Endomines AB (publ), Stock Exchange Release, 30.11.2020 at 23:15  CET

The Board of Directors of Endomines AB (publ) ("Endomines" or the "Company") has today resolved on a rights issue of a maximum of 112,547,292 shares (the "Rights Issue"), corresponding to approximately MSEK 281 in total proceeds before transaction costs upon full subscription, subject to approval by an Extraordinary General Meeting (the "EGM") intended to be held on January 4, 2021. The proceeds from the Rights Issue will be used for the ramp-up of the Friday mine, and to further exploration at, and start-up of production in, mining areas US Grant, Kearsarge, Rescue/Unity and Kimberly in the US. The proceeds will also be used for continued exploration and re-start of production at Pampalo along the Karelian Gold Line in Finland as well as for debt repayment.

The Board of Directors also proposes that the EGM authorises the Board to resolve on certain directed share issues after completion of the Rights Issue to enable set-off of part of the Company's debt and as payment to the guarantors in the Rights Issue.

• The Rights Issue comprises a maximum of 112,547,292 shares
• The shareholders have preferential rights to subscribe for six (6) new shares for every seven (7) existing shares
• Shareholders who choose not to participate in the Rights Issue will be diluted by approximately 46 percent, assuming full subscription of the Rights Issue
• Subscription price will be SEK 2.50 per share
• Rights Issue proceeds will be MSEK 281 before transaction costs, upon full subscription of the Rights Issue
• Prospectus for the Rights Issue is expected to be published on or about January 7, 2021
• Record date for participating in the Rights Issue will be January 7, 2021
• Subscription period for the Rights Issue will be January 11 - January 25, 2021
• The resolution by the Board of Directors on the Rights Issue is subject to approval by the EGM intended to be held on January 4, 2021
• In total up to MSEK 168, representing 60 percent of the total amount of the Rights Issue, is covered by subscription undertakings and guarantee commitments.

Certain of the Company's current shareholders, Joensuun Kauppa ja Kone Oy, Mariatorp Oy, Wipunen varainhallinta Oy, K22 Finance Oy, Kari Heikki Ilmari Kakkonen and Ingmar Haga, have signed undertakings to subscribe for shares in the Rights Issue, corresponding to approximately MSEK 58 in total, representing 21 percent of the Rights Issue.

In addition, certain external guarantors, led by Formue Nord A/S, have entered into guarantee undertakings for a total amount of MSEK 110, corresponding to 39 percent of the Rights Issue. The guarantee undertakings can only be utilised up to a total maximum subscription in the Rights Issue of MSEK 168.

The Rights Issue is thereby covered by subscription undertakings and guarantee commitments up to MSEK 168 in total, corresponding to 60 percent of the total amount of the Rights Issue.

As compensation for the guarantee undertaking, the guarantors are entitled to 10 percent of their respective guaranteed amount in cash, or 12 percent of their respective guaranteed amount if the compensation is paid in newly issued shares in the Company, to be determined by the guarantors in their sole discretion. However, if the Rights Issue is fully subscribed, the form of compensation, cash or shares, shall instead be determined by the Company in its sole discretion. If no authorisation to resolve on such directed issue is granted by the EGM, the compensation shall be paid in cash.

Authorisation for the Board of Directors to decide on directed share issues

In light of the above, and in order to be able to pay the compensation to the guarantors in newly issued shares in the Company, the Board has decided to propose that the EGM resolves on an authorisation for the Board to resolve on a directed share issue of a maximum of 5,280,000 shares in total, corresponding to a total of MSEK 13.2, to the guarantors as payment for their guarantee undertakings, should the compensation for the guarantee undertakings be paid in newly issued shares.

In order to provide flexibility to the Company on repayment of bridge financing and to achieve a more favourable capital structure for the Company, the Board has also decided to propose that the EGM resolves on an authorisation for the Board to resolve on a directed share issue of a maximum of 4,483,409 shares, corresponding to a total of approx. MSEK 11.2, to Mariatorp Oy and Wipunen varainhallinta Oy against set off of their loans to the Company. Such authorisation will only be used to the extent the loans have not already been set off by subscription in the Rights Issue. Further, for the same reason, the Board has decided to propose that the EGM resolves on an authorisation for the Board to resolve on a directed share issue of a maximum of 20,000,000 shares, corresponding to a total of MSEK 50, to a group of lenders, including Formue Nord A/S, that have provided bridge financing to the Company, against set-off of their claims on the Company.

The subscription price in the potential directed shares issues set out above, if resolved, will be SEK 2.50 / share, equivalent to the pricing in the Rights Issue.

If the Board of Directors uses the proposed authorisations above to resolve on the directed share issues to the maximum amounts as set out above, this would correspond to a total dilution of the Company's outstanding share capital, following completion of the Rights Issue, of approximately 11 percent, assuming that the Rights Issue is fully subscribed.

For more information on the proposed authorisations for the Board of Directors to resolve on the directed share issues, see the notice to the EGM which will be published in a separate press release on or about December 3, 2020.

Background and reasons

In October 2020, Endomines finalized the acquisition of the US Grant/Kearsarge gold properties in Montana, USA and advancing towards its goal of becoming a 100.000 oz per year gold producer. The Friday mine in Idaho, USA, started producing gold during 2020. In addition to continuing production ramp-up at Friday, the proceeds from this Rights Issue will be used to develop several other mines in the US as well as to re-start the Pampalo mine in Finland. The US Grant/Kearsarge, Rescue/Unity and Kimberly gold deposits will be developed and placed into production one by one. These mines are all expected to be in production by 2024, and the Company's intention is to increase the annual production to, in total, 100,000 oz gold by 2024.

Continued development of Friday

Endomines announced the first shipment of gold concentrate from the Friday Mine in April 2020 and continued the ramp-up of the Friday mine and mill during the summer months. Due to the very tight liquidity situation Endomines was forced to temporarily slow down operations and ramp-up after the summer months. During the slowdown period Endomines has focused on resolving the remaining technical issues at the mill mainly relating to tailings dewatering that have reduced the overall throughput at the mill. Plans to correct these issues have been finalized and the operation will continue as soon as financing is in place. Annual gold production at the Friday mine in Idaho, USA, is targeted at 9,000 oz with further expansion under evaluation, targeting more than 13,000 oz/p.a. Cash cost, depending on the mining sequence, i.e. what area is being mined at a particular time is estimated to be in the range of 550-900 USD/oz, over the life of the mine.

Exploration and start-up of US Grant/ Kearsarge, Rescue, Unity and Kimberly

The US Grant/ Kearsarge properties will be explored and developed with phase-one production start-up in 2022. At Rescue and Unity, the next steps are to carry out further exploration and mine development to place both properties into production by 2024. Subject to final permitting, the current plan is to start production at Rescue by 2023 and Unity by 2024. At Kimberly, exploration, permitting and mine development will be done for a planned production start-up by 2024. Kimberly production potential will be confirmed based on drilling results received during 2021. A large part of the Rights Issue proceeds will be used for mine development and start-up of US Grant/ Kearsarge and Rescue as well as re-starting the Pampalo mine. With all the rest of the Idaho assets producing, Endomines estimates annual gold production to be approximately 100,000 oz by 2024.

Exploration and start-up of the Pampalo mine along the Karelian Gold Line

Endomines will re-start gold production along the Karelian Gold Line by using its Pampalo mine that was put on care and maintenance in 2018. This is also why Endomines intends to allocate part of the Rights Issue proceeds to finance the production start-up and continue exploration along the highly prospective Karelian Gold Line with the intent to increase the mineral resources.

Debt repayment

Endomines will use part of the Rights Issue proceeds to repay certain bridge loans to an amount of preliminary 60 MSEK, to the extent such bridge loans have not been set-off against the respective lender's subscription of shares in the Rights Issue or the directed share issues as set out above.

Terms and conditions for the Rights Issue

The Board of Directors of the Company has today, subject to approval from the EGM, resolved on the Rights Issue. Shareholders in the Company who on the record day for the Rights Issue are entered in the share register, will for each share held in the Company receive one (1) subscription right. Seven (7) subscription rights entitle to subscription of six (6) new shares at a price of SEK 2.50 per share. The Rights Issue comprises a maximum of 112,547,292 shares. The subscription price will be recalculated to EUR for the shares traded on Nasdaq Helsinki. The subscription price in EUR will be stated in the prospectus for the Rights Issue, which is estimated to be made public on or about January 7, 2021.

The subscription period is estimated to run between January 11 - January 25, 2021 or such later dates as resolved by the Board of Directors of the Company.

The number of shares in Endomines will increase by 112,547,292 to 243,852,467 shares, assuming full subscription. Shareholders choosing not to participate in the Rights Issue will have their respective holdings diluted by approximately 46 percent, assuming full subscription of the Rights Issue, but have the possibility to be economically compensated for the dilution effect by selling their subscription rights.

As a condition for the Rights Issue, the Board of Directors proposes that the EGM resolves to decrease the shares' current quota value from approximately SEK 3.00 to SEK 2.00, through decrease of the share capital and a bonus issue to restore the share capital and restricted equity. For further details in this matter, please see the notice to the EGM, which will be published in a separate press release on or about December 3, 2020.

The Rights Issue proceeds amount to approximately MSEK 281 before transaction costs, upon full subscription in the Rights Issue.

Certain of the Company's current shareholders, Joensuun Kauppa ja Kone Oy, Mariatorp Oy Wipunen varainhallinta Oy, K22 Finance Oy, Kari Heikki Ilmari Kakkonen and Ingmar Haga, have signed undertakings to subscribe for shares in the Rights Issue, corresponding to approximately MSEK 58 in total, representing 21 percent of the Rights Issue.

In addition, certain external guarantors, led by Formue Nord A/S, have entered into guarantee undertakings for a total amount of MSEK 110, corresponding to 39 percent of the Rights Issue. The guarantee undertakings can only be utilised up to a total maximum subscription in the Rights Issue of MSEK 168.

The Rights Issue is thereby covered by subscription undertakings and guarantee commitments up to MSEK 168 in total, corresponding to 60 percent of the total amount of the Rights Issue.

For more information about the undertakings and commitments, see the prospectus that Endomines will publish on or about January 7, 2021.

EGM in Endomines

The Rights Issue and the authorisation to resolve on the directed share issues are subject to approval by the EGM in Endomines intended to be held on Monday, January 4, 2021. The notice to the EGM will be made public through a separate press release on or about December 3, 2020 and will be available at the Company's website www.endomines.com.

Indicative timetable for the Rights Issue (all dates are estimated dates)

January 4, EGM to approve the Board of Directors' resolution on the
2021 Rights Issue
January 4, Last date of trading in shares including the right to
2021 receive subscription rights
January 5, First trading day in shares excluding the right to receive
2021 subscription rights
January 7, The record date for participating in the Rights Issue, i.e.
2021 shareholders that are registered in the share register on
this date will receive subscription rights that entitle them
to participate in the Rights Issue
January 7, Publication of the prospectus
2021
January 11 - Subscription period with and without subscription rights
January 25,
2021
January 11 - Trading in subscription rights on Nasdaq Stockholm and
January 19, Nasdaq Helsinki
2021
Around January Publication of the preliminary outcome of the Rights Issue
28, 2021

Advisors

Evli Bank is financial advisor and Cederquist is legal advisor to Endomines in connection with the Rights Issue.

For further information, please contact:

Marcus Ahlström, Deputy CEO and CFO, +358 50 544 68 14, marcus.ahlstrom@endomines.com

Ingmar Haga, Chairman, +358 40 700 35 18, ingmar.haga@endomines.com

This information is information that Endomines AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication through the contact persons set out above at 23:15  CET on 30 November 2020.

About Endomines

Endomines is a mining and exploration company with its primary focus on gold. The Company explores for gold along the Karelian Gold Line in Eastern Finland and develops mining operations in Idaho, USA. Endomines aims to improve its long-term growth prospects by increasing its exploration activities and through acquisitions. Endomines aims to acquire deposits that are situated in stable jurisdictions and can be brought to production rapidly with limited investments.

The shares trade on Nasdaq Stockholm (ENDO) and Nasdaq Helsinki (ENDOM).

Important notice

The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, subscription rights or other securities in Endomines. Any invitation to the persons concerned to subscribe for shares in Endomines will only be made through the prospectus which Endomines estimates will be made public on or around January 7, 2021.

This press release may not be released, published or distributed, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, or the United States or any other jurisdiction where participation would require additional prospectuses, registration or measures besides those required by Swedish law. Nor may this press release be distributed in or into such countries or any other country or jurisdiction in which distribution requires such measures or otherwise would be in conflict with applicable regulations. Any failure to comply with the restrictions described may result in a violation of applicable securities regulations.

The subscription rights, paid subscribed shares and shares in Endomines have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities legislation of any state or other jurisdiction in the United States and no subscription rights, paid subscribed shares or shares may be offered, subscribed for, exercised, pledged, sold, resold, granted, delivered or otherwise transferred, directly or indirectly, in or into the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States. There will be no public offering of such securities in the United States.

The securities referred to herein have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the rights issue or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

This press release contains certain forward-looking information that reflects Endomines' present view of future events as well as financial and operational development. Words such as "intend", "assess", "expect", "may", "plan", "believe", "estimate" and other expressions entailing indications or predictions of future development or trends, not based on historical facts, constitute forward-looking information. Forward-looking information is inherently associated with both known and unknown risks and uncertainties as it depends on future events and circumstances. Forward-looking information is not a guarantee of future results or development and actual outcomes may differ materially from the statements set forth in the forward-looking information.

In case of differences between the Swedish, Finnish and English language versions of this press release, the Swedish language version shall prevail.