Amsterdam, Netherlands, July 22, 2015
Nord Gold N.V. (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified low-cost gold producer, announces a 7% increase in gold output to 507.5 thousand gold equivalent ounces (“koz”) and 4% growth in revenue to US$644.6 million in H1 2015.
Highlights Q2 2015 Q2 2014
Change, YoY Q1 2015 Change, QoQ H1 2015 H1 2014 Change, YoY
LTIFR 1.79 1.08 66% 2.95 (39%) 2.35 0.73 222%
Gold production,
koz 240.8 265.2 (9%) 266.7 (10%) 507.5 476.3 7%
Average realised gold price per ounce sold, US$/oz
1,200 1,292 (7%) 1,224 (2%) 1,213 1,295 (6%)
Revenue, US$m 289.0 342.1 (16%) 355.6 (19%) 644.6 617.0 4%
Gold production in H1 2015 increased by 7% year-on-year (“YoY”) to 507.5 koz mainly due to higher ore mined and processed volumes, as well as higher recovery.
In H1 2015, production increased at Bissa, Lefa, Berezitovy, Neryungri, Suzdal and one of the Buryatzoloto underground mines, Irokinda.
In Q2 2015, gold output was 240.8 koz. The prior quarters’ refined gold production of 266.7 koz included 28.5 koz of gold doré produced but not refined at the end of 2014, which was refined in Q1 2015.
Based on the robust operating performance delivered in H1 2015, the Company is targeting the upper end of the full year 2015 production guidance range of 925 – 985 koz.
Lost time injury frequency rate (LTIFR) for Q2 2015 was 1.79, an improvement of 39% compared with Q1 2015 (2.95), but higher than in Q2 2014 (1.08).
The average realised gold price in H1 2015 was US$1,213 per oz compared, with US$1,295 per oz in H1 2014. In Q2 2015, the average realised gold price was US$1,200 per oz, compared with US$1,292 per oz for Q2 2014 and US$1,224 per oz for Q1 2015.
Despite a lower gold price, revenue in H1 2015 increased by 4% to US$644.6 million compared with US$617.0 million in H1 2014 due to higher gold production and sales volumes, which included 24.5 koz of refined gold and 28.5 koz of gold doré, which were produced in the end of 2014 and sold in Q1 2015.
Revenue in Q2 2015 was US$289.0 million.
Unaudited net debt at June 30, 2015 was approximately US$546.0 million compared with US$528.7 million at the end of Q1 2015 and US$627.3 million at the end of 2014, reflecting positive free cash flow generated and dividend payment of US$24.2 million in Q2 2015 on the back of Q1 2015 results.
During the period, Nordgold has also further strengthened its operating team with the appointment of Michael Monaghan as Mining Director, from Akara Resources, subsidiary of Kingsgate Consolidated.
Message from the CEO
“I am pleased to report another strong period of operational performance. We have remained absolutely committed to our strategy – a continued focus on costs, operational efficiencies and production improvements which have enabled us to consistently deliver robust free cash flow. It is this focus on operational delivery that gives us the confidence in achieving the higher end of our full year product target range of 925-985koz.
“Looking ahead, we benefit from three well defined exciting growth projects that will require modest development capex. Two of them, Bouly and Gross, are extensions to existing mine sites and are ready for construction. We will progress these projects towards production, while remaining faithful to our strategy: keeping a very close control over costs, and continuing to drive further operational improvements. I am confident in the outlook for the Company and our ability to generate consistent growth and sustainable returns for our shareholders.”
Nikolai Zelenski, Chief Executive Officer, Nordgold
Development Highlights
Bouly
Bouly is a development project located 5 km from Nordgold’s active Bissa mine in Burkina Faso. The project represents a large low-grade gold mineralisation, favourable for heap leach treatment. As a result of the 2013-2014 intensive exploration programmes, Bouly Mineral Resources tripled to 3.5 Moz, and maiden Ore Reserves of 1.3 Moz were declared following the completion of a Feasibility Study in Q1 2015.
The Feasibility Study demonstrated excellent economic fundamentals for the project, according to which Bouly’s IRR is approximately 26% at a gold price of US$1,100 per oz and 40% at a gold price of US$1,250 per oz.
Bouly’s average annual production will be approximately 120 koz over a life of mine of 10 years.
Nordgold will expand the Bissa mine with the construction of a heap leach operation at the nearby Bouly project, which is expected to commence production in 2016.
The Company currently continues to progress the project towards obtaining its construction permit in order to start construction works in H2 2015.
Gross
Gross is an all-season open-pit heap leach project located in southwestern Yakutia, Russia, 4 km to the east of the Neryungri mine.
Nordgold updated the Gross Feasibility Study at the beginning of 2015, which confirmed the economic viability of the project giving an IRR of approximately 25% at a long-term gold price of US$1,100/oz and an IRR of almost 40% at a long-term gold price of US$1,250/oz.
Gross is expected to mine approximately 12 million tonnes of ore and to produce approximately 230 koz of gold per year at full production for 17 years.
Nordgold will invest approximately US$8.5 million in detailed design works in 2015, while continuing the Gross pilot stage with the aim of producing approximately 35 koz of gold this year.
As part of the pilot stage, in H1 2015 Gross’ run of mine amounted to 2.5 million tonnes, with 1.6 million tonnes of waste mined and 896 thousand tonnes of ore mined. The mined ore is being processed at the Neryungri mine leach pads. This pilot stage production is delivering recoveries at above 80% and low production costs, which provides strong confidence in the successful performance of Gross project.
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