Preliminary Results

RNS Number : 7831H

Beowulf Mining PLC

01 March 2010

 



1 March 2010

Beowulf Mining Plc

("Beowulf" or the "Company")

Unaudited Preliminary Results for the Year Ended 31 December 2009

Beowulf (AIM: BEM, Aktietorget: BEO), the AIM and Aktietorget traded mineral exploration company which owns several exploration projects in Sweden, announces its unaudited preliminary results for the year ended 31 December 2009.

Highlights:

Ruoutevare iron ore project:

·      Ongoing metallurgical tests on Ruoutevare ore material commissioned from MINPRO AB have to date produced a final high grade product of sponge iron containing 95% iron and 1.5% titanium.

·      Bench scale tests have also produced a magnetite pellet feed product containing 67.8% Fe of high commercial quality with low levels of contaminating metals.

Lulepotten copper-gold deposit/Ballek joint venture:

·      Flotation tests on ore grade material from the Lulepotten copper-gold deposit produced a high grade copper concentrate containing 32.4% copper, 5.6 g/t gold, 320 g/t silver and 29 g/t tellurium.

·      New earn-in joint venture agreement signed with Energy Ventures Limited ("EVE") on more favourable terms than the previous arrangement with Agricola Resources Plc ("Agricola").

Corporate:

·      Placing successfully completed in June 2009 raising £500,000 gross from both new and existing investors.

·      Approximately £190,000 in cash held at the year end with low cost base.

·      Acquisition of Agricola's Swedish assets comprising a package of five highly prospective gold, copper, nickel and uranium exploration licences at Geddaur in Northern Sweden.

·      New Munka exploration licence secured, hosting Sweden's largest molybdenum deposit.

·      Increasing trading volumes in Beowulf's shares on the AktieTorget exchange in the form of Swedish Depositary Receipts ("SDRs"). More than 20,000,000 ordinary shares were lodged and traded on the AktieTorget via SDRs at the year end.

·      The Board continues to concentrate on the rapid commercialisation of Beowulf's project portfolio as well as exploration and development activities.

Post period end:

·      EVE commences 1,600m drilling programme at the Ballek JV with results anticipated by the end of April 2010.

·      Updated conceptual study by the Raw Materials Group of Sweden shows Ruoutevare to be one of Scandinavia's largest known remaining unexploited iron ore deposits containing a significant resource of iron ore close to the surface and very amenable to open-pit mining.

Clive Sinclair-Poulton, Executive Chairman of Beowulf commented:

"Despite a challenging backdrop of global economic uncertainty, Beowulf made significant progress during 2009 and now has an enhanced project portfolio and a new joint venture partner in the form of EVE. Demand for commodities has recovered strongly and we look forward to reporting further progress during 2010."

For further information, please contact:

Beowulf Mining Plc
Clive Sinclair-Poulton, Chairman	Tel: [phone]
Strand Hanson Limited
Matthew Chandler / Simon Raggett	Tel: [phone]
Alexander David Securities Limited
David Scott / Nick Bealer	Tel: [phone]
Lothbury Financial Limited
Gary Middleton / Ron Marshman	Tel: [phone]
or visit http://www.beowulfmining.com

Chairman's Statement

The Board of Beowulf Mining Plc ("Beowulf" or the "Company") is pleased to present the Company's results for the year ended 31 December 2009. Beowulf currently has eight projects in Northern Sweden primarily prospecting for iron, copper, gold and uranium. The results show that Beowulf incurred a loss after taxation for the year of £520,096 (2008: £398,664).

While the natural resource sector has to a large extent recovered from the doom and gloom of 2008/2009, it has not yet returned to the buoyant conditions of earlier years. For Beowulf, however, the last year has been one of continued progress.  

Ruoutevare and Kallak projects (iron ore)

The Company's main Ruoutevare magnetite iron ore project in Norrbotten County, Northern Sweden has a maiden inferred JORC resource estimate, completed by independent geological consultants Runge Limited in August 2008, of 140 million tonnes grading 39.1% iron (Fe), 5.7% titanium (Ti) and 0.2% vanadium (V) (cut-off grade of 30% Fe).

In April 2009, we announced the results of metallurgical tests conducted by MINPRO AB's ("MINPRO") research laboratory at Stråssa, Central Sweden on material from Ruoutevare which confirmed that by applying reduction techniques in a laboratory scale simulation of a mechanical oven, it was possible to produce a final product of high grade sponge iron powder containing 97% iron (Fe) and less than 0.5% titanium (TiO₂), and 0.02% vanadium (V). To complement these encouraging results, in June 2009 the Company commissioned enlarged metallurgical tests, at bench scale, to further validate and optimise the earlier defined reduction technique process.

In November 2009, it was reported that working on crushed and milled ore material tests showed that a final sponge iron powder containing up to 90% iron (Fe) with 1.5% titanium (Ti) is obtainable. The initial grades of Fe 52.1% and TiO₂ 11.4% from the milled ore material studied, compared very favourably with a 1970s study by the Geological Survey of Sweden ("SGU") showing grades of Fe 53% and TiO₂ 12.3%. A further update in December 2009 on tests conducted to optimise the process, showed a 5% increase to 95% in the iron content of the final product versus the November results. It was also reported that new bench tests to assess the possibility of producing a high grade pellet feed from the ore had been successful, resulting in a magnetite pellet feed product containing 67.8% Fe of high commercial quality with low levels of contaminating metals.  MINPRO has indicated that the ongoing test programme to apply the reduction/segregation process should further improve the quality of the sponge iron powder obtainable from the Ruoutevare deposit.

The MINPRO study commissioned in June 2009 also included ore material from the Company's Kallak iron ore deposit. Results from qualitative metallurgical testing on the Kallak ore material are anticipated to be available in early March 2010.

In addition to the metallurgical test programmes, in July 2009 the Company commissioned international consultants, Raw Materials Group ("RMG") of Sweden, to commence an initial conceptual study on Kallak and update its 2006 scoping study on Ruoutevare, using the Company's most recent geological and technical data, with the objective of further defining the commerciality of these two projects. The updated conceptual study on Ruoutevare was completed in February 2010 and showed that Ruoutevare contains a significant resource of iron ore close to the surface and is very amenable to open-pit mining. On the basis of its conceptual financial analysis, RMG concluded that the project is robust and can potentially generate in excess of US$3 billion in net cash flow over a 15 year mine life.  Such results warrant further drilling and analytical work on the project. The final report will be released in the near future while a separate report on Kallak is anticipated to be received from RMG shortly.

Ballek and Grundtrask projects (copper-gold-uranium)

The second of the Company's projects to attain a JORC standard inferred resource estimate to date is the Lulepotten copper-gold deposit on the Ballek joint venture with an estimated 5.4 million tonnes grading 0.8% copper and 0.3 g/t of gold, representing a total of 43,000 tonnes of contained copper metal and 52,000 ounces of contained gold using a cut-off value of 0.3% for copper. Lulepotten currently forms the largest copper deposit within the Company's Ballek project area covering close to 11,000 hectares.

In line with our strategy of seeking to enhance and commercialise our existing projects, in July 2009 MINPRO were commissioned to conduct initial metallurgy tests. Based on a small laboratory sample, MINPRO were able to obtain a final copper concentrate, from bench scale flotation tests on material from the Lulepotten copper-gold deposit, containing 32.4% copper, 320 grammes per tonne (g/t) of silver, 29 g/t of tellurium and 5.6 g/t of gold, serving to justify further work in the Ballek area.

In September 2009, we were delighted to announce that we had acquired back full control of the Ballek project from our previous partner, Agricola Resources Plc ("Agricola"), and entered into a new joint venture agreement with the Australian resource company, Energy Ventures Limited (ASX: EVE) ("EVE") on more advantageous terms. Under the terms of the new joint venture, EVE has been appointed as manager and operator and can earn-in a 50 per cent. interest in the project if it sole funds and completes 1,600m of diamond drilling on-site by 31 March 2010. As announced in early February 2010, and confirmed during a recent site visit by the Board, EVE remains on track to meet this deadline with the current drilling programme expected to be completed by early March, following which geological and sampling activities will be undertaken with results anticipated by the end of April 2010.   

Preliminary discussions are ongoing with EVE and other potential joint venture partners in respect of certain of the Company's other projects. 

Other projects

In September 2009, in addition to acquiring back full control of Ballek, the Company also strengthened its Swedish asset base through the purchase of a package of five highly prospective licences from Agricola covering, in aggregate, an area of 148.4km² in Northern Sweden.

The Geddaur number 1, 2 and 3 uranium, gold and silver permits totalling 131.5km² are situated adjacent to our existing Ballek Project and the Manakjaure uranium permit totalling 5.4km² is approximately 120km north of Ballek. We believe that the recent renewed interest in nuclear power by the UK, German and Swedish governments serves to enhance the attractiveness of the uranium potential in such project areas. The Riikalahti nickel permit totalling 11.5km² is located in the Kiruna region.

In November 2009, the Company was also pleased to announce that it had been awarded a new exploration licence by the Swedish Mining Registrar in Bergsstaten, in respect of the Munka area in Northern Sweden, which covers 800 hectares and hosts Sweden's largest, drill confirmed deposit of molybdenum.  

The Company continues to look for other assets to complement and extend its project portfolio.

Corporate

In late June 2009, the Company successfully completed a placing of 25,000,000 new ordinary shares at a price of 2p per share with both new and existing investors to raise £500,000 gross to provide additional working capital for the Company's continued exploration expenditure and planned growth and development.

Further to the Company's connection agreement with AktieTorget AB (www.aktietorget.se) in Stockholm, it provides a facility for the Company's ordinary shares to be traded in Sweden in the form of Swedish Depositary Receipts ("SDRs"). Under this arrangement, Beowulf's ordinary shares can be lodged with custodian bank Skandinaviska Enavilda Banken AB, via its London agent, HSBC bank, as security against the issue of SDRs which can then be traded on the Swedish AktieTorget market. As well as affording Swedish investors easier access to ownership of a stake in Beowulf, the Board's intention was to also increase liquidity and demand for the Company's ordinary shares. From an initial tranche of 2,000,000 ordinary shares lodged at inception of the facility in August 2008, there are now currently in excess of 23,000,000 ordinary shares lodged and traded on the AktieTorget via SDRs.  As a company operating in Sweden and developing Swedish natural resource assets, this increased level of trading and investor support in Sweden continues to be highly encouraging.

Outlook

Despite another difficult year for the global economy, signs of a gradual recovery and increased confidence are now evident and the Board continues to believe in the commercial prospects for the Company's asset portfolio which has increased in both quantity and quality as well as resource type. Demand for both equities and commodities recovered strongly in the latter half of 2009 and future price trends for copper, gold, iron and uranium bode well for the Company's ongoing development.  We will continue to look for new projects while seeking further joint venture partners for our existing projects and promoting the merits of our portfolio within the marketplace and investor community at large.

The Board very much appreciates the assistance and support of the Company's employees, advisers and shareholder base and looks forward to announcing further progress and project developments throughout the remainder of 2010.

Dividends

No dividends will be distributed for the year ended 31 December 2009.

Clive Sinclair-Poulton

Executive Chairman

1 March 2010

INCOME STATEMENT

For the year ended 31 December 2009

	2009		2008
	(Unaudited)		(Audited)
	£		£
Continuing operations
Revenue	-		-
Other operating income	75		-
Administrative expenses	(514,055)		(407,180)
Operating loss	(513,980)		(407,180)
Finance costs	(6,394)		(10,192)
Finance income	278		18,708
Loss before tax	(520,096)		(398,664)
Tax	-		-
Loss for the year	(520,096)		(398,664)
Earnings per share expressed in pence per share:
- Basic	-0.56		-0.50
- Diluted	-0.54		-0.47

Statement of TOTAL recognised income and expense

For the year ended 31 December 2009

	2009 (Unaudited)		2008 (Audited)
	£		£
Revaluation of investments	70,685		(221,385)
Net income/(expense) recognised directly in equity	70,685		(221,385)
Loss for the financial year	(520,096)		(398,664)
Total recognised income and expense for the year	(449,411)		(620,049)

BALANCE SHEET

As at 31 December 2009

		2009 (Unaudited) £		2008 (Audited) £
Assets
Non-current assets
Intangible assets		286,193		230,904
Property, plant and equipment		1,079		1,439
Investments		155,024		74,339
		442,296		306,682
Current assets
Trade and other receivables		22,553		33,954
Cash and cash equivalents		190,332		354,291
		212,885		388,245
Liabilities
Current liabilities
Trade and other payables		31,956		22,291
Net current assets		180,929		365,954
Non-current liabilities
Financial liabilities - borrowings
Interest bearing loans and borrowings		150,000		250,000
Net assets		473,225		422,636
Shareholders' equity
Called up share capital		1,058,982		808,982
Share premium		2,847,191		2,597,191
Revaluation reserve		40,024		(30,661)
Capital contribution reserve		46,451		46,451
Share scheme reserve		5,879		5,879
Retained earnings		(3,525,302)		(3,005,206)
Total equity		473,225		422,636

CASH FLOW STATEMENT

For the year ended 31 December 2009

	Notes		2009 (Unaudited) £		2008 (Audited) £
Cash flows from operating activities
Cash generated from operations	6		(383,522)		(324,270)
Interest paid			(8,061)		(10,192)
Net cash from operating activities			(391,583)		(334,462)
Cash flows from investing activities
Purchase of intangible fixed assets			(162,654)		(64,686)
Purchase of tangible fixed assets			(10,000)		-
Interest received			278		18,708
Net cash from investing activities			(172,376)		(45,978)
Cash flows from financing activities
Loan repaid  in year			(100,000)		-
Share issue			500,000		63,500
Cost of shares issued			-		-
Net cash from financing activities			400,000		63,500
(Decrease)/Increase in cash and cash equivalents			(163,959)		(316,940)
Cash and cash equivalents at beginning of year			354,291		671,231
Cash and cash equivalents at end of year			190,332		354,291

NOTES TO THE FINANCIAL INFORMATION

For the year ended 31 December 2009

1.   Basis of preparation and accounting policies

The financial information contained in this preliminary results announcement does not constitute the Company's statutory financial statements for the years ended 31 December 2009 or 31 December 2008. The financial information for the year ended 31 December 2008 is derived from the statutory financial statements for that year which have been approved by the board of directors and delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985.

The financial information for the year ended 31 December 2009 is unaudited and has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") including IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU"). Statutory audited financial statements for that year will be finalised on the basis of the financial information presented by the directors in this preliminary results announcement and will be delivered to the Registrar of Companies and filed at Companies House following the Company's forthcoming annual general meeting.

The principal accounting policies used in preparing the preliminary results announcement are those that the Company will apply in its financial statements for the year ended 31 December 2009 and are unchanged from those disclosed in the Company's Annual Report and Financial Statements for the year ended 31 December 2008.

2.   Loss per share

The basic and diluted loss per share have been calculated using the loss for the 12 months ended 31 December 2009 of £520,096 (2008: £398,664). The basic loss per share was calculated using a weighted average number of shares in issue of 92,131,124 (2008: 79,197,974).

The diluted loss per share has been calculated using an additional weighted average number of shares in issue and to be issued of 95,781,124 (2008: 84,822,838).

3.   Called up share capital

	2009 £		2008 £
Authorised
200,000,000 ordinary shares of 1p each	2,000,000		2,000,000
Allotted, issued and fully paid
105,898,247 (2008: 80,898,247) ordinary shares of 1p each	1,058,982		808,982

25,000,000 ordinary shares of 1p each were allotted as fully paid at a premium of 1p per share during the year.

The number of shares in issue is reconciled as follows:

	2009 No.		2008 No.
At 1 January 2009	80,898,247		74,548,247
Issued during the year	25,000,000		6,350,000
At 31 December 2009	105,898,247		80,898,247

4.   Statement of movement on reserves

	Retained earnings £		Share premium £		Revaluation reserve £
At 1 January 2009	(3,005,206)		2,597,191		(30,661)
Deficit for the year	(520,096)		-		-
Revaluation in year	-		-		70,685
Cash share issue	-		250,000		-
At 31 December 2009	(3,525,302)		2,847,191		40,024

	Capital contribution reserve £		Share scheme reserve £		Totals £
At 1 January 2009	46,451		5,879		(386,346)
Deficit for the year	-		-		(520,096)
Revaluation in year	-		-		70,685
Cash share issue	-		-		250,000
At 31 December 2009	46,451		5,879		(585,757)

5.   Reconciliation of movements in shareholders' funds

		2009 (Unaudited) £		2008 (Audited) £
Loss for the financial year		(520,096)		(398,664)
Other recognised gains and losses  relating to the year (net)		70,685		(221,385)
Proceeds of share issue		500,000		63,500
Equity-settled share-based transactions		-		5,351
Net addition/(reduction) to shareholders' funds		50,589		(551,198)
Opening shareholders' funds		422,636		973,834
Closing shareholders' funds		473,225		422,636

6.   Reconciliation of loss before tax to cash generated from operations

	2009 (Unaudited) £		2008 (Audited) £
Loss before tax	(520,096)		(398,664)
Depreciation charges	117,725		75,206
Equity-settled share-based transactions	-		5,351
Finance costs	6,394		10,192
Finance income	(278)		(18,708)
	(396,255)		(326,623)
Decrease/(Increase) in trade and other receivables	11,401		472
Increase/(Decrease) in trade and other payables	1,332		1,881
Cash generated from operations	(383,522)		(324,270)

7.   Availability of Annual Report and Financial Statements

Copies of the Company's full Annual Report and Financial Statements are expected to be posted to shareholders in due course and, once posted, will also be made available to download from the Company's website at www.beowulfmining.com.

The Annual Report and Financial Statements will also be made available for inspection at the Company's registered office during normal business hours on any weekday. Beowulf Mining Plc is registered in England and Wales with registered number 02330496. The registered office is at Richmond House, Broad Street, Ely, Cambridgeshire CB7 4AH.

 

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