Third Quarter * Result after financial items -6,647 TSEK (-3,110) * Investments have been 56,088 TSEK (10,066) First nine month * Result after financial items -19,184 TSEK (-9,031) * Investments have been 110,670 TSEK (67,764) Key ratio Jan-Sept Jan-Sept Full year 2008 2007 2007 Profit/loss after financial items -19 184 -9 031 -10 861 Equity/Debt ratio 75,0% 96,7% 96,5% Total Assets 351 118 266 654 265 516 Equity 263 246 257 906 256 224 Number of yearly employee at the end of period 47 14 15 Equity per share before dilution 4,18 4,27 4,24 Equity per share after dilution 4,10 4,27 4,24 P/L per share before dilution -0,30 -0,15 -0,18 P/L per share after dilution -0,30 -0,15 -0,18 Number of shares before dilution at the end of period, thousands 63 001 60 401 60 401 Number of shares after dilution at the end of period, thousands 64 131 60 401 60 401 P/L of fiscal period The most important goal of an exploration company that is focused on becoming a producer is to transform funds raised through financing into increased ore reserves and mineral resources, and to develop the projects technically and economically. During the fiscal period the company has continued extensive exploration on several objects. The company capitalizes expenses on mature projects, and due to this the P/L reported depends both on the total expenditures and the relative distribution between mature and early projects. The Company asses that gold production can generate positive cash flow during the first half of 2009. For information: Karl-Åke Tel: +46 950 275 E-mail: karl-ake.johansson@lgold.se Johansson, CEO 01, +46 70 625 22 57 Tomas Björklund, Tel: +46 70 662 E-mail: tomas.bjorklund@lgold.se Director 35 35 Significant events * The first assessment of mineral resources for Haveri Gold project in southern Finland, in compliance with NI 43-101 was presented. The Company has, together with independent consultants, analyzed and compiled the substantial amount of geological information present. The first assessment of the project's mineral resource in compliance with the Canadian NI 43-101 consisting of 6.9 million tonnes of measured and indicated mineral resources with an average grade of 1.37 g/t Au equivalent to 308,663 troy ounces of Au, for those parts of the project included in this study. The mineral resource is 24.7 Mtonne with 0.89 g/t Au at a cut off at 0.5 g/t Au, equivalent to 710,238 troy ounces of Au. * Test run generated profits at the Pahtavaara processing plant in Finnish Lapland. After routinely replacing of wear parts in the mill, production resumed on July 15. During August, the operation has gradually increased up to a continuous three shifts, and is expected to produce approx. 25 Kg (800 oz) of gold per month. The production was based on material that previously had been classified as waste rock. The test run indicates that a relatively high percentage of previously mined waste rock holds gold grades at a level that makes them profitable when mined at a low cost. The Company estimates that the plant can be operated at full capacity for at least two years using exclusively such material. The cost of processing previously mined material is low, and the profits for processing this material alone is estimated at approx. SEK 2 million/month before depreciation and interest. * The Company has from the receiver in bankruptcy for Scan Mining AB and its subsidiaries Blaikengruvan AB, acquired the processing plant and the mines at Blaiken for SEK 40 million. The acquisition will be paid in four segments for a period of three years. The Company calculates that the operations will resume during autumn 2008, and that the entire purchase sum will be earned back during 2009. Initially, the operation will focus on mining of the Ersmarksberget gold deposit. The acquisition was financed with a directed new share issue of SEK 26 million to a group of institutions. A part of that was the for the first installment. The remaining part of the issue was operating capital. The issue price was 10 SEK/share * The Supreme Environmental Court announced on September 17 its ruling regarding the mine and processing plant at Fäboliden in the municipality of Lycksele in Västerbotten. The ruling gives the Company approval to fully develop and operate the project. Fäboliden, with the planned processing plant, is centrally located in the so-called "Gold Line", where the Company already has several projects with the potential of being developed into profitable mines. Events after the end of the reporting period * The environmental permit, for the Fäboliden mine, process plant and tailing facility, gained legal force at October 23. This means, since no additional appeal was submitted, that the permit for Fäboliden cannot be further contested. * The Company has completed planning work and arranged the required financing by loan to start mining production at the Pahtavaara mine in northern Finland, with mine production for at least three years. The plan is to start production immediately, and to bring it up to full capacity during spring 2009. The production through the processing plant is estimated to be 400 000 tons of ore from the mine and 100 000 tons from the waste rock deposit, totaling 500,000 ton/year, equivalent to approx. 900 kg (29,000 oz) gold/year, at a production cost of around 480 USD /oz with the exchange rate of 8.10 SEK/USD. The annual profit for the wholly-owned subsidiary Lappland Goldminers OY, starting from spring 2009, is estimated to be around 50 MSEK (6.5 MUSD) with current exchange rate, before depreciation and interest. * The verdict from the Supreme Environmental Court of Appeals, which has gained legal force means that the Fäboliden Gold Project now is ready for financing. With the reference to the deep decline of the economic situation, and the difficulties which now exist regarding financing of major projects, the Company has decided to priorities the start up of the two mines at Pahtavaara and Blaiken. An upgrade of the Feasibility Study will be done and financed by the cash flow from these activities. * The fast decline of prices for steel and other base metals are expected to have a positive and profound impact on the cost for the planned investment at Fäboliden. This factor will also affect the time for the investment decision. The Company will evaluate the time when the price level for the investment and market conditions for financing are the best conceivable for the Company and its share holders. The fast decline of prices for steel and other base metals are expected to have a positive and profound impact on the cost for the planned investment at Fäboliden. This factor will also affect the time for the investment decision. The Company will evaluate the time when the price level for the investment and market conditions for financing are the best conceivable for the Company and its share holders. The Interim Report for January to September 2008 has not been subject to special examination by the Company's auditors. Income statement - Group SEK (,000) 3 month 3 month 9 month 9 month Full July-Sept July-Sept Jan-Sept Jan-Sept year 2008 2007 2007 2008 2007 Income Net turnover 3 076 0 3 076 0 0 Changes in inventory 2 209 0 3 470 0 0 Capitalized work 558 763 2 511 2 673 3 671 Change in value of biological assets 0 0 0 0 5 752 5 843 763 9 056 2 673 9 423 Other external costs -7 188 -2 608 -15 375 -6 363 -9 096 Personnel costs -4 963 -1 893 -12 512 -6 125 -9 061 Depreciation of tangible and intangible fixed assets -185 -137 -439 -315 -418 Operating Profit/Loss -6 494 -3 875 -19 270 -10 130 -9 151 P/L from financial investments: Financial income 4 775 426 1 363 1 797 Financial costs -157 -10 -340 -264 -3 507 Profit/Loss after financial items -6 647 -3 110 -19 184 -9 031 -10 861 Taxes 0 0 0 0 0 Net Profit/Loss for fiscal period -6 647 -3 110 -19 184 -9 031 -10 861 Average number of shares before dilution, thousand 60 876 55 602 60 758 55 602 57 731 Average number of shares after dilution, thousand 62 006 55 602 61 712 56 260 57 731 P/L per share before dilution -0,11 -0,06 -0,32 -0,16 -0,19 P/L per share after dilution -0,11 -0,06 -0,31 -0,16 -0,19 Balance Sheet - Group SEK (,000) Sept 30 Sept 30 Dec 31 2008 2007 2007 Assets Fixed assets Intangible fixed assets 231 385 180 614 200 322 Tangible fixed assets 106 830 22 762 22 562 Financial fixed assets 3 028 1 567 3 028 341 243 204 943 225 912 Current assets Inventory 4 174 0 0 Other receivables 4 885 3 507 2 702 Investments , cash and bank balances 817 58 204 36 902 Total Current assets 9 875 61 711 39 604 Total Assets 351 118 266 654 265 516 Equity and Liabilities Equity 263 246 257 906 256 224 Allocations 4 490 0 0 Long-term liabilities 60 288 2 000 2 000 Short-term liabilities 23 094 6 748 7 291 Total Equity and Liabilities 351 118 266 654 265 516 of which interest-bearing 29 978 0 0 Changes in Equity - Group Full SEK (,000) 3 month 3 month 9 month 9 month year July-Sept July-Sept Jan-Sept Jan-Sept 2008 2007 2008 2007 2007 Equity at the 139 beginning of period 243 742 261 221 256 224 139 259 259 132 New issue 26 000 0 26 000 132 777 777 Issue cost -405 -205 -405 -5 634 -5 963 Currency effects/acquired equity 557 0 611 535 1 012 -10 P/L of fiscal period -6 647 -3 110 -19 184 -9 031 861 Equity at the end of 256 period 263 246 257 906 263 246 257 906 224 Cash Flow Analysis - Group Full SEK (,000) 3 month 3 month 9 month 9 month year July-Sept July-Sept Jan-Sept Jan-Sept 2008 2007 2008 2007 2007 Cash flow from operating activities before changes in working capital -6 462 -3 176 -18 745 -8 716 -9 324 Changes in working -13 capital 8 548 -2 578 9 445 -9 367 017 Cash flow from -22 operating activities 2 086 -5 754 -9 299 -18 083 341 0 0 Cash flow from -84 investing activities -56 086 -10 066 -110 670 -67 764 478 Cash flow from financing activities 54 409 0 83 883 94 368 94 037 Changes in liquid -12 assets 409 -15 821 -36 086 8 520 782 Liquid assets at the beginning of period 408 74 025 36 902 49 684 49 684 Liquid assets at the end of period 817 58 204 817 58 204 36 902 Undisposed overdraft facilities 2 983 5 000 2 983 5 000 5 000 Disposable cash at the end of period 3 800 63 204 3 800 63 204 41 902 Financing After the time of this/the report, the Company has been successful in securing financing for the start up of production at its mines in Blaiken and Pahtavaara through loans from certain shareholders and financial institutions together with loans from public authorities. Total funds secured are almost 40 MSEK. Production at the both sites will start before end of 2008. Personnel/consultants The Company has 47 (last year 14) employees. In addition to this, the Company engages consultants and contractors for various projects on continuing basis. Altogether the Company engages the equivalent of 75 full time employees. Reporting dates Notice of year-end statement 2008 February 27, 2009 Accounting principles The accountings has been prepared according to (ÅRL- Annual Accounts Act), RFR 2.1 "Reporting for legal entities", International Financial Reporting Standards (IFRS) and interpretations by International Financial Reporting Interpretations Committee (IFRIC), as adopted by EU, and according to RFR 1.1 "Complementary reporting principles for groups". The parent company also applies to RFR 2.1 "Reporting for legal entities" and Årsredovisningslagen (ÅRL - Annual Accounts Act). This report has been prepared in compliance with IAS 34 - Interim Financial Reporting. Same accounting principles have been applied as in the issued Annual Report for 2007. For detailed information regarding accounting principles, refer to Annual Report 2007. The annual report and the group report have been approved for issue by the Board on April 11, 2008. The group Income statements and balance sheet and the parent company income statements and balance was adopted at the Annual General Meeting on May 30, 2008. Lycksele November 28, 2008 Karl-Åke Johansson CEO
Lappland Goldminers AB (publ): Interim report January-September 2008
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