Nordgold Reports Q2 and H1 2015 Financial and Operating Results

Amsterdam, Netherlands, August 28, 2015. Nord Gold N.V. (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified low-cost gold producer, announces a 36% increase in EBITDA (1) (2) to US$332.1 million and a 20% decrease of all-in sustaining costs (1) ("AISC") to US$722 per ounce in H1 2015.

H1 2015 Highlights

  • Gold production up 7% year-on-year (“YoY”) to 507.5 thousand gold equivalent ounces (“koz”).
  • EBITDA up 36% to US$332.1 million. EBITDA margin increased to 51.9%.
  • The lower end of the global cost curve: total cash costs (1) (“TCC”) down 21% to US$558/oz and AISC down 20% to US$722/oz.
  • Full year 2015 AISC guidance decreased further to US$750/oz — US$800/oz (from US$800/oz — US$850/oz).
  • Operating cash flow up 89% to US$252.1 million and free cash flow (1) up 94% to US$141.2 million.
  • The Board has declared a dividend of 4.12 US cents per share / GDR for Q2 2015, a total of US$15.4 million

Operating Highlights

  • Gold production in H1 2015 increased by 7% YoY to 507.5 koz mainly due to increased volumes of ore mined and processed, 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 previous quarter’s 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. Similarly, Q2 2014 refined gold production of 265.2 koz included 20.1 koz of gold doré produced at Suzdal but not refined in Q1 2014, which was refined in Q2 2014.
  • Nordgold is on track to reach the upper end of the full year (“FY”) 2015 gold production guidance range of 925 — 985 koz.

Financial Highlights

  • The average realised gold price in H1 2015 was US$1,205/oz (2) compared with US$1,295/oz in H1 2014. In Q2 2015, the average realised gold price was US$1,200/oz compared with US$1,292/oz for Q2 2014 and US$1,210/oz for Q1 2015.
  • Despite a lower gold price, revenue in H1 2015 increased by 4% to US$640.3 million (2) 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.
  • EBITDA in H1 2015 increased by 36% YoY to US$332.1 million mainly driven by improved operational efficiencies, higher gold sales volumes and lower costs, as well as the depreciation of local currencies in countries where Nordgold operates, against the US dollar, which more than offset decreased gold prices. EBITDA margin in H1 2015 increased to 51.9% from 39.7% in H1 2014. Q2 2015 EBITDA was US$146.6 million, up 4% YoY.
  • Net profit increased by 83% YoY to US$134.7 million in H1 2015. Net profit for Q2 2015 was US$50.4 million, up 3% YoY.
  • Normalised net profit attributable to shareholders (3) in H1 2015 almost doubled YoY to US$132.1 million from US$67.3 million in H1 2014. In Q2 2015, normalised net profit attributable to shareholders increased to US$51.4 million from US$48.0 million in Q2 2014.
  • Nordgold maintained its position within the industry lowest cost quartile with consolidated AISC down by 20% YoY to US$722/oz in H1 2015. In Q2 2015, AISC decreased by 15% YoY to US$769/oz with the most significant reductions recorded at Lefa (down 36%), Neryungri (down 22%), Buryatzoloto (down 17%), Berezitovy (down 14%) and Bissa (down 11%).
  • TCC decreased by 21% YoY to US$558/oz in H1 2015 mainly driven by the benefit from the depreciation of local currencies in countries where Nordgold operates, against the US dollar. The TCC reduction also related to increased production, improved operational and consumption efficiency, as well as reduced general and administrative (“G&A”) expenses. TCC was US$580/oz in Q2 2015 compared with US$699/oz in Q2 2014 and US$539/oz in Q1 2015. In Q2 2015, seven out of Nordgold’s nine mines achieved TCC improvement YoY and the most significant reductions were recorded at Lefa (down 38%), Berezitovy (down 27%), Neryungri (down 27%), two Buryatzoloto mines (down 16%) and Bissa (down 10%). We continue to implement cost optimisation and operational improvement programmes at all our mines.
  • In H1 2015, Nordgold generated US$252.1 million of cash flow from operating activities (after interest and income tax paid), compared with US$133.7 million in H1 2014. In Q2 2015, cash flow from operating activities was US$94.4 million, compared with US$82.0 million in Q2 2014 and US$157.7 million in Q1 2015.
  • Capital expenditure (3) (“capex”) in H1 2015 was on budget and increased by 52% YoY to US$107.6 million as planned. The increase mainly related to the start of preliminary works and pre-ordering of equipment for the Bouly project in Burkina Faso. Q2 2015 capex was US$75.6 million.
  • In H1 2015, Nordgold almost doubled free cash flow YoY to US$141.2 million highlighting the high quality of the Company’s mines.
  • In Q1 2015, the Company delivered US$120.2 million of free cash flow compared with free cash flow of US$19.4 million in Q4 2014 on the back of significantly higher operating cash flow and lower capex.
  • Cash and cash equivalents as at June 30, 2015 were US$397.8 million with net debt (4) of US$546.2 million, compared with US$317.1 million cash and cash equivalents and net debt of US$627.3 million as at December 31, 2014.

Outlook Update

  • Nordgold is on track to reach the upper end of FY 2015 gold production guidance range of 925 — 985 koz.
  • Nordgold reiterates FY 2015 capex of approximately US$300 million, including US$95 million for Bouly mine construction and approximately US$8.5 million for Gross project development, as well as investments in exploration, development, maintenance and capitalised stripping.
  • Based on significant improvement of AISC in H1 2015, Nordgold is reducing its FY 2015 AISC guidance for the second time this year. The new FY2015 AISC range is US$750/oz — US$800/oz (previous range was US$800/oz — US$850/oz).

(1) For detailed definition, please see “Non-IFRS Financial Measures”.
(2) Q1 2015 revenue was recalculated using specific RUB/USD exchange rate for January 2015 sales due to significant exchange rate fluctuations, which led to respective change of Q1 2015 average realised gold price, EBITDA, net profit and normalised net profit attributable to shareholders.
(3) Normalised Net Profit attributable to shareholders adjusted for the non-current assets and inventories impairment or utilisation of impairment.
(4) For detailed definition, please see “Non-IFRS Financial Measures”.

“I am proud that Nordgold has delivered another exceptional half year of operational and financial performance. With gold production up by 7% on last year, a very strong EBITDA increase of 36% and a near doubling of free cash flow to over $140 million we are driving healthy returns across the business.

We are firmly on track to reach the upper end of our full year 2015 gold production guidance range of 925 — 985 koz. Our continued focus on driving down costs has meant that we were able to lower again our Full Year 2015 AISC guidance to US$750/oz — US$800/oz, which has comfortably placed us within the lower end of the global cost curve and we expect to maintain this position.

Our portfolio of high-quality, low-cost mines, a strong development pipeline of significant growth opportunities and an increasingly well regarded operational and financial track record gives me confidence that our company will have the ability to generate consistent growth and sustainable returns for our shareholders despite a challenging market environment.” Nikolai ZelenskiChief Executive Officer of Nordgold


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