Nordic Mines brings in strategic partner and secures issue proceeds of at least SEK 250 million and announces complete terms for the rights issue

Press Release, June 14, 2012 Nordic Mines brings in strategic partner and secures issue proceeds of at least SEK 250 million and announces complete terms for the rights issue Since the rights issue resolved upon by the board was announced on May 23, 2012, Nordic Mines has been engaged in discussions with a number of potential stakeholders and can now announce a broader financing solution which will provide the company with at least approximately SEK 250 million, including the previously resolved rights issue, and a new strategic partner and industrial owner, Eldorado Gold Cooperatief U...

Press Release, June 14, 2012

Nordic Mines brings in strategic partner and secures issue proceeds of at least SEK 250 million and announces complete terms for the rights issue

Since the rights issue resolved upon by the board was announced on May 23, 2012, Nordic Mines has been engaged in discussions with a number of potential stakeholders and can now announce a broader financing solution which will provide the company with at least approximately SEK 250 million, including the previously resolved rights issue, and a new strategic partner and industrial owner, Eldorado Gold Cooperatief U.A. ("Eldorado"), a subsidiary to Eldorado Gold Corporation

The Board of Nordic Mines has set the complete terms for the previously resolved rights issue, implying that each share shall entitle to subscribe for one (1) new share at a subscription price of SEK 6.00

Nordic Mines has entered into an agreement with Eldorado, a large international gold producer, which includes the following:

• The Board of Nordic Mines has, by virtue of the authorization by the Annual General Meeting in 2012, resolved upon a directed share issue of 2,500,000 shares to Eldorado at a subscription price of SEK 6.00 per share, which will provide Nordic Mines with approximately SEK 15 million before issue costs and be completed during the current week

• The shares in the directed share issue above qualify for participation in the resolved rights issue implying that the previously communicated issue proceeds of approximately SEK 220 million now corresponds to approximately SEK 236 million before issue costs

• Eldorado has committed to subscribing to their pro-rata share in the rights issue and further to register to subscribe to non-preferential shares up to an amount which in total equals USD 10 million including the initial directed share issue

• The Board of Nordic Mines has set the terms and the subscription price for the already resolved rights issue such that each existing shareholder shall be entitled to one (1) right, for each existing share held, to subscribe to for one (1) new share at a subscription price of SEK 6.00. The rights issue is conditioned upon approval from the Extra General Meeting on June 15, 2012

 

• The rights issue is fully guaranteed by a combination of large shareholders in Nordic Mines and external guarantors

• The board of Nordic Mines has also decided to, conditioned upon an approval at an Extra General Meeting, carry out an additional directed share issue to Eldorado of up to 6 750 000 shares to a subscription price of SEK 6.00 per share, which will supply Nordic Mines with a maximum amount of approximately SEK 40.5 million before issue costs. The number of shares that Eldorado will potentially acquire through non-preferential subscription in the rights issue shall decrease the allocation to Eldorado with the equivalent number of shares in the directed share issue

• In total, Nordic Mines is provided with a minimum of approximately SEK 251 million and a maximum of approximately SEK 291 million via the rights issue and the two directed share issues

• Following a fully subscribed rights issue and a potential subsequent directed share issue the ownership of Eldorado will, at the minimum total issue proceeds of approximately SEK 251 million, amount to approximately 14.9 percent and at the maximum total issue proceeds of approximately SEK 291 million will amount to approximately 13.8 percent

• Eldorado has committed to not divesting the shares included in the agreement for one year

• Eldorado and Nordic Mines have also committed to working for the nomination of a Board member appointed by Eldorado. Such a board member could be chosen by Nordic Mines at the Extra General Meeting

Background and reasons for the directed share issue

Eldorado Gold Corporation is a listed Canadian gold production company with mining, exploration and development operations in Turkey, China, Greece, Romania and Brazil. Eldorado is an established international company with a strong financial position. The company has been active since 1992 and has a market capitalization of approximately CAD 9.1 billion. For further information on Eldorado Gold Corporation please refer to the website www.eldoradogold.com.

The reason to decide to issue new shares, with divergence from the rights of the shareholders, is to obtain a strong industrial owner and strategic partner with vast experience of mining operations. It is the assessment of the Board of Nordic Mines that a strong industrial owner will contribute to the opportunities of Nordic Mines to operate as a successful company in the mining sector and that this will create value for all shareholders.

Supported by the authorization given at the Annual General Meeting 2012 the Board of Nordic Mines has decided to carry out a directed share issue of 2,500,000 shares to Eldorado. The subscription price is SEK 6.00 per issued share and will provide Nordic Mines with approximately SEK 15 million before issue costs.

The board of Nordic Mines has also decided to carry out, conditioned upon approval at an Extra General Meeting, another directed share issue to Eldorado of up to 6,750,000 shares to a subscription price of SEK 6.00, which will supply Nordic Mines with up to approximately SEK 40.5 million. The Extra General Meeting is expected to be held late July, 2012. The number of shares that Eldorado potentially will acquire through non-preferential subscription in the rights issue shall decrease the allocation to Eldorado with the equivalent number of shares in the directed share issue.

Lennart Schönning, the Chairman of the Board comments:

"The delays in the start-up of production at the Laiva Mine has caused both a liquidity and confidence issue for Nordic Mines. The combination of a directed share issue to one of the most well renowned gold producers, Eldorado, and a rights issue to existing shareholders solves both of these problems in a constructive way. We look forward to the opportunity to work with representatives for Eldorado and develop the large gold deposit at the Laiva Mine to its full potential."

 

The first directed share issue implies a share dilution of approximately six percent after completion. The directed share issue will increase the number of shares in Nordic Mines by 2,500,000 shares from 36,815,647 to 39,315,647 and the share capital by SEK 2,500,000 from SEK 36,815,647 to SEK 39,315,647.

 

The shares in the first directed share issue entitle the holder to participate in the resolved rights issue in which Eldorado has committed to subscribe to shares corresponding to their pro rata share of approximately 6.4 percent. In addition, Eldorado has committed to submitting an application for non-preferential subscription in the rights issue corresponding to an amount of approximately SEK 40.5 million.

 

The directed share issue of a maximum amount of 6 750 000 shares corresponds to a dilution of approximately eight percent after completion assuming full subscription in the rights issue.

 

The proceeds provided from the share issues will in the first instance be used to repay the bridge financing of SEK 95 million which Nordic Mines has secured in order to be able to meet its obligations to lenders in terms of interest payments, loan amortization and settlement of gold future contracts due June 29, 2012. Furthermore, the company has an immediate need to finance working capital until production generates a sufficient cash flow to be self-sustaining. The target of the company is to reach a production level of five kilos of gold per day during the summer 2012, which will mean that the company becomes cash flow positive including financial obligations.

 

Terms and conditions in the rights issue

The Board of Directors has determined the terms and the subscription price for the rights issue that the Board of Directors resolved on May 22, 2012, subject to approval by the Extraordinary General Meeting.

For one (1) share held in Nordic Mines, the holder is entitled to one (1) subscription right. One (1) subscription right entitles the holder to subscribe for one (1) new share. The subscription price is SEK 6.00 per share which implies that the rights issue will provide Nordic Mines with approximately SEK 236 million, before transaction costs, through the issue of not more than 39,315,647 new shares and the share capital may be increased by not more than SEK 39,315,647.

The record date at the Swedish Central Securities Depository, Euroclear Sweden AB, for participation in the rights issue is June 20, 2012. The subscription period will run from and including June 21, 2012, up to and including July 5, 2012, or such later date as decided by the Board of Directors. Rights not subscribed by such date will be void and have no value. Subscription rights will be tradable on NASDAQ OMX Stockholm from and including June 21, 2012 up to and including July 2, 2012.

Indicative timetable for the rights issue

June 15, 2012	Extraordinary General Meeting of shareholders to approve the rights issue resolved by the Board of Directors
June 20, 2012	Estimated date of publication of the prospectus
June 20, 2012	Record date for participation in the rights issue, i.e. shareholders registered in the share register of Nordic Mines as of this date will receive subscription rights for participation in the rights issue
June 21, 2012	First day of trading in Nordic Mines' shares, excluding preferential rights to participate in the rights issue
June 21-July 2, 2012	Trading in subscription rights
June 21-July 5, 2012	Subscription period
July 9, 2012	Announcement of preliminary outcome

 

Subscription undertakings and underwriting commitments

Lennart Schönning (the chairman of Nordic Mines' Board of Directors), the Chalmers University of Technology Foundation and Eldorado have undertaken to subscribe for their pro rata shares in the rights issue, corresponding to approximately 11 percent of the rights issue. In addition, Eldorado has committed to submitting an application for non-preferential subscription in the rights issue corresponding to an amount of approximately SEK 40.5 million.

An underwriting consortium including Carnegie Investment Bank AB (publ) ("Carnegie"), the chairman of Nordic Mines' Board of Directors and a number of institutional investors have undertaken to underwrite the remaining amount, subject to satisfaction of customary conditions.

Financial and legal advisors

Carnegie is acting as financial advisor to Nordic Mines and Gernandt & Danielsson Advokatbyrå is acting as legal advisor.

For additional information, please contact:

Lennart Schönning, Chairman of the Board of Directors, +46 18 84 345 00
Michael Nilsson, CEO, +46 18 84 345 01

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

Uppsala, June 14, 2012
Nordic Mines AB (publ)

The information above has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 08.30 on June 14, 2012.

IMPORTANT INFORMATION

The information in this press release is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Hong Kong, Japan, Canada, Singapore or South Africa. The distribution of this press release in certain other jurisdictions may be restricted. The information in this press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in Nordic Mines in any jurisdiction.

 

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. Nordic Mines does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Australia, Hong Kong, Japan, Canada, Singapore or South Africa.

 

This document has not been approved by any regulatory authority. This document is an advertisement and not a prospectus and investors should not subscribe for, or purchase any securities referred to in this document, except on the basis of information provided in the prospectus to be published by Nordic Mines on its web site in due course.

 

Nordic Mines has not authorized any offer to the public of shares or rights in any Member State of the European Economic Area other than Sweden and any other jurisdiction into which the offering of shares or rights has been passported. With respect to each Member State of the European Economic Area other than Sweden (and any other jurisdiction into which the offering of shares or rights has been passported) and which has implemented the Prospectus Directive (each, a "Relevant Member State"), no action has been undertaken to date to make an offer to the public of shares or rights requiring a publication of a prospectus in any Relevant Member State. As a result, the shares or rights may only be offered in Relevant Member States:

 

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 

(b) to any legal entity meeting two or more of the following criteria: (1) an average of at least 250

employees during the last financial year; (2) a total balance sheet of more than EUR 43 million and (3) an annual net turnover of more than EUR 50 million, as shown in its last annual or consolidated accounts; or

 

(c) in any other circumstances, not requiring Nordic Mines to publish a prospectus as provide under Article 3(2) of the Prospectus Directive.

 

For the purposes hereof, the expression an "offer to the public of Shares or Rights" in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares or rights to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

 

Carnegie is acting for Nordic Mines and no one else in connection with the rights offering and will not be responsible to anyone other than Nordic Mines for providing the protections afforded to its clients or for providing advice in relation to the rights offering and/or any other matter referred to in this announcement.

 

Carnegie accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with Nordic Mines and the new shares, or the rights offering, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Carnegie accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.

 

This press release contains forward-looking statements, which are statements related to future events. In this context, forward-looking statements often address Nordic Mines' expected future business and financial performance, and often contain words such as "expect", "anticipate", "intend", "plan", "believe", "seek", or "will". Forward-looking statements by their nature address matters that are, to different degrees, uncertain and can be influenced by many factors, including the behaviour of financial markets, fluctuations in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of regulation and regulatory, investigative and legal actions; strategic actions; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These factors may cause Nordic Mines' actual future results to be materially different than those expressed in its forward-looking statements. Nordic Mines does not undertake to update its forward-looking statements.

 

You are advised to read this announcement and, once available the prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Nordic Mines' future performance and the industries in which it operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

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