Nordic Mining ASA — Annual Report 2014

Apr 27, 2015

ANNUAL REPORT 2014

SAFETY – ENVIRONMENT – INNOVATION

A forward-looking resource company with integrated operations in exploration, extraction and production of high-end minerals and metals.

CONTENT

CEO's report	5
Operations
• Nordic Rutile – rutile (titanium dioxide)	6
• Nordic Quartz – high-purity quartz	10
• Keliber – lithium/lithium carbonate	12
• Reinfjord – mineral exploration	15
• Nordic Ocean Resources	16
• Technology development – alumina	17
Board of Directors' report	18
The Board of Directors	24
The Management team	25
Corporate governance	26
Shareholder matters	32

FINANCIAL STATEMENTS/NOTES

Consolidated income statements	34
Statements of comprehensive income	35
Consolidated statements of financial position	36
Consolidated statements of changes in equity	38
Consolidated cash flow statements	39
Notes to the consolidated financial statements	40
Corporate accounts for Nordic Mining ASA	58
Responsibility statement by Directors	71
Auditor's report	72
Articles of association	74
Financial calendar 2015	74

Photos: Olav Heggøe (CEO, Board of Directors and Management team), Kjetil Alsvik (Board member Hilde Myrberg), Ingimage, Nordic Mining, DNV GL (p. 8), Dorfner Anzaplan (p. 10), Keliber (p. 12, 14), Kallax Flyg (p. 15), NTNU (p. 16). Design and production: signatur.no

CEO'S REPORT

Permits granted for the Engebø project

On 17 April 2015, the government announced the approval of the industrial area plan and the discharge permit for the Engebø rutile project. This marks an important milestone for Nordic Mining and for the industrial development at Engebø. We would like to thank all shareholders for good support and patience during a long-lasting assessment and decision process. Clearly, the process has been comprehensive, and we believe that this forms a solid basis for the development work going forward. Our plan is to realise the project with the highest standards for health, environment and safety. We also believe that the government's approval of the Engebø project will be important for the Norwegian mineral industry in general in the years to come.

Yes, we can! And we should!

Norway has all it takes to be in the international forefront regarding sustainable mineral production and surveillance of environmental parameters. We have demonstrated such abilities in the oil and gas industry, the smelting industry and several other industries, and we have confidence in our competence, legislative framework and technologies also in the mineral industry. Experience from modern existing mineral operations has evidenced that Norwegian mines are operated in a safe and responsible manner. The industry operates in accordance with the highest international standards.

Mineral resources are not evenly distributed geographically, and must be mined where they are located. Natural resources provide significant opportunities, but they may also lead to conflict, corruption and unrecoverable environmental damage. From time to time, media report of fatal accidents, child labor, social conflict and environmental damage related to mining activities in developing countries. History has showed that nature's gifts can cause severe misery. For good reasons, Norway is proud of its ability to make a difference on several international scenes. We can make an international impact also when it comes to mineral industry standards. Well-managed Norwegian mining companies and projects can be guidelines for many projects elsewhere in the world. We have a lot to contribute, and we have an obligation to participate in developing sustainable mineral production. The Government's approval of the Engebø rutile project confirms Norway's committment to this.

New challenges for Norway

The substantial oil price reduction in 2014, as well as the outlook, represents new challenges for the Norwegian economy. As a nation we are in a good position to handle the challenges, but it is important to act swiftly to strengthen the land-based industries in order to have a broader and more balanced activity base. The Norwegian Geological Survey has estimated an in situ value of Norway's mineral deposits of around NOK 1,400 billion. On this background, the mineral industry can be a part of a forward-looking industrial strategy. Technology and innovation are important parameters for development and economic transition, and minerals and metals are important prerequisites in almost every technology.

The future is not the past

A modern society is dependent of minerals in various technologies and applications, and for renewable energy production. We will show that a modern mineral industry belongs to the future. We will face the opportunities with optimism, good technical solutions, skills and know-how, and demonstrate that we can grow the industry in an environmentally friendly and sustainable way.

Oslo, 21 April 2015

Ivar S. Fossum CEO

OPERATIONS NORDIC RUTILE – rutile (titanium dioxide)

Nordic Rutile holds the rights to a significant rutile deposit at Engebø in Naustdal municipality in Sogn og Fjordane in Norway. Rutile is a titanium feedstock, high in demand and used in the production of pigments, titanium metal and welding rods. The planned rutile production at Engebø will significantly increase economic activity and value creation in Naustdal and in the surrounding regions.

On 17 April 2015, the industrial area plan and the discharge permit for the project were approved by the Ministry of Local Government and Modernisation and the Ministry of Climate and Environment.

The Engebø Project

Through the wholly owned subsidiary Nordic Rutile, Nordic Mining will establish industrial production of rutile concentrate (TiO2) based on its rutile deposit at Engebø in Naustdal municipality in Norway. The Engebø rutile deposit is one of the largest unexploited rutile deposits in the world and has the highest in situ grade of rutile compared to current rutile producers and development projects. Nordic Mining's internal estimate for the NPV of the Engebø project is USD 466 million after tax based on a long-term rutile price of USD 1,000 per tonne and an 8% discount rate.

The mineral deposit at Engebø also contains significant quantities of garnet, and Nordic Mining plans to produce high quality garnet as a by-product. Garnet has various industrial applications and can replace silica containing sand which is harmful for health.

Environmentally friendly products and solutions

Rutile is an environmentally friendly mineral and an important titanium feedstock. It is considered a strategic mineral by the EU. Rutile is a high-end raw material used in the production of environmentally friendly pigments for paints, plastics and paper, and in the production of titanium metal and welding rods. Rutile is of a major industrial importance and has a number of applications within health and medicine, environmental technologies and consumer products. Due to its high bio-compatibility titanium is particularly suitable and demanded for prostheses and implants in the human body.

Also in other applications, titanium-based products and materials from rutile contribute to environmental advantages, e.g. weight reduction, lower fuel consumption and reduced greenhouse gas emission in modern airplanes. Further, titanium dioxide has a photocatalytic effect that in various surface products removes NOx pollution from the air.

Nordic Mining strives to ensure environmentally friendly extraction, production and shipping, as well as a sustainable solution for disposing of mineral tailings. Calculations indicate that shipping of rutile from Engebø to customers in Europe will reduce CO2 emission by 80% compared with long-distance supply from i.a. South Africa. The moderate internal transportation at Engebø will also contribute to a low CO2 footprint for the project.

Industrial area plan and discharge permit approved

On 17 April 2015, the Ministry of Local Government and Modernisation approved the industrial area plan (zoning plan) for the Engebø rutile project. At the same time, a discharge permit for the project was granted by the Ministry of Climate and Environment.

The industrial area plan includes the areas for mining operation, processing plant, harbor facilities, relocation of the county road, and a disposal site for waste rock in Naustdal municipality. In addition, the industrial area plan includes an area in the Førdefjord in Naustdal and Askvoll municipalities for deposition of tailings during the estimated 50 year life of mine period.

The discharge permit for the Engebø operation is in accordance with the Norwegian Pollution Control Act and based on a recommendation dated 13 February 2015 from the Environment Agency. The permit has various conditions with a purpose to minimise negative effects from blasting, noise and dust, use and emission of processing chemicals, as well as conditions regarding possible back-filling and alternative use of tailings. The discharge permit also includes conditions related to distribution of particles from the sea disposal and monitoring of the disposal area and the biodiversity.

The government's approvals follow from Nordic Mining's comprehensive environmental impact assessments and supplementary investigations as well as a broad decision process with hearing rounds, technical soundings and discussions. The municipality boards in Naustdal and Askvoll municipalities approved the industrial area plan for the rutile production at Engebø in May 2011.

The government's approvals represent a significant milestone for the Engebø rutile project and provide a good basis for the development work going forward. Onwards, Nordic Mining will assess plans and activities for the further development work including project management and resource allocation.

Commercial outlook

Europe has a significant supply deficit in titanium feedstock. Currently, the main volumes of rutile and other feedstock into Europe come from Australia, Africa and North-America. For industrial customers in Europe supply from Engebø will represent a substantial logistical advantage compared to overseas alternatives.

Due to its high grade and positive properties in processing rutile is a particularly attractive titanium feedstock. Emerging economies like for example China and India have a low consumption of titanium products per capita compared with industrialised countries. Future demand for rutile is expected to be higher than the supply as new production capacity is expected to be restricted. Overall this provides grounds for a positive long-term market outlook.

RUTILE

PROPERTIES

The mineral rutile is composed of titanium and oxygen, and is a titanium dioxide (TiO2). Rutile has among the highest refractive indices of any known mineral. Natural rutile is often found as deep reddish brown crystals. Rutile is used to produce titanium metal.

Placing of measuring equipment into the fjord.

Applications for mineral tailings and wall rock

In line with the discharge permit, Nordic Mining will assess potential products and applications for the tailings from the production process at Engebø. The tailings are inert minerals with low levels of heavy metals and radioactive elements, and have been approved as capping material for contaminated sediments, e.g. in harbours and other polluted areas. Further, the wall rock is considered in various concrete applications, as a soil conditioner, and as raw material for various construction purposes. The deep water port facilities at Engebø and the short distance to the European markets represent a logistical advantage also for the commercial use of the tailings and the wall rock.

In the future, various by-products from tailings and wall rock may represent an important additional value for the Engebø project, financially, and with regard to new industrial activity. As a consequence, the need to dispose of tailings would be reduced.

OPERATIONS

OPERATIONS NORDIC QUARTZ – high-purity quartz

Nordic Quartz has the exclusive rights for investigation and development of a quartz deposit in Kvinnherad municipality in Norway. Extensive analysis and processing tests have shown that the quartz is suitable for making High-Purity Quartz ("HPQ") products with exceptionally low content of contaminating elements. An independent preliminary evaluation ("Scoping Study") of the quartz project was carried out in 2012 by Dorfner Anzaplan. The Scoping Study comprised a detailed review of all project data compiled to-date, resulting in a recommendation for preferred mining and processing method and a concurrent preliminary economic analysis confirming the project as commercially viable. There has been limited activity on the Kvinnherad quartz project in 2014 due to the Group's general strategic and financial priorities.

Geological overview

The Kvinnherad deposit consists of hydrothermal quartz situated in Proterozoic basement rocks south of the Hardanger Fault Zone. The quartz vein is about 600 meters long and on average about 15 meters wide. The deposit is outcropping on the surface and detailed field mapping has been carried out. An exposure of the vein in the hillside shows that the vein continues to at least 150 meters depth.

A magnetic survey carried out in 2012 gives confidence in a sizable quartz deposit stretching below the surface. A larger depth continuation of the probable quartz vein is indicated in the magnetic data, and the vein is shown to continue to possibly 300 meters depth. The geophysics also indicates that the vein is wider in some areas than seen on the surface.

A preliminary size estimate of the quartz vein based on modelling of data from field mapping and the magnetic survey, show an estimated volume of approximately 2 million tonnes of hydrothermal quartz down to a depth of 150 meters above sea level. A drilling program is planned for delineation of the quartz vein.

Processing tests demonstrate homogenous HPQ

Comprehensive analysis and processing tests has been carried out at Dorfner Anzaplan's laboratory. Dorfner Anzaplan is an internationally accredited German consultancy company specialised in HPQ processing and analysis.

Dorfner Anzaplan has documented that the Kvinnherad quartz can be processed to HPQ products. The processing has involved various separation methods to remove contaminants, including mechanical separation and acid leaching techniques. Concentrates with a total level less than 15 ppm (parts per million) of impurities have been produced. The total level of alkalis (K, Na, Li) in the purest products was 0.3 ppm. This is in the range of "Iota 6" which is one of the highest grade quartz products on the world market. Melting tests have demonstrated that the quartz can be suitable for glass products.

The processing tests indicate that the quartz will satisfy the requirements in the main application areas for HPQ, e.g. optical glass, high temperature light bulbs, crucibles, semiconductors and microelectronics.

Scoping Study outlines a viable and profitable project

In 2012, Dorfner Anzaplan carried out an independent Scoping Study of the quartz project. The study provides an overview of previous work and studies (e.g. exploration, geology, deposit size, processing etc.), a general description of the location and its characteristics, a proposed mining and processing method, and a preliminary economic analysis of an industrial quartz project. Further, the Scoping Study gives principal recommendations and describes risk factors to be considered in the project work going forward.

In the study, the Kvinnherad quartz deposit is considered to contain raw quartz sufficient for minimum 60 years of production of HPQ products at a rate of 5,000 tonnes per year. The Scoping Study outlines an industrial base case with mine life assumption of 30 years, estimated investments of approximately USD 50 million, a preliminary net present value after tax of USD 60 million based on 8% discount rate, and an undiscounted payback period of 4.3 years. Thus, the results from the study clearly indicate the potential of a viable and profitable industrial project.

International commercial potential

Nordic Mining considers the long-term outlook for HPQ products in advanced technical and industrial applications positive and intends to position the Kvinnherad quartz project internationally. Contacts have been established with industrial companies with international commercial interests in the quartz value chain.

Exposed quartz vein in the mountain side in Kvinnherad.

QUARTZ

PROPERTIES

Quartz is a hard mineral composed of silicon and oxygen (SiO2). Common quartz is white (milky quartz) or colourless (rock crystal). Quartz also occurs in a number of other colours.

OPERATIONS KELIBER – lithium/lithium carbonate

Nordic Mining's associated company Keliber in Finland develops deposits of high quality lithium mineral suitable for extraction and production of high-purity lithium carbonate. Lithium carbonate has a variety of industrial applications, i.a. for advanced batteries which takes up an increasing share of the total global lithium consumption. In 2014, Keliber made significant progress on exploration, processing test work and environmental impact assessments.

Background

Nordic Mining owns approximately 25% of the share capital and is the largest shareholder in Keliber. Other shareholders are i.a. Finnish Industry Investment Ltd. and Ilmarinen Mutual Pension Insurance Company with approximately 20% and 9%, respectively. Keliber has a mining license for the Länttä lithium deposit and permits for mining, operation and waste disposal for Länttä and for production of lithium carbonate at its planned processing plant at Kalavesi in Kaustinen municipality.

Significantly improved resource base

In 2014, Keliber has made significant exploration progress and documented new resources. An important contribution to the increased resource base comes from the Rapasaari deposit which was acquired from the Finnish government early 2014. In total, Keliber's JORC compliant resource estimates in the "measured" and "indicated" categories increased by around 55% in 2014.

Keliber has drilled approximately 2,700 meters at Rapasaari during the winter season 2014/2015. Revised resource estimates were published in April 2015. In total, the indicated mineral resource estimate increased with around 20%. Per April 2015, Keliber's total JORC compliant spodumene resource estimates are as follows:

		Tonnage (1,000
Category	Deposit	tonnes)	Li2O %
Measured	Länttä	433	1.12
Indicated	Länttä	868	1.06
	Syväjärvi	1,668	1.34
	Rapasaari	1,956	1.25
	Outovesi	289	1.49
	Leviäkangas	190	1.13
	Emmes	818	1.40
Indicated total		5,789	1.28
Measured and indicated total		6,222	1.26
Inferred	Syväjärvi	73	1.58
	Leviäkangas	271	0.90
Inferred total		344	1.04

The mineral resource estimates are in accordance with the JORC Code 2004 (Länttä, Outovesi and Leviäkangas) and JORC Code 2012 (Rapasaari, Syväjärvi and Emmes). The Competent Persons responsible for the estimations are Markku Meriläinen (MAusIMM) and Pekka Lovén (MAusIMM), Outotec (Finland) Ltd.

In accordance with the JORC Code 2012 estimation of possible ore reserves will be done in connection with a pre-feasibility study ("PFS"), tentatively scheduled for completion in Q3 2015. The PFS will provide comprehensive information of the project status, including preliminary project financials.

All Keliber's deposits, excepting Emmes can be mined as conventional open pits. All deposits are located within a 20 km distance from the planned processing plant at Kalavesi.

Environmental impact studies

Environmental impact assessments ("EIA") in accordance with environmental legislative regulations are ongoing related to Keliber's mineral deposits. The EIA program was published in February 2014 and several studies and investigations have been completed and reported. The remaining work is expected to be finished in Q2 2015.

Process optimisation test work

Comprehensive process optimisation test work was initiated in 2014. The test work includes mineral separation techniques as well as the process stages from calcining to crystallisation of the lithium carbonate product. The work will continue in 2015.

Outotec (Finland) Oy has been contracted to carry out a test program related to the lithium carbonate process. The aim is to further define the process parameters as well as to design the right equipment configuration and parameters for each process stage. The lithium carbonate produced in the test program is aimed to be battery grade and will serve as product samples for Keliber's pre-marketing efforts. An outcome from Outotec's work will be input to the scheduled PFS.

First battery grade Li-producer in Europe

Keliber's goal is to be the first producer in Europe of lithium carbonate. The targeted product is high-purity lithium carbonate which is the preferred quality for batteries for electrical and hybrid vehicles.

A positive long-term market trend is expected for lithium carbonate and derived products, mainly driven by a strong growth in the battery sector. Lithium has favorable properties in combinations with other minerals/materials in modern batteries, and extensive product development is ongoing. Lithium carbonate and lithium minerals are also used in other applications, including lubricants, various glasses and in melting industries.

Analyses show that Keliber's lithium carbonate will have a low level of impurities and therefore will qualify as battery grade quality. Battery grade products with lithium content above 99.9% earn a price premium compared with standard/technical grade products.

LITHIUM

PROPERTIES

Lithium is a silver white metal that belongs to the alkali metal group. It is the lightest of all metals and so soft it can be cut with a knife. Lithium is highly reactive and never occurs freely in nature, but only appears in compounds.

OPERATIONS REINFJORD – mineral exploration

Nordic Mining's exploration work in Reinfjord on the Øksfjord Peninsula provides insight to a prospective geological province, the "Seiland Igneous Province". Nordic Mining has discovered a new type of nickel, palladium and platinum mineralisation in the Reinfjord intrusion. In 2014, field-mapping and exploration drilling have continued.

Nordic Mining executed geophysical measurements in Reinfjord in 2011 and 2012. The measurements indicated a metalliferous mineralisation present at approximately 100 meters depth within the Reinfjord intrusion.

Based on the interpretation of geophysical data and field observations, drilling of two drill holes were carried out in May 2012. Chemical analyses verified two mineralised zones carrying interesting grades of nickel, copper and platinum type elements.

In March 2014, a research program coordinated by NTNU, where Nordic Mining is a partner, was granted NOK 2 million from NordMin. NordMin is a research network funded by the Nordic Council of Ministers, and funding was given to explore and define the genesis of the Reinfjord intrusion.

In August 2014, an international team of geologists (see picture above) carried out field-mapping studies. Exploration drilling of two drill holes was completed in October/November 2014. Core sample analyses and other information from the exploration are expected in the first part of 2015. This will give important information for Nordic Mining's further evaluation of the ore-forming quality and potential in Reinfjord.

The best intersected metal grades in drill hole RF-1 in 2012:
---------------------------------------------------------------	--

	From	To	Lenght	Nickel	Copper	Cobalt	Gold	Palladium	Platinum	PGE+Au	Sulphur
Hole ID	(m)	(m)	(m)	%	%	%	g/t	g/t	g/t	g/t	%
RF-1	86	93	7	0.38	0.12	0.02	0.03	0.03	0.03	0.09	0.61
RF-1*	107.75	117	9.25	0.27	0.06	0.02	0.07	0.20	0.15	0.42	0.58
* including	107.75	113	5.25	0.24	0.05	0.01	0.10	0.31	0.23	0.64	0.41

OPERATIONS NORDIC OCEAN RESOURCES

Nordic Ocean Resources ("NORA") is a first-mover initiative related to seabed mineral exploration in Norway. Current assessments indicate a substantial potential for discovery of metallic ore deposits along the Mid-Atlantic Ridge ("MAR") and possible significant economic values within Norway's Exclusive Economic Zone ("EEZ"). NORA has applied for mineral exploration licenses in specific promising areas within the Norwegian jurisdiction.

Globally, the interest for marine mineral resources is increasing, and several countries and industrial companies have launched strategies and initiatives to secure exploration rights and to develop marine mining technology. The Norwegian continental shelf, and in particular the areas located along the MAR, is interesting in terms of possible Seabed Massive Sulfide ("SMS") deposits. In addition, the Norwegian oil and gas industry has developed advanced technology for subsea operations which can be applicable for mineral exploration and extraction. This can put Norway in a good position to make seafloor mining technically feasible and economically viable.

In 2012, NORA and the Norwegian University of Science and Technology ("NTNU") with the support from Statoil ASA entered into a project cooperation to increase the knowledge about seabed mineral resources within the Norwegian EEZ. Specifically, the aim was set to increase the knowledge of possible SMS deposits along the MAR. The MAR is a mountain range formed along the spreading zone defining the boundary between the Eurasian and the North American tectonic plates. The Ridge is an active, volcanic setting where new seafloor is continuously developed. SMS deposits are formed by the volcanic and hydro-thermal activity along the Ridge. A large part of the northern MAR between Jan Mayen and Spitsbergen is located within the Norwegian jurisdiction.

Analysis and interpretations of seabed topography, structures and geo-morphology were carried out in 2013 in order to discover promising areas for formation of SMS deposits. Based on these data, a statistical calculation for metal resource potential within the Norwegian zone was done using a method that has been developed for estimation of oil and gas resource potential. The calculations gave an estimated value of NOK 430 billion. The assessment further indicated that the value potential could be more than NOK 1,000 billion.

NORA is together with NTNU and other industrial and researchoriented parties investigating possibilities to participate in a comprehensive research project on marine mineral resources. The potential project will include an exploration cruise on the MAR, mineral sampling, analyses and process tests. A conclusion regarding a possible launch of the project is expected in Q2 2015.

NORA is a pioneer in Norway in terms of seabed minerals. The company intends to be a front-runner in building a strong competence on marine mineral resources in collaboration with other companies and research institutions. NORA has applied for exploration rights for SMS deposits on the Norwegian MAR. The application, updated last time in January 2014, is now being considered by the Ministry of Trade, Industry and Fisheries. A granting of submarine mineral exploration rights will anchor NORA's industrial position as a seabed mineral exploration company.

OPERATIONS TECHNOLOGY DEVELOPMENT – alumina

Nordic Mining has together with Institute for Energy Technology ("IFE") developed a new technology for production of alumina. The technology is an innovative solution for production of alumina from alumina-/calcium-rich mineral sources such as anorthosite, with the integrated use and storage of CO2. A patent application was filed in March 2014.

Today's alumina production is mainly based on bauxite resources which are processed through the Bayer process. With the new technology, alumina can be produced from alternative sources and in a more environmentally friendly manner.

The new production technology has been tested and developed at IFE's laboratory at Kjeller. The leaching process has been tested in a larger scale reactor at Herøya Industry Park in Porsgrunn. The results have showed that anorthosite can be effectively leached under moderate process conditions. In addition to alumina, precipitated calcium carbonate ("PCC") and silica are produced as by-products. PCC is a commercial commodity used as filler in paper, plastics and paint. Silica can be used as filler in tires and plastics, and in the production of cement.

The new multi-product process gives potential for almost full utilisation of the mineral resource. Further, the process consumes 500,000 tonnes of CO2 per million tonne of alumina. This

corresponds to the CO2 emission from a medium sized oil and gas platform. The CO2 can either be stored safely and/or utilised as part of a commercial production of PCC. The new technology has substantial environmental advantages both in terms of CO2 consumption and waste production. The process is theoretically almost waste free since nearly all of the components of the anorthosite are potential saleable products.

A preliminary techno-economic study by the Norwegian R&D institute Tel-Tek has shown that the new technology is economically and technically feasible. Preliminary project financials were calculated for production of approximately 1 million tonne of alumina from anorthosite. The study gives indication of a positive NPV of around NOK 2.7 billion with moderate sales of PCC and silica based on a 7.5% discount rate.

A patent application for the technology was filed in March 2014, and the patent examination process is ongoing.

BOARD OF DIRECTORS' REPORT

Nordic Mining ASA ("Nordic Mining" or "the Company") is a resource company with focus on high-end industrial minerals and metals in Norway and internationally. The Company's project portfolio is of high international standard and holds a significant economic potential. The Company's assets are in the Nordic region. Nordic Mining and its subsidiaries constitute the Nordic Mining Group ("the Group").

Through the subsidiary Nordic Rutile AS ("Nordic Rutile"), Nordic Mining is undertaking largescale project development at Engebøfjellet in Sogn and Fjordane where the Company has rights to a substantial eclogite deposit with rutile and garnet. Nordic Mining has rights for exploration and production of high-purity quartz in Kvinnherad in Hordaland and develops the project through its subsidiary Nordic Quartz AS ("Nordic Quartz"). Nordic Mining's associated company Keliber Oy ("Keliber") in Finland plans to start mining of lithium bearing spodumene and production of lithium carbonate. Nordic Mining holds explorations rights on the Øksfjord peninsula in Troms and Finnmark where the Company has discovered a prospective area of sulphide mineralisation. Through the subsidiary Nordic Ocean Resources AS ("NORA"), Nordic Mining is exploring opportunities related to seabed mineral resources.

Nordic Mining is listed on Oslo Axess.

Important events in 2014 and year-to-date General strategic priorities

• The main focus for the Group in 2014 has been the Engebø rutile project and activities related to securing permits for the project.
• On 17 April 2015, the industrial area plans was approved and a discharge permit granted for the Engebø project.
• Development of the Group's other projects in 2014 have continued based on external financing, or temporarily been put on hold.

Nordic Rutile (100%)

• On 17 April 2015, the Ministry of Local Government and Modernisation approved the industrial area plan for the Engebø rutile project. At the same time, The Ministry of Climate and Environment granted a discharge permit for the project.
• The government's approvals represent a significant milestone for the Engebø rutile project and provide a good basis for the development work going forward. Onwards, Nordic Mining will assess plans and activities for the further development work including project management and resource allocation.

Nordic Quartz (100%)

• Limited progress has been made on the quartz project in 2014 due to the Group's general strategic and financial priorities.
• High Purity Quartz remains an attractive industrial segment with a broad specter of applications in advanced products and technologies, i.a. optical glass, high temperature light bulbs, crucibles, semiconductors and microelectronics.

Nordic Ocean Resources (80%)

• NORA has applied for exploration rights for seabed massive sulfide deposits on the Norwegian part of the Mid-Atlantic Ridge ("MAR"). The application, updated last time in January 2014, is now being considered by the Ministry of Trade, Industry and Fisheries.
• NORA, together with NTNU and other industrial and researchoriented parties are investigating possibilities to participate in a new research project on marine mineral resources. The potential project will include an exploration cruise on the MAR, mineral sampling, analyses and process tests. A conclusion regarding the project is expected in Q2 2015.

High-purity quartz Lithium

Keliber (25%)

• Keliber and the Finnish government entered into a purchase agreement regarding the Rapasaari lithium deposit in the beginning of 2014. The Rapasaari deposit has previously been investigated by the Geological Survey of Finland.
• Updated and significantly increased resource estimates were presented in November 2014 and April 2015.
• Environmental impact assessments in accordance with environmental legislative regulations are ongoing related to Keliber's mineral deposits.
• Various process optimisation studies have been executed in 2014. In 2015, Outotec has been engaged for a test program to further improve the lithium carbonate process.
• Based on updated resource estimates, the results from the ongoing test program and the environmental impact assessments, Keliber plans to complete a pre-feasibility study including preliminary project financials in Q3 2015.

Other project activity

Technology development

• In March 2014, Nordic Mining and Institute for Energy Technology ("IFE") filed a patent application for a new technology for extraction of alumina from alumina/calcium-rich minerals. The patent examination process is ongoing.

Exploration

• In March 2014, a research program coordinated by NTNU and where Nordic Mining is a partner was granted NOK 2 million from NordMin to explore and define the genesis of the Ni-PGE deposits at Reinfjord. NordMin is funded by the Nordic Council of Ministers.
• In the second half of 2014, field-mapping and exploration drilling of two drill holes have been carried out. Core sample analyses and other information from the exploration are expected in the first part of 2015.

Financial performance

For comparison, numbers in brackets relate to the comparable period in 2013.

Operating loss for the Group in 2014 was NOK -16.9 million (NOK -18.7 million). The operating loss was mainly related to costs in connection with the Engebø rutile project and general corporate expenses. Costs related to share-based remuneration (no cash effect) of NOK -4.0 million (NOK 0.0 million) in connection with option agreements with key employees and resource persons (no options have been awarded to members of the Board) and estimated tax refund under the "Skattefunn" scheme of NOK 1.0 million (NOK 0.6 million) are recognised and included in the operating loss. The Group's operating loss has been reduced by NOK 1.0 million due to VAT refund from 2013. The VAT refund relates to retroactive VAT registrations which were approved in 2014.

The Group's investment in Keliber is classified as shares in an associated company. Following from equity issues in Keliber in 2014 of approximately EUR 2.5 million, Nordic Mining's shareholding in Keliber has been reduced from approximately 38.0% to around 25.0%. The net loss from the associated company in 2014 was NOK -5.8 million (NOK -3.0 million). Keliber's loss was related to costs for i.a. environmental impact assessments, process optimisation studies and general corporate expenses. An impairment loss (no cash effect) of NOK -0.8 million (NOK -6.5 million) related to Keliber has been recognised in the consolidated accounts in 2014. The carrying amount for the investment in Keliber as per 31 December 2014 is NOK 11.1 million (NOK 17.0 million).

The net loss for the Group's continuing operations was NOK -23.4 million (NOK -28.1 million). Loss from discontinued operations in 2013 was related to Gudvangen Stein (divested in June 2013) with an amount of NOK -4.3 million. Total net loss for the Group in 2014 was NOK -23.4 million (NOK -32.4 million).

Cash flow from the Group's operating activities was negative in 2014 with NOK -15.7 million (NOK -19.4 million). Net cash used in investment activities was NOK -0.3 million (NOK -0.1 million). The investments were related to the Engebø rutile project.

In October/November 2014, Nordic Mining executed a rights issue of 28 million shares at a subscription price of NOK 0.60 per share. The gross proceeds from the rights issue were NOK 16.8 million. For further information of the equity issue please see note 15 to the consolidated financial statements.

Nordic Mining's total assets as of 31 December 2014 were NOK 34.4 million (NOK 40.0 million). As per 31 December 2014, total equity amounted to NOK 30.8 million (NOK 36.3 million). This gives an equity ratio for the Group of 90% (91%).

As per 31 December 2014, the Group's cash and cash equivalents amounted to NOK 14.4 million (NOK 15.5 million).

The Board confirms that the financial statements have been prepared on the basis of a going concern assumption and in accordance with section

3-3a of the Accounting Act. The Board emphasises that there are elements of risk related to the long-term financing and consequently to the long-term ability to continue as a going concern. The Board expects that the positive clarification of regulatory matters for the Engebø project which was received on 17 April 2015 (please see note 23 in the consolidated financial statements for further information) will be positive for the Group's financial flexibility going forward. Neither the industrial area plan nor the discharge permit for the Engebø rutile project contain financial obligations for the Group prior to the investment decision. For further comments, the Board also refers to the liquidity risk section on the following page.

Main activities

In 2014, the Group's activities were mainly related to the Engebø rutile project with the purpose to secure permits to start rutile production through Nordic Rutile. The Group's development projects are described in this annual report and the Board refers to relevant sections of the report for further information.

Risk management

The Group's operations are exposed to various forms of risk associated with regulatory, market, operational and financial factors. In the opinion of the Board, the Company has established management systems that address the need for satisfactory risk management and internal control.

Regulatory risk

Nordic Mining depends on permits and licenses from various authorities. Whether and when such permits will be granted, and the terms stipulated in connection with regulatory matters, are beyond the Company's control.

On 17 April 2015, the industrial area plan for the Engebø rutile project was approved by the Ministry of Local Government and Modernisation and the permit for waste disposal was granted by the Ministry of Climate and Environment.

Also the Kvinnherad quartz project, the Keliber lithium project and other projects will depend on governmental approvals regulating mining operations and environmental matters.

Financial risk

Financing, accounts and monitoring of the Group's liquidity situation is coordinated by the Company's CFO with the assistance of TMF Group AS which has been hired to provide accounting services. The Board has established rules governing the authority of the CEO, and the CEO has established rules governing the authority of the CFO.

Nordic Mining's cash holdings are placed in bank accounts in Norwegian Kroner (NOK).

Nordic Mining will require further financing in order to continue its development and exploration activities. The progress of the development of the Group's projects can be affected by financing factors. The Board refers to comments above (see "Financial performance") with regard to further financing and assessment of important matters related to this.

The development of the Group's properties, licenses and exploration rights depends on the Company's ability to obtain financing through equity financing, debt financing, project financing or other means. There is no assurance that the Company will be successful in obtaining the required financing.

Liquidity risk

The liquidity risk is the risk that the Group will not be able to pay financial obligations on their due date. The Group has to a large extent used equity financing in order to meet liquidity requirements related to financial obligations, covering of operational losses and for investments.

All of the Group's liabilities as of 31 December 2014; NOK 3.6 million, matures within 6 months from the balance sheet date.

The Group has sufficient cash to be able to settle liabilities as at 31 December 2014 and expects also to have sufficient cash for the estimated operating losses in 2015. Based on current forecast, the Group's cash balance will last till the first quarter of 2016. The Board therefore emphasises that strategies for further financing will be important going forward. Nordic Mining will evaluate alternatives to ensure adequate liquidity for its prioritised projects and to provide for future financial strength and flexibility. Consequently, the Group will need either to raise more equity, issue debt instruments or divest assets depending on the development of ongoing projects.

Neither the industrial area plan nor the discharge permit for the Engebø rutile project contain financial obligations for the Group prior to the investment decision.

Market risk

Mineral prices, which can be affected by a number of factors such as the development of the global economy, practical factors, etc., are beyond Nordic Mining's control.

Operational risk

Mineral extraction is a high risk activity and only a few of the areas investigated will subsequently be developed into producing mining operations. Long-term returns in Nordic Mining depend on the costs and success rates of the Group's exploration and development activities.

Nordic Mining is exposed to normal business risk associated with contracts with various suppliers.

Corporate governance

Corporate governance in Nordic Mining is defined as processes and control measures established to protect the interests of the Company's shareholders and other stakeholders. Nordic Mining's corporate governance policy is founded on prevailing statutory and regulatory requirements. The Company's principles will be revised in accordance with prevailing laws and regulations.

The Company has established principles for corporate governance, ethical guidelines and a general management structure based on the principles of "The Norwegian Code of Practice for Corporate

Governance". The Board has provided a detailed report on corporate governance pursuant to the Code of Practice in this annual report; please refer page 26–31 for further information.

The Company has assessed its relations with and payments to and from governmental institutions in accordance with section 3-3d of the Accounting Act. The Board refers to note 19 in the consolidated financial statements for further information.

Sustainability

Nordic Mining assumes responsibility for how the core operations of the Group may impact social, environmental and financial aspects of local communities and internal and external stakeholders. Corporate responsibility in Nordic Mining is established in the corporate structure through the Board of Directors and the executive management team and founded on four main pillars:

• Environmental responsibility
• Value creation in a social context
• High standards for health and safety
• Strict regulations regarding anti-corruption

The Company endeavors to maintain a high standard of corporate governance with an emphasis on integrity, ethical guidelines and respect for people and the environment.

In the current stage of development, neither the Company nor the Group has any particular issues with regard to human rights, labor rights and social conditions, anti-corruption or environmental footprint.

Environmental responsibility

Nordic Mining and its subsidiaries strive to ensure that all activities are within the scope of the environmental responsibilities. Nordic Mining aims to be a positive, active and contributing force in ensuring sustainable local communities and environment.

Environmental protection is exercised throughout the extractive process, and the surveying, excavation and processing of minerals will be conducted in an environmental and safe way. Excess material will be disposed according to regulatory guidelines and sustainable principles to minimise negative effects.

Nordic Mining will, where possible, pursue mineral processing locally. This is cost efficient and enables shorter chains of transportation, which in turn saves the infrastructure and the environment. The majority of the minerals planned to be mined by Nordic Mining are destined for European markets. When possible the Company will pursue sea transport through deep-water ports to enable shorter, more cost efficient and more environmental friendly logistics than land transport. In connection with the Engebø rutile project, calculations executed by the consultancy company Global & Local Environmental Management indicate that shipping of rutile from Engebø to customers in Europe will reduce CO2 emission by 80% compared with long-distance supply from i.a. South Africa. The moderate internal transportation at Engebø will also contribute to a low CO2 footprint for the project.

The environmental effect of the mining process on local communities will be limited and temporary. Nordic Mining will utilise advanced technology and methods for safe and environmentally friendly extraction of minerals, in order to minimise environmental footprint.

Nordic Mining will utilise the extracted mineral as well as by-products. Rutile is used in various environmentally friendly and "green tech" applications, while the by-product garnet can be used in the production of environmentally friendly industrial sands which benefit health and environment while replacing products which are harmful to the human body. The associated company Keliber will produce lithium carbonate for batteries in hybrid and electric cars, cell phones and laptops. The demand for lithium has increased significantly over the last years, and the use of rechargeable batteries in high-tech appliances and cars results in a positive environmental benefit.

In the ongoing project development work, in particular with regard to the Engebø rutile project environmental issues are thoroughly addressed in order to secure sustainable future operations and a responsible realisation of the substantial values that the project will bring to the society.

In addition to the comprehensive EIA which was carried out in the period 2007 – 2009 in connection with the industrial area planning and the application for waste disposal for the Engebø project, Nordic Mining has executed supplementary measuring, surveying and investigations. The information has been a basis for the government's assessments and approval of the project 17 April 2015.

Value creation in a social context

The social responsibility for Nordic Mining is closely linked to the local communities in which the Group operates. Minerals are often found in areas where prior to mining the communities are small, so the possibility for long term mineral production will open new routes for local value creation.

Nordic Mining aims to create value, both directly and indirectly, in the regions where the Group operates. Directly, the shareholders will receive dividend, while local authorities will receive tax payment in form of income and real estate taxes. The Group will further add to local value creation through local job opportunities and purchase of services.

Where practical and possible, Nordic Mining uses local suppliers and contractors to buy services and goods. Ahead of new projects, Nordic Mining engages independent research institutions and reports in order to analyse the consequences, benefits and possibilities for local value creation resulting from a specific project.

Nordic Mining relates and engages local communities in open dialogue throughout the lifecycle of the project. Local authorities and stakeholders are invited to dialogue meetings to maintain an open line of communication between the Company and the community.

The rutile operation at Engebø in Naustdal municipality will generate a total of 170 local positions. A further 330 positions are indicated nationally as an indirect effect of the mineral production. From the start of the project development process, Nordic Mining has been active in the dialogue with industrial and commercial parties in the region with the purpose to explore regional opportunities.

High standards for health and safety

The employees in the Nordic Mining Group are the Group's most important resource. The mining and extractive industries are by nature challenging to operate, with ever present risks to personnel and machine safety. A pro-active approach in health and safety matters will therefore be a prioritised matter in the future operation.

Strict regulations regarding anti-corruption

Nordic Mining's ethical guidelines entail a set of guiding principles for the employees of the Group in the day to day operations. The ethical guidelines are established to ensure that the staff does not engage in, or participate in corruption or bribery.

Goals and further work

Nordic Mining's work on sustainability and corporate governance is a dynamic process which will be developed in accordance with the Group's size, project activities and stage of development.

Organisational matters

Nordic Mining currently has 3 employees.

The Board of Nordic Mining consists of three men and two women. Tarmo Tuominen has been Chairman of the Board since 2011. The composition of the Board will be evaluated in connection with the annual general meeting in line with normal procedures.

The Company facilitates equal opportunities for professional and personal development regardless of gender. The Company has a good gender balance in its organisation and strives to maintain a good working environment. The sick absence rate in 2014 was less than 0.5%, and no safety issues have been registered.

Shareholders and capital situation

The total number of outstanding shares in Nordic Mining as per 31 December 2014 was 308,504,805. The Company has one class of shares, each with a nominal value of NOK 0.10. The shares are listed on Oslo Axess and may be traded without restrictions.

The Company has around 3,100 shareholders. As per 10 April 2015, around 17% of the Company's shares were held by shareholders domiciled outside Norway.

In May 2014, the annual general meeting approved a share-based incentive program for leading employees and qualified resource persons. The Board was authorised to award options that in total gives the right to subscribe to up to 14 million new shares in Nordic Mining. In 2014, the Board has awarded options for 10,750,000 shares to leading employees and resource persons. 8,250,000 options have been awarded at an exercise price of NOK 0.90 per share and 2,500,000 options have been awarded at an exercise price of NOK 1.80 per share. The option agreements can be exercised until 18 May 2016.

In May 2014, the annual general meeting gave an authorisation to the Board to increase the share capital by issuing up to 28 million new shares. The Board used the authorisation in October/November 2014 in connection with a rights issue where 28 million new shares were issued at a price of NOK 0.60 per share. As a result, the number of shares in the Company increased to 308,504,805, which is the number of shares as per the date of this report. The net proceeds from the equity issue were approximately NOK 15 million.

Parent company financial result

The net loss for the parent company Nordic Mining ASA for 2014 was NOK -12.9 million (NOK -20.9 million). As per 31 December 2014, the total equity for the parent company amounted to NOK 106.2 million (NOK 102.0 million).

The Board proposes that the year's loss of NOK 12,941,982 in Nordic Mining ASA be transferred to retained losses.

The Company had no distributable equity as per 31 December 2014.

Oslo, 21 April 2015 The Board of Directors of Nordic Mining ASA

Tarmo Tuominen Chairman

Mari Thjømøe Board member

Kjell Roland Deputy chairman

Tore Viana-Rønningen Board member

Hilde Myrberg Board member

Ivar S. Fossum CEO

THE BOARD OF DIRECTORS

Tarmo Tuominen Chairman

Tuominen is Chief Supply Chain Officer (CSCO) in the Finnish group Nordkalk. He is a geologist from Åbo Academy in Finland and has held various positions in the Nordkalk Group, including geologist, mining engineer, general manager of subsidiaries, and business area manager. Tuominen is chairman of the Geological Survey of Finland ("GTK") and board member of the Swedish Association of Extractive Resources, SveMin.

Hilde Myrberg

Board member

Myrberg is a lawyer from the University of Oslo, Norway and has a MBA from INSEAD, France. Myrberg has held various managerial positions in Norsk Hydro and Orkla. She is a board member of Norges Bank, the central bank of Norway, Petoro AS, the manager of the Norwegian government's holdings in oil and gas licences on Norway's continental shelf, and CGG SA.

Tore Viana-Rønningen Board member

Viana-Rønningen holds a Master of Science in Economics and Business Administration from the Norwegian School of Economics ("NHH") in Bergen, Norway. He has experience in corporate finance and risk management from Barclays Capital and in private equity investments in the area of upstream natural resources from BNRI, both in London, UK. He is a Vice President in Dag Dvergsten AS, Chairman of Dentales AS and CEO of CellCura ASA.

Roland is CEO of Norfund, the Norwegian Investment Fund for Developing Countries. Roland holds a Master of Science in Economics from the University of Oslo, Norway. Roland previously worked as partner and CEO in ECON Management AS and ECON Analysis. As consultant, he has worked on macroeconomics, energy and environmental issues for private and public clients, in Norway and internationally.

Mari Thjømøe Board member

Thjømøe holds a Master of Science in Business Administration from the Norwegian School of Management ("BI") and is a chartered financial analyst from the Norwegian School of Economics ("NHH") in Bergen, Norway. In 2010, she completed the Senior Executive Programme at London Business School. Thjømøe has held positions as CFO and acting CEO in Norwegian Property ASA, CFO in KLP Insurance, SVP in Statoil and various positions in Norsk Hydro ASA. Thjømøe is currently running a consultancy business and is member and chairman of the board of directors of Tryg AS, Sevan Marine ASA, E-CO Energi AS, Avinor, SINTEF and Scatec Solar ASA.

THE MANAGEMENT TEAM

Fossum holds a Master of Science in Mechanical Engineering from the University of Science and Technology ("NTNU") in Trondheim, Norway. He has previously held various managerial positions in the Norsk Hydro Group, within the oil and gas industry and the fertilizer industry. Fossum has a broad international background and has been general manager of Norsk Hydro East Africa Ltd in Nairobi, Kenya.

Mona Schanche Exploration Manager

Schanche holds a Master of Science in Resource Geology from the University of Science and Technology ("NTNU") in Trondheim, Norway. She has eight years of experience from working in the mining sector with various exploration and mine development projects. Schanche has previously worked as geologist for the Norwegian mining company Titania AS, a major producer of feedstock for titanium pigment production.

Lars K. Grøndahl

Grøndahl holds a Master of Science in Economics and Business Administration from the Norwegian School of Economics ("NHH") in Bergen, Norway. He has previously held various managerial positions in Aker, Scancem and HeidelbergCement, within the cement and building materials industries. Grøndahl has been Deputy COO of HeidelbergCement's operations in Africa. Further, he has been Head of Department in the Norwegian Ministry of Industry.

CORPORATE GOVERNANCE

Nordic Mining's corporate governance principles are of key importance for ensuring confidence in the Company and to provide a basis for long-term value creation for shareholders, employees and the society as a whole.

Nordic Mining's objective is to secure the long-term value creation through exploration, extraction and processing of high-end industrial minerals and metals. In order to attain this objective, the Company shall endeavor to maintain a high standard of corporate governance with an emphasis on integrity, ethical guidelines and respect for people and the environment.

The parent company Nordic Mining ASA ("Nordic Mining" or "the Company") owns 100% of the shares in the subsidiaries Nordic Rutile AS and Nordic Quartz AS, together with 80% of the shares in Nordic Ocean Resources AS. Further, Nordic Mining ASA owns approximately 25% of the shares in Keliber Oy which is an associated company in the Nordic Mining Group ("the Group").

Implementation and reporting on corporate governance

Nordic Mining's corporate governance policy is founded on prevailing statutory and regulatory requirements. The Company establishes its routines in line with laws and regulations that are in force at any given time. The Company's guidelines are based on the principles recommended in the 'Norwegian Code of Practice for Corporate Governance', as most recently amended on 30 October 2014 ("the Code of Practice").

In the opinion of the Board, Nordic Mining's operations in 2014 complied with the Code of Practice.

This report provides a point-by-point review of how the Company and the Group have conformed to the 15 main themes in the Code of Practice, and how the Company and the Group comply with the recommendations.

Nordic Mining has prepared its own guidelines concerning corporate, social and ethical conduct. These are available on the Company's website (www.nordicmining.com) under 'Investors' and 'Corporate Governance'.

Business

Nordic Mining's objectives are defined in the Company's articles of association: "The object of the Company is to carry out exploration for coal, minerals and ores, mining activity, technology development, activities that may be associated herewith, and participate in other companies anywhere in the world."

The articles of association are reproduced in full on page 74 of the annual report and are also available on the Company's website.

Objectives and strategies are drawn up for each individual company/ project and for the Group as a whole. The key strategies related to Nordic Mining's projects can be summarised as follows:

• Establish profitable production of rutile concentrate (TiO2) and garnet from the Engebø deposit
• Establish profitable production of high-purity quartz from the Kvinnherad deposit
• Establish profitable production of lithium carbonate through Keliber in Finland
• Investigate the potential for a new technology related to production of aluminia from anorthosite
• Establish a sound knowledge platform related to marine mineral resources and possible subsequent exploration and development

Nordic Mining aims to participate in structural changes within the industrial minerals and metals sector with a view to growth and long-term value creation. This also includes evaluation of partnership models for the Group's projects in order to progress with value increasing activities.

Equity and dividends

The Group's equity as per 31 December 2014 amounts to NOK 30.8 million, i.e. 90% of the Group's total assets. On a continuous basis, Nordic Mining is evaluating alternatives to ensure adequate liquidity for its prioritised project activities and to provide for financial strength and flexibility in a longer perspective.

Nordic Mining aims to adhere to a dividend policy that is favorable to its shareholders. Distribution of dividends will be adjusted in accordance with investment requirements and other financial circumstances for the Company.

Nordic Mining has so far not paid any dividends. As per 31 December 2014 the Company has no distributable equity that could be distributed as dividends to shareholders.

On 27 May 2014, the annual general meeting adopted a resolution authorising the Board to increase the share capital by issuing up to 28 million new shares. The authorisation was valid for one year. The Board used the authorisation to carry out a rights issue in October/ November 2014 in which 28 million new shares were issued.

The annual general meeting held on 27 May 2014 also authorised the Board to issue up to 14 million shares in connection with an option program for leading employees and qualified resource persons. This authorisation deviates from the recommendation of the Code of

Practice in that it was granted for two years, until 27 May 2016. In the opinion of the Board, it is in the Company's best interests to have certain flexibility with regard to duration of the incentive program.

The Company has, as per 31 December 2014, no distributable equity that could be used to purchase its own shares. The Board has no authorisation to purchase treasury shares.

Equal treatment of shareholders and transactions with related parties

Nordic Mining has one class of share and each share entitles the holder to one vote at the general meeting. The articles of association do not place any restrictions on shareholders' voting rights. All shareholders are equal and shall be treated equally.

In the opinion of the Board, satisfactory arguments and information have been provided in connection with deviations from existing shareholders' priority rights in connection with equity issues by the Company.

The Group reports transactions with related parties on a quarterly basis. All transactions with related parties comply with the 'arm's length principle'. The Group's transactions with related parties in 2014 are described in note 21 to the financial statements.

The Company's ethical guidelines include rules intended to avoid conflicts of interest and establish that anyone who acts on behalf of Nordic Mining shall act honestly and in line with the principles for good business ethics. Nordic Mining's guidelines provide that board members and senior employees must notify the Board in the event that they either directly or indirectly have a material interest in a contract being signed by the Company. The Board is of the opinion that it is important to exercise transparency and caution in connection with transactions involving related parties.

Freely negotiable shares

All Nordic Mining shares carry equal rights and are freely negotiable. No restrictions on transactions are contained in Nordic Mining's articles of association.

General meetings

The Board of Directors seeks to ensure that as many shareholders as possible are able to participate in, and exercise their rights, at general meetings. The shareholders exercise supreme authority in Nordic Mining through the general meeting. It is important for the Company that the general meeting provides an effective forum for the shareholders and the Board.

The Company's articles of association and the provisions of the Norwegian Public Limited Companies Act assign the following functions to the general meeting:

• Election of members of the nomination committee
• Election of the external auditor and determination of the auditor's remuneration
• Approval of the annual report as required by Norwegian law, as well as the financial statements and any distribution of dividend recommended by the Board

• Consideration of any other items listed on the agenda attached to the notice of the general meeting

Nordic Mining's annual general meeting in 2014 was held on 27 May 2014. The date of the Company's forthcoming annual general meeting is 19 May 2015.

Notices of general meetings will be published in stock exchange releases and on the Company's website at least 21 days before a general meeting. The Company's annual report will be published on Nordic Mining's website at least 21 days prior to the general meeting. General meeting notices are distributed in Norwegian with an English translation to foreign shareholders. Shareholders have the right to submit proposals to the general meeting and attend and vote in the general meeting, either in person or by proxy. The deadline for notifying attendance is normally five days before the date of the general meeting.

The nomination committee's recommendation concerning the election of board members and members of the nomination committee is published together with the notice of the general meeting. In line with the Company's guidelines, the general meeting will vote on each candidate separately.

Nordic Mining has approximately 3,100 shareholders who are widely distributed geographically. By means of a separate information section in the summons for a general meeting and a separate proxy form, the Company provides its shareholders with the opportunity to vote on every item on the agenda, even if they are unable to attend the meeting in person. The Company's share registrar, DNB Verdipapirservice, assists in connection with preparations for and practical matters in relation to the arrangement of the general meeting. This helps to ensure that general meetings are conducted professionally and impartially.

Representatives of the Board, executive management and the Company's auditor are always represented at the general meetings. Normally, the Company's legal advisor is also present. The general meeting is normally chaired by the chairman or the deputy chairman of the Board. In the event of disagreement as regards specific agenda items where the chairman of the meeting either supports one of the factions or for other reasons cannot be considered impartial, Nordic Mining has procedures to ensure that the meeting is chaired impartially. In such cases the general meeting will have an opportunity to appoint an alternative chairman to ensure impartiality in relation to the items on the agenda.

Nomination committee

Pursuant to the articles of association, Nordic Mining's nomination committee consists of three members, all elected by the general meeting. The committee is independent of the Company's Board and executive management. The remuneration of the members of the nomination committee is determined by the general meeting. The members of the nomination committee are elected for terms of two years. The guidelines for the nomination committee are available on Nordic Mining's website under 'Investors' and 'Corporate Governance'. The nomination committee's duties are to:

• Provide reasoned recommendations to the general meeting concerning the election of members and deputy members of the Company's Board of Directors
• Provide a reasoned proposal to the general meeting regarding the remuneration of the board members

As of 31 December 2014, the nomination committee of Nordic Mining has the following members:

• Ole G. Klevan (chairman); lawyer with the law firm Schjødt
• Hans Olav Kvalvåg (member); employed in Ard Group AS
• Bent Nordbø (member); employed in Dag Dvergsten AS

Ole G. Klevan and Hans Olav Kvalvåg have no relationships with board members or the management in Nordic Mining. Bent Nordbø is employed in Dag Dvergsten AS, which also employs the Company's board member Tore Viana-Rønningen.

Corporate assembly and Board of Directors; composition and independence

Pursuant to the Public Limited Liability Companies Act, Nordic Mining is not required to have a corporate assembly.

The Board of Directors of Nordic Mining has five members. The management team is not represented on the Board. The Chairman of the Board and the other board members are elected by the general meeting for terms of two years following the recommendation of the nomination committee. All board members are independent of Nordic Mining's major shareholders.

Relevant information concerning the individual board members is available in the annual report and on the Company's website. Information about candidates recommended by the nomination committee is contained in the documents accompanying the notice of the general meeting which is published on the website.

Information about board members' remuneration, the number of shares held in Nordic Mining etc. is provided in the notes to the consolidated financial statements.

As of 31 December 2014 and the date of this report, the Board of Nordic Mining has the following members:

• Tarmo Tuominen, chairman
• Kjell Roland, deputy chairman
• Mari Thjømøe, board member
• Hilde Myrberg, board member
• Tore Viana-Rønningen, board member

The work of the Board of Directors

The Board of Nordic Mining has the overall responsibility for managing Nordic Mining, which includes guiding the Company and the Group in its implementation of goals and strategy. In addition, the Board is responsible for monitoring and controlling Nordic Mining's operations with a view to ensuring the highest possible level of value creation for the Company and its shareholders.

At the start of each calendar year, the Board schedules board meetings for the coming year, with an outline of the main points on the agenda for each meeting. The agenda items reflect the Board's main duties for the overall governance of the Group and for the general monitoring of the Group's activities. Goals/milestones are established for the coming year of operations as well as plans for how to achieve them. The status of the milestone plan is reported to the Board by the management and is regularly discussed by the Board.

The Board has established instructions for the Board and the CEO, and the CEO has established instructions for the CFO. These instructions cover issues concerning the Board's duties and responsibilities, the CEO's duty to inform the Board, and procedural rules for the Board's and the management's work. The Board is aware of its responsibilities when dealing with items in which a board member is, or has been, actively involved.

So far, the Board has not established a subcommittee or Board committee to prepare items for consideration by the Board. The Board has considered the establishment of an audit committee, but has concluded that at present there is no need for an audit committee. An audit committee will be established when the Company fulfills the applicable criteria. Further, the Board has decided that at present there is no need to establish a separate compensation committee. In the Board's opinion, evaluations linked to the remuneration of senior management are undertaken most appropriately, given the Company's current phase of development, by the Board acting as a whole.

The Board regularly reviews its work and the need for competence in the Company and the Group. The Board has so far not deemed it appropriate to produce a special annual report on the Board's work. When required, the Board discusses matters related to the Board's work with the nomination committee.

Risk management and internal control

The Board is responsible for ensuring that the Company has good internal control and a well-functioning system for risk management. The Board's annual plan includes a review of the Company's risk areas and internal control system. In the Board's opinion, the current governance systems satisfactorily address the need for risk management and internal control.

The management of Nordic Mining is responsible for establishing and maintaining an adequate level of internal control with regard to the Group's financial reporting. Internal control with regard to financial reporting is a process that is designed to provide reasonable certainty that financial reporting is reliable and that financial statements for external purposes are prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. The accounting principles applied by the Group conform to the IFRS as published by the International Accounting Standards Boards (IASB). A summary of significant accounting principles as well as discussion of risk factors are included in note 2 and note 17, respectively, to the consolidated financial statements.

The Company has hired TMF Norway AS as the Group's accountants. Routines have been established for accounting work and reporting.

Some types of risk are insured with external insurers. Nordic Mining has agreed various policies to insure both people and property, together with liability insurance for the board members.

Remuneration of the Board of Directors

Remuneration of the board members is fixed annually on a retrospective basis by the general meeting following recommendations from the nomination committee. The level of remuneration shall reflect the individual board member's responsibilities, competence, and time spent, as well as the complexity of the business. The remuneration does not depend on Nordic Mining's financial performance.

No option agreements have been entered into with board members.

Information concerning remuneration and fees paid to board members in 2014 is presented in note 21 to the consolidated financial statements.

Remuneration of executive personnel

Pursuant to section 6-16a of the Public Limited Liability Companies Act, the Board prepares an annual statement on the setting of salaries and other remuneration for the senior management. The statement is presented to and considered by the general meeting. The key principles underlying the remuneration of senior management for 2014 have been that the total packages should reflect the responsibilities and duties undertaken by each individual in the executive management, and that the employee should contribute to the long-term value creation in the Group. In the opinion of the Board, it is crucial for Nordic Mining to offer competitive salaries and conditions in order to attract the qualities and expertise necessary to promote the strategic development of the Group.

In addition to regular salaries, share option agreements have been entered into with the members of the management team. The option agreements entitle the holders to purchase a limited number of shares at a fixed price (NOK 0.90 or NOK 1.80 per share). The share price on the allocation date was NOK 1.04 per share. The Company's option program was approved by the annual general meeting on 27 May 2014 and is a continuation of programs the Company has operated since its establishment in 2006. The current option program will continue until May 2016.

Information concerning remuneration paid to senior management in 2014 is presented in note 21 to the consolidated financial statements.

Information and communications

Nordic Mining has adopted guidelines designed to ensure that its information policy is based on the principles of openness and the equal treatment of all shareholders and participants in the securities market. The objective is to have accounting and financial reporting systems in which investors have confidence.

The Company's management is responsible for communication with the capital markets and for the relations between the Company and the shareholders and potential new investors. In some cases, also board members participate in the dialogue with investors. Nordic Mining's annual and interim reports provide comprehensive information about the Group's operations.

The financial reports and other information are published electronically and simultaneously to all target audiences. All shareholders are treated equally in relation to access to financial information. All reports, press releases, presentations etc. are available on Nordic Mining's website.

The Company's financial calendar is published on the website and is included on page 74 in the annual report.

Take-overs

Nordic Mining's articles of association do not set any restrictions on acquisition of the shares in the Company. In the event of a take-over bid for Nordic Mining, the Board will follow the overriding principle of equal treatment of all shareholders. Further, the Board will strive to ensure that the Company's business activities are not unnecessarily disrupted. The Board will strive to ensure that the shareholders are given sufficient information and time to assess the offer.

The Board will not seek to prevent any take-over bids unless it believes that the interests of the Company and the shareholders justify such actions. The Board will not exercise mandates or pass any resolutions with the intention of obstructing any take-over bid unless it is approved by the general meeting following the announcement of the bid.

The Board will issue a statement in accordance with statutory requirements and the recommendations in the Code of Practice, including considering to obtain a valuation from an independent expert.

Transactions that in effect have as a consequence a sale of Nordic Mining's business as a whole will be subject to approval by the general meeting.

Auditor

Nordic Mining's auditor is elected by the general meeting and is independent in relation to the Company.

The auditor's work is based on a plan that is presented to the Board on an annual basis. The auditor attends board meetings that discuss and approve the Group's and the Company's annual reports. At such meetings the auditor gives a statement of any material changes to Nordic Mining's accounting principles and provides an assessment of material accounting estimates, as well as a complete account of any situations where there has been disagreement between the auditor and the management. The auditor shall, at least once a year, provide the Board with a review of the Company's control routines and potential areas of improvement in relation to accounting. When required and at least once a year, the auditor meets with the Board with no members of the management present. The Board also has contact with the auditor as and when required outside the situations mentioned above.

The Board is of the opinion that it enjoys good communications with the auditor.

Nordic Mining has to a very limited extent assigned the auditor for services other than auditing. If and when required, the Board will prepare guidelines regarding the Company's use of other services from the auditor.

The auditor's remuneration is determined by the general meeting.

Information of the fees paid to the auditor in 2014, including breakdown between statutory auditing and other assistance/service, is presented in note 6 to the consolidated financial statements.

Oslo, 21 April 2015 The Board of Directors of Nordic Mining ASA

Tarmo Tuominen Chairman

Mari Thjømøe Board member

Kjell Roland Deputy chairman

Hilde Myrberg Board member

Tore Viana-Rønningen Board member

Ivar S. Fossum CEO

SHAREHOLDER MATTERS

Nordic Mining ASA is a resource company with focus on high-end industrial minerals and metals in Norway and internationally. Nordic Mining's shares are listed on Oslo Axess with the ticker "NOM".

Nordic Mining has one class of share and each share entitles the holder to one vote. The share's face value is NOK 0.10. The shares are freely negotiable and have been listed on Oslo Axess since 14 September 2007 (ticker "NOM"). The shares in Nordic Mining are registered with the Norwegian Central Securities Depository ("VPS") with the identification number ("ISIN") NO 0010633183.

Share capital

As per the date of the annual report, Nordic Mining's share capital amounts to NOK 30,850,480.50 divided into 308,504,805 shares. The Company's share capital and the number of shares have developed as shown in the table below.

The Company's annual general meeting held on 27 May 2014 authorised the Board to issue up to 14 million new shares in connection with an options program for senior management and qualified key personnel. The authorisation is valid for two years. The Board has awarded options for 8,250,000 shares to employees and associated key people at an exercise price of NOK 0.90 per share. In addition, the Board has awarded options for 2,500,000 shares to senior management at an exercise price of NOK 1.80 per share. At the date of this report none of the awarded option shares have been exercised.

On 27 May 2014, the annual general meeting gave an authorisation to the Board to increase the share capital by issuing up to 28 million new shares. The Board used the authorisation in October/November 2014 in connection with a rights issue where 28 million new shares were issued at a price of NOK 0.60 per share. As a result, the number of shares in the Company increased to 308,504,805 which is the number of shares as per the date of this report.

The Company does not own any of its own (treasury) shares, and no authorisation exists to purchase its own shares.

Shareholders

The Company's largest shareholders as per 15 April 2015 are listed on the next page. Information about the largest shareholders as per 31 December 2014 is given in note 20 to the consolidated financial statements.

The number of shareholders in Nordic Mining as per 10 April 2015 is around 3,100 and around 17% of the shares were held by shareholders domiciled outside Norway.

The Company's Board and management team own a total of around 2.5% of the shares in the Company.

Trading of share and price development

Shares in Nordic Mining are traded on a daily basis on Oslo Axess. The trade has increased steadily over the last years. Around 253 million shares were traded in 2014 (247 million in 2013). The Company has no agreement with brokers or financial institutions concerning liquidity guarantees relating to the share.

Year	Transaction	Change in share capital (NOK)	Face value per share (NOK)	Sub. price per share (NOK)	No. of shares after transaction	Share capital (NOK)
2006	Demerger from Rocksource ASA	n/a	0.10	n/a	14 359 070	1 435 907.00
2006	Share issue	1 435 907.00	0.10	1.10	28 718 148	2 871 814.00
2007	Private placement	1 090 000.00	0.10	2.50	39 618 140	3 961 814.00
2007	Share issue	1 386 183.50	0.10	2.50	53 479 975	5 347 997.50
2008	Private placement	3 333 333.30	0.10	1.50	86 813 308	8 681 330.80
2008	Share issue	510 400,00	0.10	1.53	91 917 308	9 191 730.80
2008	Share issue	355 278.30	0.10	1.50	95 470 091	9 547 009.10
2010	Private placement	2 000 000.00	0.10	1.00	115 470 091	11 547 009.10
2010	Share issue	1 000 000.00	0.10	1.00	125 470 091	12 547 009.10
2011	Private placement	1 250 000.00	0.10	1.45	137 970 091	13 797 009.10
2011	Share issue	750 000.00	0.10	1.45	145 470 091	14 547 009.10
2012	Share issue	4 000 000.00	0.10	0.90	185 470 091	18 547 009.10
2013	Private placement	896 601.70	0.10	0.70	194 436 108	19 443 610.80
2013	Share issue	606 869.70	0.10	0.70	200 504 805	20 050 480.50
2013	Share issue	8 000 000,00	0.10	0.30	280 504 805	28 050 480.50
2014	Share issue	2 800 000,00	0.10	0.60	308 504 805	30 850 480.50

Development of Nordic Mining's share price, 1 January 2013 – 17 April 2015

Key figures for the Nordic Mining share

Year	Share price as per 31.12 (NOK)	High (NOK)	Low (NOK)	No. of shares traded	Market cap. as per 31.12 (NOK)
2009	0.97	1.75	0.55	17 million	93 million
2010	1.41	1.67	1.04	40 million	177 million
2011	0.96	2.28	0.91	50 million	140 million*
2012	0.90	1.48	0.79	77 million	167 million
2013	1.27	1.47	0.31	247 million	356 million
2014	0.90	1.36	0.66	253 million	278 million

* Exclusive value of subscription rights listed as per year-end.

The largest shareholders of Nordic Mining as per 17 April 2015

	Shareholder	Number of shares	% ownership
1	Nordnet Bank AB (nominee)	24 108 595	7.8%
2	Skagen Vekst	18 567 948	6.0%
3	MP Pensjon PK	15 423 035	5.0%
4	Nordea Bank Plc Finl. Clients Acc. (nominee)	10 032 314	3.3%
5	Dybvad Consulting AS	8 210 148	2.7%
6	Nordnet Livsforsikring	8 005 091	2.6%
7	Danske Bank A/S (nominee)	6 475 376	2.1%
8	VPF Nordea Avkastning c/o JP Morgan Europe	6 026 542	2.0%
9	Magil AS	5 200 000	1.7%
10	Snati AS	4 855 000	1.6%
11	Citibank N.a. S/A Pohjola Bank Plc (nominee)	4 063 775	1.3%
12	Ove Klungland Holding NIL	3 831 567	1.2%
13	Verdipapirfondet DNB	3 759 647	1.2%
14	Lithion AS	3 640 250	1.2%
15	Ole Kristian G. Stokken	2 849 964	0.9%
16	Reidar Jarl Hansen	2 683 000	0.9%
17	Femcon AS	2 672 348	0.9%
18	Audstein Dybvad	2 651 845	0.9%
19	Infosave AS	2 616 199	0.8%
20	Olav Birger Sletten	2 305 000	0.7%
	Total 20 largest shareholders	137 977 644	44.7%

CONSOLIDATED INCOME STATEMENTS

(Amounts in NOK thousands)	Note	2014	2013
Sales		-	-
Other income		-	25
Payroll and related costs	4, 21	(10 799)	(9 725)
Other operating expenses	6	(6 081)	(8 998)
Operating profit/(loss)		(16 880)	(18 698)
Share of result of an associate	12	(5 831)	(2 972)
Impairment of investment in associate	12	(817)	(6 523)
Financial income	7	96	114
Financial costs	7	(14)	(11)
Profit/(loss) before tax		(23 446)	(28 090)
Income Tax	8	-	-
Loss from continuing operations		(23 446)	(28 090)
Loss from discontinued operations	10	-	(4 298)
Loss for the period		(23 446)	(32 388)
PROFIT/(LOSS) ATTRIBUTABLE TO
Equity holders of parent		(23 371)	(32 388)
Non-controlling interest		(75)	-
(Amounts in NOK)
EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
Basic and diluted earnings per share for continuing operations	9	(0.08)	(0.14)
Basic and diluted earnings per share for discontinued operations	9	0.00	(0.02)
Basic and diluted earnings per share	9	(0.08)	(0.16)

STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in NOK thousands)	2014	2013
Net profit/(loss) for the period	(23 446)	(32 388)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently through profit or loss:
- Currency translation differences	799	2 996
Items that will not be reclassified subsequently to profit or loss:
- Changes in pension estimates	(1 763)	(739)
Other comprehensive income directly against equity	(964)	2 257
Total comprehensive income for the period	(24 410)	(30 131)
PROFIT/(LOSS) ATTRIBUTABLE TO
Equity holders of parent	(24 410)	(30 131)
Non-controlling interest	(75)	-

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in NOK thousands)	Note	31.12.2014	31.12.2013
ASSETS
Non-current assets
Licences	11	6 770	6 451
Investment in associate	12	11 103	16 951
Total non-current assets		17 873	23 402
Current Assets
Trade and other receivables	13	2 126	1 119
Cash and cash equivalents	14	14 360	15 495
Total current assets		16 486	16 614
Total assets		34 359	40 016

(Amounts in NOK thousands)	Note	31.12.2014	31.12.2013
SHAREHOLDERS' EQUITY & LIABILITIES
Shareholders' equity
Share capital	15	30 850	28 050
Share premium		239 194	227 145
Other paid-in capital		12 924	8 893
Retained losses		(254 005)	(230 634)
Other comprehensive income		1 913	2 877
Equity attributable to ordinary shareholders		30 876	36 331
Non-controlling interest		(75)	-
Total equity		30 801	36 331
Non-current liabilities
Other liabilities	17	1 417	52
Total non-current liabilities		1 417	52
Current liabilities
Trade payables	17	753	1 568
Other current liabilities	16	1 388	2 065
Total current liabilities		2 141	3 633
Total liabilities		3 558	3 685
Total shareholders' equity and liabilities		34 359	40 016

Oslo, 21 April 2015 The Board of Directors of Nordic Mining ASA

Tarmo Tuominen Chairman

Kjell Roland Tore Viana-

Rønningen

Mari Thjømøe Hilde Myrberg

Ivar S. Fossum CEO

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Attributed to equity holders of the parent
(Amounts in NOK thousands)	Note	Share capital	Share premium	Other paid-in capital	Other compre hensive income	Accu mulated losses	Total	Non controlling interest	Total equity
Equity 1 January 2013		18 547	206 821	8 856	619	(198 246)	36 597	-	36 597
Total comprehensive income		-	-	-	2 257	(32 388)	(30 131)	-	(30 131)
Share based payment	5	-	-	37	-	-	37	-	37
Share issue	15	9 503	25 020	-	-	-	34 523	-	34 523
Transaction costs		-	(4 695)	-	-	-	(4 695)	-	(4 695)
Equity 31 December 2013		28 050	227 145	8 893	2 877	(230 634)	36 331	-	36 331
Equity 1 January 2014		28 050	227 145	8 893	2 877	(230 634)	36 331	-	36 331
Total comprehensive income		-	-	-	(964)	(23 371)	(24 335)	(75)	(24 410)
Share based payment	5	-	-	4 031	-	-	4 031	-	4 031
Share issue	15	2 800	14 000	-	-	-	16 800	-	16 800
Transaction costs		-	(1 951)	-	-	-	(1 951)	-	(1 951)
Equity 31 December 2014		30 850	239 194	12 924	1 913	(254 005)	30 876	(75)	30 801

CONSOLIDATED CASH FLOW STATEMENTS

(Amounts in NOK thousands)	Note	2014	2013
CASH FLOW FROM OPERATING ACTIVITIES
Loss before income tax		(23 446)	(32 388)
Depreciation (discontinued)		-	854
Impairment of investment in associate	12	817	6 523
Share of loss in associate	12	5 831	2 972
Loss on disposal of subsidiary	10	-	2 186
Share-based expenses	5	4 031	37
Changes in assets and liabilities:
Inventory		-	(1 310)
Other receivables and prepayments	13	(1 007)	1 837
Trade payables		(815)	(210)
Other		(1 076)	139
Net cash used in operating activites		(15 665)	(19 360)
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of intangible assets	11	(319)	(315)
Purchases of property, plant & equipment		-	(296)
Disposal of subsidiary	10	-	465
Net cash used in investing activities		(319)	(146)
CASH FLOW FROM FINANCING ACTIVITIES
Share issuance net of transaction costs	15	14 849	29 827
Payments of loans		-	(415)
Principal payments on finance leases		-	(575)
Net cash from financing activities		14 849	28 837
Net change in cash and cash equivalents		(1 135)	9 331
Cash and cash equivalents at beginning of period	14	15 495	6 164
Cash and cash equivalents at end of period	14	14 360	15 495
Interest paid		-	265

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL INFORMATION

Nordic Mining ASA ("the Company") and its subsidiaries (together "the Group") focus on exploration, extraction and production of high-end industrial minerals and metals. The address to Nordic Mining's office is Munkedamsveien 45, N-0250 Oslo, Norway.

These financial statements have been approved for issue by the Board of Directors on 21 April 2015.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of preparation

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.

The consolidated financial statements of Nordic Mining ASA have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The consolidated financial statements have been prepared under the historical cost convention.

The annual accounts are based on the going concern assumption. Please see the Board of Directors' report for further information.

Significant accounting judgments, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Key areas of estimation uncertainty:

• Utilisation of tax loss carryforwards (note 8) The Group has incurred significant tax loss carryforwards, but has not recognised a deferred tax asset related to these tax losses beyond offsetting deferred tax liabilities.
• Impairment evaluation of intangible assets (note 11) The Group performs annual tests to evaluate potential impairment of intangible assets not yet in use. The recoverable amount from cash generating units is determined by estimating value in use. The value in use calculation requires the use of estimates. Management must estimate expected cash flows, including sales prices, margins, etc. as well as the discount rate. For cash generating units not yet available for use, value in use includes estimates of investments necessary to complete the unit for use.

• Investment in associates (note 12)

The Group has an investment in Keliber Oy in Finland. The business of Keliber Oy is currently in the exploration and development phase, and does not generate revenue. Uncertainty exists related to future values of this investment, and assessments have been made related to impairment of the investment. These assessments require substantial judgement.

• Share-based compensation (note 5)

The Group measures fair value of options that are equity settled, granted to senior management and qualified resource persons, by using the Black Scholes model on the grant date. Management must choose the right model and estimate the assumptions for the model. Assessment of assumptions requires i.a. estimates for volatility, expected life of options and risk-free interest rate.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the subsidiaries controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of another entity so as to obtain benefits from its activities.

The subsidiaries include the 100% owned Nordic Rutile AS, located in Oslo, the 80% owned Nordic Ocean Resources AS, located in Oslo, and the 100% owned Nordic Quartz AS, located in Oslo. Gudvangen Stein AS was sold in 2013 and was deconsolidated from the date control was transferred. The accounting principles of the subsidiaries have been changed when necessary to ensure consistency with the policies adopted by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interest

Non-controlling interest is presented as a separate line item in the Group's equity. The non-controlling interest's share of the net profit/ loss is included in net loss in the income statement. Non-controlling interest includes part of the excess purchase price allocated to identifiable assets and liabilities at the acquisition date. The non-controlling interest's share of total comprehensive income/loss is allocated even if this results in a negative non-controlling interest.

Business combinations

The acquisition method of accounting is used to account for the acquisition of businesses and subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Directly attributable transaction cost related to the business combination are expensed as incurred.

Investment in associates

The Group uses the equity method of accounting for investment in associates. Associated companies are investments in companies where the Group has significant influence, but not control. Significant influence normally exists when the Group controls between 20% and 50% of the voting rights.

Under the equity method, the investment in the associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The income statement reflects the Group's share of the associate. Any transactions with the associate are eliminated to the extent of the interest in the associate.

If the Group loses control over a subsidiary, but retains significant influence, it:

• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interest
• De-recognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of the investment in associate
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent's share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

Foreign currency translation

Functional and presentation currency

Assets and liabilities in foreign entities, including goodwill and fair value adjustments related to business combinations are translated to NOK at the exchange rate at the balance sheet date. Revenues, expenses, gains and losses are translated using the average exchange rate during the period. Translation adjustments are recognised directly to Other Comprehensive Income.

Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency rate at the date of the transaction. Monetary items denominated in foreign currencies are translated at the exchange rate at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised as finance income or finance expense in the income statement.

Acquisition of mining and mineral properties and exploration and development of such properties

IFRS 6 "Exploration for and evaluation of mineral resources" requires that exploration and evaluation assets are classified as tangible or intangible according to the nature of the assets acquired. Some exploration and evaluation assets should be classified as intangibles, such as drilling rights and capitalised exploration costs. When technical feasibility and commercial viability of extracting a mineral resource is demonstrable, the assets should be reclassified as tangible assets. Evaluation and exploration assets that are classified as intangible assets are tested for impairment prior to reclassification.

Exploration and development for mineral properties

The Group employs the successful efforts method to account for exploration and development costs. All exploration costs, with the exception of acquisition costs of licences and direct drilling costs of exploration wells are charged to expenses as incurred. Drilling costs of exploration holes are temporarily capitalised pending the evaluation of the potential existence of mineable ore reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the drilling costs of exploration holes are expensed. Costs of acquiring licences are capitalised and assessed for impairment at each reporting date.

Property, plant and equipment

The Group's property, plant and equipment, consisting of property, buildings, machinery and equipment, are recorded at cost less accumulated depreciation. Acquisition costs include costs directly attributable to the acquisition of the asset.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is calculated as the difference between the net disposal proceeds and the carrying amount of the asset and is presented as a net gain or net loss in the income statement.

Depreciation is calculated on a straight-line basis over the useful life of the asset (land is not depreciated):

• Machinery and equipment: 4–10 years
• Buildings: 20–40 years
• Transportation vehicles: 5–7 years

The assets' useful life and residual amount are reviewed on an annual basis and are revised if necessary. The carrying amount of the asset is written down to recoverable amount when the carrying amount is higher that the estimated recoverable amount (further details are provided under "Impairment of non-financial assets" below).

Impairment of non-financial assets other than goodwill

Intangible assets that have an indefinite useful life or intangible assets not yet available for use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell, and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Government grants

Government grants are recognised in profit and loss on a systematic basis over the periods in which the Group recognises expenses of the related cost for which the grant are intended to compensate.

Government grants related to capitalised assets are presented in the balance by deducting the grant in the calculation of the carrying amount of the asset.

Leases

The Group has no agreements related to property, plant and equipment that are classified as finance leases.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

Receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group may not be able to collect all amounts due according to the original terms of receivables.

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at banks and other short-term highly liquid investments with original maturities of three months or less.

Share capital

Ordinary shares are classified as equity.

Share issuance costs that are incremental and directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Interest-bearing liabilities

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loss and borrowings are subsequently measured at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised on the income statement over the period of the interest bearing liabilities.

De-recognition of financial liabilities

The Group de-recognises a financial liability (or a part of a financial liability) from its balance sheet when, and only when, it is extinguished. A financial liability is extinguished when the obligation specified in the contract is discharged or cancelled or when it expires.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Share-based compensation

Share-based payment transactions

The Group uses share-based, equity settled warrants to compensate service providers. The fair value of the services received is recognised as an expense in the financial statements over the period the options vest. The fair value of options that are fully vested on the grant date are fully recognised in the income statement when granted. Share-based compensation to employees and others providing a similar service is measured by reference to the fair value of equity instruments issued. The Group uses the Black Scholes model to measure the fair value of options and warrants.

Income taxes

Income tax expense represents the sum of the taxes currently payable and deferred tax. Taxes payable are provided based on taxable profits at the current tax rate. Deferred taxes are recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred income tax is not recognised on temporary differences arising from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered.

Revenue recognition

Revenue from mineral sales is based on the value of minerals sold, net of value added tax, and is recognised at the time that mineral ore is delivered to the customer, title and risks of ownership have passed, it is probable that the economic benefits associated with the transaction will flow to the Group, and the consideration can be measured reliably. The Group has no revenue from mineral sales subsequent of the divestment of Gudvangen Stein in June 2013.

Pensions

The Group has a defined benefit pension plan for its employees that meet the Norwegian statutory requirement. For the defined benefit plan, the cost of providing the benefits is determined using the unit credit method, with actual valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Past service costs are recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying

the discount rate at the beginning of the period to the net defined benefit liability or asset.

Contingent liabilities

Contingent liabilities are defined as:

• possible obligations resulting from past events whose existence depends on future events
• obligations that are not recognised because it is not probable that they will lead to an outflow of resources
• obligations that cannot be measured with sufficient reliability

Contingent liabilities are not recognised on the balance sheet unless arising from assuming assets and liabilities in a business combination. Significant contingent liabilities are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Please see note 11 in the consolidated financial statements regarding contingent liabilities related to the Engebø rutile deposit.

Cash flow statement

The Group reports the cash flow statement using the indirect method. That involves that the result for the period is adjusted for the effects of transactions without effect on cash and changes in assets and liabilities to show net cash flow from operations. Cash flow relating to investment activities and financing activities are shown separately.

Related party transactions

All transactions, agreements and business activities with related parties are conducted according to ordinary business terms and conditions. Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. The Group provides note disclosure for related party transactions and balances, ref. note 21 in the consolidated financial statements.

Earnings per share

The calculation of basic earnings per share is based on the profit (loss) attributable to ordinary shareholders using the weighted average number of shares outstanding during the year after deduction of the average number of treasury shares held over the period. The calculation of diluted earnings per share is consistent with the calculation of basic earnings per share while giving effect to all dilutive potential ordinary shares that were outstanding during the period, that is:

• The net profit for the period attributable to ordinary shares is increased by the after-tax amount of dividends and interest recognised in the period in respect of the dilutive potential ordinary shares and adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares.
• Weighted average number of shares which includes the effect of all potential dilutive shares as if converted at the beginning of the period, or from the issue date if later.

New accounting standards

New and amended standards adopted by the Group

The Group has adopted the following new and amended standards as of 1 January 2014:

• IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 requires management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. In accordance with IFRS 10, an investor controls another entity when it is exposed, or has rights, to variable returns from its involvement with the other entity, and has the ability to affect those returns through its power over the entity. The adoption had no impact on the Group's consolidated financial statements on adoption.
• IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly-controlled Entities - Non-monetary Contributions by Venturers". IFRS 11 (effective 1 January 2014) removes the option to account for jointly controlled entities ("JCEs") using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The adoption had no impact on the historical financial information for the Group.
• IFRS 12 "Disclosure of interests in other entities"; effective 1 January 2014, requires enhanced disclosure that enables users of the financial statements to evaluate the nature of, and the risks associated with, interests in other entities. The new disclosure requirements from IFRS 12 are presented in note 12.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2014 and not early adopted

The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are only effective for the accounting periods beginning on or after 1 January 2015 or later periods. The new pronouncements are listed below:

IFRS 9 'Financial Instruments' − Classification and Measurement IFRS 11 'Joint Arrangements', amendments to IAS 28 'Investment in Associates and Joint Ventures'

IFRS 15 'Revenue from Contracts with Customers' Amendments to IAS 36 'Impairment of Assets' on Recoverable Amount Disclosures

Amendments to IAS 32 'Financial Instruments: Presentation' Amendments to IAS 39 'Novation of Derivatives and Continuation of Hedge Accounting'

Amendments to IFRS 10, 11 and 12 on transition guidance Amendments to IAS 16 and IAS 38 'Classification of Acceptable Methods of Depreciation and Amortisation' IFRIC 21 'Levies'

Annual improvements 2012-2014 cycle

The impact on the Group's consolidated historical financial information of the future adoption of these and other new standards and interpretations is still under review, but the Group does not expect any of these changes to have a material effect on the results or net assets.

NOTE 3 - SEGMENTS

The Group shows segments on the basis of products or products under development. The two reportable segments are:

• Titanium feedstock which can be produced by Nordic Rutile from the mineral deposit at Engebø. On 17 April 2015, the Ministry of Local Government and Modernisation approved the industrial area plan for the project. Also on 17 April 2015, the Ministry of Climate and Environment granted the discharge permit for the project. For further information please see note 23 in the consolidated financial statements.
• Quartz which can be produced from the quartz deposit in Kvinnherad. A scoping study outlines the potential for a profitable industrial quartz project.

The reconciling column "Adjustments and eliminations" includes the Group's administration costs and other unallocated corporate business development costs as well as elimination entries related to preparing consolidated financial statements. The Group uses the segments' profit/ (loss) before tax from continuing operations as the basis for the segment results including some allocations of corporate expenses, but excluding purchase price allocations related to business combinations. All the numbers in the table below are in NOK thousands and represent the period 1 January – 31 December.

2014

			Adjustments and
(Amounts in NOK thousands)	Quartz	Titanium	eliminations	Consolidated
Revenues	-	-	-	-
Segment result before tax	(526)	(9 604)	(13 315)	(23 446)
Impairment and share of loss from associate			(6 648)	(6 648)
Financial income	-	-	96	96
Financial costs	-	-	(14)	(14)
Allocated segment assets	-	5 444	28 915	34 359

2013

			Adjustments and
(Amounts in NOK thousands)	Quartz	Titanium	eliminations	Consolidated
Revenues	-	-	-	-
Segment result before tax	(364)	(6 809)	(20 917)	(28 090)
Impairment and share of loss from associate			(9 495)	(9 495)
Financial income	-	-	114	114
Financial costs	-	-	(11)	(11)
Allocated segment assets	-	5 125	34 891	40 016

The following table reconciles the results from the reporting segments to consolidated results before tax:

(Amounts in NOK thousands)	2014	2013
Profit/(loss) from segments	(10 130)	(7 173)
Not allocated consolidated costs	(6 749)	(11 525)
Not allocated investment in associate	(6 648)	(9 495)
Not allocated net finance	82	103
Profit/(loss) before tax from continuing operations	(23 446)	(28 090)

NOTE 4 - SALARIES

(Amounts in NOK thousands)	2014	2013
Wages and salaries	4 497	6 427
Social security costs	1 001	1 334
Pension costs defined contribution plan	798	868
Board member fees etc.	1 060	1 060
Share-based payment	3 441	37
Total	10 797	9 725
Average number of full time employees	3	5

See note 21 for further information about remuneration for senior managers and guidelines for remuneration.

NOTE 5 - SHARE-BASED COMPENSATION

The annual shareholders meeting of Nordic Mining on 27 May 2014 decided to implement an incentive program for senior management and qualified resource persons. The Board was given the authority to allocate options that in full gives the right to sign up to 14 million new shares in Nordic Mining.

In June 2014, the Board granted options on 10.75 million Nordic Mining ASA shares to employees, associated resource persons as well as to stakeholders in Group projects. The exercise price for 8.25 million options is NOK 0.90, while the exercise price is NOK 1.80 for 2.5 million options. The options vested immediately and may be exercised until 18 May 2016.

	2014		2013
		Weighted		Weighted
	Number of	average exercise	Number of	average exercise
	options	price	options	price
Outstanding 1 January	4 850 000	1.05	4 550 000	1.05
Granted during the year	10 750 000	1.11	300 000	1,05
Cancelled during the year	-	-	-	-
Exercised during the year	-	-	-	-
Expired during the year	(4 850 000)	1.05	-	-
Outstanding 31 December	10 750 000	1.11	4 850 000	1.05
Exercisable 31 December	10 750 000	1.11	4 850 000	1.05

Average fair value of options granted in 2014 was NOK 0.37 per share while the average remaining contractual life at 31 December 2014 was 1.38 years. Weighted average assumptions used to calculate the real price of the granted options, using the Black Scholes model, were:

Issued in	2014	2013
Volatility	91.19%	68.00%
Expected life	1	1
Risk free interest	1.28%	1.40%
Share price	1.04	0.65
Exercise price	1.11	1.05

NOTE 6 – OTHER OPERATING EXPENSES

(Amounts in NOK thousands)	2014	2013
Office costs etc.	480	1 376
Project costs – Engebø rutile project	4 232	2 275
Other business development	835	5 264
Exploration costs	-	64
Other consulting fees	43	483
Share-based payments to consultants	591	-
Other costs	2 687	3 847
Refunded VAT	(951)	-
Research tax credit	(996)	(600)
Grant to developement expenses	(840)	(3 710)
Total	6 081	8 998

Auditor fees:

(Amounts in NOK thousands)	2014	2013
Statutory audit	410	472
Other attestation services	63	45
Tax services	-	15
Other financial audit	-	-
Total	473	532

The amounts are excluding VAT.

NOTE 7 – FINANCIAL INCOME AND FINANCIAL COSTS

(Amounts in NOK thousands)	2014	2013
Interest income on bank deposits	92	106
Foreign exchange gains	-	8
Other interest income	4	-
Financial income	96	114
Other finance costs	7	4
Foreign exchange losses	7	7
Financial costs	14	11

NOTE 8 - INCOME TAXES

The Group has incurred substantial tax loss carryforwards and the related tax values are shown in the table below. At this stage, the Group cannot substantiate that there will be sufficient future taxable income to be able to realise the Group's unused tax losses, and therefore the Group has not recognised deferred tax asset at 31 December 2014. Tax losses can be carried forward indefinitely in Norway.

(Amounts in thousands)	2014	2013
Taxes payable	-	-
Deferred tax	-	-
Income tax expense/(income)	-	-

Tax effects of temporary differences and tax loss carryforwards at 31 December:

(Amounts in thousands)	2014	2013
Mineral properties/PP&E	(358)	(356)
Other temporary differences	383	14
Tax loss carryforwards	60 852	56 504
Total deferred taxes	60 876	56 162
Deferred tax asset	-	-
Deferred tax liability	-	-

The Group recorded around NOK 2.0 million in directly attributable transaction costs of the 2014 share issue directly against equity (in 2013: NOK 4.7 million). The related tax effect of NOK 0.5 million is included in tax loss carryforwards.

The following table shows the reconciliation of expected tax using the nominal tax rate to the actual tax expense/(income):

(Amounts in thousands)	2014	2013
Loss before tax	(23 446)	(28 090)
Nominal tax rate	27%	28%
Expected tax loss	(6 330)	(7 865)
Non-deductible costs	2	12
Non-taxable income	(271)	(56)
Non-deductible share compensation costs	1 089	-
Effect of non-deductible expenses from associates	1 795	2 659
Non-recognised tax assets	3 733	5 250
Tax expense/(income)	-	-

NOTE 9 - EARNINGS PER SHARE

(Amounts in NOK thousands and number of shares in thousands)	2014	2013
Earnings
Attributable to ordinary shareholders from continuing operations	(23 371)	(28 090)
Loss attributable to ordinary shareholders from discontinued operations	-	(4 298)
Total	(23 371)	(32 388)
Number of shares
Weighted average number of ordinary shares outstanding	283 343	202 168
Earnings per share attributable to ordinary shareholders (amounts in NOK)
Basic and diluted earnings per share for continuing operations	(0.08)	(0.14)
Basic and diluted earnings per share for discontinued operations	-	(0.02)
Basic and diluted earnings per share	(0.08)	(0.16)

The effect of 10.75 million potentially dilutive shares arising from options (see note 5) is not included in the calculation of diluted result per share for 2014 since the effect is anti-dilutive (4.85 million shares in 2013).

NOTE 10 - DISCONTINUED OPERATIONS

In June 2013, Nordic Mining entered into an agreement to sell all the shares in Gudvangen Stein for NOK 1.00. The sale was completed on 17 June 2013. As part of the transaction Nordic Mining was released from corporate guarantees amounting to NOK 5.7 million.

In the table below the reclassification in 2013 from the income statement to loss from discontinued operations is specified:

	01.01-31.12 2013
(Amounts in NOK thousands)	Gudvangen
Revenue	10 807
Cost of sales	(3 220)
Payroll and related costs	(2 807)
DD&A	(854)
Other operating expenses	(5 596)
Operating loss	(1 670)
Other costs/income	(441)
Loss from discontinued operations before remeasurement to fair value	(2 111)
Impairment	-
Loss on disposal	(2 187)
Total loss for discontinued operations	(4 298)

NOTE 11 - LICENCES

(Amounts in NOK thousands)	Concessions
Cost
1 January 2013	6 136
Additions	315
31 December 2013	6 451
1 January 2014	6 451
Additions	319
31 December 2014	6 770
Carrying amounts

31 December 2013	6 451
31 December 2014	6 770

Mining concessions

The mining concessions are for the Engebø and Reinfjord mineral deposits which will be depreciated according to the unit of production method when production starts. The depreciation rate will be set according to the portion of the total remaining reserves that has been produced.

In 2014, there has been exploration activity including drilling at the Reinfjord mineral deposit in cooperation with NTNU.

In accordance with an agreement with the seller of the Engebø mineral deposit, Nordic Mining shall pay a conditional compensation to the seller of NOK 40 million if or when there is commercial production from the Engebø deposit. As of 31 December 2014, no accrual is recorded in the statement of financial position.

On 17 April 2015, the industrial area plan and the discharge permit were approved by the Ministry of Local Government and Modernisation and the Ministry of Climate and Environment, respectively. For further information, please see note 23 in the consolidated financial statements.

NOTE 12 - INVESTMENT IN ASSOCIATES

The Group holds an investment of about 25% (a combination of A- and B-shares with unequal rights; i.e. the A-shares carry more of the losses) in Keliber Oy in Finland, which is accounted for as an associate. The table below shows a summary of Keliber's financial information. The categories include the remaining amounts of excess fair values above the recognised amounts as allocated on initial recognition of the investment in associate in 2012:

(Amounts in NOK thousands)	2014	2013
Current assets	21 713	7 457
Non-current assets	51 278	58 959
Current liabilities	(2 233)	(2 281)
Non-current liabilities	(14 553)	(15 816)
Equity	56 205	48 319
Carrying amount of investment in associate	11 102	16 951

The Group recognised its share of loss of the associate of NOK 5.8 million in 2014 and NOK 3.0 million in 2013. Additionally, the Group recognised an impairment loss of NOK 0.8 million in 2014 and NOK 6.5 million in 2013.

In 2014, the Group estimated recoverable amount using fair value. The Group's ownership has been diluted to approximately 25%. The estimated fair value has been based on the price of the share issuance in Keliber in the second and third quarter of 2014.

In 2013, the Group estimated the recoverable amount by estimating value in use. The discount rate used for the value in use calculation was approximately 24%. Additional assumptions used for the value in use calculations were; production start-up in 2016, inflation rate of 2.5% and a lithium carbonate price of USD 8,500/tonne for EV/HEV battery-grade quality.

NOTE 13 - TRADE AND OTHER RECEIVABLES

(Amounts in NOK thousands)	2014	2013
Accounts receivable	449	40
Other receivables	6	640
Prepayments	110	439
Research tax credit	996	-
VAT receivable	565	-
Total	2 126	1 119

NOTE 14 - CASH AND CASH EQUIVALENTS

(Amounts in NOK thousands)	2014	2013
Bank deposits	14 360	15 495
Total cash and cash equivalents	14 360	15 495
Included in cash and cash equivalents at 31 December - Employee witholding tax	374	313

NOTE 15 - SHARE CAPITAL

Number of shares outstanding	Ordinary Shares
2013
Opening balance	185 470 091
Share issuance	95 034 714
31 December 2013	280 504 805
2014
Opening balance	280 504 805
Share issuance	28 000 000
31 December 2014	308 504 805

All shares have equal rights. The nominal value is NOK 0.10 per share.

Share issue in 2014

In October/November 2014, Nordic Mining executed a rights issue of 28 000 000 shares with preferential right for shareholders as per the end of 22 October 2014 (as registered in the VPS as of 24 October 2014). The rights issue was substantially oversubscribed. Subsequent of the rights issue the Company's share capital is NOK 30,850,480.50 divided into 308,504,805 shares, each with a par value of NOK 0.10. The net proceeds from the share issue is disclosed in the cash flow statement.

Share issues in 2013

In February 2013, Nordic Mining executed a private placement of 8,966,017 shares directed towards existing shareholders and Norwegian investors, and a subsequent offering of 6,068,697 shares was completed in April 2013. In August 2013, Nordic Mining executed a rights issue of 80,000,000 shares with preferential right for shareholders as per the end of 5 August 2013 (as registered in the VPS as of 8 August 2013). The rights issue was substantially oversubscribed. The total net proceeds from these share issues is disclosed in the cash flow statement.

Potential new shares

On 27 May 2014, the Company's annual general meeting approved an incentive program for senior management and qualified resource persons. The Board was given authority to grant options that in total give the right to issue up to 14 million new shares in Nordic Mining. A total of 10.75 million new options were granted in June 2014 as described in note 5, Share-based remuneration. The authorisation from the annual general meeting was granted for two years.

NOTE 16 - OTHER CURRENT LIABILITIES

(Amounts in NOK thousands)	2014	2013
Tax withholding and social security accrual	581	727
Employee salary and holiday pay accrual	509	728
VAT payable	98	262
Accrued expenses	200	348
Total	1 388	2 065

NOTE 17 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Management of financial risk

Nordic Mining is exposed to certain types of financial risk related to the Group's financial instruments, primarily market risk related to floating interest rate risk on cash and cash equivalents, and liquidity risk.

The management of Nordic Mining manages the Group's financial risk. Risk management is primarily done by identifying and evaluating potential risk areas. Management focus is primarily on management of the liquidity risk to secure continuing operation and financing of the Group's capital intensive projects. The Group has until now not found it necessary to use derivatives or other financial instruments to manage financial risks.

Liquidity risk

The liquidity risk is the risk that the Group will not be able to pay financial obligations on their due date. The Group has to a large extent used equity financing in order to meet liquidity requirements related to financial obligations, covering of operational losses and for investments. All of the Group's liabilities as at 31 December 2014, NOK 3.6 million, matures within 6 months from the balance sheet date.

The Group has sufficient cash to be able to settle liabilities as at 31 December 2014 and expects also to have sufficient cash for the estimated operating losses in 2015. Based on current forecast, the Group's cash balance will last till the first quarter of 2016. Going forward, the Group will consider the need to either raise more equity, issue debt instruments or divest assets depending on the development on ongoing projects.

Market risk

Market risk consists of the risk that real value or future cash flow related to financial instruments will vary as a consequence of market prices. Market risk includes, but is not limited to, currency risk, interest rate risk and price risk from sales. Currently the Group has no exposure to price risk from sale of goods, and no financial instruments have been entered into related to future expected exposures. To a limited extent, the Group has market risk from financial instruments such as cash and cash equivalents and trade payables.

(i) Variable interest rate risk

The Group's cash and cash equivalents are exposed to changes in the market interest rate on bank deposits. The Group's exposure on the result is approximately +/-NOK 140 000 per percentage-point change in the variable market interest rate.

(ii) Currency exchange risk

The Group's continuing operations are primarily in NOK, and there are limited transactions in foreign currency.

Credit risk

Credit risk is the risk of financial losses if a customer or counterpart of a financial instrument is unable to meet contractual obligations.

The Group's continuing business is assessed to have only very limited credit risk as at 31 December 2014. Cash and cash equivalents represents 97% of the Group's financial assets at 31 December 2014. There has been no loss recognised on trade receivables in 2014 or 2013.

Only to a limited degree routines for evaluation of credit risk have been introduced, however, discretionary evaluations are done on a case-by-case basis. Management will on an ongoing basis evaluate the necessity of implementing stricter credit evaluations. Maximal exposure to credit risk is related to receivables which on the date of the accounts were NOK 0.5 million in 2014 and NOK 0.7 million in 2013.

Categories and fair value of financial instruments

The carrying amounts on the balance sheet of cash and cash equivalents, receivables, payables to suppliers, interest bearing bank loans and other short term financial items are close to fair value due to the short time period till maturity.

	2014		2013
(Amounts in NOK thousands)	Carrying amount	Fair value	Carrying amount	Fair value
Loans and receivables	455	455	681	681
Cash and cash equivalents	14 360	14 360	15 495	15 495
Total financial assets	14 815	14 815	16 176	16 176
Financial liabilities measured at amortised cost
Accounts payable	753	753	1 568	1 568
Other current financial liabilities	709	709	1 455	1 455
Total financial liabilities	1 462	1 462	3 023	3 023

Currency exchange rate sensitivity

There is no substantial currency exchange risk related to financial instruments as of 31 December2014.

Capital management

The Group has used equity financing to a large degree to finance research, operations, purchase of licences and other investments. The Group has previously also used long-term interest bearing loan and financial lease obligations. The goal of the Group's capital management is to secure liquidity for operations and for development of the Group's projects. The Group's ratio of net debt (debt less cash) divided by total capital (net debt and equity) as of 31 December 2014 is -54% (as of 31 December 2013 -48%).

NOTE 18 – INVESTMENT IN SUBSIDIARIES

(Amounts in NOK thousands)	Location	Year incorp.	Share capital	Owner ship	Equity 31.12.14	Net loss 2014
Nordic Rutile AS	Oslo, Norway	2006	15 098	100%	24 860	(8 607)
Nordic Ocean Resources AS	Oslo, Norway	2011	115	80%	(706)	(640)
Nordic Quartz AS	Oslo, Norway	2011	120	100%	(533)	(527)

NOTE 19 - PAYMENTS TO AND FROM GOVERNMENTAL INSTITUTIONS

In accordance with the Accounting Act, section 3-3d, the Group has assessed its relations with and payments to and from governmental institutions. The Group's governmental relations are only with institutions in Norway. All relations and payments are in the ordinary course of business and related to i.a. licence payments, payment of prospectus/financial supervisory authority fees, R&D project grants, tax refund etc.

Estimated total payment from the Group in 2014 to various Norwegian governmental institutions was around NOK 0.3 million. Estimated total payment to the Group in 2014 from various Norwegian governmental institutions was around NOK 2 million.

NOTE 20 - SHAREHOLDERS

The following 20 shareholders held most shares in the Company as per 31 December 2014:

Shareholders	Number of shares	% ownership
NORDNET BANK AB	23 895 188	7.75%
SKAGEN VEKST	18 786 048	6.09%
MP PENSJON PK	15 613 035	5.06%
NORDEA BANK FINLAND PLC.	10 093 281	3.27%
DYBVAD CONSULTING AS	8 210 148	2.66%
NORDNET PENSJONSFORSIKRING	7 304 351	2.37%
VPF NORDEA SMB	6 218 442	2.02%
VERDIPAPIRFONDET DNB SMB	6 206 031	2.01%
DANSKE BANK A/S	6 106 971	1.98%
MAGIL AS	5 200 000	1.69%
SNATI AS	4 500 000	1.46%
CITIBANK, N.A.	3 987 164	1.29%
OVE KLUNGLAND HOLDING AS	3 829 567	1.24%
LITHINON AS	3 640 250	1.18%
OLE KRISTIAN STOKKEN	2 800 534	0.91%
FEMCON AS	2 672 348	0.87%
AUDSTEIN DYBVAD	2 649 845	0.86%
INFOSAVE AS	2 616 199	0.85%
REIDAR JARL HANSEN	2 561 867	0.83%
OLE BIRGER SLETTEN	2 280 000	0.74%
Total 20 largest shareholders	139 171 269	45.11%
Other shareholders	169 333 536	54.89%
Total	308 504 805	100%

Transactions with related parties

Transactions with related parties adhere to the "arm's length principle". Nordic Mining has an agreement with Dag Dvergsten AS for office rental and services. The Company's board member Tore Viana-Rønningen is employed in Dag Dvergsten AS. The agreement can be cancelled by both parties on a six months' notice.

In 2014, the Group has expensed NOK 0.5 million related to the agreement with Dag Dvergsten AS (NOK 1.2 million in 2013).

Compensation of board members and key management in 2014

		Board member	Other	Pension	Share-based
(Amounts in NOK thousands)	Salary	fees	compensation	cost	payment	Total
Ivar Sund Fossum, CEO	1 972	-	241	292	1 562	4 067
Lars K. Grøndahl, CFO	1 485	-	160	283	940	2 867
Mona Schanche, Exploration manager	983	-	141	156	940	2 220
Tarmo Tuominen, Board chairman	-	300	-	-	-	300
Camilla Fiskevoll, retired Board member	-	79	-	-	-	79
Tore Viana-Rønningen, Board member	-	175	-	-	-	175
Thorhild Widvey, retired Board member	-	79	-	-	-	79
Kjell Roland, Board member	-	175	-	-	-	175
Mari Thjømøe, Board member	-	96	-	-	-	96
Hilde Myrberg, Board member	-	96	-	-	-	96
Total	4 439	1 000	542	732	3 442	9 962

Compensation of board members and key management in 2013

		Board member	Other	Pension	Share based
(Amounts in NOK thousands)	Salary	fees	compensation	cost	payment	Total
Ivar Sund Fossum, CEO	1 875	-	241	240	-	2 356
Lars K. Grøndahl, CFO	1 419	-	160	246	-	1 825
Ottar Nakken, previous VP Commercial1	1 293	-	89	240	-	1 622
Paul I. Norkyn, previous VP Mining2	917	-	105	152	-	1 173
Mona Schanche, Exploration manager	907	-	52	119	-	1 078
Tarmo Tuominen, Board chairman	-	300	-	-	-	300
Camilla Fiskevoll, retired Board member	-	175	-	-	-	175
Tore Viana-Rønningen, Board member	-	175	-	-	-	175
Thorhild Widvey, retired Board member	-	96	-	-	-	96
Kjell Roland, Board member	-	96	-	-	-	96
Anne Dæhlie, retired Board member	-	79	-	-	-	79
Egil M. Ullebø, retired Board member	-	79	-	-	-	79
Mari Thjømøe, Board member	-	-	-	-	-	-
Hilde Myrberg, Board member	-	-	-	-	-	-
Total	6 411	1 000	647	997	0	9 055

1) Ottar Nakken terminated his employment with Nordic Mining from 30 June 2013.

2) Paul I. Norkyn terminated his employment with Nordic Mining from 30 September 2013.

Guidelines for management remuneration

The main components of the guidelines for senior management salaries are as follows:

• The compensation package should reflect the responsibility and the tasks of the individual persons in the senior management, and that the employee contributes towards the long-term creation of value in Nordic Mining.
• The Group will offer competitive conditions in order to attract relevant expertise for the development of the Group.
• The compensation package consists of fixed salary plus participation in an option program that has previously been approved by the annual meeting.
• Senior management participates in pension and insurance plans.
• Neither the CEO nor other members of the senior management team has an agreement of a severance package in their employment contracts.

These guidelines have been used to hire senior management in Nordic Mining ASA and to establish salary levels.

Shares owned/controlled by members of the Board and senior management and those related to them as of 31 December 2014

Name	Position	Number of shares	% ownership
Ivar Sund Fossum	CEO	1 699 030	0.55%
Lars K. Grøndahl1	CFO	5 200 000	1.69%
Mona Schanche	Exploration manager	147 317	0.05%
Tarmo Tuominen	Board chairman	100 641	0.03%
Kjell Roland	Board member	250 000	0.08%
Tore Viana-Rønningen3	Board member	195 000	0.06%
Mari Thjømøe2	Board member	111 346	0.04%
Hilde Myrberg	Board member	56 841	0.02%
Total		7 760 175	2.52%

1) The shares are owned through the company Magil AS.

2) The shares are owned through the company ThjømøeKranen AS.

3) The shares are owned through the company ETVR Invest AS.

Options held by members of the management team as of 31 December 2014

		Total granted and	All granted in
Name	Position	outstanding	2014
Ivar Sund Fossum	CEO	4 500 000	4 500 000
Lars K. Grøndahl	CFO	2 500 000	2 500 000
Mona Schanche	Exploration manager	2 500 000	2 500 000
Total		9 500 000	9 500 000

No options have been granted to members of the Board.

NOTE 22 - PENSIONS

The Group has one benefit plan for Norwegian employees with 3 active members. The Group disposed of Gudvangen Stein in 2013 and thus exited the defined benefit plan related to the employees in Gudvangen Stein.

Pension cost
(Amounts in NOK thousands)	2014	2013
Pension cost - employee benefit	797	1 123
Pension cost - interest expense	1	(33)
Total pension related costs	798	1 090
Re-measurement gains/(losses) recorded to Other Comprehensive Income	(1 763)	(738)
Movements in pension obligations during the year were as follows
(Amounts in NOK thousands)	2014	2013
Pension obligations January 1	7 088	9 061
Current value of pension benefits for the year	797	1 156
Interest costs	225	292
Curtailment/settlement	-	(2 124)
Sale of subsidiary	-	(1 384)
Payments	(246)	(494)
Re-measurement loss/(gain)	1 338	581
Other	(43)	-
Pension obligations as of 31 December	9 159	7 088
Movements in pension funds during the year were as follows
(Amounts in NOK thousands)	2014	2013
Pension funds 1 January	7 042	8 815
Interest income	224	305
Curtailment/settlement	-	(2 035)
Sale of subsidiary	-	(1 226)
Contributions	1 197	1 572
Payments	(246)	(232)
Other	(49)	-
Re-measurement (loss)/gain	(425)	(157)
Pension funds as of 31 December	7 742	7 042
The pension asset/(liability) is classified on the balance sheet as follows
(Amounts in NOK thousands)	2014	2013
Pension funds	7 742	7 042
Pension obligations	(9 159)	(7 088)
Total	(1 417)	(46)
Other	-	(6)
Net pension asset/(liability)	(1 417)	(52)
Pension asset/(liability) is shown in the balance sheet as
Other long-term asset	-	-
Other liabilities	(1 417)	(52)
Assumptions	2014	2013
Discounted interest rate	2.30%	3.70%
Annual projected increase in salary	2.75%	3.50%
Annual projected G- regulation	2.50%	3.25%

Annual projected regulation of pension under payment 0.00% 0.50%

Increased resource estimates for Keliber

In April 2015, the associated company Keliber Oy reported an increased indicated mineral resource estimate for its Rapasaari deposit and increased lithium grade for its Syväjärvi deposit. In total, the estimates for Keliber's indicated mineral resources increased with around 20%. The increased estimates followed from a drilling program in the winter season 2014/2015 in Rapasaari and re-analysis of drill cores from the Syväjärvi deposit. In total, and per the date of this report, Keliber's estimated mineral resources in the measured and indicated categories exceed 6.2 million tonnes (JORC Code 2004 and 2012 combined) at an average grade of 1.26% Li2O. The Competent Persons responsible for the mineral estimations are Markku Meriläinen (MAusIMM) and Pekka Lovén (MAusIMM), Outotec (Finland) Ltd.

Approved industrial area plan and discharge permit for the Engebø rutile project

On 17 April 2015, the Ministry of Local Government and Modernisation approved the industrial area plan (zoning plan) for the Engebø rutile project. At the same time, a discharge permit for the project was granted by the Ministry of Climate and Environment. The mineral deposit at Engebø is one of the largest and richest resources of rutile in the world.

The industrial area plan includes the areas for mining operation, processing plant, harbor facilities, relocation of the county road, and a disposal site for waste rock in Naustdal municipality. In addition, the industrial area plan includes an area in the Førdefjord in Naustdal and Askvoll municipalities for deposition of tailings during the estimated 50 year life of mine period.

The discharge permit for the Engebø operation is in accordance with the Norwegian Pollution Control Act and based on a recommendation dated 13 February 2015 from the Environment Agency. The permit has various conditions with a purpose to minimise negative effects from blasting, noise and dust, use and emission of processing chemicals, as well as conditions regarding possible back-filling and alternative use of tailings. The discharge permit also includes conditions related to distribution of particles from the sea disposal and monitoring of the disposal area and the biodiversity.

Corporate accounts for Nordic Mining ASA

INCOME STATEMENTS

(Amounts in NOK thousands)	Note	2014	2013
Revenues from Group companies		6 384	3 723
Other income		-	-
Payroll and related costs	4,5	(10 799)	(9 725)
Other operating expenses	6	(3 968)	(5 917)
Impairment of shares in subsidiaries and associates	14	(5 849)	(10 766)
Operating loss		(14 232)	(22 685)
Financial income	7	1 374	1 809
Financial costs	7	(84)	(11)
Profit/(loss) before tax		(12 942)	(20 887)
Income Tax	8	-	-
Net profit/(loss)		(12 942)	(20 887)
Allocation of the loss
Allocated to retained losses		(12 942)	(20 887)
Total allocation of the loss		(12 942)	(20 887)

BALANCE SHEETS

(Amounts in NOK thousands)	Note	2014	2013
ASSETS
Non-current assets
Licences	9	1 326	1 326
Investment in subsidiaries	3,14	51 028	50 719
Investment in associate	14	11 103	16 951
Total non-current assets		63 457	68 996
Financial assets
Long term receivables Group companies	10	31 865	14 752
Total financial assets		31 865	14 752
Total non-current assets		95 322	83 748
Current assets
Other receivables and prepayments	10	116	6 607
Cash and cash equivalents	11	14 224	14 666
Total current assets		14 340	21 273
Total assets		109 662	105 021

SHAREHOLDERS' EQUITY & LIABILITIES Shareholders' equity Share capital 12 30 850 28 050 Share premium 12 239 195 227 146 Other paid-in capital 12 12 924 8 893 Retained losses 12 (176 747) (162 041) Total equity 12 106 223 102 048 Non-current liabilities Pension liabilities 18 1 417 52 Total non-current liabilities 1 417 52 Current liabilities Trade payable 17 717 1 205 Provision and other current liabilities 13 1 304 1 717 Total current liabilities 2 022 2 921 Total liabilities 3 439 2 974 Total shareholders' equity and liabilities 109 662 105 021	(Amounts in NOK thousands)	Note	2014	2013

Oslo, 21 April 2015 The Board of Directors of Nordic Mining ASA

Mari Thjømøe Hilde Myrberg

Ivar S. Fossum CEO

Tarmo Tuominen Chairman

Kjell Roland Tore Viana-

Rønningen

NORDIC MINING ASA ANNUAL REPORT 2014 61

CASH FLOW STATEMENTS

(Amounts in NOK thousands)	Note	2014	2013
CASH FLOW FROM OPERATING ACTIVITIES
Loss before income tax		(12 942)	(20 887)
Impairment of receivables and investment in subsidiaries	14	-	3 148
Impairment of investments in associate	14	5 849	7 617
Share-based expenses	5	3 651	37
Amortisation of interest	7	-	5
Other changes in assets and liabilities:
Receivables, operating receivables from subsidiaries, prepayments		(10 621)	(4 197)
Trade payables		(487)	(1 245)
Accrued expenses and other current liabilities		(413)	(720)
Other		(329)	-
Net cash used in operating activites		(15 292)	(16 242)
CASH FLOW FROM INVESTING ACTIVITIES
Repayment of loans from to subsidiaries	10	-	16 628
Investment in subsidiaries	14	-	(21 608)
Net cash used in investing activities		-	(4 980)
CASH FLOW FROM FINANCING ACTIVITIES
Share issuance net of transaction costs	12	14 849	29 828
Net cash from financing activities		14 849	29 828
Net change in cash and cash equivalents		(442)	8 606
Cash and cash equivalents at beginning of period	11	14 666	6 060

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 – GENERAL INFORMATION

Nordic Mining ASA ("the Company") and its subsidiaries (together "the Group") focus on exploration, extraction and production of high-end industrial minerals and metals. The address of Nordic Mining's office is Munkedamsveien 45, N-0250 Oslo, Norway.

The Board approved publication of the accounts on 21 April 2015.

NOTE 2 – SUMMARY OF THE MOST IMPORTANT ACCOUNTING PRINCIPLES

The most important accounting principles that have been used in developing the Company accounts are described below. These principles have been consistently applied unless otherwise stated.

Basic principles

The Company accounts have been presented in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. The related notes are an integral part of the financial statements of the Company.

The annual accounts are based on the going concern assumption. For further comments, the Board of Directors' Report and note 17 of the consolidated financial statements are refered.

Investment in subsidiaries and associated entities

Subsidiaries are companies controlled by the entity. Associated companies are investments in companies where the Company has significant influence, but not control. Significant influence normally exists when the Company controls between 20% and 50% of the voting rights.

Subsidiaries and associates are measured at cost in the statutory accounts. The investments are measured at acquisition cost, unless impairment has been necessary. Such assets are deemed to be impaired at fair value when a decrease in value cannot be considered to be of temporary nature and in accordance with generally accepted accounting principles. Impairments are reversed when the basis for the impairment no longer applies.

Transactions in foreign currency

Transactions in foreign currencies are initially recorded in the functional currency rate at the date of the transaction. Monetary items denominated in foreign currencies are translated at the exchange rate at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Acquisition of mining and mineral properties and exploration and development of such properties

Exploration and evaluation assets are classified as tangible or intangible according to the nature of the assets acquired.

Some exploration and evaluation assets should be classified as intangibles, such as drilling rights and capitalised exploration costs. When technical feasibility and commercial viability of extracting a mineral resource is demonstrable, the assets should be reclassified as tangible assets. Evaluation and exploration assets that are classified as intangible assets are tested for impairment prior to reclassification.

Mining and mineral properties

Mining interests represent capitalised expenditures related to the acquisition, exploration and development of mining properties and related plant and equipment. Capitalised costs are depreciated and depleted using a unit of production method over the estimated economic life of the mine to which they relate.

Exploration and development for mineral properties

The Company employs the successful efforts method to account for exploration and development costs. All exploration costs, with the exception of acquisition costs of licences and direct drilling costs of exploration wells are charged to expenses as incurred. Drilling costs of exploration holes are temporarily capitalised pending the evaluation of the potential existence of mineable ore reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the drilling costs of exploration holes are expensed. Costs of acquiring licences are capitalised and assessed for impairment at each reporting date.

Receivables

The Company's receivables are mainly receivables on Group companies. Receivables are recognised initially at cost, and subsequently measured at amortised cost using the effective interest method if the amortisation effect is material, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company may not be able to collect all amounts due according to the original terms of receivables.

Cash and cash equivalents

Cash and cash equivalents consist of cash, bank deposits and other short term, easily convertible investments with maximum three months original maturity.

Share capital

Ordinary shares are classified as equity. Expenses that are directly linked to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Loans

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loss and borrowings are subsequently measured at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised on the income statement over the period of the interest bearing liabilities.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, if the amortisation effect is material.

Government grants

Government grants are recognised in profit and loss on a systematic basis over the periods in which the Company recognises expenses the related cost for which the grant are intended to compensate.

Government grants related to capitalised assets is presented in the balance by deducting the grant in arriving at the carrying amount of the asset.

Share-based compensation

The Company uses share-based, equity settled warrants to compensate service providers. The fair value of the services received is recognised as an expense in the financial statements over the period the options vest. The fair value of options that are fully vested on the grant date are fully recognised in the income statement when granted. Share-based compensation to employees and others providing a similar service is measured by reference to the fair value of equity instruments issued. The Company uses the Black Scholes model to measure the fair value of options and warrants.

Deferred tax

Income tax expense represents the sum of the taxes currently payable and deferred tax. Taxes payable are provided based on taxable profits at the current tax rate. Deferred taxes are recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax is not recognised on temporary differences arising from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered.

Revenue recognition

The primary revenue comes from sale of services to Group companies. Revenues are recognised in the accounting period in which the services are provided.

Pensions

The Company has a defined benefit pension plans for its employees that meet the Norwegian statutory requirement. For the defined benefit plan, the cost of providing the benefits is determined using the unit credit method, with actual valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in equity in the period in which they occur. Past service costs are recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Cash flow statement

The Company reports the cash flow statement using the indirect method. That involves that the result for the period is adjusted for the effects of transactions without effect on cash and changes in assets and liabilities to show net cash flow from operations. Cash flow relating to investment activities and financing activities are shown separately.

Related parties

All transactions, agreements and business activities with related parties are processed on standard arm's length business terms. Parties are related if they have the possibility to directly or indirectly control the business or provide significant influence over the financial and operational decision of the business. The parties are also related if they are subject to "common control". The Company provides information in notes about transactions and balances with related parties, ref. note 16.

Earnings per share

The calculations of earnings per share are based on the result assigned to ordinary shareholders using a weighted average of outstanding shares through the period after deduction for weighted number of shares in the period. The calculation of diluted earnings per share is consistent with the method for calculating basic earnings per share, considering potential diluted shares in the period:

• The net profit for the period that is assigned to ordinary shareholders is increased with an after-tax amount for dividends and interest recognised in the period related to potential diluted shares.
• Weighted average number of shares issued that include the effect of all potential diluted had been converted to ordinary shares in the beginning of the period or from the issuing date is this is later.

NOTE 3 – SIGNIFICANT TRANSACTIONS

As a part of Nordic Mining's assessment of strategic options and alternatives for the various parts of its business Gudvangen Stein was divested in June 2013. Nordic Mining was released from corporate guarantees at a total amount of NOK 5.7 million. The Company recognised a loss of NOK 3.1 million from impairment of the investment in Gudvangen Stein.

In 2013 and 2014, Nordic Mining's shareholding in Keliber was reduced to approximately 25% as a result of share issuances in which the Company did not participate. As Nordic Mining no longer has a controlling interest in Keliber, the shareholding has been classified as investment in an associate. For more information, please see note 14 on page 68 and note 12 in the consolidated financial statements.

NOTE 4 – SALARIES

See note 4 in the consolidated financial statements.

NOTE 5 – SHARE-BASED COMPENSATION

See note 5 in the consolidated financial statements.

NOTE 6 – OTHER OPERATING EXPENSES

(Amounts in NOK thousands)	2014	2013
Office costs etc.	480	1 376
Other business development	944	4 340
Exploration costs	-	64
Other costs	2 334	3 247
Share-based payment	210	-
Grant to development expenses	-	(3 110)
Total	3 968	5 917

Auditor fees:

(Amounts in NOK thousands)	2014	2013
Statutory audit	380	472
Other attestation services	18	45
Tax services	-	15
Other financial audit	-	-
Total	398	532

The amounts are excluding VAT.

NOTE 7 – FINANCIAL INCOME AND FINANCIAL COSTS

(Amounts in NOK thousands)	2014	2013
Interest income on bank deposits	90	279
Interest from Group companies	1 284	-
Foreign exchange gains	-	153
Financial income	1 374	432
Other finance costs	77	13
Foreign exchange losses	7	231
Financial costs	84	244

NOTE 8 – INCOME TAXES

The Company has incurred substantial losses to be carried forward, and the tax values are disclosed in the table below. At this stage, the Company cannot substantiate that there will be sufficient future income to be able to realise the Company's unused tax losses, and thus the Company has not recognised deferred tax asset as at 31 December 2014. There is no limit in years for tax loss carryforward in Norway.

Income taxes for the year
(Amounts in NOK thousands)	2014	2013
Taxes payable	-	-
Deferred tax	-	-
Income tax expense/(income)	-	-

Tax impact of temporary differences as of 31 December

(Amounts in NOK thousands)	2014	2013
Intangible assets	(358)	(358)
PPA	-	2
Pensions	383	14
Tax loss carryforwards	52 968	51 427
Total deferred taxes	52 993	51 085

Reconciliation of effective tax rate

(Amounts in NOK thousands)	2014	2013
Loss before tax	(12 942)	(20 887)
Nominal tax rate	27%	28%
Expected tax loss	(3 494)	(5 848)
Impairment of shares in subsidiaries and associates	1 579	3 014
Non-deductible costs	21	13
Non-deductible share compensation costs	986	-
Non-recognised tax assets	908	2 821
Tax expense/(income)	-	-

Government grats/R&D tax credit

The Company received NOK 0.6 million in R&D tax credit in 2014.

NOTE 9 – FIXED AND INTANGIBLE ASSETS

Carrying amount of concession related assets of NOK 1.3 million in 2014 and 2013 relates to successful exploration drilling in Reinfjord capitalised in accordance with the successful effort method. The assets will be amortised using the units of production method if the mineralisation is deemed technical and economical viable, and production commences. In 2014, exploration activity including drilling has been carried out in Reinfjord in cooperation with NTNU.

NOTE 10 – OTHER RECEIVABLES AND PREPAID EXPENSES

(Amounts in NOK thousands)	2014	2013
Accounts receivable	-	40
Other receivables	6	-
Prepayments	110	439
Intercompany receivables	-	6 128
Total	116	6 607

Specification of intercompany loans/receivables

(Amounts in NOK thousands)	2014	2013
Nordic Rutile AS	30 579	19 885
Nordic Ocean Resources AS	692	512
Nordic Quartz AS	594	484
Total	31 865	20 881
Classified as current liabilities	-	6 129
Classified long-term receivables	31 865	14 752

NOTE 11 – CASH AND CASH EQUIVALENTS

(Amounts in NOK thousands)	2014	2013
Bank deposits	14 224	14 666
Total cash and cash equivalents	14 224	14 666
Included in cash and cash equivalents at 31 December - Employee witholding tax	374	313

NOTE 12 – SHARE CAPITAL AND CHANGES IN EQUITY

Number of shares outstanding	Ordinary Shares
2013
Opening balance	185 470 091
Share issuance	95 034 714
31 December 2013	280 504 805
2014
Opening balance	280 504 805
Share issuance	28 000 000
31 December 2014	308 504 805

All shares have equal rights. Nominal value is NOK 0.10 per share. For additional information see note 15 in the consolidated financial statements.

Changes in the equity

(Amounts in NOK thousands)	Share capital	Share premium	Other-paid in-capital	Retained earnings	Total
Equity at 1 January 2013	18 547	206 821	8 856	(140 415)	93 808
Share-based payment	-	-	37	-	37
Share issue	9 503	25 020	-	-	34 523
Transaction costs on share issue	-	(4 695)	-	-	(4 695)
Actuarial gain/loss on pensions	-	-	-	(739)	(739)
Loss for the period	-	-	-	(20 887)	(20 887)
Equity at 31 December 2013	28 050	227 146	8 893	(162 041)	102 048
Share-based payment	-	-	4 031	-	4 031
Share issue	2 800	14 000	-	-	16 800
Transaction costs on share issue	-	(1 951)	-	-	(1 951)
Actuarial gain/loss on pensions	-	-	-	(1 763)	(1 763)
Loss for the period	-	-	-	(12 942)	(12 942)
Equity at 31 December 2014	30 850	239 195	12 924	(176 747)	106 223

NOTE 13 – PROVISIONS AND OTHER CURRENT LIABILITIES

(Amounts in NOK thousands)	2014	2013
Tax withholding and social security accrual	581	727
Employee salary and holiday pay accrual	509	728
VAT payable	113	262
Accrued expenses	101	-
Total	1 304	1 717

NOTE 14 – INVESTMENTS IN SUBSIDIARIES AND ASSOCIATE

Investments in subsidiaries
		Year	Share	Owner	Equity	Net loss	Carrying amount
(Amounts in NOK thousands)	Location	incorp.	capital	ship	31.12.14	2014	31.12.14
Nordic Rutile AS	Oslo, Norway	2006	15 098	100%	24 860	(8 607)	47 266
Nordic Ocean Resources AS	Oslo, Norway	2011	115	80%	(706)	(640)	1 357
Nordic Quartz AS	Oslo, Norway	2011	120	100%	(533)	(527)	2 405

In 2013, Gudvangen Stein AS was sold resulting in a loss of NOK 3.1 million.

Investments in associate

The Company holds an investment of approximately 25% in Keliber Oy in Finland, ref. note 3 on page 65 and note 10 in the consolidated financial statements for information about impairment recognised in 2014 and 2013.

(Amounts in NOK thousands)	Carrying amount
Initial fair value 26.10.2012	24 568
Impairment in 2013	(7 617)
Carrying amount 31.12.2013	16 951
Impairment 2014	(5 849)
Carrying amount 31.12.2014	11 103

NOTE 15 – SHAREHOLDERS

An overview of the largest shareholders in the Company as per 31 December 2014 is shown in note 20 in the consolidated financial statements.

NOTE 16 – RELATED PARTIES AND SALARY TO SENIOR MANAGEMENT

See note 21 in the consolidated financial statements.

NOTE 17 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Management of financial risk

Nordic Mining is exposed to various types of financial risk related to the Company's financial instruments, primarily market risk related to floating interest rate on cash and cash equivalents, and liquidity risk. The Company manages financial risk primarily by identifying and evaluating potential risk areas. The Company has at this time not found it necessary to use derivatives to several financial risks.

Liquidity risk

The liquidity risk is the risk that the Company is not able to pay its financial obligations upon maturity. The Company has used equity financing to a large degree in order to meet liquidity demands related to financial obligations, cover operational losses and acquisition of businesses. Nordic Mining ASA does not have significant financial obligations. For a more complete description of Nordic Mining Group's liquidity risk see note 17 in the consolidated financial statements and the Board of Director's report.

Market risk

Variable interest risk

The Company is exposed to cash flow risk related to receivables from subsidiaries that has a floating interest rate. Furthermore, the Company has exposure to the floating interest risk related cash or cash equivalent deposits.

Currency exchange risk

The Company has limited exposure to currency exchange risk as at 31 December 2014. Currency transactions may arise, amongst others related to its associate. The Company evaluates unpaid balances and transactions in foreign currency, but has so far not decided to secure against currency exposure.

Credit risk

The Company does not have receivables from sales and there are not many other payables (loans and payables are primarily with the companies within the Group; at 31 December 2014 the intercompany loans and payables amounted to NOK 31.9 million). The Company therefore has a limited credit risk from external parties.

Sensitivity analysis

The Company's result and equity is exposed only to a limited degree to changes in interest rate (bank deposit and intercompany loans) and currency exchange rates.

NOTE 18 – PENSIONS

See note 22 in the consolidated financial statements.

NOTE 19 – EVENTS AFTER THE DATE OF THE ACCOUNTS

See note 23 in the consolidated financial statements.

Nordic Mining ASA

Vika Atrium Munkedamsveien 45 Entrance A – 5th floor N-0250 Oslo Norway

Tel. : +47 22 94 77 90 Fax.: +47 22 94 77 91

post@nordicmining.com www.nordicmining.com

Org. no. 989 796 739

RESPONSIBILITY STATEMENT

We confirm to the best of our knowledge that the consolidated financial statements for 2014 have been prepared in accordance with IFRS as adopted by the European Union, as well as additional information requirements in accordance with the Norwegian Accounting Act, that the financial statements for the parent company for 2014 have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway, and that the information presented in the financial statements gives a true and fair view of the assets, liabilities, financial position and result of Nordic Mining ASA and the Nordic Mining Group for the period. RESPONSIBILITY STATEMENT We confirm to the best of our knowledge that the consolidated financial statements for 2014 have been prepared in accordance with IFRS as adopted by the European Union, as well as additional information requirements in accordance with the Norwegian Accounting Act, that the financial statements for the

We also confirm to the best of our knowledge that the Board of Directors' Report includes a true and fair review of the development, performance and financial position of Nordic Mining ASA and the Nordic Mining Group, together with a description of the principal risks and uncertainties that they face. parent company for 2014 have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway, and that the information presented in the financial statements gives a true and fair view of the assets, liabilities, financial position and result of Nordic Mining ASA and the Nordic Mining Group for the period.

Oslo, 21 April 2015 Group, together with a description of the principal risks and uncertainties that they face.

The Board of Directors of Nordic Mining ASA

__________________ __________________ __________________

Chairman Deputy chairman Board member

Tarmo Tuominen Kjell Roland Hilde Myrberg

Oslo, 21 April 2015 The Board of Directors of Nordic Mining ASA

__________________ __________________ __________________ Tarmo Tuominen Kjell Roland Hilde Myrberg Chairman Deputy chairman Board member

Mari Thjømøe Tore Viana-Rønningen Ivar S. Fossum Board member Board member CEO

__________________ __________________ __________________

Mari Thjømøe Tore Viana-Rønningen Ivar S. Fossum Board member Board member CEO

ARTICLES OF ASSOCIATION for Nordic Mining ASA per 17 November 2014

• 1. The name of the company is Nordic Mining ASA. The company is a public limited liability company.
• 1. The registered office of the company is in Oslo.
• 1. The object of the company is to carry on exploration for coal, minerals and ores, mining activity, technology development, activities that may be associated herewith, and participation in other companies anywhere in the world.
• 1. The share capital of the company amounts to NOK 30,850,480.50 divided on 308,504,805 shares of a nominal value of NOK 0.10. The shares of the company shall be registered in the Norwegian Registry of Securities.
• 1. The board of directors of the company shall have from 3 to 8 members according to the decision of the shareholders' meeting. Two board members jointly can sign on behalf of the company.
• 1. The company shall have an election committee consisting of three members who shall be elected by the general meeting. The members of the election committee shall, when they are elected, be shareholders or representatives of shareholders of the company. The Election Committee shall make recommendations to the general meeting concerning the election of members and deputy members to the board of directors. The election committee shall also make recommendations concerning remuneration to such members. Members of the election committee are elected for a period of two years. The members of the board of directors which have been elected by the general meeting make recommendations for and adopt instructions for the election committee.
• 1. The shareholders' meeting shall deal with:
• i) Adoption of the annual accounts and annual report, including payment of dividends.
• ii) Other matters that pursuant to law are the business of the shareholders' meeting.
• 1. If a document that relates to an issue that the general meeting shall decide on is made available to the company›s shareholders on the company›s website, then such a document does not have to be physically sent to the shareholders of the company. However, such a document shall be sent to the shareholder free of charge if shareholders request it.
• 1. Shareholders that plan to attend a general meeting have to give notice to the company within 5 days of the general meeting. Shareholders who have not given such notice within 5 days of the general meeting may be denied entrance to the general meeting.
• 1. The Board of Directors may determine that the shareholders may cast advance votes in writing in matters to be considered by the general meetings of the company. Such votes may also be casted through electronic means. Voting in writing requires an adequately secure method to authenticate the sender. The board of directors may determine further guidelines for written advance voting. The summons to the general meeting shall state whether advance voting is allowed prior to the general meeting, and, if so, the guidelines for such voting.

FINANCIAL CALENDAR 2015

27 Fourth quarter results 2014

12 First quarter results 2015

19 Annual General Meeting

14 Second quarter results 2015

13 Third quarter results 2015

Nordic Mining ASA Munkedamsveien 45 A NO-0250 Oslo Norway Tel: +47 22 94 77 90 Fax: +47 22 94 77 91 www.nordicmining.com