Disclaimer Information contained in this presentation concerns Nord - - PowerPoint PPT Presentation
Disclaimer Information contained in this presentation concerns Nord - - PowerPoint PPT Presentation
Nordgold: A High Growth International Gold Producer with a Near- Term Pipeline of Low cost, De-Risked Development Opportunities Louw Smith, COO NORD LI (LSE) September 19, 2016 Disclaimer Information contained in this presentation concerns
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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
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Actual production in 2015
Operating Mines Developing Assets Exploration Areas Exploration Assets
Suzdal 75 koz Taparko 83 koz Lefa 214 koz Bissa 235 koz Aprelkovo 20 koz Neryungri 84 koz Gross 230E+ koz Berezitovy 125 koz Buryatzoloto 113 koz Montagne d’Or Bouly 120E+ koz Pistol Bay 34% 10% 24% 33%
H1 2016 Revenue by Geography
Russia Kazakhstan Guinea Burkina Faso
Nordgold: Diversified Asset Base Across Four Continents
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Key Messages
Focus on Free Cash Flow
- Low Cost Producer Compared to Peers
- Target Positive Free Cash Flow Generation at All Mines
- Robust Balance Sheet and Liquidity Control
Margin Improvement and Profitable Extensions of Existing Operations
- Continuous Productivity Improvement Programs
- Development Projects at Operating Mines
- Near-Mine Exploration Success
Growth Pipeline Delivered
- First Gold Poured at Bouly (Burkina-Faso)
- Gross (Russia) Construction Ongoing
- Montagne d’Or (French Guyana) Feasibility Study on Schedule
- Promising Exploration at Pistol Bay (Canada)
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Nordgold is a LOW COST Producer Compared to Peers
FY 2015 All-In Sustaining Cost, US$/oz Au Eq.
FY2015 Nordgold AISC was US$793/oz (11% reduction YoY) - one of the lowest compared to peers US$158.1m Free Cash Flow achieved in 2015, while investing in construction of Bouly mine
200 400 600 800 1,000 1,200 5000 10000 15000 20000 25000 30000 35000 40000
Nordgold
Gold production, koz
793
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311 329 418
200 400 600 800 1,000 1,200 1,400 150 300 450 2013 2014 2015 US$/oz US$ million OCF Gold price
Strong Cash Flow in Challenging Market Environment
Nordgold Consistently Generates Free Cash Flow
63 181 158 238 158 258
100 200 300 2013 2014 2015 US$ million FCF Capex
Operating Cash Flow (OCF) increased despite of the 2015 falling gold price as a result of higher sales
and lower costs
Meaningful positive Free Cash Flow (FCF) generation due to strong OCF and low maintenance
CAPEX
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Nordgold’s debt position, as at 30 June, 2016: – Total Debt of US$905.3 million – Net Debt of US$562.5 million, US$161
million lower vs. Net Debt at end 2013
– Net Debt / LTM EBITDA was 1.3x, which is
significantly below our covenant level of 3.5x Gross Debt / LTM EBITDA
No large debt repayments due until mid-2018 We continue to manage our leverage and interest
rate in the most efficient manner
84 42 200 400 600 2016 2017 2018 2019
167 615
Debt Profile Improvement
Debt Maturity Schedule, US$ million Debt (in US$ million) and Average Interest Rate Dynamics
500 448 Sberbank Loan Eurobond
968 944 946 905 724 627 584 563 5.9% 4.7% 4.8% 4.9% 4.0% 4.5% 5.0% 5.5% 6.0% 200 400 600 800 1000 2013 2014 2015 1H2016 Total Debt Net Debt Average interest rate (RHS)
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Mine Productivity Improvements at Taparko
Nordgold implemented Overall Equipment Effectiveness (OEE) project in mining to improve productivity of primary equipment Key initiatives include:
- Reorganization of shift and lunch
break schedules to limit lost time
- Optimizing trucks payloads (training of
trucks operators with payload procedure)
- Blast fragmentation improvement
- Introduction of mining fleet dispatching
systems Resultantly, loading productivity was improved by 65% with less excavators in operation
Productivity Improvement Initiatives
Loading productivity, tonnes per hour
25 30 10 15 5 1 20
Lunch optimization example, additional tones moved, July 2016
Additional 97,110 tonnes moved lead to 9% increase in production
100 200 300 400 500 600 700 5 5 6 6 7 8 7 Loading productivity, t/h Number of excavators
+64,7%
Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16
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Berezitovy Underground Development Project
Location
Location Russia, Amur region Infrastructure 50 km from Trans-Siberian railway, access with all-season road, OP infrastructure
Project parameters
Mine type Open pit, CIL Stage Open pit, UG development Start-up year H1 2017 Estimated CAPEX US$14.7 million Annual production 55 koz, 3 years LoM LoM average TCC & AISC US$589/oz & US$725/oz
Berezitovy Underground Perspective Berezitovy Underground Project Overview
First underground Mineral Resources of 168koz reported in 2015
NG Feasibility study converted 107koz into Ore Reserves
Twin decline development to commence H1 2017 to access high-grade ore extensions below current open pit
First ore accessed in H2 2018, and full production in 2019 at an annual rate of 350kt at 5.4g/t.
Complete mechanized mine operated by 90 technical and operations employees.
Mining method consist of long-hole open stoping with cemented rockfill
Annual processing continue at a rate of 1.82Mtpa until 2021; mill feed consisting of underground ore, open pit
- re and historical stockpiles.
10,000m of annual exploration drilling will target Mineral Resources conversion and test depth extensions
Regional early stage exploration focused on Khaikta permit north of Berezitovy
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Improving Margin Through Exploration at Bissa
14m at 1.96g/t 2m at 7.04g/t
Location Country Burkina Faso Location 100km north from Ouagadougou Infrastructure Easy access to the national highway Operational Statistics Mine type Open pit Technology Crushing, milling, CIL circuits FY2015 production 235.3 koz P & P reserves 2,067 koz at 1.33 g/t M + I + I resources 2,959 koz at 1.27 g/t
Brief Overview
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2012 Reserves Depletion Addition
2015 Reserves 1,863 1,047 2,067
Ore Reserves Dynamics at Bissa, koz
2015 Bissa Ore Reserves at 2.1Moz; circa 1.0Moz
additional ounces added since mining commenced in 2012
2015 regional exploration delivered maiden Ore
Reserves at Yimiougou, Noungou and Zinigma for 264koz
2016 exploration drilling focused on: Infill drilling below existing pits Exploring potential between Bissa pits Regional exploration at Yimiougou and Noungou
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Construction Phase Development Phase Advanced Exploration Early Exploration
(1) JV with a partner (50/50)
FS completed In engineering or construction Pilot production at Gross Production in 2-5 years Production in 6-8 years Production in 1-2 years
Satellite Standalone
Nordgold Pipeline is Robust and Balanced with Early Stage and Advanced Projects
Production in 3-5 years Significant drilling performed Established resources Scoping/PEA completed or underway Potential resource identified Target delineation Established Resources FS completed or underway
Onot-Kitoy
Russia
Pistol Bay
Canada
Zhanok
Russia
Lefa Corridor
Guinea
Kolbachi
Russia
Goengo
Burkina Faso
Uryakh
Russia
Prognoz(1)
Russia
Kangarse
Burkina Faso
Yimiougou
Burkina Faso
Yeou
Burkina Faso
Montagne d’Or
French Guiana
Zinigma
Burkina Faso
Ronguen
Burkina Faso
Gross
Russia
Bouly
Burkina Faso
4.4 Moz Reserves 8.5 Moz Resources 1.3 Moz Reserves 3.5 Moz Resources
Robust Pipeline to Underpin Future Growth
Khaikta
Russia
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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 Stage Under construction Start-up year H2 2016 Estimated CAPEX US$140 million Annual production 118 koz, LoM 10 years LoM average TCC & AISC US$665/oz & US$730/oz
Large ore body: 1.3 Moz at 0.56 g/t in Probable
Reserves and 3.5 Moz at 0.57g/t in M,I&I Resources
Straightforward heap leach metallurgy with
superior gold recovery at above 83%
Low cost mining at strip ratio of 0.7 t/t Located within 5 km from Nordgold’s operating
Bissa mine with key infrastructure already in place
Feasibility Study with strong project economics:
26% IRR at a gold price of US$1,100/oz and 40% IRR at a gold price of US$1,250/oz
Possibility of Life of Mine extension through
processing of fresh rock ore resources and exploration at flanks
Construction is completed and the mine is in
commissioning phase
In Q2 2016 ore stacking commenced with first
gold poured in Q3 2016
Bouly – Brief Overview and Summary
Bouly – Construction completed
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World class ore body: 4.4 Moz at 0.73 g/t in
P&P Reserves and 8.5 Moz at 0.67 g/t in M,I&I Resources
Straightforward low cost heap leach
metallurgy with excellent recovery rate at above 82.5%
Feasibility study indicates IRR above 25% at
a gold price of US$1,100/oz and IRR of almost 40% at a gold price of US$1,250/oz
The successful pilot production confirmed
project recovery, low cost profile and robust economics and also reduces execution risk
The mine complex earthworks have ramped
up and excavations for Power Plant and Primary Crusher foundations are underway
Fabrication and transportation of the mine
complex’s housing facility began in Q2 2016 and construction is expected to begin in Q3 2016
In 2016, Nordgold will invest c. US$125
million in construction at Gross
Location Location Russia, Yakutia Infrastructure 5 km from Neryungri operating mine, accessible by all-season road Project parameters Mine type Open pit, Heap leach Stage Fully permitted, construction will start in early 2016 Possible start-up year Early 2018 Average production 230 koz, 20 years LoM Capital to start production US$250 million LoM average TCC & AISC US$679/oz & US$760/oz
Gross – Brief Overview and Summary
Gross – Construction ongoing
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Location Location French Guiana, 80 km from port of St Laurent Infrastructure Airstrip, all-season road, camp Project parameters Ownership Nordgold has the right to earn 55.01% Mine Type Open pit Possible start-up year 2020 Average production 250+ koz Development Stage Feasibility Study is underway, to be completed in Q4 2016
Project Summary
World-class high-grade ore body: 3.8 Moz at 2.14 g/t of
in-pit Indicated and Inferred Resources
Favorable stripping ratio Straightforward metallurgy: gravity + cyanidation.
Excellent recovery - averaged at above 95% in lab tests
Located in politically stable and low-risk jurisdiction Significant reserve upside potential at strike and in depth
47m at 4.0g/t 50m at 4.6g/t 18m at 1.9g/t 12m at 5.6g/t 8m at 4.2g/t
Pre-feasibility Study finalized in June, 2015 and
demonstrated positive economic data with CIL technology
Preliminary ESIA were completed in Q1 2015,
completion of full ESIA is expected by Q1 2017
Lycopodium won tender to complete Feasibility Study,
will be delivered in Q4 2016
Nordgold became project operator from January 2016
Deposit Cross Section and Notable Intervals
Montagne d’Or Project Overview
Montagne d’Or - High Quality Project in South America
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Location Location Arctic Canada, Nunavut Territory, on the coast
- f 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 739 koz at 2.95g/t Inferred resources (NI compliant)
Project Highlights
Pistol Bay project is wholly owned by Northquest (TSX-V: NQ) Nordgold increased its stake from 51.5% to circa 96.5% of Northquest
in result of take-over offer
Best intersections include 8.23 g/t /156m and 5.61 g/t /163m Preliminary metallurgical tests showed recovery from 93.1% to 99.6%
and indicated gold is recoverable through standard gravity and CIL methods
High grade open-pit mining conditions with favourable logistics and
best mining jurisdiction
Project Location Map
Pistol Bay Project – Nordgold’s Entry into North America
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Nordgold New Project Criteria
♦ Located in mining-friendly 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 above 150 koz
What We Look For in Greenfield Projects
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Objectives Positive Free Cash Flow Generation at All Operating Mines Reduce Leverage Through Effective Debt Management Pay Dividends to Shareholders Continuation of Growth Achievements 2016 Strategy
Comprehensive cost
reduction program in place at all mines
FY2015 AISC of
US$793/oz, a 10% improvement YoY
8 out of 9 mines were
FCF positive in 2015, FY 2015 consolidated FCF reached US$158m
Total FY2014
dividend at USc10.31/GDR
FY 2015 dividend
at USc15.61/GDR
Reduced cost of debt
and improved liquidity and debt profile through refinancing in 2014
Net debt on 31.12.2015
reduced to US$584m, Cash position of US$362m
Net debt/ LTM EBITDA
as of the end of 2015 was 1.1x
Bouly construction is
completed, production started in Q3 2016
Construction work at
Gross started in June, 2016
Montagne d’Or FS to
be completed in Q4 2016 ♦ Continue to generate efficiencies ♦ Positive FCF generation at all mines ♦ Maintain dividend pay-out ratio (30% of net profit attributable to shareholders) ♦ Launch Bouly and proceed with Gross construction ♦ Continue to invest in the pipeline ♦ Continue to efficiently manage leverage with target level Net debt/ LTM EBITDA in the range 0.5-1.0x