Quarterly Report • May 27, 2014
Quarterly Report
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3 month interim report for the period January – March 2014 - Nickel Mountain Group (publ) AB
the opportunity to attend a session of the Supreme Administrative Court in Sweden (Högsta Förvaltningsdomstolen) , in which the Government's decision not to re-consider the granting of three exploitation licenses to Nickel Mountain Group will undergo a judicial review. This session is to be held in the middle of June 2014 in Stockholm. The Court's considerations will be made public later in the summer of 2014.
The financial and liquidity situation of the group is rather critical, and the Board and management are investigating ways of attracting more external financing.
| SEK thousand | |||
|---|---|---|---|
| Q1 2014 | Q1 2013 | 12 m 2013 | |
| Sales | - | - | - |
| Other income | 186 | - | 8 |
| Total revenues | 186 | - | 8 |
| EBITDA | -2 849 | -5 767 | -21 437 |
| Impairment losses and depreciation | -44 | -14 | -20 044 |
| Net result attributable to shareholders of parent company | -6 912 | -6 045 | -110 088 |
| Investments in period (MSEK) | 2.6 | 1.3 | 3.1 |
| Cash at end of period | 7 004 | 7 095 | 15 288 |
| Interest bearing long term debt at end of period | 9 923 | 5 000 | 9 931 |
Key figures, Nickel Mountain Group
Nickel Mountain Group AB (publ) (NMG) is a Swedish mineral exploration company. The company name was IGE Resources (IGE) until the end of 2013.The Group structure consists of the Swedish parent company which in turn owns a number of subsidiary companies. The shares of NMG are listed on the Oslo Stock Exchange in Norway. The number of shareholders is around 6,000.
The key asset of NMG is the Rönnbäcken nickel sulphide deposit located in Northern Sweden in Västerbotten county. The Rönnbäcken project was evaluated by SRK Consulting (Sweden) AB in December 2011. The resultant technical report in the form of a Preliminary Economic Assessment demonstrated a NI 43-101 compliant resource of 668.3 million tons with an average total nickel content of 0.176% of which 0.097% was nickel in sulphide (Ni-AC), and an iron content of 5.67%. Of the resource, 97% was in the Measured & Indicated categories.
NMG is involved in mineral exploration activities in a number of African countries. In order to concentrate on the Rönnbäcken Nickel Project (RNP), a decision has been taken by the EGM to separate the African assets owned by subsidiary African Diamond AB and to distribute to shareholders pro-rata free shares.
NMG is focusing on completing a Prefeasibility Study of RNP, and in parallel, is undertaking activities towards preparation of an application for an environmental permit according to Swedish legislation.
The net result after tax of NMG for the 3 month period January to March 2014 amounted to MSEK –3.2 (MSEK –5.8 during the corresponding period in 2013). The net result from discontinued operations was MSEK -3.7 (MSEK -0.3).
There were no sales revenues for the reporting period (MSEK 0.0). Other operating income amounted to MSEK 0.2 for the first quarter 2014 (0), and consisted of a sale of fixed assets related to the Diamonds business segment.
Operating costs excluding depreciation and impairment from remaining operations amounted to MSEK –3.0 during the first quarter of 2014 (MSEK –5.8 in same period 2013).
Depreciation and impairment were MSEK 0 during the first three months of 2014 (0). An impairment of MSEK -3.7 (-0.1) was recorded related to discontinued operations (business segment Diamonds). Continued review of the immaterial assets in this business segment convinced the Board of Directors to carry out a write-down relating to certain mineral licenses in South Africa. The focus of the Diamonds business segment is currently on the Democratic Republic of Congo.
Nickel Mountain Group had a negative cash flow of MSEK –8.3 during the first quarter of 2014. Cash flow in the same period in 2013 was also negative and amounted to MSEK – 62.1.
Cash and cash equivalents at the end of March 2014 were MSEK 7.0, compared to MSEK 7.1 at end of the first quarter of 2013.
Nickel Mountain Group's total assets at the end of March 2014 were MSEK 150.1, compared to MSEK 281.1 at the end of the same period in 2013.
Investments during the first quarter of 2014 amounted to MSEK 2.6, mainly related to the Rönnbäcken Nickel roject (MSEK 1.3).
As is by now well-known, the 2013 financial year was extremely challenging for Nickel Mountain Group AB (previously named IGE Resources). Essentially, all liquid assets of the Group were lost in early 2013 in connection
with a proposed, but subsequently cancelled, acquisition of an African gold asset by the name of Ghana Gold AB. The lost cash in the amount of MSEK 50 has so far not been recovered despite considerable efforts. NMG, through its legal representatives, will now take legal action against the people responsible for this decision, all of whom were previous Board Directors of NMG. These liquid assets had originally been designated towards financing of the long planned Pre-feasibility Study of the Rönnbäcken Nickel Project in Northern Sweden.
During the autumn of 2013, the new Board of Directors appointed by the August AGM managed to attract more than MSEK 25 in external financing which allowed the Company to continue with its programme for evaluating its nickel project in the North of Sweden.
A new Group management, including a new Managing Director with experience from publicly listed junior mining companies in Sweden, was appointed in January 2014.
The EGM held in November 2013 decided, in principle, to separate the Diamonds business segment and its African assets from the rest of the group. Greater detail is provided in the section discussing the Diamonds business segment. This is a relatively complicated undertaking due to financial, legal and tax issues. In the EGM of NMG held in early May 2014, approval was given for separation of the Diamonds business through a free distribution of ADIAM shares to existing shareholders of NMG. The resolution implies that wholly owned subsidiary African Diamond AB will be distributed pro-rata to the shareholders of NMG in a share ratio of 1:1. The EGM authorized the Board of Directors of NMG to decide on a record date for the distribution.
The 2014 AGM is to be convened on June 4 in Stockholm. The Company's auditor has recommended to shareholders that previous Board members should not be discharged from responsibility for the catastrophic Ghana Goldtransaction and for the resultant liability incurred during financial year 2013. A new Board of Directors has been proposed for election at the AGM, as described in the next heading.
The Board Nomination Committee consists of the Chairman of the Board, Mr. Stefan Persson; Mr. Håkan Eriksson a representative of the Company's main shareholder Altro Invest; and Mr. Erlend Dunér Henriksen. Mr. Henriksen represents Norwegian Aroma Holding and a number of other minority shareholders, and is presently a Deputy Board member of NMG. The committee can be reached via email at
«[email protected]», and has held a number of meetings prior to the upcoming AGM. The Board Nomination Committee has prepared recommendations for a new Board of Directors. The committee on May 26, 2014 proposed that the new board shall consist of four directors and one deputy director. Mr. Rikard Ehnsiö is proposed to be elected Chairman of the Board with Frank Dinhoff Pedersen, Bjorn Rohdin and Svein Breivik as ordinary directors. Mr. Erlend Dunér Henriksen is proposed to remain deputy director of the board. The complete proposal by the Nomination Committee is available on the website www.nickelmountain.se.
The Company is now focused on preparations for a Pre-feasibility Study (PFS) and a permit application under the Environmental Code. This permit application will be tried by the Environmental Court and the company will conduct the investigations necessary for the Court's assessment. The drafting of an environmental impact assessment will require that consultations be held with affected authorities and stakeholders.
SRK Consulting (Sweden) AB (SRK) has during the first quarter of this year conducted a review of the remaining project tasks and the time needed to complete the PFS work. Their estimate is that remaining work will require 18 months to complete given stable financing (see also below). The total cost for completion of the PFS was estimated at MSEK 62 including contingency, which is lower than previous estimated due to a lower needed volume of infill drilling. This estimate excludes corporate administration costs of NMG.
Three exploration permits in the Rönnbäcken area approaching expiration were extended by the Swedish Mining Inspectorate following NMG's applications earlier in 2013.
In December 2013, NMG approved a 2014 work program for RNP (Rönnbäcken nickel project) mainly related to the planned PFS being coordinated by SRK. The main
components of the approved work program are as follows:
The first part of the work program revolves around re-logging of all drill cores from RNP amounting to 29,000 metres. The aim of the re-logging program is to gather further information about the lithologies of the deposits and to gather additional data such as; hardness of the rocks, additional mineralogy, vein frequency and composition, as well as gaining a better understanding of the overall geology. This work program was initiated in early 2014 and is planned to be completed during the summer of 2014. As of the middle of May 2014, more than half of the programme has been completed. It is yet too early to present any final conclusions, but the NMG geology team considers that the geologic understanding of the project is greatly improved. The different core sections demonstrate a clear geological continuity and often a predictable stratigraphy as well. This is key knowledge to be used in geometallurgical domain modelling which will be an integral part of the PFS.
As demonstrated in previous tests, the ore beneficiation process involving crushing and milling followed by flotation, yield good recoveries and a high grade nickel concentrate. Currently NMG is conducting another round of flotation trials in order to explore whether two-stage milling and pH neutral flotation can provide similar or even better recoveries, but with lower operating costs. These trials are ongoing at the Outotec Research Centre in Finland and are being coordinated by Eurus Mineral Consultants (EMC) and NMG staff. The first test data indicate that it is possible to do at least parts of the flotation at natural pH with limited effect on the flotation recoveries
NMG is continuously focused on the environmental aspects of a future nickel mine. One important environmental aspect is the long-term behaviour of the resultant tailings and waste rock from nickel production. NMG has contracted international consultancy Golder Associates to conduct long-term trials of the Rönnbäcken waste rock and tailings. Golder will monitor a number of parameters from an initial batch of four samples of waste from various parts of RNP and two samples of tailings, one from each of the Rönnbäcknäset
and Sundsberget deposits. No results are yet available but NMG anticipates that the bulk of the tests will be finalized by Q4 2014.
A fourth major component of the approved 2014 work program is the planning of the PFS program described above. SRK has completed a scoping study for a detailed PFS program delineating cost estimates and a corresponding timeline. In the study SRK concludes that "The resultant schedule and budget provide a framework for management of the PFS going forward and should allow NMG to adjust the work programme as funds become available. The current schedule reflects an overall timeline of 18 months given stable financing at a total cost of SEK 62 million.
In a decision on made August 22, 2013, the Swedish Government dismissed appeals from the Vapsten Reindeer Herding Co-operative ("Vapsten") and others egarding the Chief Mine Inspector's decision to grant the three exploitation concessions Rönnbäcken K nr 1-3 to Nickel Mountain AB, a wholly owned subsidiary of Nickel Mountain Resources AB.
However, Vapsten continued to defend its own interests, and on November 21, 2013, they petitioned to the Supreme Administrative Court (SAC) in Sweden for a judicial review of the Swedish Government's decision to dismiss Vapsten's appeals. This judicial review will be held in the middle of June in Stockholm. The implication of the judicial review, according to NMG's understanding, is not that the SAC will take a decision on the substance of the matter, but rather that it will review whether or not the Swedish Government has correctly followed the procedural requirements when it ruled that the exploitation concessions had been granted correctly. The final ruling of the SAC can therefore be only one of two – either to confirm that the Government's decision was correctly taken or otherwise to repeal it, which implies that the Government gets asked to conduct its review once more.
As an additional move, Vapsten submitted a complaint to the UN Committee on the Elimination of Racial Discrimination (CERD). In the complaint, Vapsten argues that Sweden has violated the UN prohibition on racial discrimination. CERD is an advisory committee, and its decisions are in the form of recommendations to member state
governments. For a complaint to be admissible to CERD, the party must have exhausted all domestic remedies. Nickel Mountain notes that Vapsten's above described petition to the Supreme Administrative Court has resulted in the judicial review scheduled for the middle of June this year.
The Swedish Government responded to CERD on January 22, 2014, stating that it believes CERD should reject the complaint from Vapsten because the Supreme Administrative Court in Sweden has not yet done the review of the Government's decisions regarding Vapsten's appeal in this matter. Further, the Government says that in case CERD still does not reject the complaint from Vapsten, CERD should at least wait with its next move until the Supreme Administrative Court has completed its repeated review as described above.
The first quarter's operations within the diamond segment of the Group have been characterized by preparatory work related to the spin-off of the diamond assets within the Group to existing shareholders of Nickel Mountain Group AB. A new wholly owned entity was incorporated by Nickel Mountain Group in February 2014 named African Diamond AB. All relevant assets within the Group related to the diamond segment have been transferred to this new company in order to prepare the separation of the nickel and the diamond operations according to what has previously been communicated. The decision to distribute the diamond subsidiary was made on May 8, 2014, at an EGM held after the end of the reporting period. The record date for the shareholders entitled to receive shares under the decision will be communicated by the Board as soon as it is decided. The distribution of the shares is planned to be followed in due course by a separate listing of African Diamond AB's shares on a suitable small stock exchange list in Sweden or Norway. The book value of African Diamond AB was limited at MSEK 0.56 at the end of March 2014. This corresponds to approximately SEK 0.025 per Nickel Mountain Group share given the new number of shares at end of May 2014.
Operations activities have been focused on the commencement of a small dredging operation on the Longatshimo River in Democratic Republic of Congo (DRC) within the Longatshimo license. The latter was recovered by the new management of Nickel Mountain
Group after being subject to default as a result of the former board's mismanagement. The company is targeting sales of the first small tranches of diamonds during the second quarter of 2014. In addition, during the quarter, significant work has been directed at recovering the lost machinery and equipment. Management is relatively confident that it will be able to regain legal ownership of the equipment within a short period of time.
In South Africa, the company is in continuous discussions with several interested parties with regard to a potential outright sale or joint venture related to the South African diamond concessions held by the Group. The Company will update the market on a current basis on any progress made in this regard. For reasons of prudence, these remaining licenses in South Africa were impaired to zero in the external accounts as at end of the reporting period.
Management of the diamond subsidiary has managed to achieve substantial progress with small means and has, based on its conviction, managed to recover much of what was lost during 2013, mainly due to good relationships with the local partners and people involved in the diamond projects.
city beginning at 15.00 in the afternoon.
Cash and cash equivalents at the end of the first quarter 2014 amounted to MSEK 7.0, compared to MSEK 7.1 at the end of the first quarter 2013. Total equity at the end of the reporting period was MSEK 129.5 (MSEK 234.6 at end of the corresponding period in 2013), representing an equity ratio of 86 per cent (83 per cent at the end of first quarter of 2013).
The Company's interest bearing long-term debt as at end of March 2014 amounted to MSEK 9, which was included an MSEK 5 convertible loan, granted by Norrlandsfonden in 2010 for the development of Rönnbäcken nickel project. This loan matures in August 2018 and carries an interest rate component of STIBOR + 4 per cent annually. It is described more in detail in note 7 to this report. In addition, there was an MSEK 4 unsecured loan for working capital purposes extended in May 2013 by Mr. Ulrik Jansson, the former Chairman of NMG. This loan has a 3-year term and carries an interest rate of 12 per cent annually. It is also described more in detail in note 8.
Short-term loans and other short term liabilities at the end of March 2014 amounted to MSEK 5.5 (MSEK 0.2). This represents a reduction from year end 2013 and is due to a MSEK 11.8 debt conversion for newly issued NMG shares carried out in late January 2014. Essentially all existing short-term loans were converted for new shares in May 2014, after the end of the reporting period.
The financial situation of the Group has been very strained since the beginning of 2013 when the Group was deprived of MSEK 50 of liquid assets in the disputed Ghana Goldtransaction, which was subsequently invalidated by the Swedish courts. The new Board appointed at the August 2013 AGM during the autumn of 2013 took measures to stabilize the situation.
As a company active with mineral exploration and project evaluation, NMG has no sales revenues. Therefore, the Company is in need of regular external financing in order to maintain its business. During the first part of 2014, the Board and management of NMG have continued their efforts to secure more financing in parallel with the process of trying to reclaim the funds transferred to Alluvia Mining Ltd and receive compensation for consequential damage in connection with the invalidated Ghana Gold transaction. A leading Swedish law firm has been mandated by the Board of NMG to handle all issues associated with the claim on Alluvia Mining. The documentation of this civil case is being finalized, and is planned to be filed with the Stockholm District court very shortly. The financial and liquidity situation of the group is therefore rather critical for the moment as described in previous reports. There is not enough liquidity for financing the operations during the second half of the year in the absence of more external financing, but the Board and management are in intensive discussions regarding certain solutions to the situation. There are reasonable chances of these discussions leading to a positive result, and/or a bridge loan may be a temporary solution to the
financing issue over the coming critical months, but in the absence of progress the Company may face a liquidity squeeze in the summer months.
The Parent Company's business activity is to manage the Group's operations. The result after tax during first quarter of 2014 amounted to MSEK -2.8 (MSEK -4.2 in Q1 2013).
Cash and cash equivalents in the Parent Company amounted to MSEK 1.7 at the end of March 2014 (MSEK 6.4).
At the end of March 2014, NMG had four employees, two men and two women.
There were 18,174,922 shares outstanding as at January 1, 2014 following a reversed share split 10:1 conducted in December 2013. Par value per share was by year-end 2013 still SEK 2.50. However, an EMG held on November 22, 2013 decided to reduce the share capital by changing the par value per share from SEK 2.50 to SEK 0.50. This share capital reduction was finally registered by end of first quarter of 2014.
There is only one class of shares. All shares carry one vote.
The EGM held on November 22, 2013 gave a mandate to the Board of Directors to decide on share issues of up to 9,087,461 new shares with a deviation from the shareholders' preferential rights valid until the next Annual General Meeting. Thereof, 3,052,799 shares were issued in a debt conversion transaction at end of January 2014. In that context, some MSEK 11.8 of short term loans were converted. Thereafter there were 21,227,721 shares outstanding.
After the end of the reporting period, another EGM was held on May 8, 2014. On this occasion, another MSEK 5.6 of short term loans were converted for newly issued shares. In total 1,474,619 new shares were issued as a result of the transaction. As of the date of this report, the registration of the most recent share issue is still in process at the Swedish
Companies Registrar ("Bolagsverket). After such registration, the total number of shares in the Company will amount to 22,702,340. The share capital will be SEK 11,351,170.
June 4 - Annual General Meeting in Stockholm
August 28 – Interim Report for 6 months Jan – June 2014
November 27 – Interim Report for 9 months Jan – Sept 2014
This report has not been reviewed by the Company's auditors.
Stockholm, May 27, 2014
For and on behalf of the Board of Directors
Torbjörn Ranta Managing Director
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 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 | 12 m | |
|---|---|---|---|---|
| Jan - March | Jan - March | Jan - Dec | ||
| (TSEK) | Note | 2014 | 2013 | 2013 |
| Other operating income | 186 | 8 | ||
| Other external expenses | $-2840$ | $-2344$ | $-14812$ | |
| Personnel expenses | $-195$ | $-3348$ | $-6558$ | |
| Results from equity accounted participations | -75 | -75 | ||
| Operating result before depreciation and impairment | ||||
| losses | 11 | $-2849$ | -5767 | $-21437$ |
| Depreciation/amortization and impairment loss on tangible, | ||||
| intangible and financial fixed assets | 4,11 | -44 | $-14$ | -20 044 |
| Financial revenue | 3 | 8 | 7 | 38 |
| Financial expenses | 3 | $-330$ | -5 | $-788$ |
| Total financial items | $-322$ | $\overline{2}$ | $-750$ | |
| Result before tax | 11 | $-3215$ | $-5779$ | -42 231 |
| Income tax | 9599 | |||
| Result for the period from remaining operations | $-3215$ | -5 7 7 9 | -32 632 | |
| $-3714$ | $-272$ | $-77557$ | ||
| Loss from discontinued operations | 11 | |||
| Result for the period | $-6929$ | $-6051$ | $-110189$ | |
| Result for the period attributable to: | ||||
| Equity holders of the Parent Company | $-6912$ | $-6045$ | $-1100088$ | |
| Non controlling interest | $-17$ | -6 | $-101$ | |
| Result for the period | $-6929$ | $-6051$ | $-110189$ | |
| Result per share before and after dilution | $-0,34$ | $-0,33$ | $-6,06$ | |
| Average number of shares (Millions) *) | 20,3 | 18,2 | 18,2 | |
| Consolidated Statement of comprehensive loss | Jan - March | Jan - March | Jan - Dec | |
| TSEK | 2014 | 2013 | 2013 | |
| Result for the period | $-6929$ | $-6051$ | $-1100088$ | |
| Other comprehensive income | ||||
| Foreign currency translation differences - foreign operations | $-37$ | $-2782$ | $-6856$ | |
| Total other comprehensive income | $-6966$ | $-8833$ | $-116944$ | |
| Total comprehensive income for the period attributable to: | ||||
| Equity holders of the Parent Company | -6 949 | $-8827$ | $-116843$ | |
| Non controlling interest | $-17$ | $-6$ | $-101$ |
| Consolidated statement of financial position | ||||
|---|---|---|---|---|
| (TSEK) | Note | 2014-03-31 | 2013-03-31 | 2013-12-31 |
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | ||||
| Mineral interests | 108 392 | 219 417 | 110 113 | |
| Tangible fixed assets | ||||
| Plant and machinery | 662 | 487 | 246 | |
| Long-term financial assets | ||||
| Participation in equity accounted companies | 372 | 359 | 283 | |
| Claim on Alluvia Mining | 6 | 30 000 | 30 000 | |
| Long-term receivables | 192 | 31 | 31 | |
| Total fixed assets | 139 618 | 220 294 | 140 673 | |
| Current Assets | ||||
| Client receivables | 46 | |||
| Other receivables | 3 2 0 4 | 53 043 | 2702 | |
| Prepaid expenses | 255 | 619 | 208 | |
| Cash and cash equivalents | 7 004 | 7 0 9 5 | 15 288 | |
| Total current assets | 10 463 | 60 803 | 18 198 | |
| TOTAL ASSETS | 150 081 | 281 097 | 158 871 | |
| EQUITY | ||||
| Equity attributable to equity holders of the parent company | ||||
| Share capital | 10 614 | 45 437 | 45 437 | |
| Other paid in capital | 1 220 710 | 1 175 737 | 1 174 207 | |
| Reserves | 1 0 4 4 | 5 1 5 6 | 1081 | |
| Retained earnings and profit for the period | -1 102 933 | -991 905 | $-1096021$ | |
| 129 435 | 234 425 | 124 704 | ||
| Non controlling interest | 63 | 175 | 80 | |
| Total equity | 129 498 | 234 600 | 124 784 | |
| Long term Liabilities Deferred tax liabilities |
34 087 | |||
| Other provisions | 1018 | |||
| Long term liabilities | ||||
| Convertible Ioan | 7 | 5 000 | 5 000 | 5 000 |
| Other long term liabilities | 8 | 4 9 23 | 1 0 5 9 | 4 9 3 1 |
| Total long term liabilities | 9923 | 41 164 | 9931 | |
| Current liabilities | ||||
| Accounts payable | 2683 | 2 0 3 6 | 2925 | |
| Short term interest free loans and borrowings | 9 | 1 1 2 1 | 237 | 12 927 |
| Other liabilities | 9,10 | 4 3 3 9 | 4458 | |
| Accrued expenses and prepaid income | 2517 | 3 0 6 0 | 3 8 4 6 | |
| Total current liabilities | 10 660 | 5 3 3 3 | 24 156 | |
| TOTAL EQUITY AND LIABILITIES | 150 081 | 281 097 | 158 871 | |
| Pledged assets | 31 | 10 990 | 31 |
| Consolidated Statement of changes in equity | |||||||
|---|---|---|---|---|---|---|---|
| (TSEK) | Equity related to the shareholders of the parent company | ||||||
| Share Other paid | Exchange | Retained earnings and capital in capital differences profit for the year |
Total | Non controlling interest |
Total Equity | ||
| Balance at 1 January 2013 Net result for the period Other comprehensive income: Costs referable to fund-raising |
45 437 1 175 737 | 7937 | × $-985860$ $-6045$ |
243 251 $-6045$ |
181 $-6$ |
243 432 $-6051$ |
|
| Other transactions Translation reserve Closing balance at 31 March 2013 |
45 437 1 175 737 | $-2781$ 5 1 5 6 |
-991 905 | $-2781$ 234 425 |
175 | $-2781$ 234 600 |
|
| Balance at April 1 2013 Net result for the period Other comprehensive income: |
45 437 1 175 737 | 5 1 5 6 | $-991905$ $-104043$ |
234 425 $-104043$ |
175 $-95$ |
234 600 $-104$ 138 |
|
| Costs referable to fund-raising Other transactions |
$-1530$ | $-73$ | $-1530$ $-73$ |
$-1530$ $-73$ |
|||
| Translation reserve | $-4075$ | $-4075$ | $-4075$ | ||||
| Closing balance at 31 December 2013 Balance at 1 January 2014 Net result for the period Other comprehensive income: |
45 437 1 174 207 45 437 1 174 207 |
1081 1081 |
$-1096021$ $-1096021$ $-6912$ |
128779 124 704 $-6912$ 0 |
80 80 $-17$ |
128 859 124 784 $-6929$ $\Omega$ |
|
| Costs referable to fund-raising Set-off issue Other transactions |
1526 $-36349$ |
$-126$ 10 280 36 349 |
$-126$ 11806 0 |
$-126$ 11806 $\Omega$ |
|||
| Share capital reduction Translation reserve Closing balance at 31 March 2014 |
10 614 1 220 710 | $-37$ 1044 |
-1 102 933 | 0 $-37$ 129 435 |
63 | $\Omega$ $-37$ 129 498 |
| Consolidated statement of cash flow | 3 m | 3 m | 12 m | |
|---|---|---|---|---|
| (TSEK) | Note | Jan - March 2014 | Jan - March 2013 | Jan-Dec 2013 |
| Cash flow from operations | ||||
| Result after financial items ** | $-6929$ | $-6051$ | $-153875$ | |
| Adjustments for non cash items* | 3716 | $-2625$ | 3716 | |
| Income tax paid | ||||
| Total cash flow from operations before change in working | ||||
| capital | $-3212$ | $-8676$ | $-150$ 159 | |
| Change in working capital | ||||
| Increase/decrease receivables | $-625$ | -49 285 | $-49245$ | |
| Increase/decrease in short term liabilities ***) | $-13496$ | $-2779$ | 3 1 1 8 | |
| Total cash flow from operations | $-17333$ | $-60740$ | $-196286$ | |
| Cash flow used for investments | ||||
| Purchase of tangible and intangible assets | 11 | $-2449$ | $-1298$ | $-3129$ |
| Sale of intangible assets | 37 | |||
| Purchase of financial fixed assets | $-161$ | |||
| Acquisition of shares in associated companies | $-14$ | |||
| Total cash flow used for investments | $-2623$ | $-1261$ | $-3129$ | |
| Financial activities | ||||
| New share issue net of transaction costs ***) | 11 681 | $-1530$ | ||
| Raised credits | 16 927 | |||
| Amortization of debt | -7 | -96 | $-224$ | |
| Total cash flow from financial activities | 11 673 | -96 | 15 173 | |
| Change in cash and bank | $-8284$ | $-62097$ | $-55920$ | |
| Cash and bank at 1 January | 15 288 | 69 193 | 69 193 | |
| Cash and bank at the end of reporting period | 7 004 | 7 0 9 6 | 13 273 | |
| *Adjustments for non cash items | ||||
| Depreciation and impairment losses on intangible assets | 3 4 8 7 | 130 907 | ||
| Depreciation and impairment losses of tangible assets | 267 | 81 | 228 | |
| Exchange loss | -38 | $-2782$ | $-6856$ | |
| Tax effect from partnership acquisition | 9700 | |||
| Share of loss on equity accounted companies | 75 | 75 | ||
| Total | 3716 | $-2626$ | 134 054 | |
| ** Financial items | ||||
| Interest income | 8 | 7 | 38 | |
| Interest charges | $-330$ | $-5$ | $-788$ | |
| Total financial items | $-322$ | $\overline{2}$ | $-750$ |
| Parent company income statement | 3 m | 3 m | 12 m | |
|---|---|---|---|---|
| Jan - March | Jan - March | Jan - Dec | ||
| (TSEK) | Note | 2014 | 2013 | 2013 |
| Other operating income | 6 | |||
| Other external expenses | -2582 | $-1920$ | -13 266 | |
| Personnel expenses | 130 | -2 273 | $-3350$ | |
| Depreciation/impairment of financial fixed assets | 4 | -100 379 | ||
| Operating result | $-2452$ | -4 193 | $-116989$ | |
| Result from financial items | ||||
| Result from participations in group companies | 7 275 | |||
| Financial revenue | 3 | 2 | 7 | 38 |
| Financial expenses | 3 | -328 | -2 | $-712$ |
| Total financial items | $-326$ | 5 | 6601 | |
| Result before tax | $-2778$ | -4 188 | $-110388$ | |
| Income tax | 0 | 0 | $\bf{0}$ | |
| Result for the period | $-2778$ | -4 188 | $-110388$ |
| (TSEK) | Note | 2014-03-31 2013-03-31 2013-12-31 | ||
|---|---|---|---|---|
| ASSETS | ||||
| Tangible fixed assets | ||||
| Long-term financial assets | ||||
| Receivable on Alluvia Mining Ltd | 6 | 30 000 | 30 000 | |
| Shares in subsidiaries | 97 747 | 102 635 | 97 247 | |
| Receivables from subsidiaries | 71 071 | 130 617 | 65 091 | |
| Total fixed assets | 198 818 | 233 252 | 192 338 | |
| Current Assets | ||||
| Other receivables | 760 | 50 239 | 8 3 2 9 | |
| 22 | 296 | 160 | ||
| Prepaid expenses | 1748 | 6 3 8 4 | 5 0 3 6 | |
| Cash and cash equivalents | 2 530 | |||
| Total current assets | 56 919 | 13 5 25 | ||
| TOTAL ASSETS | 201 348 | 290 171 | 175 863 | |
| SHAREHOLDERS EQUITY | ||||
| Restricted equity | ||||
| Share capital | 10 6 14 | 45 437 | 45 437 | |
| Statutory reserve | 2 3 0 0 | 2 300 | 2 3 0 0 | |
| Total restricted equity | 12914 | 47 737 | 47 737 | |
| Non restricted equity | ||||
| Share premium reserve | 1 194 671 | 1 149 572 | 1 148 042 | |
| Retained earnings | $-1021452$ | $-911163$ | $-911163$ | |
| Result for the period | -2 778 | $-4188$ | $-110.388$ | |
| Total non restricted equity | 170 441 | 234 221 | 126 491 | |
| Total shareholders equity | 183 355 | 281 958 | 174 228 | |
| Long term liabilities | ||||
| Convertible Ioan | 7 | 5 0 0 0 | 5 0 0 0 | 5 000 |
| Interest bearing long term liabilities | 8 | 4 0 0 0 | 4 0 0 0 | |
| Total long term liabilities | 9 0 0 0 | 5 000 | 9 0 0 0 | |
| Current liabilities | ||||
| Accounts payable | 1971 | 918 | 2440 | |
| Short term interest free loans and borrowings | 9 | 1 1 2 1 | 77 | 12 927 |
| Other liabilities | 9,10 | 4 3 0 7 | 4 1 1 6 | |
| 1594 | 2 2 1 9 | 3 152 | ||
| Accrued expenses | ||||
| Total current liabilities | 8993 | 3 2 1 4 | 22 635 | |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 201 348 | 290 171 | 205 863 | |
| Pledget assets | ||||
| Contingent liabilities |
| Parent Company Statement of changes in equity | |||||||
|---|---|---|---|---|---|---|---|
| (TSEK) | Restricted Equity | Non restricted Equity | |||||
| Share capital |
Statutory reserve |
Share premium reserve |
Retained earnings |
Result for the period |
Total Equity | ||
| Closing balance at 31 December 2012 | 45 437 | 2 3 0 0 | 1 149 572 | -749 536 | $-161628$ | 286 145 | |
| Balance at 1 January 2013 | 45 437 | 2 3 0 0 | 1 149 572 | $-749536$ | $-161628$ | 286 145 | |
| Transfer of prior year's net result | $-161628$ | 161628 | 0 | ||||
| Result for the period | $-4188$ | $-4188$ | |||||
| Closing balance at 31 March 2013 | 45437 | 2 3 0 0 | 1 149 572 | $-911164$ | -4 188 | 281958 | |
| Balance at 1 April 2013 | 45 437 | 2 3 0 0 | 1 149 572 | $-911164$ | $-4188$ | 281958 | |
| Costs referable to fund-raising | $-1530$ | $-1530$ | |||||
| Result for the period | $-106200$ | $-106200$ | |||||
| Closing balance at 31 December 2013 | 45 437 | 2 3 0 0 | 1 148 042 | $-911164$ | $-110388$ | 174 228 | |
| Balance at 1 January 2014 | 45 437 | 2 3 0 0 | 1 148 042 | $-911164$ | $-110.388$ | 174 228 | |
| Transfer of prior year's net result | $-110.388$ | 110 388 | o | ||||
| Set-off issue | 1526 | 10 280 | 11806 | ||||
| Share capital reduction | $-36349$ | 36 349 | $\Omega$ | ||||
| Costs referable to fund-raising | $-126$ | $-126$ | |||||
| Other transactions | 225 | 225 | |||||
| Result for the period | $-2778$ | $-2778$ | |||||
| Closing balance at 31 March 2014 | 10 614 | 2 3 0 0 | 1 194 671 | $-1021453$ | $-2778$ | 183 355 |
| Key ratios and share data for the consolidated group | 31/3/2014 | 31/3/2013 | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|---|---|
| Number of outstanding shares at beginning of reporting period | Number | 18 174 923 | 181 749 225 | 18 174 923 | 51 928 350 | 1805618810 | 795 709 953 |
| New share issue | Number | 3 052 799 | 129 820 875 | 2 348 649 150 | 1 009 908 857 | ||
| Number of outstanding shares at the end of reporting period .* | Number | 21 227 721 | 181 749 225 | 18 174 923 | 181 749 225 | 51 928 350 | 1805618810 |
| Average number of shares *** | Number | 20 311 881 | 181 749 225 | 18 174 923 | 140 846 758 | 2 930 566 085 | 1 346 291 141 |
| Operating result | TSEK | $-2849$ | $-5972$ | $-21991$ | $-24645$ | $-62531$ | $-149.987$ |
| Result after tax | TSEK | $-6912$ | $-6045$ | $-1100088$ | $-121490$ | $-185944$ | $-477330$ |
| Operating result per share | SEK | $-0.14$ | $-0.03$ | $-1.21$ | $-0.17$ | $-0,02$ | $-0.11$ |
| Result after financial items per share | SEK | $-0.34$ | $-0.03$ | $-8,35$ | $-1.07$ | $-0.19$ | $-0.41$ |
| Result per share after tax | SEK | $-0.34$ | $-0,03$ | $-6,06$ | $-0.86$ | $-0,06$ | $-0,35$ |
| Shareholders equity per share before dilution .* | SEK | 6,38 | 1,29 | 6,87 | 0,00 | 7,61 | 0,22 |
| Dividend | TSEK | - | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | ۰. | |
| Price per share at the end of reporting period | NOK | 2,44 | 0,43 | $3.00**$ | 0.45 | $1.66*$ | 0,23 |
| * A reversed split of 1:80 was executed on the 8th of December 2011 |
In calculating income per share, the average number of shares during the reporting period has been used, whereas, in calculating shareholders' equity the number of outstanding shares has been used.
NMG possessed none of its own shares at the end of the reporting period.
Further information regarding key ratio definitions can be obtained from the Annual Report for the Financial Year 2013.
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 with regard to the Parent Company. The accounting principles applied correspond to those described in the Annual Report for the Financial Year 2013.
Effective January 1, 2014. NMG applied the following new or amended IFRS's: IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements shall be applied, as of 1 January 2014 and are described in NMG's 2013 Annual Report. They have had no effect on the accounts. The accounting principles and calculation methods applied and utilised have otherwise remained unchanged from those applied in the Annual Report for the Financial Year 2013.
The new or amended IFRS's are not expected to have any material impact on the Group. Other changes are not expected to have any material impact on the Group or Parent Company's result of operations, financial position or disclosures. 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 2013.
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 2013, which is available on the NMG website, (www.nickelmountain.se).
Management and the Board of Directors are, as described repeatedly in previous interim reports and in the recently issued Annual
Report for Financial Year 2013, working on finding a solution to the financial situation of the Group following the disastrous Ghana Gold-transaction a year ago when all of the liquid assets of the Group were lost. This has created significant disturbance to management and implies that ever since the beginning of 2013 there has not existed enough liquid assets to allow the Company and Group to have stable financing for the upcoming 12 month period. This continues to be the case, and hence the financial risk of the Group is at an elevated level.
| Financial revenue | Group | ||||||
|---|---|---|---|---|---|---|---|
| (TSEK) | 2014-03-31 2013-03-31 2013-12-31 | ||||||
| Interests | б | 24 | |||||
| Exchange gains | 2 | 14 | |||||
| Total financial revenue | 8 | 38 | |||||
| Financial expenses | |||||||
| (TSEK) | 2014-03-31 2013-03-31 2013-12-31 | ||||||
| Interest | $-293$ | -3 | -647 | ||||
| Evchange Incepe | -27 | -2 | $-111$ |
Impairment during the first quarter of 2014 relates to diamond concessions held in South Africa. Impairments during the corresponding period in 2013 were limited. The greater part of the write-downs of immaterial assets in 2013 took place after the end of March 2013.
Depreciation for the 3-month period January to March of 2014 was TSEK 267 (TSEK 81).
| Jan - March 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Total Discontinued | |||||||
| remaining | operations | ||||||
| (TSEK) | Gold | Nickel | Other | operations | Diamonds | Total | |
| Revenue from sales | ۰ | ۰ | ۰ | $\overline{\phantom{a}}$ | ۰ | ٠ | |
| Operating result before depreciation and impairment losses | ٠ | $-1575$ | $-4192$ | $-5767$ | $-205$ | $-5972$ | |
| Impairment of mineral interests and claim | ۰ | ۰ | ۰ | ٠ | 0 | ||
| Depreciation according to plan | ۰ | $-14$ | ٠ | $-14$ | $-67$ | $-81$ | |
| Result before tax | ۰ | $-1589$ | $-4190$ | $-5779$ | $-272$ | $-6051$ | |
| Fixed assets | ۰ | 106 139 | ٠ | 106 139 | 114 155 | 220 294 | |
| Current assets | 50 062 | 1231 | 6919 | 58 212 | 2591 | 60 803 | |
| Long term liabilities | ٠ | 5000 | ۰ | 5 0 0 0 | 1059 | 6059 | |
| Short term liabilities | ۰ | 2036 | 3 2 1 5 | 5 2 5 1 | 82 | 5333 | |
| Investments (gross amounts) | ۰ | 1298 | ۰ | 1 2 9 8 | $\sim$ | 1 2 9 8 |
| Jan - March 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total Discontinued | ||||||||
| remaining | operations | |||||||
| (TSEK) | Gold | Nickel | Other | operations | Diamonds | Total | ||
| Revenue from sales | $\overline{\phantom{0}}$ | ٠ | 186 | 186 | 186 | |||
| Operating result before depreciation and impairment losses | ۰ | $-515$ | $-2330$ | $-2845$ | $-4$ | $-2849$ | ||
| Impairment of mineral interests | ۰ | ٠ | ۰ | 0 | $-3487$ | $-3487$ | ||
| Depreciation according to plan | ۰ | $-43$ | ۰ | $-43$ | $-224$ | $-267$ | ||
| Result before tax | ۰ | $-554$ | $-2661$ | $-3215$ | $-3714$ | $-6929$ | ||
| Fixed assets | 30 000 | 109 444 | 174 | 139 618 | ۰ | 139 618 | ||
| Current assets | ۰ | 2724 | 6529 | 9 2 5 3 | 1210 | 10463 | ||
| Long term liabilities | ۰ | 923 | 9000 | 9923 | ۰ | 9923 | ||
| Short term liabilities | ۰ | 1444 | 8992 | 10 436 | 224 | 10 660 | ||
| Investments (gross amounts) | - | 2623 | ٠ | 2623 | ٠ | 2623 |
Receivable Alluvia Mining is related to the proposed purchase of Ghana Gold in the spring of 2013. The purchase consideration was supposed to consist of a cash payment of MSEK 50 plus an additional 50 million newly issued NMG shares. A prepayment of MSEK 50 was made on the January 23, 2013, subject to approval by an EGM, which was held during the second quarter 2013. The EGM decision approved of the share issue, but a minority at the EGM voted against it. Thereafter the EGM decision was appealed by a minority shareholder group, and as a result was declared invalid by a court ruling. The Board, at the time, made a second attempt to pass the proposed purchase at the Annual General Meeting held August 2, 2013, but the meeting voted against the proposal. According to the purchase agreement, the pre-payment of MSEK 50 should be repaid immediately if a General Meeting voted against the proposed purchase. This has resulted in NMG now having a claim on the seller Alluvia Mining Ltd amounting to MSEK 50, before interest
compensation and additional claims in respect of damage caused to NMG by the transaction. The Board is currently working on getting the money refunded by Alluvia. In addition, an EGM held on November 22, 2013 cleared the way for NMG to go after the individual board members by claiming compensation for the damage caused. A leading Swedish law firm is handling the matter. The ability of the former board members to pay compensation to NMG will become evident following a potential future successful court ruling from NMG's perspective. The law firm engaged by NMG is finalising the civil case, which is expected to be filed with the Stockholm District Court within a short period of time. NMG is also potentially in possession of pledged collateral for Alluvia Mining's
obligation to return the MSEK 50 prepayment. The pledge consists of a share interest in an American non-listed mineral exploration company named Advanced Mineral Technologies Inc. (AMTO). The American SEC, however, delisted this company, from public quotations early in 2012. Furthermore, it does not seem to have filed any annual reports or interim reports since 2010. In addition, AMTO appears to have conducted limited work at its main asset, the Tillicum property, during its possession of Tillicum. Lastly, there are yearly costs associated with keeping mineral licenses, and it is not certain that AMTO's licenses are in good standing. The value of NMG's pledge is further restricted by the fact that the pledge agreement, if valid, is construed according to American Law while the SPA-agreement regarding Ghana Gold is interpreted according to Swedish Law. For all these reasons, NMG finds it prudent not to assign any value to the AMTO pledge for the time being.
There is, however, another element, which should be taken in to consideration when analysing the value of NMG's claim on Alluvia Mining Ltd. At the time of the Ghana Gold transaction, NMG had paid for a Board and management liability insurance. The insurer was an international insurance company. The nature of such liability insurance is that it covers the individual Board- and management members from claims up to a ceiling amount, provided the damage or claim is deemed to fall within the framework of the insurance. It is, therefore, not the company NMG, which is insured and claims insurance compensation. The insurance coverage can in such case be claimed by the old Board members of NMG should they potentially be ruled as being liable to pay compensation to NMG in a court process. The international insurance company has not yet accepted as being liable for paying out compensation. The legal advisors of NMG believe NMG has a good case for convincing the insurance company to pay out compensation to the old board members, and therefore indirectly to NMG. For prudence reasons, NMG has decided to write down the claim on Alluvia Mining by MSEK 20 in the last quarter of 2013. This has no implication on the legal case whatsoever.
In June 2010, NMG issued a convertible loan that provided the Company with an amount of totally MSEK 5 to Norrlandsfonden, a Swedish public sector fund investing primarily in to business projects in the North of Sweden. The convertible loan was issued based on the following conditions:
If fully converted, the convertible loan would result in an additional 10,614 shares being issued (a dilution of about 0.05% based on 21,227.721,922 shares outstanding at end of March 2014. The conversion price is deeply out of the money, leading the whole convertible loan amount to being treated as a loan and not partially 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 for a duration of three years. NMG retains the right to offset this MSEK 4 loan against its claim on the former Board Members.
No particular related party transactions took place in the first quarter of 2014. However, after the end of the reporting period, at an EGM conducted on May 8, 2014, short-term loans from related parties in an amount of MSEK 5.6 were converted for newly issued shares in accordance with plans announced in the autumn of 2013. In total, 1,474,619 new shares were issued for an issue price of SEK 3.80 per share, which was significantly above the market price of the shares at that point in time.
Other short-term liabilities consist mainly of a MSEK 4 loan provided to NMG in the autumn of 2013 by main shareholder Altro Invest AB with an annual interest of 7.5%. This loan was converted to new shares in NMG in May 2014 after the end of the reporting period. See also above.
An Extraordinary Shareholders meeting (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, and to give the 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). The relevant assets in Africa have been transferred to ADIAM. Following a second resolution at the EGM held on May 8, 2014, the ADIAM shares are to be distributed to shareholders as a dividend on a 1:1 basis in proportion to the number of Parent Company shares held on the record date to be determined by the Board of Directors.
| 3 m | 3 m | 12 m | ||
|---|---|---|---|---|
| Jan - March | Jan - March | Jan - Dec | ||
| (TSEK) | 2014 | 2013 | 2013 | |
| Other operating income | ||||
| Other external expenses | $-4$ | -33 | -96 | |
| Personnel expenses | 0 | $-172$ | -458 | |
| Depreciation/impairment of fixed assets | $-3710$ | $-67$ | $-111090$ | |
| Operating result | $-3714$ | -272 | $-111644$ | |
| Result from financial items | ||||
| Financial revenue | ||||
| Financial expenses | ||||
| Total financial items | ||||
| Result before tax | $-3714$ | -272 | $-111644$ | |
| Income tax | 34 087 | |||
| Loss from discontinued operations | $-3714$ | -272 | $-77557$ |
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