Endomines AB (publ)

Hyvää iltapäivää kaikille. Tervetuloa Endomaisiin vuoden 2023 tilinpäätösesitykseen. Mun nimi on Karvi Yhtinen. Mä oon Endomaisiin toimitusjohtaja. Ja mun kanssa täällä tänään on Minni Lempinen ja CFO. Our agenda for today is to start with a review of the executive director. We will go through the endomyses in general, and then the key points of the last year. Let's look at the most important thoughts and predictions this year, and then a bit of a long-term vision. And then we'll look at our medium-long-term operational and strategic goals. After that, Mini will continue with the financial review, and then we have the opportunity to ask questions. You can put questions in the chat, and in the end, we will answer these questions as best we can. Let's start with Endomise. We are a Finnish company that produces gold. Our business is based in North Karelia. There is a place called Pampalo, where we have a gold production facility. There is also a global mining facility and two Savolohos. We have Pampalo East. On the first day of February, we opened Hosko. what is being processed here at the production plant. Our vision is that from this gold line, a significant gold production area in the world's scale will be developed. and where gold is produced responsibly. Geology in this area is very similar to that in the world's largest areas. If you think about Kalkuuli in Western Australia, Abitibi in Canada, or Witwatersrand in South Africa, this is a very similar green stone mine. It has great potential, and we want to grow a really large production area. We have four main points in our strategy. Pampalo's production is our basic source. We grow the production and through that we get the cash flow that we can invest elsewhere. If you look at the production figures, in 2022 we produced 8600 ounces and last year almost 13000. We got really good growth, almost 50%. Malmi Etsintä is a very important strategic focus area for us. It creates a long-term growth story. Our goal is to reach over a million ounces in gold. The reason why we are talking about a million ounces is that it is a significant event worldwide. It enables us to think about the expansion of production at a significantly higher level. In the US, it's not our focus area. We have seven shows. We don't invest there. Our idea is to focus on partner consultations. We want to get a local partner who has operational knowledge and financial resources. That's our goal. And then ESG, very important, do things right, take care of the environment, take care of people, our partners, close area residents, be open. It is a very important thing that our strategy is at the center. If you think about the last year, for example, our CO2 emissions have dropped by 31% per product ton, so we are on the right track in that regard. If we go to the first point, that we are growing the Pampalo production, then the goal is that it will come from the ground, but then it will also come from the upcoming performances. And in 2022, we took this Pampalo East production and it has now been in production. Now at the beginning of February, production was launched in Hosko. And there are about 36,000 ounces of gold in Hosko. And there is also a lot of potential to find more. So we are also doing a global search this year and we are looking at whether it can grow. And also in the coming years, of course. We have estimated that 10-20% of our production this year will come from HOSCO. From HOSCO we can take into account that this is Avolouhos, and there are parts where the density is very high. It has been determined that 35,000 tons, which is 4 grams, even gold. If you compare it to the landscape, where the densities are also three between two and four grams, this will be very economically profitable in terms of oil prices, especially in areas of high density. This went into production on the first day of February. ESG is our focus area this year. We focus on environmental issues. CO2 emissions are very important to us. We reduce it by 5% every year. Then we want to circulate our water. We circulated 100% last year, but we want to continue it. All process water that is used is circulated water. We do not take water from outside into the process. A new area is biodiversity. We haven't had a goal yet, but this year we'll look at our impact. This is about diversity. We'll look at our impact and think about our activities in 2025. On the social side, security is important. We want everyone who comes to work to go home in good condition and we invest a lot in that. Then work satisfaction. Our activities are that we make a question every year. Our people know best how we need to develop our company. We make a question and implement those activities according to that question and that way we get a company where people like to be at work all the time. Then we want to be open and keep the information available. We discuss with local customers, local residents, and partners. For example, last week we were in Ilomantsi and kept the information available about our plans. On the good management side, we're doing duality analysis and we're looking at how taxonomy affects us during this year. And then we're very open. That's the important thing. Here, too, we really communicate towards our subsidiaries and then a lot of the information on how we work is visible on our new website. You should always go and check it out. We try to publish our data as much as possible there. This year, we will focus on developing these areas and creating a roadmap for the longer term. If you think about it, in 2024-2030, we will start to create a roadmap for the longer term. In 2026, according to the CSRD reporting standard, Then the U.S. update. We have these presentations, and the focus is to get a partnership model that can bring in local knowledge and economic resources. There are good presentations. Over half a million ounces in these reserves. They are a lot of historical, but still significant. There is also a lot of silver in the U.S. Grant, for example, which then takes the effect away from the price of gold. We have constantly reduced the cost of how much it costs when these are kept in good condition. It is important to keep the items in good condition and take care of them. At the moment, the cost level is about 0.8 million. Last year it was about a million. We have received it all the time. We are doing our best to ensure that we are not in a hurry. We have made these negotiations. We did not get the final decision last year. Our original goal was to get it last year, but we did not get it last year. But we have thought that the important thing is that the solution will be good for Endominds, good for our owners, and then the schedule is still secondary. The main thing is that there will be a good solution and we will continue with it. It has to be said that there is interest. Now the gold market is very strong, the price of gold is high, but then also that what the views are, it is very strong and through that interest, if compared to a year ago, it is at a higher level and it partly comes from this gold market strong situation. It is one such thing that we focus on a lot this year. If we think about the main goal of last year, our production growth is 49%, that is, we made almost 13,000 tons, so we were there with a good model and with the guidance. The same with our turnover, it increased by 46%, 19.7 million was turnover. The company's EBITDA was minus 0.7. That's a big improvement compared to the previous year, when it was minus 6.4. That's where we got the results a lot better. But then in Pampalo, where our production is, our turnover was 3.3 million, or 17%. It's important to note that, as we've been messaging a lot last year, At the end of the year, we changed the way of production in Kaivoksi. Then we focused on the opening of the HOSCO in Kaivoksi. This resulted in an excess of €2 million in natural costs. This is €2 million, which is 10% of our annual turnover. without these costs, our results would have been very strong. But we had to take them. We had to take them. It enables the growth of the future. And then we also get this HOSCO to production quickly. This year, we achieved great results in Kuittila and elsewhere. In the southern gold line, our reserves have increased by 107%. Now we have about 150,000 tons. We are on the right track towards our goals. Then CO2 emissions, the smallest of which is 31%. What we did last year that we are not at all satisfied with is the frequency of our events. We had seven events led by Poissalo. One took place for our staff and six for the employees. We have now launched a security development campaign. We have DSS consultants with us and we believe that we will get The target is zero, definitely. If we look at the results of the Malmi research, I won't go into too much detail, but last year we did a lot of research in Kuittila, we did these excavations over 5000 meters. Malmi etsinnässä aina miten se menee. Siinä on eri vaiheita. Usein ensin otetaan tällainen moreninäyte, mikä tarkoittaa sitä, että maaperän läpi mennään on the surface of the cliff and take a sample from it. If there is gold there, then usually there is gold in the cliff. And then the next step is to dig. And that means that we do a little bit of this kind of earthworm digging. Dig this kind of digging heart and then it is always analyzed from the distance of a meter, whether there is gold there. And in Kuittila we were at that point that we made these digs. We got great results. In August, the first one of these research routes was 18.5 grams of gold. There was also a lot of silver, lead, zinc, copper and molybdenum. And then there were several such significant results, that 10 meters and 17 grams, absolutely amazing results, very rare world class results, if you think about it anywhere in the world, these results are absolutely world class results. The southern gold line has been changed to the southern gold line, because we have three exhibitions that are very close to each other. Kuittila, Korvilansuo and Murrinsuo. The slide shows kilometers times kilometers, so they are very close. That's why we thought we would call them by one name. In the picture, if you look at the orange dots, they are historical moraine exhibitions with gold. There is a lot of potential that these exhibitions can somehow combine or expand in every direction. And now we actually have 150,000 tons. Today came the Kuittila update, so we are almost at 150,000 tons. We have got more than doubled due to last year's work. In that sense, a very good progress has been achieved. We have now also started to schedule operations. We have started digging in this area, and we are also conducting natural studies and observations. In February, we will conduct soil mapping in that area, and then we will continue throughout the spring, summer and autumn, and then the results will be ready next winter. It will affect all of this southern gold line. We released this today. These are the morning shows that we take first. If they have something good and promising, we go after that and do the rehearsals. We actually took 2,000 shows last year. They focused on Kartitsa, which is in the north of Pampala. There's a map on the right lower edge. Based on these, there are areas without gold analysis, but the potential thing is that there is an area 2 km long and about 500 m wide, where there is a lot of gold analysis. We see that this is a potential area that must be studied. Now we will look at this year's plans and what we are doing. The idea is that since we are focusing strongly on the Southern Golden Line, we will come here to make a small initial research campaign to see the potential areas and see what is there. Viime vuoden aikana kasvatettiin merkittävästi niitä alueita, missä me ollaan. Meillä on tällaisia varauksia, sitten on lupahakemuksia ja lupa-alueita. Tammikuussa viime vuonna meillä oli noin 13 000 hehtaaria. Nyt meillä on 87 000 hehtaaria. Tällähän turvataan se, ettei sinne tule muita yhtiöitä, koska siellä on lupavia tuloksia. Silloin usein käy niin, että sinne tulee paljon yhtiöitä. and now we have secured the area. The area is so wide that we can't do extensive studies everywhere, but they are at different stages. We can do, for example, magnetic measurement with drones, or aircraft measurement, or whatever, by looking at wider areas at some point. are more expensive and the activities are concentrated in Korvilansoa, Kuittila and even here in the Kartitsa area. If we look at our plans this year, in the northern part, where this new area is, we are doing the first mining campaign. Sitten me tullaan vahvasti keskittyy eteläiseen kultalinjaan. Siellä tehdään paljon kairauksia. Meillä on tälläkin hetkellä Kuittilassa syväkairaukset menossa. Tutkitaan se esiintymä, mikä on löydetty, sen alapuolisia osia. Aikaisemmin kairattu vaan 150 metriä, niin nyt mennään 500. Joissain kohdissa ja joissain kolmeen puoleen 400. Näin poispäin. But we also have a lot of potential areas near Pampalo that have potential results that have been achieved earlier, so they will also be studied this year. Then we will continue to take this moraine sample. Now we are there on the west side of Kuittila and in the Suona area of ​​Korvila this year. Let's see how it goes. And then there's this new version of IONI, which is the LAPIO version. It's been a good addition, too. Last year we did it and noticed that it works. We're going to do it in the Huhus and Kultavaara areas, because the area is so large. So we have to get some of those shows so we know where we can focus in the coming years. This is Kuittila's thoughts. The black ellipse in the picture is what GTK studied in the past. The red area is what we studied last year. Now we will look at the deeper parts. We will do the studies in the deeper areas. At the same time, there is potential to the north, south and west. So we're doing these morning shows. Because the area is so big, we're trying to narrow it down a bit. We're doing morning shows and looking at which areas we should go to, for example, on the west side and where we should go on the north side and where on the south side. But this is a real focus area for us this year. We're focusing a lot on this. Our goal is to expand this by 300-400% this year. The gold market is in a very strong position at the moment. If you look at the history of the year 2000, 2006, 2018, for example, it was the opposite situation. Pedi has raised interest rates, then it has balanced and started to fall. it has always been a strong time for gold. When it becomes concrete... There have been some news that inflation is surprisingly high, and then it again leads to a drop in interest rates. But when it starts to become real, there has always been a period when gold has risen very strongly. In 2018, gold rose by 50% quite quickly. In 2006, the price of gold tripled in many years. The market is very strong. In that sense, we have positive expectations for this year. We have been instructed that Pampala's production will grow by 15-35% this year. We are between 14,700 and 17,300 ounces. And that the income of the economy will improve. We will continue to work on it, because our results will clearly improve when the volume of production increases. We will continue to work on it, so that we can increase the volumes. The idea is that this year we will drive the factory at the level of 20,000 ounces. We will see if there are any places where there is a bubble and if we have to do something. We will test it and then we are ready for these new levels in the coming years. Our long-term vision is to increase the number of seats by 2024. We have also decided that the co-leaders will be decided. We have removed the schedule as soon as possible, but it will continue this year. Then we will increase the number of seats to a million. And then when it starts to be understood, then it also becomes visible that when the possible growth of production could happen to a higher level. And that's what we're starting to prepare. Our idea is that there could be a production plant that is raised in stages. If you think of a plant that would have 40,000 tons, then another 40,000 tons, and so on, it could be raised in stages. This is the style of how we go to the contract, because we would contract a larger plant that is implemented in stages, and then when the reserves grow, then we start expanding. And we are taking Endominds to a larger scale. That is our goal. We are taking the company to a completely different scale, where we are at the moment. If we are now at the 20 million turnover level, we want to grow the company to a completely different size. And at the same time, if this concerns the southern gold line, at the same time we do work in other places. We have the Kartitsa, for example, and then when it starts to take shape, there will be the next place where we can expand. And through that, we can grow a significant gold production area in the global scale. Our medium-long-term operational and strategic goals, i.e. the 1 million ounces of mineralization, will be determined by the end of next year. Then we will reach the production level of 20,000 during this year. It does not mean that we will produce 20,000 tons, but that we will produce at this level during this year at some stage. Our operational efficiency and results are good compared to other companies. We will get a solution in the USA in a reasonable time. We are in the team of leading mining companies in ESG matters. Viimeisenä ei olla unohdettu sitä, että me uskotaan siihen, että vastuullisesti tuotettu kulta Pampalosta, Ilomantsista, niin sillä on myöskin brändiarvoa, että me voitaisiin tehdä yhteistyötä vaikka korosuunnittelijan kanssa kenellä olisi koromallistoa, mikä perustuisi Ilomantsissa tuotettuun kultaan. Tämä on sellainen asia, mitä me edistetään taustalla. Me ei olla siinä vielä niin pitkällä, mutta pitkällä aikavälillä uskotaan, että se tuo lisäarvoa. Before I give the floor to Minni, we had a good year. I'm proud of our team. We've done a lot of good things. Our production has grown by nearly 50%. We've achieved great results in the global search. We've implemented our ESG program. We've advanced our partnership in the UK, even though they haven't scored. but we are still far in that area. We have implemented our strategy according to their plans. Happy year 2023. It's nice that the outlook for 2024 is also positive. Now I will give the floor to Minni.

Thank you, Kari. Let's move on to the numbers. Consernin koko vuoden liikevaihtokasvo suunnitelmien mukaisesti 46 prosenttia vuodesta 2022 ja oli 19,7 miljoonaa euroa. jäi 0,7 miljoonaa negatiiviseksi, mutta jos verrataan vuoteen 2022, niin muutos on merkittävä. Vuonna 2022 konsernin epitta oli miinus 6,4 miljoonaa euroa. Liikevaihdosta 100 % tulee Pampalosta. Pampalon liikevaihto siis 19,7 miljoonaa euroa ja Epita 3,3 miljoonaa euroa, mikä on 17 % liikevaihdosta. Pampalossa myös liiketulos ja nettotulos molemmat positiivisia. And then about our trade, it consists of many different factors. Part of the production of the whole year will be left at the end of December for storage. And especially now, when the exchange rate hit the weekend, we were perhaps a little more normal and higher. varasto. Varastossa oli suunnilleen kuusi kiloa kultaa. Ja se kultarikaste, mitä me myydään buuliidenille, niin se on semmoista kosteeta massaa, mikä kuljetetaan rekalla pampalosta buuliidenille. Ja sitten vasta siellä buuliidenin päässä se kultarikaste jatkojalostetaan. Kultarikasteen kosteus ja erilaiset these impurities are reduced from our sales. So, we have production, then there is wealth left in the stock market, then there are decreases caused by pollution and impurities, then there is a changing price of gold and a changing euro-dollar rate from which a trade-off is formed. So, many individual factors. H2 has a turnover of 9 million euros and Pampalo has an EBITDA of 10%. As Kari said, at the end of the year, the Pampalo mine was changed to a low-price model, which caused about 2 million euros of disposable costs, and they are visible in this epitaph. At the same time, the HOSKO mine was made to produce jobs that had a significant cash impact. About 0.7 million euros have been invested in the HOSKO mine during 2023. But the change in the production level and the manufacturing work in HOSCO, they are related to the increase in the production level, which then again ensures the production goals for 2024. The annual turnover is 19.7 million euros, with 17% EBITDA in Pampalo. The company's income is particularly affected by the United States' costs, but over two-thirds of the costs have been reduced by 2022. Emo companies and joint operations cost about 1.3 million euros less than in 2022. The company's income remains negative, but the change to the previous year is very significant. Here we can see how our cash cost has changed compared to 2022. Me ollaan vuoden 2023 aikana kilpailutettu suurimpia urakointisopimuksia ja tehty tuotannon tehostamiseen liittyviä toimenpiteitä, millä on saatu sitten kustannuksia alaspäin. Ja kullan hinta on myös noussut kivasti. A few words about the funding level. In 2023, new exchange loan contracts were agreed with Finnish investors for a total of 6.8 million euros, of which 0.3 million euros have already been converted into shares. And this 0.8 million euros were paid in the second half of the year. In addition, the extension of the previous exchange rate loans has been approved until 2027, which also improves the funding position. In the center of the Endomines strategy is to strongly invest in the search for Malmi at the Karjala Gold Line, and it has received strong support from our largest owners, and these new exchange rate loans will also come from the largest owners. LDA exchange rate loans amounted to 2 million euros in 2023, of which 1.8 million were converted into shares. The funding agreement with the LDA for the exchange tax liabilities made in 2021 ended in March 2023, when EndoMinds cancelled the exchange tax liability. So we no longer have any exchange tax liability with the LDA. I am positive that we will be close to 2024. According to the guidance, we expect the economic result to improve in 2024. Of course, the rise in production numbers is key, but the price of gold is also expected to remain at a high level. From this graph, we can see how the price of gold has changed from the beginning of 2022 to the end of 2023. Still, the price of gold is high this year, pysyvän korkealla. Kyllä me lähdetään tosi vahvoin askelin vuoteen 2024. Kiitos. Siinä oli mun osuus ja voidaan siirtyä Riikan puheenvuoroon.

Joo, kiitos.

There have been quite a few questions, so let's start with the first one. As an operational goal, gold production is at the level of 20,000 ounces by the end of 2024. Does this mean that production will accelerate towards that level by the end of the year, when production guidance for the entire year is at a much lower level?

Yes, that's what it means. It means that we will be driving production at the level of 20,000 ounces. But it is also true that we expect that H1 production will be lower than H2. Due to many things, the changes we made at the end of last year, often when we make major changes, the situation is balanced for a while. On the other hand, HOSCO was launched on the first day of February, and it was not yet launched in January. HOSCO also has areas with lower and higher density, and the areas at the beginning are areas with lower density. We already believe that in the end it will grow more.

The trade seemed to be a bit soft, considering the amount of production and the price of gold. Did other parameters affect this, for example, the changes in the sales agreements?

Of course, Minni can also answer, but I can answer it in such a way that As Minni said, it depends on many factors. One thing that affected us... The trade agreement will change in January, and it has positive effects on us compared to the previous one. One thing that affected us a lot, and I'm not going to go into details here, but when we had the change at the end of the year, and one of the things that a lot of the gold is paid for is the quality. And when we made this change, the quality of the product dropped. And when it drops, the percentage you pay for it is lower. That's one thing that affected us to some extent. But the whole thing is, as Minni described, that it costs a lot of money. It's not just the amount of production times the price of gold. We also had a higher reserve. When we had a chance to go to Pyhä for a new year, there were a lot of days that we didn't operate.

What kind of a schedule is the development and planning of the southern gold line? Can the southern gold line be planned as a whole?

Hyviä kysymyksiä tänään, että kyllä meidän tavoite on, että me luvitetaan sitä kokonaisuutena nimenomaan, että se on se ajatus. Me ollaan lähdetty nyt tekemään, että meillä on kaavoitus käynnissä. Me aloitettiin se tammikuussa, ilmatsin, kunta hyväksyi sen meidän suunnitelma, että lähdetään kaavoittamaan. We started to do that, and now we have launched the natural studies that are used for both mining and environmental impact assessment. The goal is to design a wide area of the Southern Golden Line, where we plan where there can be production. And then the production, let's say we have production in Pampalo, but if there is more production, then it could progress step by step. Due to the fact that we are constantly looking for more and it also shows based on our experiences that there is always more, then the stock really grows and to be able to produce as quickly as possible, we start from somewhere and then step by step we increase it to the maximum.

Entä miten nykykassa suhteutuu suunnittelemiin ne Malminetsintä investointeihin tänä vuonna?

What I think about it is that it all goes into the long picture. If we think about where we are now and where we want to be. We want the company to be completely different. It requires active research. We have the reserve. And then it requires that we start planning how to take it into production and how to grow it from a company to a large one. This path is such that it requires capital. This is a capital intensive field. And then we have to constantly assess what our own production is, what is the price of gold, what is the Euro-relationship between Jänkkä and Taala, and then think about whether we need an increase or not. But we see it that way, that in any case it is the way we create an increase for our owners, that when the company is taken there, If we invest now, the path will be faster. We believe we will get there, but investing now will make the path go faster. We have always thought that we will use the money, Let's do things aggressively, do the research, make these plans, so we can get there. And if you look at last year, at least I see that we have achieved good things in time, the change has been amazing, and we will continue the same path. But we have to keep looking at how we need funding.

What is the biggest strategic risk factor for Endominds in 2024?

That's a good question. I would say that our risks are reasonable. As the company grows, the risk level decreases. Compared to a couple of years ago and the current risk level, we have production revenue and cash flow. Our financial situation is okay and so on. Of course, when we have the values of production and research, each of them has its own risks. The biggest risks, if you think about it, are always production. We are usually quite careful about what is predicted, because it is perhaps the area of the greatest risk.

Can you give us more details on how the process is progressing in the US? What is the first option for the US?

This is an area that, at least in my experience, is progressing well. First, there's a lot of space, and then some people get a little longer. And then we focus on the common space. And then in the end, it goes either way. Often, they fall at the end. It can be that the funding doesn't work out, or we don't find the common understanding at the end. And then it falls. And then the impact goes to the fact that you have to return to the table with others. And that makes the process time-consuming, because usually many things are not discussed to the last minute with many partners, they just focus on one thing and then we see how it goes. Well, the alternatives we have is that we have considered that some performances can be divested, then there may be this kind of partial ownership thing. That it would be some kind of JV. And then possibly that if something is given up, then there may also be some kind of royalty fees or something like that. Our wish is that the partner who is found there brings resources to it, that they are developed further, that they are taken into production, that there will also be cash flow in the future. But the solution should be such that we can initially get economic benefit from it, which we can use to support our operations in the Karelian Golden Line.

What is the maximum production of Pampalo Processing Institute at the moment?

If I remember correctly, it's 440,000 tons in the refinery. We're about half of the total processing capacity. That's what I remember.

What kind of improvements to operational efficiency did you do in 2024?

This is an area where operational efficiency usually consists of many small steps. Let's see if there are areas that can be done for example by ourselves. Then let's look at these machines and processes. How can we increase the amount of production? Let's say that if the goal is, for example, that production increases by 50% in a certain area, how can it be done so that the equipment doesn't grow and the costs don't grow in the same way? It's a lot of that, that we study the current situation and then think that there is an area that can be improved, that it consists of such small streams and from which a large stream is formed when they merge.

During the presentation, we were a bit confused about this question, but let's take this one more time as an example. What kind of effects do endomines have on high market rates?

It is reflected in the price of gold. When we have VVK loans, the rate level has been decided. If you think about the gold market, the high rates generally mean that when the rates start to fall, the price of gold rises. Now we are in an exceptional situation in the sense that the rates are high and the price of gold is high. And the expectations are that it will go the same way, that when the interest rates start, the gold price will strengthen. It is very interesting to think at the moment that usually when you look at the history and you look at the Fed's interest rate curve and then you put the gold price curve next to it, as soon as the interest rates start, the gold price goes up quite a bit. We believe and hope that this will happen. At the moment, the situation is good in terms of price. Even if it would happen in a more moderate way or not, we are at a good level at the moment.

Let's take one more question from this. What is the most important strategic goal for Endomai in 2024?

I wouldn't set a single goal. We have four main goals. We want to increase the production of Pampala. We want to continue looking for good results there. We want to continue our partnership negotiations with Jenkki. We want to get progress there. And then ESG. Safety and improvements there are probably the most important for us. If someone wants to buy it, we want to get improvements there. But in general, ESKE takes things much further. But each of these four main areas is extremely important and we focus on them. We have good teams in each that take them forward. We believe in good consistency. Tässä taisi olla kaikki kysymykset. Tuonne näytettiin, että ei ole enempää kysymyksiä. Kiitoksia kaikille. 2023 oli mielenkiintoinen vuosi. Näkymät vuodelle 2024 on myös hyvin mielenkiintoiset. Kiitos kaikille.