Nordic Mining ASA — Interim / Quarterly Report 2013

Feb 28, 2014

INTERIM REPORT

Per 31 December 2013

Nordic Mining ASA – Group interim report for the quarter ended 31 December 2013

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 mainly in the Nordic region.

Through the subsidiary Nordic Rutile AS Nordic Mining is undertaking large-scale 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 Mining's associated company Keliber Oy in Finland plans to start mining of lithium bearing spodumene and production of lithium carbonate. Nordic Mining holds exploration rights in the Øksfjord region in Troms and Finnmark where the Company has discovered a prospective area of sulphide mineralisation. Through the subsidiary Nordic Ocean Resources AS, Nordic Mining is exploring opportunities related to seabed mineral resources.

Nordic Mining is listed on Oslo Axess.

Important events from 1 January 2013 and year-to-date:

• Strategic focus on the permitting process for the Engebø rutile project The Group's near-term strategic focus is to secure permits for the Engebø project. The government has stated growth ambitions for the mineral industry and more predictable planning processes towards permitting. Further, the government confirms that sea disposal of tailings may be an acceptable solution combined with strict criteria and comprehensive monitoring of the environment. For the Group's other projects, alternative financing and cooperation scenarios are investigated in order to continue development work.
• Results from ongoing measuring program in line with expectations Nordic Mining is executing a survey and investigation program to comply with the Ministry of Climate and Environment's request for additional information regarding the Engebø rutile project. The results so far show a moderate water circulation within the area of the planned tailings disposal. The results are in line with the measurements included in the environmental impact assessment for the project. The measurement program will be finalised in August 2014. Other activities in the investigation program, including ROV surveying will be executed in spring 2014.
• Keliber's lithium resources are steadily increasing In 2013, Keliber has more than doubled the JORC compliant resource and reserve estimates for its contemplated lithium production. In February 2014, the Finnish government has accepted Keliber's offer to acquire the Rapasaari deposit. A new drilling program has been initiated, and updated resource and reserve estimates are expected in Q2 2014.
• Successful pilot scale testing of production of alumina from anorthosite In 2013, the leaching of alumina from anorthosite was successfully tested in pilot scale. Alumina was dissolved within a short timeframe. Techno-economic evaluations indicate positive preliminary project financials for an annual production of around 900,000 tonnes of alumina from anorthosite.

• Substantial mineral values on the Norwegian seafloor

In the pre-project carried out by the Norwegian University of Science and Technology ("NTNU") and Nordic Ocean Resources with support from Statoil ASA the value of seabed minerals within the Norwegian zone has been estimated in the range NOK 400 – 1,000 billion. The Norwegian zone includes a large part of the Mid-Atlantic Ridge and contains substantial volumes of i.a. copper, zinc, silver and gold.

• New Exploration Rights granted on the Øksfjord Peninsula In January 2014, Nordic Mining was granted two new Exploration Rights east of the Reinfjord prospect. Electromagnetic data from the Geological Survey of Norway show an anomaly with particularly low resistivity in the granted area.
• Divestment of Gudvangen Stein Gudvangen Stein was divested in June 2013.

Financial performance

For comparison, numbers in brackets relate to the comparable period in 2012; the quarter or accumulated year-to-date as the case may be. The 2012 figures have been adjusted to reflect that Nordic Mining has divested Gudvangen Stein and no longer holds a controlling interest in Keliber. Further, the 2012 figures have been restated for discontinued presentation of Gudvangen Stein and the implementation of IAS 19R as described in note 1 to the financial statements.

Operating loss for the Group in the fourth quarter was NOK -4.6 million (NOK -4.9 million). Accumulated operating loss for the year was NOK -18.7 million (NOK -24.7 million). The operating losses for the quarter and the 12 months' period were mainly related to costs in connection with development of the Engebø rutile project and general corporate expenses.

As a consequence of Nordic Mining's reduced shareholding in Keliber as from October 2012, the Group's investment in Keliber is classified as shares in an associated company. The net loss from the associated company in the fourth quarter was NOK -0.6 million (NOK -0.7 million) and accumulated year-to-date NOK -3.0 million (NOK -0.7 million). An impairment loss of NOK 6.5 million related to Keliber has been recognised in the consolidated accounts in the fourth quarter.

Consolidated net loss in the fourth quarter for continuing operations was NOK -11.7 million (NOK -5.0 million). Accumulated net loss for continuing operations for the year was NOK -28.1 million (NOK -25.2 million).

Loss from the discontinued operations related to Gudvangen Stein (divested in June 2013) was NOK 0 (NOK -6.4 million) and NOK -4.3 million (NOK -11.3 million), respectively, for the fourth quarter and accumulated year-to-date.

Total consolidated net loss for the Group in the fourth quarter was NOK -11.7 million (NOK -11.3 million). Accumulated total consolidated net loss for the year was NOK -32.4 million (NOK -36.5 million).

Cash flow from the Group's operating activities was negative in the fourth quarter and accumulated for the year with NOK -5.0 million (NOK -2.2 million) and NOK -19.1 million (NOK -20.6 million), respectively. Net cash used in investment activities was NOK 0.5 million (NOK -0.2 million) in the fourth quarter and NOK -0.1 million (NOK -3.5 million) accumulated per 31 December 2013. The accumulated investments were related to the Engebø rutile project.

In February and April 2013, Nordic Mining executed a private placement and a subsequent offering of approximately 15 million shares directed towards existing shareholders and

Norwegian investors. The subscription price was NOK 0.70 per share, resulting in gross proceeds of approximately NOK 10.5 million. In August 2013, Nordic Mining executed a rights issue of 80 million shares at a subscription price of NOK 0.30 per share. The rights issue was significantly over-subscribed. The gross proceeds from the rights issue were NOK 24.0 million. For further information of the equity issues please see note 5 to the financial statements.

Nordic Mining's total assets as of 31 December 2013 were NOK 40.0 million (NOK 59.0 million). As per 31 December 2013, total equity amounted to NOK 36.3 million (NOK 36.6 million). This gives an equity ratio for the Group of 91% (62%).

As per 31 December 2013, the Group's cash and cash equivalents amounted to NOK 15.5 million (NOK 6.2 million).

Main projects and activities

Nordic Rutile / Engebø project (rutile/titanium dioxide)

General project information

Through its 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 an 8% discount rate.

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 paint, plastics and paper, and in the production of titanium metal, and for welding applications. 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 in prosthesis and implants for the human body.

The 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 industrial sands containing free silica which is harmful for health.

Nordic Mining strives to ensure environmentally friendly extraction, production and shipping, as well as a sustainable solution for disposing of the mineral residues. 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 permit for waste disposal

The municipality boards in Naustdal and Askvoll approved the industrial area plan for the rutile production at Engebø in May 2011. In June 2011, the county governor of Sogn and Fjordane forwarded the industrial area plan, including an objection from the Directorate of Fisheries to the Ministry of the Environment (now the Ministry of Climate and Environment) for a decision. The county governor recommended approval of the plan.

Despite the comprehensive environmental impact assessments undertaken by Nordic Mining, the strong local and regional political support for the project, considerable anticipated positive regional effects for industries and the society in general, and a solid recommendation from the Ministry of Trade and Industry (now the Ministry of Trade, Industry and Fisheries), the Ministry of the Environment requested supplementary information for its final consideration in March 2013. The request for supplementary information was related to e.g. sea water circulation, solution for mineral residue disposal, use of fresh water etc. In spring 2013, Nordic Mining and the Ministry of the Environment clarified the scope of a survey and investigation program for the requested information.

DNV GL (formerly Det Norske Veritas and Germanischer Lloyd) has been engaged for a measuring program regarding documentation of water circulations in the fjord and risk assessments regarding the planned sea disposal for the mineral residues. DNV GL will also execute additional investigations (e.g. ROV survey and sample fishing) of possible spawning grounds for fish and endangered, near-endangered or valuable species and natural resources in the disposal area.

The measuring program for water circulation started in August 2013 and 11 metering stations were installed in the Førdefjord. The measurement program will be executed for a 12 months period to include seasonal variations. Water currents will be measured using advanced profiling metering instruments which will record current velocities and directions at different water depths. Further, hydrographic measurements will be carried out continuously with recording parameters like temperature, salinity, density, pressure and oxygen content in the water.

So far, two dataset from the measurement program have been gathered by DNV GL, first in November 2013, and second in February 2014. Data from the survey stations have been collected from various locations in the fjord. The results from the first measuring period show that the water circulation is moderate within the area of the planned tailings disposal. The results are in line with the measurements included in the environmental impact assessment for the project. The results reflect the typical circulation pattern for this type of fjord and depth, and indicate that the settling of the inert, nontoxic mineral tailings will be efficient. The results from the second measurement period are expected to be published shortly.

The new government which took office in October 2013 has underlined its growth ambitions for the Norwegian mineral industry. Nordic Mining has confidence that the comprehensive environmental impact assessments undertaken for the Engebø project and the additional information following from the survey and investigation program will provide general comfort in the plans, and thus will ensure a sustainable realisation of the significant values that the project will bring to the society.

Commercial status

Europe has a significant and fundamental 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.

Rutile is an important strategic mineral with a significant number of applications within the pigment industry, in health and medicine, in environmental technologies, and in various consumer products. The market for rutile products has developed positively over the last years. In 2013, the price level has come down compared with the level in 2012. The price level is currently in the range USD 1,100 - 1,400 per tonne FOB Australia for bulk products. This is approximately 2.5 times the historic price level from 2000 to 2010. Market information indicates a tightening of the supply/demand balance going forward.

The markets for titanium feedstock, i.a. rutile, are affected by the general development of the global economy. 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.

Applications for mineral residues and wall rock

Nordic Mining assesses potential products and applications for the mineral residues from the production process at Engebø. Mineral residues are inert minerals without any heavy metals or radioactive elements, and have been approved as capping materials 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 mineral residues and wall rock.

In the future, various by-products from mineral residues 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.

Nordic Quartz / Kvinnherad project (high-purity quartz)

General project information

Nordic Mining has an agreement with landowners and exclusive rights for the investigation and development of a quartz deposit in Kvinnherad municipality in Norway. Studies and tests show that the quartz has a low content of contaminants and therefore can be regarded as a highpurity type of quartz. Nordic Mining's wholly owned subsidiary Nordic Quartz is a vehicle for the Group's development work related to quartz.

Comprehensive analysis and processing tests have been executed based on samples from different parts of the quartz vein. Product qualities at the level of the purest and best products in the market were obtained for all the samples. Melting tests also showed that glass of highest market quality could be produced from the samples.

Geophysical measuring of the quartz deposit in 2012 indicates a larger extension of the quartz vein, both horizontally and vertically, than previous studies. The indicated wider parts of the quartz vein will be further investigated by surface mapping. The actual depth of the vein and the down dip quality will be verified by drilling and analysis.

Scoping study

In 2012, Dorfner Anzaplan executed an independent preliminary evaluation (scoping study) of the Kvinnherad high-purity quartz project. The scoping study described the development status of the deposit including a review of previous work and studies; e.g. exploration, geology, deposit size, processing etc. Further, the study gave a general description of the deposit's location and characteristics, a proposed mining and processing method for the quartz, and a preliminary economic analysis. The scoping study gave principal recommendations and described various risk factors to be considered in the project development going forward.

The Kvinnherad quartz deposit is considered to contain raw quartz sufficient for minimum 60 years of production of high-purity products at a rate of 5,000 tonnes per year. The scoping study outlined an industrial base case with a 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 an 8% discount rate, and an undiscounted payback period of 4.3 years.

Further project proceedings

Nordic Mining has had limited activity on the quartz project in 2013. The long-term outlook for quartz products in advanced industrial applications is positive and Nordic Mining aims to position the Kvinnherad quartz project internationally with a long-term perspective. In connection with this, Nordic Mining investigates possibilities to establish an industrial strategic partnership for the project.

Keliber (lithium/lithium carbonate)

General project information

Nordic Mining's associated company Keliber in Finland has 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 batteries which takes up an increasing share of the total global consumption. Nordic Mining owns 38% of the share capital and is the largest shareholder in Keliber.

Positive results from 2013 drilling program

Keliber's drilling program in 2013 has more than doubled the JORC compliant resource and reserve estimates. In particular the results at Syväjärvi were good and almost all drill holes intersected spodumene pegmatite ranging from 3 to 36 meters width. Some of the holes showed two substantial spodumene pegmatite intersections.

At year-end 2013, Keliber's total JORC compliant resource and reserve estimates were as follows:

Resource category @			Reserve category @
0.5% Li2O cut-off	Tonnes	Li2O %	0.5% Li2O cut-off	Tonnes	Li2O %
Measured (M)	433.000	1.12	Proven (P1)	472.000	0.98
Indicated (I)	2.897.000	1.28	Probable (P2)	2.180.000	1.15
M & I	3.330.000	1.26	P1 + P2	2.652.000	1.12
Inferred	321.000	0.99
Historical*	1.300.000	1.30

* Not JORC compliant historical estimate for the Emmes deposit. Updated estimates are expected in Q2 2014.

In January 2014, the Finnish government accepted Keliber's offer to acquire the Rapasaari deposit. Documentation for the agreement is currently being prepared.

Keliber has initiated a new drilling program in January 2014 and updated resource and reserve estimates are expected in Q2 2014.

Initiation of environmental impact studies

In October 2013, Keliber initiated environmental impact assessment (EIA) of its various mineral deposits in the Central Ostrobothnian lithium province in accordance with environmental legislative regulations in Finland. The aim is to conduct comprehensive EIA for the relevant lithium deposits in the area. The program for the EIA was published in February 2014 and the work is expected to be completed by the end of 2014, or early 2015.

Further project proceedings

Keliber's goal is to be the first producer in Europe of lithium carbonate. The targeted product is high-purity lithium carbonate (99.99%) which is the preferred quality for batteries for electrical and hybrid vehicles. The purest lithium carbonate product qualities attract a significant price premium in the market.

In addition to continued exploration work and the ongoing environmental impact assessment, process optimisation studies will be executed in 2014. Keliber plans to compile and conclude pre-feasibility studies before year-end 2014.

Other project activity

Production of alumina from anorthosite

With NOK 4.1 million in financial support from Gassnova SF, Nordic Mining and Institute for Energy Technology ("IFE") have produced high-grade alumina from anorthosite. The production has been done in a laboratory at moderate process conditions which means low temperature, atmospheric pressure and with moderate acids. The alumina content of the tested anorthosite is approximately 30%, and thus, anorthosite is potentially a major alumina source.

The development work has focused primarily on optimisation of the leaching process to extract the alumina from the anorthosite. Efforts have also been made to test precipitated calcium carbonate concentrate ("PCC") and silica as by-products from the process stream and to regenerate acid for recirculation. The results from leaching of alumina are positive, showing effective leaching of approximately 95% alumina within a few hours.

In the fall 2013, the Norwegian R&D institute Tel-Tek executed techno-economic evaluations of the project. The evaluations included complex modeling and assessment of assumptions for the initial economic evaluation of an industrial alumina project. The evaluations indicated positive preliminary project financials for an annual production of around 900,000 tonnes of alumina from anorthosite.

Capital cost for a brownfield alumina plant was estimated to around NOK 3.7 billion (indicated accuracy +/- 35%). The study indicated a positive project NPV of NOK 0.6 billion excluding sales of by-products based on a 7.5% discount rate. The financial estimates are sensitive to the degree of regeneration of acid and energy recovery. An energy recovery of 75% and a 90% regeneration of acid have been assumed.

The study also showed that an income from by-products produced in the process, silica and PCC, can significantly improve the project financials. A scenario with moderate assumptions for production and sale of these by-products indicated a project NPV of around NOK 2.7 billion based on a 7.5% discount rate.

A new technology for extracting alumina from anorthosite may be applied to any anorthosite resource, and may represent a global potential for an improved production of feedstock for aluminium production.

Exploration on the Øksfjord Peninsula

In 2012, exploration drilling was executed in the Reinfjord area on the Øksfjord peninsula based on previous interesting indications of i.a. copper, nickel, cobalt, PGE. The metal content of the best assays was comparable with mines in commercial production.

In January 2014, Nordic Mining was granted two new Exploration Rights east of the Reinfjord prospect. Electromagnetic data published by the Geological Survey of Norway show that Nordic Mining's new Exploration Rights include an area of particular low resistivity. Low resistivity can be caused by metals contained in the bed rock and may therefore indicate existence of a metallic ore body.

Oslo, 27 February 2014 The Board of Directors of Nordic Mining ASA

CONSOLIDATED INCOME STATEMENTS

		2013	2012	2013	2012
	Note	01.10-31.12	01.10-31.12	01.01-31.12	01.01-31.12
(Amounts in NOK thousands)		Unaudited	Unaudited	Unaudited	Restated(1)
Sales		-	-	-	-
Other income		25	-	25	1 020
Payroll and related costs	1	(1 366)	(2 660)	(9 725)	(11 845)
DD&A		-	(13)	-	(13)
Other operating expenses		(3 305)	(2 186)	(8 998)	(13 886)
Operating profit/(loss)		(4 646)	(4 859)	(18 698)	(24 724)
Share of result of an associate		(621)	(702)	(2 972)	(702)
Impairment of investment in associate	3	(6 523)		(6 523)
Financial income		44	256	114	432
Financial costs		-	319	(11)	(244)
Profit/(loss) before tax		(11 746)	(4 986)	(28 090)	(25 238)
Income Tax		-	32	-	32
Loss from continuing operations		(11 746)	(4 954)	(28 090)	(25 206)
Loss from discontinued operations	2	-	(6 389)	(4 298)	(11 334)
Loss for the period		(11 746)	(11 343)	(32 388)	(36 540)
Profit/(loss) attributable to
Equity holders of parent		(11 746)	(11 143)	(32 388)	(35 404)
Non-controlling interest		-	(200)	-	(1 136)
Earnings per share attributable to ordinary shareholders (Amounts in NOK)
Basic and diluted earnings per share for
continuing operations		(0,05)	(0,03)	(0,14)	(0,14)
Basic and diluted earnings per share for
discontinued operations		-	(0,03)	(0,02)	(0,06)
Basic and diluted earnings per share		(0,05)	(0,06)	(0,16)	(0,19)

(1) Restated for discontinued presentation of Gudvangen Stein and the implementation of IAS 19R as described in note 1.

	2013	2012	2013	2012
	01.10-31.12	01.10-31.12	01.01-31.12	01.01-31.12
(Amounts in NOK thousands)	Unaudited	Restated (1)	Unaudited	Restated (1)
Net profit/(loss) for the period	(11 746)	(11 343)	(32 388)	(36 540)
Other comprehensive income:
Currency translation differences	655	33	2 996	(1 589)
Reclassification of translation adjustment	-	1 998	-	1 998
Changes in pension estimates	(739)	1 035	(739)	1 035
Other comprehensive income directly against
equity	(84)	3 066	2 257	1 444
Total comprehensive income for the period	(11 830)	(8 277)	(30 131)	(35 096)
Profit/(loss) attributable to
Equity holders of parent	(11 830)	(7 794)	(30 131)	(34 185)
Minority	-	(483)	-	(911)

STATEMENTS OF COMPREHENSIVE INCOME

(1) Restated for discontinued presentation of Gudvangen Stein and the implementation of IAS 19R as described in note 1.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		31.12.2013	31.12.2012
(Amounts in NOK thousands)	Note	Unaudited	Restated (1)
ASSETS
Non-current assets
Licences		6 451	6 136
Minerals, property, plant and equipment		-	14 813
Investment in associate	2	16 951	23 450
Other long-term assets	1	-	244
Total non-current assets		23 402	44 643
Current Assets
Inventory		-	2 806
Trade and other receivables		1 119	5 431
Cash and cash equivalents		15 495	6 164
Total current assets		16 614	14 401
Total assets		40 016	59 044
SHAREHOLDERS' EQUITY & LIABILITIES
Shareholders' equity
Share capital	5	28 050	18 547
Share premium	5	227 145	206 821
Other paid-in capital		8 893	8 856
Retained losses		(230 634)	(198 246)
Other comprehensive income	1	2 877	619
Equity attributable to ordinary shareholders		36 331	36 597
Non-controlling interest		-	-
Total equity		36 331	36 597
Non-current liabilities
Interest bearing loan		-	6 417
Lease obligations		-	3 522
Other liabilities		52	509
Total non-current liabilities		52	10 448
Current liabilities
Current portion of long-term debt		-	3 334
Trade payables		1 568	5 168
Other current liabilities		2 065	3 497
Total current liabilities		3 633	11 999
Total liabilities		3 685	22 447
Total shareholders' equity and liabilities		40 016	59 044

(1) Restated for the implementation of IAS 19R as described in note 1.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (1) Unaudited

							Non - controlling
				Attributed to equity holders of the parent			interest	Total equity
(Amounts in NOK thousands)	Share capital	Share premium	Other-paid-in capital	Other comprehensive income	Accumulated losses	Total
Equity 1 January 2012	14 547	177 416	7 033	(600)	(162 842)	35 554	8 315	43 869
Total comprehensive income	-	-	-	1 219	(35 404)	(34 185)	(911)	(35 096)
Share based payment	-	-	1 823	-	-	1 823	-	1 823
Shares to non-controlling	-	-	-	-	-	-	75	75
Loss of control of subsidiary	-	-	-	-	-	-	(7 479)	(7 479)
Share issue	4 000	32 000	-	-	-	36 000	-	36 000
Transaction costs	-	(2 595)	-	-	-	(2 595)	-	(2 595)
Equity 31 December 2012	18 547	206 821	8 856	619	(198 246)	36 597	-	36 597
Equity 1 January 2013	18 547	206 821	8 856	619	(198 246)	36 597	-	36 597
Total comprehensive income for	-	-	-	2 257	(32 388)	(30 131)	-	(30 131)
the period Share based payment	-	-	37	-	-	37	-	37
Share issue	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	2 876	(230 634)	36 331	-	36 331

(1) The 2012 figures are restated for the implementation of IAS 19R as described in note 1.

CONSOLIDATED CASH FLOW STATEMENTS

For the period ended 31 December

	2013 01.01-31.12	2012 01.01-31.12
(Amounts in NOK thousands)	Unaudited	Restated (1)
Net cash used in operating activites	(19 050)	(20 598)
Purchases of property, plant & equipment	(296)	(668)
Purchases of intangible assets	(237)	(2 776)
Sale of subsidiary - effect on cash	465	-
Other	-	(21)
Net cash used in investing activities	(68)	(3 465)
Share issuance	29 828	33 405
Payments of loans	(417)	(1 000)
Payment of contingent liability		(3 023)
Principal payments on finance leases	(962)	(2 477)
Net cash from financing activities	28 449	26 905
Net change in cash and cash equivalents	9 331	2 842
Effect of changes in foreign exchange rates	-	(18)
Cash and cash equivalents at beginning of period	6 164	3 340
Cash and cash equivalents at end of period	15 495	6 164

(1) Restated for discontinued presentation of Gudvangen Stein and the implementation of IAS 19R as described in note 1.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2013

Note 1 – ACCOUNTING PRINCIPLES

These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting". They do not include all of the information required for full annual financial reporting, and should be read in conjunction with the consolidated financial statements of Nordic Mining ASA and the Group for the year ended 31 December 2012.

This report was approved by the Board of Directors on 27 February 2014.

The accounting policies adopted are consistent with those followed in the preparation of the Company's and the Group's annual financial statements for the year ended 31 December 2012.

Nordic Mining implemented IAS 19R on 1 January 2013. The changes have been made with retrospective application. Also, changes to the presentation of have been made with regards to discontinued operations. The main changes to previously reported numbers are shown in the table below.

		Implementation
(Amount in NOK thousands)	As reported	effect IAS 19R	As restated
Opening equity 01.01.12	45 143	(1 274)	43 869
Loss after tax full year 2012	(36 479)	(61)	(36 540)
Equity - other comprehensive income 31.12.12	(416)	1 035	619
Equity 31.12.12	36 897	(300)	36 597
Net pension asset/liability	35	(300)	(265)

Note 2 – DISCONTINUED OPERATIONS

2013:

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.

2012:

In September 2012, Nordic Mining and the other shareholders in Keliber entered into an agreement with new investors related to a private placement in Keliber with cash proceeds of €4 million. The agreement was conditioned, and the transaction was completed in October 2012.

Following from the transaction, Nordic Mining's shareholding in Keliber was reduced to 38%. As Nordic Mining no longer has a controlling interest in Keliber, the shareholding was classified as shares in an associated company and initially recognized at an estimated fair value of NOK 24.6 million on the balance sheet.

Discontinued operations

The divestment of Gudvangen Stein in June 2013 and the transactions in Keliber in 2012 leading to loss of control of subsidiary and classification as investment in an associate are in the consolidated financial statements presented as discontinued operations. In the table below the amounts from the condensed income statements that have been reclassified to loss from discontinued operations are specified:

	01.01-31.12
	2013		01.01-31.12 2012
Amonts in NOK thousands	Gudvangen	Gudvangen	Keliber	Total
Revenue	10 807	24 579,75	-	24 580
Other income	-	262	14	276
Cost of sales	(3 220)	(5 733)	-	(5 733)
Payroll and related costs	(2 807)	(4 579)	(1 347)	(5 926)
DD&A	(854)	(2 731)	(79)	(2 810)
Other operating expenses	(5 596)	(13 135)	(1 387)	(14 522)
Operating loss	(1 670)	(1 336)	(2 799)	(4 135)
Other costs/income	(441)	(1 027)	(278)	(1 305)
Loss from discontinued operations
before re-measurement to fair value	(2 111)	(2 363)	(3 077)	(5 440)
Impairment	-	(4 000)	(420)	(4 420)
Loss on disposal	(2 187)		(1 474)	(1 474)
Total loss for discontinued	(4 298)	(6 363)	(4 971)	(11 334)

Note 3 – IMPAIRMENT OF INVESTMENT IN ASSOCIATE

Keliber is accounted for as an investment in an associate. Nordic Mining's share of Keliber's result is accounted for and reflected in the value of the investment of the associated company.

In the fourth quarter, Nordic Mining has recognised an impairment loss of NOK 6.5 million related to its investment in Keliber. The Company has estimated a recoverable amount from value in use. As per 31 December 2013, the investment in Keliber is recognised at an amount of approximately NOK 17.0 million.

Note 4 – SEGMENT

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; the Ministry of Climate and Environment considers the industrial area plan for the project and the application for waste disposal.
• Quartz which can be produced from the quartz deposit in Kvinnherad. A scoping study outlines the potential for a profitable industrial quartz project.

As a result of the divestment of Gudvangen Stein in June 2013 anorthosite is no longer a reportable segment in the Group. Further and following from the reduced shareholding and loss of control in Keliber, the investment in Keliber is classified as an investment in an associate and lithium is no longer a reportable segment in the Group.

The quartz segment was a new reportable segment in the Q4 2012 report, and was recognised

as a reportable segment as a result of the positive scoping study and plans for increased exploration activities. The segment reporting and comparable numbers from last year have been updated to reflect the Group's new segment structure.

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 present the period 1 January – 31 December.

	Quartz		Titanium		Adjustments and eliminations		Consolidated
	2013	2012	2013	2012	2013	2012	2013	2012
Revenues	-	-	-	-	-	-	-	-
Segment result	(364)	(1 808)	(6 809)	(9 534)	(21 113)	(13 896)	(28 090)	(25 238)

Note 5 – EQUITY ISSUES

Number of shares in thousands	Ordinary shares
Opening balance 1 January 2013	185 470
Share issuance	95 035
Closing balance 31 December 2013	280 505

In February 2013, Nordic Mining executed a private placement of 8,966,017 shares directed towards existing shareholders and Norwegian investors. A subsequent offering of 6,068,697 shares was completed in April 2013. The subscription price in the issues was NOK 0.70 per share, resulting in gross proceeds of approximately NOK 10.5 million. The net proceeds was approximately NOK 7.7 million after deducting directly attributable transaction costs of NOK 2.8 million.

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 subscription price in the rights issue was NOK 0.30 per share, resulting in gross proceeds of NOK 24.0 million. The net proceeds was approximately NOK 22.0 million after deducting directly attributable transaction costs of around NOK 2.0 million.

Note 6 – TRANSACTIONS WITH RELATED PARTIES

Nordic Mining has an agreement with Dag Dvergsten AS for office rental. The Company's board member Tore Viana-Rønningen is employed in Dag Dvergsten AS. For the period 1 January – 31 December 2013 Nordic Mining recorded NOK 1,2 million in expenses related to the agreement with Dag Dvergsten AS (NOK 2.2 million for the comparable period in 2012).