Nordgold Reports Q1 2011 Financial Results

Nordgold, an established pure-play gold producer focussed on emerging markets and a wholly-owned subsidiary of OAO Severstal, announces results for the three months ended 31 March 2011 (“Q1 2011”). Nord Gold N.V. (“Nordgold”) reports 2011 first quarter results.

Q1 Highlights

  • Production increased by 59% to 174,193 gold equivalent ounces (Q1 2010: 109,241 ounces; Q4 2010: 194,140 ounces) Sales were 173,930 gold equivalent ounces, an increase of 42% over the same period last year and 10% decrease over Q4 2010 (1Q 2010: 122,638 ounces; 4Q 2010: 194,256 ounces)
  • Revenue increased 80% to US$244.0 million and decreased 9% compared to Q4 2010 (Q1 2010: US$ 135.3 million; 4Q 2010: US$ 268.8 million)
  • Average realized gold price increased 27% to US$1,403 per ounce sold and 1% over Q4 2010 (Q1 2010: US$1,101 per ounce; 4Q 2010: US$1,385 per ounce)
  • Total cash cost per ounce of gold was US$603 (Q1 2010: US$487 per ounce; Q4 2010: US$633)EBITDA increased by 105% to US$ 135.1 million and 1% over Q4 2010 (Q1 2010: US$ 66.5 million; 4Q 2010: US$ 133.4 million)
  • EBITDA margin was 55% (Q1 2010: 50%, Q4 2010: 49%)
  • Capex increased by 74% to US$ 38.9 million and decreased by 35% compared to Q4 2010 (Q1 2010: US$ 22.3 million; 4Q 2010: US$ 56.7 million)
  • Cash flow from operating activity increased 383% to US$ 78.7 million and decreased 25% compared to Q4 2010 (Q1 2010: US$ 16.3 million; 4Q 2010: US$105 million)
  • Lost Time Injury Frequency Rate (LTIFR) in the first quarter 2011 was 1.98, a decrease of 42% over the same period last year and 44% versus 4Q 2010 (Q1 2010: 3.42; Q4 2010: 3.53)

Nikolai Zelenski commented:

Nordgold had a strong first quarter, with significant increases in production, revenue and margins. We are very pleased with the progress made but have programmes in place to further improve our operational performance.“We are proud that Nordgold is one of the most profitable gold companies in the world by EBITDA margin. We aim to maintain this position for the long-term and our ongoing operational improvements will serve us well in achieving our objective.“We continue to advance our organic growth initiatives at existing operations whilst making strong progress at our two major development projects: Bissa in Burkina Faso and Gross in Russia. As such, Nordgold remains on track to produce 800,000 – 840,000 gold equivalent ounces in 2011 and to meet our long-term production target of over 1 million ounces by 2013

Nikolai Zelenski, Chief Executive of Nordgold

Summary of financial and operating results

 

 

Three months ended
March 31

 

Three months ended
December 31

(dollars in millions, except per ounce
and per thousand ton amounts)

2011

2010

Increase / (Decrease)

2010

Increase / (Decrease)

Ore processed (kt)

2,969

963

208%

3,464

(14%)

Head grade (g/t)

2.17

3.70

(41%)

2.07

5%

 

Total gold equivalent ounces – produced (oz)

174,193

109,241

59%

194,140

(10%)

Total gold equivalent ounces – sold (oz)

173,930

122,638

42%

194,257

(10%)

 

Revenue (US$ mln)

244.0

135.3

80%

268.8

(9%)

Revenue per ounce (US$/oz)

1,403

1,103

27%

1,384

1%

Total cash cost (US$ mln)

104.1

53.3

95%

121.9

(15%)

Total cash cost per ounce (US$/oz)

603

487

24%

633

(5%)

EBITDA (US$ mln)

135.1

66.5

105%

133.4

1%

EBITDA margin (%)

55%

49%

13%

50%

12%

Net profit

95.6

13.2

623%

47.9

99%

Cash flows from operating activity

78.7

16.3

383%

105.2

(25%)

 

Capital expenditures (US$ mln)

38.9

22.3

75%

56.7

(31%)

Revenue from metal sales was US$244.0 million in the first quarter of 2011, versus US$ 135.3 million during the same period in 2010, an increase of 80% reflecting the significantly increased production and stronger average realized gold price of US$ 1,403 per ounce, 27% higher than in the comparable period in 2010.

Cash flow from operating activity was US$78.7 million in the first quarter of 2011, versus US$16.3 million during the same period in 2010, an increase of 383%, mainly due to the acquisition of Crew Gold Corporation and operational improvements at Taparko.

Capital expenditure was US$38.9 million for first quarter of 2011, compared with US$22.3 million for the same period last year. Exploration expenses for the first quarter of 2011 were US$17.1 million, an increase of 109% versus the same period in 2010, as Nordgold aims to at improve its reserve and resource base.

Total cash cost per ounce of gold (“TCC”) increased by 24% to US$603, compared with US$487 in 1Q of 2010 due predominantly to the consolidation of the Lefa mine which is currently operating above average TCC. TCC was also affected by changed grade at some mines, appreciation of local currencies and inflationary adjustments of salaries. However, 1Q 2011 TCC decreased by 5% versus 4Q 2010, due initial effects of turnaround at Lefa and Berezitovy production ramp up.

Outlook

As stated in the guidance, Nordgold expects to produce 800,000 – 840,000 gold equivalent ounces in 2011.

To advance the development, optimization and exploration projects already approved by the Board and its parent company, OAO “Severstal”, Nordgold has increased its capital expenditure estimate for 2011 by US$50 million to US$304 million, with the extra US$50 million dollars going into the exploration and evaluation budget, increasing it to US$129 million.

Enquiries

A conference call for investors and analysts hosted by Nikolai Zelenski, Chief Executive Officer, and Sergey Zinkovich, Chief Financial Officer, will be held today at 9.00am (London) / 12.00pm (Moscow). The press release and presentation will be published on Nordgold’s website www.nordgold.com at 7.00am (London) 10.00am (Moscow).

Participant dial in: +7 495 705 9451 (Russia)

Participant dial in: +44 (0)20 7784 1036 (UK)

Conference ID: 1954969

Nordgold
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