Interim report January June 2012

Transcription

1 July 26, 2012 Interim report January June 2012 Storgatan Lycksele Tel +46-(0) Org.nr Sales were MSEK 46.6 MSEK (MSEK 104.4). The exceptional high sales during the second quarter 2011 was due to sales from previous inventories Result before depreciation was MSEK 2.6 (MSEK 24.7) Net result was MSEK (MSEK 10.9) Gold production was 4,115 troy ounces (4,790 troy ounces) Gold deliveries was 4,212 troy ounces (11,735 troy ounces) 2012 Sales were MSEK (MSEK 121.9) Result before depreciation was MSEK 14.6 (MSEK 19.8) Net result was MSEK (MSEK -5.1) Gold production was 9,195 troy ounces (10,816 troy ounces) Gold deliveries was 10,192 troy ounces (14,057 troy ounces) Overview Sales Result before depreciation and write-downs, Pahtavaara Result before depreciation and write-downs, Group Net income / loss Cash flow from operating activities* Capital expenditure Net debt / Equity, % ** 81% 38% 81% 38% Equity / total assets, % *** 36% 56% 36% 56% Goldproduction Pahtavaara, kgs Goldproduction Pahtavaara, tr.oz Gold deliveries Pahtavaara, kgs Gold deliveries Pahtavaara, tr.oz * before working capital changes ** defined as financial liabilities less financial assets divided by shareholders' equity *** defined as shareholders' equity divided by total assets Comments from CEO, Henrik Grind - Golder Associates check point presentation of the feasibility study for the Fäboliden project is a silver lining during the quarter. The preliminary mining plan is based on mineral resources of 20 million tonnes with an average gold grade of 1.7 grams gold per tonne. In the preliminary plan, it is likely that the mining in open will increase to 11 million tonnes compared to the estimate of 7 million tonnes made in the Scoping Study in December The quarter started out with lower gold grades in the mine production which continued until the end of May. In combination with rock mechanical problems in a stope and that we, to my disappointment, were unable to reach a higher gold grade in the ore fed to the mill this resulted in lower gold production than planned during the quarter s first two months. In June, the gold production recovered and a higher gold grade is expected over the next two quarters, concludes Henrik Grind. 1

2 Highlights during the second quarter 2012 Gold production was 4,115 troy ounces (128 kgs) in the second quarter which can be compared to 4,790 troy ounces (149 kgs) for the second quarter For further information, please see the section about Pahtavaara in this report. The Annual General Meeting of Lappland Goldminers was held on May 24, The meeting re-elected Lars Olof Nilsson, Peter Edwall, Pia Gideon and Lars-Göran Ohlsson as board members. Lars Carnerud was elected as a new board member. Lars Olof Nilsson was re-elected as Chairman of the Board. For additional information regarding the decisions of the meeting please see the news release dated May 25, The work with completing the feasibility study for the Fäboliden project continues. In June, Golder Associates prepared a check point presentation to Lappland Goldminers on the ongoing study. The preliminary mining plan is based upon mineral resources (measured and indicated) of 20 million tonnes with an average gold grade of 1.7 grams gold per tonne. According to the preliminary mining plan it is likely that the mining in open pit will increase to 11 million tonnes compared with the estimate of 7 million tonnes in the December 2010 Scoping Study. The result from the final study is to be presented in December For further information, please see the section about Fäboliden in this report. Production and sales Full year Pahtavaara Gold production, tr.oz Gold production, kgs ** ** 621 Ore mined, tonnes Ore milled, tonnes Gold grade*, grams per tonne 1,15 1,40 1,33 1,65 1,49 Gold recovery, % 85,1 86,9 86,2 87,0 86,4 Gold deliveries, tr.oz Gold deliveries, kgs * Run of Mine (ROM) ** Gold production for the period 2011 have beed adjusted dow nw ards w ith 32 kgs (press release October 19, 2011) Pahtavaara Sales during the second quarter were approximately MSEK 46.5 (MSEK 104.2). Gold deliveries from the mine were 4,212 troy ounces (131 kgs) during the quarter compared to 11,735 troy ounces (365 kgs) for the second quarter Gold production in the second quarter 2012 was 4,115 troy ounces (128 kgs) compared to 4,790 troy ounces (149 kgs) during the corresponding quarter For the second quarter 2012 the profit in Pahtavaara, before depreciation, was MSEK 9.6 (MSEK 35.6). Including capital expenditures of MSEK 14.4 (MSEK 8.0) cash flow, excluding working capital changes, for the period was MSEK -4.8 (MSEK 27.1) for the Pahtavaara operations. The quarter started out with lower gold grades in the mine production which continued to the end of May and resulted in low gold production for April (33 kgs) and May (41 kgs). Furthermore, during the period, a planned stope was delayed due to rock mechanical problems. In June, the gold production increased to 54 kgs. A higher gold grade is expected over the next two quarters. Exploration drilling from surface is ongoing and after completion of the analysis, the 2011 drilling program has been followed up with further drilling of more than 6,800 meters in the first half of 2012 in order to locate additional areas of interest close to the existing mine. The drilling campaign will continue during the summer and fall. Analysis of mineralized core sections from holes drilled in the first half of 2012 is expected to be completed during the third quarter. 2

3 Fäboliden The work with completing the feasibility study for the Fäboliden project, which was resumed in early 2012, continues. The study is being conducted by the internationally renowned consulting firm Golder Associates. In June, Golder Associates prepared a check point presentation to Lappland Goldminers on the ongoing study. The study is examining selective mining in open pit and underground operations, and a process plant with an annual capacity of 1.5 million tonnes of ore. Basic assumptions for the study are the 2011 average prices for gold (1,572 USD/tr.oz) and silver (35 USD/tr.oz) as well as the 2011 average exchange rate for SEK/USD (6.5). Measured and indicated mineral resources, which form the basis for the projections in the preliminary mining plan presented at the check point presentation, amounts to over 20 million tonnes with an average gold grade of 1.7 grams gold per tonne. This is to be compared with 16 million tonnes (measured and indicated) with an average gold grade of 1.6 grams gold per tonne presented in the December 2010 Scoping Study. The increased tonnage for measured and indicated mineral resources is primarily a result of the drilling program conducted in 2011, where mineral resources previously classified as inferred were reclassified as indicated. It is further likely that the planned mining in open pit will increase to approximately 11 million tonnes compared with the estimate of 7 million tonnes in the December 2010 Scoping Study. Regarding the gold recovery, metallurgical testing is currently being carried out at GTK in Finland. The result from the final study is to be presented in December In parallel to completing the study the Company will examine the conditions for financing of production facilities and start-up of mining operations. Other strategic alternatives for the Fäboliden project are also being evaluated. Income Statement Sales during the second quarter 2012 were MSEK 46.5 (MSEK 104.2). The decrease in sales is due to the decrease in deliveries compared to the second quarter The deliveries to the smelters decreased during the quarter with some 7,500 troy ounces (233 kgs) compared to the same period The exceptional high deliveries and sales for the second quarter 2011 are due to deliveries from the significant gold inventory that was built-up during the first quarter 2011 as a result of the new gold concentrate produced in Pahtavaara. The decrease in deliveries are somewhat offset by a higher realized gold price during During the second quarter 2012 the average realized gold price was USD 1,586 (USD 1,412) per troy ounce. The Pahtavaara operations contributed with a result, before depreciation, of MSEK 9.6 (MSEK 35.1) during the quarter. Cash cost was USD 1,260 (USD 933) per troy ounce during the second quarter 2012, treatment and refining charges excluded. The increase in cash cost is mainly due to a more unfavorable ratio between gold delivered and the costs for the Pahtavaara operations compared to the second quarter Exploration costs of MSEK 0.9 (MSEK 1.7) and corporate costs of MSEK 6.1 (MSEK 4.5) reduced the profit during the quarter. The group recorded a profit before depreciation of MSEK 2.6 (MSEK 24.7) for the second quarter Depreciation charges during the quarter were MSEK 9.8 (MSEK 8.6). The depreciation charges are primarily due to depreciation of capitalized ore development at Pahtavaara. Depreciation charges are calculated using a unit of production method in relation to the remaining mineral reserves and mineral resources. On February 24, 2012 the Company presented updated mineral reserves and mineral resources at Pahtavaara as of January 1, This estimate is the basis for depreciation in The group result after net financial items was MSEK (MSEK -10.6) and negatively affected by a financial net of MSEK -5.0 (MSEK -5.5). The group net result for the second quarter amounts to MSEK (MSEK 10.9). Cash flow The net change of the cash position during the second quarter 2012 was MSEK 2.0 (MSEK 50.4). Cash flow from operations, before working capital changes, was MSEK -2.4 (MSEK 19.2). Pahtavaara generated positive cash flow and contributed, before working capital changes, with MSEK 9.6 (MSEK 35.1) during the quarter. Working capital changes affected the cash flow with MSEK 23.4 (MSEK -54.3). In total, cash flow from operations, after working capital changes, was MSEK 21.1 (MSEK-35.2). 3

4 Capital expenditures during the quarter were MSEK 22.5 (MSEK 11.2) of which Pahtavaara accounted for MSEK 14.4 (MSEK 8.0) and Fäboliden for MSEK 8.1 (MSEK 0.1). Capital expenditures at Pahtavaara are primarily related to ore development when the operations are moving into new areas within the existing mine. Capital expenditures at Fäboliden are related to the completion of the feasibility study that was resumed in early Financial position Cash and bank balances as of June 30, 2012 were MSEK 12.9 and undrawn overdraft facilities approximately MSEK Parent company Sales, which are mainly internal, were MSEK 0.1 (MSEK 0.2). The operating costs are mainly group overhead costs for geology, administration and group management and were MSEK 7.0 (MSEK 7.3) during the second quarter Financial net of MSEK -3.6 (MSEK -0.2) for the second quarter mainly relate to external interest costs. 4

5 Segmented Financial Information (Excluding financial intercompany transactions) Three months ended Jun 30, 2012 Pahtavaara Ersmarksberget Exploration Fäboliden Group Functions Q2 Sales Cost of sales Gross profit Maintenance costs, Ersmarksberget Explorations costs Administration Result before depreciation Depreciation Result after depreciation Financial income Financial cost EBT Taxes Net income Capital expenditures The company does note presently use a segmented balance sheet to monitor the operations. A segmented balance sheet is therefore no presented in this report. Three months ended Jun 30, 2011 Pahtavaara Ersmarksberget Exploration Fäboliden Group Functions Q2 Sales Cost of sales Gross profit Maintenance costs, Ersmarksberget Explorations costs Administration Result before depreciation Depreciation Result after depreciation Financial income Financial cost EBT Taxes Net income Capital expenditures The company does note presently use a segmented balance sheet to monitor the operations. A segmented balance sheet is therefore no presented in this report. 5

6 Six months ended Jun 30, 2012 Pahtavaara Ersmarksberget Exploration Fäboliden Group Functions Total Sales Cost of sales Gross profit Maintenance costs, Ersmarksberget Explorations costs Administration Result before depreciation Depreciation Write-downs Result after depreciation Financial income Financial cost EBT Taxes Net income Capital expenditures The company does note presently use a segmented balance sheet to monitor the operations. A segmented balance sheet is therefore no presented in this report. Six months ended Jun 30, 2011 Pahtavaara Ersmarksberget Exploration Fäboliden Group Functions Total Sales Cost of sales Gross profit Maintenance costs, Ersmarksberget Explorations costs Administration Result before depreciation Depreciation Write-downs Result after depreciation Financial income Financial cost EBT Taxes Net income Capital expenditures The company does note presently use a segmented balance sheet to monitor the operations. A segmented balance sheet is therefore no presented in this report. 6

7 Unit costs and realized gold prices April-June, 2012 Reconciliation of unit cash cost of delivered gold to consolidated income statement Total Total Cost Cash kgs tr.oz SEK/tr.oz USD/tr.oz operating delivered delivered costs Operation Pahtavaara Cash operating costs, excluding depreciations Treatment and refining charges excluded Calculation of realized prices* Total Total Realized price Sales kgs tr.oz SEK/tr.oz USD/tr.oz delivered delivered Operation Pahtavaara Total sales * it should be noted that the realized prices differ from the market price due to the terms of the smelting contracts with the customers, 2012 Reconciliation of unit cash cost of delivered gold to consolidated income statement Total Total Cost Cash kgs tr.oz SEK/tr.oz USD/tr.oz operating delivered delivered costs Operation Pahtavaara Ersmarksberget Cash operating costs, excluding depreciations Treatment and refining charges excluded Calculation of realized prices* Total Total Realized price Sales kgs tr.oz SEK/tr.oz USD/tr.oz delivered delivered Operation Pahtavaara Total sales * it should be noted that the realized prices differ from the market price due to the terms of the smelting contracts with the customers 7

8 April-June, 2011 Reconciliation of unit cash cost of delivered gold to consolidated income statement Total Total Cost Cash kgs tr.oz SEK/tr.oz USD/tr.oz operating delivered delivered costs Operation Pahtavaara Adjustment TC/RC 0 Cash operating costs, treatment and refining charges excluded Calculation of realized prices* Total Total Realized price Sales kgs tr.oz SEK/tr.oz USD/tr.oz delivered delivered Operation Pahtavaara Total sales * it should be noted that the realized prices differ from the market price due to the terms of the smelting contracts with the customers, 2011 Reconciliation of unit cash cost of delivered gold to consolidated income statement Total Total Cost Cash kgs tr.oz SEK/tr.oz USD/tr.oz operating delivered delivered costs Operation Pahtavaara Ersmarksberget Cash operating costs, treatment and refining charges excluded Calculation of realized prices* Total Total Realized price Sales kgs tr.oz SEK/tr.oz USD/tr.oz delivered delivered Operation Pahtavaara Total sales * it should be noted that the realized prices differ from the market price due to the terms of the smelting contracts with the customers 8

9 Gold price Other information Accounting principles This report has been prepared in compliance with IAS 34 - Interim Financial Reporting and according to Swedish Årsredovisningslagen. The same accounting principles have been applied as in the last issued Annual Report. For detailed information regarding accounting principles, see the Annual Report Forward sales of gold The Group has, as of June 30, 2012, no forward sales for future gold deliveries. Major customers The sales of the group presently come from the Pahtavaara mine. The mine produces two types of gold concentrate: gravity concentrate and flotation concentrate. Currently, all concentrate is shipped to a limited number of customers in Europe. Risks and uncertainties A number of risk factors can have a negative impact on the operations of the group and the parent company. External and internal factors can influence the financial position and the growth of Lappland Goldminers. Factors, among others, which can influence the Company are the price of gold, currency risks, estimates of mineral reserves and mineral resources, interest risks, liquidityand financing risks, electricity- and energy prices, key staff and employees, permits, environmental factors and political risks. For further information regarding risks and uncertainties see pages of the 2011 Annual Report of Lappland Goldminers. Environment The operations of the Company require, in many cases, permissions from authorities. See page 28 of the 2011 Annual report of Lappland Goldminers for further information regarding environmental impact. 9

10 Employees The Company and subsidiaries have 80 employees ( ) as of June 30, In addition to this, the Company engages consultants and contractors for various projects on a continuing basis. Related party transactions In addition to board fees, the Chairman Lars Olof Nilsson has sold consulting services from his company to Lappland Goldminers for SEK 90,000 in the second quarter of Reporting dates Interim report January-September 2012 October 25, 2012 Annual Report The Annual Report for 2011 is available on the Company's web site with possibility for downloading and printing. Certified Adviser Lappland Goldminers engages Mangold Fonkommission AB as the Certified Adviser. Mangold Fondkommission AB can be contacted at or by phone Lycksele, July 26, 2012 Lars Olof Nilsson Peter Edwall Pia Gideon Chairman Board member Board member Henrik Grind Lars-Göran Ohlsson Lars Carnerud Chief Executive Officer Board member Board member The interim report for the period January June 2012 has been reviewed by the Company s auditors. Conference call The Company plans to hold a conference call in connection with the interim report on July 26, 2012 at 11:00 CET. Dial in number is or participating code is For further information please contact: Henrik Grind, CEO, Phone: , henrik.grind@lgold.se Jonatan Forsberg, CFO, Phone: , jonatan.forsberg@lgold.se 10

11 FREE TRANSLATION OF THE SWEDISH ORIGINAL Auditors Review Report To the Board of Directors of Lappland Goldminers AB (publ) Introduction I have performed a review of the financial interim information in summary (the interim report) for Lappland Goldminers AB (publ) at June 30, 2012 and the six-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review I have conducted my review in accordance with the Standard on Review Engagements, SÖG 2410, Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the interim report are not prepared, in all material aspects, for the group in accordance with IAS 34 and the Swedish Annual Accounts Act and for the parent company in accordance with the Swedish Annual Accounts Act. Skellefteå, July 25, 2012 Fredrik Lundgren Authorized Public Accountant 11

12 Income statement - Group Sales Costs of goods sols Gross result Exploration costs Administration costs Other costs Operating result Financial net Result from financial investments Write-dow ns av share holding and receivables Financial income Financial costs Result after financial items Tax Net income / loss Net income attributable to: Shareholders of the parent company Minority sharholdings Basic average number of shares outstanding, thousands Diluted average number of shares outstanding, thousands Basic income / loss per share, SEK -0,09 0,13-0,12-0,06 Diluted income / loss per share, SEK -0,08 0,11-0,11-0,05 Consolidated statement of comprehensive income Net income / loss Other comprehensive income Transalation differences Tax related to other comprehensive income Total other comprehensive income Total comprehensive income for the period Total comprehensive income attributable to: Shareholders of the parent company Minority sharholdings

13 Consolidated Balance Sheets June 30 June 30 December Assets Long-term assets Mineral properties and capitalized exploration expenses Buildings and land Biological assets Tailing dams and mines Equipment Construction in progress and advances of material long-term assets Other financial assets Restricted cash Total long-term assets Current assets Inventories Tax receivables Other receivables Prepaid costs and accrued income Accounts receivable Cash and bank Total current assets Total assets Shareholders' equity and liabilities Shareholders equity Share capital Contributed surplus Cumulative transaltion differences Retained earnings Net income / loss Total shareholders' equity Long term liabilities Provison for reclamation Long-term interest bearing liabilities Convirtible loan Short-term liabilities Overdraft facilities Other financial liabilities Accounts payable Other short-term liabilities Accrues expenses and prepaid income Total liabilities Total shareholders' equity and liabilities

14 Statement of changes in shareholders's equity Shareholders' equity beginning of period Share related costs Costs for equity issues Share-based payments Translation differences Other Net income / loss Shareholders' equity end of period Consolidated statement of cash flow Operating activities Operating result Depreciation and w rite-dow ns Other adjustments Derivatives Received interest Paid interest Cash flow from operating activities before working capital changes Changes in working capital Changes in accounts receivable and other receivables Changes in inventories Changes in accounts payable and other payables Adjustments attributable to the w ind-up of Lappland Goldminers Sorsele AB Cash flow from operating activities Capital expenditures Financing activities Convertible debt / Equity issues, net of costs Changes in short- and long term financial liablities Changes in restricted cash Cash flow from financing activities Transaltion differences in cash and bank Net change of cash and bank Cash and bank beginning of period Cash and bank end of period

15 Income statement - Parent company Sales Exploration costs Operating costs Operating result Financial net intercompany receivables Financial income and costs Result after financial items Tax Net income / loss Consolidated statement of comprehensive income - Parent company Net income / loss Other comprenhensive income Transalation diffrences Tax related to other comprehensive income Total other comprehensive income Total comprehensive income for the period Total comprehensive income attributable to: Shareholders of the parent company Minority sharholdings

16 Balance Sheets - Parent company June 30 June 30 Full year Assets Mineral rights and capitalized exploration Material fixed assets Financial long-term assets Total long-term assets Current assets Total assets Shareholders' equity and liabilities Shareholders' equity Long-term liabilities Short-term liabilities Total liabilities Total shareholders' equity and liabilities Changes of shareholders' equity - Parent company Shareholders' equity beginning of period Equity issues Costs related to convertible / other Net income / loss Shareholders' equity end of period