Acquisition of Finnish Graphite Company

Beowulf (AIM: BEM; Aktietorget: BEO), the mineral exploration and development company focused on the Kallak iron ore project in northern Sweden, is pleased to announce the acquisition of Oy Fennoscandian Resources AB (“Fennoscandian”), a privately owned graphite exploration company with projects in Finland.

Highlights:

  • Through this acquisition Beowulf has acquired a portfolio of four early-stage graphite exploration projects located in Finland , with all projects being held by Fennoscandian under 100 per cent owned Claim Reservations:
    • Viistola – A potentially high grade deposit, anticipated to contain graphitic carbon (“Cg”) grading 20-35 per cent Cg.
    • Haapamäki – A high grade Cg project with attractive flake sizes . Historic studies have reported visually estimated flake sizes ranging 0.1-2.0 millimetres in length.
    • Piipumäki – This project has shown evidence of high quality graphite flakes with visible hexagonal growth, and physical characteristics reportedly comparable with synthetic graphite.
    • Kolari – A single diamond drillhole R1 intersected 170 metres of mineralisation starting from surface, with an average grade of 8.9 per cent Cg. The graphite at the project has been described as very fine to fine microcrystalline. 
  • Finland is believed to be highly prospective for graphite exploration. Studies have combined maps of ‘black schist’ trends with metamorphic grade, which have resulted in the identification of potential areas for high quality flake graphite.
  • Each of the pro jects has been explored historically, with exploration data readily available especially for the Viistola project . More recently the FennoFlake project , a collaborative group with partners representing the entire graphite value chain, from identification to exploration and mining, processing to end products and market applications , has carried out additional exploration.
  • Fennoscandian is a key partner in FennoFlake. Beowulf’s role in FennoFlake will provide the Company with access to market insight , and will help the Company allocate resources to projects that demonstrate the greatest commercial potential.
  • Graphite is a strategic mineral declared supply-critical by both the US and the EU, and it is an important ingredient in advanced technology manufacturing. There is potential long term growth in demand for large flake graphite in the electric car battery, aerospace, sensor and solar industries.
  • The founder of Fennoscandian Mr. Rasmus Blomqvist will remain with the company as Exploration Manager and will be responsible for the development of Beowulf’s graphite division. Since 2012, Mr. Blomqvist has been exploring for flake graphite within the Fennoscandian shield and is one of the most experienced graphite geologists in the Nordic region.
  • Beowulf’s workplan for its graphite projects in 2016 will include ranking projects in the portfolio, before prioritisation of exploration funds. An immediate priority is the selection of the most favourable project(s) for generating a maiden resource statement; based on current knowledge Viistola would be top of the list. In addition, the Company will be working with its partners in FennoFlake to generate sample material from each of the projects for testwork and assessment against applications in potential end-markets.
  • Beowulf has also signed a Memorandum of Understanding (“MoU”) with Oy Fennoscandian Investment Group, a Finnish company which is wholly owned by Mr. Blomqvist to evaluate nickel and polymetallic exploration assets across the Nordic region for which Mr. Blomqvist has secured exploration rights.
  • Beowulf will acquire 100 per cent of the share capital of Fennoscandian in consideration for a total of 2.55 million ordinary shares in the capital of the Company (the “Shares”). The transaction will consist of an initial payment of 2.1 million Shares with a deferred payment of 4 5 0,000 S hares. In addition, two equal tranches of s hares will be issued on achievement of certain performance milestones. The total number of ordinary shares that may be issued , if all performance milestones are achieved , is 6.7 5 million ordinary shares.

Save for the initial payment of 2.1 million Shares, the issue of additional shares is subject to the Company’s shareholders granting the Directors the relevant authorities required to issue such shares and the Directors will shortly be convening a general meeting for, inter alia, this purpose.

  • An updated corporate presentation is expected to be uploaded to the Company’s website shortly.

Kurt Budge, CEO, commented:

I am very pleased to announce this acquisition at the start of the New Year. Fennoscandian gives Beowulf a jump-start into the graphite sector, providing the Company with an attractive portfolio of projects in a known and well understood mining jurisdiction.

“Beowulf has been assessing potential acquisition targets and conducting due diligence over the last 14-months with a view to looking beyond solely delivering exploration success and towards delivering production. The acquisition of Fennoscandian offers exploration assets and, through our role in the FennoFlake project, enables the Company to gain market insight that will guide Beowulf in commercialising Fennoscandian’s projects.

“I am also delighted that Rasmus Blomqvist founder of Fennoscandian is remaining with the company. Rasmus has tremendous experience across the Fennoscandian shield and is an excellent fit with Beowulf, as we advance mineral projects up the value curve and continue to evaluate opportunities across the Nordic region.

“In parallel with the continuing efforts to gain a positive decision on the Exploitation Concession for Kallak North, we have rationalised Beowulf’s existing exploration portfolio and I am delighted that we are now able to diversify and add to it. With Kallak in Sweden and Fennoscandian in Finland, Beowulf is developing a high quality portfolio of assets in a well-established mining region.

“I look forward to updating the market on our progress in due course.

Graphite Portfolio

Viistola

Viistola is located in eastern Finland approximately 30 kilometres southeast of the town of Joensuu. Fennoscandian has a 100 per cent owned Claim Reservation over an area of 97.68 square kilometres, which includes an electromagnetic (“EM”) conductor associated with graphite schist, which is over 20 kilometres in length. The graphite is hosted in a massive to brecciated graphitic schist associated with gabbro, quartzite, dolomite and phyllite country rocks.

Based on historical diamond drilling, rock chip drilling, trenching and ground geophysics, a potential high grade target at Hyypiä, a prospect which forms part of the Viistola Project, has been identified, anticipated to grade around 20-35 per cent Cg based on the preliminary evaluation of historic exploration data. The target represents less than 10 per cent of the total strike length of the prospective EM conductor.

Two diamond drillholes tested the EM conductor 6 kilometres south of the Hyypiä prospect and intersected 9-10 metres apparent thickness of graphite schist.

Historic exploration at Viistola includes:

  • 1973-1974: The Geological Survey of Finland (“GTK”) drilled 10 diamond drillholes (Pekkarinen,1979) , which included :
    • R310 : 21.7 metres of minerali s ation from 47.6m (no grade reported). It should be noted that the mineralisation intercept is the down-hole width and may not be the true width;
    • R311: 7.8 m etres at 36.2 per cent Cg from 172.0 metres . It should be noted that the mineralisation intercept is the down-hole width and may not be the true width ; and
    • Flotation tests on core samples from drillhole R311 indicated that the Hyypiä flakes are predominately fine, with approximately 13 per cent larger than 210 microns and approximately 40 per cent finer than 63 microns.
  • 1981-1983: GTK identified a g raphite - bearing horizon associated with a two k ilometre non-magnetic ground EM anomaly. GTK conducted trenching, including 72 surface drilling samples to identify the apparent width and quality of the graphite schist and also drilled three holes. It should be noted that the mineralisation intercepts are the down-hole width and may not be the true width, and that core loss may have affected some of the drill results , which included the following composited assays using LECO equipment:
    • R430: 14.6 m etres at 31.8 per cent Cg from 48.5 m etres ;
    • R431: 15.2 m etres at 25.3 per cent Cg from 44.2 m etres; and
    • R432: 13.2 m etres at 30.3 per cent Cg from 24.6 m etres .
  • 1984: Based on a combination of drilling and EM data, Sarapää and Kukkonen (1984) estimated a (historical) Mineral Resource of 4Mt at 28.6 per cent Cg within the central part of the Hyypiä deposit (700 m etres strike length ). The deposit was described as being 10-12 m etres thick , dipping at 70° to the southwest and was interpreted to extend to at least 200 m etres depth. It should be noted that this historical estimate of Mineral Resource does not comply with any modern international reporting codes (such as JORC and has not been the subject of technical evaluation at this stage, and insufficient verification study has been undertaken to date by either Beowulf or the Competent Person (“CP”) to assign confidence to this estimate and this information is disclosed as reflecting project potential only.

Piippumäki

Piipumäki is located in southeastern Finland approximately 45 kilometres southwest of the town of Mikkeli. Fennoscandian has a 100 per cent owned Claim Reservation over an area of 94.68 square kilometres.

Historic small-scale mining for graphite has taken place in the area, with old workings corresponding to ground and airborne electromagnetic anomalies. The graphite is hosted by feldspar quartz and mica schists, associated with upper amphibole to granulite grade metamorphic rocks.

Slingram EM surveys conducted by Fennoscandian and Åbo Akademi during 2013 and 2015 have demonstrated two conductive zones of possible graphite schist along a strike extent of up to 2 kilometres; with outcrop grab samples indicating grades of 5-10 per cent Cg (analysis performed by Sintef Molab AS, Norway). Fieldwork has also visually identified occurrences of coarse flake graphite.

The Laboratory of Physical Chemistry, Åbo Akademi University conducted testwork in February 2013 on a sample from Piipumäki. Findings showed high quality graphite flakes with visible hexagonal growth, and physical characteristics reportedly similar to synthetic graphite.

Haapamäki

Haapamäki is located in eastern Finland approximately 40 kilometres southwest of the well-established mining town of Outokumpu. Fennoscandian has a 100 per cent owned Claim Reservation over an area of 96.58 square kilometres. 

The area has several historic graphite workings, the locations of which correspond to ground and airborne EM anomalies. The graphite occurs as high grade lenses hosted by mica-bearing gneisses; the metamorphic grade is typically upper amphibolite to granulite facies. Mapping and Slingram EM surveys conducted by Fennoscandian and Åbo Akademi during 2015 identified extensive conductors with potential for graphitic carbon mineralisation around historic workings at K ää rmerinne and Suurenkahanvuori.

Grab samples taken from mine workings yielded grades ranging from 48 per cent Cg to 67.7 per cent Cg. Historic studies have also reported visually estimated flake sizes ranging 0.1-2.0 millimetres (Nurmela, 1989).

Kolari

Kolari is located in northwestern Finland approximately 50 kilometres and 100 kilometres east of Talga Resources’ (ASX:TLG) Vittangi project and Jalkunen graphite projects respectively, both of which are situated in Sweden.

Fennoscandian has a 100 per cent owned Claim Reservation over an area of 96.97 square kilometres. A desktop study of the area has been completed and shows extensive areas of graphitic schist.

Archives at GTK provide information on drilling conducted by Rautaruukki Corporation in the 1970s. Diamond drillhole R1 intersected 170 metres of mineralisation starting from surface, with an average grade of 8.9 per cent Cg. The intersection included 15.8 metres grading 19.8 per cent Cg (Mattila, 1978). It should be noted that mineralisation intercepts are the down-hole width and may not be the true width. The graphite encountered was described as very fine to fine microcrystalline graphite, within graphitic schists that are generally rich in quartz, feldspar, biotite and scapolite associated with greenstone-grade metamorphic rocks. 

FennoFlake Project

Led by Professor Olav Eklund of Åbo Akademi University , Turku Finland , the FennoFlake project is described as the ‘Identification of potential flake-graphite ores in the Fennoscandian shield and utili s ation of graphene’ and it is a collaborative group with partners representing the entire graphite value chain ; Fennoscandian is one of the FennoFlake partners. FennoFlake received an award of 630,204 Euros in June 2015 from the Academy of Finland in support of its work programmes .

The project has the following main objectives:

  • Identify flake graphite ‘ores’ ;
  • Test fragmentation and flotation, including a patented ‘ZRI method’ ( ZRI-homogenizer developed by one of the FennoFlake partners Haarla Oy , Finland );
  • Solution processing of graphene; and
  • Proof of concept applications .

FennoFlake partners include:

  • Åbo Akademi University, Turku Finland;
  • GTK ;
  • Laboratory of Materials Chemistry, University of Turku;
  • Budapest University of Technology and Economics (BME), Hungary;
  • Haarla Oy, Finland; and
  • SelFrag AG, Switzerland.

FennoFlake also has an international advisory board, whose members include:

  • Pär Weihed, Professor in Ore Geology, Luleå University of Technology (“LTU”), Sweden and Director CAMM at LTU (Centre of Advanced Mining and Metallurgy). Professor Weihed is one of the most experienced persons in ore geology across the Nordic region. Professor Weihed is Project Manager for NordMin, a Nordic Network of Expertise for a sustainable mining and mineral industry, financed by the Nordic Council of Ministers.
  • Dr Jukka Marmo, Laboratory Manager of the GTK Research Laboratory and Finnish Geoscientific Resear ch Laboratory (SGL). With his research team Dr. Marmo has developed state of the art research services for diamond exploration unique within the E.U. Dr. Marmo's laboratory was the first among state sector research organizations to acquire HV pulse powered technology (2007) and has systematically developed new applications for the technology.  He has also developed SGL, a joint research and laboratory campus between GTK and five university partners , which facilitates joint research projects between its partners .
  • Professor Róbert E. Gyurcsányi Budapest University of Technology and Economics (BME), Hungary. Professor Gyurcsányi is involved in the ‘Proof of concept applications’ and has expertise in the covalent functionalization of graphene sheets with highly selective ionophores/receptors for biomarkers, proteins and specific inorganic species, and the characteri s ation of the biosensors.  
    • Dr. Di Wei, Senior R esearcher, Nokia Research Centre in Cambridge (UK). Dr. Wei is involved in the Graphene Flagship through Nokia Research Centre in Cambridge (UK). His research interests include nanotechnology, electrochemical sensors, organic electronics, electrochemical nanofabrication and energy harvesting devices such as photovoltaics, fuel cells and batteries. 

Appointment of Exploration Manager

Mr. Rasmus Blomqvist, the founder of Fennoscandian, will remain with the company as Exploration Manager and will be responsible for the development of Beowulf’s graphite division. Mr. Blomqvist has been working in exploration and mining geology for over 11 years and holds a MSc in Geology and Mineralogy from Åbo Akademi University, Turku Finland.

Since 2012, Mr. Blomqvist has been exploring for flake graphite within the Fennoscandian shield and is one of the most experienced graphite geologists in the Nordic region. Prior to Fennoscandian, Mr. Blomqvist was Chief Geologist for Nussir ASA, managing its exploration team and achieving significant exploration success for the company.

Prior to Nussir, Mr. Blomqvist worked as an independent consultant for several international mining companies including Mawson Resources, Tasman Metals and Agnico Eagle. Mr. Blomqvist has experience in gold, base metals and iron ore, and during his career has focused on the Nordic region.

Mr Blomqvist is a member of the Australasian Institute of Mining and Metallurgy (“AusIMM”).

Transaction Consideration

Beowulf has acquired 100 percent of the share capital of Fennoscandian for 2.55 million ordinary shares (the “Shares”). The transaction consists of initial payment of 2.1 million Shares, which were allotted on completion of the acquisition, with deferred payment of 450,000 Shares.

In addition, two equal tranches of ordinary s hares will be issued on achievement of certain performance milestones. The first tranche of ordinary shares will be issued on the production of a maiden resource statement on one of the graphite projects in the portfolio, or on the anniversary 24 months following completion of the acquisition, subject to Mr. Blomqvist having worked for the Company as a full-time employee during that period. The second tranche of shares will be issued on completion of a bankable feasibility study on one of the graphite projects in the portfolio. The total number of ordinary shares t hat may be issued , if all performance milestones are achieved , is 6.7 5 million shares.

Save for the initial payment of 2.1 million Shares, the issue of additional shares is subject to the Company’s shareholders granting the Directors the relevant authorities required to issue such shares and the Directors will shortly be convening a general meeting for, inter alia, this purpose.

Admission of new ordinary shares to trading on AIM

Application will be made to the London Stock Exchange for the 2.1 million new ordinary shares to be admitted to trading on AIM on 18 January 2016 (“Admission”). Following Admission, the Company will have a total of 432,413,824 ordinary shares in issue. The new ordinary shares will rank pari passu with the existing ordinary shares.

Total Voting Rights

Following Admission and in accordance with the Financial Conduct Authority’s Disclosure and Transparency Rules, the Company hereby announces that it will have 432,413,824 ordinary shares of £0.01 each in issue, each share carrying the right to one vote. The Company does not hold any ordinary shares in treasury.

Following Admission, the above figure of 432,413,824 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

References

  • Pekkarinen, L. 1979. Selostus Malmitutkimuksista Kiihtelysvaaran Viistolan-Raatevaaran Alueella Vuosina 1972-1975. Geological Survey of Finland . Drill hole log for R311 at Viistola , p p 15-16, 24-25 .
  • Sarapää, O and Kukkonen I,  1984. Grafiittitutkimukset Kiihtelysvaaran Hyypiässä Vuosina 1981-1983. Geological Survey of Finland . p 15 includes a description of mineralised sections for hole R311 at Viistola . pp 40-45 includes drilllogs for drillholes R430-432, p p 46-48 assays for drillholes R430-432.
  • Nurmela, P. 1989. Katsaus Suomeen Grafiittiesintymiin. Geological Survey of Finland. This report summarizes a number of graphite prospects in Finland. Haapamäki is briefly described on pp 8-9, but is named differently as Leppävirta
  • Mattila, H. 1978. Saarenputaan ja Juurakkajärven grafiitti-Cu-kriittisten sähköanimaloiden tutkimukset v. 1977. Rautaruukki Oy. This report summarizes work at Saarenpudas and Juurakkajärvi. Jurakkajärvi prospect (within Kolari) is described on p 6. Jurakkajärvi drill profile on p 22.

Competent Person Review

Dr. Andrew Scogings PhD Geology, MAIG, MAusIMM, RPGeo (Industrial Minerals) has conducted a desktop review of source documents and data which underpins the technical statements disclosed herein and approves the disclosure of technical information in the form and context in which it appears in this announcement, in his capacity as a Competent Person (“CP”), as required under the AIM rules. The source information, including that referenced in this announcement held by Fennoscandian has been presented by Mr. Rasmus Blomqvist and reviewed by the CP. It should be noted that the technical disclosure herein, for which the CP takes responsibility, is based on desk-top review of historical documents only, and no data verification works or project inspections have been carried out by the CP at this time.

Dr. Scogings is a Principal Consultant with CSA Global Pty Ltd and is a highly experienced geologist with expert knowledge of industrial minerals exploration, mining and processing, product development, market applications and commercialisation processes. Dr. Scogings has expertise in industrial minerals exploration management, technical evaluation of exploration and acquisition targets, geological modelling and industrial minerals resource estimation. Dr. Scogings is a regular contributor to Industrial Minerals Magazine and has published several papers on the requirements of JORC 2012 Clause 49. He has also written articles ranking global graphite exploration projects and was recently senior author of the Natural Graphite Report – strategic outlook to 2020 published recently by Industrial Minerals Research (UK). Dr. Scogings is a Registered Professional Geoscientist (Industrial Minerals) with the Australian Institute of Geoscientists (“AIG”).

Enquiries:

Beowulf Mining plc
Kurt Budge, Chief Executive Officer Tel: +44 (0) 20 3771 6993
Cantor Fitzgerald Europe (Nominated Advisor & Joint Broker)
Stewart Dickson / Jeremy Stephenson / Phil Davies / Carrie Drummond Tel: +44 (0) 20 7894 7000
Beaufort Securities Limited (Joint Broker)
Jon Belliss Tel: +44 (0) 20 7382 8300
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.

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Beowulf Mining plc är ett företag engagerat i prospektering och utveckling av malmförekomster av koppar, guld och järn i Sverige.

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