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Nordgold Reports Q4 and FY 2015 Financial and Oper...

Nordgold Reports Q4 and FY 2015 Financial and Operating Results

Amsterdam, Netherlands, February 25, 2016 - Nord Gold N.V. (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified low-cost gold producer, announces record EBITDA of US$520 million and operating cash flow of US$417.9 million in 2015, despite lower gold price. All-in sustaining costs (1) ("AISC") decreased by 10% to US$793 per ounce in 2015.

2015 Highlights

EBITDA up 7% to record US$520 million. EBITDA margin increased to 46%.
Total cash costs (1) («TCC») of US$604/oz and AISC of US$793/oz, maintaining Nordgold’s position at the lower end of the global cost curve.
Record operating cash flow of US$417.9 million.
Strong free cash flow (1) of US$158.1 million while investing in construction of new low-cost Bouly mine with production expected to start in H2 2016.
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 continues.
The Board has declared a dividend of 1.59 US cents per share / GDR for Q4 2015, representing four quarters of 2015 dividend of US15.61 cents per share / GDR or US$58.5 million.
Further net debt (1) reduction by 7% to US$584.0 million reflecting strong free cash flow.

Operating Highlights

2015 gold production of 950.0 thousand gold equivalent ounces («koz»), in line with the full year («FY») production guidance range of 925 — 985 koz.
Q4 2015 gold output increased by 21% quarter-on-quarter («QoQ») to 241.9 koz.
Construction of the new low cost Bouly mine in Burkina Faso continued on schedule and within budget, with production expected to start in H2 2016. According to the Feasibility Study, the mine will produce 120 koz per year for 10 years at AISC of US$730/oz.

Financial Highlights

Gold sales in 2015 increased by 1% year-on-year («YoY») to 972.9 koz and included 24.5 koz of refined gold, which was produced at the end of 2014 and sold in Q1 2015.
Average realised gold price in 2015 decreased by 8% YoY to US$1,161 per oz. Average realised gold price in Q4 2015 was US$1,096 per oz, compared with US$1,184 per oz in Q4 2014, a fall of 7%.
FY 2015 revenue decreased by 7% YoY to US$1,129.3 million mainly due to the lower gold price, which was partially offset by higher sales volumes.
EBITDA in 2015 increased by 7% YoY to a record US$519.8 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. Q4 2015 EBITDA was US$93.5 million. EBITDA margin in 2015 increased to 46.0% from 40.1% 2014.
Net profit increased by 53% YoY to US$188.7 million in 2015. Net profit for Q4 2015 was US$7.7 million.
Normalised net profit attributable to shareholders (2) in 2015 increased by 50% YoY to US$195.0 million. In Q4 2015, normalised net profit attributable to shareholders increased by 16% YoY to US$19.6 million.

Focus on costs

Nordgold maintained its position within the industry’s lowest cost quartile with consolidated AISC down by 10% YoY or by US$92/oz to US$793/oz in 2015. Seven out of Nordgold’s nine mines achieved AISC improvement in 2015 and the most significant reductions were recorded at Lefa (down 26% or US$290/oz), Neryungri (down 25% or US$214/oz), the two Buryatzoloto mines (down 21% or US$212/oz) and Berezitovy (down 13% or US$96/oz). Bissa AISC increased by 2% YoY or by US$14/oz in 2015 but remained at a very competitive level of US$584/oz.
TCC decreased by 11% or by US$71/oz YoY to US$604/oz in 2015 mainly driven by the benefit from the depreciation of local currencies in countries where Nordgold operates, against the US dollar. The TCC reduction was also driven by improved operational and consumption efficiency, lower staff costs, as well as reduced general and administrative («G&A») expenses. We continue to implement cost optimisation and operational improvement programmes at all our mines.

Cash generation

In 2015, Nordgold generated record cash flow from operating activities (after interest and income tax paid) of US$417.9 million, compared with US$328.0 million in 2014. In Q4 2015, cash flow from operating activities increased by 53% YoY and 12% QoQ to US$87.4 million.
FY 2015 capital expenditure («capex») (3) of US$258.3 was lower than our guidance of US$300 million mainly due to lower maintenance and capitalised stripping capex at Russian mines related to ruble devaluation.
A dedicated focus on cost reduction, operating excellence and diligent approach to capex allowed the Company to generate strong free cash flow of US$158.1 million in 2015 while investing in construction of the new low cost Bouly mine.
Cash and cash equivalents as at December 31, 2015 were US$361.7 million with net debt of US$584.0 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

FY 2016 production is expected to be in the range of 950 — 1,010 koz.
The Company will maintain its low-cost performance by continued focus on efficiencies with conservative FY 2016 AISC guidance of US$800/oz — US$850/oz, taking into account market volatility and inflation expectations.
2016 capex is anticipated to be approximately US$370 million, including US$70 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.
Nordgold will invest in near-mine exploration focused on Mineral Resource conversion drilling in existing pits and in search for new deposits near operating mines.
The Company will also continue to target high quality opportunities complying with its strict project acquisition criteria worldwide.

(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 delighted to report an outstanding set of results, in particular given the challenging markets the industry has faced in the period. Record EBITDA of US$520 million in a low gold price environment is a reflection of our high-quality asset base, operational excellence and on-going focus on costs. We are firmly established as one of the lowest cost producers of gold in the world — a tremendous achievement for our teams on the ground.

We continue to focus on creating value for shareholders. We have returned US$58.5 million in dividends to shareholders in 2015. Our commitment to paying a strong dividend is supplemented by the return of capital with our GDR buyback programme. Following its success in 2015, the Board approved a new $15 million buyback programme in November 2015.

Our strategy for 2016 is clear: we will maintain our focus on safety, while continuing to run our operations as efficiently as we can, in order to produce sustainable returns to our investors. This is the strategy that has served us well over the past three years. We benefit from a strong balance sheet, with no major debt payments due until 2018, and consistent free cash flow generation, which allows us to continue investing in our exciting international pipeline of low cost development projects, despite the weaker price environment.

We remain confident in the outlook for the group, in our portfolio of low cost, high quality assets and our significant development pipeline, as well as our proven ability to deliver on our promises — we believe this robust business model and our commitment to creating returns for the shareholders will continue to enhance the value of Nordgold.” 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 Q4 and FY 2015 on a conference call to be held on Thursday, February 25, 2016 at 1.00 pm GMT (4.00 pm Moscow time). The presentation will be followed by a Q&A session. To participate in the telephone conference, please register in advance.