+7 800 234-15-67 Anticorruption
Hotline
+7 495 780-49-95 GV Gold Corporate
Center

News and Press-releases

GV Gold Operational Results for Q2 and H1 2018

GV Gold (Vysochaishy, PJSC), together with its subsidiaries (“GV Gold”, “Vysochaishy” or “the Company”), today announces its operational results for Q2 2018 and H1 2018 ended 30 June 2018.

Highlights of Q2 2018

  • The Company produced 72 koz of gold, up 60% y-o-y, as the result of new operations at the Taryn and Ugakhan mines, and the ramp-up of output at the Bolshoy Kuranakh placer deposit.

  • Gold production increased by 29% q-o-q, driven by the ramp-up of production at the Taryn and Aldan mines due to the seasonal nature of these assets.

  • Ore volumes mined in Q2 2018 totaled 1,843 kt, up 2.5x y-o-y, due to the new operations at the Ugakhan deposit and higher output at the Drazhnoye deposit as the mine reached full capacity.

  • Ore volumes processed rose 50% y-o-y and totaled 1,787 kt, also due to the commissioning of new plants at the Taryn Mine and the Ugakhan Mine.

  • Sales of refined gold and concentrate were USD 80 million, up 67% y-o-y and up 24% q-o-q, respectively.

Highlights of H1 2018

  • Gold production totaled 128 koz, up 76% y-o-y, as the result of the commissioning of new production capacities at the Drazhnoye and Ugakhan deposits in 2017, and the ramp-up of output at the Vysochaishy and Marakan mines as well as at the Bolshoy Kuranakh placer deposit.

  • Ore volumes mined doubled, due to the launch of operations at new mines commissioned last year.

  • Ore volumes processed totaled 3,535 kt, up 62% y-o-y, due to growth of ore throughput at the Ugakhan and Taryn mines.

  • The Ugakhan project remains on schedule, with full-scale operations scheduled for 2018.

  • The average selling price of refined gold reached 1,312 USD/oz, up 6% y-o-y.

  • Sales of refined gold and concentrate totalled USD 145 million, up 73% y-o-y.[1]

  • As of 30 June 2018, the Company had net debt of USD 158 million[2], down 9% on 31 March 2018 (USD 173 million).

2018 Guidance

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

GV Gold CEO German Pikhoya said:

"The Company’s record results for the second quarter and first six months of 2018 underscore the success and consistency of GV Gold’s strategy, which aims to realize the significant potential of the Company’s resource base. In 2Q and 1H, the Company produced 72 and 128 koz of gold, respectively, representing increases on the previous year of 60% and 76%, respectively. This growth was possible due to consistent implementation of our strategic projects — the commissioning of the Ugakhan and Taryn mines in 2017, improved operational performance at the Vysochaishy Mine and the successful operation of our placer deposit in Yakutia (Sakha).

"In the reporting period we continued active exploration work aimed at realizing the significant resource potential of our existing deposits. Detailed follow-up exploration of flanks and deep levels was launched at our flagship Golets Vysochaishy deposit, and drilling and follow-up exploration of the flanks was completed at the Ugakhan deposit, with the aim of drafting the mine development plan for the next three years. In addition, a follow-up exploration program was launched at the Taryn Mine, and is scheduled to be completed by the end of the current year.

"Another important step was the approval of a new dividend policy, which complies with best Russian and international practice, and appointment of new independent directors to the Board of Directors. The appointments of Nikolay Gavrilov, Elizabeth Kirkwood and Anthony Nieuwenhuys will strengthen and bring additional expertise to the Board of Directors, and will further improve the Company’s corporate governance system.

“In summary, our team has taken another step towards achieving this year’s ambitious plans and reaching production of 280-300 koz. I’d like to thank all of the Company’s employees for their contribution to achieving our record results for H1 2018 and wish them continued success for the rest of the year”.

Health and Safety
Q2 2018 Q1 2018 H1 2018 H1 2017 2017
LTIFR 0.14 0.14 0.14 0.21 0.28

In the reporting period, the following corporate OHS standards were developed and approved:

Road Traffic Safety;

  • Corporate Overalls, which establishes uniform rules for corporate overalls at all business units;

  • Prompt Notification of Accidents, Incidents and Consequences Thereof;

  • Internal Investigation of Accidents, Incidents and Consequences Thereof;

  • Works Safety Assessment Procedure.

In addition, the Company’s business units launched an integrated program to reduce injury rates from road traffic accidents, including:

  • Acquisition of onboard vehicle monitoring systems and video recorders;

  • Additional monitoring of drivers, and training sessions in defensive driving.

Consolidated Operational Results

In H1 2018, GV Gold’s production totaled 128 koz, including 13 koz of gold contained in the Taryn Mine gravity and flotation concentrate. Production grew by 76% y-o-y as gold production ramped up at all production assets. On a q-o-q basis, gold production increased by 60% and totaled 72 koz.

The significant increase in mined ore volumes (+105% in H1 2018, +147% in Q2 2018) was due to the new mines commissioned last year: Ugakhan and Taryn.

With the commissioning of two new mills, GV Gold’s processing capacities increased to about 8 Mt/a. As a result, ore throughput in H1 2018 grew by 62% y-o-y and totaled 3,535 kt; on a q-o-q basis, ore throughput grew by 50% y-o-y and totaled 1,787 kt. The average grade increased to 1.30 g/t in H1 and 1.40 g/t in Q2, respectively. The average recovery rate in H1 2018 was 86.3%.

GV Gold Key Operational Highlights
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Rock moved, kt
10,904 7,472 46% 9,741 12% 20,645 15,993 29%
Stripping, kt
9,060 6,728 35% 7,945 14% 17,005 14,221 20%
Ore mined, kt
1,843 745 147% 1,796 3% 3,639 1,772 105%
Stripping ratio, t/t
4.9 9.0 -46% 4.4 11% 4.7 8.0 -42%
Ore processed, t
1,787 1,189 50% 1,748 2% 3,535 2,187 62%
Average grade of ore processed, g/t
1.40 1.21 16% 1.27 10% 1.30 1,19 9%
Recovery, %
88.6 95.8 -7,2 p.p. 78.4 10,2 p.p. 86.3 86,6 -0,3 p.p.
Refined gold production, koz
62.8 43.9 43% 52.0 21% 114.8 71,8 60%
Gold contained in concentrate, koz
9.4 1.1 755% 4.0 135% 13.4 1,1 12х
Total gold production, koz. 72.1 45.0 60% 56.0 29% 128.1 72,9 76%

Refined Gold Production by Mine, koz
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Golets Vysochaishy
34.1 36.6 -7% 35.0 -3% 69.1 64.6 7%
Marakan
1.6 1.3 23% 1.6 1.3 23%
Ugakhan
10.6 —12.0 -12% 22.6
Taryn
10.9 1.2 808% 5.0 117% 15.9 1.2 13х
Bolshoy Kuranakh (placer operations)
5.5 4.7 17% 5.5 4.7 17%
Gold production, koz
62.8 43.9 43% 52.0 21% 114.8 71.8 60%
Gold contained in concentrate, koz 9.4 1.1 755% 4.0 135% 13.4 1.1 12х
Total gold production, koz 72.1 45.0 60% 56.0 29% 128.1 72.9 76%

Operational Results by Mine

Irkutsk Business Unit

Golets Vysochaishy

In Q2 2018, the mine’s refined gold production totaled 34 koz, almost unchanged q-o-q but down 7% y-o-y due to processing of lower grade ore. In H1 2018, gold production increased by 7% y-o-y and totaled 69 koz due to higher throughput and recoveries.

To improve the mine’s operational efficiency, the Company is continuing to develop and introduce measures launched in Q1 2018 to optimize performance and improve process control at Mills 2 and 3.

Active exploration continued at the deposit with the aim of extending the Vysochaishy Mine’s LOM. In Q1 2018, implementation of a program for detailed exploration of the flanks and deeper levels of the deposit continued. Based on the results of this exploration programme, a new cutoff grade estimation report and reserves calculation will be prepared for the Golets Vysochaishy deposit by mid-2019.

Vysochaishy Mine Operational Results
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Rock moved, kt
2,915 4,637 -37% 4,760 -39% 7,675 8,737 -12%
of which stripping, kt
2,373 4,088 -42% 4,160 -43% 6,533 7,464 -12%
Stripping ratio, t/t
4.4 4.7 -7% 6.9 -37% 5.7 3.9 47%
Ore mined, kt 542 549 -1% 600 -10% 1,142 1,274 -10%
Ore processed, t
1,083 1,083 0% 1,043 4% 2,126 2,081 2%
Average grade of ore processed, g/t
1.13 1.16 -3% 1.27 -11% 1.13 1.16 -3%
Recovery, %
84.6 81.1 3,5 p.p. 81.0 3.6 p.p. 83.1 81.1 2,0 p.p.
Refined gold production, koz
33.4 36.0 -7% 35.0 -5% 68.4 64.0 7%
Sands washed, k m3
29 30 -5% n/a 29 30 -5%
Average grade, g/m3
0.91 0.67 36% n/a 0.91 0.67 36%
Refined gold production, koz
0.8 0.6 34% n/a 0.8 0.6 34%
Total gold production, koz
34.1 36.6 -7% 35.0 -2% 69.1 64.6 7%

Marakan

Because operation of the deposit is seasonal, no gold production took place in Q1 2018. In Q2 2018 and H1 2018, the mine produced 2 koz of gold, up 24% and 23% y-o-y, respectively.

Marakan Mine Operational Results
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Rock moved, kt 464 502 -8% 68 583% 532 753 -29%
of which stripping, kt 421 465 -9% 68 519% 489 716 -32%
Stripping ratio, t/t 9.8 12,6 -22% 11.4 19.4 -41%
Ore mined, kt 43 37 16% 43 37 16%
Ore processed, t 41 36 13% 41 36 13%
Average grade of ore processed, g/t 1.67 1.47 14% 1.67 1.47 14%
Recovery, % 81.2 79.7 1,5 p.p. 79.8 79.7 0.1 p.p.
Refined gold production, koz 1.6 1.3 24% 1.6 1.3 23%

Ugakhan

Full-scale operations at the Ugakhan Mine are scheduled for the end of 2018. The mill is completing construction and installation work to reach its full projected capacity.

In H1 2018, the Ugakhan Mine produced 23 koz of gold. In Q2 2018, it produced 11 koz, down 12% q-o-q. Q2 2018 saw scheduled maintenance of processing equipment at the mill, resulting in an insignificant decrease in ore throughput. Mill stabilization operations were also completed. The recovery rate increased by 7.4 p.p. to 68.4%. To improve the quality of feed ore, the Ugakhan Mine launched two mobile ore-crushing and -grading machines for crushing ore before it reaches the grinding department.

A program of drilling and follow-up exploration of the flanks was completed at the deposit, with the aim of developing a mid-term mining plan for the next three years.

In Q2 2018, GV Gold connected the Ugakhan Mine to the external power grid, which will significantly reduce power supply costs.

Ugakhan Mine Operational Results
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Rock moved, kt
4,025 n/a 3,863 4% 7,887 n/a
of which stripping, kt
3,073 n/a 2,728 13% 5,800 n/a
Stripping ratio, t/t
3.2 n/a 2.4 34% 2.8 n/a
Ore mined, kt
952 n/a 1,135 -16% 2,087 n/a
Ore processed, t
496 n/a 635 -22% 1,131 n/a
Average grade of ore processed, g/t
0.99 n/a 0.94 5% 0.97 n/a
Recovery, %
68.4 n/a 61.0 7.4 p.p. 64.3 n/a
Refined gold production, koz
10.6 n/a 12.0 -12% 22.6 n/a

Taryn Business Unit

Taryn

Since being launched in the summer of 2017 and reaching its projected capacity, the Taryn Mine has produced consistently high operational results. In Q2 2018, the mine produced a record 20 koz, including 9 koz of gold contained in the gravity and flotation concentrate. In H1 2018, gold production totaled 29 koz, which was to a large extent due to the significant growth of ore throughput (to 236 kt) and higher grades of processed ore (up to 4.32 g/t). In the reporting period, the mine launched a mobile ore-crushing and -grading machine for crushing ore before it reaches the mill. This step was taken to improve the mill’s operational efficiency.

Expanding the mineral resource base remains a strategic objective of the Taryn business unit, and achieving it would impact the Company’s decision regarding the feasibility of constructing the second stage of the Taryn Mine. A follow-up exploration program at the Drazhnoye deposit license area was launched in summer 2018. The program will be completed by the end of November 2018, and the new cutoff grade estimation report drafted in mid-2019.

Taryn Mine Operational Results
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Rock moved, kt 3,499 2,333 50% 1,050 233% 4,550 2,984 52%
of which stripping, kt 3,193 2,174 47% 989 223% 4,182 2,804 49%
Stripping ratio, t/t 10.4 13.7 -24% 16,2 -36% 11.4 15.5 -27%
Ore mined, kt 306 158 93% 61 402% 367 180 104%
Ore processed, t 166 70 138% 70 138% 236 70 238%
Average grade of ore processed, g/t 4.34 1.83 137% 4.28 1% 4.32 1.83 136%
Recovery, % 87.3 68.9 18,4 p.p. 90.9 -3,6 p.p. 88.3 68.9 19.4 p.p.
Refined gold production, koz 10.9 1.2 808% 5.0 118% 15.9 1.2 13х
Gold contained in concentrate, koz 9.4 1.1 755% 4.0 135% 13.4 1.1 12х
Total gold production, koz 20.0 2.3 769% 9.0 122% 29.0 2.3 13х

Aldan Business Unit

Bolshoy Kuranakh Deposit

The washing season at the placers traditionally resumes in the first half of Q2. In the reporting period, the Bolshoi Kuranakh mine produced 6 koz, up 17% y-o-y, due to higher grades in the sands.

Aldan Business Unit Operational Results
Q2 2018 Q2 2017 Y-o-Y Q1 2018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Sands washed, k m3 814 995 -18% 814 995 -18%
Average grade, g/m3 0.203 0.147 38% 0.203 0.147 38%
Refined gold production, koz 5.5 4.7 17% 5.5 4.7 17%

Consolidated Financial Results

In H1 2018, the Company’s gold sales totaled 113 koz, up 66% y-o-y. Gold sales in Q2 2018 grew by 68% y-o-y and by 33% q-o-q

H1 2018 gold sales reached USD 145 million, up 73% y-o-y. In the reporting period, the average gold selling price increased by 6% to 1,312 USD/oz.

As of 30 June 2018, the Company’s net debt stood at USD 158 million, down 9% from 31 March 2018.

Consolidated Financial Results
Q2 2018 Q2 2017 Y-o-Y Q12018 Q-o-Q H1 2018 H1 2017 Y-o-Y
Total gold sales, koz
64 38 68% 48 33% 113 68 66%
Refined gold sold, koz 58 38 52% 48 20% 107 68 57%
Gold contained in concentrate, koz 6 6
Average gold selling price, USD/oz
1,294 1,256 3% 1,335 -3% 1,312 1,239 6%
Total gold sales, million USD 80 48 67% 65 24% 145 84 73%
Refined gold sales, million USD 75 48 56% 65 16% 140 84 66%
Sales of gold contained in concentrate, million USD 5 5
Net debt, million USD 158 134 18% 173 -9% 158 134 18%

Corporate and Organizational Development

In H1 2018, GV Gold made a number of structural changes designed to increase operational performance and further improve transparency and corporate governance.

  • Changes in the Structure of the Board of Directors

The Company appointed Nikolay Gavrilov, Anthony Nieuwenhuys and Elizabeth Kirkwood as independent directors, in line with its commitment to advanced standards of corporate governance. As a result, independent directors now account for half of the new composition of the Board of Directors.

  • Record Dividends

The Annual General Meeting of shareholders (AGM), which took place on 25 June 2018, approved a dividend payment for FY 2017 of RUB 2,237.7 million, of 30% of EBITDA under the Company’s consolidated financial results under IFRS for FY 2017. This is the highest dividends payout that GV Gold has made to shareholders in its history.

Including dividends paid previously for H1 2017 of RUB 12.731 per share, or RUB 700 million in total, in July 2018 the Company will pay shareholders RUB 27.9663 per ordinary share, or RUB 1,537.7 million in total.

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

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 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