Sotkamo Silver’s Q1/2024 Interim Report: Stronger start than previous year

Sotkamo Silver AB | Stock Exchange Release | April 30, 2024 at 09:00:00 EEST

Stronger start than previous year

HIGHLIGHTS

January – March

• Net sales increased by 26 % to 85 MSEK (67 MSEK), driven mainly by a higher silver production volume, higher average silver grade and positive development of silver price. Sales of zinc and lead decreased driven mainly by lower zinc price and lower head grades
• EBITDA raised by 167 % to 17 MSEK (6), EBITDA margin increased to 20 % (9)
• EBIT increased to -1 MSEK (-10)
• Compared to the corresponding period, the profitability raised significantly driven by a higher average silver grade, higher silver price and improved efficiency of mining activities. However, the profitability compared to the previous quarter decreased mainly due to lower silver grade, increased contractor costs and increased amount of preparatory work in the underground mine
• Cash and cash equivalents amounted to 38 MSEK (34)
• Investments more than doubled to 17 MSEK (8)
• The production amounted to approximately 309,000 ounces of silver (207,000), 717 ounces of gold (516), 197 tonnes of lead (232), and 338 tonnes of zinc (515) in concentrates

Comparative figures refer to the corresponding period of the previous year. In case of discrepancies, the official Swedish version of this report prevails.

OUTLOOK

Guidance for 2024 (unchanged)

The Company has given (14 February 2024) the following guidance for 2024:

• The Company expects to produce 1.45 -1.55 million ounces of silver
• Annual EBITDA margin to be at least 28 %
• Net debt-to-EBITDA to be below 2.0 at year-end

The Company expects profitability to remain at a good level in 2024. Profitability is supported by improved operational efficiency but burdened by inflation and cost escalation. The Company's profitability is significantly affected by external factors, such as metal prices, exchange rates and inflation. The achievement of the guidance assumes a slight increase in metal prices and EUR/USD rate to remain approximately at the level of the time when the guidance was published (14 February 2024).

CEO REVIEW

In the first quarter, Sotkamo Silver's net sales increased by 26 percent to SEK 85 million. The amount of milled ore increased both from the previous quarter and from the comparison period. As we anticipated last quarter, the average silver head grade was lower than the exceptionally high level of the previous quarter. Howerer, silver production increased by 49 percent year-on-year to 309,000 ounces (207,000). At the beginning of the quarter, production was also affected by individual technical challenges in underground mining and the concentrator plant.

As we continue our journey towards our targets for this year, we are supported by the positive development of silver and gold prices which have risen sharply over the past month. A recent report by the Silver Institute forecasts that demand for silver will continue to clearly exceed supply for the full year as well. During April, the silver price in Euro terms was on the highest level during our mine production.

Sotkamo Silver's EBITDA increased by 167 percent year-on-year to SEK 17 million. EBITDA margin in the first quarter was 20 percent. Profitability was affected by increasing costs, which reflected general inflation, and the preparatory work for future production carried out during the quarter. The Group's cash and cash equivalents decreased as a result of loan repayments and investments carried, however operating cash flow was SEK 2.7 million positive.

We proceeded as planned to improve our sustainability performance. Nitrogen emissions have been reduced as anticipated due to the commissioning of the bioreactor, and work progressed to achieve performance level A in accordance with the Towards Sustainable Mining standard. The mine waste management and closure plan related to the environmental permit is in process.

In the second quarter, we will focus on continuing stable production in order to take full advantage of the favorable silver market.   

KEY FIGURES

	Q1/24	Q1/23	Change, %	1-12/23
Net sales, MSEK	85	67	26	407
EBITDA, MSEK	17	6	167	140
EBITDA margin %	20	9	113	34
EBIT, MSEK	-1	-10		67
EBIT margin %	-1	-14		16
Equity ratio %	44	40	9	43
Cash liquidity %	94	67	40	105
Net debt-to-EBITDA ratio	1,5	11,7	-87	1,5
Personnel at the end of the period	49	44	11	47
Silver production, koz	309	207	49	1 411
Mill feed, kt	124	97	28	478
Average silver grade, g/tonne	91	82	12	105

EVENTS AFTER THE REPORTING PERIOD

Resolutions made at the Annual General Meeting

The AGM made the following decisions (23 April 2024):

• The income statement and the balance sheet for both the parent company and the group regarding the financial year 2023 were adopted by the AGM. The AGM decided that no dividend would be paid out for the financial year 2023. The members of the Board and the CEO were granted discharge from liability for the financial year 2023.
• The AGM decided that the Board would comprise of six ordinary members. Jukka Jokela, Kimmo Luukkonen, Sixten Sunabacka, Eeva-Liisa Virkkunen, , and Mauri Visuri were re-elected as directors and Joni Lukkaroinen was elected as director. Eeva-Liisa Virkkunen was re-elected chairman of the Board.
• The AGM resolved to elect the auditing company KPMG until the end of the AGM 2025.
• 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 Board’s renumeration report for 2023.
• The AGM approved the nomination committee’s proposal for annual fees to the Board.
• The Board's proposal to authorize the board to resolve on new issues of shares and other financial instruments was not supported by the necessary majority of the cast votes and the shares represented at the AGM. The AGM resolved not to authorize the board to issue new shares or other financial instruments.

FINANCIAL CALENDAR

• Q2/2024: July 26, 2024 
• Q3/2024: October 25, 2024 
• Q4/2024: To be determined

WEBCAST

Sotkamo Silver will hold a webcast today (30 April 2024) at 1:00 p.m. (EEST). The presentation will be held in Finnish, and the material is in English. The webcast can be accessed through the following link:
https://link.silver.fi/2024Q1

The presentation will be available at the Company website at:
https://www.silver.fi/en/investors/presentations

CONTACT INFORMATION

Mikko Jalasto,
CEO, Sotkamo Silver
[e-mail]
[phone]

Tommi Talasterä,
CFO, Sotkamo Silver
[e-mail]
[phone]

This is information that Sotkamo Silver AB is obliged to make public pursuant to the EU Market Abuse Regulation.

This is a summary of Sotkamo Silver's Interim Report. The complete report is attached to this release and available at the Company webpage: www.silver.fi/en/investors

Sotkamo Silver in brief

Sotkamo Silver is a mining and ore prospecting company that develops and utilises mineral deposits in the Kainuu region in Finland. Sotkamo Silver supports the global development towards green transition technologies and produces the metals needed responsibly and by taking local stakeholders into account. Sotkamo Silver’s main project is a silver mine located in Sotkamo, Finland. In addition to silver, the mine produces gold, zinc and lead. The company also has mining and ore prospecting rights for mineral deposits in the vicinity of the silver mine in Kainuu. Sotkamo Silver Group consists of the parent company Sotkamo Silver AB and its wholly owned Finnish subsidiary (Sotkamo Silver Oy). Sotkamo Silver is listed at NGM Main Regulated in Stockholm (SOSI), Nasdaq Helsinki (SOSI1), and Börse Berlin.

Read more about Sotkamo Silver on www.silver.fi/en/

Attachments
Sotkamo Silver Q1 2024 Report English

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