Nordgold — A Low Cost Producer

A commitment to operational excellence,
efficiency and cost control

  • Key Indices
  • Outlook
  • Peer group comparison
  • How we do it
AISC has dropped from $1,174/oz in 2012 to $793/oz in 2015, and cemented Nordgold position   in the lowest quartile of the industry cost curve. Operating Cash Flow (OCF) increased despite the falling gold price as a result of higher sales and lower costs. Meaningful positive Free Cash Flow (FCF) is generated due to strong OCF and low maintenance capex. 63 238 181 158 2013 2014 158 258 2015 2013 311 329 2014 2015 418 1,376 1,266 1,161 800-850 2016 793 2015 887 2014 1 091 2013 1 174 2012 $ 158 m Free Cash Flow achieved in 2015 while investing in construction of Bouly mine $ 793 /oz One of the lowest All-in Sustaining Costs in 2015 compared to peers $ 418 m Operating Cash Flow up against backdrop of falling gold price AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz OCF, $ m OCF, $ m OCF, $ m Gold price, $/oz Gold price, $/oz Gold price, $/oz FCF, $ m FCF, $ m FCF, $ m Capex, $ m Capex, $ m Capex, $ m
$793/oz

One of the lowest All-in Sustaining Costs in 2015 compared to peers

$418 m

Operating Cash Flow up against backdrop of falling gold price

$158 m

Free Cash Flow achieved in 2015 while investing in construction of Bouly mine

329 AISC has dropped from $1,174/oz in 2012 to $793/oz in 2015, and cemented Nordgold position in the lowest quartile of the industry cost curve. Operating Cash Flow (OCF) increased despite the falling gold price as a result of higher sales and lower costs. Meaningful positive Free Cash Flow (FCF) is generated due to strong OCF and low maintenance capex. 63 181 158 238 158 258 2013 2014 2015 2013 2014 2015 311 1 174 1 091 887 793 800-850 418 2013 2012 2014 2015 2016 1,376 1,266 1,161 AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz OCF, $ m OCF, $ m OCF, $ m Gold price, $/oz Gold price, $/oz Gold price, $/oz FCF, $ m FCF, $ m FCF, $ m Capex, $ m Capex, $ m Capex, $ m
$793/oz

One of the lowest All-in Sustaining Costs in 2015 compared to peers

$418 m

Operating Cash Flow up against backdrop of falling gold price

$158 m

Free Cash Flow achieved in 2015 while investing in construction of Bouly mine

329 AISC has dropped from $1,174/oz in 2012 to $793/oz in 2015, and cemented Nordgold position in the lowest quartile of the industry cost curve. Operating Cash Flow (OCF) increased despite the falling gold price as a result of higher sales and lower costs. Meaningful positive Free Cash Flow (FCF) is generated due to strong OCF and low maintenance capex. 63 181 158 238 158 258 2013 2014 2015 2013 2014 2015 311 1 174 1 091 887 793 800-850 418 2013 2012 2014 2015 2016 1,376 1,266 1,161 AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz AISC, $/oz OCF, $ m OCF, $ m OCF, $ m Gold price, $/oz Gold price, $/oz Gold price, $/oz FCF, $ m FCF, $ m FCF, $ m Capex, $ m Capex, $ m Capex, $ m
Nordgold annual production Assuming flat production from the existing portfolio of mines and 350+ koz from Bouly and Gross at full capacity. $ 158 m $ 250 m 950 Koz 1.3 Moz $ 258 m $ 380 m 2015 ... ... ... 2018 E 2015 2018 E 2015 2018 E Free Cash flow Capex Growing production and a stable cost base, combined with falling capex requirements as construction at our Gross mine completes in 2018, give Nordgold confidence in our ability to further increase free cash flow generation. Annual sustaining capex requirements will remain below $200 million, while total capex will decline from 2018 following the completion of the Gross mine construction.
$ 158 m $ 250 m 950 Koz 1.3 Moz $ 258 m $ 380 m 2015 ... ... ... 2018 E 2015 2018 E 2015 2018 E Nordgold annual production Assuming flat production from the existing portfolio of mines and 350+ koz from Bouly and Gross at full capaci-ty. Free Cash flow Capex Growing production and a stable cost base, combined with falling capex require-ments as construction at our Gross mine completes in 2018, give Nordgold conf-dence in our ability to further increase free cash flow generation. Annual sustaining capex requirements will remain below $200 million, while total capex will decline from 2018 following the completion of the Gross mine construction.
$ 158 m $ 250 m 950 Koz 1.3 Moz $ 258 m $ 380 m 2015 ... ... ... 2018 E 2015 2018 E 2015 2018 E Nordgold annual production Assuming flat production from the existing portfolio of mines and 350+ koz from Bouly and Gross at full capacity. Free Cash flow Capex Growing production and a stable cost base, combined with falling capex requirements as construction at our Gross mine completes in 2018, give Nordgold confidence in our ability to further increase free cash flow generation. Annual sustaining capex requirements will remain below $200 million, while total capex will decline from 2018 following the completion of the Gross mine construction.
40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 200 400 600 800 1,000 1,200 $/Oz FY 2015 Global All-in Sustaining Cost Curve Nordgold 793   In the lowest quartile of the industry cost curve  The world's 15th largest gold producer Global gold production, koz
40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 200 400 600 800 1,000 1,200 $/Oz FY 2015 Global All-in Sustaining Cost Curve Nordgold 793   In the lowest quartile of the industry cost curve  The world's 15th largest gold producer Global gold production, koz
35,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 200 400 600 800 1,000 1,200 $/Oz FY 2015 Global All-in Sustaining Cost Curve Nordgold 793 Global gold production, koz   In the lowest quartile of the industry cost curve  The world's 15th largest gold producer

Business System of Nordgold

Business system of Nordgold has been central to our success in becoming a low cost producer. It aims to establish best in class sustainable processes at our operating assets, ensuring they are as efficient, low cost, sustainable and above all, safe as possible.

Key components of BSN:

Platform for best
practice sharing
Operational
improvement
Costs
reduction
HSE
Support
Workforce development
and training
15 (3 %) $ 240 m 43 % 57 % Positive impact on EBITDA of BSN since 2012 Proven impact on EBITDA, $ m 2015 BSN Effect on EBITDA by Source Cost reduction Productivity improvement 52 (13 %) 64 (13 %) 61 (12 %) 48 (9 %) 2012 2013 2014 2015 2016 E 533 533 512 490 495 400 West Africa West Africa West Africa West Africa West Africa Total EBITDA Total EBITDA Total EBITDA Total EBITDA Total EBITDA EBITDA effect EBITDA effect EBITDA effect EBITDA effect EBITDA effect Underground Underground Underground Underground Underground Russian open pits Russian open pits Russian open pits Russian open pits Russian open pits
15 (3 %) $ 240 m 43 % 57 % Positive impact on EBITDA of BSN since 2012 Proven impact on EBITDA, $ m 2015 BSN Effect on EBITDA by Source Cost reduction Productivity improvement 52 (13 %) 64 (13 %) 61 (12 %) 48 (9 %) 2012 2013 2014 2015 2016 E 533 533 512 490 495 400 West Africa West Africa West Africa West Africa West Africa Total EBITDA Total EBITDA Total EBITDA Total EBITDA Total EBITDA EBITDA effect EBITDA effect EBITDA effect EBITDA effect Underground Underground Underground Underground Underground Russian open pits Russian open pits Russian open pits Russian open pits Russian open pits EBITDA Effect EBITDA Effect EBITDA effect
15 (3 %) $ 240 m 43 % 57 % Positive impact on EBITDA of BSN since 2012 Proven impact on EBITDA, $ m 2015 BSN Effect on EBITDA by Source Cost reduction Productivity improvement 52 (13 %) 64 (13 %) 61 (12 %) 48 (9 %) 2012 2013 2014 2015 2016 E 533 533 512 490 495 400 West Africa West Africa West Africa West Africa West Africa Total EBITDA Total EBITDA Total EBITDA Total EBITDA Total EBITDA EBITDA effect EBITDA effect EBITDA effect EBITDA effect Underground Underground Underground Underground Underground Russian open pits Russian open pits Russian open pits Russian open pits Russian open pits EBITDA Effect EBITDA Effect EBITDA effect

Key principles / directions:

1

Constantly seeking for mining fleet efficiency improvement, which includes excavators, drill rigs and trucks.

2

Ensuring full operational and management control across the production value chain with best-in-class technology.

3

Making detailed productivity analysis for comparable open pit operations and mining equipment.

4

Identifying opportunities incorporated into a business improvement plan.

Efficiency case studies

  • Lefa turnaround
    programme
  • Cyanide consumption reduction
    at Berezitovy
  • Overall equipment
    efficiency
2013 In 2013 Lefa free cash flow was negative and AISC was above $ 1,500/oz. By 2015, Lefa AISC had droppedto $ 832/oz and the mine generated $ 77.9 millionin free cash flow. Thanks to an increased levelof monthly production, total cash cost decreased by $ 3.5-4 million monthly at each stage of the value chain (mining, processing, SG&A). 2015 A devoted management team, with the support of BSN, commenced the turnaround programme.
2013 In 2013 Lefa free cash flow was negative and AISC was above $ 1,500/oz. By 2015, Lefa AISC had droppedto $ 832/oz and the mine generat-ed $ 77.9 millionin free cash flow. Thanks to an increased levelof monthly production, total cash cost decreased by $ 3.5-4 million monthly at each stage of the value chain (mining, processing, SG&A). 2015 A devoted management team, with the support of BSN, com-menced the turnaround programme.
2013 In 2013 Lefa free cash flow was negative and AISC was above $ 1,500/oz. By 2015, Lefa AISC had droppedto $ 832/oz and the mine generated $ 77.9 million in free cash flow. Thanks to an increased levelof monthly production, total cash cost decreased by $ 3.5-4 million monthly at each stage of the value chain (mining, processing, SG&A). 2015 A devoted management team, with the support of BSN, commenced the turnaround programme.

Key success factors of the turnaround programme:

Headcount reduced from 2,300 to 1,500 employees, as well as overtimes.

Mine planning, grade control improvement at new pits — Firifirini, Kankarta North.

Sustainably lower costs of logistics.

Accurate planning to reduce overstock.

Improvement of overall efficiency of equipment (OEE).

Control over SG&A, including travelling costs.

Lower reagent consumption due to improved control and process automatisation.

Training of operators.

Cost dynamics and refined gold production, 2013-2015 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 34.3 66.9 63.1 72.7 58.4 52.1 58.4 46.4 40.1 43.7 47.9 36.6 58.9 55.6 63.1 62.7 41.7 59.8 47.2 58.4 43.3 42.2 46.3 53.7 AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz
Cost dynamics and refined gold production, 2013-2015 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 34.3 66.9 63.1 72.7 58.4 52.1 58.4 46.4 40.1 43.7 47.9 36.6 58.9 55.6 63.1 62.7 41.7 59.8 47.2 58.4 43.3 42.2 46.3 53.7 AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz
Cost dynamics and refined gold production, 2013-2015 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 34.3 66.9 63.1 72.7 58.4 52.1 58.4 46.4 40.1 43.7 47.9 36.6 58.9 55.6 63.1 62.7 41.7 59.8 47.2 58.4 43.3 42.2 46.3 53.7 AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m AISC, $ m Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz Production, koz

The Lefa turnaround programme was successful following an in-depth, detailed analysis of all the factors affecting the operational performance of the mine, combined with the resulting implementation of a series of corrective measures put in place by our experienced management team. Nordgold continues to monitor Lefa performance closely and to invest further in its development.

Nordgold installed an automatic cyanide analyser at the plant. As a result, cyanide con- sumption rate decreased at Berezitovy by 350 tonnes in 2015. The success of the cyanide consumption project at Berezitovy enabled Nordgold to roll out the technology more widely across its asset portfolio. The same cyanide analysers have now been installed at the Lefa and Taparko plants, which are now demonstrating significant reductions in the levels of cyanide consumption. 2014 2015 Having previously only analysed measurements of cyanide every 2 hours, the analyser now analyses cyanide concentration in leech solutions every two minutes and automatically makes corrections, increasing or decreasing the amount of fresh cyanide being added to the solutions. -350t -350t 1,061t 647t 2014 2015
Nordgold installed an automatic cyanide analyser at the plant. As a result, cyanide con- sumption rate decreased at Berezitovy by 350 tonnes in 2015. The success of the cyanide consumption project at Berezitovy enabled Nordgold to roll out the technology more widely across its asset portfolio. The same cyanide analysers have now been installed at the Lefa and Taparko plants, which are now demonstrating significant reductions in the levels of 2014 2015 Having previously only analysed measurements of cyanide every 2 hours, the analyser now analyses cyanide concentration in leech solutions every two minutes and automatically makes corrections, increasing or decreasing the amount of fresh cyanide being added to the solutions. -350t -350t 1,061t 647t 2014 2015
Nordgold installed an automatic cyanide analyser at the plant. As a result, cyanide consumption rate decreased at Berezitovy by 350 tonnes in 2015. The success of the cyanide consumption project at Berezitovy enabled Nordgold to roll out the technology more widely across its asset portfolio. The same cyanide analysers have now been installed at the Lefa and Taparko plants, which are now demonstrating significant reductions in the levels of cyanide consumption. 2014 2015 Having previously only analysed measurements of cyanide every 2 hours, the analyser now analyses cyanide concentration in leech solutions every two minutes and automatically makes corrections, increasing or decreasing the amount of fresh cyanide being added to the solutions. -350t -350t 1,061t 647t 2014 2015

Having analysed our studied breakdown of equipment costs, we concluded that the most significant reductions could be made by improvements in the following three performance metrics of loading and hauling units. We work continuously to improve and optimise our performance in these areas: availability ratio of staff and equipment, utilisation of available time, productivity rate.

We run detailed productivity analysis for comparable open pit operations and mining equipment

We continue to identify opportunities and incorporate them into our business improvement plans

Examples

Neryungri

Loading time efficiency improvement

Excavators availability and utilisation analysis

Lefa

Hauling time efficiency improvement

Trucks availability and utilisation analysis

Daily maintenance —bucket greasing can take up to 25 mins Results of a test show that a mechanical worker can do this operation in 15 minsInvestigate a possibility to organize a maintenance brigade for excavators during lunch Permanent control of the start time of the shift by the shift leader is in place, including fueling timeDispatch monitoring system will help to avoid any downtimes Takes up to 70 mins per shiftDifferent methods of excavator operators to be investigated (during 300 cycles study) Standard working areas need to be widened to reduce maneuvering timeManeuvering of the vehicle to be planned in advance where necessary Fueling Surface preparation Waiting for maneuvering truck — occurs in 60% of all cases Area for improvement Estimated Solution proposed +20 mins/shift +11 mins/shift +25 mins/shift +13 mins / shift Total timeDaily maintenanceAll other repairsAvailabilityShift ChangeLunchFuellingSurface preparation (waiting)MovementSurface preparationBlastingWaiting for truckWaiting for truck maneuveringOther downtimesProductive timeProductive time post-BSN 100 5 % 81 5 0 10 0 2 2 9 2 6 1 44 49 14
Daily maintenance — bucket greasing can take up to 25 mins Results of a test show that a mechanical worker can do this operation in 15 minsInvestigate a possibility to organize a maintenance brigade for excavators during lunch Permanent control of the start time of the shift by the shift leader is in place, including fueling timeDispatch monitoring system will help to avoid any downtimes Takes up to 70 mins per shiftDifferent methods of excavator operators to be investigated (during 300 cycles study) Standard working areas need to be widened to reduce maneuvering timeManeuvering of the vehicle to be planned in advance where necessary Fueling Surface preparation Waiting for maneuvering truck — occurs in 60% of all cases Area for improvement Solution proposed Estimated effect +20 mins/shift +11 mins/shift +25 mins/shift +13 mins / shift Total timeDaily maintenanceAll other repairsAvailabilityShift ChangeLunchFuellingSurface preparation (waiting)MovementSurface preparationBlastingWaiting for truckWaiting for truck maneuveringOther downtimesProductive timeProductive time post-BSN 100 5 % 81 5 0 10 0 2 2 9 2 6 1 44 49 14
Daily maintenance —bucket greasing can take up to 25 mins Results of a test show that a mechanical worker can do this operation in 15 minsInvestigate a possibility to organize a maintenance brigade for excavators during lunch Permanent control of the start time of the shift by the shift leader is in place, including fueling timeDispatch monitoring system will help to avoid any downtimes Takes up to 70 mins per shiftDifferent methods of excavator operators to be investigated (during 300 cycles study) Standard working areas need to be widened to reduce maneuvering timeManeuvering of the vehicle to be planned in advance where necessary Fueling Surface preparation Waiting for maneuvering truck — occurs in 60% of all cases +20 mins/shift +11 mins/shift +25 mins/shift +13 mins / shift Total timeDaily maintenanceAll other repairsAvailabilityShift ChangeLunchFuellingSurface preparation (waiting)MovementSurface preparationBlastingWaiting for truckWaiting for truck maneuveringOther downtimesProductive timeProductive time post-BSN 100 5 % 81 5 0 10 0 2 2 9 2 6 1 44 49 14 Solution proposed Area for improvement Estimated effect
Area for improvement Estimated Solution proposed +6% to availability Improvement of dispatching qualityOpening up working area widths for less spot timeCommunication of Wenco data to the field Improvement of communication between maintenance and mining, leading to decrease in standby without operator after maintenance Improvement control of dumping areasPlacing spotters on dumpsto dump over the edge +43 mins to utilisation +59 mins to utilisation +23 mins to utilisation 100 1 % 2 4 69 5 1 3 1 2 1 1 3 52 67 24 Total timeUnscheduled breakdownPlanned capital and major repairsScheduled downtimeDamagesAvailabilityQueue at loading unitWait for loading unitStandbyNo operatorWait / Queue at dumpFuellingShift chargeOther delaysProductive timeProductive time post-BSN Implementation of equipment maintenance strategyPlanned capital repairs plan implementation Wait / Queue at dump Standby,No operator Unscheduled breakdown / Maintenance Queue at loading unit / Wait
Area for improvement Solution proposed Estimated effect Wait / Queue at dump Standby,No operator Total timeUnscheduled breakdownPlanned capital and major repairsScheduled downtimeDamagesAvailabilityQueue at loading unitWait for loading unitStandbyNo operatorWait / Queue at dumpFuellingShift chargeOther delaysProductive timeProductive time post-BSN 100 1 % 2 4 69 5 1 3 1 2 1 1 3 52 67 24 Unscheduled breakdown / Maintenance Queue at loading unit / Wait Improvement of dispatching qualityOpening up working area widths for less spot timeCommunication of Wenco data to the field Improvement of communication between maintenance and mining, leading to decrease in standby without operator after maintenance Improvement control of dumping areasPlacing spotters on dumpsto dump over the edge Implementation of equipment maintenance strategyPlanned capital repairs plan implementation +6% to availability +43 mins to utilisation +59 mins to utilisation +23 mins to utilisation
Area for improvement Solution proposed Estimated effect Wait / Queue at dump Standby,No operator Total timeUnscheduled breakdownPlanned capital and major repairsScheduled downtimeDamagesAvailabilityQueue at loading unitWait for loading unitStandbyNo operatorWait / Queue at dumpFuellingShift chargeOther delaysProductive timeProductive time post-BSN 100 1 % 2 4 69 5 1 3 1 2 1 1 3 52 67 24 Unscheduled breakdown / Maintenance Queue at loading unit / Wait Improvement of dispatching qualityOpening up working area widths for less spot timeCommunication of Wenco data to the field Improvement of communication between maintenance and mining, leading to decrease in standby without operator after maintenance Improvement control of dumping areasPlacing spotters on dumpsto dump over the edge Implementation of equipment maintenance strategyPlanned capital repairs plan implementation +6% to availability +43 mins to utilisation +59 mins to utilisation +23 mins to utilisation
FACTSHEET
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CONTACTS

Valentina Bogomolova

Head of IR
tel.+7 495 644 44 73 #707 6711

Olga Ulyeva


Head of Media Relations
tel.+7 495 644 44 73 #707 6632

ROMAN MEZHUEV

RECRUITMENT MANAGER
tel.+7 495 644 44 73

OLEG BAZALEEV

HEAD OF SUSTAINABLE DEVELOPMENT PROJECTS
tel.+7 495 644 4473 #707 6746
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