(MENAFNEditorial) Nordic Mines AB (publ): Interim report second quarter 2017 Second quarter of 2017
Revenues were SEK 0.0 million (SEK 0.0 million) as the Laiva Mine is on care and maintenance and not in production. The Company reported an operating loss of SEK -4.2 million (SEK -8.4 million 2nd quarter 2016). Loss after tax for the period amounted to SEK -4.5 million (SEK -8.4 million 2nd quarter 2016), corresponding to SEK -0.01. (SEK -0.01) per share. Cash and cash equivalents were SEK 4.8 million (SEK 2.9 million 31 December 2016) at the end of the period. Thus, the Company currently does not have sufficient funds to cover its needs for the next three months starting from the date of this report.Equity was SEK 478.2 million (SEK 489.7 million 31 December 2016) at the end of the period. Annual general meeting decided on a rights issue of SEK 69,1 million. January to June, 2017
Revenues were SEK 0.0 million (SEK 0.0 million) as the Laiva Mine is on care and maintenance and not in production. The Company reported an operating loss of SEK -15.5 million (SEK -21.8 million 2nd quarter 2016). Loss after tax for the period amounted to SEK -16.5 million (SEK -20.4 million 2nd quarter 2016), corresponding to SEK -0.03. (SEK -0.04) per share. Significant events after June 30, 2017
The board has initiated contacts with potential partners for the purpose of carrying out the rights issue. Nasdaq has in its communication with the company had issues with the way the company handles certain tasks and asked the company for an explanation on how it perceives rectifying issues such as management and communication. The company has answered the questions from Nasdaq. Although answer has been given, Nasdaq put a trade stop on Nordic Mines shares from July 7. The company has per August 21 given a new reply to Nasdaq's questions The company has summoned to extraordinary general meeting by September 8 in order to for the meeting to decide upon two alternative deals, one presented by Firesteel and the other by the shareholder Lau Su. Documentation has already been published as press release. Board of Directors statementThe company has continued difficulties in handling significant funding challenges. Of course, it impedes Opportunities for operational activities at the Laiva mine. As previously announced, the AGM has decided New share issue of just over SEK 69 million. In connection with the extraordinary meeting of September 8, the shareholders will evaluate two offers on financing and development of the company. An offer to enter a business agreement with tFiresteel Resources Inc., listed on the Canadian Stock Exchange, or a business solution that will be presented by the shareholder Lau Su Holding AB. The company seeks to broaden the board as well as strengthen resources for management including appointing managing director.
Results, second quarter 2017Net sales were SEK 0.0 million (SEK 0.0 million) during the first quarter of 2017 as the Laiva mine remains on care and maintenance and is not in production. Production costs amounted to SEK -3.1 million (SEK -3.6 million 2nd quarter 2016) during the first quarter of 2017. Even though there has not been any production during the quarter, the Company has maintained some of the organisation around the Laiva mine, for example for maintenance work and environmental supervision. The mine and the plant also have a number of fixed costs, for example balancing the water levels in the mining area, which remain even though the mine is not in production. Depreciation, amortization and impairment losses for the first quarter of 2017 were SEK -2.9 million (SEK -5.8 million 2nd quarter 2016).
Sales and administration costs amounted to SEK -4.0 million (SEK -6.4 million 2nd quarter 2016).The Company reported an operating result of SEK -4.2 million (SEK -8.5 million 2nd quarter 2016).Net financial items were SEK -0.3 million (SEK -0.9 million 2nd quarter 2016). The Company's income tax for the period has an impact on profit of SEK 0.0 million (SEK 0.0 million 2nd quarter 2016).Loss for the period after tax amounted to SEK -4.8 million (SEK -7.5 million 2nd quarter 2016).
Cash flow and financial positionCash flow from operating activities including changes in working capital for the first quarter of 2017 amounted to SEK -0.3 million (SEK -7.4 million Q1 2016). Net cash flow from the financing operations amounted to SEK 3.5 million (SEK -0.2 million Q1 2016) during the same period. Cash and cash equivalents at the end of the period amounted to SEK 4.8 million compared to SEK 2.9 million as of 31 December 2016. Therefore the Company does not currently have sufficient funds to cover its needs for the next three months at the date of this report. If external funds are not provided, it is the assessment of the Board that there is a high risk that the Company will be facing a liquidity deficit. For more information please refer to Liquidity Risks.At the end of the period, the Group's equity was SEK 473.2 million, compared to SEK 489.7 million as of 31 December 2016. For risks related to the Company's equity, please refer to the Going Concern Principle. The equity/assets ratio was 88.8 per cent compared to 88.7 per cent as of 31 December 2016. Net debt was SEK 15.5 million compared to SEK 8.5 million as of 31 December 2016.
InvestmentsSince the Company is currently not conducting any mining operations at the Laiva mine, only smaller investments have been made. Net investments during the quarter amounted to SEK 0.0 million, compared to SEK 0.0 million during the same quarter of 2016.
Segment reportingAs per January 2013, the Group stopped using a segment division as there has only been one productive mine in Finland within the Group, and exploration work is currently limited to an administrative scope due to cost savings. The consolidated income statements and balance sheets have been reviewed and valued thereafter.
EmployeesDuring the first quarter of 2017, the average number of employees was 35. No serious accidents were reported during the period.
ExplorationDue to cost savings, Nordic Mine's exploration work was more or less suspended at the beginning of 2013. In total, capitalised exploration expenses as of 31 March 2017 amounted to SEK 64.6 million.
Mineral resource and mineral reserve, 1 January 2015, prepared by SRK Consulting UK LtdThe tables below shows the most recent update to the Mineral Resource estimate that includes ore sorting that reduces the amount of waste rock and the previous Mineral Resource estimate without sorting
Laiva Mineral Resource - with sorting (16 May 2016) Category Tonnage (t) Au Grade (g/t) Gold (kg) Gold (tr.oz) Measured - - - - Indicated 24 317 397 1,13 27 535 885 000 Measured + indicated 24 317 397 1,13 27 535 885 000 Inferred 4 374 277 1,64 7 187 231 000 The mineral resource is reported at a cut off of 0.3 g/t.The calculation of the mineral resource was based on an assumed five-year gold price of €1,225 per tr.oz (USD 1,400 pertr.oz).
Laiva Mineral Resource- without sorting (1 January 2015) Category Tonnage (t) Au Grade (g/t) Gold (kg) Gold (tr.oz) Measured - - - - Indicated 15 970 000 1,52 24 300 780 000 Measured + indicated 15 970 000 1,52 24 300 780 000 Inferred 3 220 000 2,08 6 700 215 000 The mineral resource is reported at a cut-off grade of 0.6 g/t.The model for the calculation of the mineral resource is limited by an assumed gold price of €1,300 per troy ounce (USD1,510 per troy ounce).The reported mineral resource includes the mineral reserve shown below.
Laiva Mineral Reserve - Without sorting (1 januari 2015) Category Tonnage (t) Au Grade (g/t) Gold (kg) Gold (tr.oz) Proved - - - - Probable 9 367 000 1,19 11 200 360 000 Proved + probable 9 367 000 1,19 11 200 360 000 The mineral reserve is reported at a cut-off grade of 0.6 g/t.The calculation of the mineral reserve was based on an assumed five-year gold price of €1,020 per troy ounce (USD 1,184per troy ounce).
The gold market and price of goldAccording to LBMA (London Bullion Market Association) gold fixing, the price of gold was listed at the beginning of the quarter per troy oz at USD 1,159.10 and EUR 1,100.03, and at the end of the quarter at USD 1,241.70 and EUR 1,156.58.
The Nordic Mines shareThe Nordic Mines share has been traded on the Nasdaq Stockholm's Small Cap list since July 2008. The ticker symbol for the share is NOMI and the ISIN code is SE0007491105.
ShareholdersAs per 31 March 2017, the number of shareholders in Nordic Mines amounted to approximately 11,000. The ten largest shareholders in the Company are listed in the table below.
Shareholders as per 30 Juni 2017 Antal aktier Innehav % No of shares Percentage EUROCLEAR BANK S.A/N.V, W8-IMY 123 024 503 21,75% CBSG-PHILLIP SEC P/L-CL(INSTI NDVP) 47 754 771 8,44% STATE STREET BANK & TRUST COM., BOSTON 24 326 540 4,30% FÖRSÄKRINGSAKTIEBOLAGET, AVANZA PENSION 18 857 366 3,33% SWEDBANK FÖRSÄKRING 7 534 286 1,33% NORDNET PENSIONSFÖRSÄKRING AB 5 438 996 0,96% SALA KEBAB AB 5 000 000 0,88% HILMAND, BIRTE 4 550 000 0,80% HANDELSBANKEN LIV 4 438 225 0,78% MENDRIS, NICO 3 755 000 0,66% ÖVRIGA 321 043 069 56,75% 321 043 069 56,75% TOTAL 565 722 756 100,00% Share capitalAs per 31 March 2017, the market capitalisation amounted to SEK 158.4 million divided between 565,722,756 shares with a quoted value of SEK 0.28 each.Equity amounted to SEK 478.0 million at 31 March 2017, compared to SEK 489.7 million at 31 December 2016.
Significant risks and uncertaintiesAll enterprise is associated with a certain degree of risk. Nordic Mines' operations must be assessed based on the risk, cost and difficulty that companies in the mining and exploration business often face. The risks in the majority of cases are such that the Company cannot protect itself from them.The risk faced by mining and exploration companies is mainly associated with the outcome of the exploration itself, the production and the market price on the metal markets, but there is also risk associated with licensing issues related to exploration, processing and the environment.The Group is also exposed to a number of financial risks: liquidity risk, credit risk, gold price risk and currency risk. The Board and Management attempt to address these risks by identifying, evaluating and mitigating the risks listed above where appropriate.A more detailed analysis is available in the 2016 Annual Report, which is available on the Company's website, .
Liquidity riskThe Company currently does not have sufficient funds to cover its needs for the next three months at the date of this report. Cash and cash equivalents totalled SEK 1.3 million at the end of the first quarter of 2017 and the Company basically does not have any income since production as the plant was closed, albeit there have been some modest timber sales in the fourth quarter. The Company is dependent on external capital contributions for continued operations.The Company does not currently have the funds to restart operations at the Laiva mine. In order to fund the restart of the Laiva mine, a capital contribution in addition to existing cash and cash equivalents would be required. This capital contribution is intended to fund working capital related to the restart, initial investments and a liquidity reserve for unforeseen costs and administration. This funding is assumed to be a combination of debt financing and additional equity contributions.If the Company fails to raise additional capital, there is a risk that a liquidity deficit will eventually occur. Given such a development, it is a risk that the Finnish composition plan would default, thus leading to a new reorganisation, bankruptcy or other winding down of the Company.
Composition plan Nordic Mines OyOn 31 July 2014, the Uleåborg District Court decided to adopt the composition plan proposal filed with the court by the administrator for Nordic Mines' Finnish subsidiary. The composition plan includes conditions that allow the Company's creditors and the composition plan supervisor, attorney Hannu Ylönen from the Krogerus law firm, to apply for the composition to be revoked under certain conditions. Ground for termination include those related to the Group companies not fulfilling their payment obligations under the composition plan.If Nordic Mines Oy breaches the composition plan, there is a risk that the Finnish composition plan will fail, which could lead to a new reorganisation, bankruptcy or other winding down of the Company. In the event the Finnish composition plan defaults, the relevant creditors' claims return to Nordic Mines Oy, at their full amount, and in the event of bankruptcy all shareholders will lose the entire amount of their previously invested share capital.A more detailed analysis on the Composition plan in Nordic Mines Oy is available in the prospectus from 2015, which is available on the Company's website, .
Gold price riskSales commenced in January 2012 and essentially have consisted of a single product, doré bars, containing gold, silver and copper. A decline in the price of gold could have a negative impact on the Group's future profit as well as a negative impact on the Company's possibilities for restarting operations at the Laiva mine.
Currency riskGold is quoted in USD, the majority of the costs occur in EUR and the Group is consolidated in SEK. Accordingly, the Company is directly dependent on exchange rates for these currencies. If USD strengthens against EUR, this has a positive effect. If EUR strengthens against SEK, this has a positive effect on sales, but a negative effect on costs.
EmployeesNordic Mines currently has a small organisation and is dependent on a number of key individuals. A limited expected lifetime and to date weak profitability for the Laiva mine can result in restricted opportunities to recruit key personnel once the mine restarts its operations.
Accounting principlesThe consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU and recommendation RFR 1 issued by the Swedish Financial Reporting Board on Supplementary Accounting Rules for Groups, which specifies the additions to the IFRS disclosures that are required as stipulated in the Annual Accounts Act. This financial report was prepared in accordance with IAS 34, Interim Financial Reporting. The Parent Company's financial statements are prepared in accordance with the Annual Accounts Act and RFR 2, Accounting for Legal Entities. The Group uses the same accounting principles as those described in the 2015 Annual Report. No new IFRS additions or regulations that affect the Group have entered into force.
Upcoming informational meetings and announcements---Interim report Q3 21 November 2017Interim report Q4 27 February 2018
The Board of Directors and the Chief Executive Officer hereby confirm that this interim report gives a true and fair view of the Company's and the Group's operations, financial position and results of operations, and describes significant risks and uncertainties faced by the Company and the companies in the Group. The report for January - March 2017 has not been reviewed by the Company's auditors.
Stockholm, 22 augusti 2017NORDIC MINES AB (publ)
Fredrik Zettergren Hans Andreasson Krister Söderholm Torsten BörjemalmStyrelseordförande Styrelseledamot Styrelseledamot Styrelseledamot
NoteNordic Mines is required to publish this information pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was published on 22 August 2017, at 13:00 CET.
For further information, please contact:Torbjörn Bygdén: +46 (0)10 141 21 03
Definitions according to SveMinA Mineral Resource is a concentration of occurrences of materials in or on the earth's crust in such form, quality and quantity that is of interest financially and for which financially profitable extraction is deemed possible. The location, quantity, grade, continuity and other geological characteristics of a mineral resource are measured, estimated or interpreted based on specific geological facts, tests and knowledge. On the basis of its geological certainty, a mineral resource is classified into the following categories: inferred mineral resource, indicated mineral resource and measured mineral resource.
An Inferred Mineral Resource is the part of a mineral resource for which the tonnage, density of occurrences, form, physical characteristics, grade and mineral content can be estimated with a low level of confidence. This is inferred from geological evidence, tests and assumed but not verified geological or grade continuity. It is based on information gathered using appropriate techniques through exploration and testing of, for example, outcrops, trenches, pits, workings and drill holes. The information is limited or of uncertain quality and reliability.
An Indicated Mineral Resource is the part of a mineral resource for which the tonnage, density of occurrences, form, physical characteristics, grade and mineral content can be assumed with a reasonable level of confidence. It is based on information gathered using appropriate techniques through exploration and testing of, for example, outcrops, trenches, pits, workings and drill holes. However, this information is too inconsistent or inappropriately distributed to guarantee geological or grade continuity.
A Measured Mineral Resource is the part of a mineral resource for which the tonnage, density of occurrences, form, physical characteristics, grade and mineral content can be assumed with a high level of confidence. It is based on information gathered using appropriate techniques through detailed and reliable exploration and testing of, for example, outcrops, trenches, pits, workings and drill holes. This information is sufficiently consistent to prove geological and/or grade continuity.
A Mineral Reserve is the part of a measured or indicated mineral resource that is deemed to be economically feasible for extraction. This includes diluting material and losses which may occur when the material is mined. Appropriate assessments and studies have been conducted and modified taking into consideration realistic assumptions related to mining, metallurgical, economic, marketing, legal, environmental, social and political factors. These assessments show on the reporting date that extraction can be reasonably justified. On the basis of their geological certainty, mineral reserves are classified into the following categories: probable mineral reserve and proven mineral reserve.
When using the term "mineral reserve", there is an expectation that studies have been conducted at the Pre- Feasibility level as a minimum, including a mining plan that is technically appropriate and economically viable.
A Probable Mineral Reserve is the part of an indicated or under some circumstances measured mineral resource for which extraction is economically viable. This includes diluting material and losses which occur when the material is mined. Studies at a minimum of the Pre-Feasibility level have been conducted and modified to take into consideration mining, metallurgical, economic, marketing, legal, environmental, social and political factors. These assessments show on the reporting date that extraction can be reasonably justified.
A Proven Mineral Reserve is the part of a measured mineral resource for which extraction is deemed to be economically viable. This includes diluting material and losses which occur when the material is mined. Studies at a minimum of the Pre-Feasibility level have been conducted and modified to take into consideration mining, metallurgical, economic, marketing, legal, environmental, social and political factors. These assessments show on the reporting date that extraction is justified.
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