TIDMBEM
RNS Number : 1580G
Beowulf Mining PLC
28 February 2018
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations ("MAR") (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of Kurt Budge, Chief Executive Officer.
28 February 2018
Beowulf Mining plc
("Beowulf" or the "Company")
Unaudited Preliminary Financial Results for the year ended 31
December 2017
Beowulf (AIM: BEM; AktieTorget: BEO), the mineral exploration
and development company, focused on the Kallak magnetite iron ore
project and the Åtvidaberg polymetallic exploration licence in
Sweden, and its graphite portfolio in Finland, announces its
unaudited preliminary financial results for the year ended 31
December 2017 (see Appendix 1).
Overview
-- During 2017, the Company remained focused on the Kallak North
Exploitation Concession process. The Company maintains that its
application has fully satisfied the requirements of the Swedish
Mining Act and Environmental Code.
-- On 29 June 2017, the Mining Inspectorate returned the
Company's application to the Government and confirmed that the
Kallak North Environmental Impact Assessment ("EIA") is consistent,
in the detail provided, in meeting the requirements of the Supreme
Administrative Court's ("SAC") Norra Kärr judgement.
-- On 30 November 2017, the County Administrative Board ("CAB")
for the County of Norrbotten responded to questions from the
Government and recommended that an Exploitation Concession for
Kallak North is not granted.
The CAB's latest statement contradicts its July 2015 position,
when it supported the economic case for Kallak. In the Company's
opinion, the CAB has failed to use the socio-economic assessment
criteria set out in the Environmental Code, which put emphasis on
safeguarding investment and job creation, and giving consideration
for the municipalities' financial health. It has presented a
scenario of State investment in infrastructure being necessary to
support the mine, which has never been proposed or suggested by the
Company. It is the Company's opinion that the analysis by the CAB
is flawed, and its conclusions are biased and cannot be
supported.
-- Despite the continuing delays and lack of any final decision,
the Company initiated several studies during the year,
including:
-- Heritage Impact Analysis ("HIA") of the indirect effects of a
mining operation at Kallak on Laponia with respect to reindeer
herding, and the effects of transport on Laponia.
-- A project study with Copenhagen Economics, titled 'Kallak - A
real asset, and a real opportunity to transform Jokkmokk', which
demonstrated the 'Bigger Picture' positive impact of the Kallak
project, both in Jokkmokk and the region of Norrbotten, and how it
can be successfully realised.
-- A Scoping Study with SRK Consulting (UK) Ltd ("SRK"). SRK has
undertaken a significant number of technical studies for companies
operating in the Nordic Region, and it has the relevant expertise
to work with the Company on designing and engineering a modern and
sustainable mining project at Kallak North, as well as assessing
the broader potential of the Kallak South deposit. Work on the
Scoping Study has been slowed down, while the Company waits for
clarity from the Government on what happens next in the
process.
-- During the year, the CEO attended Almedalen for the second
time, and met with representatives of the Swedish mining industry,
politicians, and government agencies. During these meetings, the
CEO detailed the chronology of the application process for an
Exploitation Concession for Kallak North, and presented the case
that the Company's application, and recent supplementary
documentation, including a Heritage Impact Assessment, have more
than satisfied the requirements of the prescribed permitting
process. The CEO shared the Company's 'big picture' vision of
Jokkmokk's economic transformation, that could be delivered by a
mining operation at Kallak, and explained the Company's development
philosophy towards designing, engineering, and building a modern
and sustainable mining operation.
-- In Southern Sweden, the Company explored its Åtvidaberg
licence. At the end of April 2017, the Company held a three-day
field workshop, which brought together the Company's exploration
team, and a handful of external experts with major mining company
exploration experience, relevant to Bergslagen. The output of the
workshop was an exciting exploration programme, with work planned
on brownfield and greenfield targets at Bersbo (prospective for
zinc and copper), Mormor (prospective for copper), and Könserum
(prospective for molybdenum, tungsten, bismuth, and rhenium).
-- In Finland, the Company focused its graphite exploration
efforts on the Aitolampi project, completing a 1,197 metre ("m")
drill programme, and then two rounds of testwork, first with SGS
Mineral Services in Canada to prove attainable concentrate grades,
and second with ProGraphite Gmbh in Germany to determine possible
market applications and end-uses of Aitolampi concentrate
products.
-- On 31 October 2017, Mr. Göran Färm was appointed to the Board
as Non-Executive Chairman, replacing Bevan Metcalf who retired.
-- Loss before and after taxation attributable to the owners of
the parent was GBP1.04 million (2016: GBP0.63 million).
-- Basic loss per share was 0.20 pence (2016: 0.13 pence).
-- The Company had GBP1.59 million in cash at the year end.
Post Period Overview
-- Further to a request from the Government of Sweden, both the
Mining Inspectorate and the Company submitted comments, separately,
regarding the CAB's statement dated 30 November 2017. Other
interested parties submitting comments included Jokkmokks Kommun,
Region Norrbotten, and the Sami reindeer herding communities of
Jåhkågasska Tjiellde and Sirges sameby.
The Mining Inspectorate commented that it is not possible to
estimate the exact production life of Kallak, but the potential for
the discovery of additional resources, that support an extended
production life, as evidenced by other mines in Sweden, should be
taken into consideration, when assessing which national interest
should take precedence. The Mining Inspectorate maintains that it
is the Government that should decide on the Company's application
for an Exploitation Concession.
Subsequently, the Government circulated all comments, and the
Company has another opportunity to make a further submission by the
5 March 2018.
-- Findings were shared from the Company's 2017 work programme
at Åtvidaberg, and the Company announced its plan to complete a
ground Fixed Loop Electromagnetic ("FLEM") survey, intended to
provide additional information to support drill target selection in
the Bersbo area, focused on copper and zinc mineralisation
-- For the Aitolampi graphite project, the Company announced
metallurgical testwork results, indicating the market potential of
the graphite concentrate products that could be produced from
Aitolampi, and that a new drilling campaign had started in the
middle of February 2017.
-- At 31 January 2018, there were 312,543,135 Swedish Depository
Receipts issued representing 58.51 per cent of the issued share
capital of the Company. The remaining issued share capital of the
Company is held in the UK as AIM securities.
-- On 19 February 2018, the CEO participated in a meeting in
Stockholm, to discuss land use, and the engagement processes
between Sami reindeer herding communities and mining companies, as
part of the OECD's project 'Linking Indigenous Communities with
Regional Development', supported by the Government.
-- On 22 February 2018, the Company announced that it had issued
2.1 million ordinary shares of one pence each to Rasmus Blomqvist,
the Company's Exploration Manager, as the first tranche of deferred
consideration pursuant to the acquisition of Oy Fennoscandian
Resources AB ("Fennoscandian") as announced via RNS on 11 January
2016 (the "Further Consideration Shares").
Application was made for the Further Consideration Shares to be
admitted to trading on AIM and it is expected that admission will
take place on 28 February 2018 ("Admission"). The Further
Consideration Shares will rank pari passu with the existing
ordinary shares of the Company. Following Admission of the Further
Consideration Shares, the Company's enlarged issued share capital
will comprise 536,307,254 ordinary shares with voting rights.
Kurt Budge, Chief Executive Officer of Beowulf, commented:
"With so much attention on the Kallak process, it's easy to
overlook how much the Company's exploration team has achieved at
both our Aitolampi graphite project and our Åtvidaberg licence
during the year. We are currently in a good position for a busy and
productive 2018.
"We are already back drilling at Aitolampi. The driller is
making rapid progress, and we have therefore decided to drill the
full 2,000m programme in a single campaign, giving ourselves a
head-start with resource development and study work.
"With Åtvidaberg, a short geophysics programme will get underway
in March 2018, and we hope to use the findings to define drill
targets for copper and zinc mineralisation at Bersbo. Our 3-D
modelling last year and the analysis of historic mining records,
showed us that miners previously stopped at around 350m in
high-grade zinc ore which they could not process. The orebody is
seemingly open at depth and has reported zinc grades of over 30 per
cent in places.
"Returning to Kallak, we have been given another opportunity by
the Government to provide final comments in support of our
application, with a deadline of 5 March 2018. After this date, the
Company will be seeking clarification on timing and next steps in
the process.
"It is difficult to attach any credibility to the CAB's
statement from last November, which not only contradicts its July
2015 position on the economic case for a mine at Kallak, but also
seems to ignore the Swedish Environmental Code socio-economic
assessment criteria for evaluating whether to conserve or utilise
natural resources, such as the Kallak deposit, which references the
need to safeguard investment and employment, and give consideration
for a municipality's financial situation. The CAB gives the
impression that it knows better than the municipality of Jokkmokk,
on what's best for Jokkmokk and its future, and it has chosen not
to listen to local voices who want investment and job creation.
"Since October 2014, the CAB has, on numerous occasions, stepped
outside the prescribed process for an Exploitation Concession. The
system in Sweden has never challenged nor corrected it. This has
cost the Company and, with the latest rankings from the Fraser
Institute, published 22 February 2018, it appears to be costing
Sweden, as the country has fallen eight places to 16th on
Investment Attractiveness.
"In January 2017, I spoke in Stockholm on the comparative
advantage of doing business in Sweden. What should be a real
advantage to Sweden, is being damaged by uncertain application
processes, a distinct lack of respect shown by Swedish authorities
for mining companies and their permit applications, scant regard
for the significant investments being made and the potential job
opportunities being created.
"We hope that the Government now looks objectively at the facts,
the Company's investment of SEK77 million, its commitment to
developing a modern and sustainable mining operation, its
comprehensive application, and the words and actions of the
authorities involved in this application process, including the
Mining Inspectorate who recommended that the Concession be awarded
in October 2015.
"We would like to take this opportunity to thank our
shareholders for their continued support during the year."
Please use the following link to see an interview with Kurt
Budge CEO:
https://www.brrmedia.co.uk/broadcasts/5a8fcaa3d601f43ad0181f59/event
Financial
-- Loss before and after taxation attributable to the owners of
the parent at GBP1.04 million is higher than the loss recorded in
2016 of GBP0.63 million, this increase is largely attributable to
impairment costs incurred of GBP0.18 million and a share-based
payment expense of GBP0.2 million. The impairment costs assessed
relate to projects Nautijaur (GBP27,621) and Piippumäki
(GBP155,510). The share-based payment expense relates predominately
to new share options awarded in the year.
-- Basic loss per share of 0.20 pence increased by 54 per cent
on last year (2016: loss per share of 0.13 pence).
-- Approximately GBP1.59 million in cash was held at the year
end. During the year GBP0.94 million (2016: GBP0.62 million) was
spent on exploration and capitalised.
Operational
Sweden
Kallak - Exploitation Concession
During 2017, the Company remained focused on the Kallak North
Exploitation Concession process. Beowulf continued to engage with
the Mining Inspectorate of Sweden, the CAB, Jokkmokks Kommun, local
stakeholders, and the Government. The Company maintains that its
application for the Exploitation Concession has satisfied the
requirements of the Swedish Mining Act and Environmental Code.
On 28 March 2017, the Mining Inspectorate wrote to the Company
and gave the Company the opportunity to respond to comments and
opinions made by the Swedish National Heritage Board
(Riksantikvarieämbetet, "RAÄ") and the Swedish Environmental
Protection Agency (Naturvårdsverket, "NV"), with respect to the
Company's application, and the interaction of Kallak and
Laponia.
On 29 March 2017, the Company met with the Mining Inspectorate
in Luleå to discuss the next steps in the process. During this
meeting, the Company outlined its interpretation of the NV and
RAÄ's comments, as follows:
-- the focus of the response is the effect of Kallak on Laponia;
-- it is acknowledged that Kallak does not directly affect Laponia;
-- it is suggested that the Company should provide more details,
to describe the possible indirect effects of a mining operation at
Kallak on Laponia, the interaction of mining and reindeer herding,
and matters related to transport; and
-- the agencies have failed to be specific, as requested by the
Mining Inspectorate, as to where the Company's EIA is insufficient
in the detail it provides.
On 28 April 2017, the Company presented an analysis of the
indirect effects of a mining operation at Kallak on Laponia with
respect to reindeer herding, and the effects of transport on
Laponia.
The analysis followed UNESCO guidelines for conducting a HIA.
Typically, a HIA is not required with an application for an
Exploitation Concession, but the Company voluntarily produced one,
with the support of its expert Swedish technical team and Swedish
Advisory Board.
It had already been concluded by NV and RAÄ that a mining
operation at Kallak will have no direct impact on Laponia. Kallak
is 13.6 square kilometres ("km(2) ) compared to Laponia's
9,400km(2) and, at its closest point, Kallak is approximately 34
kilometres ("km") away from Laponia.
The Company maintained that its studies into reindeer herding
support the case, that mining and reindeer herding can cooperate,
and prosper side by side and, to the Company's knowledge, there is
no evidence to suggest that they cannot. Kallak's area of 13.6km(2)
compares to Jåhkågaska reindeer herding community's 2,640km(2) of
grazing land or approximately 0.5 per cent, as a percentage.
With regards to transport, the Company stated that solutions
will be optimised, and sensibly controlled by the environmental
permitting process, such that there should be no material effect on
Laponia, and planning will involve other parties, including
Trafikverket and Inlandsbanan. It is the Company's ambition to seek
environmentally sensitive solutions with respect to all aspects of
the Kallak project.
On 16 June 2017, the CAB responded to the Mining Inspectorate.
In its response, the CAB suggested the Company needs to provide
more information, to further assess the potential impact of a
mining operation at Kallak on Laponia, it did not say what
information needs to be provided. The CAB has made no request to
the Company at any time to provide further information, nor has it
provided feedback on the Company's submission to the CAB in
December 2016 and the HIA.
The Company's submission in December 2016 analysed the formal
statements made since October 2014, by interested parties involved
in the application process. The objective of the analysis was to
demonstrate that the Company's application has satisfied all the
requirements of Swedish law, and that the work done by the Company,
and the reviews by the CAB, to date, were in alignment with the SAC
judgement in the Norra Kärr case.
On 29 June 2017, the Mining Inspectorate returned the Company's
application back to the Government, asking the Government to decide
who should determine what, if any, impact a mining operation at
Kallak could have on Laponia. This occurred 12 months after the
Government asked the Mining Inspectorate to conduct a further
review in respect of the Norra Kärr judgement, and matters relating
to Laponia. The Mining Inspectorate returned the application to the
Government confirming that the Kallak EIA is consistent, in the
detail provided, in meeting the requirements of the SAC's Norra
Kärr judgement.
On 10 October 2017, the Government wrote to the CAB requesting
additional information, including a statement of the CAB's position
on whether the Company's EIA meets the requirements of the
Environmental Code, and on whether mining is an appropriate land
use for Kallak, with reference to Chapters 3 and 4 of the
Environmental Code. Within its statement, the CAB was asked to
consider matters regarding Laponia and national interests.
Despite the continuing back and forth, and lack of decision
making on the Company's application, two major studies were
initiated during the year.
In September 2017, the Company announced the findings of a
project study with Copenhagen Economics, titled 'Kallak - A real
asset, and a real opportunity to transform Jokkmokk'. The study
demonstrated the 'Bigger Picture' positive impact of the Kallak
project, both in Jokkmokk and the region of Norrbotten, and how it
can be successfully realised.
The Project built on the work carried out to date, by the
Company and others, including the 2015 independent socio-economic
study initiated by Jokkmokks Kommun, completed by consultants
Ramböll, which in its findings concluded that a mining development
at Kallak would create direct and indirect jobs, increase tax
revenues and slow down population decline, and the 2010 study by
the Economics Unit of Luleå University of Technology, 'Mining
Investment and Regional Development: A Scenario-based Assessment
for Northern Sweden'.
Highlights of the Project:
-- A mining operation at Kallak has the potential to create 250
direct jobs and over 300 indirect jobs in Jokkmokk, over the period
that a mine is in operation.
-- These jobs could be sustained over a period of 25 years or
more, if the Kallak South deposit is mined after the Kallak North
deposit, and further deposits at Parkijaure can be defined.
-- The Company will seek to establish a 'Task Force' with
Jokkmokks Kommun and local employment agencies, so that between now
and the start of operations, plans are developed and implemented to
make sure as many as possible jobs are available to people living
in Jokkmokk.
-- Kallak has the potential to generate SEK 1 billion in tax
revenues, considering the case where 70 per cent of the mine's
workforce are based locally, with annual tax revenues of SEK 40
million over a 25 years mine life.
-- These tax revenues would help to develop and sustain public
services and infrastructure in Jokkmokk, which are at risk due to a
lack of new investment and job creation in the community, a
declining population, and an ageing population.
In October 2017, the Company awarded a Scoping Study to SRK. SRK
has undertaken a significant number of technical studies for
companies operating in the Nordic Region, and it has the relevant
expertise to work with the Company on designing and engineering a
modern and sustainable mining project at Kallak North, as well as
assessing the broader potential of the Kallak South deposit.
The Scoping Study and associated work streams are a significant
investment for the Company, made in the belief that Beowulf has
satisfied the Swedish requirements to be granted an Exploitation
Concession for the Kallak North deposit.
On 30 November 2017, the CAB responded to the Government
recommending that an Exploitation Concession for Kallak North is
not granted.
On 30 January 2017, the Mining Inspectorate provided its
comments on the CAB's statement to the Government. The Mining
Inspectorate maintains that it is the Government that should decide
on the Company's application for an Exploitation Concession.
In its comments, the Mining Inspectorate highlighted that the
CAB's assessment of which national interest should take precedence
under Chapter 3 of the Environmental Code, is based on the CAB's
assumption that the estimated production life of the Kallak mine is
approximately 14 years.
The Mining Inspectorate remarked that the mineral resource
underlying any Exploitation Concession application is the known
part of the mineralisation which makes a mine likely to be
economically profitable, such that a Concession can thereby be
granted.
The Mining Inspectorate stated that after the start of a mine,
further exploration is typically carried out, with the aim of
gradually increasing the resource base, thereby extending the
production life of a mine. Additional resources that are found are
benefited by the infrastructure and operational facilities that
already exist, improving the economic conditions for continued
production.
The Mining Inspectorate gave examples of existing mines in
Sweden, which have done just this, applying for separate
Exploitation Concessions over time, thereby extending their
production lives. These include Boliden's Aitik mine, in operation
since 1968, the Garpenberg mine, in operation since the thirteenth
century, and the Kristineberg mine, in operation since 1940.
The Mining Inspectorate concluded that it is not possible to
estimate the exact production life of Kallak, but that the Mining
Inspectorate's comments on the potential for the discovery of
additional resources, that support an extended production life, as
evidenced by other mines in Sweden, should be taken into
consideration, when assessing which national interest should take
precedence.
On 1 February 2018, the Company provided its comments, as
requested by the Government, on the CAB's statement.
In its response, the Company summarised chronologically the
CAB's handling of the Company's application, and the involvement of
other authorities. Also, the Company detailed its interpretation of
the Swedish Mining Act, the Environmental Code, and the roles of
each authority, in assessing the Company's application for an
Exploitation Concession
The CAB has argued that the estimated 14-year production life of
Kallak, as included in the original application, is of such short
duration, that it does not justify State investment in
infrastructure, it does not support a socio-economic case, and it
is not a reasonable use of natural resources. In addition, given
the 14-year production life, the CAB views reindeer herding as the
best use of land. Finally, that risks to the World Heritage Status
of Laponia remain unclear.
The Company summarised the main points used by the CAB to
support its latest position.
Mine Production Life
The Company has argued that a mine at Kallak is likely to be in
production for much longer than 14 years, based on existing
knowledge of the orebodies at Kallak North and Kallak South; a fact
acknowledged by the CAB in its July 2015 statement, when it
supported both the economic case for Kallak, and the Company's
application.
In addition, the Company argues that mining projects, in
general, add to their resource inventories, and apply for permits
over time, extending their production lives. There are examples of
mines in Sweden, which have been in production for decades, and in
some cases centuries.
Infrastructure Investment
The CAB asserts the State may have to invest in infrastructure
to facilitate a mine at Kallak, and by using a 14-year mine life
the CAB states that there is no case to support this. The Company
has never proposed, nor suggested, that the State needs to invest
in infrastructure associated with Kallak.
It is fact, that potential infrastructure partners in the region
have their own expansion and investment plans, including
Inlandsbanan and the Port of Luleå. Additionally, LKAB, with
Trafikverket, is working on increasing the capacity of the Ore
Railway Line.
The Company also notes that the prescribed process for handling
the Kallak application, referring to the Mining Act and
Environmental Code, and the SAC's judgement in the Norra Kärr case,
does not require full assessment of matters regarding transport at
this stage of permitting.
Reindeer Herding
The Company has reminded the Government that for four years
since February 2013, when Kallak was designated by the Swedish
Geological Unit ("SGU") as an Area of National Interest ("ANI"),
there were no competing national interests.
Before February 2017, when Sametinget placed national interest
for reindeer herding directly on top of Kallak, there were no
conflicting national interests for the Concession Area, or for
those areas taken by operational facilities necessary to support
mining. A fact recognised by the CAB in its July 2015 statement,
when it supported both the economic case for Kallak, and the
Company's application.
In the CAB's latest statement, it has given no consideration to
the years since the Company submitted its original application, in
April 2013, the Company's engagement with the CAB, and continued
investment in Kallak, when there were no conflicting national
interests. The CAB now argues in favour of national interest for
reindeer herding.
The CAB has not acknowledged that mining and reindeer herding
can prosper side by side, despite providing no evidence to the
contrary. Previously, the Company has stated that there are no
examples in Sweden of any reindeer herding community being closed
by any form of industrial activity, not just mining. Yet, there are
many examples of companies reaching agreements with reindeer
herding communities, as projects progress towards eventual
operation, which benefit all parties concerned.
In the Kallak application, the Company has included
preventative, precautionary, and compensatory frameworks, to be
developed into management plans in consultation with the reindeer
herding communities, at the appropriate time, and when details are
available to have meaningful discussions and make definitive
agreements.
The Company has restated key numbers, that Kallak's area of
13.6km(2) compares to Jåhkågaska tjellde's 2,640km(2) of grazing
land or 0.5 per cent, and that reindeer herding in Sweden covers
220,000 km(2) , representing almost half of the country.
Laponia
Kallak is situated, at the closest point, approximately 34km
away from Laponia.
Laponia's boundary has been established to protect what lies
within the boundary, and not to restrict development, such as
Kallak, which is located far beyond any conceivable 'buffer
zone'.
It is the Company's view that suggesting Kallak could have such
an impact on Laponia as to threaten Laponia's World Heritage Status
is not a reasonable argument. The Company's ambition, to develop a
modern and sustainable mining operation, in partnership with the
community, protecting all interests, will further ensure that
Laponia is unaffected.
The Kallak application and the Company's HIA have
comprehensively assessed the direct and indirect effects of Kallak
on Laponia. The Company maintains that mining and reindeer herding
can prosper side by side, and there should be no material impact on
reindeer herding in Laponia, and when it comes to transport,
environmental permitting will safeguard the interests of
Laponia.
The application is now with the Government, with all interested
parties having a final opportunity to make comments by 5 March
2018.
Åtvidaberg
At the end of April 2017, the Company held a three-day field
workshop at Åtvidaberg, which brought together the Company's
exploration team, and a handful of external experts with major
mining company exploration experience, relevant to Bergslagen,
volcanogenic massive sulphide mineralisation and modern exploration
technologies.
The workshop produced the exploration programme for the year,
with work planned on brownfield and greenfield targets at Bersbo
(prospective for zinc and copper), Mormor (prospective for copper),
and Könserum (prospective for molybdenum, tungsten, bismuth and
rhenium).
Highlights from the work carried out last year:
-- Studies of historic records, and the development of a 3-D
model of underground mining areas and orebodies, show that mines
around Bersbo appear to have been shut while still mining zinc
mineralisation, in the form of massive sphalerite (zinc iron
sulphide mineral). The exploration hypothesis is that zinc ore, and
some mixed with chalcopyrite (copper iron sulphide mineral), may
still be present below 350m depth in sufficient quantities to
support renewed mining.
-- At Bersbo, historic mines are positioned on the eastern limb
of a syncline, plunging to the northwest. Mine production ceased
with a transition out of 'wanted' copper ore, chalcopyrite.
-- The 3-D model, and existing geophysics, show prospective targets:
o at the hinge of the syncline;
o for the eastern limb, eastwards, with potential for additional
mineralised width, or bodies of parallel mineralisation; and
o to the northwest, potential continuation of mineralisation
along the eastern limb.
There is no evidence of mining around the western limb, and this
will be investigated further.
In Q1 2018, a ground FLEM survey will be carried out. The survey
will include seven fixed loops across former mining areas: Bersbo;
Bersbo West; Gruvsjöhöjden; and Grönhög. The FLEM data will provide
much better resolution, for areas previously covered by VTEM, and
known aeromagnetic anomalies. Using the results of the FLEM survey,
the Company intends to select targets for drilling.
In 2016, "grab" samples taken from road fill in the Bersbo area,
made up of sphalerite, yielded up to 19.7 per cent zinc, while
samples from waste dumps of chalcopyrite yielded up to 1.7 per cent
copper.
"Grab" samples were collected in isolation and therefore cannot
be considered representative of the grade of mineralisation over a
deposit, but nevertheless give a range of values that are
indicative of the potential for the targets being investigated, and
which have assisted the Company's exploration team in planning
work.
All samples were assayed for the Company by ALS Minerals ("ALS")
in Sweden.
Finland
On 27 March 2017, the Company announced the completion of
drilling at Aitolampi, eight holes, approximately 1,197 metres in
total, with the first four drill holes, AITDD17001-004, extending
350 metres along strike for the main conductive zone.
Drill holes AITDD17005-008 tested the extent of mineralisation
down-dip of the main conductive zone.
Substantial graphite mineralisation intersections in all holes,
including up to 113.5 metres down-hole width for the longest drill
hole AITDD17006, which correspond with identified electromagnetic
("EM") conductors. It should be noted that the mineralisation
intercept is the down-hole width and may not be the true width.
Drill holes AITDD17005-006 tested two parallel conductors to the
main conductive zone and intersected graphite mineralisation for
both conductors.
The Company's geologists completed core logging for all holes
and sent samples to ALS Minerals in Finland for assay.
On 24 May 2017, the Company presented assays for the intersected
mineralisation. Highlights as follows:
-- Drilling confirmed that EM anomalies identified at Aitolampi
are associated with wide zones of graphite mineralisation, with a
mineralised strike length of at least 350 metres along the main
conductive zone drill-tested, dipping between 40 and 50 degrees to
the southwest. The main EM zone extends for 700 metres.
-- Drill hole AITDD17006 intercepted 202.98 metres at 3.09 per
cent Total Graphite Carbon ("TGC") from 19.2 metres depth (this
includes some barren zones with no assays and calculated as zero
per cent TGC), and higher-grade zones of 18.95m at 6.33 per cent
TGC, and 14 metres at 6.26 per cent TGC.
-- Drill hole AITDD17001 intercepted 141.86 metres at 3.72 per
cent TGC from 19.67 metres depth, including a higher-grade zone of
39.48 metres at 5.02 per cent TGC.
-- Drill hole AITDD17008 intercepted 60.29 metres at 4.01 per
cent TGC from 8.71 metres depth, including 12m at 5.79 per cent
TGC.
-- Drill hole AITDD17005 intercepted 41.1 metres at 4.39 per
cent TGC from start of hole, including 28.4 metres at 5.1 per cent
TGC and 4m at 7.71 per cent TGC.
It should be noted that the mineralisation intercepts are the
down-hole widths and are not the true width of mineralisation. All
samples were prepared and analysed by ALS Finland Oy's laboratory
in Outokumpu.
Composite samples for metallurgical testwork were dispatched to
SGS Mineral Services in Canada, including an average grade
composite for the main conductive zone, a higher-grade composite
for the main conductive zone/near-surface mineralisation, and a
higher-grade composite for the parallel conductive zones.
On 2 October 2017, the Company announced high-grade concentrate
results from metallurgical testwork, highlights as follows:
-- Superior metallurgical response from all three samples
compared with grab samples from outcrops analysed earlier in the
year.
-- The process flowsheet used was simple, yet it proved to be very efficient.
-- The combined grades ranged from 96.8 per cent to 97.5 per
cent Total Carbon ("C(t)") across the three samples.
-- All three samples responded similarly in terms of concentrate
grades of the various size fractions.
On 30 January 2018, the Company announced metallurgical testwork
results for graphite samples from Aitolampi. Highlights were as
follows:
-- Alkaline purification produced 99.86 per cent Total Carbon
("C(t)") for +100-mesh concentrate and 99.82 per cent C(t) for
-100-mesh concentrate.
-- Results from acid purification were also promising and
reached 99.6 per cent C(t) for the +100-mesh and 99.41 per cent for
the -100-mesh concentrate.
-- The alkaline and acid purification results indicate that,
with some process optimisation, Aitolampi concentrates may meet the
purity specification of 99.95 per cent C(t) required for the
lithium ion battery market.
-- Aitolampi graphite shows high crystallinity, with the degree
of graphitisation measuring approximately 98 per cent, which is
almost perfect crystallinity, an important prerequisite for high
tech applications, such as lithium ion batteries.
-- Volatiles are low, which is an attractive product attribute
in many applications, including refractories, lubricants,
crucibles, and foundries.
-- Specific Surface Area ("SSA") is comparable to that of high
quality flake graphite from China.
-- Oxidation behaviour is comparable with Chinese graphite of
the same flake size, used for refractories, and other high
temperature applications.
The Company awarded a contract for 2,000m drilling to Oy
Northdrill, a Finnish company, and drilling started again in the
middle of February 2018.
Corporate
-- On 27 January 2017, the Company announced that options have
been granted on 26 January 2017 over a total of 4,500,000 ordinary
shares of 1 pence each.
-- On 17 May 2017, the Company announced a subscription for new
ordinary shares raising GBP1.5 million before expenses.
-- On 10 October 2017, an exercise notice was received from
Bevan Metcalf (Non-Executive Chairman at the time), a person
discharging managerial responsibilities ("PDMR"), over 8,500,000
new ordinary shares of 1p per share in the Company (the "Option
Shares"). Of the Option Shares 8,000,000 were exercised at 1.66p
and 500,000 were exercised at 4p for a total consideration of
GBP152,800. The 8,500,000 shares were sold on 16 October 2017.
-- On 1 September 2017, Bevan Metcalf notified the Board of his
intention to retire from his role with the Company once his
successor has been appointed. Bevan had served as Non-Executive
Chairman of the Company since 8 May 2015, and prior to that as
Non-Executive Director from 23 September 2014.
-- On 30 October 2017, the Company announced the appointment of
Mr. Per Göran Färm (known as Göran) as Non-Executive Chairman of
the Company with immediate effect.
Göran was born in 1949 and has been an elected Member of
European Parliament ("MEP") from 1999 to 2004 and, then again, from
2007 to 2014. Göran was also Deputy Mayor of Norrköping during the
1990s.
Göran has experience in industrial policy as a former Head of
the Swedish Trade Union Confederation's unit for economic policy
and investigation, as head of business issues in the City of
Norrköping and as former MEP of the Committee of Industry,
Research, and Energy of the European Parliament.
Göran has extensive experience in communications as a former
journalist, Director of Information at Riksbyggen, and as a public
affairs advisor.
In 2015, Göran was elected as Chairman of Kommuninvest, a public
development bank owned by Swedish municipalities, cities, and
regions.
Post-Period
-- On 22 February 2018, the Company announced that it has issued
2.1 million ordinary shares of 1 pence each to Rasmus Blomqvist,
the Company's Exploration Manager, as the first tranche of deferred
consideration pursuant to the acquisition of Oy Fennoscandian
Resources AB ("Fennoscandian") as announced via RNS on 11 January
2016 (the "Further Consideration Shares"). The second, and final,
tranche of 2.1 million deferred consideration shares will be issued
subject to completion of a bankable feasibility study on one of the
graphite projects in the Fennoscandian portfolio.
APPIX 1 - PRELIMINARY FINANCIAL RESULTS
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2017
2017 2016
Notes (Unaudited) (Audited)
GBP GBP
Continuing operations
Administrative expenses (658,610) (598,464)
Share based payment
expense (203,059) (40,109)
Impairment of exploration
costs 5 (183,131) -
------------ -------------
Operating loss (1,044,800) (638,573)
Finance costs - -
Finance income 5,234 5,344
------------ -------------
Loss before tax (1,039,566) (633,229)
Tax - -
Loss for the year (1,039,566) (633,229)
============ =============
Loss attributable to:
Owners of the parent (1,038,248) (632,125)
Non-controlling interests (1,318) (1,104)
(1,039,566) (633,229)
============ =============
Loss per share expressed
in pence per share:
- Basic and diluted 3 (0.20) (0.13)
============ =============
CONSOLIDATED Statement of COMPREHENSIVE income
For the year ended 31 December 2017
2017 2016
(Unaudited) (Audited)
GBP GBP
Loss for the year (1,039,566) (633,229)
Other comprehensive income
Items that may be reclassified
subsequently to profit
or loss:
Reclassification of revaluation
reserve - 55,664
Exchange gains arising
on translation of foreign
operations 67,862 626,438
Other comprehensive (loss)
/ income for the year,
net of income tax (971,704) 682,102
------------- -----------
Total comprehensive (loss)/
income for the year (971,704) 48,873
Total comprehensive income
attributable to:
Owners of the parent (970,426) 49,005
Non-controlling interests (1,278) (132)
(971,704) 48,873
========== =======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
2017 2016
Notes (Unaudited) (Audited)
GBP GBP
ASSETS
Non-current assets
Intangible assets 8,191,232 7,186,576
Property, plant and
equipment 28,580 23,511
Loans and other financial
assets 5,530 5,503
8,225,342 7,215,590
------------- -------------
Current assets
Trade and other receivables 65,032 51,766
Cash and cash equivalents 1,589,897 1,609,219
------------- -------------
1,654,929 1,660,985
TOTAL ASSETS 9,880,271 8,876,575
============= =============
EQUITY
Shareholders' equity
Share capital 4 5,342,072 5,026,302
Share premium 18,141,271 16,879,241
Revaluation reserve 25,664 25,664
Capital contribution
reserve 46,451 46,451
Share based payments
reserve 575,078 237,803
Translation reserve (397,060) (464,882)
Merger reserve 137,700 137,700
Accumulated losses (14,105,411) (13,067,163)
------------- -------------
9,765,765 8,821,116
Non-controlling interests (159,871) (158,593)
Total equity 9,605,894 8,662,523
============= =============
LIABILITIES
Current liabilities
Trade and other payables 274,377 214,052
Total liabilities 274,377 214,052
TOTAL EQUITY AND
LIABILITIES 9,880,271 8,876,575
============= =============
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2017
2017 2016
(Unaudited) (Audited)
GBP GBP
Cash flows from operating
activities
Loss before income tax (1,039,566) (633,229)
Depreciation charge 15,971 12,097
Equity-settled share-based
transactions 203,059 40,109
Impairment of exploration 183,131 -
costs
Expenses financed by issue
of shares - 29,375
Reclassification of revaluation
reserve - 55,664
Finance income (5,234) (5,344)
------------- -----------
(642,639) (501,328)
------------- -----------
(Increase)/ decrease in
trade and other receivables (12,760) 31,646
Increase /(decrease) in
trade and other payables 15,673 (15,557)
Net cash used in operating
activities (639,726) (485,239)
------------- -----------
Cash flows from investing
activities
Purchase of intangible
fixed assets (943,599) (622,817)
Purchase of tangible fixed
assets (20,448) (862)
Acquisition of subsidiary - (50,482)
Disposal of fixed asset
investments 14 50,444
Interest received 5,234 5,344
------------- -----------
Net cash used in investing
activities (958,799) (618,373)
------------- -----------
Cash flows from financing
activities
Share issue 1,652,800 2,505,530
Payment of share issue
costs (75,000) (145,114)
Net cash from financing
activities 1,577,800 2,360,416
------------- -----------
(Decrease)/(increase) in cash
and cash equivalents (20,725) 1,256,804
Cash and cash equivalents
at beginning of year 1,609,219 352,914
Effect of exchange rate changes
on cash 1,403 (499)
Cash and cash equivalents
at end of year 1,589,897 1,609,219
============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017
Share Share Revaluation Merger Capital
Capital premium reserve reserve Contribution
reserve
GBP GBP GBP GBP
GBP
At 1 January 2016 4,303,138 15,187,112 (30,000) - 46,451
---------- ----------- ------------ --------- --------------
Loss for the year - - 55,664 - -
Foreign exchange translation - - - - -
Total comprehensive - - - - -
income
---------- ----------- ------------ --------- --------------
Transactions with owners
Issue of share capital 697,664 1,837,243 - - -
Cost of issue - (145,114) - - -
Equity settled share - - - - -
based transactions
Acquisition of subsidiary 25,500 - - 137,700 -
---------- ----------- ------------ --------- --------------
At 31 December 2016 5,026,302 16,879,241 25,664 137,700 46,451
========== =========== ============ ========= ==============
Loss for the year - - - - -
Foreign exchange translation - - - - -
Total comprehensive - - - - -
income
---------- ----------- ------------ --------- --------------
Transactions with owners
Issue of share capital 315,770 1,337,030 - - -
Cost of issue - (75,000) - - -
Equity settled share - - - - -
based transactions
Acquisition of subsidiary - - - - -
At 31 December 2017 5,342,072 18,141,271 25,664 137,700 46,451
========== =========== ============ ========= ==============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017
Share Translation Accumulated Totals Non - Totals
based reserve losses controlling
payments interest
reserve GBP GBP GBP GBP GBP
GBP
At 1 January 2016 97,796 (1,090,348) (12,466,046) 6,048,103 (158,461) 5,889,642
Loss for the year - - (632,125) (576,461) (1,104) (577,565)
Foreign exchange
translation - 625,466 - 625,466 972 626,438
Total comprehensive
income - 625,466 (632,125) 49,005 (132) 48,873
---------- ------------ ------------- ------------ ------------- ------------
Transactions with
owners
Issue of share
capital - - - 2,534,907 - 2,534,907
Cost of issue - - - (145,114) - (145,114)
Equity settled share
based transactions 40,109 - - 40,109 - 40,109
Release of charge for
lapsed options (31,008) - 31,008 - - -
Acquisition of
subsidiary 130,906 - - 294,106 - 294,106
-------------
At 31 December 2016 237,803 (464,882) (13,067,163) 8,821,116 (158,593) 8,662,523
========== ============ ============= ============ ============= ============
Loss for the year - - (1,038,248) (1,038,248) (1,318) (1,039,566)
Foreign exchange
translation - 67,822 - 67,822 40 67,862
Total comprehensive
income - 67,822 (1,038,248) (970,426) (1,278) (971,704)
---------- ------------ ------------- ------------ ------------- ------------
Transactions with
owners
Issue of share
capital - - - 1,652,800 - 1,652,800
Cost of issue - - - (75,000) - (75,000)
Equity settled share
based transactions 203,059 - - 203,059 - 203,059
Acquisition of
subsidiary 134,216 - - 134,216 - 134,216
-------------
At 31 December 2017 575,078 (397,060) (14,105,411) 9,765,765 (159,871) 9,605,894
========== ============ ============= ============ ============= ============
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
INFORMATION
For the year ended 31 December 2017
1. Nature of Operations
Beowulf Mining plc (the "Company") is domiciled in England. The
Company's registered office is 201 Temple Chambers, 3-7 Temple
Avenue, London, EC4Y 0DT. This consolidated financial information
comprises the Company and its subsidiaries (collectively the
'Group' and individually 'Group companies'). The Group is engaged
in the acquisition, exploration and evaluation of natural resources
assets and has not yet generated revenues.
2. Basis of preparation
The condensed consolidated financial information has been
prepared on the basis of the recognition and measurement
requirements of International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU) and implemented in the UK.
The accounting policies, methods of computation and presentation
used in the preparation of the interim financial information are
the same as those used in the Group's audited financial statements
for the year ended 31 December 2016.
The financial information in this statement does not constitute
full statutory accounts within the meaning of Section 434 of the UK
Companies Act 2006. The financial information for the twelve months
ended 31 December 2017 is unaudited and has not been reviewed by
the auditors. The financial information for the year ended 31
December 2017 has been derived from the Group's unaudited financial
statements for the period. The auditor's report on the statutory
financial statements for the year ended 31 December 2016 was
unqualified and did not contain any statement under sections 498
(2) or (3) of the Companies Act 2006.
The financial statements are presented in GB Pounds Sterling.
They are prepared on the historical cost basis or the fair value
basis where the fair valuing of relevant assets and liabilities has
been applied.
3. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary owners of the parent by the weighted
average number of ordinary shares of 518,728,856 (31 December 2016:
472,525,290) outstanding during the period. There is no difference
between the basic and diluted loss per share.
4. Called up share capital
(Unaudited) (Audited)
31 Dec 2017 31 Dec 2016
GBP GBP
Allotted, issued and fully
paid
Ordinary shares of 1p each 5,342,072 5,026,302
The number of shares in issue was as follows:
Number
of shares
Balance at 1 January 2016 430,313,824
Issued during the period 72,316,507
-------------
Balance at 31 December 2016 502,630,331
Issued during the period 31,576,923
-------------
Balance at 31 December 2017 534,207,254
=============
5. Closing value of intangible assets
Exploration costs As at As at
31 Dec 31 Dec
2017 2016
(Unaudited) (Audited)
GBP GBP
Cost
At 1 January 7,186,570 5,588,270
Additions for the period 1,077,815 968,460
Impairment (183,131) -
Foreign exchange movements 109,978 629,846
8,191,232 7,186,576
============ ============
The net book value of exploration costs is comprised of
expenditure on the following projects:
As at As at
31 Dec 31 Dec
2017 2016
(Unaudited) (Audited)
GBP GBP
Project Country Minerals
Kallak Sweden Iron ore 6,979,844 6,438,283
Nautijaur Sweden Copper - 24,912
Åtvidaberg Sweden Lead-zinc-copper-silver 253,778 153,927
Ågåsjiegge Sweden Iron ore 7,365 7,257
Sala Sweden Lead-zinc-silver 2,634 2,372
Haapamäki Finland Graphite 231,132 141,944
Kolari1 Finland Graphite 151,706 99,554
Piippumäki Finland Graphite - 119,087
Viistola Finland Graphite 147,784 107,369
Pitkäjärvi Finland Graphite 414,372 91,871
Joutsijärvi Finland Graphite 2,617 -
------------ ----------
8,191,232 7,186,576
============ ==========
Total Group exploration costs of GBP8,191,232 are currently
carried at cost in the financial statements. During the period, an
impairment provision was recognised against costs incurred on
Nautijaur (GBP27,621) and Piippumäki (GBP155,510). No impairment
provision was recognised 2016.
Accounting estimates and judgements are continually evaluated
and are based on a number of factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
The most significant risk currently facing the Group is that it
does not receive an Exploitation Concession for Kallak. The Company
originally applied for the Exploitation Concession in April 2013
and throughout 2017, and since the year-end, management have
actively sought to progress the application, engaging with the
various government bodies and other stakeholders. These activities
are summarised above under the Operational section.
Kallak is included in condensed financial statements as at 31
December 2017 as an intangible exploration licence with a carrying
value of GBP6,979,844. Management are required to consider whether
there are events or changes in circumstances that indicate that the
carrying value of this asset may not be recoverable. Management
have considered the status of the application for the Exploitation
Concession and in their judgement, they believe it is appropriate
to be optimistic about the chances of being awarded the
Exploitation Concession and thus have not impaired the project.
6. Going Concern
At the year end the Company has cash and cash equivalents of
GBP1.59 million. The Directors have prepared cash flow forecasts
for the Group covering a 12 month period from the anticipated date
of signing off the Annual Report and Accounts. The forecasts
indicate that whilst the Group has sufficient cash to cover its
anticipated working capital requirements it will need to raise
further funds shortly after the period of review. On this basis the
Directors have concluded it is appropriate to prepare the financial
statements on a going concern basis.
7. Post balance sheet events
On 22 February 2018, 2,100,000 million shares of 1 pence each,
were issued to Rasmus Blomqvist, the Company's Exploration Manager,
as the first tranche of deferred consideration pursuant to the
acquisition of Oy Fennoscandian Resources AB.
8. Availability of interim report
A copy of these results will be made available for inspection at
the Company's registered office during normal business hours on any
weekday. The Company's registered office is at 201 Temple Chambers,
3-7 Temple Avenue, London, EC4Y 0DT. A copy can also be downloaded
from the Company's website at www.beowulfmining.com. Beowulf Mining
plc is registered in England and Wales with registered number
02330496.
** Ends **
This information is provided by RNS
The company news service from the London Stock Exchange
END
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