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In order to commence gold production in 2010, the Board of Directors
of Endomines has resolved to carry out a fully guaranteed rights
issue and signed a project financing agreement with Nordea to finance
the construction and start up of the Pampalo gold mine
Endomines controls all mining concessions and claims along the
Karelian Gold Line in Ilomantsi, Finland. The extensive exploration
performed by the Company has resulted in increased mineral resources
and ore reserves. Given that these ore reserves are now deemed to be
sufficient to sustain renewed mining operations, the Board of
Endomines has secured financing for the construction and start up of
the mine and concentrating plant in Pampalo, subject to approval of
the rights issue by an extraordinary general meeting of shareholders.
The total capital raised amounts to SEK 287 million[1]. Of this, SEK
179 million will be raised through a fully guaranteed rights issue,
as resolved by the Board on October 9, 2009, and subject to approval
by an extraordinary general meeting. A project financing facility
ofSEK 82 million has been granted from Nordea Bank Finland,
guaranteed up to SEK 62 million by Finnvera plc, a specialized
financing company owned by the State of Finland. In addition,
Endomines has been approved SEK 26 million in grants from the Finnish
Ministry of Employment and the Economy Endomines has also obtained
bridge financing of up to SEK 21 million from Erik Penser
Bankaktiebolag to enable construction of the mine to start before the
complete financing is available to the Company.
"I am very satisfied to inform that we can now commence the
construction work for the Pampalo mine and plant. In order to gain
momentum, we will start construction of the tailings storage facility
before winter and continue with other works after approval by the
extraordinary general meeting of the Board's decision on the rights
issue. Our plan is to start trial mining and processing during the
last quarter of 2010 and then increase production to full capacity
during the first half of 2011. In the area surrounding Pampalo, we
currently control ore reserves containing 200,000 oz gold, enough for
seven years of production, and our ambition is to increase the ore
reserves through additional exploration in the coming years. Our
average "cash cost" for the planned production is calculated to be
420 USD/oz.[2] With the current gold price above 1,000 USD/oz, the
timing to start gold production is excellent." comments Markus
Ekberg, CEO of Endomines.
Karl-Axel Waplan, Chairman of Endomines: "This is an important event
for Endomines and for the Finnish mining industry. We have, while
being a fairly small company in terms of size, obtained recognition
from the largest Nordic bank and the Finnish government through
Finnvera and the Ministry of Employment and the Economy. Together
with the support from our largest shareholders, this has created the
opportunity to start gold mining in the Karelian Gold Line. Our
current ore reserves are sufficient for recouping the investment and
provide basis for further corporate development. There are also
excellent possibilities to expand the resources and reserves along
strike and at depth in Pampalo and elsewhere within the 40 kilometer
long Karelian Gold Line. Until today, only a few of the identified
mineralized targets along the gold line have been duly tested.
Endomines also possesses ilmenite assets which are next in turn to be
commercialized. I am, together with the rest of the Board, very
pleased with our achievements so far and look forward to many years
of successful gold mining in Pampalo."
The Pampalo project
Pampalo is centrally located along the Karelian Gold Line, with good
regional infrastructure and a long history of successful exploration
and test mining under Outokumpu's management. Endomines acquired
Pampalo in 2006 as part of a package of mining concessions and claims
along the southern part of the Karelian Gold Line. Since then, the
Company has developed the already well explored deposit with
continued prospecting and extension of the decline down to 375 meters
from the earlier level of 275 meters. During 2008, Endomines obtained
environmental and building permits and in August 2009 a land parcel
of 292 hectars necessary to conduct mining, was acquired from the
Finnish governmental forestry organization Metsähallitus. At the
Pampalo site, construction of the tailings storage facility,
concentrating plant, office and facilities buildings and other
installations are planned to start during October 2009 with estimated
completion in the 4th quarter of 2010. The concentrating plant will
have a maximum capacity of 230,000 tonnes of ore per year in
continuous operation, with a planned yearly gold production of
900-1,000 kilograms.
Financing
The total investment in the mine and facilities, including start-up
costs, provisions for running costs until the commencement of gold
production, financing costs and other costs associated with the
project is estimated at EUR 27.9 million (SEK 287 million), of which
EUR 21.8 million (SEK 225 million) are direct investments in tangible
assets. In order to obtain a balanced financing structure, Endomines
has in addition to the rights issue resolved by the Board, secured a
project financing facility with Nordea Bank Finland of EUR 8 million
(SEK 82 million) for the Pampalo project. Furthermore, the Finnish
Ministry of Employment and the Economy has granted, conditional on
equity and project loan financing, investment subsidies of EUR 2.5
million (SEK 26 million), to be used exclusively for infrastructure
investments at the Pampalo site. Endomines has also obtained a bridge
loan of up to EUR 2 million (SEK 21 million) from Erik Penser
Bankaktiebolag to facilitate construction start-up before the
complete financing is available to the Company.
The rights issue
The Board of Endomines resolved on October 9, 2009 to carry out a
rights issue, subject to approval by an extraordinary general meeting
to be held on November 12, 2009. The rights issue will be conducted
as an issue of units consisting of shares and warrants. Subscription
commitments and underwriting guarantees for the rights issue totaling
SEK 179 million has been obtained from major shareholders and
external parties, making the rights issue fully guaranteed. The
rights issue structure is outlined below:
* Current shareholders are entitled to subscribe for units in
relation to the number of shares held
* Three (3) shares in Endomines entitle to subscription of one (1)
unit
* One (1) unit consists of nine (9) shares and one (1) warrant
* Subscription price per unit is SEK 29.25, equivalent to a
subscription price per share of SEK 3.25
* With subscription of units, warrants are included free of charge
* The total number of units to be issued is 6,111,957 according to
the Board's resolution[3]
* At full subscription of units, gross proceeds to Endomines will
be SEK 178.8 million
* The number of outstanding shares at full subscription of units
will increase with 55,007,613 resulting in a total number of
outstanding shares before exercise of warrants of 73,343,484
* The number of warrants issued is 6,111,957 according to the
Board's resolution
* The warrants are proposed to entitle to subscription of a maximum
of 6,111,957 new shares at a subscription price of SEK 5.00 per
share between November 15 and December 15, 2010
* At full exercise of warrants, gross proceeds to Endomines will be
an additional SEK 30.6 million
* The number of outstanding shares at full exercise of warrants
will increase with 6,111,957 resulting in a total number of
outstanding shares after full subscription of units and full
exercise of warrants of 79,455,441
* From the proposed rights issue, Endomines stands to receive a
maximum of SEK 209.4 million in gross proceeds of equity
* The record date at Euroclear Sweden AB for the right to
participate in the rights issue is November 20, 2009
* The subscription period runs from November 25, 2009 until
December 9, 2009, or a later date that may be decided by the
Board
* If all units are not subscribed for with preferential right,
shareholders and others have the opportunity to subscribe without
preferential right, whereby allocation will be made in accordance
with the principles as presented in the notice of the
extraordinary general meeting
The rights issue proceeds are intended to be used for financing the
Pampalo project, while the potential proceeds from future exercise of
warrants are intended to be used primarily for financing further
exploration and development of the Pampalo deposit and other deposits
along the Karelian Gold Line, and for advancement of Endomines'
ilmenite deposits, including a feasibility study of the latter.
A number of major shareholders in Endomines have through subscription
commitments totaling SEK 50.4 million committed to subscribe for
shares in the rights issue, equivalent to 28.2 percent of the rights
issue. The remainder of the rights issue, SEK 128.4 million,
equivalent to 71.8 percent of the rights issue, is secured through
underwriting guarantees from Erik Penser Bankaktiebolag, Traction
Delta AB, Yggdrasil AB, Dunross & Co AB and Bliwa Livförsäkring. The
rights issue is thus fully guaranteed through subscription
commitments and underwriting guarantees. The subscription commitments
and the underwriting guarantees are subject to customary conditions.
Securities have been pledged for part of the underwriting guarantees.
Shareholders representing approximately 46.3 percent of the share
capital and votes in Endomines have committed to vote in favor of the
rights issue and the associated resolutions on the extraordinary
general meeting on November 12, 2009.
Shareholders who choose not to subscribe in the rights issue will
have their holdings diluted by approximately 77 percent, based on
full subscription in the rights issue and full exercise of warrants,
but have the opportunity to financial compensation by selling their
unit rights.
The rights issue is subject to approval by the extraordinary general
meeting of shareholders on November 12, 2009. In conjunction with the
rights issue, the Board has decided to propose to the extraordinary
general meeting, inter alia, amendments to the articles of
association and adjustments to the share capital. Notice of the
extraordinary general meeting will be made public today and will be
published on October 15, 2009 in Svenska Dagbladet and Post- och
Inrikes Tidningar. The notice will also be available on
www.endomines.com. For complete proposals on terms and conditions and
matters to be resolved on the extraordinary general meeting, it is
referred to the separate notice.
Project financing facility
Endomines AB's operational Finnish subsidiary Endomines Oy entered on
October 9, 2009 an agreement with Nordea Bank Finland Plc regarding
project financing for the Pampalo mine. The agreement gives Endomines
Oy the right to, subject to the fulfillment of certain conditions,
borrow up to EUR 8 million (SEK 82 million) during the period from
signing of the agreement up until completion of the mine. The loan
shall be repaid in full five years after completion of the mine,
however no later than December 31, 2015. The Finnish governmental
financing company Finnvera plc has agreed with Endomines Oy to
guarantee EUR 6 million (SEK 62 million) of the project finance loan
from Nordea Bank Finland. As security for the project finance loan,
Endomines Oy has pledged, inter alia, mining concessions for the
Karelian Gold Line and mortgage in the land surrounding Pampalo in
combination with a parent company guarantee from Endomines AB.
Furthermore, all shares in Endomines Oy have been pledged to Nordea
Bank Finland, together with a business mortgage in Endomines Oy. In
accordance with the project financing agreement with Nordea Bank
Finland, Endomines will enter hedging agreements for the gold price,
exchange ratio fluctuations and interest rate levels for a portion of
the financing and the planned production
Time schedule
Indicative time schedule for the proposed rights issue:
* Extraordinary general meeting: November 12, 2009
* Last day of trading in shares with unit rights: November 17
* First day of trading in shares ex unit rights: November 18
* Record date for participation in the rights issue: November 20
* Estimated day for publication of the prospectus: November 20
* Subscription period: November 25-December 9
* Trading in unit rights: November 25-December 4
Advisors
Erik Penser Bankaktiebolag is the financial advisor and Cederquist is
the legal advisor to Endomines.
For further information, please contact:
Markus Ekberg, CEO of Endomines AB, tel. +358-40-706 48 50
Karl-Axel Waplan, Chairman of Endomines AB, tel +46-70-510 42 39
Endomines AB (publ) explores and develops mineral deposits in
Finland. The Company owns mining concessions and claims over all the
known gold deposits along the Karelian Gold Line, including the
Pampalo mine where the Company aims to start mining in 2010. In
addition, Endomines has claims for gold deposits in Finnish Lapland.
Besides gold, and through its subsidiary Kalvinit Oy, the Company
plans to develop its deposits of the industrial mineral ilmenite in
Central Ostrobothnia.
Endomines applies SveMin's and FAERI's common reporting rules for
public mining and exploration companies. Endomines report its mineral
resources according to the internationally accepted JORC or NI-43-101
code. Endomines applies International Financial Reporting Standards
(IFRS) for its accounting principles. The use of IFRS allows for
comparison of the Company with foreign exploration and mining
companies.
The shares of Endomines AB are quoted on First North Premier segment
in Stockholm under ticker ENDO. Erik Penser Bankaktiebolag acts as
Certified Adviser and Liquidity Provider.
Read more about Endomines on www.endomines.com
IMPORTANT NOTICE
In certain jurisdictions, the publication or distribution of this
press release may be subject to legal restrictions and persons in
those jurisdictions where this press release has been published or
distributed should inform themselves about and abide by such legal
restrictions.
This press release is not directed at persons located in the United
States, Canada, Australia, Hong Kong, Japan, New Zeeland, South
Africa or in any other country where the offer or sale of the unit
rights, interim shares, new shares or warrants is not permitted. This
press release may not be published or distributed, directly or
indirectly, in or into the United States, Canada, Australia, Hong
Kong, Japan, New Zeeland, South Africa or any other country where
such action is wholly or partially subject to legal restrictions or
where such action would require additional prospectuses, other offer
documentation, registrations or other actions in addition to what
follows from Swedish law. Nor may the information in this press
release be forwarded, reproduced or disclosed in such a manner that
contravenes such restrictions or would require such additional
prospectuses, other offer documentation, registrations or other
actions. Failure to comply with this instruction may result in a
violation of the United States Securities Act of 1933, as amended
("Securities Act") or laws applicable in other jurisdictions.
This press release does not contain or constitute an invitation or an
offer to acquire, sell, subscribe for or otherwise trade in shares,
warrants, unit rights or other securities in Endomines AB (publ). Any
invitation to the persons concerned to subscribe for shares in
Endomines AB (publ) will only be made through the prospectus that
Endomines AB (publ) intends to publish in the beginning of November
2009, which prospectus will contain, among other things, financial
statements as well as detailed information regarding Endomines AB's
(publ) Board of Directors and Management.
No unit rights, BTUs (interim units), new shares or warrants will be
registered under the Securities Act or any provincial act in Canada
and may not be transferred or offered for sale in the United States
or Canada or to persons resident in Canada or on account of such
persons other than pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
or in such exempt cases that do not require registration in
accordance with any provincial act in Canada, respectively.
[1] All sums are calculated using an exchange ratio of EUR/SEK 10.3
[2] Calculated using an exchange ratio of EUR/USD 1.3
[3] Calculated based on 18,335,871 outstanding shares
This press release may not be announced, published or disseminated,
directly or indirectly, in the United States of America, Canada,
Australia, Hong Kong, Japan, New Zeeland or South Africa.
This is a translation of the Swedish version. In case of divergence,
the Swedish version shall prevail.
Endomines enters financing agreements for gold mining start-up and carries out rights issue
| Source: Endomines AB
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