Construction of the Pampalo Gold Mine completed before year end in line with
budget and on the schedule. Production started early 2011 as scheduled.
The year 2010 was a successful year for Endomines AB. The company was
transformed from a junior exploration company to a mining company ready for
production. The construction of the processing plant and other surface
infrastructure was completed in late November in line with its budget and on
schedule. Test runs started immediately thereafter. The Pampalo Gold Mine is now
in commercial production, with the first gold concentrates produced at the mine
on February 2011.
Summary of key financial figures 2010
* The company does not report net revenues [as yet]
* Earnings after tax -83,261 KSEK (-13,773] of which -12,092 (-1,452) during
the fourth quarter
* Earnings per share -1.13 SEK (-0.38), of which -0.16 SEK (-0.03) during
fourth quarter
* Cash flow -71,849 KSEK (107,500), of which 679 KSEK (128,466) during the
fourth quarter
Summary of events during Q4/2010
Key milestones for the Pampalo Gold Mine project during Q4/2010 are outlined
below:
* On the surface, processing plant and power line were completed mid-November
as scheduled.
* Plant test runs started immediately, aiming to achieve nominal capacity of
230 000 tonnes/annum during summer 2011.
* Crushing plant construction was completed in December, and the plant can now
be operated at its design capacity of 130 tons/hour. Optimization of various
operating parameters continues with a view to reaching a steady rate of
production flow through the crusher circuit.
* Endomines placed an order for a new Sandvik DS420-C ground support rig with
a view to moving towards an owner-operator model in the underground mining.
operation. Delivery of the rig will take place at the end of Q2/2011.
Accordingly, the recruitment and training of operators of the rig has begun.
Summary of Events during the whole year 2010
Endomines Oy and Pampalo Gold Mine
Key milestones for the Pampalo Gold Mine project during 2010 were:
* Underground mine production started in mid-April, 2010, and 1000 meters of
underground development drifting has been completed since then. In total,
45 000 tonnes of ore has been mined by drifting and long-hole stoping.
Combined with existing ore stockpiles of 22 000 tonnes, this amounts to a
total of 67 000 tonnes of ore stockpiled for processing, equaling
approximately 4 month's mill feed. Underground production grade has come in
as expected, and complies with the ore reserve grade.
* Ventilation raises of approximately 175 meters were drifted during 2010
* Totally some 5000 meters of infill diamond drilling was carried out during
2010.
* An updated ore reserve estimate for Pampalo Gold Mine was completed in
September. The increase of the mineable reserve tonnes at Pampalo Gold Mine
by 50 % and gold content by 11% will add almost two years to the Pampalo
Gold mine production plan which together with satellite mines is now
estimated at eight years
* On the surface, a new power line and processing plant were completed mid-
November as scheduled. Test runs started immediately thereafter, with a view
that the plant will achieve its nominal capacity of 230 000 tonnes/annum
during summer 2011.
* The crusher is operating at its design capacity of 130 tons/hour. A steady
rate of production flow will be reached through the crusher circuit through
optimization of various operating parameters.
* Tailings Storage Facility works were completed in August 2010 as scheduled.
* The on-site laboratory is performing as designed and expected.
* All recruitment has been completed for the site, with c. 60-70% of personnel
hired locally and trained by Endomines.
Updated ore reserve estimate for Pampalo Gold Mine
The Pampalo Gold Mine ore reserve estimate was updated during 2010. The data
included results from the infill drilling campaign completed in the Pampalo
underground mine during spring 2010. The key purpose of the campaign was to
delineate the intended production area for the initial three to four years of
production, rather than to assessing the full potential of the Pampalo Gold
deposit. Deep extensions of the Pampalo deposit will be explored in due course
over the coming years.
The JORC-compliant Pampalo Gold Mine resource and reserve estimate was prepared
by Mr. Markku Meriläinen (MSc, Geology, MAusIMM) and Mr. Pekka Lovén, (MSc,
Mining Engineering, MAusIMM), both Competent Persons in accordance with the
JORC-code, and employed by Outotec (Finland) Oyj. Meriläinen and Lovén are not
associated in any manner with Endomines AB or any of its subsidiaries.
Kälviä Ilmenite assets write down at the end of Q2/2010
Endomines' Board of Directors carried out a thorough market study and analysis
of the Kälviä ilmenite assets during Q1 and Q2/2010, including commissioning a
study conducted by independent consultants. As a result, and particularly due to
the fact that the Board does not currently foresee the possibility of allocating
sufficient capital to continue exploration of these assets, nor investment in
production facilities, the Board has decided to write down the assets by 44,993
KSEK. The company will consider various strategic options for the project.
Safety and personnel
There were three Lost Time Injuries during 2010. The total Lost Time Injuries
for the Pampalo project, incurred during the construction and commission stage,
have resulted in an LTI-frequency rate (LTIFR[1]) for own and contractor
personnel, of 20. Endomines continues to prioritize high safety standards, which
are reviewed frequently.
At the year 2010 end total number of employees was 45 own employees and 30
contractor personnel working at the mine site.
Company Overview
The market value of Endomines' gold price and interest rate hedge programs as at
December 31st is -196 MSEK, mainly due to the strengthening of the gold price in
dollar and the weaker Euro since the beginning of the year.
The market value of the hedge programs will fluctuate in the future due to
USD/Euro exchange rates and gold price developments. The effect of the hedge
programs will be realized at term date. The company real profit will be based on
a combination of operating cost, gold production, hedge price and spot price.
The 50% hedge leaves scope to gain from the strong US Dollar price of gold and
the weak Euro, as Endomines' operating costs are in Euros and its production
sold in US Dollars.
Endomines AB (publ) carried out a rights issue of units during autumn 2009,
through which subscribers of shares received warrants free of charge. The
subscription period for these ended on 15 December 2010, and a total of 99.8 per
cent of the warrants were exercised for subscription of new shares increasing
the number of share to a total of 79,441,625
Outlook for 2011
* The ramp-up period at the Pampalo Gold mine will continue and is expected to
last 3- 6 months. During the ramp-up period, normal start-up challenges will
be resolved and some remaining modifications on the processing plant will be
carried out.
* The company will gradually transform its mining operations towards an owner-
operator model as mining contractor availability in Finland is becoming
scarcer and pricing unfavorable. The company has ordered a ground support
rig and purchased a loader from Sandvik. All required personnel to operate
these rigs have been recruited.
* The company expects to achieve annualized gold production of 900-100kg/a
before year end 2011.
* Endomines' own personnel number is expected to increase slightly due to the
change of underground works operations towards an owner-operator model.
* The company plans to start exploration on the Karelian Gold Line with low-
altitude airborne geophysical surveys during summer 2011. Some 7 000 meters
diamond drilling has also been planned with a view to commence exploring the
potential of Karelian Gold Line gold deposits. In addition 2,000 meters
diamond drilling is planned to Finnish Lapland gold targets Porkonen and
Kivimaa.
The full interim report (in Swedish) is available at Endomines.com
For further information, please contact:
Markus Ekberg
CEO of Endomines AB
tel. +358 40 706 48 50
or visit the Company's website at www.endomines.com
About Endomines
Endomines AB is a gold mining and exploration company with a portfolio
comprising the Pampalo Gold Mine, as well as other gold and industrial mineral
deposits and exploration properties located in Finland.
During 2009-2010, Endomines has taken several important steps from exploration
to full-scale gold production. The company started commercial production at the
Pampalo Gold Mine in February 2011, with a projected annualized output of
900-1.000 kg of gold.
Other deposits along the Karelian Gold Line will be exploited subsequently.
Endomines has additional claims in Finnish Lappland (gold), Ostrobothnia
(ilmenite) and Southern Finland (limestone/wollastonite).
Endomines applies SveMin's & FinnMin's respective rules for reporting (public
mining & exploration companies). Endomines has chosen to report mineral
resources and ore reserves according to JORC-code, which is the internationally
accepted Australasian code for reporting ore reserves and mineral resources.
Endomines applies International Financial Reporting Standards (IFRS) as approved
by the European Union.
The shares of Endomines AB are quoted on the First North Premier segment in
Stockholm under ticker ENDO.ST. Erik Penser Bankaktiebolag acts as Certified
Adviser and Liquidity Provider.
Read more about Endomines on www.endomines.com
----
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 statements.
--------------------------------------------------------------------------------
[1] LTIFR = The Lost Time Injury Frequency Rate (LTIFR) is calculated as
reported lost time injuries resulting in one day/shift or more off work per
1,000,000 hours worked.
[HUG#1490516]
Endomines AB Press Release, Summary of Year-End Report 2010
| Source: Endomines AB
Attachments
