Interim Report January – March 2016
Significant events during the first quarter 2016
- The issues were registered and the share capital thereafter amount to SEK 6,337,854 and the number of outstanding shares to 36,545,550.
- Additional test enrichment on a pilot scale of about 10 tonnes of crude ore from Blötberget performed at SGA and Weir Minerals in Germany.
- Condemnation drilling in the “marshy” areas where the tailings dams are to be expanded were completed during the cold period in March
- New web pages were launched in March
First quarter, 1 January – 31 March 2016
- Income amounted to SEK 0 million (0)
- Earnings after tax amounted to SEK -2.4 million (-3.7)
- Investments during the period January – March totalled SEK 2.1 million (5.3)
- Basic earnings per share were SEK -0.07 (-0.26)
- Cash as per 31 March 2016 amounted to 9,0 million (8,5)
- An application for mining concession in an area directly adjacent to Blötberget was submitted to Bergsstaten in the beginning of April.
Significant events after the end of the period
Significant improvements to the processing bring cost reductions and optimism for attracting customers and partners
This first quarter has been all about refinement of our processing techniques and improving our calculated cash OPEX during operations. Test work in Germany has progressed well and was completed in early April. Full evaluation of the date is ongoing and will continue for a while during which time production options will be assessed.
Most importantly the testwork has confirmed a largely straight through process, which provides significant flexibility to our production options and allowing NIO to make different products throughout the process. One consequence of this is that because there are choices to be made NIO needs to gain more information from the potential market and try to secure long term arrangements with potential off-takers and identify those markets that provide the most significant margin of profit, whilst being a secure source of income.
Looking forward, now that management are better able to discuss with potential off-takers details of the potential products they can receive and NIO’s calculation of the quantities available, renewed efforts are being made to promote the project with potential buyers and investors.
Once the market requirements are better defined and evaluated the sooner NIO will be able to focus on the completion of the technical and commercial components of the feasibility study.
The iron ore market has shown significant improvements during this quarter, with iron ore prices rising from the lows around $38/t Fe62% C&F China to over $60/t recently. The price has settled back below $60/t and is likely to stay there for a while. Recently, virtually all of the analysts have lifted their expectations on iron ore prices, but some still believe that it is likely to average less than $50/t in the coming 2-3 years. Other analysts are less pessimistic, with many in the iron ore business recognising that a sustainable price is likely to be above $60/t. Several iron ore mines have tried to reopen, but as the iron ore prices slide below $60/t many are likely not to succeed.
NIO is still evaluating the progress made this last quarter with its process development work, but can say with confidence that it’s has had a positive effect on the cash costs of production and brought NIO closer to the “low cost producer” quartile. We also know that we have considerable scope in the final evaluation of the feasibility study to further optimise the design of the mine and the cost for extraction and processing. These are exciting time seeing the first signs of recovery of the market and manoeuvring the company to complete the feasibility study and be ready to start production when the market really begins to pick up again.
Managing Director, Nordic Iron Ore AB (publ)
For further information please contact:
Paul Marsden Managing Director
tel: 46 240 883 05
Nordic Iron Ore Group is a mining company with the ambition to revive and develop the iron ore production of Ludvika Mines in Blötberget and Håksberg. The company also intends to expand its mineral resources, and upgrade them to ore reserves, primarily through exploration and other studies of the connecting Väsman field. For more information, see www.nordicironore.se.