The achievement of the company’s strategic goals in exploration and the growth of production requires the availability of financing. The Board of Directors and the management actively plan and identify new financing arrangements to enable the company to implement its growth strategy and secure its operations in potentially changing circumstances.
During 2022, Endomines implemented significant financing and refinancing arrangements through convertible bonds and share issues. The conversion of convertible bonds into shares and the funds raised through share issues have significantly strengthened the company’s balance sheet. In addition, an extension of the existing loans was implemented in 2022, so that nearly all of the loans are long-term and mature in the second half of 2024.
Debt instruments issued
Convertible bonds from Finnish investors
In 2022, Endomines entered into an agreement with Finnish investors on a financing arrangement in several tranches to raise a total of MEUR 6.2 in new funds.
Extensions of the convertible bonds implemented in 2021 were negotiated during 2022. The convertible bonds will mature in 2024, with the exception of a MEUR 0.1 portion maturing in 2023. The loan has an annual interest rate of 10%. The creditors have the right to convert the loan into shares in Endomines in full or in part. More information about liabilities is provided in the notes to the financial statements.
In connection with the initial public offering in December, MEUR 9.0 in convertible bonds was converted into shares. On 31 December 2022, the company had MEUR 10.6 in convertible bonds from Finnish investors.
LDA Capital Limited financing
In 2021, Endomines entered into an agreement with LDA Capital Limited on a MEUR 14 financing arrangement, which was announced on 8 May 2021. The financing arrangement was approved by the Annual General Meeting on 10 June 2021. The financing arrangement covers a put option agreement of MEUR 8, part of which was implemented in 2021, and a convertible bond agreement of MEUR 6, part of which was implemented in 2022 and after the review period in January 2023 and March 2023. More information about this financing arrangement is provided below.
LDA convertible bonds
During 2022, the company raised a total of MEUR 2.6 of convertible bonds, which LDA converted fully into shares during 2022 in accordance with the terms and conditions of the agreement. After the review period, in January 2023, LDA exercised its investor call option and offered a convertible bond to the company. The company received an investor call notice concerning the directed issue of convertible bonds as follows: the first tranche, MEUR 1.0, was issued in January 2023, and the following tranches, up to MEUR 2.4 in total, can be issued by the investor conditional on the loan agreement. In accordance with the convertible bond agreement, the conversion price corresponds to 85% of the daily volume-weighted average price of the company’s share on Nasdaq Helsinki over the 15 trading days immediately preceding the date of the conversion request.
LDA put options
The company has the option and the right to issue new shares, which LDA Capital has undertaken to subscribe for under the terms and conditions of the agreement. The put option agreement totals MEUR 8, part of which was implemented during 2021. No implementation was carried out during 2022. Endomines decides on the subscription date for new shares and the number of shares to be subscribed for. However, the maximum number of redemption options and the time frame between the lowest redemption periods will be determined in accordance with the trading volume of Endomines shares. When put options are exercised, the conversion rate will be determined as follows: 90% of the volume-weighted average price of Endomines shares over a 30-day pricing period (90% of the 30-day VWAP).
In connection with the financing arrangement, the company issued 14,000,000 options, each of which entitles its holder to subscribe for one share in the company before the reverse stock split (40:1) implemented in 2022. The number of shares subject to warrants changed accordingly after the reverse split. The share options were issued to LDA Capital by way of derogation from the shareholders’ pre-emptive subscription rights and without consideration. The subscription price of the new shares subscribed for with options corresponds to 135% of the volume-weighted average price of the company’s shares over the ten trading days immediately preceding the date of the Annual General Meeting in 2021.