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