Dannemora Mineral AB

Press Release 10 June 2008

The Board of Dannemora Mineral has called an extraordinary general meeting of shareholders on 24 June 2008 in order to consider
•  proposal authorising the Board to implement a share issue; and
•  proposal to issue warrants to key management personnel in the company.

It is the Board's intention, as soon as possible, after the EGM to implement a private placement of approx. SEK 150 million to finance pumping of the iron ore mine in Dannemora and other time-critical installation work.

In the second half of 2008, the Board plans to complete its ongoing financing discussions and to obtain more of its own and external capital in a coordinated financing programme, to the extent required for the iron ore project in Dannemora.

Background

Dannemora Mineral owns an exploitation concession for the mine area in Dannemora and has applied for a mining licence, issued under the Swedish Environmental Code. The Swedish Environmental Court will make its decision known on 18 July. Provided the Swedish Environmental Code licence is received, the company will hold all the important authority licences and permits required to carry out mining operations in Dannemora.

Dannemora Mineral has conducted a feasibility study on the re-opening of the Dannemora iron ore mine. The study indicates good profitability for the project and an estimated investment requirement of SEK 838 million for the preparatory work, equipment and installations. The study also estimates a working capital requirement of between SEK 200 and 300 million. The total financing requirement for the Dannemora mining project is therefore expected to be approx. SEK 1,100 million, distributed over three to four years.

Dannemora Mineral has made far-reaching preparations so that it will be in a position to immediately purchase installation work and equipment as soon as the company is granted a licence issued under the Swedish Environment Code. The company is currently purchasing equipment and services to clear the mine of approx. 5 million cubic metres of water. Time-critical projects also include placement of ramps to connect the ground with the main level of 460 metres construction of a new ore processing plant.

Financing plan

After sounding out various potential backers, it was decided that the Dannemora mining project would be financed with just over a third of the company’s capital and the remainder externally. The external capital is expected to comprise bank loans and/or bonds, and supplier financing in the form of leasing.

Dannemora Mineral is planning two share issues to raise the required additional share capital, which is estimated at approx. SEK 400 million. The first is expected to amount to approx. SEK 150 million. The Board is planning to implement the first share issue without preferential rights to shareholders (private placement) and the second with preferential rights. The rationale behind the private placement is to broaden the company’s ownership, thereby facilitating implementation of the planned preference issue and also increasing liquidity and trading in the company's share.

Dannemora Mineral is planning to implement the private placement of approx. SEK 150 million as soon as possible after adoption by the extraordinary general meeting. The company will then implement a preference issue later in 2008 in a coordinated financing programme that will also secure its loan financing.

Dannemora Mineral has engaged E. Öhman J:or Fondkommission AB as its financial advisor for the planned share issues.

Board mandate

The Board proposes that it be given a ‘carte blanche’ mandate for the entire financing process. The Board mandate should be designed to allow it to act and respond appropriately to changing situations and business conditions in financial markets which are unfathomable and turbulent at present. The Board’s financing plan is largely outlined above. However, it is worth noting that the financial markets may develop in such a way that changes to the plan may be necessary at short notice.

Warrants to key management personnel

The Board of Dannemora Mineral proposes that a small number of key management personnel in the group be offered share options and be given the opportunity to acquire warrants in Dannemora Mineral on market terms and conditions. It is the Board’s opinion that the proposed option scheme is conducive to encouraging these key individuals to remain with the company. The total number of warrants issued to ensure Dannemora Mineral’s commitment will (together with the previously issued warrants) produce a dilution of approx. 5.3 percent of share capital in the case of full subscription, estimated on the basis of present outstanding shares.

Time and place of the general meeting of shareholders

The extraordinary general meeting will take place on Tuesday 24 June at 15.00 at the offices of Kilpatrick Stockton Advokatbyrå, Hovslagargatan 5 B in Stockholm.

The Notice of the general meeting is enclosed

Other information about the meeting and proposals on the new share issue and option scheme is shown in the Notice.

This document is a translation of the original press release in Swedish. In case of divergence, the
Swedish version shall have precedence.

For further information, please contact:

Staffan Bennerdt, Group President
telephone 0295- 24 44 22
staffan.bennerdt@dannemoramineral.se

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