Modern exploration. Sustainable mining. October 2018

Transcription

1 Modern exploration. Sustainable mining. October 2018

2 Disclaimer Statements in this presentation which are not purely historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include fluctuations in metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the costs of goods and services, problems associated with exploration and mining operations, changes in legal, social or political conditions, and lack of appropriate funding, all of which could among other things, prevent any of the forward looking statements in this presentation from coming to fruition or lead to a delay in the development of mining operations. 2

3 Endomines Mining and exploration company focused on gold Sustainable mining Friday mine in Idaho, USA, to start in December 2018 Pampalo gold mine in Finland operational Modern exploration Karelian Gold Line; exploration permits covering the entire gold prospective 40km-long greenstone belt in Eastern Finland Orogrande and Warren mining districts in Idaho Growth through development and M&A Four gold assets in Idaho to be developed over the next 2-5 years, further consolidation in the region targeted Seeking to acquire assets in stable jurisdictions; reasonably close to production with limited capex 3

4 Endomines Endomines AB listed on Nasdaq Stockholm and Nasdaq Helsinki, market cap EUR 24m Gold production Pampalo mine, Finland Q1-Q3 2018: 9,800oz (care and maintenance from Oct 2018) FY 2017: 12,800oz Friday mine, Idaho, USA Targeted production 9,000oz p.a. at ca. 8g/t average grade Start-up in December 2018, ramp-up early 2019 All-in cash cost USD /oz depending on area of production LOM from 2019 >7 years with current resources Exploration in Karelia, Finland and Idaho, USA Key figures Revenue H1 2018: EUR 7.1m FY 2017: EUR 12.7m EBITDA H1 2018: EUR 0.0m FY 2017: EUR -0.58m Official reporting in Swedish krona. SEK converted at EUR SEK rate 9.82 as at end of 2017, and end of Q2 18 Endomines Oy Finland Endomines Idaho LLC USA Endomines AB Sweden Kalvinit Oy (1) Finland (1) Kalvinit Oy holds rights to ilmenite deposits in Western Finland; not in active development JORC indicated and inferred resources 7Mt averaging 7.5% titanium dioxide (TiO2) 4

5 Endomines renewed strategy Renewed strategy Increased focus on M&A targeting to build a portfolio of assets with short time to production cash flow generation low Capex location in stable, mining friendly jurisdictions Regional exploration along the Karelian Gold Line aiming to enable long term profitable gold production in the area, utilizing the existing production infrastructure in Pampalo Renewed strategy in action Acquisition of TVL Gold LLC with five gold projects in Idaho, USA; transaction completed in February 2018 First mine (Friday) to be commissioned in December 2018 with ramp-up in early 2019 Extensive regional exploration project along the Karelian Gold Line, execution of first phase started Q Finland Gold Industrial minerals Ilmenite Helsinki USA Orogrande District, Idaho Pampalo Karelian Gold Line 5 19-Oct-18

6 Endomines a new start Strengthened balance sheet EUR 19.4 million rights issue completed in February 2018 Bank debt eliminated in February 2018 EUR 8.7 millions cash at the end of Q New key shareholders Joensuun Kauppa ja Kone Oy with 10.5% shareholding following bank debt elimination Sellers of TVL Gold entitled to ca. 25% holding through the convertible note issued as partial payment for the acquisition New Chairman and Management Ingmar Haga, Chairman, from May 2018 Saila Miettinen-Lähde, CEO, from May 2017 Seppo Tuovinen, General Manager Finland, Jan 2017-Jul 2018, General Manager USA, from Aug 2018 Marcus Ahlström, CFO, from Jan Oct-18

7 Operating in favorable mining jurisdictions Finland Saskatchewan Nevada Ireland, Republic of Western Australia Quebec Ontario Chile Arizona Alaska Newfoundland & Queensland Yukon South Australia Utah Sweden Michigan* Manitoba Peru British Columbia Northwest Territories Ghana Colorado Kazakhstan* Mali Nunavut Northern Territory Idaho Minnesota* New Brunswick Source: Fraser Institute 2018 Leading mining jurisdictions (n=91) Finland on the top of the list for investment attractiveness Finland is the top jurisdiction in the world for investment based on an overall Investment Attractiveness Index which rates regions based on their geologic attractiveness and measures the effects of government policy on attitudes toward exploration investment. (Fraser Institute, Annual Survey of Mining Companies 2017) Strong political and public support for mining in Idaho Supportive state government, positive attitudes to mining from residents, cheap electricity, flexible labour laws and a string of data-rich abandoned mines that have potential to be reworked "You'll find a soft landing in Idaho. And that's where you'll find that you can build assets, and those assets are ongoing and enduring, because we continue to find new orebodies every time we look around, Governor CL Butch Otter 7

8 Key value drivers Friday mine to start up in December 2018, ramp-up up in early years mine life with current resource, 9,000oz/a Head grade according to current mine plan around 8g/t All-in cash cost USD /oz depending on area of production Significant exploration potential Exploration upside Karelian Gold Line M&A Idaho EUR 2m programme for 2018, to continue in 2019 Production facilities and infrastructure already in place at Pampalo Current prospects and adjacent areas; substantial consolidation potential Conversion of current historical estimated gold to classified resources low cost discovery 8 19-Oct-18

9 Key figures (1/2) Revenue and EBITDA (EURm) Gold price and cash cost (USD/oz) 5,0 4,0 3,0 2,0 1,0 0,0-1,0 4,1 3,5 3,5 2,8 3,0 3,0 0,84-0,14 0,05 0,12-0,61-0,85 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 ' Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Revenue EBITDA Cash Cost (USD/oz) Avg. gold price (USD/oz) FY 2017 revenue EUR 12.7m, EBITDA EUR -0,6m Decrease in cash cost in Q reflects end of drifting at the Pampalo mine ahead of care and maintenance to start in October Oct-18

10 Key figures (2/2) keur 2018 H H1 +/ Revenue 7,048 7, ,728 Costs 7,048 7, ,319 EBITDA Depreciation and write-downs -2,277-2, ,135 EBIT -2,277-2, ,727 Net result for the period ,294 1,949-7,194 Earnings per share (EUR) Cash flow from operating activities -1, , Investments -7,265-1,105-6,160-1,277 Financing 15, , Total cash flow 7,058-1,783 8,840-1,422 Liquid assets at end of period 8,881 1,293 7,589 1,640 Personnel at end of period Official reporting in Swedish krona Conversion at EUR/SEK H1/2018: H1/2017: FY/2017: Oct-18

11 Strengthened balance sheet EUR 19.4m rights issue in February 2018 EUR 7.6m bank loans arranged off the balance sheet EUR 2.0m pre-payment EUR 2.0m write-off by the banks EUR 3.6m acquired by Joensuun Kauppa ja Kone Oy and subsequently converted to Endomines shares (10.5% shareholding) Acquisition of TVL Gold paid 2/3 in shares Total acquisition price USD 31.25m Cash payment USD 7.25m Loan note USD 3.33m Convertible note USD 20.67m; to be converted in Endomines shares over three years at SEK per share at the Company s discretion EUR 8.7 millions cash at the end of Q Oct-18

12 Mineral resources before and after acquisition Gold resources (oz) Finland USA Endomines Old Endomines "As-is" New Endomines * Historical resources do not meet current classification standards > TVL historical estimated gold resources TVL gold resources Endomines mineral resources Endomines gold reserves Endomines prior to TVL Gold acquisition Endomines including TVL Gold Oz Gold ore reserves 21,470 Mineral resources 196,009 Grand total 217,479 Oz Gold ore reserves 21,470 Mineral resources 196,009 Endomines total 217,479 Gold resources TVL Gold 283,615 of which Measured and Indicated Historical gold resources TVL 211,200 >220,000 Grand total 721, Oct-18

13 Gold production in Pampalo Production at Pampalo Q1-Q production 303.5kg (9,626oz); avg. head grade 3.4g/t Production outlook for the year kg (10,031-10,288oz) Deep extension of Pampalo mine Ore at level 750m-850m sufficient for approx year s production Current gold price does not support investment in decline (EUR 3m) Investment decision postponed and mine placed under care and maintenance after September 2018 Production facilities and infrastructure remain in place for potential decline investment later on and/or start of production from other deposits on the Karelian Gold Line Safety H LTIFR 9.0 (7.0) 2017 LTIFR 16.0 (8.0) Sustainability No environmental incidents Strong social license to operate Pampalo mine Oct-18

14 Endomines Idaho Five gold projects in the Orogrande and Warren mining districts in Idaho, USA Friday high grade underground mine; target to commission in December 2018 Kimberly and Rescue small high grade deposits with substantial exploration potential Buffalo Gulch and Deadwood open pit mines, target to commission in 3-5 years as soon as permitting allows > USD 35m spent by previous owners on exploring the deposits Mining friendly legislation in Idaho Experienced local team Oct-18

15 Friday Mine Planned production approx. 9,000oz (290 kg) p.a. for 7+ years Good exploration potential beyond known resources Current Measured and Indicated resource 100,800oz at 3.4g/t cut-off Average head grade according to current mine plan estimated at around 8g/t Recoveries in metallurgical testing consistently above 90% Expected cash cost based on current assumptions USD/oz depending on the area of production All necessary permits to start operations at the Friday mine and the Elk City processing facility are in place Air quality and water reuse permits needed for sustainable full scale production; expected to be obtained in the coming months Capex USD 7.7m Expected to be commissioned in December 2018 with ramp-up during early

16 Friday mine project progressing ahead of schedule Mine site Status Expected completion Mine site infrastructure Completed during summer Dewatering of old decline Completed during summer Rehabilitation of existing decline Ongoing with further drifting Access to ore in December Secondary mine access Access established, drifting ongoing Access to ore in December Key underground equipment Purchased Processing site Puchase of processing facility site Completed Earth works on processing site Majority completed by September Foundations for buildings Mid-October Construction of main building Modular building ready for delivery To be erected late October Preparation of tailings areas Ongoing First sections in December Mill equipment purchasing Mill equipment deliveries and installation Deliveries in October - November Nov-Dec Permitting Underground operations Storm water permit for processing site Water reuse permits In process Early 2019 Air quality permit (mine site) In process Early 2019 Air quality permit (processing site) Not needed (operate under exemption) Oct-18

17 Regional exploration along the Karelian Gold Line High, over 50% chance of finding > 1 million ounces of gold in Karelia (source: GTK 2016) Substantial similarities between the Karelian Gold Line and the Kalgoorlie green stone belt in Australia, where gold mining has continued for over 130 years 2018 exploration project ongoing based on a 3D structural model built with Model Earth Up to 5,000m diamond drilling Up to 3,500 base of till (BOT) samples Geophysical surveys EUR 2m budget Majority of results expected to be available in December Oct-18

18 Modern exploration 3D modelling, AI 3D modelling utilizing existing data from the area (drilling, geophysics, base of till samples) Joint project with Geological Survey of Finland (GTK) Hyperspectral scanning of existing drill cores Study of mineralogy utilizing artificial intelligence to analyze large amounts of data Initial results anticipated during the summer of 2019; total project duration 2 years until spring of 2020 New exploration targets Central Duplex domain Near the Pampalo mine Northern end of the Karelian Gold Line Near-Pampalo exploration target Oct-18

19 Exploration target - Central Duplex Domain Striking structural similarity between Karelian Gold Line and Australia s Kalgoorlie greenstone belt Oct-18

20 The gold market Recycled gold 29% Supply 2016 Demand 2016 Mine production 71% Gold production 0,2% 56,1% 14,2% 20,3% 0,3% 8,8% 8,4% 6,9% 5,1% Price development China Australia Russia USA Peru Other top 10* Finland Sweden Others Central banks 9% Industry 7% Investments 36% Jewelry 47% Source: World Gold Council, Factset Oct-18

21 Gold market outlook Strong link between gold price and FX rates Trade wars have to date had little impact on gold price Medium term outlook on gold price impacted by Growth rate of economy / foreseen slow-down of growth Development of equity markets and interest rates Demand growth in e.g. China and India Change in supply/demand balance foreseen to start impacting prices in the 2020 s Toteutunut Actual Average quarterly gold price (USD/oz) Source: Metals Focus 08/2018 Optimistinen Bullish scenario skenaario Perusskenaario Base case scenario Pessimistinen Bearish scenario skenaario Oct-18

22 Endomines share, largest shareholders Listed at NASDAQ Stockholm (ENDO) and Nasdaq Helsinki (ENDOM) Market cap EUR 24m Number of shares 35,147,785 Shares registered in Finland 83 % Sweden 12 % Other countries 2% Share liquidity improved after 2018 transactions Share liquidity ( 000) in Helsinki Largest shareholders (September 2018) Shareholder Number of shares % Country 1 HANDELSBANKEN FINLAND STANDARD FI CLIENT A/C 2 NORDEA BANK AB(PUBL), NORDEA BANK FI FINLAND ABP 3 JOENSUUN KAUPPA JA KONE OY FI 4 ÅLANDSBANKEN AB, W8IMY FI 5 AKTIA BANK ABP FI 6 LAGO KAPITAL OY FI 7 FÖRSÄKRINGSAKTIEBOLAGET, AVANZA SE PENSION 8 HANDELS & INDUSTRI AB UNIVERSAL SE 9 SKANDINAVISKA ENSKILDA BANKEN S.A., LU W8IMY 10 WIP HAKKAPELIITAT SIJOITUSRAHAS FI Oct-18

23 Endomines Management Saila Miettinen-Lähde (b. 1962) CEO of Endomines AB from May 2017 Education: M.Sc. Engineering, Tampere University of Technology, Finland; MBA studies at Helsinki University of Technology Experience: Extensive leadership experience including posts as Deputy CEO and CFO of Talvivaara Mining Company Plc , as CFO of F-Secure Oyj, a cyber security company listed at Nasdaq Helsinki ( ), several senior management positions at Carnegie Investment Bank, Orion Pharma and Finnish Innovation Fund Sitra. Board Member in Outokumpu Oyj , Rautaruukki Oyj , Biohit Oyj and in several private companies Holdings in Endomines AB: 15,000 shares Marcus Ahlström (b. 1982) CFO of Endomines AB from January 2018 Education: M.Sc. (Economics and Business Administration), the Swedish School of Economics in Helsinki, Finland Experience: Various positions at Ernst & Young Oy, both at Transaction Advisory Services and Assurance Services during the period , most recently as Business Controller at Finnlines Oy. Board member at Destia Oy since Holdings in Endomines AB: 12,000 shares Seppo Tuovinen (b. 1971) President, Endomines Idaho since August 2018; General Manager, Endomines Oy (Finland) Jan Aug 2018 Education: M.Sc. Mining, Helsinki University of Technology in Finland, MBA Henley Management College (2009) Experience: 15 years experience from mining and mine development projects from Outokumpu Mining, Talvivaara Mining Oy, Altona Mining Oy and Kinross from Finland, Ireland and Russia Holdings in Endomines AB: 0 shares Oct-18

24 Endomines Board Ingmar Haga (b. 1951) Chairman of the Board since Chairman of the Remuneration Committee, Member of the Technology, Environment and Safety Committee. Independent of the Company and its signicifant shareholders. Education: M.Sc. Åbo Akademi, Finland Experience: Managing Director, Europe for Agnico Eagle Mines Ltd , CEO of Polar Mining Oy, Various senior manager positions with the Outokumpu Group in Finland and Canada in Board member of Auriant Mining AB since Holdings in Endomines AB: 0 Thomas Hoyer (b. 1974) Staffan Simberg (b. 1949) Board member since 2018, member of Board member since Member the Audit Committee. Not independent of of the Remuneration Committee. the Company s significant shareholder Independent of the Company and its Joensuun Kauppa ja Kone Oy based on signicifant shareholders. multiple business relations between JJK Education: Studies at the Helsinki and Mr. Hoyer. University of Technology and MBA, Education: M.Sc. Economics and IMD, Geneva. Business Administration, the Swedish Experience: Chairman in NEZ-Invest School of Economics in Helsinki. Ab and Simberg & Partners Ab. Board Experience: Ruukki Group, CEO 2011 member of Oriola-KD Oyj. Previously 2013, CFO , Ruukki Wood, CEO 20 years with Nokia Corporation, , Aldata Solution, CFO 2003 Chairman in Svensk Linjebesiktning 2008, Invision Asset Management AG AB, Board member in several listed , Bellevue Asset Management and private companies. AG , Allianz Asset Management Holdings in Endomines AB: 180,000 GmbH shares Holdings in Endomines AB: 0 Rauno Pitkänen (b. 1950) Board member since Chairman of the Technology, Environment and Safety Committee. Independent of the Company and its significant shareholders. Education: M.Sc. Geology, Mining and Metal Processing, Helsinki University of Technology. Experience: Senior manager positions at Sandvik Mining and Construction Finland Oy, Outokumpu Group and Tara Mines Ltd. Holdings in Endomines AB: 222 shares Michael Mattsson (b. 1973) Board member since April 2017, Chairman of the Audit Committee. Independent of the Company and its significant shareholders. Education: M.Sc. Finance, Stockholm School of Economics Experience: Current positions include: Chairman of Copperstone Resources AB, Director of Nordic Iron Ore AB and Net Trading Group AB. Previously M&A advisor in New York (working at the Blackstone Group), Enskilda Securities, Corporate Finance, Stockholm, and Kaupthing Funds, Investment Banking & Business Development, Stockholm. Holdings in Endomines AB: 8,000 shares Oct-18