Nordgold did not climb Montagne d’Or – Newspaper Kommersant No. 160 (7361) of 09/01/2022

US-sanctioned Nordgold sold a majority stake in a gold mining asset in French Guiana to Montagne d’Or for $77 million. The buyer was Nordgold’s partner in the project, Orea Mining, who doubted that Nordgold would be able to act as the operator of the project under the current circumstances. Nordgold still has a few assets outside of Russia, but the company is not going to give them up yet.

Gold miner Nordgold has reached an agreement with Orea Mining to sell a 55.01% stake in the Montagne d’Or joint venture in French Guiana. Nordgold said in a statement that Orea will pay the $77 million needed to begin construction of the 100,000-ounce-per-year mine once all necessary permits and approvals have been obtained. The controlling shareholder of Nordgold with a 52% share is Marina Mordashova, the mother of Alexey Mordashov’s children. Mr. Mordashov himself, Marina Mordashova, their sons Nikita and Kirill, as well as the largest assets of the businessman are included in the US SDN list.

Nordgold started investing in Montagne d’Or in 2013, the project has not yet started production. The Russian company’s website reported that the proven and probable reserves of Montagne d’Or in accordance with the NI 43-101 standard are estimated at 2.75 million ounces of gold (54.11 million tons of ore with an average gold grade of 1.58 g/t). Mineral resources amount to 4.81 million ounces of gold.

In June, when the Russian company was included in the SDN list, Orea said it did not yet understand the extent to which the sanctions would affect Nordgold’s ability to act as the operator of the project. On June 30, Orea announced the start of negotiations with Nordgold to buy a stake in Montagne d’Or. In its accounts at the time, Orea valued its stake in Montagne d’Or at zero due to the sanctions. At the same time, as specified in the Russian company, Nordgold still owns 7-8% of the shares of Orea Mining itself.

Nordgold has assets not only in Russia, but also in Kazakhstan, Guinea and Burkina Faso, so US sanctions against it are especially sensitive. OFAC until August 31 unblocked the securities of Severstal and Nordgold, which will allow American financial institutions to withdraw from them.

Aleksey Mordashov himself is looking for an opportunity to withdraw his assets from sanctions and, according to the WSJ, is considering the possibility of business restructuring. According to the WSJ interlocutors, one of the options suggests that Alexei Mordashov will transfer 50% of his shares to a trust under trust management, and the remaining 50% to a fund that will direct profits to unnamed projects that contribute to the implementation of the goals of the UN.

Nordgold did not publish financial statements after the imposition of sanctions. Severstal produced 5.3 million tons of steel in the first half of the year, which is 7% less than a year earlier. “Our production volume in the forestry business has drastically dipped, we have drastically dipped in steel. If in the timber industry there is an 80% drop in production, in steel it is somewhere between 25-30%… We are trying to restore the chains – both export and import. Our main task is to survive and preserve,” said Alexei Mordashov during the SPIEF (quote from Reuters).

It is premature to talk about the complete sale of Nordgold’s foreign assets, says Sergey Grishunin, head of the NRA rating service. The company’s Bissa, Bouly, Lefa and Taparko mines are stable, he said. “The sale of the stake in Montagne d’Or is rather dictated by the limited possibilities for the company to finance the development of a foreign project. Moreover, against the backdrop of subdued gold prices and rising production costs, the project is not attractive enough,” says the analyst. According to Sergei Grishunin, the metal content is 1.6 grams per tonne, which most likely suggests the use of heap leaching, which can give a more modest metal yield during actual operation.

Evgeny Zainullin