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GV Gold Operational Results for Q3 and 9M 2018

GV Gold (Vysochaishy, PJSC), together with its subsidiaries (“GV Gold”, “Vysochaishy” or “the Company”), published its operational results for Q3 2018 and 9M 2018 ended 30 September 2018.

Q3 2018 Highlights

  • In Q3 2018 the Company ramped up gold production by 50% y-o-y to 92.5 koz, incl. gold contained in concentrate. The Taryn and Ugakhan Mines, together with higher gold production across other assets of the Company, served as the main drivers of the y-o-y gold production growth.

  • On a q-o-q basis, gold production increased by 27%, driven by the gold production ramp-up in Taryn and Aldan.

  • Volumes of ore mined in Q3 2018 totaled 1,595 kt, up 58% y-o-y, resulting from scheduled mining at the Ugakhan Mine and the output ramp up at the Taryn Mine.

  • Volumes of ore processed rose 38% y-o-y and totaled 2,229 kt, which is associated with the commissioning of new plants at the Ugakhan Mine and the Taryn Mine.

  • Q3 2018 sales of refined gold and concentrate gold are estimated at USD 96 million, up 34% y-o-y and up 19% q-o-q.

9M 2018 Highlights

  • In 9M 2018, the Company’s gold production increased to 220.3 koz having reached GV Gold’s annual gold production of 2017. Gold output grew by 64% y-o-y as the result of commissioning of production at the Drazhnoye and Ugakhan deposits in 2017, the ramping up of production at Vysochaishy Mine and at the Bolshoy Kuranakh placer deposit.

  • Practically two-fold growth of the volumes of ore mined totaling 5,234 kt (+88%). Such growth is associated with the mining operations at the new mines commissioned last year.

  • An increase in the volumes of ore processed at the Taryn Mine and Ugakhan Mine is the key driver of the respective index of the whole Company. As a result, in the reporting period, the volumes of ore processed grew by 52% to 5,764 kt.

  • The Ugakhan Mine, one of the company’s main development projects, transited into full-scale production. The tonnage of ore processed at the plant totaled 1,872 kt, which corresponded to 100% of the plant’s design capacity (7,920 t/h).

  • In 9M 2018, the average refined gold selling price remained at the same level as in 9M 2017 and was USD 1,266 /oz.

  • Sales of refined gold and gold concentrate are estimated at USD 241 million, up 55% y-o-y.1

  • As of 30 September 2018, the Company’s net debt is estimated at USD 177 million2, having remained at the same level as at the end of 2017.

2018 Guidance

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

Statement from CEO German Pikhoya:

"In 9M 2018, we presented strong operational results. The tonnage of gold produced reached 220.3 koz — as compared to the previous year, each and all assets reflected the gold production ramp up, both quarterly and year-to-date.

"The growth is driven by our strategic projects launched last year. At one of GV Gold’s main development projects — the Ugakhan deposit, the mine started full-scale operation. In terms of the ore throughput tonnages, the plant reached its desired targets and we are taking further steps to improve its operational performance. Another strategic project — the Taryn Mine, continues to demonstrate high operational results — 34.4 koz in Q3 2018, which significantly exceeded the results of the respective periods of previous years.

“I’d like to draw attention to the fact, that in 9M 2018 we produced the same tonnage of gold as we produced over the whole previous year. In the last quarter of the year, we intend to show similarly strong results in order to reach our 2018 targets”.

Health and Safety

The Company carries on undertaking activities to improve the corporate OHS culture, including personal safety.

In Q3 2018, the lost time injury frequency rate (LTIFR)3 totaled 0.21 as compared to 0.14 in the previous quarter. In 9M 2018, the LTIFR totaled 0.17, having improved by 50% y-o-y (in the respective period of the previous year it totaled 0.34).

LTIFR
Q3 2018 Q2 2018 9М 2018 9М 2017 2017
LTIFR 0.21 0.14 0.17 0.34 0.28

In the reporting period, the Company continued a development and staged introduction of the corporate OHS management standards: “Road Traffic Safety” and “Prompt Notification on Accidents, Incidents and Consequences Thereof”.

Consolidated Operational Results

In 9M 2018, GV Gold’s production totaled 220.3 koz, including 25.4 koz of gold contained in the Taryn Mine. This index grew by 64% y-o-y as the result of the gold production ramp-up at all production facilities of the Company. Consequently, in 9M 2018, the Company produced a tonnage of gold equivalent to the Company’s annual gold production in 2017. On a q-o-q basis, the gold production increased by 50% due to the seasonal reason of the production in Taryn and Aldan, and totaled 92.5 koz, incl. gold in concentrate.

An increase in the volumes of ore mined (+88% in 9M 2018 and +58% in Q3 2018) is a result of operations at the new mines which were commissioned last year: Taryn Mine and Ugakhan Mine.

With the two newly commissioned plants, GV Gold’s processing capacities grew to about 8 Mt/a. As a result, in 9M 2018, the ore throughput totaled 5,764 kt (+52% y-o-y), in Q3 2018 — 2,229 kt (+38% y-o-y) at the growth of the average grade to 1.36 g/t and 1.39 g/t, respectively. The average recovery rate of 9M 2018 was 86.8%.

GV Gold Operational Highlights
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018 9M 2017 Y-o-Y
Rock moved, kt
10,399 13,291 −22% 10,904 −5% 30,983 29,540 5%
Stripping, kt 8,805 12,281 −28% 9,060 −3% 25,749 26,758 −4%
Ore mined, kt
1,595 1,010 58% 1,843 −13% 5,234 2,782 88%
Stripping ratio, t/t
5.5 12.2 −55% 4.9 12% 4.9 9.6 −49%
Ore processed, t
2,229 1,616 38% 1,787 25% 5,764 3,803 52%
Average grade in ore processed, g/t 1.39 1.37 8% 1.41 5% 1.36 1.28 6%
Recovery, %
87.2 86.7 0,5 p.p. 89.6 −2,4 p.p 86.8 86.0 0.8 p.p
Refined gold production, koz
80.3 56.7 42% 63.2 27% 194.9 128.5 52%
Gold contained in concentrate, koz 12.2 5.0 144% 9.4 30% 25.4 6.1 316%
Total gold production, koz. 92.5 61.7 50% 72,6 27% 220.3 134.6 64%

Refined Gold Production by Mine, koz
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018 9M 2017 Y-o-Y
Golets Vysochaishy
32.1 31.0 4% 34.4 −7% 101.2 95.6 6%
Marakan 2.2 2.1 5% 1.6 38% 3.8 3.4 12%
Ugakhan 15.2 10.8 41% 37.8
Taryn
22.2 17.1 30% 10.9 104% 38.0 18.3 108%
Bolshoy Kuranakh (placer operations) 8.6 6.5 32% 5.5 56% 14.1 11.2 26%
Gold production, koz 80.3 56.7 42% 63.2 27% 194.9 128.5 52%
Gold contained in concentrate, koz 12.2 5.0 144% 9.4 30% 25.4 6.1 316%
Total gold production, koz. 92.5 61.7 50% 72.6 27% 220.3 134.6 64%

Operational Results by Mine

Irkutsk Business Unit

Golets Vysochaishy

In Q3 2018, the Golets Vysochaishy Mine’s gold production totaled 32.1 koz, which is below Q2 2018 output owing to average grade decreasing, but up 4% y-o-y. On the y-o-y basis, in 9M 2018 the Company’s gold production increased by 6% and totaled 101.2 koz due to higher throughput and recoveries.

The deposit continued active exploration intended for the Vysochaishy Mine’s LOM extension. In Q3 2018, the mine carried on implementing a program for detailed exploration of the flanks and deeper levels of the deposit. By the middle of 2019 a new cutoff grade estimation report and a calculation of reserves will be prepared for the Golets Vysochaishy deposit.

Vysochaishy Mine Operational Results
Q3 2018 Q3 2017 Y-o-Y Q2 Q-o-Q 9M 2018 9M 2017 Y-o-Y
Rock moved, kt
1,897 4,395 −57% 2,915 −35% 9,573 13,384 −28%
Stripping, kt 1,555 3,946 −61% 2,373 −34% 8,089 11,662 −31%
Ore mined, kt 342 449 −24% 542 −37% 1,484 1,722 −14%
Stripping ratio, t/t 4.6 4.4 3% 4.4 4% 5.5 4.4 25%
Ore processed, t 1,117 1,065 5% 1,083 3% 3,243 3,146 3%
Average grade in ore processed, g/t 1.03 1.21 −15% 1.14 −10% 1.15 1.17 −2%
Recovery, %
84.2 78.6 5.6 p.p 84.5 0.3 p.p 83,2 80.8 2.4 p.p
Refined gold production, koz
31.1 30.2 3% 33.6 −7% 99.5 94.2 6%
Sands washed, k m3 51.3 49.1 4% 28.8 78% 80.0 79.4 1%
Average grade, g/m3 0.87 0.70 24% 0.90 −3% 0.73 0.72 1%
Refined gold production, koz 0.9 0.8 13% 0.8 13% 1.7 1.4 21%
Total gold production, koz 32.1 31.0 4% 34.4 −7% 101.2 95.6 6%

Marakan

In 9M 2018, the mine produced 3.8 koz, up 12% y-o-y. Such growth is associated with higher ore throughput (+14%) and higher average grade (+6%).

Marakan Mine Operational Results
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018
9M 2017
Y-o-Y
Rock moved, kt 402 472 −15% 464 −13% 934 1,225 −24%
Stripping, kt 354 429 −17% 421 −16% 843 1,145 −26%
Ore mined, kt 48 43 12% 43 11% 91 80 14%
Stripping ratio, t/t 7.4 10.0 −26% 9.8 −25% 9,3 14.3 −35%
Ore processed, t
49 43 15%
41 20% 90 79 14%
Average grade in ore processed, g/t 1.97 1.95 1% 1.67 18% 1.84 1.73 6%
Recovery, % 75.8 81.2 -5.4 p.p. 75.0 0,8 p.p 78.0 80.6 −2.6 p.p
Refined gold production, koz
2.2 2.1 5% 1.6 38% 3.8 3.4 12%

Ugakhan

The Mine attained its desired ore throughput (2.6 Mt) and moved into full-scale operation. In 9M 2019, the Ugakhan Mine gold production totaled 37.8 koz, in Q3 2018 — 15.2 koz.

In order to improve the quality of feed ore, the Ugakhan Mine launched two mobile ore crushing and grading complexes for crushing ore and reporting back to the grinding department. As a result, in Q3 2018, the recovery rate was 73.6%.


In order to improve operational efficiency even further, the Ugakhan Mine launched the mine fleet dispatching program. On top of this, the mine acquired composite rubber-metal lining for the mills to improve the performance of the grinding equipment.

Ugakhan Mine Operational Results
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018
9M2017
Y-o-Y
Rock moved, kt 4,371 4,025 9% 12,258
Stripping, kt 3,467 3,073 13% 9,267
Ore mined, kt 904 952 -5% 2,991
Stripping ratio, t/t 3.8 3.2 19% 3.1
Ore processed, t 741 257 188% 496 49% 1,872 257 629%
Average grade in ore processed, g/t
0.87 -0.99 -12% 0.93
Recovery, %
73.6 68.4 5.2 p.p. 67.5
Refined gold production, koz 15.2 10.8 41% 37.8

Taryn Business Unit

Taryn


After the project was launched in the summer of 2017 and first reached its desired targets, the Taryn Mine has been showing persistently high operational results. In Q3 2018, the mine produced a record-breaking 34.4 koz, including 12.2 koz of gold contained in concentrate.

In 9M 2018, the gold production totaled 63.4 koz, which was to a large extent associated with a significant growth of ore throughput (to 558 kt) and higher grades of processed ore (up to 3.97 g/t). In the reported period, the mine launched a mobile ore crushing and grading complex for crushing ore and reporting back to the mill. This step was taken within the framework of the mill’s operational efficiency improvement program.

Mineral resource base expansion is still a strategic objective of the Taryn Mine, the achievement of which would impact the Company’s decision in regard to the feasibility of construction of the second stage of the Taryn Mine. This summer, the Drazhnoye deposit license area follow-up exploration program was launched. The drilling program will be complete by the end of November 2018, and the new cutoff grade estimation report will be drafted by the mid-2019.

Taryn Mine Operational Results
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018
9M 2017
Y-o-Y
Rock moved, kt 3,730 1,906 96% 3,499 7% 8,218 4,890 68%
Stripping, kt 3,429 1,732 98% 3,193 7% 7,550 4,536 66%
Ore mined, kt 301 174 73% 306 −2% 668 354 89%
Stripping ratio, t/t 11.4 10.0 15% 10.4 9% 11.3 12.8 −12%
Ore processed, t 322 252 28% 166 93% 558 322 74%
Average grade in ore processed, g/t 3.72 3.04 22% 4.34 −14% 3.97 2.78 43%
Recovery (end-to-end), % 89.3 89.8 −0,5 p.p. 87.3 2.0 p.p. 88.8 63.8 25,0 p.p.
Refined gold production, koz 22.2 17.1 30% 10.9 104% 38.0 18.3 108%
Gold contained in concentrate, koz 12.2 5.0 144% 9.4 30% 25.4 6.1 316%
Total gold production, koz. 34.4 22.1 56% 20.2 70% 63.4 24.4 160%

Aldan Business Unit

Bolshoy Kuranakh

As of 30 September 2018, the Bolshoy Kuranakh deposit, located in the Aldan Area of the Republic of Sakha (Yakutia), produced 14.1 koz of gold, up 26% y-o-y. Such growth is associated with a 29% higher average grade in the sands.

Aldan Business Unit Operational Results
Q3 2018 Q3 2017 Y-o-Y Q2 2018 Q-o-Q 9M 2018
9M 2017
Y-o-Y
Sands washed, k m3
1,434 1,301 10% 814 76% 2,248 2,296 −2%
Average grade, mg/m3
191 157 22% 203 −6% 196 152 29%
Refined gold production, koz 8.6 6.5 32% 5,5 56% 14.1 11.2 26%

Consolidated Financial Results

In 9M 2018, the Company’s gold sales totaled 194 koz, up 56% y-o-y. In Q3 2018, gold sales grew by 44% y-o-y and by 26% q-o-q.

In 9M 2018, the refined gold and the gold concentrate sales are estimated at USD 241 million, up 55% y-o-y. In the reported period, the average gold selling price remained at the same level as in 9M 2017.

As of 30 September 2018, the Company’s net debt is estimated at USD 177 million, compared to USD 176 million as of the end of 2017.

Consolidated Financial Results
Q3 2018 Q3 2017 Y-o-Y Q2 2018
Q-o-Q 9M 2018
9M 2017
Y-o-Y
Total gold sales, koz 81 56 44% 64 26% 194 124 56%
Refined gold sold, koz 78 56 39% 58 35% 185 124 49%
Gold contained in concentrate, koz 3 6 −55% 9
Average gold selling price, USD/oz
1,202 1,278 −6% 1,294 -7% 1,266 1,257 1%
Total gold sales, million USD
96 72 34% 80 19% 241 156 55%
Refined gold sales, million USD
94 72 31% 75 25% 234 156 50%
Gold contained in concentrate, million USD
2 5 −69% 7
Net debt, million USD 177 151 17% 177 0% 177 151 17%

Corporate and Organisational Development

GV Gold continues to introduce structural changes aimed at improving operational framework, as well as further improvement of the transparency and efficiency of corporate management.

The Extraordinary General Shareholders Meeting, which took place on September 29, decided in favour of payment of dividends for H1 2018 totaling RUB 1,020 million, which is equal to 30% of EBITDA in accordance with the consolidated IFRS financials. .


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 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