Nordic Mines presents a preliminary agreement with the Company's creditors

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PRESS RELEASE, June 5, 2014

The English text is an unofficial translation of the Swedish original and in case of any discrepancies between the Swedish text and the English translation, the Swedish text shall prevail. This is not a legal document.

Nordic Mines AB (publ) ("Nordic Mines" or the "Company") has, through a non-binding term sheet agreed upon a preliminary settlement with the Company's lenders regarding the principal conditions including, inter alia, write-downs of existing claims. The settlement aims to, along with the ongoing rights issue in Nordic Mines (the "Rights Issue") and the targeted settlement with suppliers to companies within the Nordic Mines Group regarding write-downs of existing claims, restart the Laiva operations and finalize the ongoing corporate reorganizations in Sweden and Finland. The preliminary settlement with the Company's creditors implies, inter alia:

Write down of debt from EUR 45.1m (approx. SEK 406m) to EUR 12.5m (approx. SEK 113m).One-off cost of EUR 2.5m (approx. SEK 23m) to pay accrued interest and other costs related to current debt.

                

Issue of warrants in Nordic Mines directed to the Company's creditors. The new shares that can be subscribed by exercising the warrants, through a set-of issue of existing claims, should after the Rights Issue be equal to the higher value of 12 percent of outstanding shares in the Company or EUR 2.5m (approx. SEK 23m).

                
Remaining debt of EUR 12.5m (approx. SEK 113m) will have a maturity of five years. Interest will be paid the first two years only if the Company exceeds a financial plan agreed upon with the lenders in advance. If not, the first two years' interest will be accumulated and added to the debt and followed by cash interest payments during the next three years. The parties shall agree upon a three years amortization schedule effective during year three to five for the remaining debt.

One-off costs (accrued interest, legal costs of lenders and interest rate hedging costs) of EUR 2.5m (approx. SEK 23m) will be paid in two installments. The first of which of EUR 1.5m (approx. SEK 14m) will be paid in connection with the Rights Issue, however, preferably with existing cash of the Company. The remaining EUR 1.0m (approx. SEK 9m) will be paid no later than June 2016.

The Issue of warrants in Nordic Mines is conditional upon that the forthcoming Annual General Meeting on June 27, 2014, approves the authorization to issue warrants proposed by the Board of Directors.

A final settlement with the Company's lenders is conditional upon, among other things, that the parties agree upon final contract documentation (including, inter alia, adjusted loan terms, amortization plan, updated business plan, conditions of the warrants and that the Swedish and Finnish court respectively has determined on composition plans in regards to the ongoing Swedish and Finish company reorganization). A final agreement with the Company's lenders is a condition for the Rights Issue to be carried out (see also Ongoing Rights Issue below).

Proposed composition plan

As part of the ongoing company reorganization, the Company will work to ensure that a composition plan is proposed regarding unsecured creditors. For all unsecured creditors within the Nordic Mines Group, the composition plan would imply full cash payment of receivables up to EUR 1,000 (approx. SEK 9,000) and 10 percent payment of claims in excess of that.

Ongoing Rights Issue

The Extraordinary General Meeting held in Nordic Mines on April 28, 2014 approved the resolution by the Board of Directors of March 25, 2014 on a rights issue. The Rights Issue intends to provide the Company with at least SEK 150m. The application period is extended (as per press release today, June 5 2014) until July 11, 2014 but may be extended further.

Applications to subscribe for shares in the Rights Issue, with or without preferential right, will be conditional upon that, by the last day of the application period (including possible further extensions) at the latest, a final agreement is reached between the Company, Nordic Mines Oy and the Company's creditors as well as that the Swedish and Finnish court respectively has determined on composition plans in regards to the ongoing Swedish company reorganization and the Finnish company reorganization relating to companies within the Nordic Mines Group.

Restart of the Laiva operations

Provided that the transactions, the Rights Issue and settlements with creditors and suppliers are successfully implemented and that the Gold price is at an acceptable level, Nordic Mines expect to restart a cash flow positive mine operation.

The company estimates that investments of about SEK 70m is required during the first year after the restart to streamline operations in accordance with the action plan. The majority relates to investments in the mill in order to increase throughput and availability. Out of the SEK 70m, the Company expects that capital expenditures of some SEK 30m is needed upfront at the restart of the operations.

In connection with the work done during the autumn of 2013, in order to produce a preliminary economic valuation of the Laiva project and additional assumptions, financial projections were made indicating an overall positive cash flow over the life-of-mine. These initial calculations have since then been further developed and adjusted as new information has been analyzed and taken into consideration. The Company believes that the mineral resource, updated by SRK, improves the conditions for cash flow positive mining operations. A restart of the mining operations is however dependent on the availability of sufficient external funding. The company estimates that approximately SEK 150m is needed to restart the operations and to facilitate the implementation of the action plan.

For additional information, please contact:
Thomas Cederborg, CEO, +46 708 480 521
Jonatan Forsberg, CFO, +46 761 051 310

For more information about Nordic Mines, please visit; www.nordicmines.se

The above information may be information that Nordic Mines AB (publ) is required to disclose under the Securities Market Act and / or the Trading in Financial Instruments. The information was published at 08:00 am (CET) on June 5, 2014.

Nordic Mines is a Nordic mining and exploration company whose goal is to become one of Europes leading gold producers and a role model in respecting the environment. The Laiva mine in Finland commenced gold production in late 2011. The discovery is one of the largest in the Nordic countries. Exploration is performed in Finland and Sweden. Nordic Mines was founded in 2005 and has almost 100 employees and is headquartered in Uppsala. Its shares are traded on the Nasdaq OMX Small Cap list. See also www.nordicmines.se

Preliminary agreement with the creditors


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Source: Nordic Mines AB via Globenewswire
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