Since it was established in 2007, Nordgold has evolved from a high growth emerging markets gold company to a best in class internationally diversified nearly million ounce gold producer
Nordgold has established a reputation for financial delivery and operational excellence, illustrated by record EBITDA of US$520 million and operating cash flow of US$417.9 million in 2015, despite lower gold price.
In order to drive shareholder value, Nordgold plans to continue to deliver on its strategic initiatives, designed to achieve production and profit growth:
Continue to generate strong free cash flow
- Nordgold will continue to improve operating efficiency and look for further upside in free cash flow generation at all its mines in 2016.
- Nordgold delivered strong free cash flow of US$158 million in 2015 while investing in construction of new low-cost Bouly mine and despite a lower gold price, highlighting the high quality of the Company’s mines.
- A combination of Nordgold’s flexible capex, estimated to be US$370 million in 2015 (including construction and ramp-up of the Bouly mine in Burkina Faso, as well as construction of the Gross mine in Russia), a reduction in general and administrative expenses, improvements in operational efficiency, as well as the on-going implementation of Business System of Nordgold, which is expected to add US$48 million to 2016 EBITDA, are keys to ensuring the Company remains focused on costs.
- Nordgold’s efficiency and Business System programmes are showing positive results with improved drill, blast and mining practices, reduced dilution, optimised mills relining and modernisation of processing circuits, as well as improved labour productivity and mobile equipment maintenance, while the Company has also successfully reduced consumption rate of spare parts, fuel and energy, staff costs and administrative expenses.
- Nordgold has also further strengthened its senior operational management team, making new hires with proven expertise. This is expected to help Nordgold to further progress with its on-going efficiency improvement initiatives.
Effective leverage management
- 2015 net debt reduced by 7% to US$584.0 million reflecting strong free cash flow.
- Nordgold leverage was at 1.1x Net debt/LTM EBITDA as of December 31, 2015.
- Nordgold takes a proactive approach to managing its debt through effective portfolio management to obtain more favorable terms wherever possible.
Consistent shareholder returns
- In November 2013 Nordgold introduced a quarterly interim dividend payment. The purpose of this new dividend policy is to deliver more frequent dividend payments to shareholders.
- The current dividend payout ratio is 30% of net profit attributable to shareholders.
- The total dividend for four quarters of 2015 was 15.61 US cents per share or GDR and the total pay-out amounted to US$58.5 million compared with 10.31 US cents per share or GDR and the total pay-out of US$39.0 million for 2014.
- Nordgold has no limitation from bond- and debt holders on the dividend payments.
- Nordgold returned US$29.3 million to its shareholders through 2015 buyback programme. The 2016 buyback programme for a maximum total amount of US$15 million is approved by the Board.
Deliver profitable growth
- Nordgold has an extensive international pipeline of low cost development projects and a proven track record of greenfield development. Bissa mine has fully paid back the investment of US$250 million within 21 months after launch in January 2013.
- Nordgold will seek to develop the existing pipeline of high quality greenfield and brownfield projects through carefully selected investments.
- Bouly is a development project located 5 km from Nordgold’s Bissa mine in Burkina Faso. Nordgold completed construction of its new low-cost Bouly mine on schedule in 13 months and under budget. The heap leach operation was launched in September 2016.
- Gross, located in southwestern Yakutia, Russia, is another development project. 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. The project is fully permitted, which enables Nordgold to progress it towards construction. Nordgold started Gross construction in early June 2016 with production expected to start in Q1 2018.
- Nordgold is also progressing the Montagne d’Or project in French Guiana. Finalised in 2015, the Preliminary Economic Assessment for the Montagne d’Or project in French Guiana demonstrated positive economic data and Nordgold is therefore looking forward to completing a feasibility study in Q4 2016 to de-risk the project and further improve its economics.
- Following positive results from the exploration programme at Pistol Bay in 2015, which confirmed its potential of being a high quality deposit of substantial scale with high grade ore, a moderate stripping ratio and excellent metallurgy, Nordgold consolidated its stake in Northquest (owner of the Pistol Bay project) in October 2016.
- To supplement the organic growth pipeline, Nordgold will also seek to capitalise on other opportunities through the evaluation of potential purchases of premium-quality reserves and resources, which comply with our project criteria, to further enhance our reserve base.