Nordgold: Profitable Growth in the Challenging Market Environment - - PowerPoint PPT Presentation
Nordgold: Profitable Growth in the Challenging Market Environment - - PowerPoint PPT Presentation
Nordgold: Profitable Growth in the Challenging Market Environment Nikolai Zelenski, CEO NORD LI (LSE) February 2015 Disclaimer Information contained in this presentation concerns Nord Gold N.V., a company organized and existing under the laws
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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 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 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 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 operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Group
- perates 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
- ther 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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Nordgold: Diversified Asset Base with Focus on Africa
Actual production in 2014
Operating Mines Developing Assets Exploration Areas Exploration Assets 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 Bouly 140E+ Koz Pistol Bay 34% 8% 20% 38%
2014 Revenue by Geography
Russia Kazakhstan Guinea Burkina Faso
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All-in sustaining costs for 9m 2014 at US$887/oz Company is among lowest cost global producers
Nordgold – a Premium Gold Mining Company
Premium Gold Mining Company
Two compelling projects ready for construction Several prospective projects in PEA/exploration phase
Low Cost Producer High Quality Pipeline
985 koz produced in 2014 6 out of 7 years company demonstrated production growth
Production Growth
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Nordgold is Low Cost Producer Compared to Peers
9m 2014 All In Sustaining Cost ($/oz Au Eq.)
754 784 844 846 887 918 926 947 963 1 023 1 030 1 031 1 063 1 111 1 138 1 183 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’13 World Gold Council published guidance on AISC metrics which is proposed to be applied
starting from Jan 2014. The general approach is: AISC = EBITDA-based TCC(1) + Sustaining CAPEX(2)
- Nordgold’s AISC was US$887/oz in 9m 2014 and US$866/oz in Q3 2014, which is one of the lowest
level compared to peers
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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
Africa has been a focal point of growth for Nordgold
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)
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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)
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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
Interim dividend for Q3
2014 of USc3.64/GDR, bringing total 9M 2014 dividend to USc8.98/GDR
Q4 2014 dividend to be
reported shortly
Proven Strategy in a Lower Price Environment
Comprehensive cost
reduction program in place at all mines
9M 2014 Consolidated
AISC of US$887/oz, representing a 21% improvement YoY
All mines generated
positive FCF in Q3 2014, 9M 2014 consolidated FCF reached US$161.4m
Reduced cost of debt
and improved liquidity and debt profile through refinancing in March 2014
Net debt on 31 Dec
2014 at US$631 m, and cash position at US$318.6 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 ♦ Continue to reduce leverage with target level Net debt/LTM EBITDA at 1.0x ♦ Start construction of Bouly or Gross ♦ Continue to invest in the pipeline
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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
- verall 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 Q1 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
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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
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Gross – Pilot Stage in Progress
Feasibility study completed in February 2014
Project demonstrated good economic efficiency with IRR above 30% at long term gold price of US$1,250/oz and above 20% 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
2.3 Mt tons of ore was mined and 1.8 Mt 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
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Gross Project - Challenges and Solutions
Gross main technical challenges to overcome…
Large but low grade deposit for heap leach technology only 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 ore
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
20 40 60 80 100 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
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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
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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
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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
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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 optimising and
managing multiple ore processing plant
Previously: Vice-President and Head of Metallurgy
- f 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
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We believe that only a socially responsible business that operates with full cooperation from all stakeholders can deliver success and long-term returns to investors.
~ US$520,000: social development programmes and donations in Burkina Faso and Guinea in 2013-2014 Lefa mine Partnership Agreement with UNICEF & Local Communities Employees’ safety is our top priority 1.23 LTIFR in 2014 Our goal – Zero Harm 19% YoY LTIFR improvement
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 Student scholarships awarding 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, tissage 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 27 January 2015
All-in sustaining costs for 9m 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/E at 6.6x
Production Growth Undervalued Relative to Peers
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Nordgold Investor Relations
Valentina Bogomolova Head of IR Luna Arena, Herikerbergweg 238 1101 CM Amsterdam Zuidoost The Netherlands M +7 916 474 59 96 va.bogomolova@nordgold.com www.nordgold.com