Kallak North Exploitation Concession Update

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.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Kurt Budge, Chief Executive Officer.  

   

04 December 201 7

Beowulf Mining p lc

(“Beowulf” or the “Company”)

Beowulf (AIM: BEM; Aktietorget: BEO), the mineral exploration and development company, focused on the Kallak iron ore project and the Åtvidaberg polymetallic exploration licence in Sweden, and its graphite portfolio in Finland, provides an update on the Kallak North Exploitation Concession application process.

The Government of Sweden has asked the Company to provide comments on the statement, dated 30 November 2017, made by the County Administrative Board (“CAB”) for the County of Norrbotten.  In its statement, the CAB recommended that a Concession for Kallak North is not awarded.  The deadline for the Company’s comments to the Government is the 2 January 2018.

The Company maintains its position that its application has satisfied the requirements of the prescribed process, in accordance with Swedish law.

The CAB has previously stated, on 1 October 2014, that the Company's Environmental Impact Assessment ("EIA") is sufficient with respect to Chapters 3, 4 and 6 of the Environmental Code, and, on 7 July 2015, the CAB wrote to the Government indicating that the Company's application could be permissible with respect to Chapters 3 and 4 of the Environmental Code. 

In 2015, the CAB confirmed its support for the Company's application to the Mining Inspectorate, and in October 2015, the Mining Inspectorate recommended to the Government that the Exploitation Concession be awarded.

In addition, on 29 June 2017, the Mining Inspectorate confirmed to the Government that the Company's EIA is consistent, in the detail provided, in meeting the requirements of the Supreme Administrative Court judgement in the case of Norra Kӓrr. 

The Company has continued to invest in the Kallak project based on confirmatory statements made by the Swedish authorities. We are making good progress with the Kallak Scoping Study, and we have plans for drilling the Kallak South Exploration Target and Parkijaure exploration licences in 2018.

Economic Case

Kallak is Sweden’s largest known deposit of quartz-banded iron ore for which mining has not started.  Testwork carried out in 2015, produced a ‘super’ high grade magnetite concentrate with over 71 per cent iron content and very low levels of deleterious elements, and a high grade hematite concentrate with over 68 per cent iron content.

The 'super' high grade and purity of the Kallak magnetite concentrate are valuable attributes for key target markets: pellets; Direct Reduction Iron ("DRI") facilities in Europe and the Middle East; and in chemical industry applications. End-users demand higher quality iron units, which benefit manufacturing productivity with improved economy, and deliver environmental benefits. 

In July 2015, the CAB supported the economic case for Kallak, and in its analysis referenced the extended production life that the resource at Kallak South could add to a mining operation.  In the CAB’s latest assessment, it has made no mention of Kallak South, even though the Company has discussed with the CAB the potential for a 250 million tonne resource, which could support a 25-year mine life.  The Company has a valid workplan for drilling the Kallak South Exploration Target in 2018. 

The CAB has made no reference to the study by Copenhagen Economics, titled ‘Kallak – A real asset, and a real opportunity to transform Jokkmokk’, which the Company commissioned to illustrate the ‘big picture’ impact that Kallak could have on Jokkmokk and the County of Norrbotten.  The study shows that Kallak could create 250 direct jobs and over 300 indirect jobs in Jokkmokk, over the period that a mine is in operation, which could be 25 years or more, and generate SEK 1 billion in tax revenues over that period. 

In addition, the CAB seems not to recognise the interconnectedness of Kallak, the ambitions of Inlandsbanan, and the Port of Luleå, both of whom are looking to expand their capacity, grow their businesses, further boosting Norrbotten’s economy.

Area of National Interest (“ANI”)

Sticking to a 14-year mine life for Kallak North, the CAB has now decided to weigh-up one national interest against another, and determined in the favour of reindeer herding.

Since February 2013, Kallak has been designated an ANI for its minerals and metals, affording it protection against competing land use, and measures that may hinder future potential mineral extraction.  Kallak's area of 13.6 square kilometres (“km2”) compares to Jåhkågaska reindeer herding community's 2,640km2 of grazing land or 0.5 per cent, as a percentage.

Before February 2017, when Sametinget designated national interest for reindeer herding directly on top of Kallak, there were no conflicting national interests for the Concession Area, or for those areas taken by operational facilities necessary to support mining.  A fact recognised by the CAB in July 2015 when it supported the Company’s application.

Reindeer Herding – national interest at Kallak, and Laponia

Despite Sametinget’s relatively recent designation of national interest for reindeer herding at Kallak, reindeer herding is far from a static activity, and the importance of any specific area varies from year to year.  Therefore, the Company has been careful in its analyses to consider the proposed mine’s potential impacts on Jåhkågaska tjiellde’s reindeer herding activities in their totality, whatever the designation of any specific land area may be. The recent designation does therefore not change anything in our assessment of the potential impacts on Jåhkågaska.

As the Company moves forward with the project, we will work more closely with Jåhkågaska, to learn from their annual reindeer herding management plan (“renbruksplan”), such that we can plan together our mutual activities.  Even now, we have ongoing communications with Jåhkågaska, Sirges, Tuorpon, and Slakka, regarding the permitting process, and our Kallak drilling plans for 2018.

Recent comments by Naturvårdsverket (“NV”) and Riksantivarieämbetet (“RAÄ”) to the CAB suggested that Kallak poses a risk to nomadic reindeer herding in Laponia, and as a result threatens Laponia’s World Heritage Status.  This is an extreme and highly unlikely scenario, and this can be understood with a reasonable assessment of some pertinent facts:

  • Kallak is situated, at the closest point, approximately 34 kilometres away from Laponia. 
  • NV and RAÄ have already concluded that operations at Kallak would have no direct impact on Laponia, and have said that use of existing roads and railways is a positive feature;
  • Laponia’s boundary has been established to protect what lies within the boundary, and not to restrict development, such as Kallak, which is located far beyond any conceivable ‘buffer zone’;
  • Kallak represents only about 0.5 per cent of Jåhkågaska’s available pasture lands, and Jåhkågaska’s 4,500 reindeer make up less than ten per cent of the total number of reindeer that are present in Laponia over some part of the year; and
  • It is an established fact that there are solutions for how to manage the competing land requirements of mining operations (and other industrial activities) and reindeer herding. With regards to migration, for example, reindeer can be moved around an obstacle, such as a mine, using specific fenced corridors, Eco ducts or even trucks.  A highly relevant practical case can be found in LKAB-Kiruna-Abisko National Park area.  Abisko is like Laponia, a protected area which is used by reindeer herders. The reindeer herders at Abisko are maintaining their traditional activities, whilst sharing their winter pasture with the industrial activities present around Kiruna and Svappavaara.

When the Company has received specific comments from the CAB, it has addressed them immediately.  In November 2014, the Company eliminated the Jelka-Rimakåbbå transport route from its plans, after the CAB expressed concern about the potential risk the use of this route posed to reindeer herding.  The CAB has presented no specific issues or questions to the Company since then.

   

Kurt Budge, CEO, commented:

In my career, I have never been involved in a permitting process where the authorities show such a lack of willingness to engage with a company on a major application.  The permitting process we have experienced has been inefficient, and our application has been passed back and forth, from one authority to another, with no questions put to the Company, nor feedback given on additional documentation we have provided, nothing.  Instead decision makers choose to sit in isolation, and determine the fate of our application, misrepresenting the facts, and seemingly biased in their analysis.

“Throughout my time with Beowulf, we have been respectful towards the Swedish authorities and decision makers, but in return, and especially with the CAB, have seen scant recognition of the SEK72 million we have invested in Kallak, our status as a public company, and the interests of our shareholders, over 58 per cent of whom are Swedish.

“The CAB’s actions are destroying confidence in Beowulf, the Kallak project, and, as commented by industry participants in Sweden and mining analysts in London, damaging Sweden’s reputation as place to invest and do business.

“The fact that the application for Kallak is based on a deposit as defined in 2013 and a 14-year mine life, is considered by the CAB to be the same thing as the future mine’s life expectancy. The CAB thereby ignore the scale of Kallak and the potential for a 250 million tonne resource across North and South deposits, supporting a 25-year mine.

“Exploration rarely covers the whole prospect from the start, but defines a resource to support an economic enterprise.  With our work to date, we have defined Kallak North for the application, and started to define Kallak South, and we are continuing to explore the potential our other exploration licences, including Parkijaure.  It is common practice for mines in Sweden, and around the world, to add resource over time, extending a mine’s production life. This supports the case for a mining operation at Kallak to last well beyond fourteen years. 

“Focusing on a 14-year mine life, the CAB has weighed one national interest against another and finds in favour of reindeer herding, discounting the evidence that reindeer herding is on the increase in Sweden, and in practice, there are many examples of the mining industry and reindeer herders cooperating.  The Company maintains its belief, that mining and reindeer herding can prosper together.  There is no evidence to suggest otherwise.

“The CAB has given no recognition to local support for Kallak.  The fact that Robert Bernhardsson, the Mayor of Jokkmokk, is a strong supporter, the good relations we have developed with Jokkmokks Allmänning, honouring our SEK 500,000 commitment to its SME enterprise investment fund, and with local entrepreneurs who see the benefits that a mine could bring.

“Last week at SveMin’s Höstmöte in Stockholm, the Board listened to Mr. Damberg, Minister for Enterprise and Innovation, speak about the importance of the mining industry in Sweden, and the problems being experience with permitting new mines.  In September 2017, Mr. Damberg was quoted in the Swedish media as saying that Swedish law is enough for testing our application, and that the permitting process should be “by the book”. 

“With our Swedish Advisory Board and expert Swedish technical team, we will present comments to the Government which explain the reality of the Kallak project, rather than the one-sided view that the CAB has displayed.  The Company remains hopeful of an award of the Exploitation Concession.

“I look forward to updating shareholders on progress in due course.”

Competent Person Review

The information in this announcement has been reviewed by Mr. Rasmus Blomqvist, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy.  Mr. Rasmus Blomqvist has sufficient experience, that is relevant to the style of mineralisation and type of deposit taken into consideration, and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Mr. Rasmus Blomqvist is a full-time employee of Oy Fennoscandian Resources AB, a 100 per cent owned subsidiary of Beowulf.

Enquiries:

Beowulf Mining plc
Kurt Budge, Chief Executive Officer Tel: +44 (0) 20 3771 6993
Cantor Fitzgerald Europe (Nominated Advisor & Broker)
David Porter Tel: +44 (0) 20 7894 7000
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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