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News and Press-releases

GV Gold Operational Results for Q1 2018

GV Gold (Vysochaishy, PJSC), together with its subsidiaries (“GV Gold”, “Vysochaishy” or “the Company”), publishes its operational results for the three monts ended 31 March 2018 (“Q1 2018”).

Key Highlights

  • In Q1 2018, the Company produced 55 koz of gold, a twofold year-on-year (“y-o-y”) increase, driven by higher production volumes at the Vysochaishy Mine and commissioning of production at the Drazhnoye and Ugakhan deposits in 2017.
  • A quarter-on-quarter (“q-o-q”) decline in production was the result of a seasonal ramp-down at the Drazhnoye deposit and the Bolshoy Kuranakh placer deposit in Yakutia.
  • Ore mined in Q1 2018 totaled 1,686 kt, up by 75% y-o-y as a result of mining operations at new deposits commissioned during 2017.
  • Ore processing volumes rose by 75% y-o-y and amounted to 1,748 kt, as the Company began processing ore from the Ugakhan and Taryn mines.
  • The Ugakhan Project remains on schedule, with full-scale operations due to start in 2018.
  • In Q1 2018, the average refined gold selling price increased to 1,335 USD/oz, up by 10% y-o-y and by 5% q-o-q.
  • Gold sales in Q1 2018 are estimated at USD 65 million, up by 86% y-o-y.[1]
  • As of 31 March 2018, the Company’s net debt is estimated at USD 168 million, down from USD 175 million as of 31 December 2017.[2]

2018 Guidance

  • The Company confirms its production guidance for 2018 and expects to produce 280-300 koz.

CEO German Pikhoya said:

"The Company produced 55 koz of gold in Q1 2018, which, taking into consideration the seasonal nature of gold production at some of the Company’s deposits, is a record-breaking figure for this period. We achieved this growth thanks to successful operations at our flagship deposit Golets Vysochaishy, and to the ongoing implementation of our strategic projects with the commissioning of the Ugakhan and Taryn mines in 2017.

"At the Vysochaishy Mine the 25% y-o-y increase in gold production was achieved as a result of higher grades of processed ore and higher gold recovery. At the Ugakhan Mine we aim to complete the construction and achieve nameplate capacity by the end of this year. At the Taryn Mine, owing to favourable weather conditions, we managed to commence mining and commission the mill one month ahead of the schedule.

"In addition to strategic initiatives, the Company also focussed on further improvements in operational efficiency. At the Irkutsk business unit, progress was made on improvement of the flotation section’s gold recovery, and we began introduction of a dispatching system that will further improve mine fleet efficiency. During the reporting period we also managed to improve equipment availability by 69% due to better procurement conditions for spare parts.

“I am very grateful to the entire team for their contribution to the strong Q1 2018 results. We took a confident first step towards achieving our targets for 2018.”

Health and Safety

GV Gold pays great attention to the occupational health and safety (“OHS”) issues. In Q1 2018, the lost time injury frequency rate (LTIFR)[3] decreased to 0.14, down by 13% y-o-y.

The Company strives to achieve a zero injury rate, continually undertaking activities to improve the corporate OHS culture. The Company plans to carry out “Conscious Safety” trainings to improve the corporate OHS culture and motivate employees to uphold OHS rules.

In order to improve the safety culture at the GV Gold’s operations, the Company’s EHSS department has hired a new specialist with vast experience and expertise in this field.

LTIFR Dynamics
Q1 2018 Q1 2017 Y-o-Y 2017 2016 Y-o-Y
LTIFR 0,14 0,16 -13% 0,28 0,22 27%

Consolidated Operatial Results

In Q1 2018, the Company’s gold production totalled 55 koz, including 4 koz of gold contained in the Taryn mine’s gravity and flotation concentrate. Gold output grew twofold y-o-y, but declined by 38% q-o-q owing to the seasonal nature of operations at the Company’s Bolshoy Kuranakh and Drazhnoye deposits located in Yakutia.

With the commissioning of two new mills at the Ugakhan and Taryn mines last year, GV Gold’s processing capacities grew to about 8 Mt/a. As a result, in Q1 2018, ore throughput grew by 75% y-o-y and totalled 1,748 kt of ore, while the average grade increased to 1.27 g/t. The average recovery rate in Q1 2018 was 77.4%.

GV Gold Key Operational Highlights
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Rock moved, kt 9,726 8,390 16% 10 373 -6%
Stripping, kt
7,931 7,173 11% 8,772 -10%
Ore mined, kt
1,686 965 75% 1,601 5%
Stripping ratio, t/t
4.7 7.4 -36% 5,5 -15%
Ore processed, t
1,748 998 75% 2,051 -15%
Average grade in ore processed, g/t 1.27 1.09 17% 1,57 -19%
Recovery, %
77.4 79.0 -1,6 p.p. 85,2 -7,8 p.p.
Refined gold production, koz
52 28 86% 79 -34%
Gold contained in concentrate, koz
4 n/a 9 -56%
Total gold production, koz
55 28 96% 88 -38%

Refined Gold Production by Mine, koz
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Golets Vysochaishy
35 28 25% 37 -5%
Marakan
n/a 1 n/a
Ugakhan
12 n/a 14 -14%
Taryn
5 n/a 24 -79%
Bolshoy Kuranakh (placer operations)
n/a 4 n/a
Gold production, koz 52 28 86% 79 -34%
Gold contained in concentrate, koz
4 n/a 9 -56%
Total gold production, koz.
55 28 96% 88 -38%

Operational Results by Mine

Irkutsk Business Unit

Golets Vysochaishy

In Q1 2018, the mine’s refined gold production totalled 35 koz. This 25% y-o-y increase was due to higher grades of processed ore and improvement in recovery. The 5% q-o-q decrease was a result of scheduled processing of lower-grade ore.

In order to improve the mine’s operational efficiency, the Company is developing and implementing a comprehensive set of measures aimed at optimising performance and improving process control at Mills 2 and 3. These measures had a positive effect on the recovery rate, which was up by 2.0 p.p. y-o-y and up by 1.2 p.p. q-o-q.

Active exploration continued at the deposit, with the aim of extending the Vysochaishy Mine’s LOM. In Q1 2018, the mine proceeded with development of a programme for detailed exploration of the flanks and deeper levels of the deposit, scheduled for this summer.

Vysochaishy Mine Operational Results
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Rock moved, kt
4,760 4,100 16% 5,002 -5%
Stripping, kt
4,160 3,123 33% 4,139 1%
Stripping ratio, t/t
8,5 4,3 98% 6,9 23%
Ore mined, kt
490 724 -32% 598 -18%
Ore processed, t 1,043 998 5% 1,048 -1%
Average grade in ore processed, g/t
1,27 1,09 17% 1,36 -7%
Recovery, %
81,0 79,0 2,0 p.p. 79,8 1,2 p.p.
Refined gold production, koz
35 28 25% 37 -5%
Sands washed, k m3
n/a 6 n/a
Average grade, g/m3
n/a 0,94 n/a
Refined gold production, koz
n/a 0,2 n/a
Total gold production, koz
35 28 25% 37 -5%

Marakan

Due to the seasonal nature of deposit exploitation, no gold production took place in Q1 2018. In the reporting period the enterprise performed preparatory operations. Mining at Marakan resumed in April 2018.

Operational Results of Marakan Mine
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Rock moved, kt
68 251 -73% 385 -82%
Stripping, kt
68 251 -73% 363 -81%
Stripping ratio, t/t n/a 16 n/a
Ore mined, kt
n/a 23 n/a
Ore processed, kt
n/a 28 n/a
Average grade in ore processed, g/t
n/a 1.77 n/a
Recovery, %
n/a 84/0 n/a
Refined gold production, koz
n/a 1 n/a

Ugakhan

The Ugakhan Mine is completing construction to attain its nameplate recovery capacity. Full-scale operations at the Ugakhan Mine are scheduled for 2018.

In Q1 2018, the mine produced 12 koz of gold, down by 14% q-o-q. This decrease in production was associated with lower ore throughput and lower recovery as a result of scheduled maintenance of the mill.

The Ugakhan deposit has an extensive mineral resource base, which, together with a shallow bedding of the ore body as well as favourable physical and chemical properties of ore, largely offsets the low average grade of gold (1.07 g/t). According to the updated JORC-compliant estimate, the proven and probable reserves (P&P) are estimated at 824 koz of gold, while the measured, indicated and inferred resources (M,I&I) are estimated at 1,376 koz of gold.

Ugakhan Mine Operational Results
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Rock moved, kt
3,863 —n/a n/a
Stripping, kt
2,728 n/a n/a
Stripping ratio, t/t 2.4 n/a n/a
Ore mined, kt
1,135
n/a n/a
Ore processed, t
635 n/a 766* -17%
Average grade in ore processed, g/t
0.94 n/a 0,88 7%
Recovery, %
61.0 n/a 62,4 -1,4 p.p.
Refined gold production, koz
12 n/a 14 -14%


*Golets Vysochaishy ore processed


Taryn Business Unit

Taryn

Mining at the Taryn mine resumed on 1 March 2018. During the one month of operations in the reporting period, the mine produced 9 koz of gold, including 4 koz of gold contained in the gravity and flotation concentrate. The tonnage of produced gold decreased by 73% q-o-q due to seasonal termination of operations. Owing to the physical and chemical properties of processed ore, the gravity and flotation concentrate target was achieved, having reached the level of 4 koz of gold.

Open pit mining at the Taryn mine commenced one month ahead of the schedule. The tonnage of rock moved totalled 1,036 kt, ore mined totalled 61 kt, up by 61% and 57% y-o-y, respectively. During the one month of the mill’s operations, it processed 70 kt of ore at an average grade of 4.28 g/t.

Expansion of the mineral resource base is a strategic objective of the Taryn business unit, within the framework of which it intends to carry out large-scale exploration operations to determine the mine’s potential. According to the JORC-compliant estimate as at 1 July 2017, the proven and probable reserves (P&P) of the Drazhnoye deposit are estimated at 759 koz of gold. The Company continues large-scale exploration of the asset.

The Company is considering the possibility of construction of the second stage of the mine and plans to determine different project implementation options by the end of 2018.

Taryn Mine Operational Results
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Rock moved, kt
1,036 642 61% 1,756 -41%
Stripping, kt
975 620 57% 1,447 -33%
Stripping ratio, t/t 16.3 28.2
-42% 4.7 246%
Ore mined, kt
61
22 177% 309 -80%
Ore processed, t
70 n/a 209 -67%
Average grade in ore processed, g/t
4.28 n/a 5.16 -17%
Recovery, %
51.8 n/a 95.8 -44,0 p.p.
Refined gold production, koz
5 n/a 24 -79%
Gold contained in concentrate, koz 4 n/a 9 -56%
Total gold production, koz
9 n/a 33 -73%

Aldan Business Unit

Bolshoy Kuranakh Deposit

In view of the seasonal nature of placer operations, no washing of sands took place in Q1 2018.

The dredging season traditionally resumes in the first half of the second quarter (in April-May). In the reporting period the asset prepared the dredges and auxiliary equipment to launch and performed in-mine exploration of the placer.

Operational Results of the Aldan Business Unit
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Sands washed, k m3 n/a 654 n/a
Average grade, g/m3
n/a 0,175 n/a
Refined gold production, koz n/a 4 n/a

Consolidated Financial Results

In Q1 2018, the Company’s gold sales increased by 60% y-o-y and totalled 48 koz.

Gold sales are estimated at USD 65 million, up by 86% y-o-y. In the reporting period, the average gold selling price increased by 10% to the level of 1,335 USD /oz.

As of 31 March 2018, the Company’s net debt is estimated at USD 168 million, down by 4% from 31 December 2017. Company’s leverage remains at a stable level, with a possibility of early repayment of some part of the debt in 2018.

Consolidated Results of the Financial Activity
Q1 2018 Q1 2017 Y-o-Y Q4 2017 Q-o-Q
Total gold sales, koz
48 30 60% 94 -49%
Refined gold sold, koz
48 30 60% 82 -41%
Gold contained in concentrate, koz
0 0 n/a 12 -100%
Gold sales, million USD
65 35 86% 114 -43%
Refined gold sold, million USD
65 35 86% 105 -38%
Gold contained in concentrate, million USD
0 0 n/a 9 n/a
Average refined gold selling price, USD/oz.
1,335 1,217 10% 1,276 5%
Net debt, million USD 168 114 47% 175 -4%

Contacts

Investor Relations

Vasily Migunov, Deputy CEO for IR and Capital Markets

+ 7 495 287 88 40
vvm@gvgold.ru

Press Office

Tatiana Demyanova, Deputy CEO for Public Relations

+ 7 495 287 88 40
dtv@gvgold.ru

ЕМ

Denis Denisov

+7 495 363 28 49
denisov@em-comms.com

Company profile

GV Gold (Vysochaishy, PJSC) is one of largest and fastest growing Russian gold mining companies. It develops open pit deposits and washes gold at the country’s largest alluvial deposit. In 2017, the Company produced 225 koz of gold, becoming the 7th largest gold miner in Russia. GV Gold boasts an extensive resource base, with JORC reserves and resources estimated at 4.4 moz and 7.0 moz, respectively.

Its key operating assets are located in the Irkutsk Region and the Republic of Sakha (Yakutia). The Company operates six mines with a total capacity of 8 mtpa of ore and holds 20 mining and exploration licences.

The Company adheres to high corporate governance standards and has a transparent ownership structure, with BlackRock among its shareholders (17.99%).

For further information, please visit http://gvgold.ru

Forward Looking Statements

This release may contain “forward-looking statements” regarding GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries. The words “will”, “can”, “must”, “should”, “will continue”, “possibility”, “believes”, “expects”, “intends”, “plans”, “estimates” and other similar phrases are largely indicators of forward-looking statements. Forward-looking statements contain elements of risk and uncertainty, as a result of which actual results can differ dramatically from the figures listed in the forward-looking statements. Forward-looking statements contain statements regarding future capital expenditures, strategies for business operations and management, as well as development and expansion of GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries. Many of those risks and uncertainties pertain to factors that cannot be controlled or quantified by GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries, so the content of the statements should not be treated as definitive because it is provided strictly as at the date of the statement. GV Gold (Vysochaishy, PJSC) and (or) any of its subsidiaries does not make any commitment and does not plan to provide updates to the forward-looking statements, except where required by applicable law.


[1] Unaudited figures from consolidated management reports.

[2] The item is based on preliminary data from consolidated management reports. In respect to the Company, “Net debt” means the aggregate of the following amounts as at the end of each reporting period:

a) outstanding principal amount of the debt;

b) outstanding principal amount of bonds, promissory notes, debt instruments and other securities of similar nature;

c) principal amount of financial leases;

d) fixed or minimum amount of the premium payable at redemption of the securities listed in the subparagraph b) above.

[3] LTIFR per 200,000 work-hours.