XOSL:NOM ESEF Annual Report
NORDIC MINING ASA (XOSL:NOM)
ESEF Annual Report
2023-04-28
For: 2022-12-31
View Original
Added on
September 29, 2026
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
28
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS
Consolidated accounts for
Nordic Mining
(Amounts in NOK thousands)
Note
2022
2021
Other income
Payroll and related costs
Depreciation and amortization
Other operating expenses
Operating profit/(loss)
4,22
12
6
(11 650 )
(164 )
(16 220 )
(138 )
(34 106 )
(45 920 )
(44 504 )
(60 674 )
Fair value gains/losses on investments
Fair value gains/losses on convertible loan
Financial income
13
19
7
(10 476 )
Financial costs
7
(88 523 )
(456 )
Profit/(loss) before tax
Income tax
8
Profit/(loss) for the period
(Amounts in NOK)
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
9
9
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
29
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Amounts in NOK thousands)
Note
2022
2021
Net profit/(loss) for the period
OTHER COMPREHENSIVE INCOME:
Items that will not be reclassified subsequently to profit or loss:
Changes in pension estimates
17,24
(1 009 )
(100 )
Other comprehensive income directly against equity
(1 009 )
(100 )
Total comprehensive income/(loss) for the period
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Amounts in NOK thousands)
Note
31.12.2022
31.12.2021
(Amounts in NOK thousands)
Note
31.12.2022
31.12.2021
ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Non-current assets
Evaluation and exploration assets
Mine under construction
Property, plant and equipment
Right-of-use assets
10
11
12
12
13
Share capital
17
17
Share premium
Other paid-in capital
Retained earnings/(losses)
Other comprehensive income/(loss)
Total equity
(16 135 )
(4 232 )
(218 547 )
(3 223 )
Financial investments
Total non-current assets
17
Current assets
Non-current liabilities
Lease liabilities
Trade and other receivables
Bond Escrow
14,20
15
25
24
Pension liabilities
Restricted cash
16
Total non-current liabilities
Cash and cash equivalents
Total current assets
16
Current liabilities
Trade payables
20
15,20
19,20
18
Total assets
Bond loan
Convertible loan
Other current liabilities
Total current liabilities
Total liabilities
Total shareholders’ equity and liabilities
Oslo, 25 April 2023
The Board of Directors of Nordic Mining ASA
Kjell Roland
Kjell Sletsjøe
Deputy chair
Eva Kaijser
Board member
Benedicte Nordang
Board member
Antony Beckmand
Board member
Ivar S. Fossum
Chair
CEO
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Aꢀributed to equity holders of the parent
Share
capital
Share
premium
Other-paid-in
capital
Other comprehensive
Retained
Total
equity
(Amounts in NOK thousands)
Note
income/(loss) earnings/(losses)
Equity 1 January 2021
(3 124 )
(439 711 )
(100 )
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income
Share issue
(100 )
(100 )
(4 133 )
(4 133 )
(215 792 )
Transaction costs
Reduction of share premium to cover loss
Share-based compensation
Equity 31 December 2021
(3 223 )
(218 547 )
Equity 1 January 2022
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income
Share issue
(3 223 )
(218 547 )
(1 009 )
(1 009 )
(1 009 )
6
Equity 31 December 2022
(4 232 )
(16 135 )
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
32
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in NOK thousands)
Note
2022
2021
(Amounts in NOK thousands)
Note
2022
2021
Operating activities
Financing activities
Income/loss (-) before income tax
Depreciation
Share issuance
17
17
19
19
15
12
Transaction costs, share issue
Gross proceeds from borrowings, Convertible loan
Transaction costs, Convertible loan
Transfer to Bond Escrow
(4 133 )
Gain on sale of fixed assets
Gains/losses on investments
Gains/losses on on convertible loan
Interest and fees, loans and borrowings
Interest Bond Escrow
(188 )
(6 089 )
(178 782 )
(17 440 )
(151 )
13
19
(283 844 )
(5 795 )
(2 442 )
(66 374 )
Interest and financing fees paid
Payment of lease liabilities
15
25
(156 )
Foreign exchange, net
Net cash from financing activities
(62 536 )
Share-based expenses
Change in working capital
(7 285 )
(4 215 )
(259 )
Net change in cash and cash equivalents
(10 137 )
Transfer to restricted account
Difference between pension expense and payment
Net cash used in operating activites
16
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuation on cash held
Cash and cash equivalents at end of period
(406 )
(59 970 )
(48 826 )
Investing activities
Net change in restricted cash
Acquisition of licenses and properties
Investment in mine under construction
Acquisition of property, plant and equipment
Financial investments
10
11
12
13
13
(233 733 )
(921 )
(2 211 )
Restricted cash at beginning of period
Restricted cash at end of period
(24 030 )
Restricted and unrestricted cash at end of period
Proceeds from sale of financial investments
Sale of property, plant and equipment
Net cash used in investing activities
(25 879 )
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Going concern assumption
The Group has historically used equity financing to
finance research, operations, purchase of licenses
and other investments. In order to secure financing
of the Engebø project, the Group has in 2022 issued
a bond loan and a convertible loan in addition to
divesting its investment in Keliber. At the date of
these annual financial statements the Group has fully
financed the Engebø Rutile and Garnet Project. The
project financing comprises of equity, debt, and
royalty financing. For more information on liquidity
risk see Board of Directors’ report and note 20.
amount when the recoverable amount is lower
than the carrying value of the asset. The
recoverable amount is the higher of fair value
less expected cost to sell and value in use (present
value based on the future use of the asset).
All impairment assessments require a high
degree of estimation, including assessments of
expected future cash flows from the cash
generating unit and the estimation of applicable
discount rates. Impairment testing requires
long-term assumptions to be made concerning
a number of economic factors such as future
production levels, market conditions, production
expense, discount rates and political risk among
others, in order to establish relevant future
cash flow estimates. There is a high degree of
reasoned judgement involved in establishing
these assumptions and in determining other
relevant factors.
•
Classification of bond loan and Bond Escrow
(Note 15):
The Group issued in 2022 a USD 100 million
senior secured bond. The proceeds from the
bonds will following satisfaction of certain
pre-disbursement conditions precedent,
including conditions of the full amount of equity
financing and royalty financing having been
spent towards the development and construction
of the Engebø Project, be released in three
tranches from the Bond Escrow account. The bonds
are until satisfaction of the pre-disbursement
conditions precedent results in drawdown of
the bond proceeds from the bond escrow
account classified as a current liability in the
statement of financial position. The restricted
cash balances from the bonds are classified as
“Bond Escrow” in the consolidated statement of
financial position and will first be recognized as
cash in the consolidated statement of financial
position once the funds are released from the
escrow account. Interest expenses up to the
satisfaction of the condition of the Engebø
Project being fully financed are recognized as
expense in the income statement at amortized
cost using the effective interest-rate method.
The conditions were satisfied on 8 March 2023.
Following the satisfaction of the financing
conditions, borrowing costs related to the bond
loan a be capitalized as part of “Mine under
construction” at amortized cost using the
effective interest-rate method.
•
Valuation of convertible loan (Note 19):
The Group entered in 2022 into a convertible
loan with a local investor group. The loan is
measured at fair value with changes in the fair
value recognized in the income statement.
As there is no observable market price for the
convertible loan, the Group is assessing the fair
value of the convertible loan using valuation
techniques. Fair value is the price that would be
received to divest the convertible loan in an
orderly transaction between market participants
at the measurement date. The fair value of the
convertible loan is measured using the
assumptions that market participants would
use when pricing the loan. The Group uses
NOTE 1 - GENERAL INFORMATION
(“the Company”) and its
address to Nordic Mining’s office is Munkedams-
veien 45, N-0250 Oslo, Norway.
These financial
statements were approved for issue by the Board
of Directors on 25 April 2023.
NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING PRINCIPLES
Basis of preparation
The principal accounting policies applied in the
preparation of these consolidated financial
statements are set out below. These policies have
been consistently applied unless otherwise stated.
The consolidated financial statements of Nordic
Mining ASA have been prepared in accordance with
International Financial Reporting Standards (IFRS)
as adopted by the European Union.
The consolidated financial statements have been
prepared under the historical cost convention with
some exceptions outlined below; the main
exceptions being Financial investments and
Convertible loan at fair value through profit or loss.
The annual accounts are based on the going
concern assumption.
Significant accounting judgments, estimates
and assumptions
The preparation of the Group’s financial state-
ments requires Management to make judgments,
estimates and assumptions that affect the
reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent
liabilities, at the reporting date. However,
uncertainty about these assumptions and
estimates could result in outcomes that could
require a material adjustment to the carrying
amount of the asset or liability.
Key areas of judgement and estimation uncertainty:
•
Impairment of non-financial assets
(Note 11 and 12):
The Group reviews whether its non-financial
assets have suffered any impairment whenever
events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An asset is wriꢀen down to its recoverable
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
34
valuation techniques that are appropriate in the
circumstances and for which sufficient data are
available to measure fair value, maximizing the
use of relevant observable inputs and minimizing
the use of unobservable inputs. The determination
of the fair value of the convertible loan still
requires significant judgment from management.
The valuation of the convertible loan has been
based on level 3 inputs in the fair value hierarchy.
As there were no observable market price for
the convertible loan at year end 2022, the fair
value of the loan is based on Management’s
internal assessment of the market value at year
end, see note 19 for further information.
necessary to ensure consistency with the policies
adopted by the Group. All intra-group transactions,
balances, income and expenses are eliminated.
functional currency spot rates at the date the
transaction first qualifies for recognition. Monetary
items denominated in foreign currencies are
translated at the exchange rate at the balance
sheet date. Foreign exchange gains and losses
resulting from the seꢀlement of such transactions
and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in
foreign currencies are recognized as finance income
or finance expense in the income statement.
recoverable, the drilling costs are expensed. Cost
of acquiring licenses is capitalized and assessed
for impairment at each reporting date.
Business combinations
The acquisition method of accounting is used to
account for the acquisition of businesses and
subsidiaries by the Group. The cost of an acquisition
is measured as the fair value of the assets given,
equity instruments issued, and liabilities incurred
or assumed at the date of exchange. Identifiable
assets acquired, and liabilities and contingent
liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date, irrespective of the extent of any non-controlling
interest. The excess of the cost of acquisition over
the fair value of the Group’s share of the identifiable
net assets acquired is recorded as goodwill.
Directly aꢀributable transaction costs related to
business combinations are expensed as incurred.
Mine under construction
During 2022, Evaluation and exploration assets
related to Engebø was reclassified in the balance
sheet to Mine under construction. The Group’s
accounting policy is to test Evaluation and
exploration assets for impairment and transfer to
Mine under construction as soon as a project has
been sanctioned for construction. Aꢁer transfer of
the evaluation and exploration assets, all subsequent
expenditure of the construction, installation or
completion of infrastructure facilities is capitalized
as Mine under construction. Aꢁer production
starts, all costs included in Mine under construction
are transferred to the category ‘Producing mine’.
Mine under construction is not depreciated until
construction is completed and the assets are
available for their intended use.
Acquisition of mining and mineral properties and
exploration and development of such properties
IFRS 6 “Exploration for and evaluation of mineral
resources” requires that exploration and evaluation
assets are classified as tangible or intangible
according to the nature of the assets acquired.
Some exploration and evaluation assets should be
classified as intangibles, such as drilling rights and
capitalized exploration cost. When technical
feasibility and commercial viability of extracting a
mineral resource is demonstrable, the assets
should be re-classified as ”Mine under construction”.
Evaluation and exploration assets that are
classified as intangible assets are tested for
impairment prior to reclassification.
Basis for consolidation
The consolidated financial statements comprise
the financial statements of the Company and its
subsidiaries. Control is achieved when the Group is
exposed, or has rights, to variable returns from its
involvement with the investee, and has the ability
to affect those returns through its power over the
investee. Specifically, the Group controls an
investee if, and only if, the Group has:
•
Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee)
•
Exposure, or rights, to variable returns from its
involvement with the investee
•
The ability to use its power over the investee to
affect its returns
The subsidiaries include Nordic Rutile AS, Nordic
Ocean Resources AS, and Nordic Quartz AS, all 100%
owned and located in Oslo. The accounting principles
of the subsidiaries have been changed when
ꢂ
Foreign currency translation
Functional and presentation currency
NOK is the functional currency of the parent and the
presentation currency of the Group. Assets and
liabilities in foreign entities, including goodwill and
fair value adjustments related to business
combinations are translated to NOK at the
exchange rate at the balance sheet date. Revenues,
expenses, gains and losses are translated using the
average exchange rate during each quarterly
period. Translation adjustments are recognized
directly to Other Comprehensive Income.
Property, plant and equipment
The Group’s property, plant and equipment,
consisting of machinery and equipment, are
recorded at cost less accumulated depreciation.
Acquisition cost include cost directly aꢀributable
to the acquisition of the asset.
Subsequent cost is included in the asset’s carrying
amount or recognized as a separate asset, as
appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance
cost are expensed as incurred.
Exploration and development for mineral properties
The Group employs the successful efforts method
to account for exploration and development cost.
All exploration cost, with the exception of
acquisition cost of licenses and direct drilling cost
of exploration wells is expensed as incurred.
Drilling costs are temporarily capitalized pending
the evaluation of the potential existence of mineral
reserves. If reserves are not found, or if discoveries
are assessed not to be technically and commercially
Transactions and balances
Transactions in foreign currencies are initially
recorded by the Group’s entities at their respective
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
35
An item of property, plant and equipment is
de-recognized upon disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on de-recognition
of the asset is calculated as the difference
between the net disposal proceeds and the
carrying amount of the asset and is presented as a
net gain or net loss in the income statement.
Depreciation is calculated on a straight-line basis
over the useful life of the asset (land is not
depreciated):
•
Machinery and equipment: 4-10 years
The asset’s useful life and residual amount are
reviewed on an annual basis and revised if
necessary. The carrying amount of the asset is
wriꢀen down to recoverable amount when the
carrying amount is higher that the estimated
recoverable amount (further details are
provided under “Impairment of non-financial
assets” below).
separately identifiable cash flows (cash-
generating units). Non-financial assets other than
goodwill that suffered impairment are reviewed for
possible reversal of the impairment at each
reporting date.
Financial assets
Initial recognition and measurement:
Financial assets are classified, at initial recognition,
as subsequently measured at amortized cost, fair
value through other comprehensive income (OCI)
and fair value through profit or loss.
Financial liabilities
Initial recognition and measurement:
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are
recognized initially at fair value and, in the case of loans
and borrowings and payables, net of directly
aꢀributable transaction costs. The Group’s financial
liabilities include trade and other payables and loans
and borrowings, including bond loan and convertible
loan.
Government grants
Government grants are recognized where there is
reasonable assurance that the grant will be
received, and all aꢀached conditions will be
complied with. When the grant relates to an
expense item, it is recognized as income on a
systematic basis over the periods that the related
costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is
recognized as income in equal amounts over the
expected useful life of the related asset.
Financial assets at fair value through profit
or loss:
Financial assets at fair value through profit or loss
include financial assets held for trading, financial
assets designated upon initial recognition at fair
value through profit or loss, or financial assets
mandatorily required to be measured at fair value.
Financial assets are classified as held for trading if
they are acquired for the purpose of selling or
repurchasing in the near term. Derivatives,
including separated embedded derivatives, are
also classified as held for trading unless they are
designated as effective hedging instruments.
Financial assets with cash flows that are not solely
payments of principal and interest are classified
and measured at fair value through profit or loss.
Subsequent measurement:
For purposes of subsequent measurement,
financial liabilities are classified in two categories:
•
Financial liabilities at amortized cost (loans
and borrowings and trade and other payables)
•
Financial liabilities at fair value through profit
or loss
Leases (as lessee)
The Group adopted IFRS 16 – Leases from 1
January 2019. IFRS 16 sets out the principles for
recognition, measurement, presentation and
disclosures of leases. IFRS 16 defines a lease as a
contract that conveys the right to control the use
of an identified asset for a period of time in exchange
for consideration. For each contract that meets this
definition, IFRS 16 requires lessees to recognize a
right-of-use asset and a lease liability in the
balance sheet with certain exemptions for short
term and low value leases. Lease payments are to
be reflected as interest expense and a reduction of
lease liabilities, while the right-of-use assets are to
be depreciated over the shorter of the lease term
and the assets’ useful life. Lease liabilities are
measured at the present value of remaining lease
payments, discounted using the Group’s calculated
borrowing rate. Right-of-use assets are measured
at an amount equal to the lease liability.
ꢂ
Impairment of non-financial assets
Intangible assets that have an indefinite useful life
or intangible assets not yet available for use are
not subject to amortization and are tested annually
for impairment. Assets that are subject to
amortization are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognized
for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair
value less cost to sell and value in use. For the
purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
Financial liabilities at amortized cost
Aꢁer initial recognition, interest-bearing loans and
borrowings and trade and other payables are
subsequently measured at amortized cost using
the effective interest method; any difference between
proceeds (net of transaction cost) and the redemption
value is recognized on the income statement over the
period of the interest-bearing liabilities.
Receivables
Receivables are recognized initially at fair value and
subsequently measured at amortized cost using the
effective interest method, less provision for
impairment.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet
comprise cash at banks and other short-term highly
liquid investments that are readily convertible to
known amounts of cash, are subject to an
insignificant risk of changes in fair value and with
original maturities of three months or less.
Financial liabilities at fair value through
profit or loss
Aꢁer initial recognition, financial liabilities
measured at fair value through profit or loss are
measured at fair value at each balance sheet date,
with changes in fair value through profit or loss.
NORDIC MINING
ANNUAL REPORT 2022
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CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
36
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition
as at fair value through profit or loss. The Group has
designated its convertible loan into this category.
Financial liabilities are classified as held for trading
if they are incurred for the purpose of repurchasing
in the near term. This category also includes derivative
financial instruments entered into by the Group that
are not designated as hedging instruments in hedge
relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for
trading unless they are designated as effective
hedging instruments. Gains or losses on liabilities
held for trading are recognized in the statement of
profit or loss and other comprehensive income.
value of the options is recognized as a payroll expense
in the statement of profit or loss over the vesting
period and as other paid in equity in the balance sheet.
Fair value of options is estimated by use of the Black
Scholes option model and is charged to the statement
of profit or loss over the vesting period without
revaluation of the value of the options.
Pensions
Defined benefit plan:
The Group has a defined benefit pension plan for its
employees that meet the Norwegian statutory
requirement. For the defined benefit plan, the cost of
providing the benefits is determined using the unit
credit method, with actual valuations being carried
out at the end of each annual reporting period.
Re-measurement, comprising actuarial gains and
losses, the effect of asset ceiling (if applicable) and
the return on plan assets (excluding interest), is
reflected immediately in the statement of financial
position with a charge or credit recognized in other
comprehensive income in the period in which they
occur. Past service cost is recognized in profit or loss
in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the
beginning of the period to the net defined benefit
liability or asset.
•
obligations that cannot be measured with
sufficient reliability
Contingent liabilities are not recognized on the
balance sheet unless arising from assuming assets
and liabilities in a business combination. Significant
contingent liabilities are disclosed unless the
possibility of an outflow of resources embodying
economic benefits is remote. Reference is made to
Note 11 and 27 in the consolidated financial
statements regarding contingent liabilities related
to the Engebø rutile deposit.
Income taxes
Income tax expense represents the sum of the taxes
currently payable and deferred tax. Taxes payable
are provided based on taxable profits at the current
tax rate. Deferred taxes are recognized on differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding
tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for
all temporary differences, and deferred tax assets
are recognized to the extent that it is probable that
taxable profits will be available against which
deductible temporary differences can be utilized.
Deferred income tax is not recognized on temporary
differences arising from initial recognition of an asset
or liability in a transaction other than a business
combination that at the time of the transaction
affects neither accounting nor taxable profit nor loss.
The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that
sufficient taxable income will be available to allow
all or part of the asset to be recovered.
If deferred tax assets are not recognized, items
recorded directly to equity, or in other comprehen-
sive income (OCI), are accounted for gross, without
any deduction of deferred taxes.
Cash flow statement
The Group reports the cash flow statement using
the indirect method. The method involves adjusting
the result for the period for the effects of transactions
without effect on cash and changes in assets and
liabilities to show net cash flow from operations.
Cash flow relating to investment activities and
financing activities are shown separately.
De-recognition of financial liabilities
The Group de-recognizes a financial liability (or a part
of a financial liability) from its balance sheet when,
and only when, it is extinguished. A financial liability is
extinguished when the obligation specified in the
contract is discharged or cancelled, or when it expires.
Defined contribution plan:
In the defined contribution pension plan, the Group
is responsible for making an agreed contribution to
the employee’s pension assets. The future pension
will be determined by the amount of the contributions
and the return on the pension savings. Once the
contributions have been paid, there are no further
payment obligations aꢀached to the defined
contribution pension.
Related party transactions
All transactions, agreements and business
activities with related parties are conducted
according to ordinary business terms and
conditions. Parties are related if one party has the
ability, directly or indirectly, to control the other
party or exercise significant influence over the
other party in making financial and operating
decisions. Parties are also related if they are
subject to common control or common significant
influence. The Group provides note disclosure for
related party transactions and balances in Note 20
in the consolidated financial statements.
Share capital
Ordinary shares are classified as equity.
Share issuance cost that is incremental and directly
aꢀributable to the issue of new shares or options are
shown in equity as a deduction from the proceeds. If
deferred tax assets are not recognized, items
recorded directly to equity are accounted for gross,
without any deduction of deferred taxes.
Contingent liabilities
Contingent liabilities are defined as:
•
possible obligations resulting from past events
whose existence depends on future events
•
obligations that are not recognized because it
is not probable that they will lead to an outflow
of resources
Share-based compensation
The Group uses equity seꢀled options to incentivize
employees and qualified resource persons. The fair
Earnings per share
The calculation of basic earnings per share is based
NORDIC MINING
ANNUAL REPORT 2022
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OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
37
on the profit/loss aꢀributable to ordinary
shareholders using the weighted average number
of shares outstanding during the year aꢁer
deduction of the average number of treasury
shares held over the period. The calculation of
diluted earnings per share is consistent with the
calculation of basic earnings per share while giving
effect to all dilutive potential ordinary shares that
were outstanding during the period, that is:
•
The net profit for the period aꢀributable to
ordinary shares is increased by the aꢁer-tax
amount of dividends and interest recognized in the
period in respect of the dilutive potential ordinary
shares and adjusted for any other changes in
income or expense that would result from the
conversion of the dilutive potential ordinary shares.
•
Weighted average number of shares which
includes the effect of all potential dilutive
shares as if converted at the beginning of the
period, or from the issue date if later.
NOTE 3 - SEGMENTS
The Group presents segments based on of the
Group’s mineral projects. The only reportable
segment of the Group is the Titanium and Garnet
segment. These are the minerals which can be
produced from the mineral deposit at Engebø.
The zoning plan and the discharge permit for the
project are approved and final, without possibility
for appeals, and the operating license for the
project was granted in June 2020. In May 2022,
the Ministry of Trade, Industry and Fisheries
(“MTIF”) resolved that Nordic Mining’s operating
license is maintained as granted with full rights to
the Engebø deposit, confirming the resolution from
the Directorate of Mining. The Definitive Feasibility
Study was presented in January 2020 and an
Updated Feasibility Study was presented in May
2021.
In April 2022, Nordic Rutile commenced early
construction works at Engebø, which includes
preparing the properties for construction,
continuation of detailed project planning and
process for procurement of critical process
equipment, and commencement of groundworks
on process plant area and preparatory works for
underground infrastructure.
NOTE 4 - SALARIES
(Amounts in NOK thousands)
2022
2021
Wages and salaries
11 404
10 982
Social security costs
2 089
2 266
Pension costs defined benefit plan
734
862
Pension costs defined contribution plan
431
272
Board members, etc
1 300
1 300
Share-based compensation
-
234
Other personnel costs
588
304
Capitalized payroll costs
(4 896)
-
Total
11 650
16 220
Average number of full time employees
9
8
Reference is made to Note 23 for further information about remuneration of Senior Management and
guidelines for remuneration.
New accounting standards
New standards and amendments to standards and
interpretations effective from 1 January 2022 did
not have any significant impact on the financial
statements.
New standards, amendments and interpretations
issued but not adopted by the Group
A number of new standards and amendments to
standards and interpretations are effective for
annual periods beginning on or aꢁer 1 January
2023 and have not been applied in preparing these
financial statements. None of these new standards
and amendments to standards and interpretations
are expected to have any significant impact on the
Group’s financial statements.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
38
The Group used the Black Scholes model to estimate fair value of the options granted at time of grant.
The following table show the weighted-average assumptions used in the model:
Weighted-average assumptions
2022
2021
Volatility *
41 %
41 %
Expected life
2,35
2,35
Risk free interest
1,05 %
1,05 %
Share price
2,47
2,47
Exercise price
2,63
2,63
* The expected volatility has been estimated based on historical volatility of the share price of the Company.
NOTE 5 - SHARE-BASED COMPENSATION
On 1 November 2018, the General Meeting of Nordic Mining approved an equity seꢀled share-based
compensation program of up to 4.5 million options for employees and qualified resource persons. On 26
November 2018, the Board of Directors granted 3 million options at a strike price of NOK 2.63 per share
to employees in the Group. The options vest by 1/3 each year, first time on 30 June 2019. The option
agreements expired on 30 June 2022 and were conditional on the employee remaining in the Group’s
employment for the duration of the vesting period.
In April 2021 additional 0.4 million options were granted at a strike price of NOK 2.62 per share. These
options vested at grant date and expired on 30 June 2022.
All options have been exerciced during 2022 and there are no outstanding options at year end.
2022
2021
Number of
Weighted
Number of
Weighted
options
average
options
average
exercise price
exercise price
Outstanding 1 January
2 825 000
2,63
2 425 000
2,63
Granted during the year
-
-
400 000
2,62
Cancelled during the year
-
-
-
-
Exercised during the year
(2 825 000)
2,63
-
-
Expired during the year
-
-
-
-
Outstanding 31 December
-
-
2 825 000
2,63
Exercisable 31 December
-
-
2 825 000
2,63
The average fair value of options granted in 2018 was NOK 0.59 at time of grant, and the average fair
value of options granted in 2021 was NOK 0.33 at time of grant. The average remaining contractual life
for options outstanding as per 31 December 2021 was 0.5 years.
The Group has no expenses for share based payment in 2022 (2021: NOK 234 thousand).
NOTE 6 - OTHER OPERATING COSTS
(Amounts in NOK thousands)
2022
2021
Lease expenses
2 932
2 329
Project costs – Engebø Rutile and Garnet
17 994
31 999
Consulting and legal fees
9 807
7 181
Other costs
7 191
3 342
Other operating expenses capitalized
(3 818)
-
Total
34 106
44 504
Auditor fees
(Amounts in NOK thousands)
2022
2021
Statutory audit
1 117
704
Other aꢀestation services
191
62
Total
1 308
766
The amounts exclude VAT.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
39
Tax effects of temporary differences and tax loss carryforwards at 31 December:
Amounts in thousands
2022
2021
Mine under construction/PP&E
9 563
9 591
Pensions
399
234
Bond loan
(16 455)
-
Tax loss carryforwards
162 428
128 922
Total net deferred tax assets
155 935
138 747
Nominal tax rate (used for measurement)
22 %
22 %
Recognized in the statement of financial position
Deferred tax asset
-
-
Deferred tax liability
-
-
The Group recognized nil in gross transaction cost of the 2022 share issues directly in equity (in 2021:
NOK 4.1 million) which is included in tax loss carry forwards.
The following table shows the reconciliation of expected tax using the nominal tax rate to the actual tax
expense/(income):
Amounts in thousands
2022
2021
Income/loss (-) before tax
202 412
5 371
Nominal tax rate
22 %
22 %
Expected income tax
44 531
1 182
Non-deductible costs
(39)
119
Non-taxable income
-
(332)
Effect of non-taxable gains/losses on convertible loan
989
-
Effect of non taxable gains/losses on investments
(62 446)
(14 602)
Non-recognized tax assets on current year result
16 965
13 633
Tax expense/(income)
-
-
NOTE 7 - FINANCE INCOME AND FINANCE COSTS
The following table shows the components of financial income and financial expense:
(Amounts in NOK thousands)
2022
2021
Interest income on bank deposits
1 575
40
Interest income, Bond Escrow
5 795
-
Foreign exchange gains
56 117
87
Finance income
63 487
127
Interest cost
(20 056)
(28)
Other finance costs
(25 605)
(184)
Foreign exchange losses
(42 862)
(244)
Finance costs
(88 523)
(456)
Other finance costs relates to fees in relation to the convertible loan (see Note 19 for details on convertible
loan), transaction costs related to USD 50 milllion non-dilutive royalty financing agreement entered into
with between Nordic Rutile AS and Orion Resource Partner in February 2023, including the intercreditor
agreement entered into between Nordic Trustee on behalf of the senior secured bonds and Orion
Resource Partner, and other finance costs.
NOTE 8 - INCOME TAXES
The Group has incurred substantial tax losses carried forward and the related tax asset is shown in the
table below. At year end 2022, the Group cannot substantiate that there will be sufficient future taxable
income to be able to realize the Group’s unused tax losses, and therefore the Group has not recognized
deferred tax assets at 31 December 2022. Tax losses can be carried forward indefinitely in Norway.
Amounts in NOK thousands
2022
2021
Taxes payable
-
-
Deferred tax
-
-
Income tax expense/(income)
-
-
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
40
NOTE 9 - EARNINGS PER SHARE
(Amounts in NOK thousands and number of shares in thousands)
2022
2021
Earnings
Aꢀributable to ordinary shareholders
202 412
5 371
Number of shares
Weighted average number of ordinary shares outstanding - basic
231 249
224 569
Weighted average number of ordinary shares outstanding - diluted
268 286
227 272
(Amounts in NOK)
Earnings per share aꢀributable to ordinary shareholders
Basic earnings per share
0,88
0,02
Diluted earnings per share
0,75
0,02
The effect of potentially dilutive shares arising from the convertible loan (ref. Note 19) is included in the
calculation of diluted earnings per share for 2022.
The effect of potentially dilutive shares arising from options (ref. Note 5) was included in the calculation
of diluted earnings per share for 2021 since the options were in-the-money in 2021.
NOTE 10 - EVALUATION AND EXPLORATION ASSETS
License
Capitalized
(Amounts in NOK thousands)
cost
exploration
Total
Cost at 1 January 2021
13 447
18 621
32 068
Additions
451
-
451
Cost at 31 December 2021
13 898
18 621
32 519
Additions
-
-
-
Reclassified to Mine under construction
(13 898)
(14 902)
(28 800)
Cost at 31 December 2022
-
3 719
3 719
Provision for impairment at 1 January 2021
-
(3 719)
(3 719)
Impairments
-
-
-
Provision for impairment at 31 December 2021
-
(3 719)
(3 719)
Impairments
-
-
-
Provision for impairment at 31 December 2022
-
(3 719)
(3 719)
Net book value 31 December 2022
-
-
-
Net book value 31 December 2021
13 898
14 902
28 800
Net book value 1 January 2021
13 447
14 902
28 349
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
41
NOTE 11 - MINE UNDER CONSTRUCTION
(Amounts in NOK thousands)
Mine under construction
Cost at 1 January 2022
-
Transfer from evaluation and exploration assets
28 800
Additions
259 610
Cost at 31 December 2022
288 410
Impairment
-
Provision for impairment 31 December 2022
-
Net book value 31 December 2022
288 410
Net book value 31 December 2021
-
Net book value 1 January 2021
-
In April 2022 Nordic Rutile AS has exercised the agreements with landowners to acquire the main
properties at Engebø, which includes immediate access to the process plant area. The Company has
started construction works at Engebø, which includes preparing the properties for construction,
continuation of detailed project planning and process for procurement of critical process equipment,
and commencement of groundworks on process plant area and preparatory works for underground
infrastructure. The direct costs related to the work described above has been capitalized in the balance
sheet as Mine under construction, together with the cost of acquiring the land properties at Engebø.
In addition, Evaluation and exploration assets related to Engebø has in 2022 been reclassified in the
balance sheet to Mine under construction.
Mining concessions Engebø
The carrying amount for licenses related to the Engebø area is included in the transfer from Evaluation
and exploration assets. Additionally, the Group has a conditional liability to the seller of NOK 40 million
that will be paid if and when commercial operation commences at Engebø. No liability has been recognized
as per 31 December 2022.
NOTE 12 - PROPERTY, PLANT, EQUIPMENT AND RIGHT-OF-USE ASSETS
Machinery &
Right-of-use
(Amounts in NOK thousands)
equipment
assets
Total
Cost
1 January 2021
941
664
1 605
Additions
-
-
-
Disposals
(285)
(285)
31 December 2021
656
664
1 320
Additions
921
-
921
Disposals
-
-
-
31 December 2022
1 577
664
2 241
Depreciation
1 January 2021
(567)
(287)
(854)
Depreciation expense
-
(138)
(138)
Disposals
111
111
31 December 2021
(456)
(425)
(881)
Depreciation expense
(31)
(133)
(164)
Disposals
-
-
-
31 December 2022
(487)
(558)
(1 045)
Net book value
31 December 2022
1 090
106
1 196
31 December 2021
200
239
439
1 January 2021
374
377
751
Machinery and equipment are depreciated over a period of 4-10 years.
In 2021 the Group has sold a vehicle to its Senior Advisor, Lars K. Grøndahl, for NOK 363,000, which
represented the estimated market value.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
42
NOTE 13 - FINANCIAL INVESTMENTS
The Group’s only financial investment in 2022 and 2021 has been the holding of shares in the Finnish
mining company Keliber Oy. At year end 2021 the Group had a 12.7% interest in Keliber. The investment
has been measured at Fair Value Through Profit and Loss under IFRS 9 (“FVPL Method”).
2022
In June 2022, the Group accepted an offer from Sibanye-Stillwater Limited to divest its shares in Keliber
for a cash consieration of EUR 157.28 per share, in total EUR 46.9 million. The sale of the shares was
completed in Q3 2022, with a gain on investment in 2022 of NOK 283.8 million. In addition, the
consideration received in EUR resulted in foreign exchange gains from the close of the sale to the funds
was recieved and sold to NOK, included in financial income in 2022 of NOK 16.1 million.
2021
At year end 2021 the Group assessed the fair value of Keliber to EUR 64 per share, corresponding to
NOK 190.5 million. This resulted in a gain on the investment of NOK 66.3 million for the year. The
valuation as per 31 December 2021 was based on level 3 inputs in the fair value hierarchy.
Summary of effects from Keliber investment in 2022 and 2021
Balance sheet
Statement of
(Amounts in NOK thousands)
profit or loss
Fair value 1 January 2022
190 519
Gain on investment 2022
283 844
283 844
Disposal
(474 363)
Fair value 31 December 2022/
Total effects on statement of profit or loss
-
283 844
Fair value 1 January 2021
100 114
Addition in 2021
24 030
Gain on investment 2021
66 374
66 374
Fair value 31 December 2021/
Total effects on statement of profit or loss
190 519
66 374
NOTE 14 -TRADE AND OTHER RECEIVABLES
(Amounts in NOK thousands)
2022
2021
Other financial receivables
918
802
Prepayments
829
821
Skaꢀefunn (receivable tax credit)
-
347
VAT receivable
21 550
1 474
Totalt
23 297
3 444
NORDIC MINING
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
2022
Carrying
Carrying
Cash
amount
amount
transferred to
(Amounts in thousands)
Bond Loan
Bond Escrow
Bond Escrow
Loan at nominal value
1 025 220
1 025 220
-
10% discount
(102 522)
(102 522)
-
Fees paid at inception
(33 361)
(33 361)
-
Other fees
(1 606)
-
-
Amortization of fees
2 583
-
-
Future interest transferred to Bond Escrow
-
42 900
(42 900)
Discount and fees transferred to Bond Escrow
-
135 883
(135 883)
Accrued interest
-
5 795
-
Foreign exchange
(39 490)
(41 318)
-
Total at year end
850 825
1 032 597
(178 782)
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
43
ANNUAL REPORT 2022
NOTE 15 - BOND LOAN AND BOND ESCROW
In November 2022, Nordic Rutile AS completed the issue of a USD 100 million 5-year senior secured
bond. The bonds are administered by Nordic Trustee. The bond has fixed coupon of 12.5% per annum,
with interest payable quarterly in arrears, and an issue price of 90%.
The bond loan is classified as a current liability in the statement of financial position until satisfaction of
the pre-disbursement conditions precedent results in drawdown of the bond proceeds from the Bond
Escrow account.
The bond loan was initially recognized at cost, being the fair value of the consideration received net of
issue costs associated with the borrowing (inclusive the 10% discount). Aꢁer initial recognition, the bond
loan is subsequently measured at amortized cost using the effective interest method; any difference
between proceeds (net of transaction cost including the 10% discount) and the redemption value is
recognized on the income statement over the period of the loan.
The net proceeds of the bonds of USD 90 million was on issue deposited into a Bond Escrow account,
together with issue discount of USD 10 million, four months bond interest of USD 4.2 million, and
transaction costs of USD 3.3 million (in total NOK 178.8 million), transferred by Nordic Rutile AS in line
with the bond terms. Following conditions of the Engebø Project being fully funded, which were satisfied
on 8 March 2023, and certain pre-disbursement conditions precedent, the proceeds from the bonds will
be released in three tranches from the Bond Escrow account to be used for costs and expenditures to
bring the Engebø Project into commercial production.
NOTE 16 - CASH AND CASH EQUIVALENTS
(Amounts in NOK thousands)
2022
2021
Bank deposits
164 703
32 086
Total cash and cash equivalents
164 703
32 086
Restriced cash in tax withholding account
720
478
In addition to the amounts referred to above, the Group has a deposit of NOK 4.2 million on a restricted
account at year end pledged toward the Directorate of Mining. The purpose of the deposit is clean-up
measures in accordance with the operating license.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
44
Components of other comprehensive income
The following table shows a reconciliation of the components of other comprehensive income (“OCI”):
Actuarial
(Amounts in NOK thousands)
gain/loss
Total OCI
Balance on 1 January 2021
(3 123)
(3 123)
Actuarial gain/(loss)
(100)
(100)
Balance on 31 December 2021
(3 223)
(3 223)
Actuarial gain/(loss)
(1 009)
(1 009)
Balance on 31 December 2022
(4 232)
(4 232)
NOTE 17 - SHARE CAPITAL
Number of shares outstanding
Ordinary Shares
2021
Opening balance
197 491 772
Share issuance
32 000 000
31 December 2021
229 491 772
2022
Opening balance
229 491 772
Share issuance
2 825 000
31 December 2022
232 316 772
All shares carry equal rights and has a par value of 0.60 per share.
Share issues in 2022
In May 2022 a total of 2,825,000 options held by Management were exercised. Following the exercise
there are no outstanding options for shares in the Company held by Management. Gross proceeds were
NOK 7.4 million in accordance with the authorization to the Board to increase the share capital granted
by the general meeting on 14 May 2020. Following registration of the new share capital Nordic Mining’s
share capital has increased by NOK 1,695,000 to NOK 139,390,063.20 divided into 232,316,772
shares, each with a par value of NOK 0.60.
Share issues in 2021
In February 2021, Nordic Mining completed a private placement of 32,000,000 shares with gross
proceeds of NOK 80 million. Following registration of the new share capital the Company’s share capital
has increased by NOK 19,200,000 to NOK 137,695,063.20 divided into 229,491,772 shares, each with
a par value of NOK 0.60.
NOTE 18 - OTHER CURRENT LIABILITIES
(Amounts in NOK thousands)
2022
2021
Tax withholding and social security accrual
1 230
1 131
Employee salary and holiday pay accrual
1 395
1 120
VAT payable
342
193
Lease liability
116
132
Accrued interest bond loan
17 456
-
Accrued expenses
6 607
2 781
Total
27 146
5 358
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
45
NOTE 19 - CONVERTIBLE LOAN
In January 2022, Nordic Mining entered into a NOK 132.5 million 5% interest bearing convertible loan in
favor of Fjordavegen Holding AS, a local investor group led by two of the EPC partners for the Engebø
project. This transaction is the first step in the project financing of the Engebø Project.
The lenders may, and is contractually obliged to, convert all tranches from the loan, together with accrued
interests, into shares in Nordic Mining upon a share issue in Nordic Mining in relation to final investment
decision (or delay of final investment decision) for the Engebø Rutile and Garnet Project, however, at
latest 1 August 2023. The conversion price will as a starting point be NOK 3.355 per share, however, shall
be the lowest of NOK 3.355 and the subscription price in a subsequent share issue in Nordic Mining in
relation to final investment decision/delay of final investment decision, or if no such share issue occurs,
the lowest of NOK 3.355 and the volume-weighted average trading price the Nordic Mining’s share for
the last 20 trading days prior to 30 June 2023.
The convertible loan is measured at fair value with changes in fair value recognized in the income
statement. The Group has assessed the fair value of the convertible loan to be NOK 143.0 million at year
end 2022 and the recognized a fair vale loss of NOK 10.5 million in 2022. The valuation as per 31
December 2022 has been based on level 3 inputs in the fair value hierarchy.
The fair value of the convertible loan is calculated as the fair value of the loan plus the fair value of the
conversion option determined using Black Scholes option model for three (3) different scenarios for
conversion date to provide probability weighted maturity. The key unobservable input to the valuation
include: 1) risk free NOK interest rate curve at the valuation date constructed from effective yields on
Norwegian Treasury bills, 2) volatility of Nordic Mining share price calculated based on historical share
prices, and 3) expected conversion date based on managements expectation for final investment devision.
The convertible loan with accrued interests, in total NOK 139.6 million, was converted into 232,703,125
new shares in Nordic Mining ASA on 4 March 2023, in relation to the private placement to fully fund the
Engebø Project. See note 28 for more information.
2022
Carrying
(Amounts in NOK thousands)
amount
Cash flow
Convertible loan
132 500
132 500
Fees paid at inception
-
(6 089)
Change in fair value
10 476
-
Total
142 976
126 412
NOTE 20 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Management of financial risk
Nordic Mining is exposed to certain types of financial risk related to the Group’s financial instruments,
primarily market risk related to floating interest rate risk on cash and cash equivalents, liquidity risk and
currency risk.
Management of Nordic Mining manages the Group’s financial risk primarily by identifying and evaluating
potential risk areas. Management’s focus is primarily on managing liquidity risk to secure continuing
operations and financing of the Group’s capital-intensive projects. Nordic Mining’s cash holdings are
placed in bank accounts in Norwegian Kroner (NOK), United States Dollars (USD) and Euro (EUR). At year
end 2022, the Group’s main currency exposure is related to its bond loan and Bond Escrow, both wich are
denominated in USD.
The Group has at year end 2022 interest-bearing debt in the form of a bond loan and a convertible loan.
The Group does not have recurring revenues since the Group’s projects are still in the development phase.
The Group’s financial instruments at year end 2022 mainly consist of the bond loan and Bond Escrow, a
convertible loan, bank deposits, customary short-term receivables, trade and other payables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to seꢀle its financial obligations as they fall due.
The Group has historicalley used equity financing in order to meet liquidity requirements related to
financial obligations, covering operational losses, exploration activities and investments. In order to
secure financing of the Engebø project, the Group has in 2022 issued a bond loan, and a convertible loan.
Of the Group’s financial liabilities as at 31 December 2022 NOK 188.1 million mature within 6 months from
balance sheet date (31 December 2021: all financial liabilities of NOK 7.0 million mature within 6 months).
At the date of these annual financial statements the Group has secured the full project financing package
for the Engebø Rutile and Garnet Project Project of USD 277 million, comprising equity, senior secured
bond, and non-dilutive royalty financing. The project financing package is expected to fund all costs and
expenditures to bring the Engebø Project into commercial production, including a contingency of USD 25
million and project reserve of USD 30 million. The bond and royalty financing and is subject to certain
pre-disbursement conditions precedent before the proceeds can be released to the Project, including
standard conditions and utilization in full of the equity and royalty funds, respectively. The bond loan is
classified as a current liability in the statement of financial position until satisfaction of the pre-disbursement
conditions precedent results in drawdown of the bond proceeds from the Bond Escrow account.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
46
Market risk
Market risk consists of the risk that real value or future cash flow related to financial instruments will
vary as a consequence of fluctuation in market prices. Market risk includes, but is not limited to, currency
risk, interest rate risk and price risk from sales. Currently, the Group has no exposure to price risk from
sale of goods, and no financial instruments have been entered into related to future expected exposures.
(i) Interest rate risk
The Group’s interest bearing debt at year end is at fixed interest rates. Changes in interest rates affect
the fair value of the debt. The Group will going forward calculate the sensitivity on the change in fair value
of the debt of a defined parallel shiꢁ in the yield curve of the relevant curreny. The Group’s bank deposits
and the Bond Escrow are exposed to changes in the market interest rate. The Group’s exposure on the
result at year end 2022 is approximately +/-NOK 12 015 thousand per percentage-point change in the
variable market interest rate (2021: NOK 321 thousand).
(ii) Currency exchange risk
At year end 2022, the Group’s main currency exposure is related to its bond loan and Bond Escrow, both
wich are denominated in USD. A 10% increase or decrease in the USD currency rates would increase/
decrease the net income by approximately NOK 4.7 million at year end.
At year end 2021, the Group’s only currency exposure of significance was the investment in Keliber Oy
(EUR). A 10% increase or decrease in the EUR currency rates would increase/decrease the net income by
approximately NOK 19.1 million at year end 2021.
The Group operates in an industry which is subject to extensive laws and regulations relevant for mining
operations, in particular in relation to environmental and operational issues, which has become more
stringent over time, and this development is expected to continue. Compliance with respect to environmental
regulations, closure and other maꢀers may involve significant costs and/or other liabilities.
Failure to comply with applicable environmental laws, regulations and permiꢀing requirements may result
in enforcement actions including orders issued by regulatory or judicial authorities causing operations to
cease or be curtailed and may include obligations to take corrective measures requiring capital expenditures,
installation of additional equipment or remedial actions. There is a risk that the Group due to its engagement
in mining and mineral processing activities will be required to compensate those suffering loss or damage by
reason of such activities and may incur civil or criminal fines or penalties for violation of applicable laws or
regulations.
Current environmental laws, regulations and permits governing operations and activities of mining companies
may be changed. Regulatory requirements surrounding site reclamation and remediation activities, or more
stringent implementation thereof, could have a material adverse impact on the Group and cause increases in
capital expenditures or production costs or reduction in levels of operational production, or require
abandonment or delays in the development of new sites. There are no current amendments that the Group
is aware of that may impact the assets of the Group.
Nordic Mining’s climate-related financial risk is considered to be low. The mining operations at the Group’s
main asset, the Engebø Project, is expected to have the lowest greenhouse gas footprint of all titanium
feedstock producers due to available hydroelectric power in the area and a tight infrastructure with minimal
transportation. Nordic Mining has a target of zero greenhouse gas emissions at Egnebø and has initiated the
development of a Climate Strategy Plan. The Group considers that there is minimal risk for stranded assets.
Credit risk
Credit risk is the risk of financial losses if a customer or counterpart of a financial instrument is unable to
meet contractual obligations.
The Group’s current business has only limited credit risk. Cash and cash equivalents and security deposits
in banks in addition to the Bond Escrow represent a large portion of the Group’s financial assets at
31 December 2022. There has been no recognized loss on trade receivables in 2022 or 2021.
Procedures for evaluation of credit risk has only to a limited degree been introduced. However,
discretionary evaluations are done on a case-by-case basis. Management will evaluate the necessity of
implementing stricter credit evaluations on an on-going basis.
Categories and fair value of financial instruments
The carrying amounts on the balance sheet of cash and cash equivalents, receivables, payables to
suppliers, and other short-term financial items are close to fair value due to the short time period till
maturity. For the convertible loan the carrying amount equals fair value.
The bond loan was issued in November 2022 and it is assessed that the fair value at year end was around
the redemption price of 92% of the nominal value of USD 100 million, provided the condition of the
Engebø Project being fully funded by 9 March 2023, and assuming no significant change in interest rate
level and credit spread since the completion of the transaction. It is further assessed that the fair value of
Bond Escrow is approximately equal to book value of USD 104.8 million.
Political risk
In addition to financial risk, the Group is exposed to political risk related to its mining projects. The political
risk includes the risk of not obtaining or extending the relevant governmental permits necessary to extract
and produce minerals from these mining projects.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
47
Year ended 31 December 2022
Amortized
Fair value through
Carrying
(Amounts in NOK thousands)
cost
profit or loss
amount
Financial assets by category
Trade and financial receivables
918
918
Bond Escrow
1 032 597
1 032 597
Restricted cash
4 215
4 215
Cash and cash equivalents
164 703
164 703
Total financial assets
1 202 433
-
1 202 433
Financial liabilities by category
Accounts payable
37 168
37 168
Bond loan
850 825
850 825
Convertible loan
-
142 976
142 976
Other current financial liabilities
8 002
8 002
Total financial liabilities
895 995
142 976
1 038 971
Capital management
The Group has historically used equity financing to finance research, operations, purchase of licenses and
other investments. In order to secure financing of the Engebø project, the Group has in 2022 issued a
bond loan and a convertible loan in addition to divesting its investment in Keliber. At the date of these
annual financial statements the Group has fully financed the Engebø Rutile and Garnet Project. The
project financing comprises of equity, debt and royalty financing. For more information on liquidity risk
see Board of Directors’ report. The ratio of net debt (debt less cash) divided by total capital (net debt and
equity) as of 31 December 2022 is 59% (as of 31 December 2021 -9%).
NOTE 21 - INVESTMENTS IN SUBSIDIARIES
The table below provides an overview of Nordic Mining ASA’s subsidiaries as at 31 December 2022:
(Amounts in NOK thousands)
Location
Year incorp.
Ownership
Nordic Rutile AS
Oslo, Norge
2006
100 %
Nordic Ocean Resources AS
Oslo, Norge
2011
100 %
Nordic Quartz AS
Oslo, Norge
2011
100 %
Year ended 31 December 2021
Amortized
Fair value through
Carrying
(Amounts in NOK thousands)
cost
profit or loss
amount
Financial assets by category
Financial investments
190 519
190 519
Trade and financial receivables
802
802
Cash and cash equivalents
32 086
32 086
Total financial assets
32 888
190 519
223 407
Financial liabilities by category
Accounts payable
3 093
3 093
Other current financial liabilities
3 901
3 901
Total financial liabilities
6 994
-
6 994
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
48
NOTE 22 - SHAREHOLDERS
The table below shows the Company’s 20 largest shareholders as at 31 December 2022:
Shareholder
Number of shares
% ownership
Nordnet Bank AB
21 023 753
9,05 %
Clearstream Banking S.A.
8 663 269
3,73 %
Nordea Bank Abp
5 404 701
2,33 %
Knut Fosse AS
4 870 161
2,10 %
Nordnet Livsforsikring AS
4 270 190
1,84 %
Carlsen
3 607 500
1,55 %
Danske Bank A/S
3 593 285
1,55 %
Citibank, N.A.
2 549 660
1,10 %
Naturlig Valg AS
2 300 000
0,99 %
Magil AS
2 140 000
0,92 %
Infoinvest AS
2 015 000
0,87 %
Fossum
1 759 230
0,76 %
Stavanger Forvaltning AS
1 736 913
0,75 %
Dybvad Consulting AS
1 710 000
0,74 %
Snati AS
1 700 000
0,73 %
Joma Invest AS
1 500 000
0,65 %
Melum Mølle AS
1 500 000
0,65 %
Espmart Invest AS
1 500 000
0,65 %
Huldrastølen AS
1 484 124
0,64 %
Nordenꢃeldske Management AS
1 375 000
0,59 %
Total 20 largest shareholders
74 702 786
32,16 %
Other shareholders
157 613 986
67,84 %
Total
232 316 772
100,00 %
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
49
NOTE 23 - RELATED PARTIES AND COMPENSATION OF MANAGEMENT
Compensation to Board members and Senior Management in 2022
Board
Other
Pension
Share based
(Amounts in NOK thousands)
Salary
member fees
compensation
costs
compensation
Total
Ivar S. Fossum, CEO
2 355
-
218
389
-
2 962
Christian Gjerde, CFO
1 727
-
21
104
-
1 851
Kenneth N. Angedal, Operations Director
1 591
-
7
86
-
1 684
Mona Schanche, VP Resource and Sustainability
1 535
-
21
253
-
1 808
Maurice Kok, Commercial Director
521
-
8
40
-
568
Terje Gundersen, Project Director
1 356
-
9
88
-
1 453
Ole Klevan, Nomination Commiꢀee (Chair)
-
50
-
-
-
50
Brita Eilersen, Nomination commiꢀee
-
30
-
-
-
30
Torger Lien, Nomination commiꢀee
-
30
-
-
-
30
Kjell Roland, Chair of the Board
-
350
-
-
-
350
Kjell Sletsjøe, Deputy Chair of the Board
-
210
-
-
-
210
Eva Kaijser, Board member
-
210
-
-
-
210
Benedicte Nordang, Board member
-
210
-
-
-
210
Antony Beckmand, Board member
-
210
-
-
-
210
Total
9 085
1 300
283
959
0
11 627
1. Maurice Kok started as Commercial Director on 1 August 2022.
2. Terje Gundersen started as Project Director for Engebø on 1 February 2022.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
50
Compensation to Board members and Senior Management in 2021
Board
Other
Pension
Share based
(Amounts in NOK thousands)
Salary
member fees
compensation
costs
compensation
Total
Ivar S. Fossum, CEO
2 427
-
225
414
45
3 110
Christian Gjerde, CFO
1 822
28
94
131
2 075
Lars K. Grøndahl, Senior Advisor1
1 301
-
126
222
17
1 665
Kenneth N. Angedal, Operations Director
1 635
-
7
81
17
1 740
Mona Schanche, VP Resource and Sustainability
1 572
-
28
268
17
1 886
Ole Klevan, Nomination Commiꢀee (Chair)
-
50
-
-
-
50
Brita Eilersen, Nomination commiꢀee
-
30
-
-
-
30
Torger Lien, Nomination commiꢀee
-
30
-
-
-
30
Kjell Roland, Chair of the Board
-
350
-
-
-
350
Kjell Sletsjøe, Deputy Chair of the Board
-
210
-
-
-
210
Eva Kaijser, Board member
-
210
-
-
-
210
Benedicte Nordang, Board member
-
210
-
-
-
210
Antony Beckmand, Board member
-
210
-
-
-
210
Total
8 757
1 300
414
1 079
227
11 777
1. Lars K. Grøndal leꢁ the Company on 30 June 2021.
In 2021, all employees in the Group were paid a bonus for finalization of the UDFS for the Engebø Project
under the on-year Short-Term Incentive Program. No bonuses were paid under the Short-Term Incentive
Program in 2022. Senior Management is subject to termination periods of 3-6 months.
Guidelines for management remuneration
The main components of the guidelines for Senior Management salaries are as follows:
•
The compensation package should reflect the responsibility and the tasks that the individual persons
in Senior Management, and that the employee contributes towards the long-term creation of value in
Nordic Mining.
•
The Company will offer competitive conditions to aꢀract relevant expertise for the development of
the Company.
•
The compensation package consists of fixed salary plus participation in an option program that has
been approved by the annual meeting.
•
Senior Management participates in pension and insurance plans.
These guidelines have been used to recruit Senior Management in Nordic Mining ASA and to establish
salary levels.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
51
Other transactions with related parties
In 2021 the Group has sold a vehicle to its Senior Advisor, Lars K. Grøndahl, for NOK 363,000, which
represented the estimated market value.
Shares owned/controlled by members of the Board and senior management
and those related to them as of 31 December 2022
Name
No of shares
% owned
Kjell Roland, Chairman of the Board
290 475
0,13 %
Kjell Sletsjøe, Board member
21 676
0,01 %
Ivar S. Fossum, CEO
1 759 230
0,76 %
Christian Gjerde, CFO
400 000
0,17 %
Kenneth N. Angedal, Operations Director
445 822
0,19 %
Mona Schanche, VP Resource and Sustainability
441 063
0,19 %
Terje Gundersen, Project Director
66 333
0,03 %
Total
3 424 599
1,47 %
NOTE 24 - PENSIONS
The Group has a defined benefit plan or a defined contribution plan (for new employees) for its employees
in the parent company, Nordic Mining ASA and a defined contribution plan for its employees in Nordic
Rutile AS. The plans meet the Norwegian statutory requirements for pension plans for employees.
Defined Benefit Plan
The Group has one benefit plan for Norwegian employees with a total of 2 active members. The Group’s
defined benefit pension plan is a final salary plan and contributions are made to a separately administered
fund. The level of benefits provided depends on the member’s length of service and salary at retirement age.
Pension cost
(Amounts in NOK thousands)
2022
2021
Pension cost - employee benefit
617
880
Pension cost - interest expense
24
24
Total pension related costs
642
904
Remeasurement gains/(losses) recorded to OCI
(1 009)
(100)
Movement in pension obligation during the year
(Amounts in NOK thousands)
2022
2021
Pension obligations January 1
15 704
14 785
Current value of pension benefits for the year
642
904
Interest costs
263
222
Payments
(365)
(133)
Remeasurement loss/ (gain)
1 080
(4)
Other
81
(71)
Pension obligations as of 31 December
17 404
15 704
Shares owned/controlled by members of the Board and senior management
and those related to them as of 31 December 2021
Name
No of shares
% owned
Kjell Roland, Chairman of the Board
190 475
0,08 %
Kjell Sletsjøe, Board member
21 676
0,01 %
Eva Kaijser1
110 472
0,05 %
Ivar S. Fossum, CEO
732 755
0,32 %
Kenneth N. Angedal, Operations Director
45 822
0,02 %
Mona Schanche, VP Resource and Sustainability
41 063
0,02 %
Total
1 142 263
0,49 %
1. The shares are owned by the the company Fågelsången AB.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
52
Movement in pension funds during the year
(Amounts in NOK thousands)
2022
2021
Pension funds 1 January
14 641
13 417
Expected return on plan assets
212
179
Contributions
994
1 271
Payments
(365)
(133)
Other
40
11
Remeasurement (loss)/ gain
71
(104)
Pension funds as of 31 December
15 593
14 641
Pension liability is classified in the balance sheet as follows
(Amounts in NOK thousands)
2022
2021
Pension funds
15 593
14 641
Pension obligations
(17 404)
(15 704)
Net pension asset
(1 812)
(1 062)
Pension asset/(liability) is shown in the balance sheet as
Other long-term asset
-
-
Pension liabilities
(1 812)
(1 062)
Assumptions
2022
2021
Discount interest rate
3,00 %
1,90 %
Annual projected increase in salary
3,50 %
2,75 %
Annual projected G- regulation
3,25 %
2,50 %
Annual projected regulation of pension
1,50 %
0,00 %
The major categories of plan assets as a percentage of the fair value of total plan assets
2022
2021
Equities
10,20 %
9,70 %
Bonds
14,60 %
19,60 %
Money market
4,20 %
10,60 %
Hold to maturity bonds
38,10 %
26,70 %
Loans and receivables
20,90 %
19,10 %
Real estate
11,00 %
13,60 %
Other
1,00 %
0,70 %
NOTE 25 - LEASES
The Group implemented IFRS 16 Leases from 1 January 2019 and recognized a right-to-use asset
related to the leasing of vehicles; see note 11. Short-term leases have been expensed as incurred; see
note 6. The Group’s office lease is cancellable with 4 months’ notice with no more than an insignificant
penalty and is as such considered a short-term lease.
Lease liability
(Amounts in NOK thousands)
2022
2021
Lease liability 1 January
245
373
Additions lease contracts
-
-
Accretion lease liability, included in finance cost
22
28
Payments of lease liability
(151)
(156)
Total lease liability 31 December
116
245
Specification of lease liability in the balance sheet
(Amounts in NOK thousands)
2022
2021
Current *
116
132
Non-current
-
113
Total lease liability 31 December
116
245
* Current lease liability is included in other current liabilities; see note 16.
Future minimum lease payments under non-cancellable lease agreements (undiscounted)
(Amounts in NOK thousands)
2022
2021
Within a year
725
744
From year 2-5
-
132
Total
725
876
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
53
NOTE 26 - PAYMENTS TO AND FROM GOVERNMENTAL INSTITUTIONS
In accordance with the Accounting Act, section 3-3d, the Group has assessed its relations with and
payments to and from governmental institutions. The Group‘s governmental relations are only with
institutions in Norway. All relations and payments are in the ordinary course of business and related to i.a.
license payments, payment of prospectus/financial authority fees, R&D projects grants, tax refund, etc.
Estimated total payment from the Group to various Norwegian governmental institutions was NOK 0.6
million in 2022 (2021: NOK 0.2 million). Estimated total payment to the Group from various Norwegian
governmental institutions was NOK 0.0 million in 2022 (2021: NOK 1.2 million).
NOTE 28 - EVENTS AFTER BALANCE SHEET DATE
In January 2023 Nordic Rutile AS entered into a globally exclusive oꢄake agreement for the full planned
garnet production from Engebø for the first 5 years of production. The oꢄake agreement is for the
supply and delivery of minimum total of 762,500 metric tonnes of garnet concentrate in the 5-year
contract period, up to a total of 785,000 metric tonnes, which is the full planned garnet production the
first 5-years. The consideration will be based on a pre-agreed price schedule for the 5-year period. Nordic
Rutile has through this oꢄake agreement secured, together with the rutile oꢄake agreements
announced earlier, commiꢀed sales for up to the full production of both rutile and garnet from Engebø for
the first 5 years of production, all with highly reputable buyers. In addition to materially de-risk the
market side, Nordic Rutile will with the three oꢄake agreements in place satisfy the oꢄake related
conditions in the company’s financing agreements. The oꢄake agreements are inter alia subject to
certain conditions precedent.
In February 2023 Nordic Rutile AS has signed binding agreements with a fund managed by Orion Resource
Partners for USD 55 million investment in the Engebø Rutile and Garnet Project. The investment
comprises a USD 50 million non-dilutive royalty financing to Nordic Rutile AS and USD 5 million in equity,
which will be contributed to Nordic Mining ASA. The royalty instrument is secured, subordinate to the
USD 100 million senior secured bond issued on 9 November 2022, subject to the terms of an Intercreditor
Agreement.
In March 2023 the Company raised NOK 940 million in gross proceeds in a private placement through the
allocation of 1,566,666,667 new shares, at a subscription price of NOK 0.60 per share. The new capital
subscribed is, together with other sources of commiꢀed equity, debt, and other financing, expected to
fully finance the Engebø Project up to start of production.
Following the subscription mentioned above the Company’s convertible loan was converted. The convertible
loan with accrued interests, in total NOK 139.6 million was converted at the same subscription price as in
the private placement referred to above, i.e. NOK 0.60 per share.
In April 2023, the Company completed a subsequent offering of 136,544,091 shares of in total
216,666,667 shares available in the offering at the same subscription price as the private placement of
NOK 0.60 per share.
In April 2023 the Supreme Court’s appeals commiꢀee concluded that the appeal by AMR will be heard
before the Supreme Court, tentatively scheduled to take place before the summer 2023.
NOTE 27 - COMMITMENTS AND CONTINGENCIES
Conditional liability Engebø
The Group has a conditional liability to the seller of the mining rights in the Engebø area of NOK 40 million
that will be paid if and when commercial operation commences at Engebø. No liability has been recognized
as per 31 December 2022.
In October 2021 the Oslo District Court has ruled in favour of the subsidiary Nordic Rutile in the court
case against Artic Mineral Resources (AMR). The ruling confirms that Nordic Rutile’s extraction rights are
valid and that the company has the right to extract and - within the limits of the Norwegian Mining’s Act
- utilize garnet and all other minerals on the Vevring side of the Engebø deposit. AMR appealed the ruling.
The Borgarting Court of Appeal ruled in October 2022 in favour of the subsidiary, Nordic Rutile.
The ruling received confirms that Nordic Rutile has exclusive right to all minerals in the Engebø deposit -
within the limits of the Norwegian Mining Act - in line with the operating licence granted by the Ministry
of Trade, Industry and Fisheries in May 2022. The court ruled that AMR shall pay all legal expenses.
AMR appealed the verdict to the Supreme Court in November 2022. In April 2023 the Supreme Court’s
appeals commiꢀee concluded that the appeal by AMR will be heard before the Supreme Court, tentatively
scheduled to take place before the summer
2023.
NORDIC MINING
ANNUAL REPORT 2022
CONTENT
CEO’s REPORT
OPERATIONS
BOD’s REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
70
Tel: +47 22 94 77 90
Email: [email protected]
www.nordicmining.com