Endomines half-year review 1.1.2023 – 30.6.2023: solid growth accelerated the first half of the year

Endomines half-year review 1.1.2023 – 30.6.2023: solid growth accelerated the first half of the year

Endomines Finland Plc | Half-Year Interim Report | 17.8.2023, at 12.00 EET

This release is a summary of Endomines Finland Plc's half-year report for the period January-June 2023. The full report is attached to the release and available on our website at https://endomines.com/en/for-investors/reports-and-presentations/.

Highlights January-June 2023

• Gold production in January to June 2023 increased by 94.1 percent. Production for the first half of the year was 210.0 kg (108.2 kg), or 6,753 ounces (3,478 ounces). 100 % of the group’s production comes from the Pampalo production segment
• The group’s revenue increased by 91.1 % and was 10.7 MEUR (5.6 MEUR). 100 % of the group’s revenue comes from the Pampalo production segment’s revenue
• The group’s EBITDA was 0.4 MEUR (-3.5 MEUR)
• The Pampalo production segment’s EBITDA was 2.4 MEUR (0.2 MEUR), or 22.4 % of revenue (3.6 %)
• The group’s operating result was -2.3 MEUR (-10.2 MEUR)
• The group’s net result was -3.3 MEUR (-10.5 MEUR)
• At the end of June, the interest-bearing net liabilities were 12.8 MEUR (18.4 MEUR), net gearing ratio 34.2 % (48.5 %) and equity ratio 64.6 % (56.3 %)
• At the end of June, the group’s cash and cash equivalents were 1.2 MEUR (3.5 MEUR)
• Endomines has agreed with a Finnish investor group on a convertible bond loan of up to 3.6 MEUR related to the start of gold production at Hosko and to increase the production of the Pampalo underground mine
• Endomines is preparing to start production at the Hosko area located in the Karelian gold line in early 2024
• The investment option under the LDA Capital Limited convertible bond loan agreement has expired on March

Significant events after the end of the reporting period

• A significant mineralized zone has been discovered in the Kuittila area in the Karelian gold line. The high gold content is found close to ground level, which facilitates further exploration and accelerates the possible start of production in the area. The discovery also contains very high grade of silver, significant grades of lead, zinc, and molybdenum, as well as a promising grade of copper.
• A significant mineralized zone has been discovered in the Kuittila area in the Karelian gold line. The high gold content is found close to ground level, which facilitates further exploration and accelerates the possible start of production in the area. The best results from the drill hole KT-007 included a gold grade of 5.0 g/t over a length of 18 meters, a silver grade of 173.6 g/t, 1.2 % lead, 0.8 % zinc, 0.1 % copper, and 0.02 % molybdenum. Including, over a length of 4.3 meters, a gold grade of 12.2 g/t, a silver grade of 413.4 g/t, 3.2 % lead, 2.1 % zinc, 0.3 % copper, and 0.01 % molybdenum were found. The highest grade was found over a length of 1.2 meters, with an amazing gold grade of 19.8 g/t, a silver grade of 481.0 g/t, 4.5 % lead, 1.7 % zinc, 0.2 % copper, and 0.0 2% molybdenum.
• By 17 August 2023 LDA Capital Limited has converted 1.6 MEUR of convertible loan to shares and the remaining convertible loan is 0.4 MEUR.

Kari Vyhtinen, CEO:

I am pleased to say that we are now starting to see the positive results of the transformation program launched last year. Our production at Pampalo grew by 94.1 % and our revenue at Pampalo increased by 105.8 % from the comparison period. Operating expenses grew moderately in relation to revenue growth, and our operating margin improved to 22.4 percent (3.6 %) in Pampalo. The entire group's EBITDA was also positive.

Our goal is to continue on the path of strong growth, with annual production reaching 20 000 ounces, and above. This target will be supported not only by the growth of the Pampalo mine's ore reserves but also by the start of mining at the Hosko deposit in early 2024. We believe that higher production level will further improve the financial result of the company. Our vision is to grow Karelian gold line into one of the most significant sustainable gold production areas in the world.

The implementation of our strategy is progressing on schedule, as planned. We are investing heavily in the future. Our exploration efforts paid off with first drilling results from Kuittila exceeding all our expectations. New mineralisation was found very close to the ground surface where, in addition to a high gold grade, there was a very high silver grade, significant grades of zinc, lead, and molybdenum, and a promising grade of copper. The measured gold grade of 5 g/t is about four times higher than the gold grade at the Pampalo East open-pit and significantly exceeds our average gold grade in the underground mine.

Operations in the USA are not a strategic focus area for Endomines. Our goal is to develop US deposits through a partnership model. During January-June 2023, we conducted preliminary negotiations with potential partners. Based on the preliminary interest received, we restate our target that the partnership negotiations will be concluded during 2023.

The company's ESG program is also progressing, and we have started measuring the KPIs defined in the program. We are pleased about the lower CO2 emissions per produced gold ounce. On the other hand, we will invest heavily in safety work to improve Endomines’ safety culture in the future. Safety is always the first priority for us.

The first half of the year has been a very big step towards a completely new kind of Endomines. I would like to thank our employees for successfully starting a major change phase. Although our work is still in progress, we can be proud of the results already achieved. I would also like to thank our owners, partners, and other stakeholders for our pleasant co-operation.

Outlook for the financial year 2023 (revised)

• We estimate gold production in Pampalo to increase by 35–55 % from 2022. Endomines revises its guidance and estimates production volumes to be near the upper end of the range.
• No production is expected from Friday mine.
• Financial performance is expected to improve significantly from 2022.
• The ESG programme guides the development of our company in various areas. The safety and well-being of our employees, the preservation of a clean environment and nature, and good and ethical corporate governance are at the heart of our activities. We will also start measures to reduce our carbon footprint and aim for a 5 % reduction in CO2 emission levels (scope 1 and scope 2) during 2023 (CO2 per gold ounce produced).
• An important part of our future operations will be exploration of the Karelian gold line. During the year, we will actively explore through reprocessing of old material, moraine sampling and drilling.
• In the new strategy, US deposits will be developed through a partnership model. We expect to conclude partnership negotiations during 2023.

Webcast

A live webcast for analysts, investors and the media will take place on 17 August 2023 at 15.00. The event will be held in Finnish, the presentation materials will be in English. The half-year report will be presented by Kari Vyhtinen, CEO, and Minni Lempinen, Acting CFO. Participation in the event via this link. A recording of the webcast will be available later on the company's website at https://endomines.com/en/frontpage/.

Contact information

Kari Vyhtinen, CEO

kari.vyhtinen@endomines.com, +358 40 585 0050

Minni Lempinen, acting CFO

minni.lempinen@endomines.com, +358 40 7693483

Endomines Finland Plc is a Finnish forerunner in sustainable mining. Our mining operations in Pampalo, Ilomantsi region, focus on gold mining and processing, as well as exploration in the Karelian gold line, in Eastern Finland. We also own the rights to seven gold deposits in the US. We produce gold for the jewellery and electronics industries, and we create value by transforming natural resources into wealth, an investment that withstands the volatility of global politics. We are a growing mining company embracing new ways of thinking; we want to leave a positive footprint where we operate, which is why our goal is to grow the Karelian gold line to a significant, sustainable gold-producing region. Endomines is listed on the main list of OMX Helsinki (PAMPALO). www.endomines.com