TIDMBEM
RNS Number : 5303U
Beowulf Mining PLC
30 July 2020
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.
30 July 2020
Beowulf Mining plc
("Beowulf" or the "Company")
AUDITED FINANCIAL RESULTS FOR THE YEARED 31 DECEMBER 2019
Beowulf (AIM: BEM; Spotlight: BEO), the mineral exploration and
development company, announces its audited financial results for
the year ended 31 December 2019. The Chairman's statement, review
of operations and activities, and financial information have been
extracted from the Company's Annual Report for the year ended 31
December 2019.
The Annual General Meeting of the Company will be held at the
offices of One Advisory, 201 Temple Chambers, 3-7 Temple Avenue,
London, EC4Y 0DT, 10 September 2020 at 11.00 a.m. (BST).
The 2019 Annual Report will be posted to those shareholders who
have requested a copy and will be available on the Company's
website today ( www.beowulfmining.com ). A further news release
will be made in mid-August when the Notice, Form of Proxy and
Annual Report are posted to shareholders.
Enquiries:
Beowulf Mining plc
Kurt Budge, Chief Executive Tel: +44 (0) 20 3771
Officer 6993
SP Angel
(Nominated Adviser & Broker)
Ewan Leggat / Soltan Tagiev Tel: +44 (0) 20 3470
0470
Blytheweigh
Tim Blythe / Megan Ray Tel: +44 (0) 20 7138
3204
Cautionary Statement
Statements and assumptions made in this document with respect to
the Company's current plans, estimates, strategies and beliefs, and
other statements that are not historical facts, are forward-looking
statements about the future performance of Beowulf. Forward-looking
statements include, but are not limited to, those using words such
as "may", "might", "seeks", "expects", "anticipates", "estimates",
"believes", "projects", "plans", strategy", "forecast" and similar
expressions. These statements reflect management's expectations and
assumptions in light of currently available information. They are
subject to a number of risks and uncertainties, including, but not
limited to , (i) changes in the economic, regulatory and political
environments in the countries where Beowulf operates; (ii) changes
relating to the geological information available in respect of the
various projects undertaken; (iii) Beowulf's continued ability to
secure enough financing to carry on its operations as a going
concern; (iv) the success of its potential joint ventures and
alliances, if any; (v) metal prices, particularly as regards iron
ore. In the light of the many risks and uncertainties surrounding
any mineral project at an early stage of its development, the
actual results could differ materially from those presented and
forecast in this document. Beowulf assumes no unconditional
obligation to immediately update any such statements and/or
forecasts.
CHAIRMAN'S STATEMENT
Dear Shareholders
Introduction
In 2019, while our frustrations continued with Kallak and still
no decision from the Swedish Government, the Company continued to
advance projects in Kosovo and Finland.
In Kosovo, the Company increased its investment in Vardar
Minerals, funding exploration programmes across two base and
precious metals licences situated in the attractive Tethyan Belt,
and, in Finland, the Fennoscandian Resources' team produced an
upgraded Mineral Resource Estimate ("MRE") for the Aitolampi
graphite project and continued to play an important role in
Finland's emerging battery sector.
Despite the formation of a new Swedish Government in January
2019, no progress with regards to the Exploitation Concession for
Kallak was made during the year. While the Minister talked of
transparency and predictability, neither of these were evident in
the handling of the Company's application, nor it being
prioritised, as suggested by the Government and talk of a
'forthcoming decision' did not materialise.
Kallak provides the foundation asset of the Company, but with
Vardar Minerals and Fennoscandian Resources, Beowulf has a
diversified portfolio of assets, each business area displaying
strong prospects and offering investors optionality.
Vardar Minerals ("Vardar")
During 2019, significant progress was made in Kosovo. The Vardar
team delivered 'big company' geoscience on a junior's budget.
Exploration results developed our understanding of the copper-gold
porphyry potential at both the Mitrovica and Viti projects.
Porphyry deposits are exceptionally large, low grade, polymetallic
systems, that typically contain copper along with other metals,
such as gold, silver, zinc and lead.
On 1 April, the Company announced that it had increased its
ownership in Vardar to approximately 37.6 per cent for the
consideration of GBP750,000, satisfied in cash, funding exploration
activities in 2019. As a result, the Company obtained control over
the Vardar Group and consolidated it into the Company's financials.
Later in the year, Beowulf followed its money, investing two
further instalments, GBP115,000 announced on 14 October and
GBP100,000 announced on 6 November taking the Company's ownership
to 41.5 per cent.
At Mitrovica, located immediately to the west and northwest of
the world class Stan Terg lead-zinc-silver mine, potential not only
exists for the discovery of additional lead-zinc-silver deposits,
but also for the discovery of high-level epithermal gold deposits
and for copper-zinc deposits. Vardar believes all the targets are
related to a potentially much larger porphyry style mineralised
system.
At Viti, initial stratigraphic holes, intersected the correct
alteration type, returning gold and visible copper mineralisation,
and indicating potential for the discovery of a mineralised
copper-gold porphyry in a hitherto unexplored area.
In February 2020, Vardar identified an additional copper-zinc
exploration target at Mitrovica, and Beowulf invested a further
GBP50,000, increasing the Company's ownership to 42.2 per cent.
Then, in March, Beowulf co-invested another GBP30,000, alongside
existing and founding shareholders, as part of a GBP70,000 total
fundraise for soil sampling over the gold target at Madjan Peak,
part of the Mitrovica licence.
In June 2020, results from the soil sampling programme completed
across Madjan Peak were announced. An extensive gold anomaly has
been identified over an area approximately 1400 metres x 700
metres, with individual soil samples returning up to 0.36 grammes
per tonne ("g/t") gold. Furthermore, a new lead-zinc-copper-gold
target has been identified to the south of Madjan Peak, of
significance given its proximity to the Stan Terg mine.
Fennoscandian Resources ("Fennoscandian")
Fennoscandian had another strong year. Further drilling at
Aitolampi supporting an upgraded MRE, with an 81 per cent increase
in contained graphite (compared to the 2018 MRE) for the
higher-grade western zone, and an updated global Indicated and
Inferred Mineral Resource of 26.7 million tonnes ("Mt") at 4.8 per
cent Total Graphitic Carbon ("TGC") for 1,275,000 tonnes of
contained graphite.
Fennoscandian continues to develop a 'resource footprint' of
natural flake graphite to provide 'security of supply' to Finland's
emerging battery sector and to benefit from Business Finland
funding, as it seeks to establish its battery grade anode material
credentials.
Kallak
Throughout 2019, Beowulf continued to push for a decision from
the Swedish Government on its application for an Exploitation
Concession for Kallak. The Company continued to work with the Mayor
in Jokkmokk, Norrbotten Regional Council Members and Norrbotten
Members of Parliament to lobby the Government.
In late January 2019, Kurt Budge CEO delivered a presentation
titled 'Sustainability in the heart - partnership, the lifecycle of
mining projects, balancing the interest of stakeholders' at the
Future Mine and Mineral Conference in Stockholm.
The CEO spoke of the damage the permitting process for Kallak
and other mining cases is having on Sweden's reputation as a
destination for mining investors. The CEO presented Beowulf's
approach to sustainable mining and outlined how the Company can
play its part in ensuring that Sweden continues to lead in this
area, by developing a modern and sustainable mining operation at
Kallak in partnership with the community in Jokkmokk, which
includes Sami reindeer herders.
Beowulf continued to support the OECD's work in Sweden,
attending the launch of the report on its Rural Policy Review
'Linking the Indigenous Sami People with Regional Development in
Sweden', having previously participated in the OECD's land-use
workshop in early 2018.
Later in the year, the CEO attended the third OECD Meeting for
Mining Regions and Cities, organised to enable knowledge sharing,
with a focus on developing policy recommendations and standards
that can help maximise the benefits that mining can bring to a
region or city.
In April 2019, I wrote to Minister Baylan, Minister for
Business, Industry, and Innovation for The Government of Sweden
regarding the Kallak application. I reminded the Minister that
since the Company first submitted its application in 2013, the case
has been sent back and forth between Swedish authorities, and still
the Government, finds itself unable to award an Exploitation
Concession for one of Europe's largest drill defined iron ore
deposits, a potential global resource of 250 million tonnes.
The first exploration permit for Kallak was granted by the
Mining Inspectorate in 2006, and, since that time, Swedish
authorities have permitted the Company to invest over SEK 80
million. While the Kallak project suffers delay after delay, LKAB,
the state iron ore company, warned in October 2018 that the ore in
the Kiruna mine will be depleted earlier than expected. This placed
the media spotlight on the future of LKAB's operations and the
strategic importance of iron ore to Sweden. Further highlighting
the absurdity of the situation with Kallak.
In communication with the Government, it was confirmed that the
Kallak application was being prioritised and acknowledged that the
Company had been waiting an excessive period of time for a
decision. On this basis, the Company reasonably expected that a
decision would be taken by the Government before the summer of
2019.
In May 2019, I and the CEO met with Mr. Emil Högberg, State
Secretary to the Minister, to again make a case for the Concession
being awarded. The State Secretary closed the meeting acknowledging
the importance of the Kallak project to Jokkmokk. After the summer,
the Company followed up again with the State Secretary to ensure
the Government had all the information it needed with respect to
our application.
Following Almedalen in July, the Company outlined its immediate
three-step plan for advancing the Kallak project, in the event the
Swedish Government awards the Concession:
1) Scoping Study - completion within 12 months of the Concession
being awarded - and in parallel develop a roadmap for environmental
permitting.
2) Formation of a 'Development Taskforce' with Jokkmokks Kommun
and other key partners with an interest in Kallak, such that the
development of Kallak and the opportunity to regenerate Jokkmokk
can be fully coordinated.
3) To advance discussions with the Sami reindeer herding
communities, to listen to their concerns, find solutions together
to problems that might exist, working towards reaching mutually
beneficial agreements that ensure Sami reindeer herding,
livelihoods and culture are protected, and that Sami communities
benefit from the development of a mine at Kallak.
In September 2019, the CEO wrote to Minister Baylan, following
meetings with advisors, including legal advisors, and the new CEO
at SveMin, asking for clarity on the process and timeline to a
decision by the Government. In response, Minister Baylan explained
that the CEO's request for a meeting "concerns a forthcoming
Government decision - a dossier that is currently under
preparation", and that the Government is unable to meet or comment
with regard to its "ongoing review".
Also, the Company engaged legal firm Mannheimer Swartling to
work with Fröberg & Lundholm to review its Kallak application.
Specifically, to review statements by the County Administrative
Board for the County of Norrbotten ("CAB"), including the CAB's
statement made in November 2017, and the Company's comments to the
Government criticising that statement. The findings of the legal
analysis were unequivocal, that the Company has robustly argued its
case for a Concession to be awarded.
In November 2019, the Company submitted a concluding statement
(the "Statement") for Kallak, prepared by Mannheimer Swartling and
Fröberg & Lundholm, to the Government. The Statement stressed
that, as has previously been demonstrated by the Company, and
acknowledged by the CAB, the establishment of a mine at Kallak
would have significant positive effects on the local economy:
creating jobs, generating tax revenues for Jokkmokk municipality,
and stimulating and diversifying the business sector in Jokkmokk.
In so doing, Kallak would help solve the problems Jokkmokk is
facing, a lack of investment in new enterprise and job creation,
and a declining and ageing population, which is placing a financial
burden on Jokkmokks Kommun that it cannot afford to bear.
The Statement noted that neither the Company's Reindeer Herding
Impact Assessment, nor the Environmental Impact Assessment have
concluded that mining operations at Kallak would threaten the
existence and livelihoods of local Sami reindeer herding
communities. Furthermore, the Statement highlighted the
similarities between Kallak and available case law, which support
the approval of the Concession.
The Statement did not contain new facts in the Kallak case, as
all necessary and relevant facts have already been established as
part of the application process, now lasting over 7 years. Rather,
the Statement summarised the circumstances relevant to a judicial
review of whether Beowulf should be awarded the Exploitation
Concession for Kallak, concluding that the Concession should be
awarded.
In December, the CEO wrote again to Minister Baylan. The CEO
requested that the Government provide Beowulf with details on when
the Company can expect the decision on Kallak to be taken. A
response to the CEO's letter arrived in February 2020, in which the
State Secretary stated that the Government was not able to comment
on when a decision is expected to be taken, however, the Government
had taken careful note of information provided.
In February 2020, the CEO participated in a meeting discussing
the 'Mining industry and indigenous peoples: regulations, best
practice and social innovation'. On this subject, the inclusion of
Sami in regional development in Sweden, permitting, sustainable
mining, supply chain transparency, the Green Economy and the Fossil
Free Economy, Beowulf is an active participant and contributor to
the debate.
In May 2020, the Company awarded a drilling contract for up to
1,650 metres diamond drilling, targeting additional potential iron
ore mineralisation at Kallak South. The work programme will
determine if a 3D seismic model can be constructed, using the
established seismic characteristics of the Kallak deposit. If
successful, the set-up could then be applied to the Parkijaure nr 6
Exploration Licence, awarded by the Mining Inspectorate in October
2019.
In June 2020, the CEO wrote again to Minister Baylan, after a
Parliamentary Question had been put to the Minister by a member of
Parliament asking when a decision will be taken on Kallak. The CEO
reminded Minister Baylan, that when the Minister spoke at the
Mining Nordic Day in Toronto in early March, he saved his biggest
welcome for investors and said that the CEO was welcome to do
business in Sweden. In the letter, the CEO stated that Beowulf is
unable to do business in Sweden, because the Company cannot get a
decision on Kallak from the Government.
The Swedish Geological Survey ("SGU") a Government Office, which
first discovered Kallak in the 1940s, designated it an Area of
National Interest in 2013, produced its latest study in May 2020,
headlined 'New light on iron ore at Kallak'. Kallak has been on the
SGU's radar for 80 years! The Mining Inspectorate, part of the SGU,
recommended to the Government in October 2015, that the Concession
for Kallak should be awarded, and last October awarded an
Exploration Permit for Parkijaure nr 6.
On the evidence, the authorities are happy for Beowulf to
continue to invest in iron ore exploration, which in the context of
LKAB's announcement, in October 2018, on diminishing reserves at
Kiruna and the need to replenish, recent seismic activity
disrupting production at Kiruna, while thankfully sparing lives,
and Government statements on a sustainable mining industry, makes
sense. Yet, over 4.5 years after the Mining Inspectorate
recommended to the Government that the Concession for Kallak be
awarded, with the application sitting on the Government's desk for
the last 3 years and Beowulf planning to drill the 90-100 million
tonnes Exploration Target at Kallak South, the Company still has no
decision.
In the CEO's letter, Minster Baylan was reminded, that Beowulf
has several thousand Swedish shareholders, who own over 67 per cent
of the Company. Shareholders have witnessed the Government's
unacceptable mishandling of the Kallak application and false
promises, the opportunity cost of which is incalculable, and they
are demanding the Government be fully transparent now and remove
all uncertainty as to when a decision on Kallak will be taken.
With benchmark iron ore prices above US$100 per tonne, investors
with cash are looking for investment opportunities, such as Kallak,
and towards mining jurisdictions that function effectively.
Jokkmokk's need for investment and jobs is acute, and, with the
added pressure of COVID-19, it would seem logical that a project
such as Kallak, which has the potential to bring billions of SEK in
investment and hundreds of jobs to northern Sweden, should finally
gain approval. The CEO has not received a response from the
Minister to his latest letter.
Shareholder Base
Beowulf is over 98 per cent owned by retail shareholders in
Sweden and the UK. The proportion of shares owned by Swedish
shareholders continued to grow during the year.
At 31 May 2020, there were 403,904,279 Swedish Depository
Receipts representing 67.07 per cent of the issued share capital of
the Company. The remaining issued share capital of the Company is
held in the UK.
I would like to thank our existing and new shareholders for
their steadfast support.
Raising Finance
Maintaining sufficient funding to sustain the business is a
significant challenge for an exploration and development company in
the natural resources sector.
During the year, the Company raised GBP2.0 million before
expenses, through subscriptions for new ordinary shares of GBP0.01
each, with funds being invested in Vardar, Fennoscandian and for
working capital purposes.
The Board continues to adopt the going concern basis to the
preparation of the financial statements and is confident of the
Company continuing to operate into the foreseeable future. This
assessment has been arrived at after the Board has considered
various alternative operating strategies should these be necessary
in the light of the current macro-economic conditions, and is
satisfied that such revised operating strategies could be adopted,
if and when necessary. Specific attention needs to be drawn to the
comments made in respect of the impact the COVID-19 pandemic on
going concern and the approaches being taken by the Group to manage
and mitigate the additional operational and financial challenges
being faced at present.
The financial statements at 31 December 2019 show that the Group
generated an operating loss for the year of GBP428,707 (2018:
GBP1,374,584); with cash used in operating activities of GBP959,742
(2018: GBP653,832) and a net decrease in cash and cash equivalents
of GBP404,099 in the year (2018: decrease of GBP56,021). The Group
balance sheet showed cash reserves at 31 December 2019 of
GBP1,124,062 (2018: GBP1,533,232).
The Group is dependent on further equity fundraising to operate
as a going concern for at least twelve months from the date of
approval of the financial statements. Although the Group has had
past success in fundraising and continues to attract interest from
investors, making the Board confident that such fundraising will be
available to provide the required capital, there can be no
guarantee that such fundraising will be available and as such this
constitutes a material uncertainty over going concern.
2019 Financial Performance
As of 1 April 2019, following an increase in Beowulf's
investment in Vardar and ownership from 14.1% to 31.3% the Company
obtained control of the Vardar Group and as result of this control
the Vardar Group has been consolidated into the Company effective
of this date.
At the year-end, further investments in Vardar increased the
Company's holding to 41.5% with a resulting carrying value gain to
31 December 2019 of GBP563,431.
The consolidated loss fell in the year from GBP1,374,58 to
GBP428,707. This decrease is primarily attributable to a GBP563,431
fair value gain on the investment in Vardar and lower impairment
charge on Sala (GBP10,720) compared to the impairment charges in
the prior year (GBP571,456).
A further contribution to the decrease was a lower share-based
payment charge relating to employees and Directors options of
GBP119,720 for the year compared to GBP194,460 incurred in the year
to 31 December 2018.
The administration expenses increased in the year from
GBP598,391 to GBP904,666, due largely to the inclusion of Vardar's
administration expenses from 1 April 2019 to 31 December 2019 of
GBP247,493.
Consolidated basic and diluted loss per share for the 12 months
ended 31 December 2019 was 0.04 pence (2018: loss of 0.25
pence).
The cash held at the year-end was GBP1,124,062 (2018:
GBP2,071,748).
The translation reserve losses attributable to the owners of the
parent increased from GBP520,257 at 31 December 2018 to
GBP1,287,678 at 31 December 2019. Much of the Company's exploration
costs are in Swedish Krona which has weakened further against the
pound since 31 December 2018.
Corporate
The Company announced, on 14 January 2019, that options were
granted to Directors and a senior manager over a total of 8,000,000
ordinary shares of GBP0.01 each in the capital of the Company,
representing approximately 1.41 per cent of the issued share
capital of the Company.
Options were last awarded to Kurt Budge in July 2015, and to
Christopher Davies and Rasmus Blomqvist in January 2017.
The Share Options are exercisable at a price of 7.35 pence per
share, being a 30 per cent premium to the closing mid-price of 5.65
pence per share on 11 January 2019. The Share Options fully vest
one year from the date of grant or fully vest immediately if the
individual leaves the Company. The Share Options are valid for five
years from the date of grant.
Staff and Employees
On behalf of the Board, I would like to express my sincere
thanks to our staff and employees in Sweden and Finland, and also
to the staff and employees of Vardar, for their significant efforts
throughout the past 12 months to drive our Company forwards.
Outlook
The Company has acted to face the ongoing threat posed by
COVID-19, as best we can, including 30 percent salary cuts for the
CEO and Board, and sought to maintain a 'business as usual'
attitude. Despite the economic shock, mines in the Nordic region
have largely continued to operate and Vardar has been able to work
in Kosovo.
As governments bring COVID-19 under control, their focus should
shift to restarting economies and enabling investment, job creation
and supporting communities. A modern and sustainable mine at
Kallak, developed in partnership with the community, has the
potential to generate hundreds of jobs in northern Sweden and
deliver a much needed economic resurgence in Jokkmokk.
The Government has had the Kallak application on its desk for
the last 3 years. Minister Baylan wrote last September of a
'forthcoming decision', yet another 10 months has passed and the
Company is still waiting. Minister Baylan speaks of transparency
and predictability in permitting processes, but the Company has no
information on what process the Government is following or when a
decision will be made. If Minister Baylan is genuine in welcoming
investors to Sweden, then he needs to act now and end the 12-year
drought for a new mine being permitted in Sweden. How else can
exploration companies consider Sweden a low-risk mining
jurisdiction, if after significant investment and finding
resources, you are stopped from advancing a project.
I would like to take this opportunity to highlight that,
although we are being frustrated in Sweden and facing difficult
times with COVID-19, fundamentally, as a business, Beowulf is in a
strong position. We have a diversified asset base, supportive
shareholders, in both Sweden and the UK, and excellent liquidity in
the trading of the Company's shares.
To finish, Kallak remains the foundation of the Company, on
which we are building an exciting future. The Mining Journal ran
the headline 'Tethyan Belt a strong draw at PDAC' and so our
investments in Vardar's developing potential over the last
18-months seem to have been well-timed and Fennoscandian is
well-positioned in Finland's emerging battery sector as a local
supplier of natural flake graphite.
Göran Färm
Non-Executive Chairman
28 July 2020
REVIEW OF OPERATIONS AND ACTIVITIES
KOSOVO
Vardar Minerals Limited
During the year, Beowulf increased its ownership in Vardar
Minerals Limited ("Vardar"), a UK registered private exploration
company with exploration licences in Kosovo, to 41.5 per cent. The
Company funded Vardar's 2019 works programme including diamond
drilling, geophysical surveys, and other activities. Results helped
develop our understanding of the copper and gold porphyry potential
at both the Mitrovica and Viti projects.
Porphyry deposits are exceptionally large, low grade,
polymetallic systems, that typically contain copper along with
other metals, such as gold, silver, zinc, and lead. Examples in the
region include the Kiseljak deposit in Serbia (Inferred Resource:
459 million tonnes at 0.22 per cent copper, 0.2 grammes per tonne
gold. Source: Dunav Resources' announcement, June 2014) and the
Skouries high grade gold-copper deposit in Greece (Measured and
Indicated Resource: 289 million tonnes at 0.43 per cent copper and
0.58 grammes per tonne gold. Inferred Resource: 170 million tonnes
at 0.34 per cent copper and 0.31 grammes per tonne gold. Source:
Eldorado Gold).
In April, the Company announced that it had exercised its option
to increase its ownership in Vardar to approximately 37.6 per cent
for the consideration of GBP750,000, satisfied in cash, funding
exploration activities at the Mitrovica and Viti projects. Then
later in the year, Beowulf followed its money, investing a further
GBP215,000, taking the Company's ownership to 41.5 per cent.
At Mitrovica, located near to the world class Stan Terg
lead-zinc-silver mine, potential not only exists for the discovery
of additional lead-zinc-silver deposits, but also for the discovery
of high-level epithermal gold deposits and for copper-zinc
deposits.
It is simplistic to think of these targets, which occur along a
seven-kilometre trend, in isolation. However, Vardar believes the
targets are all related to a potentially much larger porphyry style
mineralised system, based on meticulous geological mapping of
hydrothermal alteration and interpretation of trench, drill and
soil geochemical exploration data.
At Viti, initial stratigraphic holes, drilled in 2019,
intersected the correct alteration type, returning gold and visible
copper mineralisation, that indicates potential for the discovery
of a mineralised copper-gold porphyry in a hitherto unexplored
area.
Exploration Overview
Both Mitrovica and Viti projects are located within the Tethyan
Belt, a major orogenic metallogenic province for gold and base
metals which extends from the Alps (Carpathians/Balkans) to Turkey,
Iran and Indochina, and contains several world class
discoveries.
The Tethyan Belt of south-east Europe can be regarded as
Europe's chief copper-gold (lead-zinc-silver) province. Mitrovica
and Viti occur within calc-alkaline magmatic arc(s) which developed
during the closure of the Neotethys Ocean, primarily targeting
epithermal gold, lead-zinc-silver replacement deposits and porphyry
related copper-gold mineralisation.
The lack of modern-day exploration in the Balkans presents a
real opportunity for new discoveries.
Mitrovica
The Mitrovica project is situated in northern Kosovo, covers 55
square kilometres ("km(2) "), and lies immediately to the west and
northwest of the Stan Terg lead-zinc-silver mine which dates back
to the 1930s (historical production records: 34 Mt at 3.45 per cent
lead, 2.30 per cent zinc and 80 g/t silver).
The licence is prospective for a range of porphyry-related
mineralisation types, including the Madjan Peak high-sulphidation
epithermal gold target, the Wolf Mountain low-sulphidation
lead-zinc-silver target and primary porphyry copper mineralisation
in the southern part of the licence area.
On a regional scale, the area is located within the late Alpine
Tethyan Orogenic Belt and more specifically within the External
Vardar Sub-zone of the Vardar Zone. The basement is comprised of
ophiolites and a metasedimentary mélange affected by a
polymetamorphic overprint (not exceeding greenschist facies
conditions). A series of felsic to intermediate sub-volcanic and
pyroclastic rocks of Oligocene to Early Miocene age represents the
cover sequence.
Wolf Mountain
The Wolf Mountain target forms a prominent outcropping feature,
with strike length of more than 4 km and width ranging from almost
20 metres ("m") to greater than 300 m. It represents a hydrothermal
breccia zone with stockworks, which outcrop as a gossan, with
iron-manganese oxides and hydroxides. The peripheral parts of the
zone are characterised by intense silicification corresponding to
fold structures which control the development of the hydrothermal
breccia.
The mineralisation is structurally controlled, and for most of
the target mineralisation is developed in the basement, broadly
following a tectonic contact between ultramafic rocks and phyllite,
with the bulk of mineralisation developed within the ultramafic
units. Mineralisation is likely vein/replacement-type related to
Oligocene magmatic activity responsible for the hydrothermal
systems mapped in the southern portion of the licence area.
In June, the Company reported that in the northern part of Wolf
Mountain, Vardar had completed 651 m of drilling and a total of
278.5 m of trenching, carried out over outcropping stockwork and
hydrothermal breccia mineralisation. In the southern part of the
licence, a soil sampling programme was undertaken
Exploration results were reported in September 2019. Drilling
and trenching results confirmed extensive lead-zinc-silver
mineralisation over an area of 800 m in length and 400 m in width
in its northern part, with significant potential for high-grade
feeder structures.
Vardar is planning to conduct Direct Current - Induced
Polarisation ("DC-IP") surveys, the results of which, when combined
with detailed magnetic data, will be used for targeting high-grade
sulphide-dominant lead-zinc-silver mineralisation associated with
both mineralised breccia and feeder structures.
-- Trenching highlights include:
-- Trench WM-T01 returned 1.43 per cent lead, 1.87 per cent zinc
and 11 g/t silver over 51.0 m, including 2.01 per cent lead, 3.17
per cent zinc and 18 g/t silver over 12.5 m; and
-- Trench WM-T02 returned 2.7 per cent lead, 0.55 per cent zinc
and 10 g/t silver over 18.0 m and 3.6 per cent lead, 0.64 per cent
zinc and 14 g/t silver over 8 m.
-- WM-T01, T02 and T03 all returned anomalously high
lead-zinc-silver concentrations for intersected zones.
-- Drilling highlights include:
-- Hole WM001 returned 1.2 per cent lead, 0.36 per cent zinc and 10 g/t silver over 14.1 m;
-- Hole WM003 returned 1.4 per cent zinc over 4.15 m;
-- Hole WM004 returned 1.27 per cent lead, 0.91 per cent zinc
and 8 g/t silver over 8.9 m; and 1.4 per cent zinc over 20.9 m;
-- Hole WM006 returned 1.38 per cent zinc over 19.3 m;
-- Hole WM007 returned 2.69 per cent lead, 0.4 per cent zinc and 16 g/t silver, over 4.3 m;
-- Hole WM009 returned 1.29 per cent lead over 3.0 m;
-- Hole WM010 returned 2.45 per cent zinc over 2.0 m; and
-- Hole WM014 returned 2.14 per cent zinc over 1.0 m.
Mitrovica South
Soil sampling results for the southern half of Mitrovica have
identified three target areas:
-- Mitrovica South exhibits potential for a large mineralised
system - soil sampling results have identified distinctive zinc,
copper, lead, silver, and gold anomalies in the southern part of
the license, extending laterally from known mineralisation,
suggesting that the system may be larger than indicated by initial
geological mapping.
-- Madjan Peak Gold target - anomalous gold and silver assays
have been returned for the eastern margin of the license,
corresponding with previously mapped advanced argillic alteration,
identified historic gold workings/pits and anomalous rock chip
samples (up to 7.2 g/t gold).
-- Madjan Peak Lower Slopes - displays elevated copper, zinc and
silver in soil results possibly correlating with structurally
controlled mineralisation
Vardar is planning to conduct DC-IP surveys, the results of
which, when combined with detailed magnetic data, will be used for
defining drill targets.
Viti
The Viti project is situated in south-eastern Kosovo and is made
up of three adjacent licences covering 213 km(2) . The licences
encompass an interpreted circular intrusive, indicated by regional
airborne magnetic data. There is evidence of intense alteration
typically associated with porphyry systems, with several copper
occurrences and stream sample anomalies in proximity to, and within
the project area. In addition, Viti is prospective for
lithium-boron mineralisation, with a geological setting similar to
Rio Tinto's Jadar deposit in Serbia.
During the year, orientation drilling at Viti intersected the
upper part of a copper-gold porphyry system. Drilling also
identified highly altered trachyte porphyry dykes with associated
copper and gold mineralisation.
Drill testing was designed to test the extent and type of
alteration associated with an extensive three-kilometre gossanous
outcrop, which had previously returned anomalous copper and gold
concentrations in rock grab samples. In addition, soil samples were
collected to determine the extent of possible anomalous metal
concentrations over the target area.
Future work will focus on copper-gold target delineation using a
combination of detailed magnetic and DC-IP surveys, and with new
targets drilling should follow.
Post-Year End
In February 2020, Vardar identified an additional copper-zinc
exploration target at Mitrovica, and Beowulf invested a further
GBP50,000, increasing the Company's ownership to 42.2 per cent.
Then, in March, Beowulf co-invested alongside existing and founding
shareholders another GBP30,000, as part of a GBP70,000 total
fundraise for soil sampling over the gold target at Madjan
Peak.
June 2020, results from the soil sampling programme completed
across the Madjan Peak gold target at Mitrovica were announced, an
extensive gold anomaly, identified over an area approximately 1400
metres x 700 metres, with individual soil samples returning up to
0.36 g/t gold. Furthermore, a new lead-zinc-copper-gold target has
been identified to the south of Madjan Peak, of significance given
its situation, approximately 3 kilometres from the Stan Terg
mine.
FINLAND
Finnish Exploration Permits
Beowulf, via its wholly owned subsidiary, Fennoscandian,
currently holds two exploration permits, although one approval is
being appealed at the time of writing and has applied for a further
two exploration permits.
The Company also holds three Claims Reservations, Merivaara 1,
Tammijärvi 1 and Polvela 1, on which it is allowed to conduct basic
prospecting work in advance of an application for an exploration
permit.
Permit Name Permit ID Area (km(2) Valid from Valid
) until
--------------------------- ---------- ------------ ------------ -----------
Approved Exploration
Permits
Pitkäjärvi 2016:0040 10.00 07/12/2016 10/01/2021
1
Rääpysjärvi 25/04/2019 See note
1 2017:0104 7.16 (1)
Applied for Exploration
Permits
Joutsjärvi 1 2017:0122 5.79 Applied for 16/10/2017
Karhunmäki 1 2019:0113 10.00 Applied for 31/12/2019
Notes:
1. Application approved by TUKES 25/04/2019. Administrative
Court of Eastern Finland rejected an appeal on 27/03/20. Further
appeal now lodged with Supreme Administrative Court.
Aitolampi (Pitkäjärvi 1 Exploration Permit) - Graphite
Introduction
The Aitolampi and Pitkäjärvi graphite prospects, located in
eastern Finland approximately 40km southwest of the
well-established mining town of Outokumpu, were discovered in 2016
and are areas of graphitic schists on a fold limb, coincidental
with an extensive electro-magnetic ("EM") anomaly. Many of the EM
zones are obscured by glacial till, but graphite observations in
road cuttings and outcrops are also associated with abundant EM
anomalies.
2019 Summary
During the year, the Company made significant progress with
Fennoscandian, specifically with its Aitolampi project, part of the
Company's 100 per cent owned Exploration Permit, Pitkäjärvi 1.
In June, drilling at Aitolampi extended the higher-grade Western
Zone, and, in October 2019, Beowulf announced an upgraded MRE for
the project.
Additionally, the drilling programme generated sample material
to support baseline environmental studies, for graphite
purification and spheroidization test work, and the further
assessment of Aitolampi graphite for battery applications as part
of the Business Finland funded BATCircle Project.
Highlights of the upgraded MRE are as follows:
-- An 81 per cent increase in contained graphite (compared to
the 2018 MRE) for the higher-grade western zone with an Indicated
and Inferred Mineral Resource of 17.2 Mt at 5.2 per cent TGC
containing 887,000 t of contained graphite.
-- An unchanged Indicated and Inferred Mineral Resource of 9.5
Mt at 4.1 per cent TGC for 388,000 t of contained graphite for the
eastern lens.
-- Updated global Indicated and Inferred Mineral Resource of
26.7 Mt at 4.8 per cent Total Graphitic Carbon TGC for 1,275,000 t
of contained graphite. All material is contained within eastern and
western graphite mineralised lenses, interpreted above a nominal
three per cent TGC cut-off grade.
-- An augmented global Indicated and Inferred Mineral Resource
of 11.1 Mt at 5.7 per cent TGC for 630,000 t of contained graphite,
reporting above a five per cent TGC cut-off, based on the
grade-tonnage curve for the resource.
Other Developments
In March, the Company announced that Fennoscandian received
additional funding from Business Finland, a 50 per cent
contribution to a budget of Euros 224,900. The funds will be used
for graphite purification and spheroidization test work, and the
further assessment of Fennoscandian's graphite for battery
applications.
Business Finland has been granted Euros 10 million funding for a
project titled "BATCircle - the development of a Finland-based
Circular Ecosystem of Battery Metals". BATCircle is part of the
European Union ("EU") Strategic Energy Technology Programme, where
Finland, under the leadership of Aalto University and Outotec, will
coordinate research into battery recycling. The national BATCircle
consortium includes a total of 22 companies, four universities, two
research institutes and two cities.
SWEDEN
Permits
Beowulf, via its subsidiaries, currently holds five exploration
permits, together with one registered application for an
Exploitation Concession, as set out in the table below:
Permit Name/Minerals Permit ID Area (km(2) Valid from Valid until
)
------------------------- ------------ -------------- -------------- ---------------
Åtvidaberg nr1 2016:51 125.32 30/05/2016 30/05/2019
(Pb,Zn,Cu, Ag)(2)
Ågåsjiegge 2014:10 11.14 24/02/2014 24/02/2020
nr2 (Fe)(1,4)
Kallak nr1 (Fe)(1,3) 2006:197 5.00 28/06/2006 28/06/2021
Parkijaure nr2 (Fe)(1) 2008:20 2.85 18/01/2008 18/01/2023
Parkijaure nr6 (Fe)(1) 2019:81 2.85 10/10/2019 10/10/2022
Notes :
(1) held by the Company's wholly owned subsidiary, Jokkmokk Iron
Mines AB ("JIMAB").
(2) held by the Company's wholly owned subsidiary, Beowulf
Mining Sweden AB.
(3) an application for the Exploitation Concession was lodged on
25 April 2013 (Mines Inspector Official Diary nr 559/2013) and an
updated, revised and expanded application was submitted in April
2014. On 21 September 2016, the Company submitted a letter to the
Mining Inspectorate of Sweden, revising its application boundary to
encompass both the Concession Area, delineated by the Kallak North
orebody, and the activities necessary to support a modern and
sustainable mining operation.
(4) Renewal application submitted.
Introduction
The Company's most advanced project is the Kallak magnetite iron
ore deposit located approximately 40 km west of Jokkmokk in the
County of Norrbotten, Northern Sweden, 80 km southwest of the major
iron ore mining centre of Malmberget, and approximately 120 km to
the southwest of LKAB's Kiruna iron ore mine.
The Company is currently going through the process of obtaining
an Exploitation Concession for Kallak North (the "Exploitation
Concession"). Testwork on Kallak ore has showed that a 'super' high
grade magnetite concentrate can be produced, yielding over 71 per
cent iron content, with low levels of deleterious elements,
including phosphorous and sulphur, lending itself to pelletisation
and consumption in DRI facilities in Europe and the Middle East,
and attracting a potential price premium.
Local infrastructure is excellent. A major hydroelectric power
station with associated electric powerlines is located only a few
kilometres to the south east of the project area. The nearest
railway (the Inlandsbanan or 'Inland Railway Line') passes
approximately 40 km to the east. This railway line is connected at
Gällivare with the 'Ore Railway Line', used by LKAB for delivery of
its iron ore material to the Atlantic harbour at Narvik (Norway) or
to the Botnian Sea harbour at Luleå (Sweden).
Kallak Resource
The Kallak North and Kallak South orebodies are centrally
located and cover an area approximately 3,700 m in length and 350 m
in width, as defined by drilling. The mineral resource estimate for
Kallak North and South is based on drilling conducted between
2010-2014, a total of 131 holes and 27,895m
A resource statement for the Kallak project was finalised on 28
November 2014, following the guidelines of the JORC Code 2012
edition, summary as follows:
Project Category Tonnage Fe P S
Mt % % %
Kallak North Indicated 105.9 27.9 0.035 0.001
----------- -------- ----- ------ ------
Inferred 17.0 28.1 0.037 0.001
-------------------------- -------- ----- ------ ------
Kallak South Indicated 12.5 24.3 0.041 0.003
----------- -------- ----- ------ ------
Inferred 16.8 24.3 0.044 0.005
-------------------------- -------- ----- ------ ------
Global Indicated 118.5 27.5 0.036 0.001
----------- -------- ----- ------ ------
Inferred 33.8 26.2 0.040 0.003
-------------------------- -------- ----- ------ ------
Notes:
(1) The effective date of the Mineral Resource Estimate is 28
November 2014.
(2) Resources have been classified as Indicated or Inferred,
following the guidelines of the JORC Code, 2012 edition.
(3) Cut-off grade of 15 per cent Fe has been used.
(4) Mineral Resource, which is not Mineral Reserves, has no
demonstrated economic viability.
(5) An exploration target of 90-100 Mt at 22-30 per cent Fe
represents potential ore below the pit shells modelled for this
resource statement, and in the gap between drilling-defined Kallak
South mineralised zones.
(6) The resource statement has been prepared and categorised for
reporting purposes by Mr. Thomas Lindholm, of GeoVista AB, Fellow
of the MAusIMM, following the guidelines of the JORC Code, 2012
edition.
The mineralised area at Kallak North is approximately 1,100 m
long, from south to north, and, at its widest part in the centre,
is approximately 350 m wide.
The deepest drill hole intercept is located some 350 m below the
surface in the central part of the mineralisation. In the southern
and northern parts, the intercepts are shallower at 150-200 m.
However, in the northern part, there are no barren holes below
them, so the mineralisation could continue at depth.
The investigations at Kallak South have been divided into two
parts, the northern and southern ends, respectively. In the
northern part the mineralisation extends approximately 750 m from
north to south and has an accumulated width of 350 m. The deepest
drill hole intercept is located some 350 m below the surface in the
southern-most part of the mineralisation. In the southern part, the
mineralisation extends approximately 500 m from north to south and
has a maximum width of just over 300 m. The deepest drill hole
intercept is located some 200 m to 250 m below the surface in the
central part of the mineralisation.
Approximately 800 m in between the southern and northern parts
of Kallak South has not been investigated by systematic drilling.
An exploration target of 90 Mt to 100 Mt at 22-30 per cent iron has
been assigned to the area between the southern and northern
parts.
2019 Update
Throughout 2019, Beowulf continued to push for a decision from
the Swedish Government on its application for an Exploitation
Concession, while demonstrating its approach to developing an
innovative, modern, and sustainable mining operation at Kallak. We
continued to work with the Mayor in Jokkmokk, Norrbotten Regional
Council Members and Norrbotten Members of Parliament to lobby the
Government.
In late January, Kurt Budge CEO delivered a presentation titled
'Sustainability in the heart - partnership, the lifecycle of mining
projects, balancing the interest of stakeholders' at the Future
Mine and Mineral Conference in Stockholm.
The CEO spoke of the damage Kallak and other mining cases are
having on Sweden's reputation as a destination for mining
investors. On a more positive note, the CEO presented Beowulf's
approach to sustainable mining and outlined how the Company can
play its part in ensuring that Sweden continues to lead in this
area, by developing a modern and sustainable mining operation at
Kallak in partnership with the community in Jokkmokk.
Beowulf continued to support the OECD's work in Sweden,
attending the launch of the report on its Rural Policy Review
'Linking the Indigenous Sami People with Regional Development in
Sweden', having previously participated in the OECD's land-use
workshop in early 2018.
Later in the year, the CEO attended the third OECD Meeting for
Mining Regions and Cities, organised to enable knowledge sharing,
with a focus on developing policy recommendations and standards
that can help maximise the benefits that mining can bring to a
region or city.
At the meeting, learnings from past situations and experiences,
what works and what does not work, and ongoing challenges, such as
gaining acceptance by communities when it comes to mining
development and the importance of engaging with indigenous
communities, were discussed. In addition, global trends were
presented, including the 'Circular Economy' and the adoption of
'Clean Energy', and the impacts that these could have on the future
demand for minerals and metals.
In the context of all these ideas, the Company's Kallak project
is an ideal candidate for bringing together the best of thinking
into the development of a modern and sustainable mining project,
that could transform a community and a region, while leveraging the
mining heritage and harnessing the innovation that Norrbotten and
Sweden possess.
Following Almedalen in July, the Company outlined its immediate
three-step plan for advancing the Kallak project, in the event the
Swedish Government awards the Concession:
1) Scoping Study - completion within 12 months of the Concession
being awarded - and in parallel develop a roadmap for environmental
permitting.
2) Formation of a 'Development Taskforce' with Jokkmokks Kommun
and other key partners, intended to coordinate the activities of
interested parties in Kallak, such that project development of
Kallak and the development of Jokkmokk can be fully
coordinated.
3) To advance discussions with the Sami reindeer herding
communities, to listen to their concerns, find solutions together
to problems that might exist, working towards reaching mutually
beneficial agreements that ensure Sami reindeer herding,
livelihoods and culture are protected, and that Sami communities
benefit from the development of a mine at Kallak.
During the year, Beowulf continued to support SME development in
Jokkmokk and, in the event that the Concession for Kallak is
awarded, has pledged an additional SEK 300,000 to the Collaboration
Agreement (the "Agreement") it has with Jokkmokks Allmänning
("Allmänning"). Beowulf has previously invested SEK 500,000 in the
partnership Agreement with Allmänning and is pleased to continue to
support SME development in Jokkmokk.
The main purpose of the existing Agreement is to invest funds
and support the development of SMEs in Jokkmokk. The funds will
match Allmänning's investment in Jokkmokks Log, a sustainable
construction company, which uses Allmänning timber production for
wooden building construction. Jokkmokks Log, which is adding value
to locally produced raw materials, could provide opportunities for
training local apprentices, and thereafter employment as its
business grows.
Exploring Iron Ore Potential at Parkijaure
Beowulf is a partner in the European Union ("EU") funded PACIFIC
Project ("PACIFIC"), launched in June 2018. The project has
received EUR3.2 million from the EU's Horizon 2020 research and
innovation programme and has a 36-month programme of activities
being coordinated by Université Grenoble Alpes.
The aim of PACIFIC is to develop a new low-cost and
environmentally friendly tool for exploring for sub-surface mineral
deposits. The PACIFIC consortium is conducting fundamental and
applied research to develop two radically new and complementary
mineral exploration techniques, both based on passive seismic
imagery.
Kallak, including Kallak North, Kallak South and the Parkijaure
licence, has been chosen as one of two PACIFIC test sites.
In September, Phase 1 work was carried out at Kallak, which
included testing the multi-array method, using an array of
receivers at surface, over the known magnetite ore at Kallak South
to provide background data, the seismic properties for the iron ore
and to correlate findings with the geological model for Kallak.
In Autumn 2020, Phase 2 work will commence testing the
multi-array method in parallel with drilling at Kallak South, with
noise from drilling providing a passive seismic source. Testwork
will determine if a 3D seismic model can be constructed, using the
established seismic characteristics of the Kallak deposit, and
whether the 3D model can be used to identify previously
undiscovered magnetite mineralisation for the Kallak South
Exploration Target areas and for Parkijaure. The Company would then
consider further drilling.
In October, the Company was awarded an Exploration Licence for
Parkijaure nr 6, covering almost 1,000 hectares immediately to the
south of the Kallak deposits, and similarly prospective for
magnetite iron ore.
Communications with the Swedish Government
During the year, the Company communicated with the government on
numerous occasions, regarding the Company's application for an
Exploitation Concession.
In April, Göran Färm Chairman wrote to Minister Baylan regarding
the Kallak application. The letter reminded the Minister that since
the Company first submitted its application in 2013, the case has
been sent back and forth between Swedish authorities and the
Government, finding themselves unable to award an Exploitation
Concession for Europe's largest drill defined iron ore deposit, a
potential global resource of 250 million tonnes of iron ore.
The first exploration permit for Kallak was granted by the
Mining Inspectorate in 2006, and, since that time, Swedish
authorities have permitted the Company to invest over SEK 80
million to date. While the Kallak project suffers delay after
delay, LKAB, the state iron ore company, warned in October 2018
that the ore in the Kiruna mine will be depleted earlier than
expected. This placed the media spotlight on the future of LKAB's
operations and the strategic importance of iron ore to Sweden.
Further highlighting the absurdity of the Kallak situation.
In communication with the Government, it was confirmed that the
Kallak application was being prioritised and acknowledged that the
Company had been waiting an excessive period of time for a
decision. On this basis, the Company reasonably expected, that a
decision would be taken, by the Government, before the summer or
2019.
In May, the Chairman and the CEO met with Mr. Emil Högberg,
State Secretary to the Minister, to again make a case for the
Concession being awarded. The State Secretary closed the meeting
acknowledging the importance of the Kallak project to Jokkmokk.
After the summer, the Chairman followed up again with the State
Secretary to ensure the Government had all the information it
needed with respect to our application.
In September, the CEO wrote to Minister Baylan, following
meetings with advisors, including legal advisors, and the new CEO
at SveMin, asking for a meeting and clarity on the process and
timeline to a decision by the Government. In response, Minister
Baylan explained that the CEO's request for a meeting at the time
"concerns a forthcoming Government decision - a dossier that is
currently under preparation", and that the Government is unable to
meet or comment with regard to its "ongoing review".
The Company engaged legal firm Mannheimer Swartling to work with
Fröberg & Lundholm to review its Kallak application.
Specifically, to review statements by the County Administrative
Board for the County of Norrbotten ("CAB"), including the CAB's
statement made in November 2017, and the Company's comments to the
Swedish Government criticising that statement. The findings of the
legal analysis were unequivocal, that the Company has robustly
argued its case for a Concession to be awarded.
In November, the Company submitted a concluding statement (the
"Statement") for Kallak, prepared by Mannheimer Swartling and
Fröberg & Lundholm, to the Government. The Statement stressed
that, as has previously been demonstrated by the Company, and
acknowledged by the CAB, the establishment of a mine at Kallak
would have significant positive effects on the local economy:
creating jobs, generating tax revenues for Jokkmokk municipality,
and stimulating and diversifying the business sector in Jokkmokk.
In so doing, Kallak would help solve the problems Jokkmokk is
facing, a lack of investment in new enterprise and job creation,
and a declining and ageing population, which is placing a financial
burden on Jokkmokks Kommun that it cannot afford to bear.
The Statement notes that neither the Reindeer Herding Impact
Assessment, nor the Environmental Impact Assessment have concluded
that mining operations at Kallak would threaten the existence and
livelihoods of local Sami reindeer herding communities.
Furthermore, the Statement highlights the similarities between
Kallak and available case law, which support the approval of the
Concession.
In December, the CEO wrote again to Minister to Minister Baylan.
The CEO requested that the Government provide Beowulf with details
on when the Company can expect the decision on Kallak to be taken.
No response was received before the year-end.
Post-Year end
In January 2020, the CEO contributed to a 'Roundtable on mining
in northern Sweden' hosted by Länsstyrelsen Norrbotten,
Länsstyrelsen Västerbotten, Boliden and LKAB. At the meeting in
Luleå, the Government was represented by the State Secretary, who
was unable to shed any light on the handling of the Company's
application by the Government, nor the timing of a decision. At the
meeting, the CEO made the Company's viewpoint clear, that any
review by the Government of Swedish legislation should have no
impact on permit applications in the system that have been waiting
years for a decision.
A response to the CEO's letter sent in December 2019 to Minister
Baylan arrived in February 2020, in which the State Secretary
stated that the Government was not able to comment on when a
decision is expected to be taken, however, the Government had taken
careful note of information provided.
During the month, the CEO participated in a meeting discussing
the 'Mining industry and indigenous peoples: regulations, best
practice and social innovation'. On this subject, the inclusion of
Sami in regional development in Sweden, permitting, sustainable
mining, supply chain transparency, the Green Economy and the Fossil
Free Economy, Beowulf is an active participant and contributor to
the debate
Also, the Board met in Stockholm to discuss the continuing and
unacceptable delays in getting a decision form the Swedish
Government for Kallak. The Board was already in receipt of a paper
detailing options, prepared by the Company's lawyers, and actively
considering ring-fencing funds for legal action. All options to
take legal action remain under active consideration.
In May 2020, the Company awarded a drilling contract for up to
1,650 metres diamond drilling, targeting additional potential iron
ore mineralisation at Kallak South. The work programme will
determine if a 3D seismic model can be constructed, using the
established seismic characteristics of the Kallak deposit. The work
is being undertaken as part of the European Union funded PACIFIC
Project.
In June 2020, the CEO wrote again to Minister Baylan, after a
Parliamentary Question had been put to the Minister by a member of
Parliament, asking when a decision will be taken on Kallak. The CEO
reminded Minister Baylan, that when the Minister spoke at the
Mining Nordic Day in Toronto in early March, he saved his biggest
welcome for investors and said that the CEO was welcome to do
business in Sweden. In the letter, the CEO stated that Beowulf is
unable to do business in Sweden, because the Company cannot get a
decision on Kallak from the Government.
The SGU, a Government Office, first discovered Kallak in the
1940s, designated it an Area of National Interest in 2013 and
produced its latest study, headlined 'New light on iron ore at
Kallak', in May 2020. Kallak has been on the SGU's radar for 80
years! Bergsstaten (the "Mining Inspectorate"), part of the SGU,
recommended to the Government in October 2015, that the Concession
for Kallak should be awarded, and last October awarded an
Exploration Permit for Parkijaure nr 6.
REMUNERATION REPORT
The Directors have chosen to voluntarily present an unaudited
remuneration report although is not required by the Companies Act
2006. Details of the Remuneration Committee's composition and
responsibilities are set out in the Corporate Governance Report on
page 34 and its terms of reference can be found on the Group's
website: beowulfmining.com
Executive Directors' terms of engagement
Mr Budge is the sole Executive Director and Chief Executive
Officer. His annual salary was increased from GBP138,000 to
GBP150,000 on 1 January 2019. Mr Budge has a notice period of 12
months.
Non-Executive Directors' terms of engagement
The Non-Executive Directors have specific terms of engagement
under a letter of appointment. Their remuneration is determined by
the Board. In the event that a Non-Executive Director undertakes
additional assignments or work for the Company, this is covered
under a separate consultancy agreement.
Mr Davies annual fee is GBP30,000 per annum. Mr Davies has a
consultancy agreement with the Company for the provision of
exploration advice over and above his Non-Executive duties. Mr
Davies has a one month notice period under his letter of
appointment.
Mr Färm was appointed as Non-Executive Chairman on 30 October
2017. Under Mr Färm's letter of appointment, he is paid an
equivalent fee in Swedish Krona of GBP33,975 per annum. Mr Färm has
a one month notice period under his letter of appointment.
Indemnity Agreements
Pursuant to the Companies Act 2006 and the Company's articles of
association, the Board may exercise the powers of the Company to
indemnify its Directors against certain liabilities, and to provide
its Directors with funds to meet expenditure incurred, or to be
incurred, in defending certain legal proceedings or in connection
with certain applications to the court. In exercise of that power,
and by resolution of the Board on 26 July 2016, the Company has
agreed to enter into this Deed of Indemnity with each Director.
Aggregate Directors' Remuneration
The remuneration paid to the Directors in accordance with their
agreements, during the years ended 31 December 2019 and 31 December
2018, was as follows:
Name Position Salary Share- Share Benefits(4) Pension(5) 2019 2018
& Fees(1) based(2) settled Total Total
Payments expense(3) (audited) (audited)
GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- --------- ------------ ----------- ---------- ---------- ----------
Chief
Executive
Mr K R Budge Officer 151,000 40,208 10,417 809 13,000 215,434 144,387
--------------- ---------- --------- ------------ ----------- ---------- ---------- ----------
Non-Executive
Mr C Davies Director 40,750 36,195 - - 76,945 140,561
--------------- ---------- --------- ------------ ----------- ---------- ---------- ----------
Non-Executive
Mr G Färm Chairman 49,596 - - - 49,596 27,351
--------------- ---------- --------- ------------ ----------- ---------- ---------- ----------
Total 241,346 76,403 10,417 809 13,000 341,975 312,299
---------- --------- ------------ ----------- ---------- ---------- ----------
Notes:
(1) Does not include expenses reimbursed to the Directors.
(2) In relation to options granted in year ended 31 December
2019 and 31 December 2017
(3) In relation to shares awarded 31 October 2019 in lieu of
option exercise (refer note 23).
(4) Personal life insurance policy
(5) Employer contributions to personal pension.
Each Director is also paid all reasonable expenses incurred
wholly, necessarily, and exclusively in the proper performance of
his duties.
The beneficial and other interests of the Directors holding
office on 31 December 2019 in the issued share capital of the
Company were as follows:
ORDINARY SHARES 31 December 31 December
2019 2018
Mr K R Budge 2,416,426 2,249,759
------------ ------------
As 31 December 2019, all options have vested.
ORDINARY SHARES UNDER NUMBER EXERCISE EXPIRY DATE
OPTION PRICE
Mr K R Budge 9,000,000 1.66 pence 17 July 2020
---------- ----------- -------------
Mr K R Budge 3,500,000 7.35 pence 14 January
2024
---------- ----------- -------------
Mr C Davies 2,500,000 12 pence 26 January
2022
---------- ----------- -------------
Mr C Davies 2,500,000 7.35 pence 14 January
2024
---------- ----------- -------------
ON BEHALF OF THE REMUNERATION COMMITTEE
Göran Färm
Non-Executive Chairman
28 July 2020
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2019
2019 2018
Note GBP GBP
CONTINUING OPERATIONS
Administrative expenses (904,666) (598,391)
Impairment of exploration costs (10,720) (571,456)
Share based payment expense (119,720) (196,460)
Share of loss in associates - (19,880)
Gain on step acquisition 563,431 -
OPERATING LOSS (471,675) (1,386,187)
Finance costs (410) -
Finance income 6,298 11,603
Grant income 37,080 -
LOSS BEFORE INCOME TAX (428,707) (1,374,584)
Income tax expense - -
LOSS FOR THE YEAR (428,707) (1,374,584)
========== ============
Loss attributable to:
Owners of the parent (267,000) (1,373,936)
Non-controlling interests (161,707) (648)
(428,707) (1,374,584)
========== ============
Loss per share attributable to the
ordinary equity holder of the parent:
Basic and diluted (pence) 2 (0.04) (0.25)
---------- ------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2019
2019 2018
Note GBP GBP
LOSS FOR THE YEAR (428,707) (1,374,584)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently
to profit or loss:
Exchange losses arising on translation
of foreign operations (794,299) (123,265)
(794,299) (123,265)
TOTAL COMPREHENSIVE LOSS (1,223,006) (1,497,849)
============ ============
Total comprehensive loss attributable
to:
Owners of the parent (1,037,811) (1,497,133)
Non-controlling interests (185,195) (716)
(1,223,006) (1,497,849)
============ ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Note 2019 2018
GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible assets 3 10,011,494 8,285,547
Property, plant and equipment 86,998 16,083
Investment in associate - 230,120
Loans and other financial assets 5,212 5,462
Right-of-use asset 7,324 -
10,111,028 8,537,212
------------- -------------
CURRENT ASSETS
Trade and other receivables 167,261 62,956
Cash and cash equivalents 1,124,062 1,533,232
1,291,323 1,596,188
------------- -------------
TOTAL ASSETS 11,402,351 10,133,400
============= =============
EQUITY
SHAREHOLDERS' EQUITY
Share capital 6,022,446 5,663,072
Share premium 20,824,009 19,266,271
Capital contribution reserve 46,451 46,451
Share based payment reserve 732,185 612,465
Merger reserve 137,700 137,700
Translation reserve (1,291,068) (520,257)
Accumulated losses (15,781,161) (15,311,933)
10,690,562 9,893,769
Non-controlling interests 326,555 (160,587)
TOTAL EQUITY 11,017,117 9,733,182
------------- -------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 242,885 208,013
Grant Income 134,877 192,205
Lease liability 7,472 -
TOTAL LIABILITIES 385,234 400,218
------------- -------------
TOTAL EQUITY AND LIABILITIES 11,402,351 10,133,400
============= =============
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2020 and were signed on its
behalf by:
Mr K Budge - Director
Company Number 02330496
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2019
Share
Capital based Non -
Share Share Merger contribution payments Translation Accumulated controlling
capital premium reserve reserve reserve reserve losses Totals interest Totals
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2018 5,342,072 18,141,271 137,700 46,451 575,078 (397,060) (14,079,747) 9,765,765 (159,871) 9,605,894
--------- ---------- ------- ------------ --------- ----------- ------------ ----------- ----------- -----------
Loss for the
year - - - - - - - (1,373,936) (648) (1,374,584)
Foreign
exchange
translation - - - - - (123,197) (1,373,936) (1,497,133) (716) (1,497,849)
Total - - - - -
comprehensive
income
--------- ---------- ------- ------------ --------- ----------- ------------ ----------- ----------- -----------
Transactions
with
owners
Issue of share
capital 300,000 1,200,000 - - - - - 1,500,000 - 1,500,000
Cost of issue - (75,000) - - - - - (75,000) - (75,000)
Share based
payment
expense - - - - 196,460 - - 196,460 - 196,460
Issues of
shares 21,000 - - - (159,073) - 141,750 3,677 - 3,677
At 31 December
2018 5,663,072 19,266,271 137,700 46,451 612,465 (520,257) (15,311,933) 9,893,769 (160,587) 9,733,182
========= ========== ======= ============
Loss for the
year - - - - - - (267,000) (267,000) (161,707) (428,707)
Foreign
exchange
translation - - - - - (770,811) - (770,811) (23,488) (794,299)
Total
comprehensive
income - - - - - (770,811) (267,000) (1,037,811) (185,195) (1,223,006)
--------- ---------- ------- ------------ --------- ----------- ------------ ----------- ----------- -----------
Transactions -
with
owners
Issue of share
capital 357,707 1,642,293 - - - - - 2,000,000 - 2,000,000
Cost of issue - (93,305) - - - - - (93,305) - (93,305)
Share based
payment
expense 1,667 8,750 - - 119,720 - - 130,137 - 130,137
Step
acquisition
of Subsidiary - - - - - - (202,228) (202,228) 672,337 470,109
At 31 December
2019 6,022,446 20,824,009 137,700 46,451 732,185 (1,291,068) (15,781,161) 10,690,562 326,555 11,017,117
========= ========== ======= ============ ========= =========== ============ =========== =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2019
2019 2018
Note GBP GBP
Cash flows from operating activities
Loss before income tax (428,707) (1,374,584)
Depreciation charges 20,971 14,696
Share based payment expense 130,137 196,460
Impairment of exploration costs 10,720 571,456
Finance income (6,298) (11,603)
Finance cost 410 -
Grant income (37,080) -
Gain on step acquisition (563,431) -
Amortisation of right -of -use asset 4,615 -
Share of loss in associate - 19,880
(868,663) (583,695)
(Increase) / decrease in trade and
other receivables (106,009) 2,603
Decrease / (increase) in trade and
other payables 14,930 (72,740)
Net cash used in operating activities (959,742) (653,832)
------------ ------------
Cash flows from investing activities
Purchase of intangible assets 3 (1,304,896) (778,495)
Purchase of property, plant and equipment (77,615) (2,515)
Sale of investments 7 13
Acquisition of subsidiary / associate (500,000) (250,000)
Cash acquired with subsidiary 530,031 -
Grant receipt - 192,205
Interest received 6,298 11,603
Net cash used in investing activities (1,346,175) (827,189)
------------ ------------
Cash flows from financing activities
Proceeds from issue of shares 2,000,000 1,500,000
Payment of share issue costs (93,305) (75,000)
Lease principal and interest paid (4,877) -
Net cash from financing activities 1,901,818 1,425,000
------------ ------------
Decrease in cash and cash equivalents (404,099) (56,021)
Cash and cash equivalents at beginning
of year 1,533,232 1,589,897
Effect of foreign exchange rate changes (5,071) (644)
Cash and cash equivalents at end
of year 1,124,062 1,533,232
------------ ------------
1. ACCOUNTING POLICIES
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. These consolidated financial statements
comprise 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.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below:
The financial information included in this announcement does not
constitute the Group's statutory financial statements as defined in
section 434 of the Companies Act 2006, but is derived from those
accounts. The financial information for the year ended 31 December
2019 has been extracted from the audited accounts of Beowulf Mining
plc which will be delivered to the Registrar of Companies in due
course. The auditors reported on those accounts and their report
was unqualified, but did contain a material uncertainty relating to
going concern, and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006. The financial information for
the year ended 31 December 2018 has been extracted from the audited
accounts of Beowulf Mining plc which have been delivered to the
Registrar of Companies. The auditors reported on those accounts and
their report was unqualified and also contained a material
uncertainty relating to going concern and did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
Going concern
At 31 December 2019, the Group had a cash balance of GBP1.12
million and the Company had a cash balance of GBP0.98 million.
Subsequent to year end, the Company has raised GBP2.0 million
(before expenses) cumulatively through a series of successful
subscriptions.
Management have prepared cash flow forecasts which indicate that
although there is no immediate funding requirement, the Group will
need to raise further funds in the next twelve months for corporate
overheads and to advance its projects.
The Directors are confident they are taking all necessary steps
to ensure that the required finance is available, and they have
successfully raised equity finance subsequent to year end. They
have therefore concluded that it is appropriate to prepare the
financial statements on a going concern basis. However, while they
are confident of being able to raise the new funds as they are
required, there are currently no agreements in place, and there can
be no certainty that they will be successful in raising the
required funds within the appropriate timeframe.
Management has implemented logistical and organisational changes
to underpin the Group's resilience to the impact felt by the
COVID-19 pandemic, with the key focus being protecting all
personnel, minimising the impact on critical work streams and
ensuring business continuity. The effect on the economy may impact
the Group in varying ways, which could lead to a direct bearing on
the Group's ability to generate future cash flows for working
capital purposes. The inability to gauge the length of such
disruption further adds to this uncertainty. For these reasons, the
generation of sufficient operating cash flows remain a risk.
Management is closely monitoring commercial and technical aspects
of the Group's operations to mitigate risk and believes the Group
will have access to sufficient working capital to continue
operations for the foreseeable future.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt over the Group's and
the Company's ability to continue as a going concern and that it
may be unable to realise its assets and discharge its liabilities
in the normal course of business. The financial statements do not
include any adjustments that would result if the Group and Company
were unable to continue as a going concern.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with applicable International Financial Reporting
Standards as adopted by the European Union ("IFRS") and with those
parts of the UK Companies Act 2006 applicable to companies
reporting under IFRS as adopted by the European Union. 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.
Merger relief under s612 of the Companies Act 2006 removes the
requirement to credit the share premium account and where the
conditions are met, the relief must be applied. However, it allows
the investment to be accounted for at the nominal value of the
shares issued or the fair value of the consideration. Where the
investment is to be recorded at fair value, then the credit will be
to the merger relief reserve.
The conditions to qualify for merger relief are:
-- the consideration for shares in another company includes issued shares;
-- on completion of the transaction, the company issuing the
shares will have secured at least a 90% equity holding in the other
company.
Merger relief was required to be applied in acquisition of
Fennoscandian Resources, in which the Company obtained 100% of the
share capital of Fennoscandian for shares issued by the
Company.
New standards, amendments and interpretations
As of 1 January 2019, the Company adopted IFRS 16 Leases,
Amendments to IFRS 2 - classification and measurement of
share-based payments transactions, Annual improvements to IFRS
Standards 2015-2017 cycle and IFRIC 23 Uncertainty over income tax
treatments.
IFRS 16 Adoption
On 1 January 2019, the Group adopted the provisions of IFRS 16 -
Leases using the modified retrospective approach, under which the
cumulative effect of initial application is recognised in retained
earnings at 1 January 2019 where material.
Accordingly, the comparative information presented for 2018 has
not been restated. IFRS 16 has been applied to one new lease which
was adopted during the financial year. In the Statement of
Financial Position the right-of-use asset is recorded in
non-current assets as part of property, plant and equipment and the
lease liability is split between current liabilities for the
portion due within 12 months and non-current liabilities for the
remainder. To determine the split between principal and interest in
the lease the incremental borrowing rate of the Group was applied.
This method was adopted as the Group was not able to ascertain the
implied interest rate in the lease. The Group has applied the
exemption not to recognise right-of-use assets and liabilities for
leases with less than 12 months of lease term when applying IFRS 16
to leases previously classified as operating leases under IAS 17.
Of the other IFRSs and IFRICs, none are expected to have a material
effect on future Company Financial Information.
There are several standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided
not to adopt early. The most significant of these are as follows,
which are all effective for the period beginning 1 January
2020:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
-- Revised Conceptual Framework for Financial Reporting
-- Interest Rate Benchmark Reform (IBOR) reform Phase 1
(Amendments to IFRS 9, IAS 39 and IFRS 7)
The Directors have assessed there to be no material impact of
these new accounting standards on the Group financial
statements.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
amounts reported for income and expenses during the year and the
amounts reported for assets and liabilities at the balance sheet
date. However, the nature of estimation means that the actual
outcomes could differ from those estimates.
The principal source of risk and judgement is that the
Exploitation Concession (the "Concession") for Kallak North will
not be awarded. Management maintains that its application for the
Concession has satisfied the requirements of the Swedish Minerals
Act and Environmental Code. In October 2015, the Mining
Inspectorate recommended to the Swedish Government that the
Concession be awarded.
In late 2019, the Company engaged Mannheimer Swartling to work
with its existing lawyers Fröberg & Lundholm to prepare a
concluding statement (the "Statement"). The Statement was sent to
the Government on 8 November 2019. The Statement did not include
any new facts in the Kallak case, as all necessary and relevant
facts have already been established as part of the application
process. Rather, the Statement summarises the circumstances
relevant to a judicial review of whether the Company should be
awarded the Concession for Kallak. The Statement concludes that the
Company should be awarded the Concession.
It is management's judgement that it is appropriate to remain
optimistic about the Government, the decision maker in the
application process, awarding a Concession, and therefore Kallak
has not been impaired.
Management's judgement is based on several factors: if the
Government were to say 'no' they would have said 'no' before now;
the Minister for Business, Industry and Innovation, Mr. Ibrahim
Baylan is under pressure to take decisions from politicians in his
own and other political parties; Sweden's reputation as a mining
investment destination is being significantly damaged.
In addition, announcements made in October 2018 by LKAB the
state iron ore company about its dwindling reserves at Kiruna,
created a lot of interest about the importance of mining to Sweden,
how it creates jobs and supports the economy, and the importance of
iron ore. The industry association SveMin continues to lobby the
Government to act, when it comes to the delays being experienced by
mining companies applying for permits.
The Åtvidaberg licence is located in the Bergslagen area,
southern Sweden. It was renewed during 2019 and now expires on 30
May 2022. Bergslagen is one of Europe's oldest mining districts and
yielded a substantial portion of Sweden's mineral wealth in the
1800-1900s, with several large mines and hundreds of smaller mines
producing copper, zinc, lead, gold, silver, and iron ore. Current
operating mines in the area include Boliden's Garpenberg and Lundin
Mining's Zinkgruvan. Most of southern Bergslagen has seen little
modern exploration, yet it hosts Bersbo, one of Sweden's largest
early copper mines, and Zinkgruvan, Sweden's most important zinc
mine. During the year, no fieldwork was undertaken, as the
Company's exploration focus moved to Finland and Kosovo. However,
the Company is now considering partners to continue with the next
stage of work on the licence and this work is ongoing.
The board has considered the impairment indicators as outlined
in the Company's accounting policies and having done so is of the
opinion that the present situations for the Company's main assets,
Kallak, Aitolampi, Mitrovica and Åtvidaberg, do not qualify as
impairment indicators and therefore no impairment provisions are
required for these assets (see note 3).
The other key areas of judgement and sources of estimation
uncertainty that have a significant risk of causing material
adjustment to the carrying amounts of assets and liabilities within
the next financial year is the judgment exercised in assessing the
control of the Vardar Group and in respect of the Parent Company
the recoverability of the loans made to subsidiary
undertakings.
The Company was assessed to have control on the 1 April 2019 as
the Company was able to exercise power over Vardar through the
appointment of Kurt Budge as Investor Director. The investment
agreement conveyed substantive rights to the Investor Director and
through the combination of the increased shareholding and these
rights the Company was able to affect the overall returns of the
investee.
The Parent Company, in applying the ECL model under IFRS 9, must
make assumptions when implementing the forward-looking ECL model.
This model is required to be used to assess the intercompany loans
receivable from subsidiaries for impairment.
Estimations were made regarding the credit risk of the
counterparty and the underlying probability of default in each of
the credit loss scenarios. The scenarios identified by management
included Production, Divestment, Fire-sale and Failure. These
scenarios considered technical data, necessary licences to be
awarded, the Company's ability to raise finance, and ability to
sell the project. A reasonable change in the probability weightings
of 3% would result in further impairment of GBP552,193.
Basis of consolidation
(i) Subsidiaries and acquisitions
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(and its subsidiaries) made up to 31 December each year. Control is
recognised where an investor is exposed, or has rights, to variable
returns from its investment with the investee, and has the ability
to affect these returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the
year are included in the statement of comprehensive income from the
effective date of acquisition, or up to the effective date of
disposal, as appropriate.
Non-controlling interests in subsidiaries are presented
separately from the equity attributable to equity owners of the
parent Company. When changes in ownership in a subsidiary do not
result in a loss of control, the non-controlling shareholders'
interests are initially measured at the non-controlling interests'
proportionate share of the subsidiaries net assets. Subsequent to
this, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the
non-controlling interests' share of subsequent changes in equity.
Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance
(ii) Equity accounted investees
Associates
Associates are entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Significant influence is
the power to participate in the financial and operating policy
decisions of the investee but not the ability to control or jointly
control those policies. Investments in Associates are accounted for
using the equity method of accounting.
Equity method of accounting - Associates
Under the equity method of accounting, interests in Associates
are initially recognised at cost. The Group's share of Associates
post acquisition profit / loss after tax and other comprehensive
income/ loss are presented as the 'Share of results of Equity
accounted investees' in the Group income statement and Group
Statement of other comprehensive income respectively. The
cumulative post-acquisition movements are adjusted against the
carrying amount of the investment less any impairment in value.
Where indicators of impairment arise, the carrying amount of the
Associate is tested for impairment by comparing its recoverable
amount against its carrying value. Unrealised gains arising from
transactions with Associates are eliminated to the extent of the
Group's interest in the entity. Unrealised losses are similarly
eliminated to the extent that they do not provide evidence of
impairment of a transferred asset. When the Group's share of losses
in an Associate equal or exceeds its interest in the Associate, the
Group does not recognise further losses unless the Group has
incurred obligations or made payments on behalf of the Associate.
When the Group ceases to have or significant influence, any
retained interest in the entity is re-measured to its fair value at
the date when or significant influence is lost with the change in
carrying amount recognised in the income statement. The Group also
reclassifies any movements previously recognised in other
comprehensive income to the income statement.
(iii) Transactions eliminated on consolidation
Intra-Group balances and any unrealised gains and losses or
income and expenses arising from intra-Group transactions are
eliminated in preparing the consolidated financial statements.
Business combinations
On acquisition, the assets, liabilities, and contingent
liabilities of a subsidiary are measured at their fair value at the
date of acquisition. Any excess of the cost of the acquisition over
the fair values of the identifiable net assets acquired is
recognised as goodwill. If the aggregate of the acquisition-date
fair value of the consideration transferred and the amount
recognised for the non-controlling interest (and where the business
combination is achieved in stages, the acquisition-date fair value
of the acquirer's previously held equity interest in the acquiree)
is lower than the fair value of the assets, liabilities and
contingent liabilities and the fair value of any pre-existing
interest held in the business acquired, the difference is
recognised in profit and loss.
Intangible assets - deferred exploration costs
All costs incurred prior to the application for the legal right
to undertake exploration and evaluation activities on a project are
expensed as incurred. Each asset is evaluated annually at 31
December, to determine whether there are any indications that
impairment exists.
Exploration and evaluation costs arising following the
application for the legal right, are capitalised on a
project-by-project basis, pending determination of the technical
feasibility and commercial viability of the project. Costs incurred
include appropriate employee costs and costs pertaining to
technical and administrative overheads.
Exploration and evaluation activity include:
-- researching and analysing historical exploration data;
-- gathering exploration data through topographical, geochemical and geophysical studies;
-- exploratory drilling, trenching and sampling;
-- determining and examining the volume and grade of the resource;
-- surveying transportation and infrastructure requirements; and
-- conducting market and finance studies.
Administration costs that are not directly attributable to a
specific exploration area are expensed as incurred.
Deferred exploration costs are carried at historical cost less
any impairment losses recognised. When a project is deemed to no
longer have commercially viable prospects to the Group, deferred
exploration costs in respect of that project are deemed to be
impaired and written off to the statement of comprehensive income.
Once the decision for investment is taken, the assets will be
assessed for impairment and to the extent that these are not
impaired, will be classified as development assets. At the point
that production commences these assets will be depreciated.
Impairment
Whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable an asset is
reviewed for impairment. An asset's carrying value is written down
to its estimated recoverable amount (being the higher of the fair
value less costs to sell and value in use) if that is less than the
asset's carrying amount.
Impairment reviews for deferred exploration and evaluation
expenditure are carried out on a project by project basis, with
each project representing a potential single cash generating unit.
An impairment review is undertaken when indicators of impairment
arise such as:
(i) unexpected geological occurrences that render the resource uneconomic;
(ii) title to the asset is compromised;
(iii) variations in mineral prices that render the project uneconomic;
(iv) substantive expenditure on further exploration and
evaluation of mineral resources is neither budgeted nor planned;
and
(v) the period for which the Group has the right to explore has
expired and is not expected to be renewed.
Property, plant and equipment
Items of property, plant and equipment are stated at historical
cost less accumulated depreciation.
Depreciation is provided at the following annual rates in order
to write off each asset over its estimated useful life.
Office equipment - 25 per cent on reducing balance
Motor Vehicles - 20 per cent on reducing balance
Machinery and - 20 to 25 per cent on reducing balance
equipment
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
Leased assets
When entering into a contract the Group assesses whether or not
a lease exists. A lease exists if a contract conveys a right to
control the use of an identified asset under a period of time in
exchange for consideration. Leases of low value items and
short-term leases (leases of less than 12 months at the
commencement date) are charged to the profit or loss on a
straight-line basis over the lease term in administrative
expenses.
The Group recognises right-of-use assets at cost and lease
liabilities at the lease commencement date based on the present
value of future lease payments. The right-of-use assets are
amortised on a straight-line basis over the length of the lease
term. The lease liabilities are recognised at amortised cost using
the effective interest rate method. Discount rates used reflect the
incremental borrowing rate specific to the lease.
Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less
provision for any impairment in value.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, and other short term highly liquid investments
with original maturities of three months or less.
Financial assets
The Group classifies all of its financial assets at amortised
cost. Management determines the classification of its financial
assets at initial recognition.
Amortised cost
The Group's financial assets held at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position.
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of goods and services to
customers (e.g. trade receivables), but also incorporate other
types of financial assets where the objective is to hold their
assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of the principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime ECLs.
During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the
amount of the expected loss arising from default to determine the
lifetime ECL for the trade receivables. For trade receivables,
which are reported net; such provisions are recorded in a separate
provision account with the loss being recognised within
administrative expenses in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Expected credit loss provisions for other receivables are
recognised based a forward-looking expected credit loss model. The
methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk
since initial recognition of the financial asset. For those where
the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit
losses along with gross interest income are recognised. For those
for which credit risk has increased significantly, lifetime
expected credit losses along with the gross interest income are
recognised. For those that are determined to be credit impaired,
lifetime expected credit losses along with interest income on a net
basis are recognised.
Financial liabilities
The Group's financial liabilities include trade and other
payables. All financial liabilities are recognised initially at
fair value, net of transaction costs incurred, and are subsequently
stated at amortised cost, using the effective interest method.
Unless otherwise indicated, the carrying values of the Group's
financial liabilities measured at amortised cost represents a
reasonable approximation of their fair values.
Fair value
All assets and liabilities for which fair value is measured or
disclosed in the consolidated financial statements are
categorised within the fair value hierarchy. The fair value
hierarchy prioritises the inputs to valuation techniques used to
measure fair value. The Group uses the following hierarchy for
determining and disclosing the fair value of financial instruments
and other assets and liabilities for which the fair value was
used:
- level 1: quoted prices in active markets for identical assets or liabilities;
- level 2: inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and
- level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs. Where equity
instruments are issued as part of an acquisition they are recorded
at their fair value on the date of acquisition.
Taxation
Current tax, including UK corporation tax and foreign tax, is
provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is recognised, using the liability method, in
respect of temporary differences between the carrying amount of the
Group's assets and liabilities and their tax base.
Deferred tax assets and deferred tax liabilities are offset, if
a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority. Any
remaining deferred tax asset is recognised only when, on the basis
of all available evidence, it can be regarded as probable that
there will be suitable taxable profits, within the same
jurisdiction, in the foreseeable future against which the
deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to
apply in the periods in which the asset is realised or liability
settled, based on tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Current and deferred tax is recognised in the profit or loss,
except when the tax relates to items charged or credited directly
in equity, in which case the tax is also recognised directly in
equity.
Foreign currencies
The individual financial statements of each Group entity are
presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and
financial position of each entity are expressed in GB Pounds
Sterling which is the presentation currency for the Group and
Company financial statements. The functional currency of the
Company is the GB Pounds Sterling.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at the balance
sheet date.
Exchange differences arising on the settlement of monetary items
and on the retranslation of monetary items are included in the
statement of comprehensive income for the period.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
expressed in GB Pounds Sterling using exchange rates prevailing at
the balance sheet date. Income and expense items are translated at
the average exchange rates for the period. Exchange differences
arising, if any, are classified as other comprehensive income and
are transferred to the Group's translation reserve.
Foreign currency movements arising from the Group's net
investment, which comprises equity and long-term debt, in
subsidiary companies whose functional currency is not the GB Pounds
Sterling are recognised in the translation reserve, included within
equity until such time as the relevant subsidiary company is sold,
whereupon the net cumulative foreign exchange difference relating
to the disposal is transferred to profit and loss.
Share-based payment transactions
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
income statement over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of all
options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where terms and conditions of options are modified before they
vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the income statement over the remaining vesting period.
Where equity instruments are granted to persons other than
employees, the income statement or share premium account, if
appropriate, are charged with the fair value of goods and services
received.
Government grant
Government grants received on capital expenditure are generally
deducted in arriving at the carrying amount of the asset purchased.
Grants for revenue expenditure are recorded gross in the Group
income statement. Where retention of a government grant is
dependent on the Group satisfying certain criteria, it is initially
recognised as deferred income. When the criteria for retention have
been satisfied, the deferred income balance is released to the
consolidated statement of comprehensive income or netted against
the asset purchased.
2. BASIC AND DILUTED LOSS PER SHARE
The calculation of basic and diluted loss per share at 31
December 2019 was based on the loss attributable to ordinary
shareholders of GBP249,192 (2018: GBP1,373,936 ) and a weighted
average number of Ordinary Shares outstanding during the year ended
31 December 2019 of 585,102,740 (2018: 554,716,045) calculated as
follows:
2019 2018
GBP GBP
Loss attributable to ordinary shareholders (249,192) (1,373,936)
========== ============
Weighted average number of ordinary shares
2019 2018
Number Number
Number of shares in issue at the beginning
of the year 554,716,045 534,207,254
Effect of shares issued during year 30,386,695 20,508,791
Weighted average number of ordinary shares
in issue for the year 585,102,740 554,716,045
============ ============
The diluted earnings per share is identical to the basic loss
per share as the exercise of warrants and options would be
anti-dilutive.
3. INTANGIBLE ASSETS - Group
Exploration
Costs
GBP
COST
At 1 January 2018 8,191,232
Additions for the year 782,437
Foreign exchange movements (116,666)
Impairment (571,456)
------------
At 31 December 2018 8,285,547
------------
At 1 January 2019 8,285,547
Additions for the year 1,304,896
Additions arising from the step-up in interest in
Vardar 1,203,685
Foreign exchange movements (771,914)
Impairment (10,720)
------------
At 31 December 2019 10,011,494
------------
NET BOOK VALUE
------------
At 31 December 2019 10,011,494
============
At 31 December 2018 8,285,547
============
The net book value of exploration costs is comprised of
expenditure on the following projects:
2019 2018
GBP GBP
Kallak 6,675,124 7,079,806
Åtvidaberg 345,978 303,565
Ågåsjiegge 15,568 17,121
Sala - 8,444
Pitkäjärvi 1,058,078 817,986
Joutsijärvi 19,095 25,002
Karhunmaki 24,078 13,685
Rääpysjärvi 39,905 19,938
Mervivaara 17,846 -
Polvela 31,316 -
Tammijärvi 24,278 -
Mitrovica 1,243,194 -
Viti 517,034 -
10,011,494 8,285,547
=========== ==========
Total Group exploration costs of GBP10,011,494 are currently
carried at cost in the financial statements. The Group will need to
raise funds and/or bring in joint venture partners to further
advance exploration and development work. An amount of GBP91,231
was recorded against the projects for services provided by the
Directors during the year (2018: GBP139,594).
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.
In accordance with its accounting policies and processes, each
asset is evaluated annually at 31 December, to determine whether
there are any indications impairment exist, the Board considers the
indications as outlined in IFRS 6.
On 30 November 2017, the County Administrative Board ("CAB") for
the County of Norrbotten made the decision to not recommend that an
Exploitation Concession for Kallak North be awarded. It should be
noted that the CAB does not have the final decision, that rests
with the Government. The CAB's decision included information not
based on fact, flawed analysis, and biased conclusions that
contradicted its previous representations provided in July 2015.
The key biases include:
-- Operating outside their mandate with respect to assessing
transport matters at this stage of permitting and suggesting the
need for State investment should Kallak be built. The Company has
never stated that State support would be needed. The CAB ignored
infrastructure projects that are already under consideration e.g.
Inlandsbanan Railway, the Ore Railway and the Port of Luleå, all of
which will bring additional capacity to regional infrastructure,
which could be utilised by Kallak.
-- Disregarding Kallak's designation as an Area of National
Interest ("ANI") awarded by the SGU in February 2013.
-- Disregarding the strong economic case for Kallak that the CAB
presented in July 2015, that a mine would have local, regional and
national benefits.
The Directors considered that the CAB's November 2017 statement
was not an impairment indicator, as the comments and findings of
the CAB represent a recommendation to Government that should have
limited to no persuasive impact due to the inaccuracies, flawed
analysis and biased conclusions the CAB has presented. At the date
of approval of the financial statements the Government's
consideration of the application was ongoing.
The most significant risk is that an Exploitation Concession is
declined for Kallak North. The Directors have considered the
impairment indicators as outlined in the Company's accounting
policies and having done so are of the opinion that the current
situation does not qualify as an impairment indicator and hence no
impairment provision is required for the Kallak permitting
situation. In addition, no other impairment indicators per IFRS 6
have been identified.
Kallak is included in the financial statements as at 31 December
2019 as an intangible exploration licence with a carrying value of
GBP 6,675,124 . 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.
During 2019, the Fennoscandian team produced an upgraded MRE for
the Aitolampi project in Finland, with a global Indicated and
Inferred Mineral Resource of 26.7 Mt at 4.8 per cent TGC for
1,275,000 tonnes of contained graphite, reported in accordance with
the JORC Code, 2012 edition.
Fennoscandian is pursuing a strategy of developing a 'resource
footprint' of natural flake graphite prospects that can provide
transparent 'security of supply' and enable Finland to achieve its
ambition of self-sufficiency in battery manufacturing. The Company
is also developing its knowledge in processing and manufacturing
value-added graphite products, including anode material for
lithium-ion batteries, in part supported financially by Business
Finland.
The Åtvidaberg licence is located in the Bergslagen area,
southern Sweden. It was renewed during 2019 and now expires on 30
May 2022. Bergslagen is one of Europe's oldest mining districts and
yielded a substantial portion of Sweden's mineral wealth in the
1800-1900s, with several large mines and hundreds of smaller mines
producing copper, zinc, lead, gold, silver, and iron ore. Current
operating mines in the area include Boliden's Garpenberg and Lundin
Mining's Zinkgruvan. Most of southern Bergslagen has seen little
modern exploration, yet it hosts Bersbo, one of Sweden's largest
early copper mines, and Zinkgruvan, Sweden's most important zinc
mine.
During the year, no fieldwork was undertaken, as the Company's
exploration focus moved to Finland and Kosovo. However, the Company
is now considering partners to continue with the next stage of work
on the licence and this work is ongoing.
At Mitrovica, in northern Kosovo, located immediately to the
west and northwest of the world class Stan Terg lead-zinc-silver
mine, potential not only exists for the discovery of additional
lead-zinc-silver deposits, but also for the discovery of high-level
epithermal gold deposits and for copper-zinc deposits. Vardar
believes the targets are all related to a potentially much larger
porphyry style mineralised system, based on meticulous geological
mapping of hydrothermal alteration and interpretation of trench,
drilling and soil geochemical exploration data. To date, the work
completed in Kosovo has yielded exciting results which warrant
further investment.
In the year, an impairment provision of GBP10,720 (2018:
GBP571,456) was made against costs incurred on Sala (2018:
GBP8,444) on the basis that no further exploration would be carried
out on those projects. In respect of the other license areas, no
impairment indicators have been identified. The impairment is
charged as an expense and included within the consolidated income
statement.
4. RELATED PARTY DISCLOSURES
Transactions with subsidiaries
During the year, cash advances of GBP286,045 (2018: GBP259,192)
were made to Jokkmokk Iron Mines AB and incurred costs of
GBP131,948 that were paid on behalf by the Company (2018:
GBP96,167). The advances are held on an interest free inter-group
loan which has no terms for repayment. At the year end the
inter-Group loan amounted to GBP7,241,374 (2018: GBP8,352,577).
Beowulf Sweden AB received cash advances of GBP72,290 (2018:
GBP88,221) and incurred costs of GBP5,057 (2018: GBP29,901) that
were paid on behalf by the Company. The advances are held on an
interest free inter-Group loan which has no terms for repayment. At
the year end the inter-Group loan amounted to GBP361,772 (2018:
GBP361,657).
OY Fennoscandian AB received cash advances of GBP479,458 (2018:
GBP457,103) and incurred costs of GBP31,296 (2018: GBP41,275) that
were paid on behalf by the Company. The advances are held on an
interest free inter-Group loan which has no terms for repayment. At
the year end the inter-Group loan amounted to GBP1,383,518 (2018:
GBP1,199,107).
In accordance with its service agreement, Fennoscandian charges
Beowulf Mining plc for time incurred by its staff on exploration
projects held by other entities in the Group. In turn Beowulf
Mining plc recharges the other entities involved.
In addition, Beowulf Mining plc charges entities in the Group
for time and expenses spent by Directors on providing services. An
arm's length margin has been included at entity level, but this is
subsequently eliminated on consolidation.
The Company has made unsecured interest-free loans to its
subsidiaries. Although they are repayable on demand, they are
unlikely to be repaid until the projects becomes successful and the
subsidiaries start to generate revenues. An assessment of the
expected credit loss arising on intercompany loans is detailed in
note
Transactions with other related parties
Key management personnel include all Directors and those who
have authority and responsibility for planning, directing and
controlling the activities of the entity, the aggregate
compensation paid to key management personnel of the Company is set
out below,
2019 2018
GBP GBP
Short-term employee benefits (including
employers' national insurance contributions) 489,727 298,288
Post-retirement benefits 30,364 29,710
Share based payments 105,359 200,137
Share settled expense 10,417 -
Insurance 809 720
636,676 528,855
========== ==========
Mr Blomqvist incurred a charge of GBP22,976 with respect of
remaining unvested options (2018: GBP87,316). Mr Blomqvist is
considered key management personnel in his role as Group's
Exploration Manager.
On 31 October 2019, 166,667 fully paid new ordinary shares of
GBP0.01 were issued to Kurt Budge, at a deemed price of 6.25p per
share. The Share Issue is to compensate Kurt Budge for the lapse of
500,000 share options granted to Kurt Budge, exercisable at a price
of 4p per share, as announced via RNS on 10 October 2014 .Kurt
Budge was unable to exercise the Share Options due to being in a
closed period in respect of the recent fundraising announced via
RNS on the 24 October 2019.
5. EVENTS AFTER THE REPORTING DATE
In January 2020, an outbreak of a coronavirus, now classified as
COVID--19, was detected in China's Hubei province. During the
following months, COVID--19 has spread steadily throughout the
World and on 11 March 2020, The World Health Organisation ("WHO")
declared the outbreak a global pandemic. In order to stem the
spread of the virus, Governments around the World are taking
drastic steps which include compulsory closure of various
businesses, shops and schools and are also heavily restricting of
movement of people with lock down. There has been no impact of
COVID-19 on the underlying operations at 31 December 2019, however
due to the rapid development of COVID--19, the degree of
uncertainty involved and the unprecedented nature of the challenges
posed by the coronavirus situation, the Directors' are of the
opinion that it is too soon to quantify what financial impact that
the COVID--19 pandemic will be, but are monitoring the situation
closely.
On 17 February 2020, Beowulf invested GBP50,000 in Vardar
Minerals limited, increasing the Company's investment in Vardar
from 41.5% to 42.2%.
On 25 March 2020, a made a further investment of GBP30,000,
alongside a further GBP40,0000 investment by founder and existing
shareholders. The additional investment maintains the Company's
holding in Vardar Minerals limited at 42.2%. Funds will be used to
continue exploration works in Kosovo, as permitted to do so under
COVID-19 restrictions. All works will be carried out in accordance
with Kosovan Government advice and Vardar's health, safety and
emergency protocols.
On 14 July, an extension was granted on 9,000,000 share options
held by Kurt Budge. The extension allowed the options that would
have otherwise expired on the 17 July 2020 to be exercised up to
the 17 July 2021.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UKVNRROUBUAR
(END) Dow Jones Newswires
July 30, 2020 02:00 ET (06:00 GMT)
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