Beowulf Regulatory News (BEM)

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law by the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

9 June 2021

Beowulf Mining plc

("Beowulf" or the "Company")

Kallak Iron Ore Project - UNESCO comments

Beowulf (AIM: BEM; Spotlight: BEO), the mineral exploration and development company, has assessed UNESCO's comments on the Company's application for an Exploitation Concession for the Kallak Iron Ore Project ("Kallak").

Main comments from UNESCO

· UNESCO suggests that the Swedish Government seek a 'revised and extended In-Depth Assessment which provides a more secure basis for assessing the impact of the proposed development on the World Heritage Property…prior to any decision being taken to approve the mining exploitation'.

· UNESCO refers to Decision 37 COM 7 of the World Heritage Committee and a '"No-go" commitment by not permitting extractive activities within World Heritage properties and by making every effort to ensure that extractive companies…cause no damage to World Heritage properties'.

· UNESCO states that 'the role of the Sami Parliament is clearly relevant to the assessment of the impact of the proposed development on the World Heritage property'.

· UNESCO suggests the Swedish Government 'should consider how the practice of reindeer husbandry outside the property and directly related to reindeer husbandry within the property will be protected'.

Overview of the Operational Guidelines of the World Heritage Convention

The planned mine at Kallak is not located in the World Heritage property Laponian Area ("Laponia"). Section 172 of the Operational Guidelines for the Implementation of the World Heritage Convention (the "Guidelines"), referred to in correspondence between the Swedish Government's Näringsdepartementet and UNESCO, states:

"The World Heritage Committee invites the States Parties to the Convention to inform the Committee, through the Secretariat, of their intention to undertake or to authorize in an area protected under the Convention major restorations or new constructions which may affect the Outstanding Universal Value of the property. Notice should be given as soon as possible (for instance, before drafting basic documents for specific projects) and before making any decisions that would be difficult to reverse, so that the Committee may assist in seeking appropriate solutions to ensure that the Outstanding Universal Value of the property is fully preserved."

The planned mine at Kallak will cover an area of 13.6 square kilometres. This is significantly less than the 80 square kilometres, as IUCN stated in 2016, when it recommended a revised Environmental Impact Assessment needed preparing. Laponia covers 9,400 square kilometres. The planned mine is 0.14% in comparison to the area covered by Laponia.

Acknowledged by UNESCO, the closest point from the planned mine to Laponia is 33.8 kilometres. The reindeer migration route from the planned mine to Laponia is approximately 45 kilometres long.

The location and the size of the mine in relation to Laponia is shown in the map below.

Please follow the link: https://beowulfmining.com/wp-content/uploads/2020/12/20201217-Kallak-Proximity-to-Laponia-.pdf 

The area of Laponia is by far the largest of the World Heritages sites in Sweden. UNESCO asked for a clarification of the boundaries of Laponia and other World Heritages sites in 2017. After the clarification was made by Sweden, UNESCO had no further questions regarding the boundaries (WHC-17/4.COM/8D).

A buffer zone around Laponia has never been considered necessary. As Section 99 of the Guidelines points out, the boundaries should be drawn to incorporate all the attributes that convey the Outstanding Universal Value and to ensure the integrity and/or authenticity of the property.

UNESCO has never questioned the fact that no buffer zone exists. An objective assessment of the area would conclude that the area is large enough to meet the criteria set by UNESCO for World Heritage sites.

In addition, Kallak is not included in any Management System for Laponia as described in Section 111 of the Guidelines. Using the Guidelines terminology, it is neither 'in' Laponia nor within a buffer zone, as none exists.

The coexistence of mining and reindeer herding

Reindeer herding is not a static activity and the importance of any specific area varies from year to year. Reindeer migrate over an area, so their presence on and around Kallak is days in the year and not permanent. The Company has been careful in its analyses to consider the proposed mine's potential impacts on Jåhkågaska tjiellde's ("Jåhkågaska") reindeer herding activities in their totality.

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. 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.

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.

There is no example in Sweden of a reindeer herding coop becoming unsustainable because of mining, while there are many examples of reindeer herding and mining coexisting; commercial agreements are made, parties benefit, as do wider stakeholder groups from the ensuing economic development.

Kurt Budge, CEO commented:

"On Tuesday morning this week, the Company was notified by the Finansinspektionen, Sweden's financial supervisory authority, whose role is to promote stability and efficiency in Sweden's financial system as well as to ensure sustainability and an effective consumer protection, of UNESCO's comments.

"UNESCO's letter was dated 2 June 2021 and Finansinspektionen wrote that the UNESCO document appeared to have been in the hands of members of the general public (including elected Sami officials) for a number of days, with associated posts on social media.

"During the last six years, there have been several occasions where 'market sensitive' information in Sweden has been made public before Beowulf has been informed. Each time damage has been caused to the Company's share price, individual's investments and Sweden's reputation as a country in which to do business. The Company treats this matter very seriously and is taking legal advice.

"It is unsurprising that, given its remit, UNESCO has an opinion on Kallak and this does not consider the 'big picture'.

"The Company maintains it is inappropriate for UNESCO to write about an area that we would strongly argue falls outside of its jurisdiction. Beowulf has been granted permits to invest, explore and develop Kallak since 2006. Kallak has never been a "No-go" area.

"Jokkmokks Kommun is one of the poorest municipalities in Sweden. It has been forced to cut its budget by SEK 28 million over the last two years, impacting public services and infrastructure which it can no longer afford to provide for the benefit of the community.

"Kallak would bring SEK billions in investment to Jokkmokk. It would create 250 direct jobs and 300 indirect jobs in the town and be in operation for 25-years or more, potentially generating SEK 1 billion in tax revenues.

"The Company has been working with Kallak over 15 years, invested over SEK 80 million, defined a significant iron ore resource, with upside potential demonstrated by the recent Mineral Resource Estimate upgrade, from which we have produced a market leading concentrate of 71.5 per cent iron content.

"Kallak is ideally positioned with respect to the HYBRIT and H2GreenSteel projects and can similarly leverage renewable power to ensure the integrity of a fossil-free supply chain in Norrbotten.

"Importantly, UNESCO does not conclude that Kallak cannot be mined. It is an easy recommendation to suggest the Company could provide more information, but the checks and balances already exist in Sweden's laws and permitting processes, granted they need to function effectively, for everything that needs to be done, to get done.

"When you look objectively, without bias, at the Kallak story, and understand that it is not about a mine, it's about producing high-quality iron ore for fossil-free steel production, and with that the regeneration of Jokkmokk, giving the town a strong economic future that lives beyond mining, which also includes reindeer herding, tourism, forestry and entrepreneurs, and you understand that all the evidence says mining and reindeer herding coexist in Sweden, then the Swedish Government should be moving closer to a decision.

"The Company has already spoken to the Government and will be doing so again to seek clarity on next steps.

"The Company will provide further updates in due course."

About Kallak

The Kallak iron ore deposit is located approximately 40 kilometres ("km") west of Jokkmokk in the County of Norrbotten, Northern Sweden, 80 km southwest of the major iron ore mining centre of Malmberget, and approximately 120 km to the southwest of LKAB's Kiruna iron ore mine. The first Exploration Licence for Kallak was awarded by the Mining Inspectorate of Sweden in 2006.

In April 2013, the Company applied for an Exploitation Concession for Kallak North (the "Concession") and in October 2015, the Mining Inspectorate recommended to the Swedish Government that the Concession be awarded. The Company is still waiting on the Swedish Government to take a decision.

Kallak Iron Ore Project - Mineral Resource Estimate ("MRE") and Exploration Target Upgrade

RNS dated 25 May 2021

https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/x8q5k9x 

· An additional 19 million tonnes ("Mt") of iron mineralisation equating to a 12.5 per cent increase in the resource.

· Measured and Indicated Mineral Resource of 132 Mt grading 27.8 per cent iron ("Fe").

· Inferred Mineral Resource of 39 Mt grading 27.1 per cent Fe.

The definitions of Measured, Indicated and Inferred Resources, as well as Reserves, as used in this MRE, conform to the definitions and guidelines of the PERC Reporting Standard, 2017.

Market Leading Potential

RNS dated 17 September 2020

https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/x8l7kjr 

· Testwork on Kallak ore has produced an exceptionally high-grade magnetite concentrate at 71.5 per cent Fe with minimal detrimental components.

· This would make Kallak the market leading high-grade product among known current and planned future producers.

· The next best magnetite product is LKAB's (the state-owned Swedish iron ore company), which produces magnetite fines ("MAF") with a target specification of 70.7 per cent Fe and is regarded as unique, until now, due to its exceptionally high iron content.

· Kallak magnetite concentrate would reduce the carbon footprint of traditional steel manufacturing, improve energy efficiency in any downstream process and reduce waste. Magnetite has inherent energy content, which ultimately results in lower energy demand for steel manufacturing when compared to current common practice.

· Globally, the feedstock for steelmaking is 80 per cent hematite and 20 per cent magnetite. The demand for high-quality feedstock and therefore magnetite should increase as producers look to protect the environment by improving energy efficiency, minimizing waste and the impact of waste disposal.

Economic Potential

In response to the Government's request, in the middle of 2015, for the County Administrative Board for the County of Norrbotten (the "CAB") to provide comments on the national economic assessment for Kallak, the CAB's findings were as follows:

· 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 Concession Area applied for by the Company creates no conflicts where national interests are considered.

· The Concession is designated as an Area of National Interest ("ANI") for minerals.

· The Company should work with communities that could be affected by the development of a mining project, in order to eliminate or mitigate any impacts, including reindeer herders and Sami villages.

· The Company should consider in its ongoing studies the potential impact of its mining activities on tourism and transport infrastructure.

In 2017, Copenhagen Economics produced a 'Big Picture' study for Kallak ("the Study" or "the Kallak Study"):

https://beowulfmining.com/wp-content/uploads/2018/10/Copenhagen-Economics_Presentation_SEP17_Swedish.pdf 

The Study built on the work carried out by the Company and others, including the 2015 independent socio-economic study initiated by Jokkmokks Kommun, completed by consultants Ramböll, which in its findings concluded that a mining development at Kallak would create direct and indirect jobs, increase tax revenues and slow down population decline, and the 2010 study by the Economics Unit of Luleå University of Technology, 'Mining Investment and Regional Development: A Scenario-based Assessment for Northern Sweden'.

Copenhagen Economics had previously reviewed the attractiveness of the Swedish mining sector on a number of parameters, including licensing and regulation, commissioned by the Swedish Agency for Growth Policy Analysis, part of the Government of Sweden.

The Study demonstrated that the economic effect of Kallak is 'not just about a mine'. A mining project would economically transform Jokkmokk and support other major capital expenditure and economic activity e.g. Inlandsbanan, Luleå Hamn, Vattenfall etc, spreading the benefits, through Norrbotten and beyond.

When it comes to Kallak's economic effect on Jokkmokk, the Study highlights were as follows:

· A mining operation at Kallak has the potential to create 250 direct jobs and over 300 indirect jobs in Jokkmokk, over the period that a mine is in operation.

· These jobs could be sustained over a period of 25 years or more, if the Kallak South deposit is mined after the Kallak North deposit, and further deposits at Parkijaure can be defined.

· The Company will seek to establish a 'Task Force' with Jokkmokks Kommun and local employment agencies, so that between now and the start of operations, plans are developed and implemented to make sure as many as possible jobs are available to people living in Jokkmokk.

· Kallak has the potential to generate SEK 1 billion in tax revenues, considering the case where 70 per cent of the mine's workforce are based locally, with annual tax revenues of SEK 40 million over a 25-year mine life.

· These tax revenues would help to develop and sustain public services and infrastructure in Jokkmokk, which are at risk due to a lack of new investment and job creation in the community, a declining population, and an ageing population.

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 forecast.