Press release:
HIGHLIGHTS OF THE FIRST QUARTER 2023
- Net sales was 67 MSEK compared to the previous year 114 MSEK. The main reason was a lower mining volume. The average silver grade developed positively
- EBITDA was 6 MSEK (38)
- EBIT was -10 MSEK (15)
- Cash and cash equivalents were 34 MSEK (44)
- Investments were 8 MSEK (13)
- The production was about 207 000 (336 000) ounces of silver, 516 (870) ounces of gold, 232 (465) tonnes of lead, and 515 (990) tonnes of zinc in concentrates
- Company received gross proceeds of approx. 3.4 MEUR or 38.4 MSEK from the rights Issue before the deduction of transaction costs
-
The Company and the senior lenders agreed on
February 13, 2023 , upon an amendment to the terms of the senior loan agreement, postponing the first instalment (1.5 MEUR due onMarch 31, 2023 ) to be paid on the termination date of the senior loan agreement (March 31, 2026 ) -
Company has provided a guarantee in accordance with the environmental permit as security for the obligations following the closure of the mine. According to the concluded contract, the guarantor released
one million euros from the escrow account at the end ofMarch 2023
Comparative figures refer to the corresponding period of the previous year.
CEO WORD
The year 2023 started with a challenging working capital situation for us. Actions for improving the financing situation were initiated already at the end of 2022 and during the first quarter of 2023 these steps were finalized. The share issue, postponing the senior loan amortization and releasing part of the escrow account funds were finalized. These actions ensure an adequate working capital situation for the short term.
Our mining and production plans and the current forecasts for the metal and electricity prices support the positive cash flow for the rest of 2023 and furthermore enable us to finance necessary investments like infill drilling.
Production volumes remained below the plans due to a delay in ramp-up with the new mining contractor. At the end of the quarter, the progress with the ramp-up has been developing in the required direction and we expect to stabilize the production during April.
The impact of the ramp-up delay is seen as temporary, and we estimate that there is no significant effect on the whole year's production volumes. The new mining contractor is fully committed to improving their performance to a level that enables stable mining volumes and meeting the mining plans.
In the first quarter cash flow management was essential due to the tight working capital situation. This included tight control of all operative costs and investments. While postponing some of the planned costs, the company ensured that the mandatory investments are carried out to continue the operations normally after the winter period. For example, an infill drilling campaign was started, which will provide us with the needed data to plan and execute the mining in an accurate and cost-efficient manner.
The positive development in silver grade is encouraging and gives us confidence in returning to the estimated 90-110 g/tonne level.
I want to thank all the employees for their excellent work in the challenging past months. The uncertainty has undoubtedly affected everyone. The whole Silver team has together ensured that the operational capability is maintained and now when the winter turns to spring, we are ready to accelerate production to the levels where we need to be. Our expectation for the increasing silver grade and positive development in electricity and metal prices is setting the base for clear positive development in the rest of the year.
BUSINESS
The Company operates the silver mine in Sotkamo,
Net sales was 67 MSEK compared to the previous year 114 MSEK. The main reason was a lower mining volume. The average silver grade developed positively. Milled ore tons were 97 000 tonnes and was on lower level due to the ramp-up period with new mining contractor. The silver head grade was improved from the previous quarter 72 to 82 g/t.
Other income of -2,6 MSEK (6) included mainly estimated unrealized final sales price adjustment due to the price difference between provisional and final invoices for the period. Net sales included -2 MSEK estimated final metal content adjustment due to metal content difference between provisional and final invoices for the period. The final sales price for silver and gold is based on the monthly average market price two months after the delivery, deducted by the customer's smelter charges.
Investments in the underground mine and environmental investments amounted to 8 MSEK (13) in Q1. P700 project's infill-drilling continued in Q1 which costs were included in the investments of the period.
In the first quarter, silver price traded in a range between
The euro strengthened against the US dollar in the first quarter of the year from 1.0683 at the beginning of the year to 1.0875.
Key figures, group | Q1 2023 | Q1 2022 | FY 2022 |
Net sales MSEK | 67 | 114 | 371 |
EBITDA MSEK | 6 | 38 | 53 |
EBIT MSEK | -10 | 15 | -34 |
Equity ratio (%) | 40 | 30 | 38 |
Cash liquidity (%) | 67 | 107 | 46 |
Personnel at end of the period | 44 | 49 | 44 |
Mill feed (kt) | 97 | 174 | 635 |
Average silver grade g/tonne | 82 | 71 | 69 |
PRODUCTION AND GUIDANCE
In the first quarter, we milled 97 000 (173 000) tonnes of ore, and produced about 207 000 (336 000) ounces silver, 516 (870) ounces gold, 232 (465) tonnes lead, and 515 (990) tonnes zinc in concentrates.
The production volume was lower due to the new mining contractor ramp-up period, where delays in some of the mining equipment was extending the original ramp-up plan. In total, the volume remained roughly one-third under the planned silver production in Q1. The effect of the delayed ramp-up period is temporary and mining contractor capability is expected to be stabilized during April.
The silver head grades improved further in the first quarter and was 82 (71) g/tonne. The development with silver head grade has been according to the expectation and a further increase is expected during Q2 2023 as the mining will primarily focus on the new levels between 360- and 420-meters. The silver grade is expected to return to the longer-term average of 90-110 g/tonne.
Guidance for 2023
The Company repeats its guidance for 2023 given in
EVENTS AFTER THE REPORTING PERIOD
The following main decisions were made at the Annual General Meeting (AGM) held on
- The income statement and the balance sheet for both the parent company and the group regarding the financial year 2022 were adopted by the AGM. The AGM decided that no dividend would be paid out for the financial year 2022. The members of the Board and the CEO were granted discharge from liability for the financial year 2022.
-
The AGM decided that the Board would comprise of six ordinary members without deputy directors. Jarmo Vesanto,
Kimmo Luukkonen , Eeva-Liisa Virkkunen, Sixten Sunabacka andJukka Jokela were re-elected as directors andMauri Visuri was elected as director. Eeva-Liisa Virkkunen was re-elected chairman of the Board. -
The AGM resolved to re-elect the auditing company
PWC until the end of the AGM 2024. - The guidelines for remuneration for the management and the procedure for appointing the members of the nomination committee were approved in accordance with the proposals from the Board.
- The AGM approved the nomination committee's proposal for annual fees to the Board.
- The AGM resolved, for the period until the next AGM, to authorize the Board, at one or several occasions, to issue new shares or other financial instruments. The authorization is limited to a maximum dilution of ten (10) percent of the total number of shares outstanding at the time of the first Board resolution in accordance with the authorization.
FINANCIAL CALENDAR
- Q2 July 28, 2023
- Q3 October 25, 2023
- Q4 February 15, 2024
CONTACT PERSON
Mikko Jalasto, CEO of
This information that
The official Stock Exchange Releases are given in Swedish and there may be differences in the translated versions. Should there be any differences, the Swedish version takes precedence.
About
Sotkamo Silver´s business concept is to develop mineral deposits in the Nordic countries with regards to human society and environment.
The company applies International Financial Reporting Standards (IFRS) as approved by the
The ticker symbol is SOSI in NGM Equity in
ISIN-code for
Legal Entity Identifier (LEI): 213800R2TQW1OZGYDX93
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The Company's press releases, and financial reports are distributed via Cision Sverige and are available on www.silver.fI
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