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Nordgold Reports Q3 and 9m 2015 Financial and Oper...

Nordgold Reports Q3 and 9m 2015 Financial and Operating Results

Amsterdam, Netherlands, November 17, 2015. Nord Gold N.V. (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified low-cost gold producer, announces a 9% increase in EBITDA (1) to US$426.2 million and a 14% decrease of all-in sustaining costs (1) ("AISC") to US$759 per ounce in 9 months of 2015.

9m 2015 Highlights

EBITDA up 9% to US$426.2 million. EBITDA margin increased to 49.3%.
The lower end of the global cost curve: total cash costs (1) (“TCC”) of US$578/oz and AISC of US$759/oz.
Operating cash flow of US$330.1 million and free cash flow (1) of US$150.3 million.
Construction of new low-cost Bouly mine continued on schedule and within the budget with aim to start production in H2 2016.
Nordgold has returned US$26.5 million to its shareholders through a continuing buyback programme.
Additionally, the Board has declared a dividend of 3.50 US cents per share / GDR for Q3 2015, a total of US$13.0 million, and approved the new share buyback programme.
Lost time injury frequency rate (LTIFR) increased to 1.71 but reduced sharply to 0.44 in Q3 2015 with a zero LTIFR at six mines for the quarter.

Operating Highlights

Gold output for the first 9 months of 2015 decreased by 5% year-on-year (“YoY”) to 708.2 thousand ounces (“koz”) mainly due to an anticipated reduction in gold production at Taparko, to facilitate the extension of Pit 35 for future ore supply, and the impact of delays in refining doré in Q3 2015 at our Burkina Faso mines due to political instability in the country. That doré was refined and sold in October 2015.
In Q3 2015, gold output decreased to 200.7 koz due to several temporary factors, which only affected Q3 2015 results, including an unusually severe wet season in West Africa, plant maintenance work at several mines, and the effect of delays in refining doré of approximately 15 koz mainly at Bissa, Taparko and Suzdal mines during the quarter. That doré was refined and sold in October 2015.
In Q3 2015, production increased quarter-on-quarter (“QoQ”) at Neryungri, Aprelkovo, at Buryatzoloto underground mine Zun-Holba and doré production grew at Suzdal.
A stronger performance in Q4 2015 is expected for the company overall and in particular at Bissa, Taparko, Lefa and Suzdal mines.
The main focus of our exploration programmes continued to be near-mine-drilling at key operating assets. In addition, in Q3 2015, field crews completed work on adjacent to Buryatzoloto mines’ brownfield tenements Onot Kitoy and Zhanok, as well as on the South Uguy area, where the Tabornoe and Gross deposits are located. The results of this work are still being analysed, but already provide some indication of targets to be actively pursued in 2016.

Financial Highlights

The average realised gold price in 9m 2015 decreased to US$1,182 per oz, compared with US$1,290 per oz in 9m 2014. In Q3 2015, the average realised gold price decreased to US$1,120 per oz, compared with US$1,281 per oz for Q3 2014 and US$1,200 per oz for Q2 2015.
Revenue in Q3 2015 was US$225.0 million due to lower gold price and sales volumes. Revenue in 9m 2015 was US$865.3 million.
EBITDA for 9m 2015 increased by 9% YoY to US$426.2 million mainly driven by improved operational efficiencies 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 9m 2015 increased to 49.3% from 40.7% in 9m 2014. Q3 2015 EBITDA was US$94.2 million.
Net profit increased by 39% YoY to US$181.0 million in 9m 2015. Net profit for Q3 2015 was US$46.3 million.
Normalised net profit attributable to shareholders (2) in 9m 2015 increased by 55% YoY to US$175.4 million. In Q3 2015, normalised net profit attributable to shareholders was US$43.3 million compared with US$45.8 million in Q3 2014.
Nordgold maintained its position within the industry lowest cost quartile with consolidated AISC down by 14% YoY to US$759/oz in 9m 2015. In Q3 2015, AISC decreased by 2% YoY to US$853/oz with significant reductions recorded at seven Nordgold mines, including Buryatzoloto (down 27%), Neryungri and Aprelkovo (down 28%), Berezitovy (down 18%), Suzdal (down 8%) and Lefa (down 4%). QoQ AISC increased only at Nordgold African mines due to several temporary factors, which only affected Q3 2015 results.
TCC decreased by 17% YoY to US$578/oz in 9m 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 improved operational and consumption efficiency, lower staff costs, as well as reduced general and administrative (“G&A”) expenses. TCC decreased to US$628/oz in Q3 2015 compared with US$669/oz in Q3 2014. In Q3 2015, seven out of Nordgold’s nine mines achieved TCC improvement YoY, including Suzdal (down 32%), Berezitovy (down 28%), Aprelkovo (down 27%), Neryungri (down 26%), two Buryatzoloto mines (down 25%) and Lefa (down 9%). We continue to implement cost optimisation and operational improvement programmes at all our mines.
In 9m 2015, Nordgold generated US$330.1 million of cash flow from operating activities (after interest and income tax paid), compared with US$272.0 million in 9m 2014. In Q3 2015, cash flow from operating activities was US$77.9 million.
Capital expenditure (3) (“capex”) for 9m 2015 was on budget and increased by 62% YoY to US$179.3 million as planned. The increase mainly related to continued construction of the Bouly mine in Burkina Faso. Q3 2015 capex was US$71.7 million.
In 9m 2015, Nordgold generated US$150.3 million of free cash flow. In Q3 2015, free cash flow decreased to US$9.1 million due to temporary lower operating cash flow and higher capex.
Cash and cash equivalents as at September 30, 2015 were US$378.6 million with net debt (3) of US$573.3 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

Nordgold is on track to reach the upper half of full year (“FY”) 2015 gold production guidance range of 925 — 985 koz.
The Company will maintain its low-cost performance with FY 2015 AISC expected to be in the range of US$750/oz — US$800/oz.
Nordgold expects FY 2015 capex to be lower than the original guidance of US$300 million mainly due to lower maintenance and capitalised stripping capex at Russian mines related to ruble devaluation.
The Board has approved construction of a low-cost large-scale Gross mine in Russia. The work will start early in 2016 with production beginning up to two years later.
2016 capex anticipated at approximately US$370 million, including US$60 million to finalise construction and reach commercial level of production at Bouly mine and US$125 million for Gross construction, as well as investments in exploration, development, maintenance and capitalised stripping.

(1) For detailed definition, please see “Non-IFRS Financial Measures”.
(2) Normalised Net Profit attributable to shareholders adjusted for the non-current assets and inventories impairment or utilisation of impairment.
(3) For detailed definition, please see “Non-IFRS Financial Measures”.

“I am encouraged by the financial progress that Nordgold has demonstrated during the first nine months of 2015, with EBITDA up 9% to US$426.2 million and EBITDA margin increasing to 49.3%. Our continued focus on cost management means we can comfortably reiterate full year 2015 AISC guidance of US$750/oz — US$800/oz and therefore maintain our position within the industry’s lowest cost quartile.

The low-cost production enables Nordgold to deliver attractive returns to shareholders and to simultaneously invest in its growth projects despite a challenging market environment. Our capital management remains strong, and the Board is pleased to approve a dividend of 3.50 US cents per share for the quarter as well as a new share buyback programme.

We look forward to a successful year end and to considerable further progress during 2016: we expect to see stable output across our portfolio of operating mines and will drive growth through the construction of our heap leach Bouly project, expected to commence production in the second half of 2016.” Nikolai ZelenskiChief Executive Officer of Nordgold

Telephone Conference and Q&A Session

Nikolai Zelenski, Chief Executive Officer of Nordgold, Dmitry Guzeev, Chief Financial Officer and Louw Smith, Chief Operating Officer will present the Company’s financial results for Q3 and 9m 2015 on a conference call to be held on November 17, 2015 at 12.00 pm GMT (3.00 pm Moscow time). The presentation will be followed by a Q&A session. To participate in the telephone conference, please register in advance.