Year-end Report January – December 2016

Significant events during the fourth quarter 2016

  • The company received a commitment of SEK 2 million before in short term loans from large shareholders, half of which was used.
  • Gap analysis of geotechnical and geophysical data to help define any deficiencies in the information necessary to build geotechnical and hydrogeological models for inclusion in the mine design.
  • Initiate a new Mineral Resource Estimate (MRE) by DMT to include an expanded mining concession area.

Fourth quarter, 1 October – 31 December 2016

  • Net income amounted to SEK 0 million (0)
  • Earnings after tax amounted to SEK -1.9 million (-2.2)
  • Investments during the period October – December totalled SEK 0.7 million (1.3)
  • Basic earnings per share were SEK -0.05 (-0.12)

The whole year, 1 January – 31 December 2016

  • Net income amounted to SEK 0 million (0)
  • Earnings after tax amounted to SEK -8.7 million (-12.9)
  • Investments during the period January – December totalled SEK 4.1 million (10.7)
  • Basic earnings per share were SEK -0.24 (-0.79)
  • Cash and cash equivalents on 31 December 2016 amounted to SEK 1.0 million (12.7)

Significant events after the end of the period

  • A rights issue of new shares raised SEK 18.3 million in new equity before issuing costs.

Heading Out of the Trough? - The Iron Ore Market Maintains Recovery

It is great to be able to report that not only has NIO continued to refine the feasibility study, but that the market for iron ore looks a lot more hopeful for NIO.

NIO has continued to develop the project with a view to designing a low cost and sustainable operation using the latest energy efficient processes in order to survive as a long term viable business. The next step is the mine design stage, where we hope by use of state of the art techniques we are able to continue to refine the design to reduce our costs further. It also seems the market may finally be with us.

Iron ore prices have sailed through the $80/t levels in recent times, with occasional dips into the high $70/t. 

Perhaps more importantly, the iron ore futures continue to rise and this is the biggest reflection of confidence and sentiment in the market, hence many the analysts and banks are now predicting much higher pricing well into 2017 than they were a year ago.

Those analysts with greater understanding of China have realised that despite the rise in iron ore prices back to $80/t, virtually no Chinese iron ore mines that had already closed have been reopened. This is in part, no doubt, due to the fact that it probably needs iron ore prices above $100/t to do so. On the basis that 60% of Chinese iron ore capacity has closed, it is thought that it is likely to stay that way and that almost all the growth in Chinese demand will have to be met by imports.

The economy in China appears to be continuing to improve and the steel industry grows at a steady pace around 6%. As Chinese imports of iron ore exceeded 1bnt in 2016 it is reasonable to assume that there will be another 60-70Mt/y of demand from China alone for a few years to come.

We all await to see if the big iron ore supply companies flood the market to keep out other new and significant iron ore suppliers, or if there is enough room to accommodate them. In either case NIO relatively small output will not disturb the market anywhere.

There is strong evidence that Chinese, Japanese and Korean buyers are starting to look for higher quality ores. This will be driven by increases in pelleting activities, environmental pressures and productivity demands. The estimated total premiums for NIO ores in Asia are now estimated at $20-25t above the base indices of 62%Fe.

I would finally like to thank all the investors who have supported NIO through this recent rights issue to fund our next important step. This will provide NIO with every chance to take advantage of the improving sentiment in the market place. This should ensure that the company can move forward rapidly in the coming months towards a time when the plans to list the company and finance the construction of the project will take place.

For further information please contact:

Paul Marsden  Managing Director
phone: 44 7776 180 988

paul.marsden@nordicironore.se

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 .

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