About the Report 4 2014 in Brief 6 The Chairman’s Message 8 The CEO’s Message 10 Our Business 12 Business Description 12 Mission and Values 12 Business Model 13 Strategy 16 o General Description of the Company’s Strategy 16 o Strategy Implementation and Key Achievements 17 o Advanced Exploration and Development Projects 19 Map of Operation 24 Mineral Resources and Ore Reserves 25 Market Overview 33 o Gold Demand 34 o Gold Supply 38 o Gold Price and Price Trends 39 o Nordgold’s Position in the Global Market 40 Performance and Efficiency 41 Operational Performance 41 o Operating KPIs of Nordgold, Key Changes in 2014 and Factors Affecting 41 o Assets Overview 44 Financial Performance 60 o Financial Performance (MD&A) 60 o Operational Information 65 o Results of Operations 72 o Financial Performance by Segment 79 o Liquidity and Capital Resources 102 o Cash Flows From Operating Activities 103 o Cash Flows From/(Used In) Financing Activities 104 o Cash Used in Investing Activities 105 o Contractual Obligations and Commitments 105 o Capital Expenditure Commitments 105 o Financial Liabilities 106 o Bank Loans 106 o Notes Issued 106 o Capital Expenditure 107 Business System of Nordgold 111 o BSN Overview 111 o Defined Key Development Areas, Goals and Actions Made 111 o Key Projects Description 112 o Top BSN Achievements in 2014, Brief Plans for the Upcoming Year 114 o BSN Projects as the Matter of Sustainable Development 116 Lefa Case: Impressive Turnaround 117 2 Respect for People 119 HR Management System 119 Performance Management 122 Organisational Efficiency Enhancing 123 Talent Management 128 Corporate Culture 131 Responsible Mining 133 Approach to Sustainability 133 Stakeholder Engagement 135 o Approach to Stakeholder Engagement 135 o Key Stakeholders Groups 137 Safety and Health 142 Environment 148 Communities 153 o Value of Community Relations 153 o Communities Relations in Africa 156 o Community and Social Development in Russia and Kazakhstan 162 Governance 165 Corporate Governance Summary 165 Directors’ Report 166 Corporate Governance Statement 172 The Board of the Company and Committees 182 Management Team 191 Remuneration Report 197 Risk Management 211 Appendix 218 Independent Audit’s Report 218 Financial Statements 223 o Consolidated Statement of Profit or Loss for the Year Ended 31 December 2014 223 o Consolidated Statement of Other Comprehensive Income for the Year Ended 31 224 December 2014 o Consolidated Statement of Financial Position as at 31 December 2014 225 o Consolidated Statement of Cash Flows for the Year Ended 31 December 2014 227 o Consolidated Statement of Changes in Equity for the Year Ended 31 December 2014 229 o Notes to the Consolidated Financial Statements for the Year Ended 31 December 230 2014 Company Only Financial Statements for the Year Ended 31 December 2014 268 o Company balance sheet as at 31 December 2014 268 o Company income statement for the year ended 31 December 2014 269 o Notes to the Company Financial Statements for the Year Ended 31 December 2014 270 o Other Information 279 GRI Index 280 Nordgold Sustainability Regulations 291 Material Aspects 292 Glossary 293 3 About the Report This Nordgold Integrated Annual Report 2014 covers the period from 1 January to 31 December 2014. The first Nordgold integrated report was published for the year 2013. In 2014 Nordgold decided to retain the integrated report format as it had been well received by the Company’s stakeholders. The Report provides an overview of the operational, sustainability and financial performance at nine Nordgold operations located in Russia, Kazakhstan, Burkina Faso and Guinea: Bissa; Taparko; Lefa; Buryatzoloto (Irokinda and Zun-Holba); Berezitovy; Neryungri; Aprelkovo; Suzdal. And six development and exploration projects: Gross; Bouly; Uryakh; Prognoz; Montagne D’Or; Pistol Bay. In 2014 the HR data also cover the managing company, Nordgold Management, as well as foreign offices (London, Toronto) and North Gold Mining Company. There were no significant restatements of data during the reporting period with the exception of matter disclosed in note 2, section «Accounting and Reclassification changes» of Financial Statement with further impact on comparative figures. As of January 1, 2015 there is new reserves and resources statement in accordance with the JORC Code guidelines (2004). The financial data in the report underwent independent assurance by Deloitte. However, Nordgold decided not to conduct independent assurance of the sustainability information presented in the report. The data in the report are disclosed in line with the following standards: Disclosure Rules and Transparency Rules (DTR); Dutch Civil Code, Book 2; Global Reporting Initiative G4 Guidelines and Metals and Mining Sector Supplement; The International Integrated Reporting Standard (<IR>); International Financial Reporting Standards (IFRS); UK Corporate Governance Code; Dutch Corporate Governance Code. 4 We believe that the Report, together with the additional materials on the corporate website (www.nordgold.com), conforms to the Core option of GRI G4 guidance. All financial indicators are denominated in US dollars, in accordance with the audited consolidated IFRS financial statements. Following a number of interviews with managers of the Group and the examination of the Group’s principal concerns, key topics (reflecting both the Group’s aspirations and the needs of stakeholders) are identified as: Efficiency improvement and cost cutting; Driving performance and productivity by means of HR policies & programmes. Other important topics are the following: Safety standards and practices improvement; Assets portfolio improvement via selected M&A activity, new projects development and construction and exploration around currently operating mines; Sustainability practices in African countries of operation. Identifying material aspects (topics) to be disclosed in the Report is required to meet GRI G4 and <IR> Frameworks. A step-by-step procedure of identifying material aspects was conducted: 1. Compilation of the list of possible relevant topics for a gold mining company, with reference to SASB (Sustainability Accounting Standards Board) recommendations for Materiality Map Issues (Metals and Mining sector). 2. Compilation of the short-list of material aspects, after questioning the top-management and the heads of the departments. 3. Arranging the material aspects from the short-list on significance from the perspective of Nordgold managers (see Appendix Material Aspects) Following the questionnaire results of the Company's management, the most material aspects turned out to be the following: Employee health, safety and wellbeing; Accident and safety management; Community relations; Labour relations; Waste and Hazardous Materials Management. Nordgold refers to the Group (i.e. the Company with its subsidiaries) and the Company to Nord Gold N.V. This integrated report contains forward-looking statements and forecasts regarding the Group’s operational and financial results, which involve risks and uncertainties, since they refer to the events and depend on the circumstances that will occur in the future. Actual performance or achievement could differ materially from that expressed in, or implied by any forward- looking information in this report. Factors that could cause or contribute to such differences include those discussed in the ‘Financial’ section and elsewhere in the Annual Report. In order to ensure the quality and constant improvement of our reporting, your feedback is welcome. Please go to the feedback form on our website (http://nordgold.devh.cpeople.ru/contact-us/#contact_form). You can contact us: Valentina Bogomolova, IR: [email protected]; Daria Grigorieva, SD: [email protected]; Olga Ulyeva, Head of Media Relations: [email protected]. For further information on Nordgold please visit our web-site: www.nordgold.com. 5 2014 in Brief Financial highlights Revenue: US$1,216.1 million EBITDA: US$487.0 million TCC: US$673 per ounce AISC: US$887 per ounce Cash flow from operating activities: US$328.0 million Positive free cash flow: US$180.7 million Dividend: US$ 10.31 cents per share/GDR, the total pay-out of US$39.1 million Operational highlights Gold production (Koz): 984.5; Gold sold (Koz): 960.4; Ore mined (kt): 18,421; Ore processed (kt): 22,001; Grade (g/t): 1.74; Recovery (%): 81.7. Non-financial highlights LTIFR (lost-time injury frequency rate): 1.23; LTI (total number of lost time injuries): 23; Investments in supporting local communities (US$ thousands): 634; Total number of employees: 8,757 people. Calendar of events February Nordgold starts Gross pilot plant operations. March Nordgold enters into US$500 million 5-year Facility Agreement with Sberbank CIB. May Nordgold announces Changes to the Board of Directors. Nordgold enters into an Agreement to acquire a stake in Northquest, which owns a promising exploration project Pistol Bay, located in northern Canada.Nordgold enters into agreements to acquire Ronguen gold project from Canada’s Goldrush Resources, which is a late stage exploration project located in 10 kilometres northwest from Nordgold’s Bissa mine. Nordgold’s Buryatzoloto receives gold exploration and mining licence for Onot-Kitoyskaya gold area in Russia. 6 August Nordgold's subsidiary in Guinea - Lefa mine – signs a Partnership Agreement with UNICEF and local communities. October Nordgold acquires ~9% Stake