Status report - unexpected presence of waste rocks causes lower production volume in May

• After a positive start to the second quarter, the yield temporarily suffered a sharp fall in May due to the unexpected presence of waste rock in the ore.
• The variations in the ROM iron content means that the previous target of positive EBITDA in the second quarter will not be achieved. In the current situation, the yield in May does not give rise to any adjustment to the estimate for the rest of the year.
• The ongoing investment programme is expected to increase the finished product yield by 10 to 15 percentage points.
• The increased uncertainty about this year's production volume and therefore cash flow means that the Company is considering initiating discussions with regard to the terms and structure of the loan portfolio.

The iron content of the crude ore from the Dannemora mine has varied widely during the beginning of the second quarter. After a relatively stable first quarter, with an average yield of approx. 30 percent, there was a gradual increase in the early part of the second quarter, rising to a peak during one day of 49 percent. The yield then fell to a low of 14 percent. The reason for the decline was that pockets of waste rock were unexpectedly encountered in two of the high-grade ore bodies that were being mined. The location of the pockets of waste rock meant that they also had to be mined. The waste rock has now been passed and the yield has in the latter part of May returned to more normal levels and amounted as of 26 May to 40 percent.  

The mine has produced more or less the planned quantity of ore so far in 2013, although the iron content has been lower than expected. The percent yield of finished product from sorting correlates strongly with the iron content of the run-of-mine crude ore, but is also highly dependent on the nature of the mineralisation. The ROM iron content of the ore for the period January until week 19, when the waste rock was encountered, ranged from 29 to 36 percent. With regard to ROM iron content, the yield at the sorting plant was as expected.

The Company is pursuing the investment programme aimed at increasing the yield significantly in two stages, which totals SEK 30 + 80 million. The investments from phase one are being installed in the existing works during week 23, and this is expected to result in a yield weight improvement of around 3 percentage points. Tests by an independent laboratory show that including the upcoming expansion in phase two the investments will result in a yield increase of 10-15 percentage points.

A variety of ores has now passed the sorting plant and conclusions have been drawn about how the different ore bodies' iron content and mineralisation affects the operation. Ores with a mineralisation and content that works well in the existing plant can therefore be prioritised until step two in the investment programme is implemented and the dependence on the nature of the individual ores declines. Overall, this should give a more stable and rising yield weight in the future.

The temporary decline in the yield in May means that the Company will not achieve a positive EBITDA in the second quarter. In the current situation, this does not necessitate any adjustment to the estimate for the rest of the year. However, with the sharp variations in ROM iron content and yield there is some uncertainty about the production volume for the remainder of the year, which in turn means increased uncertainty regarding the estimated cash flow for the year. The Company is therefore considering initiating discussions with regard to the terms and structure of its loan portfolio.

For further information, please contact:

Ralf Nordén, President and CEO
Telephone  +46 709 374 891
Ralf.norden@dannemoramineral.se

Staffan Bennerdt, Financial Advisor             
Telephone +46 295 24 44 22, +46 705 136 114
Staffan.bennerdt@dannemoramineral.se

Dannemora Mineral AB is a mining and exploration company of which the primary activity is mining operations in the Dannemora iron ore mine. The Company also engages in exploration activities to increase the iron ore base locally and regionally in several areas in Uppland where the potential for finding mineable deposits is considered good.

Dannemora Mineral comprises the Parent Company Dannemora Mineral AB and the wholly owned subsidiaries Dannemora Magnetit AB (responsible for operation of the Dannemora mine and the Group’s exploration activities) and Dannemora Förvaltnings AB (responsible for the property portfolio) and Dannemora Iron Ore Development AB, where parts of the company’s future exploration will be operated.

The Company’s most important asset is the iron deposit in the Dannemora Mine, and activity is focused mainly on the mining of this deposit at present.

The Company is listed on NASDAQ OMX First North, Stockholm, and Oslo Axess. The Company's Certified Adviser on First North is Remium AB. 

The Company's independent qualified person is mining engineer Thomas Lindholm, Geovista AB, Luleå. Lindholm is qualified as a Competent Person as defined in the JORC Code based on education and experience in exploration, mining and estimation of mineral resources of iron, base and precious metals.