Summary of Interim Report January – June 2012 [1]

Highlights

• Total Revenues Q2 KSEK 84,219 (39,188) and H1 KSEK 118,669 (64,909)
• EBITDA before unrealized loss on derivatives Q2 KSEK 44,834 (5,418) and H1 KSEK 46,005 (3,956)
• Operating result Q2 KSEK 8,838 (-11,317) and H1 KSEK 810 (-15,492)
• Profit after tax Q2 KSEK 3,680 (-6,200) and H1 KSEK 2,475 (-11,675)
• High head grade combined with high capacity utilization led to a record high gold production of 244.5 kg (7,862 oz) in Q2 2012
• Cash Cost Q2 692 USD/oz (919) and H1 770 USD/0z (1,006)
• Cash flow before working capital change H1 KSEK 42,725 (1,408)

 
Production Production guidance for 2012

The Company maintains its gold production guidance for 2012 stating that the Company could potentially not reach the planned production level of 800 kg (25,700 oz) for the full year of production.

Comments on operations

The second quarter of 2012 has been our best so far, with the highest volume of gold production since inception of the Pampalo mine. Underground mine production reached its highest quarterly head grade as ore was sourced from high grade areas in accordance with our mining plan. The processing plant also provided the highest ever throughput tonnage. Both these factors led to a record gold production of 244.5 kg (7 862 oz) for the second quarter.

This record gold production, combined with the absence of gold hedge settlements during the period (as per the April agreement with Nordea Bank), resulted in a strong cash flow result for the Q2 period. EBITDA for the Pampalo Gold mine was MSEK 48.

Underground mine operations have continued at full capacity, both during the reporting period and subsequently. Drifting has been carried out using our own drifting jumbo, supported by additional contractor equipment and personnel.

We are also very pleased with the development of our safety record. Continuous efforts to improve safety at the Pampalo Gold Mine have produced results, and this was our second quarter without any Lost Time Injuries. At the end of the period, our own workforce has had 460 days without accidents, and our contractors over 100 days. These figures bear testimony to the high quality of work carried out at Pampalo. However, despite the positive safety record of these last two periods, we remain vigilant: our twelve months’ record shows two Lost Time injuries incurred by our contractor personnel, resulting in an overall LTIFR of 11. Whilst this figure is clearly better than the industry average, Endomines remains committed to our overall safety target of “zero accidents.”

Commercial production and deliveries of gravimetric concentrate started during Q1/2012, and the final off-take agreement for all of the Pampalo gravimetric concentrate production was signed in May with Scandinavia’s largest suppliers of precious metals, K.A. Rasmussen AS, Norway. The volume of deliveries and estimated concentrate grade allow for up to 100% of gravimetric concentrate production to be delivered to Rasmussen. The agreement is signed for a period of one year, with the option of renewal for a further one-year period.

The underground core drilling campaign at the Pampalo mine, which has focused on an area between the Pampalo and Pampalo East ore zones, discovered a new mineralized zone yielding robust intercepts with grades comparable with the previously known gold lodes at Pampalo. These intercepts include 6 m @ 5.9 g/t gold, 12.6 m @ 5.2 g/t, and 9.8 m @ 5.0 g/t in addition to previously drilled intercepts yielding 9.2 m @ 4.1 g/t and 11.6 m @ 3.2 g/t gold, and provide solid confirmation of the existence of this mineralized zone. So far, results have been received from ten holes and the drilling campaign has proceeded further with a view to following the mineralized zone. Complete results will be published on the company web-site in due course.

A further regional exploration campaign on the Karelian Gold Line started during the spring. Results from this campaign will be published in due course when received.

Another key focus area for Endomines during the reporting period has been the expansion of Pampalo. The capacity expansion of the processing plant is progressing as planned. The second-hand refurbished grinding mill acquired at the end of last year was delivered to the Pampalo mine site on schedule, and construction of the mill foundation and pedestals has been completed. The installation of the grinding mill is due to begin soon. Final engineering plans as well as procurement and preparations for installing other necessary equipment are also underway. We are confident that the expansion project can be completed before or by the time the recently applied-for environmental permit is processed. This approval is expected in early 2013.

The Pampalo Gold Mine has now reached stable production levels. However, a lot of challenges lie ahead for our personnel. Our main targets will be to continue to improve production head grade through reducing waste rock dilution and simultaneously increasing underground production capacity. With regards to the processing plant, our key challenge will be installing the second grinding mill and other additional equipment with minimal production disturbances.

Furthermore, in light of recent months’ disclosures and public debate regarding the environmental footprint and social license of the mining industry in Finland, the Endomines management team has also focused its efforts on maintaining an active dialogue with the local community. To this aim, Endomines has invited locals to regular updates regarding progress at Pampalo and exploration on the Karelian Gold Line. We also held an “Open Doors Day” on 9thJune, which was attended by 250 locals, including members of the press.

Subsequent events:

Endomines has previously announced our intention to focus on gold exploration and mining and that we have been considering various strategic alternatives with regards to our industrial mineral assets. A major step was taken on 5thJuly 2012, when Endomines entered into an agreement with the Australian company, Cove Resources Ltd. ("Cove Resources"), whereby Endomines agrees to sell all of the shares in its wholly owned subsidiary Kalvinit Oy ("Kalvinit") to Cove Resources. The transaction covers all of Endomines ilmenite assets on the Finnish west coast. Kalvinit’s remaining limestone deposit and copper claims will be transferred to Endomines or a wholly-owned subsidiary of Endomines.

Full details of the transaction can be found on the company web-site, on www.endomines.com

Calendar 2012

• Next Interim report (Q3 – 2012) will be published on November 12, 2012

 
A full interim report (in Swedish) is available on the Company´s website.

 
For further information, please contact:

Markus Ekberg, CEO of Endomines AB

tel. +358 40 706 48 50

Or visit the Company's website at www.endomines.com

 
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 has several other gold and industrial mineral properties at various stages of development. All Endomines’ mineral assets are located in Finland, which is politically stable, has a highly developed infrastructure and is ranked as one of the most favorable jurisdictions for the mining industry.

Endomines aims to increase shareholder value by developing its strong portfolio of assets, as well as exploring new deposits on the Karelian Gold Line and in Finnish Lapland. The company will also consider new opportunities and acquisitions for further growth.

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.

Endomines applies International Financial Reporting Standards (IFRS) as approved by the European Union.

The shares of Endomines AB are quoted on the First North Premier segment in Stockholm under ticker ENDO.ST. Erik Penser Bankaktiebolag acts as Certified Adviser and Liquidity Provider.

Read more about Endomines on www.endomines.com

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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] This English translation is a shortened version of the complete Swedish quarterly report. In case of differences the Swedish version is prevailing.
[2] 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.
[3] 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.

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