Applying Innovative Technologies In The Development Of Scandinavian Mining Industry

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1 Contacts: INNOVATIVE ENERGY EFFICIENT SILVER MINE PROJECT Sotkamo Silver AB Dr. Timo Lindborg, CEO Sotkamo Silver Oy Arttu Ohtonen Mobile: timo.lindborg@silver.fi arttu.ohtonen@silver.fi Applying Innovative Technologies In The Development Of Scandinavian Mining Industry Figure: The Concentrator plant of Blaiken which shall be used at the Silver Mine

2 OVERVIEW OF SOTKAMO SILVER AND THE SILVER MINE vthe Company also has a number of highly prospective silver, zinc, lead and gold exploration projects around Finland and Norway vthe primary listing is on the NGM stock exchange in Stockholm (since 2010) with secondary listing completed on the Nasdaq OMX Helsinki in 2012 vsotkamo Silver has substantial growth potential. v Total amount of investments has been about 28 M during vneeded investment for mine 35 M v11 YEARS PLANNED REVENUE: 420 M vemploys PERSONS + additional Ore reserves of Sotkamo Silver's Silver Mine Project, January 2016, In Accordance with JORC Code (2012) Ore Reserves Categori Mt Grade (g/t) Silver Gold Zinc Lead Metal (oz) Grade (g/t) Metal (oz) Grade (%) Metal (t) Grade (%) Metal (t) Proven + Probable 2, , , , vkey shareholders Top five shareholders % ownership ILMARINEN KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ 9,6 SUOMEN TEOLLISUUSSIJOITUS OYJ 3.2 LINDBORG, TIMO (yhtiön kautta) 2.9 SWISS LIFE LUXEMBURG SA 2.6 EUROMIN LTD 2.6 Total top five shareholders 23,5 Other shareholders 72,5 Total 100 %

3 INNOVATIVE HIGH TECH MINING OPERATIONS SOTKAMO SILVER MINIMIZING ITS CARBON FOOTPRINT AND PURSUE A MORE CIRCULAR BUSINESS MODEL vthe Silver Mine project is part of the Finnish TEKES funded Green Mining Project in two thematic areas: 1. Intelligent and minimum-impact mines 2. New mineral resources. venhance Energy Efficiency: 1. Deployment of a first of a kind ore sorter technology venhance Operational Efficiency: 1. Use of new technologies for remote steered operations for concentrating plant 2. Use of new technologies for remote maintenance of the mine

4 INNOVATIVE HIGH TECH MINING OPERATIONS vreduce carbon footprint: 1. Use of new Internet of Things systems for waste water controls 2. Usage of a new technique to prepare tailings dams basement 3. Monetize the industrial side streams as mine tailings for geopolymers 4. Use electrical power from the hydro-power plant vother Pioneering Initiatives: 1. Big Data by neural networks 2. Considering the potential use of solar power 3. Participating in the Baltic Sea Underground Innovation Network (BSUIN) 4. Participating in Team Finland growth programme, Mining Finland

5 RAMP-UP PHASE WILL BENEFIT SIGNIFICANTLY FROM THE EXISTING WORK Mining plan and economics v The mining plan allows initial open-pit mining and initial underground mining in the area with a silver grade at 144 g/t. The subsequent underground mining plan reaches to the depth of approximately 450 meters v The projected mine life in BFS is 6 years based on current estimated mineable ore reserves (with ore-sorter) of approximately 2.7 Mt. v Annual production is planned to 350, tonnes ore. Total saleable production is estimated to comprise of approximately 1, tonnes of Ag- Au-Pb concentrate, ,500 tonnes of Zn-Ag concentrate and around 9,000 tonnes of pyrite-ag concentrate during these years. Existing underground access v The existing mine decline is 2.6 km and ramp access to the identified mineralization, as well as the vertical ventilation shaft extending 350 meters from the surface, are both already in place and ready for operational use v Underground ore will be mined initially with transverse sub-level stoping with back-fill and during the later production years, underground mining is expected to be longitudinal sub-level stoping with back-fill v Sotkamo Silver intends to backfill all waste rock and top-soil not utilized for constructing the mine area infrastructure or for landscaping purposes. At least 30 % of the tailings are also planned to be used for backfill Note: Open pit and underground mine layout and stopes Source: JK-Kaivossuunnittelu Oy

6 INVESTMENT HIGHLIGHTS v Construction ready, short time to Production v Blaiken equipment, including concentrator, purchased. v Attractive project economics: 3 Year Payback, low cash costs v All necessary mining and environmental permits received v Substantial scope for further exploration to increase mine life v Land, including the mining area, 100% owned v Supportive local community anxious to see the mine in operation v 28 M invested until now v 35 M additional investment needed

7 MINING IS PART OF THE CIRCULAR ECONOMY Mining is central to making modern society sustainable: v The global population is estimated to reach 9.7 billion by v Metals are vital for the sustainable infrastructure development that will be needed for growing populations. v Metals are indispensable for energy production and distribution. All renewable energy relies on metals. Metals Supports Environmental Responsibility v New, innovative, stronger, lighter metal products require less metal, conserving energy and raw materials. v Metals enables many products to be reused. v Remanufacturing extend the overall product life cycle and saving valuable resources. v Metals are in grate extend recyclable and the most recycled material worldwide. v Metals ensure optimal resource efficiency: 1. Long product life. 2. Generate jobs and substantial tax revenues.

8 SUBSTANTIAL GROWTH POTENTIAL Additional potential of the existing Silver Mine deposit Further exploration potential Prospects of Sotkamo Silver Oy in Tipasjärvi Greenstone Belt area; Prospects aeromagnetic of Sotkamo low altitude Silver Oy map, in Tipasjärvi picture width Greenstone 22km Belt area; aeromagnetic low altitude map, picture width 22km

9 ADDITIONAL POTENTIAL IN MO I RANA, NORWAY Mofjellet South mine area - 5 mining licensees - 3 M tonne mineral resources left in the old mine with 2,5 % zinc, 0,4 % lead and 0,3 % copper + gold and silver - Access along 4 km long tunnel is available Great geological potential, with more than 200 known deposits of which 93 selected for further exploration. The area is very favourable for the rich and large volcanogenic massive sulphide ore deposits, so called VMS deposits Mine

10 ESTIMATED ECONOMIC RESULT (MANAGEMENT CASE) Management view estimate 40 % IRR; 103 M NPV (@ 5 %) (calculated with a consensus silver price of $ 14,9-20,0/Oz Ag) LOM CAPEX 44 M inclusive underground ore-sorting and capacity increase during year 3 with ore-sorter Payback: 3 years from start of production Estimated Life-of-Mine: 11 years (mineral reserves + 5 years from Exploration Potential) 11 year s EBITDA: 194 M Alternative silver prices 86 % IRR; 223 M NPV (@ 5 %) (silver price of $ 28/Oz Ag) 15 % IRR; 22 M NPV (@ 5 %) (silver price of $ 12.7/Oz Ag) SILVER MINE - AVG ( )/case Mining Plan Low Price Consensus Price High Price USD/EUR 0,92 0,92 0,92 Ag $/oz 12,70 14,9-20,0 28,0 Au $/oz Zn $/t Pb $/t Management View Case Years Operation: LOM = Mineralreserves + 5 years from Exploration Potential Low Price Consensus Price High Price Silver Mine Silver Mine Silver Mine Mill Feed tonnes LOM years k k K Revenue Capex (LOM) Initial Capex Opex (LOM) EBITDA EBITDA first 4 years NPV (5% before tax) IRR (before tax) 15,0 % 40,0 % 85,6 % Payback 5,9 3,0 1,3

11 CASH-FLOW MODEL OF THE MANAGEMENT CASE dollar= 0, Silver ($)= 15,15 16,79 17,25 18,34 18,81 19,41 20,00 20,00 20,00 20,00 20,00 20,00 NET SALES (NSR) OperatinOperating Costs General admin Open Pit Mine Sorter Plant Site TOTAL OPERATING COSTS Total EBITDA EBITDA/Year (First 4 years) Capital 1000 CCapital x Costs Basic Investments Development Closure and Sustaining investmen Restvalue Sorter TOTAL CAPITAL COST Contingency for Initial Investments General Costs Sotkamo Silver AB GENERAL + CAPITAL COSTS Public Funding CF Adjustments CASH FLOW Cumulative CF % NPV= % NPV= % NPV= CASH FLCASH FLOW WITH FINANCING Adjusted Revenue Equity Input Loan + ABB TEKES MONEY IN Operating Costs Sotkamo Silver AB ,0% - Interest Paid ,0% - Financing Cost Main Capex Exploration & Sustaining Capex Loans Repaid % - EXTRA CONTINGENCY Total Expenditures with AB and OY Net Cash Flow (operations) Change in VAT Account Tax Paid (rough estimate) Ad just Net Cash Flow Cum Net Cash Flow

12 SILVER MINE AREA THE NECESSARY MINING LICENSE, CONSTRUCTION PERMITS, ACCESS TO LAND AND ENVIRONMENTAL PERMIT RECEIVED

13 SOTKAMO SILVER NASDAG OMX HELSINKI CODE: SOSI1