Endomines takes a new direction – New shareholders, rights issue and expansion to North-America

As made public earlier today, the gold mining and exploration company Endomines takes a new direction and raises nearly 20 million euro with a rights issue for the acquisition of gold projects in North America and expansion of exploration along the Karelian Gold Line. At the same time, the Company’s balance sheet will be strengthened by financing arrangements, in which investors Kyösti Kakkonen and Gregory Smith become significant new shareholders of the Company.

Endomines arranges a rights issue to finance its ongoing and planned growth initiatives, strengthen its balance sheet and broaden its shareholder base. In the rights issue, each existing share entitles to the subscription of two new shares for a subscription price of SEK 9 per share. The targeted size of the rights issue is approximately EUR 19.4 million and the subscription period will be in January 2018. Certain existing shareholders and other investors have given a positive indication to subscribe for a minimum of 60 million SEK in the rights issue. The Company’s shares trade on Nasdaq Stockholm and Nasdaq Helsinki.

Endomines’ operations have to date been in Finland, where the Company has the Pampalo gold mine in Ilomantsi on the Karelian Gold Line. Endomines now expands its activities to North America through the acquisition of TVL Gold LLC, which holds five gold projects in Idaho, USA. The known resources in the Idaho projects now amount to over 500,000 oz gold, in addition to which the exploration potential in the area is significant. Endomines aims to start production at first of the Idaho projects within a year from the acquisition, and at all the projects within three to five years. Concurrently, Endomines intends to increase its exploration efforts along the Karelian Gold Line. Substantial amount of information from the area already exists, indicating that only a fraction of the Karelian Gold Line potential has so far been exploited.

Endomines’ balance sheet will be strengthened also through the restructuring and repayment of a EUR 7.6 million bank loan. After the closing of the Company’s rights issue according to plan, Endomines will partially repay the loan, and the bank and guarantor will subsequently give a haircut of an equal amount. The remainder to the loan will be acquired by Joensuun Kauppa ja Kone Oy, a company primarily owned by Kyösti Kakkonen. The acquired loan will, under certain conditions, be converted to Endomines shares, making Joensuun Kauppa ja Kone Oy the Company’s largest single shareholder with approximately 10 per cent holding. After the restructuring and repayment of the loan, Endomines will have no interest-bearing bank debt.

"I am excited about the cooperation we are now starting with Endomines. The Company has demonstrated its strength in exploration and sustainable mining operations along the Karelian Gold Line. The Company is in capable hands and my faith in its bright future through exploration in Karelia and international expansion is strong. This arrangement is also a significant investment in Finnish mining industry”, says investor Kyösti Kakkonen, who is widely known as the founder of the Tokmanni Group in Finland.

"In Kyösti Kakkonen we will get a significant, well recognized shareholder, who believes in the development opportunities along the Karelian Gold Line. This is an instrumental part of the entire arrangement to us", says the Chairman of Endomines, Staffan Simberg.

The purchase price of TVL Gold LLC is USD 34 million (ca. EUR 29 million). Two thirds of the acquisition will be paid by issuing a convertible note to the owner of TVL Gold, Gregory Smith. The convertible note will be converted to Endomines shares over the course of its three-year maturity. Thereafter, Smith will be the largest shareholder of Endomines with over 20 per cent holding. Gregory Smith has extensive international experience in the mining industry, which he will bring to Endomines along with his commitment to long-term shareholding.

"We are joining forces with Endomines, which will add significant value to both parties. I am confident that both the Idaho projects and the Karelian Gold Line will succeed, which has convinced me to accept a significant part of the purchase price in Endomines shares over the coming years", says Gregory Smith.

"This comprehensive arrangement gives Endomines an excellent platform for growth. In addition to the strengthened balance sheet, we will get new shareholders that will bring along their valuable expertise. We will continue focusing on systematic exploration with modern techniques along the Karelian Gold Line, and through the acquisition in the USA we will expand our operational platform", comments the CEO of Endomines AB, Saila Miettinen-Lähde.

The rights issue as well as the transactions set out above requires the approval from Endomines’ shareholders at an extraordinary general meeting that will be held on 8 January 2018.

Endomines AB intends to be an active developer of the mining sector in the Nordics as well as more broadly internationally. With a view on the price development of gold, the Company will continue seeking new growth opportunities.

For more information on the rights issue and the transactions described herein, please see the separate press releases that have been published by Endomines earlier today, available at the Company’s website: www.endomines.com.