Endomines enters financing agreements for gold mining start-up and
carries out rights issue
(Thomson Reuters ONE) - The press release can be downloaded from the following link:Press Release PDFIn order to commence gold production in 2010, the Board of Directorsof Endomines has resolved to carry out a fully guaranteed rightsissue and signed a project financing agreement with Nordea to financethe construction and start up of the Pampalo gold mineEndomines controls all mining concessions and claims along theKarelian Gold Line in Ilomantsi, Finland. The extensive explorationperformed by the Company has resulted in increased mineral resourcesand ore reserves. Given that these ore reserves are now deemed to besufficient to sustain renewed mining operations, the Board ofEndomines has secured financing for the construction and start up ofthe mine and concentrating plant in Pampalo, subject to approval ofthe rights issue by an extraordinary general meeting of shareholders.The total capital raised amounts to SEK 287 million[1]. Of this, SEK179 million will be raised through a fully guaranteed rights issue,as resolved by the Board on October 9, 2009, and subject to approvalby an extraordinary general meeting. A project financing facilityofSEK 82 million has been granted from Nordea Bank Finland,guaranteed up to SEK 62 million by Finnvera plc, a specializedfinancing company owned by the State of Finland. In addition,Endomines has been approved SEK 26 million in grants from the FinnishMinistry of Employment and the Economy Endomines has also obtainedbridge financing of up to SEK 21 million from Erik PenserBankaktiebolag to enable construction of the mine to start before thecomplete financing is available to the Company."I am very satisfied to inform that we can now commence theconstruction work for the Pampalo mine and plant. In order to gainmomentum, we will start construction of the tailings storage facilitybefore winter and continue with other works after approval by theextraordinary general meeting of the Board's decision on the rightsissue. Our plan is to start trial mining and processing during thelast quarter of 2010 and then increase production to full capacityduring the first half of 2011. In the area surrounding Pampalo, wecurrently control ore reserves containing 200,000 oz gold, enough forseven years of production, and our ambition is to increase the orereserves through additional exploration in the coming years. Ouraverage "cash cost" for the planned production is calculated to be420 USD/oz.[2] With the current gold price above 1,000 USD/oz, thetiming to start gold production is excellent." comments MarkusEkberg, CEO of Endomines.Karl-Axel Waplan, Chairman of Endomines: "This is an important eventfor Endomines and for the Finnish mining industry. We have, whilebeing a fairly small company in terms of size, obtained recognitionfrom the largest Nordic bank and the Finnish government throughFinnvera and the Ministry of Employment and the Economy. Togetherwith the support from our largest shareholders, this has created theopportunity to start gold mining in the Karelian Gold Line. Ourcurrent ore reserves are sufficient for recouping the investment andprovide basis for further corporate development. There are alsoexcellent possibilities to expand the resources and reserves alongstrike and at depth in Pampalo and elsewhere within the 40 kilometerlong Karelian Gold Line. Until today, only a few of the identifiedmineralized targets along the gold line have been duly tested.Endomines also possesses ilmenite assets which are next in turn to becommercialized. I am, together with the rest of the Board, verypleased with our achievements so far and look forward to many yearsof successful gold mining in Pampalo."The Pampalo projectPampalo is centrally located along the Karelian Gold Line, with goodregional infrastructure and a long history of successful explorationand test mining under Outokumpu's management. Endomines acquiredPampalo in 2006 as part of a package of mining concessions and claimsalong the southern part of the Karelian Gold Line. Since then, theCompany has developed the already well explored deposit withcontinued prospecting and extension of the decline down to 375 metersfrom the earlier level of 275 meters. During 2008, Endomines obtainedenvironmental and building permits and in August 2009 a land parcelof 292 hectars necessary to conduct mining, was acquired from theFinnish governmental forestry organization Metsähallitus. At thePampalo site, construction of the tailings storage facility,concentrating plant, office and facilities buildings and otherinstallations are planned to start during October 2009 with estimatedcompletion in the 4th quarter of 2010. The concentrating plant willhave a maximum capacity of 230,000 tonnes of ore per year incontinuous operation, with a planned yearly gold production of900-1,000 kilograms.FinancingThe total investment in the mine and facilities, including start-upcosts, provisions for running costs until the commencement of goldproduction, financing costs and other costs associated with theproject is estimated at EUR 27.9 million (SEK 287 million), of whichEUR 21.8 million (SEK 225 million) are direct investments in tangibleassets. In order to obtain a balanced financing structure, Endomineshas in addition to the rights issue resolved by the Board, secured aproject financing facility with Nordea Bank Finland of EUR 8 million(SEK 82 million) for the Pampalo project. Furthermore, the FinnishMinistry of Employment and the Economy has granted, conditional onequity and project loan financing, investment subsidies of EUR 2.5million (SEK 26 million), to be used exclusively for infrastructureinvestments at the Pampalo site. Endomines has also obtained a bridgeloan of up to EUR 2 million (SEK 21 million) from Erik PenserBankaktiebolag to facilitate construction start-up before thecomplete financing is available to the Company.The rights issueThe Board of Endomines resolved on October 9, 2009 to carry out arights issue, subject to approval by an extraordinary general meetingto be held on November 12, 2009. The rights issue will be conductedas an issue of units consisting of shares and warrants. Subscriptioncommitments and underwriting guarantees for the rights issue totalingSEK 179 million has been obtained from major shareholders andexternal parties, making the rights issue fully guaranteed. Therights issue structure is outlined below: * Current shareholders are entitled to subscribe for units in relation to the number of shares held * Three (3) shares in Endomines entitle to subscription of one (1) unit * One (1) unit consists of nine (9) shares and one (1) warrant * Subscription price per unit is SEK 29.25, equivalent to a subscription price per share of SEK 3.25 * With subscription of units, warrants are included free of charge * The total number of units to be issued is 6,111,957 according to the Board's resolution[3] * At full subscription of units, gross proceeds to Endomines will be SEK 178.8 million * The number of outstanding shares at full subscription of units will increase with 55,007,613 resulting in a total number of outstanding shares before exercise of warrants of 73,343,484 * The number of warrants issued is 6,111,957 according to the Board's resolution * The warrants are proposed to entitle to subscription of a maximum of 6,111,957 new shares at a subscription price of SEK 5.00 per share between November 15 and December 15, 2010 * At full exercise of warrants, gross proceeds to Endomines will be an additional SEK 30.6 million * The number of outstanding shares at full exercise of warrants will increase with 6,111,957 resulting in a total number of outstanding shares after full subscription of units and full exercise of warrants of 79,455,441 * From the proposed rights issue, Endomines stands to receive a maximum of SEK 209.4 million in gross proceeds of equity * The record date at Euroclear Sweden AB for the right to participate in the rights issue is November 20, 2009 * The subscription period runs from November 25, 2009 until December 9, 2009, or a later date that may be decided by the Board * If all units are not subscribed for with preferential right, shareholders and others have the opportunity to subscribe without preferential right, whereby allocation will be made in accordance with the principles as presented in the notice of the extraordinary general meetingThe rights issue proceeds are intended to be used for financing thePampalo project, while the potential proceeds from future exercise ofwarrants are intended to be used primarily for financing furtherexploration and development of the Pampalo deposit and other depositsalong the Karelian Gold Line, and for advancement of Endomines'ilmenite deposits, including a feasibility study of the latter.A number of major shareholders in Endomines have through subscriptioncommitments totaling SEK 50.4 million committed to subscribe forshares in the rights issue, equivalent to 28.2 percent of the rightsissue. The remainder of the rights issue, SEK 128.4 million,equivalent to 71.8 percent of the rights issue, is secured throughunderwriting guarantees from Erik Penser Bankaktiebolag, TractionDelta AB, Yggdrasil AB, Dunross & Co AB and Bliwa Livförsäkring. Therights issue is thus fully guaranteed through subscriptioncommitments and underwriting guarantees. The subscription commitmentsand the underwriting guarantees are subject to customary conditions.Securities have been pledged for part of the underwriting guarantees.Shareholders representing approximately 46.3 percent of the sharecapital and votes in Endomines have committed to vote in favor of therights issue and the associated resolutions on the extraordinarygeneral meeting on November 12, 2009.Shareholders who choose not to subscribe in the rights issue willhave their holdings diluted by approximately 77 percent, based onfull subscription in the rights issue and full exercise of warrants,but have the opportunity to financial compensation by selling theirunit rights.The rights issue is subject to approval by the extraordinary generalmeeting of shareholders on November 12, 2009. In conjunction with therights issue, the Board has decided to propose to the extraordinarygeneral meeting, inter alia, amendments to the articles ofassociation and adjustments to the share capital. Notice of theextraordinary general meeting will be made public today and will bepublished on October 15, 2009 in Svenska Dagbladet and Post- ochInrikes Tidningar. The notice will also be available onwww.endomines.com. For complete proposals on terms and conditions andmatters to be resolved on the extraordinary general meeting, it isreferred to the separate notice.Project financing facilityEndomines AB's operational Finnish subsidiary Endomines Oy entered onOctober 9, 2009 an agreement with Nordea Bank Finland Plc regardingproject financing for the Pampalo mine. The agreement gives EndominesOy the right to, subject to the fulfillment of certain conditions,borrow up to EUR 8 million (SEK 82 million) during the period fromsigning of the agreement up until completion of the mine. The loanshall be repaid in full five years after completion of the mine,however no later than December 31, 2015. The Finnish governmentalfinancing company Finnvera plc has agreed with Endomines Oy toguarantee EUR 6 million (SEK 62 million) of the project finance loanfrom Nordea Bank Finland. As security for the project finance loan,Endomines Oy has pledged, inter alia, mining concessions for theKarelian Gold Line and mortgage in the land surrounding Pampalo incombination with a parent company guarantee from Endomines AB.Furthermore, all shares in Endomines Oy have been pledged to NordeaBank Finland, together with a business mortgage in Endomines Oy. Inaccordance with the project financing agreement with Nordea BankFinland, Endomines will enter hedging agreements for the gold price,exchange ratio fluctuations and interest rate levels for a portion ofthe financing and the planned productionTime scheduleIndicative time schedule for the proposed rights issue: * Extraordinary general meeting: November 12, 2009 * Last day of trading in shares with unit rights: November 17 * First day of trading in shares ex unit rights: November 18 * Record date for participation in the rights issue: November 20 * Estimated day for publication of the prospectus: November 20 * Subscription period: November 25-December 9 * Trading in unit rights: November 25-December 4AdvisorsErik Penser Bankaktiebolag is the financial advisor and Cederquist isthe legal advisor to Endomines.For further information, please contact:Markus Ekberg, CEO of Endomines AB, tel. +358-40-706 48 50Karl-Axel Waplan, Chairman of Endomines AB, tel +46-70-510 42 39Endomines AB (publ) explores and develops mineral deposits inFinland. The Company owns mining concessions and claims over all theknown gold deposits along the Karelian Gold Line, including thePampalo mine where the Company aims to start mining in 2010. Inaddition, Endomines has claims for gold deposits in Finnish Lapland.Besides gold, and through its subsidiary Kalvinit Oy, the Companyplans to develop its deposits of the industrial mineral ilmenite inCentral Ostrobothnia.Endomines applies SveMin's and FAERI's common reporting rules forpublic mining and exploration companies. Endomines report its mineralresources according to the internationally accepted JORC or NI-43-101code. Endomines applies International Financial Reporting Standards(IFRS) for its accounting principles. The use of IFRS allows forcomparison of the Company with foreign exploration and miningcompanies.The shares of Endomines AB are quoted on First North Premier segmentin Stockholm under ticker ENDO. Erik Penser Bankaktiebolag acts asCertified Adviser and Liquidity Provider.Read more about Endomines on www.endomines.comIMPORTANT NOTICEIn certain jurisdictions, the publication or distribution of thispress release may be subject to legal restrictions and persons inthose jurisdictions where this press release has been published ordistributed should inform themselves about and abide by such legalrestrictions.This press release is not directed at persons located in the UnitedStates, Canada, Australia, Hong Kong, Japan, New Zeeland, SouthAfrica or in any other country where the offer or sale of the unitrights, interim shares, new shares or warrants is not permitted. Thispress release may not be published or distributed, directly orindirectly, in or into the United States, Canada, Australia, HongKong, Japan, New Zeeland, South Africa or any other country wheresuch action is wholly or partially subject to legal restrictions orwhere such action would require additional prospectuses, other offerdocumentation, registrations or other actions in addition to whatfollows from Swedish law. Nor may the information in this pressrelease be forwarded, reproduced or disclosed in such a manner thatcontravenes such restrictions or would require such additionalprospectuses, other offer documentation, registrations or otheractions. Failure to comply with this instruction may result in aviolation of the United States Securities Act of 1933, as amended("Securities Act") or laws applicable in other jurisdictions.This press release does not contain or constitute an invitation or anoffer to acquire, sell, subscribe for or otherwise trade in shares,warrants, unit rights or other securities in Endomines AB (publ). Anyinvitation to the persons concerned to subscribe for shares inEndomines AB (publ) will only be made through the prospectus thatEndomines AB (publ) intends to publish in the beginning of November2009, which prospectus will contain, among other things, financialstatements as well as detailed information regarding Endomines AB's(publ) Board of Directors and Management.No unit rights, BTUs (interim units), new shares or warrants will beregistered under the Securities Act or any provincial act in Canadaand may not be transferred or offered for sale in the United Statesor Canada or to persons resident in Canada or on account of suchpersons other than pursuant to an exemption from, or in a transactionnot subject to, the registration requirements of the Securities Actor in such exempt cases that do not require registration inaccordance with any provincial act in Canada, respectively.[1] All sums are calculated using an exchange ratio of EUR/SEK 10.3[2] Calculated using an exchange ratio of EUR/USD 1.3[3] Calculated based on 18,335,871 outstanding shares This press release may not be announced, published or disseminated, directly or indirectly, in the United States of America, Canada, Australia, Hong Kong, Japan, New Zeeland or South Africa.This is a translation of the Swedish version. In case of divergence, the Swedish version shall prevail.http://hugin.info/138043/R/1346838/323638.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 12.10.2009 - 09:54 Uhr
Sprache: Deutsch
News-ID 6790
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