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SWEDEN
Kaunisvaara Project
The Group has executed the Kaunisvaara project mine and process plant project in less than two years. During this period the Group has constructed the industrial area, removed more than 5 million m3 of overburden from the Tapuli mine, and installed and commissioned the first process line, including a primary crusher, conveyor belts, grizzly building as well as stock pile buildings and the process plant. During December, 2012, Northland produced its first iron ore concentrate in the process plant.
-- Cold commissioning of the process plant is completed-- First production of concentrate has occurred-- Commissioning is close to completion, including rectification of minor items-- Ramp up of production has been successful and to date Northland has produced approximately 65,000 tonnes (dmt) of concentrate with 69 percent Fe-grade and quality well in line with planned specifications-- First concentrate has been transported by rail from Pitkajarvi to Narvik, with the concentrate carried in rented box cars.-- About 55,000 tonnes of concentrate was loaded onboard the first vessel and shipped to Northland's off-take partner Tata Steel on February 25, 2013.Mine and process plant-- The first production blast occurred on October 18, 2012-- The first Kaunisvaara process line was completed on schedule. Cold commissioning has been completed, and first concentrate has been produced.-- During the ongoing commissioning the quality of the concentrate produced meets the specification achieved during the test works and the project study-- Three haul trucks, one wheel loader, one dozer and one grader have been installed at the mining site. Atlas Copco has delivered the second of the two drill rigs. Early in 2012, Northland awarded a contract for the purchase of the mine mobile equipment to PON Equipment AB for the supply of Caterpillar mine mobile equipment. This contract covered the supply of the first batch of the mining haulage trucks, loading shovels as well as ancillary equipment. Subsequent to this contract, Northland procured adequate tires for the haulage trucks to mitigate the risk of potential supply shortages. The truck workshop has been completed.The logistics chain-- The complete logistics chain is working in accordance with expectations and will enhance gradually during 2013-- Road and rail interchange work has been completed at Pitkajarvi-- Northland and its contractor Cliffton have obtained dispensation (to be renewed on annual basis which is standard procedure) for operating 90 tonnes truck from the Swedish Transport Administration ("STA")-- STA has also allocated the four rail daily slots on the rail line from Pitkajarvi to Narvik as was requested by Northland-- At the end of January, 2013, 12 rail cars were manufactured and currently Kiruna Wagon manufactures two rail cars per week-- The first 90 tonnes (gross weight) truck left Kaunisvaara on December 7, 2012, loaded with concentrate destined for Pitkajarvi-- The first train loaded with concentrate left Pitkajarvi destined for Narvik during the weekend December 15-16, 2012-- The Swedish Government has committed to invest SEK 1.3 billion in the upgrading of the road 395, from Kaunisvaara to the re-loading terminal in Pitkajarvi. The Swedish Government has also allocated in total SEK 1.3 billion to ensure sufficient capacity on the Malmbanan rail line to accommodate for the expected increase in volumes from Northland, Luossavaara-Kiirunavaara AB and other customers.The Port-- Permits necessary for a temporary solution for the Fagernes Terminal in the Port of Narvik are in place.-- Construction of the permanent jetty in the Port of Narvik is progressing according to plan, and construction of the storage building is nearing completion-- First shipments of conveyors for moving concentrate into and out of bulk storage arrived on site in December 2012-- The Ship loader is expected to be delivered in July 2013-- The Fagernes Terminal in Narvik will be operated by Grieg Logistics AS-- One Boom stacker is delivered and is currently assembled in Narvik-- Northland has signed an agreement with the Norwegian National Rail Administration (Nw.: Jernbaneverket) to invest in the upgrade and capacity increase of the Fagernes rail line, connecting Northland's terminal, as well as the tracks in the terminal area.Consolidated statement of comprehensive income2012 numbers unaudited Year ended December 31 ------------------------ 2012 2011-------------------------------------------------------------------------- USD'000 USD'000Cost of sales (24,029) - ------------------------Gross profit / (loss) (24,029) -Marketing expenses (985) (752)General and administrative expenses (22,141) (16,892)Other operating expenses (994) (10,540)Other income 56 92 ------------------------Operating profit / (loss) (48,093) (28,092)Finance income 30,201 2,305Finance expense (5,692) (11,880) ------------------------Finance income / (expense) - net 24,509 (9,575) ------------------------Profit / (Loss) before tax (23,584) (37,667)Income tax (1,222) (402) ------------------------Profit / (Loss) for the year (24,806) (38,069) ------------------------ ------------------------Other comprehensive incomeChange in fair value of available-for-sale assets - 13Foreign currency translation 5,859 (8,498) ------------------------Total comprehensive income / (loss) for the year, net of tax (18,947) (46,554) ------------------------ ------------------------Profit / (Loss) per share:Basic and diluted loss for the year attributable to the equity (USD) (0.05) (0.17)Quarterly information, unaudited--------------------------------------------------------------------------- 4rd 3nd 2st 1th quarter quarter quarter quarter ended ended ended ended Dec 31, Sep 30, Jun 30, Mar 31, 2012 2012 2012 2012---------------------------------------------------------------------------Total income, USD '000 245 203 235 145---------------------------------------------------------------------------Net profit (loss) USD '000 (5,583) 3,728 (21,610) (1,341)---------------------------------------------------------------------------Net profit (loss) per share, USD (0.01) 0.01 (0.04) (0.00)------------------------------------------------------------------------------------------------------------------------------------------------------ 4rd 3nd 2st 1th quarter quarter quarter quarter ended ended ended ended Dec 31, Sep 30, Jun 30, Mar 31, 2011 2011 2011 2011---------------------------------------------------------------------------Total income, USD '000 358 517 816 707---------------------------------------------------------------------------Net profit (loss) USD '000 (34,348) (3,928) (8,665) 8,872---------------------------------------------------------------------------Net profit (loss) per share, USD (0.15) (0.02) (0.04) 0.11---------------------------------------------------------------------------Consolidated statement of financial position2012 numbers unaudited As at December 31 ------------------------ 2012 2011-------------------------------------------------------------------------- USD '000 USD '000AssetsNon-current assetsExploration and evaluation assets 80,054 64,165Mines under construction 678,079 236,794Property, plant and equipment 235,262 9,345Intangible assets 910 1,241Financial assets 49,427 27,632 ------------------------Total non-current assets 1,043,732 339,177 ------------------------Current assetsInventories 5,928 -Accounts receivable 19,689 17,291Other current assets 65,302 23,979Cash and cash equivalents 53,739 38,324 ------------------------Total current assets 144,658 79,594 ------------------------Total assets 1,188,390 418,771 ------------------------ ------------------------Equity and liabilitiesShareholders' equityShare capital 50,425 21,592Share premium 662,591 388,576Reserves 36,213 29,452Cumulative losses (124,713) (99,907) ------------------------Total equity 624,516 339,713 ------------------------Non-current liabilitiesBorrowings 358,131 4,302Finance lease obligations 17,937 -Provisions 28,758 327Other non-current liabilities 7,536 - ------------------------Total non-current liabilities 412,362 4,629 ------------------------Current liabilitiesTrade and other payables 146,485 74,008Finance lease obligations 3,789 -Income tax liability 1,238 421 ------------------------Total current liabilities 151,512 74,429 ------------------------Total equity and liabilities 1,188,390 418,771 ------------------------ ------------------------Consolidated statement of changes in equity2012 numbers unaudited Attributable to the owners of Northland Resources S.A. Share capital ------------------------------------ Number of Issued and Share shares fully paid premium---------------------------------------------------------------- USD'000 USD'000Balance as at January 01, 2012 226,628,899 21,592 388,576 ------------------------------------Profit / (Loss) for the year - - -Other comprehensive incomeForeign currency translation - - -Change in fair value of available-for-sale assets - - -Amount transferred to profit or loss under caption 'finance expense' due to significant decline in fair value of the available-for- sale assets - - - ------------------------------------Total comprehensive profit / (loss) - -Transactions with owners in their capacity as owners:Issuance of new shares 287,500,000 28,828 296,925Exercise of stock options 50,000 5 141Share issuance costs - - (23,051)Share-based payments - - - ------------------------------------Balance as at December 31, 2012 514,178,899 50,425 662,591 ------------------------------------ ------------------------------------ Attributable to the owners of Northland Resources S.A. Reserves ------------------------------------------------ Foreign Share option currency Fair value Other reserve translation reserve reserves---------------------------------------------------------------------------- USD'000 USD'000 USD'000 USD'000Balance as at January 01, 2012 18,629 9,757 13 1,053 ------------------------------------------------Profit / (Loss) for the year - - - -Other comprehensive incomeForeign currency translation - 5,859 - -Change in fair value of available-for-sale assets - - (533) -Amount transferred to profit or loss under caption 'finance expense' due to significant decline in fair value of the available-for- sale assets - - 520 - ------------------------------------------------Total comprehensive profit / (loss) - 5,859 - -Transactions with owners in their capacity as owners:Issuance of new shares - - - -Exercise of stock options (94) - - -Share issuance costs - - -Share-based payments 1,009 - - - ------------------------------------------------Balance as at December 31, 2012 19,544 15,616 - 1,053 ------------------------------------------------ ------------------------------------------------ Attributable to the owners of Northland Resources S.A. Cumulative Total losses equity---------------------------------------------------- USD'000 USD'000Balance as at January 01, 2012 (99,907) 339,713 ------------------------Profit / (Loss) for the year (24,806) (24,806)Other comprehensive incomeForeign currency translation - 5,859Change in fair value of available-for-sale assets - (533)Amount transferred to profit or loss under caption 'finance expense' due to significant decline in fair value of the available-for- sale assets - 520 ------------------------Total comprehensive profit / (loss) (24,806) (19,480)Transactions with owners in their capacity as owners:Issuance of new shares - 325,753Exercise of stock options - 52Share issuance costs - (23,051)Share-based payments - 1,009 ------------------------Balance as at December 31, 2012 (124,713) 624,516 ------------------------ ------------------------Consolidated statement of changes in equity (ctd)2012 numbers unaudited Attributable to the owners of Northland Resources S.A. Share capital ------------------------------------ Number of Issued and Share shares fully paid premium---------------------------------------------------------------- USD'000 USD'000Balance as at January 01, 2011 224,418,899 21,369 385,041 ------------------------------------Profit / (Loss) for the year - - -Other comprehensive incomeForeign currency translation - - -Change in fair value of available-for-sale assets - - - ------------------------------------Total comprehensive profit (loss) - -Transactions with owners in their capacity as owners:Exercise of stock options 2,210,000 223 3,795Share issuance costs - - (260)Share-based payments - - -Issuance of warrants - - - ------------------------------------Balance as at December 31, 2011 226,628,899 21,592 388,576 ------------------------------------ ------------------------------------ Attributable to the owners of Northland Resources S.A. Reserves ------------------------------------------------ Foreign Share option currency Fair value Other reserve translation reserve reserves---------------------------------------------------------------------------- USD'000 USD'000 USD'000 USD'000Balance as at January 01, 2011 17,292 18,255 - - ------------------------------------------------Profit / (Loss) for the year - - - -Other comprehensive incomeForeign currency translation - (8,498) - -Change in fair value of available-for-sale assets - - 13 - ------------------------------------------------Total comprehensive profit (loss) - (8,498) 13 -Transactions with owners in their capacity as owners:Exercise of stock options (1,679) - - -Share issuance costs - - -Share-based payments 3,016 - -Issuance of warrants - - - 1,053 ------------------------------------------------Balance as at December 31, 2011 18,629 9,757 13 1,053 ------------------------------------------------ ------------------------------------------------ Attributable to the owners of Northland Resources S.A. Cumulative Total losses equity---------------------------------------------------- USD'000 USD'000Balance as at January 01, 2011 (61,838) 380,119 ------------------------Profit / (Loss) for the year (38,069) (38,069)Other comprehensive incomeForeign currency translation - (8,498)Change in fair value of available-for-sale assets - 13 ------------------------Total comprehensive profit (loss) (38,069) (46,554)Transactions with owners in their capacity as owners:Exercise of stock options - 2,339Share issuance costs - (260)Share-based payments - 3,016Issuance of warrants - 1,053 ------------------------Balance as at December 31, 2011 (99,907) 339,713 ------------------------ ------------------------Consolidated statement of cash flows2012 numbers unaudited Year ended December 31 ------------------------ 2012 2011-------------------------------------------------------------------------- USD'000 USD'000Operating activitiesLoss for the year before taxation (23,584) (37,667)Adjustments for non-monetary items:Impairment of exploration and evaluation assets 9,036Interest income (632) -Interest expense 1,882 -Depreciation and amortization 4,905 374Share-based payments 770 2,249Loss on disposal of assets,net 1,097Foreign exchange (gain) / loss (28,914) 104Other non-monetary items 1,004 (12) ------------------------ (44,569) (24,819)Changes in working capitalInventories (858) -Accounts receivable (1,247) (30,194)Other current assets (51,336) (1,067)Trade and other payables 38,553 12,520 ------------------------Cash flows used in operating activities (59,457) (43,560)Income tax paid (309) - ------------------------Net cash used in operating activities (59,766) (43,560) ------------------------Cash flows from investing activitiesInvestment in exploration and evaluation assets (16,416) (20,496)Acquisition of PPE including Mines under construction (559,826) (139,468)Long-term receivable (21,487) (19,286)Interest received 632 - ------------------------Net cash used in investing activities (597,097) (179,250) ------------------------Cash flows from financing activitiesProceeds from issuance of ordinary shares 325,802 2,339Share issuance costs (23,050) (1,430)Net proceeds from borrowings 364,254 4,302Transaction costs on fund raising (6,039) (899)Interest paid (1,882) - ------------------------Net cash from financing activities 659,085 4,312 ------------------------Change in cash and cash equivalents 2,222 (218,498)Effect of changes in exchange rates 13,194 5,386Cash and cash equivalents at beginning of the year 38,323 251,435 ------------------------Cash and cash equivalents at end of the year 53,739 38,323 ------------------------ ------------------------
