Kallak North Exploitation Concession Update

Beowulf (AIM: BEM; Aktietorget: BEO), the mineral exploration and development company focused on the Kallak magnetite iron ore project in northern Sweden and its graphite projects in Finland, provides an update on its application to secure an Exploitation Concession for Kallak North.

Highlights:

• The Company has written a second letter to the Minister for Enterprise and Innovation, given that it is now over six months since the Mining Inspectorate of Sweden recommended to the Swedish Government that the Concession for Kallak North be awarded and that no response has been received to the Company’s first letter sent on 18 November 2015.
• The Company has maintained that its application satisfies the requirements of the Swedish regulations, and that the Environmental Impact Assessment (“EIA”) for Kallak North has comprehensively studied all aspects of a future mining operation, including mining, waste rock handling, processing, tailings management, water management and transport, and their associated environmental impacts.
• The Company has pointed out that detailed studies into local reindeer herding businesses have been completed as part of the EIA for Kallak North, and that precautionary, protective and compensatory frameworks have been established. In consultation with concerned Sami villages, these frameworks will be developed into management plans as part of the Company’s application for an Environmental Permit.
• The Company has reminded the Swedish Government that in response to the concerns of the County Administrative Board (“CAB”) for the County of Norrbotten about a specific transport corridor under consideration, the Company eliminated from its future planning the transport corridor that passes in a north/north-easterly direction through the Jelka-Rimakåbbå Natura 2000 area.

Kurt Budge, CEO, commented:

“Beowulf has been permitted to work in Sweden for over 10 years, and during that time has defined a high quality magnetite iron ore resource of national importance at Kallak, from which we have produced a market-leading ‘super’ high grade magnetite concentrate.

“We have left no stone unturned in addressing concerns with our application for an Exploitation Concession for Kallak North, respecting and listening to our stakeholders, showing our desire to become a strong local partner in the future economic growth of Jokkmokk, and demonstrating a responsible approach to the future development of Kallak.  

“We are aware that the Swedish Government is reviewing several applications and that ours may not be the priority, but we have decided to write again to the Government, as it is difficult for a company, such as Beowulf, to have a business critical decision looming and have limited insight into either the decision making process or when a decision can be expected.

“We hope that our commitment to Kallak and its stakeholders, as well as the quality of our application are recognised by the Swedish Government, and that the Exploitation Concession is awarded without further delay.”

Exploitation Concession Recap

• On 9 October 2015, the Mining Inspectorate of Sweden wrote to the Government of Sweden and recommended that the Exploitation Concession for Kallak North be granted.
• The recommendation was delivered in response to the Department of Enterprise and
  Innovation’s invitation for the Mining Inspectorate to give its views on the findings made by the CAB on Kallak North, as published in the CAB’s announcement dated 7 July 2015.
• On 7 July 2015, the CAB published their response to the Government of Sweden’s request for comments on the national economic assessment of Kallak North.
• The CAB stated in their response that mining is economically relevant, and that the Kallak North project generates economic benefits at local, regional and national levels, including direct and indirect jobs, tax revenues, and more broadly across mining equipment and services sectors in Sweden.
• The CAB stated that there are no conflicts within the Concession area where national interests are considered, as the Concession area is designated as an Area of National Interest (“ANI”) for minerals. Kallak’s ANI status was designated by the Swedish Geological Society in February 2013, affording it protection against competing land use and measures that may hinder future potential mineral extraction.
• The CAB’s announcement also looked to the future, directing the Company towards working with communities that could be affected by the development of a mining project, including reindeer herders and Sami villages. This is work that the Company has already begun, with regular interactions and meetings with key stakeholders in and around Jokkmokk, including ongoing communications with the Chairmen of Jåhkågasska and Sirges Sami Villages.
• On 8 June 2015, the Company announced testwork results showing that a market-leading ‘super’ high grade magnetite concentrate, with over 71 per cent iron content and low levels of deleterious elements (silica, alumina, phosphorous and sulphur) had been produced.
• The ‘super’ high grade and purity of the magnetite concentrate produced are valuable attributes for key target markets: pellets; Direct Reduction Iron (“DRI”) facilities in Europe and the Middle East; and in chemical industry applications, with higher quality iron units benefiting manufacturing productivity with improved economy, and high purity delivering environmental benefits.
• The Company has defined a high quality resource at Kallak, including an Indicated Resource of 118.5 million tonnes (“Mt”) at 27.5 per cent iron and an Inferred Resource of 33.8Mt at 26.2 per cent iron (JORC, 2012 edition), plus an exploration target of 90-100Mt at 22-30 per cent iron.

The exploration target represents potential ore, specifically in the gap between the northern and southern ends of Kallak South, and below the pit shells modelled for the resource statement. The 2014 drilling programme for Kallak South focused on defining the ends of the Kallak South orebody. The geophysical magnetic signature of mineralisation, evidence of the presence of magnetite, extends through the gap giving confidence for an exploration target, but insufficient drilling precludes any additional resource classification.

The Kallak North orebody remains open at depth and to the north.

• Jokkmokk Kommun’s independent socio-economic study on Kallak shows that a mining development will create direct and indirect jobs, increase tax revenues and slow down population decline, demonstrating that mining at Kallak can provide a much needed economic stimulus for the region.
• The Company has demonstrated its commitment to Jokkmokk’s economic future as a direct investor in the mining project, with over SEK 67 million having been invested to date, and through its partnership with the landowners’ association Jokkmokks Allmänning, to provide financial support for the development of small and medium enterprises in the wider community. The Company has to date funded SEK 300,000 towards this partnership, with the money being directly invested into local businesses.

Enquiries:

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.