Endomines AB Q1 2020 Business Review - Ramp-up towards commercial production at Friday continues

The full report (PDF)Press release (PDF)

Endomines AB, Stock Exchange Release 14 May 2020 at 08:30 CET

Jan-Mar 2020 (Jan-Mar 2019)

Operational highlights

  • Letter of intent signed with Transatlantic Mining to purchase US Grant Mine and mill and Kearsarge Gold Project
  • Concentrate sales agreement signed with H&H Metals for the sale of gold concentrates produced from the Company’s Friday Mine
  • Gold concentrate production continued to ramp-up successfully, however no gold concentrate was sold in Q1 2020 from Friday
  • No injuries reported in Q1 2020, LTIFR 0 (12)

Financial highlights

  • Total revenue was 3.0 MSEK (2.1)
  • EBITDA was –27.8 MSEK (-11.5)
  • Total cash flow was -14.5 MSEK (-11.2)
  • Earnings per share was -0.41 SEK (-0.37)

Significant subsequent events

  • On April 1st, 2020, Endomines announced that it has placed EUR 3.4m loan with warrants to primarily Finnish institutional investors, as well as the Chairman of the Board of Endomines and the company’s CEO.
  • On April 2nd, 2020, Endomines announced that the Friday mine project in Idaho, Successfully Commissions the Orogrande Processing Facility.
  • On April 7th, 2020, Endomines announced that it postpones the re-domiciliation to Finland from Sweden through a cross-border merger.
  • On April 7th, 2020, Endomines announced that it carries out a directed share issue in an amount of approximately EUR 1.3 million to speed up developments at the Friday mine
  • On April 29th, 2020, Endomines announced that an agreement with Transatlantic Mining was signed to buy US Grant Mine and mill and Kearsarge Gold Project
  • On April 29th, 2020, Endomines announced that it has raised a SEK 30 million short-term loan facility and signed an engagement letter with Seaport Global for raising a long-term financing
  • On May 12th, 2020, Endomines announced that the first shipment of gold concentrate from the Friday Mine was done.

Production update and guidance for 2020:
Endomines has mined first high-grade ore stopes and has managed to maintain other operations during the stay-at-home orders resulting from the COVID-19 pandemic at its Friday Mine in Idaho, USA. In Q1, Endomines focused its efforts on improving the operational efficiency at the mill and maintaining ore production at the mine. At the processing facility, Endomines was able to operate at a rate of 36 tonnes per day. The processed ore is still coming from stockpiles of low-grade pre-production development ore and is not representative of typical Friday high-grade ore. Endomines continued to ramp up to the design capacity of 3,445 tonnes per month. The goal is to reach the design capacity during Q2, the technical ability for this is good. However, the COVID-19 pandemic causes challenges with the staff and the availability for certain spare parts and components which complicates operations in Idaho. Should the pandemic effects continue throughout Q2 it is possible that the design capacity will be achieved later.

Key figures (Consolidated) Jan - Mar
MSEK if not otherwise stated 2020 2019 +/-
Total revenue 3.0 2.1 0.9
Cost -30.8 -12.6 -18.2
EBITDA -27.8 -11.5 -16.3
Depreciation and write-downs -1.4 -1.8 0.4
EBIT -29.2 -13.3 -15.9
Net result for the period -44.3 -13.0 -31.3
Earnings per share (SEK) -0.41 -0.37 -0.04
Cash flows from operating activities -30.5 -23.0 -7.5
Investments -5.2 -23.7 18.5
Financing 21.2 35.5 -14.3
Liquid assets at the end of the period 1.3 7.8 -6.5
Personnel at the end of the period 43 28 15
LTIFR 0 12 -12

LTIFR = The Lost Time Injury Frequency Rate is based on reported lost time injuries resulting in one day or more off work per 1,000,000 hours worked on a rolling 12-month basis. LTIFR has been calculated for the whole company including contractors.

CEO Greg Smith: “At the beginning of the first quarter Endomines announced that it had signed a letter of intent with Transatlantic Mining to purchase US Grant Mine and mill and Kearsarge Gold Project. With these additions of assets from Transatlantic we will be able to take a major step toward against our initial target of producing 40,000 oz Au per year and provides Endomines an avenue to become a 100,000 oz Au per year producing company. After the reporting period, we announced the signature of a sale and purchase agreement with Transatlantic Mining.

We were also able to make some significant progress at the Friday project and as of yearend successfully completed taking over full operational control of the mining activities while also achieving successful commissioning of the Orogrande Processing Facility, and nearing commercial production in the end of the quarter. After some setbacks, our team have been working hard to complete the project that represents a significant step forward for the company.

I am also very pleased that we signed the gold concentrate agreement with H&H Metals which secures a sales outlet for our gold concentrate from the Friday mine. We are looking forward to building a lasting relationship with H&H Metals.

We have now demonstrated our capability to build and operate a mine on our own which creates significant additional value for our shareholders as we continue to advance what I consider to be an exceptional portfolio of projects.”

For further information, please contact:

Greg Smith, CEO, +44 7717 8809 23, greg.smith@endomines.com
Marcus Ahlström,
Deputy CEO and CFO, +358 50 544 68 14, marcus.ahlstrom@endomines.com

This information is information that Endomines AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08:30 CEST on 14 May 2020.

About Endomines
Endomines is a mining and exploration company with its primary focus on gold. The Company explores for gold along the Karelian Gold Line in Eastern Finland and develops mining operations in Idaho, USA. Endomines aims to improve its long-term growth prospects by increasing its exploration activities and through acquisitions. Endomines aims to acquire deposits that are situated in stable jurisdictions and can be brought to production rapidly with limited investments.

The shares trade on Nasdaq Stockholm (ENDO) and Nasdaq Helsinki (ENDOM).