Scandinavian Minerals Limited
TSX : SGL
FRANKFURT : W3M

Scandinavian Minerals Limited

July 17, 2007 12:40 ET

Scandinavian Minerals Third Quarter Financial Results; Kevitsa Project Update

TORONTO, ONTARIO--(Marketwire - July 17, 2007) - Scandinavian Minerals Limited (TSX:SGL)(FRANKFURT:W3M) today announces its financial and operating results for the three and nine months ended May 31, 2007, along with an update on the Company's project development activities.

Results of Operations

The Company's consolidated net loss for the three months ended May 31, 2007 was $325,040 or $0.02 per share compared to a net loss of $165,029 or $0.01 per share for the same period ended May 31, 2006.

The Company's consolidated net loss for the nine months ended May 31, 2007 was $1,511,372 or $0.09 per share compared to a net loss of $684,046 or $0.05 per share for the nine months ended May 31, 2006.

The increase in loss is due to higher corporate and administration expenses for management compensation, directors' fees, investor relations' activities and professional fees. The higher expenses were offset as interest income increased due to the higher cash levels available for investing.

During the three and nine months ended May 31, 2007, the Company invested $1,077,276 and $2,703,734 respectively on exploration and development expenditures, primarily on the Kevitsa project, compared to $440,690 and $822,585 respectively during the same periods in the prior year.

Details of the Company's financial results are described in the unaudited consolidated financial statements and Management's Discussion and Analysis which, together with further details of the Company's projects, will be available on the Company's website at www.scandinavianminerals.com and on SEDAR at www.sedar.com. All amounts are in Canadian dollars unless otherwise stated.

Kevitsa Project Update

During the three months ended May 31, 2007, and subsequently up to the date hereof, the Company continued to develop its 100%-owned Kevitsa project. Highlights are as follows:

- Infill drilling: final results received

- Continuation of Pilot Plant metallurgical testing program

- Feasibility Study commenced

- Engineering Agreement signed with Outotec Oyj

- Environmental Permit Application submitted

- Private placement raised $35 million

In March 2007 the Company received the remaining results of the infill drilling program conducted at Kevitsa in summer 2006. The results correlated closely with results from previous drilling (See Press Release dated March 1, 2007). The drill data is being incorporated in the Feasibility Study that commenced in April 2007.

The Feasibility Study is being coordinated by St Barbara LLP (formerly St Barbara Consultancy Services) of London, UK. St Barbara will also be responsible for ensuring that the Study complies with Canadian National Instrument 43-101. Technical work, including geology, mining, metallurgy and environmental studies, will be performed by leading Finnish engineering and technical consultants. The Study is expected to take approximately 12 months to complete.

During the quarter, discussions continued with the Finnish company, Outotec Oyj with regard to their involvement in the Kevitsa Project. The discussions were completed after the end of the quarter and resulted in an Agreement being signed with Outotec in June 2007. Under the Agreement, Outotec will carry out detailed engineering work for the Feasibility Study, including open pit modelling and the design of the planned processing plant for the Kevitsa project. Outotec Oyj is one of the world's largest providers of process solutions, technologies and services for the mining industry and is a leading supplier of mineral processing equipment. The Company's staff includes mining engineers, geologists and mineral processing engineers with many years experience in their respective fields, including the design, construction and commissioning of numerous mining operations in Finland. The Company considers that Outotec's experience will be invaluable in advancing Kevitsa towards production.

The Company continued its Pilot Plant metallurgical program at the Mineral Processing Laboratory of the Geological Survey of Finland (GTK MinProc). A bulk sample totalling 575 tonnes was shipped to the facility in the summer of 2006 and tests began in September 2006. GTK MinProc completed the processing of the bulk sample in February 2007. During the latest period, additional check assays and bench-scale tests were performed.

Subsequent to May 31, 2007, the Company announced positive results of Pilot Plant testing (See Press Release dated July 12, 2007). Nickel flotation yielded a range of smelter-grade concentrates averaging 12.2% nickel, within a range varying from 9.4% to 17.3% nickel. Sulphide nickel recovery ranged from 77.4% to 80.5% and averaged 78.8%. Recoveries with respect to total nickel (sulphide nickel plus silicate nickel) ranged from 64% to 67% and averaged 65.3%. The nickel concentrate also contained an average 10 grams/ton platinum at 55% recovery, 7.7 grams/ton palladium at 38% recovery and 1.6 grams/ton gold at 10% recovery. GTK MinProc estimates that total nickel recovery for the average ore at Kevitsa will be between 70% and 72%. Copper flotation yielded high-grade concentrates averaging 28.55% copper, at an average recovery of 78%. A further 11% of the copper reported to nickel concentrate, bringing total copper recovery to 89%.

The Pilot Plant results show that good quality, smelter-grade concentrates can be produced from the Kevitsa ore at commercially acceptable levels of recovery by conventional floatation methods. The attaining of very low levels of magnesia in the nickel concentrate and the elimination of TETA from the flotation process represent two additional important achievements.

In May and June, the Company finalised its preparation of the Environmental Permit Application for Kevitsa. The application was submitted to the Finnish Environmental Permitting Authority for Northern Finland in July 2007. Such applications typically take about one year to be granted.

In May 2007 the Company announced a short-form prospectus offering of 4 million shares at a price of $8.75 per share. This offering closed on June 6, 2007 and raised gross proceeds of $35 million less commission and expenses. The funds will be used for the advancement towards production of the Kevitsa project, to complete the ongoing Feasibility Study and for general corporate purposes. In particular, the financing will enable the Company to place orders for long lead-time equipment such as the grinding mills for the processing plant. In addition, the fundraising will allow the Company to advance infrastructure planning and construction for the project, including the upgrading of the present forest road to the property, as well as water and power supply.

Management considers that the Company has made good progress during the period in advancing important aspects of the Kevitsa project. The recent financing will allow the Company to continue with the intensive technical program necessary to take Kevitsa towards production, especially the ordering of the grinding mills and the development of the necessary infrastructure. The Company has sufficient funds to complete the ongoing Feasibility Study, to place the deposit on the grinding mills and to award contracts for infrastructure construction once the necessary construction permits have been received from the relevant authorities.

About Scandinavian Minerals

Scandinavian Minerals Limited is a Canadian public company listed on the Toronto Stock Exchange under the symbol "SGL" and on the Frankfurt Freiverkehr market under the symbol W3M. The Company's current focus is the development of its 100%-owned Kevitsa nickel-copper-PGE project in northern Finland.

Forward-Looking Statements

Some of the statements contained herein may be forward-looking statements which involve known and unknown risks and uncertainties. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of mineral commodities, general market conditions, risks inherent in mineral exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital.

Contact Information

  • Scandinavian Minerals Limited
    John Kearney
    Chairman
    (416) 203-6128
    (416) 368-5344 (FAX)
    or
    Scandinavian Minerals Limited
    Chris de Saint-Rome
    Corporate Development Advisor
    (514) 802-3377
    or
    Scandinavian Minerals Limited
    Peter Walker
    President & CEO
    (+44) 7717-223909
    Email: info@scandinavianminerals.com
    Website: www.scandinavianminerals.com
    or
    Studer Consulting AG
    Marlies Studer
    (+41) 44 215 2803