Akobo Minerals Ab

the fourth quarter 2024 presentation for ACOBO Minerals. I have with me today Helge Rosfeldt, our head of mining and processing. Together we will take you through the latest updates from the company. Fourth quarter is some time back. We will try to focus more on the latest development and try to give you the information you're looking for. So, Akobo Minerals, what's new? Well, we are now officially an Ethiopian gold producer, a major step forward for the company. After 15 years of working on the project, so that's a great milestone and achievement for the company. We are the second operating mine in Ethiopia since the Legadembe mine opened in 1994. So that says a lot about what we have managed to do over the last few years. We've been there for 15 years. We have now a strong local foothold in the area. It's a nice place to work and we're operating on a daily basis every day all year round.

And again, the Segele mine is now in commercial production. Good morning.

Welcome to the fourth quarter 2024 presentation for ACOBO Minerals. I have with me today Helge Rosfeldt, our head of mining and processing. Together we will take you through the latest updates from the company. Fourth quarter is some time back. We will try to focus more on the latest development and try to give you the information you're looking for. So, Akobo Minerals, what's new? Well, we are now officially an Ethiopian gold producer, a major step forward for the company after 15 years of working on the project. So that's a great milestone and achievement for the company. We are the second operating mine in Ethiopia since the Legadembe mine opened in 1994. So that says a lot about what we have managed to do over the last few years. We've been there for 15 years. We have now a strong local foothold in the area. It's a nice place to work and we're operating on a daily basis every day all year round. And again, the Segele mine is now in commercial production. And it's based on the exploration and mining licenses that we have in the Gambela region and the Dima Voreda that you can see on the small map here, all the way to the border of South Sudan. A very nice area to work in. So the company has some strategic advantages. We have our exploration license with a world-class deposit potential. We still see a lot of potential within the area and more and more confidence as we explore the bigger and larger area around us. Of course, the high margin cash flow that we expect from the Segele mine is based upon our resource mineral estimates with an indicated part of 41,000 ounces. And as you can see, it's pretty good at 40.6 gram per ton. This is closest to the surface and it is the area that we are moving into these days. Total resource 68,811 ounces at 22.7 gram per ton. It's some of the richest gold in the world. However, of course, it's a small resource, but we are confident that we will be able to extend this over time. We do have a very modern and efficient processing plant established, and we do have in-house drilling capacity. So for the growth and the future of this company, within the mining license, we already see potential for expansion. That's something we will focus on in the near term to try to establish a wider area of mining. Of course, the Segele deposit, as I said, is positioned to deliver a substantial cash flow over the next few years. And in general, for us being the second producing mine now in Ethiopia, we are well positioned to become a key player in the Ethiopian mining industry. So for the latest key events, of course, the most important, our first ever revenue achievement and first quarter with revenues in our 15 year history. And coupled with that, the record gold price has a significant impact on the cash flow and the value of the Segele deposit from where we are right now. We have strengthened our cooperation with Sutton Global. They're working hard on progressing the vertical shaft project with the preparation for that, the design work and also the site establishment and it's all moving very well forward. We'll talk more about that later. We do have some leadership transitions. It's not unusual in our business that there are changes from time to time. So Helge Rosfeldt, he will pursue new opportunities outside of the company. Of course, I would like to extend my gratitude for all the hard work he has been doing. doing for the company over the last few years. It's not been easy, but he's been a strong supporter of the company, of the project and will continue to be so going forward. So we'll have to do some changes with that regard and what we're doing is bringing in Kobus Bilvelt. He has 40 years of mining experience and he's joining us from Sutton Global. He is already actively working in Ethiopia and I've had the pleasure of working with him in Addis for the last couple of weeks. It looks very very promising. Also some changes since we're moving from a project-based operation to a more steady state operation where we do the same every day and we're trying to improve on what we're doing every day. We have also decided to change our local general manager in ethnomining. So Tamir, who is a mining engineer, one of the first pioneers, actually, who started the mining in Ethiopia many, many years ago. He will take over while Tesfaye Medana, our general manager for the last four years, he will step down. I would like to, of course, commend his work of getting the Segele mine up and running. It's been hard work and it's very much appreciated. On the production side, we have produced 18.5 kilos of gold so far. We've started our cost covering, which of course is very important for us. Even though the first two months of the year was lower than anticipated, we don't see any reason to change or modify our overall ambitions. Helge will talk a bit more about this, but we're still in the early phase. We're still working to expand and open up areas on the ground. And with that, we will also be able to produce more efficiently and get higher grades out. On the financial positioning side, we are continuing our efforts to support the development on the vertical shaft. And we're focusing on securing funding for that. And we're looking at different options, being it strategic, industrial, off-take agreements, and more. So we will update the market once we have more information on that. I think it's worth mentioning now all the recent Ethiopian economic development. I've spent a lot of time in Ethiopia lately and it's an enormous development and activity that I see every day. This country is transforming itself again into what we thought it would be a few years ago, before the conflict in the north and before COVID. And I'm very, very happy to see the latest development, especially driven on the economic reform side. We've seen a successful currency flotation. That's not an easy achievement, but that has been, in my view, very successful. We've seen a huge reduction in inflation that is expected to continue. We've also seen the IMF and World Bank agreements coming into place that is also helping on upgrading and renewing the economics reform. There's a push for that. They have launched their own security exchange. That of course is in the early stage, but it will definitely enable future capital raising through equity and bond markets in Ethiopia and just expand the general economic activity in the country. Opening of the bank sector. Just last week, the new directive came. It's not possible for banks to get up to 40% foreign ownership. That will also strengthen the whole banking sector, connect it more to the national banking systems, and just improve the competition and financial inclusion that we see. Also important for us is the improved access to foreign currency. We are now able to pay our national suppliers from local currency being exchanged into dollars in the country and then pay them. This has never been possible before. So we are very, very positive with regards to the economic development these days. Even you see the economic growth here, estimate that some 7-8% last year in 2024. So of course, despite challenges, again, Ethiopia is making significant progress in economic reforms and creating more attractive

environment for investors and we would like to see more for direct investment investments into Ethiopia and also especially the mining sector that will only be positive for all of us What they're working on in addition is the entry to the World Trade Organization. A lot of work is being done there. might be expected to conclude in 2020. So, also a very interesting and exciting opportunity is a potential collaboration with Ethiopia and the Ethiopian Sovereign Fund. So the Sovereign Fund

They are now in charge of managing all state-owned enterprises, some 50 companies with approximately assets under management of $150 billion. They have a philosophy that is close to markets. market-based and economic-based follow-up. They're here to make money, they're here to improve, to make their state-owned companies more efficient, and they do have extensive expertise in commercial management. They're now a driving force in the Ethiopian economic development.

And mining, being a strategic industry for Ethiopia, they are now putting more effort into understanding it, more or effort into seeing how they can help expand and support support companies And with that comes a very long-standing and ongoing discussion that I have had with in Ethiopian investment holdings for a long, long time on the potential collaboration and investment into the company. We have overcome a lot of regulatory hurdles since there's no company in Ethiopia that's been allowed or ever been investing outside of Ethiopia before so yeah is now awaiting their final guidelines from the National Bank in order to conclude their first every national investment. We are saying this now because the

and the level of the national bank level of handling this tells me that we now need to disclose this. There is of course still a chance that this might not happen but we are very confident and we are addressing this together with Ethiopian Investment Holding. So we will get back to this once we have more news and updates. But so far, it looks very promising. Also worth mentioning these days is our cooperation with Sutton Global. Sutton Global, they're a group of companies with expertise in certain areas, and especially within marketing.

mining and finance related to mining. They are now more and more ungracefully taking over. our mining and processing operations at site which is something I'm very happy with it gives they have a lot of expertise and from just first interaction that we're seeing now, it makes me very comfortable, especially the trajectory towards syncing the new vertical shaft. So they already have a business support manager with us.

We now have a mine manager, operations manager.

We will get a process plant manager in once we start the CIL in the near future. They have a team working on supplier selection for the vertical shaft project. They have the technical expertise on how to do the vertical shaft project. And the mine planning side also goes along with this. So I'm very happy again that Sutton is taking full responsibility for this now going forward. As you can see here from the right hand side, Sutton is a trusted partner, not only of us, but also of our lenders, Monetary Metals. So the three of us are working hard together

and move the project forward. On the gold sales and financial updates. As I said earlier, we have ongoing strategies. discussions, not only with EIH, but with other industrial and strategic partners. we're also looking at some offtake agreements and we will get back once we have some we are working to find the solution that is the best for current shareholders and of course and you can see here we have a strong relationship and continued support from Monetary Metals in the future. Now solutions that will facilitate our

expansion, but will also be more fit for the current operation and the risk level that we're working on. You can see from the table that we're building up a small gold inventory. Of course, we would have liked to have processed that already and sold it to the bank. That is not possible before we start the processing plant and the CIL startup. But it's good to see we have gold in the bank, sort of, even though it's in the tailings at our site. You can ask some questions here on the purity of the last three batches smelted. That's something we're reviewing, and I'm happy to see that certain specialists will arrive the first week of April.

to investigate this further and help us with the next small thing that will happen that week and hopefully we will be able to fine-tune and get more out and also work more efficiently. and here you can see the total production 18.5 kilos both it has an average before taking into consideration what's in the of 15 gram per ton that's still amazing when you look at the industry average of 1 to 3 gram per ton If you include what is in the tailings, starting to match what we expect from the overall grade from the overall deposit.

It's looking good, but we're also expecting this to improve over the next few months. And again, while still early days, we are expecting improvements as we also open up new areas for mining underground. Helge will talk more about that. I found this one again. It's a slide we used a few quarters ago. It's probably even more relevant these days. We've all seen the gold price reaching all-time high, passing $3,000. I will not speculate which way it will go, but you can see here at least as an illustration of what a change up and down from the

that will do to both the cash flow and the value of the resource. So if you look at the $3,000 mark, cash flow side it's an estimated 90 million dollar cash flow and here I would like to add in that. If you do compare that to the monetary metals gold loan, which will peak at 8,750 ounces now. That is valued at $25 million. So there is still more than enough cash flow to support that loan. that's important to understand and even though we are in an ongoing dialogue with Now for better alignment with the current operational status and also the risk level.

Okay, ESG health and safety. That's still important. You see here our lovely team on the clinic. We are taking care of all our 200 employees every day. It's a wide range of things they fix every day. And we're very, very happy to have this team at site supporting us. In general, they're doing also the regular work on the environmental monitoring side, noise, dust, annual performance report being submitted.

We do have increased focus on health and safety. which you can see here. at the camp or at the mine. We're focusing on upgrading also with for instance safety officers and the general doctor reporting of incidents so that we can improve all the time. Again, we are definitely committed to responsible marketing. prioritizing the environmental stewardship and also the safety of our workers. Expiration, still a bit scaled back.

In the fourth quarter, we've still had to prioritize the Segele mining ramp-up, but we have done some essential geological groundwork. We did complete five holes at the Segele surroundings. We have identified and prioritized new drilling targets. We've also re-examined a lot of the old holes and done core re-logging. Data management is important to get a better understanding of what we have and trying to get the puzzle to fit together. A lot of surface mapping and sampling is happening. That's field work where you do

rock and soil sampling and adding that into the geological mapping. Unfortunately the drill rig is now under maintenance. We need to get spare parts from In the meantime, we're focusing hard on still doing surface mapping and sampling and then in preparation for the next It's not decided yet when that will happen, but I have a strong feeling we will start now to focus on the gingival area and together with certain and see if that is something we can get mining of so that is something we're excited about we'll get back once we have more. Yeah. A couple of nice This is the area.

Guys working the drill rig. It's not always this nice. We're moving into the rainy season. But this is the area that we're working on. It's a nice area. Then over to the more important part of our operation and what is going to generate revenues for us and cash flow, the Segele mine in itself. You see a lovely picture here. Helge, I'll leave it to you to take us through the next few slides and explain what we're doing underground, what's been happening, what we're looking for and what we expect going forward.

Good morning everybody. I would like to... I'll show you this picture first. It shows the mining management discussing and painting yellow paint on and this is kind of a historic moment because this is the first race And the yellow paint is marking where we are taking the first blast for the first stope. in the mine so it's a very nice picture historic or milestone Next. Okay.

So, the mine, as I have explained to everybody before, has two winces going down. And we have for some time now operated through one of them. But now we have extended the eastern winds, as you can see, from this crosscut one at level 585 down to crosscut two at level 575. That's a bit deeper. and and the the areas where we have so far mined is in this area of the crosscut one which is also called the trial stop area we knew that this one was not the highest grade of all but we have

still seen very high degree there but now we are moving into uh the level five 75 and where we go into area which is the highest grade area of the whole mine so i would believe that any day now uh at level 575 I would reach 4 and then the dynamics of the mine will change because then you can start to take out or both from the western winds and the eastern winds at the same time and we are moving into a very rich or level. Yeah, the key mine metrics, you have seen this before. It's not new. We still have a very We have plant capacity that is much higher than we have so far been able to mine.

And we have excellent possibilities at the depth.

Next. Okay, so what has happened?

We have, as I said, sunk the eastern winds level down to level 575 and started a new crosscut, the crosscut 2. uh we have opened several phases for our extraction in crosscut one so and that is very important because then we have the possibility to find different kinds of ores and we can blend it into the

so that the plant receives homogeneous or a better recovery in the plant and in the production. Another thing that is very important and easily overlooked is the fact that we have had steady or production day by day for the last quarter and and the whole and also the first quarter of 2025. the system is working. We are extracting ore every day. We are also blocking down to level 575.

And we have been able to do that day by day and in continuous operation. And that is a very good thing. So the eastern winds is now at 86 meters and will be used for extraction of ore from crosscut 2 down at that level. The western winds is at current length 63.5 and is used for extraction of ore from the higher up crosscut at crosscut 1. We have previously said that we have an inclined shaft and The previous slide showed that the inclined shaft still.

But we are now through the help of certain global moving away from that plan. vertical shaft I will go to that but that is a significant change in how we will The challenge we face is that the current mine infrastructure with these two winces severely limits the extraction of ore from the mine. And that is also why this new sink shaft or vertical shaft is planned. Okay. So. So the new vertical shaft, the first thing I want to say about it is that it will replace

and it will save us time and money. A vertical shaft is much shorter in length and it is easier to get down in a shorter time period. The area where it will be started is between the two current uh winces so it's very close to the ore so once we reach down to levels it's almost on the ore so far it is planned to a depth of approximately 130 meters and it will be at four levels so the first level down in the mine will be at minus

40 meters from the surface and 30 at 30 meters down minus 70 minus 130 meters those are the four levels that has been planned so far the capacity of the is like 100 to 150 tons per day and it's important to compare that with the current 10 to 20 tons per day that you get from from the . Each of this skips that go up and down we'll have two carts in them so you you use small like railway cars that fill up about 1.5 tons so two of the surface. So the just

Three of these hoistings will be the whole day production for one winch today. This system also can be used for personal carriage up and down. You have a personal cage and you also use it for waste and ore of course. What is also important is that when we reach the minus 40 level, we can already then immediately start working at that level while we are still sinking the shaft down further to the 130 meters that are planned.

So that means that it can be used for operations while it's

major advantage for us. Yeah, size system. 2.5 by 2 meters. or what you see in this drawing on top it's a standard design and it will be manufactured in South Africa. the approximate cost of everything from the top and all the equipment around 900,000 US dollars for the wine, the headgear and everything you need. And For personnel, we need two experts South Africa for that are experts on making sink shafts, vertical sink shafts.

And we also have people that have been doing this for a long time, the specialists, operators from Zimbabwe, about seven of them.

Okay, next. Yeah.

This is just a few pictures I took last time I was down in Ethiopia. To the left there, you have two of our best geologists discussing what they see on the ground in the crosscut. Right beside them, I took a picture of the wall in the mine. Do you see my fingers there?

pointing to relatively or to say it mildly, just on the face uh of the wall. So that is how it looks like underground there. Okay, so we're. back to the processing plant the fourth quarter saw a very good the production especially in November with the with two 2.8 kilo in October, 10 kilo in November, and 2.3 again in December.

And we were going through some very rich areas in this trial stop area of the mine. um another thing is that the processing plant has been running every day with minimal downtime uh processing this or from from the from the mine next yeah so the key recent developments is that yes we have produced on a daily basis without much downtime

And the way we have been producing now is meaning that we have started and stopped process every day. That has given us an