Construction starts on new low-cost, large-scale Gross mine in Russia

  • Large scale all-season open-pit heap leach project, located in southwestern Yakutia, Russia, adjacent to existing Neryungri mine
  • Pilot stage operation confirmed excellent operating and economic fundamentals
  • Construction will take up to two years and will require approximately US$250 million of capital investment
  • Gross will produce c. 230 thousand ounces (“koz”) of gold per year at full production for 17 years
  • First gold expected to be poured in Q1 2018

Amsterdam, Netherlands, 6 June 2016 - Nord Gold N.V. ("Nordgold" or the "Company", LSE: NORD), the internationally diversified low-cost gold producer, is pleased to announce it has started construction on its low-cost, large-scale Gross mine in Yakutia, Russia. First gold is expected to be poured in Q1 2018.

The Gross project is the result of a green field development initiative at Nordgold and successful exploration programme which identified a world-class reserve hosting 4.4 million ounces (“Moz”) of Ore Reserves and 8.5 Moz of Mineral Resources as at 31 December 2015. According to a Feasibility Study, 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.

In 2016, Nordgold will invest approximately US$125 million in construction at Gross. The project will require approximately US$250 million of total capital investment during construction.

Nordgold believes Gross is one of the most de-risked projects in the gold sector, following completion not just of the Feasibility Study, but also a two year pilot operation which confirmed the economic attractiveness of the project, even in a low gold price environment.

The Feasibility Study indicated the project’s IRR of almost 40% at a gold price of US$1,250/oz and approximately 25% at a gold price of US$1,100/oz. The two-year pilot operation, during which ore from the Gross mine was processed at the adjacent Neryungri mine, delivered recoveries at above 80% with low production costs (AISC of US$641/oz), giving us confidence in the future successful performance of the Gross mine.

The Gross mine will provide approximately 350 construction jobs over the next 24-months and 800 permanent jobs for its 17-year life span.

Nikolai Zelenski, CEO of Nordgold, said: "Gross is a financially compelling, high-return project that has been significantly de-risked through an extensive feasibility study and two-year pilot-testing phase, giving us confidence in our ability to deliver the project at a modest capital cost.

“We have already demonstrated our ability to deliver greenfield mining projects with the successful construction of our flagship Bissa mine in Burkina Faso in 2013, which fully paid back investment within 21 months of launch. We fully expect construction at Gross to be completed on schedule and within budget. The combination of Gross and our new Bouly mine in Burkina Faso where production is expected to start in the third quarter of 2016, will increase Nordgold’s production by more than 35 percent and further reduce our overall AISC. All of our development projects are very capital efficient, competitively positioned at the low end of the cost curve and we expect to generate robust returns for Nordgold shareholders.”

For further information, please contact:

Nordgold
Valentina Bogomolova
Head of IR
Tel: +7 495 644 4473
valentina.bogomolov@nordgold.com
Olga Ulyeva
Head of Media Relations
Tel: +7 495 644 4473
olga.ulyeva@nordgold.com
Powerscourt
Ian Middleton
Giles Read
Tessa Berry
Tel: +44 (0) 20 7250 1446
Press release
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CONTACTS

Olga Ulyeva


Head of Media Relations
tel.+7 495 644 44 73 #707 6632

ROMAN MEZHUEV

RECRUITMENT MANAGER
tel.+7 495 644 44 73

OLEG BAZALEEV

HEAD OF SUSTAINABLE DEVELOPMENT PROJECTS
tel.+7 495 644 4473 #707 6746