Encouraging exploration results in Pampalo
Highlights
Q3/2015
· Gold production 153.1 kg (210.9)
· Co-operation negotiations with the personnel started
· Revenues were 30.4 MSEK (47.8)
· EBITDA before unrealized losses on derivatives -11.6 MSEK (6.9)
· Profit after tax was -18.7 MSEK (-5.5)
· Earnings per share was -0.07 SEK (-0.04)
January- September 2015
· Gold production 411.0 kg (582.6), -29%
· Revenues were 85.2 MSEK (131.6), -35%
· EBITDA before unrealized losses on derivatives was -48.3 MSEK (8.7)
· Profit after tax was -79.4 MSEK (-23.5)
· Earnings per share was -0.30 SEK (-0.18)
· Investments were 32.1 MSEK (9.7), mainly into mine site exploration
· Closing cash balance end of September was 34.4 MSEK
Subsequent events
· The company closed its remaining 11,200 oz gold hedge on October 9
· At closing a new 26 MSEK short-term loan was obtained which on October 27
was converted into a long term loan with payback during 2018-2019
· The payback of the current project loan of 45 MSEK was prolonged from 2016
-2017 to 2018-2019
· The Board will invite all shareholders to an extra general meeting to
resolve on a right issue of some 60 MSEK net
· Further encouraging high grade intersections form Pampalo Deeps exploration
project including 10 m@18.2 g/t and 6 m@13.6 g/t
· Encouraging intersection (2.0m@3.9 g/t gold) in the previously unexplored
area south of Pampalo South supports company expectations of the unknown
potential close to Pampalo main lodes
Production guidance for 2015
· The production guidance for the full year 2015 remains as previously
announced at 550-600 kg gold.
Operations review
CEO comment
“We are very thrilled about the high grade results received so far from our
Pampalo Deep extension underground exploration project. The grade of the
intersections has improved quite dramatically and new discoveries are open down
dip. The closure of the hedge and change of the loan agreement with Nordea will
allow the company to concentrate at development of these high grade lodes at
Pampalo Deeps “, comments Markus Ekberg, CEO of Endomines AB.
Key data-Group
July- September January - September
MSEK if not otherwise 2015 2014 +/- 2015 2014 +/-
stated
Revenues 30.4 47.8 -17.4 85.2 131.6 -46.3
Ebitda before -11.6 6.9 -18.5 -48.3 8.7 -57.0
unrealised loss on
derivatives
Ebit -23.4 -5.5 -17.9 -94.4 -29.1 -65.3
Profit before tax -23.2 -6.6 -16.7 -97.7 -28.8 -68.9
Net profit -18.7 -5.5 -13.2 -79.4 -23.5 -55.9
Cash flow -33.2 0.8 -34.0 -78.8 -11.5 -67.3
Earnings per share -0.07 -0.04 -0.03 -0.30 -0.18 -0.12
(SEK)
Gold production (kg) 153.1 210.9 -57.8 411.0 582.6 -171.7
Gold production (oz) 4,922 6,781 -1,859 13,212 18,732 -5,520
Milled ore (tonnes) 90,143 95,583 -5,440 251,970 308,137 -56,167
Gold production
The operation produced 153.1 kg (210.9) of gold during the third quarter 2015 at
a Cash Cost of 1,112 USD/oz (960). The production for the first nine months was
411.0 kg gold (582.6) at a Cash Cost of 1,276 USD/oz (1,047).
Key production July- September January - September
figures
MSEK if not 2015 2014 +/- 2015 2014 +/-
otherwise
stated
Milled ore 90,143 95,583 -5,440 251,970 308,137 -56,167
(tonnes)
Head grade (Au 2.0 2.7 -0.6 2.0 2.3 -0.4
gram/tonne)
Gold recovery 82.7 81.6 1.1 83.5 81.0 2.5
(%)
Hourly 93.3 93.7 -0.4 89.2 95.2 -6.0
utilization (%)
Gold production 153.1 210.9 -57.8 411.0 582.6 -171.7
(kg)
Gold production 4,922 6,781 -1,859 13,212 18,732 -5,520
(oz)
Cost per milled 50 45 4 53 41 11
ore tonne (EUR)
Cost per milled 464 415 49 464 415 49
ore tonne (SEK)
Cash Cost 1,112 960 152 1,276 1,047 229
(USD/oz)
The gold recovery in Q3 was slightly below the target level but the utilization
rate and total milled tonnage improved from the previous quarter due to improved
access to new stoping areas. In spite of a low head grade from the Pampalo
underground operations, the gold production improved during the quarter.
Cost per milled ore tonne increased as compared to previous year quarter and
year-to-date. The main reason to this is the temporary decrease in operations
last year, e.g. drifting. The increase in Cash Cost is mainly due to lower gold
production.
Health and Safety
Endomines’ commitment to a safe working environment is clearly demonstrated by
the decreasing and lower than the Finnish industry average accident frequency
rate, LTIFR.
Mine site exploration
During the third quarter, the Company continued its exploration activities in
the mine. Assay results from numerous underground drill holes have been received
and a majority of these drill holes have returned ore grade intersections.
The results confirm that the previously reported high-grade extension of the
Pampalo Northern lens continues to deeper levels. The recently discovered and
reported high grade S2-lens has been further confirmed with several additional
drill core intersections.
These new drill intersections indicate that the structure of the deposit is
changing and that the overall in-situ grade is improving from 500 meter level
and downwards. All of these new discoveries are open towards the depth and the
company will strive to continue the exploration project.
Complete results are found in the exploration reports published during the third
quarter or from the exploration reports on the Company´s website.
Regional exploration
The Base-of-till sampling program commenced in March has been completed in
September. All together 1,704 samples were collected from the Karelian Gold
Line. About 90% of the assay results have been received so far. Interpretation
of the results is in progress.
The company’s regional exploration along the Karelian Gold line is continuing.
Diamond drilling programs at Pampalo East, Pampalo North, Pampalo North West,
Rämepuro and Hosko have been completed.
Karelian Gold Rush 2015
Endomines Exploration Challenge “Karelian Gold Rush 2015” registration has been
opened. Actual competition data will be made public at FEM 2015 meeting in
Kittilä in Northern Finland on November 4th.The amount of data to be made public
has increase to about 2,500 drill holes totalling approx. 191 km and about
130,000 till or soil sample data.
Environment
All operations have been run in accordance with the existing environmental
permits. Hosko environmental permit was granted.
Personnel
Year-to-date average number of personnel was 74 employees. The contractors
working at the Pampalo Gold Mine had 34 employees in average.
Co-operations negotiations
During the reporting period, Endomines AB’s fully owned subsidiary Endomines Oy
has, invited employee representatives to co-operation negotiations. The start-up
of negotiations will give the Company the flexibility to commence temporary or
permanent lay-offs. The co-operation negotiations, relevant to all employees of
Endomines Oy are, under Finnish law, a required first step prior to any
temporary or permanent lay-offs. During ongoing co-operation negotiations, all
alternatives for the Pampalo operations will be evaluated. These alternatives
will include adapting the mine production to the gold price development. The Co
-operation negotiations are ongoing.
Subsequent events
Closing of the remaining gold hedge
The remaining gold price hedge of 11,200 oz has been repurchased/closed. In
connection with the closing the Company also paid the third quarter hedge
liability of 5,200 oz. Endomines paid the market price of the hedge, which
amounted to around 31 MSEK (3.3 MEUR), of which 4.7 MSEK (0.5 MEUR) were paid in
cash and the remaining amount by obtaining a new loan of 26.3 MSEK.
The original hedge agreement was signed in connection with obtaining a Project
Loan from Nordea Bank in 2009. One of the terms were that a minimum of 50 per
cent of the future gold production should be hedged. In total 84,400 oz of gold
was hedged and after a change made in 2012 the hedge price for periods ending
during 2014-2015 was 843 EUR/oz (remaining 10,400 oz) and for 2016, 796 EUR/oz
(6,000 oz). The gold price in euro has been continuously significantly higher
than the hedge price. The Company has from 2011 up to the second quarter 2015
paid more than 155 MSEK (17.4 MEUR). Due to this, the Company started
negotiations to repurchase the remaining part of the gold hedge.
Financing
Endomines has reached an agreement to prolong repayment of its bank loans as
well as obtaining a new long term loan amounting to 26.3 MSEK, refer to above.
The payback of the project financing of 45.2 MSEK (4.8 MEUR) was prolonged from
earlier 2016-2017 to 2018-2019. Both loans, totalling 71.5 MSEK (7.6 MEUR) will
be repaid after a grace period 2015-2017 in the years 2018-2019. A fixed amount
of 940 KSEK (100 KEUR) is paid quarterly starting in the first quarter of 2018
and a variable amount in the form of a cash sweep every six months starting in
the second quarter of 2018. The cash sweep is 40 per cent of an adjusted cash
flow for a 12 months period (four calendar quarters) or a 6 months period (two
calendar quarters) before the payback date. The adjusted cash flow is based on
reported Ebitda of Endomines Oy less interest paid and investments actually
made. Furthermore, the agreement included changes in loan covenants to reflect
the changes in loan maturities.
An intended rights issue
The Board will propose to the general meeting of shareholders to resolve upon a
rights issue in the Company of approximately 60 MSEK net of issue costs, of
which 28 MSEK (3 MEUR) is a requirement under the agreement with Nordea. The
rights issue shall be completed before the end of Q1 2016, at the latest.
Detailed issue terms etc. will be presented in a separate notice to a
shareholders’ meeting as soon as the Board has determined the proposed terms for
the rights issue, however not later than 15 December 2015. The purpose with the
equity issue is to finance further investments in exploration and mine
development.
Encouraging exploration results
Further encouraging high-grade intersections form Pampalo Deeps exploration
project including 10 m@18.2 g/t gold, 6 m@13.6 g/t gold, 8 m@7.2 g/t gold, 3
m@14.5 g/t gold, 3 m@7.0 g/t gold and 4 m@11.5 g/t gold.
One drill hole in the Pampalo South area did intersect 2.0m@3.9 g/t gold. This
drill intersection in the previously unexplored area supports company
expectations of the unknown potential further south from Pampalo main lodes.
Outlook for 2015
The production guidance for 2015 is 550-600 kg gold.
Future liquidity development
Endomines operations are capital intensive. In order to conduct exploration
activities and mine development requires access to financing. It is the Board's
assessment that current working capital is not sufficient for the current needs
in the next coming 12-months period, but will require additional external
financing within the next coming six months, at the latest to complete ongoing
investment plans. The Company may postpone some of these investment plans in
order to prolong the time period. A number of measures have already been taken
to ensure continued adequate liquidity development. These measures include the
closing of the gold hedge, prolonging of loan maturities and the intention to
complete an equity issue.
Financial Calendar 2016
· Q4 report 2015, February 18th 2016
· Annual report (in Swedish only), during week 12
· Annual General Meeting, April 18th 2016
Summary of interim results will be issued
· Q1 2016, May 19th 2016
· Q2 2016, August 18th 2016
· Q3 2016, November 17th 2016
For further information, please contact:
Markus Ekberg, CEO of Endomines AB, tel. +358 40 706 48 50
Or visit the Company´s home page: www.endomines.com
Endomines AB discloses the information provided herein pursuant to the Swedish
Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The
information was submitted for publication at 08:45 CET on October 29, 2015.
About Endomines:
Endomines conducts exploration and mining business along the 40 kilometer long
Karelian Gold Line. Through various regulatory approvals, Endomines controls the
exploration rights to this entire area.
The Company’s first mine, Pampalo, started in February 2011. During 2014,
Endomines initiated the production of ore from the mine in Rämepuro. The ore
from satellite mines will be processed in the centrally located mill at Pampalo.
The Company’s business practices and mining operations are based on sustainable
principles and on minimizing the impact on the environment.
Endomines applies SveMin's & FinnMin's respective rules for reporting for public
mining & exploration companies. The Company has chosen to report mineral
resources and ore reserves according to the JORC-code, which is the
internationally accepted Australasian code for reporting ore reserves and
mineral resources.
Endomines vision is to participate in the future structural transformation and
consolidation of the Nordic mining industry. The Company may therefore be
involved in acquisitions of interesting deposits or companies, should such
opportunities arise.
The shares of Endomines AB are quoted on NASDAQ Stockholm under ticker ENDO and
on NASDAQ Helsinki under ticker ENDOM. The Liquidity Provider in both Stockholm
and Helsinki is Erik Penser Bankaktiebolag.
This news release may contain forward-looking statements, which address future
events and conditions, which are subject to various risks and uncertainties. The
Company's actual results, programs and financial position could differ
materially from those anticipated in such forward-looking statements as a result
of numerous factors, some of which may be beyond the Company's control. These
factors include: the availability of funds; the timing and content of work
programs; results of exploration activities and development of mineral
properties, the interpretation of drilling results and other geological data,
the uncertainties of resource and reserve estimations, receipt and security of
mineral property titles; project cost overruns or unanticipated costs and
expenses, fluctuations in metal prices; currency fluctuations; and general
market and industry conditions.
Forward-looking statements are based on the expectations and opinions of the
Company's management on the date the statements are made. The assumptions used
in the preparation of such statements, although considered reasonable at the
time of preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking
SUMMARY OF INTERIM REPORT JANUARY – SEPTEMBER 2015
| Source: Endomines AB
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