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Profitable Growth in the Challenging Market Environment Igor - - PowerPoint PPT Presentation

Nordgold: Profitable Growth in the Challenging Market Environment Igor Klimanov, Development Projects Director / NORD LI (LSE) November 2015 Disclaimer Information contained in this presentation concerns statements are not guarantees of future


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Nordgold: Profitable Growth in the Challenging Market Environment

November 2015 Igor Klimanov, Development Projects Director / NORD LI (LSE)

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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

  • r other similar expressions. These forward-looking

statements include matters that are not historical facts and statements regarding the Group’s intentions, beliefs

  • r 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

  • r 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

  • r given by or on behalf of the Company or any of its

shareholders, directors, officers or employees or any

  • ther 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

  • r 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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Nordgold: Diversified Asset Base Across 4 Continents and 6 Countries

38% 7% 23% 32% Revenue by Geography 9m 2015

Russia Kazakhstan Guinea Burkina Faso

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Nordgold – a Premium Gold Mining Company

 All-in sustaining costs for 9m 2015 at US$759/oz  FY 2015 AISC guidance decreased to US$750-800/oz

Premium Gold Mining Company

 Two compelling projects in engineering/construction  Several prospective projects in FS and PEA/exploration phase

Low Cost Producer High Quality Pipeline

 985 koz produced in 2014  6 out of 7 years company demonstrated production growth with CAGR of 31% since 2008  Bissa mine was constructed ahead of time and on budget  Track record of surpassing guidance of production and costs

Production Growth Proven Track Record of Delivering

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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) Free Cash Flow for 9m 2015 reached US$150.3m

200 400 600 800 1,000 1,200 1,400 5,000 10,000 15,000

Nordgold

Gold production, koz

Nordgold is a LOW COST Producer Compared to Peers

722

H1 2015 All-In Sustaining Cost

(US$/oz Au Eq.)

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200 400 600 800 1,000 1,200 2008 2009 2010 2011 2012 2013 2014

CAGR: 31%

(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

Track Record of Strong and Consistent GROWTH

193 koz (1) 534 koz (2) 589 koz (3) 754 koz (4) 717 koz (5) 924 koz (6) 985 koz (7)

Dynamic Growth 6 out of 7 Years

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Robust PIPELINE to Underpin Future Growth

(1) JV with a partner (50/50)

Development projects Advanced exploration projects Early exploration projects

Feasibility study completed In detailed engineering or construction Pilot production ongoing at Gross Significant drilling performed Established resources Scoping/PEA completed or underway Potential resource identified Target delineation Production in 3-6 years Production in 6-8 years Production in 1-3 years Goengo

Burkina Faso

Yeou

Burkina Faso

Nerchinsk

Russia

Uryakh

Russia

Prognoz(1)

Russia

Montagne d’Or

French Guiana

Kangarce

Burkina Faso

Yimi

Burkina Faso

Tanzaka

Burkina Faso

Zinigma

Burkina Faso

Pistol Bay

Canada

Banora Corridor

Guinea

Lefa Corridor

Guinea

Gross

Russia

Bouly

Burkina Faso 8.8 Moz resources 4.5 Moz reserves

Brownfield / Satellite Greenfield / Standalone

1.3 Moz reserves

Nordgold Pipeline is Robust and Balanced with Early Stage and Advanced Projects

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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

✓ ✓

2014 AISC US$1,050 - 1,100 / oz (1) US$887 / 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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Objectives

Positive Free Cash Flow Generation at All Operating Mines Reduce Leverage Through Effective Debt Management Pay Dividends to Shareholders Continuation of Growth

Achievements 2015 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 30.09.2015

at US$573.3m, cash position at US$378.6m

 Net debt/ LTM EBITDA

as of the end 9m 2015 was 1.1x

 Feasibility Study at

Bouly completed in Q2

  • 2015. Construction
  • ngoing

 Pilot stage operation at

Gross ongoing, construction will start in early 2016

 Montagne d’Or FS

started in Q4 2015

♦ Continue to generate efficiencies ♦ Further upside for FCF generation in 2015 ♦ Maintain dividend payout ratio of 30%

  • f net profit

attributable to shareholders ♦ Proceed with Bouly and Gross construction ♦ Continue to invest in the pipeline ♦ Continue to reduce leverage with target level Net debt/LTM EBITDA in the range 0.5-1.0x

Proven Strategy in a Lower Price Environment

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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 at M,I&I Resources

Straightforward heap leach metallurgy with superior gold recovery at above 83%

Low cost mining at strip ratio 0.7 t/t

Located within 5 km from Nordgold’s operating Bissa mine with key infrastructure already 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 Stage Under construction Start-up year H2 2016 Estimated capex US$140-150 million Annual production 118 koz, LoM 10 years LoM average TCC & AISC US$665/oz & US$734/oz

Bouly – Brief Overview

Project Summary Bouly Deposit

Feasibility Study with strong project economics with IRR 26% at gold price US$1,100/oz

Possibility of Life of Mine extension through processing of fresh rock ore resources

US$57.7 million invested in 9m 2015, all major engineering, drafting and procurement activities were completed by the end of Q3 2015

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Gross – Fully Permitted and Ready for Construction

 World class ore body: 4.5 Moz at 0.73 g/t at P&P Reserves

and 8.6 Moz at 0.67 g/t 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

 Feasibility study indicates very strong project economics with

IRR above 25% at gold price US$1,100/oz

Location Location Russia, Yakutia Infrastructure 5 km from Neryungri operating mine, access 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 220 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 Pilot Stage Projects Summary

 The successful pilot production confirms the project

recovery, low cost and robust economics. Decreases execution risk

 Detailed design work has been commenced in Q3 2015,

Nordgold will invest approximately US$8.5 million in H2 2015

 Construction has been approved by the Board to start in

early 2016 with 2016 capex of US$125 million. Production starting up to two years later

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Montagne d’Or - High Quality Project in South America

Montagne d’Or Project Overview

Location

Location French Guiana, 115 km 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 Possible start-up year 2020 Average production 250+ koz Development Stage Feasibility Study is underway, to be completed by Q1 2017

Project Summary

 World-class high-grade ore body: 3.8 Moz at 2.14 g/t of in-pit at

Indicated and Inferred Resources

 Low 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

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

 Pre-feasibility Study finalized in June, 2015 and

demonstrated positive economic data with CIL technology and production at 273koz pa in the first 10 years

 Preliminary ESIA were completed in Q1 2015, completion of

full ESIA is expected by Q4 2016

 In October Lycopodium won the tender to complete

Feasibility Study, will be delivered in Q4 2016

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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

 Northquest (TSX-V: NQ) is a 100% owner of Pistol Bay project  Nordgold holds a 52.3% stake in Northquest, financing Pistol Bay project  Promising in-house resource estimate based on drilling results  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 that the gold is recoverable through standard gravity and CIL methods

 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 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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Nordgold Generates Superior Dividend Yield

Market data as of 31 December 2014. Source: FactSet, Company fillings.

Nordgold’s Dividend Yield Among the Highest in the Industry (2014)

 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 9m 2015 Nordgold has declared total dividend at

$US14.02 cents per share

 In February 2015, BoD approved GDR/share buyback

programme with max GDRs amount at 19 million, max purchase price US$4/GDR and max purchase sum at US$30 million

 Nordgold has purchased a total of 10,094,104 GDRs for

a total amount of US$28.8 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

  • 0.8%

0.9% 1.1% 1.2% 1.9% 4.0% 6.9% 8.0% 14.3% IAMGold Petropavlovsk Semafo AngloGold Gold Fields Randgold Acacia Newmont Barrick Polymetal Nordgold Polyus Highland Gold

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Nordgold – a Premium Gold Mining Company

 All-in sustaining costs for 9m 2015 at US$759/oz  FY 2015 AISC guidance decreased to US$750-800/oz

Premium Gold Mining Company

 Two compelling projects in engineering/construction  Several prospective projects in FS and PEA/exploration phase

Low Cost Producer High Quality Pipeline

 985 koz produced in 2014  6 out of 7 years company demonstrated production growth with CAGR of 31% since 2008  Bissa mine was constructed ahead of time and on budget  Track record of surpassing guidance of production and costs

Production Growth Proven Track Record of Delivering

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Thank you for your attention

For further information on Nordgold please visit www.nordgold.com