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Nord Gold SE (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified low-cost gold producer, is pleased to announce that it has expanded its flagship Bissa mine with the launch of a heap leach operation at the nearby Bouly deposit in Burkina Faso.
According to the Feasibility Study, Bouly’s average annual production will be approximately 120 koz over a life of mine (“LOM”) of 10 years at AISC of US$730 per oz. Bouly construction was completed on schedule and under budget. Nordgold started construction of the Bouly mine in July 2015 and invested US$140 million in the project (US$15 million less than initial capex guidance of US$155 milliondue to significant savings achieved during earthworks conducted in-house, lower equipment prices combined with disciplined procurement and foreign exchange gains). Construction was completed in 13 months in August 2016.
In line with Nordgold’s development strategy, the project had been de-risked prior to final Board approval. According to the Feasibility Study, the IRR for Bouly is approximately 40% at a gold price of US$1,250 per oz and approximately 26% at a gold price of US$1,100 per oz. The payback period is expected to be 30 months at a gold price of US$1,250 per oz and 42 months at a gold price of US$1,100 per oz.
Bouly is the Company’s third operating asset in Burkina Faso and the second project Nordgold has developed from a green field development stage in the country in the last six years, again highlighting Nordgold’s proven ability to plan, develop, and construct large mining projects on time and on budget. Nordgold already operates the world-class Bissa mine, which was built by the Company in 2013, and the Taparko mine acquired in late 2008. The launch of Bouly confirms Nordgold’s position as the second largest gold producer in the country, with total production of approximately 400 koz per year.
1,000 jobs were created during the construction phase and 350 permanent jobs will be created for its 10-year life span. Direct benefits to the state will come mainly in terms of income tax and royalties, which are estimated to be US$120 million over the life of the mine, excluding state revenue derived from fuel tax.
Nikolai Zelenski, Nordgold CEO, commented:
“Bouly is another outstanding addition to our global asset portfolio and once again highlights our ability to execute large mining projects on time and in this case, under budget. Like Bissa, which we launched in 2013, Bouly is a best-in-class operation, which will not only increase overall production and efficiency at Nordgold, but will be another major economic contributor to our host country and its local community.
“The launch of Bouly is also a milestone in the delivery of our growth pipeline. Construction of our Gross project in Russia is on track and is expected to start production in early 2018, adding a further 230 koz of gold a year to our group. We also continue to progress our early stage development projects in French Guiana and Canada. All our development projects are capital efficient and competitively positioned at the low end of the cost curve, and we expect them to generate robust returns for shareholders as a result.”
ProjectDetails
Bouly is located within 5 km of Nordgold’s Bissa mine on the border of the rural communes of Sabce and Mane, 100 km north of the capital, Ouagadougou. Bouly is operated by Bissa’s management team.
Bouly is the result of a green field development initiative at Nordgold and successful exploration programme which identified a large, low-grade gold deposit hosting Mineral Resources of 3.5 Moz at 0.57g/t, and Ore Reserves of 1.3 Moz at 0.56 g/t.
Nordgold sees potential to increase the Bouly deposit’s Reserve base through the conversion of fresh rock Resources to Reserves.
The Bouly deposit represents a large, low-grade gold mineralisation, favourable for heap leach treatment. Bouly is a single open pit operation. The ore is crushed with primary jaw and secondary cone crushers, followed by agglomeration before stacking on HDPE lined pad for irrigation with sodium cyanide leach solution. Bouly utilises mining equipment and jaw crushers similar to that of Bissa, to standardise stock holding and optimise maintenance costs.
Bouly will benefit from the low cost mining operations due to an excellent average LOM stripping ratio of 0.7 t/t and straightforward heap leach metallurgy with superior gold recovery at 83%. Bouly has its own all-season heap leach facilities with final processing stages, including desorption, electro-winning and smelting taking place at the Bissa’s processing plant.
Bouly’s average annual production will be approximately 120 koz over a LOM of 10 years. In 2016, Bouly is expected to produce up to 20 thousand ounces of gold.
Infrastructure
Bouly shares much of Bissa’s existing infrastructure, including camp and mess facilities, the laboratory and the raw water reservoir (Tiben dam).
The proximity of Bouly to Bissa enables it to benefit from economies of scale, expert knowledge of the local geology, and a well-trained workforce.
Environment
Nordgold’s objective is that Bouly follows Bissa’s high environmental standards and becomes an example of environmental excellence. The Bouly project received a decree on environment compliance granted by the Burkina Faso Ministry of Environment, the Green Economy and Climate Change.
The leach pad and associated drains and ponds were designed by Knight Piesold Australia in accordance with international standards, utilising the best industry technology, including an HDPE liner.
Environmental considerations were key in all aspects of the project’s development.
CSR Priorities
Nordgold is a major contributor to the Burkina Faso economy and has invested US$690 million in the country between 2009-2015. In 2015, Nordgold’s income tax payments alone represented 5% of Burkina Faso’s entire income tax collected that year.
Nordgold invested US$140 million in Bouly construction, of which approximately 30% was spent on services and products provided by local companies. Bouly’s contribution to the state in terms of taxes and other duties to be in the region of US$120 million for the 10-year period excluding state revenue derived from fuel tax.
Nordgold’s policy is to actively hire and promote citizens of Burkina Faso in all its operations in the country. As at the end of August 2016, the combined Bissa-Bouly operations employed more than 1400 people, of which only about 5% were expatriates. Bouly is expected to follow Bissa’s example in terms of its leading industrial safety standards.
The Company’s concern for, and awareness of, the needs of the local community is an integral part of its presence in all of the regions in which it operates. At Bouly, the main project in terms of infrastructure is the relocation of the villages within the project impact zone. The first phase of relocation is ongoing and expected to be completed shortly, while the last phase will be completed in March 2017 in line with the mine site expansion plan. Nordgold has conducted comprehensive consultations and compensated local communities for the project impact.
At completion, the Company will have built about 1000 new concrete quality houses for local communities, as well as socio-economic infrastructure including 16 water wells, eight mosques, one Protestant and two Catholic churches, four community centers, seven primary schools and one secondary school (each with six classrooms and six houses for teachers and a water well), eight sport fields and a vaccination center.
The Tiben raw water reservoir also provides a valuable year round water source for gardening to the local communities. The overall resettlement budget exceeds US$10 million, which includes new houses and infrastructure construction, compensation paid to local communities, as well as livelihood restoration programmes. Through its resettlement programme at Bouly, Nordgold aims to improve both the living conditions and livelihoods of those affected.
Resources for those working in the agriculture and livestock sectors of the local communities were provided, as well as input products and training for new income-generating activities. To date, approximately 450 people from local communities have been trained for activities including driving vehicles, welding, forge, masonry, weaving and soap-making. The Company will continue training courses in 2017 with a special focus on agriculture and female empowerment. The exact list of livelihood restoration programmes for 2017 will be developed in consultations with local communities to ensure their source of income is restored.
In addition, the Company is dedicated to supporting economic development in the community and will assist with the expansion of small businesses and the allocation of microcredit. Nordgold is proud of the fact that its mines are active members of the local communities and that all its sustainable development programmes are guided by the expectations and needs of the local communities.
About Nordgold
Nordgold (LSE: NORD) is an internationally diversified low-cost 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 cash flows and in turn, continue to invest in its pipeline of new growth opportunities while generating returns for investors. In 2015, Nordgold produced 950 koz of gold with all-in sustaining costs of US$793 per ounce, maintaining its position at the lower end of the global cost curve.
Nordgold operates 9 mines (5 in Russia, 2 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 and preliminary economic assessment/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 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.
