Nordgold (FRA:RTSD) is continuing to grow its operations and development, and expects production to be in the range of 900-950 koz in 2014, according to CEO Nikolai Zelenski, speaking at the Denver Gold Forum in Denver, Colorado.
Nordgold is an emerging markets gold producer that has operations in Burkina Faso, Russia and Kazakhstan. It has nine producing mines, two large-scale development projects, and four advanced exploration projects.
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Zelenski said the company has seen significant growth of its gold production and has entered South America for the first time via its Montagne d’Or project in French Guiana. The company also has an investment in Arctic Canada with its Pistol Bay project, where Nordgold is developing a high grade open pit mine. Nordgold took a 22.6% stake in Northquest (NQ), which owns 100% of the Pistol Bay project, in order to finance a drilling program there, Zelenski said.
Nordgold has a large JORC resource base, exceeding 37 Moz gold-equivalent, and reserves at 12.6 Moz, with a life of approximately 13 years, Zelenski said. He emphasized the company’s positive free cash flow generation at all its operating mines, achieving that through cost, working capital and capex optimization and updates to its mining model. Its positive free cash flow is expected to reach US $72.6 million in 2014, with cash and cash equivalents as of June 30 of this year standing at $306.9 million in US dollars.
Zelenski said Nordgold would continue its policy of paying dividends to shareholders equivalent to 30% of profits attributable to shareholders.
Targets moving forward include developing a pipeline of high quality greenfield and brownfield projects through exploration, and to evaluate potential purchases of premium-quality reserves to enlarge Nordgold’s reserve base, Zelenski said.
Zelenski noted there are several gross major technical challenges to overcome, including large but low grade deposits for heap leach technology, the high seasonality of heap leaching in arctic climates, and a sharp slowdown of the process at low temperatures. The difficult hilly landscape, lack of flat space for large leach pads, and the lack of access to the electric power grid are obstacles. But the company is working on several solutions, including an onsite steam coal power plant for low-cost electricity and heat.
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