Interim Report January – June 2019
Significant events during the second quarter 2019
- SRK Consulting is retained to perform a scoping study of the potential in the Väsman field.
- Exploration permit for Ludvikafältet # 1 is granted by the Swedish Mining Inspectorate.
- Golder Associates informed that the feasibility study will be delayed by approx. one month.
- A short-term credit facility amounting to SEK 10 m was granted by the two largest owners.
- Timo Lindborg was elected member of the board at the AGM.
Second quarter, 1 April – 30 June 2019
- Income amounted to SEK 0 million (0)
- Earnings after tax amounted to SEK –2.8 million (–2.6)
- Investments in the period April–June totalled SEK 3.4 million (2.6)
- Basic earnings per share were SEK –0.14 (–0.23)
Interim period, 1 January – 30 June 2019
- Income amounted to SEK 0 million (0)
- Earnings after tax amounted to SEK –5.3 million (–5.1)
- Investments in the period January–June totalled SEK 8.8 million (3.7)
- Basic earnings per share were SEK -0.27 (–0.45)
- Cash and cash equivalents on 30 June 2019 amounted to SEK 5.4 million (1.0)
Significant events after the end of the period
- To strengthen the financial position a short-term loan amounting to SEK 5m was raised.
NIO approaches the end of the feasibility study for the project in Blötberget and the market continues to look promising
Work during the second quarter was primarily focused giving feed-back to Golder on parts of the feasibility study as drafts of chapters were presented.
SRK were retained to conduct a scoping study on the Väsman field. The aim is to make a high-level estimate of the potential and suitable approach to continued exploration and development of this exciting expansion potential. The ambition is to have this report ready approximately at the same time as the feasibility study for Blötberget in order to give a more complete picture of the whole project and put Blötberget into context.
Two series of field works were done within the EU-sponsored research project Smart Exploration. Seismic measurements were performed in the Blötberget area and helicopter-based deep penetrating TEMs covering also the Väsman mineral field. It will be very interesting to see what these tests can reveal about the mineral resources in the area.
Towards the end of the period Golder forewarned about a delay in the completion of the study. Initially the aim was to have a preliminary result in May and a finished report in June, but now the end of July or early August was indicated as likely time for a complete report. A draft covering all technical aspects was delivered in July, but our internal review resulted in requests for additions and adjustments, thereby prompting further work on an updated version which is now expected to be ready to be presented to the company towards the end of August.
In order to secure the financing necessary for the completion of the study and for the time needed for analysis and evaluation and to make contact with potential investors a short-term credit facility was granted by the two largest shareholders. After the information from Golder about the delay this facility was supplemented by loans of SEK 5 million from external lenders. The facility and loans all fall due at the end of this year.
The first quarter of 2019 saw iron ore price differentials start to close a little and the prices rise for the base 62%Fe indices from around $70.t to $90/t. These trends continued to prevail with the 62%Fe Indices reaching unexpected highs around $120/t, whilst the differentials continued to shrink from the highs of around $10/1%Fe/t to closer to $3-4/1%Fe/t. Futures in higher quality iron ores have also begun to rise significantly more than predicted a short while ago.
These effects have all been driven by a greatly reduced supply from one of the biggest suppliers, Vale, which is estimated to be losing close to 90Mt of product availability in 2019 and poor weather conditions in Australasia damaging infrastructure and affecting shipments. Long-term predictions by analysts suggest that the iron ore prices will fall in a medium-long term as suppliers readjust, but demand continues from China and Asia to stretch the supply chain.
During the period of July and August the iron ore price started to show some volatility again, apparently indicating, perhaps correctly, that the base IODEX 62%Fe had risen too high earlier in the year and that it was unsustainable once a threshold was reached and China was able to add its own supply. Additionally, the trade relations between China and the US has started to have a negative impact and this also fuelled the decline. Consequently, the index fell 13% in one week in early August and by mid-August the indices has corrected to around $90/t. The premium priced ores have also fallen, with the pricing at around $3/1%Fe raise, putting NIO average 69%Fe grade at around $111/t plus some value-in-use premium of a further $3/t.
The news that Vale is now able to resume production at some of the mines that were halted while investigations into their tailings dam situation and some resumption of production in China have dented the ore prices and caused the correction. Many traders and analysts believe that these falls are temporary and the market will stabilise at a level somewhat below the peaks recently seen in the new year. Goldman Sachs are suggesting that $115/t for the 62%Fe is likely in the short term. The overall view is that high quality ores will regain some of the additional premium as demand from Asia and developing markets will continue and environmental efforts intensify. Many believe that the long-term sustainable premium is closer to $15/t between the 62 and the 65%Fe Iodex.
We now look forward to the result of the DFS. After that, our focus will be on securing the financing to start operations in Blötberget. With sound funding we can then realize our plans for the entire Ludvika Mines project.
For further information please contact:
Lennart Eliasson Managing Director
phone: +46 70 640 5177
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. The Company has all the necessary permits in place for the mine in Blötberget and will be able to produce iron ore of extremely high quality.
For more information, see www.nordicironore.se.
Nordic Iron Ore’s shares and warrants are listed at Nasdaq First North Stockholm. Wildeco is the company’s Certified Adviser.
This information is required and provided by Nordic Iron Ore AB (publ) under the EU Market Abuse Regulation. The information was provided by Cision for publication at the date and time set above.