Summary of year-end report 2012 [1]

Successful first full year as a Gold Mining and Exploration Company

Highlights Q4/2012

  • Record gold production 277.4 kg (183.7), + 51%Endomines was granted a 3.8 MSEK investment subsidy for the capacity expansion at the Pampalo Gold Mine
  • Revenues 74.4 MSEK (35.6), +109%
    - EBITDA before unrealized loss on derivatives 31.6 MSEK (-4.2)
  • Operating result 30.0 MSEK (-14.0)
  • Profits after tax from continued operations 24.7 MSEK (-17.8)
  • Earnings per share from continued operations 0.31 SEK (-0.22)
  • Cash funds at end-of-year 69.0 MSEK (46.3) and accrued gold revenues 61.6 MSEK (37.6)
  • Endomines was approved for listing on NASDAQ OMX Stockholm
  • Endomines sells its Kuovila limestone deposits

Q1-Q4/2011 Highlights

  • Full year gold production 866.5 kg (615.9), +41%; guidance of 800 kg was surpassed with a good margin
  • Revenues 235.1 MSEK (150.0), +57%
    - EBITDA before unrealized loss on derivatives 88.7 MSEK (22.8)
  • Operating result 28.1 MSEK (-6.3)
  • Profits from continued operations after tax 8.5 MSEK (-10.9)
  • Earnings per share from continued operations 0.11 SEK (-0.14)
  • Investment in increased production capacity at Pampalo Gold Mine initiated
  • Agreement to sell Kalvinit Oy together with its ilmenite deposits

Production guidance and outlook for 2013

  • The company expects full year 2013 gold production to be 900 – 1,000 kg
  • Production in Q1/2013 is expected to be considerable lower than during Q4/2012
  • Mining and processing target for the whole year is up to 380,000 tonnes of ore
  • The company expects the average realized gold price in 2013 to be lower than in 2012, inter alia, due to higher gold hedge volume, 17,500 oz versus 12,000 oz
  • Mineral resource and reserve update is expected to be published during Q1/2013
  • Pampalo processing plant capacity expansion will be completed during Q1/2013
  • Rämepuro industrial scale test mining is planned for summer 2013
  • Exploration will continue - Korvilansuo and Pampalo main targets

Comments to operations during Q4/2012 and full year 2012

Key financial data

KSEK, unless otherwise stated 2012 2011 change 2012 2011 change
Revenues 74,409 35,637 38,772 235,087 149,974 85,113
EBITDA before unrealized loss on derivatives 31,647 -4,188 35,835 88,706 22,783 65,923
EBIT 30,021 -13,957 43,978 28,079 -6,301 34,380
as % of revenues 40.3% -39.2% 11.9% -4.2%
Net result from continued operations 24,660 -17,782 42,442 8,514 -10,926 19,440
Earnings per share from continued operations, SEK 0.31 -0.22 0.53 0.11 -0.14 0.25
Gold production, kg 277.4 183.7 93.7 866.5 615.9 250.6
Cash Cost, USD/oz 686 918 -232 753 864 -111
Total cash flow -5,137 -6,947 1,810 24,525 -19,195 43,720
Cash funds at end of period 69,022 46,261 22,761 69,022 46,261 22,761

In 2012 a roll over a total of 6,000 oz of the current gold hedge to the year 2016 was made to support financing of the capacity expansion at Pampalo. The positive cash flow effect is estimated to approximately 26 MSEK.

Pampalo Gold Mine

Mining at Pampalo showed stable progress during the reporting period and took place from the high-grade areas. Good head grade in combination with efficient mining resulted in the highest quarterly gold production since inception of the mine. Whole year production was also very satisfactory and guidance of 800 kg was surpassed with a good margin.

Continuous safety improvement efforts are also producing results and Q4/2012 was the third consequent quarter without any Lost Time Injuries at Pampalo. Overall Lost Time Injury Frequency Rate (LTIFR) 9 is again clearly better than the industry average but the Company remains committed to our overall safety target of “zero accidents”. The safety routines proved to work well during a minor fire in the underground mine in January 2013. Our own workforce has now worked 692 days without accidents and our contractors 343 days.

Table: Key production figures[2]

2011 2012 2012 2012 2012 2012
Tonnes mined 176,745 61,134 57,718 61,988 69,950 250,790
Tonnes processed 210,547 61,596 64,730 64,177 59,446 249,949
Head grade (Au g/t) 3.4 3.2 4.4 3.2 5.4 4.0
Gold recovery (%) 87.0 85.6 86.6 85.5 87.2 86.1
Hourly utilization (%) 85.3 86.5 94.2 95.0 88.1 91.0
Gold produced kg 615.9 168.8 244.5 175.8 277.4 866.5
Gold produced oz 19,801 5,427 7,862 5,652 8,919 27,860
LTIFR[3] (12 month rolling) 35 16 11 10 9 9
OPEX EUR/tonne 68 65 76 64 90 73
OPEX SEK/tonne 614 579 675 535 778 640
Cash Cost[4] USD/oz 864 878 692 804 686 753

Cash Cost decreased due to higher gold head grade and gold production during the period. OPEX amounted to 778 SEK/tonne, which was higher than the 12 month-average of 640 SEK/tonne. This was partly due to increased total OPEX in mine production and lower than normal capacity utilization in the plant. Part of the cost increase was due to repair of the crusher. A rented mobile crusher was used during repair time.

The Pampalo processing plant capacity expansion project is progressing as planned and on schedule. Test runs have commenced mid-January 2013 and we expect that the increased processing capacity can be fully utilized before the end of February. The formal environmental permit renewal will be delayed to summer 2013 but the increased capacity can be utilized with the current permit. The Pampalo processing plant capacity increase to 380,000 tpa level has no effect on the current permit. The incremental production will not increase discharge to the nature from the plant. Endomines has applied for a capacity expansion to a maximum of 450,000 tonnes per annum but expects to operate the plant at an annual capacity of up to 380,000 tonnes per annum. During 2013 70-75 % of the ore will be derived from the underground mine and additional ore production will be mined from the Pampalo East open pit areas. Ore and waste rock mining did commence during the reporting period by the contractor Lemminkäinen Oy.

During the period Endomines Oy received a positive decision of the investment subsidy of up to 3.8 MSEK (447 KEUR) from the North Karelia Centre for Economic Development Transport and the Environment. The grant is for the ongoing Pampalo processing plant capacity expansion. The subsidy can be a maximum of 25 percent of the total investments in equipment. The grant indicates great support to the mining industry and for investments in this region.

Early 2012 Pampalo Gold Mine started gravimetric concentrate production and signed a sales agreement with a Norwegian company K.A. Rasmussen AS in May 2012. The agreement of flotation gold concentrate production sale to Boliden was renewed in September. Endomines will deliver its estimated annual flotation concentrate production of 4,500 — 5,500 tonnes to Boliden's Harjavalta smelter in Finland. The agreement is signed for a period of two years, with the option of extending for a further two years subject to agreement.

The Pampalo Gold Mine has now achieved a stable production but a lot of challenges remain for the whole personnel. Our main targets will be to keep production head grade in good level. We will also continue our underground and surface exploration works at Pampalo and continue deepening the underground mine

The number of personnel at the Pampalo Gold Mine at the end of the reporting period was 70 own and 30 contractor employees. In addition, there were four persons working on exploration and three in administration in Stockholm and Ilomantsi.

Exploration and Karelian Gold Line development

The company started systematic exploration along the Karelian Gold Line in June 2011 by airborne low-altitude [VTEM] geophysical surveys over the entire permit area. Exploration continued by diamond core drilling and several new drilling targets have been identified during years 2011- 2012.

We can already now conclude that the company’s systematic exploration project during the years 2011- 2012 has been successful. The company has discovered a new deposit Korvilansuo and all results received so far support our firm conviction that the Korvilansuo area with its extension northwards to Kivisuo-Elinsuo-Muurinsuo targets has all the necessary characteristics of Archean greenstone-hosted gold provinces and real potential for growing into a significant and successful gold project. Up to now the core drilling has been focused to a limited area due to permit applications pending.

A large part of exploration results have been received and published but due to serious overload problems in all certified laboratories used by the company complete results have not yet been received. Complete results from 2012 exploration campaign will be published when all relevant results are available. The Company intends to publish a resource and reserve estimate update for Pampalo and Rämepuro during the Q1/2013, as well as a resource estimate for Korvilansuo.

Due to promising exploration results, Endomines has also decided to include the Korvilansuo property to the ongoing Karelian Gold Line Environmental Impact Assessment Study. The study is prepared by the environmental consulting company Linnunmaa Oy. The study covers the whole 40 km long Karelian Gold Line and includes all currently known deposits or advanced exploration targets Hosko, Kuivisto, Rämepuro, Muurinsuo, Korvilansuo and Kuittila.

Environmental permit application preparation for the Rämepuro deposit is ongoing by Pöyry Finland Oy. The target is to commence test mining during summer 2013. Test mining can be done by approval from the authorities.

Focus on gold mining and exploration

Focusing entirely on the gold mining and exploration started during summer 2012 when Endomines entered into an agreement to sell Kalvinit Oy together with its ilmenite deposits to Cove Resources Ltd in July. Prior to completion of the transaction, Cove Resources will conduct a customary feasibility study of the ilmenite deposits held by Kalvinit. Completion of the transaction is conditional on the results of the feasibility study being satisfactory to Cove Resources.

Endomines’ transformation to a pure gold mining and exploration company continued further during the reporting period, when the company sold its subsidiary Kuovila Limestone Oy to Juuan Dolomiittikalkki Oy.

Other information

The long process to proceed for listing on the NASDAQ OMX Stockholm's main market was completed when the Listing Committee did approve Endomines AB (publ) ("Endomines") application. First day of trading in Endomines' share on the main list was 7 November 2012.

As part of the financing for the expansion two loan repayments were postponed from 2012 to 2014 and 2015. Furthermore, a roll over a total of 6,000 oz of the current gold hedge from 2012 to the year 2016 was made.

Subsequent events:

  • A minor fire occurred in the Pampalo underground mine in January
  • Endomines published the exploration results for the 2012 drilling campaign in January
  • Test runs of the process plant expansion have commenced at Pampalo in January

For further information, please contact:

Markus Ekberg
CEO of Endomines AB
tel. +358 40 706 48 50
or visit the Company´s website

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 February 22, 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 also 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 the First North Premier segment in Stockholm under ticker ENDO.ST. Erik PenserBankaktiebolag acts as Certified Adviser and Liquidity Provider.

Read more about Endomines on


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] The full interim report, in Swedish only, is available on the Company´s website

[2] Production figures are final and based on the assay exchange procedure between Endomines and its customers. Figures are individually rounded

[3] 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

[4] Endomines calculates "Cash cost" per ounce figures using the guidance issued by The Gold Institute Production Cost Standard. Mining, ore processing and site administration and off-site smelting and refining costs are included to the “cash cost” but amortization, reclamation, capital and exploration costs are excluded, i.e. “Cash Cost” is calculated per payable ounces. “Cash Cost” figure is furnished to provide additional information and is a non-IFRS measure. Conversion from EUR to USD made by average rate for the period EUR/USD.

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.