Interim Report January – March 2020

Significant events during the first quarter 2020

• The company commissioned the grid owner to move a 50kV line
• Bergsstaten approved the company’s application for an exploration permit for an area next to the existing mining concessions in Blötberget

First quarter, 1 January – 31 March 2020

• Income amounted to SEK 0 million (0)
• Earnings after tax amounted to SEK -2.5 million (-2.5)
• Investments during the period January – March totalled SEK 0.4 million (5.4)
• Basic earnings per share were SEK -0.08 (-0.12)
• Cash as per 31 March 2020 amounted to 7.5 million (3.8)

Significant events after the end of the period

• The board decided to postpone the AGM until 29 June 2020
• Whittle Consulting was engaged for an optimisation study on Blötberget

A turbulent quarter

Q1 2020 offered up more drama than anyone could have predicted. The exception was the market for iron ore, which stayed surprisingly stable.

The goals for the work during the quarter focused primarily on two areas – discussions with potential suppliers and raising financing. The coronavirus pandemic affected the conditions in both of these areas, albeit to varying extents. We transitioned, like almost everyone else, to maintaining contact via video meetings. This has worked surprisingly well, so despite these limitations our work has progressed, although at a slower pace than we may have wanted.

Our efforts to raise financing have been significantly more affected by the pandemic. The considerable uncertainty and resulting volatility on the capital market has made it a major challenge to raise capital. We have therefore chosen to lay low with these activities and focus on creating conditions that are as favourable as possible for when the circumstances have normalised and we are able to renew our efforts. It is impossible to predict how quickly we will leave the problems behind us, but it is evident that the delay in the project is time we will not be able to recoup.

However, every cloud often has a silver lining, and the old adage “more haste, less speed” is often a sensible approach. A few years ago, the iron ore market experienced a rapid and sharp decline that forced out several of our industry colleagues. We took the opportunity then to review our plans since the earlier plan of simultaneously starting two mines and running iron ore trains through the centre of Ludvika was scrapped. Instead, we adopted the current plan: to create an integrated mining area underground starting with Blötberget and expanding toward Håksberg via Väsman. The obstacles, in other words, resulted in a significantly more environmentally friendly project with a significantly lower initial investment need. The current slow-down might not have as much of a disruptive impact, but we are evaluating and considering the opportunities to improve the mine that are described in the feasibility study in order to be able to base the local planning on even better information.

At the beginning of May, we therefore contracted the internationally renowned Whittle Consulting to conduct an optimisation study for Blötberget. The study uses the existing feasibility study as its point of departure but also takes into consideration the bids we received that reduce the uncertainty in the cost assumption in certain areas. The study also simulates the possibilities for influencing the economic outcome by varying the assumptions for how the work underground takes place. For example, the feasibility study uses a single assumption on the threshold at which the extraction of iron content is economical even though the costs for extraction can vary between different parts of the mine. Whittle’s study focuses on finding the planning and dimensions that maximise the economic outcome.

In February, Bergsstaten approved our application for an exploration permit for an area next to our mining concessions in Blötberget. The preliminary results of the exploration conducted a year ago as part of the EU-financed research project Smart Exploration, which develops and tests new techniques for prospecting, show that this area is interesting. 

In February, we commissioned the network owners, Västerbergslagens Elnät AB, to move and adapt the existing 50 kV lines that are above the planned location of the processing plant. The overhead lines must be moved, and even placed underground, to allow for construction of the future industrial area.

In summary, work is progressing despite the problems introduced by the coronavirus pandemic, and what has emerged so far supports our perception that the project is even better than what the feasibility study shows. It will be very exciting to see what the optimisation study shows.

Lennart Eliasson

Managing director, Nordic Iron Ore AB (publ)

For further information please contact:

Lennart Eliasson Managing Director
phone: +46 70 640 5177

lennart.eliasson@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. 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 Growth Market. Wildeco is the company’s Certified Adviser (info@wildeco.se tel +46-8-545 271 00).