Axactor SE

Regulatory Filings • Jun 29, 2015

Nickel Mountain Group ("NMG") puts further development costs relating to Rönnbäcken nickel project ("RNP") on hold

Nickel Mountain Group ("NMG") puts further development costs relating to Rönnbäcken nickel project ("RNP") on hold

· NMG puts puts further RNP development costs on hold. The decision

necessitates an impairment of the immaterial fixed assets in the group balance

sheet of MSEK 82 booked in the second quarter of 2015.

· The impairment does not have any impact on net liquidity or cash flow of the

group and the group balance sheet remains strong

· NMG Board and management will re-analyze the RNP project and also review

other business opportunities in accordance with the amended Articles of

Association approved at the recent June 3 AGM

As previously informed, NMG has during the first quarter of 2015 looked in to

the RNP magnetite concentrate by-product issue more in depth. A global leading

steel industry consultancy firm submitted a report at the end of April 2015. The

report suggested that NMG cannot rely on selling the magnetite by-product as a

substitute for iron ore, but needs to invest significant amounts in order to

produce a value added product based on the magnetite.

As stated in the Q1 2015 report the most favored value adding option would be

to construct a plant for producing merchant pig iron ("MPI"). NMG would

potentially be able to produce and sell up to 1.1 million tons per annum of MPI.

This would correspond to some 10% of the available net exports on the global

market. The surplus electricity generated would in such a case amount to almost

1 billion kWh per annum (1 TWh). The capital expenditure would be approximately

800 MUSD for such a facility. This is an increase by  50%  compared to the capex

estimate of 1.6 billion USD performed by consulting firm SRK in 2011 - 2012. The

latter report was for  RNP as a stand alone nickel project.

The Board of Directors and management of NMG have thorougly considered the

information received and consequently arrived at the following conclusions:

· The suggested commercialization option of the by-product makes the whole

project more capital intensive and complex than earlier anticipated.

· If the project shall be restarted, the pre-feasibility study ("PFS") would

need to be redesigned to include the MPI plant and the electricity generation.

· The future nickel price would need to be significantly  higher than today in

order to generate a fair return on a potentially redesigned RNP-investment.

All these issues listed above combined with the continued and repeated

challenges of the various permits awarded by the Swedish Chief Mine Inspector,

makes it necessary for  NMG to reconsider its RNP project approach. This will

take time and involvement of partners.

To conclude, NMG has decided to temporarily discontinue the ongoing Pre

-Feasibility Study and to put further development costs on hold. This decision

also necessitates an adjustment in the group balance sheet of the immaterial

fixed assets. The whole RNP-project is therefore impaired by approximately 75%

with immediate effect. This results in an impairment charge estimated at MSEK

82, which is booked in the second quarter of 2015.  Group equity amounted to

MSEK 159.8 as at end of March 2015. Remaining group equity after the impairment

charge will therefore proforma amount to MSEK 78 corresponding to approximately

SEK 0.86 SEK per share. The size of the impairment charge is of preliminary

nature at this stage, and NMG will review its internal valuation models, and

arrive at a final figure in the Q2 2015 report in August.

The write-down will also be reflected in the Parent company balance sheet, where

the value of the subsidiary shares and receivables from subsidiaries will need

to be adjusted, and on subsidiary level loans from the Parent company will be

largely converted to new equity in order to preserve a sound financial situation

in all group entities.

The impairment charge is not in itself tax deductible, but in the longer run if

realizing a loss on subsidiary level, a tax asset may arise.

The NMG group balance sheet remains very strong with liquid assets of MSEK 57.8

and external interest bearing debt of approximately MSEK 9 as at end of Q1 2015.

It should be added that NMG has for IFRS reasons at end of 2014 removed the

claim on Alluvia Mining Ltd/the old board directors with a nominal amount of

MSEK 55 plus accrued interest from the group balance sheet. This has nothing to

do with the legal process. NMG believes the prerequisities are favourable for

returning a significant part of this claim in the  coming years.

The impairment charge does not affect cash flow or net liquidity of the group.

Quoting Torbjörn Ranta, Managing Director of NMG: "NMG is a small public junior

exploration company appraising one the largest nickel projects in the world. We

can definitely not finance the development stage on our own, and even financing

the PFS program is  a challenge. The understanding that NMG not only must deal

with the current depressed nickel price, but also be able to take a 10% market

share of the global MPI trade and produce 1 billion kWh per annum of electricity

makes the project much more complex. We simply need to reconsider the project

approach together with our advisors to ascertain that we maximize shareholder

value in NMG. While we re-analyze RNP we will also review other business

opportunities. NMG has, through its major shareholder in Norway, access to a

continuous deal flow.

For and on behalf of the Board of Directors of Nickel Mountain Group AB

Torbjörn Ranta

Managing Director

For information, please contact Torbjörn Ranta

Mail: torbjorn.ranta@nickelmountain.se

Tel: + 46 8 402 28 00

Cell Phone: +46 708 855504

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 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.

Torbjörn Ranta

Managing Director

Tel: 46 8 402 28 00

Mobile: 46 708 855504

E-mail: torbjorn.ranta@nickelmountain.se