News Column

Nordgold Reports Q1 2014 Operating Results

April 29, 2014



ENP Newswire - 29 April 2014

Release date- 25042014 - Amsterdam, Netherlands - Nord Gold N.V. (LSE: NORD), the internationally diversified, pure-play gold producer strategically focused on emerging markets, announces its operating results for the first quarter ended March 31, 2014.

Lost time injury frequency rate (LTIFR) for Q1 2014 was 0.40, a significant improvement compared with Q1 2013 (1.15) and Q4 2013 (1.33). Seven of Nordgold's mines had an LTI free quarter.

Gold production in Q1 2014 was 211.1 thousand refined gold ounces ('koz'), a 15% increase on Q1 2013 (183.6 koz).

Eight out of Nordgold's nine mines achieved a year-on-year production increase, with double digit growth at Bissa, Taparko, Lefa, Neryungri and Aprelkovo as well as a 7% increase at Buryatzoloto and a 3% increase at Berezitovy.

Our Suzdal mine produced 20.1 thousand ounces of dore in Q1 2014, although very little of the dore was converted to refined metal during the quarter. This was because Suzdal's refined gold production and sales were affected by negotiations with the National Bank of Kazakhstan and a newly built refinery plant 'Tau-Ken Altyn'. The issue was resolved in April 2014 and Suzdal's dore will be refined and sold during Q2 2014.

The average realised gold price in Q1 2014 was US$1,299 per oz, a decrease of 20% compared with Q1 2013 (US$1,615/oz) and an increase of 4% compared with Q4 2013 (US$1,250/oz).

Revenues in Q1 2014 were US$274.8 million, a 7% decrease compared with US$296.8 million in Q1 2013 due to the significantly lower average realised gold price. Revenues for Q1 2014 decreased by 16% compared with US$328.8 million in Q4 2013 as a result of lower refined gold production and sales volumes.

Nordgold reiterates 2014 full year production guidance of 870 - 920 koz.

Unaudited net debt at March 31, 2014 was approximately US$729.8 million compared with US$723.9 million as at December 31, 2013.

Message from the CEO

This has been a very strong start to the year, building on the progress seen in the second half of 2013. I am delighted to see an improved production performance across nearly the entire asset portfolio, testament to the considerable efforts of our team in driving the efficiencies and improvements necessary. In particular we have seen continued strong performance at Bissa, record recovery at Taparko and further grade improvement at Buryatzoloto following investments in exploration. These improvements give me confidence that Nordgold is well positioned to deliver in a lower price environment and on track to meet our 2014 full year production target.

We have also made good progress on our projects. At Gross we have begun a pilot stage operation which we expect will give us more detailed information about the metallurgy of the future mine and around 30 koz of gold in 2014. The exploration phase at Montagne d'Or deposit in French Guiana continues and has so far shown encouraging results, while we have also begun preparation of an in-house scoping study for the Bouly project in Burkina Faso, located close to our Bissa mine.

The focus of management remains unchanged: to maintain our cost discipline across the Company, carefully manage capex spend and further improve efficiency and safety at all mines. Our goal remains to achieve positive free cash flow generation at all our mines.

Nikolai Zelenski, Chief Executive Officer, Nordgold

Development Highlights

Gross

In February 2014, Nordgold finalised the feasibility study for Gross (Yakutia, Russia), which confirmed the economic attractiveness of an all-season open-pit heap leach project at a long term gold price of US$1,250 per oz. In 2014 the Company will focus on obtaining the construction permit for Gross as well as completing outstanding infrastructure design works.

In 2014, within the pilot stage operation, 1.8 million tonnes of ore will be mined at Gross and processed at the heap leach facility of the satellite Neryungri mine, which will require minimum capex.

As part of a pilot stage operation, stripping and mining works commenced at Gross at the end of February 2014. In Q1 2014 total run of mine amounted to 515.2 thousand tonnes with 348.4 thousand tonnes of waste mined and 166.8 thousand tonnes of ore mined.

According to the feasibility study, Gross is expected to mine approximately 12 million tonnes of ore and to produce over 200 koz of gold per year at full production.

Montagne d'Or

In March 2014, Nordgold executed a definitive option agreement with Columbus Gold Corp. (CGT: TSX-V) contained in the binding letter of intent dated September 17, 2013 under which Columbus Gold granted Nordgold the exclusive right to earn a 50.01% interest in certain licences at Columbus Gold's 100%-owned Paul Isnard project by completing a bankable feasibility study and by spending not less than US$30 million over three years in staged work expenditures. Paul Isnard contains inferred gold resources of 4.15 million ounces at 2.22 g/t Au in the Montagne d'Or deposit in French Guiana.

A 14-month drill programme commenced at Montagne d'Or in November 2013 has continued in Q1 2014. 47 drill holes for a total of 5,900 metres have been completed between the start of the drill programme and April 6, 2014.

The entire programme includes 27,600 meters of diamond core drilling and is designed to complete a 50-meter spacing array to a vertical depth of 200 meters along the full strike extent of the current resources, with select 25-metre in-fill. The denser 25-metre to 50 meter drill pattern is expected to internally increase the resources between widely spaced holes, convert much of the inferred resource to the indicated and measured categories, and provide confidence in the grade-width distribution.

Bouly

In Q1 2014, positive metallurgical test results were obtained from representative samples at Nordgold's Bouly deposit, which is located close to Bissa mine in Burkina Faso. Column tests yielded favourable gold recoveries from oxide and transitional ores of 80-93%. Nordgold intends to complete an in-house Preliminary Economic Assessment for the Bouly project in Q2 2014 and to commence a Preliminary Feasibility Study in Q3 2014.

Safety

Safety remains the absolute priority for the Board and management with the objective of Zero Harm for our employees and contractors.

We continue to invest our efforts in improving safety performance and ensuring that safety is the absolute priority for everyone at our mine sites. Seven out of Nordgold's nine mines had an LTI free quarter. Lost time injury frequency rate (LTIFR) for Q1 2014 was 0.40, a significant improvement compared with Q1 2013 (1.15) and Q4 2013 (1.33).

After eight months of fatality-free production at Nordgold, it is with great regret that we report a fatality at the beginning of April at our Irokinda mine. Our deepest sympathy goes to the bereaved family and work colleagues. A full investigation has taken place to ensure we learn from the incident. The incident highlights the need to ensure we continue to focus on safety at all our mine sites and to improve the attitudes of all our employees towards safety requirements.

We recognise that we operate in a hazardous environment, but remain dedicated to our goal of ensuring every one of our employees returns home safely at the end of each shift. In Q1 2014, the Bissa mine continued to exceed planned performance due to positive reconciliation against the geological model, with 68.2 koz of gold produced in the reporting quarter out of full year 2014 production forecast of 200 koz. Ore milled at the Bissa plant in Q1 2014 totaled 889 kt at an average head grade of 2.70 g/t, while the 2014 average head grade is expected to be 2.10 g/t. The average plant recovery of 88.4% for the quarter was in line with recovery of 87.6% in Q1 2013 and 89.4% in Q4 2013.

In Q1 2014, ore mined totaled 798 kt, supplied from four contributing pits. Ore mining from the IO pit was completed by the end of Q1 2014 and is scheduled for deeper and on strike drilling in Q2 2014. Ore mining continued from the SW pit Phases 1 and 2, which is expected to contribute 21% of the ore mined in 2014. In the reporting period, Bissa also started mining activities at the Bissa Hill 1 and 2 pits. Commencement of mining operations at the Zone 52 pit is planned for early Q2 2014.

Taparko gold production for Q1 2014 was 33.1 koz, a 13% increase compared with Q1 2013 (29.4 koz) and a 6% increase compared with Q4 2013 (31.1 koz). The increase in gold production was mainly due to higher ore milled volumes (401 kt in Q1 2014 compared with 386 kt in Q1 2013 and 302 kt in Q4 2013) achieved as a result of a reduction of hard ores in the mill feed blend resulting in a higher through-put rate, and less unplanned downtime associated with the primary ball mill trunnion. Q1 2014 recoveries were at a record level of 85.7% (77.3% in Q1 2013 and 83.0% in Q4 2013), resulting from processing higher recovery ores from the 2N2K and Bouroum pits, while a number of operational improvements have been successfully implemented.

In Q1 2014, the average head grade was 2.87 g/t, while the average head grade in 2014 is expected to be 2.79 g/t. The average mining stripping ratio, including capitalised waste, decreased to 4.32 in Q1 2014 from 7.22 in Q4 2013, due to higher ore volumes mined from the 2N2K pit. The 2014 planned average stripping ratio will range between 7.5 and 8.0, resulting from the commencement of further cutbacks to the GT and 35 pits. An in-fill drilling programme continued at the advanced Yeou project, located within the Taparko exploration license area, and is expected to be completed in Q2 2014.

In 2014, Nordgold also intends to conduct geotechnical prospecting and metallurgical testing on representative samples from the Yeou deposit in order to prepare an in-house feasibility study. Exploration works are scheduled to commence by mid-2014 at the Goengo deposit, which is also part of the Taparko exploration area.

Lefa produced 40.1 koz in Q1 2014 compared with 34.4 koz in Q1 2013 and 43.7 koz in Q4 2013. First quarter gold production at Lefa increased by 17% year-on-year driven by higher head grade (1.10 g/t in Q1 2014 compared with 0.93 g/t in Q1 2013) and recoveries. The average grade in ore mined during the reporting period was 1.23 g/t.

A production decrease of 8% compared with Q4 2013 was primarily due to lower ore milled volumes and head grade, partially off-set by improved recoveries of 84.8% (from 82.3% in Q4 2013). The lower throughput can be attributed to harder ore in mill feed blends, the unplanned change-out of Hagglunds drives on the Lero crusher apron feeder and several power interruptions.

Our 2014 target is to sustain production at the level of 15 -16 koz per month to turnaround Lefa. We also commenced the optimisation of the life-of-mine mining and processing schedules based on improved technical information. During Q2 2014, the development of two new pits is planned: the Firifirini open pit is located 8 km north of the mill and requires the construction of a 8 km haul road, while the Kankarta North pit is located 6 km northwest of the mill and requires the construction of a 4 km haul road.

The implementation of efficient maintenance programmes for the mining fleet and plant is underway; five new Komatsu 785 trucks will be delivered to site in Q2 2014. During Q1 2014, Lefa reduced its workforce by 19% to approximately 1,570 employees without business interruption.

Russia

Buryatzoloto gold production for Q1 2014 was 24.9 koz, up 7% compared with Q1 2013 (23.3 koz) driven by higher head grade, which reached 5.37 g/t, compared with 4.61 g/t in Q1 2013 and 4.68 g/t in Q4 2013, as a result of continued investments in new level development, the development of new ore blocks, lower dilution and operational improvement initiatives. We expect head grade will remain above 5 g/t in 2014.

The refined gold production quarter-on-quarter was lower than expected due to a part of gold dore was produced in the end of the March, when all shipments from the mines to refinery have been done already. This dore will be shipped from Buryatzoloto stockpile to refinery plant in Q2 2014. In Q1 2014 dore production increased by 5% compared with Q4 2013.

At Zun-Holba, 90.40 kt of ore at 5.66 g/t was produced from the Adits and Shaft levels. At Irokinda, 66.60 kt of ore at 6.60 g/t was mined from the vein 3, vein Vysokaya and vein Serebryakovskaya adits; while the other veins contributed 12.70 kt at 4.68 g/t. At Irokinda, development of the mechanised declines at the vein 3 and vein Serebryakovskaya mines continued, and reached their first respective ore levels.

Russia

Berezitovy

Berezitovy produced 27.0 koz in Q1 2014, an increase of 3% compared with Q1 2013 (26.1 koz) driven by increased volumes of ore mined (492 kt in Q1 2014 compared with 362 kt in Q1 2013) and a corresponding increase of ore milled (448 kt in Q1 2014 compared with 380 kt in Q1 2013). During Q2 2014, mill feed grade is planned at 2.20 g/t, and we are targeting 30 koz of gold production.

The stripping ratio increased to 6.18 in Q1 2014 from 4.16 in Q4 2013, due to mining of the Phase 3 cut back. The stripping ratio is expected to be at the level of approximately 7.0 in 2014.

Russia

Neryungri

Neryungri produced 12.1 koz in Q1 2014, an increase of 13% on Q1 2013 (10.7 koz) as a result of stacking both run of mine lower grade ores and crushed higher grade ores. The production in Q1 2014 decreased by 42% compared with Q4 2013 (20.9 koz) as a result of lower ore volumes stacked due to normal seasonal winter effects.

The Neryungri pit is currently in a waste stripping phase, a strip ratio of 9.78 was recorded during the quarter. In Q1 2014, Nordgold commenced waste stripping and mining at the Gross open pit operation where the total run of mine ore equalled 515.2 thousand tonnes, with 348.4 thousand tonnes of waste mined and 166.8 thousand tonnes of ore mined. The 2014 plan includes the mining of 1.8 million tonnes of ore, which will be processed at Neryungri as part of the Gross heap leach trial.

Russia

Aprelkovo

In Q1 2014, Aprelkovo gold production increased by 20% compared with Q1 2013 to 5.3 koz, mainly due to increased ore volumes processed. Gold production in Q1 2014 decreased by 33% compared with 7.9 koz in Q4 2013, mainly due to normal seasonal winter effects. A total of 280 kt of ore at an average grade of 1.21 g/t was crushed and stacked during Q1 2014.

Kazakhstan

Suzdal

Suzdal mine produced 20.1 thousand ounces of dore (an increase of 25% compared with Q1 2013), while its refined gold production and sales were affected in Q1 2014 by negotiations with the National Bank of Kazakhstan and a newly built refinery plant 'Tau-Ken Altyn'. The issue was resolved in April 2014 and Suzdal's dore will be refined and sold during Q2 2014.

Ore milled decreased by 11% QoQ mainly due to unplanned repairs to the No.2 mill, while an increase in sulfur content in ore milled during the winter influenced BIOX temperatures and thus milled volumes.

Recoveries were also impacted by higher BIOX temperatures. Test-work conducted on the BIOMIN Hot Leaching process aimed at improving the gold dissolution, yielded positive results. A feasibility study will commence in Q2 2014.

IR Contact:

Valentina Bogomolova

Tel: +7 916 474 5996

Email: valentina.bogomolova@nordgold.com

Press Contact:

Olga Ulyeva

Secretary

Tel: +7 916 510 1411

Email: olga.ulyeva@nordgold.com

About Nordgold

Nordgold (LSE: NORD) is an international pure-play emerging-markets gold producer established in 2007 and publicly traded on the London Stock Exchange. Nordgold has expanded rapidly through acquisitions and organic investment, achieving a rate of growth unmatched in the industry during that period. In 2013, Nordgold's gold production increased to 924 koz from 717 koz in 2012.

The Company operates nine mines in Russia, Kazakhstan, Burkina Faso and Guinea. Nordgold has one development project, five advanced exploration projects and a diverse portfolio of early exploration projects and licenses in CIS, West Africa and French Guiana. Nordgold employs over 10,000 workers.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this press release, including any information as to Nordgold's estimates, strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance and production may constitute 'forward-looking information' within the meaning of applicable securities laws. All statements, other than statements of historical fact, constitute forward-looking information.

Forward-looking information can often, but not always, be identified by the use of words such as 'plans', 'expects', 'is expected', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates', 'predicts', 'potential', 'continue' or 'believes', or variations (including negative variations) of such words, or statements that certain actions, events or results 'may', 'could', 'would', 'should', 'might', 'potential to', or 'will' be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts.

The purpose of forward-looking information is to provide the reader with information about management's expectations and plans. Readers are cautioned that forward-looking statements are not guarantees of future performance.

All forward-looking statements made or incorporated in this press release are qualified by these cautionary statements. Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may cause actual future realities or anticipated events to differ materially from those expressed or implied in any forward-looking information and, accordingly, should not be read as guarantees of future performance or realities.

Material factors or assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting Nordgold's operations will continue substantially in their current state, including, without limitation, with respect to industry conditions, general levels of economic activity, market prices for gold, competition for and scarcity of gold mine assets, achievement of anticipated mineral reserve and mineral resource tonnages or grades, ability to develop additional mineral reserves, acquisition of funding for capital expenditures, adequacy and availability of production, processing and product delivery infrastructure, electricity costs, continuity and availability of personnel and third party service providers, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation, taxes, and that there will be no unplanned material changes to Nordgold's facilities, equipment, customer and employee relations and credit arrangements.

Nordgold cautions that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of Nordgold and there is no assurance that they will prove correct.

The risks and other factors that may cause actual future realities or anticipated events to differ materially from those expressed or implied in any forward-looking information include, but are not limited to Nordgold's ability to execute its development and exploration programs; the financial and operational performance of Nordgold; civil disturbance, armed conflict or security issues at the mineral projects of Nordgold; political factors; the capital requirements associated with operations; dependence on key personnel; compliance with environmental regulations; estimated production and competition.

Actual performance or achievement could differ materially from that expressed in, or implied by, any forward looking information in this press release and, accordingly, investors should not place undue reliance on any such forward-looking information. Further, any forward-looking information speaks only as of the date on which such statement is made, and Nordgold does not undertake any obligation to update any forward looking information to reflect information, events, results, circumstances or realities after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws.

All forward-looking information contained in this press release is qualified by such cautionary statements. New risk factors emerge from time to time, and it is not possible for management to predict all of such risk factors and to assess in advance the impact of each such factor on Nordgold's business or the extent to which any factor, or combination of factors, may cause actual realities to differ materially from those contained in any forward-looking information.


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Source: ENP Newswire


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