Interim Report January – March 2017
Significant events during the first quarter 2017
- A new issue of shares raised SEK 18.3 m before issue costs
- Work regarding geohydrology and geotechnics were carried out in preparation of the mine planning phase of the feasibility study
- Work on an update of the mineral resource statement will include an extended mine concession area
- Income amounted to SEK 0 million (0)
- Earnings after tax amounted to SEK -2.3 million (-2.4)
- Investments during the period January – March totalled SEK 0.9 million (2.1)
- Basic earnings per share were SEK -0.04 (-0.07)
- Cash as per 31 March 2016 amounted to 14.4 million (9)
- A Letter of Intent was signed with Rail Cargo, a subsidiary of Austrian state owned ÖBB, regarding future logistics between the mine and harbour.
- Consultants contracted and work commenced regarding mine planning and production scheduling.
First quarter, 1 January – 31 March 2017 Significant events after the end of the period
Investors Start to Return to the Iron Ore Market, Supported by Improved Prices
Iron ore prices were maintained during the first quarter of 2017, averaging $86/t for IODEX 62%Fe iron ore. This is double the value in predictions of the “analysts” less than a year before. This, again, shows there is a lack of understanding of the dynamics of the global iron ore market and the relationships with general economies, technology implementation, the steel industry and political interference.
However, as is predictable, these higher prices have allowed several iron ore mine operations in India, China and Iran restart production. This will, inevitably, lead to an oversupply situation and a correction downward in prices. The market controlling largest iron ore producers are likely to also increase supply in order to encourage some of the reopened mines to close again. Prices could be volatile for a while whilst a price that keeps the supply demand balance in check is sought. There are also some concerns as to how a large Australian iron ore project, Roy Hill, will fit their output into the market place.
Overall for NIO management believe that the annual average prices will be more than sufficient for NIO’s first Phase, the reopening of the Blötberget mine, to be an attractive business, with Phases II and III to add volumes and increase the NPV of the company.
To support this belief NIO has recently been engaged in several discussions regarding potential strategic investors coming on board and supporting the NIO development. This is largely because NIO has survived the downturn in iron ore prices and is now in a strong position to conclude the Phase I feasibility study this year. NIO has been fortunate that the owners of the company have maintained their support for the project and NIO has been able to keep a core of management and geologists to maintain the development of the project through the recent difficult times.
The immediate activities of the company this last Q have been working towards the completion of the mine design. In order to complete this, the activities at the beginning of this year have been updating the Mineral Resources, to not only increase the total mineral resources, but also to define and increase development options. This could include exploration of possibilities to start some form of interim production during the development of the mine. Also important to the mine design phase are the hydrogeological and geotechnical model inputs, which define many of the parameters that must be considered.
Discussions have taken place with providers of logistics solutions and services, with the result that NIO recently signed a letter of intent (LoI) with the state owned Austrian company Rail Cargo. This LoI is for supply of all equipment, railing services and maintenance of all, in order to take the products from the mine to the port of Oxelösund, with whom NIO has an existing LoI.
For further information please contact:
Paul Marsden Managing Director
phone: 44 7776 180 988
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.