Nordgold cuts Q1 gold production 11%, boosts reserves 50%
MOSCOW. April 24 (Interfax) - Russian gold miner Nordgold reduced production of gold equivalent 11% year-on-year in Q1 2012 to 156,000 oz, the company said.
Guidance for the whole year is unchanged at 800,000-850,000 oz.
Production increased at Buryatzoloto and the Suzdal and Aprelkovo fields, with lower production at Lefa, Taparko, Berzitovy and Neryungri due to temporary mechanical bottlenecks that have been rectified.
Byproduct silver production was 1,000 oz in gold equivalent.
The increased average realized gold price of $1,689 per ounce over the quarter had a positive impact on cash flow and earnings with revenue at $264 million.
Nordgold operating highlights for Q1:
| Q1 2012 | Q1 2011 | % | |
| Ore mined, mln tonnes | 3,6 | 3,89 | -7% |
| Ore milled, mln tonnes | 2,602 | 2,969 | -12% |
| Grade, g/t | 2,17 | 2,17 | 0% |
| Recovery, % | 81,80% | 83,8 | - 2 pp |
| Gold production, '000 oz | 155,7 | 174,2 | -11% |
| Gold sales, '000 oz | 156,2 | 173,9 | -10% |
| Average realized gold price per ounce sold, $/oz | 1689 | 1403 | 20% |
| Revenue | 263,9 | 244 | 8% |
Refined gold production by mines, '000 oz
| Q1 2012 | Q1 2011 | % | |
| Lefa | 39,8 | 56,7 | -30% |
| Taparko | 32,4 | 37,3 | -13% |
| Suzdal and Zherek* | 19,1 | 14,4 | 32% |
| Buryatzoloto | 31,6 | 30,7 | 3% |
| Berezitovy | 20,3 | 22,5 | -10% |
| Neryungri | 8,7 | 9,7 | -11% |
| Aprelkovo | 3,8 | 2,8 | 35% |
| Total for group | 155,7 | 174,2 | -11% |
*) Data for Balazhal not disclosed
"Nordgold has been impacted in the quarter by mine-specific issues which have been identified and fixed, and production has returned to our forecast rates. I anticipate a strong second half and expect the investments we have made across our portfolio, including new mining equipment and enhanced processing systems, will ensure we meet our 2012 and 2013 production targets. Finally, work at our major development projects of Bissa and Gross is on schedule and on budget and we expect first gold at Bissa in H1 2013," said Nikolai Zelensky, CEO.
Nordgold also said its combined JORC and CIM Code Compliant Proved and Probable ore reserves were 12.7 million of as of January 1, 2012, up 54% from 8.2 million oz in June 2011.
Total JORC Code and CIM compliant mineral resources were 29.5 million oz, up 30% from 22.7 million oz in June 2011, of which 16.7 million oz are Measured and Indicated Resources (up 39% from 12.0 Moz) and 12.7 Moz are Inferred Resources (up 20% from 10.6 Moz).
Ore Reserves were estimated using a gold price of US$1,250/oz. The previous estimate in June 2011 was at a price of US$1,100/oz. Given the increased grade at nearly all projects, the substantial growth in reserves and resources is attributable primary to exploration works, and only marginally to change in price assumptions.
The average gold grade in Ore Reserves shows a decrease from an average 1.30 g/t to 1.15 g/t since the last update, due to inclusion of the Resource base at Gross (a low grade robust heap leach project in Russia with low stripping ratio and high recoveries).
Some of the 2011 drilling results at Taparko will be available shortly, and a reserve
update is expected in Q3 2012.
JORC Reserves and Resources Summary (mln oz):
| Reserves | Jan 1, 2012 | June 1, 2011 | % |
| Proved | 3,454 | 3,627 | -5% |
| Probable | 9,203 | 4,565 | 102% |
| P+P | 12,657 | 8,193 | 54% |
| Resources | |||
| Measured | 4,172 | 4,472 | -7% |
| Indicated | 12,571 | 7,571 | 66% |
| Inferred | 12,726 | 10,608 | 20% |
| M+I+I | 29,469 | 22,651 | 30% |
Resource and Reserve upgrade uses all available data for the Company's mines and deposits as reported by Wardell Armstrong International, Snowden Group (JORC Code compliant updates) and Ricardo Valls (CIM compliant updates).
Nordgold is an established pure-play emerging-markets gold producer, with operations in Burkina Faso, Guinea, Russia and Kazakhstan. Nordgold has eight producing mines, two development projects, five advanced exploration projects and a broad portfolio of early exploration projects and licenses.
Nordgold, which was listed on the London Stock Exchange in January, owns 75.1% of Canada's High River Gold, which controls the Berezitoviy deposit in Amur region, gold mining company OJSC Buryatzoloto (Zun-Holba and Irokinda deposits in Buryatia), 50% of silver deposit Prognoz in Yakutia, together with Somita in West Africa's Burkina-Faso, which works at the Taparko deposit and the Bissa geological exploration project (production to start in 2013). Nordgold owns Neryungi-Metallik in Yakutia, Aprelkovo in Trans-Baikal territory, it consolidated 100% of Canadian company Crew Gold, working at the Lefa deposit in Guinea (West Africa) and three companies in Kazakhstan - Suzdal, Zherek and Balazhal.
