The Board of Directors of Nordic Mines AB (publ) ("Nordic Mines") has resolved to conduct a rights issue of shares of approximately SEK 220 million before issue costs, subject to approval by the Extraordinary General Meeting
Summary
Rights issue of approximately SEK 220 million, before issue costs, with preferential rights for shareholders in Nordic Mines
The rights issue is fully underwritten by a combination of larger shareholder in Nordic Mines and external guarantors
The proceeds will be used to pay accounts payable, amortize and pay interest on project loans, pay the difference between the current higher spot price and the lower gold price in entered gold future contracts and also strengthen the working capital in the company
The rights issue is subject to approval by the Extraordinary General Meeting, which is scheduled to be held on June 15, 2012
The subscription price and the offer ratio are expected to be announced on or about June 12, 2012
Trading in subscription rights is expected to occur during the period June 21, 2012 - July 2, 2012
Subscription period will occur during the period June 21, 2012 - July 5, 2012
Background and reasons
During the end of the summer 2011 ore mining commenced in the first mine of Nordic Mines; the Laiva Mine located in Finland. The Laiva mine is one of the largest gold deposits in the Nordic region. During the fall of 2011 the gold production facilities at the mine were gradually taken into operation and the fine-tuning and the ramp-up was initiated. The Laiva mine with its process plant, is a major investment of some SEK 750 million. The investment has been financed to two thirds via project loans from Standard Bank Plc, UniCredit Bank AG and Finnvera Plc. The production start-up was delayed by four months compared to plan and the first doré bar was produced in December 2011.
The late start to the production in the Laiva mine arose as a result of a number of concurrent factors such as delayed deliveries and changeovers of certain ancillary components in the mill which led to several halts in production. The ore mining itself is another factor which has affected production results. The share of waste dilution has been higher than estimated during the period. This is gradually getting better and is nearing the level that was originally projected.
The fine-tuning of the mill and the ramp-up of production have continued during the beginning of 2012 albeit at a slower pace than was originally anticipated. The production has increased gradually each month and in April 2012 preliminary reports show that 90 kg of gold, corresponding to 3 kg per day, was produced. The company estimates that production will amount to some 5 kg per day by the summer, which means it will generate a positive cash flow also considering the financial obligations of the company. The objective is to produce 10 kg of gold per day at full capacity. Over the course of the lifetime of the mine an average production of 8 kg per day is expected to be achieved.
In March 2012 Nordic Mines carried out a directed share issue of approximately SEK 89 million to a few institutional investors in order to strengthen its working capital. The slower than anticipated increase in production has meant that the earlier estimates of Nordic Mines regarding the time needed to start operations and production have not been met. In April 2012 the Board of Directors decided to strengthen the liquidity of Nordic Mines which was primarily planned to be achieved by the implementation of a new hedge program. After having investigated the alternative it is the opinion of Nordic Mines that a new hedge program cannot be created at acceptable terms.
As a consequence of the above the Board of Nordic Mines has decided to, provided approval from the Extraordinary General Meeting, conduct a rights issue of approximately SEK 220 million before issue costs. Proceeds from the rights issue are expected to allow Nordic Mines to:
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Pay accounts payable of approximately EUR 1.8 million.
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To amortize and pay interest on project loans according to plan of approximately EUR 5.4 million due on June 30, 2012 to Standard Bank Plc, UniCredit Bank AG and Finnvera Plc.
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Settlement of future contracts, entered into for the purpose of hedging the price of gold, due June 30, 2012, for which the current spot price is higher than the contracted price why Nordic Mines has to pay the difference amounting to approximately EUR 2.0 million.
The remaining part of the proceeds will be used to strengthen the working capital of Nordic Mines until sufficient cash flows are generated from the companys gold production. Since funds from the rights issue will not be made available to Nordic Mines until after the end of the subscription period which is estimated to be around July 5, 2012 it is the intention of Nordic Mines to apply for a waiver from the banks regarding the payments mentioned above or alternatively arrange a bridge financing facility.
1) Based on drilling results up to the end of 2011 - proven and probable mineral reserve amounts to 16.9 million tonnes, with 1.60 grams of gold/tonne according to the ore calculation published May 8, 2012 to be compared to the earlier calculation which amounted to 12.9 million tonnes with 1.85 grams of gold/tonne.
The rights issue
On May 22, 2012, the Board of Directors resolved, subject to approval from the Extraordinary General Meeting and subject to a decision to amend the limits for share capital and number of shares in the articles of association at the Annual General Meeting, which will be held on May 23, 2012, to raise approximately SEK 220 million before issue costs through a rights issue of new shares with preferential rights for existing shareholders, pro rata to the number of shares held on the record day. The Extraordinary General Meeting is planned to be held on June 15, 2012.
The Board of Directors expects to announce the final terms of the rights issue, including the maximum increase of the share capital and the highest number of shares to be issued and the subscription price for the new shares, on or about June 12, 2012. The final terms will be agreed between the Board of Directors and its financial advisor.
In the event that all shares are not subscribed for with subscription rights, shareholders and others will have the opportunity to subscribe for the remaining shares without subscription rights. The record date for participation in the rights issue will be June 20, 2012 and the subscription period will occur in the period June 21 - July 5, 2012.
Subscription undertakings and underwriting commitments
Lennart Schönning, the chairman of Nordic Mine's Board of Directors, have undertaken to subscribe for his pro rata share in the rights issue, corresponding to approximately 4 per cent of the rights issue.
An underwriting consortium including Carnegie Investment Bank AB (publ) ("Carnegie"), the chairman of Nordic Mine's Board of Directors and a number of institutional investors have undertaken to underwrite the remaining amount, subject to satisfaction of customary conditions.
All commitments mentioned above to subscribe for shares are conditioned upon that Nordic Mines have received or will receive sufficient funds to carry out its obligations under (taking into consideration any waivers or consents for delayed payments) the financing agreements with Standard Bank Plc, UniCredit Bank AG and Finnvera and under forward contracts (hedging) for gold until Nordic Mines have the funds from the rights issue at its disposal.
Indicative timetable for the rights issue
| June 12, 2012 | Subscription price and offer ratio announced in a press release | |
| June 15, 2012 | Extraordinary General Meeting of shareholders to decide on the rights issue resolved by the Board of Directors | |
| June 18, 2012 | The share is traded excluding subscription right to participate in the rights issue | |
| June 20, 2012 | Estimated date of publication of the prospectus | |
| June 20, 2012 | Record date for participation in the rights issue, i.e. shareholders registered in the share register of Nordic Mines as of this date will receive subscription rights for participation in the rights issue | |
| June 21-July 2, 2012 | Trading in subscription rights | |
| June 21-July 5, 2012 | Subscription period | |
| June 9, 2012 | Announcement of preliminary outcome | |
Financial and legal advisors
Carnegie is acting as financial advisor to Nordic Mines and Gernandt & Danielsson Advokatbyrå is acting as legal advisor.
For additional information, please contact
Lennart Schönning, Chairman of the Board of Directors, +46 18 84 345 00
Michael Nilsson, CEO, +46 18 84 345 01
For additional information about Nordic Mines, please visit; www.nordicmines.com (http://www.nordicmines.com/)
Uppsala, May 23, 2012
Nordic Mines AB (publ)
The information above has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 08.00 am (CET) on May 23, 2012.
IMPORTANT INFORMATION
The information in this press release is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Hong Kong, Japan, Canada, Singapore or South Africa. The distribution of this press release in certain other jurisdictions may be restricted. The information in this press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in Nordic Mines in any jurisdiction.
This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. Nordic Mines does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Australia, Hong Kong, Japan, Canada, Singapore or South Africa.
This document has not been approved by any regulatory authority. This document is an advertisement and not a prospectus and investors should not subscribe for, or purchase any securities referred to in this document, except on the basis of information provided in the prospectus to be published by Nordic Mines on its web site in due course.
Nordic Mines has not authorized any offer to the public of shares or rights in any Member State of the European Economic Area other than Sweden and any other jurisdiction into which the offering of shares or rights has been passported. With respect to each Member State of the European Economic Area other than Sweden (and any other jurisdiction into which the offering of shares or rights has been passported) and which has implemented the Prospectus Directive (each, a "Relevant Member State"), no action has been undertaken to date to make an offer to the public of shares or rights requiring a publication of a prospectus in any Relevant Member State. As a result, the shares or rights may only be offered in Relevant Member States:
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity meeting two or more of the following criteria: (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of more than EUR 43 million and (3) an annual net turnover of more than EUR 50 million, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances, not requiring Nordic Mines to publish a prospectus as provide under Article 3(2) of the Prospectus Directive.
For the purposes hereof, the expression an "offer to the public of Shares or Rights" in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares or rights to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Carnegie is acting for Nordic Mines and no one else in connection with the rights offering and will not be responsible to anyone other than Nordic Mines for providing the protections afforded to its clients or for providing advice in relation to the rights offering and/or any other matter referred to in this announcement.
Carnegie accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with Nordic Mines and the new shares, or the rights offering, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Carnegie accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.
This press release contains forward-looking statements, which are statements related to future events. In this context, forward-looking statements often address Nordic Mines' expected future business and financial performance, and often contain words such as "expect", "anticipate", "intend", "plan", "believe", "seek", or "will". Forward-looking statements by their nature address matters that are, to different degrees, uncertain and can be influenced by many factors, including the behaviour of financial markets, fluctuations in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of regulation and regulatory, investigative and legal actions; strategic actions; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These factors may cause Nordic Mines' actual future results to be materially different than those expressed in its forward-looking statements. Nordic Mines does not undertake to update its forward-looking statements.
You are advised to read this announcement and, once available the prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Nordic Mines' future performance and the industries in which it operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.
Nordic Mines is a Nordic mining and exploration company whose goal is to be one of the leading gold producers in Europe and a role model in respecting the environment. The company started mining gold in the Laiva mine in Finland in summer 2011. These gold deposits are among the largest in the Nordic region. Exploration is in progress in Finland and Sweden. Nordic Mines has 86 employees and its head office is in Uppsala. The Nordic Mines share is traded on the Nasdaq OMX Mid Cap list in Stockholm. For more information, go to www.nordicmines.com
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: Nordic Mines AB via Thomson Reuters ONE
