30.11.2020

Endomines AB Q3 2020 Business Review - Commercial ramp-up at Friday still facing some technical challenges

The full report (PDF)

Endomines AB, Stock Exchange Release 1 December 2020 at 00:15 CET

Jan-Sep 2020 (Jan-Sep 2019)

Operational highlights

  • Gold concentrate production continued at the beginning of the quarter
  • Technical challenges at the mill are still reducing the throughput from Friday
  • No injuries reported in Q3 2020, LTIFR 0 (15)

Financial highlights

  • Total revenue was 12.4 MSEK (5.1)
  • EBITDA was –68.4 MSEK (-33.7)
  • Total cash flow was -3.5 MSEK (42.9)
  • Earnings per share was -0.99 SEK (-0.84)            

Significant subsequent events

  • On October 8th, 2020, Endomines announced that it has completed the purchase of US Grant and Kearsarge Gold Projects and has resolved on a directed share issue in connection therewith.
  • The number of shares and votes in Endomines has increased by 15,392,535 during the month of October following the directed share issue to Transatlantic Mining informed on 8th of October 2020.
  • On November 30th, 2020, the Board of Endomines resolved on a rights issue of app. 281 MSEK to i.a. ramp-up the Friday mine and develop other mines in the US and Finland.

Production update and outlook for 2020:

The COVID-19 pandemic continues to impact the production and ramp-up efforts severely, also the mechanical breakdown of the tailings dewatering system in February and the inability to secure suitable dewatering replacement equipment continued to disrupt the capacity of the processing plant. As a result of this, Endomines decided to put Friday mine and Orogrande processing facility on care and maintenance at the end of August. At this stage, the short -term production guidance is not possible to specify.

 

Key figures (Consolidated) Jan - Sep
MSEK if not otherwise stated 2020 2019 +/-
Total revenue 12.4 5.1 7.3
Cost -80.8 -38.8 -42.0
EBITDA -68.4 -33.7 -34.7
Depreciation and write-downs -17.3 -5.0 -12.3
EBIT -85.7 -38.7 -47.0
Net result for the period -112.2 -44.4 -67.8
Earnings per share (SEK) -0.99 -0.84 -0.15
Cash flow from operating activities -65.3 -69.7 4.4
Investments -25.5 -45.3 19.8
Financing 87.3 157.8 -70.5
Liquid assets at the end of the period 12.0 61.9 -49.9
Personnel at the end of the period 34 32 2
LTIFR 0 15 -15

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: “We have been working very hard on ramping-up operations both at the Friday mine and mill but have been challenged by the COVID-19 pandemic that continued to severely impact the production ramp-up, principally due to supply chain disruptions and slowdowns in hiring. Further our very tight liquidity situation also forced us to take necessary actions and temporarily slow-down operations towards the end of the quarter until we can secure our long-term financing.

During the slowdown period we have focused on resolving the remaining technical issues at the mill that mainly relate to the dewatering of the tailings thus reducing our overall throughput at the mill. The plan to correct the issues has been finalized and we are currently working on resolving these and will be ready to continue the ramp-up as soon as we can secure the needed financing.

Despite the challenges occurred and the postponement of commercial production at Friday I am very pleased to see the strong commitment by our personnel during these difficult times. We have also experienced great support from our vendors as well as lenders giving us the confidence to overcome our challenges and get back on track.

After the reporting period we announced that we completed the purchase of US Grant and Kearsarge Gold Projects. The assets acquired from Transatlantic represent a major step towards our initial target of producing 40.000 gold ounces per year and provides a possibility towards reaching a target of 100.000 oz per year production. I am very satisfied that we could finalize the transaction. It has been a long process that has required a lot of work from the people involved. When we, in January, contracted with Transatlantic on this deal, gold was trading at around USD 1.500 per oz. Today, with a gold price of approximately USD 1.800 per oz, this is truly a transaction that we see will add value to the company and our shareholders.”

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 00:15 CET on 1 December 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).