Interim Report January – March 2015

Significant events during the first quarter 2015

• The results of pilot tests were announced at the end of January
• Property owners appealed against the detailed development plan approved for the industrial areas in Blötberget
• The design work for the Skeppmora rail terminal was completed
• Cutfield Freeman & Co was engaged as the Company’s financial adviser

The first quarter, 1 January – 31 March 2015

• Income amounted to SEK 0 million (0)
• Earnings after tax amounted to SEK -3.7 million (-5.8)
• Investments in the period October–December totalled SEK 5.3 million (3.3)
• Basic earnings per share were SEK -0.26 (-0.50)
• Cash and cash equivalents at 31 March 2015 amounted to SEK 8.5 million (0.8)

Significant events after the period end

• An updated estimate of the mineral resources in Blötberget was announced at the end of April
• Following the rejection by the County Administrative Board of objections by property owners to the detailed development plan for the industrial areas in Blötberget, the plan was finally adopted

Comments from the CEO

An important step forward in an insecure business environment

The market for iron ore seems to have touched bottom following a significant upturn in prices in April. The shake-out in the market that is currently under way, due to the substantial expansion in low-grade ore production mainly by Rio Tinto, BHP Billiton and Fortescue in Australia, is also starting to have an adverse effect on the Australian state budget. There are signs that the largest ore producers are in part influenced by the criticisms currently being advanced by the Australian Government.

In addition, the market is starting to show signs of earlier market segmentation than before, as there is now a lack of high-quality ore concentrate. We see this in the contacts we have with prospective customers.

We gather from these customer contacts that the demand for high-quality iron ore concentrate will continue to rise and exceed the production output that is planned over the next few years. This interpretation is supported by the view of the market taken by the iron ore producer Vale, as recently expressed in an article in the Financial Times, in which Vale, which is the largest producer of iron ore in the world, judges that the price premium for high-grade ore will be high and sustainable in the long term. This is favourable to our project.

During the period, we appointed Cutfield Freeman & Co as our new financial adviser. This company is an acknowledged adviser in the raw materials sector, and this gives us access to informed contacts with specialist funds. This collaboration is an important step in advance of the considerable plant and equipment financing to come.

During the period, work continued on the feasibility study for Blötberget, and in the middle of April DMT was ready with the technical report. The results highlight two positive factors that will be extremely important for the continued success of the project. The report shows that the production costs can be expected to be competitive even at low price levels and points to a significant reduction in the previously assessed investment requirements before production can be started.

The aim of the technical report is to act as a checkpoint for the future process development work in collaboration with future customers, to serve as guidance for the coming detailed design work and to provide a basis for the work of future capitalisation of the Company.

Despite the satisfactory development of the Blötberg project and approaching better times for producers of high-quality iron ore concentrate, there remain difficulties in financing the Company’s operations in the short term up to the large plant and equipment financing. At present, a hectic period of work is under way to secure the financing of the last part of the feasibility study, and it is my hope that this will be successful in the next few months.

For further information: Christer Lindqvist, CEO 46 (0)240-88301
                                           christer.lindqvist@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.