Beowulf Mining: From Exploration to Exploitation.

It is a difficult time for the mining sector losing over 20% since the start of the year and commodity prices falling worldwide against a stronger US dollar and rising profitable equities. Iron ore prices, in particular, tumbled this week amid fear spreading through the Chinese steel industry.

Companies find it hard to attract nervous and sceptical investors, glossing over the risk with confidence in their projects and expectations for positive change in the commodities market.

One of the answers can be to stick with companies that can promise stability and certainty.

Here is the Story of Beowulf Mining. The company operating in Sweden can be proud of a fully funded 2013 work programme at its iron ore projects at Kallak North and Kallak South, moving away from exploration towards development and potential future production.

Presenting at Proactive Evening Event at Chesterfield Hotel in London, Clive Sinclair-Poulton, CEO of Beowulf Mining, stressed the advantage of operating in a country like Sweden: politically stable and keen to invest in mining.

Sweden: Best environment and destination for the European market

Sweden is a promising land, a mineral-rich country with a long tradition of mining and the infrastructure to support it.

Accordingly to the annual survey by the Fraser Institute, Canada's leading public policy think-tank, Sweden emerged as one of the top worldwide mining destinations of 2013, with Quebec falling dramatically to N11th from N1 in just three years. The document, which compiles the answers of international mining executives, notes that mining companies are pessimistic about short-term commodity prices, expecting nearly level or reduced prices for silver, copper, diamonds, coal, zinc, nickel, potash, and platinum this year. However, it also shows that investment opportunities in the industry and environmental protection can, in fact, go hand in hand, said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the survey.

 “In order to compete for investment on the global mining stage, jurisdictions need not only stellar resource potential but also a stable, certain, straightforward mining policy framework,” Green said.

“Reduce red tape, minimize risk with regard to policy changes and tax increases, respect negotiated contracts: that’s how you woo the global mining sector,” he added.

This is where Beowulf Mining finds its advantage. As we said, in the long term investors are looking for stability and moderate prices with favourable mining and government polices. Beowulf Mining has a winning power: total support from local authorities in a country politically risk-free and stable country. The big African competitors can be proud of large projects but the political risk is higher.

Business Sweden- The Swedish Trade & Investment Council states how a transparent mining legislation and a supportive government in Sweden encourage mineral development and exploration in a sustainable manner, giving the country a leading role in metallurgical R&D as well as in the development of advanced and ecological underground mining.

Through the years, Sweden has built an extensive geological database and has the world’s largest drill core sampling available for research.

Clive Sinclair-Poulton, CEO of Beowulf Mining, showed his confidence in future opportunities, as Sweden is the largest producer of iron ore in Europe, the second largest producer of silver, gold, lead and zinc and the third largest producer of copper.

Sweden’s strength is the opportunity to satisfy Iron ore demand from Europe, which is currently importing 130 mill ton of Iron from outside Europe.

Kallak projects: a profitable and safe investment

Clive Sinclair-Poulton, Beowulf Mining CEO, is very pleased with good results coming from new sampling and drilling exploration at it Kallak projects looking ahead into production.  

In an interview with Proactive Investors, Sinclair-Poulton stated: “Every dollar we have put in the ground so far at Kallak has been a very worthwhile investment because we’re getting very good returns. The tonnage keeps on increasing. Next step is test mining coming on soon, which will go ahead and show the commerciality of the project,”

The Beowulf boss is confident the company will get an exploitation concession – the Swedish equivalent of a mining licence – and says the company is moving “away from aspiration to exploitation”.

The geologic environment is really good. Mineralisation comprises a significant proportion of the Kallak North and Kallak South deposits designated as an Area of National Interest by the Swedish authorities. Iron is extracted from magnetite but going below there is hematite, which is even higher in grade and requires fewer processing stages.

"We’ve got 400 tonnes being taken out of the ground to be analysed, so we’re moving away from the laboratory, or, as I say, we’re moving away from aspiration, where everything’s being done in the laboratory to a situation where we’re basically going to be going into production.” Sinclair-Poulton said.

Strategic location and logistic

Mining is not just a matter of location: logistics also play an important role. Access to infrastructures can save lots of money and CAPEX spending.

Beowulf Mining doesn’t have these problems.

Kallak projects are an open pit and they are just 40 km from Narvik, Norway.That is only 4 days’ travel to Amsterdam, from whichCanada is 14 days and Shangai 48 days.

Kallak relies also on a cheap Hydroelectric energy as it is close to the second largest power station in the country.

 

Conclusions

Beowulf Mining is moving away from exploration to exploitation and a potential future production concentrated on certainty.

Important milestones have been completed during 2013 and other developments are in place and on schedule.

The company is well funded with £2,5M of cash, and good prospects for investors. 

So, the logic of Sinclair-Poulton's case seems to be that it is good discipline to operate in an environment where you can't rely on a perpetually rising commodity price to bail you out.

Here the last world from Clive Sinclair-Poulton :"Over the remainder of 2013 I look forward to announcing positive news from our exploration work programmes, including the test mining sampling programme expected to commence this summer at Kallak North, the ongoing exploratory drilling at both Kallak North and Kallak South and, towards the end of the year, planned drilling at Ballek."

However statistics warn via Bloomberg Swedish Industry sees falling investment as exports struggle  “The most investment intensive industry, the mining industry, will decrease its volumes by 10 percent.”

Industry in the $500 billion economy plans to reduce spending to 53.7 billion kronor ($8.12 billion) from 56.9 billion kronor last year, according to a survey of about 8,000 companies published last week. The Stockholm-based statistics office uses the survey to estimate investment volume as the actual numbers differ from company forecasts in a “somewhat systematic way,” it said in a statement.

Saami communities

After the presentation one question raised was about the relationship with the Saami communities, who delayed Beowulf Mining’ drilling campaign last year due to ongoing issues with the company.

The communities declared their opposition to Beowulf’s mining plans because Beowulf Mining has allegedly conducted exploration drilling in their area without a relevant permit. ”Any mining developments on our lands entail major negative impacts on the reindeer husbandry in the area, which is our traditional livelihood,” says Bengt-Åke Kuljok, Chairman of Sirges Saami community. ”There is absolutely no confidence in this company from the perspective of the Saami communities” concludes Jon – Mikko Länta, Chairman of Jåhkågaska tjiellde Saami community. SSR and the Sami communities have now turned to the Sami Council for support.

Beowulf has to tread carefully has it can easily lose its credibility towards investors if it doesn’t respect the Saami rights.