Quarterly Report • Nov 26, 2015
Quarterly Report
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Financial results for the nine-month period January – September 2015 and for the quarter July - September 2015
The net result after tax for the 9-month period January – September 2015 amounted to MSEK –89.9 (MSEK –7.0 excluding and MSEK -11.8 including discontinued operations). This corresponds to earnings per share (EPS) of SEK –0.99 (SEK –0.32 excluding discontinued operations and SEK -0.55 including discontinued operations).
| SEK thousand | 9 months | 9 months | |||
|---|---|---|---|---|---|
| Q3 2015 | 2015 | Q3 2014 | 2014 | 2014 | |
| Sales | ۰ | ۰ | ۰ | $\overline{\phantom{a}}$ | |
| Other income | 40 | 40 | 33 | 108 | 108 |
| Total revenues | 40 | 40 | 33 | 108 | 108 |
| EBITDA | $-1663$ | $-4367$ | $-1286$ | $-8048$ | $-11046$ |
| Impairment losses and depreciation | $-34$ | $-82102$ | $-34$ | $-121$ | $-30$ 155 |
| Net result attributable to shareholders of parent company | $-4822$ | $-89906$ | $-1573$ | $-11771$ | -45 986 |
| Investments in period (MSEK) | $\overline{\phantom{a}}$ | 2.1 | 1.5 | 5.0 | 5.9 |
| Cash at end of period | 50 765 | 50 765 | 834 | 834 | 61 502 |
| Interest-bearing long term debt at end of period | 5 000 | 5 000 | 9 0 0 0 | 9 0 0 0 | 9 0 0 0 |
Nickel Mountain Group AB (publ) ("NMG" or "Group") is a Swedish mineral exploration and appraisal company. The Group structure consists of the Swedish parent company ("NMG" or "Parent Company") which in turn owns two subsidiary companies by the end of the third quarter. The shares of NMG are listed on the Oslo Stock Exchange in Norway. Ticker name is "NMG". The number of shareholders is around 5,800.
The key asset of NMG has so far been the Rönnbäcken nickel sulphide deposit ("RNP") located in Northern Sweden. The Rönnbäcken resource report by SRK Consulting (Sweden) AB was updated most recently in January 2012. This report at that time demonstrated an NI 43-101 compliant resource of 668.3 million tons measured and indicated resources with an average total nickel content of 0.176% of which 0.099% is nickel in sulphide (Ni-AC), and an iron content of 5.67%. For a break-down of the resource categories, please refer to the NMG website, http://nickelmountain.se/assets-operations/geology-and-resources/
In late June 2015, the Board of Directors of NMG decided to temporarily stop all investments in RNP with immediate effect as a result of the very low nickel price and the increased complexity of the project relating to the proposed commercialization of the iron oxide by-product. A MSEK 82 impairment charge was in that context booked in the 6-month interim report for 2015 relating to the nickel project.
Thereafter, as described in numerous sections of this interim report, the Board in October 2015 published its proposal for a new strategic business direction for NMG; the company will focus on debt collection business in Europe with a start in the Spanish market. The mineral assets of the group may be disposed of in due time. These proposals were approved at an Extraordinary General Meeting of the shareholders held on November 17, 2015.
The net result of NMG from remaining operations (excluding the business segment "Diamonds" which was transferred to the shareholders of NMG in June 2014) for the 9-month period January to September 2015 amounted to MSEK –89.9 (MSEK –7.0 during the corresponding period in 2014). The mentioned Q2 2015 MSEK 82 impairment charge is the cause for the significant loss in the report period. The net result from discontinued operations (business segment "Diamonds") for the 9-month period of 2015 was 0 (MSEK –4.8). For the third quarter of 2015 in isolation, the net result from remaining operations was MSEK -4.8 (-1.6). For discontinued operations the corresponding net result for Q3 2015 was 0 (0).
Earnings per share (EPS) for the 9-month period ending September 2015 amounted to SEK -0.99 (SEK –0.32). The latter figure excludes discontinued operations. Including discontinued operations in the first nine months of 2014, EPS was then SEK -0.55. The EPS for the third quarter of 2015 was SEK -0.05 (SEK -0.07 excluding and including discontinued operations).
There were no sales revenues for the report period (MSEK 0). Other operating income amounted to MSEK 0 (0.3), of which MSEK 0 (0.2) related to discontinued operations. For the third quarter of 2015 other operating income was 0 (MSEK 0). The latter figure relates only to remaining operations.
Operating costs excluding depreciation and impairment for remaining operations amounted to MSEK –4.4 during the first nine months of 2015 (MSEK -8.2 in same period of 2014). The same figure for discontinued operations was 0 (-1.3). For the quarter July – September 2015 these operating costs amounted to MSEK -1.7 (MSEK -1.3 including and excluding discontinued operations). NMG has in view of the decision to temporarily stop the investment program by the end of the second quarter of 2015 not capitalized any administration costs on subsidiary level in the third quarter in accordance with the accounting principles established. This has resulted in administration costs of a few hundred thousand SEK being charged to the profit and loss account of the group in the last quarter instead of as previously getting capitalized and attributed to the mining permits in the group balance sheet.
Depreciation and impairment for remaining operations were MSEK -82.1 during the first nine months of 2015 (-0.1). The decision in the end of the second quarter 2015 to impair the nickel project in Sweden by MSEK 82 is the explanation for the high number. For discontinued operations, depreciation and impairment were MSEK 0 during the first nine months of 2015 and MSEK -3.7 during the same period of 2014. The latter figure related to a write-down of certain mineral interests in South Africa at the time. For the third quarter of 2015 depreciation and impairment for remaining operations were MSEK 0 (0). The corresponding figure for discontinued operations was MSEK 0 (0).
Net financial items in remaining operations during the 9-month report period amounted to MSEK -3.5 (+1.2). The positive number in 2014 is explained by a realization gain from the sale of the subsidiary IGE Diamond at that time. The same figure relating to the third quarter of 2015 exclusively reached MSEK -3.1 (-0.2). The negative number in the 9-month period and in the last quarter of the report period depends on the NOK weakening against the SEK, and NMG for the time being keeps the absolute majority of its cash balances in NOK. This leads to currency exchange component swings in each report period. In the discontinued operations the financial net items were 0 in the report period (0). The same figure for the third quarter of 2015 was 0 (0).
There was no income tax effect neither in the remaining operations nor in the discontinued operations for the first 9 months of 2015, and that also applied to the third quarter of 2015 in isolation. The same goes for the corresponding periods of 2014. The MSEK 82 RNP impairment by end of this year's second quarter is not tax deductible until the loss in the future has been realized in accordance with Swedish tax rules, if at all.
NMG had a cash flow of MSEK -10.7 during the 9-month period January – June 2015 (MSEK -14.4). Discontinued operations are included in the comparative figures for 2014.
Cash and cash equivalents at the end of September 2015 were MSEK 50.8 compared to MSEK 0.8 at the same point in time a year earlier. The 68 million NOK rights issue successfully closed in early November 2014 has generated the higher cash figure by end of the report period.
NMG's total assets at the end of September 2015 were MSEK 83.9 compared to MSEK 143.6 at the end of the same period in 2014. The MSEK 82 RNP impairment by end of Q2 2015 has caused the reduction in total assets.
Investments during the first nine months of 2015 amounted to MSEK 2.1, and exclusively related to the RNP (MSEK 5.0). The corresponding figure for the third quarter of 2015 in isolation was MSEK 0 (1.5).
In the civil court case against the four former board directors new information appeared in the very beginning of July 2015. The Swedish public prosecutor then filed criminal charges against two of the four former NMG Board Directors in office during first half of 2013. This does possibly benefit NMG's position. If the prosecutor
wins the criminal case, it will imply that at least a few of the former Board Directors have also acted in a grossly negligent way. Overall this strengthens the case for NMG's compensation claim (see also note 6 to this report). As per the report date it is not yet clear when the criminal and civil cases will start in Sweden. Both will take place in the Stockholm District Court. The initially scheduled pre-trial hearing was by the Stockholm District Court cancelled and replaced by a request to NMG to file the corresponding information in written form, which has been done.
NMG has also via a previously owned partnership received a request to clarify certain issues in connection with the tax declaration of the partnership in respect of financial year 2013. Such requests are standard issues, and in due time it will get clear if the tax authorities want to challenge something relating to the partnership.
During the last few years the Company has been focused on preparations for a PFS and a permit application under the Swedish Environmental Code. The situation, however, changed during the second quarter of 2015 in conjunction with the receipt of a desk study of the various options for commercializing the by-product iron oxide from the nickel project. In short the report received from an international consultancy firm suggested that NMG would, in order to receive any significant value for the by-product, need to integrate forward by taking on a significant investment relating to production of so called merchant pig iron ("MPI"). Such facility would then be constructed in Norway, and would have an estimated price tag of some 800 million USD. Still any such investment would first demand a long term nickel price much higher than the spot prices existing in summer and autumn 2015.
In view of the in such way much more complex approach of possibly arriving at a profitable and realistic business plan for the whole nickel project, and also in view of the currently depressed spot prices for minerals in general and thereby for nickel, the Board of Directors in summer 2015 decided to put all further investments in to the nickel project on hold. In that context the nickel project was also impaired by approximately 75% leading to an impairment charge of MSEK 82 booked in the second quarter of 2015.
In October 2015 the Board of Directors decided to propose to the shareholders of NMG a totally new business direction according to below. In that context the Board also proposed to the convened Extraordinary General Meeting to allow for a possible outright sale of the group's mineral assets or even possibly to unwind them. The EGM took place on November 17, 2015.
Cash and cash equivalents at the end of September 2015 amounted to MSEK 50.8, compared to MSEK 0.8 at the end of September 2014. The absolute majority of the liquid assets are held in the Norwegian currency NOK. Total equity at the end of the report period was MSEK 70.8 (MSEK 129.8 at end of the corresponding period in 2014), representing an equity ratio of 84 per cent (90 per cent at the end of September, 2014).
The Company's interest bearing long-term debt as at the end of September 2015 amounted to MSEK 5 (MSEK 9 by end of September 2014). The long term debt relates to an MSEK 5 convertible loan granted by Norrlandsfonden in 2010 for the development of RNP. It is described in greater detail in note 7 to this report. The MSEK 4 unsecured loan for working capital purposes extended in May 2013 by Mr. Ulrik Jansson formally matures in May 2016, and is therefore as from the second quarter of 2015 classified as short term debt.
Short-term loans and other short-term liabilities at the end of the third quarter 2015 amounted to MSEK 8.1 (MSEK 4.8).
On October 16, 2015 NMG published that it had entered in to a conditional purchase agreement relating to a leading Spanish private debt collection company, ALD Abogados S.L. for a total consideration of some 18 million Euro whereof some 5 million Euro in kind via up to 47 million new NMG-shares to be issued. In this conjunction NMG also announced a fully underwritten directed issue of 400 million shares at an issue price of 1 NOK per share. And in the same context a rights issue of up to 60 million new shares was announced at the same issue price, also fully underwritten In essence, NMG has in accordance with previously published intentions embarked on a new growth strategy as international debt collection company, and the mineral
assets may be disposed of in due time. These proposals were put forward for approval by an Extraordinary General Meeting of NMG, which took place on November 17 in Stockholm. All proposals were approved by the present shareholders. At the same EGM certain amendments to the Articles of Association were approved, an employee stock option program encompassing 55.5 million new shares and a consultancy agreement with the related party Ferncliff company in Oslo were also endorsed. Following the EGM a new group management was appointed, and Mr. Endre Rangnes took up duties as new Group CEO.
The Spanish debt collection company has estimated full year 2015 revenues of approximately 7 million Euro with an estimated EBITDA result (operating result) of approximately 3 million Euro. Only a minor part will be consolidated in the NMG group Profit and Loss account for 2015, as only that part of the Spanish company's revenues and results relating to the time period following the formal acquisition date will be included.
In addition to the new equity being contributed to NMG via the mentioned share issues, NMG has also received back-up from a major Norwegian bank, which has committed to support NMG's future growth also by extending certain credits on commercial terms.
In preparation for the European expansion within debt collection, a number of new wholly-owned subsidiaries have been incorporated by the parent company after end of the report period.
For further information on the new business direction and the various issues of shares, please go to NMG's website www.nickelmountain.com.
In early October NMG also notified the stock market that the Swedish tax authorities have asked for additional information in respect of the tax declaration for fiscal year 2013 for one of the NMG group's subsidiaries.
On November 25 2015, NMG convened a new Extraordinary General Meeting (EGM) that takes place on December 23 in Stockholm. The main items in the EGM-notice are to approve the new company name Axactor AB (publ), to appoint a new Board of Directors and to ask for a new mandate from the shareholders to issue shares or other financial instruments. For more details, please go NMG's website and look at the press release covering the EGM-notice.
The financial situation of the Group improved considerably following the closing of the 68 million NOK rights issue in November 2014. As per the date of this report, NMG can state that it has adequate working capital for sustaining normal business operations during the upcoming 12 month period. And the new significant share issues approved at the November 17 EGM will further strengthen the group's financial situation.
The Parent Company's business activity is to manage the Group's operations. The result after tax during the first nine months of 2015 amounted to MSEK -150.1 (MSEK -5.7 during January – September 2014). The net result relating to the quarter July – September 2015 was MSEK -4.4 (-2.0). The Q2 2015 MSEK 82 impairment of immaterial fixed assets on group level on parent company level translates in to a write-down of subsidiary shares and subsidiary loans, which is the explanation for the significant loss in the report period. Post this write-down it was necessary to re-capitalize the subsidiaries by way of shareholder contributions. Loans to subsidiaries were therefore converted to new equity, and this has resulted in a satisfactory financial situation in the two subsidiaries post the write-down.
Cash and cash equivalents in the Parent Company amounted to MSEK 50.5 at the end of September 2015 (MSEK 0.7).
At the end of September 2015, NMG had two employees. One of them left the company in early November 2015, after end of the report period.
There are currently 90,809,360 outstanding shares each with a par value of SEK 0.50. There is only one type of shares and all shares have equal rights. The AGM held in June 2015 gave authorization to the Board of Directors to decide on new issues of shares or convertible debt instruments with or without a deviation from the shareholders' preferential rights. The maximum dilution permitted according to this authorization is 50% which translates into 90,809,360 new shares given the number of shares outstanding at end of June 2015. The issue price shall, in case of a directed issue, be in line with the market price of the share with a deduction for any reasonable discount required. The authorization is valid to next year's AGM. This authorization is proposed to be replaced by a new enlarged authorization at the EGM convened for December 23, 2015. The new mandate is proposed to be 280 million new shares, which will amount to a dilution of some 30% given total number of shares outstanding post this authorization being implemented and post all the issues proposed at the November 17, 2015 EGM being registered (see below).
The Extraordinary General Meeting held on November 17 approved of issuing in total some 507 million new shares at an issue price of 1 NOK per share and further to give authorization to issue up to 55.5 million incentive options to the new management team each entitling to subscription of one new ordinary share. The option program consists of different tranches of options with different strike prices and a maturity until end of 2020 at the latest.
As previously noted, a Nomination Committee is supposed to get appointed in autumn 2015 for presenting recommendations to the Annual General Meeting in the spring of 2016. Nomination Committee members will comprise the Chairman of the Board of Nickel Mountain Group and two representatives of the two largest shareholders in the company. The significant share issues scheduled for and approved in November 2015 have lead to a decision to postpone the appointment of the Nomination Committee until the new shareholder structure gets more clear by year-end 2015. The exact committee composition will be announced in due time.
12-Month Interim Report for Full Financial Year 2015: Will be published in February 2016. Exact date will be communicated towards the end of 2015.
This report has not been reviewed by the Company's auditors.
Stockholm, November 25, 2015
For and on behalf of the Board of Directors,
Endre Rangnes
Chief Executive Officer Nickel Mountain Group AB (publ) Hovslagargatan 5B, bottom floor 111 48 STOCHOLM Sweden www.nickelmountain.se [email protected] [email protected] Telephone number: +46 8 402 28 00 Cell phone: +47 48 221111
The shares of Nickel Mountain Group (publ.) are listed on the Oslo Stock Exchange, ticker symbol NMG.
Cautionary Statement: Statements and assumptions made in this document with respect to Nickel Mountain Group AB's ("NMG") current plans, estimates, strategies and beliefs, and other statements that are not historical facts, are forward-looking statements about the future performance of NMG. Forward-looking statements include, but are not limited to, those using words such as "may", "might", "seeks", "expects", "anticipates", "estimates", "believes", "projects", "plans", strategy", "forecast" and similar expressions. These statements reflect management's expectations and assumptions in light of currently available information. They are subject to a number of risks and uncertainties, including, but not limited to, (i) changes in the economic, regulatory and political environments in the countries where NMG operates; (ii) changes relating to the geological
NMG 9-month interim report for the period January – September 2015 6
information available in respect of the various projects undertaken; (iii) NMG's continued ability to secure enough financing to carry on its operations as a going concern; (iv) the success of its potential joint ventures and alliances, if any; (v) metal prices, particularly as regards nickel. In the light of the many risks and uncertainties surrounding any mineral project at an early stage of its development, the actual results could differ materially from those presented and forecast in this document. NMG assumes no unconditional obligation to immediately update any such statements and/or forecasts
| Consolidated statement of loss | 3 m | 3 m | 9 m | 9 m | 12 m | |
|---|---|---|---|---|---|---|
| (TSEK) | Note | July -Sept 2015 |
July -Sept 2014 |
Jan - Sept 2015 |
Jan - Sept 2014 |
Jan-Dec 2014 |
| Remaining operations Other operating income |
40 | 33 | 40 | 108 | 108 | |
| Other external expenses Personnel expenses |
-1 521 -182 |
-1 687 368 |
-4 225 -182 |
-8 084 -72 |
-11 380 226 |
|
| Operating result before depreciation and impairment losses | -1 663 | -1 286 | -4 367 | -8 048 | -11 046 | |
| Depreciation/amortization and impairment loss on tangible, intangible and financial fixed assets |
4,6 | -34 | -34 | -82 102 | -121 | -30 155 |
| Operating result after depreciation and impairment losses | -1 697 | -1 320 | -86 469 | -8 169 | -41 201 | |
| Financial revenue Financial expenses |
3 | 0 -3 125 |
- -251 |
92 -3 559 |
2 009 -842 |
3 112 -3 129 |
| Total financial items | -3 125 | -251 | -3 467 | 1 167 | -17 | |
| Result before tax | -4 822 | -1 571 | -89 936 | -7 002 | -41 218 | |
| Income tax | - | - | - | - | - | |
| Result for the period from remaining operations | -4 822 | -1 571 | -89 936 | -7 002 | -41 218 | |
| Loss from discontinued operations | - | - | - | -4 789 | -4 789 | |
| Result for the period | -4 822 | -1 571 | -89 936 | -11 791 | -46 007 | |
| Result for the period attributable to: Equity holders of the Parent Company Non-controlling interest Result for the period |
-4 822 0 -4 822 |
-1 573 2 -1 571 |
-89 906 -30 -89 936 |
-11 771 -20 -11 791 |
-45 986 -21 -46 007 |
|
| Result per share before and after dilution including discontinued operations | -0,05 | -0,07 | -0,99 | -0,55 | -1,54 | |
| Result per share before and after dilution excluding discontinued operations | -0,05 | -0,07 | -0,99 | -0,32 | -1,38 | |
| Average number of shares (Millions) | 90,8 | 22,7 | 90,8 | 21,6 | 29,8 | |
| Consolidated Statement of comprehensive loss | 3 m July-Sept 2015 |
3 m July -Sept 2014 |
9 m Jan-Sept 2015 |
9 m Jan - Sept 2014 |
12 m Jan-Dec 2014 |
|
| Result for the period Items that could be reclassified to the income statement: |
-4 822 | -1 571 | -89 936 | -11 791 | -46 007 | |
| Foreign currency translation differences - foreign operations | - | - | - | -1 081 | -1 081 | |
| Total other comprehensive loss Total comprehensive loss for the period attributable to: |
-4 822 | -1 571 | -89 936 | -12 872 | -47 088 | |
| Equity holders of the Parent Company | -4 822 | -1 573 | -89 906 | -12 852 | -47 067 | |
| Non-controlling interest | 0 | 2 | -30 | -20 | -21 |
| (TSEK) | Note | 2015-09-30 | 2014-09-30 | 2014-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | ||||
| Mineral interests | 31 742 | 110 906 | 111 676 | |
| Tangible fixed assets | ||||
| Plant and machinery | 448 | 585 | 551 | |
| Long-term financial assets | ||||
| Claim on Alluvia Mining | 6 | - | 30 000 | - |
| Participation in equity accounted companies | 11 | - | 359 | - |
| Other long-term investments | 11 | 359 | - | 359 |
| Long-term receivables | 52 | 31 | 31 | |
| Total fixed assets | 32 601 | 141 881 | 112 617 | |
| Current Assets | ||||
| Other receivables | 453 | 640 | 696 | |
| Prepaid expenses | 130 | 279 | 161 | |
| Cash and cash equivalents | 50 765 | 834 | 61 502 | |
| Total current assets | 51 348 | 1 753 | 62 359 | |
| TOTAL ASSETS | 83 949 | 143 634 | 174 976 | |
| EQUITY | ||||
| Equity attributable to equity holders of the parent company | ||||
| Share capital | 45 405 | 11 351 | 45 405 | |
| Other paid in capital | 1 256 648 | 1 225 575 | 1 256 648 | |
| Retained earnings and profit for the period | -1 231 282 | -1 107 249 | -1 141 416 | |
| 70 771 | 129 677 | 160 637 | ||
| Non-controlling interest | 73 | 160 | 157 | |
| Total equity | 70 844 | 129 837 | 160 794 | |
| Long-term Liabilities | ||||
| Deferred tax liabilities | ||||
| Long-term liabilities | ||||
| Convertible loan | 7 | 5 000 | 5 000 | 5 000 |
| Other long-term liabilities | 8 | - | 4 000 | 4 000 |
| Total long-term liabilities | 5 000 | 9 000 | 9 000 | |
| Current liabilities | ||||
| Accounts payable | 1 346 | 1 822 | 1 560 | |
| Short-term loans and borrowings | 4 000 | 1 099 | 1 146 | |
| Other liabilities | 37 | 83 | - | |
| Accrued expenses and prepaid income | 2 722 | 1 793 | 2 476 | |
| Total current liabilities | 8 105 | 4 797 | 5 182 | |
| TOTAL EQUITY AND LIABILITIES | 83 949 | 143 634 | 174 976 | |
| Pledged assets | 31 | 31 | 31 | |
| Contingent liabilities | - | - | - |
| Jan-Sept | Jan-Sept | Jan-Dec | |
|---|---|---|---|
| (TSEK) | 2015 | 2014 | 2014 |
| Cash flow from operations | |||
| Result after financial items | -89 936 | -11 791 | -46 007 |
| Adjustments for non-cash items* | 82 088 | 2 967 | 31 468 |
| Income tax paid | - | - | - |
| Total cash flow from operations before change in working capital | -7 848 | -8 824 | -14 539 |
| Change in working capital | |||
| Increase/decrease receivables | 274 | 1 991 | 2 041 |
| Increase/decrease in short term liabilities | 23 | -5 047 | -4 665 |
| Total cash flow from operations | -7 551 | -11 880 | -17 163 |
| Cash flow used for investments | |||
| Purchase of intangible assets | -2 066 | -4 479 | -5 162 |
| Purchase of tangible fixed assets | - | -485 | -691 |
| Purchase of financial fixed assets | -21 | - | - |
| Sale of financial fixed assets | - | 2 000 | 2 000 |
| Total cash flow used for investments | -2 087 | -2 964 | -3 853 |
| Financial activities | |||
| New share issue | - | - | 74 081 |
| Cost related to fund raising | - | 222 | -7 950 |
| Raised credits | - | 1 077 | 1 098 |
| Dividend | - | - | - |
| Amortization of debt | -1 099 | -909 | - |
| Total cash flow from financial activities | -1 099 | 390 | 67 229 |
| Change in cash and bank | -10 737 | -14 454 | 46 213 |
| Cash and bank at 1 January | 61 502 | 15 288 | 15 289 |
| Cash and bank at the end of reporting period | 50 765 | 834 | 61 502 |
| *Adjustments for non-cash items | |||
| Impairment losses on intangible fixed assets | 82 000 | 3 685 | 3 685 |
| Impairment losses on financial fixed assets | - | - | 30 000 |
| Depreciation on tangible fixed assets | 102 | 146 | 180 |
| Exchange loss | - | -1 081 | -1 081 |
| Other | -14 | 217 | -1 316 |
| 82 088 | 2 967 | 31 468 |
| (TSEK) | Equity related to the shareholders of the parent company |
|---|---|
| Share | Other paid | Exchange | Retained earnings and profit for the |
Non controlling |
|||
|---|---|---|---|---|---|---|---|
| capital | in capital | differences | year | Total | interest | Total Equity | |
| Balance on 1 January 2014 | 45 437 | 1 174 207 | 1 081 | -1 096 021 | 124 704 | 8 0 |
124 784 |
| Net result for the period | -11 771 | -11 771 | -20 | -11 791 | |||
| Comprehensive loss for the period | |||||||
| Total comprehensive result | -1 081 -1 081 |
-11 771 | -1 081 -12 852 |
-20 | -1 081 -12 872 |
||
| New share issue | 2 263 | 15 146 | 17 409 | 0 | 17 409 | ||
| Share capital reduction | -36 349 | 36 349 | 0 | 0 | 0 | ||
| Cost related to fund raising | -127 | -127 | -127 | ||||
| Dividend | -568 | -568 | -568 | ||||
| Other transactions | 1 111 | 1 111 | 100 | 1 211 | |||
| Closing balance on September 30 2014 | 11 351 | 1 225 575 | 0 | -1 107 249 | 129 677 | 160 | 129 837 |
| New share issue | 34 054 | 40 029 | 74 083 | 74 083 | |||
| Net result for the period | -34 216 | -34 216 | -34 216 | ||||
| Comprehensive loss for the period | |||||||
| Total comprehensive result | |||||||
| Costs related to fund-raising | -7 824 | -7 824 | -7 824 | ||||
| Other transactions | -1 132 | 5 0 |
-1 082 | -3 | -1 085 | ||
| Closing balance on 31 December 2014 | 45 405 | 1 256 648 | - | -1 141 415 | 160 637 | 157 | 160 794 |
| Balance on 1 January 2015 | 45 405 | 1 256 648 | - | -1 141 415 | 160 637 | 157 | 160 794 |
| Net result for the period | -89 906 | -89 906 | -30 | -89 936 | |||
| Comprehensive loss for the period | 0 | ||||||
| Total comprehensive result | 0 | -89 906 | -89 906 | -30 | -89 936 | ||
| Other transactions | 3 9 |
3 9 |
-54 | -15 | |||
| Closing balance on September 30 2015 | 45 405 | 1 256 648 | 0 | -1 231 282 | 70 771 | 7 3 |
70 844 |
The total number of shares as at September
30,2015 amounts to 90,809,360
| Parent company income statement | 3 m | 3 m | 9 m | 9 m | 12 m | |
|---|---|---|---|---|---|---|
| July - Sept | July - Sept | Jan - Sept | Jan - Sept | Jan-Dec | ||
| (TSEK) | Note | 2015 | 2014 | 2015 | 2014 | 2014 |
| Other operating income | - | - | - | 7 5 |
7 5 |
|
| Other external expenses | -1 314 | -1 548 | -3 877 | -6 837 | -10 316 | |
| Personnel expenses | - | -241 | - | -111 | 187 | |
| Depreciation / impairment of financial fixed assets | 4 | - | - | -142 735 | - | -30 000 |
| Operating result | -1 314 | -1 789 | -146 612 | -6 873 | -40 054 | |
| Result from financial items | ||||||
| Financial revenue | 3 | 0 | 0 | 8 7 |
2 002 | 2 023 |
| Financial expenses | -3 125 | -247 | -3 557 | -823 | -3 111 | |
| Total financial items | -3 125 | -247 | -3 470 | 1 179 | -1 088 | |
| Result before tax | -4 439 | -2 036 | -150 082 | -5 694 | -41 142 | |
| Income tax | - | - | - | - | - | |
| Result for the period | -4 439 | -2 036 | -150 082 | -5 694 | -41 142 |
| (TSEK) | Note | 2015-09-30 2014-09-30 | 2014-12-31 | |
|---|---|---|---|---|
| ASSETS | ||||
| Tangible fixed assets | ||||
| Long-term financial fixed assets | ||||
| Receivable on Alluvia Mining Ltd | 6 | - | 30 000 | - |
| Shares in subsidiaries | 24 662 | 97 247 | 97 247 | |
| Receivables from subsidiaries | 3 030 | 69 551 | 70 468 | |
| Total fixed assets | 27 692 | 196 798 | 167 715 | |
| Current Assets | ||||
| Other receivables | 377 | 522 | 584 | |
| Prepaid expenses | 121 | 29 | 65 | |
| Cash and cash equivalents | 50 549 | 718 | 61 366 | |
| Total current assets | 51 047 | 1 269 | 62 015 | |
| TOTAL ASSETS | 78 739 | 198 067 | 229 730 | |
| SHAREHOLDERS EQUITY | ||||
| Restricted equity | ||||
| Share capital | 45 405 | 11 351 | 45 405 | |
| Statutory reserve | 2 300 | 2 300 | 2 300 | |
| Total restricted equity | 47 705 | 13 651 | 47 705 | |
| Non-restricted equity | ||||
| Share premium reserve | 1 239 565 | 1 199 537 | 1 239 565 | |
| Retained earnings | -1 071 213 | -1 022 709 | -1 030 070 | |
| Result for the period | -150 082 | -5 694 | -41 142 | |
| Total non-restricted equity | 18 270 | 171 134 | 168 353 | |
| Total shareholders equity | 65 975 | 184 785 | 216 057 | |
| Long term liabilities | ||||
| Convertible loan | 7 | 5 000 | 5 000 | 5 000 |
| Interest bearing long-term liabilities | 8 | - | 4 000 | 4 000 |
| Total long-term liabilities | 5 000 | 9 000 | 9 000 | |
| Current liabilities | ||||
| Accounts payable | 1 324 | 1 601 | 1 388 | |
| Short-term loans and borrowings | 4 000 | 1 099 | - | |
| Other liabilities | - | - | 1 099 | |
| Accrued expenses | 2 440 | 1 582 | 2 186 | |
| Total current liabilities | 7 764 | 4 282 | 4 673 | |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 78 739 | 198 067 | 229 730 | |
| Pledget assets | - | - | - | |
| Contingent liabilities | - | - | - |
| (TSEK) | Restricted Equity | Non-restricted Equity | ||||
|---|---|---|---|---|---|---|
| Share | ||||||
| Share | Statutory | premium | Retained | Result for | ||
| capital | reserve | reserve | earnings | the period | Total Equity | |
| Closing balance on 31 December 2013 | 45 437 | 2 300 | 1 148 042 | -911 164 | -110 388 | 174 228 |
| Balance on1 January 2014 | 45 437 | 2 300 | 1 148 042 | -911 164 | -110 388 | 174 228 |
| Transfer of prior year's net result | -110 388 | 110 388 | 0 | |||
| Costs related to fund-raising | 222 | 222 | ||||
| Dividend | -568 | -568 | ||||
| Other transactions | -812 | -812 | ||||
| New share issue | 2 263 | 15 146 | 17 409 | |||
| Share capital reduction | -36 349 | 36 349 | 0 | |||
| Result for the period | -5 694 | -5 694 | ||||
| Closing balance on 30 September 2014 | 11 351 | 2 300 | 1 199 537 | -1 022 710 | -5 694 | 184 785 |
| Balance on 1 October 2014 | 11 351 | 2 300 | 1 199 537 | -1 022 710 | -5 694 | 184 785 |
| New share issue | 34 054 | 40 028 | 74 082 | |||
| Costs related to fund-raising | -7 362 | -7 362 | ||||
| Result for the period | -35 448 | -35 448 | ||||
| Closing balance on 31 December 2014 | 45 405 | 2 300 | 1 239 565 | -1 030 070 | -41 142 | 216 057 |
| Balance on 1 January 2015 | 45 405 | 2 300 | 1 239 565 | -1 030 070 | -41 142 | 216 057 |
| Transfer of prior year's net result | -41 142 | 41 142 | 0 | |||
| Other transactions | ||||||
| Result for the period | -150 082 | -150 082 | ||||
| Closing balance on 30 September 2015 | 45 405 | 2 300 | 1 239 565 | -1 071 213 | -150 082 | 65 975 |
| The total number of shares outstanding is 90,809,360 as at September 30, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Key ratios and share data for the consolidated group | 30/9/2015 | 30/9/2014 | 2014 | 2013 | 2012 | 2011 | ||
| Number of outstanding shares at beginning of report period | Number | 90 809 360 | 18 174 922 | 18 174 922 | 18 174 922 | 51 928 350 | 1 805 618 810 | |
| New share issues |
Number | - | 4 527 418 | 72 634 438 | - | 129 820 875 | 2 348 649 150 | |
| Number of outstanding shares at the end of report period ,* | Number | 90 809 360 | 22 702 340 | 90 809 360 | 18 174 922 | 181 749 225 | 51 928 350 | |
| Average number of shares *** | Number | 90 809 360 | 21 577 828 | 29 804 775 | 18 174 922 | 140 846 758 | 2 930 566 085 | |
| Operating result before depreciaton & impairment (for remaining operations only in 2014-2015) | TSEK | -89 936 | -8 048 | -11 046 | -21 437 | -24 645 | -62 531 | |
| Result after tax | TSEK | -89 906 | -11 771 | -45 986 | -110 088 | -121 490 | -185 944 | |
| Operating result per share | SEK | -0,99 | -0,37 | -1,38 | -1,21 | -0,17 | -0,02 | |
| Result after financial items per share | SEK | -0,99 | -0,32 | -1,38 | -6,06 | -1,07 | -0,19 | |
| Result per share after tax | SEK | -0,99 | -0,55 | -1,54 | -6,06 | -0,86 | -0,06 | |
| Shareholders equity per share before dilution ,* | SEK | 0,78 | 5,72 | 1,77 | 6,87 | 1,34 | 7,61 | |
| Dividend | TSEK **** | 0 | -568 | -568 | - | - | - | |
| Price per share at the end of reporting period | NOK | 0,64 | 1,34 | 1,42 | 3 ** | 0,45 | 1,66* | |
* A reversed split of 1:80 was executed on the 8th of December 2011 ** A reversed share split of 1:10 was conducted on December 13, 2013
*** The average number of shares during the 12 m period 2013 has been adjusted for the reversed split as from the beginning of the year.
**** The dividend was non-cash (subsidiary African Diamond AB was distributed in a relation 1:1)
NMG possessed none of its own shares at the end of the report period. Further information regarding key ratio definitions can be obtained from the Annual Report for the Financial Year 2014.
This interim report has been prepared in accordance with IAS 34 and recommendation RFR 1 of the Swedish Financial Reporting Board (RFR), and recommendation RFR 2 and the Annual Accounts Act with regard to the Parent Company. The accounting principles applied correspond to those described in the Annual Report for the Financial Year 2014. This interim report does not contain all of the information and disclosures available in the annual report and the interim report should be read together with the Annual Report for the Financial Year 2014.
The operations of NMG involve certain significant risks, including but not limited to credit risk, foreign exchange risk and political risk. For a complete discussion of the aforementioned risks, refer to the Company's Annual Report for the Financial Year 2014, which is available on the NMG website, www.nickelmountain.se. In addition, a detailed risk factor account is given in the various issue prospectuses published and available at NMG's website.
| Financial revenue | Group | ||||||
|---|---|---|---|---|---|---|---|
| (TSEK) | 2015-09-30 | 2014-09-30 | 2014-12-31 | ||||
| Interests | - | 6 | 28 | ||||
| Sales of group company | - | 2 000 | 2 000 | ||||
| Exchange gains | 92 | 3 | 1 084 | ||||
| Total financial revenue | 92 | 2 009 | 3 112 | ||||
| Financial expenses | |||||||
| Interest | -580 | -664 | -838 | ||||
| Exchange losses | -2 979 | -178 | -2 291 | ||||
| Total financial expenses | -3 559 | -842 | -3 129 |
Depreciation and impairment during the 9-month period January – September 2015 amounted to TSEK 82,102 in the remaining operations (TSEK 121). The high number is related to the decision by NMG at end of Q2 2015 to stop all investments in the Rönnbäcken nickel project with immediate effect, and to book an associated TSEK 82,000 impairment charge relating to the group's immaterial fixed assets.
In the discontinued operations, depreciation and impairment were 0 for the report period but TSEK 3,710 for the first nine months of 2014. The latter figure consists almost entirely of a full impairment of a mineral license in South Africa at the time. NMG group did in early 2014 not have enough funds to maintain the license, and therefore the write-off was conducted.
| (TSEK) | Gold | Nickel | Jan - Sept 2015 Other |
Total remaining operations |
Discontinued operations |
Total |
|---|---|---|---|---|---|---|
| Other operating income | 4 0 |
4 0 |
4 0 |
|||
| Operating result before depreciation and impairment losses | -490 | -3 877 | -4 367 | -4 367 | ||
| Impairment of mineral interests and claim | -82 000 | -82 000 | -82 000 | |||
| Depreciation according to plan | -102 | -102 | -102 | |||
| Financial items | 3 | -3 470 | -3 467 | -3 467 | ||
| Result before tax | -82 589 | -7 347 | -89 936 | -89 936 | ||
| Fixed assets | 32 580 | 2 1 |
32 601 | 32 601 | ||
| Current assets | 294 | 51 054 | 51 348 | 51 348 | ||
| Long-term liabilities | 5 000 | 5 000 | 5 000 | |||
| Short-term liabilities | 341 | 7 764 | 8 105 | 8 105 | ||
| Investments | 2 087 | 2 087 | 2 087 |
| Jan - Sept 2014 | ||||||
|---|---|---|---|---|---|---|
| Total | ||||||
| remaining | Discontinued | |||||
| (TSEK) | Gold | Nickel | Other | operations | operations | Total |
| Other operating income | 108 | 108 | 186 | 294 | ||
| Operating result before depreciation and impairment losses | -1 174 | -6 874 | -8 048 | -1 091 | -9 139 | |
| Impairment of mineral interests | 0 | -3 685 | -3 685 | |||
| Depreciation according to plan | -121 | -121 | -25 | -146 | ||
| Financial intems | -13 | 1 180 | 1 167 | 1 2 |
1 179 | |
| Result before tax | -1 307 | -5 695 | -7 002 | -4 789 | -11 791 | |
| Fixed assets | 30 000 | 111 881 | 141 881 | 141 881 | ||
| Current assets | 484 | 1 269 | 1 753 | 1 753 | ||
| Long-term liabilities | 9 000 | 9 000 | 9 000 | |||
| Short-term liabilities | 515 | 4 282 | 4 797 | 4 797 | ||
| Investments | 4 964 | 4 964 | 4 964 |
This receivable is related to the proposed purchase of Ghana Gold in the spring of 2013. This disastrous transaction was put forward for approval by a Shareholders' Meeting in the spring of 2013. The purchase consideration was supposed to consist of a MSEK 50 cash payment and 50 million newly issued NMG-shares. The transaction was never approved in a correct way by the above-mentioned Shareholders' Meeting, and was therefore supposed to be reversed. In January 2013 a pre-payment of MSEK 50 was made by NMG, however this payment should have been returned as the purchase was never completed. This did not happen. Further, as a result of suspicions of fraud arising, a criminal investigation was initiated, and has now resulted in the Swedish public prosecutor filing criminal charges against two of the Board Directors in office at that time. In parallel, NMG shareholders appointed a new Board of Directors in August 2013. At successive shareholder meetings in 2013 and in 2014, resolutions were repeatedly taken in order to clear the way for demanding compensation from the people considered responsible for the transaction. A civil law claim was in June 2014 filed by NMG with the Stockholm District Court against four former board directors deemed responsible for the transaction, with NMG thereby demanding MSEK 55 in compensation plus accrued interest from June 2014. In view of the uncertainty with regard to the financial situation of Alluvia Mining Ltd itself and the respondents' financial possibilities to in the future pay the claimed amount in full, the nominal value of the claim was written down to MSEK 30 in the external accounts at the end of 2013. At year-end 2014 the conclusion was made, that the principal claim on the debtor, Alluvia Mining Ltd, a foreign offshore company, most likely was worth nil. The debtor had not responded to numerous contact attempts and seemed to be insolvent or maybe even bankrupt. Therefore the claim on Alluvia Mining is probably worth zero while as the claim in accordance with the civil law suit against the former board members is the main valuable asset. It should also be considered that at the time of the disastrous event, NMG had paid for a liability insurance provided by a foreign insurance company covering the Board of Directors and Management. The insurance coverage cannot be claimed by NMG itself, but only by the former Board Directors should they be deemed liable by a court for the caused loss to NMG. The insurance coverage according to the policy was some MSEK 25. As far as NMG understands, the insurance company has thus far not accepted to pay out insurance compensation with reference to various circumstances. NMG's legal advisors consider that it is unlikely that in the end the insurance company will succeed in rejecting the claims. On balance, NMG and its legal advisors consider that the prerequisites are very good for NMG to, directly via a court decision, with or without insurance compensation, succeed in securing the mentioned amount. The decision in summer 2015 by the Swedish public prosecutor to file criminal charges against two of the four former NMG Board Directors for their actions in connection with the Ghana Goldtransaction is beneficial to NMG's civil court case. The criminal case may timeing wise take place before the civil court case.
Given the circumstances described above, that as of now the principal claim on the debtor Alluvia Mining Ltd has zero value, but instead the compensation claim on the former board members is the primary valuable asset, the decision was at year-end 2014 taken to treat this item as a contingent asset in accordance with IAS 37. The consequence was that this item was removed from the group balance sheet. In the external accounts, this resulted in an impairment of 30 million SEK as per end of December 2014. It is repeated that this has no relation whatsoever to the legal assessment of the case.
A pre-trial hearing is scheduled for October 2015 was by the Stockholm District Court cancelled and replaced in NMG's case by a written statement submitted by the Company's legal advisors to the Court. The exact starting time for the civil and criminal cases in this matter is not yet known to NMG. NMG estimates that the legal process will cost some 1 – 2 million SEK per year. Given an appeal to a higher court instance, the final ruling may take a couple of more years.
In June 2010, NMG issued a convertible debenture in the amount of MSEK 5 to Norrlandsfonden, a Swedish public sector fund investing primarily in business projects in the north of Sweden. The convertible loan was issued based on the following conditions:
be forced to pay compensation for the lost interest to Norrlandsfonden of 15% (on an annual basis) on the loan amount during the period that it has been utilised by NMG.
Since the conversion price is deeply out of the money, the whole convertible loan amount is being treated on the balance sheet as a loan and not partly as equity.
As a consequence of the MSEK 50 payment to Alluvia Mining in January 2013, the Group was drained of cash at the end of May 2013, creating the need for external funding. At the time, former Board member Ulrik Jansson lent MSEK 4 to NMG. The loan carries an interest of 12 per cent per annum and has a term of three years. NMG retains the right to offset this MSEK 4 loan against its claim on the former Board Members. In view of the remaining maturity of this loan being less than 12 months, this loan now classified as a short term loan.
In the third quarter of 2015, NMG paid in total 100,000 NOK to its major shareholder Strata Marine & Offshore AS in respect of managerial services extended by the Board Director Jan Frode Anderson during the first six months of 2015 over and beyond his normal duties as Board Director of NMG.
The EGM held on November 22, 2013 approved in principle a proposal by the Board of Directors to separate all remaining African assets held by the group at the time, and to confer to shareholders pro-rata rights to receive said assets. During the first quarter of 2014, a new company for holding the African operations was incorporated and named African Diamond AB (ADIAM). All relevant assets in Africa were transferred to ADIAM. Following a second resolution at the EGM held on May 8, 2014, and also a third resolution at the AGM held on June 4, 2014 the ADIAM shares in June were distributed as a dividend on a 1:1 basis in proportion to the number of Parent Company shares held on the record date.
| 3 m July - Sept |
3 m July - Sept |
9 m Jan - Sept |
9 m Jan - Sept |
12 m Jan - Dec |
|
|---|---|---|---|---|---|
| TSEK | 2015 | 2014 | 2015 | 2014 | 2014 |
| Other operating income | - | - | - | 186 | 186 |
| Other exernal expenses | - | - | - | -1 276 | -1 276 |
| Personnel expenses | - | - | - | - | |
| Depreciation/impaiment of fixed assets | - | - | - | -3 710 | -3 710 |
| Operating result | - | - | - | -4 800 | -4 800 |
| Result from financial items | |||||
| Financial revenue | - | - | - | 11 | 11 |
| Financial expenses | - | - | - | - | - |
| Total financial items | - | - | - | 11 | 11 |
| Result before tax | - | - | - | -4 789 | -4 789 |
| Income tax | - | - | - | - | |
| Loss from discontinued operations | - | - | - | -4 789 | -4 789 |
The below table shows the revenues and costs relating to the African operations. These amounts have been excluded from the consolidated statement of loss for the group.
The minor share interests in Nordic Iron Ore AB and Tasman Metals Ltd held by NMG were at end of Q1 2014 treated as participation in equity accounted companies. At year end 2014 they were instead viewed as other long-term investments. This new treatment has neither had an effect on the Group result for full year 2014, nor for the six month periods January – June of 2014 and 2015.
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