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Kallak North Exploitation Concession Update

04 September 2015

Beowulf Mining plc

(“Beowulf” or the “Company”)

Kallak North Exploitation Concession Update

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

Highlights:

  • The Department of Enterprise and Innovation of the Government of Sweden has now invited the Company to give its views on the findings made by the County Administrative Board (“CAB”) for the County of Norrbotten on Kallak North, as published in its announcement dated 7 July 2015.
  • The Company has been given a deadline of the 14 September 2015 to make a final statement.
  • The Government of Sweden has said in the media that a decision on the Exploitation Concession for Kallak North can be expected in autumn 2015.

Kurt Budge, Chief Executive Officer (“CEO”), commented:

“We respect the process that The Government of Sweden is conducting with regard to our application and are pleased that we appear to be in the final stages.

“We welcomed the recent announcement by the CAB, and its important findings that a mining project can deliver significant economic benefits for Jokkmokk, the County of Norrbotten, and for Sweden.

“The CAB’s findings also add to the list of supporting arguments for why an Exploitation Concession for Kallak North should be granted: its designation as an Area of National Interest (“ANI”) for minerals; the scale and quality of the defined resource; and the “super” high grade magnetite concentrate that can be generated from the orebody for which there is market demand.

“We have been at pains to demonstrate the distinct change in leadership and management approach by the Company to the development of Kallak North, our respect for all stakeholders, our desire to partner, and our responsible attitude to project development.

“We remain optimistic for a positive decision, which will recognise the Company’s commitment to Sweden over 10 years, and that of our Swedish and non-Swedish shareholders who have invested over £5 million in the Kallak Project to date.

“Our application for an Exploitation Concession has met all the requirements of the Swedish regulations, with comprehensive studies being undertaken and reports complied, by an experienced team of Swedish consultants, to produce an Environmental Impact Study for Kallak North sufficient for this stage of permitting.”

Exploitation Concession Recap

Since the Company received notification on 13 February 2015 that the Mining Inspectorate of Sweden had referred the decision regarding the Exploitation Concession for Kallak North to the Government of Sweden, the CEO has visited Sweden regularly and met with officials at the CAB, the municipality (Jokkmokks Kommun) and other key stakeholders, including the landowners’ association in Jokkmokk and the Mining Inspectorate.

During these meetings the CEO has explained the changes that have taken place within Beowulf and its subsidiary Jokkmokk Iron Mines AB since October 2014, in terms of its leadership and approach to stakeholders. He also provided an update on the Company’s understanding of the process being followed by the Swedish Government, and presented supporting arguments for the award of the Exploitation Concession, including:

  • Kallak’s designation, in February 2013, by the Swedish Geological Society as an ANI for minerals, affording it protection against competing land use and measures that may hinder future potential mineral extraction.
  • The definition of 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 £5 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.

An important step forward was taken on 7 July 2015 when 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. In addition, 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 ANI for minerals. No other national interests were identified.

The announcement by the CAB was a positive turnaround from its position in October 2014, when concerns were raised regarding transport routes, which are typically assessed at a later stage during environmental permitting. In response, the Company made significant concessions (see the Company’s Third Quarter Update Announcement dated 28 November 2014), including:

(i) that it will not be proposing transport routes that pass in a north/north-easterly direction through the Jelka-Rimakåbbå Natura 2000 area. This ensures that future transport routes will not lead to a significant impact on reindeer husbandry;

(ii) specifically to reindeer husbandry, the Company proposed precautionary and protective measures which resulted from analysis undertaken as part of its environmental impact assessment; these measures will be developed further in consultation with concerned Sami villages as part of the application for an Environmental Permit; and

(iii) in the event of any residual effects on reindeer husbandry, the Company intends to establish a framework for economic compensation.

In addition, 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 a first meeting between the new management team and representatives of the Sami villages in June 2015.

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.

About Us

The Kallak North iron ore project is located about 40km west of the Jokkmokk municipality centre in the Norrbotten County in Northern Sweden.

Local infrastructure is excellent with all-weather gravel roads passing through the project area and all parts are easily reached by well used forestry tracks. A major hydroelectric power station with associated electric power-lines is located only a few kilometres to the south east. The nearest railway (the ‘Inland Railway Line’) passes approximately 40km to the east. This railway line is connected at Gällivare with the ‘Ore Railway Line’, which is used by LKAB for delivery of their iron ore material to the Atlantic harbour at Narvik (Norway) or to the Botnian Sea harbour at Luleå (Sweden).

The total Kallak project area is approximately 80km2, and includes the Parkijaure licence granted in 2010 and the Ågåsjiegge nr2 licence granted in 2014.

The Kallak North and Kallak South orebodies are centrally located and cover an area approximately 3,700m in length and 350m 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 27,895m drilled, including 131 drillholes.

The latest resource statement for the Kallak project was finalised on 28 November 2014, following the guidelines of the JORC Code 2012 edition, summary as follows:

 

Category

Tonnage

Mt

Fe

%

P

%

S

%

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

The Ballek Joint Venture project comprises two exploration permits over a total area of approximately 8.7km2, located in the Norrbotten County in Northern Sweden. In September 2008 Beowulf reported a maiden JORC Code compliant Inferred Resource estimate for the Lulepotten copper-gold deposit of 5.4Mt, grading 0.8% Cu and 0.3g/t Au.

Other attractive portfolio assets include the Nautijaure licence with potential for IOCG, Grundträsk gold project and the Munka licence which hosts Sweden’s largest, drill confirmed deposit of molybdenum.