Hello everyone, and welcome to hear the exciting news concerning our U.S. assets. Thanks for joining us today. Here is Kari Vyhtinen , our CEO, and my name is Anni Turpeinen. I'm the Chief Communications Officer here at Endomines. Our topic today is the divestment of our Idaho assets: Friday, Deadwood, and Buffalo Gulch. The agenda for today is that we start by summarizing the facts of the transaction and by explaining why we wanted to sell these assets. After that, we'll move on to the details of the deal structure and payment milestones. Of course, we want to explain how this transaction is beneficial for Endomines. After that, we'll share a few words about the gold potential in Montana. At the end of the presentation, we will have the questions and answers session where we will answer your questions.
Please feel free to send your questions via chat during the presentation, and we will go through them afterwards, right after Kari's part. Please type your questions in English. Thanks again for joining us. Let's get started, Kari. Go ahead.
Thank you, Anni. Extremely pleased to be here today to explain the recent transaction that was signed today. To give you the summary of the transaction, we sold three of the assets we have in Idaho: Friday, Deadwood, and Buffalo Gulch. The payment was AUD 18.5 million in cash, which we will use to develop the Karelian Gold Line in Finland, and then 9.95% ownership of the parent company. That offers potential upside, as we strongly believe that the buyer is somebody that can actually develop the assets into a completely different category. There is also a minimum value that when the shares are issued, the minimum value of shares will be AUD 1.5 million. The operating cost saving is significant.
We have been taking good care of the assets, so divesting the assets will save the company approximately EUR 500,000 per annum, plus any possible legal and advisory fees, as we have been negotiating on the deal quite a while. There has been a significant amount of extraordinary expenses. We will still have control of two gold assets in Idaho and also two assets in Montana, so something to look forward to also in the future. Why did we sell the assets? If we go back to what we are doing, Endomines is a gold mining company and gold exploration company, and we are producing gold in Finland. Our operations, they are in a place called Pampalo, in the center of Karelian Gold Line. This year, the guidance is 16,000-22,000 ounces of gold production.
We are doing a lot of exploration in Southern Gold Line and Northern Gold Line. The Karelian Gold Line is approximately 40 km long, our key greenstone belt, with significant gold mining and gold exploration potential, very similar to, for example, PTP in Canada, Kalgoorlie in Australia, with Waterfront in South Africa. There are also critical minerals, tungsten and molybdenum, in the Southern Gold Line. We are permitting the Southern Gold Line to increase the production to closer to 100,000 ounces around 2030. Our strategy, the strategy focus growth in Finland. We are a Finnish company. We are listed in Nasdaq, Helsinki. The ownership is very Finnish. The strategy focus is on Finland. We have in the strategy, Pampalo is the center for production. That's where we aim to produce the gold. We focus on exploration, and that drives on the long-term growth.
Increasing resources enables us to increase the production volumes. Critical minerals is part of the strategy. Tungsten, very important, used in the defense industry as well. There is a lot of interest on tungsten. It's available in Karelian Gold Line. Financial stability. We want to separate us from junior mining companies that continuously raise funding. Our financial situation is solid. We have a strong operational cash flow, and we are really looking at long-term development activities. Sustainability is the backbone of the business. You have to do things right and take care of the environmental side, take care of the people, take care of the people who live close by, our partners, and just work in an ethical way. If you think about our long-term targets, our long-term targets are that we increase the gold resource to 1.5 million-2 million ounces by the end of 2030.
It is currently at 500,000, so it requires exploration during the five years before 2030. It has been proceeding exactly as we have planned. The other target is to increase the gold production to 70,000-100,000 ounces by around 2030. At the same time, we will also start producing tungsten and molybdenum. This will be done by taking the Southern Gold Line into production. For sulphur gold production by 2035, the targets are very Finland-focused, and therefore we thought the U.S.A. is not in our strategic focus right now. It was a good time to divest the assets and get more financial resources to develop the Karelian Gold Line to achieve our long-term targets.
If we go back and look at the assets that we had, there were seven assets in total, five in Idaho, two in Montana. The assets that were sold were Friday, Deadwood, Buffalo Gulch. What is common with these assets, they are all located near a small mining town, Elk City. They are very close to each other. There is only a few kilometers' distance between the assets. There is a lot of gold potential in the area. We are really looking forward to seeing what the new owners can do with the assets. What is still left with Endomines is Rescue and Kimberly. They are located near a place called Warren, a little bit further away. High-grade gold assets, fairly small scale, and so on. Montana, very interesting. There are two assets, U.S. Grant and Kearsarge .
With Kearsarge, we have an option to buy U.S. Grant we own fully. Those are very interesting, and I will come back to those assets a little bit later in the presentation, as we see that there is significant potential there. The deal structure and the benefits for Endomines. We sell three assets, Friday, Deadwood, and Buffalo Gulch. The buyer is Yellowstone Mining, an Australian company, through its wholly owned subsidiary, Elk Range Minerals, which is a company based in Idaho. The owners and the management are very different from Australia. The deal includes machinery and equipment. This is mainly related to Friday, where we actually have a lot of machinery and equipment, which are part of the deal. The closing is done; it is anticipated to be done within 90 days, so it will go forward quickly.
The price is AUD 20 million paid in cash and shares. The main benefits for us are that we get more financial resources, which we can use to develop Finland and to achieve our strategic targets. There is also upside potential through the ownership on the parent company when the assets get developed. There is AUD 18.5 million cash, and then 9.95% ownership of the parent company, the Australian parent company. There is a minimum value of AUD 1.5 million when the shares are issued. There is very strong management in the buyer's company, and that really supports the development. When we were negotiating and looking at the options, what we want to do, one of the key factors here was that we actually truly believe in Yellowstone's capabilities and Elk Range Minerals' capabilities to develop the assets.
That gives us potential upside. We will save in the operating cost side $500,000 per year. We have been keeping the assets in very good conditions. We have few people; most of the people will be transferred to the buyer at closing. One important factor is also the fact that we have been spending a lot of time in the U.S., and now we can focus. We can really use our resources to focus on Finland, to focus on exploration activities in Finland and production growth in Finland and other activities. We are very happy about it that we can actually now fully focus to Finland. These three assets have been the ones that have required the most attention because there are people working, and there is a mine that we have to keep in a good condition and so on.
As a summary, the transaction increases financial resources for the company, lowers our operating cost, and offers potential upside via ownership of the Australian parent. The payment milestones is that at closing we will get AUD 3.5 million. The second milestone is the shares issue, which is anticipated to happen within 12 months. If it does not happen in 12 months, we will get additional AUD 1.5 million in cash. The third milestone is AUD 6 million, and that is going to happen within two years. There is a definition that if the resource grows to 500,000 ounces, then it is paid within two years. The next milestone is within four years, and the last one is within five years or start of the commercial production. With milestones three and four, we can also choose to take the payment in shares, but it is Endomines option.
We can select either cash or shares, and that's something that we can evaluate once we see how the assets are developed. Currently, we see that we need financial resources to develop Finland. The buyer's team is extremely strong, and usually I wouldn't even show this kind of slide here, just to emphasize that there is true upside potential. Very strong team, a lot of experience. Campbell, who is the chairman, is working as CEO at Bellevue Gold, and he has done a magnificent job in transferring the company. A lot of experience from other projects as well. Rafael is the CEO of Ridge Mining and Metals and has a lot of experience in developing projects from greenfield to production. Fraser, very experienced geologist, a lot of experience also in the U.S.A. so knows exactly how to work in the U.S.A.
Steve is working for Bell Potter Securities, and he and his team, just last year, have raised AUD 3.5 billion in equity financing. He knows how to do the financing. Big, important piece in the puzzle. If we look at the Montana assets, we see that it is a region of untapped gold opportunity, and there are historical gold resources. There is also silver. As we know, the market is now very strong. The gold market is very strong. The silver market is also strong. There is a lot of speculation that the price of silver and the price of gold will further increase in the future. The outlook is seen to be very strong. What we are planning to do is now actually to make an external assessment.
We will use external advisories to evaluate the assets so that we can evaluate what would be the best way forward. We are not going to do anything in the near future. It will take some time before the assessment is completed. After the assessment, we will decide what to do. We will have a sort of break here, and we will not look for any further divestment in the next few months or even longer time. Let's see how it goes. If you look at the assets, there are two in Montana, U.S. Grant, historical mine. It has been in production. There is also a mill, which needs some work to get it running, but it's there. It has a capacity of 150 tons a day. We have the small miners' exemption permit valid, which we actually got in 2024.
We did some small-scale permitting in 2024, and the permit is valid. Kearsarge, very high potential as a whole. Currently, there is a resource which is over 300,000 ounces at 3 grams per ton. The latest drill hole, for example, the latest exploration activities were done by Transatlantic in 2019. In those results, they got 20 meters of 8.64 grams per ton of gold. Very, very significant intersection. How we see it, like back in the days when the gold price was below $2,000, for example, there was always thinking that this would be an underground, small-scale operation. However, with the current gold market, we see that there is potential for large-scale open pit, significant volume. This is something that we will think about, how we could increase the value, increase the value before we make any decisions.
Combined, this is a very nice package as they are located only 8 km apart. They can be developed together. If you look also at U.S. Grant, the grade in the deposit is very significant, and the silver is also very significant, over 400 grams per ton silver in the deposit. It really looks potential. This is something that we want to further evaluate and not to make any too fast decisions. What is the best way forward to assess the potential and maybe increase the value before we make a decision? That is in short the presentation, and happy to answer any questions there might be.
Yes, we do have a couple of questions here in the chat. Let's start with the question concerning the future. Endomines is still holding rights to two assets in Idaho and two in Montana.
What are your plans from this forward with those assets, especially those in Idaho? What are you going to do with them?
With Idaho, we are still looking to continue the sort of looking for the partnership type of arrangement. However, the situation now is very good because one of the key drivers to get this transaction done was the fact that we were spending EUR 700,000 per annum on the operational cost side. With these two assets and the two assets in Montana, the cost level is very low. We are talking about approximately EUR 200,000 per annum anymore. We are not in a hurry. We will see and look for the options and then make a decision what would be the best way forward. With Idaho, it is possible also to divest it or have a similar structure to what we did now.
With Montana, we really want to take the time to evaluate the potential and see if there are any ways to increase the value before we make concrete deals.
Let's continue with Montana. Could you tell more about it and why Montana hasn't been considered before?
It was actually back in the days before the strategy was changed in 2022 when there was an Endomines strategy that Finland was small and then the growth comes from the U.S.A. In that plan, there were different steps, and the steps were that the first one is Friday in Idaho, and it increases the production a little bit. The company goes to Montana, and those steps were a lot bigger. It has been in the plans, but if we think about the journey here from 2022 to today, the company has been growing very aggressively.
I personally think that one of the success factors why we have been so successful in growing the company and getting things done in Finland is the focus that we have focused really into one area. Our team is focused to develop Finland. The financial resources are focused to develop Finland. That is why we have not really spent time to look at those assets more thoroughly. Now the company is bigger. We have more financial resources, so we can afford to spend a little bit to actually assess, to make some plans how those could be developed before we make any further decisions.
Okay. What about potential buyers? Have you had talks with potential buyers regarding the Montana assets?
There has been a lot of interest, but currently we are not talking as we want to assess it ourselves.
There has been a lot of interest, and I just spent some days today and last week in London, and there is interest. There is interest for sure, but we are just holding back, and we want to do the assessment before we make decisions what would be the best step forward.
Okay. Now we move on to the payment milestones. What would make you choose payment in shares for milestones three and four?
I think the only option, because currently we see that cash is the option because we want to use it to develop Finland, I think the only option would be that we would see that the growth potential is so huge and there is liquidity in the shares that you can easily trade the shares later, then that could be something that we could evaluate.
It's also possible to have a portion or something like that, so let's see. Currently we see that the most likely option would be that we choose cash.
Okay. We have this kind of question. What proportion of the book value of the U.S. assets is being sold now?
We have sold approximately, just on top of my head, I would say 40% of the book value, approximately less than half anyway. I think the value of the remaining assets is something like $18 million. This was less than half. Yeah, that's the situation currently.
You told us that you will get 9.95% ownership stake in the parent company of the buyer. Can you specify how Endomines will benefit from this? Would it be better to have just cash instead or the shares?
We see that because it's now in the deal, it's mainly cash and then this portion. We see that it offers significant upside as we truly believe in the team. We know the team members, and we have done a lot of research on the company. We trust the team, and we trust that it will do a great job in developing the assets. That can offer significant upside depending on the company valuation. Of course, it's still speculation, but that's how we have seen it. We want to stay in the journey and see what happens in Idaho.
Okay. How is the AUD 18 million balance sheet value divided between Idaho and Montana?
If I remember correctly, these are rough figures. I would say in Idaho, the valuation is around AUD 8 million, and in Montana, it's AUD 10 million- AUD 12 million.
AUD 6 million - AUD 8 million in Idaho, AUD 10 million - AUD 12 million in Montana. That would be my rough estimation. Yeah, something like that. Montana is valued higher, and Idaho is valued lower. Yeah, that is the valuation. We see, just as I mentioned in the presentation, we truly see that in the Montana assets, there is significant potential to increase the value with limited investment. Doing something small can increase the value significantly, especially in this kind of gold market and silver market.
That was the last question. Thank you very much for the questions. Thank you.
Thank you.