Last year, the precious metal held firm in comparison to other commodities, such as platinum and diamonds, which, owing to the sluggish global market performance, were softer.
Looking ahead, Nordgold CEO Nikolai Zelenski believes that the impact of under-investment in gold exploration by mining companies over the past few years, coupled with increased global market volatility in key destinations, will be the main driver for the positive appetite for gold this year.
“Over the past three to four years gold companies have invested little in the exploration, construction and development of new gold mines, and, furthermore, a black swan event such as the Brexit vote, which occurred in June last year, would give the precious metal an added boast, as traders try to hedge their bets,” notes Zelenski.
As a result of the positive outlook, the gold producer is investing heavily in developing its suite of gold projects. Nordgold now operates nine mines (four in Russia, three in Burkina Faso and one each in Guinea and Kazakhstan) including the Bouly mine in Burkina Faso, which was launched in September last year and a further advanced development project – Gross in Russia, which is expected to launch in early 2018. Nordgold also has a diverse portfolio of further exploration projects in Russia, Burkina Faso, Canada and French Guiana.
This year, the gold miner will look to increase its African exploration efforts in its key operating areas while focusing on further developing its Russian and French Guiana and Canadian footprint.
According to Zelenski, Africa, which contributes over 50% to Nordgold’s gold production, remains a key focus area for the company.
In September last year, Nordgold expanded its flagship Bissa mine with the launch of a heap leach operation at the nearby Bouly deposit in Burkina Faso. Bouly is the company’s third operating asset in Burkina Faso and the second project that Nordgold has developed from a greenfield development stage in Burkina Faso in the last six years, he says.
Bouly’s average annual production is pegged at 120 000oz over a life of mine of 10 years at $730 per oz.
“Like Bissa, which we launched in 2013, Bouly is a best-in-class operation, which not only increases overall production and efficiency at Nordgold, but is another major economic contributor to our host country and its local community.”
The Bouly mine has created 350 permanent jobs over its 10-year lifespan with direct benefits to the state in terms of income tax and royalties, estimated at $120m over the life of mine.
Bouly’s construction was completed on schedule and under budget ― Nordgold started construction on the Bouly mine in July 2015 and completed the project (in 13 months) in August last year. The project was developed at a cost of $140m.
Total gold production from Nordgold for Burkina Faso is scheduled to reach 400 000oz by this year, while total African production in 2017 is expected to be around 600koz.
Nordgold’s main West African focus this year will be around developing satellite deposits around its existing operations with the aim of ‘feeding the best quality ore into its processing plant’.
Zelenski states that the company is keen to consider ‘quality ore bodies that require low capital outlay and favour strong returns’.
The internationally diversified low-cost gold producer, which was established in 2007, explains that it has grown rapidly in Africa in the last four years, ‘from two to four mines and doubled production capacity from 300koz in 2012 to an expected 600koz in 2017, when Bouly is at full capacity’.
“We also have a strong portfolio of next generation projects outside of Africa, and this year we will focus on developing our Russian and French Guiana portfolios.”