operating results q4 and full year 2016 · 1/26/2017 · operating results q4 and 2016 the tender...

Operating Results

Q4 and Full Year 2016

1 www.nordgold.com

Nord Gold SE operating results for the fourth quarter and 12 months ended 31 December 2016 London, United Kingdom, 26 January 2017

Nord Gold SE ("Nordgold" or the "Company", LSE: NORD), the internationally diversified gold producer, announces its operating results for the fourth quarter and 12 months ended 31 December 2016

Highlights Q4 2016 Q4 2015 Change,

YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.96 1.30 (26%) 1.47 (35%) 1.47 1.60 (8%)

Refined gold production, koz 235.1 241.9 (3%) 211.1 11% 868.8 950.0 (9%)

Gold doré production, koz 242.7 227.9 6% 207.8 17% 870.4 924.1 (6%)

Average realised gold price per ounce sold, US$/oz

1,198 1,096 9% 1,335 (10%) 1,246 1,161 7%

Revenue, US$m 281.5 264.0 7% 281.1 0% 1,083.0 1,129.3 (4%)

2016 refined gold production of 868.8 thousand gold equivalent ounces (“koz”), in line with the full year (“FY”) production guidance range of 840-880 koz.

2016 gold doré production was 870.4 koz, down 6% compared with 924.1 koz in 2015, mainly due to the discontinuation of production at Aprelkovo, and limited access in H2 2016 to flooded higher grade ore blocks in the West African open pit mines after an unusually long wet season.

Q4 2016 refined gold output increased by 11% quarter-on-quarter (“QoQ”) to 235.1 koz driven by higher production at Bissa, Bouly, Taparko, Lefa, Berezitovy and Suzdal mines. Doré production increased by 17% QoQ to 242.7 koz in Q4 2016.

The new Bouly mine, launched in September 2016 on schedule and under budget, has exceeded forecasts, reaching full capacity in November 2016 and producing 31.4 koz of gold doré in 2016, ahead of 2016 production guidance of 20 koz.

2016 AISC is expected to be in line with 2016 guidance of US$900/oz – US$950/oz.

FY 2017 production expected to be in the range of 900-950 koz.

2017 AISC guidance of US$900/oz - US$950/oz.

In 2016, the LTIFR improved to 1.47 compared with 1.60 in 2015.

Average realised gold price in 2016 increased by 7% to US$1,246 per oz. Average realised gold price in Q4 2016 was US$1,198/oz, up 9% YoY and down 10% QoQ.

FY 2016 revenue decreased by 4% YoY to US$1,083 million mainly due to the lower sales volumes, which were partially offset by higher gold price. Revenue in Q4 2016 increased by 7% YoY to US$281.5 million.

Unaudited net debt at 31 December 2016 decreased to approximately US$506.9 million compared with US$559.7 million as at 30 September 2016 and US$584.0 million as at 31 December 2015.

2 www.nordgold.com

Operating Results

Q4 and 2016

Message from the CEO

“I am pleased to report another solid quarter of production for Nordgold. In particular I am delighted with

the performance of our new Bouly mine in Burkina Faso which has delivered ahead of our expectations.

Bouly once again demonstrates our strong track record in developing outstanding mining assets from the

ground up, following the big success of our flagship Bissa mine in 2013. Our low cost development

pipeline is progressing well. Construction of our new Gross mine in Russia is ongoing and we expect to

launch the mine in 2018 as planned. Looking ahead, to 2017, the investments and improvements we have

made across our asset portfolio in 2016, combined with the positive outlook for Bouly, give us confidence

in expecting a rise in production this year.”

Nikolai Zelenski, Chief Executive Officer, Nordgold

Production Outlook

Nordgold expects gold production for the full year 2017 to be in the range of 900 – 950 koz.

2017 production growth will largely be driven by the contribution of our new Bouly mine which is expected to produce up to 110 koz in 2017 and additional growth from our operating mines, in particular Bissa, Lefa and Berezitovy which will all benefit from a programme of investment and mine development including:

o Bissa will benefit from the 2016 investments in the pits cutback programmes undertaken in order to enable ore supply from the pits to match annual plant capacity in 2017; the 7th leach tank commissioned in October 2016 will increase residence time and help to maintain recoveries at approximately 87% in 2017 despite the expected increase of fresh rock ores from deepening pits.

o Lefa will target an increase of ore mined volumes on the back of investments in the mining fleet update programme, which was started in 2016 and will continue in 2017, as well as due to the commencement of ore mining at the Toume-Toume satellite deposit. Lefa is also expected to benefit from an improvement of head grade in 2017, driven by Lero-Karta pit ore mining.

o Berezitovy will increase ore mined volumes as the first ore will be mined from Stage 3 cutback in Q2 2017, which will replace Stage 1 ore mining in Q2 2017. The mine will also be focused on higher throughput by modifying the crushing circuit, and increased availability from replacing the SAG mill coupling.

Nordgold will continue to invest in its Business System of Nordgold (BSN) programmes, and targets cash improvements of approximately US$60 million in 2017 through the implementation of best in class operating processes. Initiatives include improvements in mining practices, mobile equipment maintenance and metallurgical recovery, in both open pit and underground mining with continued strict cost control. We remain focused on achieving increased efficiency at all our mines to reduce costs further.

Development Highlights

Gross

Gross is an all-season open-pit heap leach project located in southwestern Yakutia, Russia, 4 km east of the Neryungri mine.

The Feasibility Study confirmed the economic attractiveness of the project giving an IRR of almost 40% at a gold price of US$1,250/oz and an IRR of approximately 25% at a gold price of US$1,100/oz.

Nordgold started Gross construction in early June 2016 with production expected to start in H1 2018. Construction is on track.

The first two camp buildings are completed and launched.

Power station civil works progressed in Q4 2016.

Tenders were conducted for the elution, electrowinning carbon regeneration and refining area and are under evaluation.

The earthworks fleet has been purchased and is mobilising to site. Earthworks are progressing on the heap leach pad and ponds.

3 www.nordgold.com

Operating Results

Q4 and 2016

The tender has been issued for the installation of the crushing chamber.

At full production, Gross is expected to mine and process c. 12 million tonnes of ore, producing approximately 230 koz of gold per year, at full production, for 17 years.

In 2016, the Gross pilot stage operation by Neryungri continued. During the year Gross’ run of mine amounted to 5.4 million tonnes (“Mt”), with 2.4 Mt of waste mined and 3.0 Mt of ore mined. The mined ore is being processed at the Neryungri mine leach pads.

Montagne d'Or

The Montagne d’Or gold deposit is located in north-west French Guiana.

The Preliminary Economic Assessment for the project, which was finalised in 2015, demonstrated positive economic data and Nordgold is therefore looking forward to completing a Bankable Feasibility Study in Q1 2017.

This is based on a set of conservative estimates, which represent significant upside potential for the operation, after-tax NPV is US$324 million at 8% and IRR is 23% at a gold price of US$1,200 per ounce.

The preliminary Environmental and Social Impact Assessment was completed in Q1 2015 and completion of the Environmental and Social Impact Assessment is expected in H1 2017.

Nordgold has a right to earn a 50.01% plus an additional 5% interest in the Montagne d'Or deposit by funding a minimum of US$30 million in expenditures and completing a Bankable Feasibility Study by no later than March 2017. By the end of Q2 2016, total project expenditures had reached US$30 million.

Pistol Bay

Pistol Bay is a high grade gold exploration project located in Nunavut Territory, northern Canada, on the west coast of Hudson Bay.

In October 2016, Nordgold completed the acquisition of Northquest Ltd, 100% owner of the Pistol Bay project.

The Pistol Bay property consists of 860 square kilometers of mineral rights within the underexplored Rankin-Ennadai greenstone belt. Within Arctic Canada, the project is favourably located with relatively easy access and existing infrastructure.

Maiden Inferred Resources of 739 koz of gold at 2.95 g/t were estimated for the Vickers deposit, part of the Pistol Bay project on 31 March 2016 (based on the NI 43-101 in-pit gold resource estimate utilising a cut-off grade of 1.25 g/t Au).

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. Although the data is still under analysis, Vickers drilling is expected to provide additional ounces to the announced resource when the modelling is complete later in 2017. Howitzer drilling was successful in that many holes encountered highly anomalous gold, but work is ongoing to determine its economic viability.

The analysis of 2016 drilling data as well as information gleaned from geological mapping and glacial till sampling during the past year will determine the precise programme for 2017, but an aggressive drilling program at existing and new targets, similar in size to 2016, is planned.

Safety

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

The LTIFR for 2016 was 1.47, an improvement of 8% compared with 1.60 in 2015. In Q4 2016 LTIFR improved by 35% QoQ and by 26% YoY to 0.96. We continue to invest our efforts in improving our overall safety performance.

In 2016, our Taparko, Berezitovy and Neryungri mines operated according to the highest industry standards, with no LTI incidents recorded, while LTIFR improved at Aprelkovo open pit mine as well as at Suzdal and Irokinda underground mines.

In 2016, following the tragic death of two of our colleagues at Irokinda and Zun-Holba in March and July 2016 respectively, a comprehensive underground Safety Turnaround programme was developed. Its implementation continues at Zun-Holba, Irokinda and Suzdal mines. The programme is focused on

4 www.nordgold.com

Operating Results

Q4 and 2016

transforming safety culture and leadership skills, improvement of processes and procedures; comprehensive operator’s training in mechanised underground equipment and a study to transition Zun-Holba to mechanized mining; including a trade-off study on most suitable mining method.

It is with great regret that we report a fatality at our Neryungri mine in January 2017. Our deepest sympathy goes to the bereaved family and colleagues. A full investigation has taken place to ensure that we learn from the incident.

LTIFR by mine

Mines Q4 2016 Q4 2015 Change,

YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

Bissa-Bouly 0.00 0.00 0% 0.00 0% 0.47 0.00 n.a.

Taparko 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Lefa 0.00 0.00 0% 0.00 0% 0.59 0.54 9%

Buryatzoloto (Zun-Holba mine)

4.93 2.87 72% 6.81 (28%) 6.26 3.27 91%

Buryatzoloto (Irokinda mine)

1.85 3.72 (50%) 0.00 n.a. 1.85 2.26 (18%)

Berezitovy 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Neryungri 0.00 0.00 0% 0.00 0% 0.00 2.20 (100%)

Aprelkovo 0.00 0.00 0% 7.37 (100%) 1.75 3.11 (44%)

Suzdal 0.00 4.53 (100%) 2.42 (100%) 1.19 4.03 (70%)

Nordgold 0.96 1.30 (26%) 1.47 (35%) 1.47 1.60 (8%)

5 www.nordgold.com

Operating Results

Q4 and 2016

Production Overview

Refined Gold Production by Mine, koz 1 2

Operating results Q4 2016 Q4 2015 Change,

YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

Bissa-Bouly 78.5 65.2 20% 49.0 60% 213.9 235.3 (9%)

Bissa 53.0 65.2 (19%) 46.4 14% 185.8 235.3 (21%)

Bouly 25.5 - - 2.6 881% 28.1 - -

Taparko 29.9 21.5 39% 29.6 1% 111.2 83.2 34%

Lefa 49.1 53.8 (9%) 44.8 10% 194.7 214.2 (9%)

Buryatzoloto (Irokinda and Zun-Holba mines)

19.4 27.3 (29%) 22.0 (12%) 97.7 112.7 (13%)

Berezitovy 21.2 28.5 (26%) 17.4 22% 79.7 125.3 (36%)

Neryungri 15.8 20.4 (23%) 28.4 (44%) 80.5 84.1 (4%)

Aprelkovo 0.6 5.2 (88%) 0.7 (14%) 9.8 19.8 (51%)

Suzdal 20.5 20.0 2% 19.2 7% 81.4 75.3 8%

Nordgold 235.1 241.9 (3%) 211.1 11% 868.8 950.0 (9%)

Operating Results Summary 1


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.96 1.30 (26%) 1.47 (35%) 1.47 1.60 (8%)

Run of mine, kt 3 32,673 28,227 16% 33,314 (2%) 129,162 107,395 20%

Waste mined, kt 3 25,816 22,757 13% 28,407 (9%) 107,679 88,678 21%

Ore mined, kt 7,149 5,775 24% 5,219 37% 22,694 19,935 14%

Stripping ratio, t/t 4 3.76 4.16 (10%) 5.79 (35%) 5.01 4.74 6%

Ore processed, kt5 6,606 5,202 27% 6,829 (3%) 25,191 22,127 14%

Grade, g/t 1.32 1.63 (19%) 1.24 6% 1.34 1.58 (15%)

Recovery, % 84.1 81.1 3.0pp 81.0 3.1pp 82.0 81.7 0.3pp

Gold production, koz

235.1 241.9 (3%) 211.1 11% 868.8 950.0 (9%)

Gold sold, koz 234.9 240.8 (2%) 210.6 12% 869.5 972.9 (11%)


1,198 1,096 9% 1,335 (10%) 1,246 1,161 7%

Revenue, US$m 281.5 264.0 7% 281.1 0% 1,083.0 1,129.3 (4%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal to gold produced due to differences in work in

progress figures and volumes of silver production

1 May include the effect of rounding.

2 Including 1.463 and 5.805 thousand gold equivalent ounces of silver production for Q4 2016 and 2016 respectively (Based on ~ 1:74 Au/Ag).

3 Open pit mines only.

4 Calculated for total ore mined and waste mined at open pits only.

5 Includes ore processed at Berezitovy heap leach.

6 www.nordgold.com

Operating Results

Q4 and 2016

Burkina Faso Bissa-Bouly

Nordgold expanded its flagship Bissa mine with the launch of a heap leach operation at the nearby Bouly deposit in Burkina Faso in September 2016. Bouly construction was completed on schedule and under budget. The Bouly mine reached its full capacity in November 2016 and produced 31.4 koz of gold doré in 2016, ahead of 2016 production guidance of 20 koz.

The combined Bissa-Bouly operations produced 213.9 koz in 2016 and 78.5 koz in Q4 2016.

The standalone Bissa mine produced 185.8 koz in 2016, down 21% YoY due to lower ore mined volumes and head grade mainly related to higher waste stripping activities performed in order to facilitate pits cutbacks for higher grade ore supply in 2017. The mine increased gold production in Q4 2016 by 14% QoQ to 53.0 koz driven by higher throughput and grade.

In 2016, Bissa run of mine increased by 55% to 38,645 kt while ore mined decreased by 13% to 3,948 kt. In Q4 2016, Bissa run of mine decreased by 7% QoQ to 8,768 kt while ore mined increased by 30% to 1,189 kt.

Average stripping ratio reduced further in Q4 2016 to 6.37 t/t, down 31% QoQ. In 2016, average stripping ratio was 8.79 t/t, lower than 2016 guidance of 9.2 t/t.

Bissa’s average head grade increased in Q4 2016 by 9% QoQ to 1.63 g/t due to higher grade ore blocks from Zone 51 and Zone 52 pits fed into the mill. FY2016 head grade was 1.54 g/t.

In Q4 2016, ore processed increased by 4% QoQ to 1,102 kt, while in FY2016 ore processed increased by 2% to 4,184 kt, exceeding 2016 guidance of 4.1 Mt. A 66.5 hrs reline was completed as planned in October 2016.

Recovery increased by 1.5 percentage points (“pp”) to 88.4% in 2016. Q4 2016 recovery was 89%, down 0.7 pp QoQ and up 2.1 pp YoY.

In 2017, Bissa will benefit from 2016 investments in the pits cutback programmes realised in order to enable ore supply from pits to match annual plant capacity in 2017. Ore will be mined from the South West, IO, Zone 51, Zone 52 and Gougre pits with a planned average stripping ratio of 8.0 t/t. The average head grade is expected to be 1.7 g/t, while increasing hardness of ores from the deepening of pits will result in slightly lower total throughput of 3.9 Mt in 2017. The 7th leach tank commissioned in October 2016 will increase residence time and help to maintain recoveries at approximately 87% in 2017 while processing lower recovery harder ores.

The mine will be focused on mining efficiency and productivity in 2017 as pits increase in depth and more fresh rock are mined.

In 2016, Bissa continued near mine exploration with a focus on resources conversion, reserve replacement and extensions of current pits, and definition of satellite pits. Exploration teams completed drilling programmes at satellite deposits Yimiougou (14,991m) and Noungou (8,049m), encountering additional mineralisation that will be included in the annual resource update.

Mining License applications for Bissa satellite pits Ronguen and Zinigma are progressing through the regulatory process. Contracts were awarded for feasibility & environmental studies for the Yimiougou and Noungou satellite pits, and upon their completion Mining License applications will be submitted in mid-2017. Nordgold is also seeking to obtain access to three additional exploration areas in Burkina Faso near Bissa. In parallel aggressive brownfield exploration including geological mapping, geochemical sampling and drilling will continue on permits near Bissa with particular emphasis on the Baola II permit.

7 www.nordgold.com

Operating Results

Q4 and 2016

Burkina Faso Bissa-Bouly

Bissa Operating Results Summary


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR (Bissa-Bouly)

0.00 0.00 0% 0.00 0% 0.47 0.00 n.a.

Run of mine, kt 8,768 7,176 22% 9,378 (7%) 38,645 25,009 55%

Waste mined, kt 7,579 6,066 25% 8,461 (10%) 34,697 20,464 70%

Ore mined, kt 1,189 1,110 7% 917 30% 3,948 4,545 (13%)

Stripping ratio, t/t 6.37 5.46 17% 9.23 (31%) 8.79 4.50 95%

Ore processed, kt 1,102 1,042 6% 1,063 4% 4,184 4,097 2%

Grade, g/t 1.63 1.95 (16%) 1.49 9% 1.54 1.94 (21%)

Recovery, % 89.0 86.9 2.1pp 89.7 (0.7pp) 88.4 86.9 1.5pp


53.0 65.2 (19%) 46.4 14% 185.8 235.3 (21%)

Gold sold, koz 53.0 64.8 (18%) 46.4 14% 185.8 235.2 (21%)


1,190 1,104 8% 1,333 (11%) 1,241 1,165 7%

Revenue, US$m 63.1 71.6 (12%) 61.8 2% 230.4 274.2 (16%)

Bouly Operating Results Summary


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

Run of mine, kt 3,368 - - 2,918 15% 8,651 - -

Waste mined, kt 1,440 - - 1,760 (18%) 5,133 - -

Ore mined, kt 1,928 - - 1,158 66% 3,518 - -

Stripping ratio, t/t 0.75 - - 1.52 (51%) 1.46 - -

Ore processed, kt 1,858 - - 1,072 73% 3,292 - -

Grade, g/t 0.63 - - 0.56 13% 0.57 - -

Recovery, %6 83.0 - - 83.0 0.0pp 83.0 - -


25.5 - - 2.6 881% 28.1 - -

Gold sold, koz 25.5 - - 2.6 881% 28.1 - -


1,203 - - 1,313 (8%) 1,213 - -

Revenue, US$m 30.6 - - 3.4 800% 34.1 - -


progress figures and volumes of silver production.

6

Technical recovery rate. Actual recovery may differ due to seasonal effects.

8 www.nordgold.com

Operating Results

Q4 and 2016

Burkina Faso Taparko

Taparko production increased by 34% in 2016 to 111.2 koz mainly due to higher average head grade and recovery. In Q4 2016, Taparko increased gold output by 19% QoQ and 39% YoY to 29.9 koz.

In 2016, Taparko mined 1,994 kt of ore compared with 987 kt in 2015. Stripping ratio decreased in 2016 by 52% to 9.13 t/t.

Ore processed volumes decreased slightly in 2016 to 1,636 kt from 1,657 kt in 2015. Q4 2016 ore processed volumes decreased by 1% QoQ to 399 kt mainly attributable to an unplanned downtime event in the power generating facility. A review of current operating and maintenance practices in the power generating facility will be conducted in January 2017.

Recovery in 2016 increased by 0.9 pp to 83.1%. In Q4 2016, recovery increased by 3.8 pp QoQ and by 9.2 pp YoY to 85.3%.

In 2017, Taparko will deliver a waste cutback at the current 35 pit and mine an extension to the 2N2K pit in order to access new ore blocks. The mine will also continue to work on permitting of the satellite Goengo deposit in order to start its development and mining in H2 2017. As a result, the 2017 average stripping ratio is expected to be approximately 13 t/t. The mine will target ore mined volumes of approximately 1.5 Mt in 2017 with head grade at above 2.0 g/t. Throughput in 2017 will be maintained at 2016 level, while recovery is expected to be c. 82%.

In 2016, positive results came from 27,808 m of drilling completed at Goengo West and Kangarse, satellite deposits located on the Taparko mining lease. Taparko also converted the Goengo Mineral Resources to Ore Reserves which will be reflected in the annual resource update. At the Yeou deposit, an environmental licence was granted and approval was received for a mining license.

In 2017 exploration work at and near Taparko will feature exploration drilling at Kangarse for additional ore positions and exploration drilling along strike at Goengo West. Mapping and sampling will continue around Goengo and Kangarse to determine what additional targets can be defined for drill testing.


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 4,055 5,973 (32%) 5,158 (21%) 20,198 19,800 2%

Waste mined, kt 3,652 5,647 (35%) 4,824 (24%) 18,204 18,814 (3%)

Ore mined, kt 403 325 24% 333 21% 1,994 987 102%

Stripping ratio, t/t 9.05 17.36 (48%) 14.47 (37%) 9.13 19.07 (52%)

Ore processed, kt 399 462 (14%) 405 (1%) 1,636 1,657 (1%)

Grade, g/t 2.67 1.73 54% 2.89 (8%) 2.54 1.82 40%

Recovery, % 85.3 76.1 9.2pp 81.5 3.8pp 83.1 82.2 0.9pp

Gold production, koz 29.9 21.5 39% 29.6 1% 111.2 83.2 34%

Gold sold, koz 29.9 21.2 41% 29.6 1% 111.6 82.7 35%


1,211 1,106 9% 1,336 (9%) 1,252 1,152 9%

Revenue, US$ m 36.2 23.4 55% 39.5 (8%) 139.7 95.2 47%

Ore processed multiplied by head grade and multiplied by recovery may not be equal to gold produced due to differences in work in progress figures and volumes of silver production.

9 www.nordgold.com

Operating Results

Q4 and 2016

Guinea Lefa

In 2016, Lefa gold production decreased by 9% to 194.7 koz mainly due to flooding in the higher grade Karta pit, following the heavy rainy season. Dewatering of the pit was completed on 10 October 2016 and on 20 October 2016 access onto the pit floor was re-established and mining continued.

In Q4 2016, Lefa returned to normal production increasing output by 10% QoQ to 49.1 koz.

Run of mine increased by 6% in 2016 to 26,473 kt. Ore mined increased by 2% to 6,137 kt in 2016. Average stripping ratio increased to 3.31 t/t in 2016 from 3.15 t/t in 2015, lower than full year guidance of 3.70 t/t. Average head grade decreased by 9% in 2016 to 1.05 g/t, mainly due to the inability to access the flooded Karta pit. Ore processed increased by 1% in 2016 to 6,599 kt, higher than full year guidance of 6.3 Mt. Recovery decreased in 2016 by 0.6 pp to 87.7%, but was higher than 2016 guidance of 87.5%.

In Q4 2016, ore mined increased by 47% QoQ and 7% YoY to 1,742 kt. Stripping ratio decreased by 11% QoQ to 3.46 t/t. Volumes of ore processed increased by 12% QoQ to 1,782 kt. The average head grade in Q4 2016 increased by 3% QoQ to 1.01 g/t. Recovery decreased by 0.6 pp QoQ to 86.8%.

In 2017, Lefa will target an increase of ore mined volumes to 7.0 Mt supported by investments in the mining fleet update programme, which was started in 2016 and will continue in 2017. The mine will also complete construction of an access road to the Toume-Toume satellite deposit with the aim of starting ore mining at the deposit in 2017. The stripping ratio will increase to approximately 4.0 t/t in 2017 as the mine will commence further cutbacks at the Lero-Karta mining complex. Lefa is expected to benefit from an improvement of head grade to approximately 1.15 g/t in 2017. The 2017 average recovery will be c. 87% due to processing of increased amounts of lower recovery harder ores.

Lefa is currently evaluating a new replacement powerhouse to supply power more efficiently, resulting in lower operating and maintenance costs.

Commissioning of a 10 tonnes per day oxygen plant to replace peroxide addition in the leach is scheduled for Q1 2017. A cost reduction will be realised as oxygen will replace the addition of hydrogen peroxide.

In Q4 2016, Lefa finalised a preliminary design for a new Tailings Storage Facility (“TSF”), with permitting and detail design continue in Q1 2017. Land compensation has been completed and permitting is progressing well. Order for new TSF and return water lines has been placed.

In 2016, the Lefa geological team conducted successful exploration near the current operating pits to add resources that will be included in the year-end resource update. Lefa’s exploration programme was expanded to include regional oxide deposits up to 45km away from the plant. In 2017, the mine will continue to work on regional oxide ore deposits. Lefa will also evaluate underground mining potential at the Banora satellite deposit and at the Lero-Karta complex.

10 www.nordgold.com

Operating Results

Q4 and 2016

Guinea Lefa

Lefa Operating Results Summary


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.59 0.54 9%

Run of mine, kt 7,769 6,288 24% 5,795 34% 26,473 24,999 6%

Waste mined, kt 6,026 4,664 29% 4,609 31% 20,336 18,980 7%

Ore mined, kt 1,742 1,623 7% 1,186 47% 6,137 6,019 2%


Ore processed, kt 1,782 1,624 10% 1,590 12% 6,599 6,558 1%

Grade, g/t 1.01 1.14 (11%) 0.98 3% 1.05 1.15 (9%)

Recovery, % 86.8 88.4 (1.6pp) 87.4 (0.6pp) 87.7 88.3 (0.6pp)

Gold production, koz 49.1 53.8 (9%) 44.8 10% 194.7 214.2 (9%)

Gold sold, koz 49.0 53.8 (9%) 44.5 10% 195.1 223.5 (13%)


1,189 1,099 8% 1,343 (11%) 1,241 1,164 7%

Revenue, US$m 58.2 59.1 (2%) 59.8 (3%) 242.0 260.1 (7%)



11 www.nordgold.com

Operating Results

Q4 and 2016

Russia Buryatzoloto

Buryatzoloto, which operates the Irokinda and Zun-Holba underground mines, decreased production in 2016 by 13% YoY to 97.7 koz mainly due to lower ore volumes mined (down 3% to 661 kt) and processed volumes (down 4% to 660 kt), as well as lower head grade (down 8% to 4.78 g/t) partially offset by higher recovery (up 0.3 pp to 92.6%).

In Q4 2016, Buryatzoloto decreased gold production by 12% QoQ to 19.4 koz mainly due to lower grade (down 14% to 3.81 g/t).

Zun-Holba

In Q4 2016, mechanised development of the Zun-Holba 2 Decline continued in order to access the Deep horizons. A focused Decline development productivity improvement programme was successfully launched; development increased from 160 m per month in Q2 2016 to achieving 206 m in November 2016. Development totalled 603 m in Q4 2016.

A new twin boom jumbo was delivered to site in December 2016, which will focus on main Decline development. The first production drill, required for ore production, will be delivered in Q2 2017.

The mine in Q4 2016 continued to develop exploration platforms from which targets in the Dalnaya, Kvartsevaya and Kontaktovoe zones were successfully drilled out. A new access road to Granitnoe zone was constructed and reconstruction of the old Adit entrance started in Q4 2016.

Zun-Holba production in 2017 expected to be in the range of 28 – 32 koz, depending on availability of high grade reserves in the Decline area.

At Zun-Holba, exploration efforts focused on the Kontaktovoe, Kvartsevaya, Severnoe-3 and Sulphidnoe-1 zones. Drilling continued at deep locations of the mine from the new decline that is progressing to drilling positions from which new deep ore horizons are being defined. Work is also underway to bring resources in the Grantinoe satellite zone east of Zun-Holba into the mine plan. 2017 will see intensified effort to define ore at deep levels and the near-surface ICE, Granitnoe and Ozernoe zones at Zun-Holba.

Irokinda

In Q4 2016, earthworks for the Medvegya vein portal development were completed, decline development achieved 444 m in Q4 2016. Earthworks continued at the Adit 72 portal development, located at the high-grade Vein Vysokya.

In Q4 2016, Irokinda continued levels development and ore production from Vein #3 lower horizons, and Vein Serebryakovskaya.

A new twin boom jumbo and LH410 Sandvik loader were delivered in Q4 2016, which will focus on the main Decline development on Medvegya vein.

The mine also purchased a CAT D6 dozer and CAT 725 articulated truck for surface ore transportation, with delivery expected in Q1 2017.

The review of Irokinda plant efficiency improvements associated with the reconstruction of the crushing circuit has been completed, the plant capacity expansion from 350 ktpa to 380 ktpa project will have a noticeable impact, design for the expansion is in progress and will aim to maintain as much of the initial project benefits as possible. Procurement of long lead items for the expansion project will commence in Q4 2017.

Irokinda will decrease gold output in 2017 mainly due to lower head grade of c. 5.0 g/t.

Exploration at Irokinda continued during 2016 in the Vein #3, Petrovskaya, Visokaya-Poperechnaya, and Serebryakovskaya zones. Intersections as high as 146 g/t Au were encountered as the ongoing work added resources and mine life to the mine. Resources defined by the drilling will be added to the annual resource update and included in mine planning. The exploration programme will be continued in 2017.

12 www.nordgold.com

Operating Results

Q4 and 2016

Russia Buryatzoloto

West of the Irokinda permit work continues on the highly prospective Zhanok exploration project. Sampling and trenching during the year produced high grade surface results that will be drilled aggressively during 2017 in an effort to produce a new discovery near existing infrastructure.

Buryatzoloto Operating Results Summary


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR (Zun-Holba mine)

4.93 2.87 72% 6.81 (28%) 6.26 3.27 91%

LTIFR (Irokinda mine)

1.85 3.72 (50%) 0.00 n.a. 1.85 2.26 (18%)

Ore mined, kt 153 174 (12%) 165 (7%) 661 683 (3%)

Ore processed, kt 162 163 (1%) 160 1% 660 691 (4%)

Grade, g/t 3.81 5.32 (28%) 4.45 (14%) 4.78 5.18 (8%)

Recovery, % 92.1 92.1 0.0pp 92.5 (0.4pp) 92.6 92.3 0.3pp

Gold production, koz 19.4 27.3 (29%) 22.0 (12%) 97.7 112.7 (13%)

Gold sold, koz 19.3 26.9 (28%) 22.1 (13%) 97.8 122.8 (20%)


1,202 1,090 10% 1,328 (9%) 1,236 1,172 5%

Revenue, US$m 23.2 29.4 (21%) 29.3 (21%) 120.9 143.9 (16%)



13 www.nordgold.com

Operating Results

Q4 and 2016

Russia Berezitovy

Berezitovy refined gold production decreased to 79.7 koz in 2016 from 125.3 koz in 2015. Gold doré production in 2016 was 81.6 koz compared with 117.6 koz in 2015 mainly due to processing lower grade ore as the mine completes mining ore from Stage 1 and continues cutbacks of Stages 3 and 4, with mill throughput supported by ore supply from historical stockpiles.

The run of mine in 2016 was 15,943 kt, while waste mined was 15,239 kt. Berezitovy mined 704 kt of ore in 2016 against 1,110 kt in 2015. Stripping ratio was to 21.66 t/t in 2016. The average head grade was 1.72 g/t in 2016, down 23% from 2015. Throughput decreased in 2016 by 12% to 1,481 kt due to unplanned downtime associated with the 42” Wichita coupling of the SAG mill, which deteriorated more than expected. Recovery remained flat at 89.5% in 2016.

In Q4 2016, Berezitovy production of refined gold increased by 22% QoQ to 21.2 koz and gold doré production increased by 53% QoQ to 25.0 koz driven by higher throughput and head grade.

In Q4 2016, the Exploration Decline Development Study was approved by the authorities allowing to commence underground development in 2017.

In 2017, Berezitovy will increase ore mined volumes as the first ore will be mined from Stage 3 cutback in Q2 2017, which will replace Stage 1 ore mining in Q2 2017. The mine will also be focused on throughput increase to c. 1.8 Mt by modifying the crushing circuit and replacing the SAG mill coupling. 2017. Head grade is expected to be approximately 1.5 g/t while recovery will stay in line with 2016.

Exploration teams completed fieldwork on the Khaikta greenfield project north of the Berezitovy mine during the year, yielding high priority drilling targets for commencement in early 2017. The work included collection of 3,402 geochemical samples, geophysical surveys, 33 km of access roads, and 45m of trenching. Results include grab samples of up to 126 g/t Au in several large clusters. Planning is underway to aggressively drill the Khaikta anomalies that could provide additional resources for the Berezitovy mill if drilling confirms economic mineralisation.

14 www.nordgold.com

Operating Results

Q4 and 2016

Russia Berezitovy

Berezitovy Operating Results Summary


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 4,161 3,246 28% 4,589 (9%) 15,943 14,715 8%

Waste mined, kt 3,698 2,867 29% 4,481 (17%) 15,239 13,605 12%

Ore mined, kt 463 379 22% 107 333% 704 1,110 (37%)


Ore processed, kt 382 401 (5%) 331 15% 1,481 1,684 (12%)

Grade, g/t 2.10 2.19 (4%) 1.42 48% 1.72 2.23 (23%)

Recovery, % 90.0 90.0 0.0pp 90.7 (0.7pp) 89.5 89.5 0.0pp

Gold production7, koz 21.2 28.5 (26%) 17.4 22% 79.7 125.3 (36%)

Gold sold, koz 21.1 28.4 (26%) 17.2 23% 79.5 129.5 (39%)


1,184 1,090 9% 1,329 (11%) 1,234 1,158 7%

Revenue, US$m 25.0 31.0 (19%) 22.9 9% 98.1 150.0 (35%)



7 Including gold from heap leach.

15 www.nordgold.com

Operating Results

Q4 and 2016

Russia Neryungri

Neryungri production in 2016 was 80.5 koz of refined gold, down 4% YoY. Gold doré production was 80.0 koz in 2016 compared with 77.9 koz in 2015 mainly due to higher throughput and head grade.

Ore mined volumes increased by 10% in 2016 to 5,163 kt. 2016 stripping ratio was 2.64 t/t compared with 2.61 t/t in 2015. Ore processed volumes increased by 13% to 4,742 kt at 0.70 g/t comprising of 2,473 kt ore at 0.60 g/t from Gross and 2,269 kt at 0.82 g/t from Tabornoe.

In Q4 2016, the mine decreased production by 44% QoQ to 15.8 koz mainly due to lower throughput (down 53% to 659 kt), and lower head grade (down 11% to 0.59 g/t) related to the seasonality of heap leach operation.

In 2016, Neryungri continued development of the Gross pilot stage operation. During the year Gross’ run of mine amounted to 5.4 Mt, with 2.4 Mt of waste mined and 3.0 Mt of ore mined. The mined ore is being processed at the Neryungri mine leach pads.

In 2017, Neryungri will continue development of the Gross pilot stage operation. The mine’s stripping ratio in 2017 is expected to increase to c. 3.0 t/t due to waste stripping of the Tabornoe main pit. Neryungri also plans to start waste stripping at Tomniy and Trench 7 deposits in 2017 when permits are granted. Throughput will remain at 2016 level while head grade is expected to be 0.6 g/t in 2017.

Near the Tabornoe pit, teams completed a 2,784 m drilling programme at the Visokiy deposit intersecting continuous high grade ore that will be incorporated into a resource for inclusion in the mine plan for exploitation. On the flanks of the Tabornoe pit drilling continued in parallel in 2016 to fill in areas of sparse drilling and expand resources.

The newly acquired Tokkinsky permit to the west of Tabornoe saw 1,120 m of diamond drilling. Preliminary results indicate a consistent, sub-horizontal mineralised horizon that will be followed up in 2017 with further drilling. The expected result is a resource that will provide a development option for the Tabornoe-Gross complex. While the Gross project is under construction drilling is planned on a systematic basis to increase confidence in the reserves to be mined and improve reconciliation during the mining phase.


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 2.20 (100%)

Run of mine, kt 4,552 4,117 11% 5,476 (17%) 18,776 16,976 11%

Waste mined, kt 3,422 2,441 40% 4,270 (20%) 13,613 12,272 11%

Ore mined, kt 1,131 1,676 (33%) 1,206 (6%) 5,163 4,703 10%


Ore processed, kt 659 812 (19%) 1,394 (53%) 4,742 4,211 13%

Grade, g/t 0.59 0.69 (14%) 0.66 (11%) 0.70 0.69 1%

Recovery, %8 75.0 75.0 0pp 75.0 0pp 75.0 75.0 0pp


15.8 20.4 (23%) 28.4 (44%) 80.5 84.1 (4%)

Gold sold, koz 16.1 20.4 (21%) 28.2 (43%) 80.4 84.1 (4%)


1,216 1,061 15% 1,340 (9%) 1,284 1,145 12%

Revenue, US$m 19.6 21.7 (10%) 37.8 (48%) 103.2 96.2 7%

Ore processed multiplied by head grade and multiplied by recovery may not be equal to gold produced due to differences in work in progress figures and volumes of silver production.

8 Technical recovery rate. Actual recovery may differ due to seasonal effects.

16 www.nordgold.com

Operating Results

Q4 and 2016

Russia Aprelkovo

In 2016, Aprelkovo gold production decreased to 9.8 koz from 19.8 koz in 2015, mainly due to decommissioning of the operation.

In September 2016, Aprelkovo was shifted into winter mode until May 2017, meaning operations were restricted to maintaining irrigation and solution management.

As previously disclosed, the regional tax authority decided to impose an additional tax payment of 229 million rubbles (approximately US$3.5 million) on the Aprelkovo mine operations related to the period 2011 and 2012. The additional tax assessment mainly comprises a further royalty, which was calculated by the tax authority based on the disputable taxation of lower recoveries. This assessment was confirmed by the Arbitration Court of Appeal. In July 2016 the Court of Cassation confirmed the decision of the Arbitration Court of Appeal. The claim was specific to Aprelkovo and is not expected to impact other Nordgold mines in Russia.

The additional tax assessment will result in Aprelkovo generating negative free cash flows, which are now expected to continue for the remaining two years life of mine. As a result, Aprelkovo, the smallest mine in Nordgold’s portfolio by some distance, will be unsustainable as a standalone entity. These circumstances have resulted in the decision to file a petition for bankruptcy of Aprelkovo. The observation procedure was introduced by the Arbitration Court of Moscow on 22 December 2016.


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 0.00 0% 7.37 (100%) 1.75 3.11 (44%)

Run of mine, kt - 1,428 - - - 476 5,896 (92%)

Waste mined, kt - 1,071 - - - 457 4,544 (90%)

Ore mined, kt - 356 - - - 19 1,352 (99%)

Stripping ratio, t/t - 3.00 - - 24.29 3.36 623%

Ore processed, kt - 362 - 151 - 912 1,485 (39%)

Grade, g/t - 0.97 - 0.64 - 0.74 1.09 (32%)

Recovery, %9 - 47.7 - 47.7 - 47.7 47.7 0.0pp

Gold production, koz 0.6 5.2 (88%) 0.7 (14%) 9.8 19.8 (51%)

Gold sold, koz 0.5 5.3 (91%) 0.7 (29%) 9.7 19.8 (51%)


1,229 1,096 12% 1,349 (9%) 1,237 1,154 7%

Revenue, US$m 0.6 5.8 (90%) 0.9 (33%) 12.0 22.9 (48%)



9 Technical recovery rate. Actual recovery may differ due to seasonal effects.

17 www.nordgold.com

Operating Results

Q4 and 2016

Kazakhstan Suzdal

In 2016, Suzdal gold production increased by 8% to 81.4 koz driven mainly by higher average head grade (up 9% to 6.99 g/t).

Ore mined volumes increased by 3% to 551 kt. Ore processed volumes decreased by 6% to 543 kt as a result of downtime associated with the loss of BIOX activity in Q4 2016, which took approximately 2 weeks to correct.

In Q4 2016, the Suzdal mine increased production by 7% QoQ to 20.5 koz. Performance improvement was driven by higher head grade (up 6% to 7.41 g/t) and recovery (up 3.1 pp to 67.7%).

In June 2016, Suzdal launched the Outotec High Temperature Caustic Conditioning circuit to recover gold from both historical and CIL future tailings.

HiTeCC is currently operating on current CIL tails. A study is on-going to process old tails during winter, if feasible the project will be launched in December 2017. Ore Body 4 metallurgical testwork with Tomsk University is aimed at improving the understanding of future ore and improvements in recovery.

In 2017, Suzdal will target the same level of production as in 2016.

The Suzdal team drilled from underground positions (18,469 m) and from surface (2,000 m), encountering high grade ore in Ore Body 1-3 and 4. These ores will be added to the Suzdal resource and provide options for exploitation going forward. Work in 2017 will be more focussed and aggressive, totalling more than 50,000 m in Ore Body 1-3 and 4.


YoY Q3 2016

Change, QoQ

2016 2015 Change,

YoY

LTIFR 0.00 4.53 (100%) 2.42 (100%) 1.19 4.03 (70%)

Ore mined, kt 139 130 7% 147 (5%) 551 536 3%

Ore processed, kt 132 157 (16%) 133 1% 543 575 (6%)

Grade, g/t 7.41 6.47 15% 6.96 6% 6.99 6.42 9%

Recovery, % 67.7 62.8 4.9pp 64.6 3.1pp 66.4 66.4 0.0pp

Gold production, koz 20.5 20.0 2% 19.2 7% 81.4 75.3 8%

Gold sold, koz 20.5 20.1 2% 19.2 7% 81.4 75.4 8%


1,216 1,101 10% 1,332 (9%) 1,260 1,150 10%

Revenue, US$m 25.0 22.2 13% 25.6 (2%) 102.6 86.7 18%



Operating Results


18 www.nordgold.com

Enquiries

Nordgold

Valentina Bogomolova

Head of IR

Tel: +7 (495) 644 4473

[email protected]

Olga Ulyeva

Head of Media Relations

Tel: +7 (495) 644 4473

[email protected]

Powerscourt

Peter Ogden

Giles Read

Tessa Berry

Tel: +44 (0) 20 7250 1446

For further information on Nordgold please visit the Company’s website - www.nordgold.com

About Nordgold

Nordgold (LSE: NORD) is an internationally diversified gold producer established in 2007 and publicly traded on the London Stock Exchange. Nordgold has a proven track record of operational excellence and benefits from a significant international development pipeline. The Company is relentlessly focused on shareholder value, committed to running safe, efficient, profitable operations, which enable it to generate strong cashflows and in turn, continue to invest in its pipeline of new growth opportunities while generating returns for investors. In 2016, Nordgold produced 869 koz of gold.

Nordgold operates 9 mines (4 in Russia, 3 in Burkina Faso and one each in Guinea and Kazakhstan). It has one project in construction phase (Gross in Russia), several prospective projects in feasibility study, preliminary economic assessment and advanced exploration phase and a diverse portfolio of early-stage exploration projects and licences in Burkina Faso, Russia, French Guiana and Canada. Nordgold employs over 8,000 people.

Cautionary Note Regarding Forward-Looking Statements The accompanying document has been prepared by Nord Gold SE, a company existing under the laws of the United Kingdom (the “Company” or “Nordgold” and, together with its subsidiaries, the “Group”), and is for informational purposes only. While information in this document is obtained from sources believed by the Company to be reliable, the Company has not undertaken an independent verification of such information, and no assurance can be provided as to the accuracy or completeness of any such information.

Certain statements in this document are not historical facts and constitute “forward-looking” statements regarding future events or the future financial performance of the Group, including within the meaning of Section 27A of the United States Securities Act of 1933, as amended and Section 21E of the United States Securities Exchange Act of 1934, as amended. Such forward looking statements may be identified by terms such as “expect”, “believe”, “estimate”, “anticipate”, “intend”, “will”, “could”, “may”, or “might”, the negative of such terms or other similar expressions. These forward-looking statements include matters that are not historical facts and statements regarding the Group’s intentions, beliefs or current expectations concerning, among other things, the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and the Groups’ actual results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Group operates may differ materially from those described in or suggested by the forward-looking statements contained in these materials. In addition, even if the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Group operates are consistent with the forward-looking

mailto:[email protected]

mailto:[email protected]

http://www.nordgold.com/

Operating Results


19 www.nordgold.com

statements contained in these materials, those results or developments may not be indicative of results or developments in future periods. Any such statements speak as of the date on which they are made, and the Company does not undertake any obligation to update any such statements to reflect information, events, results or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events, except as may be required by applicable law. Many factors could cause the actual results to differ materially from those contained in forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in the states where the Group operates, changes in the world gold market, as well as many other risks specifically related to the Group and its operations. 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. New risks and uncertainties 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. Actual performance or achievement could differ materially from that expressed in, or implied by, any forward-looking information in this document and, accordingly, investors should not place undue reliance on any such forward-looking information.

The information in these materials is provided as at the date hereof, and is subject to verification, completion and change. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in these materials, and no reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. None of the Company or any of its shareholders, directors, officers or any other person accepts any liability whatsoever for any loss howsoever arising from any use of the contents of these materials or otherwise arising in connection therewith.

operating results q4 and full year 2016 · 1/26/2017 · operating results q4 and 2016 the tender...

Documents