Endomines AB: Summary of Year-End Report 2013

The year was characterized by a substantial decline in the gold price

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Endomines AB (STO:ENDO)

The full interim report, in Swedish only, is available on the Company´s website, www.endomines.com

Highlights Q4/2013

· Gold production 213.0 kg (277.4), -23 %

· Revenues 41.4 MSEK (74.4), -44% due to lower gold production and price

· EBITDA before unrealized losses/gains on derivatives –12.0 MSEK (31.6)

· Profit after tax -41,9 MSEK (26.2)

· Earnings per share -0.48 SEK (0.33)

· Total investments 9.6 MSEK (13.8)

· Total cash flow -38.1 MSEK (-5.1)

· Rämepuro satellite mine test mining was completed during Q4/2014

Highlights January-December 2013

· Gold production 790.0 kg (866.5), -9 %

· Revenues 164.1 MSEK (235.1), -30 %

· EBITDA before unrealized losses/gains on derivatives -24.2 MSEK (88.4)

· Profit after tax -63,8 MSEK (18.9)

· Earnings per share from SEK -0.75 (0.23)

· Total investments 42.5 MSEK (40.1)

· Total cash flow -24.1 MSEK (24.5)

· Cash funds at end of 2013 45.9 MSEK (31 December 2012: 69.2)

· Write down due to lower gold price 32,5 MSEK

Subsequent events

· Exploration activities refocused to the Pampalo mine site and its immediate surroundings

· The codetermination negotiations that the Company has initiated in order to carry out cost saving initiatives and improve overall efficiency are expected to be completed in February

· New mining permits granted for the Hosko and Muurinsuo deposits

· Encouraging assay results from the extended exploration program

Outlook for 2014

· The production guidance for 2014 is in line with 2013 gold production (790 kg)

· Mineral resource and reserve update is expected to be published during Q1/2014

Key financial data

  Q4   Q1 - Q4
MSEK, unless otherwise stated 2013   2012   change 2013   2012   change
Revenues 41.4 74.4 -33.0 164.1 235.1 -71.0
OPEX -53.4 -42.8 -10.7 -188.3 -146.7 -41.6
EBITDA before unrealised result on derivative instruments -12.0 31.6 -43.7 -24.2 88.4 -112.6
Depreciation and write-down -44.3 -9.4 -34.9 -71.4 -36.3 -35.2
Unrealised result on derivative instruments 5.1 7.8 -2.7 19.4 -24.4 43.7
EBIT -51.3 30.0 -81.3 -76.3 27.7 -104.0
Net result -41.9 26.1 -68.1 -63.8 18.9 -82.7
Earnings per share -0.48 0.33 -0.81 -0.75 0.24 -0.99
Total cash flow -38.1 -5.1 -33.0 -24.1 24.5 -48.6
Cash funds at end of period 45.9 69.2 -23.3 45.9 69.2 -23.3
Other key financial data
Gold production, kg 213.0 277.4 -23% 790.0 866.5 -9%
Cash Cost, USD/oz 1,351 686 97% 1,197 753 59%
Average gold price (USD/oz) 1,273 1,721 -26% 1,411 1,669 -15%
Average gold price (EUR/oz) 935 1,328 -30% 1,063 1,298 -18%

Comments to operations

Pampalo Gold Mine

The production for the fourth quarter was 213 kg and for the full year 790 kg gold.

The Pampalo processing plant capacity expansion project was completed during the second quarter. The design capacity is 50 tonnes/hour equalling an annual capacity of 420,000 tonnes. The Company expects to operate the plant at an annual capacity utilization of up to 380,000 tonnes in accordance with the current environmental permit.

Rämepuro satellite mine test mining was completed during Q4/2014. The test mining campaign tonnage and grade (20 000 t @ 2.1 g/t) were as planned and ore processing at Pampalo was done satisfactorily. The project included initially construction of infrastructure such as roads and power lines, as well as other extensive preparations such as overburden removal. In order to accelerate the test mining, the contractor previously engaged at the open pit at Pampalo East was transferred to Rämepuro in the summer. As a consequence less ore was mined in the Pampalo East open pit during the second half of the year. Thus, the total ore tonnage from the open pit decreased and the cost increased as the ore was mined in the underground mine.

Key production figures [1]

  Q1-2013   Q2-2013   Q3-2013   Q4-2013   FY 2013   FY 2012
Milled ore (tonnes) 58,856 80,939 93,460 96,328 329,583 249,949
Head grade (Au gram/tonne) 3.5 2.3 3.0 2.6 2.8 4.0
Gold recovery (%) 88.4 86.7 82.6 82.8 84.8 86.1
Hourly utilization (%) 88.8 92.7 92.7 87.5 90.4 91.0
Gold production (kg) 180.4 168.1 228.5 213.0 790.0 866.5
Gold production (oz) 5,800 5,405 7,346 6,848 25,399 27,860
LTIFR (12 month rolling)[2] 9 0 8 8 8 9
OPEX/ (EUR/tonne) 57 69 57 56 60 59
OPEX/ (SEK/tonne) 483 592 498 499 518 513
Cash cost (USD/oz) rolling 12 months 745 954 998 1,197 1,197 753
Cash Cost (USD/oz) 1,081 1,441 983 1,351 1,197 753

The process plant production showed positive results. Due to the capacity increase, it has been possible to increase the quantity of milled ore by more than 30% compared to previous year. Despite this, gold production during the quarter did not reach the target level due to lower than expected head grade as well as an unplanned stoppage due to main transformer problems at the processing plant.

Exploration and other Karelian Gold Line development

Following the share issue in April the exploration drilling program has been carried out along Karelian Gold Line and the received assay results at an early stage are encouraging. The mineral rights of the drilled properties are fully owned by the Company.

Because most companies have reduced their exploration programs due to the general recession in the mining business, 2013 was a favourable year for exploration works. Contractors with drilling rigs as well as assay services have been available at reasonable rates. The drilling program has been conducted with two rigs from Pöyry Finland Oyj and one rig from MK-Drilling Oy.

The drillings aimed to discover new or extend the previously discovered target areas. Totally 149 diamond core holes were drilled, amounting to a total of 15,248 drilling meters. All of the cores have been logged and 11,750 samples have been sent for assays. The results are encouraging. The detailed drilling results are expected to be published within February.

The Karelian Gold Line Environmental Impact Assessment (EIA) that was completed and submitted to North Karelian Centre for Economic Development, Transport and the Environment in May has been formally approved by the relevant authorities.

The environmental impacts of mining and ore transports from the currently known gold deposits Hosko, Kuivisto, Pampalo NW, Rämepuro, Muurinsuo, Korvilansuo and Kuittila to the Pampalo processing plant, as well as the impact on local living conditions have been thoroughly researched in the report. The analysis is covering the entire life cycle of the project, from mining preparation activities to site rehabilitation. The analysis covers a time frame extending to 2020.

In 2013 the gold price had its largest annual drop in more than three decades and this marked the end of a 12-year increase of the gold price.

The average price for gold has dropped by 26 per cent during the last quarter compared to the same quarter 2012. For the full year the average price was 15 per cent lower in 2013, expressed in US dollars, when compared to previous year.

Gold price development

(Average price according to LBMA)   2013   2012   %
Q1 1,631 1,691 -4
Q2 1,415 1,610 -12
Q3 1,326 1,653 -20
Q4 1,273 1,721 -26
Full year 1,411 1,669 -15

Health and Safety

The Company’s safety performance continues on a good level. The overall “LTIFR” rate is 7.5. The company remains committed to our overall safety target of “zero accidents – zero harm”.

Personnel

By the end of the reporting period the number of personnel was 86 employees of which 72 were working at the Pampalo Gold Mine, 10 people were employed in exploration and 4 people in the administration in Stockholm and Ilomantsi. The contractors working at the Pampalo Gold Mine had 46 employees.

Company

The planned sale of Kalvinit to Cove Resources Ltd was not completed. During the agreement period, from July 2012, Cove has undertaken Feasibility Studies toward development which has been provided to the Company under the terms of the agreement. Endomines has started the search for a new partner in order to continue developing the project. Meanwhile Kalvinit will continue to develop the deposit and is proceeding with the mining concession application in cooperation with local landowners.

In March the Company completed a directed new share issue raising a net of 45 MSEK. The purpose of the share issue was to finance accelerated exploration along the Karelian Gold Line. There was significant interest for this issue and an allotment of 7,944,000 shares was made to mainly Swedish and Finnish investors. Following the issue, the number of shares amounts to 87,385,625 of which the new shares correspond to approximately 9.1 per cent of the share capital. The Company’s share capital was increased by SEK 23.8 MSEK to SEK 262.2 MSEK.

In May the Company was secondary listed on NASDAQ OMX Helsinki. First day of trading was 14 May 2013. The Company shall maintain its primary listing on NASDAQ OMX Stockholm. No new shares were issued in connection with the secondary listing.

Outlook for 2014

The production guidance for 2014 is in line with 2013 gold production (790 kg). Decided cost savings measures are expected to have positive impact on among other things Cash Cost.

Subsequent events

Exploration activities refocused to the Pampalo mine site and its immediate surroundings. Drilling at Korvilansuo area and development works at Hosko deposit will currently be put on hold as well as all green field exploration activities. The reason behind these decisions is recent and near term future expected low gold price. The company has decided to reduce its exploration spending and preserve cash to be better prepared for the low gold price period.

To support the Company´s cost saving initiatives and overall efficiency and in response to the continuing low gold price, Endomines Oy has invited employee representatives to start cooperation negotiations in order to reduce staff in accordance with applicable Finnish law (which is equivalent to The Co-determination at Work Act in Sweden). The Company considers the negotiations necessary to keep all options open. In the negotiations all cost saving opportunities will be considered to adjust the production cost to the current gold price in order to secure continued operations.

Invitation to investors

Dr. Warren Pratt, the new geological consultant for Endomines, will present 'the true potential of Karelian Gold Line' on the 17th March in Stockholm. Dr Pratt consults at numerous mines and advanced projects around the world, including Scandinavia; this includes World Class deposits, such as Navidad, Argentina. The Igor project, in Peru (c. 750,000 oz gold-equivalent) is among his most recent discoveries. His specialty is finding new orebodies.

Calendar 2014

2014-03-17 Investor meeting in Stockholm

Week 14 Annual report 2013

2014-04-24 Annual General Meeting

2014-05-12 Q1 Quarterly report

2014-08-14 Q2 Quarterly report

2014-11-05 Q3 Quarterly report

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

Endomines applies SweMin’s & FinnMin's respective rules for reporting (public mining & exploration companies). It has 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.

The shares of Endomines AB are quoted on NASDAQ OMX Stockholm under ticker ENDO and on NASDAQ OMX Helsinki under ticker ENDOM. Pareto Öhman acts as Liquidity Provider in Stockholm.

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This news release may contain forward-looking statements, which address 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.

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Endomines AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 08:45 CET on February 10th, 2013.

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[1] Production figures for Q4/2013 are based on company own assaying and not confirmed by any external laboratory. Figures are individually rounded off.

[2] LTIFR = The Lost Time Injury Frequency Rate is based on reported lost time injuries on a rolling 12-month bases resulting in one day/shift or more off work per 1,000,000 hours worked. LTIFR has been calculated for the whole company including exploration.

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Contacts

Endomines AB
Markus Ekberg, CEO
tel. +358 40 706 48 50
www.endomines.com

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Contacts

Endomines AB
Markus Ekberg, CEO
tel. +358 40 706 48 50
www.endomines.com