DANNEMORA MINERAL ANNUAL REPORT 2008

Staffan Bennerdt, President and CEO

Our good transport links and proximity to Europe’s steelworks bring reduced costs for our customers. The combination of geographical advantages and attractive products makes Dannemora an interesting alternative in a market which is in dire need of a fresh approach and increased competition.

CONTENTS

Business concept, vision, goals and strategy 4Group structure 52008 Highlights 5A word with the President 6

Iron ore 8

Exploration 20

Risks and factors which can affect Dannemora Mineral 26The Dannemora share & ownership 27Four-year overview 29

Board of Directors’ Report 31Income statements 35Balance sheets 36Cash flow statements 38Additional information and notes 39Audit report 47

Corporate governance 48Board, management and auditor 2008 49

Glossary 52

One of Sweden’s oldest mines 54

This annual report is a translation of the original annual report in Swedish. In case of divergence, the Swedish version shall have precedence.

4 Business concept, vision, goals and strategy

BUSINESS CONCEPTDannemora Mineral’s business concept is:

to • resume operations in the Dannemora iron ore mine, and to operate the mine profitablyinalong-termperspective.to identify other iron mineralisations and •develop them into workable ore deposits which create good synergies with the Dannemora operationsto explore for base and precious metal •mineralisations in and around Dannemora anddeveloptheseintoworkabledeposits.

VisionDannemora Mineral’s vision is to maximise shareholder value by becoming an established and valued niche supplier of iron ore to a number of European steel companies within fiveyears.

GoalsDannemora Mineral’s goal is to resume operations in the Dannemora mine, establish long-term supply contractswith two to fiveleading steel companies for the majority of its production and gradually increase the ore reserves in the Dannemora deposit by continuous exploration. It is also thecompany’s goal to gradually develop known or new deposits of iron ore in other parts of Sweden.

Theboardhasdefinedthefollowingfinancialgoals for the business:

to• achieveapositiveoperatingprofitwithintwo years of production starttoachieveprofitabilityatleastatthelevel•of the industry average within three years of production startThe operational goals can be summarised •as follows: resume operations in the Dannemora mine •in summer 2011 achieve full production by autumn 2012•substantially increase iron ore reserves by •means of exploration in the mine and its vicinitylocate and develop known or new iron ore •deposits in other parts of Sweden

StrategyThe key elements of Dannemora Mineral’s strategyforachievingitsdefinedgoalsareasfollows:

OrganisationThe company has established a well adapted and effective organisation which will be developed in line with growth of the company’soperations.

PersonnelExperiencedandhighlyqualifiedpersonnelarevitaltothecompany’ssuccess.Withthisin mind, the board and management work actively to ensure the company stands out as an attractive and stimulating workplace. Inorder to ensure future provision of personnel, the company has constant dialogue with representativesof themunicipalcouncil.

MarketDannemorawillestablishastable,long-termmarket for iron ore products by focusing on customers and creating added value by providing geographical and transport advantages.Themarketdevelopmentwillbeaimedattheearlyestablishmentof long-termrelationshipsandmulti-yearsupplycontractswith a large number of European steel companies.Customerswithsteelproductionwhich is particularly suited to Dannemora’s localisation and product properties are prioritisedintermsof timeandresources.

Exploration for new and known deposits of iron ore mineralisations is focused on such with geographical and transport advantages and on ore with similar product properties to the Dannemora ore as this brings considerable marketsynergiesfromacustomerperspective.New or known mineralisations of base or precious metals may either be processed into workable deposits or sold if this is considered profitable.

FinancingResumption of operations in the Dannemora mine and continuing exploration for new deposits will require capital contributions.Creation of shareholder value is dependent onthestructureof theplannedfinancingof the production facilities (internal-externalcapital ratio) and the capital cost at which

it can be carried out. Alternative marketand technical solutions will be considered in relationtodifferentfinancialsolutionsinaninteractiveprocess.Animportantpartof thisprocess is assessment of the risks inherent in differentfinancialsolutions.

StructureDannemora will be established as a central platform for future mining activity in eastern Bergslagen.Theinitiallyextensiveexplorationpermits will gradually be concentrated on a smaller number of interesting prospects.It is expected that theDannemora sitewilleventually represent the centre of the mining industry in eastern Bergslagen, not only from a technical and production perspective but also in a knowledge and administrative context.

PermitsOfficial permits and other legal regulationsare critical components of the company’s activities. The company will endeavour tominimise time and cost risks with regard to permits and trials, and its operations will be characterised by open and constructive cooperationwiththerelevantauthorities.

EnvironmentThe exploration and mining industry is regulated by extensive and mission-criticalenvironmental legislation. The companyhas therefore organised its business so that it is able to closely monitor developments in environmental legislation and always take whatever action is required to comply with currentlegislation.

5Group structure & 2008 highlights

2008 HIGHLIGHTS InJanuary,DannemoraMineralconducted•a feasibility study of the planned operations in the Dannemora mine, which showed the projecthassolidfinancialviability.In February, Östhammar Municipality•transferred an area of land of approx-imately 400 ha to the Dannemora Group’s newly established subsidiary Dannemora Förvaltnings AB. The purchase gaveDannemoraMineralownershipof build-ings and installations important to mining operations.On 1 April, Staffan Bennerdt took up•his position of President and CEO of DannemoraMineral.On 18 June, the Swedish Environmental•Court approved Dannemora Mineral’s application to engage in mining activities inDannemora.Therulinghastheforceof resjudicataandcannotbeappealed.Theenvironmental permit is for the mining andprocessing of up to 2.0Mt of lumporeandfinesannually.In June, Dannemora Mineral completed•a private placement which brought the company proceeds of SEK 155 million beforeissueexpenses.Atotalof 3,100,000shares were subscribed for at a price of SEK50.InAugust, preparations for pumping out•the mine began. Pumping of the waterbeginsinthesecondquarterof 2009.October saw the start of mobilisation •

DANNEMORA MINERAL AB (PUBL)

DANNEMORA MAGNETIT AB

DANNEMORA FöRVALTNINGS AB

DANNEMORA PROSPEKTERING AB

GROUP STRUCTURE Dannemora Mineral comprises the parent company Dannemora Mineral AB andthe wholly-owned subsidiaries DannemoraMagnetit AB, which is responsible foroperation of the Dannemora mine, and Dannemora Förvaltnings AB, which isresponsible for the property portfolio. In2008, the group’s exploration activities were conducted in the wholly-owned subsidiaryDannemoraProspekteringAB.Thisentity’sactivities were transferred to Dannemora Magnetit AB with effect from 1 January2009, after which Dannemora Prospektering ABbecameadormantsubsidiary.

of the ramp placement work which will connect the mine’s main level with the existing ramp.The actualworkbegan inFebruary2009.DannemoraMineralABhashadintensive•discussions with potential customers from Northern Europe during the year. Thesediscussions culminated in the signing of a letter of intent with four steel companies inspring2009.Discussions on the renovation of the •railwaylineontheÖrbyhus–Dannemora– Hargshamn – Hallstavik section wereheld in 2008, and resulted in Dannemora Mineral and a number of interested parties signing a declaration of intent with the Swedish Rail Administration in January2009.In the second half of the year, the•subsidiary Dannemora Prospektering’s activities were concentrated on the iron ore in and around the Dannemora mine in order to prioritise the commencement of mining.Witheffect from1January2009,exploration was transferred to Dannemora Magnetit, where it now forms a separate division.

Slag separation at blast furnace. Jernkontorets bildbank.Photo: Stig Göran Nilsson.

6 AwordwiththePresident

Photo: Peter Svensson

Staffan Bennerdt, President and CEO

A stronger China provides potential for Bergslagen

7AwordwiththePresident

Staffan Bennerdt took up the position of President and CEO of Dannemora Mineralon1April2008.Hehasadegreeineconomics and is highly experienced in the mining and construction industries, having held a number of senior positions, the most recentbeingBoliden.

Why did you take on the job? What attracted you?– I was fascinated by the challenge of be-ing involved in starting up a brand new undertaking. Our proximity to Europeansteelworks and good access to transport give us a great chance of success.What’smore,we are an experienced team, each of us bringing different skills, who work together in acreativeandpositivespirit.Onapersonalnote,Ienjoyworkinginasmall organisation and getting involved in developing the entire business.

How are falling prices and reduced demand for iron ore affecting Dannemora?– We have based our calculations on significantly lower prices, and, with thestronger dollar, our capital budget actually looks better than before. However, as youwould expect, it ismore difficult to borrowmoney with the global financial marketsin such turmoil. In order to satisfy lenders’requirements for an unbiased insight into the mining project, we have engaged an independent consultant to carry out a due diligence process, which will be completed in spring2009.

However, loan financing of the miningproject is dependent on trial deliveries, which culminate in long-term supply contracts.With demand for steel falling sharply, ourpotential customers are anxious to postpone thepreviouslydiscussedtrialdeliveries.Thiswill have the effect of delaying the loan financing,whichmeanstheminewillnotbeoperationaluntilsummer2011.Weexpecttobeinfullproductionbyautumn2012.

What is your target customer group and what makes Dannemora stand out as a supplier?–Tostartwith,wearetargetingsteelworksin fairly close proximity; in other words those which obtain their ore from Baltic and NorthSeaports.Theshortdistancesgiveusmajor cost advantages over our competitors fromBrazil and theAfrican countries.Ourproducts are sinter fines and lump ore, thelatter being particularly attractive on the market. Results from tests have provedpositive, which has played an important role in the signing of a letter of intent with four steelcompaniesinNorthernEurope.

On18June, theSwedishEnvironmentalCourt grantedus the last remaining funda-mental permit we needed to resume mining operations in Dannemora which were closed downin1992.

What has been the reaction of the local population?– Very positive! The inhabitants of Bergs-lagen are fiercely proud of their mininghistory, which laid the ground for Sweden’s emergence as an industrial nation in bygone days. When we resume mining operationsand create new jobs in the area, this will really meanalottothepeoplewholivehere.

In January 2009, you signed a decla-ration of intent with the Swedish Rail Administration on renovating the railway section to Hargshamn. What does this mean to you?–Therailwaylinegivesussmootherlogisticsand transporttoHargshamn,whichisourportof shipment. Although the project initiallyinvolves an increased cost of investment, the variable transport costs are reduced at thesametime.Overall,itoffersmuchbetterprofitability than the truck alternative we considered.Andof course,railtransporthasimportantenvironmentaladvantages.

What else is happening this year?–Weshallsoonbestartingtopumpoutthemine, and this is expected tobefinished inspring2010.Oreminingandproductionof materials for trial deliveries to our customers will take place on a gradual basis as the mineisemptiedof water.Atthesametime,work will begin on the new ramp which will connecttheexistingrampatStrömsmalmenwiththemine’smainlevel.Thenewrampwillallowtrucktrafficaccess intheentiremine.The work also includes approximately 700 metres of tunnelling for development prior to thestartof production.Thenewrampanddevelopment headings will generate about 50,000tonnesof ironorefortrialdeliveries.

Do you know the extent of ore reserves in the mine? And how long will they last?–Theprovenandprobableironorereservesin the Dannemora mine have been estimated at justover28million tonnes,grading35.2percent iron and 1.8 percent manganese.Looking at an estimated annual production of 1.5milliontonnesof lumporeandfines(approx. 2.45 million tonnes of minedore), this ore reserve will allow over 12 years of continuous mining. In order toincrease the reserves and extend the life of the mine or increase its annual production, we have initiated an iron ore exploration programme.

What is the main indicator that Dannemora Mineral will be a successful company in the future?– Our geographical location and goodlogistics give us a clear competitive edge.Wealsohaveabroadbankof expertiseandattractive products for which there is market demand. A feasibility study conducted in early 2008 shows the project has sound financial viabilityover thecomingyears. Ina longer-term context, as the standard of living in China and other parts of the world rises, iron ore will become one of the world’s products in short supply.SohavingamineinBergslagen isn’t such a mad idea!

The financial crisis has shattered many a Swedish industrial dream. However, Danne-mora Mineral’s President Staffan Bennerdt views the future with a great sense of hope and looks forward to an increasing need for iron ore and raw materials as economies in China and other parts of the world grow stronger.

8 Ironore

The goal is to resume operations in the Dannemora mine and establish long-term supply contracts.

IRON ORE

9Ironore

The Dannemora mine lies about 40 kilometres north of Uppsala and 35 kilometres west of the port of shipment (Hargshamn).

Iron ore Photo: Mikael Eriksson

The Dannemora deposit lies in the muni-cipalityof Östhammar,about40kilometresnorthof Uppsalaand35kilometreswestof Hargshamn,fromwheretheshipmentof oreisplanned.ThenearesttownisÖsterbybrukwhichisabout2kilometreseastof themine.

ORGANISATIONFollowing the reorganisation in January2009, Dannemora Magnetit now has eight employees. Kjell Klippmark, a veryexperienced mining engineer who has held leading positions in iron ore companies which includeLKAB,succeededLarsAlmasCEOof DannemoraMagnetit.LarsAlmremainsasDeputyCEO.

InordermaketheGroup’sfocusonironore projects clearer, the exploration part was transferred to Dannemora Magnetit at the beginningof 2009.

The geological activities will continue to be concentrated on exploration for iron ore (preferably) in and around the Dannemora mine and on iron ore deposits in Bergslagen In addition, the geological and planningunits in the Group are responsible for mine planning, ore reserve calculation and quality controlinthemine.

GEOLOGY OF THE DANNEMORA AREAThe dominating bedrock in the Dannemora area consists of steeply dipping layers of metamorphosed supracrustal rocks (formed onthesurface),assumedtobeabout1.9billionyears old. They are mainly volcaniclasticrocks (fragmented rocks of volcanic origin), carbonate rocks, iron mineralisations and metamorphosedvariantsof these.

The volcaniclastic rocks were formed during intense volcanic activity from gas-richandfragment-bearingashwhichfloweddown, or from material raining down from the cloudof ashthrownupbytheeruptions.Thecarbonate rocks are made up of limestone anddolomite.Theserocksareoftenalteredintomanganese-richskarncontainingmine-rals such as knebelite and dannemorite, or manganese-poor skarn,dominatedbydiop-side,actinoliteandgarnet.

The bedrock in the Dannemora area has experienced relatively little folding, apart from the early folding phase that turned the supracrustalrocksintotheirpresentposition.Instead,thetectonicsarecharacterisedbyalarge number of faults, which in some cases havecausedconsiderabledisplacement.

IRON ORE IN THE DANNEMORA DEPOSITThecarbonate-bearingandiron-mineralisedpart of the Dannemora deposit has a length of about 3 kilometres and awidth rangingbetween 400 and 800 metres. Due to theprimary mode of formation as well as later tectonisation, the iron mineralisation occurs as a large number of ore bodies along the strikeof thedepositandatvariousdepths.Inall, some 25 ore bodies were mined until the minewascloseddownin1992.

The ore bodies appear as more or less stratabound layers in the carbonate rocks.ThestrikeisapproximatelyN30°Eandtheyhave a thickness varying from a few metres to

The primary goal of Dannemora Mineral’s wholly owned subsidiary Dannemora Magnetit is the resumption of operations in the Dannemora iron ore mine and profitable operation of the mine in a long-term perspective.

DANNEMORAHargshamn

Uppsala

Norrtälje

Österbybruk

TOWARDS GÄVLE

TOWARDS STHLM

10 Ironore

Length section of the Dannemora deposit showing mined out ore and remaining ore down to the depth investigated by core drilling.

60metres.Closetothesurface,theorebodiesdip steeply to the northwest, while a less steep dipisencountereddeeperdown(70°to55°).In the northern part of the deposit, coredrilling has indicated iron ore at a depth of 1,000metres.

The only economically interesting iron mineral in the deposit is magnetite, which is composedof ironandoxygen (Fe3O4).Themagnetite is mostly fine-grained (0.04-0.1millimetres).Itoftenappearsassociatedwithskarn minerals, which also surround many of theorebodies.Asmanganeseisfoundinsome skarn minerals such as knebelite and dannemorite, several of the Dannemora ore bodies have relatively high total manganese

According to the date on the wea-ther vane, the bell tower in Dan-nemora was erected in 1754..Photo: Tommy Persson

LENGTH SECTION THROUGH THE DANNEMORA DEPOSIT

Konstäng1-4

Diamanten1

Botenhäll

Lyndon

Mellanfält

Myrmalm

Norrnäs

Sjöhag

Svea

100

200

300

400

500

600

700

800

4900 4800 4700 4600 4500 4400 4300 4200 4100 4000 3900 3800 3700 3600 3500 3400 3300 3200 3100 3000 2900 2800 2700 2600 2500 2400 2300 2200

Silvbergsmalm 1&2

Main crusher

Skip station

Southern ventilation shaft Northern ventilation shaft

LENGTH SECTION (m)

Drifts & shafts

Mined out ore

Remaining ore

NS

Head frame

Strömsmalm

KruthusSchaktmalm

Diamanten 2

DEP

TH (

m)

11Ironore

Proven ore reServeS Probable ore reServeS ToTal ore reServeSOre Mineralisation Kton % Fe % M n Kton % Fe % M n Kton % Fe % M nlyndon 1 2 834 37,23 0,77 47 28,95 0,46 2 881 37,09 0,77lyndon 3 0 - - 0 - - 0 - -Konstäng 1 -4 1 111 39,65 1,05 126 36,28 1,03 1 237 39,30 1,05Konstäng 2 -3 2 602 34,94 3,44 114 34,25 3,21 2 716 34,92 3,44Kruthus 1 896 38,67 0,61 56 38,34 1,08 1 952 38,66 0,62Kruthus <500m 0 - - 1 401 38,67 0,61 1 401 38,67 0,61Svea 2 750 37,26 2,44 103 29,61 1,41 2 853 36,98 2,40Diamanten 2 3 236 36,74 2,82 837 37,15 2,78 4 073 36,82 2,81Sjöhag 526 33,09 0,31 244 36,50 0,28 770 34,17 0,30Schaktmalmen 1 512 33,40 0,60 493 27,36 0,64 2 005 31,91 0,61Ströms 1 642 28,76 1,51 152 31,22 1,51 794 29,23 1,51Ströms 2 234 27,71 1,14 102 26,75 1,09 336 27,42 1,12botenhäll 1 464 26,89 1,34 285 26,85 1,53 1 749 26,88 1,37normäs 1 718 33,28 1.84 1 499 34,27 1,93 2 217 33,95 1,90normäs 2 1 089 30,03 1,67 691 31,54 1,80 1 780 30,62 1,72Pillars etc.* 0 - - 1 699 39,00 2,40 1 699 39,00 2,40ToTal 20 612 35,12 1,78 7 849 35,32 1,69 28 461 35,18 1,76

grades, mostly silicate-bound. All the orebodies have lowphosphorus content (0.001to0.007percent).Thesulphurcontentvariesbut can amount to a few tenths of a percent insomeorebodies.

MINERAL RESOURCES AND ORE RESERVESIn2007,DannemoraMineralcommissionedthree independent consultancy companies to conduct a feasibility study on production conditions in the Dannemora mine. Moredetailed information on the feasibility study was reported in the press release issued on 28 January2008.

The calculations of mineral resources were carriedoutbyHans-EricLundgren(ARRCGeoconsultingAB),whohasbeenapprovedasaQualifiedPerson(QP)bySveMin(SwedishAssociation of Mines, Mineral and MetalProducers). The calculations were carriedout in accordance with the recommendations issued by SveMin, which broadly follow the CanadianpolicydocumentNI43-101.

With a cut-off of 30 percent iron, andincluding lower grade sections which cannot be avoided during mining, the measured mineralresourcesare23.6Mt,grading38.5percent iron and 1.9 percent manganese,the indicatedmineral resourcesare8.0Mt,grading 35.5 percent iron and 2.2 percentmanganese, and the inferred mineral resources are 1.3Mt, grading 32.4 percentironand2.0percentmanganese.

ORE RESERVES IN THE DANNEMORA DEPOSIT, END OF 2007 Ramp development at the 162 metres level, Strömsmalmen.Photo: Mikael Eriksson

The grades are calculated from older analyses which have been partly checked by re-analysis at the Geo-laboratory of Geolo-gical Survey of Finland (now La-btium Oy), which is accredited according to FINAS TO25 (EN ISO/IEC 17025). *Based on old data.

12 Ironore

2009-01-30: The drilling rig leaves daylight and rolls down into the Dannemora mine.Photo: Mikael Eriksson

The calculations of ore reserves in the Dannemora mine were carried out by VattenfallPowerConsultantAB.Thesewerebased on the calculated mineral resources shown above, also taking into account waste rockdilutionandorelosses.

Total waste rock dilution was estimated at 3.0Mt, grading 5 percent iron (approx. 10percentof themineralresources).

Ore losses, which are partly attributable to irregularities in the ore bodies, are estimated at4.8Mt,grading36.9percentironand1.8percent manganese (approx. 15 percent of themineralresources).

The proven ore reserves in the Dannemora deposit have been calculated at 20.6 Mt,grading 35.1 percent iron and 1.8 percentmanganese, while the probable ore reserves are 7.9Mt, grading 35.3 percent iron and1.7percentmanganese (a totalof 28.5Mt,grading 35.2 percent iron and 1.8 percentmanganese).

ENVIRONMENTAL PERMITIn the middle of May, the EnvironmentalCourt considered Dannemora Magnetit’s application for an annual production of two million tonnes of saleable iron ore products from Dannemora. On conclusion of thenegotiations, the Court indicated that it would announce its decision on 18 June2008, and on that date the application was granted.TheCourt’sdecisionalso includedwhat is referred to as leave to issue execution, which means that operations can start even if thereisanappealagainstthecourt’sruling.All consultation bodies had supported theapplication. The environmental conditionsthe court imposed on the operations were as expectedandacceptable.

CUSTOMERSThe intention is that deliveries from the planned production in the Dannemora mine will be primarily to steelworks in the region; in other words, those importing their ore via Baltic or North Sea ports, which gives clear freightadvantages.

During spring, chemical, physical and metallurgical tests were performed on Dannemora’s iron ore products; finesand lump ore. The tests continued in the

summerwhenlarge-scalesinteringtestswereconducted.

The results of these test programmes showed that Dannemora’s iron ore products are suitable for the blast furnace processes of future steel customers. The positive testresults have also formed the basis of detailed technical discussions with a number of potentialcustomersinNorthernEurope.

These discussions have resulted in the signing of a letter of intent between Dannemora Magnetit and four steel companies in Northern Europe. The letterof intent expresses the parties’ intention to negotiate a long-term, binding contract forfuture iron ore deliveries from the Dannemora ironoremine.

13Ironore

However, as a result of the economicrecession and the steel industry’s reduced production volumes, supply contracts with these steel companies are not expected to be finaliseduntilthefirsthalf of 2010.

LAND ACQUISITION AND PROPERTY MANAGEMENTAspartof theplannedresumptionof mining,on 1 April 2008 Dannemora Mineral ABtook possession of an area of land of about 400 hectares which was purchased from the municipalityof Östhammaratthebeginningof the year. The area encompasses all theland that will be needed to make the mine operational again. The subsidiary Danne-

moraFörvaltningsAB,which is responsiblefor land and property management, was established in conjunction with the land acquisition. The land transaction also gaveDannemora Mineral ownership of buildings and installations important to mining operations (ore processing plant, mine head frame, workshops, warehouses and officebuildings). It also included a number of residential buildings which are so close to the industrial area that the company considered itimportanttohavecontroloverthem.Thetransfer contract also regulates a number of environmental issues, one of which stipulates that the municipality of Östhammar isresponsible for any environmental impacts from previous activity. The total purchase

considerationwasSEK13.5million.Adownpaymentof SEK0.5millionwasmadewhenthe company took possession of the land in April. The remaining SEK 13.0 million isdueforpaymentinDecember2012.

On 1 September 2008, Dannemora Förvaltnings AB acquired the remainingproperty required to ensure full control of theplannedoperationalarea.

The land acquisition from the muni-cipalityof ÖsthammarhasalsogivenDan-nemora Förvaltnings AB responsibility for15 residential buildings. In autumn, thecompany signed an agreement with Lars Eklöf Fastighetsförvaltning for technicalmanagement of the Group’s property portfolio.

On1June2008,LarsAlmwasappointedCEOof DannemoraFörvaltningsAB,withspecial responsibility for property matters.Lars remains as Deputy CEO of Dannemora MagnetitAB.

DESIGNATION OF LAND, BUILDING PERMITIn December 2008, Dannemora MagnetitAB received a designation of land fromthe Mining Inspectorate of Sweden forthe planned operational area. This meansthe area of land the company needs for its mining operations has been approved by the authority.TheMiningInspectorate’sdecisionwas facilitated by the fact that Dannemora was thesoleownerof the land inquestion.

The stable buildings in Danne-mora.Photo: Mikael Eriksson

14 Ironore

Passenger lift for pump installa-tion in the main shaft.Photo: Tommy Persson

Connecting the 20 kV high-vol-tage line.Photo: Mikael Eriksson

The company already has a building permit from the municipality of Östhammar; thisdesignation of land was the last important permit required for the planned mining operations.

ENERGY ACQUISITIONInSeptember,DannemoraMagnetitenteredinto an energy acquisition consultancy agreement with EME Analys. The acqui-sition, which was completed in autumn, was important in securing the company’s electricity requirements, mainly for ramp placement, development work and draining of themine.

ELECTRICITY SUPPLYA20kVpowersupplylinetoDannemora’soperational area was connected in autumn 2008 and a new building was erected with switchgear which will distribute the power supply in the area. A high-voltage cable tothe ramp in the northern part of the ore field was laid during 2008. In early 2009,the transformers were installed at the inclined drift, which gave the green light for commencementof thedevelopmentwork.

PROJECTS IN PROGRESS

Pumping the mine dryAt the end of June, Dannemora Magnetitentered into an agreement on pumping out the Dannemora mine with a consortium made up of ITTWater &Wastewater ABandContectorAB.

The consortium, which began mobilisation in autumn 2008, will start the pumping in 2009. The pumps will be installed in theexisting main shaft, followed by draining down to the 465metre level.Apermanentpumping system will then be installed to allow continuous pumping throughout the life of themine.DannemoraMagnetitalreadyhasa permit from the County AdministrativeBoardforpumpingoutthemine.

Inordertomakethepumpingoperationpossible, extensive work was carried out in theshaftduringautumn2008.Aprovisionalpassengerliftanda10-tonnehoisthavebeeninstalled and inspected. The submergedpart of the shaft has been surveyed with an

15Ironore

under-waterrobot.Scaling,safetyworkandin-spectionshavebeencarriedoutinthepartof theshaftwhichisnotsubmerged.

In addition, surface work on the instal-lation of two sedimentation basins and one clearwaterbasincontinues.

Extension of the inclined drift and development of Strömsmalmen In September 2008, Dannemora Magnetit AB entered into an agreement with Berg-teamet AB for ramp development andtunnelling work in the Dannemora mine.Bergteamet AB is one of Sweden’s leadingtunnellingandshaftcontractors.

Under the agreement, the existing ramp in the northern part of the mine area will be extendedfromthe162metreleveltothe350metre level. The new section of the ramp,which has a length of approximately 1,600 metresandanareaof 32squaremetres,willallow access to all parts of the mine with heavyvehiclesfromthesurface.

The agreement with Bergteamet covers approximately 700 metres of drift deve-lopment in Strömsmalmen (one of thesmaller ore bodies with an ore reserve of 450 thousand tonnes). This will generateapproximately 50 thousand tonnes of iron ore.Planningof thenew inclineddrift anddevelopment drifts began in autumn 2008, andinearlyFebruary2009theundergroundworkstarted.

Drilling for access to ventilation raise.Photo: Peter Svensson

Planned main ramps and mining ramps in the Dannemora depo-sit.

16 Ironore

The ore berth at Hargs Hamn.Photo: Hargs Hamn

The ironore tonnage from thedevelop-ment is intended to be used for trial deliveries tocustomers.Thecrudeorewillbecrushed,screened and processed into lump ore and fines in a simple temporary ore processingfacility.Themajorityof theequipmentcanbeusedintheplannedoreprocessingplant.

TRANSPORT TO HARGSHAMNDiscussions on the renovation of the rail-way line on the Örbyhus – Dannemora –Hargshamn – Hallstavik section were heldin 2008, and resulted in the signing of a declaration of intent between the Swedish Rail Administration, Dannemora MagnetitAB, Hargs Hamn AB, Holmen PapperAB, Östhammar municipality, Norrtäljemunicipality and the Regional Council of thecountyof UppsalainJanuary2009.

Annual iron ore deliveries from theDannemora mine are expected to amount to approximately 1.5 million tonnes. Afterthe renovation of the line, the railway will allowgoodstrafficatspeedsof upto70kphandanaxleloadof upto22.5tonnes.Thetrafficcontrolsystemwillalsobeupgradedtoallow efficientmanagement of the increaseintraffic.

Under the declaration of intent, the SwedishRailAdministrationhasundertakento implement and finance the renovationof the existing line and upgrade the trafficcontrol system.Thecostsof thisworkhavebeenestimatedatSEK100million.

Dannemora Magnetit has undertaken to acquire and implement the upgrading of the branch line from the mine to the main line at a costof SEK10million.Themunicipalitiesof ÖsthammarandNorrtäljehaveundertakento provide noise and vibration protection andtostrengthencertainlevelcrossings.Thecosts of this work have been estimated at SEK5million.

Although the rail option represents asomewhat higher cost of investment for Dannemora Magnetit, the variable transport costs are expected to fall considerably.Overall, the rail option is seen as offering muchbetterprofitabilitythanthepreviouslyconsidered truck alternative. In addition,the rail option has important environmental advantages.

In March 2009, Dannemora Magnetitalso signed a letter of intent with HargsHamnABregardingthereceipt,storageandloadingof finalproductsonvessels.

FINANCING AND DUE DILIGENCEThroughout 2009, Dannemora Mineral worked to secure financing for the ironoreproject.Aspartof thefinancing,DannemoraMineralABcompletedaprivateplacementin June 2008, which brought the companyproceeds of SEK 155 million before issue expenses.It is planned to obtain the remainingfinancingbyissuingsharesorotherfinancialinstrumentsandbymeansof bankloans.

Dannemora Mineral AB has engagedEndeavourFinancialLtdasfinancialadviserfor the planned borrowing. EndeavourFinancialLtd,basedinLondon,has20years’experience specialising in natural resources projects.

To satisfy lenders’ need for an unbiased insight into the mining project, the customary technical,legal,environmentalandfinancialdue diligence processes were begun in autumn2008.

Loan financing for the investmentsin mining operations is conditional on Dannemora Mineral having established customer relationships which ensure sale of itsironoreproducts.Asaresultof thesteelindustry’sreducedproductionvolumes,long-term supply contracts are not expected to be finalised until the first half of 2010. Loanfinancing agreements are expected to besignedonthebasisof thisschedule.

PLANNED MINING AND ORE PROCESSINGAsaresultof thepostponedloanfinancing,the mine and ore processing plant will not be operational until summer 2011, which is a delay of just over one year on the original plans.It isplannedthatfullproduction,1.5million tonnes of iron ore products annually, canbeachievedbyautumn2012.

Aswasthecasebeforetheminewasshutdown in 1992, the mining method that will beused is sub-level caving.Theorewill be

17Ironore

developed and mined with sub-level drifts,but in most cases the wall rock will not cave in.Theorewillbetransportedfromdifferentmining points, either directly by truck or via ore chutes to a main level, and then taken to theprimarycrusherunderground.Itwillthen be placed in a storage bin before being hoisted by skip to the surface.However, inthefirsttwoyearsof operation,theorewillbe driven up the ramp and crushed above ground, as deliveries and installations of skips andcrushingstationshavelongleadtimes.

Itisplannedthattheentireoreprocessingwill be dry, by means of of repeated crushing, screening and magnetic separation. Dryprocessing has many advantages over the conventional two-stage process previouslyused, which comprised sorting, followed by wet milling, magnetic separation and dewatering.

THE IRON ORE MARKET

Steel Production Steel production fell in 2008, for the firsttime in10years.A totalof 1,329.7milliontonnes was produced, which is a decline of 1.2 percent. Production in Asia continuedto increase – China by 2.6 percent, SouthKorea by 3.8 percent and India by 3.7percent. However, Japanese production fellby 1.2 percent between 2007 and 2008. Inthe fourth quarter of 2008, steel production fell by almost 20 percent compared with the

laDDnInG

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Simplified sketch showing the principle for sub-level caving in the Dannemora mine.

CHARGING

CRUSHER

POCkET

BELT CONVEyOR

MEASURING POCkET

SkIP STATION

NEW SLICE LEVEL

DRILLING

SLICE LEVELS

LOADING

18 Ironore

sameperiodthepreviousyear.

Steel consumptionSteel made a strong start to 2008, with the World Steel Association predicting thatsteel consumption would grow by 7 percent during the year. Extraordinary events onthefinancialsideandgloomier forecasts forthe steel industry’s customers resulted in a rapid decline in the use of steel products.WorldSteeldecidednottoissueitsOctoberforecastintheclimateof majoruncertainty.Massive financial stimulus packages arebeing launched in the USA, China, G7countries and the EU aimed at retaining jobs and generating employment, particularly in infrastructure, creating confidence inbanksandrestoringstabilityonthefinancialmarkets.

Iron Ore Production 2008 was another year of record iron ore production in the world.World productiongrew by 4 percent, rising to 1,695 million tonnes from the previous year’s figure of 1,630milliontonnes.Chineseproductionin2008wasestimatedtobe387*milliontonnes,whichisanincreasefrom321*milliontonnesin 2007. Three countries, Australia, Braziland India, together accounted for morethan half the production but also 80 percent of export.Theexportmarket isdominatedby Vale followed by Rio Tinto and BHPBilliton.

IRON ORE TRADEAs a result of the decline in production inthe fourth quarter of 2008, trade in iron ore is expected to have fallen during 2008.Most steel works stopped all shipments from November, although deliveries have been slowly resuming in the early part of 2009.ThelargestimportmarketisChina.Despitethe decline in volumes towards the end of the year, the country imported 444 million tonnescomparedwith383milliontonnesin2007,anincreaseof 16percent.

CONSOLIDATION BHP Billiton’s hostile bid for Rio Tintowas stopped in its tracks by the accelerating

Country Import (Mt)

China 444

eU 25* 156

Japan 140

Korea 48

Taiwan 14

Country Export (Mt)

australia 310

brazil 282

India 100

South africa 31

Canada 28

Sweden 18

Construction of sedimentation basins.Photo: Tommy Persson

Largest iron ore importers in 2008. Source: Raw Materials Data, Stockholm 2009.* Estimate.

Major iron ore exporters in 2008. Source: Raw Materials Data, Stockholm 2009.

* Corrected for iron content to facilitate comparison

19Ironore

The old processing plant in Dan-nemora with conveyor in the foreground.Photo: Tommy Persson

financial crisis. It is not likely that mergerbidswillbeseenontheAustraliancontinentinthenextfewyears.

Chinese interest in obtaining transparency and better control over its imports of natural resourcescontinues.Thelatestacquisitionof 9 percent of Rio Tinto by Chinalcos gives theChinesecompanya15-percent stake inRio’s largest iron ore producer HamersleyIron.TheUSD19.5billiontransactionisthelargesteverbyaChinesecompany.

IRON ORE PRICES Prices rose to record levels for the sixth consecutive year. The strong expansion of

steel production in China was behind the shortageof ironore,whichsawa65-percentincrease in the benchmark price for Brazilian fines toEurope,andan80-percent increaseinthepriceof AustralianfinestoAsia.AlateattemptbyValetoachievethesameincreaseas its Australian competitors failed, mainlyduetotheapproachingrecession.

The uncertain economic situation has madethisyear’spricenegotiationsveryslow.However, one thing is clear – the upwardpricetrendhasnowbeenbroken.Thesteelindustry claims it needs 40 to 50 percent price reductions for sinter fines and evenmoreforlumporeandpellets.Theresponsefrom suppliers is not known, although sectoranalystsareestimatingafallof 20-30

percent in the fines price and a decline inthe lump and pellet premium as a reaction to lowerdemand.Wearealsobeginning tosee a question mark next to the benchmark contractpricesystem.Themainreasonbe-hind this is the spotmarket for Indian ironore which was established in China. BHPBilliton has declared it will not enter into any new contracts containing pure benchmark clauses. Importers, particularly in Europe,haveoptedtokeeptheexistingmodelsofar.

Iron ore product trade flows.

20 Ironore

Geolog lena landersjö och prospekteringschef Peter Svensson Photo: Mikael eriksson.

EXPLORATIONThe goal is to gradually increase the ore reserves in Dannemora by continuous exploration and to gradually develop known or new deposits of iron ore in other parts of Sweden.

21Exploration

Geological overview map of the area around the Dannemora mine.yellow = felsic volcanicsbrown = older intrusive rocks (granitoids)green = older intrusive rocks (gabbro)red = younger intrusive rocks (granite)light blue = sedimentary rocksdark blue = limestoneThe map is copied from: Geological Survey of Sweden (SGU) Ser. Ba 47.

ORGANISATIONDannemora Prospektering AB had six em-ployees during 2008: the CEO, Exploration Manager, three geologists and one geo-physicist.Anothergeologistwasengagedonaconsultingbasis(80percent).

At theendof 2008,CEOLennartFalk,one of the founders of Dannemora Mineral AB, stepped down.However, he still servesontheparentcompany’sBoard.

Atthesametime,areorganisationinvolvedpersonnel inDannemora ProspekteringABbeing transferred to form a department for planning and exploration in Dannemora Magnetit AB. Peter Svensson, the formerExploration Manager at Dannemora Pro-spekteringAB,wasappointedExploration&Planning Manager for Dannemora Magnetit AB.

Two of the geologists were given more responsibility in the work relating to the Dannemora mine, while other personnel continuedtohavethesamedutiesasbefore.

EXPLORATION ACTIVITY IN 2008In 2008 Dannemora Prospektering ABfocused a major part of its operations in north-westUppland.In addition, a number of projects in other parts of Bergslagen were investigated.

Till sampling was carried out in three projectareasinUppland.Bedrockmappingand ground magnetic surveys were carried

outinanumberof areas.Diamonddrillingwas carried out in two areas. DannemoraProspekteringABalsoworkedoncompilingand evaluating all available information relating to the Dannemora iron ore mine.A drilling programme is planned in thenorthernpartof theDannemoradeposit.

During the year, Dannemora Prospekt-ering AB produced information about anumberof otherironoreprojects.Thisworkhas resulted in an application by Dannemora Mineral AB for seven new explorationpermitsfocusingonmagnetiteskarnore.

EXPLORATION PERMITS AND

EXPLOITATION CONCESSIONIn addition to an exploitation concessionfor the Dannemora deposit, Dannemora Mineral AB had 28 exploration permits attheendof 2008,coveringanareaof 25437hectares.

The permits are distributed among the following counties: 21 in Uppsala, two in Västmanland, two in Värmland, one inÖrebro,oneinJönköpingandoneinVästraGötaland.Thecompanyhasalsosubmittedfour new exploration permit applications to theMiningInspectorate.

22 Exploration

Map showing Dannemora Mineral’s exploration permits and exploita-tion concession (line screened) in the county of Uppland.

Ralby Nr 2

Film

Hälsinggruvan

Ramhäll

Ralby

Gruvsjön-Gryttjom

Vigelsbo

Sjötorp

Dannemora

Vattholma

Forsmark

Sandby

Andersbo Östmora

Frebbenbo

Ursbo nr 1

Österby

INVESTIGATIONS IN THE EXPLOITATION CONCESSION AND EXPLORATION PERMITS

Geology and mineral deposits in the county of Uppsala The county’s supracrustal rocks consist mainly of felsic volcanics, with layers of carbonates, which were formed about 1.9billionyearsago.Sedimentaryrocksappeartoalesserextent.Theintrusiverockscanbedivided into two main groups, one from an earlystage(1.87to1.9billionyearsago)andonefromalaterstage(1.87billionyearsago)of the Svecokarelian orogeny. It is mainlyin the felsic volcanics with carbonate layers that the mineralisations of iron and base and

precious metals occur. Mining operationshave focused mainly on the large iron ore deposits.Dannemora,where36millionton-nes have been mined, is by far the largest miningarea.Zinc, leadandsilverhavealsobeenminedinthecounty.

DANNEMORA EXPLOITATION CONCESSIONFor some 100 years, from the 1880s untilthe 1980s, 1,116 diamond drill holes were drilled in the Dannemora deposit. Sincethen, Dannemora Prospektering has drilled 15 holes. From these drill holes, 470 olddrill cores and the 15 new cores are stored in Dannemora. 83 drill cores are stored

in the archive at the Geological Survey of Sweden(SGU)inMalå.Allstoreddrillcoresareloggedandinmanycasesre-sampledinorder to allow control and new calculations of mineral resources. In conjunction withthe logging, 926 mineralised sections were sampledin2008.Atotalof 1,954mineralisedsections have been sampled since Dannemora ProspekteringABstartedtheworkin2006.Extensive planning work was carried out in 2008 in order to optimise implementation of continuing iron ore exploration in the mining area.

In 2008, eight diamond drill holesweredrilled on a good electrical conductor in the southern part of the mining area

Open pit in Södra fältet, Danne-mora.Photo: Mikael Eriksson

23Exploration

Geologist Gunnar Rauseus car-ries out a detailed ground mag-netic survey in the northern part of the Dannemora deposit.Photo: Mikael Eriksson

(Södra fältet), identified by means of drillhole TEM surveys. All the diamond drillholes encountered a zinc mineralisation whichcorrespondedwellwiththe identifiedelectrical conductor. The best sections arefromdrillhole3015with3.2metredrillcoresectionwith12.2percentzinc(or18.4metreswith 2.9 percent) and from drill hole 3012with 7.5 metres drill core section with 4.5percentzinc(or18.0metreswith2.5percentzinc).AfullreportonthedrillingprogrammeinSödrafältetcanbefoundonDannemoraMineralAB’swebsiteandinthepressreleaseissued on 27 May 2008.

BASE AND PRECIOUS METAL PROJECTS IN THE COUNTY OF UPPSALA In the Gruvsjön-Gryttjom exploration per-mit, a till sampling programme in 2007 encountered an area with elevated grades of basemetalsandgold.

The anomaly was followed up in the first half of 2008 by means of bottom tilland rock chip sampling. The results showinterestinggradesalsointhebottomtill.Theproject will be evaluated in 2009 before the nextexplorationphasestarts.

In theVigelsbo, Andersbo andHälsing-gruvan exploration permits, an area with basemetalandgoldanomalieswasidentifiedinthe2007tillsamplingprogramme.Inthefirsthalf of 2008,theanomalywasfollowed

24 Exploration

upwithbottomtillandrockchipsampling.The results still show interesting contents of base and precious metals in the bottom till. The project requires more work withtill sampling and geophysical surveys before diamonddrillingcangoahead.

IntheForsmarkexplorationpermit,anareawithagoldanomalywasidentifiedfromthesampling of a dump in 2006 and till sampling carried out in 2007. In the early summer2008, a trial drilling with two diamond drill holes was conducted on a magnetic anomaly near an old pit at Ytterängarna. One of the drill holes encountered a mineralisation representedbya0.95metrelongcoresectionwithgoldgradesof 6.78gramspertonne.Afull report on the 2008 drilling programme at Ytterängarna canbe foundonDannemoraMineralAB’swebsiteandinthepressreleaseissuedon24June2008.

In the Ralby nos. 1 and 2 explorationpermits, an area with a base and precious metal anomaly was identified with tillsampling.In2008,detailedgroundmagneticsurveys were conducted in order to help differentiate structures in the bedrock.These structures can indicate areas where exploration should be continued. The nextstage in this project includes more ground geophysical surveys and more detailed till sampling.

Copper and nickel projects

Dannemora Mineral AB has three explo-ration permits focusing on copper and nickel in the countyof Uppsala.Themainproject is Gaddebo, which is covered by two explorationpermits.Inthesepermitsthereisasmallclosed-downnickelmineandanumberof pitswithsulphides.Newanalysesof coresfrom historical diamond drill holes show that this is an interesting area in terms of copper, nickel,gold,platinumandpalladium.

In 2008, Dannemora Prospektering ABcarried out bedrock mapping and ground magnetic surveys. A two-kilometre longanomaly has been identified with goodpotential forfindingnewmineralisationsbycontinuingexplorationactivitythere.

There is also an old nickel mine in the Ekedalexplorationpermit.Bedrockmappinghas been carried out in the whole area and a numberof oldpitshavebeenexamined.Thearea is considered to be less interesting and nofurtherworkisplannedthere.

Manganese projectsThe Spexeryd (county of Jönköping),Bölet (county of Västra Götaland) andSlöjdartorpsgruvan (county of Örebro)explorationpermitsfocusonmanganese.In2008,DannemoraProspekteringABcarriedout bedrock mapping and compilation of historicalmaterial.Aneconomicanalysisof themanganesemarketwasalsoconducted.

Evaluation of this work showed that the

Exploration Manager Peter Svensson with geologist Lena Landersjö in the background.Photo: Mikael Eriksson

25Exploration

project has low development potential, and nofurtherworkisplanned.

PLANNED ACTIVITIES IN 2009In 2008, considerable efforts were devotedto producing support data relating to several iron ore projects in Bergslagen This work resulted in seven new exploration permit applications.Attheendof theyear,fourof thesehadbeengranted.

TheRiddarhyttanno.1explorationper-mit is in Skinnskatteberg municipality in the countyof Västmanland.

The Riddarhyttan ore field is one of the oldest in Sweden, with a documented history stretching back to 1437. The area

has been known for both copper and iron ore production. The field contains a largenumber of mines, of which Bäckegruvanand Källfallsgruvan have been particularlyimportant. Bäckegruvan, which is minedfor skarn magnetite ore, was operated by FagerstaAB until 1978.Historical iron oreproduction from the entire Riddarhyttan deposit has been estimated at over 20 million tonnes.

During 2009, work in Riddarhyttan will be concentrated on compiling information about historical ore calculations and previous explorationactivity.Newexploration isalsoplanned in the form of ground magnetic surveys, bedrock mapping and sampling of

historicaldrillcores.TheRudgruvanno.1explorationpermit

is located in Fagersta municipality in thecountyof Västmanland.Rudgruvanbelongsto what is known as the Semla ore field,which has an estimated historical iron ore productionof 2.9milliontonnes.Rudgruvanwas owned and operated by Fagersta ABuntil the1960s.Activities in2009will focuson collecting further information about the Semlaorefield.

The Persberg nos. 1 and 2 explorationpermitsarelocatedinFilipstadmunicipalityin the county of Värmland. Odalfältet inPersberg,whichproduced7.7milliontonnesof iron ore, was one of the most important ironorefieldsinVärmlanduntilproductionceased in 1979. Planned activities in 2009include the compilation of information from mine maps and the gathering of further historicaldataontheminesinPersberg.

Bedrock mapping of the Ströms-malmen ramp wall.Photo: Mikael Eriksson

26

RIS

KS

RISKS – and factors which can affect Dannemora Mineral

Allentrepreneurialactivityandshareownershipinvolvesrisks,and a shareholding inDannemoraMineral is no exception.Even though the iron ores at Dannemora are well understood, and a feasibility study has been carried out with positive results, a shareholding in Dannemora Mineral should always be regarded as a risk investment in view of the present economic decline.Someof thefactorsthatthecompanyconsiderstobeof majorsignificancearedescribedbelow.

ORE PRICES AND CURRENCIESKey risks, but at the same time also opportunities, are associated with the price of iron ore and movements in the USD/SEK exchange rate. The price of iron ore is set indollarsperpercentageof iron content.Prices are setduringannual negotiations between the major steel producers and themajor ironoreproducers.Thesebenchmarkprices thensetthepaceforotherplayersaroundtheworld.Thepriceislargely governed by supply and demand, and can vary widely inboththeshortandlongterm.The2009benchmarkpricesareexpectedtobe lowerthanin2008.However, thisshouldbe viewed against the backcloth of the sharp price increases inrecentyears.

RISK CAPITALResumption of operations in the Dannemora mine and continuing exploration for new deposits will require capital contributions. Creation of shareholder value is dependenton the structureof theplannedfinancingof theproductionfacilities (internal-external capital ratio) and the capital costatwhich itcanbecarriedout.Althoughthe feasibilitystudyshowsthattheminingprojectisclearlyfinanciallyviable,thereare no guarantees that additional risk capital or loans may be forthcoming.

EXPLORATIONExploration activities are aimed at increasing the Group’s ironore reserves, particularly in the vicinity of Dannemora.Consequently, the Group must have the technology, expertise and financial resources to find and explore newmineralisations.

PERSONNELLike many other small and medium-sized enterprises,Dannemora Mineral is dependent on its personnel.Recruitment of key personnel has been successful so far, although resumption of operations in the Dannemora mine willrequireasubstantialincreaseintheworkforce.

ENVIRONMENTAL REQUIREMENTSExploration and mining activities are regulated by stringent environmental requirements, which can cause considerable

delays and additional expenditure. However, DannemoraMineral has been granted an environmental permit under the environmental code to conduct mining operations in the Dannemoramine.

PRODUCTION TECHNOLOGYThe geology of the deposit must be well understood and mining technology and process technology properties fully tested. Nevertheless, problemsmay arise which change theproject’stechnicalorcommercialyields.

CONFLICTS OF INTERESTDisputes may arise between the holder of an exploration permit or exploitation concession and a property owner or other rights holder.Thistypeof disputecoulddelaytheimplementationof aprojectorgiverisetoadditionalexpenditure.

27

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The Dannemora share and ownership

SHARE PRICE DEVELOPMENT 2008-01-02 – 2009-03-06

SHARE PRICE DEVELOPMENT Dannemora Mineral’s class B shares have been listed on FirstNorthsince25May2007.The initialpriceat thetimeof thelistingwasSEK61.00pershare.Onthefirsttradingdayof 2008,thesharewasquotedatSEK32.60.ItshighestlistingduringtheyearwasSEK63.50on5June.Onthefinaltradingday,30December2008,thesharewasquotedatSEK8.60,whichrepresentsadeclineof 73.6percentduring2008.TheFirstNorthAllShares indexfellby64.1percentduringthe sameperiodand theOMXStockholmPI indexby40.9percent.

At 6March 2009, the Dannemora share was quoted atSEK11.10,whichisayear-to-dateincreaseof 29.1percent.In the same period, the First North All-Share index fell by5.7percent,while theOMXStockholmPI index fellby8.6percent.

Intheperiod1January2008to6March2009,atotalof 2,004,376sharesweretradedatavalueof approximatelySEK62 million, which gives an average turnover of 6,749 shares pertradingday.

NEW SHARE ISSUEDannemora Mineral completed a private placement during the second quarter of 2008, which brought the company SEK 155millionbeforeissueexpenses.Atotalof 3,100,000classBsharesweresubscribedforatanissuepriceof SEK50.

SHARE CAPITAL DannemoraMineral’stotalsharecapitalat31December2008wasSEK1,241,600,dividedinto1,200,000classAsharesand6,560,000classBshares.Eachsharehasaparvalueof SEK0.16.ClassAsharescarry10votespershare,whileBsharescarryonevotepershare.Allsharescarryanequalentitlementtoashareof thecompany’sassetsandearnings.

The company’s share capital must be no less than SEK 500,000 and no more than SEK 2,000,000, which corresponds toaminimumof 3,125,000andamaximumof 12,500,000shares.

2008 2009

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB0

10

20

30

40

50

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Dannemora Mineral

First North All−Share

OMX Stockholm_PI

Dannemora Mineral AB

© NASDAQ OMX

28

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INCENTIVE SCHEME In2006,anincentiveschemecomprisingamaximumof 3,000warrants for personnel, executive management and board memberswasadopted.Atotalof 2,500optionswereallocated.Thesubscriptionperiodwas15March2007to31December2008.At31December2008,noshareshadbeensubscribedforundertheincentivescheme.

In2008,anewincentiveschemecomprisingamaximumof 85,000 warrants and 85,000 share options for the parent company’s CEO and key management personnel in the Group

SHARE CAPITAL DEVELOPMENT

year Transaction Increase in share capital, SEk

Total share capital, SEk

Increase in number of

shares

Total number of shares

Share issue price, SEk

March -05 Company formed 100 000 100 000 - 100 000 1,00

Jan -06 new share issue 22 000 122 000 22 000 122 000 50,00

June -06 new share issue 41 000 163 000 41 000 163 000 369,00

March -07 bonus issue 358 600 521 600 - 163 000 -

March -07 Share split 20:1 - 521 600 3 097 000 3 260 000 -

May -07 new share issue 224 000 745 600 1 400 000 4 660 000 61,00

July -08 new share issue 496 000 1 241 600 3 100 000 7 760 000 50,00

The table below shows the ownership structure of Dannemora Mineral at 30 December 2008, based on an extract from Euroclear AB.

Share of

A-shares B-shares Capital, % Votes, %

lennart Falk, directly and via family and compa-nies 600 000 262 200 11,1 33,7

nils bernhard, directly and via family 600 000 218 000 10,5 33,5

HQ Strategifond 468 000 6,0 2,5

Per-Uno Sandberg ab 300 000 3,9 1,6

awake Swedish equity Fund 216 400 2,8 1,2

Mikaros Invest ab 208 600 2,7 1,1

nils Sandstedt 150 000 1,9 0,8

nordea nordic equity Hedge Fund 138 890 1,8 0,8

Hargs bruk ab 126 400 1,6 0,7

Handelsbankens Småbolagsfond 100 000 1,3 0,5

brita Werner 100 000 1,3 0,5

Swedbank robur råvarufond 87 193 1,1 0,5

Försäkringsaktiebolaget avanza 76 595 1,0 0,4

ben Hayes 65 000 0,8 0,4

nordnet Pensionsförsäkring 45 194 0,6 0,2

Foreign investors* 3 194 866 41,2 17,2

other 802 662 10,4 4,4

Total 1 200 000 6 560 000 100,0 100,0

*Foreigninvestorsareinstitutions,fundmanagersandprivateowners.

wasadopted.75,000warrantsand85,000shareoptionswereallocated.The subscriptionperiod for thewarrants is 1 July2009to15January2012,whilethesubscriptionperiodfortheshareoptionsis1July2011to15January2012.

The two programmes are described in more detail in note 5onpage41.

29

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Four-year overview

GroUP

Income statement (SEk 000)2008-01-01-2008-12-31

2007-01-01-2007-12-31

2006-01-01-2006-12-31

2005-03-172005-12-31

operating revenue 2 866 - - -

operating expenses -30 128 -11 835 -2 754 -96

Net financial items 4 564 1 661 124 -

Profit/loss after financial items -22 698 -10 174 -2 630 -96

Profit/loss for the year -22 698 -10 174 -2 630 -96

Balance sheet (SEk 000) 2008-12-31 2007-12-31 2006-12-31 2005-12-31

Assets

Intangible assets 30 602 22 722 5 659 125

Tangible assets 56 129 257 102 -

Financial assets 119 115 100 -

Current receivables 4 915 1 013 500 1 103

Cash and bank balances 148 614 63 706 9 865 2

Total assets 240 379 87 813 16 226 1 230

Equity and liabilities

equity 208 358 82 668 13 103 1 104

non-current liabilities 13 000 - - -

Trade payables 12 440 3 125 1 306 60

other current liabilities 6 581 2 020 1 817 66

Total equity and liabilities 240 379 87 813 16 226 1 230

Cash flow statement (SEK 000)2008-01-01-2008-12-31

2007-01-01-2007-12-31

2006-01-01-2006-12-31

2005-03-172005-12-31

Cash flow from operating activities -20 497 -7 805 -2 104 27

Cash flow from investing activities -42 983 -18 093 -3 762 -125

Cash flow from financing activities 148 388 79 739 15 729 100

Total cash flow 84 908 53 841 9 863 2

Cash & cash equivalents at beginning of year 63 706 9 865 2 -

Cash & cash equivalents at end of year 148 614 63 706 9 865 2

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key ratios2008-01-01-2008-12-31

2007-01-01-2007-12-31

2006-01-01-2006-12-31

2005-03-172005-12-31

Profit/loss after financial items, SEK 000 -22 698 -10 174 -2 630 -96

return on average total assets, % -13,8 -19,6 -30,1 -14,5

return on average equity, % -15,6 -21,2 -37,0 -16,0

equity, SeK 000 208 358 82 668 13 103 1 104

Equity/assets ratio, % 86,7 94,1 80,7 89,8

Cash and bank balances, SeK 000 148 614 63 706 9 865 2

Gross investments in intangible assets, SeK 000 9 399 17 363 5 534 124

Gross investments in tangible assets, SeK 000 56 261 225 118 -

Gross investments in financial assets, SEK 000 4 15 300 -

outstanding shares on balance sheet date before full dilution 7 760 000 4 660 000 163 000 100 000

outstanding shares on balance sheet date after full dilution 8 009 000 4 720 000 163 000 100 000

average no. of shares before full dilution 6 210 000 3 470 347 140 666 100 000

average no. of shares after full dilution 6 377 250 3 530 347 140 666 100 000

earnings per share before full dilution, SeK -3,66 -2,93 -18,70 -0,96

earnings per share after full dilution, SeK -3,56 -2,88 -18,70 -0,96

equity per share, SeK 26,85 17,74 80,39 11,04

Share price, SeK 8,60 31,00 - -

average number of employees 14 8 3 -

Definitions of key ratios

return on average total assets: Profit/loss after financial items plus finance costs as a % of average total assets.

return on average equity: Profit/loss after financial items as a % of average equity.

equity: equity at year-end.

Equity/assets ratio: equity as a % of total assets.

outstanding shares on balance sheet date before full dilution:

number of shares at year-end.

outstanding shares on balance sheet date after full dilution:

number of shares at year-end adjusted by the number of shares that can be subscribed for under outstanding option schemes.

average number of shares before full dilution: Average number of shares during the financial year.

average number of shares after full dilution: Average number of shares during the financial year adjusted by the number of shares that can be subscribed for under outstanding option schemes.

earnings per share, after full dilution: Profit/loss after financial items divided by the average number of shares before full dilution.

earnings per share, after full dilution: Profit/loss after financial items divided by the average number of shares after full dilution.

equity per share: equity at year-end divided by outstanding shares before full dilution.

Share price: Share price at year-end.

average number of employees: average number of employees during the year converted to full-time equivalents.

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The Board and CEO of Dannemora Mineral AB (publ), company reg. no. 556678-3329, herewith submit the annual report for the financial year 1 January – 31 December 2008.

GENERAL INFORMATIONDannemoraMineralABisaminingandexplorationcompanywhichislistedonFirstNorth.Thecompany’smaingoalistoresumeminingoperations in theDannemora ironoremine.The Company also intends to engage in exploration activities to increase the iron ore base locally and regionally, and to explore base and precious metals in several areas in Uppland wherethepotentialforfindingworkabledepositsisconsideredgood.

Dannemora Mineral comprises the parent company DannemoraMineral AB and the wholly-owned subsidiariesDannemoraMagnetitAB,whichisresponsibleforoperationof theDannemoramine, andDannemora FörvaltningsAB,which is responsible for the property portfolio. In 2008, thegroup’s exploration activities were conducted in the wholly-ownedsubsidiaryDannemoraProspekteringAB.Thisentity’sactivitieswere transferred toDannemoraMagnetitABwitheffectfrom1January2009,

OPERATIONS IN THE FINANCIAL YEARParent companyOn 1 April, Staffan Bennerdt was appointed CEO of Dannemora Mineral AB and President of the DannemoraGroup. Staffan Bennerdt has a degree in economics andextensive experience from senior positions in the mining and constructionindustries.

In the second quarter of the year, an incentive schemecomprising warrants and share options was introduced for CEO Staffan Bennerdt and other key management personnel intheGroup.

Also during the secondquarter,DannemoraMineralABcompleted a private placement which brought funds of SEK 155millionbeforeissueexpenses.Atotalof 3,100,000sharesweresubscribedforatanissuepriceof SEK50.

DANNEMORA IRON ORE MINE

Feasibility studyDannemora Mineral commissioned three independent consultancy companies to conduct a feasibility study on the resumption of operations in the Dannemora mine. Theresults were published in January 2008. The study showedthat the project is clearly financially viable and representsgoodtechnicalandfinancialsupportmaterialforpursuingtheprojectfurther.

Agreement with östhammar municipalityOn1April2008,viathesubsidiaryDannemoraFörvaltningsAB,theDannemoraGrouptookpossessionof thelandwithindustrial and residential buildings which was purchased from themunicipalityof Östhammaratthebeginningof theyear.After the acquisition of another area of land, DannemoraMagnetit now has all the land, buildings and installations neededtoresumeoperationsintheDannemoramine.

Responsibility for certain environmental matters is also regulated under the purchase agreement, with Östhammarmunicipality responsible for any environment impacts caused by previous activities and Dannemora Mineral responsible for any environment impacts associated with the planned future miningoperations.

Environmental permitOn18June,theEnvironmentalCourtapprovedDannemoraMineral’s application to conduct mining activities in Dannemora, which meant the company was able to implement the time-critical installation work required for the plannedoperational start-up. The environmental permit is for theminingandprocessingof upto2.0Mtof lumporeandfinesannually.ThepermitisthelastofficialauthorisationneededtoresumeminingoperationsinDannemora.

Pumping and rock worksAugust saw the start of mobilisationworkprior topumpingout themine.Thewaterwill start to bepumpedout in thesecondquarterof 2009.InNovember,mobilisationworkforramp development began, along with tunnelling work in the Dannemoramine.RampplacementbeganinFebruary2009.

Sintering testsDuring spring, chemical, physical and metallurgical tests were performedonDannemora’sironoreproducts,finesandlumpore.Followingtheseinitialmetallurgicaltests,moreextensivesinteringtestingwascarriedoutinsummer.

The results of these test programmes showed that Dannemora’s iron ore products are suitable for the blast furnace processes of future steel customers. The positive test resultshave also formed the basis of detailed technical discussions withanumberof potentialcustomersinNorthernEurope.

Financing and scheduleIt isplannedtoraisetheremainingfinancingneededfortheresumption of mining by issuing shares and by arranging bank loans.

In autumn, Dannemora Mineral engaged a financialadviser for the planned borrowing. To satisfy lenders’ needfor an unbiased insight into the mining project, the customary technical, legal, environmental and financial due diligenceprocesseswerebeguninautumn2008.

Board of directors´ report

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Loan financing for the investments inmining operationsis conditional on Dannemora Mineral having established customer relationships which ensure sale of its iron ore products.Asaresultof thesteelindustry’sreducedproductionvolumes, long-term supply contracts are not expected to befinaliseduntilthefirsthalf of 2010.Loanfinancingagreementsareexpectedtobesignedonthebasisof thisschedule.Thiswill also delay the start of production, which is now expected duringsummer2011.

MarketThe intention is for the planned production from the Dannemora Mine to primarily be aimed at local steel works; in other words, those which import their ore via Baltic or North Seaports.Thelocalfocusobviouslyoffersclearadvantagesintermsof freightcosts.

In early 2009, Dannemora Magnetit signed a letter of intent with four steel companies in Northern Europe. Theletter of intent expresses the parties’ intention to negotiate a long-term,bindingcontractforfutureironoredeliveriesfromtheDannemoraironoremine.

EXPLORATIONIn the second half of the year, exploration activities werelargely focused on the iron ore in and around the Dannemora deposit and on the zinc/iron mineralisations located earlier in theyearinSödrafältet.

At the end of the year, the parent company had oneexploitation concession (Dannemora deposit) and 28 explorationpermitswithatotalareaof 25,437hectares.TheCompany also applied for four more exploration permits duringtheyear.

Iron ore in Dannemora The proven and probable ore reserves in the Dannemora mine havebeenestimatedatjustover28Mt,grading35.2percentiron and 1.8 percentmanganese.With an estimated annualproduction of 1.5Mt of lump ore and fines (approx. 2.45Mt of mined ore), this ore reserve will allow over 12 years of continuousmining.

In order to increase the reserves and extend the life of the mine and/or increase its annual production, we have initiated an iron ore exploration programme.Whilewaitingfor drifts in the Dannemora mine to become available for exploration drilling, initial activity has been focused on iron ore mineralisations close to the surface. The results of thegeophysical surveys conducted in the northern part of the mine area have been used to produce models of the mineralisations closetothesurface.Theresultswillbeusedtoplanthecomingexplorationactivities.

Detailed studies of the ore bodies in the northern part of themineareaare inprogress.Theaim is toobtainabetter

basis for mine planning and product optimisation in this area, which is where ore production will be concentrated in the early yearsof operation.

Project Södra fältet in Dannemora Anumberof smallsulphidemineralisationsareknownintheDannemoraminearea,someof themwithhighzincgrades.Asaresultof DannemoraProspektering’sexplorationactivitiesin the area, another interesting zinc mineralisation has been identified.

Two drilling programmes were implemented during the year. As the mineralisation still is open at depth and alongstrike, it is still considered interesting. However, in view of the current low zinc prices, the project is not prioritised at the presenttime.

New exploration permitsIn autumn, Dannemora Mineral was granted four newexploration permits for iron mineralisations (Riddarhyttan no.1,Rudgruvanno.1,Persbergnos.1and2).InFebruary2009, another exploration permit for iron mineralisations was obtained (Riddarhyttanno.3).Thenewexplorationpermitsare based on skarn magnetite ore of the same type as in the Dannemoramine.

TheRiddarhyttanno.1andno.3explorationpermitsmeanthat Dannemora will now be working in yet another historically importantironorefieldinBergslagen.Together,thetwopermitscover the part of Riddarhyttan which contains interesting iron oredeposits.Thecompanyhasastrategicinterestinsecuringiron ore reserves which, in a longer perspective, may increase iron ore production to a level above that which the measured reservesintheDannemoraminecanyield.

RESULTS AND FINANCIAL POSITION

Turnover and financial resultThegroup’sturnoverduringthe2008financialyearamountedtoSEK2.9 (0.0)million.Profit/loss afternetfinancial itemswasSEK-22.7(-10.2)million.Theparentcompany’sturnoverduring the year amounted toSEK2.4 (0.0)million,And itsprofit/loss after net financial items was SEK -4.3 (-10.2)million.

InvestmentsThe Group’s investments during the year amounted to SEK 65.7(17.6)million.Theparentcompany’sinvestmentsduringtheyearwereSEK6.9(17.6)million.

Liquidity and financingThe Group’s cash & cash equivalents at the end of the period were SEK 148.6 (63.7)million, while the parent company’samountedto141.6(63.5)million.TheGroupdidnothaveanyinterest-bearingliabilitiesat31December2008.

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Havingreceivedamandatefromtheextraordinarygeneralmeeting, the board decided to implement a private placement in June. The share issue brought the company SEK 155million before share issue costs. A total of 3,100,000 sharesweresubscribedforatanissuepriceof SEK50.Aftertheshareissue, the number of shares was 7,760,000, with the new shares representing39.9percentof sharecapitaland16.7percentof thevotes.

Thepurposeof theshareissuewastofinancetime-criticalinstallation work in the Dannemora mine. The reason forimplementing the share issue without preferential rights for shareholderswas tobroaden thecompany’sownership.Oneof the benefits of this will be to facilitate future issues withpreferentialrights.

EmployeesTheaveragenumberof employeesduring thefinancialyearwas14(8)inthegroupand2(8)intheparentcompany.

An extraordinary generalmeeting held in April adoptedan option scheme for the parent company’s CEO Staffan Bennerdt. The option scheme comprises 50,000 warrantsand50,000shareoptions.Eachwarrantentitlestheholdertosubscribe for one new B share, while each share option entitles the holder to acquire one new B share. An extraordinarygeneral meeting held in June adopted an extension of theoptionscheme.Theextendedshareoptionschemeis forkeymanagement personnel in theGroup and comprises 35,000warrantsand35,000shareoptions.

The company had already had an outstanding warrant programme consisting of amaximum of 3,000warrants toemployees,keymanagementpersonnelandtheBoard.Attheendof thesubscriptionperiod(31December2008),noshareshadbeensubscribedforundertheshareoptionscheme.

WORK OF THE BOARDTheBoardhadsixmembersduringtheyear.TheBoardheld14meetingsatwhichminutesweretaken.Alargeproportionof the Board’s work was devoted to planning of the Company’s financing,monitoringliquidityandmarkettrends,andplanningandfollow-upof plant&equipmentinvestmentswhichbeganduringtheyear.Atitsmeetings,theBoardobtainedwrittenandverbal information from the President about the Company’s development.

Board members also maintained regular contact with the Presidentandotherpersonnel,inordertostayup-to-dateonthedevelopmentandperformanceof thebusiness.

EVENTS AFTER THE END OF THE FINANCIAL YEARWitheffectfrom1January2009,responsibilityfortheGroup’s exploration activities was transferred to Dannemora Magnetit

AB.ThemainreasonwastoclearlydemonstratetheGroup’sprioritisation of the commencement of mining in the Dannemoramine.

InJanuary2009,DannemoraMagnetitABandanumberof interested parties signed a declaration of intent with the SwedishRailAdministrationontherenovationof therailwaylineontheÖrbyhus–Dannemora–Hargshamn–Hallstaviksection, which will bring Dannemora cost-efficiency andenvironmentaladvantages.

In spring 2009, DannemoraMagnetit signed a letter of intent for future iron ore deliveries with four European steel companies.

In February 2009, rock works in the Dannemora minebegan with ramp placement and development work, which will generateironorestartinginQ2.Theoreismainlyintendedforuseintrialdeliveriestopotentialcustomers.

InMarch2009,inthelightof theweakeconomyandthesteel industry’s marked production declines during the year, it was decided to postpone certain investments and keep running costs down. The intention is to retain the Company’s goodfinancial position and be well equipped when the economyrecovers.

RISKS AND UNCERTAINTIESRebuilding of the Dannemora mine and continuing exploration willrequirecontributedcapital.Theabilitytoraisefinancingis largely governed by the price of iron ore, the USD/SEK exchangerateandthefinancialmarkets.

Withthecurrentrecessionhavingcausedthesteelproducers’production volumes to fall, the world’s steel production is expected to be lower in 2009 than in 2008. This meanslower demand for iron ore, and lower prices can therefore be expected.However, stronger global financial development ispredictedinafewyears’time,withhigherironoreprices.

The current turbulence on the financial markets meansuncertaintyaboutwhentheCompanycanraisefinancing.

Mining and exploration are regulated by strict environmentalrequirements.TheCompanyhasbeenawardedan environmental permit under the Environmental Code, but environmental impacts may still arise which could delay or add tothecostof mining.

FUTURE PROSPECTSDannemora Mineral believes the financing of the miningprojectcanbeimplementedinthefirsthalf of 2010.Financingwilltaketheformof loansandadditionalequity.

The current projects relating to pumping out the mine and rockworks continue.The rockworks aremainly focusedondevelopmentworkinStrömsmalmen.Thedevelopmentworkwillbecarriedoutinspring2009.

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Contracts for the ore processing plant are dependent on full financing being in place and have been delayed. Theoperational start for the ore processing plant is now scheduled forsummer2011.Fullproductionisexpectedtobereachedbyautumn2012.

Thecurrentfinancialturmoilanduncertaintysurroundingthe development of the iron ore market mean that factors outside the Company’s control may change the scheduling for thefinancingandtheresumptionof mining.

PROPOSED ALLOCATION OF PROFITSThefollowingamountsareatthedisposalof theAGM

Share premium reserve 241637111kr

Retained earnings -12900968kr

Loss for the year -22664072kr

206 072 071 kr

TheBoardproposes that theprofit of SEK206,072,071becarriedforward.

RESULTS AND FINANCIAL POSITIONThe results of the Company’s and the Group’s operations and theirfinancialpositionattheendof theyearcanbefoundinthe income statement, balance sheet, additional information andnoteswhichfollow.

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2008-01-01-

2008-12-312007-01-01-2007-12-31

2008-01-01-2008-12-31

2007-01-01-2007-12-31note

operating revenue 2, 3 2 866 - 2 380 -

other external costs 3, 4, 5 -18 652 -8 044 -8 300 -8 044

Personnel expenses 5 -9 562 -3 421 -2 613 -3 421

Depreciation, amortisation and impairment of assets 6, 7, 8 -1 914 -370 -1 635 -370

Total operating expenses -30 128 -11 835 -12 548 -11 835

Operating profit/loss -27 262 -11 835 -10 168 -11 835

Interest income from group companies - - 1 435 -

other interest income 4 583 1 662 4 460 1 662

Interest expense -19 -1 -3 -1

Total financial items 4 564 1 661 5 892 1 661

Profit/loss after financial items -22 698 -10 174 -4 276 -10 174

Group contributions made - - -18 388 -

Profit/loss for the year -22 698 -10 174 -22 664 -10 174

Income Statements

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GroUP ParenT CoMPanYnon-CUrrenT aSSeTS note 2008-12-31 2007-12-31 2008-12-31 2007-12-31

Intangible assets

exploration and evaluation assets 3, 6 30 602 22 722 12 203 22 722

Tangible assets

land and buildings 7 15 266 - - -

Equipment, tools and fixtures & fittings 8 625 257 255 257

Construction in progress 9 40 238 - - -

Total tangible assets 56 129 257 255 257

Financial assets

Shares and interests in group companies 10 - - 300 200

Cash deposits 11 119 115 119 115

Total financial assets 119 115 419 315

Total non-current assets 86 850 23 094 12 877 23 294

Current assets

Trade receivables 153 - - -

receivables from group companies - - 56 434 -

other current receivables 4 478 750 892 750

Prepayments and accrued income 284 263 221 263

Cash and bank balances 148 614 63 706 141 606 63 506

Total current assets 153 529 64 719 199 153 64 519

ToTal aSSeTS 240 379 87 813 212 030 87 813

Balance Sheets

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GroUP ParenT CoMPanYeQUITY anD lIabIlITIeS note 2008-12-31 2007-12-31 2008-12-31 2007-12-31

Equity 12

Restricted equity

Share capital 1 242 746 1 242 746

Statutory reserve 1 078 1 078 1 078 1 078

Total restricted equity 2 320 1 824 2 320 1 824

Unrestricted equity

Share premium reserve 241 637 93 745 241 637 93 745

retained earnings -12 901 -2 727 -12 901 -2 727

Profit/loss for the year -22 698 -10 174 -22 664 -10 174

Total unrestricted equity 206 038 80 844 206 072 80 844

Total equity 208 358 82 668 208 392 82 668

Long-term liabilities 13 000 - - -

Current liabilities

Trade payables 12 440 3 125 2 591 3 125

liabilities to group companies - - 321 -

other liabilities 704 394 258 394

accruals and deferred income 13 5 877 1 626 468 1 626

Total current liabilities 19 021 5 145 3 638 5 145

ToTal eQUITY anD lIabIlITIeS 240 379 87 813 212 030 87 813

Pledged assets 14 17 609 105 109 105

Contingent liabilities 14 none none 13 000 none

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2007-01-01-2007-12-31

2008-01-01-2008-12-31

2007-01-01-2007-12-31

Operating activities

Operating profit before financial items. -27 262 -11 835 -10 168 -11 835

Depreciation of tangible assetst 395 69 116 69

Impairment of intangible assets 1 519 301 1 519 301

Interest received 4 583 1 662 4 460 1 662

Interest paid -19 -1 -3 -1

Cash flow from operating activities before changes in working capital:

-20 784 -9 804 -4 076 -9 804

Cash flow from changes in working capital

Changes in other current receivables -3 902 -513 -57 778 -513

Changes in trade payables 2 056 1 891 -411 1 891

Changes in other current liabilities 2 133 621 -746 621

Total change in working capital 287 1 999 -58 935 1 999

Cash flow from operating activities -20 497 -7 805 -63 011 -7 805

Investing activities

Investments in intangible assets -9 629 -17 854 -7 059 -17 854

Investments in tangible assets -33 350 -224 -114 -224

Investments in financial assets -4 -15 -104 -15

Cash flow from investing activities -42 983 -18 093 -7 277 -18 093

Financing activities

new share issue 147 963 79 692 147 963 79 692

Issue of share warrants 425 47 425 47

Cash flow from financing activities 148 388 79 739 148 388 79 739

CaSH FloW For THe Year 84 908 53 841 78 100 53 841

Cash & cash equivalents at beginning of year 63 706 9 865 63 506 9 665

Cash & cash equivalents at end of year 148 614 63 706 141 606 63 506

Cash flow statements - indirect method

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NOTE 1 RECOGNITION AND MEASUREMENT PRINCIPLES The Company’s annual report has been prepared in accordance withtheSwedishAnnualAccountsActandthegeneraladviceissuedbytheSwedishAccountingStandardsBoard,apartfromwhereBFNAR2008:1(annualaccountingforsmallcompanies)hasbeenapplied.Reportingof explorationforandevaluationof assetsisinaccordancewithIFRS6.

Consolidated financial statementsSubsidiaries where the parent company directly or indirectly owns more than 50 percent of the voting power or has some otherformof controlareconsolidated.

The consolidated annual financial statements have beenprepared by use of the acquisition method of accounting, whichmeansthesubsidiaries’equityonacquisition,definedasthe difference between the fair values of assets and liabilities, is eliminatedinitsentirety.Consequently,thegroup’sequityonlycomprises the portion of the subsidiaries’ equity arising after theacquisition.

Companies acquired during the year are included in the consolidated accounts with amounts relating to the period after the acquisition. Internal profits are eliminated in theirentirety.

Intheparentcompany,sharesinsubsidiariesarereportedatcostof acquisitionlessanyimpairmentlosses.

RevenueRevenue consists largely of rental income, which is recognised in the rental period. Internal sales are eliminated in theirentirety.

Expenditure on exploration for and evaluation of assetsExpenditure on exploration for and evaluation of assets is reported under intangible assets in accordance with IFRS6. Exploration and evaluation assets are measured at costand cover all costs directly attributable to exploration and evaluation.

Impairment losses on exploration and evaluation assetsare recognised when facts and circumstances indicate that the carrying amount of the assets may exceed their recoverable amount.

ReceivablesReceivables with a due date more than 1 year after the balance sheet date are reported as non-current assets; other assetsare reported as current assets. Receivables are measured atthe amounts expected to be paid following an individual assessment.

LiabilitiesLiabilities with a due date more than 1 year after the balance sheetdatearereportedasnon-currentliabilities;otherliabilitiesarereportedascurrentliabilities.Therearenoliabilitiesduemorethan5yearsafterthebalancesheetdate.

Foreign currencies Foreign currency assets and liabilities are measured at theclosingrate.Foreigncurrencytransactionsaretranslatedatthetransactiondateexchangerate(spotrate).

Property, plant & equipmentItemsof property,plant&equipmentare recognisedat costlessdepreciation.Expenditureon improvementof anasset’sperformance from its original level increases its carrying amount.Repairandmaintenancecostsare recognisedasanexpense.

Itemsof property,plant&equipmentaredepreciatedonastraight-linebasisovertheirestimatedusefullives.Thestraight-linemethodisusedforalltypesof fixedassets.Thefollowingdepreciation periods are applied:

Buildings 50 yearsEquipment,toolsandfixtures&fittings 5 yearsComputers 3years

If anasset’scarryingamountexceedsitsrecoverableamount,itiswrittendowntotherecoverableamountimmediately.

NOTE 2 DISTRIBUTION OF OPERATING REVENUE

SeK 000 GroUP ParenT CoMPanY2008-01-01- 2008-12-31

2007-01-01- 2007-12-31

2008-01-01- 2008-12-31

2007-01-01- 2007-12-31

rental income 2 431 - - -

Group-wide services - - 2 380 -

other revenues 435 - - -

Total 2 866 - 2 380 -

Additional Information and notes

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NOTE 4 REMUNERATION OF AUDITORS

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2008-01-01-2008-12-31

2007-01-01-2007-12-31

2008-01-01-2008-12-31

2007-01-01-2007-12-31

Öhrings PriceWaterhouseCoopers ab

audit fees 197 125 79 125

other assignments 176 240 176 240

Total 373 365 255 365

NOTE 5 EMPLOYEES AND PERSONNEL EXPENSES

NOTE 3 PARENT COMPANY’S SALES AND PURCHASES WITH GROUP COMPANIESThe parent company invoiced subsidiaries SEK 2,380 (-)thousand for group-wide services. The parent company’spurchases from group companies amounted to SEK 147 (-)thousandand related to rental costs. Inaddition, theparentcompany purchased services from group companies relating to work invested in exploration permits. These have beencapitalisedasexplorationassets.

GroUP ParenT CoMPanY

2008-01-01-2008-12-31

2007-01-01-2007-12-31

2008-01-01-2008-12-31

2007-01-01-2007-12-31

Average number of employees

Men 11 5 2 5

Women 3 3 - 3

Total 14 8 2 8

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2007-01-01-2007-12-31

2008-01-01-2008-12-31

2007-01-01-2007-12-31remuneration paid

SeK 000

remuneration of the board and President 1 858 1 387 1 858 1 387

remuneration of other key management personnel 4 439 3 172 696 3 172

remuneration of other employees* 2 582 1 822 - 1 822

Pension expenses - board and President 206 - 206 -

Pension expenses - other key management personnel 622 327 106 327

Pension expenses - other employees 106 63 - 63

other social security contributions* 2 754 1 452 762 1 452

Total 12 567 8 223 3 628 8 223

Sicknessabsenceinthegrouprepresented0.4%of totalworkingtimein2008..

Remuneration of the Board and PresidentBoard fees for the year were as follows: SEK 225 thousand was paid to the chairman of the board, SEK 150 thousand to the deputy chairman and SEK 75 thousand to the other four boardmembers.Therearenopension,bonusorotherbenefitarrangementsfortheboard.

ThePresidentandCEOwasappointedon1April2008andreceivesafixedremuneration.Histotalremuneration,excludingpension,amountedtoSEK923thousand.PensionpremiumspaidamountedtoSEK206thousand.Noterminationbenefitshave been agreed over and above the normal period of notice of sixmonths.

The former President provided consulting services, and received consulting fees amounting to SEK 416 thousand for theperiodJanuarytoMarch2008(inclusive).

Remuneration of key management personnelRemuneration of key management personnel took the

formof salariesandconsultingfeesduringtheyear.FivekeymanagementpersonnelreceivedsalariestotallingSEK3,700thousand. One senior manager is engaged on a consultingbasisandreceivedremunerationtotallingSEK738thousand.

Pension premiums paid for key management personnel employed in the companyamounted toSEK622 thousand.Noterminationbenefitshavebeenagreedforkeymanagementpersonnel over and above the normal period of notice of six months.

Incentive scheme In2006,anincentiveschemecomprisingamaximumof 3,000warrants for personnel, management and board members wasadopted.A totalof 2,500warrantswereallocated.The

subscriptionperiodwas15March2007to31December2008.At 31 December 2008, no shares had been subscribed forundertheincentivescheme.

TheextraordinarygeneralmeetinginApril2008adoptedan option scheme comprising 50,000 warrants and 50,000 shareoptionsfortheparentcompany’sCEO.

Thewarrantswere transferred at amarket price definedusingtheBlack&Scholesoptionpricingformula.Eachwarrantgives entitlement to subscribe for one new class B share during theperiod1July2009to15January2012.ThesubscriptionpricepershareisSEK75.Theshareoptionswereallottedfreeof charge. Each share option gives entitlement to subscribeforonenewclassBshareduringtheperiod1July2011to15January2012.ThesubscriptionpricepershareisSEK50.

Theextraordinarygeneralmeeting inJune2008adopteda proposal to extend the above option scheme by issuing 35,000warrantsand35,000shareoptionstokeymanagementpersonnel in the group. 25,000 warrants and 35,000 shareoptionswereallocated.

Thewarrantswere transferred at amarket price definedusing the Black & Scholes option pricing formula. Eachwarrant entitles the holder to subscribe for one new class B shareduringtheperiod1July2009to15January2012.ThesubscriptionpricepershareisSEK91.Theshareoptionswereallottedtoemployeesfreeof charge.Eachshareoptionentitlesthe holder to subscribe for one new class B share during the period1July2011to15January2012.ThesubscriptionpricepershareisSEK68.

* The portions of salaries and social security contributions relating to workinvestedinexplorationpermitswerecapitalisedasexplorationassets.

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NORE 7 LAND AND BUILDINGS

SeK 000GroUP

2008-12-31 2007-12-31

Investments for the year 15 498 -

Depreciation for the year -232 -

Closing balance 15 266 -

Thetotaltaxablevalueof thegroup’spropertiesisSEK16,344thousand,of whichSEK9,123thousandrelatestobuildings.

NOTE 8 EQUIPMENT, TOOLS AND FIXTURES & FITTINGS

SeK 000

GroUP ParenT CoMPanY2008-12-31 2007-12-31 2008-12-31 2007-12-31

opening accumulated cost 342 118 342 118

Investments for the year 531 224 114 224

Closing accumulated cost 873 342 456 342

opening accumulated depreciation -85 -16 -85 -16

Depreciation for the year -163 -69 -116 -69

Closing accumulated depreciation -248 -85 -201 -85

CloSInG balanCe 625 257 255 257

NOTE 6 EXPLORATION AND EVALUATION ASSETS

SeK 000GroUP ParenT CoMPanY

2008-12-31 2007-12-31 2008-12-31 2007-12-31

opening accumulated cost 23 023 5 659 23 023 5 659

Capitalised expenditure for the year 9 399 17 364 6 709 17 364

Transfers to group companies - - -15 709 -

Closing accumulated cost 32 422 23 023 14 023 23 023

opening accumulated impairment losses -301 - -301 -

Impairment for the year -1 519 -301 -1 519 -301

Closing accumulated impairment losses -1 820 -301 -1 820 -301

CloSInG balanCe 30 602 22 722 12 203 22 722

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NOTE 9 CONSTRUCTION IN PROGRESS

SeK 000

GroUP2008-12-31 2007-12-31

Investments for the year 40 238 -

Closing balance 40 238 -

NOTE 11 CASH DEPOSITS

SeK 000

GroUP ParenT CoMPanY2008-12-31 2007-12-31 2008-12-31 2007-12-31

opening deposits 115 100 115 100

Deposits during the year 4 15 4 15

Closing balance 119 115 119 115

NOTE 10 SHARES AND INTERESTS IN GROUP COMPANIES

SeK 000

Carrying amount

Dannemora Magnetit AB Dannemora Prospektering AB Dannemora Förvaltnings AB

reg. no. 55 67 09-16 64 55 67 08-19 88 55 67 50-36 27

Reg’d office Östhammar Östhammar Östhammar

Share of equity % 100% 100% 100%

number of shares 100 000 100 000 100 000

Carrying amount 2008-12-31 100 100 100 300

Carrying amount 2007-12-31 100 100 - 200

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SeK 000

ParenT CoMPanY

restricted equity Unrestricted equity

Share capital Statutory reserve Share premium reserve retained earnings

opening equity, 1 2007-01-01 163 1 078 14 589 -2 727

bonus issue 359 -359

new share issue 224 85 176

Share issue expenses -5 708

Issue of warrants 47

Profit/loss for the year -10 174

Closing equity, 2007-12-31 746 1 078 93 745 -12 901

new share issue 496 154 504

Share issue expenses -7 037

Issue of warrants 425

Profit/loss for the year -22 664

Closing equity, 2008-12-31 1 242 1 078 241 637 -35 565

GroUP

restricted equity Unrestricted equity

Share capital Statutory reserve Share premium reserve retained earnings

opening equity, 2007-01-01 163 1 078 14 589 -2 727

bonus issue 359 -359

new share issue 224 85 176

Share issue expenses -5 708

Issue of warrants 47

Profit/loss for the year -10 174

Closing equity,2007-12-31 746 1 078 93 745 -12 901

new share issue 496 154 504

Share issue expenses -7 037

Issue of warrants 425

Profit/loss for the year -22 698

Closing equity 2008-12-31 1 242 1 078 241 637 -35 599

At31December2008,DannemoraMineralhad7,760,000outstandingshares,comprising1,200,000classAshares(tenvotespershare)and6,560,000classBshares(onevotepershare).

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NOTE 13 ACCRUALS AND DEFERRED INCOME

SeK 000

GroUP ParenT CoMPanY2008-12-31 2007-12-31 2008-12-31 2007-12-31

accrued expenditure on construction in progress 2 576 - - -

accrued fees 1 354 292 293 292

accrued holiday pay 595 365 40 365

accrued social security contributions 410 118 81 118

accrued exploration and evaluation expenses 110 427 35 427

other 832 424 19 424

Total accruals and deferred income 5 877 1 626 468 1 626

NOTE14 PLEDGED ASSETS AND CONTINGENT LIABILITIES

SeK 000GroUP ParenT CoMPanY

2008-12-31 2007-12-31 2008-12-31 2007-12-31

Pledged assets

Property mortgages 13 000 - - -

Pledged bank funds 4 500 - - -

Deposit in accordance with Minerals act, made to Mining Inspectorate of Sweden 109 105 109 105

Total pledged assets 17 609 105 109 105

Contingent liabilities

Contingent liabilities for group companies' commitments - - 13 000 -

Total contingent liabilities - - 13 000 -

46

The income statements and balance sheets for the Parent Company and Group will be submitted to the annual general meeting on4May2009.

Dannemora,3April2009

Staffan Bennerdt Nils BernhardPresident and CEO Chairman of the Board

NilsSandstedt LennartFalkDeputy Chairman

ChristerLindberg NiklasNordström

Lars-GöranOhlsson

Ourauditreportwassubmittedon7April2009.

ÖhrlingsPricewaterhouseCoopersAB

AnnikaWedinAuthorisedPublicAccountant

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Audit report

To the Annual General Meeting of Dannemora Mineral AB (publ) Company reg. no. 556678-3329

We have audited the consolidated and Parent Company’sannual financial statements, the accounting practices andthe administration of the Board of Directors and CEO of DannemoraMineral AB (publ) for the financial year 2008.The consolidated annual financial statements for the ParentCompany and Group can be found in the printed version of thisdocumentonpages31-46.TheBoardof DirectorsandCEO are responsible for the annual financial statements,administration and preparation of the accounts in accordance withtheSwedishAnnualAccountsAct.Ourresponsibilityistoexpressanopinionontheannualfinancialstatementsandtheadministrationbasedonouraudit.

We conducted our audit in accordance with generallyaccepted auditing standards in Sweden. These standardsrequire that we plan and perform the audit to obtain reasonableassurancethattheannualfinancialstatementsarefreeof materialmisstatement.Anauditincludesexamination,on a test basis, of evidence supporting the amounts and disclosuresintheaccounts.Anauditalsoinvolvesassessmentof the accounting principles used and their application by the Board of Directors and CEO, an evaluation of the most critical estimates made by the Board and CEO in preparing the annual financial statements and an assessment of theoverall presentationof information in the annual report.Asa basis for our opinion concerning discharge from liability, we have examined significant decisions, actions taken andcircumstances of the Company in order to determine the liability, if any, to the Company of any member of the Board

ortheCEO.Wehavealsoconductedexaminationstoestablishwhether any member of the Board or the CEO has in any other way acted in contravention of the Swedish Companies Act,theAnnualAccountsAct,ortheCompany’sArticlesof Association.Webelieve thatourauditprovidesa reasonablebasisforouropinionsetoutbelow.

Theannualfinancial statements for theParentCompanyand Group have been prepared in accordance with the Swedish AnnualAccountsActandthusprovideatrueandfairpictureof theCompany’sandtheGroup’searningsandfinancialpositionin accordance with generally accepted accounting practices in Sweden.TheBoardof Directors’reportisconsistentwiththeotherpartsof theannualreport.

We recommend that theAnnualGeneralMeeting adoptthe income statement and balance sheet, that the profit bedealt with in accordance with the proposal in the Board of Directors’ report, and that the members of the Board and the CEObedischargedfromliabilityforthefinancialyear.

Gävle,7April2009

ÖhrlingsPricewaterhouseCoopersAB

AnnikaWedinAuthorisedPublicAccountant

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The Swedish Code of Corporate Governance (the Code) is includedinNasdaqOMXStockholm’srulebookfor issuers.The Code’s rules represent an addition to the corporate organisation provisions contained in the Swedish Companies Act,andtotherelativelylarge-scalecorporategovernanceself-regulationwhichexists.

In formal terms, the Code is not directly applicable toDannemoraMineralAB,astheCompany’ssharesaretradedon First North. However, Dannemora Mineral AB is keento maintain a high standard of corporate governance which is constantly balanced against the nature and scope of the Company’sactivities.

The shareholders’ meetingThe general meeting of shareholders, which is the Company’s highest decision-making body, gives shareholders theopportunitytoexercisetheirinfluence.

Dannemora Mineral’s shareholders’ meetings are open to allshareholders.Theannualgeneralmeetingof shareholdersmakes decisions on the adoption of the income statement andbalancesheet,allocationof theCompany’sprofitorloss,discharge of Board members and the President & CEO from liability, election of the Board members, Chairman of the Boardandauditor.Themeetingalsodefinesthelevelof Boardandauditor’sfees.

The Board of DirectorsTheBoardof DannemoraMineralABisresponsiblefortheorganisation and management of the Company’s affairs, and its work is led by the Chairman of the Board. The Boardcurrently consists of six members who are appointed by the annualgeneralmeetingof shareholders.Boardmembersareat the present time appointed until the next annual general meeting.

The present Board, which was elected at the annual general meeting held on 8 May 2008, consists of Nils Bernhard, Lennart Falk, Lars-GöranOhlsson,Nils Sandstedt,ChristerLindbergandNiklasNordström.In2008,therewere14Boardmeetingsatwhichminutesweretaken.ThreeBoardmeetingshavebeenheldtodatein2009.

The Board of Dannemora Mineral has the expertise and experience required to support, monitor and control activities inaminingandprospectingcompany.Boardmembers’areasof expertise include geology, mining, mineral dressing, licence management,corporatedevelopment,PRandfinancing.

The Board’s activities, the division of responsibility between Board and Management and guidelines for reporting to the BoardareclearlystatedintheBoard’sformalworkplan.Theformal work plan is adopted by the Board following the annual generalmeetingeachyear.ThecurrentworkplanwasadoptedattheBoardmeetingheldon8May2008.TheBoardhasnotestablished a special audit committee or any other permanent committeesorworkingcommittees.

Group ManagementThe President & CEO Staffan Bennerdt is responsible for the continuing management of the Company and Group.In addition to the President & CEO, Group managementcomprises the CEOs of Dannemora Magnetit AB andDannemora Förvaltnings AB, the Marketing & LogisticsManager, the Exploration Manager and the CFO. Groupmanagementmeettwiceeverymonth.

Salaries and remuneration of board members and senior managementSalaries and remuneration for the financial year 2008 arereportedinNote5onpage41.

Share market informationThe Board of Dannemora Mineral AB is responsible forensuring that the Company fulfils the requirements forinformation disclosure to the stock market. DannemoraMineral’s financial and other communication shall alwaysconformtorelevant ruleson theFirstNorthandStockholmStock Exchanges, legal obligations which may apply to DannemoraMineralandbeststockmarketpractice.

The aim is also to maintain a good relationship with the financial market’s participants by providing relevant andtimelyinformationinaprofessionalway.DannemoraMineralpublishes an interim report after each quarter, a year-endreportandanannualreportforthefullfinancialyear.

Insider policy and insider rulesThe Board of Dannemora Mineral has adopted an insider policytocomplementcurrentinsiderlegislation.Eachpersonto whom the policy applies is notified of this. The policyregulates procedures for the periods during which there is a prohibitionintradinginsharesorotherfinancialinstruments(if applicable) in Dannemora Mineral AB. Trading is notpermitted for thirty days prior to and including the day before publicationof financialinformation.

Alistof insiderscoveredbytheinsiderpolicy isavailableon the Company’s website. These individuals’ holdings arereported in this annual report together with the date and size of anychangesintheirholdings.

AuditingThe auditor’s task is to examine the Company’s annual financial statements and accounting practices and to reviewthe management of the Company by the Board and President &CEO.Aftereachfinancialyear,theauditorssubmitanauditreporttotheannualgeneralmeeting.

Auditors are appointed by the annual general meetingforatermof fouryears.TheCompany’sauditorisÖhrlingsPricewaterhouseCoopers AB. The Chief Auditor is AnnikaWedin,whoisanauthorisedpublicaccountant.

Corporate Governance

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Corporate Governance Board, management and auditor 2008

Nils BernhardBorn 1947M.Sc.(Eng.),B.Sc.(Econ).Entrepreneur and private investor Foundedthecompanyin2005,Chairmanof theBoardsincethen.Otherdirectorships:TobiiTechnologyABetal.No. of shares and options*: 600,000 classA shares and 218,000 classB shares(directlyandthroughrelatedparties).

Lennart FalkBorn 1941Ph.D.andGeologist.Entrepreneur and private investor Foundedthecompanyin2005,BoardMembersincethen.CEOof DannemoraProspekteringuptoandincluding2008.Otherdirectorships:PajebKvartsABandSvenskProspekteringskonsultAB.No.of sharesandoptions*:600,000classAsharesand262,200classB*shares(directly,throughrelatedpartiesandcompanies).

Nils SandstedtBorn 1964B.Sc.(Econ).Corporatefinanceconsultantandprivateinvestor.ElectedtoBoard2006.DeputyChairmansince2007.Otherdirectorships:SkeboKonferensAB,SkeboHerrgårdAB,NordrosAB,Rosa&coABetal.No.of sharesandoptions*:150,000classBshares.

Christer LindbergBorn 1948B.Sc.(Econ).CEOAlmiFöretagspartnerStockholmAB.ElectedtoBoard2006.Otherdirectorships:Chairmanof theBoardof ÖstergrensElmotorAB,BoardMember of Almi Stockholm InvesteringsfondAB, S.E.GResistorAB, LightlabABetal.No.of sharesandoptions*:2,400classBsharesand300classBwarrants(onfullsubscription 6,000 shares)

BOARD:

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Niklas NordströmSeniorConsultantatPrimePRAB.ElectedtoBoardin2007.Otherdirectorships:EgenmaktAB.No.of sharesandoptions*:1,500classBshares.

Lars-Göran OhlssonBorn 1944Mining EngineerCEOof GeoManagementAB.ElectedtoBoardin2006.CEOof parentcompanyfrom2006toApril2008.Otherdirectorships:Chairmanof GeoManagementABandBoardMemberof EndominesAB.No.of sharesandoptions*:1,000classBwarrants(onfullsubscription20,000shares).

SENIOR MANAGEMENT:

Staffan BennerdtBorn 1954B.Sc.(Econ).CEOof DannemoraMineralandGroupPresident.AppointedApril2008.No.of sharesandoptions*:50,000classBwarrants(onfullsubscription50,000shares)and50,000classBshareoptions(onfullsubscription50,000shares).

Kjell KlippmarkBorn 1954MiningEngineer.CEOof DannemoraMagnetit.Appointed2007.No.of sharesandoptions*:15,000classBwarrants(onfullsubscription15,000shares)and15,000classBshareoptions(onfullsubscription15,000shares).

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*Informationonholdingsof sharesandwarrantsasat31December2008.

Lars AlmBorn 1947MiningEngineer.CEOof Dannemora FörvaltningsAB andDeputyCEOof DannemoraMagnetit.Appointed2007.No.of sharesandoptions*:100classBsharesand600classBwarrants(onfull subscription 12,000 shares)

Jan VestlundBorn 1947M.A.(PoliticalScience),B.Sc.MarketingandLogisticsManagerof DannemoraMineral.Appointed2007.No. of shares and options*: 4,000 class B warrants (on full subscription4,000 shares) and 10,000 class B share options (on full subscription 10,000 shares).

Niklas KihlBorn 1964B.Sc.(Econ).CFOof DannemoraMineral.Appointed2007.No.of sharesandoptions*:100classBshares.6,000classBwarrants(onfull subscription 6,000 shares) and 10,000 class B share options (on full subscription10,000shares).

Peter SvenssonBorn 1968M.Sc.(Geosciences).ExplorationManageratDannemoraMagnetit.Appointed2007.No.of sharesandoptions*:1,000classBsharesand200classBwarrants(onfullsubscription4,000shares).

AUDITOR:ÖhrlingsPricewaterhouseCoopersABhasbeentheCompany’sauditorsince2005.TheChief AuditorAnnikaWedin(b.1961)is an authorised public accountant (1984) and a member of FARSRS.

52

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Actinolite Skarn mineral with the chemical composition Ca2(Mg,Fe)5Si8O22(OH)2.

Anomaly Alocaldeviationfromthenormalpropertiesorcompositionof bedrock/till.

Base metals Metalssuchascopper,zincandlead.

Blast furnace Furnaceinwhichtheironoxideintheoreisreducedtorawiron.

Carbonate rock Rockconsistingmainlyof carbonatemineralssuchascalciteordolomite.

Cut-off Lowestacceptablegradetobepartof acalculationof tonnageanditsaveragegrade.

Dannemorite Skarnmineralwiththechemicalcomposition(Fe,Mn,Mg)7Si8O22(OH)2.

Development Tunnellingworkpriortoproductionminingof ore.

Diamond drilling Avarietyof rotarydrillingbywhichacore(drillcore)of bedrockisobtained.

Diopside Skarn mineral with the chemical composition CaMg(SiO3)2.

Dolomite Mineral with the chemical composition CaMg(CO3)2.

Dressing Generallyaprocesswherebytheconcentrationof valuablemineralsisincreased.Inthisannualreport,itisanoreconcentrationprocesswherebyfinesareproducedfromtheorebygrindingorcrushingandmagneticseparation.

Drift Generallyhorizontaltunnelinanundergroundmine.

Environmental permit Permissiontocarryoutminingandoreprocessingactivities.IssuedundertheSwedishEnvironmentalCode.

Eruption Volcanicoutbreak.

Exploitation concession Licencetomineadeposit(also:miningconcession).

Exploration Searchingforore.

Exploration permit PermitissuedbytheMiningInspectorateof Swedentocarryoutexplorationinaparticulararea.

Felsic volcanics Silica-richrocksof volcanicorigin.

Fines Inthisannualreport,aproductmeasuringlessthan4mmandcontaining55%iron.

Folding phase Oneof severalperiodsinwhichtheEarth´scrustiscompressedandfolded.

Garnet Groupof skarnmineralswiththechemicalcompositionA3B2(SiO4)3whereAisFe,Mn,MgorCaandBisAl,Fe,CrorTi.

Geological mapping Survey of bedrock to produce a map showing the extent of the rock units and the tectonics in an area.

Geophysical survey Surveywithinstrumentswhichdetectthephysicalpropertiesof rocks,oreortectonicstructures.

Inclined drift Tunnelfordescendinginto/ascendingfromamine.Ofteninaspiral.Alsocalledaramp.

Indicated mineral resources

Amineralisedtonnagewithastatedgrade,estimatedfromreliableinformation,whichshowstheform,extentandcontinuityof themineralisation.

Inferred mineral resources A mineralised tonnage with potential economic value, with a stated grade, estimated fromlimited information, giving a reasonable interpretation of the form, extent and continuity of the mineralisation.

Intrusive RockformedfromasolidifiedmagmaintheEarth´scrust,e.g.granite,gabbroordiorite.

Knebelite Skarnmineralwiththechemicalcomposition(Fe,Mn)2SiO4.

Limestone Rockconsistingmainlyof themineralcalcite.

Lump ore Inthisannualreport,aproductmeasuringbetween4and16mmandcontaining50%iron.

Magnetic separation Methodof separatingmagneticmineralsfromwasterockmagnetically.

Magnetite MineralwiththechemicalcompositionFe3O4.Minedforextractionof iron.

Magnetite skarn ore Ironoreassociatedwithcalc-silicaterock.

Magnetometer Instrumentusedtomapmagneticvariationsinthebedrock.

Glossary

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Measured mineral resources

A mineralised tonnage with a stated grade estimated from very reliable information fromobservations in outcrops, drill holes, trenches and mining activities which clearly shows the form, extentandcontinuityof themineralisation.

Mineralisation Concentrationof potentiallyinterestingmineralsinthebedrock.

Mining Extractionof rockorore.Maytakeplaceatsurfaceorunderground.

Ore Mineralisationwhichcanbeexploitedwitheconomicbenefits.

Ore chute Achuteintowhichtheoreistippedbeforebeingtakenoutatamainlevel.

Ore loss Thepartof theorewhichhastobeleftinthemine.

Orogeny MountainbuildingepochintheEarth´shistory.

Precious metal Metalsuchasgold,silverandplatinum.

Probable ore reserve Thecalculatedquantityandgradeof theindicatedmineralresourceforwhicheconomicprofitabilityhasbeenshown(bymeansof adequatetechnical,economicandlegalstudies)withsufficientreliabilitytojustifyinvestment.

Proven ore reserve The part of the measured mineral resources for which quantity, grade, and technical, legal and economicfactorsareknownwiththehighestgradeof certainty.

Ramp Tunnelfordescendinginto/ascendingfromamine.Ofteninaspiral.Alsocalledaninclineddrift.

Rock chip Piecesof rockobtainedbydrilling.

Screening Separationof grainsizefractions.

Sedimentary rock Formedfromrockparticlesthataredepositedoutof airorwater,andlatersolidified.Therockparticlesarecommonlysortedandlayeredduringdeposition.

Shaft Largelyverticalspaceusedforhoistingof oreandventilation.

Silicate Silica-richmineral.

Skarn Calc-silicatemineralswhichoftenaccompanyironandsulphidemineralisations.

Skip Liftcagefortransportingoreintheshaft.

Sorting Dryoreprocessingmethodwhichincludesmagneticseparationandscreening.

Stratabound Amineralisationorrockwhichoccurswithinaspecificstratigraphicunit.

Sub-level caving Miningmethodwherethehangingwallisallowedtocallapse,oftenusedforsteeplydippingores.

Sulphide mineral Mineralconsistingof sulphurandmetal(s).

Sulphide mineralisation Mineralisationwithsulphideminerals.

Supracrustal rock RockformedontheEarth´ssurface.

Svecokarelian orogeny Mountainbuildingevent1.80-1.86billionyearsago.

Tectonics Branchof geologydealingwithdeformationof thebedrock.

TEM TimeDomainElectroMagnetic.Geophysicalmethodwhichcanindicateelectricallyconductingbodiesdowntoaconsiderabledepth.

Till Rockmaterialtransportedanddepositedbyglaciersorinlandice.

Waste rock dilution Additionof non-metalliferous(notworkable)materialduringminingof ore.

54 The history of Dannemora

TheDannemora ore field has been knownforover500years.Theoldestdocument inwhich Dannemora ore is mentioned is a deed of gift from 1481, in which Sten Sture the Elder gave the recently discovered sulphide mineralisation in “Silverberget” in the parish of FilmtoCouncillorof StateJakobUlfsson,whowas alsoArchbishop of Uppsala.Theiron ore, which until the end of the 1800s was the most important in the country, was notmentioneduntilacenturylater.However,there is much to indicate that iron ore was extractedlongbeforethen.Dannemorahasa very large number of old mines and pits, which bear witness to the extensive mining activityinhistoricaltimes.

In1532,GustavVasaissuedachartertoJoakim Piper for the “Dannemora Mine”.Operations continued until a company founded by the King in 1545 took over the mines. After 1640, individuals were givenrights to extract ore from the deposits even thoughtheywerestillownedbytheCrown.

Theminingregulationsof 1723confirmedthe ownership rights to the operational mines.Atthattimethemainco-ownerswerefoundries and ironworks, which over the years had established themselves close to the mines in locations with access to water power andwoodland.

As a result of closures andmergers, thenumberof co-ownersfellandby1918therewereonlysix.In1937,theLimitedCompanyDannemoraGruvorwasformedbyFagerstaAB,StoraKopparbergAB, IggesundsBrukAB and Hargs Bruk AB. The number of owners gradually declined and in 1974 Stora Kopparberg AB was sole owner of DannemoraGruvor.

Svenskt Stål AB (SSAB) was formed in1978 to rationalise and streamline the iron oreminesandsteelworks.Thenewcompanywas owned by the Swedish government, StoraKopparbergABandGrängesAB,andits mining division operated the Dannemora, GrängesbergandStråssaironoremines.

In February 1987, the Board of SSABannounced that the Dannemora Mine would be closing, although the mine actually remainedinoperationuntil1992.Themainreason for the decision was a combination of poordemandforironoreandlowprices.

On 17 March 2005, Dannemora Mineral ABwasfoundedforthepurposeof resumingoperationsintheDannemoraMine.

Thelastofficialauthorisationthecompanyneeded was an environmental permit from the Environmental Court. The Courtapproved the company’s permit application in June 2008, which gave the go-ahead forthe installation work needed to make the mineoperationalagain.

One of Sweden’s oldest mines

Dumps which bear witness to Dannemora’s long mining historyPhoto: Tommy Persson

MINE OFFICEVisiting and postal address:Storrymningsvägen 7SE - 748 30 Österbybruk

Tel + 46 295 244 400Fax + 46 295 250 30

GROUP OFFICEVisiting address: Svärdvägen 7Postadress: Box 627SE - 182 16 Danderyd

Tel + 46 295 244 400Fax + 468 753 43 90

www.dannemoramineral.seinfo@dannemoramineral.se

MINE OFFICEVisiting and postal address:Storrymningsvägen 7SE - 748 30 Österbybruk

Tel + 46 295 244 400Fax + 46 295 250 30

GROUP OFFICEVisiting address: Svärdvägen 7Postadress: Box 627SE - 182 16 Danderyd

Tel + 46 295 244 400Fax + 468 753 43 90

www.dannemoramineral.seinfo@dannemoramineral.se

Drift development in Strömsmalmen, DannemoraPhoto: Tommy Persson