Nordgold: Low Cost Producer with Excellent Growth Pipeline
March 2016
Nikolai Zelenski, CEO / NORD LI (LSE)
Nordgold: Low Cost Producer with Excellent Growth Pipeline Nikolai - - PowerPoint PPT Presentation
Nordgold: Low Cost Producer with Excellent Growth Pipeline Nikolai Zelenski, CEO / NORD LI (LSE) March 2016 Disclaimer Information contained in this presentation concerns industry in which the Group operates may differ officers or any other
March 2016
Nikolai Zelenski, CEO / NORD LI (LSE)
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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 or 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
such terms
similar
include matters that are not historical facts and statements regarding the Group’s intentions, beliefs or current expectations concerning, among
financial condition, liquidity, prospects, growth, strategies, and the industry in which the Group
By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the
looking statements are not guarantees of future performance and that the Groups’ actual results of
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
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
general economic conditions, the competitive environment, risks associated with
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
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
Company nor any of its shareholders, directors,
whatsoever for any loss howsoever arising from any use of the contents of this presentation or
The presentation and the information contained herein does not constitute or form a part of any
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
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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 37% 8% 23% 33%
2015 Revenue by Geography
Russia Kazakhstan Guinea Burkina Faso
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All-in sustaining costs for 2015 at US$793/oz Strong Free Cash Flow generation
Two compelling projects in construction phase Several prospective projects in FS and PEA/exploration phase
Low Cost Producer High Quality Pipeline
Track record of surpassing production and cost guidance Bissa mine was constructed ahead of time and budget
Proven Track Record of Delivering
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200 400 600 800 1 000 1 200 1 400 5 000 10 000 15 000
Nordgold
Gold production, koz
722
H1 2015 All-In Sustaining Cost, US$/oz Au Eq.
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US$311m US$329m US$418m
200 400 600 800 1 000 1 200 1 400 150 300 450 2013 2014 2015 $/oz $ million OCF Gold price
Nordgold Consistently Generates Free Cash Flow
US$63m US$181 US$158m US$238 US$158 US$258m
100 200 300 2013 2014 2015 $ million FCF Capex
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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
reduction program in place at all mines
US$793/oz, a 10% improvement YoY
FCF positive in 2015, FY 2015 consolidated FCF reached US$158.1m
dividend at USc10.31/GDR
at USc15.61/GDR
programme is
program approved by the Board
and improved liquidity and debt profile through refinancing in 2014
reduced to US$584.0m, cash position at US$361.7m
as of the end of 2015 was 1.1x
Bouly completed in Q2 2015. Construction
at Gross ongoing, construction will start in 2016
started in Q4 2015 ♦ Continue to generate efficiencies ♦ Positive FCF generation at all mines ♦ Maintain dividend payout ratio (30% of net profit attributable to shareholders) ♦ Proceed with Bouly and 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
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Project Target Parameter Promised Delivered
Delivered Target? Exceeded Expectations? Consolidated Operations 2013 Production 770 - 850 koz Au 924 koz Au
✓ ✓
2014 Production 870 - 920 koz Au (1) 985 koz Au
✓ ✓
AISC US$1,050 - 1,100 / oz (1) US$887 / oz
✓ ✓
2015 Production 925 - 985 koz Au 950 koz Au
✓
US$850-900/oz US$793/oz
✓ ✓
Bissa Mine
Commercial Production & Mine Construction Mid-2013 / 18 months January 2013 / 15 months
✓ ✓
Capital Expenditure
US$250 mln
✓
100 koz Au 254 koz Au
✓ ✓
2013 TCC US$700 / oz US$468 / oz
✓ ✓
ON PROJECT DEVELOPMENT
Bissa payback period = 21 months
ON OPERATING BUSINESS
(1) Initial target announced on 24th February 2014
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Construction Phase Development Phase Advanced Exploration Early Exploration
(1) JV with a partner (50/50)
FS completed In engineering or construction Pilot production at Gross Production in 2-5 years Production in 6-8 years Production in 1-2 years
Satellite Standalone
Nordgold Pipeline is Robust and Balanced with Early Stage and Advanced Projects
Production in 3-5 years Significant drilling performed Established resources Scoping/PEA completed or underway Potential resource identified Target delineation Established resources FS completed or underway
Onot-Kitoy
Russia
Pistol Bay
Canada
Zhanok
Russia
Lefa Corridor
Guinea
Kolbachi
Russia
Goengo
Burkina Faso
Nerchinsk
Russia
Uryakh
Russia
Prognoz(1)
Russia
Kangarse
Burkina Faso
Yimiougou
Burkina Faso
Yeou
Burkina Faso
Montagne d’Or
French Guiana
Zinigma
Burkina Faso
Ronguen
Burkina Faso
Gross
Russia
Bouly
Burkina Faso
4.5 Moz reserves 8.8 Moz resources 1.3 Moz reserves 3.5 Moz resources
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New Projects are Efficient: Low Construction Capex and Low Production Costs
200 400 600 800 1 000 1 200 1 400 5 000 10 000 15 000
Nordgold’s New Projects AISC ($/oz) vs H1 2015 Global AISC Curve
koz Bouly US$730/oz Gross US$750/oz Montagne d’Or US$711/oz Nordgold, 722
400 800 1 200 1 600 2 000 Bissa Blagodatnoye Gross Montagne d'Or Bouly Copler Essakane Twanziga Tongon Phoenix Nzema Tropicana Buzwagi
Selected Gold Projects - Capex per ounce
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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$150 million Annual production 118 koz, LoM 10 years LoM average TCC & AISC US$665/oz & US$734/oz
Probable Reserves and 3.5 Moz at 0.57g/t in M,I&I Resources
superior gold recovery at above 83%
already in place
economics: 26% IRR at a gold price of US$1,100/oz
processing of fresh rock ore resources and exploration at flanks
Bouly – Brief Overview and Summary
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activities were completed by the end of Q3 2015
equipment is either on site or has been shipped
work erected on site as at the end of 2015
remainder expected on site in Q1 2016
Q1 2016
budget
Projects Update
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P&P Reserves and 8.6 Moz at 0.67 g/t in M,I&I Resources
metallurgy with excellent recovery rate at above 82.5%
mine with all necessary infrastructure in place
economics with IRR above 25% at a gold price of US$1,100/oz
Board to start in early 2016, with 2016 capex
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
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Projects Update
recovery, low cost profile and robust economics and also reduces execution risk
US$638/oz
2015 and has continued in Q4 2015
related to ore processing system including the primary gyratory crusher, as well as turbines and boilers for 16MW power plant, were ramped up
accelerate to support 2016 construction activities
commence in March-April, 2016
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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
in-pit Indicated and Inferred Resources
Excellent recovery - averaged at above 95% in lab tests
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
demonstrated positive economic data with CIL technology
completion of full ESIA is expected by Q4 2016
will be delivered in Q4 2016
Deposit Cross Section and Notable Intervals
Montagne d’Or Project Overview
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Pistol Bay Project Overview
Location Location Arctic Canada, Nunavut Territory, on the coast
Infrastructure Accessible by air or by sea with about 5-month navigation
Project parameters Mine type Open pit, high grade Development Stage Advanced exploration, successful 2014-2015 drilling programme Resources No NI or JORC compliant resource yet
Project Highlights
project
and indicated gold is recoverable through standard gravity and CIL methods
best mining jurisdiction
Project Location Map
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♦ 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 at above 150 koz
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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
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
Joined Nordgold in August 2013 Over 10 years of experience in optimising and
managing multiple ore processing plant
Previously: Vice-President and Head of Metallurgy
Member of the Australian Institute of Mining and
Metallurgy and Canadian Institute of Metallurgists
Joined Nordgold in June 2013 and has over 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 Michael Monaghan Director of Mining
Joined Nordgold in July 2015 and has 30 years
experience in the mining industry
Previously: COO of Akara Resources, General
and Mining manager in AngloGold Ashanti
Member of the Australian Institute of Mining and
Metallurgy
Howard Golden Geology Director
Joined Nordgold in March 2015 Over 24 years of experience across 6 countries Previously: Rio Tinto, Kinross
A Balanced Management Team with Strong Corporate and Technical Track Record
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Nordgold’s Dividend Yield Among the Highest in the Industry (FY2015)
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 share, which implies almost 7.0% annual dividend yield
For FY2015 Nordgold declared total dividend at
$US15.61 cents per share
In 2015 Nordgold has purchased a total of
10,282,212 GDRs for a total amount of US$29.3 million
In November 2015, BoD approved a new GDR
buyback programme with max GDRs amount at 5 million, max purchase price US$5/GDR and max purchase sum at US$15 million
The Board and management consider return of
capital to the shareholders in the form of share repurchase to be a good supplement to stable dividend payments
0,6% 1,1% 1,6% 1,9% 2,5% 6,4% IAMGOLD AngloGold Newmont Gold Fields Randgold Acacia Barrick Polymetal Nordgold
Market data as of 31 December 2015. Source: CapIQ, Company fillings. (1) Proposed final dividend
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6 737 3 523 3 443 3 410 3 393 2 333 2 228 1 970 1 750 1 726 1 545 1 270
Market data as of 15 February 2016 Source: Company information, Bloomberg (1) Excludes IRC
EV / 2015E EBITDA (x) EV / Reserves (US$/oz Au Eq.) EV / 2015 Production (US$/oz Au Eq.)
23,7 8,3 7,7 7,1 6,8 6,0 5,9 5,6 5,2 4,5 3,6 3,2 Randgold Barrick Polymetal Newmont Acacia IAMGOLD AngloGold SEMAFO Gold Fields Petropavlovsk Highland Gold Nordgold
However, Nordgold is Dramatically Undervalued by the Market
544 388 254 222 205 196 128 128 124 119 98 87
(2) 2015 production guidance (3) Based on 2015E EBITDA
(3) (3)
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Source: Bloomberg consensus market data as of 16 February 2016
Low Cost Producer High Quality Pipeline
2015E EV/EBITDA at 3.2x 2015E P/E at 5.2x
Proven Track Record
Undervalued Relative to Peers
All-in sustaining costs for FY 2015 at US$793/oz Strong Free Cash Flow generation Two compelling projects in engineering/construction phase Several prospective projects in FS and PEA/exploration phase Track record of surpassing production and cost guidance Bissa mine was constructed ahead of time and budget
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For further information on Nordgold please visit www.nordgold.com