Financial development
Third quarter, 1 July - 30 September 2023

  • Sales amounted to SEK 0 million (0)
  • Earnings after tax amounted to SEK -4.3 million (-2.8)
  • Investments amounted to SEK 0.5 million (0.3) during the period
  • Earnings per share before and after dilution amounted to -0.12 SEK (-0.10)

First nine months, 1 January – 30 September 2023

  • Sales amounted to SEK 0 million (0)
  • Earnings after tax amounted to SEK -9.8 million (-7.7)
  • Investments amounted to SEK 1.2 million (4.6) in January - September
  • Earnings per share before and after dilution amounted to -0.26 SEK (-0.21)
  • Cash and cash equivalents amounted to SEK 0.3 million (1.8) on September 30, 2023.

Significant events during the third quarter 2023

  • Nordic Iron Ore and Cargill Metals entered a collaboration agreement through which Cargill Metals undertakes to purchase 25 Mt of ultra high-grade iron ore concentrate from the Blötberget mine in Dalarna, Sweden. In addition to the supply agreement, the collaboration includes conditional funding commitments from Cargill, in total amounting to SEK 307 million. The supply agreement is estimated to generate SEK 35 billion in total revenue during an estimated period of at least 15 years of production.
  • Nordic Iron Ore AB entered into loan agreements, to extend an existing loan facility by SEK 1.5 million, with Bengtssons Tidnings AB and Ronne Hamerslag, CEO of Nordic Iron Ore, to a total of SEK 26.0 million. The term for repayment for the existing outstanding loans was prolonged for existing loans amounting to SEK 24.5 million until December 31, 2023. The previous loan agreements have been entered with the company’s three largest shareholders and a former board member. The agreement has the same interest as previous loans which entails an annual interest rate of 8 percent on the outstanding loans.

Significant events after the period

  • Nordic Iron Ore AB has entered into loan agreements to extend an existing loan facility by SEK 6.0 million from Bengtssons Tidnings AB with family, Ludvika Holding AB and a group of investors including Fredrik Attefall, Johan Flink och Martin Ramqvist, to a total of SEK 32.0 million. At the same time, the term for repayment for the existing outstanding loans of SEK 26.0 million has been prolonged until February 28, 2024. The agreement has the same interest as previous loans which entails an annual interest rate of 8 percent on the outstanding loans.
  • Nordic Iron Ore is a partner to the research center “Smart Exploration Research”. The research center has been granted SEK 60 million by the Swedish Foundation for Strategic Research and is a multidisciplinary center that will do research on exploration and refinement of metals and minerals. The research is led by Uppsala University and is important for the ongoing energy transition and society’s adjustment to the climate.
  • Nordic Iron Ore has followed up on this spring’s exploration of rare earth elements (REE) with additional testing at Blötberget. This testing shows even more promising results and that the total share of REE, TREE (total rare earth elements) amount to 15,285 ppm (1.53 %) at the most. Nordic Iron Ore will carry out additional testing in order to gain a better understanding of the extent of the REE-mineralization.
  • Nordic Iron Ore has made an application to Bergsstaten for an additional exploration permit in the proximity of Blötberget. The reason for the application is that initial exploration has given signals that the area is very interesting for expanded exploration. A successful broadened exploration of the area could potentially increase Nordic Iron Ore’s mineral resources.


CEO comments

Dear Shareholder,
During the quarter we took decisive steps on our journey to realize a modern, electricified mining facility with a uniquely low carbon footprint at Blötberget. In July we secured an offtake agreement with Cargill Metals following lengthy negotiations which ensures the sale of at least 15 years’ production. In the agreement, Cargill Metals undertakes to purchase 25 Mt of ultra high-grade iron ore concentrate, an agreement valued at SEK 35 billion in total sales at the time of the agreement. Next we plan a capital raise to fund zoning planning for Blötberget, where existing shareholders, Cargill Metals and other investors will be given an opportunity to participate.

The announcement of Cargill Metals as our new collaboration partner was a decisive milestone for Nordic Iron Ore as they represent a company with both financial resources and deep industrial knowledge. The supply agreement means that Cargill Metals undertakes to purchase 25 Mt of ultra high-grade iron ore concentrate from the company’s mine in Blötberget which values the contract at SEK 35 billion based on the prevalent market price and exchange rates at the time of signing. As part of the collaboration, Cargill Metals has also made a conditional funding commitment of SEK 307 during the construction of the Blötberget mine.

We have previously communicated that we aim to complete a directed share issue and a preferential rights issue during the autumn of 2023 in order to finance zoning planning at Blötberget. In the prevailing investment climate with continued high inflation, high interest rates and heightened concerns regarding the overall economy, we can conclude that work to secure funding will require more time but since we signed the agreement with Cargill Metals, we see increased interest and respect for our plans. We have sufficient short term funding to await the right circumstances in order to complete a rights issue at attractive terms for our shareholders. The delayed capitalization means that the previous goal to initiate mining of iron ore towards the end of 2026 no longer can remain. During the quarter, the agreement with our financial advisor Arctic Securities ended and we are currently in final negotiations with new advisors that can lead the capitalization process. The Board will also look over the final structure of the capitalization. We will share more information as this work progresses.

Due to the previous years’ inflation and currency changes, the company has updated its cost and investment estimates for completing Blötberget. We now estimate that it will require a total of SEK 3.5 billion in order to make Blötberget into an operational mine, compared to the previous study from Golder in 2019 which estimated a total investment of SEK 2.5 billion. In order to reduce our capital need, the company is looking to lease or rent some plants and machines. Examples of such assets are buildings, power supply plants, material handling/ offloading terminal, mobile machines and process equipment.

If these opportunities are fully exploited, SEK 1.0-1.5 billion of our capex requirement can be converted into opex and thereby reduce our capital need to SEK 2.0-2.5 billion. The previous study was based on all assets being purchased. We will complete additional studies related to design of the production plant and how best to allocate our spending in terms of capex and opex before we finally choose our type of funding.

Also our sales price which is based on a iron ore price index denoted in USD has changed due to the changes in the currency exchange rates and a strong dollar contributes positively to our sales. Compared to the study in 2019, the prices in SEK have increased 15-20% due to a stronger dollar and this partly compensates for the larger investment in order to make the mine operational.

The company has also continued to work on its Environmental Permit and continues its dialogue with the County Administrative Board concerning clarification of the terms for the working time for the water operations in the Environmental Permit and handling of identified changes. During the quarter, we have also made an application to the Land and environmental court for an extended working time regarding water operations and we are currently in a dialogue with the court regarding additional material that they require in order to deal with the issue. To summarize, work continues to secure and update the Environmental Permit for water operations in order to fulfil requirements of our operations.

A lot of the infrastructure is already available through close access to the grid and the railway that will transport the iron ore concentrate to Oxelösunds harbour. These are important reasons for why Nordic Iron Ore will be able to produce ultra high-grade iron ore concentrate with exceptionally low CO2 emissions, corresponding to only a few kilos of carbon dioxide equivalents per tonne iron ore concentrate.

As soon as we have secured capital to finance initial zoning planning work at Blötberget, the company will accelerate strengthening of its organization, both through recruitments and consultants, and secure agreements with partners and suppliers to complete necessary studies, construction and zoning planning, and provide an updated estimate for production start. I look forward to keeping you posted on our progress and challenges of this exiting journey.

Ronne Hamerslag
CEO
Nordic Iron Ore AB (publ)

For additional information, please contact:
Ronne Hamerslag
Verkställande Direktör, Nordic Iron Ore AB
Telefon: 0240 88 301
E-mail: ronne.hamerslag@nordicironore.se

About Nordic Iron Ore
Nordic Iron Ore Group is a mining company with the ambition to revive and develop the iron ore production of Ludvika Mines in Blötberget and Håksberg. The company also intends to expand its mineral resources, and upgrade them to ore reserves, primarily through exploration and other studies of the connecting Väsman field. The Company has all the necessary permits in place for the mine in Blötberget and will be able to produce iron ore of high quality. For more information, see www.nordicironore.se.

Nordic Iron Ore’s shares are listed at Nasdaq First North Growth Market. Wildeco is the company’s Certified Adviser.

This information is information that Nordic Iron Ore is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2023-11-23 08:30 CET.

Attachments
Nordic Iron Ore Interim Report Q3 2023

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