Financial and Operating Results Q2 and H1 2014...Q 3 Financial and Operating Results 2 and H1 2014 In July 2014, Fitch Ratings affirmed Nordgold Long-term Issuer Default Rating (IDR)

Financial and Operating Results

Q2 and H1 2014

1 www.nordgold.com

Nord Gold N.V. reports financial and operating results for

the second quarter and six months ended June 30, 2014

Amsterdam, Netherlands, August 29, 2014

Nord Gold N.V. (“Nordgold” or the “Company”, LSE: NORD), the internationally diversified,

pure-play gold producer strategically focused on emerging markets, announces its financial

and operating results for the second quarter and six months ended June 30, 2014.

H1 2014 Highlights:

Gold production increased by 14% year-on-year (“YoY”) to 476.1 thousand ounces (“koz”). Based on

this strong production performance, guidance for the FY 2014 has been increased to 900 - 950 koz.

EBITDA increased by 24% to US$244.8 million highlighting strong production performance and

efficiencies offsetting lower gold price.

Total cash costs decreased by 22% to US$708/oz and all-in sustaining costs (“AISC”) decreased by

22% to US$899/oz. Based on the significant improvement in AISC, FY 2014 AISC guidance has been

decreased to US$950/oz - US$1,000/oz.

Cash flow from operating activities of US$133.7 million and positive free cash flow of US$72.6 million.

The Board has declared a dividend of 3.81 US cents per share / GDR for Q2 2014, bringing the total

dividend for H1 2014 to 5.34 US cents per share / GDR.

LTIFR improved by 49% to 0.73 compared to LTIFR of 1.42 in H1 2013.

Highlights Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

Gold production, koz 265.0

(1) 232.6 14% 211.1 26% 476.1 416.3 14%

Average realised gold price per ounce sold, US$/oz

1,292 1,379 (6%) 1,299 (1%) 1,295 1,482 (13%)

Revenue, US$m(2)

342.1 320.3 7% 274.9 24% 617.0 617.1 0%

EBITDA, US$m (2)(3)(4)

141.3 99.5 42% 103.5 37% 244.8 197.3 24%

Total Cash Costs,

US$/oz (3)(4)

699 875 (20%) 719 (3%) 708 911 (22%)

AISC, US$/oz(3)(4)(5)

905 1,103 (18%) 893 1% 899 1,148 (22%)

LTIFR 1.08 1.87 (42%) 0.40 170% 0.73 1.42 (49%)

(1) Including 20.1 thousand ounces of doré produced by Suzdal mine in Q1 2014, but refined and sold during Q2 2014.

(2) Suzdal’s doré produced in Q1 2014 was refined and sold during Q2 2014 and therefore was accounted in Q2 2014 revenue, EBITDA, net profit and Operating Cash Flows.

(3) The figures for Q2 2013 and H1 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Interim Condensed Consolidated Financial Statements.

(4) Normalised EBITDA, total cash costs and all-in sustaining costs as defined in the section for “Non-IFRS Financial Measures”.

(5) Q1 2014 Lefa AISC was recalculated due to correction of classification in P&L, Nordgold AISC for Q1 2014 changed accordingly.

2 www.nordgold.com


Q2 and H1 2014

Operating and Financial Highlights

Gold production in Q2 2014 was 265.0 thousand refined gold ounces, a 14% increase compared with Q2

2013 (232.6 koz) and a 26% increase compared with Q1 2014 (211.1 koz).

In H1 2014 gold production reached 476.1 koz, a 14% increase compared with 416.3 koz in H1 2013.

During the first six months of the year eight out of Nordgold’s nine mines achieved a YoY production

increase mainly as a result of measures the Company has implemented to improve operational efficiency

at the mines. Double-digit growth was recorded at Bissa, Taparko, Lefa, both the Buryatzoloto

underground mines (Irokinda and Zun-Holba) and Neryungri.

Despite a lower gold price, revenue in Q2 2014 was US$342.1 million, a 7% increase compared with

US$320.3 million in Q2 2013 and a 24% increase compared with US$274.9 million in Q1 2014, due to

higher gold production and sales volumes. In H1 2014, Nordgold revenue was US$617.0 million, in line

with the same period last year (H1 2013: US$617.1 million) despite a 13% decrease in the average

realised gold price.

EBITDA for Q2 2014 increased by 42% YoY and by 37% quarter-on-quarter (“QoQ”) to US$141.3

million. In H1 2014, EBITDA increased by 24% YoY to US$244.8 million mainly driven by improved

operational efficiencies, higher production volumes and strict cost control, which offset lower gold prices.

EBITDA margin for H1 2014 was 39.7% compared with 32.0% in H1 2013.

Net profit for Q2 2014(6)

was US$49.1 million compared with US$24.6 million in Q1 2014 and against a

net loss of US$204.6 million(7)

related to impairment of tangible and intangible assets recognised in Q2

2013. In H1 2014 net income was US$73.7 million compared with a net loss of US$190.0 million(7)

in H1

2013.

Normalised net profit attributable to shareholders for Q2 2014(9)

was US$48.0 million compared with

US$19.3 million in Q1 2014 and US$25.8 million in Q2 2013. In H1 2014 normalised net profit

attributable to shareholders almost doubled YoY to US$67.3 million.

In Q2 2014, total cash costs (“TCC”) were US$699 per ounce, a 20% decrease compared with Q2 2013

(US$875/oz) and a 3% decrease compared with Q1 2014 (US$719/oz) mainly due to improved

operational and consumption efficiency. The main drivers of the YoY TCC improvement were Lefa (down

40%), Taparko (down 11%), Buryatzoloto (down 17%), Berezitovy (down 29%), Neryungri (down 36%)

and Suzdal (down 9%). In H1 2014, TCC were US$708/oz, a 22% decrease compared with US$911/oz

in H1 2013. We continue to implement cost optimisation and operational improvement programmes at all

our mines.

In H1 2014, eight out of Nordgold’s nine mines achieved significant improvement in all-in sustaining

costs compared with H1 2013. As a result, Nordgold’s consolidated AISC were US$899/oz in H1 2014,

which is 22% lower compared with H1 2013 (US$1,148/oz).

In H1 2014, Nordgold generated US$133.7 million of cash flow from operating activities (after interest

and income tax paid), compared with US$103.5 million in H1 2013. In Q2 2014, cash flow from operating

activities was US$83.8 million(6)

, compared with US$63.1 million in Q2 2013.

Capital expenditure (“capex”)(8)

for H1 2014 decreased by 46% YoY to US$70.6 million (including

US$10.0 million for exploration and evaluation).

The Company delivered US$72.6 million of positive free cash flow (6)

in H1 2014 compared with negative

free cash flow of US$30.1 million in H1 2013 on the back of higher operating cash flow and significantly

lower capex.

Cash and cash equivalents as at June 30, 2014 were US$306.9 million with net debt of US$687.0

million, compared with US$244.0 million cash and cash equivalents as at December 31, 2013, and net

debt of US$723.9 million.

The Board of Directors has approved an interim dividend of 3.81 US cents per share or per Global

Depositary Receipt (“GDR”) in respect of the three months ended June 30, 2014, payable to

shareholders on the register as of September 15, 2014. (6) Suzdal’s doré produced in Q1 2014 was refined and sold during Q2 2014 and therefore was accounted in Q2 2014 revenue, EBITDA, net profit and

Operating Cash Flows.


(8) For detailed definition, please see “Non-IFRS Financial Measures”.

(9) Normalised Net Profit attributable to shareholders adjusted for the non-current assets and inventories impairment or utilisation of impairment.

3 www.nordgold.com


Q2 and H1 2014

In July 2014, Fitch Ratings affirmed Nordgold Long-term Issuer Default Rating (IDR) at 'BB-' with a

stable outlook. In its analysis of the Company, Fitch notes that the affirmation of the ratings reflects

Nordgold’s manageable capex profile and its focus on organic growth.

Outlook Update

Based on the robust operating performance delivered in H1 2014, Nordgold is revising upwards its 2014

full year production forecast to 900 - 950 koz from the original guidance of 870 – 920 koz.

Nordgold expects FY 2014 capex of approximately US$180 million, a 10% lower than the original

guidance of US$200 million.

Based on the significant improvement in AISC in H1 2014, Nordgold is revising its FY 2014 AISC

guidance and now expects AISC to be in range of US$950/oz - US$1,000/oz (previous range was

US$1,050/oz - US$1,100/oz).

Message from the CEO

“This has been an extremely strong financial and operating performance for the Company in the first half of

the year. We continue to successfully drive down operating costs across our mine sites, which combined with

our strong production results and stringent focus on capex has enabled us to more than offset the on-going

gold price weakness. I am delighted that as a result we have reported a rise in EBITDA and are able to

restate our full year expectations for production, capex and AISC. We have achieved this with absolutely no

compromise on our commitment to safety.

The market environment remains challenging, but we have clearly demonstrated our ability to achieve

sustainable value for our shareholders through outstanding operating performance and a track record of cost

reduction. This puts us in a strong position to achieve our full year targets. Looking ahead, we will continue to

focus on organic growth and driving value through the existing portfolio, while seeking to advance our

development projects carefully, complemented in the period by the bolt-on acquisitions of the very promising

Ronguen Project and share in the Pistol Bay project.”

Nikolai Zelenski, Chief Executive Officer, Nordgold

Dividend

The Board has approved an interim dividend of 3.81 US cents per share or per GDR in respect of the three

months ended June 30, 2014, representing a total pay-out of US$14.4 million.

The ex-dividend date for Q2 2014 is set on September 11, 2014, with dividend record date on September 15,

2014 and payment on September 25, 2014.

In 2014, despite challenging market conditions, the Company already paid an interim dividend of 1.53 US

cents per share or per GDR for Q1 2014 for the total amount of US$5.8 million. The the total dividend in

respect of Q1 2014 and Q2 2014 is 5.34 US cents per share or per GDR and the total pay-out is US$20.2

million for the six months of 2014.

We remain focused on delivering a dividend to our shareholders. According to our dividend policy, we intend

to distribute 30% of normalised net provit attributable to shareholders as dividends on a quarterly basis.

Safety

Safety remains the absolute priority for the Board and management with the objective of Zero Harm for our

employees and contractors.

We continue to invest our efforts in improving safety performances. During H1 2014, Nordgold reviewed its

Nordgold More Than Gold Safety Rules, to promote a further step-change in safety performance, especially

at the Nordgold underground mines. Nordgold continues to pursue the integration of safety methodologies

and sharing of best practices between its international mines, as well as investing in the safety of its

employees.

Six out of Nordgold’s nine operations worked according to the highest industry standards, with no LTI

incidents recorded at Bissa, Taparko, Lefa, Berezitovy, Aprelkovo and Suzdal during H1 2014. LTIFR for H1

4 www.nordgold.com


Q2 and H1 2014

2014 was 0.73, a significant improvement compared with H1 2013 (1.42). In Q2 2014, the LTIFR was 1.08,

an improvement of 42% compared with Q2 2013 (1.87).

However, it is with great regret that we report two fatalities in Q2 2014: the first at the beginning of April 2014

at our Irokinda underground mine, and the second at the end of June 2014 at Neryungri open pit operations.

Our deepest sympathy goes to the bereaved families and work colleagues. Full investigations have taken

place to ensure that we learn from these incidents.

While we recognise that we operate in a hazardous environment, we remain dedicated to our goal of

ensuring every one of our employees returns home safely at the end of each shift.

LTIFR by mine

Mines Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

Bissa 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Taparko 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Lefa 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Buryatzoloto 2.17 5.36 (60%) 1.32 64% 1.75 4.01 (56%)

Berezitovy 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Neryungri 5.18 2.80 85% 0.00 n.a. 2.66 1.08 146%

Aprelkovo 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Suzdal 0.00 0.00 0% 0.00 0% 0.00 1.98 (100%)

Nordgold 1.08 1.87 (42%) 0.40 170% 0.73 1.42 (49%)

Development Highlights

Bouly

In Q2 2014, Nordgold finalised an in-house Preliminary Economic Assessment (“PEA”) of the Bouly

project, which is located next to the Bissa mine in Burkina Faso. The PEA resulted in robust economic

data, on which the decision was made to progress the project towards a Feasibility Study, bypassing the

Preliminary Feasibility Study stage.

Subsequently, in July 2014, Lycopodium was awarded the contract to be a leading consultant for a

Feasibility Study of the Bouly project. Lycopodium will be responsible for metallurgy/processing,

engineering and overall study report. Knight Piésold will be responsible for design of the heap leach

facility. Environmental & social and geology & mining consultants will be selected in Q3 2014.

It is expected that the Feasibility Study will be completed in Q2 2015.

Gross

Gross is an all-season open-pit heap leach project located in the southwestern Yakutia, Russia and

some 4 km to the east of Neryungri mine. Gross is expected to mine approximately 12 million tonnes of

ore and to produce over 200 koz of gold per year at full production for 17 years.

In 2014, the Company is focused on obtaining the construction permit for Gross, as well as completing

outstanding infrastructure design works and pilot stage operation.

Since the start of the pilot stage operation in February 2014 to the end of June 2014, total run of mine

amounted to 2.6 million tonnes, with 1.6 million tonnes of waste mined and 1 million tonnes of ore mined. The mined ore is being processed at Neryungri mine leach pads with gold leaching dynamics tracking

positive Feasibility study data.

Nordgold is on track to achieve targets set at the start of Gross’ pilot stage operation: 1.8 million tonnes

of ore will have been mined at Gross and processed at the heap leach facility of the satellite Neryungri

mine by the end of 2014.

5 www.nordgold.com


Q2 and H1 2014

Montagne d'Or

The 14-month Phase II drill programme that commenced at Montagne d’Or in November 2013 has

continued in Q2 2014. 59 drill holes totaling 7,978 metres have been completed since the start of the

drilling programme. The entire drilling programme includes 27,600 meters of diamond core drilling and is

designed to complete a 50-meter spacing array to a vertical depth of 200 meters along the full strike

extent of the current resources, with select 25-metre in-fill. In order to accelerate the drill programme a

second drill rig and additional drilling supplies arrived at the site in July 2014. The second drill rig,

operating on a 24 hour basis, commenced drilling on August 1, 2014. A third drill rig arrived in French

Guiana and cleared customs in the end of August, 2014. The rig is being mobilised to Montagne d'Or

gold deposit and is expected to commence operating on a 24 hour basis in due course.

On June 30, 2014, Nordgold’s partner in the Montagne d’Or project in French Guiana - Columbus Gold

Corp. (CGT: TSX-V) – announced the results of a resource estimate, dated June 28, 2014, prepared by

independent consultant Coffey Mining Pty Ltd on the Montagne d'Or gold deposit. Utilising a cut-off

grade of 0.4 g/t gold, the resource estimate was adjusted from 5.4 million ounces to 4.6 million ounces.

As previously reported, SRK Consulting (U.S.), Inc. (“SRK”) in early May 2014 was awarded the contract

to complete a preliminary economic assessment of Montagne d’Or gold deposit and resource estimate.

Nordgold expects that by the end of 2014, SRK will provide a new resource update on the Montagne

d'Or gold deposit that will incorporate the results of the Phase II drilling programme, which to date has

been delivering positive results.

Pistol Bay

On July 14, 2014, Nordgold completed an acquisition of 12,777,777 newly issued common shares of

Northquest Ltd. (TSX-V:NQ) (“Northquest”) and warrants to acquire up to an additional 6,388,889

Common Shares for total proceeds of CAD 2.5 million in two tranches through a non-brokered private

placement.

The transaction gives Nordgold a 22.6% holding in Northquest (on a non-diluted basis), which owns the

Pistol Bay Gold Project, a high grade exploration project located in Nunavut Territory, the northern

Canada, on the west coast of Hudson Bay.

Nordgold has appointed Igor Klimanov, Development Projects Director of the Company, to Northquest’s

board of directors.

In late July 2014, Northquest commenced a diamond drilling and an airborne magnetometer survey at

the Pistol Bay.

Ronguen Gold Project

On June 11, 2014, Nordgold entered into a Share Purchase Agreement with Goldrush Resources Ltd.

(TSX-V:GOD) to acquire the Ronguen Gold Project, a late stage exploration project located only 10

kilometres northwest of Nordgold’s operating Bissa mine and 100 kilometres north of Ouagadougou, the

capital city of Burkina Faso.

The Project comprises the Tikare and Kongoussi 1 mineral permits. According to a 2012 technical report

performed by SRK for Goldrush Resources, it contains total gold resources of 384 thousand ounces at

1.3 g/t, including total Measured and Indicated mineral resources of 332 thousand ounces of gold at a

grade of 1.22 g/t.

Ronguen’s favourable location close to Nordgold’s recently constructed Bissa mine, as well as the

similar properties of their ore bodies with higher grade core, will enable Nordgold to process the ore from

the Project at Bissa’s facilities, and therefore extend the Bissa minelife and benefit from low-cost gold

production at this world-class facility. Nordgold expects to finalise the feasibility study of Ronguen Gold

Project in Q2 2015.

On August 6, 2014, the shareholders of Goldrush Resources passed a special resolution to approve the

sale of Ronguen Gold Project to Nordgold. The deal is expected to close in September 2014.

6 www.nordgold.com


Q2 and H1 2014

Onot-Kitoyskaya Licence

In June 2014, Nordgold received an exploration and mining licence to develop and operate the Onot-

Kitoyskaya gold area in the Republic of Buryatia in Russia. The Onot-Kitoyskaya area is adjacent to

Nordgold’s of Zun-Holba mine. Total resource potential of the area is estimated at 50 tonnes of gold in P2

Russian classification resources and 105 tonnes in P3 resources.

Capital Expenditure

We remain focused on keeping a tight control over capex. Capex for Q2 2014 was US$48.2 million

(including US$4.6 million for exploration and evaluation), a 26% decrease compared with US$65.2

million in Q2 2013 (including US$25.7 million for exploration and evaluation).

In H1 2014, capex decreased by 46% YoY to US$70.6 million including US$10.0 million for exploration

and evaluation, US$50.6 million for maintenance, US$9.9 million for development and new technology

and US$0.1 million for mine construction.

Nordgold targets its FY 2014 capex to be approximately US$180 million, 10% lower than the original

guidance of US$200 million, including exploration (approximately US$30 million), maintenance

(approximately US$80 million), development and new technology, including the rollout of the SAP

system across all company sites (approximately US$27 million), capitalised stripping works

(approximately US$40 million) and Gross pilot stage operation support (US$3 million).

Capex by Mine for H1 2014, US$m (10)

Mines Maintenance Development and New Technology

Exploration and Evaluation

Mine Construction Total

Bissa 11.4 - 0.4 - 11.8

Taparko 4.8 - 1.0 - 5.8

Lefa 20.5 2.8 1.5 - 24.8

Buryatzoloto 6.1 - 3.4 - 9.5

Berezitovy 4.8 - 0.3 - 5.0

Aprelkovo 0.2 - - - 0.2

Neryungri 0.1 0.1 0.1 - 0.4

Gross - - 0.4 0.1 0.5

Suzdal 2.7 0.1 0.2 - 3.1

Others 0.0 6.9 2.7 - 9.4

Nordgold 50.6 9.9 10.0 0.1 70.6

(10) May include the effect of rounding

Cash Flow Optimisation and Cost Management

Nordgold’s target is for all its operating mines to be free cash flow positive in 2014, through a forensic

approach to cost management, diligent capex and working capital optimisation.

A combination of reduction in general and administrative expenses, improvements in operational efficiency,

as well as the on-going implementation of Business System of Nordgold (BSN) with the aim of realising a

positive effect on 2014 EBITDA of approximately US$55 million, is key to ensuring the Company remains

focused on driving down costs. In H1 2014, BSN programmes already have resulted in a positive effect of

approximately US$33.6 million.

In Q2 2014, Nordgold decreased its working capital by US$7.2 million mainly due to reduced materials and

supplies inventories at Lefa, Taparko, Berezitovy and Suzdal mines. Sale of the refined gold from Suzdal in

Q2 2014 also helped to release working capital. The achieved effect was partially offset by income tax paid

during the reporting quarter.

We expect to see further reduction in net working capital in H2 2014, primarily due to inventory stock

decrease and increase in payables.

7 www.nordgold.com


Q2 and H1 2014

Business System of Nordgold

As previously disclosed, the objective of Business System of Nordgold (BSN) is to establish best-in-class

sustainable processes at the Company’s operating assets, ensuring they are as efficient, low cost,

sustainable and, above all, as safe as possible. BSN roll out began in mid-2012 and has now been rolled out

across all mine sites, with the ultimate aim of reducing total cash costs.

The positive impact from BSN, reduced consumption of key materials, lower repair costs and administrative

expenses totaled more than US$80 million in 2013, compared with US$17 million in 2012.

We expect a further materially positive impact from BSN in 2014 as we continue to roll out operational

improvements and cost saving initiatives. BSN’s targeted effect on 2014 EBITDA is approximately US$55

million. In H1 2014, improved consumption efficiency of materials, spare parts, fuel and energy, as well as

staff and services costs reduction have delivered the positive effect of approximately US$33.6 million.

With BSN now having been rolled out across all mine sites, in 2014 the focus has been shifted towards

support and training. Lefa remains the key asset where BSN continue to focus on operational improvements

including stabilisation of mining volumes and improvement of fleet availability, together with other operational

efficiencies designed to improve both safety and productivity.

We are also implementing our “Top-20 materials” project – a method of procurement to ensure we are using

the best suppliers, with the best products at the most cost-effective prices.

Financial Results Summary (11)

Financial Results, US$m

Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change

, YoY

Revenue 342.1 320.3 7% 274.9 24% 617.0 617.1 0%

EBITDA (12) (13)

141.3 99.5 42% 103.5 37% 244.8 197.3 24%

EBITDA Margin, % (12)(13)

41.3 31.1 10.2pp 37.6 4pp 39.7 32.0 7.7pp

Net Profit/(Loss) (13)

49.1 (204.6) n.a. 24.6 99% 73.7 (190.0) n.a.

Normalised Net Profit Attributable to Shareholders (14)

48.0 25.8 86% 19.3 149% 67.3 34.7 94%

Cash flows from operating activity

83.8 63.1 33% 49.8 68% 133.7 103.5 30%

Capital expenditures (12)

48.2 65.2 (26%) 22.4 115% 70.6 129.7 (46%)

incl. Exploration 4.7 25.7 (82%) 5.4 (14%) 10.0 39.9 (75%)

Free cash flow (12)

49.6 (2.3) n.a. 22.9 116% 72.6 (30.5) n.a.

Cash and cash equivalents

306.9 228.3 34% 270.5 13% 306.9 228.3 34%

Total debt 993.8 1,030.2 (4%) 1,000.3 (1%) 993.8 1,030.2 (4%)

Net debt (12)

687.0 801.8 (14%) 729.8 (6%) 687.0 801.8 (14%)

TCC (12)(13)

185.1 201.9 (8%) 150.9 23% 336.0 595.2 (44%)

TCC, US$/oz (12)(13)

699 875 (20%) 719 (3%) 708 911 (22%)

AISC, US$/oz (12)(13)(15)

905 1,103 (18%) 893 1% 899 1,148 (22%)

(11) May include the effect of rounding.



(14) Normalised Net Profit attributable to shareholders adjusted for the non-current assets and inventories impairment or utilisation of impairment.

(15) Q1 2014 Lefa AISC was recalculated due to correction of classification in P&L, Nordgold figure changed accordingly.

8 www.nordgold.com


Q2 and H1 2014

Revenue

Despite a lower gold price, revenue in Q2 2014 was US$342.1 million, a 7% increase compared with

US$320.3 in Q2 2013 and a 24% increase compared with US$274.9 million in Q1 2014, due to higher gold

production and sales volumes.

In H1 2014, Nordgold revenue was US$617.0 million, in line with H1 2013’s US$617.1 million despite a 13%

fall in the average realised gold price YoY to US$1,295/oz in H1 2014 (0.3% above The London Bullion

Market Association average of US$1,291/oz) offset by higher production (a 14% increase compared with H1

2013 to 476.3 koz).

Nordgold does not have any gold hedging in place, and we therefore expect our realised gold price to remain

close to the market price in 2014. We remain a pure play gold producing company, and consider market gold

prices as the main risk to our revenue expectations.

The low gold price environment after a sharp correction in 2013 remains one of the biggest challenges for

the Company. However, Nordgold’s focus on growing production, as well as its stringent cost cutting

measures, means the Company remains well positioned.

Total Cash Costs

Nordgold’s consolidated TCC in H1 2014 decreased by 22% to US$708/oz compared with H1 2013

(US$911/oz). Nordgold achieved YoY TCC improvement at seven out of the Company’s nine mines, while

Bissa mine TCC was flat YoY.

The consolidated cost reduction in H1 2014 was largely driven by improved operational efficiency, including

higher volumes of throughput at Neryungri, Taparko and Suzdal mines, better recovery at Taparko and Lefa,

as well as significantly lower stripping ratio at Lefa, Neryungri and Berezitovy. TCC for H1 2014 was also

positively impacted by improved consumption efficiency and decreased general and administrative

expenses.

In Q2 2014, Nordgold’s consolidated TCC was US$699/oz, a 20% decrease compared with Q2 2013

(US$875/oz) and a 3% decrease compared with Q1 2014 (US$719/oz). The main contributors to the YoY

TCC improvement were Lefa (down 40%), Taparko (down 11%), Buryatzoloto (down 17%), Berezitovy (down

29%), Neryungri (down 36%) and Suzdal (down 9%).

We continue to implement BSN and other cost cutting initiatives in order to control our costs.

TCC by Mine for Q2 and H1 2014, US$ per ounce of gold


YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

Bissa (16)

476 471 1% 457 4% 466 465 0%

Taparko 740 832 (11%) 609 22% 672 803 (16%)

Lefa (16)

915 1,517 (40%) 1,073 (15%) 988 1,603 (38%)

Buryatzoloto (16)

822 990 (17%) 878 (6%) 847 1,040 (19%)

Berezitovy (16)

605 856 (29%) 670 (10%) 635 819 (23%)

Neryungri (16)

858 1,335 (36%) 706 22% 794 1,208 (34%)

Aprelkovo 1,093 1,006 9% 1,086 1% 1,090 1,044 4%

Suzdal (17)

629 687 (9%) 875 (28%) 709 776 (9%)

Nordgold 699 875 (20%) 719 (3%) 708 911 (22%)


(17) Suzdal TCC for Q1 2014 per ounce of gold doré, the rest per refined gold.

Bissa mine recorded TCC of US$466/oz in H1 2014, in line with H1 2013 (US$465/oz). The costs were

positively impacted by higher production volumes, lower reagents consumption rate in metallurgy, material

costs and the frequency of major repairs of mobile equipment. In Q2 2014, TCC at Bissa was US$476/oz

compared with US$457/oz in Q1 2014 mainly due to lower grade and higher stripping ratio partially offset by

a decrease in the fuel and reagents consumption rate and lower energy cost related to the HFO farm

9 www.nordgold.com


Q2 and H1 2014

commissioned in Q2 2014, as well as lower staff, services and rental equipment costs. We expect TCC at

Bissa to remain very competitive in 2014.

At Taparko, TCC decreased in H1 2014 by 16% YoY to US$672/oz mainly due to increased gold output,

significantly higher recovery (up 9.3 pp) and lower stripping ratio. TCC reduction was also driven by

improved consumption efficiency, including savings on spare parts, reagents and materials, as well as fuel

and energy, grinding balls cost in pretreatment and external services costs. In Q2 2014, TCC was

US$740/oz, down 11% compared with Q2 2013. TCC increase QoQ was mainly related due to lower grade

and higher stripping ratio partially offset by improved recovery and consumption efficiency, as well as higher

production volumes.

In Q2 2014, Nordgold achieved its goals at Lefa, which included stable production of 15-16 koz per month

with a TCC level of US$1,000/oz. In Q2 2014, Lefa produced 46.5 koz of gold with TCC at US$915/oz owing

to the implementation of the Lefa turnaround programme. The costs decreased QoQ mainly due to improved

mining productivity, lower materials, spare parts, fuel and energy consumption. During Q2 2014, Lefa further

reduced its workforce to 1,465 employees without business interruption from 1,570 employees in Q1 2014,

and from approximately 2200 employees at its peak. In H1 2014, Lefa TCC decreased by 38% YoY to

US$988/oz driven by improved grade and recovery, decreased stripping ratio, as well as lower staff costs

related to workforce cutback and lower services costs. The TCC decrease was also supported by savings

achieved through optimisation of repairs at the processing plant, reagents consumption control, increased

drill and blast productivity and tires control, as well as a decrease in general and administrative expenses. In

H2 2014 the Company aims to sustain the Lefa results achieved in Q2 2014.

Buryatzoloto recorded significant TCC improvement with a level of of US$822/oz in Q2 2014, down 17%

YoY and down 6% QoQ. The QoQ costs decrease was mainly related to higher grade, recovery and output,

lower stripping ratio, as well as improved consumption efficiency and lower costs related to personnel. In H1

2014, TCC decreased by 19% YoY to US$847/oz also mainly due to higher grade, recovery, production

volumes and lower consumption of materials, spare parts, fuel and energy.

Berezitovy improved its TCC in Q2 2014 by 29% compared with Q2 2013 to US$605/oz. TCC also

decreased by 10% QoQ mainly due to higher grade, recovery and output, lower stripping ratio, as well as

lower costs related to materials, spare parts and a seasonal decrease of diesel fuel and electricity

consumption for heating. In H1 2014, the mine decreased TCC by 23% to US$635/oz mainly due to higher

gold output and lower stripping. The costs reduction was related to decreased consumption of grinding balls,

mine truck tires and explosives, as well as the lower frequency of grinding and mining equipment repairs.

In H1 2014, Neryungri recorded a 34% TCC decrease YoY to US$794/oz due to higher mining volumes and

gold output. Completion of the Neryungri pit waste stripping phase and continued development of the low

strip ratio Gross’ pilot stage operation resulted in a significant decreased in the mine stripping ratio, which

positively influenced Neryungri costs. BSN programmes, such as implementation of the daily balance of

mining equipment; decrease of reagents consumption and headcount optimisation, have also improved TCC.

In Q2 2014, TCC decreased by 36% YoY to US$858/oz.

TCC at Aprelkovo for H1 2014 increased by 4% to US$1,090/oz due to lower grade and production

volumes.

At Suzdal, TCC decreased in H1 2014 by 9% YoY to US$709/oz due to increased production, improved

consumption efficiency, including savings on materials, spare parts, as well as decreased services costs.

In H1 2014, an improvement of TCC in USD per ounce at Nordgold’s mines in Russia and Kazakhstan was

supported by the Russian rouble and Kazakhstan tenge depreciation against US dollar during the period.

In Q2 2014, general and administrative expenses (G&A) decreased to US$16.1 million compared with

US$17.3 million in Q1 2014 and US$16.4 million in Q2 2013. In H1 2014, G&A costs decreased to US$70/oz

compared with US$77/oz in H1 2013. We continue to control and review our G&A costs to achieve further

improvement to increase profitability.

All-in Sustaining Costs

AISC measures costs related to sustaining production. We calculate it as the sum of EBITDA-based TCC

and sustaining capex (capex spent to sustain the current production level).

AISC were US$905/oz for Q2 2014, down 18% YoY primarily due to a 14% production increase and 20%

TCC decrease partially offset by 6% increase in sustaining capex. The 1% QoQ increase in AISC mainly

relates to almost twofold higher sustaining capex in Q2 2014.

10 www.nordgold.com


Q2 and H1 2014

In H1 2014, eight out of Nordgold’s nine mines achieved significant AISC improvement compared with H1

2013. As a result, Nordgold’s consolidated AISC decreased by 22% YoY to US$899/oz due to higher

production, lower TCC and maintenance capex.

Based on the significant improvement in AISC achieved in H1 2014, Nordgold has revised its FY 2014 AISC

guidance and now expects AISC to be in range of US$950/oz - US$1,000/oz compared to its previous range

of US$1,050/oz - US$1,100/oz. At this AISC level and given the current pricing environment we expect to be

able to generate meaningful positive free cash flow.

AISC by Mine, US$ per ounce of gold (18)


YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

Bissa 600 480 25% 531 13% 565 499 13%

Taparko 857 1,467 (42%) 734 17% 793 1,208 (34%)

Lefa (19)

1,257 1,724 (27%) 1,294 (3%) 1,274 1,867 (32%)

Buryatzoloto 1,007 1,478 (32%) 1,084 (7%) 1,041 1,461 (29%)

Berezitovy 758 954 (20%) 764 (1%) 761 943 (19%)

Neryungri 1,004 1,569 (36%) 799 26% 918 1,424 (36%)

Aprelkovo 1,188 1,170 2% 1,122 6% 1,161 1,189 (2%)

Suzdal (20)

788 679 16% 980 (20%) 846 902 (6%)

Nordgold (19)

905 1,103 (18%) 893 1% 899 1,148 (22%)


(19) Q1 2014 Lefa AISC was recalculated due to correction of classification in P&L, Nordgold AISC for Q1 2014 changed accordingly.

(20) Suzdal AISC for Q1 2014 per ounce of gold doré, the rest per refined gold.

Finance Income and Finance Costs

Net finance costs in Q2 2014 decreased by US$4.3 million to US$24.1 million compared with the previous

quarter (US$28.4 million). Q2 2014 interest expense decreased to US$12.8 million from US$14.9 million in

Q1 2014. Other finance costs decreased to US$3.8 million in Q2 2014 compared with US$9.4 million in Q1

2014. These costs totaled US$13.2 million in H1 2014 and were mainly related to US$7.1 million of loss

related to discontinuing of hedge accounting and $US2.2 million of royalties related to Bissa operations. In

Q2 2014, net finance costs included a foreign exchange loss of US$8.1 million.

Taxation

Taxes other than income taxes for Q2 2014 were US$19.0 million compared with US$17.3 million for Q1

2014 and US$19.4 million for Q2 2013. In H1 2014, taxes other than income taxes decreased to US$36.3

million compared with US$37.2 million in H1 2013. The most significant part of taxes other than income

taxes is mining tax, which was affected by lower gold prices.

Nordgold reported an income tax expense of US$14.1 million in Q2 2014 compared with US$3.5 million in

Q1 2014 and income tax benefit of US$79.6 million in Q2 2013.

Interim period income tax is accrued based on the estimated average annual effective income tax rate of

19.3% compared with 27.5% in 2013. The decrease in the estimated average effective tax rate in 2014 is

mainly affected by share of Lefa’s financial result (subject to income tax rate of 30%) in consolidated

Nordgold financial result, which decreased from 86% in H1 2013 to 7% in H1 2014 and changes of income

tax related contingencies (mainly at Taparko).

Cash Flow

The Company continues to pay close attention to its liquidity position and to optimise cash flow in order to

maximise shareholder value. We are targeting positive free cash flow at all of our operating mines in 2014

through cost, working capital and capex optimisation. In Q2 2014, eight out of Nordgold’s nine mines

achieved positive free cash flow generation, including Lefa. Nordgold plans to use the cash generated for

organic debt reduction and for dividend distributions.

11 www.nordgold.com


Q2 and H1 2014

We are pleased to report that despite the volatile gold price, Nordgold’s cash flows from operating activities

for H1 2014 were at US$133.7 million, materially higher than the US$103.5 million reported in H1 2013.

Nordgold’s cash flows from operating activities in Q2 2014 increased by 68% QoQ to US$83.8 million. The

cash flows increase was partially related to the fact that Suzdal’s doré produced Q1 2014 was not refined

and sold during Q1 2014 as Suzdal’s refined gold production and sales were affected by negotiations with

the National Bank of Kazakhstan and a newly built refinery plant “Tau-Ken Altyn”. The issue was resolved in

April 2014 and Suzdal’s doré produced in Q1 2014 has been refined and sold during Q2 2014 and was

accounted in Q2 2014 revenue, EBITDA and operating cash flows.

Some Buryatzoloto gold doré produced in the end of Q1 2014 was also refined in Q2 2014 due to the

shipment schedule and therefore was accounted in Q2 2014 revenue, EBITDA and operating cash flows.

In H1 2014, the Bissa mine remained the main cash-generating asset with US$63.3 million of operating cash

flow recorded for the first six months of 2014, while Aprelkovo posted negative operating cash flow of

US$1.6 million.

Cash used in investing activities for Q2 2014 amounted to an outflow of US$42.0 million compared with an

outflow of US$65.6 million in Q2 2013 and of US$30.8 million in Q1 2014. YoY difference mainly relates to

lower cash used for development and maintenance capital expenditures (US$29.4 million in Q2 2014

compared with US$40.1 million in Q2 2013) as well as lower exploration and evaluation capex (US$4.8

million in Q2 2014 compared with US$25.3 million in Q2 2013).

Nordgold reported a cash outflow of US$7.6 million in Q2 2014 from financing activities compared with

US$14.5 million inflow in Q1 2014. In Q1 2014, Nordgold entered into a 5-year facility agreement with

Sberbank CIB (21)

for the amount of US$500 million(22)

. The proceeds from the facility were partially used for

the debt repayment (US$465.5 million), as well as general corporate purposes.

Nordgold generated positive free cash flow of US$72.6 million in H1 2014 and increased cash and cash

equivalents to US$306.9 million as of June 30, 2014. We remain strongly focused on our strategy to operate

with positive free cash flow at all our producing units and continue to improve our operational efficiency and

closely manage working capital.

Debt Position

As of June 30, 2014 Nordgold’s total debt was US$993.8 million, US$6.5 million lower than at the March 31,

2014 (US$1,000.3 million) and US$25.8 million higher than at the December 31, 2013 (US$968.0 million).

The Company’s net debt position at June 30, 2014 was US$687.0 million, US$42.9 million lower than net

debt at March 31, 2014 (US$729.8 million) and US$36.9 million lower than net debt at December 31, 2013

(US$723.9 million).

Net debt/LTM EBITDA remained at 1.6x at the end of June 2014, which is significantly below our covenant

level of 3.0x net debt/LTM EBITDA.

In Q1 2014, Nordgold entered into a 5-year facility agreement with Sberbank CIB(21)

for the amount of

US$500 million(22)

. The proceeds from the facility were partially used to repay Nordgold’s existing debt

facilities, with the balance being used for general corporate purposes. The refinancing helped us to reduce

our cost of debt and improve our liquidity position and debt profile, decreasing short-term debt to almost

zero, with the first debt repayment due to be made in 2016.

(21) On the basis of CJSC “Sberbank CIB”

(22) Financing provided by Sberbank of Russia

12 www.nordgold.com


Q2 and H1 2014

Production Overview

Refined Gold Production by Mine, koz (23)(24)

Operating results Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

Bissa 65.8 72.2 (9%) 68.2 (4%) 134.0 112.5 19%

Taparko 30.8 25.8 19% 33.1 (7%) 63.9 55.1 16%

Lefa 46.5 36.6 27% 40.2 16% 86.6 71.0 22%

Buryatzoloto 30.5 25.7 19% 24.9 22% 55.4 48.9 13%

Berezitovy 32.1 30.6 5% 27.0 19% 59.0 56.8 4%

Neryungri 16.7 13.3 26% 12.1 38% 28.8 23.9 20%

Aprelkovo 7.4 8.5 (13%) 5.3 40% 12.7 12.9 (2%)

Suzdal(25)

35.4 20.0 77% 20.1 76% 35.7 35.0 2%

Nordgold 265.0 232.6 14% 211.1 26% 476.1 416.3 14%

(23) Including 1.624and 2.951 thousand gold equivalent ounces of silver production for Q2 2014 and H1 2014 respectively (Based on 1:60 Ag/Au).

(24) May include the effect of rounding.

(25) Suzdal mine produced 20.1 thousand ounces of doré in Q1 2014, although only 0.3 koz was refined during the quarter. This was because Suzdal’s refined gold production and sales were affected by negotiations with the National Bank of Kazakhstan and a newly built refinery plant “Tau-Ken Altyn”. The issue was resolved in April 2014 and Suzdal’s doré produced in Q1 2014 has been refined and sold during Q2 2014.

Operating Results Summary (26)

Operating results Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 1.08 1.87 (42%) 0.40 170% 0.73 1.42 (49%)

Run of mine, kt (27)

24,536 30,213 (19%) 22,329 10% 46,865 58,027 (19%)

Waste mined, kt (27)

20,474 25,824 (21%) 18,840 9% 39,315 50,175 (22%)

Ore mined, kt 4,365 4,695 (7%) 3,795 15% 8,160 8,428 (3%)

Stripping ratio, tn/tn

(28)

5.04 5.88 (14%) 5.40 (7%) 5.21 6.39 (18%)

Ore milled, kt 6,201 5,026 23% 4,345 43% 10,546 8,473 24%

Grade, g/t 1.63 1.84 (11%) 1.97 (17%) 1.77 1.90 (7%)

Recovery, % 80.8 79.3 1.5pp 82.5 (1.7pp) 81.6 81.4 0.2pp

Gold production, koz

265.0 232.6 14% 211.1 26% 476.1 416.3 14%

Gold sold, koz 264.7 232.2 14% 211.5 25% 476.3 416.0 14%


1,292 1,379 (6%) 1,299 (1%) 1,295 1,482 (13%)

Revenue, US$m 342.1 320.3 7% 274.9 24% 617.0 617.1 0%

Ore processed multiplied by head grade and multiplied by recovery may not be equal to gold produced due to differences in work in

progress figures and volumes of silver production

(26) May include the effect of rounding

(27) Presented only for open pit mines

(28) Calculated for total ore mined and waste mined only for open pits

13 www.nordgold.com


Q2 and H1 2014

Burkina Faso Bissa

In Q2 2014, the Bissa mine continued its excellent performance, producing 65.8 koz of gold in the quarter. In

H1 2014, Bissa gold production reached 134 koz. QoQ, mill throughput increased by 9% due to resolving

long standing issues with the ball mill motor brushes that impacted mill availability and optimal utilisation of

installed mill power, off-set by a 10% reduction in reconciled head grade. The average reconciled head

grade for H1 2014 was 2.55 g/t. The average plant recovery of 88.5% for the quarter and first half of 2014

was in line with recovery of 88.6% reported in H1 2013.

Ore mined totaled 838 kt in Q2 2014 and 1,636 kt in H1 2014. Ore mining continued from the SW pit Phases

1 and 2. As a part of the 2014 mining plan, Bissa is developing two more pits: Bissa Hill and Zone 52. In Q2

2014 Bissa continued mining activities at the Bissa Hill 1 and 2 pits which were started in Q1 2014. In May

2014 mining operations also commenced at the Zone 52 pit. The development of both pits progresses in line

with the mining plan. An infill drilling of future IO pit Phases and extensional drilling is currently in progress

and will be completed by the end of 2014.

In Q2 2014 the average stripping ratio increased by 11% QoQ to 6.18 due to the commencement of the new

pits operations. As previously reported, the 2014 average stripping ratio is planned at the level of

approximately 6.80. Due to the new pits development ore mined was lower than ore milled at Bissa plant in

H1 2014, with the difference in ore supplied from high-grade stockpiles.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 6,020 7,588 (21%) 5,246 15% 11,266 14,166 (20%)

Waste mined, kt 5,183 5,942 (13%) 4,448 17% 9,631 11,683 (18%)

Ore mined, kt 838 1,647 (49%) 798 5% 1,636 2,483 (34%)

Stripping ratio, tn/tn 6.19 3.61 71% 5.57 11% 5.89 4.71 25%

Ore milled, kt 971 853 14% 889 9% 1,860 1,600 16%

Grade, g/t 2.42 2.84 (15%) 2.70 (10%) 2.55 2.58 (1%)

Recovery, % 88.5 89.1 (0.6pp) 88.4 0.1pp 88.5 88.6 (0.1pp)


65.8 72.2 (9%) 68.2 (4%) 134.0 112.5 19%

Gold sold, koz 65.8 72.2 (9%) 68.2 (3%) 134.0 112.5 19%


1,292 1,403 (8%) 1,304 (1%) 1,298 1,470 (12%)

Revenue, US$m 85.1 101.3 (16%) 88.9 (4%) 174.0 165.4 5%

EBITDA, US$m (29)(30)

53.1 67.6 (22%) 57.0 (7%) 110.0 111.6 (1%)

EBITDA margin, % (29)(30)

62.4 66.8 (4.4pp) 64.1 (1.7pp) 63.2 67.5 (4.2pp)

TCC, US$/oz (29)(30)

476 471 1% 457 4% 466 465 0%

AISC, US$/oz (29)(30)

600 480 25% 531 13% 565 499 13%


progress figures and volumes of silver production.


(30) The figures for Q2 2013 and H1 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Interim

Condensed Consolidated Financial Statements.

14 www.nordgold.com


Q2 and H1 2014

Burkina Faso Taparko

Taparko gold production for H1 2014 was 63.9 koz, a 16% increase compared with H1 2013 (55.1 koz). As a

result of a softer mill feed blend and improvements made to the plant operating and blending strategies in

2014, ore processing volumes increased in H1 2014 to 842 kt compared with 739 kt in H1 2013. In Q2 2014,

Taparko produced 30.8 koz of gold, up 19% compared with 25.8 koz in Q2 2013. Q2 2014 recovery was at a

record level of 90.9% (85.7% in Q1 2014 and 80.6% in Q2 2013), resulting from treating lower volumes of

preg-robbing ores and improvements made to the plant operating and blending strategies. In H1 2014, the

average head grade was 2.65 g/t, while the average head grade in 2014 is expected to be 2.46 g/t. In July

2014, an 8-day planned downtime period took place to replace the primary ball mill trunion.

The volumes of ore mined in H1 2014 increased by 42% YoY, while the average stripping ratio, including

capitalised waste, decreased to 4.91 in H1 2014 from 8.36 in H1 2013. This was due to higher ore volumes

mined from the 2N2K pit. The 2014 planned average stripping ratio will range between 5.3 and 5.6, resulting

from the commencement of a further cut-back at the 35 North pit.

An in-fill drilling programme (35 diamond drilling holes totaling 4,468 metres and 55 reverse circulation holes

totaling 6,078 metres) at the advanced Yeou project, located 50 km North West of the Taparko processing

facility, was completed in Q2 2014. Nordgold also completed 6 HQ core holes totaling 406 metres for

metallurgical test work (samples at SGS, Johannesburg, South Africa) on representative samples from the

Yeou deposit in order to complete a feasibility study by Q1 2015. Exploration drilling at the Goengo target, 15

km south of Taparko processing facility and on the Taparko Mining License commenced in May 2014.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 3,826 4,357 (12%) 3,499 9% 7,325 8,205 (11%)

Waste mined, kt 3,244 3,878 (16%) 2,842 14% 6,086 7,329 (17%)

Ore mined, kt 582 480 21% 658 (11%) 1,240 876 42%

Stripping ratio, tn/tn 5.57 8.09 (31%) 4.32 29% 4.91 8.36 (41%)

Ore milled, kt 441 353 25% 401 10% 842 739 14%

Grade, g/t 2.45 2.80 (13%) 2.87 (15%) 2.65 2.80 (5%)

Recovery, % 90.9 80.6 10.3pp 85.7 5.2pp 88.2 78.9 9.3pp

Gold production, koz 30.8 25.8 19% 33.1 (7%) 63.9 55.1 16%

Gold sold, koz 30.7 25.8 19% 33.1 (7%) 63.8 55.2 16%


1,285 1,398 (8%) 1,292 (1%) 1,288 1,519 (15%)

Revenue, US$ m 39.5 36.1 9% 42.8 (8%) 82.2 83.8 (2%)

EBITDA, US$ (29)(30)

15.2 12.3 24% 22.0 (31%) 37.2 33.8 10%


38.5 34.0 4.6pp 51.4 (12.8pp) 45.2 40.3 4.9pp

TCC, US$/oz (29)(30)

740 832 (11%) 609 22% 672 803 (16%)

AISC, US$/oz (29)(30)

857 1,467 (42%) 734 17% 793 1,208 (34%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal gold to produced due to differences in work in


(29) For detailed definition, please see “Non-IFRS Financial Measures” (30) The figures for Q2 2013 and H1 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Interim

Condensed Consolidated Financial Statements

15 www.nordgold.com


Q2 and H1 2014

Guinea Lefa

Lefa delivered strong operating results for a Q2 2014 as a result of its turnaround programme. The mine

produced 46.5 koz of gold, up 27% compared with 36.6 koz in Q2 2013 and up 16% compared with 40.2 koz

in Q1 2014. The recovery reached 85.4% in Q2 2014, and is expected to range between 84.5% and 86.0%

in H2 2014.

During Q2 2014, Lefa commenced the development of two new pits: the Firifirini open pit is located 8 km

north of the Fayalala process plant and the Kankarta North pit is located 6 km northwest of the Fayalala

process plant. Therefore the stripping ratio in Q2 2014 was two times higher compared with Q1 2014. The

strip ratio in H2 2014 is expected to decrease to 5.6, while ore tonnage mined is expected to increase to

1,850 kt.

In H1 2014, Lefa gold production increased by 22% YoY to 86.6 koz due to higher throughput, grade and

improved recovery. The average head grade in Q2 2014 decreased by 9% QoQ to 1.00. The lower head

grade resulted from processing lower grade stockpiled ores, while the mining activity was focused on

stripping of the new Firifirini and Kankarta pits. The grade in ore mined was 1.32 g/t in H1 2014 and 1.46 g/t

in Q2 2014. In H2 2014, grade from ore mined is planned at 1.48 g/t.

The implementation of efficient maintenance programmes for the mining fleet and plant is underway. During

Q2 2014, Lefa further reduced its workforce to 1,465 employees without business interruption from 1,570

employees in Q1 2014, and from approximately 2200 employees at its peak.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 4,109 7,191 (43%) 3,612 14% 7,720 14,811 (48%)

Waste mined, kt 3,617 6,265 (42%) 2,808 29% 6,424 12,859 (50%)

Ore mined, kt 492 925 (47%) 804 (39%) 1,296 1,952 (34%)

Stripping ratio, tn/tn 7.35 6.77 9% 3.49 111% 4.96 6.59 (25%)

Ore milled, kt 1,730 1,523 14% 1,290 34% 3,020 2,930 3%

Grade, g/t 1.00 0.95 5% 1.10 (9%) 1.04 0.94 11%

Recovery, % 85.4 82.7 2.7pp 84.8 0.6pp 85.1 83.4 1.7pp

Gold production, koz 46.5 36.6 27% 40.2 16% 86.6 71.0 22%

Gold sold, koz 46.5 36.6 27% 40.2 16% 86.6 71.0 22%


1,295 1,395 (7%) 1,289 0% 1,292 1,507 (14%)

Revenue, US$m 60.2 51.1 18% 51.7 16% 111.9 107.0 5%


19.1 (7.2) n.a. 4.4 336% 23.5 (12.3) n.a.


31.8 (14.1) n.a. 8.5 23.3pp 21.0 (11.5) n.a.

TCC, US$/oz (29)(30)

915 1,517 (40%) 1,073 (15%) 988 1,603 (38%)

AISC, US$/oz (29)(30)

(31)

1,257 1,724 (27%) 1,294 (3%) 1,274 1,867 (32%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal gold produced due to differences in work in progress figures and volumes of silver production.

(29) For detailed definition, please see “Non-IFRS Financial Measures”

(30) The figures for Q1 2013 and Q4 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Interim Condensed Consolidated Financial Statements.

(31) Q1 2014 Lefa AISC was recalculated due to correction of classification in P&L

16 www.nordgold.com


Q2 and H1 2014

Russia Buryatzoloto

Buryatzoloto continues to deliver strong production performance. In Q2 2014, gold output was 30.5 koz, up

19% compared with Q2 2013 (25.7 koz) and up 23% compared with Q1 2014 (24.9 koz). In H1 2014, gold

production increased by 13% YoY, to 55.4 koz, driven by higher head grade, which reached 5.52 g/t,

compared with 4.72 g/t in H1 2013, as a result of continued investments in new level development, the

development of new ore blocks, lower dilution and operational improvement initiatives. We expect head

grade will remain above 5 g/t in 2014. Buryatzoloto also improved recovery by 1.0 pp to 92.9% in H1 2014

from 91.9% in H1 2013.

In H1 2014, at Zun-Holba, 181 kt of ore at 5.52 g/t was produced from the Adits and Shaft levels. During Q2

2014, the Zun-Holba mechanised decline was approved and will be established in H2 2014. The mechanised

decline will access the levels below the current shaft levels and be used for extensional drilling along strike

and at depth. At Irokinda, 135 kt of ore at 6.23 g/t was mined from the Vein 3, Vein Vysokaya and Vein

Serebryakovskaya adits; while the other veins contributed 41 kt at 4.41 g/t. At Irokinda, development of the

mechanised declines at the Vein 3 and Vein Serebryakovskaya mines continued, and reached their first

respective ore levels.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 2.17 5.36 (60%) 1.32 64% 1.75 4.01 (56%)

Ore mined, kt 176 181 (3%) 181 (3%) 358 348 3%

Ore milled, kt 172 168 2% 166 4% 338 331 2%

Grade, g/t 5.67 4.82 18% 5.37 6% 5.52 4.72 17%

Recovery, % 93.1 91.8 1.3pp 92.8 0.3pp 92.9 91.9 1.0pp

Gold production, koz 30.5 25.7 19% 24.9 22% 55.4 48.9 13%

Gold sold, koz 30.5 25.7 19% 25.0 22% 55.5 49.0 13%


1,288 1,361 (5%) 1,306 (1%) 1,296 1,484 (13%)

Revenue, US$m 39.3 34.9 13% 32.7 20% 71.9 72.7 (1%)


15.2 6.2 143% 8.4 81% 23.5 16.0 48%


38.6 17.9 20.7pp 25.6 13.0pp 32.7 21.9 10.8pp

TCC, US$/oz (32)(33)

822 990 (17%) 878 (6%) 847 1,040 (19%)

AISC, US$/oz (32)(33)

1,007 1,478 (32%) 1,084 (7%) 1,041 1,461 (29%)





17 www.nordgold.com


Q2 and H1 2014

Russia Berezitovy

Berezitovy exceeded our Q2 2014 production target with 32.1 koz of gold produced during the quarter, an increase of 19% compared with Q1 2014 (27.0 koz) and of 5% compared with Q2 2013 (30.6 koz). In H1 2014, gold production increased by 4% YoY to 59.0 koz, driven by increased volumes of ore mined (1,002 kt in H1 2014 compared with 754 kt in H1 2013) and a corresponding increase of ore milled (911 kt in H1 2014 compared with 832 kt in H1 2013). The stripping ratio decreased in Q2 2014 to 5.96 compared with 7.29 in Q2 2013 and 6.18 in Q1 2014, due to Phase 1 ore mining off-setting waste mining from the Phase 3 cut-back. In H1 2014, the average stripping ratio decreased by 19% to 6.07. The stripping ratio is expected to be in the range of 6.0 to 7.0 in 2014.

In Q2 2014 average head grade was 2.34 g/t, up 11% compared with 2.11 g/t in Q2 2013 and up 17% compared with 2.00 g/t in Q1 2014. The H2 2014 average head grade is planned at between 2.15 g/t and 2.25 g/t. The recovery was 90.4% in Q2 2014, a 0.6 pp increase compared with Q2 2013 (89.8%) and a 1.3 pp increase compared with Q1 2014 (89.1%) due to processing performance optimisations achieved through a number of initiatives, including increasing the mill utilization, improved throughput by reduced SAG mill ore feed size through improving screening and crushing efficiency, and recovery initiatives including installation of air addition lances to all leach tanks to improve dissolved oxygen levels and tightened reagent control.

A plant trial to increase dissolved oxygen levels in the leach using hydrogen peroxide will be conducted in Q3 2014, testwork indicates that recovery above 90.5% is sustainable. Berezitovy mill ring gear replacement was postponed to the first half of 2015 as the pinion diagnostic showed acceptable vibrations and no significant deterioration in condition.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 3,554 3,252 9% 3,528 1% 7,082 6,417 10%

Waste mined, kt 3,043 2,860 6% 3,036 0% 6,080 5,663 7%

Ore mined, kt 510 392 30% 492 4% 1,002 754 33%

Stripping ratio, tn/tn 5.96 7.29 (18%) 6.18 (3%) 6.07 7.51 (19%)

Ore milled, kt 462 452 2% 448 3% 911 832 9%

Grade, g/t 2.34 2.11 11% 2.00 17% 2.17 2.20 (1%)

Recovery, % 90.4 89.8 0.6pp 89.1 1.3pp 89.8 89.9 (0.1pp)

Gold production, koz(34)

32.1 30.6 5% 27.0 19% 59.0 56.8 4%

Gold sold, koz(34)

32.0 30.6 5% 27.2 18% 59.2 56.7 4%


1,288 1,359 (5%) 1,309 (2%) 1,298 1,480 (12%)

Revenue, US$m 41.2 41.6 (1%) 35.6 16% 76.8 84.0 (9%)


20.1 14.3 41% 16.2 25% 36.3 33.7 8%


48.8 34.3 14.6pp 45.3 3.5pp 47.2 40.1 7.1pp

TCC, US$/oz (35)(36)

605 856 (29%) 670 (10%) 635 819 (23%)

AISC, US$/oz (35)(36)

758 954 (20%) 764 (1%) 761 943 (19%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal gold produced due to differences in work in


(34) Including gold from heap leach


(36) The figures for Q1 2013 and Q4 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Financial

Statements.

18 www.nordgold.com


Q2 and H1 2014

Russia Neryungri

Neryungri produced 16.7 koz in Q2 2014, an increase of 26% on Q2 2013 (13.3 koz) and an increase of 38%

on Q1 2014 (12.1 koz) mainly due to significantly higher throughput and seasonality. In H1 2014, gold

production increased by 21% YoY to 28.8 koz.

The stripping ratio in Q2 2014 decreased to 2.73 compared with 9.78 in Q1 2014 due to the completion of

the Neryungri pit waste stripping phase and as a result of the full quarter continued development of the low

strip ratio Gross’ pilot stage operation, which started in late February 2014. In Q2 2014 Gross’ total run of

mine material was 2,061 kt, with 1,212 kt of waste and 849.0 kt of ore mined. Since the start of the pilot

stage operation to the end of June 2014, total run of mine amounted to 2,576 kt, with 1,560 kt of waste

mined and 1,016 kt of ore mined.

The 2014 plan includes the mining of 1.8 million tonnes of ore, which will be processed at Neryungri as part

of the Gross heap leach trial.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 5.18 2.80 85% 0.00 n.a. 2.66 1.08 146%

Run of mine, kt 4,027 4,616 (13%) 3,610 12% 7,637 8,349 (9%)

Waste mined, kt 2,947 4,140 (29%) 3,275 (10%) 6,222 7,589 (18%)

Ore mined, kt 1,080 476 127% 335 222% 1,415 759 86%

Stripping ratio, tn/tn 2.73 8.69 (69%) 9.78 (72%) 4.40 9.99 (56%)

Ore milled, kt 1,132 642 76% 505 124% 1,637 725 126%

Grade, g/t 0.71 1.05 (32%) 0.68 4% 0.70 1.06 (34%)

Recovery, %(37)

75.0 75.0 0pp 75.0 0pp 75.0 75.0 0pp


16.7 13.3 26% 12.1 38% 28.8 23.9 21%

Gold sold, koz 16.6 13.2 26% 12.1 37% 28.7 23.9 20%


1,290 1,346 (4%) 1,292 0% 1,291 1,469 (12%)

Revenue, US$m 21.4 17.8 20% 15.7 36% 37.1 35.2 5%


4.7 (1.9) n.a. 6.0 (21%) 10.7 2.7 294%


22.0 (10.7) n.a. 38.2 (16.2pp) 28.9 7.7 21.1pp

TCC, US$/oz (38)(39)

858 1,335 (36%) 706 22% 794 1,208 (34%)

AISC, US$/oz (38)(39)

1,004 1,569 (36%) 799 26% 918 1,424 (36%)



(37) Technical recovery rate. Actual recovery may differ due to seasonal effects.


(39) The figures for Q2 2013 and H1 2013 were restated due to change in accounting policy. For more information, please see Note 2 in the Interim

Condensed Consolidated Financial Statements

19 www.nordgold.com


Q2 and H1 2014

Russia Aprelkovo

Aprelkovo produced 7.4 koz in Q2 2014, an increase of 36% compared with Q1 2014, mainly due to higher

volumes of ore mined and processed as a result of seasonality.

In Q2 2014, the stripping ratio decreased by 28% QoQ to 4.36 in line with the mine plan of the mature

Aprelkovo pit. During H2 2014, infill drilling and evaluation of extensions to the Aprelkovo pit, and Zone 10

and Nerchinsk ore bodies will be completed.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 0.00 0%

Run of mine, kt 3,001 3,209 (6%) 2,833 6% 5,834 6,079 (4%)

Waste mined, kt 2,441 2,740 (11%) 2,431 0% 4,872 5,051 (4%)

Ore mined, kt 560 469 19% 401 40% 962 1,028 (6%)

Stripping ratio, tn/tn 4.36 5.84 (25%) 6.06 (28%) 5.07 4.91 3%

Ore milled, kt 730 672 9% 280 161% 1,010 862 17%

Grade, g/t 1.20 1.32 (9%) 1.21 (1%) 1.20 1.31 (8%)

Recovery, %(37)

47.7 46.7 1.0pp 47.7 0pp 47.7 46.7 1.0pp

Gold production, koz 7.4 8.5 (13%) 5.3 40% 12.7 12.9 (2%)

Gold sold, koz 7.4 8.5 (14%) 5.4 37% 12.8 12.9 (1%)


1,290 1,308 (1%) 1,306 (1%) 1,297 1,414 (8%)

Revenue, US$m 9.5 11.1 (14%) 7.1 35% 16.5 18.3 (10%)

EBITDA, US$m(38)(39)

1.0 2.2 (56%) 1.1 (8%) 2.0 4.3 (53%)


10.3 19.8 (9.5pp) 15.1 (4.8pp) 12.3 23.5 (11.2pp)

TCC, US$/oz (38)(39)

1,093 1,006 9% 1,086 1% 1,090 1,044 4%

AISC, US$/oz (38)(39)

1,188 1,170 2% 1,122 6% 1,161 1,189 (2%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal gold produced due to differences in work in


(37) Technical recovery rate. Actual recovery may differ due to seasonal effects.



20 www.nordgold.com


Q2 and H1 2014

Kazakhstan Suzdal *Includes gold from Zherek

Suzdal mine increased gold production in H1 2014 by 2% YoY to 35.7 koz due to higher volumes of ore

mined and milled.

In Q1 2014, Suzdal’s refined gold production and sales were affected by negotiations with the National Bank

of Kazakhstan and a newly built refinery plant “Tau-Ken Altyn”. Therefore Q2 2014 mine gold production

includes 20.1 koz of doré produced in Q1 2014, which has been refined and sold during Q2 2014 and

therefore was accounted in Q2 2014 revenue, EBITDA, net profit and Operating Cash Flows.

A power failure event in June 2014 severely impacted the BIOX and overall recovery for the quarter; this was

compounded by a slight decline in flotation recovery during the commissioning of the newly completed phase

I flotation module in June 2014. The overall recovery for the quarter decreased by 4.4 pp QoQ to 63.7%.

However, we expect the new flotation module to improve flotation availability and plant recovery by 1.5-2.0

pp and the 2014 average recovery rate is targeted at 68-69%. In Q2 2014, Suzdal commenced feasibility

study for a BIOMIN HiTeCC technology (High Temperature Caustic Conditioning) aimed at gold recovery

from CIL tailings. In Q3 2014 the mine will also launch an improvement program aimed at increasing the

current CIL efficiency and thereby overall recovery.

Suzdal exploration focused in three areas; the Deep levels of the southwestern flank of Ore Bodies №1-3,

the shallower north-eastern flank of Ore Bodies №1-3 below open pit №1, and exploration of Ore Body №4

from open pit №4. Seven drill holes were drilled in three sections with the objective to confirm reserves

above the 200m level. The programme will be completed in H2 2014, while dewatering of open pit №4

continues for portal and decline development in 2015.


Q2 2014 Q2 2013 Change,

YoY Q1 2014

Change, QoQ

H1 2014 H1 2013 Change,

YoY

LTIFR 0.00 0.00 0% 0.00 0% 0.00 1.98 (100%)

Ore mined, kt (40)

126 125 1% 126 0% 252 227 11%

Ore milled, kt (40)

136 126 8% 128 6% 264 218 21%

Grade, g/t (40)

6.50 6.99 (7%) 7.20 (10%) 6.84 7.47 (8%)

Recovery, % (40)

63.7 69.3 (5.6pp) 68.1 (4.4pp) 66.0 69.5 (3.5pp)

Gold production, koz (41)

35.4 20.0 77% 20.1 76% 35.7 35.0 2%

Gold sold, koz(41)

35.3 19.6 80% 0.3 - 35.6 34.7 3%


1,300 1,349 (4%) 1,314 (1%) 1,300 1,463 (11%)

Revenue, US$m 46.1 26.5 74% 0.4 - 46.5 50.8 (8%)


21.9 15.5 41% (3.1) n.a. 18.7 23.8 (21%)


47.5 58.6 (11.1pp) (714) n.a. 40.2 46.9 (6.7pp)

TCC, US$/oz (42)(43)(44)

629 687 (9%) 875 (28%) 709 776 (9%)

AISC, US$/oz (42)(43)(44)

788 679 16% 980 (20%) 846 902 (6%)

Ore processed multiplied by head grade and multiplied by recovery may not be equal gold produced due to differences in work in progress figures and volumes of silver production.

(40) Represents figures for Suzdal

(41) Represents figures for Celtic Group, includes gold from Zherek.



(44) Suzdal TCC and AISC for Q1 2014 per ounce of gold doré, the rest per refined gold.


Q2 and H1 2014

21 www.nordgold.com

Telephone Conference and Q&A Session

Nikolai Zelenski, Chief Executive Officer of Nordgold, Dmitry Guzeev, acting Chief Financial Officer and

Louw Smith, Chief Operating Officer will present the Company's financial and operating results for Q2 and

H1 2014 on a conference call to be held on September 1, 2014 at 12.30 pm London time (3:30 pm Moscow

time). The presentation will be followed by a Q&A session. To participate in the telephone conference,

please register in advance.

Registration Details

Conference Title: Nordgold's Presentation of Q2 2014 Financial Results

To participate in the telephone conference, please dial:

Great Britain

+44 (0) 203 043 2439

USA

+1 866 907 5925

Russia

+7 495 705 9472

Webcast

The presentation will be broadcast live over the Internet and will also be available as a recording after the

conference.

To participate in the webcast please follow the link:

http://www.anywhereconference.com?UserAudioMode=DATA&Name=&Conference=135289100&PIN=703552

Materials

The Company's financial and operating results for the second quarter and six months ended June 30, 2014

will be available on the Company's official website: www.nordgold.com on August 29, 2014 and associated

presentation materials on September 1, 2014.

http://www.anywhereconference.com/?UserAudioMode=DATA&Name=&Conference=135289100&PIN=703552

http://www.anywhereconference.com/?UserAudioMode=DATA&Name=&Conference=135289100&PIN=703552

http://www.nordgold.com/


Q2 and H1 2014

22 www.nordgold.com

Non-IFRS Financial Measures

This press release includes certain measures that are not measures defined by International Financial

Reporting Standards (as adopted by the European Union) (“IFRS”). These measures are EBITDA and

EBITDA margin, total cash costs, all-in sustaining cost and net debt, and they are used by the management

of Nordgold to assess the Company’s financial performance. However, these measures should not be used

instead of or considered as alternatives to Nordgold’s historical financial results based on IFRS. There are

no generally accepted principles governing the calculation of these measures and the criteria upon which

these measures are based can vary from company to company.

EBITDA and EBITDA Margin

Normalised EBITDA results from operating activities adjusted for income tax expense, finance income and

costs, depreciation and amortisation charges, impairment / (reversal of impairment) of non-current assets,

the net result from the disposal of property, plant and equipment, equity remeasurement loss / (gain), social

expenses and charity donations, and net gain on disposal of subsidiaries. Nordgold uses EBITDA in the

reporting of its segments and in assessing its growth and operational efficiencies. The EBITDA margin is

EBITDA as a percentage of sales.

Information regarding EBITDA and the EBITDA margin or similar measures is sometimes used by investors

to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment

of debt, capital expenditures and working capital requirements.

EBITDA, by itself, does not provide a sufficient basis to compare Nordgold’s performance with that of other

companies and should not be considered in isolation or as a substitute for operating profit or any other

measure as an indicator of operating performance, or as an alternative to cash generated from operating

activities as a measure of liquidity.

Total Cash Cost

Total cash costs measure what Nordgold considers to be the cash costs most relevant to its principal

operations. Total cash cost is calculated by subtracting non-cash, central corporate and ancillary or

exceptional operational costs (including depreciation and amortisation, provision for asset retirement

obligations, allowance for slow-moving and obsolete inventories, corporate overheads, allowance for bad

debts, unused employee vacation time and employee bonuses, change in finished goods and revenue of by-

products) from cost of sales, general and administrative expenses and taxes other than income tax.

All-In Sustaining Costs

All-in-sustaining cost (“AISC”) stands for the costs related to sustaining production and is calculated as the

amount of production cash cost, plus cash selling general and administrative expenses, plus taxes other

than income tax and other cash operating result with addition of capital expenditure spent to sustain the

production level. The latter includes maintenance capex on all the mines, exploration capex on operating

mines and capitalised stripping together with underground development performed on operating mines.

Net Debt

In order to assess Nordgold’s liquidity position, management uses a measure of net cash or debt, which is

the sum of short- and long-term debt finance less cash and cash equivalents. Short-term and long-term debt

includes loans and other credit facilities, accrued interest and bank overdrafts.


Q2 and H1 2014

23 www.nordgold.com

Capex

Capital expenditure (“capex”) is the amount of additions to construction in progress (“CIP”), property, plant

and equipment and intangible assets as disclosed in IFRS financial statements, adjusted for net change of

advances paid for CIP and result of dismantling of fixed assets into materials.

Free cash flow

Free cash flow represents cash flows from operating activities less cash used for capital expenditure.

Enquiries

Nordgold

Valentina Bogomolova

Head of IR

Cell: +7 916 474 5996

[email protected]

Olga Ulyeva

Press Secretary

Cell: +7 916 510 1411

[email protected]

Maitland

Peter Ogden

James Devas

Tel: +44 (0)20 7379 5151

For further information on Nordgold please visit the Company’s website - www.nordgold.com

Notes to Editors

About Nordgold

Nordgold (LSE: NORD) is an international pure-play emerging-markets gold producer established in 2007

and publicly traded on the London Stock Exchange. The Company has expanded rapidly through carefully

targeted acquisitions and organic growth, achieving a rate of growth unmatched in the industry during that

period. In 2013, Nordgold’s gold production increased to 924 koz from 717 koz in 2012.

The Company operates 9 mines and has 2 development projects, 4 advanced exploration projects and a

diverse portfolio of early-stage exploration projects and licenses in Russia, Kazakhstan, Burkina Faso,

Guinea and French Guiana. Nordgold employs about 10,000 people.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this press release, including any information as to Nordgold's estimates,

strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or

operating performance and production may constitute “forward-looking information” within the meaning of

applicable securities laws. All statements, other than statements of historical fact, constitute forward-looking

information. Forward-looking information can often, but not always, be identified by the use of words such as

“plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”,

“predicts”, “potential”, “continue” or “believes”, or variations (including negative variations) of such words, or

statements that certain actions, events or results “may”, “could”, “would”, “should”, “might”, “potential to”, or

“will” be taken, occur or be achieved or other similar expressions concerning matters that are not historical

facts. The purpose of forward-looking information is to provide the reader with information about

mailto:[email protected]

mailto:[email protected]

http://www.nordgold.com/


Q2 and H1 2014

24 www.nordgold.com

management’s expectations and plans. Readers are cautioned that forward-looking statements are not

guarantees of future performance.

All forward-looking statements made or incorporated in this press release are qualified by these cautionary

statements.

Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may

cause actual future realities or anticipated events to differ materially from those expressed or implied in any

forward-looking information and, accordingly, should not be read as guarantees of future performance or

realities. Material factors or assumptions that were applied in formulating the forward-looking information

contained herein include the assumption that the business and economic conditions affecting Nordgold’s

operations will continue substantially in their current state, including, without limitation, with respect to

industry conditions, general levels of economic activity, market prices for gold, competition for and scarcity of

gold mine assets, achievement of anticipated mineral reserve and mineral resource tonnages or grades,

ability to develop additional mineral reserves, acquisition of funding for capital expenditures, adequacy and

availability of production, processing and product delivery infrastructure, electricity costs, continuity and

availability of personnel and third party service providers, local and international laws and regulations,

foreign currency exchange rates and interest rates, inflation, taxes, and that there will be no unplanned

material changes to Nordgold’s facilities, equipment, customer and employee relations and credit

arrangements. Nordgold cautions that the foregoing list of material factors and assumptions is not

exhaustive. 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. The risks and other factors that may cause

actual future realities or anticipated events to differ materially from those expressed or implied in any

forward-looking information include, but are not limited to Nordgold’s ability to execute its development and

exploration programs; the financial and operational performance of Nordgold; civil disturbance, armed

conflict or security issues at the mineral projects of Nordgold; political factors; the capital requirements

associated with operations; dependence on key personnel; compliance with environmental regulations;

estimated production; and competition.

Actual performance or achievement could differ materially from that expressed in, or implied by, any forward-

looking information in this press release and, accordingly, investors should not place undue reliance on any

such forward-looking information. Further, any forward-looking information speaks only as of the date on

which such statement is made, and Nordgold does not undertake any obligation to update any forward-

looking information to reflect information, events, results, circumstances or realities after the date on which

such statement is made or to reflect the occurrence of unanticipated events, except as required by

applicable securities laws. All forward-looking information contained in this press release is qualified by such

cautionary statements. New risk factors 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.


Q2 and H1 2014

25 www.nordgold.com

STATEMENT OF DIRECTORS RESPONSIBILITIES

The Board of Directors hereby declares that, to the best of their knowledge: the interim financial statements

prepared in accordance with IAS 34, “Interim Financial Reporting”, give a true and fair view of the assets,

liabilities, financial position, profit and loss of the company and the undertakings included in the consolidation

taken as a whole; and the interim management board report gives a fair review of the information required

pursuant to section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het financieel

toezicht).

DECLARATIONS

The Board of Directors hereby declare that, to the best of their knowledge, the half-year financial statements

included in this interim report, which have been prepared in accordance with IAS 34 "Interim Financial

Reporting," give a true and fair view of the Company’s assets, liabilities, financial position and profit or loss,

and the undertakings included in the consolidation taken as a whole, includes a fair review of the information

required pursuant to section 5:25d, subsection 8 of the Dutch Financial Markets Supervision Act (“Wet op het

financieel toezicht”).

On behalf of the Board of Directors by:

Zelensky N.G. Guzeev D.V.

Chief Executive Officer Acting Chief Financial Officer


Q2 and H1 2014

Nord Gold N.V. Interim Condensed Consolidated Financial Statements as at and for the Six Months Ended 30 June 2014

Nord Gold N.V.

Contents

Statement of directors’ responsibilities 1

Interim condensed consolidated statement of profit or loss 2

Interim condensed consolidated statement of profit or loss

and other comprehensive income 3

Interim condensed consolidated statement of financial position 4

Interim condensed consolidated statement of cash flows 5

Interim condensed consolidated statement of changes in equity 6

Selected Notes to the interim condensed consolidated financial statements 7-17

Nord Gold N.V.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

1

The following statement, which should be read in conjunction with the independent auditor’s responsibilities stated on the independent auditor’s report on review of the interim condensed consolidated financial statements set out on page 2, is made with a view to distinguishing the responsibilities of Directors and those of the independent auditor in relation to the interim condensed consolidated financial statements of Nord Gold N.V. and its subsidiaries (the “Group”). Directors are responsible for the preparation of the interim condensed consolidated financial statements that present fairly the consolidated financial position of the Group as at 30 June 2014, and financial performance, cash flows and changes in equity for the six months then ended, in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”). In preparing the interim condensed consolidated financial statements, Directors are responsible for:

Selecting suitable accounting principles and applying them consistently;

Making judgments and estimates that are reasonable and prudent;

Stating whether IAS 34 has been followed, subject to any material departures disclosed and explained in the interim condensed consolidated financial statements; and

Preparing the interim condensed consolidated financial statements on a going concern basis, unless it is inappropriate to presume that the Group will continue in business for the foreseeable future.

Directors are also responsible for:

Designing, implementing and maintaining an effective system of internal controls, throughout the Group;

Maintaining statutory accounting records in compliance with the legislation and accounting standards in the jurisdictions in which the Group operates;

Taking steps to safeguard the assets of the Group; and

Detecting and preventing fraud and other irregularities. The Board of Directors hereby declares that, to the best of their knowledge the interim condensed consolidated financial statements for the six months ended 30 June 2014 prepared in accordance with IAS 34, give a true and fair view of the Group’s consolidated assets, liabilities, financial position, and profit and loss. The interim condensed consolidated financial statements for the six months ended 30 June 2014 were approved on 29 August 2014 on behalf of the Board of Directors by:

Zelensky N.G. Guzeev D.V. Chief Executive Officer Acting Chief Financial Officer

Nord Gold N.V.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED 30 JUNE 2014 (UNAUDITED)

(Amounts in thousands of US dollars, except as otherwise stated)

2

Six months

ended 30 June

Three months ended 30 June

2014 2013

(Restated) 2014

2013 (Restated)

Sales 4 617 017 617 123 342 121 320 307

Cost of sales (386 572) (464 844) (201 688) (245 522)

Gross profit 230 445 152 279 140 433 74 785

General and administrative expenses 5 (33 355) (32 040) (16 054) (16 402)

Taxes other than income tax (36 269) (37 208) (18 953) (19 398)

Impairment of non-current assets (15 638) (314 052) (15 023) (314 052)

Other operating income /(expenses), net (1 323) (75) (3 108) 636

Profit/(loss) from operations 143 860 (231 096) 87 295 (274 431)

Finance income 6 1 269 1 037 644 8 141

Finance costs 6 (53 810) (31 964) (24 742) (17 950)

Profit/(loss) before income tax 91 319 (262 023) 63 197 (284 240)

Income tax (expense)/benefit 7 (17 651) 72 066 (14 130) 79 639

Profit/(loss) for the period 73 668 (189 957) 49 067 (204 601)

Attributable to:

Shareholders of the Company 64 296 (200 386) 45 030 (209 294)

Non-controlling interests 9 372 10 429 4 037 4 693

Weighted average number of shares outstanding during the period (millions of shares) - basic and diluted 8 378.122 378.095 378.122 378,122

Earnings/(loss) per share Basic and diluted earnings/(loss) per share (US dollars) 8 0.17 (0.53) 0.12 (0.55)

Nord Gold N.V.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2014 (UNAUDITED) (Amounts in thousands of US dollars, except as otherwise stated)

3

Six months ended 30 June Three months ended 30 June

2014 2013

(Restated) 2014

2013 (Restated)

Profit/(loss) for the period 73 668 (189 957) 49 067 (204 601)

Items that may be reclassified subsequently to profit or loss:

Foreign exchange differences (39 347) (75 096) 37 803 (46 350)

Change in fair value of cash flow hedges 2 372 (5 514) - (4 072)

Revaluation of available-for-sale financial assets 31 288 (50 621) 13 987 (35 040)

Deferred tax on revaluation of available-for-sale financial assets

(3 958) 6 690 (1 884) 4 827

Items that will not be reclassified subsequently to profit or loss:

Foreign exchange differences (1 569) (4 234) 2 008 (1 970)

Other comprehensive (loss)/income for the period, net of tax

(11 214) (128 775) 51 914 (82 605)

Total comprehensive income/(loss) for the period 62 454 (318 732) 100 981 (287 206)

Attributable to:

Shareholders of the Company 54 651 (324 927) 94 936 (289 929)

Non-controlling interests 7 803 6 195 6 045 2 723

Nord Gold N.V.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 (UNAUDITED) (Amounts in thousands of US dollars, except as otherwise stated)

4

30 June

2014

31 December 2013

(Restated)

ASSETS

Current assets

Cash and cash equivalents 306 915 244 042

Accounts receivable 49 297 51 787

Inventories 429 434 435 777

VAT recoverable 54 253 82 656

Income tax receivable 4 176 10 854

Total current assets 844 075 825 116

Non-current assets

Property, plant and equipment 10 781 339 816 356

Intangible assets 869 226 906 000

Long-term financial investments 12 60 795 16 534

Investment in joint venture - 3 105

Restricted cash 8 302 6 496

Deferred tax assets 24 947 26 466

Other non-current assets

64 310 31 502

Total non-current assets 1 808 919 1 806 459

TOTAL ASSETS 2 652 994 2 631 575

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short-term borrowings 11 5 428 326 678

Accounts payable 182 139 203 143

Income tax payable 21 330 44 196

Provisions 9 037 19 655

Total current liabilities 217 934 593 672

Non-current liabilities

Long-term borrowings 11 988 383 641 279

Provisions 67 710 67 608

Deferred tax liabilities 57 759 59 683

Other non-current liabilities 20 571 18 736

Total non-current liabilities 1 134 423 787 306

Total liabilities 1 352 357 1 380 978

Equity

Share capital 1 307 121 1 307 121

Additional paid-in capital 894 352 894 352

Foreign exchange differences (153 499) (114 152)

Accumulated losses (859 120) (912 439)

Revaluation reserve 26 943 (2 759)

Total equity attributable to shareholders of the Company 1 215 797 1 172 123

Non-controlling interests 84 840 78 474

Total equity 1 300 637 1 250 597

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2 652 994 2 631 575

Nord Gold N.V.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THESIX MONTHS ENDED 30 JUNE 2014 (UNAUDITED) (Amounts in thousands of US dollars, except as otherwise stated)

5

Six months ended 30 June

2014 2013

(Restated)

Operating activities

Profit/(loss) for the period 73 668 (189 957)

Adjustments for non-cash movements:

Finance income (1 269) (1 037)

Finance costs 53 810 31 964

Income tax expense/(benefit) 17 651 (72 066)

Depreciation and amortisation 98 560 107 203

Impairment of non-current assets 15 638 314 052

Impairment/ (utilisation of impairment) of work-in-progress (13 783) 7 495

Net loss from joint ventures 2 909 248

(Gain)/loss on disposal of property, plant and equipment (957) 653

Movements in provisions for inventories, receivables and other provisions 1 349 (1 209)

247 576 197 346

Changes in operating assets and liabilities:

Accounts receivable 276 21 006

Inventories 1 674 (23 193)

VAT recoverable (10 887) (6 597)

Accounts payable (23 764) (15 669)

Other changes in operating assets and liabilities, net (5 985) (22 712)

Cash flows from operations 208 890 150 181

Interest paid (28 162) (20 069)

Income taxes paid (46 995) (26 593)

Cash generated from operating activities 133 733 103 519

Investing activities

Acquisition of property, plant and equipment (50 529) (93 668)

Acquisition of exploration and evaluation assets (10 598) (39 998)

Additions to financial investments (12 401) (1 582)

Interest received 680 240

Cash used in investing activities (72 848) (135 008)

Financing activities

Proceeds from borrowings 500 229 579 633

Repayment of borrowings (474 056) (282 911)

Acquisition of non-controlling interest in subsidiary - (23 589)

Dividends paid (10 934) (43 573)

Finance and equity transaction costs paid (7 500) (8 417)

Bank charges paid (802) (690)

Cash generated from financing activities 6 937 220 453

Net increase in cash and cash equivalents 67 822 188 964

Cash and cash equivalents at beginning of the period 244 042 44 991

Effect of exchange rate fluctuations on cash and cash equivalents (4 949) (5 632)

Cash and cash equivalents at end of the period 306 915 228 323

Nord Gold N.V.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2014 (UNAUDITED) (Amounts in thousands of US dollars, except as otherwise stated

6

Attributable to the shareholders of the Company

Non-controlling interests Total

Share capital

Additional paid-in capital

Foreign exchange

differences Accumulated

losses Revaluation

reserve Total

Balance at 1 January 2013 1 306 900 894 292 (43 307) (606 710) 55 544 1 606 719 84 583 1 691 302

Effect of change in accounting policy (Note 2) - - - (14 148) - (14 148) (337) (14 485)

Balance at 1 January 2013, restated 1 306 900 894 292 (43 307) (620 858) 55 544 1 592 571 84 246 1 676 817

(Loss)/ profit for the period - - - (200 386) - (200 386) 10 429 (189 957)

Other comprehensive loss for the period, net of tax

- - (75 096) - (49 445) (124 541) (4 234) (128 775)

Total comprehensive (loss) / income for the period

(324 927) 6 195 (318 732)

Shares issue 221 60 - - - 281 - 281

Dividends - - - (44 618) - (44 618) - (44 618)

Acquisitions of non-controlling interests - - - (3 571) - (3 571) (20 335) (23 906)

Balance at 30 June 2013 1 307 121 894 352 (118 403) (869 433) 6 099 1 219 736 70 106 1 289 842

Balance at 1 January 2014 1 307 121 894 352 (114 152) (869 489) (2 759) 1 215 073 79 074 1 294 147

Effect of change in accounting policy (Note 2) - - - (42 950) - (42 950) (600) (43 550)

Balance at 1 January 2014, restated 1 307 121 894 352 (114 152) (912 439) (2 759) 1 172 123 78 474 1 250 597

Profit for the period - - - 64 296 - 64 296 9 372 73 668

Other comprehensive (loss)/income for the period, net of tax

- - (39 347) - 29 702 (9 645) (1 569) (11 214)

Total comprehensive income for the period 54 651 7 803 62 454

Dividends - - - (10 977) - (10 977) (1 437) (12 414)

Balance at 30 June 2014 1 307 121 894 352 (153 499) (859 120) 26 943 1 215 797 84 840 1 300 637

Nord Gold N.V.

SELECTED NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2014 (UNAUDITED) (Amounts in thousands of US dollars, except as otherwise stated)

7

1. OPERATIONS Nord Gold N.V. (the “Company”) is a Dutch public limited liability company as defined in the Netherlands Civil Code. The Company’s registered office is Luna ArenA, Herikerbergweg 238, 1101 CM Amsterdam Zuidoost, the Netherlands. As at 30 June 2014 and 31 December 2013, the immediate parent company of the Company was Canway Holding B.V. (“the Parent Company”), registered in the Netherlands, and the controlling shareholder of the Company was Mr. Alexey A. Mordashov. The principal activity of the Company and its subsidiaries (together referred to as the “Group”) is the extraction, refining and sale of gold. Mining and processing facilities are located in Burkina Faso, Guinea, Republics of Buryatia and Yakutia and Amur and Transbaikal regions of the Russian Federation and in Kazakhstan.

2. BASIS FOR PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS Statement of compliance These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim condensed consolidated financial statements are not the statutory financial statements. The interim condensed consolidated financial statements are unaudited and do not include all of the information required in the annual financial statements. The Group omitted disclosures which would substantially duplicate the information contained in its audited annual consolidated financial statements for the year ended 31 December 2013 prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted in the European Union (“IFRSs EU”), such as full set of accounting policies and details of accounts which have not changed significantly. The Group has provided disclosures where significant events have occurred during six months ended 30 June 2014. Management believes that disclosures provided in these interim condensed consolidated financial statements are adequate to make the information presented not misleading if these interim condensed consolidated financial statements are read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2013. In the opinion of management, these financial statements reflect all adjustments necessary to present fairly the Group’s financial position, results of operations, statements of changes in equity and cash flows for the interim reporting period.

Significant accounting policies New standards and interpretations The accounting policies applied by the Group in these interim condensed consolidated financial statements are the same as those applied by the Group in its annual consolidated financial statements for the year ended 31 December 2013, except for the impact of adoption of the new and revised standards and interpretations mandatory for the annual periods beginning on 1 January 2014 and the impact of voluntary change in accounting policy, as described below. The following new and revised standards and interpretations mandatory for the annual periods beginning on 1 January 2014 were adopted by the Group.

IAS 27 (Amended) Separate Financial Statements

IAS 28 (Amended) Investments in Associates

IAS 32 (Amended) Financial Instruments: Presentation

IFRS 10 Consolidated Financial Statements

Nord Gold N.V.


8

IFRS 11 Joint Agreements

IFRS 12 Disclosure of Interest in Other Entities

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities The amended standard IAS 27 Separate Financial Statements carries forward the existing accounting and disclosure requirements of IAS 27 for separate financial statements with some clarifications. The requirements of IAS 28 and IAS 31 for separate financial statements have been incorporated into IAS 27. The amended standard IAS 28 Investments in Associates and Joint Ventures combines the requirements in IAS 28 and IAS 31 that were carried forward but not incorporated into IFRS 11 and IFRS 12. Amendments to IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities do not introduce new rules for offsetting financial assets and liabilities; rather they clarify the offsetting criteria to address inconsistencies in their application. IFRS 10 Consolidated Financial Statements supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 introduces a single control model which includes entities that are currently within the scope of SIC-12. Consolidation procedures are carried forward from IAS 27. When the adoption of IFRS 10 does not result a change in the previous consolidation or non-consolidation of an investee, no adjustments to accounting are required on initial application. When the adoption results a change in the consolidation or non-consolidation of an investee, the new standard may be adopted with either full retrospective application from date that control was obtained or lost or, if not practicable, with limited retrospective application from the beginning of the earliest period for which the application is practicable, which may be the current period. IFRS 11 Joint Arrangements supersedes IAS 31 Interests in Joint Ventures and introduces a classification of all joint arrangements either as joint operations, which are consolidated on a proportionate basis, or as joint ventures, for which the equity method is applied. IFRS 12 Disclosures of interests in other entities requires extended disclosures for interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The adoption of these new and revised standards and interpretations did not have significant effect on the Group’s consolidated interim condensed financial statements. Change in accounting policy for stripping costs Starting from 1 January 2014, the Group has voluntary changed its accounting policy with respect to the current production stripping costs. It was decided to apply actual stripping ratio instead of average stripping ratio when allocating the current production stripping costs to the cost of ore mined. Under the new method, all current production stripping costs incurred in the period are charged directly to the cost of ore; accordingly, no deferred stripping cost is recognised within work-in-progress. Management believes that the new policy provides more accurate and relevant information for the users of financial statements. The above change of accounting policy was applied retrospectively. The impact on the interim condensed consolidated financial statements for the six months ended 30 June 2014 and as at 31 December 2013 is shown in the table below:

Nord Gold N.V.


9

As previously reported Adjustments As restated

Statement of profit or loss for the six months ended 30 June 2013

Cost of sales (445 080) (19 764) (464 844)

Income tax benefit 67 344 4 722 72 066

Profit/(loss) for the period (174 915) (15 042) (189 957)

Attributable to:

Shareholders of the Company (185 344) (15 042) (200 386)

Basic and diluted loss per share (US dollars) (0.49) (0.04) (0.53)

Statement of profit or loss and other comprehensive income for the six months ended 30 June 2013

Loss for the period (174 915) (15 042) (189 957)

Total comprehensive loss for the period (303 690) (15 042) (318 732)

Attributable to:

Shareholders of the Company (309 885) (15 042) (324 927)

Statement of financial position as at 31 December 2013

Inventories 489 369 (53 592) 435 777

Other non-current assets 32 968 (1 466) 31 502

Deferred tax liabilities 71 191 (11 508) 59 683

Accumulated losses (869 489) (42 950) (912 439)

Non-controlling interests 79 074 (600) 78 474

Statement of cash flows for the six months ended 30 June 2013

Loss for the period (174 915) (15 042) (189 957)

Income tax benefit (67 344) (4 722) (72 066)

Change in inventory (38 228) 15 035 (23 193)

Depreciation and amortisation 102 474 4 729 107 203

Critical accounting judgments, estimates and assumptions The preparation of the interim condensed consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were consistent with those that were applied in the Group’s annual consolidated financial statements for the year ended 31 December 2013. Renewal of licenses The Group’s geological research licenses with a carrying value of US$ 78.1 million are partially expired or near expiry term as at 30 June 2014. The licenses mostly relates to Burkina Faso fields. Management is in the process of applying for renewal and has assessed the probability of the renewal of the licenses as high. The interim condensed consolidated financial statements are prepared based on management’s expectation that either the term of all such licenses will be

Nord Gold N.V.


10

renewed, or the Group will obtain an exploration and production licenses for the same areas. Management’s estimate is based on competitive advantage of the Group and historical experience of renewal of the licenses in Burkina Faso. If the expired or near expiry licenses are not renewed the Group will have to write off costs incurred in connection with the projects. Seasonality Due to the cold winter weather in the Russian Federation, which limits the ability to mine, production volumes generated from the Neryungri and Aprelkovo mines are usually higher during the second half of the year. For these mines, ore is placed on heap leach pads mostly in the second and third quarters of each year with revenue being generated primarily in the third and fourth quarters. Accordingly, the volume of work-in-progress inventory increases at the end of the third quarter of each year and declines at the end of the first quarter of the following year, which results in lower revenues in the first half of the year. Moreover, changes in inventory levels impact cash flows from operating activities, usually resulting in significant cash outflows (due to greater expenses associated with the heap leaching process) during the second and third quarters of each year and significant inflows during the first and fourth quarters. The effect of seasonality is not significant at the other Group mines. Financial risk management Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Group’s activities. The Group’s Directors monitor compliance with the Group’s risk management policies and procedures and review the adequacy of the risk management framework. There has been no material changes in the risk profile compared to the risk management disclosed in the 2013 integrated report.

3. SEGMENT REPORTING The Group has nine reportable segments, as described below, representing the Group’s strategic business units. Each strategic business unit is managed separately with relevant results regularly reviewed by the Group’s CEO. The following summary describes the operations of each reportable segment:

Neryungri and Aprelkovo .The segment includes gold mining activities in the Republic of Yakutia and the Chitinskaya region of the Russian Federation, including open-pit operating mines with the heap-leaching technology for gold processing Tabornoye and Pogromnoye and Gross gold exploration project.

Suzdal and Balazhal. Includes the Suzdal underground gold mine located in Kazakhstan with the flotation, bio-oxidation and carbon-in-leach (“CIL”) technology for gold processing and the Balazhal gold deposit in Kazakhstan.

Buryatzoloto. Includes two underground gold mines located in the Republic of Buryatia of the Russian Federation: Zun-Holba with the gravity, flotation and carbon-in-pulp (“CIP”) technology for gold processing and Irokinda with gravity and flotation technology for gold processing.

Berezitovy. An open-pit gold mine located in the Amur region of the Russian Federation with the CIP technology for gold processing.

Taparko. An open-pit gold mine located in Burkina Faso, West Africa with the CIL technology for gold processing.

Nord Gold N.V.


11

Lefa. Includes the Lefa open-pit gold mine located in Guinea, West Africa with the CIP technology for gold processing.

Bissa. An open-pit gold mine located in Burkina Faso, West Africa with the CIL technology for gold processing.

Burkina Faso Greenfields. Includes a number of gold deposits at exploration and evaluation stage located in Burkina Faso, West Africa.

Russian Greenfields. Includes a number of gold deposits at exploration and evaluation stage located in the Russian Federation.

Operations of the holding company and subsidiaries involved in non-core activities are disclosed as “Other companies”, none of which meet the criteria for separate reporting. The Group’s CEO uses normalised EBITDA in assessing each segment’s performance and allocating resources. Normalised EBITDA represents profit/(loss) for the period adjusted to exclude income tax (expense)/benefit, finance income, finance costs, depreciation and amortisation, impairment of non-current assets, net loss on disposal of property, plant and equipment, impairment of work-in progress and other (expenses)/income, net. Business segment assets and liabilities are not reviewed by the CEO and therefore are not disclosed in these interim condensed consolidated financial statements. Segment financial performance The following is an analysis of the Group’s sales and normalised EBITDA by segment:


2014 2013 2014 2013

Sales

Neryungri and Aprelkovo 53 609 53 438 30 880 28 888

Suzdal and Balazhal 46 531 50 799 46 092 26 494

Buryatzoloto 71 946 72 664 39 273 34 920

Berezitovy 76 847 83 976 41 215 41 595

Taparko 82 202 83 797 39 451 36 050

Lefa 111 907 107 017 60 159 51 082

Bissa 173 975 165 432 85 051 101 278

Total 617 017 617 123 342 121 320 307



2014 2013

2014 2013

Normaised EBITDA by segment

Neryungri and Aprelkovo 12 732 7 024 5 683 288

Suzdal and Balazhal 18 731 23 830 21 927 15 516

Buryatzoloto 23 539 15 956 15 162 6 246

Berezitovy 36 277 33 666 20 125 14 251

Taparko 37 158 33 778 15 202 12 261

Lefa 23 535 (12 310) 19 144 (7 181)

Bissa 110 029 111 578 53 065 67 639

Burkina Faso Greenfields (181) (758) (74) (457)

Russian Greenfields (151) (133) - (129)

Normalised EBITDA of other companies

(16 857) (15 285) (8 895) (8 962)

Total 244 812 197 346 141 339 99 472

Nord Gold N.V.


12

The reconciliation of profit/(loss) for the period to normalised EBITDA:



2014 2013

2014 2013

Profit/(loss) for the period

73 668 (189 957) 49 067 (204 601)

Income tax expense/(benefit)

17 651 (72 066) 14 130 (79 639)

Finance income (1 269) (1 037) (644) (8 141)

Finance costs 53 810 31 964 24 742 17 950

Depreciation and amortisation

98 560 107 203 52 030 53 005

Impairment of tangible and intangible assets

15 638 314 052 15 023 314 108

Net (income)/loss on disposal of property, plant and equipment

(957) 653 (1 110) 644

Work-in-progress impairment/(utilisation of impairment) recognised in cost of sales

(13 783) 7 495 (13 783) 7 495

Other (income)/expenses 1 494 (961) 1 884 (1 349)

Normalised EBITDA for the period

244 812 197 346 141 339 99 472

4. SALES


2014 2013 2014 2013

By product

Gold 613 271 613 477 340 038 318 100

Silver 3 746 3 646 2 083 2 207

Total 617 017 617 123 342 121 320 307


2014 2013 2014 2013

By customer

Switzerland: Metalor Technologies S.A. 256 616 300 029 124 503 163 824

Russia: VTB 122 939 83 976 87 307 41 595

Switzerland: MKS Finance S.A. 111 907 107 017 60 159 51 082

Russia: NOMOS bank 88 495 90 928 48 766 46 020

Russia: Sberbank 37 060 35 173 21 386 17 786

Total 617 017 617 123 342 121 320 307

Nord Gold N.V.


13

5. GENERAL AND ADMINISTRATIVE EXPENSES


2014 2013 2014 2013

Wages and salaries 17 294 15 859 8 172 9 022

Professional services 9 431 9 857 4 681 5 126

Social security costs 2 449 2 384 927 1 244

Depreciation and amortisation 1 225 357 737 180

Materials and consumables 672 622 451 367

Change in bad debt allowance 376 146 441 52

Other expenses 1 908 2 815 645 411

Total 33 355 32 040 16 054 16 402

For the six months ended 30 June 2014 key management’s remuneration, representing short-term employee benefits, amounted to US$ 4.3 million (six months ended 30 June 2013: US$ 4.0 million).

6. FINANCE INCOME AND COSTS


2014 2013 2014 2013

Finance income

Foreign exchange gain - - - 7 535

Interest income 1 269 1 037 644 606

Total 1 269 1 037 644 8 141

Finance costs

Interest expenses (27 722) (24 369) (12 795) (13 982)

Foreign exchange loss (12 841) (741) (8 117) -

Other (13 247) (6 854) (3 830) (3 968)

Total (53 810) (31 964) (24 742) (17 950)

During the six months ended 30 June 2014 other finance costs include US$ 7.1 million of loss related to the discontinuance of hedge accounting (Note 11) and US$ 2.2 million of royalties related to Bissa operations. During the six months ended 30 June 2013 other finance costs include US$ 3.2 million of costs related to High River Gold Mines Ltd. outstanding shares buy-out offering transaction and US$ 2.3 million of royalties related to Bissa operations.

7. INCOME TAX

Income tax is accrued based on the estimated average annual effective income tax rate of 19.3% (2013: 27.5%). The following factors affected the decrease of the effective tax rate in 2014:

Decrease of Lefa’s result share in profit before income tax during the six months ended 30 June 2014, which is subject to income tax rate of 30%;

Decrease of the amount provided for tax contingencies, mainly in respect of Taparko.

Nord Gold N.V.


14

8. EARNINGS PER SHARE Basic earnings per share for the six months ended 30 June 2014 were based on the income attributable to shareholders of the Company of US$ 64.3 million (six months ended 30 June 2013: loss of US$ 200.4 million) and a weighted average number of outstanding ordinary shares of 378.1 million (30 June 2013: 378.1 million), calculated as per below (in million of shares):

Issued shares

Weighted

average number of shares

1 January 2013 378.053 378.053

Shares issued in March 2013 0.069 0.042

30 June 2013 378.095

1 January 2014 378.122 378.122

30 June 2014 378.122

9. RELATED PARTY TRANSACTIONS AND BALANCES

Transactions with entities under common control were the following:


2014 2013 2014 2013

Operating expenses 2 434 7 582 1 335 2 377

Capital expenditures 7 080 2 7 070 -

As at 30 June 2014, balances with entities under common control included accounts payable of US$ 13.2 million (31 December 2013: US$ 5.3 million), which are to be settled in cash.

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2014, the Group acquired items of property, plant and equipment for US$ 47 863 thousand (six months ended 30 June 2013: US$ 83 306 thousand).

11. BORROWINGS

Short-term borrowings:

30 June 2014

31 December 2013

Bank loans 230 301 015

Accrued interest 5 198 5 602

Derivative financial instruments - 20 749

Unamortised balance of transaction costs - (688)

Total 5 428 326 678

The decrease in short-term borrowings as at 30 June 2014 was due to re-financing of Sberbank loans received in 2012. As at 31 December 2013, derivative financial instruments were represented by the cross-currency swaps held by the Group for hedging of currency and interest rate risks attributable to

Nord Gold N.V.


15

the Sberbank loan facilities received in 2012.In 2014, the cross-currency swaps were disposed due to re-financing of the Sberbank loans received in 2012.

Long-term borrowings:

30 June 2014

31 December 2013

Notes and bonds issued 500 000 500 000

Bank and other credit organisations financing 500 000 132 591

Derivative financial instruments - 13 954

Unamortised balance of transaction costs (11 617) (5 266)

Total 988 383 641 279

In May 2013, the Company issued US$ 500 million unsecured notes. The notes are denominated in US Dollars, mature in May 2018, and bear interest of 6.375% per annum payable semi-annually in May and November, commencing November 2013. The notes are unconditionally and irrevocably guaranteed by certain Group’s subsidiaries. In March 2014, the Company received a US$ 500 million non-revolving loan facility from Sberbank denominated in US dollars, maturing in March 2019. The loan repayment starts in June 2016. The loan bears interest at a variable rate of 3-month LIBOR + 2.95% per annum payable on a quarterly basis. The proceeds were partially used for re-financing of Sberbank loans received in 2012. As at 30 June 2014, loan facility from Sberbank was secured by the following shares in the Group’s subsidiaries:

75% of the Group’s ownership in Bissa Gold S.A., securing not more than US$ 10 million of the liability;

75% of the Group’s ownership in Societe des Mines de Taparko, securing not more than US$ 10 million of the liability;

75% of the Group’s ownership in LLC Berezitovy Rudnik;

75% of the Group’s ownership in OJSC Buryatzoloto;

100% of the Group’s ownership in High River Gold Mines (West Africa) Ltd.;

100% of the Group’s ownership in Jilbey Burkina SARL, securing not more than US$ 10 million of the liability.

The carrying value of the pledged entities’ net assets amounted to US$ 891 million. The fair value of debt instruments approximated their carrying value at 30 June 2014, except for the fair value of notes which had a market value of US$ 495.0 million (31 December 2013: US$474.7 million).

12. LONG-TERM FINANCIAL INVESTMENTS As at 30 June 2014, the Group’s long-term financial investments included the following:

2.0% equity interest in Detour Gold Corporation, valued at US$ 42.6 million (31 December 2013: 2.6% valued at US$ 11.9 million) held by the Group’s Canadian subsidiary;

US$ 11.8 million of advances paid to Columbus Gold Corporation for the bankable feasibility study, as a requirement of the Option agreement to acquire 50.01% stake in Montagne d’Or gold mining project in French Guiana. Nord Gold may earn the option by completing a bankable feasibility study and by expending not less than US$ 30 million in 3 years in staged work expenditures;

Nord Gold N.V.


16

Other individually immaterial investments of US$ 6.4 million (31 December 2013: US$ 4.6 million) represented by a number of holdings in gold exploration and mining companies.

13. COMMITMENTS AND CONTINGENCIES

Capital commitments As at 30 June 2014, the Group had contractual capital commitments of US$ 7.3 million (31 December 2013: US$ 18.3 million). Operating environment Starting from March 2014, sanctions have been imposed in several packages by the U.S. and E.U. on certain Russian officials, businessmen and companies. In addition, in April 2014 credit agency Standard & Poor’s downgraded Russia’s long-term foreign currency sovereign rating from BBB to BBB- with a negative outlook. Previously, Fitch credit agency has also revised Russia’s creditworthiness outlook from stable to negative. These events, including official sanctions, particularly if further extended, may adversely affect the Russian economy through reduced access of the Russian businesses to international capital and export markets, capital flight, weakening of the Rouble and other economic consequences. The impact of these developments on the operations and financial position of the Group’s Russian subsidiaries is difficult to predict at this stage. No impact is expected on the Group’s subsidiaries located in other countries.

Tax contingencies The taxation system and regulatory environment of the Russian Federation, Kazakhstan, Burkina Faso and Guinea are relatively new and characterised by frequently changing legislation, which is often unclear, contradictory and subject to varying interpretations between the differing regulatory authorities and jurisdictions. Events during recent years suggest that the regulatory authorities within these countries are adopting a more assertive stance regarding the interpretation and enforcement of legislation. This situation creates substantial tax and regulatory risks. Russian Federation and Kazakhstan At 30 June 2014, management assessed the total amount of potential claims from Russian and Kazakhstan tax authorities at US$ 20.3 million, of which US$ 1.5 million was accrued in these interim condensed consolidated financial statements. Burkina-Faso and Guinea At 30 June 2014, management assessed the total amount of potential claims from Burkina Faso and Guinean tax authorities at US$ 15.1 million, of which US$ 5.7 million was accrued in these interim condensed consolidated financial statements. Other jurisdictions Guinor, a subsidiary of the Group, which is a Canadian tax resident, is exposed to tax risks up to US$ 15.3 million. Management assesses the probability of unfavourable outcome of this risk as medium.

Nord Gold N.V.


17

14. EVENTS AFTER THE REPORTING PERIOD On 14 July 2014, the Group acquired an additional 17.7% interest in Northquest Limited (“Northquest”), an owner of a high grade exploration project located in Canada, for a cash consideration of US$ 1.9 million, increasing its ownership in this company to 22.6%. Prior to this transaction, investment in Northquest was classified as long-term financial investment.

Documents

Financial and Operating Results Q2 and H1 2014...Q 3 Financial and Operating Results 2 and H1 2014 In July 2014, Fitch Ratings affirmed Nordgold Long-term Issuer Default Rating (IDR)