Last checked at 2 Jun 2008 07:00
BEOWULF MINING PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
The Board of Beowulf Mining PLC ("Beowulf") is pleased to present the reportand accounts for the year ending 31 December 2007. Beowulf has six projects inNorthern Sweden prospective for copper, gold, uranium and iron. Drilling hastaken place, since the last Annual Report, on the Grundtrƒ¤sk gold project andthe Ballek iron oxide copper gold uranium deposit.
The results show that Beowulf made a loss of GBP362,638 in 2007 as compared to a loss of GBP318,276 in 2006. This was due to increased expenditure on drilling.
Since 31 December 2006 the Company's cash reserves have been increased by the following developments:
i) On 24 July 2007 Beowulf signed a convertible loan agreement
with Starvest Plc. The loan is for GBP250,000 and bears interest at 4% per annum and is convertible in to new ordinary shares of Beowulf at 4p per share at any time prior to 31 July 2012 at the option of Starvest Plc.
ii) On 16 August 2007 Beowulf placed 8,000,000 new ordinary
shares at a price of 4.25p each raising the gross sum of GBP 340,000, arranged by Loeb Aron & Company Ltd. The issue was together with 400,000 warrants exercisable for two years at 6p per warrant.
iii) On 31 March 2008 Mrs Carole Rowan exercised 4,100,000
warrants at 1p per share, Mr. Edward Taylor exercised 250,000 warrants at 1p per share, and Miss Eleanor Poulton exercised 2,000,000 warrants at 1p per share, raising GBP63,500. On 31 May 2007 Beowulf signed a joint venture with Agricola Resources Plc("Agricola") under which Agricola may earn a 51% interest in the Ballekcopper-gold-uranium exploration permits that cover 110 square kilometres in theArjeplog municipality, Northern Sweden. To earn this interest Agricola mustcomplete ground geophysics and 3,000m of diamond drilling on the Ballektenements prior to 31 December 2008. Agricola can increase its equity share to70% through sole funding a further exploration program totaling USD500,000.
On the 22 February 2008 Alexander David Securities Limited was appointed as sole broker to the Company.
On the 31 March 2008 Beowulf announced that it had signed a connectionagreement with AktieTorget AB (www.aktietorget.se).The agreement offers afacility for Beowulf's shares to be traded in Sweden as Depository Notes. It isintended that shareholders in Beowulf will be able to deposit their shares withSkandinaviska Enavilda Banken AB, via a London Bank, against the issue ofdepository notes which will be traded on the Swedish AktieTorget Market. FutureSwedish investor demand for Beowulf shares could lead to new issues of sharesthrough this facility.During 2007 diamond drilling was undertaken on the Grundtrƒ¤sk area, in theSkellefte Mining District, where the Company has three licences. Drilling byBeowulf has defined gold mineralization over a "Central Mineralised Zone" of800 meters with grades of about 1 gram per tonne of gold. Mathematicalmodelling, geophysical surveys and uranium prospecting was undertaken byAgricola Resources PLC under terms of the Joint Venture Agreement with Beowulfon the four Ballek licences. In early 2008 a diamond drilling programme wasstarted on these Ballek licences.We were unable to find a suitable drilling rig in 2007 for the titanium ironRuoutevare project, but it is anticipated that the drilling campaign will beginin 2008. The dramatic increase in the price of iron ore fines in 2008 hasfocussed attention on all the iron ore projects in Sweden and the economic casefor the exploitation of the Ruoutevare project has become stronger.Developments are expected during 2008 which shall be reported to shareholdersin due course.The share price of Beowulf has under-performed in 2007 and the early part of2008 and the Directors will work hard during the remainder of 2008 to increasethe value of its exploration and development assets and will report regularlyon the very active exploration programmes currently in progress.REVIEW OF OPERATIONSSwedenBeowulf currently holds 14 exploration permits in Northern Sweden as tabulatedbelow.Name of licence Size Valid Valid (km2) from until Arjeplog Region:Ballek 2 38.0 2005-04-21 2009-04-21 Ballek 3 37.9 2005-05-24 2009-05-24 Ballek 4 22.0 2005-09-29 2009-09-29 Ballek 5 12.0 2007-03-27 2010-03-27 Jokkmokk Region:Majves 1 5.0 2003-04-03 2009-04-03 Majves 2 2.5 2003-06-06 2009-06-06 Kallak 1 5.0 2006-06-28 2009-06-28 Ruoutevare 8.5 2006-03-21 2009-03-21
Skellefte Mining District:
Grundtrƒ¤sk 4 20.6 2008-11-12 2011-11-12 Grundtrƒ¤sk 2 15.9 2004-02-13 2009-02-13 Grundtrƒ¤sk 3 6.4 2004-02-13 2009-02-13 Kiruna region:Ussalahti 1 4.6 2005-01-26 2009-01-17 Ussalahti 2 2.6 2005-01-26 2009-01-26 Ussalahti 3 2.0 2005-02-17 2009-02-17 Total 183.0
The exploration permits are governed by the Swedish Minerals Act (1991:45),which was subject to amendments in 1993 and 1998. The Act accords that anexploration permit is granted for an initial period of 3 years, and can besubsequently renewed for a further 3 years. A final extension of the permitscan be granted for an additional 3 years, after which an application for amining licence must be made. Further information on the permits can be obtainedfrom the Mining Inspector in Luleƒ¤ (Bergsstaten, Varvsgaten, SE 972 32, Luleƒ¤,Sweden (www.bergsstaten.se).Ballek Joint VentureOn 31 May 2007 Beowulf signed a joint venture with Agricola Resources PLC("Agricola") under which Agricola may earn a 51% interest in the Ballekcopper-gold-uranium exploration permits that cover 110 square kilometers in theArjeplog municipality, northern Sweden. To earn this interest Agricola mustcomplete ground geophysics and 3,000m of diamond drilling on the Ballektenements prior to 31 December 2008. Agricola can increase its equity interestto 70% through sole funding a further exploration program of USD500,000.The Ballek Project occurs at the intersection of two major fault systems, a WNWtrending continental-scale lineament corridor which contains the SkellefteMineral Field, and a NNE trending major fault which extends through the giantKiruna iron-ore district.A prominent gravity anomaly and co-incident magnetic anomaly occurs in theBallek Project, and there is a known uranium occurrence, Rebraur Vƒ¤stra, in theNW tenement. Previous drilling by the Geological Survey of Sweden (SGU) hasidentified a trend of copper and copper-gold mineralisation along the westernpart of the project, including a small (non-JORC compliant) mineral resource atthe Lulepotten copper-gold deposit. On the basis of the presence of this largeco-incident gravity and magnetic anomaly, and known copper, gold and uraniummineralisation, it is considered that the project exhibits significantpotential for iron-oxide, copper-gold-uranium mineralisation (IOCG).IOCG systems are highly prized exploration targets due to their potential forlarge, high-grade deposits containing multiple commodities (usually iron-ore,copper, gold and uranium in varying amounts). Most of the known IOCG depositsare characterised by a few common criteria, including their location alongfundamental crustal lineaments and the presence of co-incident gravity andmagnetic anomalies. Recent industry experience has shown that this co-incidenceof gravity and magnetic anomalies is required in a three-dimensional sense, andthat conventional analysis of 2D images of gravity and magnetic data may not besufficient to identify the best targets.In August 2007, the Joint Venture completed a programme of 3D modelling of thegravity and magnetic data for the district which contains the Ballek Project.The results of this modelling can be viewed in 3D computer software where it ispossible to assess the relationship between three-dimensional magnetic bodiesand three-dimensional gravity anomalies (representing bodies which are denserthan the surrounding rocks). Analysis of the data for the Ballek Project showsthat complex magnetic bodies are spatially co-incident with large dense bodiesreflected by anomalous gravity readings.Comparison of the location of the known copper and copper-gold deposits in theBallek Project shows a very good correlation with co-incident gravity andmagnetic anomalies. The copper mineralised trend that included the Lulepottendeposit extends along the edge of a co-incident magnetic and gravity anomalyand joins a smaller co-incident pair of anomalies at its southern extent. Themineralisation in the Lulepotten trend was drilled between 1960 and 1971 anddoes not appear to have been analysed for its uranium content. It comprisesdisseminated chalcopyrite with abundant bornite, pyrite, chalcocite and ironoxides hosted in potassically altered volcanic rocks adjacent to graniticintrusions. This description is entirely consistent with the IOCG style ofcopper-gold-uranium mineralisation, lending further support to the BallekProject.In October 2007, a geophysical program was completed, with a total of 28.75line-km of ground magnetic data and 20.30 line-km of IP and resistivity datacollected by Swedish company GeoVista AB. Interpretation of the IP and groundmagnetic survey data by GeoVista AB and by Agricola's geophysical consultantshas identified a number of IP anomalies where resistivity highs are also markedby increased IP effect and the presence of magnetic anomalism. A number of suchanomalies are also co-incident with the gravity and magnetic anomalies derivedfrom the 3-D inversion modelling, and nine of these have been prioritised fortesting by diamond drilling.
In January 2008 Agricola commenced a 3,300m diamond drilling programme to test the nine geophysical targets. To date 4 of the holes (1600m) have been completed.
Uranium exploration took place focused on the Ballek licences in the 2007 fieldseason, with scintillometer measurements and sampling of boulders and outcrop,over the Rebraur West uranium prospect. Drill holes and refilled trenches from1980s' exploration were studied and highly radioactive boulders that areproximal to one of the trenches were sampled.The analytical results received show that the uranium content varied from 0.19%to 1.75 % in the boulders that gave the highest scintollometer readings. Theboulders are considered remnants of the local bedrock within or close to thetrench, which is now refilled. The uranium grade is much higher than originalreported levels from bedrock (max 0.07 % of uranium) from the area in 1984.Only background levels of thorium were noted, but high contents of lead areaccompanying high levels of uranium.
Future studies will include detailed soil grid radon cup surveys in order to define drill targets in the area outside the previously drill-tested zone.
The Rebraur West uranium prospect was originally discovered by the GeologicalSurvey of Sweden (SGU) in the early1970s. Limited drilling and trenchingoutlined a uranium mineralisation at outcrop between 1-8 m wide and extendingalong several parallel fractures at 150 m but open in both directions alongstrike. Grades of up to 700 ppm of uranium were reported. The fine-graineduranium minerals occur in an albite-quartz-chlorite host rock, (Gustafsson, B,"Uranium report 1981-8", SGU, Mala, IRAP 84005).
Analytical results of these samples are presented below.
Uranium Sample No Assay % Thorium % Lead % REB 07 001 0.264 0.004 0.08 REB 07 001b 0.394 0.004 0.10 REB 07 002 1.540 0.004 0.25 REB 07 003 0.192 0.005 0.37 REB 07 003b 0.953 0.005 1.02 REB 07 004 1.75 0.006 0.24
All samples were analysed by ALS Chemex laboratories at Vancouver, Canada.Thirty six elements including uranium, thorium, base metals and gold and silverwere determined by ICP- analysis. Samples with high uranium were re-analysed byXRF.
The results suggest that a commercial uranium deposit can be located in the Rebraur West area.
Grundtrƒ¤sk Gold ProjectThe Grundtrƒ¤sk project is focused solely on gold. It covers 45 squarekilometers in the Skellefte Mining District of Northern Sweden. There is littleoutcrop and the land is currently used for forestry. There is goodinfrastructure in place, with the area being served by a network of forestroads and benefiting from the main road from Skellefte to Malƒ¤ passing throughthe licence area. There are no problems with water and electricity with bothbeing available locally. Grundtrƒ¤sk has the potential for a shallow depth goldresource with gold bearing sulphide mineralisation starting at shallow depthsof less than 12 metres, ensuring that any deposit will likely be amenable toopen pit mining. As a result of recent drilling, which targeted the SouthernGold Structure, the known mineralised corridor has been increased in length by50 metres to stretch over 800 metres in length. Recent drilling completed inearly 2007 and released to the market on 6 June 2007, supports the belief thatGrundtrƒ¤sk has the potential to host an economic gold deposit.The most recent drilling programme, completed in 2007, saw 10 diamond drillholes completed on the South Gold Structure. The results indicate the presenceof sigmoidal gold bearing structures in the mineralised corridor over a strikelength of 800 metres. The drilling returned gold grades of up to 5.2 metres at4.28 grams per tonne, 4.62 metres at 2.8 grams per tonne, 5.7 metres at 2.53grams per tonne and 16.9 metres at 1.86 grams per tonne.The results achieved at Grundtrƒ¤sk to date justify further work either byBeowulf solely or in joint venture. Geophysical surveys and diamond drillingare planned for 2008. With gold currently trading close to USD900 per ounce,the directors believe that with further positive drilling results it could takeGrundtrƒ¤sk forward to a mineable stage.
Ruoutevare
Beowulf's Ruoutevare project translates to mean 'iron mountain' and has anon-JORC compliant resource, as verified by Snowden Mining Industry Consultants(Snowden), of 116 million tonnes, grading 38.2% iron, 5.6% titanium dioxide and0.17% vanadium oxide. Detailed geological mapping has been completed over theexploration concession and indicates that there are two mineralised lensoverlying each other. The Directors believe that the mapping suggests that themineral resource can be increased by further diamond drilling. This drilling isdue to start in 2008 and the intention is to make the mineral resource JORCcompliant as recommended by Snowden. The drilling will be extended to includeten to twelve extra holes laid out in a cruciform manner with strict geologicalcontrol and the drilling will continue thereafter in 2008.Beowulf commissioned the Swedish Raw Material Group (RMG) to conduct a scopingstudy of the economics of development of the Ruoutevare deposit. RMG based itsstudy on the approximate current iron ore and titanium dioxide prices andconcluded that at a throughput of 10 million tonnes per year, with trucking theconcentrates to the rail head, would yield positive results. The extra drillingto extend the resource estimate, addressing transport issues and subsequentdiscussions with state bodies off take clients will be factored into thescoping study in 2008, as will the rising cost of iron ore.
Jokkmokk
The target of the Jokkmokk area is that of an iron oxide copper gold deposit(IOCG). Beowulf has been exploring in the area since 2003 and still retains theMajves 1 and Majves 2 claims. The area was previously the subject of a jointventure with the copper major, Phelps Dodge. Drilling in 2004 intersected 110metres of 0.42% copper and 0.52 grammes per tonne of gold. Follow up drillingin 2005 was not so successful and Phelps Dodge withdrew from the Joint VentureThe exploration logic is that the area is associated with large north-eastsouth-west fracture zones, and similar structures are associated with Boliden'sAitik copper mine. Beowulf is exploring the possibility of conducting furtherwork in the area with another copper major.
Other Projects
Beowulf has two other projects Ussalahti Copper-Gold and Kallak - Iron Ore.During 2007 only small amounts of work were conducted on the projects. It isintended to carry out additional work in these areas in 2008, especially on theKallak iron ore project because of the rising price of iron ore.Dr Robert YoungChairmanINCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 GBP GBPCONTINUING OPERATIONSRevenue - -Other operating income 150 250Administrative expenses (378,775) (338,286)OPERATING LOSS (378,625) (338,036)Finance costs (4,167) -Finance income 20,154 19,760LOSS BEFORE TAX (362,638) (318,276) Tax - -LOSS FOR THE YEAR (362,638) (318,276)Earnings per share expressedin pence per share:Basic -0.52 -0.50Diluted -0.42 -0.35STATEMENT OF RECOGNISED INCOME AND EXPENSEFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 GBP GBP Revaluation of investments 68,319 (204,158)
NET INCOME/(EXPENSE) RECOGNISED DIRECTLY IN
EQUITY 68,319 (204,158) LOSS FOR THE FINANCIAL YEAR (362,638) (318,276)TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR (294,319) (522,434) BALANCE SHEET31 DECEMBER 2007 2007 2006 GBP GBPASSETSNON-CURRENT ASSETSIntangible assets 240,943 232,894Property, plant and equipment 1,920 2,100Investments 295,724 227,405 538,587 462,399CURRENT ASSETSTrade and other receivables 34,426 17,348Cash and cash equivalents 671,231 495,653 705,657 513,001LIABILITIESCURRENT LIABILITIESTrade and other payables 20,410 24,984NET CURRENT ASSETS 685,247 488,017NON-CURRENT LIABILITIESFinancial liabilities - borrowings Interest bearing loans and borrowings 250,000 - NET ASSETS 973,834 950,416SHAREHOLDERS' EQUITYCalled up share capital 745,482 663,982Share premium 2,597,719 2,361,482Revaluation reserve 190,724 122,405
Capital contribution reserve 46,451
46,451Retained earnings (2,606,542) (2,243,904)TOTAL EQUITY 973,834 950,416CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 GBP GBPCash flows from operating activitiesCash generated from operations (318,319)
(267,006)
Net cash from operating activities (318,319)
(267,006)
Cash flows from investing activitiesPurchase of intangible fixed assets (93,534)
(141,367)
Purchase of tangible fixed assets (460) (2,216)Purchase of fixed asset investments -
(30,000)Interest received 20,154 19,760
Net cash from investing activities (73,840)
(153,823)
Cash flows from financing activitiesNew loans in year 250,000 -Share issue 341,500 503,000Cost of shares issued (23,763) (26,500)
Net cash from financing activities 567,737
476,500
Increase in cash and cash equivalents 175,578 55,671 Cash and cash equivalents at beginning of year 495,653
439,982
Cash and cash equivalents at end of year 671,231
495,653 NOTES TO THE CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 20071. RECONCILIATION OF LOSS BEFORE TAX TO CASH GENERATED FROM OPERATIONS
2007 2006 GBP GBPLoss before tax (362,638) (318,276)Depreciation charges 86,125 54,623Finance costs 4,167 -Finance income (20,154) (19,760) (292,500) (283,413)
Increase in trade and other receivables (17,078) (991)(Decrease)/Increase in trade and other payables (8,741) 17,398Cash generated from operations (318,319) (267,006)
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in respect of these balance sheet amounts:
Year ended 31 December 2007 31/12/07 1/1/07 GBP GBP Cash and cash equivalents 671,231 495,653Year ended 31 December 2006 31/12/06 1/1/06 GBP GBP Cash and cash equivalents 495,653 439,982
Cash and cash equivalents consist of cash on hand and balances with banks.NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 20071. INFORMATIONThe financial information set out in this report, which has been approved bythe directors on 2 June 2008 does not constitute the Company's statutoryaccounts for the year ended 31 December 2007 or 31 December 2006 but is derivedfrom those accounts.
Statutory accounts for 2006 have been delivered to the Registrar of Companies and those for 2007 will be delivered following the Company's Annual General Meeting.
The auditors have issued an unqualified report in respect of the 2007 accounts.
The report and accounts for the year ended 31 December 2007 will be sent to the shareholders shortly.
2.ACCOUNTING POLICIESReporting entityBeowulf Mining plc is a company domiciled in United Kingdom. The address of theCompany's registered office is 1 Green Hill, Little Thetford, Ely,Cambridgeshire, CB7 3HD. The Company primarily is involved in the explorationof copper and gold deposits.Compliance with accounting standardsThese financial statements have been prepared in accordance with InternationalFinancial Reporting Standards and IFRIC interpretations and with those parts ofthe Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention.
Basis of preparationThis is the first time the Company has prepared its financial statements inaccordance with IFRSs, having previously prepared its financial statements inaccordance with UK GAAP accounting standards. Details of how the transitionfrom UK accounting standards to EU adopted IFRS has affected the Company'sreported financial position, financial performance and cash flows are given inthe notes to these accounts.Changes in accounting policies- First-time adoptionIn preparing these financial statements, the Company has elected to apply thefollowing transitional arrangements permitted by IFRS 1 'First-time Adoption ofInternational Financial Reporting Standards':- There have been no changes to the treatment of the intangible Licences and exploration costs. IFRS 6 'Exploration for and evaluation of Mineral resources' permits that entity to continue to use the accounting policy applied immediately prior to adopting IFRS. Intangible fixed assets - exploration costsExpenditure on the acquisition costs, exploration and evaluation of interestsin licences including related overheads are capitalised. Such costs are carriedforward in the balance sheet under intangible assets and amortised over themaximum period of the licences in respect of each area of interest where:
a) such costs are expected to be recouped through successful development and exploration of the area of interest or alternatively by its sale;
b) exploration activities have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active operations in relation to the areas are continuing.
An annual impairment review is carried out by the directors to consider whether any exploration or development costs have suffered impairment in value and whether necessary provisions are made accordingly.
Accumulated costs in respect of areas of interest that have been abandoned are written off to the profit and loss account in the year in which the area is abandoned.
Exploration costs are carried at the lower of cost and net realisable value.
Property, plant and equipmentDepreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life.Plant and machinery - 25% on reducing balance
Investments
Fixed asset investments are stated at open market value. The revaluation adjustment is taken to the revaluation reserve.
Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Foreign currenciesAssets and liabilities in foreign currencies are translated into sterling atthe rates of exchange ruling at the balance sheet date. Transactions in foreigncurrencies are translated into sterling at the rate of exchange ruling at thedate of transaction. Exchange differences are taken into account in arriving atthe operating result.Share-based payment transactionsWhere equity settled share options are awarded to employees, the fair value ofthe options at the date of grant is charged to the income statement over thevesting period. Non-market vesting conditions are taken into account byadjusting the number of equity instruments expected to vest at each balancesheet date so that, ultimately, the cumulative amount recognised over thevesting period is based on the number of options that eventually vest. Marketvesting conditions are factored into the fair value of all options granted. Aslong as all other vesting conditions are satisfied, a charge is madeirrespective of whether market vesting conditions are satisfied. The cumulativeexpense 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.
3. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares of 69,466,329 (2006 - 63,570,576) outstanding during the period.
Diluted earnings per share is calculated using the weighted average number ofshares of 86,173,497 (2006 - 91,209,358) adjusted to assume the conversion ofall dilutive potential ordinary shares.
Contact:
Dr. Robert Young, Chairman, Beowulf Mining Plc+44 (0)1353 649 701Gavin Burnell, Ruegg & Co Limited+44 (0)207 584 3663
David Scott / Nick, Bealer Alexander David Securities Limited +44 (0)207 448 9800
Gary Middleton, St. Swithins PR Ltd07951 603 289
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