Nordgold Robustly Positioned for Cash Flow and Growth Nikolai - - PowerPoint PPT Presentation

nordgold robustly positioned for cash flow and growth
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Nordgold Robustly Positioned for Cash Flow and Growth Nikolai - - PowerPoint PPT Presentation

Nordgold Robustly Positioned for Cash Flow and Growth Nikolai Zelenski, CEO February 2014 Disclaimer Information contained in this presentation concerns Nord Gold N.V., a company organized and existing under the laws of Netherlands (the


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Nordgold Robustly Positioned for Cash Flow and Growth Nikolai Zelenski, CEO

February 2014

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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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2013 Key Highlights

 Leading emerging markets gold producer with

  • perations in Russia, Kazakhstan, Burkina Faso and

Guinea

 Diversified asset portfolio: operating 9 producing

mines, 1 large-scale development project and 5 advanced exploration projects

 Large JORC resource base, exceeding 34.7 Moz

gold-equivalent (1), and reserves at 12.6 Moz with life

  • f 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

introduced the quarterly interim dividend payment with payout ratio at 30%

 London Stock Exchange listed GDR (ticker: NORD)

with 14.6% free float

(1) Total resources (measured, indicated and inferred) including silver resources (2) Normalised EBITDA is presented / used, before year-end adjustments

Nordgold at a Glance

924koz Gold Production, FY13 TCC US$844/oz AISC US$1,071/oz TCC & AISC, 9m13 US$321M(2) 34% EBITDA & Margin, 9m13 15% Production CAGR 2012 – 2015e

Russia Kazakhstan Guinea Burkina Faso

34% 9% 18% 39%

2013 Revenue by Geography

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Operating Mines Developing Assets Exploration Areas

Nordgold: Diversified Asset Base

(1) Actual production in 2013

Suzdal 81 Koz Taparko 108 Koz Lefa 163 Koz Bissa 254 Koz Aprelkovo 33 Koz Neryungri 67 Koz Gross 150E+ Koz Berezitovy 120 Koz Buryatzoloto 99 Koz Montagne d’Or Exploration Assets

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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

History of Operations and Development

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

  • ptimisation and

substantial growth of resource base  More than doubled the resource base to 22.7 Moz  Reached c. 50% production

  • utside Russia

 Growth in reserves by more than 50%  Consolidation of 100% of High River Gold  A year of consolidation and efficiency improvement

Peer-leading track record of dynamic growth

2012

Production in 2014 is expected to be in the range of 870 – 920 koz

 Significant growth of gold production

2013

 Record gold production in 4Q 2013  Launch of world class Bissa mine  Entered South America with Montagne d’Or project in French Guiana Guinea Russia Kazakhstan Burkina Faso

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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  CFO of Nordgold since its formation in

late 2007

 At OAO Severstal since 2005 as Head

  • f Taxes at Severstal Mining division

 Previously at audit and consulting group

BDO Unicon, held various financial management positions in manufacturing industry

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

Sergey Zinkovich Chief Financial Officer

 Joined Nordgold in August 2013  Over 10 years of experience in

  • ptimising 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

  • ver 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

Hired in 2013

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Key Objectives 2013 Targets 2013 Achievements

Clear and Achievable Production Targets Improvements in Production Efficiency Focus on Financial Performance Continuation of Organic Growth

2013 Key Objectives and Achievements

♦ Production of 770-850koz in gold equivalent ounces ♦ 2013 production was 924koz ♦ Launch and Ramp up of Bissa: 2013 production target 100koz ♦ Turnaround of underperforming Lefa and Buryatzoloto mines ♦ Continue to implement Business System of Nordgold (BSN) efficiency program ♦ 2013 output at Bissa exceeded FY 2013 target, produced 254koz ♦ Sustainable improvement in head grade achieved at Lefa and Buryatzoloto. Lefa production was +29% h-o- h in H2 ♦ We estimate the overall effect of BSN in FY2013 at more than $80mln in efficiency gains ♦ Demonstrate revenue growth ♦ Improved EBITDA and operating cash flows ♦ Control cash costs ♦ Pay dividends to shareholders ♦ 2013 revenue increased by 6% YoY despite lower gold price (-18% YoY) ♦ EBITDA margin was 34.1% and over $200m of OCF generated in 9m 2013 ♦ 9m 2013 TCC improved to $844/oz, ♦ Q3 2013 interim dividends at USc2.38/GDR, total 9m2013 dividends at USc6.43/GDR was paid. ♦ Replenish mined out reserves and increase resources through exploration ♦ First gold at Gross ♦ Identification of new mine candidates ♦ Reserve update published in April 2013 with stable reserves and resources upgraded by 12% ♦ Gross remains our main development project and

  • n track first gold in H1 2014

♦ Advancement of exploration pipeline. Addition of Montagne d’Or project

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Bissa Success – Launch of a World Class Mine

Brief Overview Key Milestones Achieved Mine outlook

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 Start-up January 2013 Plant Capacity 3.5 Mtpa 2013 production 254 koz Proven & probable reserves 1,863 koz at 1.74 g/t(1)(3) M + I + I resources 5,066 koz at 1.13 g/t(1)(3) 9 months 2013 total cash costs US$463/oz

(1) Based on WAI/CPR (2) Nordgold data (3) Management estimates (4) Based on LT gold price USD1,500/oz (5) 2013 expected costs based on CPR.

One of the most efficiently constructed project in the industry, capital intensity is only US$1,000 of capex per oz

  • f gold produced

Industrial production reached on the first month of operation

Current Life-of Mine - 10 years

Significant reserve upside through resource conversion, extension of flanks and addition of satellite deposits

In-fill drilling indicates upside in reserve grade and tons. 2013 geological model positive reconciliation has been at above 40% Jun 2010 Jul 2011 Sep 2011 Jan 2013 2013

Feasibility study completed Mining lease

  • btained

Construction started First gold poured; construction took

  • nly 15 months

Mine operates at full capacity; 2013 gold

  • utput was 254.3 koz.

Total design and construction capex – $250 million

Bissa mine

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Defining Our Strategy for a Lower Price Environment

♦ Despite significant gold price decline Nordgold operations remained solidly FCF-positive 2013 ♦ We target all our operating mines to become FCF positive in 2014 through cost, working capital, and capex optimization

Positive Free Cash Flow Generation at All Operating Mines

♦ Nordgold distributes dividends quarterly and USc6.43/GDR was paid in the first three quarters of 2013 ♦ Current dividend payout ratio is 30% of net profit attributable to shareholders

Pay Dividends to Shareholders

♦ Organic debt reduction through positive FCF generation ♦ Effective existing portfolio management to obtain favourable terms

Reduce Leverage Through Effective Debt Management

♦ Develop our existing pipeline of high quality greenfield and brownfield projects through focused exploration expenditure ♦ Evaluate potential purchases of premium-quality reserves to further enhance the reserve base

Continuation of Growth

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Nordgold: Further Growth Potential From Exploration

(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 Production expected in H1 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

Gross

Russia

13.3Moz resources 3.6Moz reserves

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

Montange d’Or

French Guiana

Bouly

Burkina Faso

Banora Corridor

Guinea

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Key Exploration Assets - Brownfields

Gross – Brief Overview

Location Country Russia Location Yakutiya, 5 km away from Neryungri- Metallic deposit Infrastructure Access by an all-season road Project parameters Mine type Open pit Technology Heap Leach Trial production H1 2014 Mining rate 12 Mtpa Peak production Up to 200 koz Proven & probable reserves 3,600 koz at 0.56 g/t M + I + I resources 13,317 koz at 0.56 g/t Feasibility study To be approved by the Board in Q1 2014, the reserves and head grade are updated

Bouly – Brief Overview

Location Country Burkina-Faso Location 10km east from Bissa mine Infrastructure Bissa infrastructure is available to support Bouly Project parameters Mine type Open pit Technology Heap leach Possible start-up year 2016-2017 Development stage Scoping study Resources 1 Moz at 0.75 g/t Indicated & Inferred Reserve potential 2-3 Moz at 0.75 g/t for open pit Scoping study 2014

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Key Exploration Assets - Greenfields

Prognoz Silver Project – Brief Overview

Location Country Russia Location Yakutia Infrastructure 300km winter road access Project parameters Ownership Nordgold - 50% Mine type Potentially underground Development stage Scoping study completed Resources 5,860 koz at 11.8 g/t Indicated & Inferred (50^50) in GE Reserve potential 5,000 koz

Uryakh – Brief Overview

Location Country Russia Location 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 Feasibility study Will take 1-2 years

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Montagne d’Or - New High Quality Project

Montagne d’Or Project Overview

Location Country French Guiana Location 115km from port of St Laurent Infrastructure Airstrip; all-season road Ownership Nordgold has the right to earn 50,01% Project parameters Mine type Open pit Development Stage Advanced exploration In-fill drilling to convert Inferred resource into Indicated; will be done in Q4 2013 – Q1 2014 Resources 4.2 Moz at 2.2 g/t Inferred (Coffey Mining, Nov 2012) Reserve potential 2-4 Moz Scoping study Will be done in 2014 Bankable Feasibility study Will be completed in 2016

Montagne d’Or Gold Deposit

Project Highlights

Large high grade deposit in politically stable jurisdiction, geologically similar to West Africa

Mining optimization shows good potential for low to moderate strip ratio high grade open pit operation

Significant exploration upside at the flanks of the deposit, silver by- product is not yet taken into account

Mining concession valid till 2019, renewable for 25 years

Potential to connect to the EDF power grid

No settlements in the vicinity of the deposit, low risk of community relation issues

Deposit location and mine map

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Nordgold New Project Criteria

♦ Located in emerging market geographies ♦ With gold as the primary metal ♦ Non-refractory ores ♦ Processed by a familiar to Nordgold technology ♦ Capex minimised through synergies with existing operational and logistic infrastructure

What We Look For in Brownfield Projects

♦ Located in emerging market geographies ♦ With gold as the primary metal ♦ Non-refractory ores ♦ Not less than 2Moz of reserve potential with grade at above 2g/t ♦ Possible to generate annual production at above 150 kOz

What We Look For in Greenfield Projects

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Health and Safety

1.51 LTIFR in 2013 45% LTIFR reduction in 2010- 2013

We established an extensive health, safety, and risk-management system to:

  • Employee safety is our top priority
  • Preventing incidents and injuries benefits everyone
  • Every worker is responsible for observing safety rules
  • Our management is directly responsible for preventing incidents

and injuries

  • Health and safety targets must be clear to all employees

1 Understand the risks 2 Implement risk mitigation processes 3 Learn from incidents 4 Encourage appropriate behavior

More than 10,000 employees

Respect for people Trust and co-operation Safety Professionalism

Our goal – Zero Harm

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Socially Responsible Approach to Gold Mining

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. We are investing in a

number of social and community development initiatives in the regions of our operations.

Education: - organization of social and cultural programmes

  • building and renovation of schools
  • construction of libraries
  • awarding the scholarships for students

Health: - health support for local population

  • new clinics and health centers construction
  • sponsoring of new medical equipment and ambulance service
  • actively support anti-malaria program in West Africa

Economic empowerment: - initiatives to support local communities

  • promotion of opportunities for local people to launch and manage successful

enterprises

  • support farming and ranching
  • help local people in case of natural disasters (floods, poor crop, etc)
  • drinking water supply for residents and water-pumping equipment for local farmers

in West Africa

Key Areas:

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12.8x 8.5x 4.6x 4.2x 3.3x Randgold Semafo ABG IAMGOLD Nordgold 925 924 835 642 208 Randgold (1) Nordgold IAMGOLD ABG Semafo (2) 17 16 13 11 2 32 27 37 30 6 ABG Randgold Nordgold IAMGOLD Semafo Reserves Resources

Nordgold Leads its Peer Group Operationally, but is Undervalued by the Market

2013A Production (koz Au) 9M 2013 All In Sustaining Cost (US$ / oz )

1,071 1,231 1,429 n/a n/a Nordgold IAMGOLD ABG Randgold Semafo

Reserves & Resources (Moz Au)

Source: Company information. Market data as of 27 January 2014 (1) Based on latest Company guidance (2013A production not available) (2) Includes 49.2 koz production from discontinued operations (3) EBITDA estimates as per latest available broker consensus

EV / 2013A Production (US$ / oz) EV / Reserves (US$ / oz) EV / 2013E EBITDA (x) (3)

7,056 3,986 2,049 1,889 1,495 Randgold Semafo IAMGOLD ABG Nordgold 415 408 156 106 73 Semafo Randgold IAMGOLD Nordgold ABG

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Nordgold: Investment Proposition

High Quality, Internationally Diverse Portfolio of Assets

World Class Board and Management Team, with a Demonstrated Commitment to Best Corporate Governance Standards Large JORC Resource/Reserve Base with Strong Pipeline of Development Projects Proven Track Record of Operational Improvements, Organic Growth and Value Creation

Improving efficiencies/output at producing assets

Recently commissioned Bissa now operating at full capacity – a case study in mine development

Gross project on track to produce first gold in H1 2014 Commitment to Delivering Dividends to Shareholders Strong Free Cash Flow Generation and Focus on Delivering Competitive Cash Costs

    

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Contact

Nordgold Investor Relations

Valentina Bogomolova IR Manager Luna ArenA, Herikerbergweg 238 1101 CM Amsterdam Zuidoost The Netherlands M +7 916 474 59 96 E va.bogomolova@nordgold.com W www.nordgold.com