsible for design of the heap Environmental & social study is being conducted locally Feasibility Study is expected to be completed in Q2 2015. Mining permit is in place

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

Bouly – Brief Overview

Development Highlights Bouly Landscape

slide-10
SLIDE 10

10 10

Bouly – Robust PEA Results

 Mineralisation at Bouly is very uniform down to 600 m and open at depth  Column tests demonstrated excellent recovery for oxide and transition zones 80-93% confirming heap leach potential  Gold recoveries in column tests from fresh rock were 56-73%  PEA considered oxide and transition ore only (phase I, <100 m vertical depth), while mine design will take into account

probable future fresh rock mining (phase II)

 Minable resources (Indicated + Inferred) for phase I amounted to 1.2 Moz  2014 drilling 38,000 m campaign was focused on upgrading oxide inferred resources to indicated category, and nearby

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

Bouly – PEA Results Overview

Development Highlights Bouly Long Section

* - first three years

slide-11
SLIDE 11

11 11

Gross – Pilot Stage in Progress

 Feasibility study completed in February 2014  Project demonstrated good economic efficiency with IRR almost 40% at long term gold price of US$1,250/oz and about

25% at long term gold price of US$1,100/oz

 Start of pilot stage operation at the end of February 2014 – processing of Gross ore on existing facilities of Neryungri mine  1.8 M tons of ore was processed in 2014, 29 koz of gold was produced at Neryungri mine facilities  Excellent recovery is confirmed at production scale test – 83.7% recovery has been achieved after 90 days of leaching  Obtaining formal project construction permit from Russian authorities expected in H1 2015  2 year construction time to reach full capacity

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 – Brief Overview

Gross 2014 Pilot Stage Ore Processing Development Highlights

slide-12
SLIDE 12

12 12

Gross Project - Challenges and Solutions

Gross main technical challenges to overcome…

 Large but low grade deposit for heap leach technology

  • nly

 High seasonality of heap leaching in arctic climate,

sharp slowdown of the process at low temperatures

 Difficult hilly landscape and lack of flat space for large

leach pads

 No access to electric power grid

… and solutions suggested

 Dynamic leach pad with stacking ore and removing it to

  • re dump after leaching cycle. Only one flat space is

required for life of mine volume of ore processing instead of three of similar size

 Cyanide solution heating to reach high and stable

recovery and eliminate seasonality

 Onsite steam coal power plant to supply low cost

electric power and heat

 Presence of a large coal mine within 200 km vicinity  All metallurgical tests conducted to date produced

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

slide-13
SLIDE 13

13 13

Montagne d’Or - High Quality Project in South America

Montagne d’Or Project Overview

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

 Nordgold entered into an option agreement with Columbus Gold to earn 50.01% in Montagne d’Or  Nordgold should invest US$30 million and complete Feasibility Study no later than Q1 2017  Nordgold expenditures on the project to date US$16 million  Mining concession valid till 2019, renewable for 25 years; application made for adjacent areas  Metallurgic tests produced an excellent recovery at 95-97%  The 2013-2014 drilling program commenced in November 2013 to support Feasibility Study completed  Resource update and Preliminary Economic Assessment (PEA) to be completed by SRK in Q1-Q2 2015  Environmental Impact Study is underway

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

slide-14
SLIDE 14

14 14

Pistol Bay Project – Nordgold’s Entry in North America

Pistol Bay Project Overview

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

 Northquest (TSX-V: NQ) is a 100% owner of Pistol Bay project  Nordgold acquired a 23.7% stake in Northquest, financing

2014 Pistol Bay drilling program

 Promising in-house resource estimate based on drilling results  Best intersections include 8.23 g/t /156m and 5.61 g/t /163m  No metallurgical test doing yet, abundant visible gold suggests

good gravity recovery

 High grade open-pit mining conditions with favourable logistics

and some existing infrastructure on site Project Location Map

slide-15
SLIDE 15

15 15

Nordgold New Project Criteria

♦ Located in emerging gold geographies ♦ With gold as the primary metal ♦ Non-refractory ores ♦ Not less than 2Moz of reserve potential with grade at above 2g/t, low to medium strip ratio ♦ Potential annual production at above 150 koz

What We Look For in Greenfield Projects

slide-16
SLIDE 16

16 16

Management Team with Broad International Expertise

A balanced management team with strong corporate and technical track record

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

  • ptimising and managing multiple ore

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

  • ver 20 years of experience in the

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

slide-17
SLIDE 17

17 The Board and management consider return of capital to the shareholders in the form of share repurchase to be

a good supplement to stable dividend payments

We are confident that Nordgold’s shareholder value will appreciate given company’s operational track record

and strong growth profile, while the structure of the minority shareholder base improve

We remain fully committed to being a public company and to the long-term aim of significantly increasing the

freefloat

It is intended to cancel the treasury shares/GDRs after their repurchase of GDRs under the buyback programme

according to the Dutch legislation

  • Duration of the program till 31 Dec 2015
  • Maximum GDRs amount 19 million
  • Maximum purchase sum

US$30 million

  • Maximum purchase price

US$4.0/GDR

Buyback programme

17

Rationale:

Buyback programme parameters:

The Board has approved a GDR/share buyback programme on the London Stock Exchange

17

slide-18
SLIDE 18

18 18

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

Operationally Nordgold Leads its Peer Group

2014 Production (koz Au Eq.) H1 2014 All In Sustaining Cost ($/oz Au Eq.) Reserves & Resources (moz Au Eq.)

Nordgold is a Large, Low-cost Gold Producer with a Solid Resource Base

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

slide-19
SLIDE 19

19 19

485 346 244 186 131 120 117 115 105 Randgold Semafo Polymetal Highland Petropavlovsk (1) Polyus Acacia Nordgold IAMGOLD

Valuation Benchmarking – Nordgold vs. Key Peers

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

Nordgold is Undervalued by the Market

EV / 2014 Production ($/oz Au Eq.)

slide-20
SLIDE 20

20 20

Dividend Benchmarking – Nordgold vs. Key Peers

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

targeted dividend payout ratio is 30% of net profit attributable to shareholders

 Nordgold paid FY 2014 dividends of US$10.31

cents per GDR, which implies almost 6.0% annualized dividend yield.

 Nordgold’s yield is higher than many of its

peers expected to pay on a 2014 annual basis

Nordgold Generates Superior Dividend Yield

slide-21
SLIDE 21

21 21

Nordgold – a Premium Gold Mining Company

Source: Bloomberg market data as of 25 February 2015, Sberbank forecast

 All-in sustaining costs for FY 2014 at US$887/oz  Company is among lowest cost global producers

Premium Gold Mining Company

 Two compelling projects ready for construction  Several prospective projects in PEA/exploration phase

Low Cost Producer High Quality Pipeline

 985 koz produced in 2014  6 out of 7 years company demonstrated production growth  2015E EV/EBITDA at 3.3x  2015E P/FCF at 4.1x

Production Growth Undervalued Relative to Peers

slide-22
SLIDE 22

22 22

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

Contact