SOTKAMO SILVER AB ANNOUNCES THE TERMS OF THE RIGHTS ISSUE AND RESOLVES UPON A DIRECTED ISSUE OF WARRANTS

Not for distribution or publication, directly or indirectly, to or within Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa, Switzerland, the US, or any other jurisdiction where the distribution or publication of this press release in full or in part is subject to legal restrictions. This press release does not constitute an offer of any securities in Sotkamo Silver AB. Please see the section “IMPORTANT INFORMATION” below.

On 27 February 2020, Sotkamo Silver AB (publ) (“Sotkamo Silver” or the “Company”) announced that, subject to the approval of the annual general meeting, the board had agreed to issue new shares with preferential rights for existing shareholders to a value of around SEK 60 million (the “Rights Issue”). The purpose of the Rights Issue is to accelerate core drilling and development programmes to extend the mine’s current useful life and to ensure a working capital reserve. The board of Sotkamo Silver is today announcing the terms of the Rights Issue by way of this press release.

Based on the authorisation given by the annual general meeting on 11 April 2019, the board of Sotkamo Silver has also resolved upon a directed issue of warrants which could bring in approximately an additional SEK 22 million to the Company. The issue of warrants will be directed to the Company, which in turn will transfer the warrants for no consideration to those who have been allotted shares in the Rights Issue (the “Warrant Issue”). The rationale for the Warrant Issue and the reasons for deviating from the shareholders’ preferential rights is to make the Rights Issue more attractive to participate in and to create an additional working capital reserve.

SUMMARY OF THE RIGHTS ISSUE

• Shareholders in Sotkamo Silver have preferential rights to subscribe for one (1) new share for every three (3) existing shares of the same class, i.e. a subscription ratio of 1:3.
• The subscription price is set at SEK 1.38 per new share. Provided that the Rights Issue is fully subscribed, the Company will receive approximately SEK 62 million in issue proceeds before the deduction of issue costs.
• The record date for the Rights Issue is 14 April 2020 and the subscription period runs from 16 April to 5 May 2020. The Company intends to publish the prospectus on 15 April 2020.
• The last day of trading in Sotkamo Silver’s shares with the right to participate in the Rights Issue is 8 April 2020.
• The Company has received subscription commitments of approximately SEK 9.4 million (corresponding to 15.2 percent of the Rights Issue). The Company has also received guarantee commitments of approximately SEK 34 million (corresponding to 54.8 percent of the Rights Issue) from a guarantee consortium consisting of qualified investors. Consequently, up to 70 percent of the initial volume of the Rights Issue is covered by subscription and guarantee commitments.
• The Rights Issue is subject to the approval of the annual general meeting, which takes place on 2 April 2020.

SUMMARY OF THE WARRANT ISSUE

• The right to initially subscribe for the warrants shall, by deviating from the shareholders’ preferential rights, be granted to the Company. The warrants are issued without consideration.
• The warrants will thereafter be transferred, for no consideration, to those who have been allotted shares in the Rights Issue as follows: for four (4) shares allotted in the Rights Issue, one (1) warrant shall be transferred.
• Each warrant shall grant the right to subscribe for one (1) new share in the Company at a subscription price of SEK 2.00 .
• The subscription of shares supported by the warrants may take place in accordance with the terms of the warrants from 1 May 2021 to 28 May 2021. 
• The warrants are expected to be admitted for trading on NGM Equity and NASDAQ Helsinki during week 24 2020, provided that NGM Equity and NASDAQ Helsinki approve the Company’s application for the warrants’ admission for trading.

TERMS OF THE RIGHTS ISSUE

Those who are registered as shareholders in Sotkamo Silver on the record date of 14 April will receive one (1) subscription right for each share held. The subscription rights entitle the holder to the preferential right to subscribe for new shares, whereby each three (3) subscription rights entitle the holder to one (1) new share. In addition, investors are offered the opportunity to register their interest in the subscription for shares without subscription rights.

In the event that all shares are not fully subscribed for by way of utilizing subscription rights, the board shall, within the scope of the maximum amount of the Rights Issue, resolve to allocate shares to those who have registered their interest to subscribe for shares without subscription rights, in accordance with the following allocation grounds:

• In the first instance, shares subscribed for without the support of subscription rights shall be allotted to those who have also subscribed for shares with subscription rights, regardless of whether the subscriber was a shareholder on the record date. In the event of oversubscription, the allotment shall be made pro rata in relation to the number of subscription rights used for the subscription and, where this is not possible, by drawing lots.
• Secondly, shares subscribed for without subscription rights shall be allotted only to those who have registered their interest in subscription without subscription rights. In the event of oversubscription, the allotment shall be made pro rata in relation to the number of shares that each person has registered interest for the subscription for and, where this is not possible, by drawing lots.
• Finally, any remaining shares shall be allocated pro rata in relation to the guaranteed amount to those parties who have undertaken to guarantee the Rights Issue.

The subscription price is SEK 1.38 per new share to be listed in Sweden and EUR 0.1252 per new share to be listed in Finland. Provided that the Rights Issue is fully subscribed, the share capital will increase by a maximum of approximately SEK 61,725,388.70 by way of a new issue of a maximum of 44,994,433 new shares. If fully subscribed, the Rights Issue will provide Sotkamo Silver with approximately SEK 62 million before the deduction of issue costs.

The subscription period runs from 16 April to 5 May 2020. The board reserves the right to extend the subscription period and the payment period which, if applicable, will be announced by the Company by way of a press release no later than 5 May 2020.

TERMS OF THE WARRANT ISSUE

The right to subscribe for the warrants shall, by deviating from the shareholders’ preferential rights, be granted to the Company, which in turn will transfer the warrants without consideration to those who have been allotted shares in the Rights Issue as follows: for four (4) shares allotted in the Rights Issue, one (1) warrant shall be transferred. The warrants are issued without consideration.

Subscription for shares by exercise of the warrants may take place in accordance with the terms of the warrants from 1 May 2021 to 28 May 2021. Each warrant shall grant the right to subscribe for one new share in the Company at a subscription price of SEK 2.00. The subscription price in EUR will be determined at the end of April 2021.

If all the warrants are exercised to subscribe for shares, the Company’s registered share capital will increase by SEK 15,431,346.83 by way of a new issue of a maximum of 11,248,608 shares (taking into account the current quotient value and provided that no recalculation is made according to the warrant terms).

The warrants are expected to be admitted for trading on NGM Equity and NASDAQ Helsinki during week 24 2020, provided that NGM Equity and NASDAQ Helsinki approve the Company’s application for the warrants’ admission for trading.

OTHER INFORMATION

The Rights Issue is subject to the approval of the Company’s annual general meeting. The annual general meeting is to take place on 2 April 2020 at 11:00 at Jernkontoret, Kungsträdgårdsgatan 10, Stockholm, Sweden. The notice is available on the Company’s website: www.silver.fi.

SUBSCRIPTION COMMITMENTS AND ISSUE GUARANTEES

The Company has received subscription commitments of approximately SEK 9.4 million (corresponding to 15.2 percent of the Rights Issue). The Company has also received guarantee commitments of approximately SEK 34 million (corresponding to 54.8 percent of the Rights Issue) from a guarantee consortium consisting of qualified investors. Consequently, up to 70 percent of the initial volume of the Rights Issue is covered by subscription and guarantee commitments.

PRELIMINARY TIMETABLE FOR THE RIGHTS ISSUE

ADVISORS

Stockholm Corporate Finance is the financial advisor. A1 Advokater and Advokatfirman Schjødt are the legal advisors to Sotkamo Silver. Hagberg & Aneborn Fondkommission and Evli Bank are the issuing agents in the Rights Issue and the Warrant Issue.

_________________________

Stockholm, 31 March 2020

Sotkamo Silver AB (publ)

Paul Johnsson, CEO

CONTACT

Paul Johnsson, CEO of Sotkamo Silver AB, phone +46 70 777 69 76.

Sotkamo Silver AB is obliged to publish this information in accordance with the EU Market Abuse Regulation. The information was submitted for publication through the agency of the above contact on 31 March 2020, at 20:45.

The official stock exchange announcements are provided in Swedish, and there may be differences in the translated versions. Should there be any differences, the Swedish version takes precedence.

IMPORTANT INFORMATION

This press release does not constitute an offer to acquire, subscribe for, or otherwise trade in shares, warrants, subscription rights, paid subscription shares, or other securities in Sotkamo Silver AB (publ). Investors must subscribe for or acquire securities only on the basis of the information in the prospectus, which will be published before the start of the subscription period for the Rights Issue around 15 April 2020. Within the European Economic Area, no public offer is made in any country other than Sweden or Finland.

This press release must not be published or distributed, directly or indirectly, to or within Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa, Switzerland, the US, or any other jurisdiction where the distribution of this press release is against the law. Similarly, this press release does not constitute an offer to sell new shares, warrants, paid subscription shares, subscription rights, or other securities to anyone in a jurisdiction where it is not allowed to make such an offer to such a person, or where such action would require an additional prospectus, registration, or measures other than those required under Swedish law. The prospectus, registration slip, and other documents attributable to the Rights Issue may not be distributed to or within any country where such distribution or Rights Issue requires measures as stated in the preceding sentence, or where this would contravene the law of that country.

No shares, warrants, subscription rights, paid subscription shares, or other securities have been registered or will be registered pursuant to the 1933 United States Securities Act in its current version (“the Securities Act”) or securities legislation in any state or other jurisdiction of the US, and may not be offered, subscribed to, utilised, pledged, sold, resold, granted, supplied, or otherwise transferred, directly or indirectly, to or within the US, except in accordance with any applicable exemption from or by way of a transaction that is not covered by the registration requirements of the Securities Act and in accordance with the securities legislation in the relevant state or other jurisdiction of the US.

This press release contains some forward-looking information that reflects the Company’s current view of future events and financial and operational development. Words such as “intended”, “will”, “believed”, “assessed”, “expected”, “planned”, “estimated”, and other expressions that imply indications or predictions of future developments or trends constitute forward-looking information. Forward-looking information is inherently associated with both known and unknown risks and uncertainties because it is dependent on future events and circumstances. Forward-looking information does not constitute a guarantee of future results or developments. Actual results may differ substantially from what is stated in this forward-looking information. This information, these opinions, and the forward-looking statements contained in this press release are valid only on this date and are subject to change without notice.

About Sotkamo Silver AB (publ)

Sotkamo Silver’s business concept is the development and extraction of metal deposits in the Nordic region. The business is run with due regard for people and the environment. Sotkamo Silver owns mineral deposits containing silver and gold in Finland and zinc and gold in Norway. The company’s primary project is the Silvergruvan mine in the municipality of Sotkamo.

Sotkamo Silver applies SveMin’s and FinMin’s joint reporting rules for public mining and exploration companies. Sotkamo Silver has chosen to report its mineral resources in accordance with the internationally accepted JORC or NI 43 101 codes. Sotkamo Silver applies the International Financial Reporting Standards (IFRS) as well as the standards adopted by the European Union.

Sotkamo Silver’s ticker code is SOSI for NGM Equity and SOSI1 for NASDAQ Helsinki.

The ISIN number for Sotkamo Silver AB’s shares is SE0001057910.

The Legal Entity Identifier (LEI) number is: 213800R2TQW1OZGYDX93.

Find out more about Sotkamo Silver at www.silver.fi

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