First Quarter Update

RNS Number : 7940M

Beowulf Mining PLC

01 June 2010

 



1 June 2010

Beowulf Mining Plc

("Beowulf" or the "Company")

First Quarter Update

Beowulf (AIM: BEM; Aktietorget: BEO), the AIM and Aktietorget traded mineral exploration company, which owns several exploration projects in Sweden, announces an unaudited operational and financial update for the three months ended 31 March 2010.

Clive Sinclair-Poulton, Chairman of Beowulf, commented:

"The first quarter of 2010 has been an active period for the Company as it has sought to both confirm and increase its long term potential.

The Company's Ballek Joint Venture project has made good progress with our new operational partner, Energy Ventures Limited ("EVE") successfully fulfilling its 1,601 metre drilling commitment to earn-in a 50 per cent. interest. Accordingly, a new UK private company, Wayland Copper Limited ("Wayland"), was established to hold the project's exploration permits which is jointly and equally owned by Beowulf and EVE.

Results of further analysis of the recent work undertaken on the Ballek project area are expected to be available in the near future which will assist Wayland in assessing its further development options for this very promising copper project.

An independent conceptual study completed by Sweden's Raw Materials Group ("RMG") and released during the period under review, showed that the Company's two flagship iron ore deposits at Ruoutevare and Kallak have considerable promise and are believed to be some of Scandinavia's largest known remaining iron ore deposits still awaiting commercial exploitation, containing a significant resource close to the surface and very amenable to open-pit mining. RMG recommended that Beowulf conduct further drilling and analytical work on these two iron ore projects to further refine their commerciality and prove up their potential value.

Based on various assumptions, RMG estimated that both projects, over an estimated 15 year mine life, could potentially generate a net profit of US$2.3 billion at an iron ore price of US$102 per tonne or just under US$6 billion at an iron ore price of US$139 per tonne. With the iron ore market changing its pricing model in 2010 the current price for iron ore is US$148 per tonne.

With further work, there is believed to be good potential for increasing the current JORC resource estimate at Ruoutevare from the current level of 140 million tonnes to approximately 200 million tonnes and to achieve a maiden JORC resource classification for Kallak in the region of 150 million tonnes. Ongoing metallurgical tests being conducted by MINPRO AB of Sweden have shown that the quality of iron obtainable from both sites remains high and therefore commercially attractive.

A successful placing of 40,000,000 new ordinary shares at a price of 2.5p per share was completed in late March 2010 raising £1 million (gross), which has provided the Company with greater flexibility in respect of the development of its two major iron ore assets. In April 2010 we embarked on a 3,500 metre drilling campaign at Kallak with a further campaign planned for Ruoutevare in Q4 2010. The rationale for Beowulf taking on the operational and drilling risk is that based upon both the Company's own work and that of RMG; the board believes such risk to be warranted, since a successful campaign could serve to significantly enhance the value attributed to these assets.

Our broker, Alexander David Securities Limited ("ADS") published a research note in April 2010 which highlighted the commercial strengths of both Ruoutevare and Kallak. ADS calculated that at the higher iron ore price forecast the two projects had an estimated net present value of US$202 million assuming a resource base of 350 million tonnes of iron ore.

Whilst we have to date principally concentrated on the development of our copper and iron ore projects we continue to look at ways to develop our other assets including exploration for gold, molybdenum and uranium resources.

We are committed to maintaining strong relations with our investor base and the Company's recent presentation in April at the Minesite investor forum in London was very well received. We have also recently upgraded our corporate website to provide a better conduit for keeping all shareholders informed about the Company's progress.

With commodity prices remaining strong and fragile signs of global economic recovery, we remain confident in the long term value of our asset portfolio and will continue to seek to enhance shareholder value.

We shall continue to develop our existing project portfolio and also look to add to it where attractive opportunities are identified which could benefit both the Company and its shareholders.

The independent conceptual study on our iron ore projects will assist us in identifying potential partners for their future commercial development.

In summary, the first quarter of 2010 has been both positive and eventful and your board believes that the initiatives commenced in 2009 will continue to deliver progress during the remainder of 2010."

Enquiries:

Beowulf Mining Plc
Clive Sinclair-Poulton, Chairman	[phone]
Strand Hanson Limited
Matthew Chandler / Simon Raggett	[phone]
Alexander David Securities Limited
David Scott / Nick Bealer	[phone]
Lothbury Financial Services Limited
Gary Middleton / Michael Padley	+ 44 (0) 207 868 2567
or visit http://www.beowulfmining.net

Beowulf Mining Plc

Unaudited Income Statement

For the Three Months Ended 31 March 2010 

			Unaudited 3 months ended 31 March 2010 £000's			Unaudited 3 months ended 31 March 2009 (as restated) £000's
Revenue
Interest Received			-			-
Expenses
General & Administrative			94			67
Interest paid			2			-
Depreciation			-			-
			96			67
Loss before and after taxation			96			67
Basic loss per share			0.086p			0.083p
Diluted loss per share			0.084p			0.079p
Unaudited Balance Sheet As at 31 March 2010
				Unaudited 31 March 2010 £000's			Unaudited 31 March 2009 (as restated) £000's
ASSETS
Non-current assets
Intangible assets				737			517
Property, plant and equipment				1			1
Investments				108			74
				846			592
Current assets
Trade and other receivables				32			38
Cash and cash equivalents				1,061			151
				1,093			189
Liabilities
Current liabilities
Trade and other payables				59			13
Taxation				2			1
				61			14
Total assets less current liabilities				1,878			767
Financial liabilities - borrowings
Interest bearing loans and borrowings				(250)			(150)
Total assets less liabilities				1,628			617
Shareholders equity
Called up share capital				1,459			809
Share premium account				3,388			2,597
Revaluation reserve				(37)			(30)
Warrants & capital contribution reserve				52			52
Retained earnings:
	As previously reported			(3,694)			(3,082)
	Prior year adjustments			460			271
Total liabilities and shareholders funds				1,628			617

Notes:

1) Change of accounting policy

When originally adopting International Financial Reporting Standards, the Company took the option under IFRS 6 (Exploration for and Evaluation of Mineral Resources) to continue to use the accounting policy applied immediately before adopting the IFRS, resulting in exploration costs continuing to be amortised over the licence periods.  The Company has now changed its accounting policy to fully adopt the provisions of IFRS 6, which it feels makes the financial statements more relevant to the economic decision-making needs of users.

2) Prior Year Adjustments

As a result of the abovementioned change of accounting policy, amortisation of exploration costs previously charged to the income statement has been removed and the value of intangible assets on the statement of financial position increased. The amortisation charged in the year to 31 December 2007 was £189,000, for the year ended 31 December 2008 was £75,000 and for the year ended 31 December 2009 was £196,000.  After applying the prior year adjustments and removing there charges from the income statements, the amount of intangible assets shown on the statements of financial position increase by £264,000 as at 31 December 2008 and £460,000 as at 31 December 2009, and have been restated accordingly.

 

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