Endomines AB (publ)

Hyvää iltapäivää kaikille ja tervetuloa Endomaisin tilinpäätöskatsaukseen. Mun nimi on Kari Pyyhtinen, mä oon Endomaisin toimitusjohtaja. Mun kanssa täällä tänään on myöskin Mikko Sopanen, meidän talousjohtaja. Our agenda for today, I'll start with a look at the data from Endominds. Then we'll look at our main events, H2 and the whole year 2022. Let's also take a look at the results for this year. Then we'll go through our ESG program. It's a new program. It was completed at the end of the year. We'll take a good look at it. Then we'll look at the climate results from the Earth and our Malmi research plan for this year. Mikko will continue and go through the financial review. During the broadcast, you can ask questions via the chat, and we will answer them accordingly. Let's start with Endomines. Endomines is a Finnish company that is active and responsible in mining. We operate at the Karelian Gold Line. The name of our production plant is Pampalo, and it is located in Ilomantsi. The Golden Line of Karelia is well known as a green stone pyramid, where geology is very similar to the world's leading gold-producing areas. If you think about Kalkuuli in Australia, Abitibi in Canada, or Witwatersrand in South Africa, it is a very similar area. We have upgraded our strategy and our focus is strongly on the gold line in Karelia. Our mission is to increase the awareness of the gold produced responsibly. We believe that there is a value in the fact that gold is made in Pampalo, in Finland, responsibly and correctly. Our long-term goal is to introduce a consumer concept that could be in the form of coins, that the coin is made from Pampalo gold, and we believe that it also has value from the point of view of business. Our vision is to make Karhankulta Line one of the world's most significant and responsible gold production areas. The potential in that area is great, and we believe that in the long run, we can grow a very significant gold-produced area. We are a growth company, and we like to think in a slightly different way. We are a human chain, we do things right, and we openly tell what we do. Our strategy has four main points. Pampalo is our production centre. It has a free production capacity. There are also exhibitors in the vicinity, which we know are there. At the same time, we conduct researches. The idea is to increase production by bringing other materials to Pampalo. With longer targets, the proportion of agricultural mining decreases, and the proportion of material coming from elsewhere increases, and production increases. Our second focus is Malmi's research at Karelian Kultalinja. We have set a goal of over a million units. Why do we want to set this goal? There are two reasons. One is that it creates opportunities. Then we can think about increasing production levels. much bigger, opens opportunities for cooperation in pictures and such. But then the other reason is that the gold in the country has value. Often in mining companies it is valued at 100 to 200 dollars per ounce in the country. It doesn't have to be in production yet. We strongly believe that this way we can create added value also for the owners. In the new US strategy, we are not investing in it significantly, but we want to advance through partner models, where a local partner brings in local knowledge, operational knowledge and also economic resources. The ESG program is a very important thing for us. It's the way to develop companies in general. We do things right, we meet people and partners in the right environment. We have short-term goals that we do every month, and then the long-term goals with which we develop companies. If we look at our main events, H2 and then the whole year. If we start with H2, our production growth is 47.3%. We produced 159.4 kilos of gold, which is over 5,000 tons. It went according to our plans. This is how we thought it would go. In that sense, we can be satisfied with the production growth as we thought. Our EBITDA was 0.5 million, 6.7% of the turnover. If we take it out, gold and usually metal in the business, the final turnover is often measured only after the final analysis, and H2 had effects from previous seasons. If we take them out, our EBITDA was 0.7 million, 9.1% of the turnover. During H2, we started funding with IDA's help fund. We got 7.7% of our production from there. It was a good increase, and it will definitely increase here. We moved our home to Finland. We are a Finnish company now. We invest in Finland and our home is in Finland. We got it ready in October. When a new company, Endominds Finland OYJ, was listed in Finland, we made a listing fee of 13 million euros. We are very pleased with that. We received 4 million euros from hands and converted 9 million euros from our exchange loan to shares. We also received positive results from land-based mining. We also found a new gold mineralization called Kartitsa, which is about 20 km north of Pampalo. If you think about the whole year, our production was 267.5 kg, 8601 oz. And our EBITDA was 0.6 million, which is 5% of the turnover. It's good to note that we started our production at the beginning of the year. Our first operations were in January, and if you think about it, our EBITDA for the entire year was 0.5 million in June. Q2 and Q3 were quite normal. In Q4, the conditions were also very unusual. There was high inflation. The price of gold also went to lower levels. Energy is one of those things that hit the stock market quite hard in March and December. We are pleased that we reached this level. We were positive on the use case, also on H2, throughout the year. We came up with a new strategy this year. We reorganized our operations in the US. We have a much lower cost structure in the US. This is important because we have the partnership negotiations going on. We are not in a hurry. The cost structure is at a level where we can do the negotiations properly. We are not in a hurry to make decisions. The important thing is to get a good result. We have also developed our organization a lot. Last year, we received additional geological resources from the Malmi Research Foundation. It is a great thing that people make the results and we have got our organization in order. Our balance sheet is much stronger, because we converted 9 million of our loans into stocks. Mikko will probably tell you more about it, but the change is significant. In terms of security, the rate of our event was 7.7% at the end of December. We still have work to do. We want to be a 0% event company. Let's take a look at this year. Viime vuonna laitettiin asioita kuntoon, luotiin se perusta. Tehtiin paljon juttuja, meillä oli monta perusprojektiä. Niin kuin ollaan aikaisemminkin kommunikoitu, meidän fokus keskittyi siihen, että saadaan tuotantomääriä ylös, koska se luo sen pohjan. Tänä vuonna keskitytään siihen, että meidän tulos paranee ja sitten, että me kasvetaan ja luodaan se kasvupolku ja myöskin sitten sitä pidemmän tähtäimen näkymää. And we see that this year, our gold production is growing by about 35-55%, which is a significant increase. All that gold comes from Pampalo, and it is not included in the US operations of gold production. We believe that our economic results will be much better than in 2022. There are many reasons for that. The reason is that energy costs are significantly lower, and the outlook is very positive. At the moment, energy prices can already be protected to a very low level this year. We also believe that because our focus has been to raise the production levels, we can now also promote and continue to improve our operations and thus lower our production costs. On the other hand, through our volume increases, there will also be a clear improvement in unit prices. Kullan hinta on hyvällä tasolla ja näkymä on kohtuullisen vahva. Vaikka vaihtelua on, se näkymä on aika positiivinen. Uskotaan, että sekin tukee tätä vuotta. What is also interesting this year is that, according to the strategy, we are starting to do a large-scale Malmi research, and we have already started this. It is in progress. There are three things that we are doing. First, we have the old data, which the Geological Research Centre of Outokumpu has, for example, done in the previous years. We process it again. We have new computer programs and new experts to look at it. We look at the area as a whole, where there could be differences in the old measurements, and where it is better to do more Malmi research. On the other hand, we do a lot of mining. We have a mining computer in Kartitsa, and the mining is going on in Korvilansuo. They proceed according to the plans. When we look for gold, we first take a mining computer and analyze it. If there is gold, we dig a research hole and see if there is more gold. It goes through the system. Toisaalta me uskotaan, että meidän kumppanuudusneuvottelut saadaan päätökseen koskien Yhdysvaltojen toimintaa, niin saadaan ne päätökseen tänä vuonna. Sitten me jatketaan työtä ESG parissa ja me halutaan olla siinä hyvä ja se ohjaa meidän yrityksen kehitystä. Briefly about our ESG program. Last year, we did a priority analysis, where we interviewed our partner groups, customers, employees, partners, and local residents. and also investors. Based on that, we created a program where we determined what is important to us, what people see as important to us in our business, important to take into account. In terms of the environment, the important things for us are especially CO2 emissions. It is an issue where we want to be good, that we reduce emissions and show examples to others. We have a small company, so we can do great things from the team. Water is important. We want to circulate all our process waters. We don't take any new water. The water in the process is circulating all the time. Tänä vuonna on tarkoitus tehdä jälkihoitosuunnitelma. Nämähän on olemassa, mutta haluamme päivittää ja tehdä ne sellaiseen muotoon, että ne ovat helposti esitettävissä ja ymmärrettävissä. Monesti tällaiset suunnitelmat ovat monimutkaisia. If we look at the social side, health and safety are the most important. We follow the frequency of our events and do everything to ensure that everyone gets home from work in the same order as where they came from. Then there's work satisfaction. People are at the heart of everything. During the work satisfaction season, we hold annual work satisfaction questions and meetings. That's the main thing. Things happen better on the basis of feedback. When people see things happening, they also give feedback. If that doesn't happen, the feedback easily ends. It is very important to have close relationships with local residents. We hold information sessions there, and we also host visitors, so they can come and see what it looks like for us. In terms of the management style, we intend to carry out a joint risk assessment this year. to update it. It also focuses on continuous communication with the subgroups. We will have new websites released within a month or two. It is meant to be a bit different. We are transparent. We show where our work is going, what kind of displays we have taken, what analyses we had. and tell stories about our employees and so on. It's going to be a great job. If we look at our long-term goals, ESG has done its own analysis last year. We created the focus areas. This year, we'll look at the goals and follow the KPI metrics. We will also start reporting or preparing for reporting in 2024. We will focus on improvement. We will create a development plan, a longer-term roadmap, and then in 2026, reporting will be done according to the CSDR reporting standard. There are good things going on, and this is extremely important for us. If we take a look at the information that came out at the beginning of January, and I wanted to clarify it a bit at the same time as a good event, we have something like this, how this mining operation in Pampalo is progressing, it is progressing in such a way that we always study 60 meters and then the area from there is cleared away. Again, we study 60 meters, it is cleared away and we go 60 meters. And this is how it works. And the reason for that has been the costs. Because the study costs a lot for a long time, we study a 60-meter area like this and then it is cleared away, because it has been the belief that it will continue. At the end of last year, a study was conducted on the current operating level, which was 1,050. The great thing about it was that the gold was right where we thought it was. When we thought that the gold would continue in this model, when we put a research hole in it, it was there. Even though there is only one such hole, it strongly indicated to us that it would continue into the depths. That kind of 1050 level would be in production in 7-8 years. This is a big part of our strategy. We want to determine the number of million-units from the gold line. This year, we are focusing on three places. At the moment, this has started. We have the Moreni exhibition in Kartitsa, and the Kairaukset exhibition in Korvilansuo. In the nearby area of Pampala, The research hole has been dug and we are waiting for the results. But the Kartitsa is an area that has been very potential when other magnetic field measurements have been made. It has not been studied. Last fall, we made four of these first research holes. There was gold in all of them. There was gold in all of them. The best distance was 2.7 m, 1.4 m in tons. But we didn't go to the area we wanted to go to. We didn't have a permit to look for it. We were on the side. But there was gold in all of the routes. We believe there is a lot of potential in this area. It will be one of the focus areas. Our plan is that... Two, three, four months, we do the MRI scan, go through the data, and then we go and study the best areas more closely. In Pampala, right next to the Avonlahu, there are areas that have not been studied. Even if you think that everything has already been studied nearby, there are clear areas that we still have to go through. In the fall, we decided where to go and what to do, and now we are also studying there. This would be the best, of course, that there would also be to bring to Pampalo. Our goal is that, as I mentioned earlier, a greater part of the money would come from abroad, because then the cost level is completely different. Korvilan Suota has been in many of our presentations. The basis is that the Geological Research Center and Outokumpu, which runs in this area, They had very potential analyses from Korvila. There were a lot of Mornin displays with a lot of gold. There were some kind of Kaira displays with a lot of gold. Nothing has been done to them since then, for 30 years. It is an area where, at the moment, Kairakone has started work, we don't have any analysis yet, but the work has started and we are moving forward. It is best to study in the winter when it is cold. It is an area that is best. There is some water in some places, so it is better to study in the winter. But here's the timeline of how this will go. Now that it has been launched, it will take some time to get the material. Then it will be analyzed, processed, and there will be more information. I believe that... In the fall, we will have more information about these studies. The idea is that this will continue for years. We will have more and more new material, and more information will be added. We will then update our database, and through that, we will be able to grow our gold exhibitions in the area. I am very interested and looking forward to this very much. Tässä oli mun esitys tältä kertaa. Mä annan nyt puheenvuoron Mikolle. Lopuksi laittakaa kysymyksiä chatin kautta. Tässä Mikon esityksen jälkeen me vastaillaan parhaamme mukaan.

Kiitos, Kari. Oikein hyvin. Kuten Kari kertoi, meillä on ollut Sangen tapahtumarikas vuosi 2022. Vauhti on oikeastaan kiihtynyt tähän. Oh, let's keep switching slides quickly. Let's look at the end of the year. If we look at the main targets of our numbers and figures, 7.9 million was the turnover for the second half of this year, and 13.5 million for the entire year. It's good that the turnover has improved and grown positively every quarter. Also in USA on Friday, we had written 0.4 million in sales. This was actually very good, because there is previous production from the beginning of the year that has been implemented. The final analysis with the customer came from there. The gold was predicted and the expectations were better. We got more from that, which is really good from Fridays. It's a good result and tells a good story about the gold there. If we look at the costs of H2, we have a growing investment in the Karelian Gold Line and research. Some of it is written in our books for investments, but partly also for the cost of the revenue cycle. Sähkön hinta oli vaikuttamassa ennen kaikkea tässä ihan vuoden lopussa Q4, ja myöskin tuossa meillä esitettyin Pampalon käyttökatteessa ja kustannuksissa. Yksi selkeä asia myöskin tässä on tosiaan ollut nyt tämä the relocation of the premises, which was decided in December. In addition to that, we have continued to work on the location decision and other aspects of the economy. We are working on the combination of the numbers and the melting point. There was also a significant one-off cost, which is present in these business transactions. We are talking about a significant amount. from the sum of the million, over a million euros, which comes from the costs of moving the home and related activities. It's noteworthy that in Pampala, emissions began to rise in 2022. Due to production, there is a production-related emission, which was not done in 2021. In the H2 period, nothing was written, and there was no need to write anything down for 2022. What has been done before can be seen in the release contact. In that sense, if we look at the future and assess our numbers, the housing market is plummeting once and for all. We have also managed to reduce costs in USA at the moment. First of all, we reported on the numbers related to utility. related to sales and repairs, but most importantly, the cash flow. The cash flow is still better than the number presented by USA. To be more specific, as Kari said earlier, we have a very good starting point and a start to 2023. in terms of financing and a strong balance. The cash reserves were almost €4 million at the end of the year. We also saw a major change in net sales, which was €6.9 million. which was almost 17 million years ago. So, the fact that we have exchange loan contracts converted into stocks, which also significantly reduces interest rates. Netgear's rate was 19% at the end of the year, compared to 56% a year earlier. We have also implemented the current loans. At the end of 2024, all of them will be deducted. As a reminder, after the review in January 2023, LDA used its investment option according to its agreement, and wanted to make a 1 million exchange rate investment, which has already been converted into a share by 400,000, so 600,000 is left. They also have a possibility of 2.4 million. to increase the investment. This is a strong element, and the possibility is there. Good. Here are the key points. Let's start with the economy. Let's look at the gold market and the price of gold. The price of gold has been in a very strong trend. It's noteworthy that, at least from our point of view, when the prices rise, there may be a momentary swing and a momentary decline. But the development has been good. Gold has traditionally been considered to be a protection against inflation. In that respect, the expectations are generally very positive in relation to the price of gold. And also, if we look at the 22-year review period, we also have a strong exchange rate support for the strong dollar rate, which is still, compared to, of course, last year's Hiven, weakened, but at a good level. If we go back to what Kari mentioned, the appreciation of the performances. Performances have value in themselves. Gold is valued in the world. It is also a big part of how we try to raise the company's value. Kullan hinta myös tukee siinä, että markkinahinta peilaa siihen hintaan, että miten arvostetaan maassa oleva kullan määrä. Mennään kysymyksiin. Täällä näyttää, että kiitos tullut runsaasti kysymyksiin. Do we have time to answer all of them? Let's see. Thank you for these. You can add more. I will combine them later. Let's start here. This is the first question. What is the purpose of the 2023 production forecast? It has been mentioned that the old Malmi-sales have already been used this year.

That's a good question. As I mentioned earlier, we have always looked at the 60 m area and then the 60 m area. If we look at what has been published, our production this year, It's bigger than what the rest of the stocks are. But we've been looking at it last year and published the results. But the update hasn't been published yet. We know that gold is there. There's no need to worry about it. Our production is done without a doubt, so we hear it on the next level, but we have still released the next reserve update, so it's coming soon.

And then there was this, or you also had this, that it was even more important that we had calculated 23 production forecasts for these crop results or unannounced results.

Yes, we are, yes, without a doubt.

And then there was The question is, in the future, in what way we will be in the field of aquaculture and land-based mining.

Yes, we have thought so. At the moment, our forecast is that it will be about 10-20% of our production. With H2, it was 7.7%, so it was a bit lower. But with longer targets, as I mentioned earlier, the goal is that a larger and larger part will come from other than from the Earth. I myself would see that with longer targets, our goal is to reach half and half. The situation is that half comes from abroad and the other half from the mainland. The mainland is a good base, but it is important that it also comes from abroad. This year, I would estimate that 10-20% will come from the avalanches.

There is a question here. This can probably relate to the gold line. In our operation, we ask whether the area will go to Russia.

We don't do our research in Russia. Kultalinja continues to do its research. Local researchers can also do their research there. But our work remains firmly in Finland.

And then, would the result have been significantly better if the energy price had been at the previous basic level?

Yes, it would have been. Our electricity energy costs for H2 were 1.8 million, and for H1 they were 0.9 million. They doubled. Of course, we also increased our production numbers, but it doesn't go in that way. There is the basic level, which is quite big, and then when the production rises, the energy consumption also increases. But it was very significant, and let's say that in March, it really hit when I looked at the electricity bills and what came of them. A very exceptional situation, and in that sense, it's nice to see that it has gone back to the normal level, and the outlook is also positive.

The next question is, how will you reduce CO2 emissions?

Yes, we focus on machines and devices. Another thing is where to get electricity. That's one important thing. Machines and devices. We use biofuel or electricity-operating machines. Electricity has been purchased in such a way- that the output of electricity is small. These are the main points for us. We did this work at the end of the fall, where we surveyed our carbon dioxide emissions and what they are, and also the locations. It gives a very good basis for us to be able to take the largest ones first and then reduce them.

Let's go back to the same topic. When responsibility seems to be visible in many places, what do you expect from it?

Responsibility is extremely important. It is reflected in many things. In this kind of business, where we produce gold, it is extremely important that we have the acceptance locally, but also responsible activities. It is reflected in the fact that we get good employees. People are happier when they work in a company that works responsibly. We want to be there for the future. We want to be a company that when a person comes to work in the morning, they are proud of it. Because then the work is done better and it can be seen in our results. It can be seen in many ways. Of course, there are also things that we want to... tuleville sukupolville jätetään sellainen luonto, mikä on hyvässä tilassa. Luonto on hieno asia ja tärkeä asia meille kaikille. Se on tärkeää, että tehdään asiat oikein joka paikassa.

I will answer this question first. About the 23 companies' expectations for the year. As mentioned, we also have investments in the Karelian Gold Line. will also be visible, and so will the activities and development activities. The goal is to open up these numbers more closely later this year. As for the Pampala project,

We haven't been given precise guidance. It's clear to us that our economic results will be much better. We have a lot of things going in the right direction. Last year, we followed the plans, but the plan was to get the production up. We make a lot of changes and create a basic company. Now we can focus on improving production efficiency and creating growth. Improvement measures have also been launched. Higher volume brings better unit cost. Energy price looks good. Gold price looks good. There are a lot of moving elements, but the outlook is very positive. We are moving forward positively this year.

In addition, it is possible that our partner project in the USA, too, can bring in lower costs and change the overall model. In that sense, we are also looking forward to, especially if we compare the costs of the USA operations throughout the year, it will be significantly better. In a way.

Another small thing that hasn't been mentioned is that we have a home in Finland. We have a Finnish company. We also have a simpler company structure. We also save a certain amount of money. It's not that significant, but at the annual level, it's reasonable. We save a lot of people's time and work. That's one positive thing.

There was also a question about what the investments and plans look like. As you mentioned, Karelia has a gold line.

We are investing about three million euros. That is our plan. We are doing that all year round. a large-scale Malmi research. We'll be digging all year round, and we'll be processing the old data. That's the idea. That's our biggest investment, clearly. Of course, Pampalo's production is a bit smaller, but our investment is currently focused on Malmi research, almost.

Let's move on to the last question. What are the most likely options for USA?

It's still... It is still unclear what will happen there. We have had those alternatives that have been told that there would be such a joint venture, a JV-type building, or then we could sell some possible performances and then fund something else with it, or something like that. Ne on vielä auki. Meillä on hommat kyllä käynnissä ja uskoisin, että ne tässä lähiaikoina selventyvät, minkälaiseksi se malli alkaa muodostumaan, mutta se vasta muodostuu sitten neuvottelupöydässä, niin ei pysty sitä vielä spekuloimaan. Kiitoksia. Kiitos paljon.