Q1 2011 Endomines Group
* Revenues KSEK 25,721 ( - )
* Profit after tax KSEK -5,473 (-8,753 )
* Earnings per share SEK -0.07 (SEK -0.12)
* Total cash flow KSEK -31,602 (SEK -43,011)
* All production costs since the beginning of the period have been expensed.
Revenues are derived from the (Pampalo Mine) production period February-
March.
* The operating result from the Pampalo Mine was positive (205 KSEK).
* Company gold production guidance for 2011 production is 700 kg (22 500 oz)
of gold to be produced during 2011.
* An amendment letter in relation to the planned production increase to an
annual production level of 270 000 tonnes of ore was submitted to local
environmental authorities. The authorities' response stated that the
increase has no effect on the current Environmental Permit.
Business Area Pampalo Gold Mine
* Production at the Pampalo Gold Mine commenced as scheduled in early February
2011.
* Production ramp-up at the Pampalo Gold Mine proceeded as planned.
* Key production indicators for the first quarter of 2011 are as follows[1]:
+---------------------------+-------+
| |Q1/2011|
+---------------------------+-------+
|Tonnes mined | 25 382|
+---------------------------+-------+
|Tonnes processed | 35 797|
+---------------------------+-------+
|Head grade (Au g/t) | 3,4|
+---------------------------+-------+
|Utilization (%) | 63,4|
+---------------------------+-------+
|Gold recovery (%) | 86,6|
+---------------------------+-------+
|Gold produced kg | 105,4|
+---------------------------+-------+
|Gold produced oz | 3 390|
+---------------------------+-------+
|LTIFR[2] (12 month rolling)| 39,7|
+---------------------------+-------+
* Cash Cost[3] for the period was 1,136 USD/oz (854 USD for February-March).
This Cash Cost level is due to all Pampalo Gold Mine costs having been
expensed since the beginning of the period whilst commercial production
output was only derived from the period February-March. During the planned
ramp-up period, over most of 2011, the Cash Cost level will remain higher
than the planned long-term Cash Cost level.
Business Area Gold Exploration
* Plans for the summer 2011 exploration campaigns were prepared
* Tenders were invited for the planned airborne geophysical low-altitude
survey over the Karelian Gold Line, and the contract was awarded to Danish
company SkyTem.
* Offers for the diamond drilling contract were received, and Pöyry
Environmental Oy was awarded a contract to carry out a 9 000-meter drilling
campaign.
Business Area Industrial Minerals
* Continued work to seek partners for the development of Industrial Minerals.
Corporate
Key financial figures Jan-Mar Jan-Mar
KSEK 2 011 2 010
Revenues 25 721 -
Operating cost -29 896 -5 363
EBIT -4 175 -5 363
Net finance cost -2 239 -3 687
Profit before tax -6 414 -9 050
Total cash flow for the period -31 602 -43 011
Outlook
* Endomines expects that the ramp-up at the Pampalo Gold Mine will proceed as
planned, and that the nominal annual capacity level of 230 000 tonnes of ore
will be reached during Q2/2011.
* Company gold production guidance for 2011 production is 700 kg (22 500 oz)
of gold to be produced during 2011.
* During 2012, Endomines expects to increase gold production at the Pampalo
mine to 900-1 000 kg by increasing the annual milled ore tonnage to the
level of 260-270 000 tonnes of ore, and improving head grade and plant
technical parameters.
* An amendment letter in relation to the planned production increase to an
annual production level of 270 000 tonnes of ore was submitted to local
environmental authorities. The authorities' response stated that the
increase has no effect on current Environmental Permit.
* Work continued with a view to preparing Endomines' application to list on
the main market of NASDAQ OMX Nordic Stockholm. The application is expected
to be submitted during Q3/2011.
CEO statement
Pampalo Gold Mine
There were three Lost Time Injuries during the quarter. The company has started
a campaign to improve the safety statistics at the Pampalo mine.
The infill diamond drilling campaign in the underground mine was completed in
January. This 2 389-meter campaign aimed to delineate the ore between levels
+320- 360 so that drifting for the next production panel could be started from
the deeper level.
The Pampalo Mine loading and hauling contractor sought bankruptcy during the
reporting period, which led to some delays in underground mine production and a
lower than planned mining rate. However, Endomines responded immediately to the
situation and placed an order for a brand new Sandvik LH 514 underground loader.
The loader was delivered in mid-February and put to work after a brief training
period. Ore hauling was contracted out.
The above underground production disturbances were mitigated by partially
sourcing processing plant feed from the previously accumulated ore stockpile on
the surface.
In the future, Pampalo mining operations will shift further towards an owner-
operator model as underground mining contractor availability in Finland is
becoming scarcer and its pricing unfavorable.
Pampalo processing plant test runs commenced in mid-January, once faulty
equipment was repaired under a supplier's guarantee scheme and some issues
relating to severe cold weather were resolved. The initial test runs involved
waste rock and low grade ore.
The plant feed was gradually changed to normal grade ore early February and the
first truck-load of gold concentrate left the site on February 7th. Since this
date, ramp-up has progressed relatively smoothly, and hourly production has
improved to 28-30 tonnes of ore per hour (planned capacity 32 tonnes/h). The
plant utilization rate[4] has improved to over 90% and gold recovery to 86%.
A test campaign to produce gravimetric concentrate was carried out. End-user
refineries have been contacted.
The number of personnel at the Pampalo Gold Mine at the end of reporting period
was 50 own and 22 contractor employees.
Exploration
A former border guard building in Hattuvaara village was purchased to serve as
an exploration base and company office.
Plans for the summer 2011 exploration campaigns were prepared.
Tenders were invited for the planned airborne geophysical low-altitude survey
over the Karelian Gold Line, and the contract was awarded to Danish company
SkyTem.
Offers for the diamond drilling contract were received, and Pöyry Environmental
Oy was awarded a contract to carry out a 9 000-meter drilling campaign. In
total, 7 000 meters will be drilled at the Karelian Gold Line, and 2 000 meters
planned in Finnish Lapland, at the Porkonen and Kivimaa deposits.
Industrial Minerals
Endomines continued to seek partners for developing Industrial Minerals.
Concentrate samples originating from earlier pre-feasability phases were
delivered to two potential end-users.
Corporate
Work continued with a view to preparing Endomines' application to list on the
main market of NASDAQ OMX Nordic Stockholm. This application is expected to be
submitted during Q3/2011.
Gold Market Outlook
Despite the last decades' favourable gold price development, primary mine
supply has increased only slightly during the years 2009-2010. Primary mine
production is expected to further increase in the future, but an improved
demand side will compensate for this. During 2010, the official sector
reversed its previous trend and became a net buyer for the first time since
1989.
This positive gold price development is widely expected to continue as central
banks, particularly in Asia, are expected to diversify their foreign exchange
reserves further by increasing their holdings in gold, and inflows into gold
exchange traded funds will continue to increase. The reason for this is that
investors are seeking to protect themselves against the twin threats of
deflation and inflation.
Endomines' view is that it is most likely that the gold price will stay at a
high level or even increase slightly in the next few years. Expected strong
demand, loose monetary policies and investors perceiving gold to be a safe
haven would support this scenario.
For further information, please contact:
Markus Ekberg
CEO of Endomines AB
tel. +358 40 706 48 50
Or visit the Company's website atwww.endomines.com
--
About Endomines AB:
Endomines AB is a Nordic mining and exploration company with its first operating
gold mine located in Eastern Finland. The company has several other gold and
industrial mineral properties at various stages of development. All Endomines'
mineral assets are located in Finland, which is politically stable, has a highly
developed infrastructure and is ranked as one of the most favorable
jurisdictions for the mining industry.
The Pampalo Gold Mine is currently producing gold at an expected annualized rate
of 900 - 1 000 kg. The mine is located on the 40 km-long gold-critical Karelian
Gold Line, where Endomines controls all currently known gold deposits.
Endomines aims to increase shareholder value by developing its strong portfolio
of assets, as well as exploring new deposits on the Karelian Gold Line and in
Finnish Lapland. The company will also consider new opportunities and
acquisitions for further growth.
The company's business practices and mining operations are based on sustainable
principles and on minimizing the impact on the environment.
Endomines applies SveMin's & FinnMin's respective rules for reporting (public
mining & exploration companies). It has also chosen to report mineral resources
and ore reserves according to the JORC-code, which is the internationally
accepted Australasian code for reporting ore reserves and mineral resources.
Endomines applies International Financial Reporting Standards (IFRS) as approved
by the European Union.
The shares of Endomines AB are quoted on the First North Premier segment in
Stockholm under ticker ENDO.ST. Erik Penser Bankaktiebolag acts as Certified
Adviser and Liquidity Provider.
Read more about Endomines onwww.endomines.com
---
This news release may contain forward-looking statements, which address future
events and conditions, which are subject to various risks and uncertainties. The
Company's actual results, programs and financial position could differ
materially from those anticipated in such forward-looking statements as a result
of numerous factors, some of which may be beyond the Company's control. These
factors include: the availability of funds; the timing and content of work
programs; results of exploration activities and development of mineral
properties, the interpretation of drilling results and other geological data,
the uncertainties of resource and reserve estimations, receipt and security of
mineral property titles; project cost overruns or unanticipated costs and
expenses, fluctuations in metal prices; currency fluctuations; and general
market and industry conditions.
Forward-looking statements are based on the expectations and opinions of the
Company's management on the date the statements are made. The assumptions used
in the preparation of such statements, although considered reasonable at the
time of preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.
[1] Production figures are final and based on assay exchange between Boliden
Commercial AB and Endomines Oy, Pampalo Gold Mine.
[2] LTIFR = The Lost Time Injury Frequency Rate (LTIFR) is calculated as
reported lost time injuries resulting in one day/shift or more off work per
1,000,000 hours worked.
[3] Endomines calculates "Cash cost" per ounce figures using the guidance issued
by The Gold Institute Production Cost Standard. Mining, ore processing and site
administration and off-site smelting and refining costs are included to the
"cash cost" but amortization, reclamation, capital and exploration costs are
excluded, i.e. "Cash Cost" is calculated per payable ounces. "Cash Cost" figure
is furnished to provide additional information and is a non-IFRS measure.
Conversion from EUR to USD made by average rate for the period EUR/USD rate
1,37.
[4] Operating hours of the mill in relation to total available hours
[HUG#1517871]
Endomines AB Press Release, Summary Interim Report January-March 2011
| Source: Endomines AB
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