Nordgold:
Robustly Positioned for Cash Flow and Growth in a Volatile Environment
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Nordgold: Robustly Positioned for Cash Flow and Growth in a - - PowerPoint PPT Presentation
Nordgold: Robustly Positioned for Cash Flow and Growth in a Volatile Environment September 2014 1 Disclaimer Information contained in this presentation concerns Nord Gold N.V., a company organized and existing under the laws of Netherlands
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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
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
circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees
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
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
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
H1 2014 Key Highlights
Leading emerging markets gold producer with
Kazakhstan
Diversified asset portfolio: nine producing mines, two
large-scale development project and four advanced exploration projects
Large JORC resource base, exceeding 37 Moz gold-
equivalent (1), and reserves at 12.6 Moz with life of approximately 13 years
World class board and management team, with a
commitment to high standards of corporate governance
Commitment to a solid dividend plan, as Nordgold
pays the dividend quarterly with payout ratio at 30%
London Stock Exchange listed GDR (ticker: NORD)
with 14.6% free float (incl. into FTSE Gold Mines Index)
(1) Total resources (measured, indicated and inferred) including silver resources (2) Normalised EBITDA is presented / used, before year-end adjustments
476koz Gold Production US$708 / oz Total Cash Costs US$899 / oz All-in Sustaining Costs US$245M(2) 40% EBITDA & Margin
Russia Kazakhstan Guinea Burkina Faso
34% 8% 17% 40%
H1 2014 Revenue by Geography
Operating Mines Developing Assets Exploration Areas
(1) Actual production in 2013
Suzdal 81 Koz Taparko 108 Koz Lefa 163 Koz Bissa 254 Koz Aprelkovo 33 Koz Neryungri 67 Koz Gross 220E+ Koz Berezitovy 120 Koz Buryatzoloto 99 Koz Montagne d’Or Exploration Assets Bouly 140E+ Koz
34% 9% 18% 39% 200 400 600 800 1,000 2008 2009 2010 2011 2012 2013
193 koz (1) 534 koz (2) 589 koz (3) 754 koz (4) 717 koz (5) 924 koz (6)
(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
2009 2008 2010 2011
Expands into West Africa acquiring High River Gold Optimisation and integration of assets Forms integrated business model Acquires Crew Gold – further expanding in West Africa and diversifying resource base Established operations in 4 countries Completed 4 acquisitions Next successful year of substantial growth of production and resource base More than doubled the resource base to 22.7 Moz Reached c. 50% production
Growth in reserves by more than 50% Consolidation of 100% of High River Gold A year of consolidation and construction of Bissa mine
Peer-leading track record of dynamic growth
2012
Production in 2014 is expected to be in the range of 900 – 950 koz
Significant growth of gold production and enhancement of management team
2013
Record gold production Launch of world class Bissa mine Entering South America with Montagne d’Or project in French Guiana Guinea Russia Kazakhstan Burkina Faso
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 Acting 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
Key Objectives 2014 Targets H1 2014 Achievements Reduce Leverage Through Effective Debt Management Continuation of Growth
♦ Organic debt reduction through positive FCF generation ♦ Effective existing portfolio management to obtain favourable terms ♦ Nordgold entered into a 5-year facility agreement with Sberbank for the amount of US$500 million ♦ Refinancing reduced a cost of debt and improved the liquidity position and debt profile ♦ First debt repayment due to be made in summer 2016. ♦ Develop pipeline of high quality greenfield and brownfield projects through focused exploration expenditure ♦ Evaluate potential purchases of premium-quality reserves to enlarge the reserve base ♦ Mining works commenced at Gross at the end of February 2014. ♦ PEA of Bouly project was completed internally, we progress to FS (will be completed in Q2 2015) ♦ 14-month drill programme commenced at Montagne d’Or in November 2013
Pay Dividends to Shareholders
♦ Nordgold has a policy of paying a dividend equivalent to 30% of profits attributable to shareholders ♦ Interim dividends for Q2 2014 of USc3.81/GDR were approved, record date is September 15, 2014 ♦ Total H1 2014 dividend is USc5.34/GDR ♦ We remain focused on delivering a dividend to
Positive Free Cash Flow Generation at All Operating Mines
♦ We are targeting positive FCF at all our operating mines in 2014 through cost, working capital and capex optimization and mining model update ♦ Consolidated AISC declined 22% YoY to US$899/oz ♦ Reached positive free cash flow of US$72.6 million ♦ Cash and cash equivalents as of June 30, 2014 were US$306.9 million
♦ Located near existing operations ♦ With gold as the primary metal ♦ Non-refractory ores ♦ Processed by a familiar to Nordgold technology ♦ Capex minimized to put into production or to significantly increase
What We Look For in Brownfield Projects
♦ 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 ♦ Possible to generate annual production at above 150 koz
What We Look For in Greenfield Projects
(1) JV with former shareholders of High River Gold (50/50)
Development projects Advanced exploration projects Early exploration projects
Delineated resource Feasibility underway or completed Trial production started in Q1 2014 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 1-2 years Production in 3-5 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
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$300 million All-in sustaining costs US$850-900 /oz
Gross – Brief Overview Development Highlights Gross 2014 pilot stage ore processing
Gross major technical challenges to overcome…
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
power and heat
consistently high recoveries in excess of 80% Gross deposit landscape
10 20 30 40 50 60 70 80 90 100 20 40 60 80 100 122 40 мм, sample 1 170 мм 700 мм 40 мм, sample 2 Irrigation period, days Recovery Au, %
Pilot stage metallurgical tests dynamics
engineering and overall study report
Location Location Burkina-Faso, 10km 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
probable future fresh rock mining (phase II)
geochemical anomalies will be 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
Montagne d’Or Project Overview
Location Location French Guiana, 115km from port of St Laurent Infrastructure Airstrip, all-season road, camp Ownership Nordgold has the right to earn 50,01% Project parameters Mine type Open pit Resources 4.0 Moz at 1.1 g/t Inferred Reserve potential 2-4 Moz Development Stage Advanced exploration In-fill drilling to convert Inferred resource into Indicated Scoping study Will be done in 1Q 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
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
CAD2.5mln, financing 2014 Pistol Bay drilling program
good gravity recovery
and some existing infrastructure on site Project location map
Prognoz Silver Project – Brief Overview
Location
Location Russia, Yakutia Infrastructure 300km winter road access
Project parameters
Ownership Nordgold - 50% Mine type Potentially underground Development stage Scoping study completed Resources 290 Moz at 600 g/t of silver in Indicated & Inferred (50^50)
Uryakh – Brief Overview
Location
Location Russia, Irkutsk region, 60km away from BAM railway Infrastructure Will require construction of all-season road
Project parameters
Mine type Underground and/or Open pit are possible Development Stage Advanced exploration Possible start-up year 2018 Resources 946 koz at 1.61 g/t inferred (WAI 2012) Reserve potential 1.5 – 2.5 Moz Scoping study 2014 - 2015 Feasibility study Will take 1-2 years
83 15 14 13 13 10 9 2 2 29 26 37 28 30 26 6 17 Polyus Randgold ABG Nordgold Polymetal IAMGOLD (1) Petropavlovsk (2) Semafo Highland Reserves Resources 150
H1 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 vs. Peers Gold Producer with a Solid Resource Base
746 652 561 476 378 362 306 120 108 Polyus Polymetal Randgold Nordgold IAMGOLD (1) ABG Petropavlovsk (2) Highland Semafo 899 905 938 1,034 1,118 n/a n/a n/a n/a Nordgold Polyus Polymetal IAMGOLD (2) ABG Petropavlovsk Randgold Semafo Highland
Source: Company information (1) Excludes Niobium (2) Excludes IRC
527 489 358 261 200 153 123 107 104 Randgold Semafo Polymetal Highland IAMGOLD (1) Petropavlovsk (2) Polyus ABG Nordgold
EV / 2014E EBITDA (x) (3) EV / Reserves ($/oz Au Eq.)
Market data as of 28 August 2014 Source: Company information, Broker research (1) Excludes Niobium (2) Excludes IRC
8,685 6,190 5,620 3,497 2,645 2,427 2,193 1,898 1,449 Randgold Polyus Semafo Polymetal Highland IAMGOLD (1) ABG Petropavlovsk (2) Nordgold 14.7 13.2 10.0 6.6 6.2 5.8 4.9 4.0 3.5 Randgold Polyus Semafo Polymetal Petropavlovsk (2) IAMGOLD (1) ABG Highland Nordgold
Nordgold is Undervalued by the Market
EV / 2013 Production ($/oz Au Eq.)
(3) EBITDA estimates as per latest available broker consensus
High Quality, Internationally Diverse Portfolio of Assets
World Class Board and Management Team, with a Demonstrated Commitment to Strong Corporate
Governance
Large JORC Resource/Reserve Base with Substantial Potential for Growth
Proven Track Record of Operational Improvements, Organic Growth and Value Creation
♦ Improving efficiencies/output at producing assets ♦ Commissioned in 2013 Bissa operating at full capacity – a case study in project development ♦ 2 development and 4 advanced exploration projects
Commitment to Delivering Dividends to Shareholders
Conservative Balance Sheet, Strong Cash Generation and Focus on Delivering Competitive Cash
Costs
GROSSLY UNDERVALUED
Nordgold Investor Relations
Valentina Bogomolova Head of IR Luna ArenA, Herikerbergweg 238 1101 CM Amsterdam Zuidoost The Netherlands T +31 20 406 4480 F +31 20 406 4555 M +7 916 474 59 96 E va.bogomolova@nordgold.com W www.nordgold.com