London, United Kingdom, 23 March 2017 – Nord Gold SE (“Nordgold” or the “Company”), the internationally diversified gold producer, announces a 6% rise in Ore Reserves to 14.9 million gold ounces (“Moz”) and a 10% rise in Mineral Resources to 31.5 Moz in 2016.
Ore Reserves (1) increased by 6% or 851 thousand ounces (“koz”) to 14.9 Moz of gold in 2016, in addition to the 1.1 Moz replenishment of mined out ore (2).
Measured and Indicated Gold Resources increased by 13% or 2.8 koz to 24.8 Moz despite depletion of 1.1 Moz.
Total Mineral Resources (3) increased by 10% or 3.0 Moz to 31.5 Moz mainly due to successful near-mine exploration, and the inclusion of Reserves and Resources of the Montagne d’Or project in French Guiana and Pistol Bay project in Canada for the first time, as previously guided.
Montagne d’Or attributable (55.01%) Ore Reserves of 1,510 koz and Mineral Resources of 2,646 koz were added to Nordgold’s 2016 total (4).
Pistol Bay Mineral Resources of 742 koz were added to Nordgold’s 2016 Nordgold total.
The Neryungri mine in Russia represented the most successful near-mine exploration activity in 2016, resulting in a 51% or 395 koz increase in Ore Reserves to 1,164 koz, and a 61% or 849 koz increase in Mineral Resources.
The recently launched Bouly mine in Burkina Faso increased its Ore Reserves by 24% or 310 koz to 1,628 koz, and Mineral Resources by 12% or 428 koz to 3,915 koz.
Nordgold’s strong balance sheet and consistent free cash flow generation, enables the Company to continue investing in its globally diversified asset base across four continents and six countries, as well as in its exciting pipeline of high-quality development projects, despite the volatile price environment.
2016 exploration programmes remained focused on Ore Reserve replacement and the extension and conversion of Mineral Resources at the operating mines.
Nordgold invested US$28 million in exploration and evaluation during 2016, including US$19 million in sustaining exploration (in-mine and near-mine Ore Reserves conversion) and US$9 million in greenfield exploration.
In 2016, 27,808 m of drilling was completed at Goengo West and Kangarse, satellite deposits located on the Taparko mining lease in Burkina Faso. The mine also converted the Goengo Mineral Resources to Ore Reserves. At the Yeou deposit, an environmental licence was granted and approval was received for a mining licence. The Yeou project is likely to consist of two small satellite pits to feed the Taparko mine, and will be operated by conventional truck and excavator mining. Ore will be trucked to Taparko for processing.
In June 2016, the Company began construction of the new Gross mine in Russia, Nordgold’s key development project. Nordgold invested a total of US$42 million in construction at Gross in 2016. The project requires approximately US$250 million of total capital investment during construction. It is expected that Gross will begin gold production in the first half of 2018.
In 2016, Nordgold invested US$11.1 million in the Montagne d’Or project development and acquired an additional 5% stake in the project for US$6 million. Nordgold earned-in its 55.01% interest in Montagne d’Or on 13 March 2017.
Pistol Bay exploration activities for 2016 were completed in July-September 2016. A total of 4,007 m were drilled at the Vickers property in an effort to expand the known resource, and 6,863 m at the new Howitzer target to test the potential for economic mineralisation. In 2016, Pistol Bay’s total exploration capex was US$4.9 million.
Nikolai Zelenski, Chief Executive Officer, Nordgold commented:
“Sustainable profitable growth remains a key strategic priority. Our focus on cash generation enables us to continue enhancing our Reserve and Resource base, while investing in intensive exploration programmes and our pipeline of low-cost, capital efficient development projects. I am delighted to report that we added to our Reserves and Resources base significantly more gold than was mined during 2016.
“We made good progress on our development pipeline this year. Our newly launched Bouly mine in Burkina Faso reached full production capacity in just two months, well ahead of plan. Construction of our new Gross mine in Russia began in June 2016 and is progressing well with production scheduled for the first half of 2018. We have also continued to progress our other development projects, including the Montagne d’Or project in French Guiana and the Pistol Bay exploration project in Canada. All our projects are capital efficient and competitively positioned at the low end of the cost curve. With this strong pipeline in place, the Company expects to be able to generate robust returns from a number of high-quality new assets over the next decade, giving us confidence in our long-term sustainability.”
2017 key exploration and development priorities
Nordgold will continue to focus on near-mine and satellite deposits exploration at operating mines, with the aim of at least replacing mined out ore reserves annually, while progressing its growth pipeline.
Strategy of organic growth remains the primary focus, the strength of its cash flow generation and balance sheet means that Nordgold is also able to review new opportunities continuously with a view to acquiring premium-quality reserves and resources at competitive valuations to further enhance the reserve base.
The Company has strict criteria when considering potentially viable gold projects; they must be located in mining-friendly jurisdictions with non-refractory ore and 2+ Moz of potential minable resources. Such highly efficient assets will allow us to pay back the invested capital in the short-term and to continue delivering strong returns to our shareholders
(1) Ore Reserves were estimated using a gold price of US$1,200/oz, unchanged from 2015, and operational costs for the first 9 months of 2016. Development projects Ore Reserves based on the gold price from their Feasibility Study: Gross – US$1,250/oz and Montagne d’Or – US$1,200/oz.
(2) Depletion based on Dore produced and average weighted recovery.
(3) Mineral Resources estimated within pit shells that are defined by an US$1,550/oz price (a US$50/oz increase from the 2015 estimate of US$1,500/oz), costs and relevant modifying factors used for their estimates. Development projects Mineral Resources based on the gold price from their Feasibility Study: Gross – US$1,600/oz, Uryakh – US$1,350/oz, Montagne d’Or – US$1,300/oz.
(4) Montagne d’Or Reserves and Resources were added to 2016 Nordgold total on the basis the Company met the earn-in conditions by spending at least US$30 million in the development of the project, completing a Bankable Feasibility Study by 13 March 2017 and there are no barriers to exercising the option. In mid-March 2017, the Company delivered a notice of option exercise to Columbus Gold Corp. to receive a total 55.01% interest in the project.