Summary of interim report January– March 2013

The full interim report is found on the company’s website and is in Swedish only.

Highlights Q1/2013

  • Gold production 180.4 kg (168.8), + 7%
  • Revenues 40.1 MSEK (34.5), +16%
  • EBITDA before unrealized loss on derivatives 8.9 MSEK (1.4)
  • Operating result 1.5 MSEK (-7.8)
  • Profits after tax from continued operations -5.2 MSEK (-10.0)
  • Earnings per share from continued operations -0.07 SEK (-0.13)
  • Cash funds at end of Q1 85.5 MSEK (31 December 2012: 69.0)
  • Announcement made of intention to a secondary listing on NASDAQ OMX Helsinki
  • Directed share issue 45 MSEK in beginning of April

Production guidance and outlook for 2013

  • The company expects full year 2013 gold production to be 900 – 1,000 kg
  • The company expects the average realized gold price in 2013 to be lower than in 2012, inter alia, due to the gold price development and to higher gold hedge volume, 17,500 oz versus 12,000 oz 2012
  • Rämepuro industrial scale test mining is planned for summer and autumn 2013
  • Endomines invites shareholders and the public to the Open House and Shareholder’s Days on May 24-25 in Pampalo. Further information will be presented at the Annual General Meeting on April 23 as well as on the company´s website www.endomines.com

Subsequent events

  • Significant expansion and new long gold intersections within Endomines Korvilansuo gold property
  • Endomines AB and Cove Resources Ltd have agreed terms for early payment of total acquisition consideration and executed a Deed of Variation to the Sale and Purchase Agreement for the acquisition of Kalvinit Oy
  • Korvilansuo is the main target for the exploration program that commenced in April

Key financial data

Q1
MSEK, unless otherwise stated 2013 2012 change
Results
Concentrate sales 54.0 52.7 1.3
Gold price hedge -13.3 -17.8 4.4
Other revenues -0.5 -0.5 0.0
Total Revenues 40.1 34.5 5.7
Revenue, growth, % 16.5 33.9
EBITDA, Pampalo*) 12.2 7.1 5.1
EBITDA, Other -3.3 -5.8 2.5
EBITDA before unrealized loss on derivatives 8.9 1.4 7.6
EBITDA margin, % 22.3 4.0
Depreciation and amortization -8.0 -9.0 1.0
Unrealized loss on derivatives 0.6 -0.2 0.8
EBIT, Group 1.5 -7.8 9.4
EBIT, % 3.8 -22.7
Net Profit from continuing operations -5.2 -10.0 4.8
Gold production, oz 5,800 5,427 373
Cash cost (USD per oz) 832 878 -46

Comments to operations Q1/2012

Pampalo Gold Mine

Mining at Pampalo showed stable progress during the reporting period and was directed to the lower grade areas according to plan. Open pit mining at Pampalo continued from the Pampalo East –area and the ore was mostly stockpiled for later processing.

Continuous safety improvement efforts produced results and Q1/2013 was the fourth consecutive quarter without any Lost Time Injuries at Pampalo. Overall Lost Time Injury Frequency Rate (LTIFR [1] ) dropped to zero and thus the Company has achieved its safety target of “zero accidents”. Our own workforce has now worked 740 days without accidents and our contractors 400 days.

The actions taken in conjunction with the minor fire that occurred in the Pampalo underground mine in January confirmed that the safety routines at Pampalo Gold mine are working according to plan. The incident had no effect on the production at the mine.

During the reporting period the Company published its updated resources and reserve statement. Successful mine site exploration during 2012 replaced almost all the ore reserve mined at Pampalo Gold Mine. The Pampalo mine gold production in 2012 was 867 kg but the total contained gold in the Pampalo ore reserves was reduced only by 235 kg. For the updated ore reserves and mineral resources, see Company website.

Table: Key production figures [2]

Q1/2012 Q2/2012 Q3/2012 Q4/2012 FY 2012 Q1/2013 Rolling 12 months
Tonnes mined (incl. open pit) 61,134 57,718 61,988 69,950 250,790 90,386 280,042
Tonnes processed 61,596 64,730 64,177 59,446 249,949 58,856 247,209
Head grade (Au g/t) 3.2 4.4 3.2 5.4 4.0 3.5 4.1
Gold recovery (%) 85.6 86.6 85.5 87.2 86.1 88.4 87.0
Hourly utilization (%) 86.5 94.2 95.0 88.1 91.0 88.8 91.5
Gold produced kg 168.8 244.5 175.8 277.4 866.5 180.4 878.1
Gold produced oz 5,427 7,862 5,652 8,919 27,860 5,800 28,233
LTIFR (12 month rolling) 16 11 10 9 9 0 0
Opex/tonne processed (EUR) 65 76 64 90 73 70 75
Opex/tonne processed (SEK) 579 675 535 778 640 598 645
Cash Cost (USD/oz) 878 692 804 686 753 832 745

Operating cost per milled ore ton was slightly below average for last year. Cash cost was 832 USD per oz.

The processing plant capacity expansion project was completed at the end of the reporting period. The project comprised of installation of the second grinding mill and additional flotation capacity. Fine tuning and balancing of the process equipment will continue during the Q2/2013.

The Company has informed the authorities about its intentions to increase the processing capacity and that the capacity increase will not increase or change discharge to the nature. North Karelian Centre for Economic Development, Transport and the Environment has respectively informed that Pampalo production increase to 380 000 tpa level has no effect on the current permit, as there will be no increase of discharge to the nature.

Exploration and Karelian Gold Line development
A new resource estimate was prepared for the Korvilansuo target. Within the Korvilansuo-Elinsuo-Muurinsuo-area all of the results so far obtained support the Company’s view that the area has a real potential for growing into a significant and successful gold project. The area has all the typical characteristics of an Archean greenstone-hosted gold province.

The main target for the coming exploration campaign will be the Korvilansuo-Elinsuo-Muurinsuo area, where the Company intends to drill at least 12,000-15,000 meters during year 2013. The Company has secured enough core drilling contractor capacity as well as all personnel required for this program. The first drilling-rig is operative and the second is expected by the turn of the month April-May.

The preparation of the environmental permit application for the Rämepuro deposit is on-going by Pöyry Finland Oy. The goal is to commence industrial scale test mining and processing during summer 2013. Test mining can commence upon approval from the authorities.

Company
During the period the Board of Directors announced its intention to apply for secondary listing on NASDAQ OMX Helsinki. The shares of Endomines are currently traded on NASDAQ OMX Stockholm and will continue to do so also after a secondary listing has been completed. The Company’s ambition is to have the secondary listing completed during Q2/2013.

In March Endomines completed a directed new share issue raising a net of 45 MSEK. The purpose of the share issue was to finance accelerated exploration along the Karelian Gold Line. There was significant interest for this issue and an allotment of 7,944,000 shares was made to mainly Swedish and Finnish investors.

Following the issue, the number of shares amounts to 87,385,625 of which the new shares correspond to approximately 9.1 per cent of the share capital. The Company’s share capital was increased by SEK 23.8 MSEK to SEK 262.2 MSEK.

Personnel
The number of personnel at the end of the reporting period was 85 people. Pampalo Gold Mine had 75 own and 45 contractor employees. Six people were employed in exploration and four people in general administration in Stockholm and Ilomantsi.

Subsequent events
Endomines AB and Cove Resources Ltd ("Cove") have agreed terms for early payment of total acquisition consideration and executed a Deed of Variation to the Sale and Purchase Agreement for the acquisition of all shares in Kalvinit Oy. Endomines and Cove have agreed that if Cove completes an equity capital raising of not less than 3 MAUD (≈ 20.2 MSEK) by 15 May 2013, then Cove will proceed with the purchase of the Kalvinit Shares by paying the acquisition price in full at Closing.

Outlook for 2013
The gold price has been in a continuous downward trend in April [3] . During Q1 the gold price was 1,631 USD/oz in average according to LBMA. From 1 April to 22 April the average price was 1,501 USD/oz. The management’s view is that fundamentals for the gold price have not changed and that the gold price is believed to recover and remain on a relatively high level.

For further information, please contact:
Markus Ekberg
CEO of Endomines AB
tel. +358 40 706 48 50

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Endomines AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 08:45 CET on 23 April, 2013.

About Endomines AB
Endomines AB is a Nordic mining and exploration company with its first operating gold mine in production since February 2011. The mine is located in Eastern Finland, on the Karelian Gold Line, a 40 km long gold critical belt, where Endomines controls all currently known gold deposits.

The company’s business practices and mining operations are based on sustainable principles and on minimizing the impact on the environment.

Endomines applies SveMin's&FinnMin's respective rules for reporting (public mining & exploration companies). It has chosen to report mineral resources and ore reserves according to the JORC-code, which is the internationally accepted Australasian code for reporting ore reserves and mineral resources.

The shares of Endomines AB are quoted on NASDAQ OMX Stockholm under ticker ENDO.ST. Pareto Öhman acts as Liquidity Provider.

Read more about Endomines on www.endomines.com

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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
[2]
Production figures for Q1/2013 are based on company own assaying and not confirmed by an external laboratory. Figures are individually rounded.
[3]
An example of theoretical changes in revenues of the Company for Q1 2013 based on isolated changes of the gold price, shows that revenues would be reduced by 4.1 MSEK including the effect of the gold hedge if the average price of gold decreases by 10%.

About Us

Endomines consists of the parent company, Endomines AB, with two wholly owned subsidiaries: Endomines Oy and Kalvinit Oy. The operations of Endomines Oy include exploration and development of gold deposits and planned gold mining. Kalvinit Oy is focused on the development of the industrial mineral ilmenite deposits. The Company’s present mineral deposits are all located in Finland. The Company acquired all shares outstanding in the two subsidiaries, Endomines Oy and Kalvinit Oy, through a non-cash issue. These subsidiaries were founded in the mid-1990s and have been financed by private individuals and Finnish institutions since inception.

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