What is Nordgold's business?
Nordgold is the internationally diversified gold producer established in 2007. We have nine active mines, one project in construction phase (Gross in Russia), several prospective projects in feasibility study, advanced exploration phase and a diverse portfolio of early-stage exploration projects and licences in Burkina Faso, Russia, French Guiana and Canada.
When was Nordgold established?
Nordgold established in 2007 as Severstal Gold, a gold producing subsidiary of Severstal the Russian steel company owned by Alexey Mordashov. We began to create the gold business through acquisitions and organic investment. In early 2012, Nordgold separated from Serverstal and became a publically listed company via the listing of GDRs (Global Depositary Receipts) on the London Stock Exchange. On 16 March 2017 trading in the Company’s GDRs on the Main Market of the London Stock Exchange and the listing of the GDRs on the Official List of the Financial Conduct Authority were cancelled due to low trading volumes and general lack of liquidity in the GDRs. A key objective for the de-listing was to eliminate the public market value benchmark, which did not fully reflect the fundamental value of the Company and to consider re-listing in the future, subject to market conditions.
How fast has Nordgold grown?
We have expanded rapidly through both acquisitions and organic growth. Our gold production has increased from approximately 21 koz in 2007 to 869 koz in 2016. We have also delivered strong financial growth. In 2016, our normalised normalised net profit attributable to shareholders increased by 14% to US$223.1 million in 2016. This enabled us to increase returns to shareholders in a form of dividends to US$66.9 million in 2016 from US$58.5 million in 2015. We also reduced our net debt by US$79 million to US$505.4 million and maintained EBITDA margin close to the 2015 level at 45.4%.
What is your strategy?
Nordgold has a strategy designed for a volatile price environment:
- continue to generate strong free cash flow at all operating mines.
- reduce leverage through effective debt management.
- consistent shareholder returns.
- maintaning growth.
What is your key development project?
- Gross is currently Nordgold’s key development asset. The deposit is located 4 km from Nordgold’s existing Neryungri mine in Russia, enabling the Company to benefit from economies of scale, an expert knowledge of the local geology and shared expertise from Neryungri’s management team. Nordgold started Gross construction in early June 2016 with production expected to start in H1 2018.
- Nordgold also invests in development of the Montagne d’Or project in French Guiana. The NI 43-101 compliant Bankable Feasibility Study for Montagne d’Or was finalised in March 2017.
How big are your reserves and resources?
At 31 December 2016, our JORC resources were 31.5 moz and reserves - 14.9 Moz with life of approximately 18 years and strong pipeline of development projects.
Are you considering expanding into other countries?
We are continually reviewing our strategic options, both in our existing regions and in other countries. Making value accretive acquisitions is one of the pillars of our strategy.
Our geographical spread of mines and countries reduces our risk and increases our security of production. It also allows us to identify more opportunities, create synergies across our sites and transfer technology and people around the business.
What is the background of your senior management?
Our senior management is made up of highly qualified and experienced professionals, with gold mining, general mining, operational, consulting and financial backgrounds.
The management team has led Nordgold since the first acquisitions in 2007 and has a proven track record of executing acquisitions and increasing their efficiency.
From 2013, we have added to our team very strong professionals with the operational experience and attitudes in developing mines in different parts of the world.
Our team has in-depth knowledge and expertise across the full project development cycle from exploration to construction, operation and optimisation, and all types of gold mining operations.
What is your approach to sustainability?
The health and safety of our employees, respect for the environment and active engagement with local communities are fundamental to our success. We also believe we have a moral obligation to work in the right way.
We want to operate to the highest standards. This means that we aim to comply with either international best practice or national laws and practices, whichever sets the higher standards. We do this by maintaining and improving our existing health, safety and environmental systems and programmes and aligning them with these standards.
We also look for ways that we can help our communities with sustainable projects, which will continue to benefit them after our mines are gone.
What is your approach to corporate governance?
Nordgold is committed to transparency and high standards of corporate governance. The UK Corporate Governance Code (the Code) sets out principles of good corporate governance and Code provisions which are applicable to premium listed companies in the UK. As a non premium listed company, Nordgold is not subject to the Code, however we recognise the value of applying the principles of the Code and do so where practicable.
What is your approach to human resources?
We are committed to developing our employees so that we have the right mix of skills as Nordgold grows, and they are able to fulfil their potential.
We look to employ local people where possible. This is both good business practice, due to the cost of employing expatriates, and helps to develop the skills base and economies of the regions where we work. We do employ expatriates where they have the best skills and are able to train our people and pass on their knowledge.
Each of the countries we work in has its own laws, customs and lifestyles. This means that we take a flexible and pragmatic approach to managing our people. At the minimum, we always ensure that we fully understand and comply with our legal obligations to our employees.
Nordgold’s dynamic culture and potential for growth help us to attract the people we need. We aim to pay salaries that are in line with or ahead of the market, and use bonuses and other retention payments to incentivise and retain key staff. Our policy is to be clear and transparent about remuneration.