Endomines - Offering underway, uncertainties remain

Endomines to raise gross proceeds of EUR 13m

Endomines seeks to raise gross proceeds of EUR 13m (SEK 141m). The 2.6 million new shares offered represents 38.9% of the current shares outstanding. The subscription price is EUR 5.00 (SEK 54.25 at the current FX rate). In case of oversubscription, the company’s BoD may increase the number of shares issued up to 3.6m shares with a one million share upsize option. The net proceedings from the issue (excl. upsize option) are roughly EUR 12.3m (SEK 134m). The company has received commitments from investors worth of EUR 12.2m in total (or roughly 94% of the total offering) of which roughly EUR 3.4m is paid in cash.

Proceeds used to fund exploration activities in Finland

Endomines updated its strategy earlier this year which set the company’s focus back to Finland. The company aims to conduct wide scale exploration activities in the Karelian gold line with a mid-term target of defining a deposit with more than one million ounces of gold resources. The proceeds of the issue are used for the implementation of the new strategy and especially for exploration activities along the Karelian Gold Line.

HOLD with a target price of SEK 59 (64)

We have adjusted the shares outstanding and net debt figures with an assumption that the offering will be fully subscribed. In addition, we have made changes to our estimates and the SOTP valuation. The favorable gold price development is outweighed by the dilution effect from the offering and the uncertainty regarding the successfulness of the company’s exploration activities, the value realization of the US assets and changes in the FX rates. We decrease our target price to SEK 59 (64), HOLD-rating remains intact.