Endomines Finland Plc – Stock Exchange Release, Half-Year Interim Report – 15/8/2024, at 11.00 EEST
Endomines Half-Year Business Review 1.1.2024–30.6.2024: significant turnaround in our business
This release is a summary of Endomines Finland Plc's Half-Year Report for the period January-June 2024. The full report is attached to the release and available on our website at https://endomines.com/en/for-investors/reports-and-presentations/.
January-June 2024 in brief
- The group’s revenue increased by 22% and was 13.1 MEUR (10.7 MEUR). 100% of the group's revenue consists of the revenue of Pampalo production segment
- Gold production in January – June 2024 increased by 4%, production was 218.3 kg (210.0 kg) which is 7,019 oz (6,753 oz). 100% of the group's production consists of Pampalo production segment's production
- The group’s EBITDA was 1.9 MEUR (0.4 MEUR), which is 15% of the revenue (3%)
- Pampalo production segment’s EBITDA was 4.0 MEUR (2.4 MEUR), which is 31% of the revenue (22%)
- The group's operating result was 0.1 MEUR (-0.8 MEUR)
- The group's net result was -1.0 MEUR (-1.9 MEUR)
- The group's interest-bearing net liabilities at the end of June was 18.0 MEUR (11.6 MEUR), the net gearing ratio was 56% (33%) and the equity ratio was 50% (66%)
- At the end of June, the group's cash and bank receivables were 3.0 MEUR (1.2 MEUR)
- On February 1, 2024, Endomines started gold production at the Hosko production area located on the Karelian gold line
- On March 13, 2024, Endomines announced its 2024 ore reserve and mineral resources estimate for the Pampalo mine and the Karelia gold line deposits, according to the situation on December 31, 2023. Endomines also reports gold and silver resource estimates for gold deposits located in Idaho and Montana in the United States. The Karelian gold line, including Pampalo, has a total of 310,300 oz of gold in measured, indicated and inferred categories mineral resources grades additional to ore reserves, as estimated in accordance with the JORC (2012) code. The updated ore reserve and mineral resource estimate represents a 72% (129,800 oz) increase compared to the 2023 resource estimate. There was no change in the reported mineral resources of U.S. deposits
- On March 13, 2024, Endomines has agreed with a group of Finnish investors for a maximum of 3.8 MEUR convertible bonds related to the expansion of ore exploration on the Southern gold line and general business needs
- During February to March 2024, Endomines completed a deep drilling program in Kuittila, on the Southern gold line. The deep drilling program consisted of eight boreholes, with a total length of 5,076.8 meters. Based on the results, the known mineralized zone was significantly extended downward, all drill holes intersected the gold mineralization
- On June 10, 2024, the financing arrangement with LDA Capital Limited has ended, when the right to subscribe shares with warrants ended
| Key figures | Unit | 1.1.-30.6.2024 | 1.1.-30.6.2023 | 1.1.-31.12.2023 |
| Revenue | MEUR | 13.1 | 10.7 | 19.7 |
| Pampalo production revenue | MEUR | 13.1 | 10.7 | 19.7 |
| % of revenue | % | 100 % | 100 % | 100 % |
| Operating expenses | MEUR | -11.2 | -10.4 | -20.3 |
| EBITDA | MEUR | 1.9 | 0.4 | -0.7 |
| Pampalo production EBITDA | MEUR | 4.0 | 2.4 | 3.3 |
| % of revenue | % | 31 % | 22 % | 17 % |
| Depreciation and impairment losses | MEUR | -1.8 | -1.1 | -2.3 |
| Operating result | MEUR | 0.1 | -0.8 | -3.0 |
| Net result | MEUR | -1.0 | -1.9 | -5.3 |
| Net gearing ratio | % | 56 % | 33 % | 46 % |
| Equity ratio | % | 50 % | 66 % | 55 % |
| Earnings per share | EUR | -0.1 | -0.2 | -0.6 |
| Cash Cost in Pampalo, excl. investments | EUR/oz | 1,306 | 1,193 | 1,278 |
Significant events after the end of the reporting period
- 11.7.2024 Endomines reports results from the 2023-2024 base of till sampling program performed at the Southern gold line area.
- 16.7.2024 Endomines reports the results of the drilling program carried out in the Karelian gold line Korvilansuo during the spring of 2024
- 31.7.2024 Endomines reports that it has reached its production capability to run the production periodically at a production level of 20,000 ounces
- 1.8.2024 Endomines reports high-grade exploration results from Kartitsa
CEO’s Review
Endomines' January-June 2024 was overall strong. We took a big leap towards our future goals. Our revenue grew by 22% and was 13.1 MEUR (10.7 MEUR), the group's EBITDA was 1.9 MEUR (0.4 MEUR) and our operating result was 0.1 MEUR positive (-0.8 MEUR). Our production at Pampalo increased by 4% compared to the strong comparison period and was 218.3 kg (7,019 oz). Pampalo production EBITDA rose to 4.0 MEUR (2.4 MEUR) and was 31% of revenue (22%). The strong price development of gold supported operations at the beginning of the year. In March, the spot price rose to its new record of 2,160 USD/oz, and in May the price already exceeded 2,400 USD/oz. Sustainability is a key part of our strategy and in April we published Endomines' first sustainability report.
We completely renewed our strategy in the summer of 2022. After renewing the strategy, we have achieved a significant turnaround in our business, both operationally and financially.
Our vision is to grow Karelia's gold line into one of the most significant responsible gold production areas in the world. The plan is to achieve this by increasing production from current production areas and at the same time to start production also in new production areas. Increasing Pampalo's production volume continued according to our plan, and at the same time the EBITDA increased by 68.4% compared to the comparison period.
We will continue increasing the production level at Pampalo towards the 20,000 oz annual production level, and then upwards. After the reporting period, we announced that we had achieved the capability to run production periodically at this level. Production was run at a higher level for two weeks from July 16th to July 29th, 2024. Total production during the period was approximately 26.7 kg (858 ounces) of gold. On an annual basis, the production level achieved is equivalent to approximately 22,300-ounce production. We see this very significant milestone as the achieved production period confirms that the joint production of Pampalo and Hosko can be increased to the target level of 20,000 ounces per year for longer periods.
Early 2024, we submitted an environmental permit application to take the Pampalo NW and Pampalonlammit areas into production. We also started nature surveys in the Southern gold line area. Our goal is to complete the environmental impact assessment program for the area in early 2025 and at the same time start a more detailed technical planning for placing the area into production. We believe that the Southern gold line offers a unique opportunity to multiply the production volume and take the company to a larger size category within 5–7 years. In planning, our goal is to create a production area where the effects on nature are minimized and at the same time a cooperative concept of gold production and tourism is created. This can include the manufacture of gold jewelry by a goldsmith, cafe operations, gold panning and the presentation of the rich history of the area. At the same time, we want to invest in preserving the area's valuable nature as a source of well-being for all of us.
Our strong investment in exploration supports our goal of growing the Karelian gold Line into a significant gold production area on a global scale. Our goal is to define a gold mineralization of more than one million ounces in the area. In March 2024, we announced a significant resource update, where gold resources increased by 72%, to over 310,000 ounces of gold. We are well on our way towards our strategic goal.
In exploration, we started the year with the Southern gold line in Kuittila and Korvilansuu. The results of the deep drilling program in the Kuittila area confirmed the continuation of the mineralized zone downwards in the bedrock. We published the results of the Korvilansuo drilling program in July. The results confirmed the wide continuation of high-grade mineralization towards the north. In both programs, every drill hole intersected gold mineralization. We believe that both programs will have a positive impact on our next resource update.
In base of till sampling programs, sampling is carried out from the surface of the bedrock. The gold concentrations in the samples indicate gold potential in the bedrock. The results strongly guide the location of future drilling programs. In July, we announced the results of base of till sampling from the Southern gold line. The program included 1,066 samples in the vicinity of Kuittila and Korvilansuo. Based on the results, we identified eight gold potential areas near known gold deposits. Such results from previously untested areas, in the immediate vicinity of known deposits, indicate a great possibility of growing the known deposits into much larger than the current size. Several of the analyzed samples also contained molybdenum, which is used in the steel industry, and tungsten, a raw material for the military industry. Tungsten has been designated as a critical mineral in the European Union and we will explore the possibilities for utilizing these minerals as well.
Regarding the Northern gold line, we published the results of the base of till sampling program carried out in Kartitsa in February 2024. Based on the results, an approximately two-kilometer-long gold potential area was identified. The area's first larger drilling program was launched in the spring of 2024. The results published after the reporting period confirmed the gold potential in the area, and the results of the northernmost drill hole particular were excellent. We see the potential of the area as very significant, and we will continue exploration in this area in the future.
Up North we also started production at Hosko's new open pit. After the start of the open pit, we were able to visually see the structures of the bedrock and gained significant additional information about the direction of continuity of the Hosko ore. Based on this, we implemented a drilling program in the summer of 2024 also in Hosko. We believe that the exploration potential in Hosko is significant.
In the US, our goal is to develop operations through a partnership model. During January-June, we actively worked to achieve this important goal. Partnership negotiations will be an important priority in our operations during July-December 2024.
Overall, we are moving towards the end of 2024 with a positive attitude. We expect an increase in our gold production compared to the beginning of the year. We especially believe that the production volumes of Hosko and Pampalo open pit (East) will increase at the end of the year. In exploration our activities focus on increasing the gold resources on the Southern gold Line.
The price of gold has continued to rise during the year. In January-March, the average price of gold was 2,073 USD/oz, and in April-June, the average price rose to 2,337 USD/oz. In several forecasts, the price outlook for the end of the year is positive. The political turmoil in the United States is predicted to have a positive effect on the price of gold.
I would like to thank our employees and partners for a job well done during the beginning of the year. We can be proud of the results achieved and continue our journey towards the next target levels. I would also like to thank our owners and other stakeholders for their pleasant cooperation.
Guidance for fiscal year 2024
We estimate that gold production will increase by 15–35% from 2023.
We expect the financial result to improve from 2023.
Gold's recent price development and strong short-term market prospects support the outlook for 2024.
Webcast
A live webcast for analysts, investors, and the media will take place on August 15th, 2024, at 14.00. The event will be held in Finnish, with presentation materials in English. To participate in the event, please follow this link. A recording of the webcast will be available later on the company's website at https://endomines.com/en/for-investors/reports-and-presentations/
Endomines Finland Plc
Further information
Kari Vyhtinen, CEO, Endomines Finland Plc
kari.vyhtinen@endomines.com, +358 40 585 0050
Minni Lempinen, CFO, Endomines Finland Plc
minni.lempinen@endomines.com, +358 40 769 3483
Endomines Finland Plc is a Finnish forerunner in sustainable mining. Our operations are focused on gold production and exploration in the Karelian Gold Line in Eastern Finland. We also own the rights to seven gold deposits in the US. We produce gold for the jewellery and electronics industries and create value by turning natural resources into wealth, and we also create value by transforming natural resources into wealth, an investment that can withstand the volatility of global politics. Our vision is to develop the Karelian gold line into one of the most important and sustainable gold-producing regions in the world. Endomines is listed on the OMX Helsinki main list (PAMPALO). www.endomines.com.