PROSPECTUS. A Norwegian public limited company organised under the laws of Norway

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1 PROSPECTUS A Norwegian public limited company organised under the laws of Norway RIGHTS ISSUE AND LISTING OF UP TO 28,000,000 OFFER SHARES AT A SUBSCRIPTION PRICE OF NOK 0.60 PER OFFER SHARE, WITH TRADABLE SUBSCRIPTION RIGHTS FOR EXISTING SHAREHOLDERS AS OF THE END OF 22 OCTOBER 2014 SUBSCRIPTION PERIOD: FROM AND INCLUDING 28 OCTOBER 2014 TO AND INCLUDING 12 NOVEMBER 2014 TRADING IN SUBSCRIPTION RIGHTS: FROM AND INCLUDING 28 OCTOBER 2014 TO AND INCLUDING 10 NOVEMBER 2014 SUBSCRIPTION RIGHTS THAT ARE NOT EXERCISED AND USED FOR SUBSCRIPTION OF OFFER SHARES PRIOR TO THE EXPIRY OF THE SUBSCRIPTION PERIOD WILL LAPSE WITHOUT COMPENSATION AND CONSEQUENTLY BE OF NO VALUE MANAGER: 24 OCTOBER 2014

2 Important Notice The information in this prospectus (the Prospectus ) has been prepared according to Sections 7-2 and 7-3 of the Norwegian Securities Trading Act of 29 June 2007 no 75 (the Securities Trading Act ) in connection with the Rights Issue and Listing on Oslo Axess of Offer Shares in Nordic Mining ASA (the Company or Nordic Mining, and, together with its consolidated subsidiaries, the Group ), as defined and described herein, in order to provide information about the Group and its business in relation to the offering of up to 28,000,000 new shares in the Company (the Offer Shares ) to be issued in connection with the Rights Issue at a subscription price of NOK 0.60 per Offer Share (the Subscription Price ) with tradable subscription rights (the Subscription Rights ) for shareholders of the Company who as of the end of 22 October 2014, as registered in the Norwegian Central Securities Depository (the VPS ) on 24 October 2014 (the Record Date ), and who are not resident in a jurisdiction where such offering would be unlawful, or for other jurisdictions than Norway would require any filing, registration or similar action (the Eligible Shareholders ), subject to applicable securities laws and the terms set out in this Prospectus (the Rights Issue ). The Offer Shares are offered pursuant to a resolution by the Board of Directors on 22 October The resolution was passed pursuant to the authorisation given to the Board of Directors by the Annual General Meeting on 27 May The Company's shares (the Shares ) are listed on Oslo Axess under the ticker code NOM. This Prospectus has been prepared to comply with the Securities Trading Act and related secondary legislation, including EC Commission Regulation EC/809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 (and amendments thereto) regarding information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements. This Prospectus has been prepared solely in the English language. The Financial Supervisory Authority of Norway (the Norwegian FSA ) has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information included in this Prospectus. The approval by the Norwegian FSA only relates to the information included in accordance with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or referred to in this Prospectus. The Company has furnished the information in this Prospectus. The Company has engaged Swedbank as manager (the Manager ) for the Listing and the Rights Issue. Neither the Company nor the Manager have authorised any other person to provide investors with any other information related to the Listing and the Rights Issue and neither the Company or the Manager will assume any responsibility for any information other persons may provide. Unless otherwise indicated, the information contained herein is current as of the date hereof and subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the Shares between the time when this Prospectus is approved and the date of Listing of the Offer Shares on Oslo Axess will be included in a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus shall under any circumstances create any implication that there has been no change in the Group's affairs or that the information herein is correct as of any time subsequent to the date of this Prospectus. An investment in the Company involves inherent risks. Potential investors should carefully consider the risk factors set out in section 2 in addition to the other information contained herein before making an investment decision. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should consult with its own legal adviser, business adviser and tax adviser as to legal, business and tax advice. In the ordinary course of their respective businesses, the Manager and certain of their respective affiliates have engaged, and will continue to engage, in investment and commercial banking transactions with the Group. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of an investment in the Shares for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company s obligations under applicable law and regulations, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system. The distribution of this Prospectus and the offer and sale of the Offer Shares in certain jurisdictions may be restricted by law. The Company and the Manager require persons in possession of this Prospectus, in possession of Subscription Rights or considering subscribing for Offer Shares to inform themselves about, and to observe, any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase, any of the Offer Shares in any jurisdiction in which such offer or subscription or purchase would be unlawful. No one has taken any action that would permit a public offering of the Subscription Rights or the Offer Shares to occur outside of Norway. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Rights Issue and/or the Prospectus that are not known or identified by the Company and the Manager at the date of this Prospectus may apply in various jurisdictions as they relate to the Prospectus. For other selling and transfer restrictions, see section Selling restrictions and restrictions on distribution of Subscription Rights.

3 TABLE OF CONTENTS 1. SUMMARY... 6 SECTION A INTRODUCTION AND WARNINGS... 6 SECTION B ISSUER... 6 SECTION C SECURITIES SECTION D RISKS SECTION E OFFER RISK FACTORS FINANCIAL RISKS GENERAL RISKS RISK CONNECTED TO EXPLORATION AND DEVELOPMENT OF MINERALS AND METALS RISKS CONNECTED TO TECHNOLOGICAL DEVELOPMENTS REGULATORY RISK IN NORWAY FOREIGN OPERATIONS STATEMENT OF RESPONSIBILITY GENERAL INFORMATION OTHER IMPORTANT INVESTOR INFORMATION PRESENTATION OF FINANCIAL AND OTHER INFORMATION THIRD PARTY INFORMATION CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS THE RIGHTS ISSUE BACKGROUND FOR THE RIGHTS ISSUE OVERVIEW OF THE RIGHTS ISSUE TERMS AND CONDITIONS OF THE RIGHTS ISSUE SHARES FOLLOWING THE RIGHTS ISSUE DILUTION ADVISORS AND AUDITOR NET PROCEEDS AND EXPENSES INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE RIGHTS ISSUE PUBLICATION OF INFORMATION RELATING TO THE RIGHTS ISSUE JURISDICTION AND CHOICE OF LAW PRESENTATION OF NORDIC MINING HISTORY AND DEVELOPMENT LEGAL STRUCTURE BUSINESS OVERVIEW BUSINESS IDEA, GOALS AND STRATEGY OVERVIEW MINERALS AND METALS DEPOSITS IN NORDIC MINING STRATEGIC BUSINESS APPROACH RESEARCH AND DEVELOPMENT PATENTS AND LICENSES MARKET OVERVIEW RECENT TRENDS AND OUTLOOK IN THE MINING INDUSTRY THE NORWEGIAN MINING INDUSTRY NORDIC MINING'S PRINCIPAL MARKETS TITANIUM GARNET HIGH PURITY QUARTZ LITHIUM FINANCIAL INFORMATION

4 8.1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES HISTORICAL CONSOLIDATED FINANCIAL INFORMATION SEGMENT INFORMATION MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTERIM FINANCIAL INFORMATION DIVIDEND POLICY LEGAL AND ARBITRATION PROCEEDINGS FUNDING AND TREASURY POLICIES AND OBJECTIVE TRENDS IMPORTANT EVENTS IN 2014 YEAR-TO-DATE SIGNIFICANT CHANGES IN THE GROUP S FINANCIAL OR TRADING POSITION SINCE 30 JUNE CAPITAL RESOURCES CASH FLOWS WORKING CAPITAL STATEMENT CAPITALISATION AND INDEBTEDNESS INVESTMENTS PROPERTY, PLANT AND EQUIPMENT ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT BOARD MANAGEMENT CONFLICTS OF INTERESTS ETC FRAUDULENT OFFENCE, BANKRUPTCY, INCRIMINATION AND DISQUALIFICATION REMUNERATION AND BENEFITS BOARD AND EXECUTIVE MANAGEMENT SHAREHOLDINGS AND OPTIONS OF MANAGEMENT AND BOARD OPTIONS AND INCENTIVE SCHEMES PENSION OBLIGATIONS BOARD PRACTICES COMPENSATION FOR TERMINATION COMMITTEES CORPORATE GOVERNANCE EMPLOYEES EMPLOYEES AND SERVICE PROVIDERS CONSULTANCY AGREEMENT WITH TARMO TUOMINEN HIRED CONSULTANTS MAJOR SHAREHOLDERS SHAREHOLDER STRUCTURE RELATED PARTY TRANSACTIONS ADDITIONAL INFORMATION THE SHARE CAPITAL MEMORANDUM AND ARTICLES OF ASSOCIATION SHAREHOLDER RIGHTS CORPORATE MATTERS LEGAL AND ARBITRATION PROCEEDINGS SHAREHOLDER MATTERS

5 17.7. SECURITIES TRADING IN NORWAY CONTRACTS CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS MATERIAL CONTRACTS NORWEGIAN TAX NORWEGIAN SHAREHOLDERS NON-RESIDENT SHAREHOLDERS DUTIES ON THE TRANSFER OF SHARES DOCUMENTS ON DISPLAY INCORPORATED BY REFERENCE NORSK SAMMENDRAG PUNKT A INTRODUKSJON OG ADVARSEL PUNKT B - UTSTEDER PUNKT C VERDIPAPIRENE PUNKT D RISIKO PUNKT E TILBUDET DEFINITIONS & GLOSSARY TERMS APPENDICES Appendix 1: Articles of Association of Nordic Mining Appendix 2: Annual report 2014 on Nordic Mining's mineral deposits, exploration results, mineral resources and mineral reserves Appendix 3: Information regarding Competent Person Engebø Appendix 4: Subscription Form for the Rights Issue Appendix 5: Tegningsblankett (in Norwegian)

6 1. SUMMARY Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A E (A.1 E.7) below. This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". SECTION A INTRODUCTION AND WARNINGS Element Description Disclosure requirement of Element A.1 Warnings This summary should be read as an introduction to the Prospectus. Any decision to invest in the Offer Shares should be based on consideration of the Prospectus as a whole by the investor. A.2 Resale and final placement by financial intermediaries Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation in its Member State, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Not applicable. No resale will take place. No financial intermediaries will be used for the final placement of the offer. SECTION B ISSUER Element Description of Element Disclosure requirement B.1 Legal and commercial name of the Issuer B.2 Domicile and legal form of the Issuer, the legislation under which the Issuer operates and its country of incorporation Nordic Mining ASA. Nordic Mining ASA is a Norwegian public limited company, incorporated under the laws of Norway and has its registered address at Munkedamsveien 45, 0250 Oslo, Norway. 6

7 Element Description of Element Disclosure requirement B.3 Key factors relating to current operations and activities, main categories of products sold and principal markets The Group's operations, including the operations of the associated company Keliber, currently comprise the following main projects: Engebø rutile deposit (titanium dioxide), Kvinnherad quartz deposit (quartz) and Keliber spodumene pegmatite deposit (lithium/lithium carbonate). The projects are pre-commercial. In addition, the Group and its associated company hold various Exploration Rights for minerals (i.a. copper, nickel, palladium, platinum and lithium) in Norway and Finland. During the last two years, Nordic Mining has actively prospected for sulphide mineralisation in The Reinfjord Intrusion on the Øksfjord Peninsula (nickel, copper, cobalt and palladium-platinum-gold). On 13 March 2013, Nordic Mining received a letter from the Ministry of Climate and Environment stating that the information related to the industrial area plan and the application for disposal of mineral residues in connection with the Engebø rutile project, in the Ministry of Climate and Environment s opinion, was not sufficient for making a decision. The Ministry of Climate and Environment requested additional information regarding e.g. sea water circulation and risk assessment regarding particle distribution, biological investigations, arrangements for tailings disposal, use of fresh water etc. In 2013, Nordic Mining assigned DNV GL to conduct a measuring program regarding documentation of water circulations in the Førdefjord and risk assessments regarding the planned sea disposal for the mineral residues. DNV GL was also assigned for various additional investigations, e.g. survey of the seafloor with a remotely operated vehicle ("ROV"), sample fishing and investigation of possible spawning grounds for fish, eel and other species in the disposal area. In August 2014, the measuring program for water circulations was completed after 12 months of measuring at 11 metering stations. Water currents have been measured using advanced profiling metering instruments which have recorded current velocities and directions at different water depths. Further, hydrographic measurements have been executed with recording parameters like temperature, salinity, density, pressure and oxygen content in the water. The results from the measuring program have been reported and published on a quarterly basis, last time in August On 30 September 2014, Nordic Mining submitted comprehensive information on all the requested issues to the Ministry of Climate and Environment and the Ministry of Local Government and Modernisation. The submitted reports are available on Nordic Mining s webpage In summary, the supplementary information supports and strengthens the results and documentation which was compiled in the EIA for the Engebø project, showing i.a. that the planned sea disposal for the mineral residues represents a safe and good storage solution for the mine tailings from Engebø. The Ministry of Climate ad Environment has confirmed that the final decision process subsequent of the submitted supplementary information will be coordinated. The Ministry of Climate and 7

8 Element B.4a Description of Element Significant recent trends affecting the Issuer and the industries in which it operates Disclosure requirement Environment is currently assessing the supplementary information, and has stated that the decision process shall be efficient. Nordic Mining has confidence that the supplementary information following from the survey and investigation program provides comfort in the plans for industrial rutile production at Engebø, and thus will ensure a sustainable realisation of the significant values that the Engebø project will bring to the society. The Group underscores that the government s decisions, currently being awaited, with regard to permits for the Engebø rutile project is expected to have a material effect on the Company s prospects. Other than this, the Group is not aware of trends, uncertainties, demands, commitments or events that could possibly have a material effect on the Group's prospects since the end of the last financial year to the date of this Prospectus. B.5 Group/issuer's position within the Group Nordic Mining is the ultimate parent company of the Nordic Mining Group. Nordic Mining ASA Nordic Rutile AS 100% Nordic Quartz AS 100% Nordic Ocean Resources AS 80% Nordic Mining is also a project development company and provides support to its subsidiaries, Nordic Rutile AS, Nordic Quartz AS and Nordic Ocean Resources AS on geological, technical, commercial and economic aspects. Nordic Rutile AS 100% Nordic Rutile AS is a wholly owned subsidiary of Nordic Mining and is the Group s vehicle for the development of the Engebø rutile project. Nordic Quartz AS 100% Nordic Quartz AS is a wholly owned subsidiary of Nordic Mining, and is the Group s vehicle for development of the Kvinnherad quartz deposit in Norway. The Company has exclusive agreements with landowners for exploration and development of the Kvinnherad quartz deposit. Nordic Ocean Resources AS 80% Nordic Ocean Resources AS is owned 80 per cent by Nordic Mining, and is a vehicle for the Group s activities related to subsea mineral exploration and production. The remaining 20 per cent of Nordic Ocean Resources AS is owned by Ocean Miners AS, a company owned by Prof. Fredrik Søreide who is assigned as general manager for 8

9 Element Description of Element Disclosure requirement Nordic Ocean Resources AS. Nordic Ocean Resources AS will develop knowledge, expertise and network related to prospecting and exploration of subsea mineral resources. Keliber 25.0% Nordic Mining holds 25.0 per cent of the shares in the Finnish limited liability company Keliber. Finnish Industry Investment Ltd. and Ilmarinen Mutual Pension Insurance Company hold 20.0 per cent and 8.6 per cent, respectively. The remaining shares are held by Finnish private citizens and companies. Keliber has mining rights to a deposit of lithium bearing spodumene mineral in Finland and concessions and permits to start mining operation and production of lithium carbonate. In addition, Keliber has various exploration rights and reservations for exploration rights for other lithium deposits in the Ostrobothnia region in Finland. B.6 Persons having an interest in the issuer's capital or voting rights The following shareholders owned more than 5 per cent of the issued share capital in the Company on 20 October 2014: Nordnet Bank AB (20,203,994 Shares representing 7.2 per cent of the share capital and votes), Skagen Vekst (17,081,021 Shares representing 6.1 per cent of the share capital and votes) and MP Pensjon PK (14,319,952 Shares representing 5.1 per cent of the share capital and votes). Under the nominee account of Nordnet Bank AB, there is at the date of this Prospectus no indication that any one individual shareholder represents more than 5 per cent of the share capital in the Company. As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which directly or indirectly has a shareholding in the Company above five per cent which is noticeable under Norwegian Law. Shareholders with ownership exceeding five per cent must comply with disclosure obligations according to the Securities Trading Act Section 4.2. All Shares and shareholders have equal rights, including voting rights. To the knowledge of the Board, there are no arrangements which may at a subsequent date result in a change of control of the Company. B.7 Selected historical key financial information The selected unaudited condensed financial information set forth in this Prospectus should be read in conjunction with the relevant financial statements and the notes to those statements which can be found on the Company s webpage, The selected financial data presented in this section has been derived from the audited consolidated financial statements of the Group for the year ended December 2013, 2012 (restated) and 2011 (restated), based on International Financial Reporting Standards ( IFRS ) as adopted by the European Union (the EU ), and the Group's unaudited condensed consolidated financial statements prepared in accordance with IAS 34 for the three and six months periods ended 30 June 2014 and

10 Condensed consolidated income statements Q Q Restated Restated 2 (NOK thousands) Unaudited Unaudited Unaudited Unaudited Sales ,342 Other income , Cost of sales (6,577) Payroll and related costs (6,342) (3,997) (7,915) (6,456) (9,725) (11,845) (12,679) DD&A (13) (2,931) Other operating expenses (1,847) (2,171) (3,095) 3,826 (8,998) (13,886) (28,154) Operating profit/(loss) (8,189) (6,168) (11,010) (10,282) (18,698) (24,724) (24,736) Share of result of an associate (1,868) (682) (3,049) (1,334) (2,972) (702) - Impairment of investment in associate (6,523) - - Financial income Financial costs (6) (4) (11) (10) (11) (244) (1,875) Loss from continuing operations before tax (10,045) (6,851) (14,013) (11,616) (28,090) (25,238) (26,158) Income tax Loss from continuing operations (10,045) (6,851) (14,013) (11,616) (28,090) (25,206) (26,158) Loss from discontinued operations - (2,900) - (4,298) (4,298) (11,334) (2,486) Loss for the period (10,045) (9,751) (14,013) (15,914) (32,388) (36,540) (28,644) Profit/(loss) attributable to Equity holders of parent (10,045) (9,751) (14,013) (15,914) (32,388) (35,404) (27,841) Non-controlling interest (1,136) (803) Earnings per share attributable to ordinary shareholders (Amounts in NOK) Basic and diluted earnings per share (0.04) (0.03) (0.05) (0.06) (0.14) (0.14) (0.18) for continuing operations Basic and diluted earnings per shares - (0.01) - (0.02) (0.02) (0.06) (0.01) for discontinued operations Basic and diluted earnings per share (0.04) (0.05) (0.05) (0.08) (0,16) (0.19) (0.19) 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R) 2) Restated for discontinued presentation of Keliber Source: NOM Q and Q interim financial report and annual reports 2013, 2012 and

11 Condensed consolidated statements of financial position (NOK thousands) ASSETS Non-current assets Unaudited Unaudited Restated Restated 2 Goodwill ,206 Licences 6,611 6,293 6,451 6,136 7,110 Minerals, property, plant and equipment ,813 64,904 Investment in associate 13,892 23,788 16,951 23,450 - Other long-term assets Pension assets Total non-current assets 20,503 30,155 23,402 44,643 79,692 Current Assets Inventory ,806 3,163 Trade and other receivables 1, ,119 5,431 5,970 Cash and cash equivalents 6,854 3,104 15,495 6,164 3,340 Total current assets 8,121 4,077 16,614 14,401 12,473 Total assets 28,624 34,232 40,016 59,044 92,165 SHAREHOLDERS' EQUITY & LIABILITIES Shareholders' equity Share capital 28,050 20,050 28,050 18,547 14,547 Share premium 227, , , , ,416 Other paid-in capital 12,858 8,893 8,893 8,856 7,033 Retained losses (244,647) (214,159) (230,634) (198,246) (161,567) Translation adjustment 2,867 2,291 2, (600) Equity attributable to ordinary shareholders 26,273 30,102 36,331 36,597 36,829 Non-controlling interest ,314 Total equity 26,273 30,102 36,331 36,597 45,143 Non-current liabilities Interest-bearing loan ,417 7,421 Deferred tax ,686 Lease obligations ,522 6,085 Other liabilities ,728 Total non-current liabilities ,448 31,920 Current liabilities Current portion of long-term debt ,334 3,554 Trade Payables 1, ,568 5,168 4,509 Other current liabilities 1,242 3,481 2,065 3,497 7,039 Total current liabilities 2,270 4,130 3,633 11,999 15,102 Total liabilities 2,351 4,130 3,685 22,447 47,022 Total shareholders' equity and liabilities 28,624 34,232 40,016 59,044 92,165 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R) 2) Restated for discontinued presentation of Keliber Source: NOM Q and Q interim financial report and annual reports 2013, 2012 and

12 Condensed consolidated cash flow statements (NOK thousands) Q Unaudited Q Unaudited Unaudited Unaudited Restated Restated 2 Net cash used in operating activities (3,052) (3,743) (8,481) (8,853) (19,360) (20,598) (23,986) Purchases of property, plant and (296) (296) (668) (1,768) equipment Purchases of intangible assets (80) (79) (160) (158) (315) (2,776) (854) Other (21) 15 Net cash used in investing activities (80) (79) (160) (454) (146) (3,465) (2,607) Share issuance - 3,587-7,709 29,827 33,405 26,079 Payments of loans - (250) - (500) (415) (1,000) (916) Payment of contingent liability (3,023) - Principal payments on finance leases - (387) - (962) (575) (2,477) (2,411) Net cash from financing activities - 2,950-6,247 28,837 26,905 22,752 Net change in cash and cash equivalents Effect of changes in foreign exchange rates Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (3,132) (872) (8,641) (3,060) 9,331 2,842 (3,841) (18) 116 9,986 3,976 15,495 6,164 6,164 3,340 7,065 6,854 3,104 6,854 3,104 15,495 6,164 3,340 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R) 2) Restated for discontinued presentation of Keliber Source: NOM Q and Q interim financial report and annual reports 2013, 2012 and

13 There has been no significant change in the Group s financial or trading positions during or subsequent to 30 June B.8 Pro forma financial information B.9 Profit forecast or estimate B.10 Qualifications in the audit report B.11 Working capital Not applicable. Not applicable. No forecasts or estimates are made public. Not applicable. There are no qualifications in the audited financial reports for the Nordic Mining Group. In the audited financial reports for 2013 and 2012, the auditor included an emphasis of matter with regard to the Group s need for further financing to continue its operations. In the opinion of the Company the working capital for the Group is not sufficient for the present requirements for the next twelve months. The Group s existing working capital, exclusive the proceeds from the Rights Issue, is expected to be sufficient until December A minimum working capital requirement for the next 12 months is estimated to be around NOK 15 million. Thus, the Group will have to attract financing of approximately 15 million in the Rights Issue in order to obtain a minimum working capital for its operation for the next 12 months. The Group s capital requirement for the next 12 months will depend on the final outcome of the government s decisions regarding the industrial area plan and waste disposal permit for the Engebø rutile project. The estimated minimum working capital requirement for the next 12 months of around NOK 15 million does not take into account the working capital requirements which will materialise if and when the permits for the Engebø rutile project are granted. If and when the permits for the Engebø rutile project are granted, the Company will consider the working capital requirement for the project development work going forward until the investment decision. The Company s preliminary estimate for the pre-investment costs related to the Engebø rutile project is in the range NOK million. SECTION C SECURITIES Element Description of Element Disclosure requirement C.1 Type and class of securities being offered / security identification numbers The Rights Issue comprises an offering of up to 28,000,000 Offer Shares at a Subscription Price of NOK 0.60 per Offer Share, corresponding to gross proceeds of up to NOK 16.8 million. The Company has one class of shares and all Shares are equal in all respects. The Offer Shares will, upon delivery, be registered on the same ISIN as the existing Shares, being ISIN NO , and will be listed on Oslo Axess under ticker code NOM. 13

14 Element Description of Element Disclosure requirement C.2 Currency NOK (Norwegian kroner) C.3 Number of shares and par value C.4 Rights attached to the securities The Company s share capital is NOK 28,050, divided into 280,504,805 shares, each Share with a par value of NOK The Offer Shares will rank pari passu in all respects with the existing Shares and will carry full shareholder rights in the Company from the time of registration of the share capital increase pertaining to the Rights Issue in the Norwegian Register of Business Enterprises, which is expected to occur on or about 24 November The Offer Shares will be eligible for any dividends which the Company may declare after said registration. All Shares, including the Offer Shares, will have voting rights and other rights and obligations which are standard under the Public Limited Companies Act, and are governed by Norwegian law. C.5 Restrictions on free transferability C.6 Listing and admission to trading C.7 Dividend policy The Shares of the Company are freely transferable. The Offer Shares will be freely transferable, subject to any local regulatory transfer restrictions. The Company's Shares are listed on Oslo Axess. The Offer Shares to be issued to subscribers in the Rights Issue will be listed on Oslo Axess upon registration of the share capital increase in connection with the Rights Issue in the Norwegian Register of Business Enterprises. The Company expects that the Offer Shares will be listed on Oslo Axess on or about 24 November However, delays may occur due to delayed payment from one or more subscribers. Nordic Mining intends to follow a dividend policy favourable to the shareholders. The amount of any dividends to be distributed will be dependent on the Group's investment requirements and rate of growth as well as the general development and financing requirements of the Group. 14

15 SECTION D RISKS Element Description of Element Disclosure requirement D.1 Key risks specific to the Issuer or its industry The Group is exposed to various risks which may materially adversely affect the Group's results of operations, cash flows or financial situation. Financial risk: The development of the Group s properties will depend upon the Group s ability to obtain financing through equity financing, debt financing, project financing or other means. There is no assurance that Nordic Mining will be successful in obtaining the required financing. Risk connected to exploration and development of minerals and metals: Market risk: Market risk include changes in mineral and metal prices which can be affected by a numerous factors, government regulations, political risk and environmental factors. All phases of the Group s operations are subject to environmental regulations in the jurisdictions in which it operates and there is no assurance that future changes in environmental regulations, if any, will not adversely affect the Group s operations. Operational risk: Mineral exploration involves a high degree of risk, and few properties that are explored, are ultimately developed into producing mines. The long-term profitability of the Group will in part depend on the cost and success of its exploration programs. There is also considerable uncertainty in estimating the size and value of mineral reserves, thus estimated reserves may be adjusted downward or upward. The minerals and metals industries are also highly competitive in all phases and the Company has no guarantee that this competition will not have an adverse effect at some point on the Group s ability to acquire, explore and develop its mineral and metals resource deposits. The operations of the Group are subject to project development risk as the projects are in a pre-commercial development phase, and there are production and operating risk. Risk connected to technological developments: The Group is generally dependent on its ability to keep pace with technological changes and improvements in data acquisition and processing technologies. Regulatory risks: The current and future operation of the Group will, from time to time, require permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. Currently, the Ministry of Local Government and Modernisation and the Ministry of Climate and Environment are considering the industrial area plan and waste disposal application related to the Engebø rutile project. There is no 15

16 Element Description of Element Disclosure requirement assurance that the Group will be successful in obtaining governmental permits, licenses and approvals related to its projects on conditions acceptable to the Group. Foreign operations: The Group s associated company Keliber has licenses, exploration and/or developments projects and economic interests in Finland, which expose the Group s activities to varying degrees of political and economic risk and other risks and uncertainties. These risks include among others fluctuations in currency exchange rates, labour unrest, terrorist activities and changing political conditions. The Group has normally limited influence on foreign political and economic risk factors. Risks related to the Shares include share price fluctuations in response to quarterly variations, general economic outlook, interest rate changes and adverse business developments. Accordingly, the market price of the Shares may not always reflect the underlying value of the Group s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, of which some are outside Nordic Mining s control. D.3 Key risks specific to the securities An investment in the Offer Shares involves certain risks associated with the characteristics, specification and type of the securities which could lead to substantial or total losses the subscriber would have to bear in the case of selling their Shares. Those risks include and comprise, inter alia, the following: The price of the Shares may be highly volatile. In addition, the stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities, which may be unrelated to company specific operating performance or prospects. Furthermore, the Group s operating results and prospects may from time to time differ from the expectations of market analysts and investors. Any of these events could result in a material change in the price of the Shares. Market conditions may affect the Shares regardless of the Group s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Group s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Group while others of which may be outside the Group s control. The trading price of the Shares could fluctuate significantly in response to quarterly variations in general economic outlook, adverse business developments, interest rate changes, matters announced in respect of commodity prices or competitors or changes to the regulatory environment in which the Group operates. 16

17 Element Description of Element Disclosure requirement The market price of the Shares could decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate. Shareholders may be diluted if they are unable to participate in future offerings. The development of the Group s properties, licenses, Extraction Permits and Exploration Rights will, inter alia, depend upon the Company s ability to obtain financing through equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors. SECTION E OFFER Element Description of Element Disclosure requirement E.1 Net proceeds The Company will bear the fees and expenses related to the Rights Issue, which are estimated to approximately NOK 1.5 million, of which approximately NOK 0.8 million are fees and expenses to the Manager, and approximately NOK 0.7 million are other costs and expenses. No expenses or taxes will be charged by the Company or the Manager to the subscribers in the Rights Issue. Total net proceeds from the Rights Issue are estimated to amount to approximately NOK 15.3 million, assuming that the Rights Issue is fully subscribed and will be allocated to the Company s share capital and share premium reserve fund. E.2a Use of proceeds The net proceeds from the Rights Issue will be used for expenditures related to the development of the Company s pre-commercial projects and general corporate purposes. In particular, the net proceeds will secure financing in the decision period for permits related to the Engebø rutile project and possibly also initial planning activities related to the further development of the Engebø project. E.3 Terms and conditions of the offer Below is a brief overview of the terms and timetable for the Rights Issue: 17

18 Last day of trading in the Shares including Subscription Rights 22 October 2014 Ex. rights trading in the Shares October 2014 Record Date October 2014 Subscription Period commences October 2014 First day of trading of Subscription Rights on Oslo Axess October 2014 End of trading of Subscription Rights on Oslo Axess November 2014 at 16:30 hours (CET) Subscription Period ends November 2014 at 16:30 hours (CET) Allocation of the Offer Shares... On or about 13 November 2014 Publication of the results of the Offering... On or about 14 November 2014 Distribution of allocation letters... On or about 14 November 2014 Payment Due Date November 2014 Registration of the share capital increase... On or about 24 November 2014 Delivery date for the Offer Shares... On or about 24 November 2014 Listing and commencement of trading on Oslo Axess... On or about 24 November 2014 The Eligible Shareholders will be granted transferrable Subscription Rights for each existing Share registered as held by such Eligible Shareholders as of Record Date. Each Subscription Right provides preferential right to subscribe for and to be allocated one Offer Share in the Rights Issue. The number of Subscription Rights granted to each Eligible Shareholder will be rounded downwards to the nearest whole Subscription Right. The Subscription Rights are fully tradable and transferable, and will be listed on Oslo Axess with ticker code NOM T and registered in VPS with ISIN NO Trading in the Subscription Rights on Oslo Axess may take place from and including 28 October 2014 and until 10 November 2014 at 16:30 hours (CET). The Subscription Rights will hence only be tradable during part of the Subscription Period. The Subscription Price for one Offer Share is NOK One (1) Share will give Subscription Rights. Each Subscription Right will, subject to applicable securities laws, give the right to subscribe for and be allocated one Offer Share in the Rights Issue. Over-subscription (i.e. subscription for more Offer Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated) and subscription without Subscription Rights will be allowed. Subscription Rights which are not exercised before 12 November 2014 at 16:30 will have no value and will lapse without compensation to the holder. Shares in the Rights Issue that are not subscribed by Eligible Shareholders may be subscribed by other investors who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action. The Board will decide on the allocation for such subscriptions. Correctly completed Subscription Forms (Appendix 4 and 5) must be received by the Manager or, in the event of online subscription in VPS, correctly completed subscription must be registered, no later than 16:30 (CET) on 12 November The Rights Issue is not conditional. Subscriptions received after the end of the Subscription Period and/or incomplete or incorrect Subscription Forms and any illegal 18

19 subscription may be disregarded at the sole discretion of the Company and the Manager without notice to the subscriber. Subscriptions are irrevocable and cannot be withdrawn, cancelled or modified once it has been received by the Manager. Allocation of the Offer Shares is expected to take place on or about 13 November The following allocation criteria will be used for allotment of Offer Shares in the Rights Issue: 1. Offer Shares shall be allocated on the basis of exercised Subscription Rights; 2. In the event that not all Offer Shares are allotted by exercising Subscription Rights, the Eligible Shareholders that have subscribed for more Offer Shares than they are entitled to shall be allocated Offer Shares in accordance with the principles set forth in the Public Limited Companies Act Section Offer Shares not allocated based on exercised Subscription Rights may be allocated to other investors who are resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action, according to the decision by the Board based on market principles. Notifications of allocated Offer Shares in the Rights Issue and the corresponding amount to be paid by each subscriber will be set out in a letter from the Manager, which will be distributed on or about 14 November The Company expects to issue a stock exchange notification announcing the results of the Rights Issue prior to the opening of Oslo Stock Exchange on or about the same date. The payment due date for the Offer Shares is 19 November When subscribing for Offer Shares, each subscriber with a Norwegian bank account must, and will by signing the Subscription Form, provide the Manager with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount (in NOK) payable for the Offer Shares which are allocated to the subscriber. The amount is expected to be debited on 19 November 2014 (the payment due date) and an amount to cover payment for the allocated Offer Shares must be available on the payment date. The Managers reserve the right to make up to three debit attempts within seven working days after the payment due date. Subscribers not having a Norwegian bank account must ensure that payment for the Offer Shares is made with cleared funds on or before 18 November 2014 and should contact the Manager in this respect. Selling restrictions: The grant of Subscription Rights and issue of the Offer Shares upon exercise of Subscription Rights in the Rights Issue may in certain jurisdictions be restricted by law. The distribution of this Prospectus and the offering and sale of the Offer Shares offered hereby may also in certain jurisdictions be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. The Company is not taking any action 19

20 to permit a public offering of the Subscription Rights and Offer Shares in any jurisdiction other than Norway. Shareholders who reside in any country outside EU/EAA may not be permitted to receive Subscription Rights or Offer Shares. The Subscription Rights and the Offer Shares are not being offered and may not be offered or sold, directly and indirectly, in the United States of America, Canada, Australia or Japan, or to or for the account of any resident of the United States of America, Canada, Australia or Japan. Eligible Shareholders should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to exercise Subscription Rights or subscribe for Offer Shares. E.4 Material interests in the offer The Manager and its affiliates may have interests in the Rights Issue as they have provided from time to time, and may in the future provide, investment and commercial services to the Company and its affiliates in the ordinary course of their respective businesses, for which they may have received and may continue to receive customary fees and commissions. The Manager, its employees and any affiliate may currently own Shares in the Company. Employees of the Manager may obtain allotment in the transaction. The Manager will receive a commission in connection with the Rights Issue and, as such, has an interest in the Right Issue. Further, in connection with the Rights Issue, the Manager, their employees and any affiliate acting as an investor for its own account may receive Subscription Rights (if they are Eligible Shareholders) and may exercise its right to take up such Subscription Rights and acquire Offer Shares, and, in that capacity, may retain, purchase or sell Offer Shares and any other securities issued by the Company or other investments for their own account and may offer or sell such securities (or other investments) otherwise than in connection with the Rights Issue. There are no other persons that have an interest material to the Rights Issue, including conflicting interests. E.5 Manager/Lockup Swedbank has been retained as manager for the Company in connection with the Rights Issue. No lock-up agreements have been entered into. E.6 Dilution Eligible Shareholders participating in the Rights Issue will be able to maintain their relative holding prior to the Rights Issue provided they subscribe for their full amount, and will as such not be subject to any dilution. Assuming full subscription in the Rights Issue, shareholders who do not participate in the Rights Issue will be diluted with approximately 9.1 per cent. E.7 Estimated expenses Not applicable. The Issuer will not charge any costs, expenses or taxes directly to any shareholder in connection with the Offer Shares. 20

21 2. RISK FACTORS Investing in the Shares involves inherent risks. Before deciding whether or not to invest in the Shares, a prospective investor should consider carefully all of the information set forth in this Prospectus, and in particular, the specific risk factors set out below, being the material risk factors presently known by the Company. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. If any of the risks described below materialise, individually or together with other circumstances, they may have a material adverse effect on the Group s business, financial condition, results of operations and/or cash flow, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares. The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance FINANCIAL RISKS Requirement for new capital The development of the Group s properties, licenses and Exploration Rights depends on the Company s ability to obtain financing through equity financing, debt financing, project financing or other means. Depending on the Norwegian government s decision regarding permits for the Engebø rutile project and the time schedule for the decision process, the Company may have to attract further financing in addition to the Rights Issue in order to obtain sufficient working capital for its normal operations for the next 12 months, ref. section 9.2. There is no assurance that the Company will be successful in obtaining the required financing. Any additional equity financing may be dilutive to existing shareholders and debt financing, if available, may involve restrictions on financing operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, or delay or indefinitely postpone exploration, development or production on any or all of the Group s projects Currency risk Currency fluctuations will affect the cash flow that the Group will realise from its operations GENERAL RISKS The Group s operating results and prospects may from time to time be below the expectations of market analysts and investors. Any of these events could result in a material decline in the price of the Shares Volatility of the share price The price of the Shares may be highly volatile. In addition, the stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities, which may be unrelated to company specific operating performance or prospects. Market conditions may affect the price of the Shares regardless of the Group s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Group s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Group while others may be outside the Group s control. The trading price of the Shares could fluctuate significantly in response to quarterly variations in general economic outlook, adverse business developments, interest rate changes, matters 21

22 announced in respect of commodity prices or competitors or changes to the regulatory environment in which the Group operates. The market price of the Shares could decline due to sales of a large number of Shares in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate. Shareholders may be diluted if they are unable to participate in future offerings. The development of the Group s properties, licenses, Extraction Permits and Exploration Rights will, inter alia, depend upon the Company s ability to obtain financing through equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders' pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors Macro-economic fluctuations The Group is exposed to the economic cycle, and changes in the general economic situation could affect demand for the Group s products and services. Market conditions may affect the Shares regardless of the Group s operating performance or the overall performance of the mineral exploration and development sector RISK CONNECTED TO EXPLORATION AND DEVELOPMENT OF MINERALS AND METALS General The Group s prospects, of which many are pre-commercial and in the exploration stage, will only be developed if the exploration is successful. Mineral exploration involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The long-term profitability of the Group will in part depend on the cost and success of its exploration programs. The Company's main projects; the Engebø rutile project and the Kvinnherad quartz project, and the associated company Keliber's lithium project, are in an exploration stage and dependent on successful exploration results. Keliber must prove larger resources in order to be feasible to mine with a positive economic outcome. Further, the Group has Exploration Rights to other prospects that are in a very early stage. These prospects have only indications of minerals and no proven mineral estimates as they are in an early stage of or have not started the exploration process. Substantial expenditures are required to establish mineral reserves through exploration in order to eventually develop the resources and later extract the established resource. Although substantial benefits may be derived from the discovery of a major mineral resource, no assurance can be given that the resources discovered will be of sufficient size, have a beneficial location, and be amenable to processing in order for the deposit to justify commercial and profitable operations Market risk Minerals and metal prices The Group has no control over mineral or metal prices, which can be affected by numerous factors including international economic and political trends, inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased or decreased production due to changes in extraction and production methods. The effect of these factors on the price of minerals and metals, and therefore the future economic viability of any of the Group's projects, cannot be accurately predicted. 22

23 Government regulations The future operations of the Group and the associated company will, from time to time, require permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. The Group and the associated company may in the future need to apply for permits from different authorities. Companies engaged in the exploration and development of resource properties can experience increased costs as a result of the need to comply with applicable laws, regulations and permits as they change in the future, see also sections 2.5 and 2.6. Political risk The operation of the Group and the associated company is subject to local laws governing prospecting, development, production, taxes, national ownership restrictions, land use, land claims of local people and other matters. Although the Group and the associated company believe that its exploration and development activities are currently carried out in accordance with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail development. Several of the regulatory approvals, planning regulations, licences etc. outlined in section 2.5 below may be rejected, in full or in part based on political grounds. Of particular importance is the outcome of the pending process of the industrial area plan and the permit for waste disposal related to rutile production at Engebø. The industrial plan is subject to approval from the Ministry of Local Government and Modernisation and the permit for waste disposal is subject to approval from the Ministry of Climate and Environment. A negative result for Nordic Mining will have an adverse effect for the Group. Further, the Keliber lithium project and other projects will also depend on additional necessary governmental approvals regulating mining operations after successful, if any, exploration. Environmental factors All phases of the Group's and the associated company s operations are subject to environmental regulations in the jurisdictions in which it operates. Environmental legislation may evolve in a manner, which in the future may require stricter regulations, increased fines and penalties for noncompliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees. There are no assurances that future changes in environmental regulations, if any, will not adversely affect the Group s and the associated company s operations. Compliance with respect to environmental regulations, closure and other matters may involve significant costs and/or other liabilities. Nongovernmental organisations generally being against mining may also from time to time criticise the Group's and the associated company s operations and development plans Operational risk Exploration risks The Group s existing activities are primarily directed towards exploration for and development of mineral deposits. Mining operations generally involve a high degree of risk. The Group s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of mineral deposits. These include rock bursts, cave-ins, adverse weather conditions, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although adequate precautions to minimise risk are and will be taken, operations are subject to risks which may result in environmental pollution and possible liability. 23

24 The exploration for and development of mineral deposits, involve significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development programs planned by the Group and the associated companies will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are, the particular attributes of the deposit, such as size, grade and proximity to infrastructure, commodity prices which are highly cyclical, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Group not receiving an adequate return on the invested capital. The Group s projects are in an early development phase. Expenditures made by the Group or initial drilling results are no guarantee for further developments or discoveries of profitable commercial mining operations. Lack of availability of drilling rigs could cause increased project expenditures and/or project delays. Permits and licenses The Group and the associated company s hold Exploration Rights and mining rights in Norway and Finland. Some of these licenses are subject to certain conditions. The Company has no reason to expect that the conditions will not be fulfilled. However, the Company has no guarantee that such conditions will be fulfilled or that all necessary permits will be granted for specific projects. Risk for inaccurate estimates There are considerable uncertainty factors in estimating the size and value of mineral resources and reserves. The reservoir technique is a subjective and inexact process where the estimation of the accumulation of mineral/metals resources and reserves in the property cannot be accurately measured. In order to evaluate the recoverable mineral volumes, a number of geological, geophysical, technical and production data must be evaluated. The evaluation may later prove to be inaccurate, and estimated resources and reserves may therefore be adjusted downward or upward. Competition The minerals and metals industries are highly competitive in all phases and the Group and the associated company will be competing with many established companies, which may have more advantageous financial and technical resources. The Group has no guarantee that this competition will not have an adverse effect either now, or at some time in the future, on the Group's ability to acquire, explore, and develop its mineral and metals resource deposits. The mining industry is a global business with producers in several different countries. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. The Group competes with other mining companies, many of which have greater financial resources than the Group, for the acquisition of properties, leases and other interests as well as for the recruitment and retention of skilled personnel. Such factors may influence the Group s ability to secure new exploration areas or recruit and retain staff. Dependence on key personnel The Group s development and prospects are dependent upon the continued services and performance of its senior management and other key personnel and consultants. Financial difficulties or other factors could adversely affect the Group s ability to retain key employees. 24

25 Uninsured losses The Group s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, snow falls and avalanches. Such occurrences could have a material adverse effect on the Group s business, operating result or financial condition. Although the Group intends to obtain some insurance to protect against certain risks in such amounts as it considers reasonable, its insurance will not cover all the potential risks associated with a mining company s operations. Project development risk The Group s project at Engebø and in and the associated company Keliber are in a developing phase. Final geological resource estimation including classification and evaluation of mine ability, ore grade and operating mining costs remains to be executed. Also capital expenditures, processing costs and other financial and non-financial aspects of feasibility remain to be executed. There are risks related to and implied for these project development aspects. The Group and the associated company plan to execute various feasibility studies with assistance from third party experts. This is expected to clarify and possibly reduce parts of the project development risks. Production and operating risk Mining operations and mineral processing, such as the planned operations at Engebø and in Keliber, generally involve a high degree of risk. Examples of risks are unexpected geological formations and mine failures, risks related to explosives and removal of material, as well as damage to life, equipment and property. Damage of infrastructure, i.a. roads, supply of electricity or shipping facilities, may seriously impact feasibility and profitability of the operation. Availability of production equipment and spare parts, skilled personnel, and possible delays in supplies of critical resources for production may impact operating costs, capital expenditures and production output. These and several other operating aspects involve considerable risk RISKS CONNECTED TO TECHNOLOGICAL DEVELOPMENTS Risk for technological change The Group s ability to compete is highly dependent upon, among other things, its ability to utilise geo-related services and data of a competitive quality. Because of the significant running technological development in the industry the Group operates in, for instance with respect to 3D and 4D seismic data acquisition and processing and those that may occur in the future, the Group is generally dependent on its ability to keep pace with changes and improvements in data acquisition and processing technologies REGULATORY RISK IN NORWAY General The future operations of the Group will, from time to time, require permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. Risk connected to Exploration Rights The Norwegian Mineral Act of 2009 sets out a distinction between Exploration Right and Extraction Permit. The Group has both Exploration Rights and Extraction Permits (Engebø). Exploration Rights do not provide for mining operations as such. In order to initiate mining operations, the Group will have to obtain Extraction Permits with regard to the Exploration Rights. The basis for applying for a Extraction Permit is that one has one or more Exploration Rights where there is a deposit 25

26 consisting of claimable minerals which presumably is or will be feasible to mine with a positive economic outcome within a relevant timescale. Protection of Sami interests Due to the protection of Sami interests, special regulations pertain to companies operating in the county of Finnmark in Norway. Protection of Sami interest may have negative impact on the Group s current and future operations in this area. Risk of not obtaining operational licenses According to the Norwegian Mineral Act of 2009, an enterprise which holds a Extraction Permit is obliged to obtain an operational license from the Directorate of Mining before carrying out large scale mining operations in that Extraction Permit. No assurances can be given that the Group will be granted such operational licenses. Risk relating to maintenance of Exploration Rights and Extraction Permits According to the Norwegian Mineral Act of 2009, an enterprise which holds an Exploration Right is obliged to apply for an Extraction Permit within seven years as from the date of issue of the Exploration Right. The seven year time-limit may be prolonged with three years. The time-limit requires that the Group's projects must have necessary progress in order complete the exploration process before the Exploration Rights expire. Fees for Exploration Rights and Extraction Permits must be paid annually in order to retain the rights. Planning regulations According to the Norwegian Planning and Building Act of 2008, it will regularly be required to obtain a municipal permission before work which substantially affects the terrain can be carried out. Further, in certain situations it will be necessary to make changes in, or to prepare new, planning regulations, for the relevant area. No assurances can be given in relation to the granting of such permissions, adoption of, or the existence of, planning regulations facilitating the current or future operations of the Group. Risk of not obtaining discharge permit (waste disposal permit) As a main rule, mining operations in Norway will require a discharge permit in accordance with the Norwegian Pollution Act of No assurances can be given that the Group will be granted discharge permits for one or several of its mineral deposits. Preservation of natural resources The Norwegian Act on the Preservation of the Diversity of Nature of 2009 may set limits with regard to the current or future activities of the Group activities, e.g. due to preservation of cultural monuments, rare species or specific bio-diversity. Use of motorised machinery The current and future exploration and mining operations of the Group will require use of motorised machinery and motor vehicles in outlying fields. Restrictions on use of motorised machinery and motor vehicles may have negative impact on the current or future operations of the Group FOREIGN OPERATIONS The associated company Keliber has licenses, exploration and/or development projects and economic interests in Finland. Therefore the Group s activities are exposed to varying degrees of political and economic risk and other risks and uncertainties. The Group has normally limited influence on foreign political and economic risk factors. Keliber will, from time to time, require 26

27 permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. These risks and uncertainties regarding foreign operations vary from country to country and include inter alia extreme fluctuations in currency exchange rates, hyperinflation, labour unrest, terrorist activities, risk of war or civil unrest, expropriation and nationalisation, renegotiation or nullification of existing concessions, licenses, permits and contracts, illegal mining, changes in taxation policies, restrictions on foreign exchange and repatriation, changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of or purchase supplies from a particular jurisdiction. Changes in exploration, mining or investment policies or shifts in political attitude could materially adversely impact the Group s financial results. The Group s operations may be affected in varying degrees by government regulations with respect to, for example, restrictions on exploration, development, processing, production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests. 27

28 3. STATEMENT OF RESPONSIBILITY The members of the Board of Directors, who is responsible for this Prospectus, confirm that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import. Oslo, 24 October 2014 The Board of Directors of Nordic Mining ASA Tarmo Tuominen Chairman Kjell Roland Deputy chairman Hilde Myrberg Board member Mari Thjømøe Board member Tore Viana-Rønningen Board member 28

29 4. GENERAL INFORMATION 4.1. OTHER IMPORTANT INVESTOR INFORMATION No representation or warranty, express or implied, is made by the Manager as to the accuracy, completeness or verification of the information set forth in this Prospectus, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. The Manager assumes no responsibility for its accuracy, completeness or verification and accordingly disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this Prospectus or any such statement. Neither the Company nor the Manager, or any of their respective affiliates, representatives or advisors, is making any representation to any subscriber or purchaser of the Offer Shares regarding the legality of an investment in the Offer Shares Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Offer Shares. Investing in the Offer Shares involves a high degree of risk; see section 2 "Risk Factors" PRESENTATION OF FINANCIAL AND OTHER INFORMATION Financial information The Group s audited financial statements as of, and for the years ended 31 December 2013, 2012 and 2011, have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The Group's unaudited interim financial statements as of and for the three and six months ended 30 June 2014 and 2013, have been prepared in accordance with International Accounting Standard (IAS) 34. The financial statements for the years ended 31 December 2013, 2012 and 2011 have been audited by Ernst & Young AS. In the audited financial reports for 2012 and 2013, the auditor has expressed an emphasis of matter with regard to the Group s need for further financing to continue its operations. The wording of the auditor s emphasis of matter with regard to the Group s further financing is identical, and the emphasis of matter in the auditor s report for 2013 is quoted below for reference: Without qualifying our opinion, we draw attention to the Board of Directors Report and note 21 in the Group s financial statements, which indicate that the Group will need to either raise more equity, sell assets or to issue debt instruments to finance future operations. Our opinion is not qualified in respect of this matter THIRD PARTY INFORMATION This Prospectus contains statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to the Group s business and the industries and markets in which it operates. Unless otherwise indicated, such information reflects the Company s estimates based on analysis of multiple sources, including data compiled by professional organisations, consultants and analysts and information otherwise obtained from other third party sources, such as annual and interim financial statements and other presentations published by listed companies operating within the same industry as the Company, as well as the Company s internal data and its own experience, or on a combination of the foregoing. Unless otherwise indicated in the Prospectus, the basis for any statements regarding the Group s competitive position is based on the Company s own assessment and knowledge of the market in which it operates. Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any 29

30 assurances as to the accuracy of market data contained in this Prospectus that was extracted from these industry publications or reports and reproduced herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. Where information in this Prospectus has been sourced from third parties, the information has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used. As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Prospectus (and projections, assumptions and estimates based on such information) may not be reliable indicators of the Company s future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 2 Risk Factors and elsewhere in this Prospectus Other information In this Prospectus, all references to NOK are to the lawful currency of Norway. Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same category presented in different tables may vary slightly. As a result of rounding adjustments, the figures presented may not add up to the total amount presented CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Prospectus includes "forward-looking statements", including without limitation, projections and expectations regarding the Group's financial position, business strategy, plans and objectives. The forward looking statements reflect the Group s current views with respect to future events and financial and operational performance. These forward-looking statements can be identified by the use of forward-looking terminology, such as the terms anticipates, assumes, believes, can, could, estimates, expects, forecasts, intends, may, might, plans, projects, should, will, would or, in each case, their negative or other variations or comparable terminology. These forward-looking statements are not historic facts. They appear in the following sections in this Prospectus, section Error! Reference source not found. "Strategic business pproach", section 7 Market Overview and section 9 "capital resources", and include statements regarding the Company s intentions, beliefs or current expectations, concerning, among other things, financial strength and position, operating results, liquidity, prospects, growth, the implementation of strategic initiatives, as well as other statements relating to the Group's future business development and financial performance, and the industry in which the Group operates. Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group s actual financial position, operating results and liquidity, and the development of the industry and market in which the Group operates, may differ materially from those made in, or suggested by, the forward-looking statements contained in this Prospectus. The Company cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur. By their nature forward-looking statements involve, and are subject to known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forward-looking statements. Should one or more of these risks and uncertainties materialise, or should any 30

31 underlying assumption prove to be incorrect, the Group's business, actual financial condition, cash flows or results of operations could differ materially from that described herein as anticipated, believed, estimated or expected. The information contained in this Prospectus, including the information set out under section 2 Risk factors, identifies additional factors that could affect the Group s financial position, operating results, liquidity and performance. Prospective investors in the Shares are urged to read all sections of this Prospectus and, in particular, section 2 Risk factors for a more complete discussion of the factors that could affect the Group s future performance and the industry in which the Group operates when considering an investment in the Shares. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. These forward-looking statements speak only as of the date on which they are made. Except as required according to Section 7-15 of the Securities Trading Act, the Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus. 31

32 5. THE RIGHTS ISSUE 5.1. BACKGROUND FOR THE RIGHTS ISSUE This section provides a detailed overview of the Rights Issue that will be effectuated through the issue of Subscription Rights to the Eligible Shareholders. The main purpose of the Rights Issue is to strengthen the Group's capital resources for the current and future engagements the Group is involved in. In March 2013, Nordic Mining received a letter from the Ministry of Climate and Environment stating that the information related to the industrial area plan and the application for disposal of mineral residues in connection with the Engebø rutile project, in the Ministry of Climate and Government s opinion, was not sufficient for making a decision. The Ministry of Climate and Environment requested additional information regarding e.g. sea water circulation, biological conditions in the disposal area, solution for tailings disposal, use of freshwater etc. The request for supplementary information was not expected on the background of the comprehensive environmental impact assessment (EIA) undertaken and considering the strong local and regional support of the Engebø project. Nordic Mining assigned DNV GL to conduct a measuring program regarding documentation of water circulations in the Førdefjord and risk assessments regarding the planned sea disposal for the mineral residues. DNV GL was also assigned for various additional investigations, e.g. remotely operated vehicle (ROV) survey and sample fishing of possible spawning grounds for fish and other species in the disposal area. In August 2014, the measuring program for water circulations was completed after 12 months of measuring at 11 metering stations. Water currents have been measured using advanced profiling metering instruments which have recorded current velocities and directions at different water depths. Further, hydrographic measurements have been executed with recording parameters like temperature, salinity, density, pressure and oxygen content in the water. On 30 September 2014, Nordic Mining submitted all the requested supplementary information to the Ministry of Climate and Environment. In summary, the supplementary information supports and strengthens the comprehensive results and documentation which was compiled in the EIA for the Engebø project, showing i.a. that the planned sea disposal for the mineral residues represents a safe and good storage solution for the mine tailings from Engebø. The Ministry of Climate and Environmental has confirmed that the final decision process subsequent of the submitted supplementary information will be coordinated, i.e. the industrial area plan which is considered by the Ministry of Local Government and Modernisation, and the application for waste disposal which is handled by the Ministry of Climate and Environment, will be coordinated politically by the Government. The Ministry of Climate and Environment is currently assessing the supplementary, and has stated that the decision process shall be efficient. Nordic Mining has confidence that the submitted supplementary information following from the survey and investigation program will strengthen the general comfort in the plans for industrial rutile production at Engebø, and thus will ensure a sustainable realisation of the significant values that the Engebø project will bring to the society. Nordic Mining has, however, no information of the government s decision process or the expected timing of a clarification of the permits. In order to secure sufficient working capital in the decision period and possibly also finance initial planning activities related to further development of the Engebø project, the Company conducts a Rights Issue of up to NOK 16.8 million targeted at the Company s shareholders. The Rights Issue is implemented in a manner that ensures, to the extent practically possible, equal treatment of the Company's shareholders, by giving shareholders as of 22 October 2014 who are not resident in a jurisdiction where such offering would be unlawful, or for other jurisdictions than Norway, would require any filing, registration or similar action the opportunity to maintain their 32

33 approximate relative ownership by subscribing for Offer Shares. The gross proceeds raised from the Rights Issue will be up to NOK 16.8 million. The net proceeds from the Rights Issue will be approximately NOK 15.3 million, and will be used primarily for expenditures related to the development of the Engebø project and general corporate purposes. The Shares in the Company, including the Offer Shares, are or will be issued in accordance with the Public Limited Companies Act. Nordic Mining awaits the government s approval of the industrial area plan and the waste disposal application for the Engebø rutile project. As the timing for the permitting process is uncertain, Nordic Mining s plan for use of the net proceeds from the Rights Issue will to some extent have to be flexible. Until the Engebø permits are in place, Nordic Mining does not intend to initiate costly activities on the project, e.g. drilling program, pilot production or similar. When the permits are in place, the Group will focus on initiation of a drilling program in the open pit area and further development of the beneficiation process flow sheet. Nordic Mining will consider the financing of the project development activities from permitting and until investment decision at a later stage. A preliminary estimate for the financing requirements for these activities is in the range of NOK million. Further, the Company does not intend to initiate costly activities on other projects. Discussions will, however, proceed with possible partners on various projects with the purpose to continue value increasing activity with limited financial contribution from Nordic Mining. All proceeds will be used to progress on pre-commercial project development activities. Financing activities related to realisation of project plans and indicated future investments outlined in section 9 will be evaluated at a later stage when permits, commercial aspects and other parameters important for a feasible project are satisfactorily in place OVERVIEW OF THE RIGHTS ISSUE The Rights Issue consists of an offering of up to 28,000,000 Offer Shares at a Subscription Price of NOK 0.60 per Offer Share. Subject to all Offer Shares being issued, the Rights Issue will result in NOK 16.8 million in gross proceeds to the Company. The Rights Issue will be directed towards the shareholders in Nordic Mining as of close of the Oslo Stock Exchange on 22 October 2014, as registered in the Norwegian Central Securities Depository (VPS) on 24 October 2014 (the "Record Date") who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action (the "Eligible Shareholders") Resolution regarding the Rights Issue Pursuant to an authorisation given to the Board of Directors by the annual general meeting on 27 May 2014 the Board of Directors on 22 October 2014 resolved that the Company should conduct the Rights Issue of up to 28,000,000 Offer Shares at a price of NOK 0.60 per Offer Share. The Board of Directors passed the following resolution (translated from Norwegian): "The share capital of the Company is increased pursuant to Section 10-17, cf. Section 10-1 of the Norwegian Public Limited Liability Companies Act on the following terms and conditions: 1. The share capital shall be increased by minimum NOK 0.10 and maximum NOK 2.8 million through the issuance of up to 28 million Offer Shares. 2. The nominal value of each Offer Share is NOK The subscription price is NOK 0.60 per Offer Share. 33

34 4. The Offer Shares may be subscribed by shareholders that owned Shares in the Company as of 22 October 2014, as registered in the Norwegian Central Securities Depository (VPS) on 24 October 2014 (the "Record Date") who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action (the "Eligible Shareholders"). 5. Tradable subscription rights will be issued. The Eligible Shareholders will be granted tradable subscription rights corresponding with their pro rata ownership as per Record Date. The number of subscription rights granted to each Eligible Shareholder will be rounded down to the nearest whole subscription right. Each subscription right gives the right to subscribe for, and be allocated, one share in the rights issue. 6. Over-subscription exceeding allotted Subscription Rights is permitted. In case of oversubscription, the Offer Shares shall be allocated according to section 10-4 of the Public Limited Liability Companies Act. 7. Offer Shares that are not subscribed for by Eligible Shareholders may be subscribed by other investors who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action. The Board of Directors will decide on the allocation for such subscriptions based on market principles. 8. The Company shall issue a Prospectus to be approved by the Financial Supervisory Authority of Norway. The Offer Shares are to be subscribed for on a subscription form enclosed the Prospectus. The subscription period will be decided by the Board of Directors; nevertheless it shall expire no later than 5 December Further criteria regarding the subscription will be determined by the Board of Directors and be described in the Prospectus. 9. Payment for the subscription amount shall be made to a special share issue account. The Board of Directors shall determine more detail conditions for the settlement, which will be described in the Prospectus; nevertheless the due date for payment shall be no later than 19 December The Offer Shares shall carry rights to dividend as from the date on which the capital increase is registered with the Norwegian Register of Business Enterprises." Based on the decision set forth above, the Board of Directors resolved to amend Section 4 of the Articles of Association to read as follows: "The company's share capital is increased by [minimum NOK 0.10 and maximum NOK 2,800,000] divided on [increased by minimum 1 and maximum 28,000,000 shares] shares each with a nominal value of NOK The company's shares shall be registered in the Norwegian Central Securities Depository." Timetable The timetable below provides certain indicative dates for the Rights Issue, subject to timely payment of the entire proceeds for the Offer Shares to the Company: Last day of trading in the Shares including Subscription Rights 22 October 2014 Ex. rights trading in the Shares October 2014 Record Date October 2014 Subscription Period commences October 2014 First day of trading of Subscription Rights on Oslo Axess October 2014 End of trading of Subscription Rights on Oslo Axess November 2014 at 16:30 hours (CET) Subscription Period ends November 2014 at 16:30 hours (CET) Allocation of the Offer Shares... On or about 13 November 2014 Publication of the results of the Offering... On or about 14 November

35 Distribution of allocation letters... On or about 14 November 2014 Payment Due Date November 2014 Registration of the share capital increase... On or about 24 November 2014 Delivery date for the Offer Shares... On or about 24 November 2014 Listing and commencement of trading on Oslo Axess... On or about 24 November 2014 In the event of extension, the allocation date, the first trading date, the payment date and the date of delivery of Offer Shares will be extended correspondingly. Please see section which describes the circumstances of an extension, while section describes the subscription procedures. The Shares of the Company are listed on Oslo Axess under ticker code "NOM". The Offer Shares will be listed on Oslo Axess as soon as the Offer Shares have been registered with the Norwegian Register of Business Enterprises and the VPS. The Company expects that the Offer Shares will be listed and admitted to trading on Oslo Axess on or about 24 November TERMS AND CONDITIONS OF THE RIGHTS ISSUE Overview The Rights Issue consists of an offer to issue up to 28,000,000 Offer Shares directed towards existing shareholders. No minimum or maximum subscription amount applies in the Rights Issue. The terms of the Rights Issue are set out below Subscription Rights The Eligible Shareholders will be granted transferrable Subscription Rights for each existing Share registered as held by such Eligible Shareholders as of the Record Date. Each Subscription Right provides a preferential right to subscribe for and to be allocated one Offer Share in the Rights Issue. The number of Subscription Rights granted to each Eligible Shareholder will be rounded downwards to the nearest whole Subscription Right. Over-subscription (i.e. subscription for more Offer Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated) and subscription without Subscription Rights will be allowed. Shares in the Rights Issue that are not subscribed for by Eligible Shareholders may be subscribed for by other investors who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action. The Board will decide on the allocation for such subscriptions. The Subscription Rights must be used to subscribe for Offer Shares before the end of the Subscription Period (i.e. 12 November 2014 at 16:30 (CET)). Subscription Rights which are not exercised before 12 November 2014 at 16:30 (CET) will have no value and will lapse without compensation to the holder. Holders of Subscription Rights should note that subscriptions for Offer Shares must be made in accordance with the procedures set out in this Prospectus and that holding of Subscription Rights in itself should not represent a subscription of Offer Shares. For VPS technical reasons, Subscription Rights may initially be credited to other shareholders of the Company as of the Record Date than the Eligible Shareholders and/or to shareholders resident in jurisdictions where the Prospectus may not be distributed and/or with legislation that, according to the Company s assessment, prohibits or otherwise restricts subscription for Offer Shares ( Ineligible Shareholders ). Such credit specifically does not constitute an offer to Ineligible Shareholders to subscribe for Offer Shares. The Company will instruct the Manager to withdraw any such Subscription Rights from the relevant VPS accounts with no compensation to the holder. 35

36 Eligible Shareholders should be aware that the exercise of Subscription Rights by holders who are located in countries outside of Norway may be restricted or prohibited by applicable securities laws. No action will be taken to permit a public offering of the Offer Shares in any jurisdiction outside of Norway. Please refer to section Selling restrictions and restrictions on distribution of Subscription Rights below for a further description of such restrictions Record Date The date for determining the Eligible Shareholders who receive Subscription Rights is 22 October 2014, as registered in the shareholders register in VPS at the end of the Record Date on 24 October The first day of trading without the right to receive Subscription Rights is 23 October Transactions in the existing Shares made on or before this date, but which have not been registered in the VPS within the Record Date will be disregarded for the purposes of determining the allocation of Subscription Rights Subscription Period The Subscription Period for the Rights Issue will commence on 28 October 2014 and end at 16:30 hours (CET) on 12 November The book will close at 16:30 hours on 12 November 2014 after which no further orders will be accepted. The Company cannot revoke the Rights Issue or shorten the Subscription Period. The Subscription Rights are fully tradable and transferrable, and will be listed on Oslo Axess with ticker code NOM T and registered in VPS with ISIN NO Trading in the Subscription Rights on Oslo Axess may take place from and including 28 October 2014 and until 10 November 2014 at 16:30 hours (CET). The Subscription Rights will hence only be tradable during part of the Subscription Period. Persons intending to trade in Subscription Rights should be aware that the exercise of Subscription Rights by holders who are located in jurisdictions outside Norway may be restricted or prohibited by applicable securities laws. The Subscription Period for the Rights Issue may be extended at the Company s own discretion, but not beyond 5 December Any extension of the Subscription Period will be announced through the Company s website. A decision to extend the Subscription Period will be announced no later than 16:30 (CET) on 12 November In the event of extension, the allocation date, the first trading date, the payment date and the date of delivery of Offer Shares will be extended correspondingly Subscription Price The Subscription Price in the Rights Issue is NOK 0.60 per Offer Share. The subscribers will not incur any costs related to the subscription for, or allotment of, the Offer Shares Subscription procedures Subscriptions for Offer Shares must be made by submitting a correctly completed Subscription Form to the Manager during the Subscription Period or may, for Norwegian citizens, be made online as further described below. Subscribers who are residents of Norway with a Norwegian personal identification number (Nw.: personnummer) are encouraged to subscribe for Offer Shares through the VPS online subscription system (or by following the link on which will redirect the subscriber to the VPS online subscription system). Correctly completed Subscription Forms (either Appendix 4 or Appendix 5) must be received by the Manager or, in the event of online subscription in the VPS, correctly completed subscription 36

37 must be registered, no later than 16:30 hours (CET) on 12 November 2014 at the following address or fax number: Swedbank P.O. Box 1441 Vika N-0115 Oslo Norway Facsimile: Telephone: Web: Neither the Company nor the Manager may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Manager. Subscription Forms received after the end of the Subscription Period and/or incomplete or incorrect Subscription Forms and any subscription that may be unlawful may be disregarded at the sole discretion of the Company and the Manager without notice to the subscriber. Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager or registered in the VPS. The subscriber is responsible for the correctness of the information filled into the Subscription Form or registered when subscribing online in the VPS. By signing and submitting a Subscription Form or submitting an online subscription in the VPS, each subscriber confirms and warrants to have read this Prospectus and to be eligible to subscribe for Offer Shares under the terms set forth herein. There is no minimum subscription amount for which subscriptions in the Rights Issue must be made. Oversubscription (i.e. subscription for more Offer Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated) and subscription without Subscription Rights is permitted. Multiple subscriptions (i.e. subscriptions on more than one Subscription Form) are allowed. Please note, however, that each separate Subscription Form submitted by the same subscriber with the same number of Offer Shares subscribed for on both Subscription Forms will only be counted once unless otherwise explicitly stated in one of the Subscription Forms. In the case of multiple subscriptions through the VPS online subscription system or subscriptions made both on a Subscription Form and through the VPS online subscription system, all subscriptions will be counted Allocation of Offer Shares Allocation of the Offer Shares is expected to take place on or about 13 November The following allocation criteria will be used for allotment of Offer Shares in the Rights Issue: 1. Offer Shares shall be allocated on the basis of validly exercised Subscription Rights; 2. In the event that not all Offer Shares are allotted by exercising Subscription Rights, the Eligible Shareholders that have subscribed for more Offer Shares than they are entitled to shall be allocated Offer Shares in accordance with the principles set forth in the Public Limited Companies Act Section 10-4; 3. Offer Shares not allocated based on exercised Subscription Rights may be allocated to other investors who are resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action, according to the decision by the Board based on market principles. Notifications of allocated Offer Shares in the Rights Issue and the corresponding amount to be paid by each subscriber will be set out in a letter from the Manager, which will be distributed on or about 14 November The Company expects to issue a stock exchange notification announcing 37

38 the results of the Rights Issue prior to the opening of Oslo Stock Exchange on or about the same date Payment of the Offer Shares The payment for the Offer Shares falls due on 19 November Subscriber who have a Norwegian bank account must, and will by signing the Subscription Form, provide the Manager with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount (in NOK) payable for the Offer Shares which are allocated to the subscriber. The specified bank account is expected to be debited on 19 November 2014 (the payment date) and an amount to cover payment for the allocated Offer Shares must be available on the payment date. The Manager is only authorised to debit such account once, but reserves the right to make up to three debit attempts, and the authorisations will be valid for up to seven working days after the payment date. The Manager reserve the right to consider the payment overdue if there are not sufficient funds in the account to cover the payment. If there are insufficient funds in a subscriber s bank account or if it for other reasons is impossible to debit the bank account when a debit attempt is made pursuant to the authorisation from the subscriber, the subscriber s obligation to pay for the Offer Shares will be deemed overdue. Subscribers who do not have a Norwegian bank account must ensure that payment for the Offer Shares allocated to them is made with cleared funds on or before 12:00 hours (CET) on 18 November Prior to such payment being made, the subscriber must contact the Manager. By signing the Subscription Form, subscribers who subscribe for an amount exceeding NOK 5 million give the Manager an authorisation to manually debit the stated bank account on or about the payment due date. Should any subscriber have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976 No. 100, currently 9.50 per cent per annum. If the subscriber fails to comply with the terms of payment, the Offer Shares allocated will not be delivered to the subscriber. The Manager reserves the right, at the cost and risk of the subscriber (and that the subscriber will not be entitled to any profit therefrom), to at any time cancel the allocation and to re-allot, or otherwise dispose of all or parts of the allocated Offer Shares, on such terms and in such manner as the Manager may decide. The Manager further reserves the right to fund the Offer Shares for which payment has not been made by the subscriber when due, and to take over and/or sell the Offer Shares for the subscriber's account and risk without further notice to the subscriber. The original subscriber will remain fully liable for the payment for the Offer Shares allocated to the subscriber, together with any loss, costs, charges and expenses suffered or incurred by the Company and/or the Manager as a result of or in connection with such sales. The Company and/or the Manager may enforce payment of any such amounts outstanding in accordance with applicable law Delivery and listing of the Offer Shares All subscribers subscribing for Offer Shares must have a valid VPS account (established or maintained by an investment firm or Norwegian bank that is entitled to operate VPS accounts) to receive Offer Shares. 38

39 Delivery of the Offer Shares will take place following registration of the share capital increase pertaining to the Offer Shares in the Norwegian Register of Business Enterprises which is expected on or about 24 November Assuming that payment from all subscribers are made on the payment due date, delivery of the Offer Shares is expected to take place by registration of the Offer Shares in the VPS on or about 24 November The Offer Shares will be listed on Oslo Axess as soon as the Offer Shares have been registered in the VPS, where the existing shares are already listed. The Offer Shares may not be traded on Oslo Axess before they are fully paid, issued and registered in the VPS Participation of major existing shareholders and members of the Company s management, supervisory or administrative bodies The Company has no certain knowledge about the subscription plans for the major shareholders, but expects that members of the Company's management, supervisory or administrative bodies will participate in the Rights Issue according to their current ownership to the extent that they have the financial resources available Mandatory anti-money laundering procedures The Rights Issue is subject to the Norwegian Money Laundering Act no. 11 of 6 March 2009 and the Norwegian Money Laundering Regulations no. 302 of 13 March 2009 (collectively, the Anti- Money Laundering Legislation ). Subscribers who are not registered as existing customers of the Manager must verify their identity to the Manager in accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period will not be allocated Offer Shares. Furthermore, participation in the Rights Issue is conditional upon the subscriber holding a VPS account. The VPS account number must be stated in the Subscription Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. However, non-norwegian subscribers may use nominee VPS accounts registered in the name of a nominee Financial intermediaries All persons or entities holding Shares or Subscription Rights through financial intermediaries should read this section All questions concerning the timelines, validity and form of instructions to a financial intermediary in relation to the exercise, sale or purchase of Subscription Rights should be determined by the financial intermediary in accordance with its usual customer relations procedure or as it otherwise notifies each beneficial shareholder. Neither the Company nor the Manager is liable for any action or failure to act by a financial intermediary through whom shareholders of the Company hold their Shares. Subscription Rights: If an Eligible Shareholder holds Shares through a financial intermediary on the Record Date, the financial intermediary will customarily give each Eligible Shareholder details of the aggregate number of Subscription Rights to which each Eligible Shareholder will be entitled. The relevant financial intermediary will customarily supply each Eligible Shareholder with this information in accordance with its usual customer relations procedures. Eligible Shareholders holding Shares through a financial intermediary should contact their financial intermediary if they have received no information with respect to the Rights Issue. 39

40 Eligible Shareholders who hold their Shares through a financial intermediary and who are Ineligible Shareholders will not be entitled to exercise Subscription Rights or have Subscription Rights exercised on their behalf. Subscription Period: The time by which notification of exercise instructions for subscription of Offer Shares must validly be given to a financial intermediary may be earlier than the expiry of the Subscription Period. Such deadline will depend on the financial intermediary. Subscription: Any Eligible Shareholders, who holds Subscription Rights through a financial intermediary, that wishes exercising Subscription Rights, should instruct their financial intermediary in accordance with the instructions received from such financial intermediary. The financial intermediary will be responsible for collecting exercise instructions from the Eligible Shareholders and for informing the Manager of their exercise instructions. Method of payment: Any Eligible Shareholders holding Subscription Rights through a financial intermediary should pay the Subscription Price for the Offer Shares that they are allocated in accordance with the instructions received from that financial intermediary. The financial intermediary must pay the Subscription Price to the Manager, who will in turn pay it to the Company. Payment for the Offer Shares must be made to the Manager no later than the payment due date. Accordingly, financial intermediaries may require payment to be provided to them prior to the payment due date Selling restrictions and restrictions on distribution of Subscription Rights The grant of Subscription Rights and issue of the Offer Shares upon exercise of Subscription Rights in the Rights Issue may in certain jurisdictions be restricted by law. The distribution of this Prospectus and the offering and sale of the Offer Shares offered hereby may also in certain jurisdictions be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. The Company is not taking any action to permit a public offering of the Subscription Rights and Offer Shares in any jurisdiction other than Norway. Shareholders who reside in any country outside EU/EAA may not be permitted to receive Subscription Rights or Offer Shares. The Subscription Rights and the Offer Shares are not being offered and may not be offered or sold, directly or indirectly, in the United States of America, Canada, Australia or Japan, or to or for the account of any resident of the United States of America, Canada, Australia or Japan. Eligible Shareholders should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to exercise Subscription Rights or subscribe for Offer Shares. The information set out in this section is intended as a general guide only. If the Eligible Shareholder is in any doubt as to whether it is eligible to subscribe for the Offer Shares, that Eligible Shareholder should consult its professional adviser without delay. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an Eligible Shareholder receives a copy of this Prospectus in any territory other than Norway, the Eligible Shareholder may not treat this Prospectus as constituting an invitation or offer to it, nor should the Eligible Shareholder in any event deal in the Subscription Rights and Offer Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that Eligible Shareholder, or the Subscription Rights and Offer Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an Eligible Shareholder receives a copy of this Prospectus, the Eligible Shareholder should not distribute or send the same, or transfer the Subscription Rights and/or Offer Shares to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If the Eligible Shareholder forwards this Prospectus into any such territories (whether under a 40

41 contractual or legal obligation or otherwise), the Eligible Shareholder should direct the recipient s attention to the contents of this section Subscription Rights will initially be credited to financial intermediaries for the accounts of shareholders who hold Shares registered through a financial intermediary on the Record Date. Subject to certain exceptions, financial intermediaries, which include brokers, custodians and nominees, may not exercise any Subscription Rights on behalf of any person in the ineligible jurisdictions or any ineligible persons and may be required in connection with any exercise of Subscription Rights to provide certifications to that effect. Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Rights Issue in or into any ineligible jurisdiction or to any ineligible persons. Subject to certain exceptions, exercise instructions or certifications sent from or postmarked in any ineligible jurisdiction will be deemed to be invalid and Offer Shares will not be delivered to an addressee in any ineligible jurisdiction. The Company reserves the right to reject any exercise (or revocation of such exercise) in the name of any person who provides an address in an ineligible jurisdiction for acceptance, revocation of exercise or delivery of such Subscription Rights and Offer Shares, who is unable to represent or warrant that such person is not in an ineligible jurisdiction and is not an Ineligible Person, who is acting on a non-discretionary basis for such persons, or who appears to the Company or its agents to have executed its exercise instructions or certifications in, or dispatched them from, an ineligible jurisdiction. Furthermore, the Company reserves the right, with sole and absolute discretion, to treat as invalid any exercise or purported exercise of Subscription Rights which appears to have been executed, effected or dispatched in a manner that may involve a breach or violation of the laws or regulations of any jurisdiction The Offer Shares The Offer Shares will be ordinary Shares in the Company with a nominal value of NOK 0.10 each, and will be issued electronically in the VPS in registered form in accordance with the Public Limited Companies Act. The Offer Shares will rank pari passu in all respects with the existing Shares and will carry full shareholder rights in the Company from the time of registration of the share capital increase pertaining to the Rights Issue in the Norwegian Register of Business Enterprises, which is expected to occur on or about 24 November The Offer Shares will be eligible for any dividends which the Company may declare after said registration. All Shares, including the Offer Shares, will have voting rights and other rights and obligations which are standard under the Public Limited Companies Act, and are governed by Norwegian law. Please refer to section 17 for a more detailed description of the Shares. The Offer Shares will, upon delivery, be registered on the same ISIN as the existing Shares, being ISIN NO , and will be listed on Oslo Axess under ticker code NOM Shareholder register and registrar The Company's shareholder register is maintained by the VPS with address Biskop Gunnerus gate 14 A, P.O. Box 4, 0051 Oslo, Norway. The Company's registrar is DNB ASA with address Dronning Eufemias gate 30, N-0191 Oslo, Norway SHARES FOLLOWING THE RIGHTS ISSUE Following completion of the Rights Issue, the number of issued and outstanding shares in the Company will increase from 280,504,805 up to 308,504,805 Shares, each with a nominal value of NOK 0.10, depending on the amount of subscriptions received in the Rights Issue. The Company has only one class of Shares outstanding and all Shares are freely transferable. 41

42 5.5. DILUTION Eligible Shareholders participating in the Rights Issue will be able to maintain their relative holding prior to the Rights Issue provided they subscribe for their full amount, and will as such not be subject to any dilution. The percentage of immediate dilution resulting from the Rights Issue, based on an issuance of 28,000,000 Offer Shares under the Rights Issue, for the existing shareholders who do not participate in the Rights Issue is approximately 9.1 per cent ADVISORS AND AUDITOR Swedbank has been retained as manager for the Company in connection with the Rights Issue. Kvale Advokatfirma DA is acting as legal advisors to the Company in relation to the Rights Issue. The Company s statutory auditor is Ernst & Young AS with address Dronning Eufemias gate 6, N Oslo, being a member of the Norwegian Institute of Public Accountants. The financial statements for 2013, 2012 and 2011 have all been audited by Ernst & Young AS, in accordance with laws and regulations, and auditing standards and practices generally accepted in Norway, including International Standards of Auditing. Ernst & Young has issued audit reports on the aforementioned financial statements without any qualifications; however the audit reports for 2012 and 2013 included an emphasis of matter; ref. section 4.2 for further information. Ernst & Young AS has not audited, reviewed or produced any report on any other information provided in this Prospectus NET PROCEEDS AND EXPENSES The Company will bear the fees and expenses related to the Rights Issue. The costs related to the Rights Issue are estimated to be NOK 1.5 million, assuming that the Rights Issue is fully subscribed. Total net proceeds from the Rights Issue will be approximately NOK 15.3 million, assuming full subscription in the Rights Issue INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE RIGHTS ISSUE The Manager and its affiliates may have interests in the Rights Issue as they have provided from time to time, and may in the future provide, investment and commercial services to the Company and its affiliates in the ordinary course of their respective businesses, for which they may have received and may continue to receive customary fees and commissions. The Manager, its employees and any affiliate, may currently own existing Shares in the Company. Employees of the Manager may obtain allotment in the transaction. The Manager will receive a commission in connection with the Rights Issue and, as such, has an interest in the Right issue. Further, in connection with the Rights Issue, the Manager, their employees and any affiliate acting as an investor for its own account may receive Subscription Rights (if they are Eligible Shareholders) and may exercise its right to take up such Subscription Rights and acquire Offer Shares, and, in that capacity, may retain, purchase or sell Offer Shares and any other securities issued by the Company or other investments for their own account and may offer or sell such securities (or other investments) otherwise than in connection with the Rights Issue. Reference is made to section 5.7 Net proceeds and expenses PUBLICATION OF INFORMATION RELATING TO THE RIGHTS ISSUE In addition to press releases, which will be posted on the Company s website, the Company will use Oslo Stock Exchange's information system to publish information relating to the Rights Issue. Please see section for a timetable providing certain indicative dates for the Rights Issue. 42

43 5.10. JURISDICTION AND CHOICE OF LAW This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of Oslo City Court. 43

44 6. PRESENTATION OF NORDIC MINING 6.1. HISTORY AND DEVELOPMENT The Company s legal and commercial name is Nordic Mining ASA. The Company is a Norwegian public limited liability company established on 8 May 2006 after the demerger from Rocksource ASA, an exploration and production company listed on Oslo Stock Exchange. Nordic Mining is regulated by the Norwegian Public Limited Liability Companies Act. The Company is registered in the Norwegian Register of Business Enterprises with the organisation number: , subject to Norwegian regulations. The Articles of Association are included in Appendix 1 to this Prospectus. Nordic Mining has its head office at Munkedamsveien 45, N-0250 Oslo, Norway. The phone number to Nordic Mining s head office is Nordic Mining is listed on Oslo Axess with ticker NOM. On 15 September 2006, Nordic Mining entered into an agreement with ConocoPhillips Investments Norge AS, whereby Nordic Mining acquired their Extraction Permits for a mineral deposit at Engebø in Naustdal municipality in Norway. The deposit contains a mineral resource (JORC compliant) currently estimated to million tonnes with titanium dioxide (TiO 2 ) content of 3.75 per cent. Nordic Mining was granted concessions for the acquisition from Norwegian authorities in January On 24 November 2011, the Engebø rutile project was transferred from Nordic Mining to Nordic Rutile AS, a wholly owned subsidiary in the Nordic Mining Group. Consequently, the Engebø project will be developed through Nordic Rutile AS. In June 2008, Nordic Mining acquired 68 per cent of the share capital in the Finnish company Keliber. Keliber has rights to deposits of lithium bearing spodumene mineral in Finland and concessions and permits to start mining operation and production of lithium carbonate. In addition, the associated company Keliber has various exploration rights and reservations for such for lithium in the Ostrobothnia region in Finland. Nordic Mining s shareholding in Keliber was reduced to 64.6 per cent in 2011 due to conversion of a convertible loan in Keliber. In 2012, Keliber completed a private placement with cash proceeds of EUR 4 million (~NOK 30 million) for project development of Keliber's lithium project in Finland. In 2014, Keliber has completed additional share issues with total cash proceeds of approximately EUR 2.5 million without the participation of Nordic Mining. Subsequent to the abovementioned transactions, Nordic Mining remains the largest shareholder in Keliber with approximately 25.0 per cent. In the Group accounts, the shareholding in Keliber is presented as an investment in an associate. In April 2011, Nordic Mining established Nordic Quartz AS, a wholly owned subsidiary, as a vehicle for the Company s exploration and development work related to the Kvinnherad high-purity quartz deposit in Norway. The Group has exclusive agreements with landowners for exploration and development of the Kvinnherad quartz deposit. At the same time, Nordic Mining established Nordic Ocean Resources AS as a vehicle for the Company s activities related to subsea mineral exploration and production. At the date of this Prospectus, Nordic Ocean Resources AS is owned 80 per cent by Nordic Mining. The Group has mineral Exploration Rights for i.a. palladium, platinum, copper and, nickel in the Tromsø county in northern Norway. The Group has a competent organisation with three permanent employees and an active advisory network with broad industrial experience and in-depth knowledge of geology, mining and minerals processing. In Norway, Nordic Mining s operations and projects are governed by and must comply with i.a. the Norwegian Minerals Act and the Minerals Act Regulations as well as environmental legislation related to production and exploration. General information and links to environmental regulations etc. are provided by the Directorate of Mining (Nw.: Direktoratet for mineralforvaltning) at: 44

45 Keliber's activity is governed by and must comply with the Finnish Mining Act and environmental legislation. General information and guidelines as well as links to Finnish environmental legislation are provided by the Geological Survey of Finland at: LEGAL STRUCTURE The Group Nordic Mining ASA Nordic Rutile AS 100% Nordic Quartz AS 100% Nordic Ocean Resources AS 80% Nordic Mining Nordic Mining is both the holding company in the Nordic Mining Group and a project development company. In accordance with agreements, Nordic Mining provides services and support to its subsidiaries, Nordic Rutile AS, Nordic Quartz AS and Nordic Ocean Resources AS on geological, technical, commercial and economic aspects. Nordic Rutile AS 100% Nordic Rutile AS is a wholly owned subsidiary of Nordic Mining and has its registered address at Munkedamsveien 45 A, Vika Atrium, 0250 Oslo, Norway. Nordic Rutile AS is the Group s vehicle for the development of the Engebø rutile project. Nordic Quartz AS 100% Nordic Quartz AS is a wholly owned subsidiary of Nordic Mining and has its registered address at Munkedamsveien 45 A, Vika Atrium, 0250 Oslo, Norway. Nordic Quartz AS is the Group s vehicle for development of the Kvinnherad quartz deposit in Norway. The Group has exclusive agreements with landowners for exploration and development of the Kvinnherad quartz deposit. Nordic Ocean Resources AS 80% Nordic Ocean Resources AS is owned 80 per cent by Nordic Mining and has its registered address at Munkedamsveien 45 A, Vika Atrium, 0250 Oslo, Norway. Nordic Ocean Resources AS is a vehicle for the Group s activities related to subsea mineral exploration and production. The remaining 20 per cent of Nordic Ocean Resources AS is owned by Ocean Miners AS, a company owned by Prof. Fredrik Søreide who is assigned as general manager for Nordic Ocean Resources AS. Nordic Ocean Resources AS will develop knowledge, expertise and network related to prospecting and exploration of subsea mineral resources. The company has applied for exploration licenses for seabed minerals on the Norwegian continental shelf Associated company Keliber Oy 25.0% Nordic Mining holds 25.0 per cent of the shares in the Finnish limited liability company Keliber. Finnish Industry Investment Ltd. and Ilmarinen Mutual Pension Insurance Company hold 20.0 per cent and 8.6 per cent, respectively. The remaining shares are held by Finnish private citizens and companies. Keliber has mining rights to a deposit of lithium bearing spodumene mineral in Finland and concessions and permits to start mining operation and production of lithium carbonate. In 45

46 addition, Keliber has various exploration rights and reservations for exploration rights for other lithium deposits in the Ostrobothnia region in Finland BUSINESS OVERVIEW The Norwegian mining industry has for many years experienced a decreasing level of activity and lack of long-term investments, both within the industry in general, as well as within prospecting and exploration activities. Compared to Sweden and Finland, mining resources in Norway are under-explored even though there is reason to believe that Norway has significant resources of attractive minerals and metals. In a global perspective, the growth of the national economies in emerging regions, in particular China, India and other Asian countries, has led to increased demand for metals, minerals and commodity materials. With increasingly scarce mineral resources in central and southern Europe, it is expected that the Nordic countries will play an important role in the future supply of strategic metals and minerals to the European market. Exploration in the Nordic countries in the period (Million ) Source: Raw Materials Group European exploration survey, Stockholm BUSINESS IDEA, GOALS AND STRATEGY The business idea of Nordic Mining is to be an integrated resource company within exploration and production of high-end minerals and metals. The Company shall seek to exploit combinations of strategic mineral reserves and special and high-end applications through dedicated exploration activities and focused research on beneficiation technologies and products. In a short-term perspective, Nordic Mining will focus on the Engebø rutile project with the purpose to secure permits for industrial development. The requested supplementary information regarding the Engebø project was submitted to the Ministry of Climate and Environment and the Ministry of Local Government and Modernisation on 30 September At the date of this Prospectus, Nordic Mining awaits the government s decisions regarding the Engebø permits. In a longer perspective, Nordic Mining will seek to acquire operating companies in the minerals and metals value chain in order to secure mining competence, market access and knowledge, utilising existing operational capabilities and product knowledge for further development. Nordic Mining aims to establish itself as an attractive partner/owner for smaller and medium sized companies. 46

47 Nordic Mining s strategy for long-term growth is to: Explore and develop the Group s existing assets; Seek to exploit M&A opportunities in order to secure cash flow from production and to expand operational competence, market network and financial solidity; and Prospect, mine and produce high-end minerals and metals OVERVIEW MINERALS AND METALS DEPOSITS IN NORDIC MINING The Group s minerals and metals deposits, including the deposits of the associated company Keliber, currently comprise the following: Engebø rutile deposit (titanium dioxide) Kvinnherad quartz deposit (quartz) Keliber spodumene pegmatite deposit (lithium/lithium carbonate) In addition, the Group and its associated company hold various Exploration Rights for minerals (i.a. palladium, platinum, copper and nickel and lithium) in Norway and Finland. During the last years, Nordic Mining has actively prospected for sulphide mineralisations in The Reinfjord Intrusion on the Øksfjord Peninsula (nickel, copper, cobalt and palladium-platinum-gold) in the northern part of Norway. When estimated and classified, the Group's and the associated company s mineral deposits are reported according to the Australasian Joint Ore Reserve Committee code (JORC code). This is a widely accepted standard for reporting of mineral deposits. Nordic Mining annually publishes a report on its mineral deposits, exploration results, mineral resources and mineral reserves. The annual report for 2014 is enclosed hereto as Appendix STRATEGIC BUSINESS APPROACH The Nordic countries are today major producers of certain industrial minerals such as olivine, nepheline syenite and carbonates. In addition, there is production of quartz, graphite, talc, limestone, anorthosite, feldspar, mica, dolomite and ilmenite. The value of products from industrial minerals is highly dependent on the degree of beneficiation and production of speciality products. It is recognised that there is a considerable future growth potential in industrial minerals and metals production. The vast number of applications of products from minerals and metals can be split into high-technology/high-end products, speciality products and special alloys metals. In a short-term perspective, Nordic Mining will focus on the Engebø rutile project with the purpose to secure permits for industrial development. In general, Nordic Mining seeks to identify and verify strategic mineral and metal deposits that have potential applications within high-end industries, such as high purity quartz, rutile (titanium dioxide), tungsten, lithium and others, and actively pursue the development and commercialisation of new speciality products. Nordic Mining has cooperation and relations with various knowledge institutions, i.a. certain departments and individuals at the Norwegian University of Science and Technology, ( NTNU ), DNV GL, SINTEF, NIVA, Asplan Viak and Institute for Energy Technology ( IFE ). Areas of cooperation are defined on a project to project basis. According to the arrangements, Nordic Mining may have access to a number of individuals within different fields of specialisation, which will be remunerated according to time used. It is market standard that agreements with institutions such as NTNU, SINTEF and others are of short durations. Nordic Mining has, and has had, various consultancy agreements, mainly of short term duration, with various institutions, companies and consultants in various fields of competence. The Company s strategic business approach emphasises competence networking for business development and other matters. 47

48 Engebø rutile deposit Nordic Rutile AS Overview In September 2006, Nordic Mining acquired 100 per cent of ConocoPhillips Investments Norge AS interest in a rutile resource at Engebø in Naustdal municipality in Norway. The purchase price was NOK 3.2 million. Additionally, the agreement specifies a fixed contingent consideration that will be paid to the seller if and when commercial production or sales of mineral from the property commence. The contingent liability (NOK 40 million) is relatively limited compared to current total investment estimates related to industrial development of the Engebø rutile project (approximately NOK 1.9 billion). The assets, rights, and obligations related to the Engebø deposit were transferred to Nordic Mining's subsidiary Nordic Rutile AS in November The Engebø rutile deposit is one of the largest unexploited rutile deposits in the world and has the highest grade of rutile compared to current rutile producers and forecasted projects; see illustration below. Engebø 3.77% Murray Basin - Iluka 2.32% Cerro Blanco 2.10% Akonolinga (Years 1-6) Sierra Rutile 1.42% 1.66% Project Producer Akonolinga 1.15% Kwale Snapper 0.65% 0.59% Donald Gingko Cyclone Perth Basin - Iluka Fairbreeze Jacinth - Ambrosia Namakwa Mindarie Zircon Stradbroke 0.37% 0.35% 0.29% 0.27% 0.22% 0.20% 0.20% 0.16% 0.13% Source: Cameroon Rutile Ltd 1 Further, the Engebø rutile deposit is low on radioactive elements, such as uranium and thorium. This is an important advantage in the processing of rutile to i.a. pigment products and titanium metal. A comparison of the uranium and thorium content/spread in various titanium feedstock and the Engebø rutile is shown below. 1 Figures from a report distributed by Cameroon Rutile Ltd. in Not publically available. 48

49 ppm 100 Uranium in Ti feedstocks ppm 1000 Thorium in Ti feedstocks Max 10 Max Min 1 Min 0.1 Ilmenite Sulphate slag Chloride Synthetic slag rutile Rutile Engebø rutile 0.1 Ilmenite Sulphate slag Chloride Synthetic slag rutile Rutile 0.21 Engebø rutile Source: Production of titanium dioxide (2007) by Fahli and Martin-Matarranza The Engebø rutile project has an estimated net present value (NPV) of USD 466 million after tax, based on a discount rate of 8% and a long-term rutile price (f.o.b.) of USD 1,000 per tonne. The estimate which is an internal Company estimate was originally developed in 2012 and confirmed in The estimated payback time for the investment is 4.5 years. Based on the Australian consulting group TZMI s indicative revenue-to-cash cost curve developed in 2011 with forward looking estimates for 2015, the Group s internal cost data indicates a position better than the average for TiO 2 -producers. Consequently, the projections indicate a competitive position for the Engebø operation. The Engebø project is in a pre-commercial stage of development awaiting final decisions from the Ministry of Local Government and Modernisation related to the industrial area plan, and the Ministry of Climate and Environment related to the waste disposal application. In a short-term perspective, Nordic Mining will focus on the Engebø rutile project with the purpose to secure permits for industrial development. Please see section for further information regarding the development. No investment commitment has been undertaken and no operational activity has been started Mineral resources In 2008, a technical report ( Scoping Study ), which included a resource estimate in accordance with the JORC Code 2004, was completed by competent person Adam Wheeler. For further information regarding Adam Wheeler, please see Appendix 3. As per the date of this Prospectus, there have been no changes to the information and the report is still valid. For full report please visit: B8%20Engelsk/Rapporter/Scoping%20Study.pdf The table below summarises the key resource data for the Engebø deposit from the report. Resource class (JORC) Resource (million tonnes) Grade (% TiO 3% cut-off) Indicated Inferred Total indicated and inferred Source: Expert opinion on Engebø by Competent Person Adam Wheeler, 2009 An inferred mineral resource is that part of a mineral resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. An inferred mineral resource has a lower level of confidence than applying to an indicated mineral resource and must not be converted to an ore reserve. It is reasonably expected that the majority inferred mineral resources could be upgraded to indicate mineral resources with continued exploration. 49

50 An indicated mineral resource is that part of a mineral resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit(s). The JORC Code requires a certain quality of information including drilling density for a mineralisation to be included and classified as a resource. As the criteria for the JORC Code resource estimates are stricter and require more detailed information from core drilling and analysis, the current resource estimates in accordance with the JORC Code are lower than the historical estimates from previous owners activities. The JORC estimates will be updated as a result of new drilling campaigns which will reveal more detailed information for a larger part of the ore body. Nordic Mining expects that the resource estimates in accordance with the JORC Code will increase and be improved in line with further resource mapping and drilling. For further information regarding the JORC Code, please see Appendix 2, Annual report 2014 on Nordic Mining s mineral deposits. No resource mapping or drilling has been carried out on the Engebø deposit in the last years. Various test works have been put on hold or postponed since the permits for the project have been postponed as a result of the Ministry of Climate and Environment request for further information, as well as the Company s limited financial resources. Blasting and preparation of approximately 100 tonnes of ore intended for further processing test work was executed in Extraction Permits, Exploration Rights and infrastructure The Company's subsidiary Nordic Rutile holds the following Extraction Permits related to the Engebø deposit: Identification number Name of area Duration (extensions may be granted) Extraction Permit no. FU-1/1997-VB Engebø 1 23 October 2017 Extraction Permit no. FU-2/1997 VB Engebø 2 23 October 2017 Extraction Permit no. FU-3/1997 VB Engebø 3 23 October 2017 Extraction Permit no. FU-4/1997 VB Engebø 4 23 October 2017 Extraction Permit no. FU-5/1997 VB Engebø 5 23 October 2017 Extraction Permit no. FU-6/1997 VB Engebø 6 23 October 2017 Extraction Permit no. FU-7/1997 VB Engebø 7 23 October 2017 Extraction Permit no. FU-8/1997 VB Engebø 8 23 October 2017 Extraction Permit no. FU-9/1997 VB Engebø 9 23 October 2017 The Engebø deposit and the planned production/processing plant are located adjacent to a county road and a deep water harbour facility. Shipping of products will take place from the local deep sea harbour directly to the customers. The Extraction Permits are maintained and valid in accordance with the general provision of the Norwegian Mining Act. Nordic Rutile will, if necessary, apply for an extension of the Extraction Permits. Extension shall in general be granted if the areas in question are considered necessary for Nordic Rutile s (planned) operations Description of the Engebø rutile project The Engebø deposit was recognised as a potential rutile deposit in the 1970s. During 1995 to 1997, a large drilling campaign carried out by DuPont documented a deposit estimated to 383 million tonnes of eclogite ore, not in accordance with the JORC Code, with an average content of 3.96 per cent titanium dioxide. So far, 154 million tonnes with an average content of titanium dioxide of 3.75 per cent has been classified as indicated or inferred resource in accordance with the JORC Code

51 Nordic Mining estimates that production from the Engebø deposit can continue for approximately 50 years. The mine life estimate is based on the assumption that the continued drilling to increase and upgrade the preliminary resource estimates will be successful. In Nordic Mining s opinion, this is a realistic assumption. The preliminary financial estimates for the Engebø rutile project as informed in section above are based on the preliminary resource estimate of 154 million tonnes in accordance with the JORC Code. The financial estimates will be revised when updated resource estimations are available. Nordic Mining s plan for industrial development of the Engebø deposit has the following main elements: The mining operation will be developed in two stages; firstly with open pit production for a period of years, followed by an underground mining operation for approximately 35 years. A crusher will be installed and operated underground. The mining operation will be based on standard production equipment with drilling rigs, wheel loaders, trucks etc. Crushed rock will be transported on conveyor belts to the processing plant where it will be milled and prepared for beneficiation with various technologies/equipment. Magnetic separation and flotation will be the main beneficiation methods for separation and concentration of rutile and garnet as a by-product. From the processing plant finished products will be transported on conveyor belts to storage facilities and subsequently loaded in bulk carriers for shipment to customers. The concept for industrial development at Engebø has a limited area footprint and is efficient due to low costs and investments related to internal transportation. With regard to external logistics the location adjacent to an existing deep water harbour and short sailing distance to potential customers in Europe is considered to be a competitive advantage. The rutile concentrate produced from Engebø may serve as feedstock for pigment production and as feedstock for production of titanium metal. The global demand for titanium pigments is generally growing in line with, or above, the GDP. Several of Europe s major pigment producers are located within 1-2 days sailing time from Engebø in the UK, Germany and Belgium. Nordic Mining considers titanium metal to be of strategic importance with forecasted growth and potential applications within areas like aerospace, defence, offshore and more specific applications as in nano technology and health care. Possible new production technologies for titanium metal may reduce production costs and prices for titanium metal, and lead to increased demand for titanium metal. The external conditions in Norway, and in particular the Sogn and Fjordane county where the Engebø deposit is located, are good for possible future production of titanium metal due to excess hydrothermal power supply and comprehensive knowledge and experience in metallurgical industries. The purchase and the subsequent development of the Engebø rutile deposit will establish Nordic Mining as a major long-term feedstock supplier both for the pigment industry and for production of titanium metal. Nordic Mining s evaluations of the Engebø project have verified that high-quality garnet can be produced as a by-product. Commercial development of garnet, e.g. for water-jet cutting and various abrasives, is expected to add positively to the profitability of the Engebø project. Nordic Mining has signed a Memorandum of Understanding with a leading, international producer of industrial minerals. The parties intend to establish long-term cooperation within development, production, sales, marketing and distribution of garnet products from Engebø. The technical cooperation will consist of testing, product analysis, process evaluation and process design in order to verify and define an optimal beneficiation process for the Engebø garnet. The technical work may also include preparation, design and specification of pilot plant configuration for garnet beneficiation. Subject to a successful development of the Engebø project and establishment of production processes that meet the necessary requirements, the parties intend to enter into exclusive commercial relations for all garnet produced from Engebø. This may include off-take 51

52 agreement, joint marketing, sales and distribution arrangements for garnet products to the international markets Status of the political decision process The planning program related to Environmental Impact Assessment (EIA) for the Engebø project at Engebø was approved by Naustdal and Askvoll municipalities in November Nordic Mining appointed the Norwegian Institute for Water Research ("NIVA ) to coordinate all aspects of the EIA in connection with the preparation of proposal for industrial area plan and application for waste disposal permit for the project. Asplan Viak was engaged in connection with industrial area plan issues. Independent, well-reputed institutions were contracted for the various EIA studies in order to have a best possible documentation of project consequences and impact. During 2009 and 2010, Nordic Mining undertook evaluation and tests related to mineral resource prospecting and methods for ore dressing and beneficiation for production of rutile and garnet. In cooperation with leading technology and equipment suppliers, Nordic Mining has evaluated alternative solutions for crushing and grinding. Further, the basis for completion of a process flow chart has been established. Critical stages in the process have been identified in order to achieve highest possible rutile recovery. Microscopy has been undertaken to evaluate mineralogy and liberation of high purity rutile concentrate in laboratory tests. The work will continue and various alternative methods for mineral separation will be evaluated when the industrial area plan and the waste disposal permit are approved by the government. In 2009, Nordic Mining completed its proposal for industrial area plan with environmental impact assessment in connection with the contemplated industrial activity at Engebø. Naustdal and Askvoll municipalities reviewed the proposal and submitted the plan for public hearing in two separate rounds. The last hearing period closed in September Various local, regional and national institutions commented on the planning proposal. Nordic Mining had invested significant effort and focus to secure that the impact studies included in the planning documentation were of high quality and covered all relevant aspects related to industrial development at Engebø. The county committee (Nw: Fylkesutvalget) in Sogn og Fjordane county gave strong support to Nordic Mining s proposal for Engebø. The Norwegian Directorate of Fisheries filed a remark to the industrial area plan. The municipality boards in Naustdal and Askvoll approved the industrial area plan for the planned rutile production at Engebø in May In June 2011, the county governor of Sogn and Fjordane forwarded the industrial area plan, including the objection from the Directorate of Fisheries to the Ministry of Climate and Environment for a decision. The county governor recommended approval of the plan. In March 2013, Nordic Mining received a letter from the Ministry of Climate and Environment stating that the information related to the industrial area plan and the application for disposal of mineral residues in connection with the Engebø project, in the Ministry of Climate and Environment s opinion, was not sufficient for making a decision. The Ministry of Climate and Environment requested additional information. The request for supplementary information was not expected on the background of the comprehensive EIA undertaken and considering the strong local and regional support of the Engebø project. The Ministry of Climate and Environment requested additional information for the following five areas: 1. Documentation of water circulations in the fjord and risk assessment regarding distribution of finer particles 12 months measuring program 2. Additional survey of possible spawning grounds for fish and endangered, near-endangered or valuable species and natural resources in the disposal area analysis program 3. More detailed plan for tailings disposal arrangements 52

53 4. Further assessments regarding drilling and blasting 5. Information regarding fresh water supply and consequences for the diversity of nature and the state of the water environment for different options In 2013, Nordic Mining assigned DNV GL to conduct a measuring program regarding documentation of water circulations in the Førdefjord and risk assessments regarding the planned sea disposal for the mineral residues. DNV GL was also assigned for various additional investigations, e.g. remotely operated vehicle ("ROV") survey and sample fishing of possible spawning grounds for fish, eel and other species in the disposal area. In August 2014, the measuring program for water circulations was completed after 12 months of measuring at 11 metering stations. Water currents have been measured using advanced profiling metering instruments which have recorded current velocities and directions at different water depths. Further, hydrographic measurements have been executed with recording parameters like temperature, salinity, density, pressure and oxygen content in the water. The results from the measuring program have been reported and published on a quarterly basis, last time in August On 30 September 2014, Nordic Mining submitted comprehensive information on all the requested issues to the Ministry of Climate and Environment and the Ministry of Local Government and Modernisation. The submitted reports are available on Nordic Mining s webpage In summary, the supplementary information supports and strengthens the results and documentation which was compiled in the EIA for the Engebø project, showing i.a. that the planned sea disposal for the mineral residues represents a safe and good storage solution for the mine tailings from Engebø. In the following, a brief summary is given of the supplementary information which was submitted to the Ministry of Climate and Environment and the Ministry of Local Government and Modernisation on 30 September The summary is given separately for each of the five areas for which the authorities requested supplementary information. 1. Water circulations and particle distribution The 12 months measuring program for water circulations which was coordinated by DNV GL, was finalised in August Based on the measuring, SINTEF has applied an advanced model, SINMOD for modelling of the water circulations in the Førdefjord. The measuring program shows that the circulation pattern is in line with previous measurements, showing a stable water body at the depth and moderate current velocities. The current velocities in the deep parts of the fjord are only to a limited extent affected by seasonal changes. Further, SINTEF has utilised its DREAM model for simulations of particle dispersion from the planned fjord disposal. Various simulations have been carried out using results from SINMOD as input. Particle dispersion was modelled for a 12 month period, including seasonal variations in currents and water exchange. Also two scenarios for depositing after 25 and 50 years were modelled. The results from DREAM show that the tailings will deposit mainly within the planned area. The scenarios for disposal after 25 and 50 years, indicate somewhat increased particle concentrations, however, the main sedimentation will still take place within the planned disposal area. No harmful effects are expected outside the deposition areas. 2. Biological investigations DNV GL has executed a ROV survey of five transects along the bottom of the Førdefjord. In total, approximately 7 km along the seafloor has been covered. The survey has provided additional information of the seafloor and the steep walls along the planned 53

54 disposal area. The survey confirms that the fjord bottom is a typical sedimentation environment, consisting mainly of mud and finer particles. No indications of corals or endangered, near-endangered or particularly valuable species were detected. DNV GL also carried out test fishing for eel and fish, as well as sampling of fish eggs and larvae in the disposal area. The sampling gave no evidence of important spawning grounds for fish. One possible spawning ground for ling was indicated; however ling is a common deep water fish in Norwegian fjords, and it is expected that the fish can spawn in other areas of the fjord when depositing of tailings takes place. The results from the supplementary investigations are in line with the results from earlier investigations as part of the EIA. DNV GL has, based on the particle dispersion model and the biological investigations, evaluated the potential effects of the tailings disposal on the fjord environment. The evaluation shows that the main expected effects are on the benthic fauna within the disposal area. Outside the disposal area the bottom fauna is not anticipated to be effected negatively. The effects on fish using the disposal area are evaluated to be limited, and spawning fish are likely to use adjacent areas. 3. Tailings disposal arrangement Supplementary description of the planned solution for tailings disposal has been submitted, including description of design parameters and instrumentation, policies for inspection, maintenance, safety and emergency measures. Further, solutions for optimisation of the deposit are outlined with regards to configuration, possible alternative locations of the discharge pipeline, possible backfill etc. 4. Assessments regarding drilling and blasting Additional information is documented regarding blasting pattern and procedures for the planned Engebø mining operation, as well as effect assessments and ward-off measures. DNV GL has compiled information regarding possible effects on fish from mining operations. No documentation of negative effects from onshore blasting in mining has been observed with regard to national salmon protection areas or fish farms. 5. Alternatives for supply of fresh water Environmental impact assessments related to supply of fresh water are regulated by the Norwegian Water Supply Act ( Vannressursloven ). Subsequent of the approval of the industrial area plan and the waste disposal permit Nordic Rutile will present its plans and alternatives regarding fresh water supply. The Norwegian Water Resources and Energy Directorate ( NVE ) will be responsible for the decisions in the matter. Asplan VIAK has investigated alternatives for supply of fresh water to the planned mineral processing at Engebø. Three alternative sources of supply of fresh water to the Engebø process plant are outlined. The most probable alternatives are to supply either by pipeline on the seafloor or by land from the Skorven water system or in a surface pipeline or tunnel pipeline from the Svardal lake and water system. Based on preliminary assessments, these alternatives are considered to have limited impact on the diversity of nature and the state of the water environment. Possible impacts will mainly be related to the construction phase. The Ministry of Climate and Environment has confirmed that the final decision process subsequent of the submitted supplementary information will be coordinated, i.e. that the industrial area plan which is considered by the Ministry of Local Government and Modernisation, and the application for waste disposal which is handled by the Ministry of Climate and Environment, will be coordinated and handled jointly by the Government. Further, the Ministry of Climate and Environment has stated that the decision process shall be efficient. 54

55 Nordic Mining has confidence that the supplementary information following from the survey and investigation program will complement the comprehensive information package in the EIA for the Engebø rutile project and thus provide comfort in the plans for industrial rutile production at Engebø. In the opinion of Nordic Mining, the available information will ensure a sustainable realisation of the significant values that the Engebø project will bring to the society; locally, regionally and domestically. If permits for the Engebø rutile project should not be granted, the Group will pursue business opportunities related to the other projects in its portfolio, i.a. the Kvinnherad quartz project and the Keliber lithium project Additional usages of the Engebø mineral resources In addition to production of mineral products from rutile and garnet, Nordic Mining is exploring potential applications for various products from eclogite waste rock and processing waste (tailings). Several industrial contacts have been established in order to gradually explore and develop such market outlets in order to optimise the use of the Engebø mineral resources. In 2010, the tailings from Engebø was approved for capping applications in accordance with the official guide for capping materials issued by the Norwegian Climate and Pollution Agency (TA- 2143/2005). Accumulation of heavy metals and components consisting of Tributyltin ( TBT ) and Polychlorinated biphenyls ( PCB ) represents a major environmental challenge in many port areas throughout Europe. In Norway, a total of 17 port areas have been prioritised by the authorities for further examination and clean-up, possibly by the use of capping materials. Several other alternatives and applications for the waste rock and minerals are also considered, i.a. concrete aggregates, soil conditioner and as raw material for various construction purposes, i.a. in connection with dyke reinforcement and other measures for flooding protection, and various marine up filling and land construction. As a consequence of the severe damages that have been experienced both in Europe and on other continents, following from rain storms and other extreme weather conditions, flooding protection is high on the agenda for the authorities in many countries. Nordic Mining expects that the demand for suitable heavy minerals and materials to protect from flooding will increase in the coming years. Nordic Mining has signed an agreement with a global energy services company with purpose to develop suitable eclogite products for use in specialty concrete applications. Further, the Group has a cooperation agreement with the Dutch company Arcadis Nederland BV with the purpose to test eclogite as stone meal for soil conditioning in agriculture. In the future, parts of the waste materials may represent a positive additional value for the project, financially and with regard to new industrial activity. In addition, waste disposal from the project can be reduced Next development steps for the Engebø rutile project after receiving of permits In a short-term perspective, Nordic Mining will focus on the Engebø rutile project with the purpose to secure permits for industrial development. When the permits are in place, the further development of the project will mainly deal with: a) Process optimisation studies and pilot production Trials and development work will be initiated within grinding, separation techniques and flotation methods for optimal utilisation/recovery of rutile and garnet from the crude ore. Further, pilot plant production for production of rutile and garnet concentrates will be carried out. b) Core drilling, mineralogical analysis and modelling Additional core drilling of the eclogite deposit will be executed in the open pit area to improve the production simulation. The drilling will make basis for updating the 3D resource model and for 55

56 improving resource and reserve figures according to the JORC Code. The model will serve as a basis for further evaluation of mining strategy, production scenarios and project economy. Further mineralogical analysis will be carried out for optimising the processing solutions. c) Project engineering and design Conceptual engineering and cost analysis will be conducted in order to further enhance the estimates for investment and operational costs. This will also include conceptual studies for freshwater supply, electricity and mineral residues disposal arrangement. d) Market and joint operations activities A possible scenario is to develop the Engebø deposit in a consortium consisting of one or more companies being active in beneficiation of titanium feedstock products. Although this is in an early phase, initial discussions with potential participants have started. A preliminary cost estimate for the development work subsequent of the permits and up till the point of investment decision is in the range NOK million (USD million). An industrial development of the Engebø rutile deposit represents a major long-term engagement. The planning, construction and operation will demand a significant level of labour in the region for decades. The planning and development activities will be carried out in close cooperation with local, regional and national authorities Quartz in Kvinnherad Nordic Quartz AS Overview Nordic Mining has entered into an agreement with landowners and secured exclusive rights for investigation and development of a quartz deposit in Kvinnherad municipality in Hordaland county in Norway. Pursuant to the agreement, Nordic Mining is entitled to explore the deposit in order to assess whether the project is commercially viable. The Company has exclusive right to exploit the deposit against a consideration to the landowners, such consideration to be negotiated prior to production start. Should concrete plans for regular operations not be established within 2018, the landowners may terminate the agreement with three months notice. The quartz deposit is an approximately 600 meter long hydrothermal quartz vein. The Geological Survey of Norway ( NGU ) has preliminary estimated the deposit to approximately 2.7 million tonnes. The estimate is not in accordance with the JORC Code. The quartz deposit is located on a hillside close to the main county road along the Hardangerfjord and adjacent to the sea. Harbour alternatives for shipping of products are available within a few kilometres range from the deposit. There is no infrastructure (access road, power and water facilities etc.) currently installed at the potential mine site. The Kvinnherad quartz project is developed through Nordic Quartz AS, a wholly owned subsidiary of Nordic Mining. No investment commitment has been undertaken and no operational activity has been started for this project. In 2012, Nordic Mining executed a Scoping Study for the Kvinnherad quartz project. The study which was coordinated by the German minerals expert group Dorfner Anzaplan gave evidence of a technically feasible and financially profitable industrial quartz project Exploration results/processing tests The Kvinnherad deposit consists of hydrothermal quartz situated in Proterozoic basement rocks south of the Hardanger Fault Zone. The quartz vein is about 600 meter long and on average meters wide. A cross-cutting of the hillside shows that the deposit in parts extends to at least 150 meters depth. 56

57 A preliminary estimate made by NGU based on field mapping indicates that the deposit contains approximately 2.7 million tonnes of hydrothermal quartz. Nordic Mining s own field mapping from 2011 broadly confirms this picture. Neither the preliminary NGU estimate nor the Company s assessments are JORC compliant. In 2012, Nordic Mining executed a magnetic survey of the quartz vein. The purpose was to distinguish between the non-magnetic quartz vein and the more magnetic granitic gneiss side rock to make a 3D interpretation of the orientation, volume and depth of the vein. The survey was successful in recognising differences in magnetic properties. A non-magnetic body corresponding well with the mapped outcropping quartz was discovered. The non-magnetic body has the same length and strike direction as the mapped quartz vein, but is somewhat wider. The wider parts of the non-magnetic body can be related to unexposed quartz that is not yet surface mapped. Depth interpretation shows that it is likely that the vein extends to at least 150 meters depth below the highest surface outcrop. There are also indications of a possible further continuation to about 300 meters depth. The magnetic survey supported NGU s preliminary volume estimate (not JORC compliant) and indicated an even larger extension of the quartz vein both horizontally and vertically. The indicated wider parts of the quartz vein will be further investigated by surface mapping. The actual depth of the vein and the down dip quality will be verified by core drilling and analysis. Nordic Mining has over the last years carried out comprehensive analysis and an advanced processing test program at Dorfner Anzaplan s laboratory in Germany. A suitable processing route for the quartz was developed by Dorfner Anzaplan in Analysis show the quartz from the Kvinnherad deposit is of very high purity. Advanced processing tests show that the impurity level can be further reduced by physical and chemical processing to a level of the best products in the market, comparable with Iota 4 and Iota 6 high-purity quartz ("HPQ") products. To confirm that high quality products could be obtained from a larger part of the deposit four samples of approximately 250 to 500 kg were blasted from different locations across the length of the vein in 2012 for processing tests. All the processed samples showed high product qualities both in terms of impurity levels and glass qualities, thus indicating that the deposit is of homogenous quality. HPQ is quartz which is extremely pure, having only a few parts per million of contaminating elements such as alkalis, iron and heavy metals. HPQ is used in various high-tech applications. There is a growing demand for HPQ in various industry applications such as semiconductors, telecommunication, optics, electronics and solar silicon. The HPQ world market is currently limited in volume, but with high value. The global HPQ market is expected to grow in the coming years. The project is in an early, pre-commercial phase. A Scoping Study which investigates mining and production scenarios together with the project s economic viability was completed in 2012; ref. section below. Additional information about the Kvinnherad quartz project is available on Nordic Mining s webpage and in Nordic Mining s press releases: and on NGU s webpage:

58 Scoping Study A Scoping Study for the Kvinnherad quartz project was completed in The study which was executed and coordinated by Dorfner Anzaplan outlined a technically feasible and financially profitable industrial quartz project. Based on current estimations (not in accordance with the JORC Code) the Scoping Study considered the Kvinnherad quartz deposit to contain raw quartz sufficient for minimum 60 years of production of high-purity quartz products at a rate of 5,000 tonnes per year. The Scoping Study described a preliminary mine plan from an open pit with transport of raw quartz to a processing plant located at suitable premises in Kvinnherad. A general pre-requisite for mining and processing of minerals is that permits are granted, e.g. related to industrial area plan for the mining area and waste disposal permit for the mine and processing plant. The Group will evaluate and initiate processes related to permitting in connection with the further development of the quartz project. The Scoping Study describes an industrial base case with mine life assumption of 30 years, estimated investments of approximately USD 50 million (~NOK 286 million), a preliminary net present value (NPV) after tax of USD 60 million (~NOK 344 8% weighted average cost of capital (WACC), and an undiscounted payback period of 4.3 years. The average HPQ product price assumption was USD 6,700 per tonne based on a qualitative and commercial assessment. Significant upside potential was identified for further elaboration in the project development process going forward. The Scoping Study is available at: tudy.pdf Certain sections of the report have been excluded for commercial reasons. This comprises e.g. details of process description, preliminary marketing concept and discussions of certain market issues. The high purity quartz industry is highly specialised and in many ways a secretive market. Potential sensitive information is consequently evaluated in a commercial context Further project development Nordic Mining will proceed with market screening and customer contacts in order to assure the commercial framework for forthcoming subsequent feasibility process and project financing. Efforts will be made to advance project plans towards a possible investment decision. The project activity has, however, been low in 2013 and 2014 to the date of this Prospectus due to limited financial resources in the Group and a strict prioritisation of efforts to secure permits for the Engebø rutile project. Granting of permits for the Engebø rutile project is expected to allow for a greater financial flexibility for the Group in general Nordic Ocean Resources Nordic Ocean Resources is a vehicle for the Group s activities related to subsea mineral exploration and production. Nordic Ocean Resources will develop knowledge, expertise and network related to prospecting and exploration of subsea mineral resources. In 2012, NTNU and Nordic Ocean Resources with support from Statoil ASA entered into a cooperation regarding a pre-project to review the knowledge about seabed mineral resources in Norway and identify and prioritise needs for further research and development. A special focus area in the project has been to increase the knowledge of possible massive sulphide mineralisation along the Mid-Atlantic Ridge. The Ridge is a sub-sea range of mountains which separates the Eurasian and the North American continental plates. In this area, marine sulphides are formed 58

59 from the volcanic and hydro-thermal activities along the Ridge. The northern Mid-Atlantic Ridge between Jan Mayen and Spitsbergen is located within Norwegian jurisdiction. In 2013, analysis and interpretations of seabed topography, structures and geology have been done by NTNU in order to disclose relevant areas for the formation of sulphides. Based on these data, a statistical mineral resource calculation has been done using the same methods as is used for oil and gas resources. The calculations give a value estimate for the seabed minerals within the Norwegian zone of NOK 430 billion. The estimation further indicates that the possible value potential could be more than NOK 1,000 billion. Nordic Ocean Resources is currently the sole company in Norway with focus on seabed minerals and intends to play an active role in this exciting part of the industry. Nordic Ocean Resources has applied for submarine mineral exploration rights in Norway, and a granting of such will substantially anchor Nordic Ocean Resources industrial position. Nordic Ocean Resources is exploring industrial contacts in Norway and internationally with regards to possible cooperation on exploration and development. The activity has, however, been low in 2014 to the date of this Prospectus due to limited financial resources in the Group and a strict prioritisation of efforts to secure permits for the Engebø rutile project. Granting of permits for the Engebø rutile project is expected to allow for a greater financial flexibility for the Group in general Øksfjord exploration project for nickel, copper, cobalt and palladium-platinumgold Nordic Mining General Nordic Mining holds the Exploration Rights number /2011 named Reinfjord for nickel ( Ni ), copper ( Cu ), cobalt ( Co ) and platinum group elements ( PGE ) in Kvænangen municipality in Troms county in Norway. The Exploration Rights are valid until 28 February 2018 and can upon application be extended for three more years. The exploration area is located approximately 5 km from the seaside and the populated area of Reinfjord, at an altitude of approximately 600 meters above sea level. Further, Nordic Mining holds the Exploration Rights number /2009 named "Lokkarfjord" for the same minerals in Alta municipality in Finnmark County in Norway. The Exploration Rights are valid until 2016 and can upon application be extended for three more years. In January 2014, Nordic Mining was granted the Exploration Rights number /2013 named Stortinden Øksfjord for Ni, Cu and Co in Loppa municipality in Finnmark County in Norway. The Exploration Rights are valid until 2021 and can upon application be extended for three more years. Electromagnetic data published by the Geological Survey of Norway ( NGU ) show that the Stortinden Øksfjord Exploration Rights include an area of particular low resistivity. Low resistivity can be caused by metals contained in the bed rock and may indicate existence of a metallic ore body. NGU has informed of plans to carry our field-mapping studies in the area in the autumn 2014, and Nordic Mining awaits information from this exercise before planning of possible exploration in the Stortinden area. There is no infrastructure (access road, power and water facilities etc.) currently installed in the areas covered by the abovementioned Exploration Rights. All Exploration Rights are located within the Seiland Magmatic Province. Nordic Mining considers the province a prospective area for Ni, Cu and PGE. The exploration work so far in the Reinfjord and Lokkarfjord areas, including geophysical measuring, drilling and analyses, has provided the Company with good understanding and competence related to the mineral generating processes in the region and suitable methods for investigation. All Exploration Rights are strategically located in the region. 59

60 Nordic Mining has since 2011 prospected for sulphide mineralisation within the area that is hosted by an ultramafic intrusion, The Reinfjord Intrusion. The intrusion has specific characteristics in terms of ore-forming processes and share geological features with large ore-forming provinces such as Bushveld in South Africa. Nordic Mining s prospecting model is that a high-grade base and precious metals deposit is located within the depths of the central part of the intrusion related to wall rock contamination and magma replenishment. Geophysical surveys in the area have detected a large electromagnetic anomaly centrally placed in the intrusion at approximately 100 meters depth. Drilling of two holes in 2012 revealed mineralisation of Ni, Cu, Co and PGE at about the same depth as the interpreted conductor. The Øksfjord exploration project is in an early pre-commercial phase. No resource estimations in accordance with the JORC Code have so far been made. No investment commitment has been undertaken and no operational activity has been started. Subject to further successful exploration an extraction permit may be granted from the Directorate of Mining. Standard regulatory processes related to industrial area planning and application for waste disposal must be executed and permits granted before possible production can be started Exploration results/prospects Nordic Mining carried out fieldwork, surface sampling and airborne geophysical surveys within the Reinfjord Intrusion in The airborne geophysical survey (electromagnetic and magnetic measurements) was carried out by the Danish company SkyTem. An expert review of the SkyTem data by Revelation Geosciences, USA revealed two conductive bodies side by side in the Reinfjord Intrusion. Conductivity may indicate metals contained in the ground and electromagnetic surveys are widely used in prospecting for base and precious metals. In early 2012, a ground electromagnetic survey was completed to get a more detailed picture of the conductor discovered by airborne geophysics. The survey was carried out by Geovista AB and confirmed a sizeable conductor in Reinfjord at approximate depth of 100 meters. Exploration drilling of two drill holes was carried out in 2012 to investigate whether the conductor was related to a mineralisation containing economic metals. This drilling lead to the discovery of Ni, Cu, Co, PGE and gold (Au) enriched sulphide mineralisation between 86 and 116 meters fitting well with the interpreted conductors. Two drill holes were drilled to a depth of 243 (RF-1) and 169 (RF-2) meters. Drillhole RF-1 intersected a Ni-Cu enriched zone underlain by a more PGE-Au enriched zone. The table below shows the average metal content for the two intersected mineralised zones: Hole ID From To Meters Nickel Copper Cobalt Gold Palladium Platinum PGE+Au Sulphur (m) (m) (m) % % % g/t g/t g/t g/t % RF RF-1* *including Source: Aqua regia multielement ICP-OES analysis by Labtium Rovaniemi, Drill hole RF-2 shows a more complex lithology with cross-cutting younger intrusive phases. Disseminated sulphides are found especially between 94 and 116 meters. The table below shows the average metal content for the mineralised zone in drill hole RF-2: Hole ID From To Length Nickel Copper Cobalt Gold Palladium Platinum PGE+Au Sulphur (m) (m) (m) % % % g/t g/t g/t g/t % RF

61 Source: Aqua regia digest, ICP-AES analysis by ALS Minerals, Sulphidic Nickel was analysed by ME-ICP09 sulphide specific analyses. Additional information about the Øksfjord exploration project and complete drillhole assays are available on: In March 2014, a research program coordinated by NTNU, and where Nordic Mining is a partner, was granted NOK 2 million from NordMin for further exploration in the Reinfjord area. NordMin is a research network funded by the Nordic Council of Ministers. A team of Norwegian and Danish geologists has carried out field-mapping studies in the area in August Exploration drilling of two new boreholes is planned for execution in October The analytical results of the fieldmapping studies and the exploration drilling will be reported when they are available Lithium in Ostrobothnia, Finland - Keliber Oy Overview The associated company Keliber has a lithium project located in the Kokkola and Kaustinen municipalities in the Ostrobothnia region of Finland. Keliber has rights to deposits of lithium bearing spodumene mineral e.g. in Länttä, Outovesi, Syväjärvi, Leviäkangas and Rapasaari. Further, Keliber has exploration rights for other areas in the Ostrobothnia region that may contain mineable volumes of lithium bearing spodumene mineral. For further information of Keliber s mineral deposits, please see Appendix 2, Annual mineral report 2014 on Nordic Mining s mineral deposits. Keliber is in a pre-commercial stage of development awaiting verification of additional mineable lithium deposits resulting from further exploration and drilling in order to prove that the project is economically feasible. No investment commitment has been undertaken and no operational activity has been started Mineral resources and ore reserves Keliber holds mining concession for the Länttä lithium deposit, concession number 7025/1a. The mining concession comprises in total 37.5 hectares in the Länttä mining district in the municipality of Kokkola. According to the mining concession, mining operations must be initiated by 23 May Extensions may be granted. The concession is maintained and valid in accordance with the general provision of the Finnish Mining Act. Keliber has environmental permits for the Länttä deposit and its planned processing plant at Kalavesi in Kaustinen municipality. Keliber is currently undertaking a comprehensive environmental impact assessment ( EIA ) for 5 of its most prospective mineral deposit areas; Länttä, Outovesi, Syväjärvi, Leviäkangas and Rapasaari in accordance with Finnish laws and regulations. Expected completion of the studies is around year-end 2014 or early Subsequent of the EIA environmental applications for the subject areas will be submitted to the environmental authorities, tentatively mid Two experienced representatives from Outotec (Finland) Oy have been engaged to make independent classifications of the deposits in Länttä, Outovesi, Leviäkangas, Syväjärvi, Rapasaari and Emmes. The resource estimates in accordance with the JORC Code were made by Markku Meriläinen (geologist) and Pekka Lovén (mining engineer). Both are Competent Persons registered with the Australasian Institute of Mining and Metallurgy (AusIMM) and have long experience in the mining industry. All estimates have been established prior to the effective date of the JORC Code As no material changes have occurred, the estimations remain valid. The Competent Persons preliminary estimation regarding Länttä is: 61

62 Resources (JORC) Reserves (JORC) Res. Class Tonnes Li 2O% Res. class Tonnes Li 2O% Measured 433, Proven 472, Indicated 868, Probable 513, Total 1,301, Total 985, Note: Resources are not additional to reserves. Source: Expert opinion on Keliber by Competent Persons Markku Meriläinen and Pekka Lovén Cut-off grade in the estimates is 0.5 per cent lithium oxide (Li 2 O). Ore reserve tonnage and grade include 95 per cent mining recovery and 15 per cent waste rock dilution at 0% Li 2 O grade. The estimated maximum open pit extends to a bedrock depth of 120 meters with a waste/ore ratio of 6.9. In future mine planning optimisation, a combination of open pit and underground mining will be considered to find the most economical mining method. Keliber holds four exploration rights for the Outovesi lithium deposit, with code numbers 9030/1, 9085/1, 9102/1 and 9160/1. The exploration rights in Outovesi comprise in total approximately 210 hectares. The Competent Persons preliminary estimation regarding Outovesi is: Resources (JORC) Reserves (JORC) Res. class Tonnes Li 2O% Res. class Tonnes Li 2O% Indicated 289, Probable 277, Total 289, Total 277, Note: Resources are not additional to reserves. Source: Expert opinion on Keliber by Competent Persons Markku Meriläinen and Pekka Lovén The estimates are based on the same cut-off grade, mining recovery and waste rock dilution as for Länttä. The vertical depth of the estimated open pit is 60 meters. Following an acquisition of mineral rights from the Finnish government in 2012, Keliber holds four exploration rights based on applications currently in the process with the mining authority of Finland for the Syväjärvi lithium deposit, with code numbers ML2011:0077, 9065/1, 9068/ and 9143/1. The exploration rights in Syväjärvi comprise in total approximately 315 hectares. One of the exploration rights is in the process of registration in Keliber s name. Two of the exploration rights have been appealed by the Centre for Economic Development, Transport and the Environment due to environmental concerns. The Competent Persons preliminary estimation regarding Syväjärvi is: Resources (JORC) Reserves (JORC) Res. Class Tonnes Li 2O% Res. Class Tonnes Li 2O% Indicated 1,550, Probable 1,390, Inferred 50, Total 1,600,000 Total 1,390, Note: Resources are not additional to reserves. Source: Expert opinion on Keliber by Competent Persons Markku Meriläinen and Pekka Lovén Cut-off grade in the estimates is 0.5 per cent Li 2 O. The Syväjärvi lithium deposit is amenable for conventional open pit mining. The open pit stripping ratio (waste-to- ore ratio) is 3.9:1 and the mining modifying factors are; ore loss 5 per cent, dilution 15 per cent and the mining recovery from Mineral resource is 78 per cent. Keliber is currently undertaking re-analysis of drill cores from Syväjärvi. The new information is expected to have a positive impact on the resource estimate. However, the new information is likely to represent a material change compared to the previous information, and thus an ore reserve estimate may not be applicable until a pre-feasibility study has been completed. 62

63 Following an acquisition of mineral rights from the Finnish government in 2012, Keliber holds four exploration rights for the Leviäkangas lithium deposit, with code numbers 8390/1, 9144/1, 9144/2 and 9144/3. The exploration rights in Leviäkangas comprise in total approximately 342 hectares. The mining authority has a back log of applications and the time schedule for granting is uncertain. In the meantime, the application status in combination with landowners approvals secure adequate rights for Keliber to undertake exploration work including drilling in Leviäkangas. Further drilling will be executed in Leviäkangas and the mineral estimates will be updated when additional information is available. The Competent Persons preliminary estimation regarding Leviäkangas is: Resources (JORC) Reserves (JORC) Res. class Tonnes Li 2O% Res. class Tonnes Li 2O% Indicated 190, Inferred 271, Total 461,000 Source: Expert opinion on Keliber by Competent Persons Markku Meriläinen and Pekka Lovén The estimates are based on the same cut-off grade and mining parameters as for Syväjärvi. In February 2014, Keliber was offered to purchase seven exploration rights in Rapasaari from the Finnish government. The transaction is in the final stage of completion, and for six of the exploration rights the Centre for Economic Development, Transport and the Environment has appealed due to environmental concerns. Keliber has secured landowners approvals and clarified with the environmental authorities to undertake exploration work including drilling in parts of the area. The code numbers for the Rapasaari exploration rights are 8982/1, 9095/1, 9095/2, 9095/3, 9095/6, 9095/7 and 9095/8. The exploration rights in Rapasaari comprise in total approximately 440 hectares. In 2014, Keliber has executed a drilling program to investigate the Rapasaari deposit. A preliminary resource estimate in accordance with the JORC Code 2012 is expected in the fall Production lifetime based on the abovementioned deposits will be evaluated in connection with an upcoming pre-feasibility study of the lithium project, tentatively scheduled for completion around year-end 2014 or early In connection with this, the ore reserve estimates will be confirmed or revised in accordance with the JORC Code 2012 which with effect from 1 December 2014 has a requirement for a completed pre-feasibility study or a feasibility study in order to present an ore reserve estimate; ref. Appendix 2 for further information. Regardless of this, a priority for Keliber going forward is to acquire and/or identify additional deposits and qualify such deposits through drilling, analysis and classification in order to increase the resource base. In Nordic Mining s opinion, the probability for continued success in ongoing and future exploration work is good due to the geological properties of the Ostrobothnia region. Keliber has identified several prosperous areas for exploration Rights related to exploration Keliber holds two exploration rights, Emmes and Jänislampi 1, which have been renewed in The two exploration rights have been renewed for a period of 3 years. For these exploration rights, previous exploration data indicate mineral potential. None of these rights have, however, so far been documented with JORC compliant estimates. On a general note, an exploration right entitles the holder of the right to carry out exploration work on a claim to ascertain the nature and extent of the deposit and, as needed, to use ground outside the claim for roads, power lines and water or other pipelines. 63

64 Rights to exploration granted to Keliber under the previous Finnish Mining Act are, subject to transitional provisions, partly regulated by the general provisions of the previous and partly the current Finnish Mining Act. Rights related to explorations granted to Keliber after the implementation of the current Finnish Mining Act are subject to the general provisions in the current Finnish Mining Act. The legal conditions for exploring and developing are set out in the relevant Finnish Mining Act. Keliber also has other exploration rights in application status, please see list below. As can be seen from the list, the Finnish government s current processing time for applications is relatively high. When an application for exploration right is finally approved, the permit will normally be for 3 5 years, with possibility for extension. In the processing period until an application is approved/granted ordinary exploration work can be executed based on permission from the subject landowners. Keliber has secured landowners permissions for its ongoing exploration work including drilling. Below is an overview of Keliber s mining licence, exploration rights and applications for exploration rights held by Keliber: Name Municipality MR-number Applied Granted Expiry date Mining licences: Länttä Kokkola 7025/1a Exploration rights: Old mining act Emmes Kruunupyy 9137/ Jänislampi 1 Kaustinen 8646/ Outovesi 1 Kaustinen 9030/ Palojärvi* Kaustinen 9036/ Timmerpakka Kaustinen 9059/ Outovesi 2 Kaustinen 9085/ Outovesi 3 Kaustinen 9102/ Miljunäärisaari Kaustinen 9155/ Harijärvi Kaustinen 9155/ Outovesi 4 Kaustinen 9160/ Emmes 2 Kruunupyy 9291/ New mining act Haukkamaa Kokkola ML2011: Pykälikkö Kokkola ML2011: Outovedenneva Kokkola ML2011: Rytilampi Kokkola ML2011: Someroharju Kokkola ML2012: Heikinkangas Kaustinen ML2012: Karhusaari Kaustinen ML2012: Päiväneva Kaustinen ML2012: Acquired exploration rights from GTK: Leviäkangas 1 Kaustinen 8390/ Leviäkangas 2 Kaustinen 9144/ Leviäkangas 3 Kaustinen 9144/ Leviäkangas 4 Kaustinen 9144/ Syväjärvi 1 Kokkola ML2011: Syväjärvi 2* Kokkola 9065/ Syväjärvi 3* Kokkola 9068/ Syväjärvi 4 Kokkola 9143/ Source: Company Information Description of Keliber's lithium project Keliber s lithium project includes plans for building of a new beneficiation and process plant in Kalavesi, 20 km south-west of the Länttä deposit, and adjacent also to other prospective deposits. 64

65 The process plant will consist of a traditional ore dressing plant and a new advanced process plant for direct production of high purity lithium carbonate. The planned capacity is ,000 tonnes per year of spodumene ore, resulting in an annual production of approximately 6,000 tonnes of lithium carbonate. Outotec and GTK Mintec have carried out pilot production and Sweco Group has done engineering, plant design and construction drawings. Further processing studies are ongoing. Keliber has in laboratory pilot production demonstrated ability to produce high purity lithium carbonate (>99.9 per cent grade). The quality of Keliber s products from pilot production is considered to be excellent for advanced battery materials/chemicals in modern lithium batteries which is the largest and fastest growing market segment for lithium carbonate. Marketing and product development in order to prepare the project commercially have high priority. Keliber s mineral deposits and the site for the planned processing plant are located in the Central Ostrobothnia region of Finland close to roads, electricity grid and other infrastructure. The distance to the city of Kokkola with high-quality harbour facilities is around 50 km. Illustration of the planned Keliber processing plant Other project activity Production of alumina from anorthosite Nordic Mining has together with Institute for Energy Technology ( IFE ) developed a new technology for production of alumina. The technology is an innovative solution for production of alumina from alumina-/calcium-rich mineral sources such as anorthosite, with the integrated use and storage of CO 2. Anorthosite is an alumina-rich rock type (approx. 30 per cent) that is present in several large massifs around the world. Anorthosite may therefore potentially be a substantial global source of alumina. The project has been ongoing since 2009 i.a. with financial support from Gassnova SF, and the process has been tested and developed at IFE s laboratory at Kjeller. In 2013, the work focused on optimising the process parameters, and the leaching process was tested in a larger scale reactor at Herøya Industry Park in Porsgrunn. The results from the test showed that the anorthosite could be effectively leached under moderate process conditions. Today s alumina production is mainly based on bauxite through the Bayer process. With the new technology alumina can be produced from alternative sources and in a more environmentally friendly manner. In addition to alumina, precipitated calcium carbonate ( PCC ) and silica may be 65

66 produced as by-products. PCC is a commercial commodity used as filler in paper, plastics and paint. Silica can be used as filler in tyres and plastics, and in the production of cement. The new multi-product process gives potential for almost full utilisation of the mineral resource. Further, the process consumes 500,000 tonnes of CO 2 per million tonne of alumina. This corresponds to the CO 2 emissions from a medium sized oil and gas platform. The CO 2 can either be stored safely and/or utilised as part of a commercial production of PCC. A preliminary techno-economic study by the Norwegian R&D institute Tel-Tek shows that the new technology is economically and technically feasible. Preliminary project financials were calculated for production of approximately 1 million tonne of alumina from anorthosite. The study indicated a positive NPV of NOK 0.6 billion excluding sales of by-products based on a 7.5 per cent discount rate. A scenario with moderate sales of PCC and silica indicated a NPV of around NOK 2.7 billion (same discount rate). Going forward, the focus will be to optimise the process, further test production of alumina and byproducts, and to run the technology in pilot scale. Nordic Mining and IFE are actively seeking additional partners in continuing the project. In March 2014, Nordic Mining and IFE filed a patent application for the new technology for extraction of alumina from alumina/calcium-rich minerals. The new technology is an innovative solution for production of alumina from alternative mineral sources such as anorthosite, with the integrated use and storage of CO 2. The technology may represent a global potential for an improved production of feedstock for aluminium production EM-technology Description of the EM-technology Nordic Mining s technology licence agreement with Rocksource has been a dormant asset in Nordic Mining s portfolio since the de-merger from Rocksource due to limited financial and human resources for further technology development. In the accounts, the technology licence agreement holds no book value following from the continuation principle which was applied in the de-merger. The EM-technology principle has been utilised for decades within the traditional mining industry. The use has primarily been related to data acquisition over larger areas, resulting in superficial source indications derived from resistivity variations. The mining industry is today mainly dependant of drilling of exploration boreholes both for localisation and further definition of the deposit. The next further development of the EM interpretation technology may result in increased use of the technology for precise identification of reservoir based mineral reserves Technology license agreement Rocksource and Nordic Mining entered into a technology license agreement in connection with the de-merger from Rocksource. The technology license agreement grants Nordic Mining a perpetual global license to all EM- and reservoir management technology applied to other resources and materials than hydrocarbons, owned or licensed by Rocksource. The Company shall not pay consideration for the use of the license Development and testing of the EM-technology for onshore environments The EM principle is tested and proven onshore for mining purposes and has been available for several decades. Recent key advances are related to equipment improvements; computer processing related to inversion/migration, and integrated analysis RESEARCH AND DEVELOPMENT The Group has had limited research and development costs in the years 2011, 2012, 2013 and 2014 to the date of this Prospectus. No research and development costs have been capitalised. 66

67 In 2011, investments were related to production equipment in Gudvangen Stein AS and exploration licences etc. in Keliber. In 2012, the main investments are capitalised exploration costs related to drilling at Reinfjord on the Øksfjord Peninsula and on Keliber s licence areas in Finland, as well as production equipment in Gudvangen Stein AS. In 2013 and 2014 to the date of this Prospectus, investments have been limited and mainly related to the Engebø rutile project. The Group has initiated various development projects that have been granted financial support from various governmental institutions i.a. Gassnova and Innovation Norway ( Innovasjon Norge ). No expenditures on these projects have been capitalised in the years 2011 to 2013, or year-to-date In Finland, the Group s associated company Keliber has initiated and participated in projects that have been granted financial support from various governmental institutions i.a. the National Technology Agency of Finland ( TEKES ) PATENTS AND LICENSES The Company holds a perpetual global licence to all EM- and reservoir technology developed by Rocksource ASA applied on other resources and materials than hydrocarbons as further described in section 6.6.7, and the Extraction Rights and Exploration Rights as further described in sections and If and when the Company s mineral rights are ready for extraction and mining, various licences are required related to operation and environment, i.e. waste disposal permits etc. For the Engebø rutile project, the Group is dependant of the approval of the industrial area plan and the permit for waste disposal on terms and conditions which are satisfactory for the Group. The decision process for these permits are ongoing, ref. i.a. section (Political risk), section 2.5 (Planning regulations and Risk of not obtaining discharge permit (waste disposal permit)) and section In the associated company Keliber relevant licences and permits for mining and production are in place related to the Länttä deposit and the Kalavesi processing plant. For the other lithium deposits and prospects environmental permits and extraction permits will be applied for if and when the outlook for economical operation has been satisfactorily investigated. Keliber is dependant of the granting of environmental permits and extraction permits on terms and conditions which are satisfactory to the company in order to start operation from its deposits. Together with IFE, Nordic Mining has filed a patent application for the new technology for extraction of alumina from alumina/calcium-rich minerals. Other than as described in paragraph two above, the Company is not dependent on and holds no other patents or licences, industrial, commercial or financial contracts or new manufacturing processes of which is of material importance for the Company s business. 67

68 7. MARKET OVERVIEW 7.1. RECENT TRENDS AND OUTLOOK IN THE MINING INDUSTRY The mining industry is a global industry, consisting of companies ranging from some of the largest in the world with multiple production sites, to the smaller public and private early stage exploration companies. Companies in the industry explore for, develop projects and produce a wide range of commodities, including precious metals, base metals, and industrial minerals. A key theme among mining companies over the last decade has been the spectacular growth of China. As vast changes are taking place in this global economic power, including growth in urbanisation, development of megacities, infrastructure developments and the shift to become "the world factory". In addition to the Chinese developments, the economic growth seen in India and other emerging economies has had a strong demand impact on many of the commodities produced by the world's miners. However, as GDP growth in these countries are slowing down (albeit from very high levels), the growth in absolute terms is still expected to be strong. Going forward, it is expected that the supply side will be the challenge for the industry. A recurring theme in the last years has been that projected output over the spectrum of commodities has not materialised due to a number of factors, including rising operating and capital costs, ever changing operating regimes, resource nationalism and the difficulties seen in developing the more remote projects. When this is added to the difficulties in obtaining project finance due to the financial and debt crises experienced in , many development and expansion projects have been delayed or abandoned completely. Commodity prices have in general increased over the last decade, although decreases in prices were seen for most commodities in Prices for commodities have also become increasingly volatile, as more financial players have entered the trading market, and larger parts of the industry has adopted spot-oriented pricing, and are taking advantage of a more liquid forward market to hedge their production. PwC expect commodity prices to stabilize in 2014, which will help to shake loose some deals in the industry. Mining companies are often more willing to deals if they feel that the prices are steady was one of the worst years for mining industry mergers and acquisitions (M&A) in nearly a decade. The volume of deals fell to its lowest levels since 2005, while the overall value was at its lowest point since Overall in 2013 there were 1,437 transactions, compared to 1,803 transactions in Both years were down significantly from 2011, when the industry saw 2,605 deals completed. According to PwC, the value off announced M&A activity in 2013 plummeted 35% or about USD 35 billion, compared to USD 110 billion in 2012 (including Glencore-Xstrata USD 54 billion merger), which was a 30% decrease since However, 2011 was the second busiest year for mining M&A activity in history. The lower M&A activity was a reflection of the difficulty mining companies were experiencing in regards to financing future growth, in which buyers were not willing to put up the funds and sellers were reluctant to agree on takeovers at lower valuations 3. PwC do not expect a huge turnaround in M&A activity in 2014, but they do expect activity to pick up. While many of the majors remain sellers of assets, PwC expects more mid-tier companies to be active buyers in Juniors are also expected to become more active with M&A this year. Many juniors will need to decide whether they can continue to survive alone, or will need to sell or merge with another company to stay afloat. They are also starting to see an increase in earn-in type arrangements in the junior sector, which is positive from an exploration perspective and should help increase their valuations going forward. 2 "Down, but not out", Global Mining Deals 2012 Review 2013 Outlook,

69 7.2. THE NORWEGIAN MINING INDUSTRY The Norwegian mining industry has undergone significant changes over the last years. A new Mineral Act was introduced in 2010, and the previous Norwegian Government published a new Mineral Strategy for Norway in March The Government emphasised its ambitions for mineral industry growth in Norway and identified various areas for change and improvement in order to facilitate growth. Norway s geological potential and the possibility to supply mineral products i.a. to other European countries was elaborated. In particular, Norway s potential to supply in accordance with the European Union s Raw Material Initiative was discussed. The Norwegian mining industry is for the most part a regional activity along or near Norway s long coastline. A total 6,226 man-years at 1,169 producing mines or quarries were reported for 2013, mainly related to the aggregates, sand and gravel sector. There are totally registered 865 different mining businesses in Norway in Norway has several mineral resources, including TiO 2, iron, copper, molybdenum, coal, olivine, high purity quartz, graphite and limestone, some of which are not known to be present in the rest of Europe. The Norwegian State, who historically was a major owner and operator in the industry, has reduced its ownership, and only the coal mines at Svalbard are now under direct state ownership. Total sales value of products in the Mining industry amounted to NOK 13 billion in of which 58 per cent, NOK 7.6 billion were exported. The value from production of aggregates has increased significantly, and in the last few years, and also the value of iron ore concentrates has come up, driven by reopening old mines and expansions at existing operations 5. A total of 97 million tonnes mineral raw materials were produced in 2013, almost the same as in The production of some mineral products such as coal, gravel, crushed stone and natural stone increased in Exploration spending has increased over the last years, amounting to NOK 91 million in Companies exploring in Norway are searching for new targets and deposits in areas with existing or past producing mines, and in areas where mineralisations are not yet known. Several international companies are actively exploring in Norway, as the country is seen to have stable framework and low political risk, as well as being under explored and holding good possibilities of new discoveries NORDIC MINING'S PRINCIPAL MARKETS The Group s and the associated company Keliber s principal projects include various products and qualities for natural rutile (TiO 2 ), garnet, high purity quartz and lithium carbonate. The Engebø rutile project may also include aggregates products and various products from tailings from the processed minerals. The Keliber lithium project may in addition to lithium carbonate and spodumene concentrate include tantalum pentoxide, concentrates of quarts and feldspar and crushed rock as by-products. Norway is today the only producer of titanium feedstock (ilmenite) in Western Europe. In Europe as a whole, Ukraine is the second producer. Rutile production from Nordic Mining s Engebø deposit will strengthen Norway s position in the international titanium industry. Significant quantities of rutile are today imported from Australia, South Africa and Western Africa to European pigment producers. Considering the growth of the titanium industry in the Asian markets, a new supply source in Norway is expected to be an attractive option and shift the current trade pattern for European buyers of rutile. The fast-growing demand for titanium feedstock in Asia is likely to take up the volumes today imported into Europe from Australia and Africa. 4 NGU Mineralressurser i Norge NGU Mineralressurser i Norge

70 Keliber will be the first European producer of lithium carbonate, an industry currently dominated by a few significant players, and with a large part of the supply currently coming from deposits in South America and Australia. The outlook for lithium carbonate and its main applications indicate establishment of more integrated supply chains in Europe TITANIUM Titanium feedstock: ilmenite and rutile Titanium dioxide does not occur in nature in its pure form, but is derived from ilmenite or leuxocene ores containing per cent TiO 2. In addition it can be mined from natural rutile reserves. Rutile has in commercial products a typical content of per cent TiO 2. So far, rutile production has been based on sand reserves, but hard rock deposits, including Engebø, are also candidates for the supply chain of the titanium industry. The global rutile production in 2013 was approximately 770,000 tonnes. By way of comparison, the global production of ilmenite in 2013 was around million tonnes. Ilmenite is the most widespread titanium mineral and accounts for approximately 92 per cent of the world s consumption of titanium minerals 7. The vast majority of the world s resources are found in coastal areas of Australia, South Africa, India, Brazil, Madagascar, and USA. The mineral is also found in hard rock deposits in Norway, Canada and Chile. Ilmenite mine production (1,000 tonnes TiO 2 ) Ilmenite e Reserves United States ,000 Australia ,000 Brazil ,000 Canada ,000 China ,000 India ,000 Madagascar ,000 Mozambique ,000 Norway ,000 South Africa 1,110 1,100 1,100 63,000 Sri Lanka N/A Ukraine ,900 Vietnam ,600 Other countries ,000 World total 6,100 6,500 6, ,000 Source: United States Geological Survey (USGS): Mineral Commodity Summaries 2013 and In contrast to ilmenite, the vast majority of the world resources of rutile are more restricted with production concentrated in Australia, South Africa and Sierra Leone. Today, Ukraine is the only European country with rutile production. Rutile mine production (1,000 tonnes TiO 2 ) Rutile e Reserves United States Included in ilmenite Included in ilmenite Included in ilmenite Included in ilmenite Australia ,000 Brazil ,200 7 Source: United States Geological Survey (USGS): Mineral Commodity Summaries 2013,

71 India ,400 Mozambique Sierra Leone ,800 South Africa ,300 Ukraine ,500 Other countries World total ,000 Annual average prices (USD per tonne) TiO 2 feedstock Origin Rutile Australia ,055 2,400 1,600 Ilmenite Australia Source: Mining Engineering June 2013, and company estimates Ilmenite and rutile are usually extracted together from sand deposits. For many sand deposit operations, by-product minerals such as monazite and zircon play a significant role economically when it comes to developing a deposit. Suction dredging is used where possible, although wet mining is also used to mine ore reserves located below the water table. Upon wet mining dredging material is transferred to a wet plant from where it is screened and then concentrated using spiral. In ilmenite hard rock deposits the ore has to be mined and crushed and the ilmenite has to be separated out. The separation process is expensive which implies that ore grade requirements should be high. Some deposits are mined mainly for their zircon and rutile contents, notably deposits at the east coast of Australia. In these cases ilmenite is separated from the other minerals at the concentration stage using wet high intensity magnetic separation. The ilmenite may then be returned to the tailings, stockpiled at the mine site or sold for low value applications such as sandblasting. Because of the limited resources of naturally occurring rutile, the mining industry has developed two beneficial products that are used as substitutes for natural rutile: synthetic rutile and titanium slag. Both products are produced by upgrading ilmenite by removing iron oxide and other impurities. As Norway and Ukraine are the only titanium feedstock producers in Europe, there are large quantities of ilmenite and rutile being imported to European pigment producers from suppliers in South and Western Africa and Australia. Hence new supply sources of titanium feedstock in Western Europe will likely replace some of these imports. According to the Australian consultancy company TZMI, 2013 was marked by oversupply of titanium feedstock and depressed pricing due to weak and sluggish conditions throughout the value chain and a slowing global economy. The pricing pressure in the downstream pigment industry and high product inventory levels resulted in lower profitability of TiO 2 producers. This, in turn, resulted in lower demand for feedstocks. At the time of this Prospectus, and according to the Industrial Minerals magazine, the f.o.b. price for bulk rutile ex. Australia is around USD 1,000 per tonne. Going forward, the supply/demand balance is expected to tighten and the long-term prices are expected to increase Process routes Chloride and Sulphate The titanium feedstock is upgraded through two main processing routes, the sulphate and the chloride processes. The first uses sulphuric acid as extraction agent, the second uses chloride. One factor that has led to the increase in capacity to upgrade ilmenite into beneficiated slag or synthetic rutile is the trend in the TiO 2 pigment industry towards greater chloride route capacity, which requires higher quality feedstock. 71

72 In TiO 2 production, the chloride process is favoured for two main reasons; firstly, TiCl 4, the intermediate product, is easily purified and oxidised to a superior pigment and chlorine; secondly, it is easier to produce exact TiO 2 particle distributions. In this process higher quality feedstock is required to minimise chlorine consumption and to prevent operational difficulties, which generally is not tolerant of high impurity levels. In the sulphate route, the production of TiO 2 pigment, ilmenite and titanium slag are directly reacted with sulphuric acid to produce titanium sulphate and iron sulphate. The titanium sulphate is subject to selective thermal hydrolysis to produce hydrated TiO 2. This is further washed and caleaned to produce titanium pigments. Comparing the two routes and considering the trend to move to the chloride processes, one factor is lower associated costs. Industry experts also emphasise that the chloride route TiO 2 pigment has better properties for the premium grade coatings. These properties are colour brightness, covering ability, durability and gloss. This is the major factor behind the decline in sulphate pigment use and the trend away from the consumption of sulphate grade ores. These are mostly low-grade primary ilmenites and slags made from high alkali/high iron content ilmenites. The chlorination reactors for rutile, synthetic rutile, slag and ilmenite are similar, but the higher volume of chlorine required for ilmenite reduces capacity. For high grade ores the process is more efficient and simple. DuPont, the world leader in the pigment industry, uses blends of the various raw materials and decides the blend based on price of raw materials including ore, coke, chlorine and waste processing. Requirement for secondary ilmenite among pigment producers for both synthetic rutile as well as chlorination grade ilmenite has led to increasingly strong demand for the minerals. Escalating costs of chloride and waste processing have also been drivers for producers to use higher-grade ores. Producers have responded by expanding slag capacity to maximise profits from valuable iron coproduct and use of higher-grade content ilmenite. Titanium feedstock processing route Mining Hard rock Sand deposits Processing Wet or dry concentration Key products exmine Ilmenite Leucoxene Rutile Zircon Key upgraded titanium products Titanium slag Synthetic rutile High purity pig iron Chloride TiO2 process Pigment production process Sulphate TiO2 process Titanium Tetrachloride Final products White pigment Titanium sponge Titanium metal End-uses Foundries Paints, plastics and paper Aeorospace Welding Various Source: Iluka Mineral Sands Technical Information, Iluka Resources, November 2012 and Nordic Mining 72

73 Trend for higher-grade feedstock due to environmental benefits Pigment production based on rutile has less environmental challenges than pigment production based on ilmenite. The chloride process, using a rutile feed, generates about 0.2 tonne of waste per tonne of TiO 2 product. For the sulphate process, using ilmenite the waste volume is 3.5 tonnes, and for synthetic rutile using ilmenite the waste volume is 0.7 tonne. Direct chlorination of ilmenite generates 1.2 tonnes of waste per tonne of TiO The TiO 2 value chain The dominant application of titanium dioxide is as feedstock for pigment manufacturing, and titanium dioxide is the most widely used white pigment. Approximately 90 per cent of the titanium dioxide is supplied into the pigment industry with a sales value of approximately USD 10 billion for a volume of 5 million tonnes (assuming average sales price of USD 2,000 per tonne). The remaining 10 per cent go to welding products and into the making of titanium metals. Radioactive elements, i.a. uranium and thorium are of particular concern for the downstream titanium industries due to end-use product quality and health issues as well as the significant cost of waste handling. Different to many other sources of titanium feedstock the Engebø rutile is very low on radioactive elements. Titanium feedstock end markets 6% 4% 25% 9% 56% Pigments paint Pigments plastics Pigments paper Welding Titanium sponge Source: Iluka Resources, November 2012 Some 56 per cent of the pigment becomes part of the raw materials for manufacturing of paint and coating. This supply is worth around USD 30 billion. In the pigment part of the chain the concentration of production has been high for a long time. The top five pigment producers supplied about 84 per cent of the market in 2010, compared to just below 70 per cent in , and the share has remained on a high level over the last years. The distribution of TiO 2 feedstock demand is expected to have changed only moderately in recent years. The largest rutile producers dominate the market. The current leading rutile producers take up the vast majority of the rutile production output of around 700,000 tonnes per annum. 8 Iluka Resources, November 2012, 73

74 TiO 2 per capita (kg) PROSPECTUS NORDIC MINING ASA Titanium feedstock top producers 4% 9% 23% 42% Iluka Sierra Rutile RBM Vilnogorsk Others Captive Supply 11% 11% Source: Iluka Resources, November TiO 2 market trend The conditions of the global economy are a key driver for the TiO 2 industry. Growth in GDP usually leads to higher TiO 2 demand and vice versa. According to the UK consultant Artikol, the global demand growth for TiO 2 is estimated to average 2.7 per cent per year up to The majority of the growth will be driven by China which is estimated to grow at 5 per cent per year. Chloridebased pigment for the automotive industry is one of the key drivers for the Chinese demand growth. 9 Stronger growth is also expected in Russia, India and Eastern Europe. Demand for rutile is expected to have a higher growth than the average TiO 2 growth rate due to the favourable characteristics and properties in downstream processing (e.g. pigments, titanium metal and welding rods). There is a clear correlation between economic welfare and consumption of titanium feedstock, as illustrated on the graph below. Titanium consumption per capita vs. GDP per capita Germany US Poland UK Japan China Brazil India Russia GDP per capita (USD 1000) Source: DuPont Market Analysis 2012, Titanium metal applications Titanium metal, with its physical and chemical properties, represents a material for new technological and environmental innovative applications. Titanium metal is the best corrosion resistant metal available; it has double strength of steel and has significantly lower weight. Areas 9 ICIS news: 74

75 of usage are e.g. aerospace, defence, automobile, construction, offshore, healthcare, chemical industry, power and sporting goods. The production volume of titanium metal is significantly lower than the volume of pigment. The metal production has however high value and strong growth expectations. The major consumption areas are the USA, Europe, China, Japan and Russia, whilst the dominant producer countries are China, Kazakhstan, Japan, Ukraine, Russia and the USA Price development of rutile titanium feedstock The demand for titanium feedstock is increasing. Supply tightened sharply in resulting in a substantial increase in prices. Since that, prices have come down due to reduction of stocks and normalisation of supply/demand parameters. The long-term supply/demand market balance for TiO 2 is expected to remain favourable for producers, particularly within the rutile segment where high grade TiO 2 feedstock is required for the chloride pigment process and for premium titanium metal and welding products Competitiveness There are two significant aspects of the titanium feedstock market that indicates a competitive strength for the Engebø project: First of all in terms of global supply vs. demand there is a significant deficit in European supply of feedstock, leaving the European pigment industry very dependant of overseas imports from suppliers in South Africa, West Africa, Canada and Australia. Secondly, the supply outlook for rutile, representing the high-end feedstocks is uncertain as most new feedstock projects are based on ilmenite and only bring marginal new volumes of rutile to the market. Further, rutile is a unique feedstock to certain speciality segments like welding rods and titanium metal. Lastly, the Engebø project has an inherent competitive advantage versus the European pigment industry, in its capability to supply small tailor-made shipments on a plant to plant basis, thus improving flexibility, supply security and working capital for its customers. A competitive threat would potentially be represented by new upgrading technologies for ilmenite that could significantly reduce the cost for producing high grade feedstock. Based on the Australian consulting group TZMI s indicative revenue-to-cash cost curve developed in 2011 with forward looking estimates for 2015, the Group s internal cost data indicates a position better than the average for TiO 2 -producers. Consequently, the projections indicate a competitive position for the Engebø operation GARNET The world production of industrial garnet was 1,700,000 tonnes in The major garnet producing nations are Australia, India, China and USA 10. The price range of industrial garnet is based on the application, quality, quantity purchased, source, and type. There is no exchange or market price available and the price and terms are not published except for indications outlined in some trade journals. Market price ranges from USD per tonne, dependant on quality and application. Certain product qualities are also sold at significantly higher prices, however, the sales volumes for such products are limited. 10 Company/Industrial partner 75

76 World garnet production and garnet price ,500 1, Production in 1000 tonnes (rhs) Price per ton USD (lhs) Source: United States Geological Survey (USGS): Mineral Commodity Summaries 2011, The majority of industrial garnet is used as a loose-grain abrasive because of its hardness, which ranges from 6.0 to on the Mohs mineral hardness scale, where 1 (talc) is the least hard and 10 (diamond) is the most hard mineral. Lower-quality industrial garnet is used as a filtration medium in water-purification systems because it is relatively inert and resists chemical degradation. High-quality, high-value garnet grain principally has been used for such applications as optical lens grinding and plate-glass grinding for more than a century; industrial diamond and fused aluminium oxide are competitors. In recent years, industrial garnet powders have been used for high-quality, scratch-free lapping of semiconductor materials and other metals. Other industrial applications include the manufacture of coated abrasives; hydrocutting; and the finishing of wood, leather, hard rubber, felt, and plastics. Garnet is replacing silica sand in the blast cleaning market. This market displacement is happening because of the health risks associated with the inhalation of airborne crystalline silica dust having curtailed its use in blasting (Source: Harris, 2000). Worldwide end uses and their estimated market shares were in 2013; waterjet cutting 35 per cent, abrasive blasting media 30 per cent, water filtration 20 per cent, abrasive powdwers 10 per cent and other end uses 5 per cent (unchanged from 2012) 12. Markets for waterjet cutting and blasting media are expected to exhibit the highest growth. Waterjet is considered unparalleled technology in many respects; not only for its precision, but also for its environmentally friendly characteristics. Waterjets can perform tasks with a simple mixture of water and abrasive materials such as high quality garnet, replacing harmful chemicals that were used in the past. Waterjet technology is on the rise in many engineering fields and holds many advantages over existing technology. The new waterjet machines have six-axis capability able to precisely sculpt three-dimensional objects, a vast improvement over previously available machines which operated in only two-dimensions. Garnet properties as industrial mineral: Garnet has no free silica and hence does not cause dust and silicosis in its industrial applications unlike silica sand or quartzite. 11 A scale of mineral hardness characterizes the scratch resistance of various minerals through the ability of a harder material to scratch a softer material 12 United States Geological Survey (USGS): Mineral Commodity Summaries 2014, 76

77 Garnet is non-toxic, inert and hence environment (eco) friendly. Garnet's grain hardness / toughness improve efficiency in blasting and reduce the breakdown percentage on impact. About 65 per cent of garnet used for abrasive applications (not waterjet cutting) can be recovered and recycled. Almandine garnet has a high destiny specific gravity of , giving this mineral a 3 to 4 times higher impact than quartz grains of the same size. Garnet is well suited for abrasive blasting / surface cleaning in fields like shipyards, petrochemical industry, building industry, non-ferrous surfaces etc. Competitiveness The garnet market is very competitive. There is a wide variety of different qualities; hence the competitive edge for the individual suppliers to a large extent is a combination of actual product quality and supply and market performance. To increase profitability and remain competitive with foreign imported material, production may be restricted to only high-grade garnet ores or other saleable mineral products that occur with garnet. The distribution and sales pattern for garnet is highly diverse, hence there are several possibilities to develop unique market and distribution strategies in order to build a market position HIGH PURITY QUARTZ High Purity Quartz ("HPQ") is defined as quartz products with exceptional purity with a SiO 2 content of more than per cent. This equals less than 100 ppm of total impurities such as alkalis, iron and heavy metals that can affect the performance of the final product. The HPQ market is a highly specialised market for the ultrapure end member of the world quartz market. The market can be divided into two main groups of products quartz fillers to make epoxy moldings compounds ("EMC"), and high purity quartz sand used for e.g. crucibles, lamp tubing and special glass. The table below shows the purity level, approximate market size and indicative price level for the different quartz market segments with increasing purity 14. Type or application SiO 2 (minimum %) Other elements (maximum %) Other elements (maximum ppm) Market size (m tap) Typical price (USD/ton) Clear glass- grade sand ,000 >70 30 Semiconductor filler, LCD and , optical glass Low grade high purity quartz Medium grade high purity quartz High grade high purity quartz <0.1 ~5,000 Source: Industrial Minerals EMC s are used as an encapsulating layer around the finished silicon chip to protect it from light, heat humidity, dust and physical shock. The filler is of lower quality than the sand products and have smaller grain size; 5-10 micron. A number of companies are active in this market segment. Quartz products from India and Sri-Lanka are exported to Japan and South Korea for further processing into filler products. Major players in this market are Tatsumori Ltd in Japan and Korea Semiconductor Material Co. Ltd ( Kosem ). 13 Specific gravity (sp.gr) is the ratio of the density of a substance to the density (mass of the same unit volume) of a reference substance. 14 Industrial Minerals Magazine, January 2012, pages

78 The high purity quartz sand products are coarser grained; micron, and of higher purity than EMC fillers. These products are more dependent on the purity of the natural resources they are derived from. The market is dominated by the Sibelco subsidiary Unimin Corporation ( Unimin ) which is mining and processing HPQ products from the Spruce Pine deposit in North Carolina, USA. The products from Unimin under the IOTA brand have in many ways set a global informal standard for HPQ products. The Quartz Corp. is a competing company to Unimin that is also mining and processing quartz from the Spruce Pine deposit. The Quartz Corp. is a joint venture between the French group Imerys and Norwegian Crystallites. The market for the most high grade HPQ products, equalling Unimin s Iota quality quartz products is approximately 100,000 tonnes per year. This market is largely driven by technology development and the developing green technologies. The figure below shows the market share for the different industry sectors for HPQ 15. Market share for industry sectors Microelectronics Optics Lamptubing Crucibles Semiconductors, Base materials The price level for different HPQ products depend on the level of impurities in the final product and is ranging from standard products with some 100 ppm impurities to extreme purity products of % SiO 2 equalling less than 8 ppm impurities. Prices for IOTA quality quartz range from approximately 5 USD/kg to 14 USD/kg for the best quality products. 15 Dorfner Anzaplan presentation: Advanced Quartz Qualities Markets and Applications, Silica Arabia Conference: Jeddah, Saudi Arabia, March

79 Driven by a booming photovoltaic ("PV") industry China has been the fastest growing market in the crucible sector for the last five years (Crucible Grade quartz with % SiO 2 ). 16 Processing of the quartz from Nordic Mining s quartz deposit in Kvinnherad shows that the quartz can be processed into HPQ products equalling the best products on the market which is the IOTA grade material LITHIUM Lithium ("Li") is a chemical element. It is a soft alkali metal with a silver-white colour, the lightest metal with the least dense solid element, highly reactive, corroding quickly in moist air to form a black tarnish, and it has a high electrochemical potential. Lithium does not occur free in nature. It is found combined in different amounts in igneous minerals and salts including various types of rocks, brine lakes and sea water. Important minerals containing lithium are lepidolite, spodumene, petalite and amblygonite. On a commercial scale, lithium is extracted from brine lakes and mineral deposits. The lithium markets can be divided between lithium chemicals, sourced from brines or minerals, and lithium minerals (concentrates) consumed directly in various industrial applications. Lithium chemicals, which comprise a broad variety of different chemicals, account for approximately 80 per cent of the total lithium consumption. Lithium carbonate represents approximately 40 per cent of the total global consumption of lithium chemicals. Below is a principal illustration of the main lithium sources and application areas: Lithium Rich Mineral (Spodumena) Lithium Rich Brine (Salar) Lithium Mineral Concentrate Lithium Brine Concentrate Direct sales Chemical Conversion Plants Lithium Chemicals Chemical Extraction Plants Technical Market Chemical Market Glass Fibreglass Batteries Lubricants Ceramics Continuous Casting Glass-Ceramics Other Pharmaceuticals Aluminium Refigeration Other Source: Talison Lithium Limited, 2009, 16 Dorfner Anzaplan

80 Lithium derivatives Lithium carbonate ("Li 2 CO 3 ") is a fine white powder (1 tonne of lithium carbonate = 188 kg lithium metal) used inter alia in; Fuel cells, electricity cogeneration Glass industry, optics, screens, container glasses Enamels, iron coating Heat-resistant glass and ceramics, telescope mirrors, kitchen glass Aluminium production Construction, concrete Lithium hydroxide ("LiOH.H 2 O") has its main applications within; High performance greases, lubricating greases Lithium chloride ("LiCl") Welding fluxes, aluminium heat exchangers Butyllithium ("C 4 H 9 Li") is used for inter alia; Rubber and plastics market, tire industry, pharmaceuticals The neurological effect of the lithium ion Li+ makes some lithium salts useful as a class of mood stabilizing drugs Lithium demand and price development Demand level for lithium was close to 80,000 tonnes lithium carbonate equivalent ("LCE") in In 2008, the estimated consumption peaked at around 113,000 tonnes LCE (Roskill estimate). In 2009, lithium consumption decreased due to the global financial crisis. Demand picked up in 2010 and is expected to experience a growth well above average GDP-growth the coming years according to industry estimates. Worldwide lithium production increased in 2012, and slightly more in Production of one major lithium producer in Chile increased through the first half of 2013, while the other major Chilean producer reduced output owing to increased lithium production from other countries. Industry analysts and the major lithium producers expected worldwide consumption of lithium in 2013 to be between approximately 30,000 tonnes, an increase by 6 per cent from that of Many emerging companies continued exploring for lithium on claims worldwide 17. Lithium mine production (tonnes) Rutile e Reserves United States Withheld Withheld Withheld 38,000 Argentina 2,950 2,700 3, ,000 Australia 12,500 12,800 13,000 1,000,000 Brazil ,000 China 12,900 13,200 13,500 7,500,000 Chile 4,140 4,500 4,000 3,500,000 Portugal ,000 Zimbawe 470 1,060 1,100 23,000 World total 34,100 35,000 35,000 13,000,000 Source: United States Geological Survey (USGS): Mineral Commodity Summaries 2013 and 2014, United States Geological Survey (USGS): Mineral Commodity Summaries 2013, 80

81 Over the last years, the largest growth application area has been rechargeable batteries which have had an estimated compounded annual demand growth of more than 20 per cent. Growth in the use of lithium ion batteries has been driven by the rapid expansion in the portable consumer electronics sector. Nearly all mobile phones and over 90 per cent of laptop computers have incorporated lithium-based rechargeable batteries. Lithium-based batteries have higher energy density and lighter weight than nickel-cadmium and nickel-metal hydride products. The prices were stable until 2004/2005 when demand growth resulted in price increases for prices of lithium carbonate and other lithium derivatives. Prices stabilised to a large extent in Mid- 2012, information from the Industrial Minerals magazine indicates a general price level around USD 6.50 per kg lithium carbonate of standard quality. In 2013, lithium prices on average remained flat owning to the balanced increase in worldwide lithium consumption and supply. There is no official exchange or market price for lithium carbonate products. Prices are set in negotiations between producers/sellers and customers. Prices vary according to i.a. product quality (mainly depending on lithium purity and/or types of impurities in the product) and duration of contract period. Lithium carbonate used for battery chemicals/materials is generally of high purity and with strict specifications regarding impurities that can possibly harm electrochemical properties in battery applications. Roskill Information Services ( Roskill ) is one of the world's leading providers of information on international metals and minerals markets incl. lithium products. Also Industrial Minerals magazine provides information of lithium carbonate based on market information/observation. Battery grade lithium carbonate (>99.5%) is informed to trade with a price premium compared with average/standard qualities. There is no official source of market information for special battery grade lithium carbonate. According to information, high purity battery grade lithium carbonate trades with a premium in the range of USD 3 10 per kg compared with standard quality/grade. Lithium Carbonate supply The main producing countries of lithium chemicals and minerals are Chile, USA, Argentina, China, Australia and Russia. Chile and Australia account for nearly two-thirds of world output. There is no current production of lithium carbonate in any Nordic or European countries. In the future, China might develop a stronger supply position. Large producers of lithium chemicals (Roskill s estimated market shares in brackets); SQM, listed (40 per cent) Chemetall/Rockwood, listed (33 per cent) FMC Lithium, listed (21 per cent) CITIC, state owned, and other Chinese producers (6 per cent) Competitiveness Keliber plans to be the first producer of lithium carbonate in Europe. The product quality demonstrated in pilot production shows a high-purity product (Li-grade >99.9 per cent). Keliber s production process and current cost assessments indicate that Keliber will be a competitive producer of high-grade lithium carbonate. Ultra-pure products i.a. for advanced battery applications are gaining price premiums compared to standard qualities, and Keliber is expected to develop a good position in the market for high quality products. 81

82 8. FINANCIAL INFORMATION The Company's financial reports are available at the Company s website, and at under the ticker NOM SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the EU. The IFRS principles have been applied consistently for 2014 year-to-date, 2013, 2012 and 2011, except for the implementation of IAS 19R Employee Benefits. IAS 19R was implemented with retrospective application on 1 January 2013, and as a result of this, the 2012 financial statements were restated. For further information, please see note 2 to the financial statements in the 2013 annual report. The annual reports for 2013, 2012 and 2011 have been audited by Ernst & Young AS, Nordic Mining s statutory auditor. The interim reports for the three and six months periods ended 30 June 2014 and 2013, respectively have been prepared in accordance with IAS 34. The interim reports are unaudited. Please use the following link to see the Company s significant accounting policies: /Nordic%20Mining_Annual%20Report_2013.pdf 8.2. HISTORICAL CONSOLIDATED FINANCIAL INFORMATION The following table s present data extracted from selected financial information for the Company as of, and for each of the three years ended 31 December 2013, 2012 and 2011, and for the unaudited three and six months periods ended 30 June 2014 and 2013, respectively. All figures in the tables are in NOK thousand Pro forma financial information In June 2013, Nordic Mining entered into a share sales agreement for Gudvangen Stein AS with Nannok Invest AS and Bjørkehagen AS comprising of 100 per cent of the shares of Gudvangen Stein AS. The purchasers did not pay any consideration for the shares in Gudvangen Stein AS. Nordic Mining was through the transaction released from corporate guarantees related to Gudvangen Stein AS's bank and leasing obligations at a total amount of NOK 5.7 million. Gudvangen Stein AS is presented as discontinued operations in the audited 2013 annual report and in the unaudited report for the 3 and 6 months period ended 30 June The divestment of Gudvangen Stein AS reduced Nordic Mining s financial liabilities and downside risk. The Group's revenues from sales were related to Gudvangen Stein AS. The requirement for pro forma financial information for the divestment is satisfied through the presentation of Gudvangen Stein AS as discontinued operations in accordance with IFRS 5. Please see section in this Prospectus for an overview of the other discontinued operations Information incorporated by reference The information incorporated by reference in this Prospectus shall be read in connection with the cross-reference list set out in section 20.1 where direct links to the audited annual reports for each of the three years ended 31 December 2013, 2012 and 2011, and for the unaudited three and six months periods ended 30 June 2014 and 2013, respectively, can be found. 82

83 Condensed consolidated income statements The following table summarises the audited consolidated income statements for the Group for the periods ended 31 December 2013, 2012 and 2011, and the unaudited income statements for the three and six months periods ended 30 June 2014 and Q Q Restated Restated 2 (NOK thousands) Unaudited Unaudited Unaudited Unaudited Sales ,342 Other income , Cost of sales (6,577) Payroll and related costs (6,342) (3,997) (7,915) (6,456) (9,725) (11,845) (12,679) DD&A (13) (2,931) Other operating expenses (1,847) (2,171) (3,095) 3,826 (8,998) (13,886) (28,154) Operating profit/(loss) (8,189) (6,168) (11,010) (10,282) (18,698) (24,724) (24,736) Share of result of an associate (1,868) (682) (3,049) (1,334) (2,972) (702) - Impairment of investment in associate (6,523) - - Financial income Financial costs (6) (4) (11) (10) (11) (244) (1,875) Loss from continuing operations before tax (10,045) (6,851) (14,013) (11,616) (28,090) (25,238) (26,158) Income tax Loss from continuing operations (10,045) (6,851) (14,013) (11,616) (28,090) (25,206) (26,158) Loss from discontinued operations - (2,900) - (4,298) (4,298) (11,334) (2,486) Loss for the period (10,045) (9,751) (14,013) (15,914) (32,388) (36,540) (28,644) Profit/(loss) attributable to Equity holders of parent (10,045) (9,751) (14,013) (15,914) (32,388) (35,404) (27,841) Non-controlling interest (1,136) (803) Earnings per share attributable to ordinary shareholders (Amounts in NOK) Basic and diluted earnings per share (0.04) (0.03) (0.05) (0.06) (0.14) (0.14) (0.18) for continuing operations Basic and diluted earnings per shares - (0.01) - (0.02) (0.02) (0.06) (0.01) for discontinued operations Basic and diluted earnings per share (0.04) (0.05) (0.05) (0.08) (0,16) (0.19) (0.19) 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R ) 2) Restated for discontinued presentation of Keliber Source: NOM Q interim financial report and annual reports 2013, 2012 and

84 Condensed consolidated statements of financial position The following table summarises the audited consolidated statements of financial position for the Nordic Mining Group as of 31 December 2013, 2012 and 2011, and the unaudited statements of financial position for the six months periods ended 30 June 2014 and (NOK thousands) ASSETS Non-current assets Unaudited Unaudited 2013 Audited Restated 1 Restated 2 Goodwill ,206 Licences 6,611 6,293 6,451 6,136 7,110 Minerals, property, plant and equipment ,813 64,904 Investment in associate 13,892 23,788 16,951 23,450 - Other long-term assets Pension assets Total non-current assets 20,503 30,155 23,402 44,643 79,692 Current Assets Inventory ,806 3,163 Trade and other receivables 1, ,119 5,431 5,970 Cash and cash equivalents 6,854 3,104 15,495 6,164 3,340 Total current assets 8,121 4,077 16,614 14,401 12,473 Total assets 28,624 34,232 40,016 59,044 92,165 SHAREHOLDERS' EQUITY & LIABILITIES Shareholders' equity Share capital 28,050 20,050 28,050 18,547 14,547 Share premium 227, , , , ,416 Other paid-in capital 12,858 8,893 8,893 8,856 7,033 Retained losses (244,647) (214,159) (230,634) (198,246) (161,567) Translation adjustment 2,867 2,291 2, (600) Equity attributable to ordinary shareholders 26,273 30,102 36,331 36,597 36,829 Non-controlling interest ,314 Total equity 26,273 30,102 36,331 36,597 45,143 Non-current liabilities Interest-bearing loan ,417 7,421 Deferred tax ,686 Lease obligations ,522 6,085 Other liabilities ,728 Total non-current liabilities ,448 31,920 Current liabilities Current portion of long-term debt ,334 3,554 Trade Payables 1, ,568 5,168 4,509 Other current liabilities 1,242 3,481 2,065 3,497 7,039 Total current liabilities 2,270 4,130 3,633 11,999 15,102 Total liabilities 2,351 4,130 3,685 22,447 47,022 Total shareholders' equity and liabilities 28,624 34,232 40,016 59,044 92,165 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R ) 2) Restated for discontinued presentation of Keliber Source: NOM Q and Q interim financial reports and annual reports 2013, 2012 and

85 The goodwill in the consolidated balance sheets for the year ended 31 December 2011 was related to the acquisition of Keliber in As from October 2012, Keliber is an associated company in the Group Statements of changes in equity The table below shows the audited statements of changes in equity as of 31 December 2013, 2012 and (NOK thousands) Share capital Attributed to equity holders of the parent Share premium Otherpaid-in capital Other comprehe nsive income Accumulate d losses Total Noncontrolling interest Total equity Equity 1 January , ,337 7,033 (408) (133,649) 38,860 7,526 46,386 Total comprehensive (192) (27,841) (28,033) (857) (28,890) income for the period Conversion of debt (78) (78) 1,631 1,553 Sale of shares Share issue 2,000 27, ,000-29,000 Transaction costs - (2,921) (2,921) - (2,921) Equity 31 December , ,416 7,033 (600) (161,568) 36,828 8,315 45,143 Equity 1 January , ,416 7,033 (600) (161,568) 36,828 8,315 45,143 Equity 1 January , ,416 7,033 (600) (162,842) 35,554 8,315 43,869 restated 1 Total comprehensive ,219 (35,404) (34,185) (911) (35,096) income for the period Share based payment - - 1, ,823-1,823 Shares to non-controlling Loss of control in (7,479) (7,479) subsidiary Share issue 4,000 32, ,000-36,000 Transaction costs - (2,595) (2,595) - (2,595) Equity 31 December , ,821 8, (198,246) 36,597-36,597 Equity 1 January , ,821 8, (198,246) 36,597-36,597 Total comprehensive ,257 (32,388) (30,131) - (30,131) income for the period Share based payment Share issue 9,503 25, ,523-34,523 Transaction costs - (4,695) (4,695) - (4,695) Equity 31 December , ,145 8,893 2,876 (230,634) 36,331-36,331 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R ) Source: Annual reports 2013, 2012 and 2011 The table below shows the unaudited statements of changes in equity as of 30 June 2014 and 2013, respectively. (NOK thousands) Share capital Attributed to equity holders of the parent (unaudited) Share premium Other-paidin capital Other comprehensiv e income Accumulate d losses Total Noncontrolling interest Total equity Equity 1 January , ,145 8,893 2,877 (230,634) 36,331-36,331 Total comprehensive income for the period (10) (14,013) (14,023) - 14,023 85

86 Share based payment - - 3, ,965-3,965 Share issue Transaction costs Equity 30 June , ,145 12,858 2,867 (244,647) 26,273-26,273 Source: NOM Q interim financial report (NOK thousands) Share capital Attributed to equity holders of the parent (unaudited) Share premium Other-paidin capital Other comprehensiv e income Accumulate d losses Total Noncontrolling interest Total equity Equity 1 January , ,821 8, (198,246) 36,597-36,597 Total comprehensive ,672 (15,914) (14,242) - (14,242) income for the period Share based payment Share issue 1, ,523-10,523 Transaction costs - (2,813) (2,813) - (2,813) Equity 30 June , ,028 8,893 2,291 (214,160) 30,102-30,102 Source: NOM Q interim financial report Condensed consolidated cash flow statements The following table shows the audited consolidated cash flow statements for the Group for the periods ended 31 December 2013, 2012 and 2011, and the unaudited cash flow statements for the six months periods ended 30 June 2014 and (NOK thousands) Q Unaudited Q Unaudited Unaudited Unaudited Restated 1 Restated 2 Net cash used in operating activities (3,052) (3,743) (8,481) (8,853) (19,360) (20,598) (23,986) Purchases of property, plant and (296) (296) (668) (1,768) equipment Purchases of intangible assets (80) (79) (160) (158) (315) (2,776) (854) Other (21) 15 Net cash used in investing activities (80) (79) (160) (454) (146) (3,465) (2,607) Share issuance - 3,587-7,709 29,827 33,405 26,079 Payments of loans - (250) - (500) (415) (1,000) (916) Payment of contingent liability (3,023) - Principal payments on finance leases Net cash from financing activities Net change in cash and cash equivalents Effect of changes in foreign exchange rates Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period - (387) - (962) (575) (2,477) (2,411) - 2,950-6,247 28,837 26,905 22,752 (3,132) (872) (8,641) (3,060) 9,331 2,842 (3,841) (18) 116 9,986 3,976 15,495 6,164 6,164 3,340 7,065 6,854 3,104 6,854 3,104 15,495 6,164 3,340 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R ) 2) Restated for discontinued presentation of Keliber Source: NOM Q interim financial report and annual reports 2013, 2012 and

87 8.3. SEGMENT INFORMATION As per the date of this Prospectus the Group s two reportable segments are: Titanium feedstock which can be produced by Nordic Rutile from the mineral deposit at Engebø; the Ministry of Local Government and Modernisation considers the industrial area plan for the project and the Ministry of Climate and Environment considers the application for waste disposal. Quartz which can be produced from the quartz deposit in Kvinnherad. A scoping study executed in 2012 outlines the potential for a profitable industrial quartz project. As a result of the divestment of Gudvangen Stein AS in June 2013, Anorthosite is no longer a reportable segment in the Group. Further and following from the reduced shareholding and loss of control in Keliber Oy in 2012, the investment in Keliber Oy is classified as an investment in an associate, and Lithium is no longer a reportable segment in the Group. The reconciling column Adjustments and eliminations includes the Group s administration costs and other unallocated corporate business development costs as well as elimination entries related to preparing consolidated financial statements. The Group uses the segments profit/loss before tax as the basis for the segment results including some allocations of corporate expenses but excluding purchase price allocations related to business combinations. All the numbers in the table below are unaudited and presented in NOK thousands for the periods 1 January 30 June 2014 and 2013, respectively, and for the periods 1 January 31 December 2013, 2012 and 2011, respectively. Revenues Segment results Year Q2 14 Q Q2 14 Q Anorthosite N/A N/A N/A N/A 25,342 N/A N/A N/A N/A Titanium ,064-2,837-6,809-9,534-8,918 Quartz , Adjustments ,779-8,405-20,917-13,895-9,412 and eliminations Consolidated ,342-14,013-11,616-28,090-25,238-26,158 The table below provides an overview of the historical geographical sales split for 2012 and In 2013, the Group had no sales revenue. All numbers in NOK thousand. Country Norway - - 5,591 23% 6,010 24% Germany - - 4,029 16% 8,355 33% Sweden - - 2,233 9% 2,576 10% Netherlands - - 1,772 7% 1,686 7% Lithuania - - 2,964 12% 2,186 9% Denmark - - 3,503 14% 3,207 13% Poland - - 4,349 18% 1,321 5% Malta % - - Total , % 25, % All sales income for the years 2012 and 2011 was related to Gudvangen Stein AS which was divested in June For information about the markets in which Nordic Mining operates, please see section MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless specifically noted, all figures below relate to the Company s consolidated accounts. For comparison, numbers in brackets relate to the same period the previous year. 87

88 The three and six months period ended 30 June 2014 For comparison, numbers in brackets relate to the same period in Nordic Mining has no operational activity or sales income. Operating loss for the Group in the second quarter was NOK -8.2 million (NOK -6.2 million). Accumulated consolidated operating loss was NOK million (NOK million). Costs related to share based remuneration (no cash effect) of NOK -4.0 million (nil) in connection with option agreements with leading employees and resource persons was recognised and included in the consolidated operating loss in the second quarter and for the half year period. The Group s accumulated operating loss was reduced by approximately NOK 1.0 million due to VAT refund from The VAT refund followed from retroactive VAT registrations which were approved in April The Group has significantly reduced general corporate expenses compared to the same period in 2013 on the back of strategic focusing and cost reduction measures. The Group s investment in Keliber is classified as shares in an associated company. Following from an equity issue in Keliber in June 2014 of approximately EUR 2.2 million, Nordic Mining s shareholding in Keliber has been reduced from 38.0 per cent to 25.9 per cent. The net loss from the associated company in the second quarter was NOK -1.9 million (NOK -0.7). Accumulated net loss from the associated company was NOK -3.0 million (NOK -1.3 million). Consolidated net loss in the second quarter for continuing operations was NOK million (NOK -6.9 million). The Group s accumulated net loss for continuing operations in the first half year was NOK million (NOK million). Total consolidated net loss in the second quarter was NOK million (NOK -9.8 million). Accumulated total consolidated net loss in the first half year was NOK million (NOK million). Nordic Mining s balance sheet as of 30 June 2014 was NOK 28.6 million (NOK 34.2 million). The Group s main assets are related to the mineral rights for Engebø rutile project, the investment in the associated company Keliber, as well as cash and cash equivalents. As per 30 June 2014, the Group s total equity amounted to NOK 26.3 million (NOK 30.1 million). This gives an equity ratio for the Group of 92 per cent (88 per cent). The Group s total debt as of 30 June 2014 of NOK 2.4 million (NOK 4.1 million) was mainly related to trade receivables and other current liabilities. Cash flow from the Group s operating activities was negative in the second quarter with NOK -3.1 million (NOK -3.7 million), and NOK -8.5 million (NOK -8.9 million) accumulated for the half year period. The cash used in the operating activities in the first half year of 2014 was mainly related to the Engebø rutile project and general corporate expenditures. Net cash used in investment activities was NOK -0.1 million (NOK -0.1 million) in the second quarter and NOK -0.2 million (NOK -0.5 million) accumulated for the first half year. The investments in the second quarter and accumulated were related to the Engebø rutile project. As per 30 June 2014, the Group s cash and cash equivalents amounted to NOK 6.9 million (NOK 3.1 million) Discontinued operations The divestment of Gudvangen Stein AS in June 2013 and the transactions in Keliber in 2012 leading to loss of control of subsidiary and classification as investment in associate are in the consolidated financial statements presented as discontinued operations. In the table below the amounts from the condensed consolidated income statements that have been reclassified to loss from discontinued operations for the six months periods ended 30 June 2013 and 2012 are specified: 88

89 (NOK thousand) Gudvangen Gudvangen Keliber Total Sales 10,807 11,593-11,593 Other income Cost of sales (3,220) (2,760) - (2,760) Payroll and related costs (2,807) (1,863) (680) (2,543) DD&A (854) (1,399) (50) (1,449) Other operating expenses (5,596) (6,114) (866) (6,980) Operating profit/(loss) (1,670) (356) (1,582) (1,938) Other costs/income (441) (566) (152) (717) Loss from discontinued operations before (2,111) (921) (1,734) (2,655) remeasurement to fair value Impairment Loss on disposal (2,187) Total loss for discontinued (4,298) (921) (1,734) (2,655) Source: NOM Q and Q interim financial report In the table below the amounts from the condensed consolidated income statements that have been reclassified to loss from discontinued operations for the years 2013 and 2012 are specified: (NOK thousand) Gudvangen Gudvangen Keliber Total Sales 10,807 24,580-24,580 Other income Cost of sales (3,220) (5,733) - (5,733) Payroll and related costs (2,807) (4,579) (1,347) (5,926) DD&A (854) (2,731) (79) (2,810) Other operating expenses (5,596) (13,135) (1,387) (14,522) Operating profit/(loss) (1,670) (1,336) (2,799) (4,135) Other costs/income (441) (1,027) (278) (1,305) Loss from discontinued operations before (2,111) (2,363) (3,077) (5,440) remeasurement to fair value Impairment - (4,000) (420) (4,420) Loss on disposal (2,187) - (1,474) (1,474) Total loss for discontinued (4,298) (6,363) (4,971) (11,334) Financial year 2013 For comparison, numbers in brackets relate to the same period The 2012 figures have been adjusted to reflect that Nordic Mining has divested Gudvangen Stein and no longer holds a controlling interest in Keliber. Further, the 2012 figures have been restated to reflect the implementation of IAS 19R regarding new accounting principles for pensions. The Group s operating loss amounted to NOK million (NOK million). The operating loss was mainly related to costs in connection with the Engebø rutile project and general corporate expenses. As a consequence of Nordic Mining s reduced shareholding in Keliber as from October 2012, the Group s investment in Keliber has been classified as shares in an associated company. In 2013, the net loss from the associated company was NOK -3.0 million (NOK -0.7 million). Further, an impairment loss of NOK 6.5 million related to Keliber was recognised in The Group s total net loss amounted to million (NOK million). Net loss from the Group s continued operations was NOK million (NOK million). The Group s net loss from discontinued operations related to Gudvangen Stein (divested in June 2013) was NOK -4.3 million (NOK million). Cash flow from the Group s operating activities was negative in 2013 with NOK million (NOK million). The cash used in the operating activities in 2013 was mainly related to the Engebø rutile project and general corporate expenditures. Net cash used in investment activities amounted 89

90 to NOK -0.1 million (NOK -3.5 million). The investments were related to the Engebø rutile project. In 2013, Nordic Mining completed issues with total gross proceeds of approximately NOK 34.5 million. As per 31 December 2013, the Group s cash and cash equivalents amounted to NOK 15.5 million (NOK 6.2 million). Nordic Mining s total assets as of 31 December 2013 were NOK 40.0 million (NOK 59.0 million). The Group s main assets were related to the mineral rights for Engebø rutile project, the investment in the associated company Keliber, as well as cash and cash equivalents. As per 31 December 2013, the Group s total equity amounted to NOK 36.3 million (NOK 36.6 million). The equity ratio for the Group was 91 per cent (62 per cent) Financial year 2012 For comparison, numbers in brackets relate to the same period The 2011 figures have been adjusted to reflect Nordic Mining s loss of control in Keliber. Nordic Mining s operational activity was related to production and sales of anorthosite in Gudvangen Stein AS. Sales revenue in 2012 amounted to NOK 24.6 million (NOK 25.3 million) and were based on a sales volume of 213,000 tonnes (215,000 tonnes) anorthosite. The Group s operating loss amounted to NOK million (NOK million). The operating loss was related to costs in connection with development of the projects at/in Engebø, Gudvangen Stein AS, Nordic Quartz/Kvinnherad and the exploration activity on the Øksfjord Peninsula. An impairment loss of NOK 4.0 million (NOK 0.0 million) related to Gudvangen Stein AS was recognised in the consolidated accounts. Costs related to share based remuneration of NOK 1.8 million (nil) in connection with option agreements with leading employees and resource persons were recognised in As a consequence of Nordic Mining s reduced shareholding in Keliber completed in October 2012, the Group s investment in Keliber has been classified as shares in an associated company. In 2012, the net loss from the associated company was NOK -0.7 million (nil). The Group s loss in 2012 related to Keliber for the period up to the transaction in October was classified as loss from discontinued operations. The Group s total net loss amounted to million (NOK million). Net loss from continued operations was NOK million (NOK million). Net financial costs associated with ongoing operations of NOK -0.8 million (NOK -1.4 million) were charged to the Group s result. The Group s net loss from discontinued operations was NOK -5.0 million (NOK -2.5 million). Cash flow from the Group s operating activities was negative in 2012 with NOK million (NOK million). The cash used in the operating activities in 2012 was mainly related to the Engebø rutile project, the Kvinnherad quartz project, exploration in Reinfjord and general corporate expenditures. Net cash used in investment activities amounted to NOK -3.5 million (NOK -2.6 million). The investments related to i.a. capitalised drilling expenses in connection with exploration on the Øksfjord Peninsula. In January 2012, Nordic Mining completed a rights issue with gross proceeds of NOK 36.0 million. As per 31 December 2012, the Group s cash and cash equivalents amounted to NOK 6.2 million (NOK 3.3 million). Nordic Mining s total assets as of 31 December 2012 were NOK 59.2 million (NOK 92.2 million). The Group s main assets were related to the mineral rights for Engebø rutile project, the investment in the associated company Keliber, as well as cash and cash equivalents. As per 31 December 2012, the Group s total equity amounted to NOK 36.9 million (NOK 45.1 million). The equity ratio for the Group was 62 per cent (49 per cent). 90

91 Financial year 2011 For comparison, numbers in brackets relate to the same period In 2011, the Group generated total sales income of NOK 25.3 million (NOK 22.4 million). The sales income was related to the mining operation in Gudvangen Stein AS. Consolidated operating loss for 2011 was NOK million (NOK 24.7 million). The operating loss in 2011 was mainly related to the titanium feedstock segment. Net loss in 2011 was NOK million (NOK million). Net financial cost of NOK -1.4 million (NOK -2.0 million) was included in the result. Cash flow from operating activities in 2011 was negative with NOK million (NOK million). The cash used in the operating activities in 2011 was mainly related to the Engebø rutile project, the Kvinnherad quartz project, exploration in Reinfjord, and the operations in Gudvangen Stein and Keliber, as well as general corporate expenditures. Net cash flow from investments was negative with NOK -2.6 million (NOK -3.3 million). Net cash flow from financing was positive with NOK 22.7 million (NOK 24.7 million). In 2011, Nordic Mining completed equity issues with gross proceeds of NOK 29.0 million. The Group s balance sheet as of 31 December 2011 was NOK 92.2 million (NOK 94.1 million). The Group s main assets were related to the mineral rights for Engebø rutile project and the minerals, property, plant and equipment in Gudvangen Stein (divested in 2013) and Keliber (shareholding reduced in 2012 and thereafter an associated company in the Group), as well as trade receivables and cash and cash equivalents. The Group s equity per 31 December 2011 was NOK 45.1 million (NOK 46.4 million). The equity ratio per 31 December 2011 was 49 per cent (49 per cent), and the Group s cash and cash equivalents amounted to NOK 3.3 million (NOK 7.1 million) INTERIM FINANCIAL INFORMATION The quarterly financial report for Nordic Mining for Q can be found on the Company s webpage, This report has not been audited. Interim reports (unaudited) for previous periods are also available on the Company s website DIVIDEND POLICY Nordic Mining intends to follow a dividend policy favourable to the shareholders. The amount of any dividends to be distributed will be dependent on the Group s investment requirements and rate of growth as well as the general development and financing requirements of the Group. Nordic Mining has not paid any dividend since its incorporation LEGAL AND ARBITRATION PROCEEDINGS During the preceding twelve months, the Group has not been involved in any governmental, legal or arbitration proceedings which may have, or have had in the recent past significant effects on the Company s or the Group s financial position or profitability and the Company is not aware of any such proceedings which are pending or threatened FUNDING AND TREASURY POLICIES AND OBJECTIVE The Board together with the Executive Management shall ensure that the Company has adequate, though not excessive cash resources, and when applicable borrowing arrangements and overdraft or standby facilities, to enable it at all times to have the level of funds available which is required to achieve its business/service objectives. The Company has established accounting and internal control systems to ensure that the cash resources, or when applicable loan facility funds, are appropriate according to plans and allowed 91

92 use set by the Board, in accordance with laws, regulations and auditing standard and practices generally accepted in Norway TRENDS General trends related to the markets for the Group s development projects are commented in section 7. The Group underscores that the government s decisions, currently being awaited, with regard to permits for the Engebø rutile project is expected to have a material effect on the Company s prospects. Other than this, the Group is not aware of trends, uncertainties, demands, commitments or events that could possibly have a material effect on the Group's prospects since the end of the last financial year to the date of this Prospectus IMPORTANT EVENTS IN 2014 YEAR-TO-DATE In 2014, Nordic Mining has completed a comprehensive measuring program for water circulation in the Førdefjord as well as modelling of circulation patterns and particle distribution in connection with the planned sea disposal of mineral residues. Further, various biological investigations have been completed. The results from all the supplementary investigations requested in 2013 by the Ministry of Climate and Environment were reported to the authorities 30 September The associated company Keliber has in 2014 been offered to acquire the Rapasaari lithium deposit in Finland from the Finnish government. On the date of this Prospectus, the transaction is in the final phase of completion. Based on permission from landowners, Keliber has executed a drilling program in Rapasaari in 2014, and information from the drilling program and other exploration results are currently being reviewed by the competent persons Markku Märilainen and Pekka Lovén. A preliminary resource estimate in accordance with the JORC Code 2012 is expected in the fall SIGNIFICANT CHANGES IN THE GROUP S FINANCIAL OR TRADING POSITION SINCE 30 JUNE 2014 There has been no significant change in the Group s financial or trading positions since 30 June

93 9. CAPITAL RESOURCES 9.1. CASH FLOWS The Company s unaudited consolidated cash flow statements for the period 1 January to 30 June 2014 and 2013 respectively, and the audited cash flows statements for the years ended 31 December 2013, 2012 and 2011, are summarised below: (NOK thousands) Unaudited Unaudited Restated 1 Restated 2 Net cash used in operating activities (8,481) (8,853) (19,360) (20,598) (23,986) Purchases of property, plant and equipment - (296) (296) (668) (1,768) Purchases of intangible assets (160) (158) (315) (2,776) (854) Other (21) 15 Net cash used in investing activities (160) (454) (146) (3,465) (2,607) Share issuance - 7,709 29,827 33,405 26,079 Payments of loans - (500) (415) (1,000) (916) Payment of contingent liability (3,023) - Principal payments on finance leases - (962) (575) (2,477) (2,411) Net cash from financing activities - 6,247 28,837 26,905 22,752 Net change in cash and cash equivalents (8,641) (3,060) 9,331 2,842 (3,841) Effect of changes in foreign exchange rates (18) 116 Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 15,495 6,164 6,164 3,340 7,065 6,854 3,104 15,495 6,164 3,340 1) Restated for discontinued presentation of Gudvangen Stein and the implementation of new accounting principles for pensions (IAS 19R ) 2) Restated for discontinued presentation of Keliber Source: NOM Q interim financial report and the annual reports 2013, 2012 and 2011 Consolidated net cash used in operating activities in reflected the activities related to exploration and development of the Group s projects. The Group s cash and cash equivalents as per 30 June 2014 was NOK 6.9 million. The cash is deposited in bank accounts in Norwegian kroner ( NOK ). Except for cash flow movements related to the Group s ordinary business, no material changes have occurred. The Group has rights and access to its cash and cash equivalents. Transactions with cash payments can be executed without any particular restrictions between subsidiaries in the Group Net cash used in the Group s operating activities was negative in 2013 with NOK million. The net cash used in operating activities was mainly related to the Engebø rutile project and general corporate activities. Net cash used in investment activities amounted to NOK -0.1 million (NOK million). The investments were related to the Engebø rutile project. In 2013, Nordic Mining completed share issues with total net proceeds of approximately NOK 29.8 million which explained the significant positive cash flow from financing activities. As per 31 December 2013, the Group s cash and cash equivalents amounted to NOK 15.5 million Net cash used in operating activities in 2012 was negative at an amount of approximately NOK 20.6 million. The net cash used in operating activities was related to the operating activity in Gudvangen Stein AS with sales income, production cost etc., as well as the Group s project development activity and general administrative expenses and overhead cost. Net cash used in 93

94 investment activities in 2012 was mainly related to production equipment in Gudvangen Stein AS, and capitalised drilling expenses in connection with exploration on the Øksfjord Peninsula and On Keliber s prospects in Finland. In 2012, the Company completed a rights issue with net proceeds of approximately NOK 33.4 million which explained the significant positive cash flow from financing activities Net cash used in operating activities in 2011 was negative at an amount of approximately NOK 24.0 million. The net cash used in operating activities was related to the operating activity in Gudvangen Stein AS with sales income, production cost etc. as well as the Group s project development activity and general administrative expenses and overhead cost. Net cash used in investment activities was mainly related to purchase of property rights and production equipment (approximately NOK 1.8 million) as well as capitalised drilling expenses in Keliber (approximately NOK 0.9 million). In 2011, the Company completed equity issues with net proceeds of approximately NOK 26.1 million which explained the significant positive cash flow from financing activities WORKING CAPITAL STATEMENT In the opinion of the Company the working capital for the Group is not sufficient for the present requirements for the next twelve months. The Group s existing working capital, exclusive the proceeds from the Rights Issue, is expected to be sufficient until December The working capital requirement for the next 12 months will be dependent on the timing and the outcome of the Government s ongoing decision process related to the Engebø rutile project. As per the date of this Prospectus, the Company has no firm information of timeline for the decision process. Assuming no particular project development activity for the next 12 months, a minimum working capital requirement is estimated to be around NOK 15 million. Thus, the Group will have to attract financing of approximately NOK 15 million in the Rights Issue in order to obtain sufficient working capital for its minimum normal operation for the next 12 months. The Group s activities short-term will be to secure permits for the Engebø project and to follow up with the authorities in connection with the supplementary information which was submitted to the Ministry of Climate and Environment and the Ministry of Local Government and Modernisation on 30 September If and when the industrial area plan and the waste disposal application for the Engebø rutile project are approved, the Company will consider the working capital requirement for the project development work going forward until the investment decision. The Company s preliminary estimate for pre-investment costs related to the Engebø rutile project is in the range NOK million. This includes i.a. a drilling program in the open pit area, pilot production and optimisation of the processing flow sheet, and feasibility studies. Should the Rights Issue not be successful, the Company will be looking for other solutions which could include a new equity issue by way of a private placement or sale of assets. The shortfall might also, depending on the Rights Issue being partly successful, be covered by decrease in activity level, reduction of expenditure, and possible sale of assets. Additional measures in order to deal with a possible situation with inadequate financing subsequent of the Rights Issue may, if needed, be initiated and completed on short notice. In the opinion of Nordic Mining, the Group has a certain degree of flexibility regarding how to cover a possible shortfall. Based on previous experience, the Group s comprehensive efforts to assess and document the various consequences of the Engebø rutile project and the expected limited time period until the government s final decisions, the Company is confident that it will be able to raise sufficient equity prior to and without having to further reduce its activity level or sell assets. The assets of the Group are in the Company s opinion easily saleable and the Company is confident that it will be able to raise sufficient funds through a sale if necessary. The Company may initiate sales processes on short notice. In the opinion of Nordic Mining, the combined efforts of possible 94

95 reduction of expenditures, equity issues and sale of assets will provide the Group with sufficient funds for a longer period than the next twelve months. Should the actions described above fail and all other options to secure funds for the Group be unsuccessful, the Company may have to file for bankruptcy and enter into administration or receivership. In the Company s view, such events are unlikely to incur both in the next twelve months period, and in a longer perspective Key ratios The table below sets forth some key ratios for the Group as of 30 June 2014, and the years 2013, 2012 and Key Ratios Working capital ratio* 357.8% 457.3% % 82.6 % Debt to equity ratio* 8.9% 10.1% 38.0 % % Solidity* 91.8% 90.8% 64.7 % 49.0 % *Working capital ratio is defined as current assets/current liabilities, debt/equity ratio is total debt/total equity and solidity is defined as total equity/total assets 9.3. CAPITALISATION AND INDEBTEDNESS The following table shows the Group s capitalisation and indebtedness as of 30 June 2014 (unaudited) and the date of this Prospectus. (NOK thousands) (unaudited) Notes Total current debt Guaranteed (description of types of guarantees) Secured (description of assets secured) Unguaranteed/unsecured 2,270 Total current debt 2,270 Total Non-current debt (interest-bearing loans, excl. deferred tax, provisions, pension liabilities) Guaranteed (description of the types of guarantees Secured ( description of the assets secured) Total non-current debt Equity a. Share Capital 28,050 b. Legal reserves 240,003 c. Other reserves (241,780) 1 Total equity 26,273 Total 28,5434 A. Cash 6,854 B. Cash equivalents (detail) C. Trading securities D. Liquidity (A+B+C) 6,854 E. Current financial receivables (including held-for sale) 96 F. Current bank debt G. Current portion of non-current debt - H. Other current financial debt 1,260 I. Current financial debt (F+G+H) 1,260 J. Net current financial indebtedness (I-E-D) (5,690) 95

96 K. Non-current bank loans - L. Bond issues - M. Other non-current loans - N. Non-current financial debt (K+L+M) - O. Net financial indebtedness (J+N) (5,690) Notes: 1. Other reserves at 30 June 2014 include the profit and loss account. No significant changes have been considered for profit and loss items in the period subsequent to 30 June The capitalisation and indebtedness as per 30 June 2014 provide a fair and valid documentation of the Group s financial condition as per this date and the date of this Prospectus. The Group has a contingent liability to ConocoPhillips Investments Norge AS of NOK 40 million related to the acquisition of the mineral deposit in Engebø which materialises if and when commercial production from the deposit commences. Compared with total preliminary estimated investments for the Engebø project (approximately NOK 1.9 billion), the contingent liability is limited. The Group does not have any indirect indebtedness. There have been no events subsequent to 30 June 2014 that would in a material way influence the capitalisation and indebtedness presented in this Prospectus. As of 30 June 2014, the Group had NOK 6.9 million in cash and cash equivalents. As of 31 December 2013, the Group had NOK 15.5 million in cash and cash equivalents. The Group s cash and cash equivalents are held in bank accounts registered in the names of Nordic Mining and the subsidiaries. There are no restrictions on the Group s access or possibility to use its cash and cash equivalents. As of 30 June 2014 the Group had no interest bearing debt or financial lease liabilities. Reference is also made to section 8.8 (Funding and treasury policy and objectives), section 9.1 (Cash flows) and section (Key ratios). The Group s current liabilities of approximately NOK 2.3 million as per 30 June 2014 are i.a. trade payables, payroll tax liability etc. The Group s current receivables, in total approximately NOK 1.3 million per 30 June 2014 are pre-payments and various receivables. The Group has not entered into any contracts or agreements related to hedging of financial risks INVESTMENTS Historical investments The table below sets forth the Group s principle investments (cash considerations) for the years The capitalised investments in the first six months of 2014, in total approximately NOK 0.2 million were related to the Engebø rutile project. The Group s investments in the period after the last reporting date and till the date of this Prospectus have been negligible. 96

97 (Amounts in NOK thousands) Investing activities: Nordic Rutile AS/Engebø mineral concessions Gudvangen Stein AS N/A 668 1,198 Nordic Mining, Øksfjord Peninsula - 1,326 - Keliber Oy N/A 1,142 1, In 2013, the Group s investments were related to the mineral concessions for the Engebø rutile project which were capitalised at an amount of approximately NOK 0.3 million In 2012, the Group s main investments were related to capitalised drilling expenses at the Øksfjord Peninsula (approximately NOK 1.3 million), and in Keliber (approximately NOK 1.1 million). Mineral/property rights in Nordic Rutile related to the Engebø project were capitalised at an amount of (approximately NOK 0.3 million) and investments in various production equipment in Gudvangen Stein AS amounted to approximately NOK 0.7 million In 2011, the Group invested in total NOK 2.6 million, where NOK 1.2 million was related to production equipment in Gudvangen Stein AS. NOK 1.1 million was investments in Keliber, mainly related to capitalised drilling expenditures in connection with exploration work. The remaining NOK 0.3 million was related to various licenses/property rights etc. in Nordic Rutile in connection with the Engebø rutile project. Committed investments As per the date of this Prospectus the Group has no committed investments of material importance. Possible non-committed investments related to development projects The mineral projects that the Group is working on may result in substantial investments. Such investments will be considered, decided and financed on a case by case basis. On a general note, the Group s possible non-committed investments will depend on positive clarification of outstanding matters for each of the projects in question. This includes i.a. permitting issues, further geological and technical issues, market and commercial issues, financing issues and investment decisions for each of the subject projects on separate basis. Going forward, Nordic Mining will deal with the various issues for each project in a structured manner and with the purpose to reduce risks as the project development work proceeds. On a general note, it cannot be excluded that the outcome of such considerations might result in change of project plans and scope, or in cancellation of projects. The pre-investment costs estimated for the various non-committed projects outlined below are based on assumption that the pre-investment phase proceeds until the point of investment decision. Possible change of project plans and scope, or cancellation of project plans as a result of unfavourable clarifications in the development process could possibly change the Group s estimated pre-investment cost for the various projects. Industrial development of Nordic Mining s mineral resources at Engebø will demand additional financing. The current preliminary investment estimate for the Engebø project is approximately NOK 1.9 billion including around 20 per cent contingency. The estimate is based on preliminary 97

98 budgetary quotations and the Company s own assessments. Approximately NOK 1,050 million of the estimated project investments are related to production/processing equipment, around NOK 600 million is related to royalty, acquisition of land and infrastructure/civil, and the remaining NOK 250 million is related to mine and crushing installations. In addition to the estimated capital expenditures, pre-investment costs and investments are estimated in the range NOK million (USD million). This includes i.a. a drilling program in the open pit area, pilot production and optimisation of the processing flow sheet, and feasibility studies. Planning of the Engebø investments, including financing and possible establishment of project partnerships, will be dealt in further detail when the industrial area plan and the waste disposal permit have been approved by the Ministry of Local Government and Modernisation and the Ministry of Climate and Environment. The further development program for the Engebø project will include feasibility studies with contribution from external experts in various fields of competence. Industrial development of Nordic Mining s quartz resources in Kvinnherad municipality will demand additional financing. In the Scoping Study which was presented in December 2012, investments related to industrial production of high-purity quartz in Kvinnherad were preliminary estimated to USD 49.7 million (~NOK 310 million), including 10 per cent contingency. The preliminary estimate was based on preliminary assessments and list prices for relevant equipment. Approximately USD 3.8 million (~NOK 25 million) was related to preparation of the mine site including access road and other infrastructure. The main part of the estimated capital cost is related to production equipment for processing of the quartz. Approximately USD 40 million (~NOK 250 million) was related to equipment for physical, chemical and thermal processing of the quartz. In total, contingency is included at an amount of approximately USD 5.2 million (~NOK 30 million). In addition to the estimated capital expenditures, pre-investment costs are preliminary estimated at a level of NOK million. This includes i.a. a drilling program, pilot production of test material for potential customers, optimisation of the processing flow sheet and feasibility studies. Further, regulatory processes related to an industrial area plan e.g. for the mine site area, and a waste disposal application will be initiated. The development program for the Kvinnherad quartz project will include contributions from external experts in various fields of competence. Current focus in the project is to test and demonstrate product quality opportunities and potential as a basis for commercial discussions with possible partners/customers. In addition, further geological investigations are required to validate preliminary assessments of the deposit. Planning of possible future investments related to the Kvinnherad quartz deposit, including financing and possible establishment of project partnerships, will be dealt with as part of the ongoing development program. 98

99 10. PROPERTY, PLANT AND EQUIPMENT As the date of this Prospectus, the Company has no tangible fixed assets. The Company leases administrative office space located in the city centre of Oslo, Norway. The facilities serve as the general corporate and operational headquarters. As of today, the Group s main intangible fixed assets relates to the Extraction Permits at Engebø, as described in section 6.6.1, which are encumbered with a pledge in favour of ConocoPhillips Investments Norge AS security for the NOK 40 million contingent liability. Production from Engebø is scheduled to commence in 2018/2019 (preliminary schedule). The Group s Extraction Permits and rights in connection with option agreements to acquire certain properties are intangible assets with a total book value of approximately NOK 6.5 million as per 31 December The Group has on the date of this Prospectus no activities or operation at Engebø. Nordic Mining has agreements with landowners and has secured exclusive rights for investigation and development of a quartz deposit at Nesodden in Kvinnherad municipality in Hordaland county in Norway. The Group has on the date of this Prospectus no assets in the accounts related to the Nesodden quartz deposit, and there is no activity or operation ongoing at Nesodden. The associated company Keliber has mining concession to a spodumene pegmatite deposit at Länttä in Central Ostrobothnia in Finland. The Länttä deposit is located in the municipality of Kokkola. Keliber has several exploration rights, applications and reservations for exploration rights in the Ostrobothnian lithium province. At the date of this Prospectus, the total JORC compliant ore reserve estimate for Keliber is approximately 2.7 million tonnes of lithium bearing spodumene pegmatite ore. The ore reserve estimates will be confirmed or revised in connection with the forthcoming pre-feasibility study scheduled at the end of 2014 or early 2015, in accordance with the JORC Code 2012 which with effect from 1 December 2014 has a requirement for a completed pre-feasibility study or feasibility study, in order to present an ore reserve estimate. Keliber s production in Central Ostrobothnia is scheduled to commence in 2018 (preliminary schedule). The planned operation consists of open pit mining from one or several deposits, enrichment, conversion, leaching and precipitation. Keliber s process plant will be located on a leased property at Kalavesi in the municipality of Kaustinen. The distance from the Länttä, Outovesi, Syväjärvi, Leviäkangas and Rapasaari deposits to the process plant is in the range km. Please note that Keliber is no longer part of the Group, as Nordic Mining currently holds 25.9 per cent of the shares in Keliber. The shareholding is therefore booked in the Group accounts as an investment in an associated company. We refer to section 6.1 for further information. The Group has no committed investments in tangible fixed assets for any of its main projects at Engebø or in Kvinnherad. Any future investments in connection with ongoing project development for these projects will be further verified and decided on a case by case basis after completion of feasibility studies for each individual project. Investments related to the various projects are discussed in section 9.4. A summary of preliminary, uncommitted investment estimates for the Group s and Keliber's mineral projects at Engebø, Kvinnherad and in Keliber is given in the table below. Project Engebø rutile project Nordic Quartz project Keliber lithium project Total Current preliminary investment estimate (not committed) NOK 1,900 million (USD 300 million) NOK 310 million (USD 50 million) NOK 490 million (EUR 60 million) NOK 2,700 million 99

100 The Company is not aware of any environmental issues that may affect the Group s utilisation of its assets, other than the general environmental issues pertaining to companies operating within the mining industry as further described below and in section 2.3. Environmental issues related to the Company s tangible fixed assets As per the date of this Prospectus, the Company has no tangible fixed assets. The comments below are therefore of a principal character. Generally, mining projects must have various permits, licenses and approvals in place before production can be started. During the lifetime of a mining project, regulations can be changed in accordance with relevant laws and regulations. The scope for this also includes environmental issues, i.a. waste disposal, blasting, noise, dust etc. For the Engebø rutile project, Nordic Mining has executed comprehensive environmental impact assessments and applied for waste disposal in accordance with Norwegian laws and regulations. Nordic Mining has also submitted a proposal for an industrial area plan for the areas related to mine operation, process plant and disposal of excess minerals from production. The industrial area plan with environmental impact assessment has been on public hearing in two rounds. Naustdal and Askvoll municipalities have with solid majority approved the industrial area plan. In September 2014, and on request from the Ministry of Climate and Environment, Nordic Mining has submitted supplementary information regarding certain environmental issues. Decision in the matter will be made by the Ministry of Local Government and Modernisation with regard to the industrial area plan and by the Ministry of Climate and Environment with regard to the waste disposal application. In Finland, where Nordic Mining's associated company Keliber is developing a lithium project all permits are in place to start mining at the Länttä deposit and for production of lithium carbonate at the Kalavesi plant site. The permits in Finland also include environmental issues at the Länttä mine site and related to the planned process plant. For other mineral deposits, i.a. Outovesi, Syväjärvi, Leviäkangas, Rapasaari and possible other future mineable deposits, mining concession and environmental permits must be granted based on applications and environmental impact assessments. Keliber has initiated environmental impact assessment for its prospective mineral deposits in accordance with Finnish laws and regulations. Expected completion of the studies is around year-end 2014 or early Subsequent of the EIA environmental applications for the subject areas will be submitted to the environmental authorities, tentatively mid

101 11. ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT BOARD In accordance with Norwegian law, the Board is responsible for conducting the Company s affairs and for ensuring that the Company s operations are organised and controlled in a satisfactory manner. The table below sets forth the composition of the Board at the date of this Prospectus: Name Age Year first appointed Current Term Expires Position Current position and business address Tarmo Tuominen Chairman CTO in Nordkalk Corporation, Skräbbölevägen 18, FI Pargas, Finland Kjell Roland Deputy chairman CEO in Norfund, Støperigata 2,, N-0250 Oslo, Norway Hilde Myrberg Board member Gabelsgate 11, N-0272 Oslo, Norway Mari Thjømøe Board member Manager at ThjømøeKranen AS, Myrhaugen 20, N Oslo, Norway Tore Viana- Rønningen Board member Vice President in Dag Dvergsten AS, Munkedamsveien 45, N-0250 Oslo, Norway Tarmo Tuominen, Chairman (77,677 Shares and 0 options) Tuominen is Chief Technology Officer in the Finnish group Nordkalk, a significant producer of limestone-based products for industrial, agricultural and environmental applications. He is a geologist from Åbo Academy and has since 1992 had various positions in the Nordkalk Group, i.a. as geologist, mining manager, general manager of subsidiaries, business area manager, and vice president process technology. Tuominen has served, and is currently serving on several corporate boards in Nordkalk Group and externally, i.a. the Geological Survey of Finland ( GTK ). Tuominen is a Finnish citizen and resides in Turku, Finland. Kjell Roland, Deputy Chairman (250,000 Shares and 0 options) Roland holds a Master of Science degree from the department of Economics at the University of Oslo, a lower degree in Philosophy from University of Tromsø and has been a visiting scholar at the Department of Economics and Department Operations Research at Stanford University. Roland was partner and CEO in ECON Management AS and ECON Analysis over two decades. He co-founded ECON in As consultant, he has worked on macro-economics, energy and environmental issues for private companies, governments and international organizations such as the World Bank and the Asian Development Bank. Since 2006 he has been CEO of Norfund (the Norwegian government s investment fund for developing countries). Roland is a Norwegian citizen and resides in Oslo, Norway. Hilde Myrberg, Board member (0 Shares and 0 options) Myrberg is a lawyer from the University of Oslo and has a MBA from INSEAD, France. She has extensive experience as board member, general manager and corporate staff leader, with an emphasis on the oil and gas and power industry. Myrberg has held various positions in Norsk Hydro for 22 years, as a lawyer and manager, last position, before leaving the company in 2006, as Senior Vice president Energy Markets, and was thereafter EVP Corporate Staffs in Orkla. She is board member and is on the nomination committee/supervisory body of various companies. Myrberg is a Norwegian citizen, and resides in Oslo, Norway. 101

102 Mari Thjømøe, Board member (100,000 Shares 18 and 0 options) Mari Thjømøe holds a Master of Economy and Business Administration from BI Norwegian Business School, and is a Chartered Financial Analyst from the Norwegian School of Economics and Business Administration ( NHH ). Thjømøe has attended the Senior Executive Program, SEP 70 at London Business School and has 25 years of experience from the oil and energy sector, working with financial reporting and control, business development, strategy, investor relations etc. Thjømøe has held various management positions including SVP in Statoil ASA, CFO in KLP Insurance, and CFO and CEO in Norwegian Property ASA. Mari Thjømøe is board member of several companies, both listed and private. Thjømøe is a Norwegian citizen, and resides in Oslo, Norway. Tore Viana-Rønningen, Board member (140,000 Shares 19 and 0 options) Tore Viana-Rønningen holds a Master of Science in Business from the Norwegian School of Economics and Business Administration ( NHH ) in Bergen, Norway. Viana-Rønningen is Vice President in Dag Dvergsten AS. He has several years working experience from Barclays Capital in London, including principal investment activities in upstream natural resources. Viana-Rønningen is a Norwegian citizen and resides in Oslo, Norway. Independency The Board is independent of any sectional interests. The Board satisfies the requirement of having two board members independent of shareholders owning more than 10 per cent of the Company s share capital and half of the members independent of the executive management of the Company and the Company s material business contacts. All board members are considered to be independent of the Company s major shareholders, executive management and material business contacts. Consequently, the composition of the Board complies with the Norwegian Code of Practice for Corporate Governance MANAGEMENT The table below sets forth the members of the Group management at the date of this Prospectus: Name Age Position Business address Ivar S. Fossum 56 CEO Nordic Mining ASA, Munkedamsveien 45, N-0250 Oslo, Norway Lars K. Grøndahl 59 CFO Nordic Mining ASA, Munkedamsveien 45, N-0250 Oslo, Norway Mona Schanche 35 Exploration manager Nordic Mining ASA, Munkedamsveien 45, N-0250 Oslo, Norway Ivar S. Fossum, CEO (1,525,877 Shares and 4,500,000 options) Fossum holds a Master of Science in Mechanical Engineering from the University of Science and Technology in Trondheim, Norway ( NTNU ). He has previously held various managerial and commercial positions within the oil and gas industry and the fertilizer industry, among those positions as head of Natural Gas Transportation, License Administration, Hydro s department for exploration and production, director of raw material sourcing and trading in Hydro Agri International, general manager of Norsk Hydro East Africa Ltd. and chief executive officer of Loke AS. Fossum is a Norwegian citizen and resides in Asker, Norway. Lars K. Grøndahl, CFO (4,700, Shares and 2,500, options) Grøndahl holds a Master of Science in Business from the Norwegian School of Economics and Business Administration ( NHH ) in Bergen, Norway. Grøndahl has more than 20 years of experience from industrial companies including e.g. controller of Aker Group, Oslo, CFO of Cementa AB, Stockholm, CFO of Scancem International ANS, Oslo, and Senior Vice 18 Owned through the company ThjømeKranen AS 19 Owned through the family owned company ETVR Invest AS 20 Owned through his company Magil AS. 102

103 President/Deputy COO of Scancem International/Heidelberg Cement Africa. Prior to his engagement in the industry, Grøndahl was Head of Department in the Norwegian Ministry of Industry. Grøndahl is a Norwegian citizen and resides in Oslo, Norway. Mona Schanche, Exploration manager (132,306 Shares and 2,500,000 options) Schanche is a resource geologist from the Norwegian University of Science and Technology ( NTNU ) in Trondheim, Norway. Schanche has previously worked as Project Geologist in Titania AS. Schanche is a Norwegian citizen and resides in Oslo, Norway CONFLICTS OF INTERESTS ETC. The board member, Tore Viana-Rønningen may at times be in a position where there is a conflict of interest between his position as Vice President in Dag Dvergsten AS and the interests of Nordic Mining, see section 16. A possible conflict could for instance arise related to re-negotiation of the Company s business service agreement with Dag Dvergsten AS. Nordic Mining has taken reasonable steps to avoid potential conflicts of interests arising from Tore Viana-Rønningen s other interests and duties to the extent possible, and if such occurs, to mitigate any conflict of interest. A possible re-negotiation of the business service agreement will be dealt with by the Company s independent board members. There are currently no other potential conflicts of interests between any duties to the Company or its subsidiaries, of the Board or the senior management, and their private interests or other duties. There are no family relations between any of the Company s board members or management. There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the administrative, management, supervisory bodies or executive management has been selected as a member of the administrative, management or supervisory bodies or member of senior management. Over the five years preceding the date of this Prospectus, the members of the Board and senior management presently have, and have held, the following directorships (apart from the directorship in Nordic Mining) and or/partnerships: Name Current directorship/partnership Directorships/partnerships previous 5 years Board Tarmo Tuominen Nordkalk Oyj Abp, Finland (CTO) AIZ Russia (Nordkalk company) Kalkproduktion Storugns AB, Chairman Nordkalk AB, Sweden Nordic Rutile AS, Chairman Svenska Kalkföreningens Service AB Föreningen för gruvor, mineral- och metallproducenter i Sverige, SveMin (Sweden) Gruvornas Arbetsgivareförbund (Sweden) Geological Survey of Finland ( GTK ), Chairman Finnish Association of Extractive Resources Industry, Chairman Hilde Myrberg Norges Bank (Norway s Central Bank) Petoro AS, Vice Chair CGGVeritas SA Nordic Rutile AS Renewable Energy Corporation ASA Borregaard AS Sapa AB Orkla Brands AS Mari Thjømøe Tryg AS E-CO Energi Holding AS Argentum Fondsinvesteringer AS Sevan Marine ASA Sintef Seilsport Maritimt Forlag AS, Chair ThjømøeKranen AS, Chair and CEO Alladin Oil ASA Bank2 ASA, Chair GTB Invest ASA SinOceanic Shipping ASA Petoro AS Onshore Petroleum Company AS, Chair Infratek ASA 103

104 Nordic Rutile AS Scatec Solar ASA Avinor AS Magseis ASA AGR Group ASA Norwegian Property ASA, CEO Kjell Roland Agua Imara AS Aureos Africa Fund NMI AS Nordic Rutile AS SN Power Africa AS KJR AS Noce Risk DA Statkraft Norfund Power Invest AS Umoe Solar AS EDFI (European Development Finance Institutions) EFP (European Financing Partners) ICCF (Interact Climate Change Facility) Norwegian-African Business Association (NABA) Tore Viana-Rønningen Nordic Rutile AS CellCura ASA, CEO CellCura Solutions A/S, Chairman CellCura PFM AS, Chairman Dentales AS, Chairman Dentales Norge AS, Chairman Executive Management Current directorship/partnership Directorships/partnerships previous 5 years Ivar S. Fossum Keliber Oy Nordic Quartz AS, Chairman Nordic Ocean Resources AS, Chairman Gudvangen Stein AS Fetch Marine AS Fossum Consulting Nordic Mining America, Inc., Chairman Nordic Rutile AS, Chairman Lars K. Grøndahl Keliber Oy Magil AS, Chairman Gudvangen Stein AS, Chairman Grøndahl Management Consulting Mona Schanche Keliber Oy FRAUDULENT OFFENCE, BANKRUPTCY, INCRIMINATION AND DISQUALIFICATION No member of the Board of Directors or the management has during the last five years preceding the date of this Prospectus: had any convictions in relation to fraudulent offences; been involved in any bankruptcies, receiverships or liquidations in his or her capacity as a founder, member of the administrative body or supervisory body, director or senior manager of a company the last 5 years; or been subject to any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies) or been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer. 104

105 12. REMUNERATION AND BENEFITS BOARD AND EXECUTIVE MANAGEMENT Total remuneration including compensation, salary, pension cost and additional benefits in 2013 for the Board and the executive management is set out in the following table: (Amounts in NOK thousands) Salary Board member fees Other compens ation Pension cost Sharebased payment Ivar Sund Fossum, CEO 1, ,356 Lars K. Grøndahl, CFO 1, ,825 Mona Schanche, Exploration manager ,078 Ottar Nakken, previous VP 1, ,622 Commercial 1 Paul I. Norkyn, previous VP Mining ,173 Tarmo Tuominen, Board chairman Kjell Roland, Board member Tore Viana-Rønningen, Board member Mari Thjømøe, Board member Hilde Myrberg, Board member Camilla Fiskevoll, former Board member Thorild Widvey, former Board member Anne Dæhlie, former Board member Egil M. Ullebø, former Board member Total 6,411 1, ,054 Total 1. Ottar Nakken terminated his employment with Nordic Mining from 30 June Paul I. Norkyn terminated his employment with Nordic Mining from 30 September The general meeting of the Company has decided the remuneration to the members of the Board for No members of the Board or the executive management have any service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. No member of the Board or the executive management has bonus agreements or similar compensation arrangements SHAREHOLDINGS AND OPTIONS OF MANAGEMENT AND BOARD The following table sets forth the number of options and Shares held by Board members of the Company as at the date of this Prospectus: Board Shares Options Tarmo Tuominen 77,677 0 Kjell Roland 250,000 0 Hilde Myrberg 0 0 Mari Thjømøe 100,000 0 Tore Viana-Rønningen 140,000 0 The following table sets forth the number of options and Shares held by the Company s executive management as at the date of this Prospectus. The mentioned options below were awarded in relation to the incentive program for leading employees and qualified resource persons described further in section

106 Executive management Shares Options Ivar S. Fossum 1,525,877 4,500,000 Lars K. Grøndahl (owns the 4,700,000 2,500,000 shares and the options through his company Magil AS) Mona Schanche 132,306 2,500,000 The options are non-transferable. There is no lockup or restrictions agreed for the Board members' and the executive management's shareholdings in the Company OPTIONS AND INCENTIVE SCHEMES Outstanding options In addition to regular salaries, share option agreements have been entered into with senior management of Nordic Mining. The members of the executive management in Nordic Mining have been awarded options as follows: Ivar S. Fossum, CEO, has option to buy 3,000,000 Shares in Nordic Mining at a price of NOK 0.90 per share. In addition, Fossum has option to buy 1,500,000 Shares in Nordic Mining at a price of NOK 1.80 per share. As per the date of this Prospectus, Fossum has 1,525,877 Shares in Nordic Mining in addition to the options. Lars K. Grøndahl, CFO, through his company Magil AS, has option to buy 2,000,000 Shares in Nordic Mining at a price of NOK 0.90 per share. In addition, Grøndahl through Magil AS has option to buy 500,000 Shares in Nordic Mining at a price of NOK 1.80 per share. As per the date of this Prospectus, Grøndahl through Magil AS has 4,700,000 Shares in Nordic Mining in addition to the options. Mona Schanche, Exploration manager, has option to buy 2,000,000 Shares in Nordic Mining at a price of NOK 0.90 per share. In addition, Schanche has option to buy 500,000 Shares in Nordic Mining at a price of NOK 1.80 per share. As per the date of this Prospectus, Schanche has 132,306 Shares in Nordic Mining in addition to the options. One option can be converted into one Share in Nordic Mining ASA. All options mentioned above were fully vested on award and expire on 18 May As per the date of this Prospectus none of the options have been exercised. The option program described above replaced the Company's previous option program for 2012/2014, which comprised the executive management with following number of options: Name Options program 2012/2014 Ivar S. Fossum 1,000,000 Lars K. Grøndahl 700,000 Mona Schanche 700,000 The aforesaid options could have been exercised at a strike price of NOK 1.05 per Share. The options were not paid for at the time of the granting of the options. None of the options were exercised during 2012/ Board authorisation to implement employee share purchase scheme On 27 May 2014, the general meeting of the Company resolved to renew the incentive program for leading employees and qualified resource persons. The new program is based on the same principles as the previous program. The Board was authorised to award options that in total gives the right to subscribe for up to 14 million new Shares in the Company. Today, a total of 106

107 10,750,000 options have been awarded to leading employees and resource persons. For more information see section above. The general meeting of the Company on 27 May 2014 passed the following resolution regarding the option program for leading employees and qualified resource persons: "The Board of Directors of Nordic Mining ASA ("the Company") is authorised to resolve one or several share capital increases by issuing up to 14 million shares, equal to approximately 5% of the Company's registered share capital at the date of this authorisation. Consequently, the share capital may pursuant to this authorisation be increased by up to NOK 1.4 million. This authorisation may be used in connection with the issuing of shares in favour of employees in the Company and/or subsidiaries of the Company and qualified resource persons. The shares may be issued to the person directly or to a company owned by the person. The Board of Directors may also issue shares in favour of persons or companies that are not shareholders in the Company. The subscription price shall be determined by the Board of Directors. The minimum subscription prise shall, however, be the closing price for the Nordic Mining ASA share on 27 May The existing shareholders' preferential right to subscribe for shares is deviated. The Board of Directors is granted the authority to amend article 4 of the Articles of Association with regard to the size of the share capital in compliance with any capital increase determined by the Board of Directors pursuant to this authorisation. The authorisation to the Board of Directors under this section 11 shall be valid for two years. This authorisation replaces former authorisation given the ordinary general meeting held on 12 June 2012 and shall apply in addition to the authorisation resolved in section 12 below." PENSION OBLIGATIONS Nordic Mining has arranged a pension scheme for its employees. The pension scheme meets the requirements of the Norwegian law on required occupational pension ("Lov om Obligatorisk Tjenestepensjon") and description in relevant detail is given in the annual report for The Group had pension related expenses of approximately NOK 1.1 million in 2013 and fulfils the requirements of the Norwegian law on required occupational pension. Pension related expenses for the Group in 2012 and 2011 were NOK 1.5 million and NOK 1.3 million respectively. 107

108 13. BOARD PRACTICES COMPENSATION FOR TERMINATION No members of the administrative, management or supervisory bodies have service contracts with the Company or its subsidiaries providing for benefit upon termination of employment. The Company has not granted any loans, guarantees or other commitments to any member of the Board and there are no unusual agreements regarding extraordinary bonuses to any member of the Board COMMITTEES The Company has not established an audit committee or a separate remuneration committee. The nomination committee is responsible for proposing to the general meeting the remuneration of the Board. Nomination committee The Company has established a nomination committee. The nomination committee s main task is to propose members to the Board in Nordic Mining. The nomination committee consists of the following persons: Ole G. Klevan Chairman: Klevan is a lawyer at the law firm Schjødt. Klevan is not a shareholder in Nordic Mining nor has he any relation to the Board or management of the Company. Hans Olav Kvalvaag: Kvalvaag is a legal professional and has experience from the consultancy firm McKinsey, the law firm Selmer and Hydro. Currently, Kvalvaag is a partner the ADR Group. Kvalvaag is not a shareholder in Nordic Mining nor has he any relations to the Board or management of the Company. Bent Nordbø: Nordbø has a Master of Science in Business from the Norwegian School of Economics and Business Administration ( NHH ) in addition to technical background. Bent Nordbø has experience from leading positions in the Schibsted Group, and has since 2005 worked in Dag Dvergsten AS. Nordbø holds 15,282 Shares in Nordic Mining CORPORATE GOVERNANCE The corporate governance principles of Nordic Mining comprise the framework of guidelines and management principles regulating the division of roles between the owners, Board and executive management of the Company. Nordic Mining is of the opinion that sound corporate governance contributes to increased shareholder value through improved growth and higher profits, as well as lower capital expenditures. Corporate governance in Nordic Mining is based on openness and equal treatment. Investor confidence is maintained and developed through open and accountable investor information. The Board and the management are committed to ensuring transparency within the business, fair treatment of all shareholders and accountability in all forms of communication. The Company has adopted and implemented a corporate governance regime which complies with the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board on 23 October 2012 ( the Code of Practice ). The Code of Practice is a comply or explain guideline and the Board will state and explain any deviation by the Company from the recommended guidelines in its annual reports. Nordic Mining s corporate governance principles are available on the Company s website. 108

109 14. EMPLOYEES EMPLOYEES AND SERVICE PROVIDERS As of the date of this Prospectus, the Nordic Mining Group has three employees. TMF Group (Accepta AS) is bookkeeper for the Company and provides assistance with, inter alia, consolidation, tax and IFRS-matters. In addition, Nordic Mining has consultancy agreements with various research institutions and consultancy firms as in force from time to time. The Company has an office rental agreement with Dag Dvergsten AS. Dag Dvergsten AS is the employer of board member Tore Viana-Rønningen and member of the Nomination committee Bent Nordbø CONSULTANCY AGREEMENT WITH TARMO TUOMINEN In second quarter 2012 Nordic Mining entered into an agreement with the chairman of the board, Tarmo Tuominen. Tuominen has specific technical competences which Nordic Mining from time to time has a requirement for. The agreement comprises services that are outside the scope of Tuominen s duties as chairman of the board. In the period from signing of the agreement to the date of this Prospectus, Nordic Mining has purchased services according to the agreement with Tuominen for approximately NOK 20,000. No service purchase or payments have been executed in 2014 till the date of this Prospectus HIRED CONSULTANTS Nordic Mining is on a continuous basis hiring external consultants with expertise within business segments in which the Group operates. For a further description of the most important consultancy relations of Nordic Mining, please refer to section

110 15. MAJOR SHAREHOLDERS SHAREHOLDER STRUCTURE As registered in VPS on 20 October 2014, the Company had a total of around 3,000 shareholders. Of these there are 3 per cent of the shareholders who are registered in VPS with address outside Norway, the remaining in registered in Norway. A summary of the Company s 20 largest shareholders as of 20 October 2014 is set out below. Rank Name of shareholder Number of Shares Percentage 1 NORDNET BANK AB 20,203, % 2 SKAGEN VEKST 17,081, % 3 MP PENSJON PK 14,319, % 4 NORDEA BANK FINLAND PLC. 8,885, % 5 FINNISH INDUSTRY INVESTMENT LTD. 8,358, % 6 DYBVAD CONSULTING AS 7,910, % 7 VPF NORDEA SMB 6,739, % 8 VERDIPAPIRFONDET DNB SMB 5,886, % 9 NORDNET PENSJONSFORSIKRING 5,264, % 10 DANSKE BANK A/S 5,220, % 11 MAGIL AS 4,700, % 12 SNATI AS 4,003, % 13 CITIBANK, N.A. 3,539, % 14 OVE KLUNGLAND HOLDING AS NIL 3,439, % 15 LITHINON AS 2,979, % 16 STOKKEN OLE KRISTIAN GUNDERSEN 2,525, % 17 HANSEN REIDAR JARL 2,466, % 18 FEMCON AS 2,400, % 19 DYBVAD AUDSTEIN 2,379, % 20 INFOSAVE AS 2,150, % Total 20 largest shareholders ,452, % Others ,052, % Total ,504, % The following shareholders owned more than five per cent of the issued share capital and votes in the Company on 20 October 2014: Nordnet Bank AB (20,203,994 Shares representing 7.2 per cent of the share capital and votes), Skagen Vekst (17,081,021 Shares representing 6.1 per cent of the share capital and votes) and MP Pensjon PK (14,319,952 Shares representing 5.1 per cent of the share capital and votes). Under the nominee account of Nordnet Bank AB, there is at the date of this Prospectus no indication that any one individual shareholder represents more than 5 per cent of the share capital and votes in the Company. As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which directly or indirectly has a shareholding in the Company above five per cent which is noticeable under Norwegian Law. Shareholders with ownership exceeding five per cent must comply with disclosure obligations according to the Securities Trading Act Section 4.2. All Shares and shareholders have equal rights, including pro rata voting rights according to shareholding in the Company. To the knowledge of the Board, there are no arrangements which may at a subsequent date result in a change of control of the Company. 110

111 16. RELATED PARTY TRANSACTIONS During the period covered by the historical financial information included in this Prospectus, the Group has entered into the following related party transactions: 2014 YTD: Nordic Mining has an agreement with Dag Dvergsten AS for office rental. The Company s board member Tore Viana-Rønningen is employed in Dag Dvergsten AS. For the period 1 January till 30 June 2014 Nordic Mining has recorded NOK 0.24 million in expenses related to the agreement. 2013: In 2013 Nordic Mining recorded NOK 1.2 million in expenses related to the agreement with Dag Dvergsten AS. 2012: In 2012, Nordic Mining purchased services for NOK 2.2 million according to a business service agreement for i.a. office rental and administrative support functions with Dag Dvergsten AS (ref. information above). Further, the Group purchased services according to the consultancy agreement with Tarmo Tuominen, the Company s Chairman of the Board, for NOK 20,000 in 2012; ref. section 14.2 for information regarding the consultancy agreement. 2011: The Company had a business service agreement with Dag Dvergsten AS for i.a. office rental and administrative support functions. Dag Dvergsten AS is owned by Dag Dvergsten who was the Company s Chairman of the Board until 14 September In 2011, Nordic Mining purchased services according to the agreement with Dag Dvergsten AS for approximately NOK 2.7 million. The above mentioned transactions are/were based on the principle of arm's length pricing. 111

112 17. ADDITIONAL INFORMATION THE SHARE CAPITAL The Company s share capital is NOK 28,050, divided into 280,504,805 Shares, each with a par value of NOK The Company has one class of Shares that are authorised and issued and fully paid. Reconciliation of the number of Shares outstanding at the beginning of the year and at the end of the year and YTD 2014 is set out below. Year Beginning of the year End of the year Par value beginning of the year Par value end of the year ,718,140 53,479, ,479,975 95,470, ,470,091 95,470, ,470, ,470, ,470, ,470, ,470, ,470, ,470, ,504, ytd 280,504, ,504, General Under Norwegian law, limited liability companies are divided into two categories, private and public companies. Only the shares of public companies may be traded on a stock exchange or other regulated market places. Nordic Mining is a public limited liability company (ASA), subject to provisions of the Public Limited Companies Act Own shares The Company does not own Shares in the Company. The Board holds no authorisation to acquire Shares in the Company Share options, convertible securities, etc. There are no options established to the share capital of the Company, other than the options granted to the members of the executive management and other key persons, according to the option plan resolved by the Board, in accordance with an authorisation from the general meeting, see section The Company has not issued any convertible securities, exchangeable securities, warrants or other securities exchangeable into Shares other than the incentive scheme for executive officers and key personnel described in section Authorisations to increase the share capital On 27 May 2014, the general meeting of the Company authorised the Board to increase the Company s share capital by up to NOK 2.8 million Share capital development The Company has undertaken the following share capital changes since it was registered in May

113 Change in share capital (NOK) Face value per share (NOK) Sub. price per share (NOK) No. of shares after transaction Share capital (NOK) Year Transaction 2006 Demerger from n/a 0.10 n/a 14,359,070 1,435, Rocksource ASA 2006 Share Issue 1,435, ,718,148 2,871, Private Placement 1,090, ,618,140 3,961, Share Issue 1,386, ,479,975 5,347, Private Placement 3,333, ,813,308 8,681, Share Issue 510, ,917,308 9,191, Share Issue 355, ,470,091 9,547, n/a n/a n/a n/a n/a n/a 2010 Private Placement 2,000, ,470,091 11,547, Share Issue 1,000, ,470, ,547, Private Placement 1,250, ,970,091 13,797, Share Issue 750, ,470,091 14,547, Share Issue 4,000, ,470,091 18,547, Private Placement 896, ,436,108 19,443, Share Issue 606, ,504,805 20,050, Rights Issue 8,000, ,504,805 28,050, There were no capital changes in None of the share issues/private placements referred to in the list set forth above have been settled by way of contribution in kind exceeding 10 per cent of the share capital MEMORANDUM AND ARTICLES OF ASSOCIATION The Articles of Association of Nordic Mining is included in Appendix 1 to this Prospectus. According to its Articles of Association Section 3, the object of the Company is to carry on exploration for coal, minerals and ores, mining activity, technology development, activities that may be associated herewith, and participation in other companies anywhere in the world. Nordic Mining s objects and purposes may also be found in the Memorandum of Incorporation under Section 2. The Company has one class of shares only. According to the Articles of Association Section 5 the Board shall have at least 3 and maximum 8 members. The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares. There are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote for the Shares SHAREHOLDER RIGHTS The Shares are identical in every respect and carry the right to one vote at general meetings. None of the major shareholders have different voting rights. All dividends of the Company shall be declared, apportioned and paid to the shareholders pro rata to the number of Shares held at the relevant date. Shareholders have pre-emption rights in new issues of securities by the Company. Such pre-emption rights may be waived by two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting of the Company. Any amendment of shareholders rights, including the right to vote at the general meeting, must be done by amending the Articles of Association. Such amendments requires the affirmative vote of two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting. 113

114 All Shares carry an equal right to any surplus in the event of a liquidation of the Company. There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of the Company s Shares. Existing shareholders do not have any pre-emptive rights upon the transfer of Shares in the Company. The actions necessary to change the rights of the holders of the shares are not more significant than required by law CORPORATE MATTERS The Company is a Norwegian public limited company (ASA) registered on 8 May 2006 through the demerger of Rocksource s business within exploration of metals and minerals. The Company is registered with the Norwegian Registry of Business Enterprises with the organisation number: NO , subject to Norwegian regulations. The Articles of Association are included in Appendix 1 to this Prospectus. Nordic Mining has its head office at Munkedamsveien 45, N-0250 OSLO, Norway. The Shares of Nordic Mining are admitted to trading on the Oslo Axess with the ticker NOM with a traded share price of NOK 1.05 and a market capitalisation of approximately NOK 295 million as the end of 22 October The Company s share register is operated through VPS. The Company s registrar is DNB ASA. The securities number (ISIN number) for the Shares is NO LEGAL AND ARBITRATION PROCEEDINGS As of the date of this Prospectus and for the preceding 12 months, the Group is not and has not been involved in any governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened of which the Company is aware of, which are likely to have, or have had in the recent past, significant effects on the Group s financial position SHAREHOLDER MATTERS Transfer of Shares According to the Articles of Association, there are no limitations on transfer of the Shares in the Company General meetings of shareholders The Articles of Association do not set forth additional conditions with regard to changing the rights of the Shareholders than as required by the Norwegian Public Limited Companies Act. Through the general meeting, the Company s shareholders exercise the supreme authority in the Company, subject to the limitations provided by Norwegian law. All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by proxy. See Voting rights with regard to certain restrictions on voting right applying for nominee-registered shares, etc. General meetings are conveyed by the Board. A notice of a general meeting shall be sent at the latest 21 days before the date of the meeting, and shall include a proposal for an agenda for the meeting. The notice shall be made available on the Company's website along with documents to be submitted to the general meeting and forms to be used to vote by proxy unless the forms are sent directly to each shareholder. A shareholder is entitled to submit proposals to be discussed at general meetings provided such proposals are submitted in writing to the Board within seven days prior to the time limit for the notice to the general meeting, along with a proposal to a draft resolution or an explanation as to why the matter has been put on the agenda. The ordinary general meeting shall be held within six months from the end of each financial year. The ordinary general meeting shall deal with and decide on the approval of the annual financial statement and directors' report, including the distribution of any dividend, the election of the Board, and such other matters as may be set out in the notice of the meeting. 114

115 Extraordinary general meetings can be called by the Board. In addition, the Board shall call an extraordinary general meeting whenever so demanded in writing by the auditor or shareholders representing at least five per cent of the share capital, in order to deal with a specific subject Voting rights The Articles of Association do not set forth additional conditions with regard to changing the rights of Shareholders other than as required by the Norwegian Public Limited Companies Act. Each share in the Company carries one vote. As a general rule, resolutions that shareholders are entitled to make pursuant to Norwegian law or the Company's Articles of Association require a simple majority of the votes cast. In the case of elections, the persons who obtain the greatest number of votes cast are elected. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights in connection with any share issue, to approve a merger or de-merger, to amend the Company's Articles of Association or to authorise an increase or reduction in the share capital, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least twothirds of the share capital represented at a general meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of the holders of such shares or class of shares as well as the majority required for amendments to the Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require a majority vote of at least 90 per cent of the share capital represented at the general meeting in question, as well as the majority required for amendments to the Company's Articles of Association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby, as well as the majority required for amendments to the Company's Articles of Association. In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of Shares in the share register kept by the VPS. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register as holding such Shares as nominees. Normally, information regarding the right to vote for Shares registered through a custodian will be included in the summons for the annual general meeting. An owner with Shares registered through a custodian approved pursuant to section 4-10 of the Norwegian Public Limited Companies Act has voting rights equivalent to the number of Shares, which are covered by the custodian arrangement, provided that the owner of the Shares prior to the general meeting provide the Company with his/her name and address together with a confirmation from the custodian to the effect that he/she is the beneficial owner of the Shares held in custody, and provided further that the Board does not disapprove such beneficial ownership after receipt of such notification Dividends Procedure for declaration of dividend under Norwegian Law Under Norwegian law, interim dividends may only be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of the Company, if the dividend payments are based on an audited interim balance presented by the Board and approved by the general meeting of the Company. The interim balance may not be dated any later than six months prior to the day the resolution of paying dividends is resolved. Any proposal to pay a dividend must be recommended or accepted by the Board and approved by the Shareholders at a general meeting or resolved by the Board in accordance with an authorisation from the general meeting. The shareholders at the annual general meeting may vote to reduce (but not, unless accepted by the Board, to increase) the dividends proposed by the Board. 115

116 Legal constraints on the distribution of dividend The Public Limited Liability Companies Act provides several constraints on the distribution of dividends in cash or in kind: Dividends are payable only out of distributable equity. Pursuant to section 8-1 of the Public Limited Liability Companies Act, the Company may only distribute dividends provided that, following such distribution, it retains net assets that provide coverage for the Company s share capital and other non-distributable equity pursuant to sections 3-2 and 3-3 of the Public Limited Liability Companies Act. The calculation shall be made on the basis of the balance sheet in the Company s last approved annual accounts, however, so that it is the registered share capital at the time the resolution is adopted that forms the basis for the calculation. A deduction shall be made for the total nominal value of own Shares the Company has acquired for ownership or as security prior to the balance-sheet date. A deduction shall also be made for credit and security, etc., furnished pursuant to sections 8 7 to 8 10, prior to the balance-sheet date, which, pursuant to these provisions, shall be within the limits of the assets the Company may distribute as dividend. A deduction shall nonetheless not be made for credit and furnished security, etc., that has been repaid or cancelled before the resolution is adopted, or for credit furnished to a Shareholder insofar as the credit is cancelled by being offset against the dividend. In connection with the calculation above, a deduction shall be made for other transactions after the balance-sheet date that, pursuant to the Public Limited Liability Companies Act, shall be within the limits of the assets the Company may utilize for the distribution of dividends. The Company may only distribute dividends provided that it has sound equity and liquidity following such distribution, cf. section 3 4. Under Norwegian foreign exchange control rule and regulations currently in effect, transfers of capital to and from Norway are not subject to prior government approval except for the physical transfer of payments in currency, which is restricted to licensed banks. Consequently, a non- Norwegian resident may receive dividend payments without Norwegian exchange control consent if such payment is made only through a licensed bank. The Board will consider the amount of dividend (if any) to recommend for approval by the general meeting of the Company, on an annual basis, based upon the earnings of the Company for the years just ended and the financial situation of the Company at the relevant point in time. Hence, the shareholders do not have a right to share in the Company s profits by way of dividends. All shareholders that are shareholders at the time of the general meeting making its resolution are entitled to dividend. There is no time limit under which the individual shareholder s entitlement to a declared dividend lapses. All Shareholders who are Shareholders at the time the general meeting passes a resolution to distribute dividends are entitled to such dividends, unless otherwise is resolved by the general meeting. According to the Public Limited Companies Act, there is no time limit after which entitlement to dividends lapses. Further, there are no dividend restrictions or specific procedures for non-norwegian resident Shareholders in the Public Limited Companies Act. Consequently, the procedures for non-norwegian shareholders are under the Public Limited Companies Act equal to the procedures as described above. Please see section 19 of this Prospectus for a description of withholding tax on dividends that is applicable to non-norwegian residents. Nordic Mining's dividend procedure Any future payments of dividends from Nordic Mining on the Shares will be denominated in NOK, and will be paid to the shareholders through the VPS. Investors registered in the VPS whose address is outside Norway and who have not supplied the VPS with details of any NOK account, will, however, receive dividends by check in their local currency, as exchanged from the NOK 116

117 amount distributed through the VPS. If it is not practical in the sole opinion of DNB ASA, being the Company s VPS registrar, to issue a check in a local currency, a check will be issued in USD. The issuing and mailing of checks will be executed in accordance with the standard procedures of DNB ASA. The exchange rate(s) that is applied will be DNB ASA's rate on the date of issuance. Dividends will be credited automatically to the VPS registered shareholders NOK accounts, or in lieu of such registered NOK account, by check, without the need for shareholders to present documentation proving their ownership of the Shares Additional share issuances and preferential rights All issuances of shares by the Company, including bonus issues, require an amendment to the Articles of Association, which requires the same vote as other amendments to the Articles of Association. Furthermore, under Norwegian law, the Company's shareholders have a preferential right to subscribe for issues of new shares by the Company. The preferential rights to subscribe in an issue may be waived by a resolution in a general meeting by the same vote required to approve amendments to the Articles of Association. A waiver of the shareholders' preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class. Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the Company's free equity or from its share premium reserve. Such bonus issues may be effectuated either by issuing shares or by increasing the par value of the shares outstanding Redemption and conversion rights There are no redemption rights or conversion rights attached to the Shares Rights on liquidation Under Norwegian law, the Company may be liquidated by a resolution in a general meeting of the Company passed by a two-thirds majority of the aggregate votes cast as well as two thirds of the aggregate share capital represented at such meeting. The Shares rank pari passu in the event of a return on capital by the Company upon a liquidation or otherwise Reports to shareholders The Company publishes annual and interim reports that include financial statements. The consolidated financial statements are published in accordance with the International Financial Reporting Standards, IFRS, as issued by the International Accounting Standards Board Notification and publication requirements As from the date of the application for listing on Oslo Axess, the Company has provided its shareholders, Oslo Axess and the market as a whole with timely and accurate information. Notices are published through and on the Company s website ( SECURITIES TRADING IN NORWAY The following is a summary of certain information in respect of trading and settlement of shares on Oslo Børs/Oslo Axess, securities registration in Norway and certain provisions of applicable Norwegian securities law, including the Norwegian Securities Trading Act, in effect as at the date of this Prospectus. This summary does not purport to be complete and is qualified in its entirety by Norwegian law Trading and settlement Trading of equities on Oslo Børs/Oslo Axess is carried out in the electronic trading system Millennium Exchange. This trading system is in use by all markets operated by the London Stock Exchange. Official trading on Oslo Børs/Oslo Axess takes place between 09:00 and 16:20 each 117

118 trading day, with a pre-trade period between 08:15 and 09:00, a closing auction between 16:20 and 16:25 and a post-trade period from 16:25 to 17:30. The settlement period for trading on Oslo Børs/Oslo Axess is three trading days (T+2). Investment services in Norway may only be provided by Norwegian investment firms holding a license under the Securities Trading Act, branches of investment firms from a member state of the European Economic Area (the EEA ), or investment firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member state may also provide crossborder investment services into Norway. It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have a license to this under the Securities Trading Act, or, in the case of investment firms in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Securities Trading Act relating to brokers trading for their own account. Such market-making activities do not as such require notification to the Norwegian FSA or Oslo Børs, except for the general obligation of investment firms that are members of Oslo Børs to report all trades in stock exchange listed securities Information, control, and surveillance Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of Oslo Børs monitors all market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments. Under Norwegian law, implementing the EU Market Abuse Directive, a company that is listed on a Norwegian regulated market, or that is subject to the application for listing on such market, must promptly release any inside information (i.e., precise information about financial instruments, the issuer thereof, or other matters that are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and that are not publicly available or commonly known in the market). A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. Oslo Børs may levy fines on companies violating these requirements Insider trading Pursuant to the Securities Trading Act, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in section 3-2 of the Securities Trading Act. The same applies to the entry into, purchase, sale, or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions Disclosure obligations Pursuant to the Securities Trading Act, a person, entity, or group acting in concert that acquires or disposes shares or rights to shares (i.e., convertible loans, subscription rights, options for shares or other similar rights to shares) which results in beneficial ownership, directly or indirectly, in the aggregate, reaching or exceeding or falling below the respective thresholds of 5 per cent, 10 per cent, 15 per cent, 20 per cent, 25 per cent, 1/3, 50 per cent, 2/3 or 90 per cent of the share capital or a corresponding portion of the votes in a company whose shares are quoted on Oslo Axess is obligated to notify such transaction to the stock exchange. Certain voting rights are counted on equal basis as shares and rights to shares. A change in ownership level due to other circumstances (i.e., other than acquisition or disposal) can also 118

119 trigger the notification obligations when the said thresholds are passed, e.g., changes in the company s share capital Mandatory offer requirement Pursuant to the Securities Trading Act, any person, entity or group acting in concert that acquires shares representing more than 1/3 (with a repeated obligation at 40% and 50% of the voting rights of a Norwegian company whose share are listed on Oslo Axess or Oslo Stock Exchange is obliged to make an unconditional general offer for the purchase of the remaining shares in the company or within four weeks or, within the same period, dispose of a number of voting shares which brings the percentage of voting rights below 1/3. The shareholder must, immediately upon reaching any of the said thresholds, notify the Company and Oslo Stock Exchange accordingly and of whether it will make a mandatory offer or perform a sell-down. A notice informing about a disposal can be altered to a notice of making an offer within the four week period, while a notice stating that the shareholder will make an offer cannot be amended and is thus binding. The mandatory offer obligation ceases to apply if the person, entity, or consolidated group notifies the Company and Oslo Børs of its decision to sell down and then sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. An offer is subject to approval by Oslo Stock Exchange before submission of the offer to the shareholders or made public. The offer price per share must be at least as high as the highest price paid or agreed by the offeror in the six-month period prior to the date the 1/3 threshold was exceeded, but at least equal to the market price if it is clear that the market price was higher when the mandatory offer obligation was triggered. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. A mandatory offer must be unconditional and in cash (NOK), but it may contain a consideration alternative at least equivalent to the cash consideration offered. Until an offer has been made or a disposal completed, the shareholder will have no voting rights or other rights relating to the shares exceeding the 1/3 threshold, apart from the right to receive dividends and pre-emption rights in the event of a share capital increase. In case of the failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, Oslo Stock Exchange may force the acquirer to sell the shares exceeding the threshold by public auction. Any person, entity or consolidated group that has passed any of the above-mentioned threshold in such a way as not to trigger the mandatory offer obligation, and that has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules, is as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of shares in the company. The Company has not received any takeover bids or bids to acquire controlling interest during the last 12 months Compulsory acquisition Pursuant to the Public Limited Companies Act and the Securities Trading Act, a shareholder who, directly or via subsidiaries, acquires Shares representing more than 90 per cent of the total number of issued Shares as well as 90 per cent or more of the total voting rights in the Company, then such majority shareholder would have the right (and each remaining minority shareholder of the Company has a right to require such majority shareholder) to effect a compulsory acquisition for cash of the Shares not already owned by such majority shareholder. Through such compulsory acquisition, the majority shareholder becomes the owner of the thus acquired shares with immediate effect. A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the 119

120 majority shareholder. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline not to be of less than two months' duration, request that the price be set by the Norwegian courts. Absent such request or other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the two- month deadline. As a general rule, the cost of such court procedure would be for the account of the majority shareholder, and the courts would have full discretion in respect of the valuation of the Shares as per the effectuation of the compulsory acquisition within the scope of the real value of the Shares. In event a shareholder, directly or through subsidiaries, exceeds the 90 per cent threshold by way of a mandatory offer in accordance with the Securities Trading Act, and a compulsory acquisition is resolved within three months, then the share price in the compulsory acquisition shall be equal to the price in the mandatory offer if no special circumstances call for a different price. Further, if the 90 per cent threshold is exceeded by way of a voluntary offer, the compulsory acquisition may, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution according to the rules for mandatory offers. 120

121 18. CONTRACTS CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS Nordic Mining has entered into the following contracts considered to be of material importance for the business of the Company: Acquisition of Engebø rutile deposit from ConocoPhillips Investments Norge AS. For further information please see section 6.1. Agreements with landowners regarding exclusive rights for investigation and development of the Kvinnherad quartz deposit. For further information please see section 6.1. Nordic Mining will from time to time enter into consultancy agreements with research institutions and consultants, and resource persons employed at such institutions and companies, with expertise within mining, geology mineral processing and other related areas. Nordic Mining has entered into various agreements with regards to development of production processes, product qualities and other issues related to various products, i.a. rutile concentrate, garnet products, eclogite products etc. Subject to a successful development of the subject project and establishment of production processes that meet the other party s requirements, the agreements normally states an intention for the parties in question to enter into long-term commercial relations MATERIAL CONTRACTS The Group has not entered into any material contracts other than contracts entered into in the ordinary course of business. 121

122 19. NORWEGIAN TAX The statements herein regarding taxation are unless otherwise stated based on the laws in force in Norway as of the date of this Prospectus, and are subject to any changes in law occurring after such date. Such changes could be made on a retrospective basis. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire, own or dispose of the Shares. Furthermore, the summary only focuses on the shareholder categories explicitly mentioned below (individual shareholders and limited liability companies). Shareholders are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of Shares. In particular, this document does not include any information with respect to U.S. taxation or taxation in any other jurisdiction than Norway. Prospective investors who may be subject to tax in the United States or any other jurisdiction are urged to consult their tax adviser regarding federal, state, local and other tax consequence of owning and disposing of Shares NORWEGIAN SHAREHOLDERS Taxation of dividends - Individual shareholders Dividends distributed to Norwegian individual shareholders are taxable as ordinary income at a rate of 27 per cent. The shareholders are, however, entitled to deduct a calculated tax-free allowance when calculating their taxable dividend income. The tax-free allowance will be calculated on a share by share basis, and the allowance for each Share will be equal to the cost price of the Share multiplied by a risk free interest rate. Any part of the calculated allowance one year exceeding the dividend distributed on the Share will be added to the cost price of the Share and included in the basis for calculating the allowance the following years. Taxation of dividends - Corporate shareholders (Limited liability companies) Dividends distributed to shareholders who are limited liability companies resident in Norway for tax purposes ( Norwegian corporate shareholders ) are exempted from taxation. However, 3 per cent of dividends are as a main rule, added to the taxable income and taxed as general income at a rate of 27 per cent. Taxation on realisation of Shares - Individual shareholders Sale, redemption or other disposal of Shares is considered a realisation for Norwegian tax purposes. A capital gain or loss generated by a Norwegian individual shareholder through a disposal of Shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of ordinary income in the year of disposal. Ordinary income is taxable at a rate of 27 per cent. Gain is subject to tax and loss is deductible for tax purposes irrespective of the duration of the ownership and the number of Shares owned and/or disposed of. The capital gain (loss) equal the consideration received less the cost price of the Share and transactional expenses. From this capital gain, Norwegian individual shareholders are entitled to deduct a calculated tax-free allowance when calculating their taxable income. The allowance for each Share is equal to the total of allowance amounts calculated for dividends for this Share for previous years (ref. above), less dividends distributed on this Share. The calculated allowance may only be deducted in order to reduce a taxable gain calculated upon the realisation of the Share, and may not be deducted in order to produce or increase a loss for tax purposes. If the shareholder owns Shares acquired and/or subscribed for at different points in time, the Shares that were acquired or subscribed for first will be regarded as the first to be disposed of, i.e. a first-in first-out basis applies. 122

123 Exit tax An individual shareholder who is resident in Norway for tax purposes is liable for tax on calculated inherent capital gains on shares he owns at the time the tax liability to Norway cease. Similarly calculated inherent loss is tax deductible provided the individual immigrates to another EEA state. The tax triggering event is the cessation of Norwegian tax residency, either under domestic Norwegian law or in accordance with any applicable tax treaty. At this point of time, usually several months after physical emigration from Norway, inherent gain (or loss) on securities shares, warrants, share options etc. shall be calculated. The Norwegian Exit tax rules only apply if the calculated capital gain on shares etc. exceeds NOK 500,000. Moreover, the calculated tax is annulled if the shares are not realised within five years from the point of time the tax liability to Norway ceased. Similarly, the settlement of any loss determined in the emigration year is delayed until realisation takes place and is contingent on that realisation takes place within five years from the point of time the tax liability to Norway ceased. In order to avoid payment of the calculated inherent gains upon cessation of Norwegian tax residency, the taxpayer must provide a sufficient security or guarantee. With respect to some of the EU and EEA states, a guarantee is not necessary in order to obtain interest free postponement of payment. Further detailed rules do apply. The exit tax rules also apply to Non-resident individuals establishing Norwegian tax residency. In such cases, the market value at the time of immigration to Norway for tax purposes of any shares owned by the individual shall be appraised in order to enable calculation of any future inherent capital gain on such shares upon a future (re) transfer of residency from Norway to another state. Taxation on realisation of shares - Corporate shareholders Norwegian corporate shareholders are not taxable in Norway on capital gains related to realisation of Shares, and losses related to such realisation are not tax deductible. Net wealth tax The value of shares is included in the basis for the computation of net wealth tax imposed on Norwegian individual shareholders. Norwegian corporate shareholders are not subject to net wealth tax. The marginal net wealth tax rate is 1.0 per cent of the value assessed. The value for assessment purposes for shares on Oslo Axess is 100 per cent of the listed value as of 1 January in the year of assessment NON-RESIDENT SHAREHOLDERS This section summarises Norwegian tax rules relevant to shareholders who are not resident in Norway for tax purposes ( Non-resident shareholders ). Non-resident shareholders tax liabilities in their home country or other countries will depend on applicable tax rules in the relevant country. Taxation of dividends Dividends distributed to shareholders who are individuals not resident in Norway for tax purposes ( Non-resident personal shareholders ) are as a general rule subject to withholding tax at a rate of 25 per cent. The withholding tax rate of 25 per cent is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends. The above generally applies also to shareholders who are limited liability companies not resident in Norway for tax purposes ( Non-resident corporate shareholders ). However, dividends distributed to Non-resident corporate shareholders resident within the EEA for tax purposes are exempt from Norwegian withholding tax. 123

124 Non-resident personal shareholders resident within the EEA area are subject to ordinary withholding tax, but entitled to apply for a partial refund of the withholding tax, to the extent the dividend received less a calculated allowance similar to the calculated allowance used by Norwegian personal shareholders, multiplied with the general 25 per cent withholding tax rate, is lower than the actual withheld tax based on the withholding tax rate according to the applicable tax treaty. Nominee registered Shares will be subject to withholding tax at a rate of 25 per cent unless the nominee has obtained approval from the Norwegian tax authorities for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee is committed to file a summary to the relevant Norwegian tax authority including all beneficial owners that are subject to lower withholding tax. Non-resident shareholders that have suffered a higher withholding tax than set out by an applicable tax treaty or the Norwegian Tax Act, may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. If a Non-resident shareholder is carrying on business activities in Norway, and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation as Norwegian shareholders, as described above. Taxation on realisation of shares Gains from the sale or other disposal of Shares by a Non-resident shareholder will not be subject to taxation in Norway unless the Non-resident shareholder owns the shares in connection with the conduct of a trade or business in Norway. In such case, the shareholder will be subject to the same taxation as Norwegian shareholders, as described above DUTIES ON THE TRANSFER OF SHARES No stamp or similar duties are currently imposed in Norway on the transfer of shares whether on acquisition or disposal. 124

125 20. DOCUMENTS ON DISPLAY For the life of this Prospectus the following documents may be inspected: The Memorandum and the Articles of Association Nordic Mining Q interim financial report (unaudited) Nordic Mining Annual report 2013 Nordic Mining Annual Report 2012 Nordic Mining Annual Report 2011 Annual report 2014 on Nordic Mining's mineral deposits, exploration results, mineral resources and mineral reserves The Prospectus will be made physically available at the Company s and the Manager's business address as at the date of this Prospectus. Any public documents referred to in this Prospectus, among other things the Articles of Association, historical financial information, expert opinions and the annual report on mineral deposits etc. may also be physically obtained from the Company at the Company's address: Munkedamsveien 45, 0250 Oslo, Norway INCORPORATED BY REFERENCE The Company hereby incorporates the following documents by reference into this Prospectus, all electronically available at its interim report for the period ended 30 June 2014 (unaudited) its annual report for the year ended 31 December 2013 its annual report for the year ended 31 December 2012 its annual report for the year ended 31 December 2011 The information incorporated by reference in this Prospectus shall be read in connection with the cross-reference list set out in the table below. All the relevant information can be found on the Company s webpage Cross reference Section in Webpage Prospectus Q2 report , 9 inancial%20reports/reports%202014/140814_q2% %20Interim%20report.pdf Q2 report , 9 inancial%20reports/reports%202013/nm%20q2% pdf Annual report , 9 inancial%20reports/reports%202014/nordic%20mining_a nnual%20report_2013.pdf Annual report , 9 inancial%20reports/130429_annual%20report%202012_fi nal.pdf Annual report , 9 inancial%20reports/reports%202012/120257_annual_rep ort_web.pdf Auditor s report , 9 inancial%20reports/reports%202014/nordic%20mining_a nnual%20report_2013.pdf Auditor's report ,

126 inancial%20reports/130429_annual%20report%202012_fi nal.pdf Auditor's report , 9 inancial%20reports/reports%202012/120257_annual_rep ort_web.pdf Expert opinion Engebø,, a scoping study prepared by Adam Wheeler and Bob Dowdell Scoping study Nordic Quartz, Kvinnherad, a scoping study prepared by Dorfner Anzaplan erations/engeb%c3%b8/engeb%c3%b8%20engels k/rapporter/scoping%20study.pdf s/quartz/reports/scoping%20study.pdf 126

127 21. NORSK SAMMENDRAG Sammendraget består av informasjon som skal gis benevnt som Elementer. Elementene er nummerert i punkt A E (A.1 E.7). Dette sammendraget består av alle Elementer som skal være inkludert i et sammendrag for denne type verdipapirer og Utsteder. Som følge av at noen Elementer ikke må beskrives, kan noen nummereringer være utelatt. Selv om ett Element kan være pålagt inntatt i sammendraget som følge av verdipapiret og Utsteder, er det mulig at ingen relevant informasjon kan gis knyttet til Elementet. I så fall er det inntatt en kort beskrivelse av Elementet i sammendraget med benevnelsen Ikke aktuelt. PUNKT A INTRODUKSJON OG ADVARSEL Element Beskrivelse Pliktig informasjon av Element A.1 Advarsel Dette sammendraget må leses som en innledning til prospektet. Investorens vurdering om å investere i tilbudsaksjene må baseres på en vurdering av hele prospektet. Dersom et krav knyttet til informasjonen i prospektet fremsettes for en domstol, kan saksøkende investor, i henhold til nasjonal lovgivning i sitt medlemsland, bli pålagt å dekke kostnadene med å oversette prospektet før rettsforhandlingene igangsettes. A.2 Videresalg og endelig plassering gjennom finansielle mellommenn Sivilt ansvar kan kun pådras for de personer som har satt opp sammendraget, herunder oversettelse av dette, men kun dersom sammendraget er misvisende, ikke korrekt eller usammenhengende når det leses i sammenheng med andre deler av prospektet eller dersom det ikke gir, lest i sammenheng med andre deler av prospektet, nøkkelinformasjon for å bistå investorene når de vurderer å investere i slike verdipapirer. Ikke aktuelt. Det vil ikke skje et videresalg. Ingen finansielle mellommenn vil bli benyttet knyttet til plassering av tilbudet. PUNKT B - UTSTEDER Element Beskrivelse av Element B.1 Utsteders rettslige- og forretningsnav n B.2 Hjemstat og rettslig organisering av Utsteder, lovgivning som regulerer Utsteders virksomhet og Pliktig informasjon Nordic Mining ASA. Nordic Mining ASA («Nordic Mining» eller «Selskapet») er et norsk allmennaksjeselskap, stiftet i henhold til norsk lov. Selskapets registrerte adresse er Munkedamsveien 45, 0250 Oslo, Norge. 127

128 landet det er stiftet i. B.3 Nøkkelfaktorer knyttet til eksisterende virksomhet og aktiviteter, viktigste kategorier og produkter som selges og viktigste markeder Nordic Mining Konsernets («Konsernet» eller «Gruppen») nåværende virksomhet, herunder det tilknyttede selskapet Keliber, omfatter følgende hovedprosjekter: Engebø rutilforekomst (titandioksyd), Kvinnherad kvartsforekomster (kvarts) og Keliber spodumen pegmatitt forekomst (litium/litiumkarbonat). Prosjektene er prekommersielle. I tillegg har Konsernet og det tilknyttede selskapet flere leterettigheter for mineraler (kopper, nikkel, paladium, platina og litium) i Norge og Finland. Nordic Mining har de siste to år aktivt undersøkt en sulfidmineralisering i Reinfjord intrusjonen på Øksfjord halvøya (nikkel, kobber, kobolt og paladium-platina-gull). Den 13. mars 2013 mottok Nordic Mining brev fra Klima- og Miljøverndepartementet hvor det fremkommer at informasjon knyttet til reguleringsplan og søknad om utslippstillatelse knyttet til Engebø rutile prosjektet, var etter departements oppfatning, ikke tilstrekkelig for å kunne treffe vedtak i saken. Departementet krevde tilleggsinformasjon knyttet til strømforhold i fjorden og risikovurderinger vedrørende partikkeldistribusjon, biologiske undersøkelser, deponiløsning for avfallsdeponeringer, bruk av ferskvann osv. I 2013 engasjerte Nordic Mining DNV GL for å gjennomføre et program for strømmåling i Førdefjorden, samt risikovurderinger knyttet til det planlagte sjødeponiet for restmineraler. DNV GL ble også engasjert for å gjennomføre visse andre undersøkelser, bl.a. undersjøisk kartlegging av fjordbunnen med ROV (remotely operated vehicle) og prøvefiske, samt undersøkelser av mulige gyteområder for fisk og andre arter i deponiområdet. I august 2014 ble programmet for strømmåling ferdig etter 12 måneders måling på 11 målestasjoner. Vannstrømmene har blitt målt ved hjelp av avanserte måleinstrumenter som har målt strømhastigheter og strømretninger på ulike havdyp. Videre er det foretatt hydrofgrafiske målinger, blant annet av temperatur, saltholdighet, densitet, trykk og oksygeninnhold i vannet. Resultatene fra måleprogrammet er rapportert og publisert kvartalsvis, siste gang i august september 2014 leverte Nordic Mining omfattende informasjon om alle de forespurte temaene til Klima- og Miljødepartementet og Kommunal- og Moderniseringsdepartementet. De innsendte rapportene er tilgjengelig på Nordic Minings hjemmeside Kort oppsummert støtter den omfattende dokumentasjonen opp under resultatene og dokumentasjonen som ble utarbeidet i konsekvensutredningen for Engebøprosjektet. Dette viser blant annet at det planlagte sjødeponiet for lagring av overksuddsmineraler er en trygg og god løsning for Engebøprosjektet. Klima- og Miljøverndepartementet har bekreftet at endelig beslutningsprosess av ettersendt tilleggsinformasjon vil bli samordnet. Klima- og Miljødepartementet er i ferd med å vurdere den supplerende informasjonen, og har uttalt at behandlingstiden skal 128

129 være effektiv. B.4a Vesentlige aktuelle trender som påvirker Utsteder og industrier som Usteder operer i Nordic Mining har tillit til at tilleggsopplysningene fra undersøkelsesprogrammet gir trygghet for planene for industriell rutilproduksjon på Engebø, og dermed vil sikre en bærekraftig realisering av de betydelige verdiene som Engebøprosjektet representere for samfunnet. Gruppen understreker at myndighetenes beslutninger, som per dato for dette Prospektet avventes, angående tillatelser for Engebøprosjektet forventes å ha en vesentlig effekt på Selskapets utsikter. Annet enn dette kjenner ikke Gruppen til trender, usikkerheter, krav, forpliktelser eller hendelser siden slutten av siste finansielle år og frem til datoen for Prospektet som kan ha en vesentlig påvirkning på Nordic Minings utsikter. B.5 Gruppens/ Utsteders stilling i Gruppen Nordic Mining er morselskapet i Nordic Mining Gruppen. Nordic Mining ASA Nordic Rutile AS 100% Nordic Quartz AS 100% Nordic Ocean Resources AS 80% Nordic Mining er også et prosjektutviklingsselskap, og bistår med støtte til sine datterselskaper, Nordic Rutile AS, Nordic Quartz AS og Nordic Ocean Resources AS vedrørende geologiske, teknologiske, kommersielle og økonomiske forhold. Nordic Rutile AS 100 % Nordic Rutile AS er et heleid datterselskap av Nordic Mining. Engebø rutilforekomst ble overført fra Nordic Mining til Nordic Rutile AS den 24. november Nordic Rutile AS forestår prosjektutviklingen vedrørende Engebøprosjektet. Nordic Quartz AS 100 % Nordic Quartz AS er et heleid datterselskap av Nordic Mining, og forestår prosjektutviklingsarbeid vedrørende kvartsforekomsten i Kvinnherad. Selskapet har eksklusive avtaler med grunneiere for utvinning og utvikling av Kvinnherad kvartsforekomsten. Nordic Ocean Resources AS 80 % Nordic Mining eier 80 prosent av Ocean Resources AS, og forestår Gruppens aktiviteter knyttet til undersjøiske mineralvirksomhet. De resterende 20 prosent i Nordic Ocean Resources AS eies av Ocean Miners AS, et selskap som eies av professor Fredrik Søreide, som er engasjert som daglig leder i Nordic Ocean Resources AS. Nordic Ocean Resources AS utvikler kompetanse, faglig kunnskap og nettverk vedrørende prospektering og undersøkelser knyttet til undersjøiske mineralforekomster. 129

130 B.6 Personer som har interesser i utsteders kapital og stemmeretter Keliber 25,0 % Nordic Mining eier 25,0 prosent av aksjene i det finske selskapet Keliber. Finnish Industry Investment Ltd. og Ilmarinen Mutual Pension Insurance Company eier henholdsvis 20,0 prosent og 8,6 prosent. De øvrige aksjene eies av finske statsborgere og selskaper. Keliber har rettigheter til en spodumen pegmatitt forekomst i Finland og konsesjoner og tillatelser til å begynne gruvevirksomhet og produksjon av litiumkarbonat. I tillegg har Keliber ulike undersøkelsesrettigheter for andre litium forekomster i Østerbotten regionen i Finland. Følgende aksjonærer eide mer enn 5 prosent av den utstedte aksjekapitalen i Nordic Mining den 20. oktober 2014: Nordnet Bank AB ( aksjer tilsvarende 7,2 prosent av aksjekapitalen), Skagen Vekst ( aksjer tilsvarende 6,1 prosent av aksjekapitalen) og MP Pensjon PK ( aksjer tilsvarende 5,1 prosent av aksjekapitalen). I nominee account for Nordnet Bank AB er det på datoen for prospektet ingen indikasjon på at noen individuell aksjonær representerer mer enn 5 prosent av aksjekapitalen i Nordic Mining. Nordic Mining har ikke kunnskap om at noen person eller juridisk person utover de ovennevnte, direkte eller indirekte, eier mer enn 5 prosent av aksjene i Selskapet som er flaggepliktig i henhold til norsk lov. Aksjonærer som eier mer en 5 prosent må overholde flaggeregler i henhold til Verdipapirhandelloven 4-2. B.7 Utvalgt historisk finansiell nøkkelinforma sjon Alle aksjer og aksjonærer har like rettigheter, herunder stemmerettigheter. Styret kjenner ikke til arrangementer som på et senere tidspunkt kan føre til et kontrollskifte i Selskapet. Den utvalgte finansielle informasjon som fremgår av Prospektet er ikke revidert og må leses i sammenheng med de relevante finansielle rapportene og notene til disse. De finansielle rapportene er tilgjengelige på Selskapets hjemmeside, De utvalgte finansielle data som er presentert i dette punkt er hentet fra de reviderte årsregnskapene for Gruppen for årene som ender 31. desember 2013, 2012 (omarbeidet) og 2011 (omarbeidet), basert på International Financial Reporting Standards ( IFRS ) som benyttet av den Europeiske Union ( EU ), og Gruppens ureviderte sammendratte konsoliderte finansielle rapporter utarbeidet i samsvar med IAS 34 for tre og seks måneders periodene som slutter 30. juni 2013 og

131 Sammendratte konsoliderte resultatregnskaper Q Q Omarbei det Omarbei det 2 (NOK tusen) Urevidert Urevidert Urevidert Urevidert Salgsinntekter ,342 Andre inntekter , Varekostnader (6,577) Lønn og tilknyttede kostnader (6,342) (3,997) (7,915) (6,456) (9,725) (11,845) (12,679) Avskrivning og amortisering, (13) (2,931) Nedskrivning Andre driftskostnader (1,847) (2,171) (3,095) 3,826 (8,998) (13,886) (28,154) Driftsresultat/(tap) (8,189) (6,168) (11,010) (10,282) (18,698) (24,724) (24,736) Andel av tap i tilknyttet selskap (1,868) (682) (3,049) (1,334) (2,972) (702) - Nedskrivning (6,523) - - Finansinntekter Finanskostnader (6) (4) (11) (10) (11) (244) (1,875) Tap knyttet til videreført virksomhet før skatt (10,045) (6,851) (14,013) (11,616) (28,090) (25,238) (26,158) Skattekostnad Tap knyttet til videreført virksomhet (10,045) (6,851) (14,013) (11,616) (28,090) (25,206) (26,158) Tap knyttet til ikke-videreført virksomhet - (2,900) - (4,298) (4,298) (11,334) (2,486) Tap for perioden (10,045) (9,751) (14,013) (15,914) (32,388) (36,540) (28,644) Periodens resultat fordeler seg som følger: Aksjonærer i morselskap (10,045) (9,751) (14,013) (15,914) (32,388) (35,404) (27,841) Minoritetsinteresser (1,136) (803) Resultat pr. aksje knyttet til ordinære aksjonærer (Beløp i NOK) Resultat pr. aksje og utvannet resultat (0.04) (0.03) (0.05) (0.06) (0.14) (0.14) (0.18) pr. aksje fra videreført virksomhet Resultat pr. aksje og utvannet resultat - (0.01) - (0.02) (0.02) (0.06) (0.01) pr. aksje fra ikke-videreført virksomhet Utvannet resultat per aksje (0.04) (0.05) (0.05) (0.08) (0,16) (0.19) (0.19) 1) Korrigert for ikke videreføring av Gudvangen Stein og implementering av nye regnskapsprinsipper for pensjoner (IAS 19R) 2) Korrigert for ikke videreføring av Keliber Kilde: NOM Q og Q delårsrapport og årsregnskap 2013, 2012 og

132 Sammendratte konsoliderte balanser (NOK tusen) EIENDELER Anleggsmidler Urevidert Urevidert Omarbeidet 1 Omarbeidet 2 Goodwill ,206 Immaterielle eiendeler 6,611 6,293 6,451 6,136 7,110 Mineraler, eiendom, anleggsmidler og utstyr ,813 64,904 Investering i tilknyttet selskap 13,892 23,788 16,951 23,450 - Andre langsiktige eiendeler Sum anleggsmidler EIENDELER 20,503 30,155 23,402 44,643 79,692 Omløpsmidler Varelager ,806 3,163 Kundefordringer og andre fordringer 1, ,119 5,431 5,970 Kontanter og kontantekvivalenter 6,854 3,104 15,495 6,164 3,340 Sum omløpsmidler 8,121 4,077 16,614 14,401 12,473 Sum eiendeler 28,624 34,232 40,016 59,044 92,165 EGENKAPITAL OG GJELD Egenkapital Aksjekapital 28,050 20,050 28,050 18,547 14,547 Overkursfond 227, , , , ,416 Annen innskutt egenkapital 12,858 8,893 8,893 8,856 7,033 Udekket tap (244,647) (214,159) (230,634) (198,246) (161,567) Omregningsdifferanser 2,867 2,291 2, (600) Egenkapital henført til aksjonærer i 26,273 30,102 36,331 36,597 36,829 morselskapet Ikke-kontrollerende eierinteresse ,314 Sum egenkapital 26,273 30,102 36,331 36,597 45,143 Langsiktig gjeld Rentebærende lån ,417 7,421 Utsatt skatt ,686 Finansielle leieforpliktelser ,522 6,085 Annen langsiktig gjeld ,728 Sum langsiktig gjeld ,448 31,920 Kortsiktig gjeld Kortsiktig del av lån ,334 3,554 Leverandørgjeld 1, ,568 5,168 4,509 Annen kortsiktig gjeld 1,242 3,481 2,065 3,497 7,039 Sum kortsiktig gjeld 2,270 4,130 3,633 11,999 15,102 Sum gjeld 2,351 4,130 3,685 22,447 47,022 Sum egenkapital og gjeld 28,624 34,232 40,016 59,044 92,165 1) Korrigert for ikke videreføring av Gudvangen Stein og implementering av nye regnskapsprinsipper for pensjoner (IAS 19R) 2) Korrigert for ikke videreføring av Keliber Kilde: NOM Q og Q delårsrapport og årsregnskapet for 2013, 2012 og

133 Sammendratte konsoliderte kontantstrømoppstillinger (NOK tusen) Q Urevidert Q Urevidert Urevidert Urevidert Omarbei det Omarbei det 2 Netto kontantstrøm benyttet i operasjonelle aktiviteter (3,052) (3,743) (8,481) (8,853) (19,360) (20,598) (23,986) Kjøp av varige driftsmidler (296) (296) (668) (1,768) Kjøp av immaterielle eiendeler (80) (79) (160) (158) (315) (2,776) (854) Annet (21) 15 Netto kontantstrøm benyttet i investeringsaktiviteter (80) (79) (160) (454) (146) (3,465) (2,607) Aksjeemisjoner - 3,587-7,709 29,827 33,405 26,079 Nedbetaling av lån - (250) - (500) (415) (1,000) (916) Betaling av betinget forpliktelse (3,023) - Nedbetaling av finansielle leieforpliktelser - (387) - (962) (575) (2,477) (2,411) Netto kontantstrøm fra - 2,950-6,247 28,837 26,905 22,752 finansieringsaktiviteter Netto endring i kontantbeholdning (3,132) (872) (8,641) (3,060) 9,331 2,842 (3,841) Effekt av valutaendring (18) 116 Kontantbeholdning ved begynnelsen av perioden Kontantbeholdning ved slutten av perioden 9,986 3,976 15,495 6,164 6,164 3,340 7,065 6,854 3,104 6,854 3,104 15,495 6,164 3,340 1) Korrigert for ikke videreføring av Gudvangen Stein og implementering av nye regnskapsprinsipper for pensjoner (IAS 19R) 2) Korrigert for ikke videreføring av Keliber Kilde: NOM Q og Q delårsrapporter og årsregnskap for 2013, 2012 og

134 Det har ikke vært noen vesentlig endring i Gruppens finansielle stilling eller handelsposisjon etter 30. juni B.8 Pro forma finansiell informasjon B.9 Resultatprogn ose eller estimater B.10 Forbehold i revisors rapport Ikke aktuelt. Ikke aktuelt. Ingen prognoser eller estimater er offentliggjort. Ikke aktuelt. Det er ingen forbehold i de reviderte årsregnskapene til Nordic Mining Gruppen. I årsrapportene for 2012 og 2013 har revisor gitt en presisering knyttet til Konsernets behov for ytterligere finansiering for å opprettholde/videreføre virksomheten. B.11 Arbeidskapital Det er Selskapets vurdering at Gruppens arbeidskapital ikke er tilstrekkelig for normal virksomhet for de neste tolv måneder. Gruppens eksisterende arbeidskapital, med unntak for provenyet fra fortrinnsrettsemisjonen, forventes å være tilstrekkelig til midten av desember Minimum arbeidskapitalbehov for de neste tolv måneder er beregnet til ca. NOK 15 millioner. Gruppen må følgelig innhente omtrent NOK 15 millioner i fortrinnsrettsemisjonen for å ha tilstrekkelig arbeidskapital for sin normale drift de neste tolv månedene. Konsernets kapitalbehov de neste 12 månedene vil avhengig av det endelige utfallet av myndighetenes behandling av reguleringsplanen og utslippstillatelse for Engebøprosjektet. Det estimerte minimum arbeid kapitalbehovet for de neste 12 månedene på rundt NOK 15 millioner, tar ikke hensyn til arbeidskapitalbehov som vil materialisere hvis og når det gis tillatelser for Engebøprosjektet. Hvis og når det gis tillatelser for Engebøprosjektet, vil Selskapet vurdere arbeidskapitalbehovet for prosjektutviklingsarbeid fremover mot investeringsbeslutningen. Selskapets foreløpige estimat for preinvesteringskostnader knyttet til Engebøprosjektet er i størrelsesorden NOK millioner. PUNKT C VERDIPAPIRENE Element Beskrivelse av Element Pliktig informasjon C.1 Type og klasse verdipapir som tilbys / verdipapirets identifikasjons nummer Fortrinnsrettsemisjonen omfatter tilbud på inntil tilbudsaksjer til en tegningskurs på NOK 0,60 per tilbudsaksje, tilsvarende et brutto proveny på inntil NOK 16,8 millioner. Selskapet har én aksjeklasse og alle aksjer er likestilt i alle sammenhenger. Tilbudsaksjene vil ved levering bli registrert på det samme ISIN som eksisterende aksjer, ISIN NO , og bli notert på Oslo Axess under tickeren «NOM». C.2 Valuta NOK (norske kroner) C.3 Antall aksjer og pålydende Selskapets aksjekapital er NOK ,50 fordelt på aksjer, hver pålydende NOK 0,

135 Element Beskrivelse av Element Pliktig informasjon C.4 Rettigheter knyttet til verdipapirene Tilbudsaksjene vil i alle sammenhenger være likestilt med eksisterende aksjer og vil ha fulle aksjonærrettigheter i Selskapet fra registrering av kapitalforhøyelsen knyttet til fortrinnsrettsemisjonen i Foretaksregisteret. Forventet registrering av kapitalforhøyelsen er omkring 24. november Tilbudsaksjene gir rett til utbytte som Selskapet måtte beslutte etter nevnte registrering. Alle aksjer, herunder tilbudsaksjene, vil ha stemmerett og andre rettigheter og forpliktelser i henhold til Allmennaksjeloven, og er regulert av norsk lov. C.5 Omsetningsre striksjoner C.6 Notering og tilgang til handel Selskapets aksjer kan fritt omsettes. Tilbudsaksjene vil være fritt omsettelige med mindre annet følger av lokal lovgivning. Selskapets aksjer er notert på Oslo Axess. Tilbudsaksjer som utstedes til tegnere i fortrinnsrettsemisjonen vil bli notert på Oslo Axess ved registrering av kapitalforhøyelsen knyttet til fortrinnsrettsemisjonen i Foretaksregisteret. Selskapet forventer at tilbudsaksjene vil bli notert på Oslo Axess omkring 24. november Forsinkelser kan imidlertid oppstå ved forsinket betaling fra en eller flere tegnere. C.7 Utbyttepolitikk Nordic Mining har som intensjon å ha en utbyttepolitikk som er fordelaktig for aksjonærene. Utbyttets størrelse vil avhenge av Gruppens investeringsbehov og veksttakt, samt den generelle utviklingen og finansieringsbehovet for Gruppen. 135

136 PUNKT D RISIKO Element Beskrivelse av Element Pliktig informasjon D.1 Viktigste risiki knyttet til Utsteder eller industrien Utsteder opererer i Gruppen er utsatt for flere risiki som kan vesentlig negativt påvirke Gruppens virksomhet, kontantstrømmer eller finansielle situasjon. Finansiell risiko: Utviklingen av Gruppens prosjekter er avhengig av Gruppens evne til å oppnå finansiering gjennom egenkapital, fremmedkapital, prosjektfinansiering eller på annen måte. Det er ingen sikkerhet for at Nordic Mining vil klare å skaffe slik nødvendig finansiering. Risiko knyttet til leting og utvinning av mineraler og metaller: Markedsrisiko: Markedsrisiko omfatter endringer i mineralog metallpriser som kan bli påvirket av en rekke faktorer, offentlige reguleringer, politisk risiko og miljømessige faktorer. Alle faser av Gruppens virksomhet er gjenstand for miljømessige reguleringer i de jurisdiksjoner Selskapet opererer, og det er ingen sikkerhet for at fremtidige endringer i miljømessige reguleringer, hvis noen, ikke vil påvirke Gruppens virksomhet på en vesentlig negativ måte. Operasjonell risiko: Mineralvirksomhet innebærer en høy grad av risiko, og det er kun et fåtall av de forekomster som blir undersøkt som til slutt blir utviklet til produserende gruver. Den langsiktige lønnsomheten til Gruppen vil delvis avhenge av kostnader og suksess knyttet til dets lete- og utvinningsprogrammer. Det er også betydelig usikkerhet knyttet til beregning av størrelse og verdi på mineralreserver, og følgelig kan estimerte reserver bli justert opp eller ned. Mineral- og metallindustrien er også veldig konkurranseutsatt i alle ledd og Nordic Mining har ingen garanti for at denne konkurransen på et tidspunkt ikke i vesentlig grad vil kunne påvirke Gruppens mulighet til å erverve, undersøke og utvikle sine mineral- og metallressursprosjekter. Virksomheten til Gruppen er gjenstand for prosjektutviklingsrisiko da prosjektene er i en prekommersiell fase, og det er produksjons- og operasjonelle risiki. Risiko knyttet til teknologisk utvikling: Gruppen er generelt avhengig av sin evne til å holde følge med teknologiske endringer og forbedringer knyttet til datainnsamling og prosesseringsteknologier. Regulatorisk risiko: Gruppens eksisterende og fremtidige virksomhet vil kreve tillatelser fra statlige myndigheter og vil være regulert av lover og forskrifter knyttet til leting, utvikling, utvinning, skatt, arbeidsmiljø, helse, miljø og sikkerhet, utslipp, bruksrett, miljøvern, gruvesikkerhet og andre forhold. Kommunal- og Moderniseringsdepartementet, og Klima og Miljødepartementet vurderer på nåværende tidspunkt reguleringsplan og søknad om utslippstillatelse knyttet til Engebøprosjektet. Det er ingen garanti for at Gruppen vil få statlige tillatelser og godkjennelser knyttet til sine prosjekter på betingelser som er akseptable for Gruppen. 136

137 Element Beskrivelse av Element Pliktig informasjon Utenlandsk virksomhet: Gruppens tilknyttede selskap, Keliber, har lete- og utvinningsrettigheter og/eller utviklingsprosjekter og økonomiske interesser i Finland, som i varierende grad er utsatt for politisk og økonomisk risiko og andre risiki og usikkerheter. Slike risiki omfatter blant annet risiko for/endringer i valutakurser, arbeidsuro, terroristhandlinger og endringer i politiske vilkår. Gruppen har normalt begrenset mulighet til å påvirke utenlandske politiske og økonomiske risikofaktorer. Risiko knyttet til aksjene omfatter svingninger i aksjekursen som følge av kvartalsmessige variasjoner, generelle økonomiske utsikter, endringer i rentenivået og negativ virksomhetsutvikling. Følgelig vil ikke markedsprisen for aksjene kan følgelig ikke alltid reflektere den underliggende verdien av Gruppens netto eiendeler, og kursen investorer kan selge sine aksjer for kan påvirkes av en rekke forhold, hvorav flere av disse forholdene er utenfor Nordic Minings kontroll. D.3 Viktigste risiki knyttet til verdipapirene En investering i tilbudsaksjene innebærer visse risiki som kan medføre vesentlig eller fullt tap som tegneren må bære ved en realisasjon av sine aksjer. Disse risiki omfatter blant annet følgende: Kursen på Selskapets aksjer kan være veldig volatil. I tillegg har aksjemarkedet til tider opplevd vesentlige svingninger i pris og volum som har påvirket markedsprisen for slike verdipapirer, og som kan være helt uavhengig av selskapsspesifikke forhold eller utsikter. Videre kan Gruppens resultater og utsikter fra tid til annen avvike fra forventningene til analytikere og investorer. Slike hendelser kan hver for seg resultere i en vesentlig endring i kursen på Selskapets aksjer. Markedsvilkår kan påvirke aksjene uavhengig av Gruppens operasjonelle resultater eller de resultater som generelt oppnås i mineralsektoren. Følgelig vil markedsprisen for Nordic Minings aksjer ikke alltid reflektere den underliggende verdi av Gruppens netto eiendeler, og den pris som en investor kan selge sine aksjer for på et gitt tidspunkt, kan være påvirket av en rekke faktorer, hvorav bare noen kan knytte seg til Gruppen, mens andre kan være utenfor Gruppens kontroll. Kursen Selskapets aksjer handles for kan svinge vesentlig som følge av kvartalsvise variasjoner i generelle økonomiske utsikter, negativ forretningsutvikling, endringer i valutakurser, forhold offentliggjort knyttet til prising av handelsvarer eller konkurrenter eller regulatoriske endringer som er relevant for Gruppens virksomhet. Markedsprisen for Selskapets aksjer kan synke som følge av salg av store volum aksjer i Selskapet eller oppfatning av at slik salg kan skje. Slike salg kan også gjøre det mer vanskelig for Selskapet å tilby verdipapirer i fremtiden på et tidspunkt og til en kurs som anses hensiktsmessig. 137

138 Element Beskrivelse av Element Pliktig informasjon Aksjonærer kan bli utvannet dersom de ikke er i stand til å delta i fremtidige aksjeemisjoner. Utviklingen av Gruppens forekomster og lete- og utvinningsrettigheter vil blant annet avhenge av Nordic Minings evne til å sikre finansiering gjennom egenkapitalfinansiering. Aksjonærer kan være forhindret fra å delta i fremtidige tilbud som følge fravikelse av aksjonærenes fortrinnsrett for å sikre egenkapitalfinansiering på kort varsel i investormarkedet, eller som følge av forhold knyttet til utenlandsk verdipapirhandellovgivning eller andre forhold. PUNKT E TILBUDET Element Beskrivelse Pliktig informasjon av Elementet E.1 Nettoprovenyet Selskapet vil dekke gebyrer og kostnader knyttet til fortrinnsrettsemisjonen. Det anslås at disse kostnadene vil utgjøre ca. NOK 1,5 millioner, hvorav ca. NOK 0,8 millioner er honorar og utlegg tilrettelegger, og ca. NOK 0,7 millioner er andre kostnader og utlegg. Tegnerne vil ikke bli krevet å dekke noen kostnader eller skatter av Selskapet eller tilrettelegger knyttet til fortrinnsrettsemisjonen. Nettoprovenyet knyttet til fortrinnsrettsemisjonen anslås til ca. NOK 15,3 millioner forutsatt at fortrinnsrettsemisjonen fulltegnes. Nettoprovenyet vil allokeres til Selskapets aksjekapital og overkursfond. E.2a Bruk av provenyet E.3 Vilkår for tilbudet Nettoprovenyet fra fortrinnsrettsemisjonen vil bli benyttet til å dekke kostnader knyttet til utvikling av Selskapets prekommersielle prosjekter og generelle selskapsformål. Nettoprovenyet vil i særdeleshet sikre finansiering i beslutningsperioden for tillatelser knyttet til Engebøprosjektet og eventuelt også innledende planleggingsaktiviteter i tilknytning til den videre utviklingen av Engebøprosjektet. Nedenfor gis en kort oversikt over vilkårene og tidslinje for fortrinnsrettsemisjonen: Siste dag for handel i aksjene inkludert tegningsretter oktober 2014 Eks. rett handel i aksjene oktober 2014 Registreringsdato oktober 2014 Start tegningsperiode oktober 2014 Første dag med handel av tegningsretter på Oslo Axess oktober 2014 Siste dag med handel i tegningsretter på Oslo Axess november 2014 kl 16:30 Tegningsperioden avsluttes november 2014 kl 16:30 Tildeling av tilbudsaksjer... Ca. 13. november 2014 Publisering av resultat av tilbudet... Ca. 14. november 2014 Utsendelse av allokeringsbrev... Ca. 14. november 2014 Betalingsfrist november 2014 Registrering av kapitalforhøyelsen... Ca. 24. november 2014 Levering av tilbudsaksjene... Ca. 24. november 2014 Notering og første handledag på Oslo Axess... Ca. 24. november

139 De tegningsberettigede aksjonærene vil motta 0,09982 omsettelige tegningsretter for hver eksisterende aksje registrert på registreringsdato. Hver tegningsrett gir fortrinnsrett til å tegne og bli tildelt en tilbudsaksje i fortrinnsrettsemisjonen. Antallet tegningsretter som tildeles den enkelte tegningsberettigede aksjonær vil bli rundet nedover til nærmeste hele tegningsrett. Det er fullt mulig å handle og overføre tegningsrettene, og de vil bli notert på Oslo Axess med ticker koden NOM T og registrert i VPS med ISIN NO Handel i tegningsrettene er mulig fra og med 28. oktober 2014 til 10. november 2014 kl 16:30. Tegningsrettene vil derfor kun være omsettelige i deler av tegningsperioden. Tegningskursen for hver tilbudsaksje er NOK 0,60. En (1) aksje i Selskapet vil gi 0,09982 tegningsrett. En (1) tegningsrett vil, med forbehold om gjeldende verdipapirlovgivning, gi rett til å tegne og få tildelt en (1) ny aksje i emisjonen. Overtegning (dvs. tegning av flere tilbudsaksjer enn det antall tegningsretter som den tegningsberettigede aksjonæren har) og tegning uten tegningsretter er tillatt. Tegningsrettene som ikke er utøvd innen 12. november kl 16:30, vil være uten verdi og automatisk bortfalle uten kompensasjon til eier av rettene. Aksjer i fortrinnsrettsemisjonen som ikke tegnes av berettigede aksjonærer kan tegnes av andre investorer som ikke er hjemmehørende i en jurisdiksjon hvor slik tilbud vil være ulovlig, eller i jurisdiksjoner med unntak for Norge hvor det kreves registrering eller liknende handling. Styret vil avgjøre tildeling av aksjer for slike tegninger. Riktig utfylt tegningsblankett (vedlegg 4 eller 5) må være mottatt av tilrettelegger, eller registrert i VPS, senest 12. november 2014 kl. 16:30 CET. Fortrinnsrettsemisjonen er ikke betinget. Fortrinnsrettsemisjonen er ikke betinget. Aksjetegninger mottatt etter endt tegningsperiode og/eller ufullstendige eller ukorrekte tegningsskjemaer, og alle tegninger som er ulovlige, kan bli tilsidesatt etter selskapets og tilretteleggers selvstendige vurderinger og uten nærmere varsel til den som har tegnet aksjer. Tegning er ugjenkallelig og kan ikke trekkes tilbake, kanselleres eller endres når den er mottatt av tilrettelegger. Tildeling av tilbudsaksjer forventes å skje ca. 13. november Følgende tildelingskriterier vil bli benyttet ved tildeling av tilbudsaksjer i fortrinnsrettsemisjonen: 1. Tilbudsaksjer vil bli tildelt basert på utøvde tegningsretter; 2. Dersom ikke alle tilbudsaksjene tildeles gjennom utøvelse av tegningsretter, skal de tegningsberettigede aksjonærer som har tegnet seg for flere tilbudsaksjer enn de er berettiget til bli tildelt tilbudsaksjer i samsvar med prinsippene i allmennaksjeloven

140 3. Aksjer som ikke tegnes ved bruk av tegningsretter kan tegnes av investorer som ikke er hjemmehørende i en jurisdiksjon hvor slik tilbud vil være ulovlig, eller i jurisdiksjoner med unntak for Norge hvor det kreves registrering eller liknende handling. Styret vil avgjøre tildeling av aksjer for slike tegninger basert på markedsmessige prinsipper. Meddelelse om tildelte tilbudsaksjer i fortrinnsrettsemisjonen og det tilsvarende beløp som skal betales av tegneren vil fremgå av brev fra tilrettelegger som vil bli sendt ca. 14. november Selskapet forventer å sende en børsmelding med informasjon om resultatet av fortrinnsrettsemisjonen før åpningen av Oslo Axess i same tidsrom. Forfallsdato for betaling for tilbudsaksjene er ca. 19. november Ved tegning av tilbudsaksjer, og signering av tegningsblanketten, gir den enkelte tegner med norsk bankkonto tilrettelegger en en-gangs ugjenkallelig fullmakt til å debitere en spesifisert bankkonto hos en norsk bank for beløpet (i NOK) for betaling av tilbudsaksjene som er tildelt tegneren. Beløpet forventes å bli trukket 19. november 2014 (forfallsdato) og et beløp til betaling av de tildelte tilbudsaksjene må være tilgjengelig på forfallsdagen. Tilrettelegger tar forbehold om å foreta inntil tre trekkforsøk i en periode på syv hverdager etter forfallsdato. Tegnere som ikke har norsk bankkonto må sikre at betaling for deres tilbudsaksjer med klarerte midler skjer den 18. november 2014 eller tidligere og bør kontakte tilrettelegger i denne sammenheng. Salgsrestriksjoner: Tildeling av tegningsretter og utstedelse av tilbudsaksjer i en fortrinnsrettsemisjon kan i visse jurisdiksjoner være begrenset ved lov. Distribusjon av dette prospektet og tilbudet og salg av tilbudsaksjene som her tilbys kan også i visse jurisdiksjoner være begrenset ved lov. Personer som er i besittelse av dette prospektet er forpliktet til å skaffe seg kunnskap om og overholde slike begrensninger. Selskapet har ikke foretatt noen handling som vil innebære et offentlig tilbud av tegningsretter eller tilbudsaksjer utenfor Norge. Aksjonærer som er bosatt i et land utenfor EU/EØS kan bli nektet å motta tegningsretter eller tilbudsaksjer. Tegningsrettene og tilbudsaksjene kan ikke bli tilbudt og kan ikke tilbys eller selges direkte eller indirekte i USA, Canada, Australia eller Japan, eller på vegne av personer bosatt i USA, Canada, Australia eller Japan. Tegningsrettsberettigede aksjonærer bør rådføre seg med sine profesjonelle rådgivere hvorvidt det kreves offentlig tillatelse eller annet samtykke, eller behov for å følge andre formaliteter for å kunne utøve tegningsretter eller tegne tilbudsaksjer. E.4 Vesentlig interesse i tilbudet Tilrettelegger og dets tilknyttede selskaper kan ha interesser i fortrinnsrettsemisjonen da de har, og i fremtiden kan, yte investerings- og kommersielle tjenester til Selskapet og dets tilknyttede selskaper gjennom sin ordinære forretningsvirksomhet, og hvor de har mottatt og kan i fremtiden motta sedvanlige vederlag. Tilrettelegger og dets tilknyttede selskaper kan på nåværende 140

141 tidspunkt eie utstedte aksjer i Nordic Mining. Personer i tilrettelegger kan motta tildeling i transaksjonen. Tilrettelegger vil motta vederlag i tilknytning til fortrinnsrettsemisjonen og har gjennom dette en interesse i fortrinnsrettsemisjonen. Videre kan tilrettelegger, dets ansatte eller et tilknyttet selskap i egenskap av å opptre som investor for egen regning motta tegningsretter (dersom de er tegningsberettigede aksjonærer) og kan utøve sin rett til å benytte tegningsrettene til å erverve tegningsrettsaksjer, og i denne egenskap, kunne beholde, kjøpe eller selge tilbudsaksjer og andre verdipapirer utstedt av Selskapet eller foreta annen investering for egen regning og kan tilby eller selge slike verdipapirer (eller andre investeringer) på annen måte enn i fortrinnsrettsemisjonen. Det er ingen andre personer som har vesentlige interesser i fortrinnsrettsemisjonen, herunder interesser som er i strid med denne. E.5 Tilrettelegger/B inding Swedbank er engasjert som tilrettelegger for Nordic Mining i tilknytning til fortrinnsrettsemisjonen. Ingen bindingsavtaler er inngått. E.6 Utvanning Tegningsberettigede aksjonærer som deltar i fortrinnsrettsemisjonen vil kunne opprettholde sin relative eierandel forut for fortrinnsrettsemisjonen forutsatt at de tegner seg for sitt fulle beløp, og vil således ikke være gjenstand for utvanning. Forutsatt fulltegning av fortrinnsrettsemisjonen, vil aksjonærer som ikke deltar i fortrinnsrettsemisjonen bli utvannet med ca. 9.1 prosent. E.7 Antatte utgifter Ikke aktuelt. Selskapet vil ikke kreve noen kostnad eller skatt fra noen aksjonær knyttet til tilbudsaksjene. 141

142 22. DEFINITIONS & GLOSSARY TERMS The following definitions and glossary apply in this Prospectus unless dictated otherwise by the context, including the foregoing pages of this Prospectus. Definitions in plural also apply for words in singular, and vice versa. Anorthosite Anorthosite is an igneous plutonic rock comprising more than 90 weight per cent plagioclase Articles of Association Board (of Directors) Breccia Business Day Company The Articles of Association of Nordic Mining ASA at the date of the Prospectus The Board of Directors of Nordic Mining ASA A fragmented rock with angular components A day (not being a Saturday) on which banks are open for business in Oslo Nordic Mining ASA excluding its subsidiaries Code of practice The Norwegian Code of Practice for Corporate Governance as of 23 October 2012 DuPont EBIT EBITDA Eclogite Eligible Shareholders EM Exploration Right Extraction Permit Group GTK Hydrothermal IFE IFRS IMC E.I. du Pont de Nemours and Co. - major international life sciences and chemical company whose white pigment and mineral products business unit instigated exploration for a hard rock rutile source in the 1980s and culminating in the Engebø project in the 1990s Earnings Before Interest and Tax Earnings Before Interest, Tax, Depreciation and Amortisation A metamorphic rock consisting of garnet, omphacite, pyroxene and rutile, formed by the high temperature and high pressure metamorphism of basic igneous rocks Shareholders in Nordic Mining on the close of trading on Oslo Axess on 22 October 2014 (appearing in VPS on 24 October 2014) Electro Magnetic Right to explore and, subject to approval from governmental authorities, test production as defined in the Norwegian Mineral Act of 2009 Right to extract and utilise deposits of minerals within certain limits The Company and its subsidiaries Nordic Rutile AS (100 per cent), Nordic Quartz AS (100 per cent) and Nordic Ocean Resources AS (80 per cent) and the investment in the associated company Keliber Oy (25 per cent) The Geological Survey of Finland The action of natural hot aqueous solutions The Norwegian Institute for Energy Technology International Financial Reporting Standards International Mining Corporation 142

143 IOTA JORC Keliber Listing Management Manager NGU NOK Nordic Mining Nordic Mining Group or the Group Offer Shares Ore reserve Oslo Stock Exchange ppm Prospectus Prospectus Rules Non-official standard for description of quartz products of the highest purity issued by the world leading producer within the high-purity quartz segment, Unimin Corporation. Means the Australasian Joint Ore Reserve Committee code (JORC code) to which is a professional code of practice that sets minimum standards for public reporting of minerals exploration results, mineral resources and ore reserves Nordic Mining's Finnish associate company, Keliber Oy Listing on Oslo Axess by Nordic Mining of up to 28,000,000 Offer Shares each with a par value of NOK 0.10 to be issued in connection with the Rights Issue The management of Nordic Mining ASA Swedbank The Geological Survey of Norway The currency in the Kingdom of Norway (Norwegian krone) Nordic Mining ASA excluding its subsidiaries Nordic Mining and its subsidiaries Up to 28,000,000 new Shares to be issued by the Company in the Rights Issue A mineral deposit of proven economic value Oslo Børs ASA Parts per million This Prospectus issued by the Company in relation to the Rights Issue published and approved by and filed with Financial Supervisory Authority in accordance with the Prospectus Rules The Prospectus rules in the Securities Trading Act and the Securities Trading Regulation, which implements the Prospective Directive (EC/2003/71), including the Commission Regulation EC/809/2004, in Norwegian law Public Limited Companies Act The Norwegian Public Limited Companies Act of 13 June 1997 No. 45 (as amended) Quarts Record Date REE Rights Issue Rocksource Rutile Securities Trading Act Crystalline silica 24 October 2014 (at the close of trading on Oslo Axess) Rare Earth Elements The right issue of up to 28,000,000 new Shares as described in section 5 of this Prospectus Rocksource ASA with subsidiaries Rutile is a mineral composed dominantly of titanium dioxide The Norwegian Securities Trading Act of 29 June 2007 No. 75 (as amended) 143

144 Securities Trading Regulation The Norwegian Securities Trading Regulation of 29 June 2007 No. 876 (as amended) Shares Silica SiO2 Stock Exchange Regulations Subscription Period Subscription Price Subscription Rights Sulphide mineral TiO 2 VPS VPS account All shares issued by the Company Dioxide of silicon, SiO 2, an ingredient of many types of host rock Means Silicon dioxide The Stock Exchange Regulations of 29 June 2007 No. 74 (as amended) The subscription period in which the investors must either submit the Subscription Form to the Manager or subscribe online in respect if the Rights Issue, being from and including 28 October 2014, to and including 16:30 (CET) on 12 November 2014 NOK 0.60 per Offer Share Tradable Subscription Rights issued to Eligible Shareholders in connection with the Rights Issue, with ISIN NO The Eligible Shareholder will receive Subscription Rights per Share owned in the Company as the Record Date. One Subscription Right will grant the right to subscribe for one (1) Offer Share A mineral containing unoxidized sulphur Means Titanium dioxide The Norwegian Central Securities Depository (Verdipapirsentralen) An account held with VPS to register ownership of securities 144

145 Appendix 1: Articles of Association for Nordic Mining ASA update ARTICLES OF ASSOCIATION NORDIC MINING ASA (last updated 27 May 2014) 1. The name of the company is Nordic Mining ASA. The company is a public limited liability company. 2. The registered office of the company is in Oslo. 3. The object of the company is to carry on exploration for coal, minerals and ores, mining activity, technology development, activities that may be associated herewith, and participation in other companies anywhere in the world. 4. The share capital of the company amounts to NOK 28,050, divided on 280,504,805 shares of a nominal value of NOK The shares of the company shall be registered in the Norwegian Registry of Securities. 5. The board of directors of the company shall have from 3 to 8 members according to the decision of the shareholders meeting. Two board members jointly can sign on behalf of the company. 6. The company shall have an Election Committee consisting of three members who shall be elected by the general meeting. The members of the Election Committee shall, when they are elected, be shareholders or representatives of shareholders of the company. The Election Committee shall make recommendations to the general meeting concerning the election of members and deputy members to the board of directors. The Election Committee shall also make recommendations concerning remuneration to such members. Members of the Election Committee are elected for a period of two years. The members of the board of directors which have been elected by the general meeting make recommendations for and adopt instructions for the Election Committee. 7. The shareholders meeting shall deal with: (i) Adoption of the annual accounts and annual report, including payment of dividends. (ii) Other matters that pursuant to law are the business of the shareholders meeting. 8. If a document that relates to an issue that the general meeting shall decide on is made available to the company's shareholders on the company's website, then such a document does not have to be physically sent to the shareholders of the company. However, such a document shall be sent to the shareholder free of charge if shareholders request it. 9. Shareholders that plan to attend a General meeting have to give notice to the company within 5 days of the general meeting. Shareholders who have not given such notice within 5 days of the general meeting may be denied entrance to the general meeting. 10. The Board of Directors may determine that the shareholders may cast advance votes in writing in matters to be considered by the general meetings of the Company. Such votes may also be casted through electronic means. Voting in writing requires an adequately secure method to authenticate the sender. The Board of Directors may determine further guidelines for written advance voting. The summons to the general meeting shall state 145

146 whether advance voting is allowed prior to the general meeting, and, if so, the guidelines for such voting. 146

147 Appendix 2: Annual report 2014 on Nordic Mining's mineral deposits, exploration results, mineral resources and mineral reserves Introduction The Nordic Mining ASA Group's ( Nordic Mining or the Group ) operations currently comprise the following main subsidiaries with its respective mineral projects: 1. Nordic Rutile AS (100%): Engebø rutile deposit (titanium dioxide) in Naustdal municipality in Norway 2. Nordic Quartz AS (100%): Kvinnherad quartz deposit (quartz) in Kvinnherad municipality in Norway 3. Nordic Mining ASA (100%): Exploration project (nickel, copper, cobalt and palladiumplatinum-gold) at Reinfjord on the Øksfjord peninsula in Kvænangen municipality in Norway In addition, Nordic Mining has a shareholding of approximately 25% in Keliber Oy ( Keliber ). The investment in Keliber is classified as shares in an associated company. Keliber has several spodumene pegmatite deposits (lithium) in the Ostrobothnia region in Finland. Keliber s mineral deposits are described in section 4. Nordic Mining also holds other exploration rights not included in the abovementioned main mineral projects; ref. section 5. This report (the "Report") sets out the details of the Group's and Keliber s exploration results/prospects, mineral resources and, where applicable, ore reserves in connection to its mineral projects. The Report is updated per 8 October On an annual basis, Nordic Mining issues an updated report on its mineral projects. Reports/sources of information referred in this Report related to the Group s mineral projects are available at Nordic Mining s webpage Information regarding Keliber s lithium prospects is available at Keliber s webpage In section 1 (Nordic Rutile AS - Engebø rutile deposit in Norway) and section 4 (Keliber Oy - lithium in the Ostrobothnia region in Finland) the classification of mineral deposits is based on the JORC Code reporting standard. The JORC Code differentiates between three different resource classes: Measured, Indicated and Inferred, depending on the level of geological knowledge and confidence. A mineral deposit may also be classified into Proven and Probable ore reserve categories based on considerations of so called modifying factors such as mining, market, economy and environment. The figure below gives an overview of the JORC Code classification system and the relation between exploration results, mineral resources and ore reserves. 147

148 The JORC Code 2012 took effect from 1 December 2013, with exception of the requirements for a study at the Pre-Feasibility or Feasibility level to be completed in order to declare an Ore Reserve which do not come into effect until 1 December For more information see Going forward, Nordic Mining and Keliber will report in accordance with the JORC Code Results or estimates that were prepared in accordance with the JORC Code 2004 and reported before the 2012 Code took effect will, in accordance with the transitional provisions for the 2012 Code, be referred unchanged unless it is established that there has been material changes in those results or estimates. This applies to the information in sections 1 and 4. Please note that estimates described in sections 2 and 3 of this Report are not in accordance with the JORC Code. 1. Nordic Rutile AS - Engebø rutile deposit 1.1. General In September 2006, Nordic Mining acquired 100% of ConocoPhillips Investments Norge AS interest in a rutile deposit at Engebø in Naustdal municipality in Sogn og Fjordane county in Norway. The Engebø rutile deposit is recognised internationally as a significant deposit containing approximately 4% of hard-rock rutile. The ore is a large eclogite body stretching 2.5 km across the Engebø mountain. Nordic Mining's wholly owned subsidiary Nordic Rutile AS holds the following Extraction Permits for the Engebø deposit: Identifiation number Name of area Duration (extensions can be granted) Extraction Permit no. FU-1/1997-VB Engebøfjellet 1 23 October 2017 Extraction Permit no. FU-2/1997 VB Engebøfjellet 2 23 October 2017 Extraction Permit no. FU-3/1997 VB Engebøfjellet 3 23 October 2017 Extraction Permit no. FU-4/1997 VB Engebøfjellet 4 23 October 2017 Extraction Permit no. FU-5/1997 VB Engebøfjellet 5 23 October 2017 Extraction Permit no. FU-6/1997 VB Engebøfjellet 6 23 October 2017 Extraction Permit no. FU-7/1997 VB Engebøfjellet 7 23 October 2017 Extraction Permit no. FU-8/1997 VB Engebøfjellet 8 23 October 2017 Extraction Permit no. FU-9/1997 VB Engebøfjellet 9 23 October

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