Nordgold: Low Cost Producer with Excellent Growth Pipeline Nikolai - - PowerPoint PPT Presentation
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) February 2016 Disclaimer Information contained in this presentation concerns Nord by the forward-looking statements contained in these connection
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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
- n general information gathered at the time of writing and
are subject to change without notice. The Company relies
- n 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
- f 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
- n circumstances that may or 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
- perations, 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
- n 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
- f 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
- ffered 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 2014
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
Nordgold: Diversified Asset Base with Focus on Africa
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All-in sustaining costs for 9m 2015 of US$759/oz Strong Free Cash Flow generation
Nordgold – a Premium Gold Mining Company
Premium Gold Mining Company
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 Delivery
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Nordgold is a LOW COST Producer Compared to Peers
- H1 2015 Nordgold’s AISC was US$722/oz (down 20% YoY) - one of the lowest compared to peers
- 9m 2015 Nordgold AISC was US$759/oz (down 14% YoY)
- US$150.3m Free Cash Flow achieved in 9m 2015
200 400 600 800 1,000 1,200 1,400 5,000 10,000 15,000
Nordgold
Gold production, koz
722
H1 2015 All-In Sustaining Cost, US$/oz Au Eq.
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US$311m US$329m >US$400m
200 400 600 800 1,000 1,200 1,400
150 300 450 2013 2014 2015F
$/oz $ million OCF Gold price
Strong Cash Flow in Challenging Market Environment
Nordgold consistently generates Free Cash Flow
US$63m US$181 cUS$150m US$238 US$158 cUS$260m
100 200 300 2013 2014 2015F
$ million FCF Capex
- Nordgold Operating Cash Flow (OCF) increased despite the falling gold price as a result of higher
- utput and lower costs
- Meaningful positive Free Cash Flow (FCF) generation due to strong OCF and low maintenance 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
Comprehensive cost
reduction program in place at all mines
9m 2015 AISC of
US$759/oz, a 14% improvement YoY
All mines were FCF
positive in 2014, 9m 2015 consolidated FCF reached US$150.3m
Total FY2014 dividend
at USc10.31/GDR
9m 2015 dividend at
USc14.02/GDR
Share buyback
programme is ongoing, new program approved by the Board
Reduced cost of debt and
improved liquidity and debt profile through refinancing in 2014
Net debt on 31.12.2015
at US$584.0m, cash position at US$360m
Net debt/ LTM EBITDA
as of the end of 2015 was 1.1x
Feasibility Study at
Bouly completed in Q2
- 2015. Construction
- ngoing
Pilot stage operation at
Gross ongoing, construction will start in 2016
Montagne d’Or FS
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 of 0.5-1.0x
Proven Strategy in a Lower Price Environment
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Proven Track Record of DELIVERING on Promises
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
✓
- AISC
US$850-900/oz US$790/oz
✓ ✓
Bissa Mine Commercial Production & Mine Construction Mid-2013 / 18 months January 2013 / 15 months
✓ ✓
Capital Expenditure
- c. US$250 mln
US$250 mln
✓
- 2013 Production
100 koz Au 254 koz Au
✓ ✓
2013 TCC US$700 / oz US$468 / oz
✓ ✓
ON PROJECT DEVELOPMENT
Bissa payback period = 21 months
ON OPERATING BUSINESS
(1) Initial target announced on 24th February 2014
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Construction Phase Development Phase Advanced Exploration Early Exploration
Robust Pipeline to Underpin Future Growth
(1) JV with a partner (50/50)
FS completed In engineering or construction Pilot production at Gross Production in 2-5 years Production in 6-8 years Production in 1-2 years
Satellite Standalone
Nordgold Pipeline is Robust and Balanced with Early Stage and Advanced Projects
Production in 3-5 years Significant drilling performed Established resources Scoping/PEA completed or underway Potential resource identified Target delineation Established resources PEA completed or FS underway Onot-Kitoy
Russia
Pistol Bay
Canada
Zhanok
Russia
Lefa Corridor
Guinea
Kolbachi
Russia
Goengo
Burkina Faso
Nerchinsk
Russia
Uryakh
Russia
Prognoz(1)
Russia
Kangarce
Burkina Faso
Yimi
Burkina Faso
Yeou
Burkina Faso
Montagne d’Or
French Guiana
Zinigma
Burkina Faso
Ronguen
Burkina Faso
Gross
Russia
Bouly
Burkina Faso 4.5 Moz reserves 8.8 Moz resources 1.3 Moz reserves 3.5 Moz resources
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Compelling Economics of New Projects
New projects are efficient: low construction capex and low production costs
- Nordgold projects are capital-efficient: low capex per ounce of production
- Nordgold projects are competitively positioned at the low end of the global AISC curve
200 400 600 800 1,000 1,200 1,400 5,000 10,000 15,000
Nordgold’s New Projects AISC ($/oz) vs H1 2015 Global AISC Curve
koz
Bouly
US$730/oz Gross US$750/oz Montagne d’Or US$650/oz
Nordgold, 722
400 800 1,200 1,600 2,000
Bissa Blagodatnoye Gross Montagne d'Or Bouly Copler Essakane Twanziga Tongon Phoenix Nzema Tropicana Buzwagi
Selected Gold Projects - Capex per ounce
- f Production, US$/oz
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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
Bouly – Brief Overview and Summary
Bouly – Construction Started
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
Possibility of Life of Mine extension through processing of fresh rock ore resources and further exploration at flanks
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Bouly – Construction Started
Projects Update
Approximately US$85 million invested in 2015
All major engineering, drafting and procurement activities were completed by the end of Q3 2015
98% of structural concrete completed by the end of 2015
All plate work, steelwork and mechanical equipment is either on site or has been shipped
Approximately 65% of structural steel and plate work erected on site as at the end of 2015
Mining fleet delivery at approximately 75% with remainder expected on site in Q1 2016
Infill grade control program commenced
Pre-stripping works will commence at the end of Q1 2016
Construction continuing on schedule and within budget
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World class ore body: 4.5 Moz at 0.73 g/t in P&P Reserves and 8.6 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%
Located just 5 km from Nordgold’s Neryungri mine with all necessary infrastructure in place
Feasibility study indicates very strong project economics with IRR above 25% at a gold price of US$1,100/oz
Board approval to start construction in early 2016, with 2016 capex of US$125 million.
Production start up expected two years later
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
Gross – Fully Permitted and Ready for Construction
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Projects Update
The successful pilot production confirmed project recovery, low cost profile and robust economics and also reduces execution risk
AISC of the pilot production in 2015 of US$638/oz
Detailed design work was commenced in Q3 2015 and has continued in Q4 2015
Engineering and long-lead equipment ordering related to ore processing system including the primary gyratory crusher, as well as turbines and boilers for 16MW power plant, were ramped up
In Q1 2016 project design and purchasing will accelerate to support 2016 construction activities
Earthworks and construction works on-site will commence in March-April, 2016
Gross – Fully Permitted and Ready for Construction
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Montagne d’Or - High Quality Project in South America
Montagne d’Or Project Overview
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 Q4 2016
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
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Pistol Bay Project – Nordgold’s Entry into 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
Project Highlights
Pistol Bay project is wholly owned by Northquest (TSX-V: NQ) Nordgold holds a 51.5% stake in Northquest, financing Pistol Bay project 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
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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 at above 150 koz
What We Look For in Greenfield Projects
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Qualified and Balanced Management Team
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
- f 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 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 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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We believe that only a socially responsible business that operates with the full cooperation of all stakeholders can deliver success and long-term returns to investors.
> US$ 1,000,000: social development programmes and donations in Burkina Faso and Guinea in 2014-2015 Lefa mine Partnership Agreement with UNICEF & Local Communities
Employees’ safety is our top priority 1.60 LTIFR in 2015 Our goal – Zero Harm Best practice sharing
Preventing incidents and injuries benefits everyone Every worker is responsible for observing safety rules Health and safety targets must be clear to all employees
Community relations in partnership with local authorities, international & local NGOs
Health Economic Empowerment Education & Culture
Building and renovation of educational infrastructure Awarding student scholarships Ebola precautionary measures Health support of local population, incl. sports’ events Ambulance service improvement and medical equipment upgrade Active support of anti-malaria program Promotion of opportunities to launch and manage enterprises by locals Support farming and ranching, weaving and joinery Drinking water supply to residents and water-pumping equipment to local farmers Respect for People Safety Trust and Collaboration Professionalism and Efficiency
Responsible Approach to Gold Mining
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Nordgold – a Premium Gold Mining Company
Source: Bloomberg consensus market data as of 03 February 2016
Premium Gold Mining Company
Low Cost Producer High Quality Pipeline
2015E EV/EBITDA at 3.1x 2015E P/E at 4.4x
Proven Track Record
- f Delivery
Undervalued Relative to Peers
All-in sustaining costs for 9m 2015 of US$759/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