Interim report for the period January 1 - June 30, 2024

CINIS IS NOW IN CONTINUOUS PRODUCTION
In the second quarter of 2024, barely 15 months after ground was broken, we started the production of environmentally friendly potassium sulfate with a low carbon footprint in Örnsköldsvik. A long-awaited milestone and a starting point to lower the carbon footprint from fertilizer production and thus contribute to greener agriculture. The focus during the second quarter has been on tuning in the plant, which now produces high-quality water-soluble potassium sulfate in accordance with specification. The first delivery has been sold to Van Iperen International and delivered to the end-customer. Gradually we will now increase the deliveries.

April – June 2024

• Net sales amounted to SEK – million (0.0)
• Operating profit/loss amounted to SEK -20.5 million (-8.5)
• Profit/loss after financial items amounted to SEK -22.3 million (-8.5)
• Earnings per share, before and after dilution, amounted to SEK -0.31 (-0.12)
• Cash flow from operating activities after changes in working capital amounted to SEK -38.6 million (19.7)

Significant events during the quarter

• Sweden’s s first production of green mineral fertilizer on an industrial scale started.
• An official inauguration of Cinis Fertilizer’s first production facility was held.
• The Annual and Sustainability report was published.
• The Annual General Meeting of Cinis Fertilizer AB was held on May 23, 2024.

January – June 2024

• Net sales amounted to SEK – million (0.0)
• Operating profit/loss amounted to SEK -34.2 million (-14.2)
• Profit/loss after financial items amounted to SEK -36.5 million (-13.2)
• Earnings per share, before and after dilution, amounted to SEK -0.50 (-0.18)
• Cash flow from operating activities after changes in working capital amounted to SEK -44.8 million (19.6)

Significant events after the quarter

• A first truckload of potassium sulfate was sent to the customer Van Iperen International.
• After Northvolt's delays, the company has chosen to revise the timetable for the planned production facility in Skellefteå. The company assesses that Northvolt's non-delivery of sodium sulfate will entail additional costs of approximately SEK 25 million in 2024 and that the target of an EBITDA margin exceeding 25 percent will not be reached in 2024

CEO's comment

STEP BY STEP WE ARE INCREASING DELIVERIES AND OUR CONTRIBUTION TO A GREENER AGRICULTURE

At the beginning of May, barely 15 months after ground was broken, we started the production of environmentally friendly potassium sulfate with a low carbon footprint. A long-awaited milestone and a starting point to lower the carbon footprint from fertilizer production and thus contribute to greener agriculture. Now we have gone into continuous production and the first delivery has been sold to Van Iperen International and delivered on to the end customer.

I am incredibly impressed by our employees who, in an inspiring and solution-oriented way, took on the demanding, but also enormously fun, task of starting up and fine-tuning a brand-new business and production facility. After building a brand-new facility in record time, we and our partners had high hopes of being able to ramp it up to high, continuous production in record time. There, together with our technical suppliers, we have had to revise the plan after having to deal with a few challenges, such as minor mechanical problems and operational disturbances, that have now been fixed. It is nothing unusual when you put this type of process plant into operation and solving problems and dealing with unplanned events is business as usual for all of us who work to build new industry and break new ground.

During a critical phase of the tuning in July, we suffered a longer power outage that could not be parried because the redundancy line ordered in the design phase had not yet been completed. The interruption meant a production stoppage for just over three weeks, during which the facility underwent an extensive cleaning process. The stop means that the timing of expected cash flow positivity is moved forward a few weeks. Production has since been started up again and we are already producing continuously. Periodically, we are also producing very close to the facility's planned capacity. The next step in the ramp-up plan is to achieve these high production levels continuously over time. Our employees are constantly making new progress in tuning and improving operations. Our communicated production volume of 100,000 tons in Örnsköldsvik when the ramp-up is complete includes planned downtime for service and maintenance and corresponds to an availability of approximately 85 percent.

The first production runs delivered a high-quality water-soluble potassium sulfate that met all quality requirements. The following production interval we experienced some mechanical problems and operational disruptions, which is very common when tuning in a new plant, and the quality during this period was of satisfactory and sellable quality. Now we continuously produce a water-soluble potassium sulfate of the highest quality, completely according to the required specifications, which has been confirmed by our own analyzes as well as an external laboratory.

In the first week of July, we sent a bulk truck of potassium sulfate to Van Iperen as they wanted to test the product in their packaging plant. For this purpose, we sent a sample batch of satisfactory quality from the plant trim period which, if successful, could be sold to selected markets. The test was very successful, and the product has been sold on by Van Iperen. The volumes from the early trim period that cannot be sold to the "high-tech" segment will be sold to other markets.

The demand for a green mineral fertilizer with a lower carbon dioxide footprint is great, and together with Van Iperen we are the first to provide a potassium sulfate that meets that demand. The big environmental benefit Cinis Fertilizer offers comes from the fossil-free production process, which has significantly lower energy consumption than today's dominant process.

To manage the slightly longer ramp-up period and the increased costs of sodium sulfate in the start-up phase, we have established a new credit facility to ensure that we can get to positive cash flows without new equity.

In Hopkinsville, Kentucky, Ascend Elements’ construction is progressing at a rapid pace. With the lessons learned from Northvolt, we are following Ascend Element's progress closely and await further milestones in their project before breaking ground in the US. We have proven that we can build a production plant for potassium sulfate in a short time and therefore see no need to make any major investments until we see that Ascend Elements has progressed further and we ourselves have generated positive cash flows. We are thus postponing the start of production in Hopkinsville until 2026.

Our circular idea – turning industrial by-products into nutritious fertilizers – is not just about creating a profitable product; it is about promoting a new way of thinking about the process industry and the chemical industry. The industry's green transition will not happen overnight, but our business model will create profitable growth already in the near future and give our partners better opportunities to reach their goals for a sustainable future. Of course, we would have liked to be further ahead already today, but building and starting up a new industry takes time. However, we see a huge interest around the world in what we do. To launch an industrial project as quickly as we have done is unique and arouses great interest globally. Cinis Fertilizer has already shown that it is possible to produce potassium sulfate with a fossil-free production method, and together with our partners we will establish new facilities. We have been conducting concrete and detailed discussions with several companies in the global electric vehicle battery industry for some time now regarding the establishment of new cooperations, which will now be further prioritized against the background of the delays at Northvolt. We are also working actively with several pulp mills that have shown an interest in upcycling their residual material, and together with them we are working on technical solutions that make this possible. Our long-term targets remain.

We have now crossed the first threshold on Cinis Fertilizer's journey. We have moved from the start-up phase and fine-tuning to continuous production that enables profitability, expansion and additional production facilities. In the near future, I look forward to step by step increasing deliveries and our contribution to greener agriculture.

Jakob Liedberg, CEO

For full report, please see attached file.

For more information, please contact:

Jakob Liedberg, CEO
[email protected]
+46 768 58 12 86

Charlotte Becker, IR and Communications Director
[email protected]
+46 730 37 07 07

Henrik Andersson, CFO
[email protected]
+46 705 70 87 53

This information is such information that Cinis Fertilizer is obliged to make public pursuant to the EU’s Market Abuse Regulation. This report has been prepared with a Swedish and an English version. In the event of any discrepancies between the two, the Swedish version applies. This information was published, through the agency of the contact persons above, on August 22, 2024, at 08:00 a.m. CET.

About Cinis Fertilizer
Cinis Fertilizer is a Swedish green-tech company producing an environmentally friendly mineral fertilizer, potassium sulphate (SOP), by recycling waste products from battery manufacturing and recycling, as well as the pulp industry and other industries. The patent protected technology will use half as much energy as today’s production methods and the result is a fertilizer with low carbon footprint, a unique and circular contribution enabling sustainable agriculture. FNCA Sweden AB is Certified Adviser. For further information please visit: www.cinis-fertilizer.com.