Sotkamo Silver Interim Report Q3/2024: Restored profitability

HIGHLIGHTS

July – September (Q3)

• Net sales increased by 4% to 114 MSEK (110 MSEK), driven mainly by higher prices of silver, gold and zinc and increased zinc production. Net sales increased by 35% compared to Q1 2024 and 8 % compared to Q2 2024.
• EBITDA increased by 34% to 50 MSEK (37) and EBITDA margin increased to 44 % (34). EBITDA was 33 MSEK higher than in Q1 2024 and 31 MSEK higher than in Q2 2024.
• EBIT increased by 75% to 30 MSEK (17). EBIT was 32 MSEK higher than in Q1 2024 and 31 MSEK higher than in Q2 2024.
• Cash and cash equivalents amounted to 76 MSEK (65). The Company changed the environmental collateral provider, and cash collateral of 3.5 MEUR was released.
• Investments were 18 MSEK (12). A large part of the investments is related to exploration drilling, the aim of which is to extend the life of the mine and infill drilling that increases the predictability of production.
• The Company recognized the value of its stocks of spare parts and consumables (MSEK 8) as a component of inventory, which is reflected on EBITDA through change of inventories.
• The production amounted to approximately 312,000 ounces of silver (412,000), 684 ounces of gold (794), 211 tonnes of lead (183), and 507 tonnes of zinc (393) in concentrates. Silver production increased by 14% and zinc production by 41% compared to Q2/2024.

January – September

• Net sales increased by 2% to 304 MSEK (297 MSEK), driven mainly by the positive development of silver and gold prices
• EBITDA decreased by 11% to 86 MSEK (96), EBITDA margin decreased to 28 % (32). Profitability decreased mainly due to lower silver grade and increased contractor costs
• EBIT decreased to 29 MSEK (41)
• Cash and cash equivalents increased to 76 MSEK (65)
• Investments increased to 46 MSEK (28).
• The production was approximately 895,000 ounces of silver (1,002,000), 1,991 ounces of gold (2,146), 575 tonnes of lead (732), and 1,204 tonnes of zinc (1,570) in concentrates

Comparative figures refer to the corresponding period of the previous year. In case of discrepancies, the official Swedish version of this report prevails.

OUTLOOK

Guidance for 2024 (unchanged)

The Company has given (28 August 2024) the following guidance for 2024:

• The Company expects to produce 1.2 -1.4 million ounces of silver
• Annual EBITDA margin to be at least 28 %
• Net debt-to-EBITDA to be below 2.0 at year-end

The Company's profitability is significantly affected by external factors, such as metal prices, exchange rates and inflation. The achievement of the guidance assumes that metal prices and EUR/USD rate stay approximately at the current level of the time when the guidance was published (28 August 2024).

CEO REVIEW

Profitability and silver content improved

The price of Profitability was better than last year and the EBITDA margin for the quarter was 44%. Good profitability was supported by the strong price of silver and the silver grade in the ore fed to the concentration plant having increased from the beginning of the year. Operating cash flow was SEK 66 million positive and the Company's cash and cash equivalents increased to SEK 76 million. The cash security of EUR 3.5 million released from the environmental collateral had a positive effect on cash and cash equivalents.

We successfully opened new mining levels at a depth of 460–480 metres, through which the average silver content was higher, as expected. The average silver content increased towards the end of the third quarter and was in line with the target levels for the full quarter. The measures taken to increase underground mining have progressed, which means that the progress of drifting and quarrying was at the planned level at the end of the third quarter.

The price of silver was USD 31.1 per ounce at the end of the review period, compared to a low of USD 26.9 per ounce in August. Investors’ interest in silver has increased during the year due to lower interest rates, the weakening of the dollar and continued strong industrial demand for silver, among other reasons. The weakening of the dollar from EUR 1.07 to EUR 1.12, on the other hand, reduced the returns received in euros from silver.

In July, the authorities approved our mine waste and closure plan, which removed the temporarily lower annual limits for mining. In September, the Kainuu ELY Centre also issued a reasoned conclusion on the environmental impact assessment report for Sotkamo Silver. Based on this conclusion, we have now started preparing the permit application for the expansion of the tailings dam.

Work on the areas of the Towards Sustainable Mining responsibility system has also progressed well, and we are aiming for level A in all areas. During the past quarter, we continued training the personnel and organised, among other things, a dam accident exercise related to the management of tailings.

During the third quarter, we also started drilling in the deep extension aimed at extending the life of the mine, as well as exploration drilling for potential mineralisation on the side of the current ore body. We will tell more about the extending the life of the mine at the end of the year 2025 after all the drillings results are completed. Similarly, we will tell you more about the potential on the west side of the current orebody in early 2025.

We expect that the demand for silver and the general market situation will continue to be favourable, and in order to respond to this, we will further develop production together with the mining contractor.

KEY FIGURES

EVENTS AFTER THE REPORTING PERIOD

No significant events have materialized after the reporting period.

FINANCIAL CALENDAR

• Q4/2024: 14 February 2025
• Financial Statements and the Board of Directors' Report for the Year 2024: Week commencing 31 March 2025
• Q1/2025: 29 April 2025
• Q2/2025: 31 July 2025
• Q3/2025: 23 October 2025

The Annual General Meeting is planned to be held on 24 April 2025 in Stockholm.

WEBINAR

The result webinar will be held today on October 25 at 1:00 p.m. Finnish time (EET). You can participate in the event through the link provided below:

https://link.silver.fi/2024Q3

The webinar will be conducted in Finnish, with the material presented in English. During the event, you can ask questions using the chat function. The presentation from the webinar will be made available on the company's website at: https://www.silver.fi/en/investors/reports-and-materials

Stockholm, 25 October 2024

Sotkamo Silver AB’s Board of Directors and CEO

CONTACT INFORMATION

Mikko Jalasto,
CEO of Sotkamo Silver AB
mikko.jalasto@silver.fi
+358 50 482 1689

Tommi Talasterä,
CFO of Sotkamo Silver AB
tommi.talastera@silver.fi
+358 40 712 6970

This is information that Sotkamo Silver AB is obliged to make public pursuant to the EU Market Abuse Regulation.

This is a summary of Sotkamo Silver's Q3/2024 report. The complete report is attached to this release and available at the Company webpage: https://www.silver.fi/en/investors

Sotkamo Silver in brief

Sotkamo Silver is a mining and ore prospecting company that develops and utilises mineral deposits in the Kainuu region in Finland. Sotkamo Silver supports the global development towards green transition technologies and produces the metals needed responsibly and by taking local stakeholders into account. Sotkamo Silver’s main project is a silver mine located in Sotkamo, Finland. In addition to silver, the mine produces gold, zinc and lead. The company also has mining and ore prospecting rights for mineral deposits in the vicinity of the silver mine in Kainuu. Sotkamo Silver Group consists of the parent company Sotkamo Silver AB and its wholly-owned Finnish subsidiary (Sotkamo Silver Oy). Sotkamo Silver AB is listed at NGM Main Regulated in Stockholm (SOSI), Nasdaq Helsinki (SOSI1), and Börse Berlin.

Read more about Sotkamo Silver on www.silver.fi/en/