First Quarter Update

RNS Number : 9576F

Beowulf Mining PLC

31 May 2013

 



31 May 2013

Beowulf Mining Plc

("Beowulf" or the "Company")

First Quarter Update

Beowulf (AIM: BEM; Aktietorget: BEO), the mineral exploration company focused on developing its Kallak North and Kallak South iron ore deposits in northern Sweden, announces an unaudited operational and financial update for the three months ended 31 March 2013.

Highlights:

Operational:

·     Mineralisation present in a significant proportion of the Kallak North and Kallak South deposits designated as an Area of National Interest by the Swedish authorities. The designation affords protection against competing land use and measures that may hinder future potential mineral extraction.

·     Updated independent JORC Code compliant resource estimate completed by GeoVista AB for the Kallak North deposit comprising 88.8 million tonnes ("Mt") of Indicated Resources grading at 27.7 per cent iron and 55.3Mt of Inferred Resources grading at 28.2 per cent iron. 

·     Application submitted in late April 2013 to the Swedish Mining Inspectorate for an exploitation concession for the Kallak North deposit.

·     In order to concentrate resources on those projects which offer the best potential for generating long term shareholder value, certain exploration permits, including Ruoutevare nr1, have been relinquished.

·     Fully funded drill programme in progress on Kallak South with approximately 4,000m drilled by late May 2013. Principally targeting a maiden JORC Code compliant resource estimate for the Kallak South deposit as well as seeking to confirm whether the Kallak South and Kallak North deposits are geologically connected.

·     An additional, up to 11,000m, 40 hole drilling campaign on Kallak North is now underway.

Financial:

·     Nil revenue (2012: Nil), loss before and after taxation of £220,000 (2012: £191,000) and basic loss per share of 0.105p (2012: 0.091p).

·     Approximately £3.2m in cash held at the period end.

Clive Sinclair-Poulton, Executive Chairman of Beowulf, commented:

"2013 to date has been a good period for Beowulf. There have been a number of positive developments for the Company as we continue to progress away from exploration towards development and potential future production.

"Over the remainder of 2013 I look forward to announcing positive news from our exploration work programmes, including the test mining sampling programme expected to commence this summer at Kallak North, the ongoing exploratory drilling at both Kallak North and Kallak South and, towards the end of the year, planned drilling at Ballek."

Executive Chairman's Statement:

There has been significant progress this quarter at our flagship Kallak project where we are currently drilling on both the Kallak North and Kallak South deposits, as well as preparing for the start, in the near term, of our test mining sampling programme at Kallak North. In addition, much of the project area has been designated as an Area of National Interest for minerals ("ANI"). This combination has been reflected in our recent application for an exploitation (mining) licence for Kallak North.

"The area is important from a material supply perspective and of importance to the mining industry on a national basis", is how the Swedish Geological Society ("SGU") described our Kallak project in February when a substantial proportion of the project area was designated an ANI. Obtaining such a designation is essentially not something you apply for, but rather it is assessed and awarded by the appropriate Swedish authorities based upon merit and the needs of the Swedish economy. Receiving ANI status will greatly assist the group as we seek to progress the project from exploration towards future production.

2013 to date has been a good period for Beowulf as there have been a number of positive developments.

In early February we resumed drilling at Kallak South and by late May approximately 4,000m had been drilled. We are currently targeting, dependent on conducive summertime ground conditions at the planned individual drillhole locations, the completion of up to approximately a further 2,000m of drilling prior to the scheduled expiry of the current work plan at the end of October 2013. Subject to analysis of the results from this, in aggregate, intended 6,000m of initial drilling with our retained consultants, it is currently expected that the balance of the up to total 19,000m programme will form part of a future work plan(s) in due course. We currently envisage commissioning a maiden independent JORC Code compliant resource estimate for the northern part of the Kallak South deposit based on the initial phase of up to 6,000m of drilling.

Also in February we detailed some of the potential transport options under consideration for the Kallak project. Reliable logistics are key to the development of any multi-million tonne project and the Kallak deposits are well situated next to established infrastructure with a number of alternative modes of transport and routes to market close at hand. A significant amount of work has been performed to date by the Company's Swedish operating subsidiary, Jokkmokk Iron Mines AB ("JIMAB"), and its consultants to prepare the way for transporting ore. As we progress further towards potential future production, Kallak's demonstrable strength in this area will become more apparent and should compare favourably to other iron ore projects catering for the European market.

Post period end developments

In early April, Kallak North secured an independent upgraded JORC Code compliant resource estimate with approximately 61 per cent of the increased total tonnage now in the "Indicated Resource" category, an important milestone in the development of the project.

On 25 April 2013, JIMAB submitted its comprehensive application for an "Exploitation Concession" for the Kallak North deposit, the equivalent of a mining licence. This reflects more than two years of exploration activities and our application should be greatly assisted by the recent JORC Code compliant resource upgrade and the ANI designation. A decision is expected by early 2014.

In May, JIMAB's previously notified work plans in respect of its planned additional drilling campaign and test mining programme at Kallak North became valid. Unlike the 2012 work plan application for the currently ongoing Kallak South drill programme, neither of these latest plans received objections from the local Saami community's representatives. We hope that this reflects our considerable efforts to foster good relations with the local community at Kallak.

With funds in place to deliver further progress over the remainder of 2013, we have recently commenced our planned additional drill campaign of up to 11,000m on Kallak North in order to further determine the extent of the deposit. Our test mining sampling programme on Kallak North this summer should also serve to demonstrate the commercial potential of the area whilst our ongoing Kallak South drill programme will enable us to start defining the size of the Kallak South deposit.

We have consistently aimed to commit the group's resources to the development of projects that the Board believes offer the best prospects of generating a return for our shareholders. Accordingly, based on legal advice and our pragmatic assessment of the limited potential for achieving an exploitation concession and the requisite environmental clearances for Ruoutevare, we have recently relinquished this project's permit, together with certain other non-core permits, which leaves the group better placed to focus on the most cost effective advancement of its more promising assets.

Our Ballek copper-gold JV project continues to be of interest to us, albeit we have reduced the project area retained under permit by Wayland Copper Limited. The retained Ballek nr2 permit area contains the Lulepotten deposit with a pre-existing JORC Code compliant Inferred Resource estimate of 5.4Mt, grading at 0.8 per cent copper and 0.3 g/t gold at a cut-off value of 0.3 per cent for copper. We believe that there is significant further potential here and a work plan in respect of a planned 3,000m drill programme in late 2013 was notified and disseminated to the Mining Inspector and the relevant land owners and users earlier this month.

Reflecting our active exploration programmes, we currently expect newsflow in respect of four key areas over the remainder of the year, namely:

·     Kallak North drill campaign

·     Kallak North test mining sampling programme

·     Kallak South drill programme

·     Ballek drill programme

We highlighted above a key strength for Beowulf's Kallak project with respect to its proximity to well established infrastructure and comprehensive transport network. Another strength is that we operate in Sweden, one of the most politically stable countries in the world. This factor is well recognised in the mining community and will be of considerable importance when seeking to raise funds to move towards production at Kallak. When considerable sums are required to be invested certainty of ownership, taxation, legal procedures, transparency and stability are vital. Without this combination and a fully functioning and accessible infrastructure many projects face difficulties in reaching fruition and realising their full potential.

The global iron ore market continues to react to the differing views on the outlook for the Chinese economy. Current sentiment is less positive than earlier in the year, however prices remain at around US$110 per tonne.

We remain positive on the price of iron ore as few commentators appear to have factored in how India will change the market outlook. In 2011 India exported 79 million tonnes of iron but this year they are currently importing a net total of one million tonnes per month. This major switch reflects not only the condition of Indian iron ore producers but also that the country is undertaking significant infrastructure projects alongside a general increase in its use of iron and steel.

As ever, we would like to thank all those who work with and for the Beowulf group for their efforts and support and look forward to reporting the results of their continued endeavours. Much has been achieved in the first part of 2013 which augurs well for the rest of the year and into 2014.

Enquiries:

Beowulf Mining Plc
Clive Sinclair-Poulton, Chairman	Tel: [phone]
Strand Hanson Limited
Matthew Chandler / Rory Murphy	Tel: [phone]
Cantor Fitzgerald Europe
Stewart Dickson / Julian Erleigh / Jeremy Stephenson	Tel: [phone]
Blythe Weigh Communications
Tim Blythe / Robert Kellner / Eleanor Parry	Tel: [phone]
or visit http://www.beowulfmining.com

UNAUDITED CONSOLIDATED INCOME STATEMENT

FOR THE THREE MONTHS ENDED 31 MARCH 2013

	Unaudited 3 months ended 31 March 2013 £000's		Unaudited 3 months ended 31 March 2012 £000's
Continuing operations
Revenue	-		-
Administrative expenses	(234)			(204)
Operating loss	(234)		(204)
Finance costs	-		-
Finance income	14		13
	(220)		(191)
Loss before and after taxation	(220)		(191)
Loss attributable to:
Owners of the parent Non-controlling interests	(220) -		(191) -
	(220)		(191)
Loss per share:
- Basic	(0.105p)		(0.091p)
- Diluted	(0.103p)		(0.089p)

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2013

	Unaudited As at 31 March 2013 £000's		Unaudited As at 31 March 2012 £000's
ASSETS
Non-current assets
Intangible assets	3,870		2,468
Property, plant and equipment	2		1
Investments	24		117
Loans and other financial instruments	135		270
Financial fixed assets	64		-
	4,095		2,856
Current assets
Trade and other receivables	227		162
Cash and cash equivalents	3,175		5,574
	3,402		5,736
TOTAL ASSETS	7,497		8,592
EQUITY
Shareholders' equity
Called up share capital	2,104		2,104
Share premium account	10,859		10,859
Revaluation reserve	(101)		(8)
Capital contribution reserve	46		46
Share scheme reserve	68		68
Translation reserve	194		(1)
Retained earnings	(5,943)		(4,620)
	7,227		8,448
Non-controlling interest	-		-
TOTAL EQUITY	7,227		8,448
LIABILITIES
Current liabilities
Trade and other payables	270		144
Taxation	-		-
TOTAL LIABILITIES	270		144
TOTAL EQUITY AND LIABILITIES	7,497		8,592

** Ends **

 

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