Financing

The financial position of the group

At the end of December, the group’s cash and bank receivables were 1.2 MEUR (3.7 MEUR). In accordance with the strategy, Endomines invests in ore exploration on the Karelian gold line, which is reflected in significantly higher investments than in the comparison period. In addition, the work related to the change in the mining method and the work preparing the Hosko production area had a significant impact on the cash flows at the end of the year. The effects are one-time. Interest-bearing net debt at the end of December was 14.9 MEUR (6.9 MEUR), the net gearing ratio was 46 % (19 %) and the equity ratio was 55 % (66 %).

Endomines Finland Plc’s board of directors has approved new convertible bonds from Finnish investors totaling a maximum of EUR 7.1 million during 2023. During 2023, 6.0 MEUR of convertible bonds were realized and 0.3 MEUR was converted into shares. 0.8 MEUR of the convertible bonds will be implemented in 2024. In addition, it has been agreed to extend the convertible bonds arranged in 2021 and 2022 by three years until the year 2027, which will contribute to improving the company’s financial position in the coming years.

The share of LDA Capital Limited’s convertible bonds in the company’s financing in 2023 was 2.0 MEUR, of which 1.8 MEUR was converted into shares. In November 2023, Endomines redeemed the remaining convertible bond early, as a result of which the conversion of the convertible bond into shares ended immediately. The financing arrangement agreed between Endomines Ab and LDA Capital Limited in 2021 regarding convertible bonds has ended.

Convertible bonds from Finnish investors

In June 2023, Endomines’ board of directors approved a total maximum of 3.6 MEUR in convertible bonds with a group of Finnish investors. In accordance with the financing arrangement, 1.8 MEUR of the convertible bond was implemented in June. In addition, Endomines had an option to take out another 1.8 MEUR convertible bond in October 2023. The board decided in September 2023 to implement the option share as well. The maturity of the convertible bonds is 36 months, and the annual interest rate is 12 %. The interest is paid at the end of the contract. According to the agreement, the convertible bonds can be fully or partially exchanged for company shares after 24 months from the loan drawdown date. The subscription price of the 1.8 MEUR convertible bond raised in June is the average share price for the period between 15 May 2023 and 15 June 2023, minus 15 percent. The subscription price of the convertible bond issued in October is the average share price for the period between September 1, 2023 and September 30, 2023, minus 15 percent. Apart from the subscription price, the other terms are the same for both convertible bonds. The minimum commitment of the members of the investor group in the financial arrangement was 100,000 EUR. The financing arrangement was decided to start production in Hosko, and to increase production in the Pampalo underground mine.

In November 2023, Endomines’ board of directors approved a total maximum of EUR 3.2 million in convertible bonds with a group of Finnish investors. The maturity of the convertible bonds is 36 months, and the annual interest rate is 10 %. The interest is paid at the end of the contract. In accordance with the financing agreement, the convertible bonds can be fully or partially exchanged for company shares no earlier than 12 months after the loan drawdown date. The exchange price consists of the daily average price calculated at the share’s closing price during the 15 trading days preceding the day of the exchange request, minus 15 percent. The financing arrangement was decided for ore exploration in the Kuittila area and general business needs.

In November 2023, Endomines agreed with a group of Finnish investors to extend the convertible bonds arranged in 2021 and 2022 by three years. Convertible bonds of EUR 10.7 million and the related interest are due to be paid in 2027 instead of the previously agreed 2024. The other terms of the convertible bonds remain unchanged.

LDA Capital Limited financing

In 2021, Endomines agreed with LDA Capital Limited on a financing arrangement totaling 14.0 MEUR, which was announced on May 8, 2021. The annual general meeting approved the financing arrangement on June 10, 2021. The financing arrangement covers a put option agreement totaling 8.0 MEUR, part of which was realized in 2021, and a convertible bond agreement totaling 6.0 MEUR, of which 2.6 MEUR was realized in 2022, and 1.0 MEUR in January 2023 and 1.0 MEUR in March 2023. At the end of 2023, there were convertible bonds 0.0 EUR left. In November 2023, Endomines exercised the contractual right to redeem the remaining convertible bond early. In accordance with the terms of the agreement, early redemption takes place at a price that corresponds to 115 percent of the remaining nominal amount. LDA’s convertible bond was 250,000 EUR unconverted, and the redemption price was 287,500 EUR. In order to redeem LDA’s convertible bond, Endomines agreed with the company’s owners on a new convertible bond of 287,500 EUR. The maturity of the convertible bonds is 36 months, and the annual interest rate is 10 %. According to the financing agreement, the convertible bonds can be fully or partially exchanged for the company’s shares from the date of withdrawal of the loan. The exchange price consists of the daily average price of the share during the 15 trading days preceding the day of the exchange request, minus 15 percent. The interest is paid at the end of the contract. In November 2023, Endomines received a notice of exchange for the entire 287,500 EUR convertible bond. The convertible bond has been converted into shares in its entirety.

Warrants of LDA

In connection with the 2021 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 40:1 reverse split share merger implemented in 2022. The number of shares subject to the warrants changed accordingly after the reverse split. The share options were issued to LDA Capital Limited, deviating from the shareholders’ pre-emptive rights, and without consideration. The subscription price of the new shares subscribed with options corresponds to 135 % of the average price weighted by the turnover of the company’s share for the 10 trading days preceding the date of the 2021 annual general meeting. After the Reverse Split, there are 350,000 options (1,400,000/40). According to the agreement, the subscription price of one share is EUR 0.36/share, i.e. EUR 14.4/share (0.36*40). The right to subscribe for shares ends on June 10, 2024. The fair value of the warrants on 31 December 2023 is 0.0 EUR.