Nordgold can close production at Aprelkovo

16 May 2016

Nordgold of Alexei Mordashov can, within the next few months to suspend production at the mine Aprelkovo in the Trans-Baikal region, and file its bankruptcy petition, according to the Company statement. As noted, the local tax authorities ruled on the Company additional 229 million rubles in taxes for 2011 and 2012. This amount mainly represents an additional tax on natural resources production, which was calculated by the authorities on the basis of disputable taxation of the production with a low recovery rate. The decision of the tax authorities was upheld by the Fourth Arbitration Court of Appeal. The Company believes additional taxation unfounded and is going to challenge it under cassational procedure.These tax claims will not affect the other Nordgold assets in Russian. "Tax collection will generate negative cash flow of the mine, which will remain so for the remaining two years of mine operation. As a result, the mine would be loss-making enterprise. Such factors may lead to the suspension of production in the next few months and the filing of the bankruptcy petition", the report says. In 2015, the volume of production at Aprelkovo amounted to 19.8 thousand ounces (616 kg) of gold with zero free cash flow. In the first quarter, Aprelkovo received 3.6 thousand ounces (112 kg) of gold, as well the forecast for the full year amounted to 17 thousand ounces. Nordgold does not expect significant write-offs and does not expect impacting to forecast of the company's total production volume in 2016, which remains in the range of 950-1,010 thousand ounces.

Source: Economical Information Agency "PRIME"