Endomines AB Press Release, Summary Interim Report January-September 2011

Monday, 14. November 2011 08:31
Endomines delivers positive result for the Q3/2011.

Q3/2011 Highlights
* Revenues KSEK  49,428 (-)
* Operating result  23,075 (-5,108) and profits after tax KSEK 18,088 (-
* Earnings per share  SEK 0.23 (-0.13)
* Gold production 185.2 kg (5,957 oz)
* A cave-in occurred on July 28th in the high-grade southern ore body, the
overall effect on production was limited
* The Board of Endomines initiated a feasibility study with a view to
increasing processing capacity at Pampalo beyond 270,000 tonnes per annum
* Exploration proceeded according to plan

Q1-Q3/2011 Highlights
* Revenues KSEK  114,337 (-)
* Operating result  7,391 (-61,095) and profits after tax KSEK 6,413 (-
* Earnings per share  SEK 0.08 (-0.97)
* Gold production was 435.3 kg (13,997 oz) from February to end-September

Production guidance
* The Company maintains its gold production guidance of 550-600 kg (17,700-
19,300 oz) for the full year 2011 and at 800-900 kg (25,700-28,900 oz) per
annum as from 2012.

Subsequent events
* Trial production of gravimetric concentrate started in early October
* In accordance with Endomines' decision to shift to an owner-operator model,
the company took delivery of a Sandvik drifting jumbo at the Pampalo mine
site at the end of October. For an initial period, drifting will be carried
out using both contractors and Endomines' own workforce and equipment.

Key financial figures

Key figures   Q3 Q3 Q1-Q3 Q1-Q3

KSEK   2 011 2 010 2 011 2 010

Revenues   49 428 - 114 337 -

Operating cost   -26 353 -5 108 -106 946 -61 095

EBIT   23 075 -5 108 7 391 -61 095

Net finance cost   1 256 -5 801 1 773 -12 953

Profit before tax   24 331 -10 909 9 164 -74 048

Total cash flow for the period   12 819 -53 334 -3 735 -149 340

Cash at end of period       54 635 65 733


Endomines expects production at its Pampalo Gold Mine to progress according to
its production plan. The Company maintains its gold production guidance of
550-600 kg (17,700-19,300 oz) for the full year 2011, and at 800- 900 kg
(25,700-28,900 oz) per annum as from 2012.

The gold price is generally expected to stay at high levels, a view which is
shared by Endomines. This will have a positive effect on the Company financial
results and cash flow for the proportion of sales which exceeds the hedged gold
production volume.

Cash flow from operations is expected to turn positive for the full year 2011.

CEO statement

The Pampalo Gold Mine ramp-up was completed during H1/2011 as per our original
schedule, and the mine and plant have achieved planned operational capacity of
230,000 tonnes per annum during Q3/2011.

We faced our first real operational challenge during the reporting period when a
stope in the S-lens caved in on July 28. We lost a newly delivered cable bolting
rig, but there were no injuries to personnel. The rig was fully insured. This
had a limited effect on production tonnage as we were able to increase
production in other areas of the mine. Longer-term, however, there will be some
increases in costs as a consequence of the cave-in due to the need to increase
cable-bolting. However, there will not be any need to change mining principles.

It is thanks to the dedication and hard work of our mining team that the cave-in
had no significant effect on gold production.  We have since achieved a good
head grade as well as the highest level of gold output from Pampalo since coming

The Pampalo processing plant continues to show good production performance. We
are very satisfied by the recent plant utilization rate and throughput tonnage.
However, total Q3/2011 mining and processing tonnage was slightly below our
production target, mainly due to a scheduled power line guarantee repair and
maintenance shutdown for a total of nine days in August. With debottlenecking in
the processing plant, we have over long periods achieved hourly capacity levels
of 34 tonnes per hour. This is above the planned capacity of 32 tonnes per hour.
Further debottlenecking will continue with a target of mining and processing
270 000 tonnes of ore during 2012.

We are also pleased to have reached an agreement with Sandvik on the accelerated
delivery of a new cable-bolting rig before the year-end. It will replace the rig
which was wrecked in the July incident. Meanwhile, ground support is provided by
a contractor. In addition, a new Sandvik drifting jumbo was delivered at the end
of October. This will speed up underground development work and will allow for
the rapid opening of new production areas in the underground mine.

Pampalo Gold Mine
Key production indicators[1]:

  Q1/2011 Q2/2011 Q3/2011 Q1-Q3 2011

Tonnes mined 25,382 44,050 49,441 118,873

Tonnes processed 35,797 53,169 56,915 145,881

Head grade (Au g/t) 3.5 3.1 3.7 3.5

Hourly utilization 63.4 90.5 86.7 87.7

Recovery (%) 83.8 87.0 88.1 86.4

Gold produced (kg) 105.4 144.7 185.2 435.3

Gold produced (oz) 3,390 4,651 5,957 13,997

LTIFR (12 month rolling) 39 50 42 42

Cash Cost USD/oz 1,136 919 675 833

Cash Cost[2] for the period Q3/2011 was 675 USD/payable ounce of gold. Cash Cost
for Q1-Q3 was 833 USD per payable ounce. Endomines expects future Cash Cost
levels for the Pampalo Gold Mine to be lower after the ramp-up phase, although
it will remain higher than the 520 USD indicated earlier and which was based on
the Pampalo Gold Mine feasibility studies. This increase reflects the lower gold
production levels published in Endomines' Q2 report as well as generally
increased production costs and drifting volumes in the mine.

Drifting and other operating costs of mining operations can vary significantly
from quarter to quarter, thus affecting the Cash Cost. Furthermore, cash cost
calculations depend on a number of variables which can be difficult to predict
accurately and can thus change significantly over time. Endomines has therefore
taken the decision to no longer issue future cash cost estimates but will only
publish actual cash cost levels per quarter and per annum.

Environmental consulting company Linnunmaa Oy was contracted to conduct an
Environmental Permit Renewal process, including a further capacity increase to a
level above 270 000 tonnes per annum. The application is expected to be
completed in January 2012, and the final decision can be expected before autumn
next year.

There was one Lost Time Injury during the quarter, resulting in one day of sick
leave. The number of personnel at the Pampalo Gold Mine at the end of the
reporting period was 55 own, 25 contractor employees and 10 short-term seasonal

With regards to personnel, one of Endomines' main challenges, and one which
affects the whole mining industry in in the Nordic region, is a shortage of
qualified personnel for key positions. In order to help resolve this issue,
Endomines has taken the decision, amongst other measures, to actively
participate in various mining industry initiatives and education programs.

[1] Production figures for Q1-Q2 are final and based on the assay exchange
procedure between Boliden Harjavalta Oy and Endomines Oy, Production figures for
Q3 are mainly based on assays carried out by the Pampalo Gold Mine laboratory.
[2] Endomines calculates"Cash cost" per ounce figures using the guidance issued
by The Gold Institute Production Cost Standard.  Direct mining, ore processing
and site administration, and off-site smelting and refining costs are included
in the "Cash cost" calculation, but amortization, stock change, reclamation,
capital and exploration costs are excluded. "Cash cost" is calculated per
payable ounces. "Cash cost" figure is given to provide additional information
and is a non-IFRS measure.  Conversion from EUR to USD is made by using the
average exchange rate for the period, ie 1.37 for Q1/2011, 1.44 for Q2/2011 and
1.41 for Q3/2011. For January-September the rate was 1.40.


Airborne low-altitude geophysical surveys were completed in July, and final
results of these were received in August. Several new drilling targets have been
discovered all over the claimed areas.

During the period, exploration drilling has been carried out in the vicinity of
Pampalo, as well as in the Hosko, Rämepuro and Korvilansuo areas. A total of
some 5,400 meters of the planned 7,000 meter campaign for the year 2011 have
been drilled.  Our drilling contract included an option to increase this by an
additional 2,000 meters of drilling.  Endomines has recently decided to exercise
the option, and has notified the contractor accordingly.

Several assays are still pending due to the high work load at all laboratories.

Final results of the summer exploration campaign will be published once all
relevant information has been compiled.

The mining authorities granted 50 additional reservation areas (~35,000 ha) to
Endomines during the period, all located on the Karelian Gold Line.
An Environmental Impact Assessment (EIA) program hearing was held in Hattuvaara,
with public opinions and official statements expected by the end of November
2011. The final regional EIA -report is scheduled to be ready for review by the
authorities in January 2012.

The number of exploration personnel at the end of the reporting period was 3
own, 8 contractor employees in drilling, as well as 3 short-term seasonal

Industrial Minerals

Endomines continued to work on strategic alternatives with regards to its
Industrial Minerals assets.

Gold price hedge

In December 2009, Endomines hedged 84,400 oz of its future gold deliveries up to
and including the year 2015. The hedge price was 843 EUR per oz.  The period H1
2011 was unhedged. Endomines applies hedge accounting, and thus any changes in
market value of  yet unexecuted deliveries are included under "Other
Comprehensive Income" and therefore do not affect "Net Profits After Tax". An
exception to this is when the hedge is not 100% effective. In this case, the
ineffective part of the hedge is included under "Operating Costs".

The market value of the hedge is driven by several factors such as the gold
price in USD as well as changes in the EUR/USD exchange rates. A higher gold
price leads to a weakening of the market value of the hedge derivatives.

As from Q3 2011, the revenues from the hedged production volume will be reduced
by the difference between the average price per quarter and the hedge price. The
hedged production volume in Q3 was 4,500 oz.  Sales over this volume were at
market price.

General Corporate

Work continued according to plan with a view to preparing Endomines' application
to list on the main market of NASDAQ OMX Nordic Stockholm. The application is
expected to be submitted during Q4/2011.

Endomines Board of Directors took the decision to publish estimated production
figures for 2012 in its full-year report scheduled for February 2012. Ore
reserve calculations will be updated at year-end and published once these have
been finalized.

A full interim report (in Swedish) is available on the Company's website.

For further information, please contact:
Markus Ekberg, CEO of Endomines AB
tel. +358 40 706 48 50
Or visit the Company's website atwww.endomines.com

About Endomines AB

Endomines AB is a Nordic mining and exploration company with its first operating
gold mine in production since February 2011. The mine is located in Eastern
Finland, on the Karelian Gold Line, a 40 km long gold critical belt, where
Endomines controls all currently known gold deposits.

The company has several other gold and industrial mineral properties at various
stages of development. All Endomines' mineral assets are located in Finland,
which is politically stable, has a highly developed infrastructure and is ranked
as one of the most favorable jurisdictions for the mining industry.

Endomines aims to increase shareholder value by developing its strong portfolio
of assets, as well as exploring new deposits on the Karelian Gold Line and in
Finnish Lapland. The company will also consider new opportunities and
acquisitions for further growth.

The company's business practices and mining operations are based on sustainable
principles and on minimizing the impact on the environment.

Endomines applies SveMin's & FinnMin's respective rules for reporting (public
mining & exploration companies). It has also chosen to report mineral resources
and ore reserves according to the JORC-code, which is the internationally
accepted Australasian code for reporting ore reserves and mineral resources.
Endomines applies International Financial Reporting Standards (IFRS) as approved
by the European Union.
Endomines AB shares are quoted on the First North Premier segment in Stockholm
under ticker ENDO.ST. Erik Penser Bankaktiebolag acts as Certified Adviser and
Liquidity Provider.

Read more about Endomines on www.endomines.com
This news release may contain forward-looking statements, addressing future
events and conditions which are subject to various risks and uncertainties. The
Company's actual results, programs and financial position could differ
materially from those anticipated in such forward-looking statements as a result
of numerous factors, some of which may be beyond the Company's control. These
factors include the availability of funds, the timing and content of work
programs, results of exploration activities and development of mineral
properties, the interpretation of drilling results and other geological data,
the uncertainties of resource and reserve estimations, receipt and security of
mineral property titles, project cost overruns or unanticipated costs and
expenses, fluctuations in metal prices, currency fluctuations and general market
and industry conditions.
Forward-looking statements are based on the expectations and opinions of the
Company's management on the date the statements are made. The assumptions used
in the preparation of such statements, although considered reasonable at the
time of preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.

Summary of Interim Report Q3 2011:

This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.

Source: Endomines AB via Thomson Reuters ONE

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