Nordic Mining ASA

NORDICMINING - 2022 5967007LIEEXZXFVKO542022-01-012022-12-315967007LIEEXZXFVKO542021-01-012021-12-315967007LIEEXZXFVKO542022-12-315967007LIEEXZXFVKO542021-12-315967007LIEEXZXFVKO542020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542020-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542020-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542020-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXFVKO542020-12-315967007LIEEXZXFVKO542021-01-012021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542021-01-012021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542021-01-012021-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542021-01-012021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXFVKO542021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542021-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXFVKO542021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542021-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXFVKO542021-12-315967007LIEEXZXFVKO542022-01-012022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542022-01-012022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542022-01-012022-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542022-01-012022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXFVKO542022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFVKO542022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXFVKO542022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFVKO542022-12-31ifrs-full:AccumulatedOtherComprehensiveIncomeMember5967007LIEEXZXFVKO542022-12-31ifrs-full:RetainedEarningsMemberiso4217:NOKiso4217:NOKxbrli:shares NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 28 CONSOLIDATED STATEMENT OF PROFIT OR LOSS Consolidated accounts for Nordic Mining (Amounts in NOK thousands) Note 2022 2021 Other income - 188 Payroll and related costs Depreciation and amortization Other operating expenses Operating proﬁt/(loss) 4,22 12 6 (11 650) (164) (16 220) (138) (34 106) (45 920) (44 504) (60 674) Fair value gains/losses on investments Fair value gains/losses on convertible loan Financial income 13 19 7 283 844 (10 476) 63 487 66 374 - 127 Financial costs 7 (88 523) 202 412 (456) 5 371 Proﬁt/(loss) before tax Income tax 8 - - Proﬁt/(loss) for the period 202 412 5 371 (Amounts in NOK) EARNINGS PER SHARE Basic earnings per share Diluted earnings per share 9 9 0.88 0.75 0.02 0.02 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 29 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Amounts in NOK thousands) Note 2022 2021 Net proﬁt/(loss) for the period 202 412 5 371 OTHER COMPREHENSIVE INCOME: Items that will not be reclassiﬁed subsequently to proﬁt or loss: Changes in pension estimates 17,24 (1 009) (100) Other comprehensive income directly against equity (1 009) (100) Total comprehensive income/(loss) for the period 201 403 5 271 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 30 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Amounts in NOK thousands) Note 31.12.2022 31.12.2021 (Amounts in NOK thousands) Note 31.12.2022 31.12.2021 ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity Non-current assets Evaluation and exploration assets Mine under construction Property, plant and equipment Right-of-use assets 10 11 12 12 13 - 288 410 1 090 106 28 800 - Share capital 17 17 139 390 319 430 16 038 137 695 313 699 16 038 Share premium 200 Other paid-in capital 239 Retained earnings/(losses) Other comprehensive income/(loss) Total equity (16 135) (4 232) (218 547) (3 223) Financial investments Total non-current assets - 190 519 219 758 17 289 606 454 491 245 662 Current assets Non-current liabilities Lease liabilities Trade and other receivables Bond Escrow 14,20 15 23 297 1 032 597 4 215 3 444 25 24 - 1 812 1 812 113 1 062 1 175 - - Pension liabilities Restricted cash 16 Total non-current liabilities Cash and cash equivalents Total current assets 16 164 703 1 224 812 32 086 35 530 Current liabilities Trade payables 20 15,20 19,20 18 37 168 850 825 142 976 27 146 3 093 - Total assets 1 514 418 255 288 Bond loan Convertible loan Other current liabilities Total current liabilities Total liabilities - 5 358 8 451 9 626 1 058 115 1 059 927 Total shareholders’ equity and liabilities 1 514 418 255 288 Oslo, 25 April 2023 The Board of Directors of Nordic Mining ASA Kjell Roland Kjell Sletsjøe Deputy chair Eva Kaijser Board member Benedicte Nordang Board member Antony Beckmand Board member Ivar S. Fossum Chair CEO NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 31 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Aꢀributed to equity holders of the parent Share capital Share premium Other-paid-in capital Other comprehensive Retained Total equity (Amounts in NOK thousands) Note income/(loss) earnings/(losses) Equity 1 January 2021 118 495 472 824 15 804 (3 124) (439 711) 164 288 5 371 (100) Proﬁt/(loss) for the period Other comprehensive income Total comprehensive income Share issue - - - - 5 371 - - - - (100) - - - (100) 5 371 5 271 80 000 (4 133) - 19 200 60 800 (4 133) (215 792) - - - - Transaction costs - - - - - 215 792 - Reduction of share premium to cover loss Share-based compensation Equity 31 December 2021 - - - - 234 234 137 695 313 699 16 038 (3 223) (218 547) 245 662 Equity 1 January 2022 Proﬁt/(loss) for the period Other comprehensive income Total comprehensive income Share issue 137 695 313 699 16 038 (3 223) - (218 547) 202 412 - 245 662 202 412 (1 009) - - - - - - - (1 009) (1 009) - - - 202 412 - 201 403 7 426 6 1 695 5 731 319 430 Equity 31 December 2022 139 390 16 038 (4 232) (16 135) 454 491 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 32 CONSOLIDATED STATEMENT OF CASH FLOWS (Amounts in NOK thousands) Note 2022 2021 (Amounts in NOK thousands) Note 2022 2021 Operating activities Financing activities Income/loss (-) before income tax Depreciation 202 412 164 5 371 Share issuance 17 17 19 19 15 7 426 - 80 000 12 138 Transaction costs, share issue Gross proceeds from borrowings, Convertible loan Transaction costs, Convertible loan Transfer to Bond Escrow (4 133) Gain on sale of ﬁxed assets Gains/losses on investments Gains/losses on on convertible loan Interest and fees, loans and borrowings Interest Bond Escrow - (188) 132 500 (6 089) (178 782) (17 440) (151) - 13 19 (283 844) 10 476 41 961 (5 795) (2 442) - (66 374) - - - - - Interest and ﬁnancing fees paid Payment of lease liabilities 15 - - 25 (156) 75 711 Foreign exchange, net Net cash from ﬁnancing activities (62 536) Share-based expenses 234 Change in working capital (7 285) (4 215) (259) 1 255 - Net change in cash and cash equivalents 128 347 32 086 4 269 (10 137) 42 223 - Transfer to restricted account Diﬀerence between pension expense and payment Net cash used in operating activites 16 Cash and cash equivalents at beginning of period Eﬀect of exchange rate ﬂuctuation on cash held Cash and cash equivalents at end of period (406) (59 970) (48 826) 164 703 32 086 Investing activities Net change in restricted cash 4 215 - - Acquisition of licenses and properties Investment in mine under construction Acquisition of property, plant and equipment Financial investments 10 11 12 13 13 - (233 733) (921) (2 211) Restricted cash at beginning of period Restricted cash at end of period - - - 4 215 168 918 - (24 030) - Restricted and unrestricted cash at end of period 32 086 - Proceeds from sale of ﬁnancial investments Sale of property, plant and equipment Net cash used in investing activities 474 363 - 363 239 709 (25 879) NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Going concern assumption The Group has historically used equity ﬁnancing to ﬁnance research, operations, purchase of licenses and other investments. In order to secure ﬁnancing of the Engebø project, the Group has in 2022 issued a bond loan and a convertible loan in addition to divesting its investment in Keliber. At the date of these annual ﬁnancial statements the Group has fully ﬁnanced the Engebø Rutile and Garnet Project. The project ﬁnancing comprises of equity, debt, and royalty ﬁnancing. For more information on liquidity risk see Board of Directors’ report and note 20. amount when the recoverable amount is lower than the carrying value of the asset. The recoverable amount is the higher of fair value less expected cost to sell and value in use (present value based on the future use of the asset). All impairment assessments require a high degree of estimation, including assessments of expected future cash ﬂows from the cash generating unit and the estimation of applicable discount rates. Impairment testing requires long-term assumptions to be made concerning a number of economic factors such as future production levels, market conditions, production expense, discount rates and political risk among others, in order to establish relevant future cash ﬂow estimates. There is a high degree of reasoned judgement involved in establishing these assumptions and in determining other relevant factors. • Classiﬁcation of bond loan and Bond Escrow (Note 15): The Group issued in 2022 a USD 100 million senior secured bond. The proceeds from the bonds will following satisfaction of certain pre-disbursement conditions precedent, including conditions of the full amount of equity ﬁnancing and royalty ﬁnancing having been spent towards the development and construction of the Engebø Project, be released in three tranches from the Bond Escrow account. The bonds are until satisfaction of the pre-disbursement conditions precedent results in drawdown of the bond proceeds from the bond escrow account classiﬁed as a current liability in the statement of ﬁnancial position. The restricted cash balances from the bonds are classiﬁed as “Bond Escrow” in the consolidated statement of ﬁnancial position and will ﬁrst be recognized as cash in the consolidated statement of ﬁnancial position once the funds are released from the escrow account. Interest expenses up to the satisfaction of the condition of the Engebø Project being fully ﬁnanced are recognized as expense in the income statement at amortized cost using the eﬀective interest-rate method. The conditions were satisﬁed on 8 March 2023. Following the satisfaction of the ﬁnancing conditions, borrowing costs related to the bond loan a be capitalized as part of “Mine under construction” at amortized cost using the eﬀective interest-rate method. • Valuation of convertible loan (Note 19): The Group entered in 2022 into a convertible loan with a local investor group. The loan is measured at fair value with changes in the fair value recognized in the income statement. As there is no observable market price for the convertible loan, the Group is assessing the fair value of the convertible loan using valuation techniques. Fair value is the price that would be received to divest the convertible loan in an orderly transaction between market participants at the measurement date. The fair value of the convertible loan is measured using the assumptions that market participants would use when pricing the loan. The Group uses NOTE 1 - GENERAL INFORMATION Nordic Mining ASA (“the Company”) and its subsidiaries (together “the Group”) is engaged in the exploration for and development of projects for high-end industrial minerals and metals. The address to Nordic Mining’s oﬃce is Munkedams- veien 45, N-0250 Oslo, Norway. These ﬁnancial statements were approved for issue by the Board of Directors on 25 April 2023. 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 with some exceptions outlined below; the main exceptions being Financial investments and Convertible loan at fair value through proﬁt or loss. The annual accounts are based on the going concern assumption. Signiﬁcant accounting judgments, estimates and assumptions The preparation of the Group’s ﬁnancial state- ments 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. Key areas of judgement and estimation uncertainty: • Impairment of non-ﬁnancial assets (Note 11 and 12): The Group reviews whether its non-ﬁnancial assets have suﬀered any impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset is wriꢀen down to its recoverable NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 34 valuation techniques that are appropriate in the circumstances and for which suﬃcient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The determination of the fair value of the convertible loan still requires signiﬁcant judgment from management. The valuation of the convertible loan has been based on level 3 inputs in the fair value hierarchy. As there were no observable market price for the convertible loan at year end 2022, the fair value of the loan is based on Management’s internal assessment of the market value at year end, see note 19 for further information. necessary to ensure consistency with the policies adopted by the Group. All intra-group transactions, balances, income and expenses are eliminated. functional currency spot rates at the date the transaction ﬁrst qualiﬁes for recognition. 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 seꢀlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized as ﬁnance income or ﬁnance expense in the income statement. recoverable, the drilling costs are expensed. Cost of acquiring licenses is capitalized and assessed for impairment at each reporting date. 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 aꢀributable transaction costs related to business combinations are expensed as incurred. Mine under construction During 2022, Evaluation and exploration assets related to Engebø was reclassiﬁed in the balance sheet to Mine under construction. The Group’s accounting policy is to test Evaluation and exploration assets for impairment and transfer to Mine under construction as soon as a project has been sanctioned for construction. Aꢁer transfer of the evaluation and exploration assets, all subsequent expenditure of the construction, installation or completion of infrastructure facilities is capitalized as Mine under construction. Aꢁer production starts, all costs included in Mine under construction are transferred to the category ‘Producing mine’. Mine under construction is not depreciated until construction is completed and the assets are available for their intended use. 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 capitalized exploration cost. When technical feasibility and commercial viability of extracting a mineral resource is demonstrable, the assets should be re-classiﬁed as ”Mine under construction”. Evaluation and exploration assets that are classiﬁed as intangible assets are tested for impairment prior to reclassiﬁcation. Basis for consolidation The consolidated ﬁnancial statements comprise the ﬁnancial statements of the Company and its subsidiaries. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee, and has the ability to aﬀect those returns through its power over the investee. Speciﬁcally, the Group controls an investee if, and only if, the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee • The ability to use its power over the investee to aﬀect its returns The subsidiaries include Nordic Rutile AS, Nordic Ocean Resources AS, and Nordic Quartz AS, all 100% owned and located in Oslo. The accounting principles of the subsidiaries have been changed when ꢂ Foreign currency translation Functional and presentation currency NOK is the functional currency of the parent and the presentation currency of the Group. 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 each quarterly period. Translation adjustments are recognized directly to Other Comprehensive Income. Property, plant and equipment The Group’s property, plant and equipment, consisting of machinery and equipment, are recorded at cost less accumulated depreciation. Acquisition cost include cost directly aꢀributable to the acquisition of the asset. Subsequent cost is included in the asset’s carrying amount or recognized 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 cost are expensed as incurred. Exploration and development for mineral properties The Group employs the successful eﬀorts method to account for exploration and development cost. All exploration cost, with the exception of acquisition cost of licenses and direct drilling cost of exploration wells is expensed as incurred. Drilling costs are temporarily capitalized pending the evaluation of the potential existence of mineral reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially Transactions and balances Transactions in foreign currencies are initially recorded by the Group’s entities at their respective NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 35 An item of property, plant and equipment is de-recognized 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 The asset’s useful life and residual amount are reviewed on an annual basis and revised if necessary. The carrying amount of the asset is wriꢀen 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). 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. Financial assets Initial recognition and measurement: Financial assets are classiﬁed, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI) and fair value through proﬁt or loss. Financial liabilities Initial recognition and measurement: Financial liabilities are classiﬁed, at initial recognition, as ﬁnancial liabilities at fair value through proﬁt or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an eﬀective hedge, as appropriate. All ﬁnancial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly aꢀributable transaction costs. The Group’s ﬁnancial liabilities include trade and other payables and loans and borrowings, including bond loan and convertible loan. Government grants Government grants are recognized where there is reasonable assurance that the grant will be received, and all aꢀached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Financial assets at fair value through proﬁt or loss: Financial assets at fair value through proﬁt or loss include ﬁnancial assets held for trading, ﬁnancial assets designated upon initial recognition at fair value through proﬁt or loss, or ﬁnancial assets mandatorily required to be measured at fair value. Financial assets are classiﬁed as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classiﬁed as held for trading unless they are designated as eﬀective hedging instruments. Financial assets with cash ﬂows that are not solely payments of principal and interest are classiﬁed and measured at fair value through proﬁt or loss. Subsequent measurement: For purposes of subsequent measurement, ﬁnancial liabilities are classiﬁed in two categories: • Financial liabilities at amortized cost (loans and borrowings and trade and other payables) • Financial liabilities at fair value through proﬁt or loss Leases (as lessee) The Group adopted IFRS 16 – Leases from 1 January 2019. IFRS 16 sets out the principles for recognition, measurement, presentation and disclosures of leases. IFRS 16 deﬁnes a lease as a contract that conveys the right to control the use of an identiﬁed asset for a period of time in exchange for consideration. For each contract that meets this deﬁnition, IFRS 16 requires lessees to recognize a right-of-use asset and a lease liability in the balance sheet with certain exemptions for short term and low value leases. Lease payments are to be reﬂected as interest expense and a reduction of lease liabilities, while the right-of-use assets are to be depreciated over the shorter of the lease term and the assets’ useful life. Lease liabilities are measured at the present value of remaining lease payments, discounted using the Group’s calculated borrowing rate. Right-of-use assets are measured at an amount equal to the lease liability. ꢂ Impairment of non-ﬁnancial assets Intangible assets that have an indeﬁnite useful life or intangible assets not yet available for use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized 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 cost to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are Financial liabilities at amortized cost Aꢁer initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortized cost using the eﬀective interest method; any diﬀerence between proceeds (net of transaction cost) and the redemption value is recognized on the income statement over the period of the interest-bearing liabilities. Receivables Receivables are recognized initially at fair value and subsequently measured at amortized cost using the eﬀective interest method, less provision for impairment. Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at banks and other short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insigniﬁcant risk of changes in fair value and with original maturities of three months or less. Financial liabilities at fair value through proﬁt or loss Aꢁer initial recognition, ﬁnancial liabilities measured at fair value through proﬁt or loss are measured at fair value at each balance sheet date, with changes in fair value through proﬁt or loss. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 36 Financial liabilities at fair value through proﬁt or loss include ﬁnancial liabilities held for trading and ﬁnancial liabilities designated upon initial recognition as at fair value through proﬁt or loss. The Group has designated its convertible loan into this category. Financial liabilities are classiﬁed as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative ﬁnancial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as deﬁned by IFRS 9. Separated embedded derivatives are also classiﬁed as held for trading unless they are designated as eﬀective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of proﬁt or loss and other comprehensive income. value of the options is recognized as a payroll expense in the statement of proﬁt or loss over the vesting period and as other paid in equity in the balance sheet. Fair value of options is estimated by use of the Black Scholes option model and is charged to the statement of proﬁt or loss over the vesting period without revaluation of the value of the options. Pensions Deﬁned beneﬁt plan: 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 recognized in other comprehensive income in the period in which they occur. Past service cost is recognized 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. • obligations that cannot be measured with suﬃcient reliability Contingent liabilities are not recognized 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. Reference is made to Note 11 and 27 in the consolidated ﬁnancial statements regarding contingent liabilities related to the Engebø rutile deposit. 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 recognized 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 recognized for all temporary diﬀerences, and deferred tax assets are recognized to the extent that it is probable that taxable proﬁts will be available against which deductible temporary diﬀerences can be utilized. Deferred income tax is not recognized 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. If deferred tax assets are not recognized, items recorded directly to equity, or in other comprehen- sive income (OCI), are accounted for gross, without any deduction of deferred taxes. Cash ﬂow statement The Group reports the cash ﬂow statement using the indirect method. The method involves adjusting the result for the period 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. De-recognition of ﬁnancial liabilities The Group de-recognizes 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. Deﬁned contribution plan: In the deﬁned contribution pension plan, the Group is responsible for making an agreed contribution to the employee’s pension assets. The future pension will be determined by the amount of the contributions and the return on the pension savings. Once the contributions have been paid, there are no further payment obligations aꢀached to the deﬁned contribution pension. 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 in Note 20 in the consolidated ﬁnancial statements. Share capital Ordinary shares are classiﬁed as equity. Share issuance cost that is incremental and directly aꢀributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. If deferred tax assets are not recognized, items recorded directly to equity are accounted for gross, without any deduction of deferred taxes. Contingent liabilities Contingent liabilities are deﬁned as: • possible obligations resulting from past events whose existence depends on future events • obligations that are not recognized because it is not probable that they will lead to an outﬂow of resources Share-based compensation The Group uses equity seꢀled options to incentivize employees and qualiﬁed resource persons. The fair Earnings per share The calculation of basic earnings per share is based NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 37 on the proﬁt/loss aꢀributable to ordinary shareholders using the weighted average number of shares outstanding during the year aꢁer 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 aꢀributable to ordinary shares is increased by the aꢁer-tax amount of dividends and interest recognized 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. NOTE 3 - SEGMENTS The Group presents segments based on of the Group’s mineral projects. The only reportable segment of the Group is the Titanium and Garnet segment. These are the minerals which can be produced from the mineral deposit at Engebø. The zoning plan and the discharge permit for the project are approved and ﬁnal, without possibility for appeals, and the operating license for the project was granted in June 2020. In May 2022, the Ministry of Trade, Industry and Fisheries (“MTIF”) resolved that Nordic Mining’s operating license is maintained as granted with full rights to the Engebø deposit, conﬁrming the resolution from the Directorate of Mining. The Deﬁnitive Feasibility Study was presented in January 2020 and an Updated Feasibility Study was presented in May 2021. In April 2022, Nordic Rutile commenced early construction works at Engebø, which includes preparing the properties for construction, continuation of detailed project planning and process for procurement of critical process equipment, and commencement of groundworks on process plant area and preparatory works for underground infrastructure. NOTE 4 - SALARIES (Amounts in NOK thousands) 2022 2021 Wages and salaries 11 404 10 982 Social security costs 2 089 2 266 Pension costs deﬁned beneﬁt plan 734 862 Pension costs deﬁned contribution plan 431 272 Board members, etc 1 300 1 300 Share-based compensation - 234 Other personnel costs 588 304 Capitalized payroll costs (4 896) - Total 11 650 16 220 Average number of full time employees 9 8 Reference is made to Note 23 for further information about remuneration of Senior Management and guidelines for remuneration. New accounting standards New standards and amendments to standards and interpretations eﬀective from 1 January 2022 did not have any signiﬁcant impact on the ﬁnancial statements. New standards, amendments and interpretations issued but not adopted by the Group A number of new standards and amendments to standards and interpretations are eﬀective for annual periods beginning on or aꢁer 1 January 2023 and have not been applied in preparing these ﬁnancial statements. None of these new standards and amendments to standards and interpretations are expected to have any signiﬁcant impact on the Group’s ﬁnancial statements. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 38 The Group used the Black Scholes model to estimate fair value of the options granted at time of grant. The following table show the weighted-average assumptions used in the model: Weighted-average assumptions 2022 2021 Volatility * 41 % 41 % Expected life 2,35 2,35 Risk free interest 1,05 % 1,05 % Share price 2,47 2,47 Exercise price 2,63 2,63 * The expected volatility has been estimated based on historical volatility of the share price of the Company. NOTE 5 - SHARE-BASED COMPENSATION On 1 November 2018, the General Meeting of Nordic Mining approved an equity seꢀled share-based compensation program of up to 4.5 million options for employees and qualiﬁed resource persons. On 26 November 2018, the Board of Directors granted 3 million options at a strike price of NOK 2.63 per share to employees in the Group. The options vest by 1/3 each year, ﬁrst time on 30 June 2019. The option agreements expired on 30 June 2022 and were conditional on the employee remaining in the Group’s employment for the duration of the vesting period. In April 2021 additional 0.4 million options were granted at a strike price of NOK 2.62 per share. These options vested at grant date and expired on 30 June 2022. All options have been exerciced during 2022 and there are no outstanding options at year end. 2022 2021 Number of Weighted Number of Weighted options average options average exercise price exercise price Outstanding 1 January 2 825 000 2,63 2 425 000 2,63 Granted during the year - - 400 000 2,62 Cancelled during the year - - - - Exercised during the year (2 825 000) 2,63 - - Expired during the year - - - - Outstanding 31 December - - 2 825 000 2,63 Exercisable 31 December - - 2 825 000 2,63 The average fair value of options granted in 2018 was NOK 0.59 at time of grant, and the average fair value of options granted in 2021 was NOK 0.33 at time of grant. The average remaining contractual life for options outstanding as per 31 December 2021 was 0.5 years. The Group has no expenses for share based payment in 2022 (2021: NOK 234 thousand). NOTE 6 - OTHER OPERATING COSTS (Amounts in NOK thousands) 2022 2021 Lease expenses 2 932 2 329 Project costs – Engebø Rutile and Garnet 17 994 31 999 Consulting and legal fees 9 807 7 181 Other costs 7 191 3 342 Other operating expenses capitalized (3 818) - Total 34 106 44 504 Auditor fees (Amounts in NOK thousands) 2022 2021 Statutory audit 1 117 704 Other aꢀestation services 191 62 Total 1 308 766 The amounts exclude VAT. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 39 Tax eﬀects of temporary diﬀerences and tax loss carryforwards at 31 December: Amounts in thousands 2022 2021 Mine under construction/PP&E 9 563 9 591 Pensions 399 234 Bond loan (16 455) - Tax loss carryforwards 162 428 128 922 Total net deferred tax assets 155 935 138 747 Nominal tax rate (used for measurement) 22 % 22 % Recognized in the statement of ﬁnancial position Deferred tax asset - - Deferred tax liability - - The Group recognized nil in gross transaction cost of the 2022 share issues directly in equity (in 2021: NOK 4.1 million) which is included in tax loss carry forwards. The following table shows the reconciliation of expected tax using the nominal tax rate to the actual tax expense/(income): Amounts in thousands 2022 2021 Income/loss (-) before tax 202 412 5 371 Nominal tax rate 22 % 22 % Expected income tax 44 531 1 182 Non-deductible costs (39) 119 Non-taxable income - (332) Eﬀect of non-taxable gains/losses on convertible loan 989 - Eﬀect of non taxable gains/losses on investments (62 446) (14 602) Non-recognized tax assets on current year result 16 965 13 633 Tax expense/(income) - - NOTE 7 - FINANCE INCOME AND FINANCE COSTS The following table shows the components of ﬁnancial income and ﬁnancial expense: (Amounts in NOK thousands) 2022 2021 Interest income on bank deposits 1 575 40 Interest income, Bond Escrow 5 795 - Foreign exchange gains 56 117 87 Finance income 63 487 127 Interest cost (20 056) (28) Other ﬁnance costs (25 605) (184) Foreign exchange losses (42 862) (244) Finance costs (88 523) (456) Other ﬁnance costs relates to fees in relation to the convertible loan (see Note 19 for details on convertible loan), transaction costs related to USD 50 milllion non-dilutive royalty ﬁnancing agreement entered into with between Nordic Rutile AS and Orion Resource Partner in February 2023, including the intercreditor agreement entered into between Nordic Trustee on behalf of the senior secured bonds and Orion Resource Partner, and other ﬁnance costs. NOTE 8 - INCOME TAXES The Group has incurred substantial tax losses carried forward and the related tax asset is shown in the table below. At year end 2022, the Group cannot substantiate that there will be suﬃcient future taxable income to be able to realize the Group’s unused tax losses, and therefore the Group has not recognized deferred tax assets at 31 December 2022. Tax losses can be carried forward indeﬁnitely in Norway. Amounts in NOK thousands 2022 2021 Taxes payable - - Deferred tax - - Income tax expense/(income) - - NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 40 NOTE 9 - EARNINGS PER SHARE (Amounts in NOK thousands and number of shares in thousands) 2022 2021 Earnings Aꢀributable to ordinary shareholders 202 412 5 371 Number of shares Weighted average number of ordinary shares outstanding - basic 231 249 224 569 Weighted average number of ordinary shares outstanding - diluted 268 286 227 272 (Amounts in NOK) Earnings per share aꢀributable to ordinary shareholders Basic earnings per share 0,88 0,02 Diluted earnings per share 0,75 0,02 The eﬀect of potentially dilutive shares arising from the convertible loan (ref. Note 19) is included in the calculation of diluted earnings per share for 2022. The eﬀect of potentially dilutive shares arising from options (ref. Note 5) was included in the calculation of diluted earnings per share for 2021 since the options were in-the-money in 2021. NOTE 10 - EVALUATION AND EXPLORATION ASSETS License Capitalized (Amounts in NOK thousands) cost exploration Total Cost at 1 January 2021 13 447 18 621 32 068 Additions 451 - 451 Cost at 31 December 2021 13 898 18 621 32 519 Additions - - - Reclassiﬁed to Mine under construction (13 898) (14 902) (28 800) Cost at 31 December 2022 - 3 719 3 719 Provision for impairment at 1 January 2021 - (3 719) (3 719) Impairments - - - Provision for impairment at 31 December 2021 - (3 719) (3 719) Impairments - - - Provision for impairment at 31 December 2022 - (3 719) (3 719) Net book value 31 December 2022 - - - Net book value 31 December 2021 13 898 14 902 28 800 Net book value 1 January 2021 13 447 14 902 28 349 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 41 NOTE 11 - MINE UNDER CONSTRUCTION (Amounts in NOK thousands) Mine under construction Cost at 1 January 2022 - Transfer from evaluation and exploration assets 28 800 Additions 259 610 Cost at 31 December 2022 288 410 Impairment - Provision for impairment 31 December 2022 - Net book value 31 December 2022 288 410 Net book value 31 December 2021 - Net book value 1 January 2021 - In April 2022 Nordic Rutile AS has exercised the agreements with landowners to acquire the main properties at Engebø, which includes immediate access to the process plant area. The Company has started construction works at Engebø, which includes preparing the properties for construction, continuation of detailed project planning and process for procurement of critical process equipment, and commencement of groundworks on process plant area and preparatory works for underground infrastructure. The direct costs related to the work described above has been capitalized in the balance sheet as Mine under construction, together with the cost of acquiring the land properties at Engebø. In addition, Evaluation and exploration assets related to Engebø has in 2022 been reclassiﬁed in the balance sheet to Mine under construction. Mining concessions Engebø The carrying amount for licenses related to the Engebø area is included in the transfer from Evaluation and exploration assets. Additionally, the Group has a conditional liability to the seller of NOK 40 million that will be paid if and when commercial operation commences at Engebø. No liability has been recognized as per 31 December 2022. NOTE 12 - PROPERTY, PLANT, EQUIPMENT AND RIGHT-OF-USE ASSETS Machinery & Right-of-use (Amounts in NOK thousands) equipment assets Total Cost 1 January 2021 941 664 1 605 Additions - - - Disposals (285) (285) 31 December 2021 656 664 1 320 Additions 921 - 921 Disposals - - - 31 December 2022 1 577 664 2 241 Depreciation 1 January 2021 (567) (287) (854) Depreciation expense - (138) (138) Disposals 111 111 31 December 2021 (456) (425) (881) Depreciation expense (31) (133) (164) Disposals - - - 31 December 2022 (487) (558) (1 045) Net book value 31 December 2022 1 090 106 1 196 31 December 2021 200 239 439 1 January 2021 374 377 751 Machinery and equipment are depreciated over a period of 4-10 years. In 2021 the Group has sold a vehicle to its Senior Advisor, Lars K. Grøndahl, for NOK 363,000, which represented the estimated market value. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 42 NOTE 13 - FINANCIAL INVESTMENTS The Group’s only ﬁnancial investment in 2022 and 2021 has been the holding of shares in the Finnish mining company Keliber Oy. At year end 2021 the Group had a 12.7% interest in Keliber. The investment has been measured at Fair Value Through Proﬁt and Loss under IFRS 9 (“FVPL Method”). 2022 In June 2022, the Group accepted an oﬀer from Sibanye-Stillwater Limited to divest its shares in Keliber for a cash consieration of EUR 157.28 per share, in total EUR 46.9 million. The sale of the shares was completed in Q3 2022, with a gain on investment in 2022 of NOK 283.8 million. In addition, the consideration received in EUR resulted in foreign exchange gains from the close of the sale to the funds was recieved and sold to NOK, included in ﬁnancial income in 2022 of NOK 16.1 million. 2021 At year end 2021 the Group assessed the fair value of Keliber to EUR 64 per share, corresponding to NOK 190.5 million. This resulted in a gain on the investment of NOK 66.3 million for the year. The valuation as per 31 December 2021 was based on level 3 inputs in the fair value hierarchy. Summary of eﬀects from Keliber investment in 2022 and 2021 Balance sheet Statement of (Amounts in NOK thousands) proﬁt or loss Fair value 1 January 2022 190 519 Gain on investment 2022 283 844 283 844 Disposal (474 363) Fair value 31 December 2022/ Total eﬀects on statement of proﬁt or loss - 283 844 Fair value 1 January 2021 100 114 Addition in 2021 24 030 Gain on investment 2021 66 374 66 374 Fair value 31 December 2021/ Total eﬀects on statement of proﬁt or loss 190 519 66 374 NOTE 14 -TRADE AND OTHER RECEIVABLES (Amounts in NOK thousands) 2022 2021 Other ﬁnancial receivables 918 802 Prepayments 829 821 Skaꢀefunn (receivable tax credit) - 347 VAT receivable 21 550 1 474 Totalt 23 297 3 444 NORDIC MINING CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT 2022 Carrying Carrying Cash amount amount transferred to (Amounts in thousands) Bond Loan Bond Escrow Bond Escrow Loan at nominal value 1 025 220 1 025 220 - 10% discount (102 522) (102 522) - Fees paid at inception (33 361) (33 361) - Other fees (1 606) - - Amortization of fees 2 583 - - Future interest transferred to Bond Escrow - 42 900 (42 900) Discount and fees transferred to Bond Escrow - 135 883 (135 883) Accrued interest - 5 795 - Foreign exchange (39 490) (41 318) - Total at year end 850 825 1 032 597 (178 782) CORPORATE GOVERNANCE FINANCIAL STATEMENTS 43 ANNUAL REPORT 2022 NOTE 15 - BOND LOAN AND BOND ESCROW In November 2022, Nordic Rutile AS completed the issue of a USD 100 million 5-year senior secured bond. The bonds are administered by Nordic Trustee. The bond has ﬁxed coupon of 12.5% per annum, with interest payable quarterly in arrears, and an issue price of 90%. The bond loan is classiﬁed as a current liability in the statement of ﬁnancial position until satisfaction of the pre-disbursement conditions precedent results in drawdown of the bond proceeds from the Bond Escrow account. The bond loan was initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing (inclusive the 10% discount). Aꢁer initial recognition, the bond loan is subsequently measured at amortized cost using the eﬀective interest method; any diﬀerence between proceeds (net of transaction cost including the 10% discount) and the redemption value is recognized on the income statement over the period of the loan. The net proceeds of the bonds of USD 90 million was on issue deposited into a Bond Escrow account, together with issue discount of USD 10 million, four months bond interest of USD 4.2 million, and transaction costs of USD 3.3 million (in total NOK 178.8 million), transferred by Nordic Rutile AS in line with the bond terms. Following conditions of the Engebø Project being fully funded, which were satisﬁed on 8 March 2023, and certain pre-disbursement conditions precedent, the proceeds from the bonds will be released in three tranches from the Bond Escrow account to be used for costs and expenditures to bring the Engebø Project into commercial production. NOTE 16 - CASH AND CASH EQUIVALENTS (Amounts in NOK thousands) 2022 2021 Bank deposits 164 703 32 086 Total cash and cash equivalents 164 703 32 086 Restriced cash in tax withholding account 720 478 In addition to the amounts referred to above, the Group has a deposit of NOK 4.2 million on a restricted account at year end pledged toward the Directorate of Mining. The purpose of the deposit is clean-up measures in accordance with the operating license. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 44 Components of other comprehensive income The following table shows a reconciliation of the components of other comprehensive income (“OCI”): Actuarial (Amounts in NOK thousands) gain/loss Total OCI Balance on 1 January 2021 (3 123) (3 123) Actuarial gain/(loss) (100) (100) Balance on 31 December 2021 (3 223) (3 223) Actuarial gain/(loss) (1 009) (1 009) Balance on 31 December 2022 (4 232) (4 232) NOTE 17 - SHARE CAPITAL Number of shares outstanding Ordinary Shares 2021 Opening balance 197 491 772 Share issuance 32 000 000 31 December 2021 229 491 772 2022 Opening balance 229 491 772 Share issuance 2 825 000 31 December 2022 232 316 772 All shares carry equal rights and has a par value of 0.60 per share. Share issues in 2022 In May 2022 a total of 2,825,000 options held by Management were exercised. Following the exercise there are no outstanding options for shares in the Company held by Management. Gross proceeds were NOK 7.4 million in accordance with the authorization to the Board to increase the share capital granted by the general meeting on 14 May 2020. Following registration of the new share capital Nordic Mining’s share capital has increased by NOK 1,695,000 to NOK 139,390,063.20 divided into 232,316,772 shares, each with a par value of NOK 0.60. Share issues in 2021 In February 2021, Nordic Mining completed a private placement of 32,000,000 shares with gross proceeds of NOK 80 million. Following registration of the new share capital the Company’s share capital has increased by NOK 19,200,000 to NOK 137,695,063.20 divided into 229,491,772 shares, each with a par value of NOK 0.60. NOTE 18 - OTHER CURRENT LIABILITIES (Amounts in NOK thousands) 2022 2021 Tax withholding and social security accrual 1 230 1 131 Employee salary and holiday pay accrual 1 395 1 120 VAT payable 342 193 Lease liability 116 132 Accrued interest bond loan 17 456 - Accrued expenses 6 607 2 781 Total 27 146 5 358 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 45 NOTE 19 - CONVERTIBLE LOAN In January 2022, Nordic Mining entered into a NOK 132.5 million 5% interest bearing convertible loan in favor of Fjordavegen Holding AS, a local investor group led by two of the EPC partners for the Engebø project. This transaction is the ﬁrst step in the project ﬁnancing of the Engebø Project. The lenders may, and is contractually obliged to, convert all tranches from the loan, together with accrued interests, into shares in Nordic Mining upon a share issue in Nordic Mining in relation to ﬁnal investment decision (or delay of ﬁnal investment decision) for the Engebø Rutile and Garnet Project, however, at latest 1 August 2023. The conversion price will as a starting point be NOK 3.355 per share, however, shall be the lowest of NOK 3.355 and the subscription price in a subsequent share issue in Nordic Mining in relation to ﬁnal investment decision/delay of ﬁnal investment decision, or if no such share issue occurs, the lowest of NOK 3.355 and the volume-weighted average trading price the Nordic Mining’s share for the last 20 trading days prior to 30 June 2023. The convertible loan is measured at fair value with changes in fair value recognized in the income statement. The Group has assessed the fair value of the convertible loan to be NOK 143.0 million at year end 2022 and the recognized a fair vale loss of NOK 10.5 million in 2022. The valuation as per 31 December 2022 has been based on level 3 inputs in the fair value hierarchy. The fair value of the convertible loan is calculated as the fair value of the loan plus the fair value of the conversion option determined using Black Scholes option model for three (3) diﬀerent scenarios for conversion date to provide probability weighted maturity. The key unobservable input to the valuation include: 1) risk free NOK interest rate curve at the valuation date constructed from eﬀective yields on Norwegian Treasury bills, 2) volatility of Nordic Mining share price calculated based on historical share prices, and 3) expected conversion date based on managements expectation for ﬁnal investment devision. The convertible loan with accrued interests, in total NOK 139.6 million, was converted into 232,703,125 new shares in Nordic Mining ASA on 4 March 2023, in relation to the private placement to fully fund the Engebø Project. See note 28 for more information. 2022 Carrying (Amounts in NOK thousands) amount Cash ﬂow Convertible loan 132 500 132 500 Fees paid at inception - (6 089) Change in fair value 10 476 - Total 142 976 126 412 NOTE 20 - 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, liquidity risk and currency risk. Management of Nordic Mining manages the Group’s ﬁnancial risk primarily by identifying and evaluating potential risk areas. Management’s focus is primarily on managing liquidity risk to secure continuing operations and ﬁnancing of the Group’s capital-intensive projects. Nordic Mining’s cash holdings are placed in bank accounts in Norwegian Kroner (NOK), United States Dollars (USD) and Euro (EUR). At year end 2022, the Group’s main currency exposure is related to its bond loan and Bond Escrow, both wich are denominated in USD. The Group has at year end 2022 interest-bearing debt in the form of a bond loan and a convertible loan. The Group does not have recurring revenues since the Group’s projects are still in the development phase. The Group’s ﬁnancial instruments at year end 2022 mainly consist of the bond loan and Bond Escrow, a convertible loan, bank deposits, customary short-term receivables, trade and other payables. Liquidity risk Liquidity risk is the risk that the Group will not be able to seꢀle its ﬁnancial obligations as they fall due. The Group has historicalley used equity ﬁnancing in order to meet liquidity requirements related to ﬁnancial obligations, covering operational losses, exploration activities and investments. In order to secure ﬁnancing of the Engebø project, the Group has in 2022 issued a bond loan, and a convertible loan. Of the Group’s ﬁnancial liabilities as at 31 December 2022 NOK 188.1 million mature within 6 months from balance sheet date (31 December 2021: all ﬁnancial liabilities of NOK 7.0 million mature within 6 months). At the date of these annual ﬁnancial statements the Group has secured the full project ﬁnancing package for the Engebø Rutile and Garnet Project Project of USD 277 million, comprising equity, senior secured bond, and non-dilutive royalty ﬁnancing. The project ﬁnancing package is expected to fund all costs and expenditures to bring the Engebø Project into commercial production, including a contingency of USD 25 million and project reserve of USD 30 million. The bond and royalty ﬁnancing and is subject to certain pre-disbursement conditions precedent before the proceeds can be released to the Project, including standard conditions and utilization in full of the equity and royalty funds, respectively. The bond loan is classiﬁed as a current liability in the statement of ﬁnancial position until satisfaction of the pre-disbursement conditions precedent results in drawdown of the bond proceeds from the Bond Escrow account. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 46 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 ﬂuctuation in 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. (i) Interest rate risk The Group’s interest bearing debt at year end is at ﬁxed interest rates. Changes in interest rates aﬀect the fair value of the debt. The Group will going forward calculate the sensitivity on the change in fair value of the debt of a deﬁned parallel shiꢁ in the yield curve of the relevant curreny. The Group’s bank deposits and the Bond Escrow are exposed to changes in the market interest rate. The Group’s exposure on the result at year end 2022 is approximately +/-NOK 12 015 thousand per percentage-point change in the variable market interest rate (2021: NOK 321 thousand). (ii) Currency exchange risk At year end 2022, the Group’s main currency exposure is related to its bond loan and Bond Escrow, both wich are denominated in USD. A 10% increase or decrease in the USD currency rates would increase/ decrease the net income by approximately NOK 4.7 million at year end. At year end 2021, the Group’s only currency exposure of signiﬁcance was the investment in Keliber Oy (EUR). A 10% increase or decrease in the EUR currency rates would increase/decrease the net income by approximately NOK 19.1 million at year end 2021. The Group operates in an industry which is subject to extensive laws and regulations relevant for mining operations, in particular in relation to environmental and operational issues, which has become more stringent over time, and this development is expected to continue. Compliance with respect to environmental regulations, closure and other maꢀers may involve signiﬁcant costs and/or other liabilities. Failure to comply with applicable environmental laws, regulations and permiꢀing requirements may result in enforcement actions including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed and may include obligations to take corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. There is a risk that the Group due to its engagement in mining and mineral processing activities will be required to compensate those suﬀering loss or damage by reason of such activities and may incur civil or criminal ﬁnes or penalties for violation of applicable laws or regulations. Current environmental laws, regulations and permits governing operations and activities of mining companies may be changed. Regulatory requirements surrounding site reclamation and remediation activities, or more stringent implementation thereof, could have a material adverse impact on the Group and cause increases in capital expenditures or production costs or reduction in levels of operational production, or require abandonment or delays in the development of new sites. There are no current amendments that the Group is aware of that may impact the assets of the Group. Nordic Mining’s climate-related ﬁnancial risk is considered to be low. The mining operations at the Group’s main asset, the Engebø Project, is expected to have the lowest greenhouse gas footprint of all titanium feedstock producers due to available hydroelectric power in the area and a tight infrastructure with minimal transportation. Nordic Mining has a target of zero greenhouse gas emissions at Egnebø and has initiated the development of a Climate Strategy Plan. The Group considers that there is minimal risk for stranded assets. 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 current business has only limited credit risk. Cash and cash equivalents and security deposits in banks in addition to the Bond Escrow represent a large portion of the Group’s ﬁnancial assets at 31 December 2022. There has been no recognized loss on trade receivables in 2022 or 2021. Procedures for evaluation of credit risk has only to a limited degree been introduced. However, discretionary evaluations are done on a case-by-case basis. Management will evaluate the necessity of implementing stricter credit evaluations on an on-going basis. Categories and fair value of ﬁnancial instruments The carrying amounts on the balance sheet of cash and cash equivalents, receivables, payables to suppliers, and other short-term ﬁnancial items are close to fair value due to the short time period till maturity. For the convertible loan the carrying amount equals fair value. The bond loan was issued in November 2022 and it is assessed that the fair value at year end was around the redemption price of 92% of the nominal value of USD 100 million, provided the condition of the Engebø Project being fully funded by 9 March 2023, and assuming no signiﬁcant change in interest rate level and credit spread since the completion of the transaction. It is further assessed that the fair value of Bond Escrow is approximately equal to book value of USD 104.8 million. Political risk In addition to ﬁnancial risk, the Group is exposed to political risk related to its mining projects. The political risk includes the risk of not obtaining or extending the relevant governmental permits necessary to extract and produce minerals from these mining projects. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 47 Year ended 31 December 2022 Amortized Fair value through Carrying (Amounts in NOK thousands) cost proﬁt or loss amount Financial assets by category Trade and ﬁnancial receivables 918 918 Bond Escrow 1 032 597 1 032 597 Restricted cash 4 215 4 215 Cash and cash equivalents 164 703 164 703 Total ﬁnancial assets 1 202 433 - 1 202 433 Financial liabilities by category Accounts payable 37 168 37 168 Bond loan 850 825 850 825 Convertible loan - 142 976 142 976 Other current ﬁnancial liabilities 8 002 8 002 Total ﬁnancial liabilities 895 995 142 976 1 038 971 Capital management The Group has historically used equity ﬁnancing to ﬁnance research, operations, purchase of licenses and other investments. In order to secure ﬁnancing of the Engebø project, the Group has in 2022 issued a bond loan and a convertible loan in addition to divesting its investment in Keliber. At the date of these annual ﬁnancial statements the Group has fully ﬁnanced the Engebø Rutile and Garnet Project. The project ﬁnancing comprises of equity, debt and royalty ﬁnancing. For more information on liquidity risk see Board of Directors’ report. The ratio of net debt (debt less cash) divided by total capital (net debt and equity) as of 31 December 2022 is 59% (as of 31 December 2021 -9%). NOTE 21 - INVESTMENTS IN SUBSIDIARIES The table below provides an overview of Nordic Mining ASA’s subsidiaries as at 31 December 2022: (Amounts in NOK thousands) Location Year incorp. Ownership Nordic Rutile AS Oslo, Norge 2006 100 % Nordic Ocean Resources AS Oslo, Norge 2011 100 % Nordic Quartz AS Oslo, Norge 2011 100 % Year ended 31 December 2021 Amortized Fair value through Carrying (Amounts in NOK thousands) cost proﬁt or loss amount Financial assets by category Financial investments 190 519 190 519 Trade and ﬁnancial receivables 802 802 Cash and cash equivalents 32 086 32 086 Total ﬁnancial assets 32 888 190 519 223 407 Financial liabilities by category Accounts payable 3 093 3 093 Other current ﬁnancial liabilities 3 901 3 901 Total ﬁnancial liabilities 6 994 - 6 994 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 48 NOTE 22 - SHAREHOLDERS The table below shows the Company’s 20 largest shareholders as at 31 December 2022: Shareholder Number of shares % ownership Nordnet Bank AB 21 023 753 9,05 % Clearstream Banking S.A. 8 663 269 3,73 % Nordea Bank Abp 5 404 701 2,33 % Knut Fosse AS 4 870 161 2,10 % Nordnet Livsforsikring AS 4 270 190 1,84 % Carlsen 3 607 500 1,55 % Danske Bank A/S 3 593 285 1,55 % Citibank, N.A. 2 549 660 1,10 % Naturlig Valg AS 2 300 000 0,99 % Magil AS 2 140 000 0,92 % Infoinvest AS 2 015 000 0,87 % Fossum 1 759 230 0,76 % Stavanger Forvaltning AS 1 736 913 0,75 % Dybvad Consulting AS 1 710 000 0,74 % Snati AS 1 700 000 0,73 % Joma Invest AS 1 500 000 0,65 % Melum Mølle AS 1 500 000 0,65 % Espmart Invest AS 1 500 000 0,65 % Huldrastølen AS 1 484 124 0,64 % Nordenꢃeldske Management AS 1 375 000 0,59 % Total 20 largest shareholders 74 702 786 32,16 % Other shareholders 157 613 986 67,84 % Total 232 316 772 100,00 % NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 49 NOTE 23 - RELATED PARTIES AND COMPENSATION OF MANAGEMENT Compensation to Board members and Senior Management in 2022 Board Other Pension Share based (Amounts in NOK thousands) Salary member fees compensation costs compensation Total Ivar S. Fossum, CEO 2 355 - 218 389 - 2 962 Christian Gjerde, CFO 1 727 - 21 104 - 1 851 Kenneth N. Angedal, Operations Director 1 591 - 7 86 - 1 684 Mona Schanche, VP Resource and Sustainability 1 535 - 21 253 - 1 808 Maurice Kok, Commercial Director 521 - 8 40 - 568 Terje Gundersen, Project Director 1 356 - 9 88 - 1 453 Ole Klevan, Nomination Commiꢀee (Chair) - 50 - - - 50 Brita Eilersen, Nomination commiꢀee - 30 - - - 30 Torger Lien, Nomination commiꢀee - 30 - - - 30 Kjell Roland, Chair of the Board - 350 - - - 350 Kjell Sletsjøe, Deputy Chair of the Board - 210 - - - 210 Eva Kaijser, Board member - 210 - - - 210 Benedicte Nordang, Board member - 210 - - - 210 Antony Beckmand, Board member - 210 - - - 210 Total 9 085 1 300 283 959 0 11 627 1. Maurice Kok started as Commercial Director on 1 August 2022. 2. Terje Gundersen started as Project Director for Engebø on 1 February 2022. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 50 Compensation to Board members and Senior Management in 2021 Board Other Pension Share based (Amounts in NOK thousands) Salary member fees compensation costs compensation Total Ivar S. Fossum, CEO 2 427 - 225 414 45 3 110 Christian Gjerde, CFO 1 822 28 94 131 2 075 Lars K. Grøndahl, Senior Advisor1 1 301 - 126 222 17 1 665 Kenneth N. Angedal, Operations Director 1 635 - 7 81 17 1 740 Mona Schanche, VP Resource and Sustainability 1 572 - 28 268 17 1 886 Ole Klevan, Nomination Commiꢀee (Chair) - 50 - - - 50 Brita Eilersen, Nomination commiꢀee - 30 - - - 30 Torger Lien, Nomination commiꢀee - 30 - - - 30 Kjell Roland, Chair of the Board - 350 - - - 350 Kjell Sletsjøe, Deputy Chair of the Board - 210 - - - 210 Eva Kaijser, Board member - 210 - - - 210 Benedicte Nordang, Board member - 210 - - - 210 Antony Beckmand, Board member - 210 - - - 210 Total 8 757 1 300 414 1 079 227 11 777 1. Lars K. Grøndal leꢁ the Company on 30 June 2021. In 2021, all employees in the Group were paid a bonus for ﬁnalization of the UDFS for the Engebø Project under the on-year Short-Term Incentive Program. No bonuses were paid under the Short-Term Incentive Program in 2022. Senior Management is subject to termination periods of 3-6 months. 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 that the individual persons in Senior Management, and that the employee contributes towards the long-term creation of value in Nordic Mining. • The Company will oﬀer competitive conditions to aꢀract relevant expertise for the development of the Company. • The compensation package consists of ﬁxed salary plus participation in an option program that has been approved by the annual meeting. • Senior Management participates in pension and insurance plans. These guidelines have been used to recruit Senior Management in Nordic Mining ASA and to establish salary levels. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 51 Other transactions with related parties In 2021 the Group has sold a vehicle to its Senior Advisor, Lars K. Grøndahl, for NOK 363,000, which represented the estimated market value. Shares owned/controlled by members of the Board and senior management and those related to them as of 31 December 2022 Name No of shares % owned Kjell Roland, Chairman of the Board 290 475 0,13 % Kjell Sletsjøe, Board member 21 676 0,01 % Ivar S. Fossum, CEO 1 759 230 0,76 % Christian Gjerde, CFO 400 000 0,17 % Kenneth N. Angedal, Operations Director 445 822 0,19 % Mona Schanche, VP Resource and Sustainability 441 063 0,19 % Terje Gundersen, Project Director 66 333 0,03 % Total 3 424 599 1,47 % NOTE 24 - PENSIONS The Group has a deﬁned beneﬁt plan or a deﬁned contribution plan (for new employees) for its employees in the parent company, Nordic Mining ASA and a deﬁned contribution plan for its employees in Nordic Rutile AS. The plans meet the Norwegian statutory requirements for pension plans for employees. Deﬁned Beneﬁt Plan The Group has one beneﬁt plan for Norwegian employees with a total of 2 active members. The Group’s deﬁned beneﬁt pension plan is a ﬁnal salary plan and contributions are made to a separately administered fund. The level of beneﬁts provided depends on the member’s length of service and salary at retirement age. Pension cost (Amounts in NOK thousands) 2022 2021 Pension cost - employee beneﬁt 617 880 Pension cost - interest expense 24 24 Total pension related costs 642 904 Remeasurement gains/(losses) recorded to OCI (1 009) (100) Movement in pension obligation during the year (Amounts in NOK thousands) 2022 2021 Pension obligations January 1 15 704 14 785 Current value of pension beneﬁts for the year 642 904 Interest costs 263 222 Payments (365) (133) Remeasurement loss/ (gain) 1 080 (4) Other 81 (71) Pension obligations as of 31 December 17 404 15 704 Shares owned/controlled by members of the Board and senior management and those related to them as of 31 December 2021 Name No of shares % owned Kjell Roland, Chairman of the Board 190 475 0,08 % Kjell Sletsjøe, Board member 21 676 0,01 % Eva Kaijser1 110 472 0,05 % Ivar S. Fossum, CEO 732 755 0,32 % Kenneth N. Angedal, Operations Director 45 822 0,02 % Mona Schanche, VP Resource and Sustainability 41 063 0,02 % Total 1 142 263 0,49 % 1. The shares are owned by the the company Fågelsången AB. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 52 Movement in pension funds during the year (Amounts in NOK thousands) 2022 2021 Pension funds 1 January 14 641 13 417 Expected return on plan assets 212 179 Contributions 994 1 271 Payments (365) (133) Other 40 11 Remeasurement (loss)/ gain 71 (104) Pension funds as of 31 December 15 593 14 641 Pension liability is classiﬁed in the balance sheet as follows (Amounts in NOK thousands) 2022 2021 Pension funds 15 593 14 641 Pension obligations (17 404) (15 704) Net pension asset (1 812) (1 062) Pension asset/(liability) is shown in the balance sheet as Other long-term asset - - Pension liabilities (1 812) (1 062) Assumptions 2022 2021 Discount interest rate 3,00 % 1,90 % Annual projected increase in salary 3,50 % 2,75 % Annual projected G- regulation 3,25 % 2,50 % Annual projected regulation of pension 1,50 % 0,00 % The major categories of plan assets as a percentage of the fair value of total plan assets 2022 2021 Equities 10,20 % 9,70 % Bonds 14,60 % 19,60 % Money market 4,20 % 10,60 % Hold to maturity bonds 38,10 % 26,70 % Loans and receivables 20,90 % 19,10 % Real estate 11,00 % 13,60 % Other 1,00 % 0,70 % NOTE 25 - LEASES The Group implemented IFRS 16 Leases from 1 January 2019 and recognized a right-to-use asset related to the leasing of vehicles; see note 11. Short-term leases have been expensed as incurred; see note 6. The Group’s oﬃce lease is cancellable with 4 months’ notice with no more than an insigniﬁcant penalty and is as such considered a short-term lease. Lease liability (Amounts in NOK thousands) 2022 2021 Lease liability 1 January 245 373 Additions lease contracts - - Accretion lease liability, included in ﬁnance cost 22 28 Payments of lease liability (151) (156) Total lease liability 31 December 116 245 Speciﬁcation of lease liability in the balance sheet (Amounts in NOK thousands) 2022 2021 Current * 116 132 Non-current - 113 Total lease liability 31 December 116 245 * Current lease liability is included in other current liabilities; see note 16. Future minimum lease payments under non-cancellable lease agreements (undiscounted) (Amounts in NOK thousands) 2022 2021 Within a year 725 744 From year 2-5 - 132 Total 725 876 NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 53 NOTE 26 - 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. license payments, payment of prospectus/ﬁnancial authority fees, R&D projects grants, tax refund, etc. Estimated total payment from the Group to various Norwegian governmental institutions was NOK 0.6 million in 2022 (2021: NOK 0.2 million). Estimated total payment to the Group from various Norwegian governmental institutions was NOK 0.0 million in 2022 (2021: NOK 1.2 million). NOTE 28 - EVENTS AFTER BALANCE SHEET DATE In January 2023 Nordic Rutile AS entered into a globally exclusive oꢄake agreement for the full planned garnet production from Engebø for the ﬁrst 5 years of production. The oꢄake agreement is for the supply and delivery of minimum total of 762,500 metric tonnes of garnet concentrate in the 5-year contract period, up to a total of 785,000 metric tonnes, which is the full planned garnet production the ﬁrst 5-years. The consideration will be based on a pre-agreed price schedule for the 5-year period. Nordic Rutile has through this oꢄake agreement secured, together with the rutile oꢄake agreements announced earlier, commiꢀed sales for up to the full production of both rutile and garnet from Engebø for the ﬁrst 5 years of production, all with highly reputable buyers. In addition to materially de-risk the market side, Nordic Rutile will with the three oꢄake agreements in place satisfy the oꢄake related conditions in the company’s ﬁnancing agreements. The oꢄake agreements are inter alia subject to certain conditions precedent. In February 2023 Nordic Rutile AS has signed binding agreements with a fund managed by Orion Resource Partners for USD 55 million investment in the Engebø Rutile and Garnet Project. The investment comprises a USD 50 million non-dilutive royalty ﬁnancing to Nordic Rutile AS and USD 5 million in equity, which will be contributed to Nordic Mining ASA. The royalty instrument is secured, subordinate to the USD 100 million senior secured bond issued on 9 November 2022, subject to the terms of an Intercreditor Agreement. In March 2023 the Company raised NOK 940 million in gross proceeds in a private placement through the allocation of 1,566,666,667 new shares, at a subscription price of NOK 0.60 per share. The new capital subscribed is, together with other sources of commiꢀed equity, debt, and other ﬁnancing, expected to fully ﬁnance the Engebø Project up to start of production. Following the subscription mentioned above the Company’s convertible loan was converted. The convertible loan with accrued interests, in total NOK 139.6 million was converted at the same subscription price as in the private placement referred to above, i.e. NOK 0.60 per share. In April 2023, the Company completed a subsequent oﬀering of 136,544,091 shares of in total 216,666,667 shares available in the oﬀering at the same subscription price as the private placement of NOK 0.60 per share. In April 2023 the Supreme Court’s appeals commiꢀee concluded that the appeal by AMR will be heard before the Supreme Court, tentatively scheduled to take place before the summer 2023. NOTE 27 - COMMITMENTS AND CONTINGENCIES Conditional liability Engebø The Group has a conditional liability to the seller of the mining rights in the Engebø area of NOK 40 million that will be paid if and when commercial operation commences at Engebø. No liability has been recognized as per 31 December 2022. In October 2021 the Oslo District Court has ruled in favour of the subsidiary Nordic Rutile in the court case against Artic Mineral Resources (AMR). The ruling conﬁrms that Nordic Rutile’s extraction rights are valid and that the company has the right to extract and - within the limits of the Norwegian Mining’s Act - utilize garnet and all other minerals on the Vevring side of the Engebø deposit. AMR appealed the ruling. The Borgarting Court of Appeal ruled in October 2022 in favour of the subsidiary, Nordic Rutile. The ruling received conﬁrms that Nordic Rutile has exclusive right to all minerals in the Engebø deposit - within the limits of the Norwegian Mining Act - in line with the operating licence granted by the Ministry of Trade, Industry and Fisheries in May 2022. The court ruled that AMR shall pay all legal expenses. AMR appealed the verdict to the Supreme Court in November 2022. In April 2023 the Supreme Court’s appeals commiꢀee concluded that the appeal by AMR will be heard before the Supreme Court, tentatively scheduled to take place before the summer 2023. NORDIC MINING ANNUAL REPORT 2022 CONTENT CEO’s REPORT OPERATIONS BOD’s REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS 70 Nordic Mining ASA Munkedamsveien 45 A NO-0250 Oslo Norway Tel: +47 22 94 77 90 Email: [email protected] www.nordicmining.com

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