Nordic Mines AB (publ) Interim report January - June 2014

Second quarter 2014
·       Net sales proceeds for Gold and silver amounted to SEK 10.0 million (SEK 97.3 million).
·       The company recorded an operating loss of SEK -26.0 million (SEK -10.1 million).
·       Loss after tax for the period amounted to SEK -27.1 million (SEK -26.6 million), corresponding to SEK -0.08 (SEK -0.08) per share.
·       Comprehensive income for the period amounted to SEK -32.8 million (SEK 37.7 million), corresponding to SEK -0.10 (SEK 0.11) per share.
·       Cash and cash equivalents were SEK 7.0 million (SEK 21.9 million, 31 March 2014) at the end of the period.
·       Investments were SEK 0.8 million (SEK 10.2 million).
·       As Nordic Mines decided to stop production at the Laiva mine until further notice, no ore was processed during the period. However, the tanks at the processing plant were emptied and doré bars equivalent to 36 kg of gold were produced.
·       On 8 April 2014, Nordic Mines published the annual report for the 2013 fiscal year.
·       Nordic Mines held an extraordinary general meeting on 28 April 2014. The EGM decided to approve the Board's decision from 25 March 2014 on one rights issue for Company shareholders and two directed new share. Under the terms of the rights issue, full subscription of the rights issue provides the Company a maximum of SEK 194 million before issue expenses. For more information on new share issues, refer to the section New share issues.
·       On 7 May 2014, Nordic Mines published a prospectus regarding the rights issue.
·       On 5 June 2014, Nordic Mines announced a preliminary agreement with the Company's lenders after the Company entered into a non-binding term sheet with its lenders. The preliminary agreement includes write-down of debt from EUR 45 million (approx. SEK 410 million). Pursuant to the preliminary agreement, after write-down lenders received EUR 12.5 million (approx. SEK 113 million) in extended loan, payment of diverse one-off costs of EUR 2.5 million (approx. SEK 23 million) and the issue of warrants in Nordic Mines (after the completed new issues) equal to 12 per cent of the outstanding shares in the Company or EUR 2.5 million (approx. SEK 23 million), whichever is higher.
·       On 27 June, Nordic Mines held its annual general meeting. The AGM resolved, among other things, to grant the outgoing Board discharge from liability and the Chairman and remaining board members were re-elected. The AGM also authorised the Board to decide on one or several issues of warrants without preferential rights to shareholders. This authorisation is part of the preliminary agreement with the Company's lenders.
·       Since applying for reorganisation, the bank consortium continues to exercise an administrative option of withholding payments from sales of gold, which increases the risk of delayed or missed payments to other creditors, such as suppliers, authorities and employees.

Post balance sheet events

·       On 31 July 2014, the Uleåborg District Court adopted the composition plan proposal filed with the court by the administrator for Nordic Mines' Finnish subsidiary, attorney Hannu Ylönen of the law firm Krogerus. For the subsidiary's unsecured creditors, the composition means full cash payment for claims amounting to maximum EUR 1,000 (approx. SEK 9,000). For claims exceeding EUR 1,000, the composition prescribes 10 per cent payment of the total claim amount.
·       On 7 August 2014, the Uppsala District Court adopted the composition plan proposals filed with the court by the administrator for Nordic Mines' Swedish companies, attorney Håkan Rudström of the law firm Lindahl. For the Swedish companies' unsecured creditors, the composition plan proposals mean full cash payment for claims amounting to maximum SEK 9,000 and 10 per cent payment of claims exceeding this amount.
·       On 11 August 2014, Nordic Mines announced that the Company had reached an agreement in principle with its lenders, which largely confirmed the preliminary, non-binding agreement presented on 5 June 2014. In addition, the agreement entailed, among other things, that the Company accept stringent demands when it comes to factors such as a ramp-up plan, financial model and operational testing. If the Finnish subsidiary fails to comply with the demands in the agreement in principle, an event of default under the facility agreement will be at hand which may result in the lenders having a right to apply for the Finnish composition plan to be revoked.
·       On 14 August 2014, Nordic Mines announced that the final contract documentation regarding the agreement with the Company's lenders presented on 11 August 2014 had been signed. With the agreement, all of the stipulated conditions for registration for subscription of shares in the rights issue were met.
·       On 14 August 2014, Nordic Mines published a supplementary prospectus regarding the upcoming rights issue. The supplementary prospectus was drafted due to the final agreement with the Company's lenders and the composition plans adopted by the Swedish and Finnish courts.
·       On 22 August 2014, Nordic Mines announced that it received notification of subscription for new shares in the rights issue amounting to SEK 100 million.  The outcome of the issue meant that the rights issue on its own did not subsequently provide the Company the minimum capital contribution of SEK 150 million which was imposed as a condition for implementing the rights issue. At the same time, the Board announced that the Company was continuing to work within the framework of the financing plan presented in April 2014 to achieve the imposed issue condition relating to minimum capital contribution. In the event that additional capital contribution equivalent to at least SEK 50 million could not be obtained, there would be a risk that the Company will be forced to declare bankruptcy.

January - June 2014

·       Net sales proceeds for gold and silver amounted to SEK 61.6 million (SEK 182.7 million).
·       The company recorded an operating loss of SEK -62.8 million (SEK -69.1 million).
·       Loss after tax for the period amounted to SEK -63.6 million (SEK -72.3 million), corresponding to SEK -0.19 (SEK -0.23) per share.
·       Comprehensive income for the period amounted to SEK -69.8 million (SEK 15.2 million), corresponding to SEK -0.20 (SEK 0.05) per share.
·       Cash and cash equivalents were SEK 7.0 million (SEK 28.1 million, 31 December 2013) at the end of the period.
·       Investments were SEK 1.2 million (SEK 36.0 million).

Comments by the Managing Director, Thomas Cederborg

"Through the agreement with the Company's lenders and the composition plan proposals adopted for the Company's Swedish and Finnish subsidiaries, debts totalling approximately EUR 48 million (approximately SEK 440 million) have now been written down. In combination with a capital contribution, this enables restart of the Laiva mine. We are grateful for the confidence shown by Company shareholders through their submission of registrations for subscription in the rights issue in an amount equivalent to SEK 100 million. The Company Board and management are now working intensively within the framework of the financing plan presented in April to achieve the set issue condition relating to minimum capital contribution of SEK 150 million," says Managing Director Thomas Cederborg in a statement.

Reorganisation proceedings

On 7 August 2014, the Uppsala District Court decided to adopt the composition plan proposals filed with the court by the administrator for Nordic Mines' Swedish companies, attorney Håkan Rudström of the law firm Lindahl. For the Swedish companies' unsecured creditors, the composition plan proposals mean full cash payment for claims amounting to maximum SEK 9,000 and 10 per cent payment of claims exceeding this amount. On 31 July 2014, the Uleåborg District Court decided to adopt the composition plan proposal filed with the court by the administrator for Nordic Mines' Finnish subsidiary, attorney Hannu Ylönen of the law firm Krogerus. For the subsidiary's unsecured creditors, the composition means full cash payment for claims amounting to maximum EUR 1,000 (approx. SEK 9,000). For claims exceeding EUR 1,000, the composition prescribes 10 per cent payment of the total claim amount. The composition plan includes conditions that allow the Company's lenders and the composition plan supervisor, under certain conditions (which are presented in more detail in the composition plan proposal) to apply for the composition to be revoked.

Additional disclosures regarding the composition plans are provided in the supplementary prospectus that has been registered by the Swedish Financial Supervisory Authority and published on 14 August 2014.

Project loans

Nordic Mines has signed final contract documentation regarding an agreement with the Company's lenders, which  includes, inter alia:

Write-down of debt from EUR 45.1 million (approximately SEK 406 million) to EUR 12.5 million (approximately SEK 113 million).A one-off cost of EUR 2.5 million (approximately SEK 23 million) to pay accrued interest and other costs related to current debt.Issue of warrants in Nordic Mines directed to the Company's lenders. The new shares that can be subscribed by exercising the warrants, where the parties' intention is that these shall be paid through offset against outstanding debt under the facility agreement, shall after the completed rights issue (and any targeted issues) be 12 per cent of the outstanding shares in the Company or EUR 2.5 million (approximately SEK 23 million), whichever is higher.

Through the agreement with the Company's lenders and the composition plan proposals adopted for the Group's Swedish and Finnish subsidiaries (see the section "Reorganisation proceedings" above), debts totalling approximately EUR 48 million (approximately SEK 440 million) are being written down.

The agreement also includes that Nordic Mines accepts stringent demands when it comes to the drafting of a ramp-up plan for the Laiva mine and an updated financial model (which shall be approved by the lenders) and that various operational tests shall start to be measured already for the period 1 February - 30 April 2015. If the Finnish subsidiary fails to comply with these or other demands, an event of default under the facility agreement will be at hand which may result in the lenders having a right to apply for the Finnish composition plan to be revoked.  Additional disclosures regarding the agreement are presented in the supplementary prospectus.

With the agreement with the Company's lenders, all conditions of registration for subscription of shares in the rights issue are met.

 New share issues

Nordic Mines' extraordinary general meeting resolved on 28 April 2014 to approve the rights issue for new shares previously resolved by the Board of Directors. The EGM also resolved to approve two directed new share issues to long-term investors and the Company's creditors. The subscription deadline for the rights issue was initially 22 May 2013, althoughthe Board had the possibility to decide on extensions. After such extensions deadline was finalised as 15 August 2014.

For further information, please contact:
Thomas Cederborg, CEO, +46 708 480 521
Susanne Andersson, CFO, +46 730 668 904

For further information regarding Nordic Mines, please connect to www.nordicmines.com

The information above has been made public in accordance with the Securities Market Act and/or Financial Instruments Trading Act. The information was published at 09.00 (CET) on August 29, 2014.

Nordic Mines is a Nordic mining and exploration company whose vision is to be one of the leading gold producers in the Nordics and Europe and a role model in respecting the environment. The company started mining gold in the Laiva mine in Finland in summer 2011. These gold deposits are among the largest in the Nordic region. Exploration is in progress in Finland and in Sweden. Nordic Mines was established 2005 and have more the 100 employees with head office in Uppsala, Sweden, The Nordic Mines share is traded on the Nasdaq OMX Small Cap list in Stockholm.

Nordic Mines Interim report January - June 2014


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Source: Nordic Mines AB via Globenewswire
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