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Mittwoch, 30.11.2016 09:15 von GlobeNewswire | Aufrufe: 150

NORDIC MINES AB (publ): Financial remodelling with the aim to restart the mine 2017, introduces a new share class and conducts directed new share issues of SEK 23 million

Eine Fördermaschine für Kohle (Symbolbild). pixabay.com

Nordic Mines is planning to re-model the value chain financially and operatively by outsourcing the processing plant operations through a lease model. By doing this, it becomes capital efficient, reduces risk, and generates margins of 38 percent on a base gold price scenario of USD 1080/ounce. The approach is to make Nordic Mines "do much more with much less" and start production during 2017. The board of directors of Nordic Mines has further, subject to approval by an extraordinary general meeting, resolved to issue common shares and preferential shares for SEK 23 million. The preferential shares are to be introduced by a change in Nordic Mines articles of association, which is proposed to be resolved upon by the extraordinary general meeting.

Nordic Mines plans to re-model the value chain at Laiva and re-calibrating margins by separating upstream (mining operations) and down stream (processing plant) activities.
As part of the target operating model, Nordic Mines plans to outsource (a) Processing plant operations and (b) Gold off-take to an Indian based gold trading player with a fixed margin, in line with industry standard in the gold trading business, resulting in a USD 400/ounce cost-outsourcing.
The model has been designed for a threshold annual production of 1200 kgs, and would be executed through a 10-year processing plant lease model with the outsourcing partner.
Nordic Mines value chain transformation aims at rewarding the residual mining operations with a significantly improved margin and reducing sensitivity of its profitability to gold price movements. This transformation program enables profitable production within 2017.
The board of directors of Nordic Mines has resolved to, subject to approval by an extraordinary general meeting, issue common shares and preferential shares, directed to the current shareholder Lau Su Holding AB and to Lao Tzu Investments AB.

Nordic Mines is in discussions with U.A.E based Viren Jewellers LLC (Turnover USD 3,5B) and Indian based Swarn Shilp Pvt Ltd (Annual turnover USD 700M), gold trading players of repute, to negotiate an outsourcing contract for gold-ore processing and gold off-take, which would be executed through a 10-year operative lease of processing plant at a flat lease cost of USD 400/ounce.

Nordic Mines intends to mandate accounting and payroll outsourcing advisory firm Visma Services AB, who along with Ola Wahlquist senior advisor at Nordic Mines, former senior partner at Ernst &Young, will work closely to formulate the lease outsourcing agreement in lines with IFRS (International Financial Reporting Standards) best practices, and help Nordic Mines establish the outsourcing structure on ground.

The transformed operating model is aimed at both increasing efficiency by 20 percent and improving Nordic Mines gross margin to around 38 percent at base case gold price of USD 1080/ounce.

Nordic Mines has already documented a 20 percent increase in business efficiency by improving costs by USD 100 each accruing from mine operations and processing plant operations (total USD 200/ounce). India is the largest consumer of gold in the world. Reliable and consistent supply has been a constraint for a lot of the gold traders in India. It makes imminent business sense to direct our production to India. The off-take model enables Nordic Mines to pass significant cash-cost risks to its gold trading partners. This substantially improves production margins. Moreover, the profitability scenario is considerably less sensitive to gold price movements and improves viability even in downturns.

Nordic Mines estimates an additional funding requirement of USD 5M to establish the leased outsourcing model. Funds will be primarily deployed towards start-up mining costs, composition plan exit, implementing the measures identified to deliver 20 percent efficiency pre-outsourcing, legal structuring, and applying sorting technology to the waste dump to process gold from the existing stockpile by installing a sorting pilot plant.

- It is doing much more with much less innovation. It minimizes risk in a capital-intensive industry. Our approach is to make Nordic Mines capital efficient by customer facing the mine to the Indian market, says Chairman Vinod Sethi.

- Executing this model will be a breakthrough. We as investors have the conviction on this model. Out of the additional USD 5M equity required to put the model in place, the current USD 2M equity arrangement from Lau Su Holding AB and our USD 0,75M existing shareholder debt conversion to equity means lead promoters have already underwritten more than 50 percent of the equity requirement for gold production targeted to commence within 2017. Although we have shareholder group interests for the gap of USD 2M as well on this model, we would prefer some institutional presence in Nordic Mines balance sheet, says Lau Su Holding's Pranay Panda.

The past six months of work around sorting does indicate the potential that Nordic Mines can reach from a total mine life and production volume perspective which is much higher than the base case business scenario on 1200 kgs gold production. The attempt will be to similarly outsource the operative and capital cost components associated with sorting through a revised lease outsourcing/off-take agreement for the additional gold output.

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The new operating model will enable Nordic Mines to have a much greater ability and agility to enhance the additional efficiency drivers - sorting being a very important lever among those. This approach enables the sorting business case to stand over the base case scenario in a capital efficient way, by using our deep access into the Indian gold market. Nordic Mines ends up reducing risk by using the approach of doing much more with much less.

- We have been fortunate that our gold is principally in quartz veins and quartz is easy to sort. Such is not the case with many mines. Sorting is indeed a potential game changer but we still have to develop a sorting algorithm and that would entail setting up a pilot plant. The algorithm will be the foundation of laying up the sorting business case over the base case. With our outsourcing approach, we will achieve this in a capital efficient way, comments Vinod Sethi.

- Our first step would be to build the base case to establish profitability and business viability without sorting and then make sorting stand over the base case. Sorting is the overflow to the base case illustrated above, concludes Pranay Panda.

Resolution on new issues of shares and proposal to amend the company's articles of association

The board of directors of Nordic Mines has decided to (i) issue up to 8,347,182 new common shares, corresponding to an increase in the company's share capital up to no more than SEK 3,684,403.54 and to (ii) issue up to 33,388,727 preferential shares, corresponding to an increase in the company's share capital up to no more than SEK 14,737,613.73. The board of directors' decisions are subject to approval by the extraordinary general meeting, and that the extraordinary general meeting resolves to amend the company's articles of associations in accordance with the board of directors' proposal.

Terms of the preferential shares

The preferential shares will entitle the holder to one-tenth (1/10) of a vote and have preferential rights over the common shares to an annual dividend of 0.044 SEK per preferential share. Further, the holders of preferential shares shall have the right to convert preferential shares to common shares.

Terms of the new issues of shares

The subscription price will be SEK 0.55 per common share and SEK 0.55 per preferential share. The board of directors of Nordic Mines deems the subscription prices per common share and preferential share to be equal to the market price, as it equals the last closing price of the Nordic Mines common share on 29th November 2016, being the last trading day prior to this announcement, and with consideration to the financial situation of the company.

The right to subscribe for the new common shares shall, with deviation from the shareholders' preferential rights, belong to Lau Su Holding AB. The right to subscribe for new preferential shares shall, with deviation from the shareholders' preferential rights, belong to Lau Su Holding AB and Lao Tzu Investments AB.

Lau Su Holding AB currently holds 27.22 percent of the total number of shares and votes in Nordic Mines and is the company's largest shareholder. Pranay Panda, board member of Nordic Mines, is also the chairman of Lau Su Holding AB. Lau Su Holding AB will be entitled to subscribe for up to 8,347,182 common shares and up to 29,215,136 preferential shares. Lau Su Holding AB shall pay SEK 4,590,950.10 for the 8,347,182 common shares through payment in cash. Lau Su Holding AB intends to pay SEK 9,181,900.20 for 16,694,364 of the preferential shares through payment in cash, and intends to pay SEK 6,886,425.15 for 12,520,773 preferential shares through a set-off of shareholder loans.

Lau Su Holding AB will, upon the completion of the new issues of common shares and preferential shares, hold shares corresponding to 28.62 percent of the total number of votes and 31.54 percent of the total share capital in Nordic Mines.

Vinod Sethi, the chairman of Nordic Mines, and Salim Govani, board member of Nordic Mines, are also board members of Lao Tzu Investments AB. Kari Langenoja, board member of Nordic Mines, is the chairman of Lao Tzu Investments AB. Lao Tzu Investments AB will be entitled to subscribe for up to 4,173,591 preferential shares and intends to pay SEK 2,295,475.05 for the 4,173,591 preferential shares through a set-off of a shareholder loan.

Lao Tzu Investments AB currently does not hold any shares in Nordic Mines but will, upon completion of the new issue of preferential shares, hold preferential shares corresponding to 0.07 percent of the total number of votes and 0.7 percent of the total share capital in Nordic Mines.

After the completion of the new issues the total share capital will amount to SEK 268,129,155.13 and the total number of shares will amount to 607,458,665, of which 574,069,938 are common shares and 33,388,727 preferential shares.

The completion of the new issues will result in a dilution effect of approximately 2.02 percent in the number of votes and 6.87 percent in the total share capital, calculated on the total number of votes and total share capital upon completion of the new issues.

The new issue of common shares and the new issue of preferential shares are subject to approval by the extraordinary general meeting, and also that the extraordinary general meeting resolves to amend the company's articles of association in accordance with the board of directors' proposals. The extraordinary general meeting will be held at 10.00 CET on 9 January 2017 at Visma Services premises at Lindhagensgatan 94 in Stockholm. See separate press release on the notice to the extraordinary general meeting for further information.

For additional information, please contact: D. Saradhi Rajan, CEO: +44 207 993 5261 (switchboard) or Rune Nordström, Head of Corporate Communications and Investor Relations: rune.nordstrom@nordicmines.com, +46 70 602 65 20

For more information about Nordic Mines, please visit; www.nordicmines.com.

This information is Nordic Mines AB (publ) obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of D. Saradhi Rajan, at 8.00 AM GMT, 30th November 2016.

Nordic Mines is a Nordic mining and exploration company. The Laiva mine in Finland produced gold between 2011 and 2014. The deposit is among the largest in the Nordic region. Nordic Mines is a member of SveMin and applies its reporting regulations for public mining and exploration companies. The Nordic Mines share has been admitted for trading on Nasdaq Stockholm's Small Cap list. For further information, see www.nordicmines.com.

Press release (PDF)

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Nordic Mines AB via Globenewswire

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