Beowulf Mining plc
GROUP OF COMPANIES
Annual Report and Consolidated Financial Statements 2014
Company Information
Directors
Mr B Metcalf
Mr K R Budge
Dr Jan-Ola Larsson
Secretary
Mr L O’Donoghue
Registered Number
02330496 (England and Wales)
Registered Office
Beowulf Mining plc
201 Temple Chambers
3-7 Temple Avenue
London
EC4Y 0DT
Swedish Office
Jokkmokk Iron Mines AB
Umevägen 1
921 45 LYCKSELE
Sweden
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Nominated Adviser & Broker
Cantor Fitzgerald Europe
1 Churchill Place
Level 20
Canary Wharf
London
E14 5RB
Solicitors
Spearing Waite LLP
41 Friar Lane
Leicester
LE1 5RB
UK Bank
The Royal Bank of Scotland
Piccadilly Circus Branch
48 Haymarket
London
SW1Y 4SE
Public Relations
Blytheweigh
4-5 Castle Court
London
EC3V 9DL
Swedish Custodian Bank
Skandinaviska
Banken AB
SEB Securities Services
106 40 Stockholm
Sweden
Website
www.beowulfmining.com
2
Beowulf Mining plc Annual Report 2014
Beowulf Mining plc Annual Report 2014
Contents
Company Profile
Company Strategy
Chairman’s Statement
Review of Operations and Activities
Board of Directors
Strategic Report
Report of the Directors
Remuneration Report
Corporate Governance Report
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Other Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash flows
Notes to the Consolidated Financial Statements
2
3
4
6
16
17
18
20
22
24
26
27
28
29
30
32
34
35
36
1
Beowulf Mining plc Annual Report 2014 Company Profile
Beowulf Mining plc (“Beowulf”
or the “Company”) is listed on
London’s Alternative Investment
Market (“AIM”) (Ticker: BEM) and
Stockholm’s AktieTorget (Ticker:
BEO).
The Company’s principal project is the
delivery of their iron ore material to the
Kallak North iron ore deposit located
Atlantic harbour at Narvik (Norway)
about 40 kilometres (“km”) west of the
or to the Botnian Sea harbour at Luleå
Jokkmokk municipality centre in the
(Sweden).
Norrbotten County in Northern Sweden.
Local infrastructure around the project
is excellent, with all-weather gravel
roads passing through the project area,
and all parts 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’, used by
Luossavaara-Kiirunavaara (“LKAB” ) for
Other portfolio assets include the Ballek
Joint Venture project in the Norrbotten
County in Northern Sweden where the
Company has a JORC Code compliant
Inferred Resource for the Lulepotten
copper-gold deposit of 5.4 million tonnes
(“Mt”), grading 0.8 per cent copper and
0.3 grammes per tonne (“g/t”) gold;
the Nautijaure licence with potential
for iron oxide copper gold (“IOCG”); the
Grundträsk gold project; and the Munka
molybdenum project.
2
Beowulf Mining plc Annual Report 2014 Company Strategy
Beowulf’s strategy is to build a
sustainable Scandinavian based
mining company, which creates
shareholder value, while remaining
opportunistic for mergers and
acquisitions; preserving the
Company’s low sovereign risk profile
and rewarding its investors in London
and Stockholm.
The development of Kallak North is
In addition to Kallak North, Beowulf is
at a point now where the Company
focusing its efforts on the potential of its
is considering the introduction of
wider exploration portfolio, which offers
a strategic partner and associated
commodity diversification in copper, gold
investment; a partner who understands
and molybdenum.
the value of Kallak North as a high
quality producing asset within 5 years,
supplying high grade concentrate
over 69 per cent iron content with
very low levels of phosphorous and
sulphur, lending itself to pelletization
and consumption in Direct Reduction
Iron (“DRI”) facilities in Europe and the
Middle East.
The leadership team is also looking
beyond the Company for value creation
opportunities in Finland, Norway and
Sweden.
3
3
Beowulf Mining plc Annual Report 2014 Chairman’s Statement
I am pleased to be able to present
my first Chairman’s Statement to
shareholders and stakeholders of the
Company. I joined the Company in
September 2014 together with Kurt
Budge, as a Non-Executive Director.
Since then Kurt has taken over the role
of Chief Executive Officer and I have
taken on the role of Non-Executive
Chairman. I would also like to take
this opportunity to thank the directors
of the Company (“Directors”) who left
during the year for their contribution to
the development of the Company.
With the change in leadership, Beowulf has re-established itself, strengthened its financial
controls and governance procedures, re-focused the Company’s strategy and aligned
its interests with those of its shareholders. The management team is working hard
to strengthen relationships with key stakeholders, encapsulating the Company’s new
approach in the following three mission statements:
“Showing respect to all our stakeholders”
“Visar respekt för alla intressenter”
“Becoming a local partner”
“Vill samverka lokalt”
“Delivering responsible development”
“Står för ansvarsfull utveckling”
Iron ore market
AIM1
2014 will be remembered for the severity
Equity proceeds of approximately £245
and speed of commodity price falls -
million (“M”) were raised by AIM’s junior
particularly iron ore - that very quickly
miners in 2014 – an increase of 80 per cent
rendered higher-cost producers vulnerable.
on 2013, but from a very low base, and
The 62 per cent iron CFR China benchmark
some 82 per cent short of 2007’s peak.
price nearly halved in 2014, and in the first
Only £5M of the 2014 total was raised from
quarter of 2015 the price has continued
new issues, with IPOs remaining firmly
to fall. The fall in the benchmark price is
off the agenda. The dominance of the
due to a combination of factors, including
mining sector on AIM has lessened, with
weakening demand especially from China,
mining shares ending the year with just a
and significant growth in output from
third of their value when compared with
the big producers. Nonetheless, we are
the prior year. Despite these difficulties
encouraged by the 7 per cent recovery in
the Company undertook a fundraising
the benchmark pricing since its recent low
in August/September 2014 to raise gross
in April 2015.
£1.74M and in March 2015 raised a further
Beowulf is not seeking to compete in
gross £350,000.
the seaborne iron ore trade into China.
Kallak Iron Ore Project (“Kallak”)
Kallak North should be a high quality
producing asset within 5 years, supplying
high grade concentrate over 69 per cent
iron with very low levels of phosphorous
and sulphur, lending itself to pelletization
and consumption in Direct Reduction Iron
(“DRI”) facilities in Europe and the Middle
East at premium prices. As a comparison,
the 65 per cent iron pellet price has been
on average $40 per tonne (“t”) higher than
the 62 per cent iron price in 2014.
Excellent progress has been made during
the year at Kallak. The known orebodies
now cover an area approximately 3,700
metres (“m”) in length and 350m in width.
In December we reported an upgraded
resource for Kallak North and a maiden
resource for Kallak South – a 34 per cent
increase in indicated resource to 118.5Mt at
27.5 per cent iron from 88.3Mt at 27.7 per
cent iron in the 2013 resource statement.
1 EY Mining Eye Q4 2014; London Stock Exchange Statistics
4
Beowulf Mining plc Annual Report 2014 We also reported a total inferred resource
consequences, that mining and reindeer
£0.85M in equity rate swap agreements.
of 33.8Mt at 26.2 per cent iron, and an
husbandry can coexist.
The amount receivable under these
exploration target of 90-100Mt at 22-30
per cent iron representing potential ore
below the pit shells and in the gap between
drilling defined Kallak South mineralized
zones. The exploration target together
with the drilling completed to date gives us
confidence that there is substantially more
iron ore at Kallak than previously defined.
The Company continues to engage with
key stakeholders at the local and county
levels, focus on strengthening relationships
and addressing all outstanding concerns.
The north of Sweden is seeking ways to
stimulate economic growth, create jobs
and slowdown population decline and a
mine at Kallak North is seen as part of the
However, rather than continue to drill,
solution for achieving those goals. It is
we are focusing our efforts on obtaining
the Company’s belief that the Exploitation
the Exploitation Concession for Kallak
Concession application satisfies all the
North. In February 2015 the Chief Mining
requirements of the Swedish regulations
Inspectorate found that the prerequisites
and that there should be no obstacle for an
for an Exploitation Concession had been
early and positive decision by the Swedish
fulfilled, but left the Government to make a
Government in favour of granting the
agreements was linked to the Company’s
share price performance. Unfortunately, due
to the fall in the share price, exacerbated
by difficult market conditions for mining
and exploration companies, the expected
settlements fell significantly. The Directors
mutually agreed with Lanstead to
accelerate all outstanding settlements
in consideration of a final settlement of
£150,000. The Directors consulted with
Cantor Fitzgerald Europe, the Company’s
nominated adviser, who agreed that the
terms of the accelerated settlement were
fair and reasonable insofar as shareholders
were concerned.
decision regarding Chapters 3 and 4 of the
Exploitation Concession for Kallak North.
The Company also gave shareholders
Environmental Code.
Before the Mining Inspectorate’s decision
and further to the County Administrative
Boards (“CAB’s”) response in October 2014,
the Company took the opportunity to make
a further written submission to the Mining
Inspectorate on issues identified by CAB
regarding transport. In that submission,
the Company stated that it will not be
proposing transport routes that pass in
a north/north-easterly direction through
the Jelka-Rimakåbbå Natura 2000 area,
ensuring that future transport routes will
Other projects in the portfolio
The management team has spent time
reviewing the Company’s other projects,
including the Ballek Joint Venture located
in Norrbotten County in northern Sweden,
where the Company has a JORC Code
compliant Inferred Resource for the
Lulepotten copper-gold deposit of 5.4Mt,
grading 0.8 per cent copper and 0.3g/t
gold; the Nautijaure licence with potential
for iron oxide copper gold (“IOCG”); the
Grundträsk gold project; and the Munka
not lead to a significant impact on reindeer
molybdenum project.
husbandry.
With regard 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 Company’s application for
an Environmental Permit. The Company
also intends to establish a framework for
compensatory measures and economic
compensation in the event that there are
residual consequences for neighbouring
communities. It is the Company’s firm
belief that having put in place systems
to manage its future operations,
and frameworks to address residual
The 2015 exploration programme will
involve reassessing the significant historical
data that exists on each of the projects,
supplemented with fieldwork, before
finalising plans for further drilling. The
Board of the Company (“Board”) has
received approaches to joint venture
on assets within the portfolio, and will
continue to review the attractiveness of
each proposal when received.
Corporate
The Company undertook a fundraising
in August/September 2014 to raise gross
proceeds of £1.74M. This included a capital
raise of £1M from Lanstead Capital L.P.
(“Lanstead”), the Company’s largest
shareholder, which involved investing
the opportunity to subscribe for new
shares through an open offer in the
September fundraising and I want to take
this opportunity to thank all those who
participated.
The loss for the year is £3.1M (2013: loss of
£2.2M) with a basic loss per share of 1.00p
(2013: loss of 0.91p). The increase in the loss
over 2013 is due primarily to losses on the
derivative financial assets. Approximately
£0.2M in cash was held at the year end,
before receipt in early January 2015 of
£150,000 from the Accelerated Settlement
of the Equity Swap Agreements and the
completion of the March 2015 fundraising
which raised gross £350,000.
The Company appointed Liam O‘Donoghue
as Company Secretary on 8 May 2015.
Liam is a qualified corporate lawyer and
director of the AIM specialist advisory and
administration firm, CMS Advisory Group
Limited.
The Board and Executive have sought to
align themselves with shareholder interests,
by setting basic pay and fees at market
levels, thereafter seeking to conserve cash
by electing to salary sacrifice a third of
compensation, which will be converted into
shares. The salary sacrifice has continued
since October 2014, but due to close periods
the Directors have been unable to convert
this into shares. The Board will continue to
5
Beowulf Mining plc Annual Report 2014 ensure that the Directors and executives
is still focused on creating value for
I would like to thank our employees,
are appropriately incentivised and that
shareholders, by first seeking an early
consultants, contractors, advisers,
their interests remain aligned to those of
and positive decision by the Swedish
shareholders and other stakeholders for
the Company’s shareholders.
Government on the application for an
their valued support during the year.
Outlook
While the short term fundamentals for
commodities look challenging and the
economic outlook remains uncertain, the
management team of Beowulf
Exploitation Concession for Kallak North,
and secondly by attracting the right
partner for Kallak by demonstrating the
quality of the orebody and its market
potential as a high grade premium
concentrate.
Bevan Metcalf
Non-Executive Chairman
29 May 2015
Review of Operations and Activities
Introduction
Beowulf has been active in northern
exploration and development work in
Sweden for more than 10 years, focusing
recent years.
its activities on areas with high
exploration potential for iron, copper,
gold and molybdenum in the Norrbotten
and Västerbotten counties. The Kallak
project in the Norrbotten County has
been the principal focus of the Group’s
The application for exploration permits
and exploitation concessions are
governed by the Swedish Minerals Act
(1991:45) (the “Act”), which was subject
to amendments in 1993, 1998 and
Sweden continues to be a prominent
mining jurisdiction and the largest
iron ore (mostly magnetite) producer
in the EU. It provides modern,
efficient and well-established
infrastructure, excellent power
accessibility and affordability, a
highly skilled mining and exploration
workforce, extremely low sovereign
risk and a very strong mining culture.
Almost all current iron ore production
is located in the Norrbotten County of
northern Sweden at the Kiruna and
Malmberget deep underground mines
owned by the state owned company,
LKAB.
6
Beowulf Mining plc Annual Report 2014 1999. The Act accords that an exploration
to four years on special grounds and, on
permit fee cost per hectare is increased.
permit is granted for an initial period of
exceptional grounds, a further maximum
An exploitation concession is granted for
three years from the date of issue and
of five years. The longest possible period
a period of twenty-five years and can be
can be subsequently extended for up to
of validity for any one permit is therefore
extended by ten years at a time without
a further three years by way of annual
fifteen years, after which an application
application if regular exploitation is in
extensions. The period of validity of the
for an exploitation concession must be
progress when the period of validity expires.
permit can be further extended by up
made. After each three year period the
Current exploration permits
Beowulf, via its subsidiaries, currently holds 13 exploration permits, together with one registered application for an exploitation concession
(Kallak North), all in northern Sweden, as set out in the table below:
Permit Name/Mineral(s)
Permit ID
Area (km2)
Date Valid From
Date Valid Until
Arjeplog Region:
Ballek nr2 (Copper-Gold)*
Ballek nr6 (Copper-Gold)*
Munka nr10 (Molybdenum)^
Jokkmokk Region:
Parkijaure nr3 (Iron)**
Parkijaure nr2 (Iron)**
Kallak nr1 (Iron)**µ
Kallak nr2 (Iron)**
Kallak nr3 (Iron)**
Parkijaure nr4 (Copper)**+
Parkijaure nr5 (Iron)**
Nautijaur nr1 (IOCG)**+
Ågåsjiegge nr2 (Iron)**+
Malå Mining District:
2005:69
2015:143
2009:178
2011:135
2008:20
2006:197
2011:97
2012:100
2012:59
2013:36
2012:57
2014:10
5.57
3.15
8.00
4.17
2.85
5.00
22.19
5.56
7.59
12.97
8.80
11.14
Lodged 31/03/2015
Awaiting grant of licence
23/03/2015
03/11/2009
23/03/2018
03/11/2015
11/08/2011
18/01/2008
28/06/2006
22/06/2011
09/08/2012
04/05/2012
04/03/2013
04/05/2012
24/02/2014
11/08/2017
18/01/2016
28/06/2016
22/06/2017
09/08/2015
Awaiting grant of licence
04/03/2016
Awaiting grant of licence
24/02/2017
Grundträsk nr6 (Gold)^
2010:161
15.53
04/11/2010
04/11/2016
TOTAL:
112.52
Notes:
* the Ballek permits are held by Wayland Sweden AB which is a wholly owned subsidiary of Wayland Copper Limited (“Wayland Copper”).
Beowulf has a 65.25 per cent ownership interest in Wayland Copper, which is a subsidiary of Beowulf, and is the operator of the Ballek project.
**held by the Company’s wholly owned subsidiary, Jokkmokk Iron Mines AB (“JIMAB”).
+ area recently reduced.
^ held by the Company’s wholly owned subsidiary, Norrbotten Mining AB (“Norrbotten Mining”).
µ an application for an exploitation concession was originally lodged on 25 April 2013 (Mines Inspector Official Diary nr 559/2013) and an updated, revised and
expanded application was submitted in April 2014. The Chief Mining Inspectorate has found that the prerequisites for an Exploitation Concession are fulfilled,
but leaves the Government to make a decision regarding Chapters 3 and 4 of the Environmental Code.
7
Beowulf Mining plc Annual Report 2014
An overview of Beowulf’s principal projects and exploration activities is
provided below.
Kallak Iron Ore Project
Introduction
Kallak is located in the Jokkmokk
municipality north of the Arctic Circle,
approximately 40km west of Jokkmokk city
centre and 80km south west of the major
iron ore mining centre of Malmberget
in the Norrbotten County in northern
Sweden. LKAB’s Kiruna iron ore mine, the
world’s second largest underground mine,
is located approximately 120km to the
north east.
Iron mineralization was first discovered in
the Kallak area by the Swedish Geological
Survey (“SGU”) in 1947/48. Between 1968
and 1970, detailed ground geophysical
surveys were carried out by the SGU over
the entire area of interest including closely
grid spaced magnetic, gravimetric and
electromagnetic measurements. Some
limited diamond drilling was also carried
out. Two iron ore deposits were discovered,
separated by only a few hundred metres
in distance. Located in the same geological
structures, the deposits may well be
connected at depth and have been defined
by the Company as the Kallak North
and Kallak South deposits, respectively.
Data from these surveys has now been
compiled and interpreted. A composite of
the magnetic field, resulting from these
ground surveys and airborne surveys is
shown in Figure 1.
Kallak is located within the Svecofennian
shield, consisting of metamorphic,
sedimentary and volcanic rocks that are
commonly between 1900 and 1870 million
years old.
The area around Kallak and the villages of
Björkholmen and Randijaur is dominated
by mafic to intermediary volcanites
and metavolcanites as well as gabbro,
diorite, diabase, ultramafic rocks and
their metamorphic equivalents. The
bedrock of the area is thus dominantly
mafic. Only smaller areas with felsic rocks
are found in the north east, north west
and south west. These areas consist of
granites, syenites and their metamorphic
equivalents, pegmatites and other felsic to
intermediary rocks.
8
Figure 1: Magnetic field anomaly map for the Kallak area. Composite from airborne
and ground surveys. The outlines of Kallak North and South marked with green.
The deposits are outcropping and consist
more than 300m at both deposits. The
of so called “quartz banded magnetite
iron ore type”, comprised of fine grained
mineralised structures at both Kallak North
and Kallak South are almost vertically
banded magnetite and minor hematite,
dipping, generally covered by only shallow
interlayered with quartz, feldspar and some
(<2m) glacial overburden and, as such, are
hornblende. The dominant host rock is a
highly amenable to potential open pit
grey, altered volcanite. The deposits occur in
mining. Some sections of the central part
a north-south oriented syncline of altered
of Kallak South have, however, been found
sediments and felsic volcanic rocks of early
to be covered by more extensive glacial
Proterozoic age within granitic gneisses. The
overburden covering the outcropping
deposits are up to 300m wide at surface
mineralised structures.
outcrop and located on topographically
high ground. The northern deposit has a
confirmed length extension of more than
one kilometre and the southern deposit has
a total length of more than two kilometres.
Drilling has confirmed, in single drillholes,
mineralised vertical depth extensions to
With one new licence area registered in
February 2014, Ågåsjiegge nr2, the project
now covers a total area of approximately
80km2, comprising nine separate licences
(Kallak nr1, Kallak nr2, Kallak nr3, Parkijaure
nr2, Parkijaure nr3, Parkijaure nr4, Parkijaure
nr5, Nautijaur nr1 and Ågåsjiegge nr2).
Beowulf Mining plc Annual Report 2014 Figure 2: Current exploration licenses (blue line) and the outcropping area of
Kallak North and Kallak South (red line).
Kallak North and South drilling
operations in 2014
Kallak South
A total of 5,051m of drilling was completed
in the 2014 winter campaign, covering
16 holes all inclined at 45 or 60 degrees
and directed towards the west. Iron
mineralization was encountered in most
holes. High grades and thicknesses of iron
mineralization were encountered at depth
in drillhole KS 14016. This hole returned an
average grade of 52.87 per cent iron over an
intersection of 36.35m, including a 16.68m
section of 55.65 per cent iron. This high
grade section is centrally located within an
89.32m long section of 42.09 per cent iron
between 300.08m and 390.40m along the
drillcore or vertically approximately 245m
below surface. The iron mineralization is
mostly comprised of massive hematite.
Drillhole KS 14016, which was the last hole
drilled in the 2014 Kallak South campaign,
was collared at the most easterly position
on the drill tested east west profile. From
iron mineralization encountered earlier in
other holes further west in this profile, it is
clear that the mineralization remains open
to the south east and at depth.
The results of KS 14016 are by far the
most interesting of the received assays
with the highest grades of iron over the
longest intersections encountered in all
Area description and accessibility
Local infrastructure is excellent, with all-
of the Kallak drilling campaigns. Further
Kallak comprises forested, low hilly ground
close to a main paved road between
Kvikkjokk and Jokkmokk.
The principal land use is forestry, with the
majority of the ground area being owned
by a large local forestry company. Regional
vegetation is generally comprised of mature
pine, birch and spruce trees. The ground
elevation varies between 300m and 450m
above sea level in an area of undulating
forested or logged ground forming a
peninsula surrounded by Lake Parkijaure.
The highest point is the Råvvåive hill at
481m located in the south east part of the
project area.
weather gravel roads passing through the
to the north of drillhole KS 14016, iron
project area and all parts easily reached
mineralization was also noted in drillholes
by well used forestry tracks. A major
KAL 13055 and KAL 13056. This gives a 350m
hydroelectric power station with associated
drill confirmed extension of mineralization
electric power-lines is located only a few
in north to south strike length, with dip
kilometres to the south east. There are no
towards the south and south east. The full
settlements within the project area, with
extension towards the south and south east
the closest villages being Björkholmen,
remains open at depth.
approximately two kilometres to the
north west, and Randijaur approximately
three kilometres to the 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 ore material to the
Atlantic harbour at Narvik (Norway) or to
the Botnian Sea harbour at Luleå (Sweden).
The results of drillholes KS 14009, KS 14011
and KS 14013 indicated that these holes
have been drilled somewhat east of the
main ore zone. It may also be possible that
this mineralization does not continue at
depth and therefore further sections of
mineralization were not encountered.
In the southern part of the Kallak South
9
Beowulf Mining plc Annual Report 2014 deposit the focus has been to extend
the iron mineralization to the north
from KAL 10054 where it was confirmed
over significant width during the 2010
drilling campaign. Assays received from
the 2014 drill campaign show that the
iron mineralization, although weak, is
intersected 200m north in KS 14012 and
a further 100m north in KS 14008 and
KS 14014. Thus, the iron mineralization
at KAL 10054 is extending to KS 14014,
with a confirmed length in north south
direction of more than 300m, remaining
open both to north and south and at
depth.
The results confirm that there is a close
correlation between the extension of
the iron mineralization at Kallak South
as obtained by drilling, and the results of
detailed ground geophysical, gravimetric
and magnetic exploration. These
pronounced geophysical anomalies
extend on surface more than 2,000m
and as defined by drill intersections are
more than 200m in width.
Kallak North
A total of 3,156.3m of drilling was
completed in the 2014 campaign for
Kallak North, comprised of 10 drillholes
mainly targeted on the southern
and central part of the deposit. The
assay results from KAL 14004 and KAL
14007, both collared in the central
part of the Kallak North deposit, were
very encouraging with significantly
long intercepts of iron mineralization
encountered in both holes, with
similarities in grades and mineral
character to earlier reported holes.
Drillhole KAL 14004, inclined at 60
degrees, returned an intersection of
232.61m with an iron average grade of
26.36 per cent iron, between 146.54m
and 379.15m. Some longer parts of
this section displayed grades of more
than 35 per cent iron. Likewise drillhole
KAL 14007, which was inclined at 60
degrees, also showed a remarkably long
intersection of 298.36m, starting almost
at bedrock surface and extending to
309.36m, with an average grade of 26.35
10
Figure 3: Dry (top) and wet (bottom) pictures taken of the logged drill core box before
shipment to ALS Piteå for cutting and sample preparation for assay.
per cent iron. A 10.4m section of this
tested through open pit optimization
hole ran at a higher grade of 41.18 per
using Whittle software.
cent iron. This hole delivered the longest
intersection of iron mineralization so
far received of all drillholes at the Kallak
North deposit since drilling commenced
in 2010.
JORC Compliant Resource Statement
for Kallak North and South deposits
GeoVista AB was commissioned in
October 2014 to provide an independent,
updated resource statement for Kallak
North, as well as a maiden resource
for Kallak South. The mineral resource
for Kallak North had previously been
reported in March 2013, by GeoVista AB.
The mineral resource estimate for Kallak
North and South is based on drilling
The resource statement provided an
increase of 34 per cent in indicated
resource to 118.5Mt at 27.5 per cent iron
from 88.3Mt at 27.7 per cent iron in the
2013 resource statement. A total inferred
resource of 33.8Mt at 26.2 per cent iron,
and an exploration target of 90-100Mt
at 22-30 per cent iron representing
potential ore below the pit shells and
in the gap between drilling defined
Kallak South mineralized zones was also
reported.
Kallak, as defined by drilling, is
approximately 3,700m in length and
350m in width. Kallak North remains
open to the north and at depth, and
Kallak South remains open both to north
conducted between 2010-2014, a total of
and south and at depth.
27,895m drilled, including 131 drillholes.
A significantly lower price of $90/t 62
per cent iron, as compared to $150/t
62 per cent iron in the 2013 resource
statement was used, with the potential
for eventual open pit extraction being
Beowulf Mining plc Annual Report 2014 Kallak Resource Statement
Kallak North
Kallak South
Global
Notes:
Category
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Tonnage
Mt
105.9
17.0
12.5
16.8
118.5
33.8
Iron
%
27.9
28.1
24.3
24.3
27.5
26.2
P
%
0.035
0.037
0.041
0.044
0.036
0.040
S
%
0.001
0.001
0.003
0.005
0.001
0.003
1. The effective date of the Mineral Resource Estimate is 28 November 2014.
2. Resources have been classified as Indicated or Inferred, following the guidelines of the JORC Code, 2012 edition.
3. Cut-off grade of 15 per cent iron has been used.
4. Mineral Resources which are not Mineral Reserves have no demonstrated economic viability.
Figure 4: Isometric view of Kallak North and South. Background grid 250m. Red
= Hematite dominated, Blue = Magnetite dominated with >95 per cent magnetite,
Brown = Magnetite dominated with 5-10 per cent hematite.
For Kallak North, a total of 14 mineralized
lenses (domains) have been interpreted
and modeled, delineating principally the
distribution of magnetite versus hematite.
For the northern part of Kallak South, a total
of 17 domains have been modelled, and for
the southern part of Kallak South, a total of 9
domains are interpreted.
An overview of the interpreted mineralization
is shown in Figure 4.
The mineralized area at Kallak North is
shallower, at 150-200m below surface.
approximately 1,100m long and at its
However, in the northern part there are no
widest part, in the center, approximately
barren holes below the intercepts and so
350m wide. The deepest drillhole intercept
the mineralization is open at depth.
is 350m below surface in the central part
of the mineralization. In the southern
and northern parts the intercepts are
Exploration of Kallak South has been
divided in two parts, the northern and
11
Beowulf Mining plc Annual Report 2014
southern ends, respectively. In the
northern part, the mineralization is
approximately 750m long and is up to
350m in width. The deepest drillhole
intercept is 350m below surface. In the
southern part, the mineralization is
approximately 500m long and is up to
300m in width. The deepest drillhole
intercept is 200m-250m below surface.
Approximately 800m in between the
southern and northern parts of Kallak
South has not been investigated by
systematic drilling. However, as can
be seen in Figure 1, the magnetic
anomalous area is of equal or even
bigger extension to that defined by
drilling. The exploration potential is
therefore considered high in this area
and included within an exploration
target reported with the resource
statement made in November 2014.
Further to the south of Kallak, within
other exploration permits controlled
by JIMAB, there are further known
magnetite occurrences, but the current
level of investigation does not permit
the estimation of additional mineral
resource.
12
Figure 5: Mineral resource classification. Green = Indicated, Red = Inferred.
Metallurgical test work on Kallak
North material
Metallurgical bench scale tests,
including Davis Tube Recovery (DTR)
tests were completed in 2010 by
MINPRO AB (“MINPRO”) of Strassa,
Sweden (www.minpro.se) on ore grade
material from drillholes on the Kallak
North deposit. The tests were directed
towards the production of a high
grade magnetite pellet feed product.
as bench scale grinding and magnetic
separation, on composite samples
extracted from six separate sections
across the Kallak North deposit guided
by advice from Micon. The main scope
of the test work was to establish
a variability pattern in the mineral
processing versus standardised test
work, with the results obtained used
to plan for JIMAB’s test mining and
sampling programme in 2013 and the
subsequent mineral processing tests,
Traditional treatment of the ore material
laboratory and pilot scale, conducted in
by fine grinding and wet magnetic
early 2014.
separation resulted in a clean magnetite
pellet feed product containing 68.0 per
cent iron corresponding to a recovery
of 85.1 per cent. The head grade ore
material contained 39.8 per cent iron,
33.1 per cent silica (SiO2), 0.57 per cent
manganese (MnO), 0.09 per cent
phosphorous (P2O5), 0.10 per cent
titanium (TiO2) and 0.007 per cent
sulphur. Further testing by MINPRO,
using flotation techniques combined
with wet magnetic separation, resulted
in a final, high grade pellet feed product
containing 70.4 per cent iron with
low levels of contaminants such as
phosphorous, manganese, sulphur and
titanium.
In 2012, JIMAB commissioned MINPRO
to perform further DTR tests, as well
The 2012 DTR tests, grinding to liberation
and using wet low intensity magnetic
separation techniques (“WLIMS”)
produced high grade concentrate
68.9-70.3 per cent iron suitable for
pelletization.
Pilot scale test work on Kallak North
material
In late 2013, approximately 500t of
ore from the test mining sampling
programme completed on a defined
area of the Kallak North deposit in
summer 2013 was transported to a test
facility in Outokumpu City, owned by
GTK. The main portion of the material
was a general composite bulk sample,
representing all of the test mined
sections at Kallak North in proportion to
Beowulf Mining plc Annual Report 2014 their respective occurrence.
of dry magnetite concentrate produced for
maximise the hematite recovery, without
GTK’s initial report in respect of its test work
was received in Q1 2014. Approximately
60 tonnes of the general composite bulk
sample was tested during a two-week
pilot campaign, primarily focusing on
establishing recovery and product quality
parameters for the magnetite content.
Average iron content for the submitted
sample was 29.5 per cent. The proportion of
downstream test work was approximately
fully reaching optimised levels. The best
2.7 tonnes, grading at 69.4 per cent iron
beneficiation result was achieved using a
at a magnetite recovery of approximately
combination of spiral separators, supported
95 per cent. Average silica content in the
by SLon HGIMS (“High-Gradient Intensity
final product was 4.2 per cent and the
Magnetic Separator”), recovery remained
levels of sulphur and phosphorous were
at below 30 per cent. The short test work
insignificant, being below 0.01 per cent.
programme did not enable optimisation
The end product fineness was 80 per cent
of the hematite beneficiation section.
passing 25 microns.
Process mineralogy studies proved that the
hematite losses were mostly occurring in
the very fine particle sizes.
magnetite to hematite in the sample was
The secondary objective, to produce a
established to be approximately 3.4:1.
concentrate of the hematite content,
The magnetite beneficiation circuit
was conventional and straightforward,
consisting of rod milling with rougher-
scavenger cobbing LIMS (“Low Intensity
Magnetic Separation”) pre-concentration,
followed by ball mill re-grinding together
with six cleaner LIMS stages to achieve the
final magnetite product. The grade and
recovery levels were excellent. The amount
was successful in respect of the quality
In April 2015, bench scale test work has been
aspect. A sample of 0.36t of dry hematite
resumed at GTK to identify opportunities to
iron concentrate was produced, at an
produce a “super” high grade concentrate
average grade of 66.6 per cent iron,
lending itself to pelletization and
containing 3.3 per cent silica, 0.03 per
consumption in DRI facilities in Europe
cent phosphorous and less than 0.02 per
and the Middle East, and commanding a
cent sulphur. The fineness was 80 per
significant price premium; the work will
cent passing 175 microns. Several different
also generate critical design data for pre-
flow sheet options were tested in order to
feasibility studies.
13
13
Beowulf Mining plc Annual Report 2014 Application for an Exploitation
Concession for Kallak North
In April 2013, JIMAB a subsidiary of
Beowulf submitted an application to
the Swedish Mining Inspectorate for
an Exploitation Concession for Kallak
North located in the Kallak nr1 permit
area. Further to the Swedish Mining
Inspectorate’s consultation process, in
late November 2013 CAB raised a number
of queries and additional information
requests on certain aspects of the
Environmental Impact Assessment
(“EIA”) component of JIMAB’s application.
In April 2014, an updated and enhanced
application dealing with CAB’s queries
was submitted.
In a letter to the Chief Mining Inspector,
dated 1 October 2014, CAB expressed the
belief that the effects of the possible
transport routes, from the future
mine through areas used for reindeer
husbandry could be detrimental and
that the Exploitation Concession should
In February 2015, the Chief Mining
Specifically to reindeer husbandry, the
Inspector found that the prerequisites
Company proposed precautionary and
for an Exploitation Concession had been
protective measures which resulted
fulfilled, but left the Government to
from analysis undertaken as part of
make a decision regarding Chapters 3
its environmental impact assessment;
and 4 of the Environmental Code.
these measures will be developed
The Mining Inspectorate stated in their
findings that:
• The Exploitation Concession which
has been applied for covers an area
which is deemed suitable in light
of the discovery, purpose, and other
circumstances;
• The Company has shown that a
further in consultation with concerned
Sami villages as part of the Company’s
application for an Environmental Permit.
The Company also intends to establish a
framework for compensatory measures
and economic compensation in the
event there are residual consequences
for neighbouring communities. It is the
Company’s view that having put in place
systems to manage its future operations,
discovery of iron has been found, and is
and frameworks to address residual
likely to be commercially viable;
consequences, that mining and reindeer
• In the Chief Mining Inspector’s opinion,
the environmental impact study, with
the supplements which have been
made, meets the requirements set
husbandry can coexist.
The Company continues to engage
with key stakeholders at the local and
county levels, focus on strengthening
forth in Chapter 6 of the Environmental
relationships and addressing all
Code; and
outstanding concerns. The north of
Sweden is seeking ways to stimulate
economic growth, create jobs and
slowdown population decline and a
mine at Kallak North is seen as part
of the solution for achieving those
goals. It is the Company’s belief that
the Exploitation Concession application
satisfies all the requirements of the
Swedish regulations and there should
be no obstacle for an early and positive
decision by the Swedish Government
in favour of granting the concession for
Kallak North.
therefore not be granted by the Mining
• In the view of the Chief Mining
Inspector, as CAB has not developed
their arguments sufficiently regarding
the scope of the encroachment on
reindeer herding which will be caused
by the concession area, the Chief
Mining Inspector has decided to refer
the issue to the Government.
Before the Mining Inspectorate’s
decision and further to CAB’s response
in October 2014 to the Company’s
application, the Company took the
opportunity to make a further written
submission to the Mining Inspectorate
on issues identified by CAB regarding
transport. In that submission the
Company stated that it will not be
proposing transport routes that pass in
a north/north-easterly direction through
the Jelka-Rimakåbbå Natura 2000 area,
ensuring that future transport routes
will not lead to a significant impact on
reindeer husbandry as feared by the CAB.
Inspectorate at this time.
14
Beowulf Mining plc Annual Report 2014 Other Projects
Grundträsk Gold Project
deposit may be significantly larger.
Ballek Copper-Gold Project
The Grundträsk Project, focused solely on
In 2015, a desktop review will be undertaken
gold, is located in the Skellefte Mining
together with fieldwork prior to the licence
District of northern Sweden. There is little
renewal in November 2015.
The Ballek project, where Beowulf acts as
operator is in the Arjeplog municipality in
northern Sweden. The Group increased its
interest from 50 per cent to 65.25 per cent
in Wayland Copper Limited (“Wayland”),
in accordance with the terms of a joint
venture agreement with Energy Ventures
Limited. Energy Ventures chose not to pro-
rata fund in the most recent exploration
campaign. The Company took control of
the project during the year and Wayland
became a subsidiary on 1 October 2014.
The project area contains the Lulepotten
deposit on which a maiden independent
JORC Code compliant Inferred Resource
estimate was compiled and reported
in September 2008 of 5.4Mt, grading
at 0.8 per cent copper and 0.3g/t gold,
representing a total of 43,000t of contained
copper metal and 52,000 ounces of
contained gold at a cut-off value of 0.3 per
cent for copper.
The latest drill programme commenced in
December 2013 and a total of 2,039m of
drilling across eight holes was completed
by April 2014. The programme was sole
located within one of the selected targets
showed abundant mostly fracture type
copper mineralization present in quartz
veins at relatively shallow levels with assays
ranging up to 3.70 per cent copper over a
1m section and 0.5 per cent copper over a
13.2m section. The copper mineralization
identified at this target is located on the
Lulepotten trend less than 3km to the
north east directly along strike and with
similar geological structures as those of the
Lulepotten deposit.
outcrop and the land is currently used
for forestry. There is good infrastructure
in place, with the area being served by
a network of forest roads, including the
paved main road from Skellefte to Malå,
which passes through the licence area.
Water and electricity supplies are both
available locally. Grundträsk has potential
for a shallow depth gold resource, with gold
bearing sulphide mineralization starting
at depths of less than 12m, suggesting that
any deposit will most likely be amenable to
open pit mining.
Exploration results to date indicate the
presence of sigmoidal gold bearing
structures in a mineralised corridor over a
strike length of 800m. Historic drilling from
20 holes has returned gold grades of up to
5.2m at 4.28g/t, 4.62m at 2.8g/t, 5.7m at
2.53g/t and 16.9m at 1.86g/t.
The focus in 2015 is a desktop review of
historic data and fieldwork. The Company
will also consider the potential for joint
venturing.
Nautijaure IOCG Project
Nautijaure lies directly north and adjacent
to Kallak. Based on regional geological and
geophysical evidence, Nautijaur shows
exploration potential for sulphides; the
hypothesis being that in a large IOCG
system, at the time of forming from
worldwide references, there are a number of
different metals (iron, sulphide metals, rare
earths etc.) entering the sea water/floor in
volcanic fluids, which deposit themselves
at the interface. We have defined the large
volumes of iron present at Kallak, and there
could be associated metal deposits in close
proximity. Fieldwork during 2014 season
identified several copper sulphide rich
boulders.
Ågåsjiegge Iron Ore Project
Ågåsjiegge lies in close proximity to the
north east of Kallak, and shows exploration
potential to host the same geological
structures for iron mineralization as those
seen at Kallak. The SGU has a historic
resource estimate of 74-75Mt of magnetite,
grade 30 per cent iron and almost free of
The Munka molybdenum deposit is
impurities. Historic logs on two holes show
located in the municipality of Arjeplog
mineralization in hole 72601 (west position)
approximately 40km north west of the
from depth at 16m, and in the 72602 hole
Ballek project area. The deposit has
(east position) from depth at 8.5m. Logging
been confirmed from historic drilling to
extend over 800m in length, with parallel
files show mostly classification QFA_MIF,
Quartz-Feldspar-Amphibole_Magnetite iron
mineralised lenses of varying width in
formation, and QF_MIF, intersected with
excess of 20m. Between 1973 and 1977,
pegmatite, PEG. The holes are 202.5m and
a total of 67 holes were drilled by the
214m in length respectively.
SGU for approximately 10,000m. Based
on the results of this historic drilling, the
SGU estimated a resource, up to 100m
funded by the Company. Five drillholes all
Munka Molybdenum Project
The focus for Ballek in 2015 is on expanding
depth, to be 1.7Mt grading at 0.156 per
the defined resource, initially through
cent molybdenum. This historic estimate
reassessing the significant geophysical
does not comply with current JORC Code
work that has been undertaken to date,
or 43-101 international standards. At the
before embarking on further drilling.
estimated tonnage, the Munka deposit
represents the largest molybdenum deposit
in Sweden. Recent finds of high grade
glacial boulders of unknown, non-drill
tested, bedrock sources indicate that the
15
Beowulf Mining plc Annual Report 2014 Board of Directors
Bevan Metcalf
BMS ACA (NZ) - Non-Executive Chairman, Age 57
Mr Metcalf served as the Chief Financial Officer of Afferro Mining Inc. (“Afferro”) from
January 2008, initially in a part time capacity, but becoming full time in November 2011.
He left Afferro in December 2013 following the sale of the company. He joined African
Eagle Resources plc in July 2004 and served as Part-time Finance Director from November
2004 to November 2011 and its Company Secretary from March 2005 to November 2011.
He left African Eagle to take up a full time position with Afferro. He has 30+ years of
financial management experience with international companies, such as ICI, SmithKline
Beecham and Orion Corporation. He was granted ACA membership of the Institute of
Chartered Accountants of New Zealand in 1986. Mr. Metcalf graduated with a Bachelor of
Management Studies degree from Waikato University in New Zealand. Mr Metcalf was
appointed a Non-Executive Director of Beowulf on 22 September 2014, became Senior
Non-Executive Director on 1 December and Non-Executive Chairman on 8 May 2015.
Kurt Budge
MBA MEng ARSM - Chief Executive Officer, Age 45
Mr Budge holds an M.Eng (Hons) in Mining Engineering from The Royal School of Mines,
Imperial College London and an MBA from London Business School. His career in the
mining sector spans over 20 years. Most recently he has been an independent advisor
to junior mining companies on acquisitions and project development. Prior to this he
was General Manager Business Development for African Minerals Limited, where he
developed options for growing the company’s iron ore production and identified M&A
opportunities. Prior to African Minerals he worked as a mining analyst in investment
research, and before that was Vice President of Pala Investments AG (“Pala”), a mining
focused private equity firm based in Switzerland. Before joining Pala, he spent five years as
a Business Development Executive in Rio Tinto’s Business Evaluation Department, where
he was engaged in M&A, divestments and evaluated capital project investments. During
the earlier part of his career he held several senior operations and planning roles in the
UK coal industry with RJB Mining (now UK Coal plc) and worked as a Venture Capital
Executive with Schroder Ventures. Mr Budge was appointed a Non-Executive Director of
Beowulf on 22 September 2014 and became Chief Executive Officer on 24 October 2014.
Dr Jan-Ola Larsson
Fil. Kand PhD DIC – Chief Operating Officer, Age 73
Dr Larsson holds a geology degree (Fil. Kand) from Uppsala University and a PhD in
geochemistry from Imperial College London. He has over 40 years of varied exploration
experience in base metals and diamonds in the Republic of Ireland, Canada, Brazil, Angola,
Finland and Sweden. Previously he held positions including Head of Geochemistry at
Geological Survey of Sweden, Head Geochemist of LKAB Exploration Company, Stockholm
and Barringer Research Ltd., Toronto and Exploration Manager for Tetron Mineracao
S/A, Cuiaba, Brazil and North Star Diamonds AB, Stockholm. He has been a director with
Beowulf Mining plc since the start of the Company in 2002.
16
Beowulf Mining plc Annual Report 2014 Strategic Report
The Directors present their strategic report for the year ended 31 December 2014.
Principal Activity
Review Of The Business
The principal activities of the Group in
The results of the Group for the year
the year under review were exploration
are set out in the consolidated income
and development for iron, copper and
statement and show a loss after
gold in Sweden. The Group is controlled,
taxation attributable to the owners of
financed and administered within the
the parent for the year of £3,060,482
United Kingdom which remains the
(2013: £2,186,514 loss). A comprehensive
principal place of business.
review of the business is given under the
Chairman’s Statement and Review of
Operations and Activities.
Principal Risks And Uncertainties
The principal risks and uncertainties faced by the Group are as follows:
• the ability to raise sufficient funds to continue with its principal activities.
• long-term adverse changes in commodity prices could affect the viability of exploration
and extraction projects.
• the operations of the Group are in a foreign jurisdiction where there may be a number
of associated risks over which it will have no control. These may include economic, social
or political instability or change, taxation, rates of exchange, exchange controls and
exploration licensing.
• licences may be subject to conditions which, if not satisfied, may lead to the revocation
of the licences.
• the exploration for and development of mineral deposits involves significant risks which
even a combination of careful evaluation, experience and knowledge may not eliminate.
Few properties which undergo exploration are ultimately developed into producing
mines. There can be no guarantee that the estimates of quantities of minerals disclosed
will be available to extract. With all mining operations there is uncertainty and hence
risk, associated with operating parameters and costs resulting from the scaling up of
extraction methods tested in pilot conditions.
ON BEHALF OF THE BOARD:
Mr B Metcalf
Director
29 May 2015
17
Beowulf Mining plc Annual Report 2014 Report of the Directors
Directors
The Directors who served during the year under review were:
Mr B Metcalf
Mr K R Budge
Dr Jan-Ola Larsson
Appointed 22 September 2014
Appointed 22 September 2014
Mr C Sinclair-Poulton
Resigned 27 November 2014
Resigned 14 October 2014
Resigned 22 September 2014
Resigned 22 September 2014
Mr F Boman
Mr A C R Scutt
Mr E Taylor
Dividends
No dividends will be distributed for the year ended 31 December 2014 (2013: £nil).
Going Concern
In common with many exploration companies, the Company raises funds for its
operations in discrete tranches, as and when required. The Group does not incur
commitments or liabilities which cannot reasonably be met from available funds. While
the Company has been successful in the past in raising funds, there is no assurance that
it will continue to raise funds in the future. However, the Directors are confident that
they will secure additional funding to meet corporate overheads and exploration-related
costs for the foreseeable future and therefore believe that the going concern basis is
appropriate for the preparation of the financial statements.
Substantial Shareholdings
The Directors are aware of the following who were interested, directly or indirectly, in 3 per
cent or more of the Group’s ordinary shares on 28 May 2015:
Shareholders
Lanstead Capital LP
Shares
78,415,251
TD Direct Investing Nominees (Europe) Limited
32,449,355
Barclayshare Nominees Limited
HSDL Nominees Limited
SVS (Nominees) Limited
HSBC Client Holdings Nominee (UK) Limited
Sunvest Corporation Limited
21,601,171
17,524,035
16,505,843
15,005,378
11,250,000
%
20.94
8.67
5.77
4.68
4.41
4.01
3.00
18
Beowulf Mining plc Annual Report 2014
AUTHORITY TO ISSUE SHARES
the Directors must not approve the
accordance with legislation in the United
financial statements unless they are
Kingdom governing the preparation and
satisfied that they give a true and fair
dissemination of financial statements,
view of the state of affairs of the Group
which may vary from legislation in other
cash up to an aggregate nominal value
In preparing these financial statements,
of £530,991.
the Directors are required to:
SIGNIFICANT AGREEMENTS
• select suitable accounting policies and
Information relating to events since the
and
by the European Union, subject to any
the steps that he ought to have taken
material departures disclosed and
as a Director in order to make himself
explained in the financial statements;
aware of any relevant audit information
Each year at the AGM the Directors seek
authority to allot shares. The authority,
when granted, lasts until the next AGM
(unless renewed, varied or revoked by
the Company prior to or on such date).
Subsequent to last year’s AGM held on
11 July 2014, a General Meeting was held
on 22 September 2014. At that Meeting
shareholders gave authority for the
Directors to allot equity securities for
The Companies Act 2006 requires the
Company to disclose any significant
agreements which take effect, alter or
terminate upon a change of control of
the Company. The Company is not aware
of, or party to, any such agreement.
EVENTS AFTER THE REPORTING
PERIOD
end of the year is given in note 25 to the
financial statements.
FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICIES
Financial risk management policies and
objectives for capital management are
provided within note 22.
DIRECTORS’ RESPONSIBILITIES
STATEMENT
The Directors are responsible for
preparing the strategic report, annual
report and the financial statements in
accordance with applicable law and
regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors have elected to prepare
and Company and of the profit or loss
of the Group for that year. The Directors
are also required to prepare financial
statements in accordance with the
rules of the London Stock Exchange for
companies trading securities on the
Alternative Investment Market.
then apply them consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• state whether they have been prepared
in accordance with IFRSs as adopted
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the Company
and enable them to ensure that the
financial statements comply with the
jurisdictions. The maintenance and
integrity of the Company’s website is
the responsibility of the Directors. The
Directors’ responsibility also extends to
the ongoing integrity of the financial
statements contained therein. The
Company has a new website which went
live on 31 March 2015.
www.beowulfmining.com
STATEMENT AS TO DISCLOSURE
OF INFORMATION TO AUDITORS
So far as the Directors are aware, there is
no relevant audit information (as defined
by Section 418 of the Companies Act
2006) of which the Group’s auditors are
unaware, and each Director has taken all
and to establish that the Group’s
auditors are aware of that information.
AUDITOR
The auditor for the Company was
changed during the year. BDO LLP has
extensive experience of working with
AIM companies in the Natural Resources
sector. BDO LLP have expressed their
willingness to continue in office and a
resolution to re-appoint them will be
proposed at the Group’s forthcoming
Annual General Meeting.
requirements of the Companies Act
ANNUAL GENERAL MEETING
2006. They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps
The Group’s Annual General Meeting will
be held at 10.30 a.m. (BST) on 29 June
for the prevention and detection of fraud
2015 and full details of the proposed
and other irregularities.
Website Publication
resolutions at that meeting will be
posted to shareholders and will appear
on the Company’s website.
the Group and Company financial
The Directors are responsible for
statements in accordance with
ensuring the annual report and the
ON BEHALF OF THE BOARD:
International Financial Reporting
financial statements are made available
Standards (IFRSs) as adopted by the
on a website. Financial statements are
European Union. Under company law
published on the Company’s website in
Mr B Metcalf
Director
29 May 2015
19
Beowulf Mining plc Annual Report 2014 Remuneration Report
Executive Directors’ terms of
engagement
Remuneration in equity rather than
cash
There are two Executive Directors of the
The current Board agreed to forgo one
Company. Mr Budge was appointed Chief
third of their salary and fees (after tax
Executive Officer, on 24 October 2014 and
and national insurance for UK resident
Dr Larsson is the Chief Operating Officer
Directors) for equity in the Company. This
Compensation for loss of office
In line with their letters of appointment
no compensation was paid to Mr Boman
when he resigned as an Executive
Director on 14 October 2014 nor to Mr
Taylor and Mr Scutt who resigned as
and has been with the Company for
will be reviewed on a quarterly basis and
Non-Executive Directors of the Company
more than ten years.
is dependent on the financial resources
on 22 September 2014.
of the Company. Shares have not been
acquired to-date as the Company is in a
close period. Up to the end of December
2014 the amount set aside for shares is
approximately £14,000.
Reconstruction, merger, takeover and
change of control
At the 16 December 2014 Board
Meeting it was agreed a change of
control clause would be included in
Compensation was paid to Mr Sinclair-
Poulton under a settlement agreement,
when he stepped down from the Board
on 27 November 2014. The compensation
was significantly less than what Mr
Sinclair-Poulton was entitled to under
his consultancy and service agreements.
The sum of £30,000 was paid under
his service agreement in two equal
instalments of £15,000 in December 2014
and January 2015. Under his consultancy
the Director’s contracts. In the event
agreement a payment of £20,000 is
of a reconstruction, merger, takeover,
contingent on the Company’s cumulative
acquisition, change of control of
the Company, whereby a Directors
fundraising since his departure from the
Company reaching £500,000 (£350,000
agreement is terminated or they are
has been raised to-date).
asked to resign without being offered a
similar position in the existing Company
or any new company on terms and
conditions no less favourable than the
terms of this agreement, then they will
be paid a prescribed fee equivalent to
either:
(i) two times their annual entitlement
to salary, fees and bonus if they hold,
at the least, two years tenure as a
Director; or
(ii) their annual entitlement to salary,
fees and bonus if they hold less than
two years tenure as a Director.
Mr Budge is on an annual salary
of £120,000 which is currently
benchmarked in the lowest quartile
for AIM companies of similar market
capitalization and in the pre-revenue
category. Mr Budge has a notice period
of 12 months.
Dr Larsson receives annual fees of SEK
991,200 (equivalent to £81,480 at the
year-end exchange rate). These fees
are invoiced through his business,
Geoexperten and are subject to VAT,
which is reclaimable by the Company.
Non-Executive directors’ terms of
engagement
The Non-Executive Directors have
specific terms of engagement
under a letter of appointment. Their
remuneration is determined by the
Board. In the event that a Non-Executive
Director undertakes additional
assignments or work for the Company,
this will be covered under a separate
consultancy agreement.
Under Mr Metcalf’s letter of
appointment he is paid a fee of
£35,000 per annum. Mr Metcalf
has a consultancy agreement with
the Company for financial and
administrative advice and guidance
as the Company does not yet have a
Finance Director. Mr Metcalf has a one
month notice period under his letter of
appointment.
20
Beowulf Mining plc Annual Report 2014 Aggregate Directors’ Remuneration
The remuneration paid to the Directors in accordance with their agreements, during the years ended 31 December 2014 and 31 December
2013 was as follows:
Executive/
Non-Executive
Salary
& Fees1
£
Termination
Payments
£
Share- based
Payments2
£
2014
Total
£
2013
Total
£
Mr B Metcalf
Mr K R Budge
Dr Jan-Ola Larsson3
Non-Executive
Executive
Executive
Mr C Sinclair-Poulton4
Executive
21,579
30,102
87,817
152,713
111,418
20,378
-
-
-
30,000
-
-
-
779
779
-
-
-
-
-
22,358
30,881
87,817
182,713
111,418
20,378
30,000
-
-
108,990
174,996
153,162
28,000
40,000
Executive
Non-Executive
Non-Executive
30,000
Mr F Boman5
Mr A C R Scutt6
Mr E Taylor7
Notes:
1. Does not include expenses reimbursed to the Directors.
2. In relation to options granted in 2014.
3. Fees of £87,817 for Dr Larsson were paid through Geoexperten a business owned by Dr Larsson.
4. Fees of £125,113 for Mr Sinclair-Poulton were paid through Merchant Adventurers Company Limited. Mr Sinclair-Poulton resigned from the Company and as a
Director on 27 November 2014.
5. Fees of £111,418 for Mr Boman were paid through FHB AB, a Swedish company of which Mr Boman is a director and shareholder. Mr Boman resigned from the
Company and as a Director on 14 October 2014.
6. Mr Scutt resigned from the Company and as a Non-Executive Director on 22 September 2014.
7. Fees of £30,000 for Mr Taylor were paid through Tearne Foulsham Limited of which Mr Taylor is a director and shareholder of this company. Mr Taylor resigned
as a Non-Executive Director on 22 September 2014.
Each Director is also paid all reasonable expenses incurred wholly, necessarily and exclusively in the proper performance of his duties.
The Group does not operate a pension scheme and has not paid any contributions to any pension scheme for Directors or employees.
The beneficial and other interests of the Directors holding office on 31 December 2014 in the issued share capital of the Company were as
follows:
Ordinary Shares
31 December
2014
31December
2013
Mr B Metcalf
Mr K R Budge
333,333
333,333
-
-
Dr Jan-Ola Larsson
650,000
650,000
Mr Metcalf and Mr Budge were each awarded 500,000 options on 9 October 2014. These options have a vesting period of one year.
Ordinary Shares
Under Option
Mr B Metcalf
Mr K R Budge
Number
500,000
500,000
Exercise
Price
Expiry
Date
4 pence
9 October 2019
4 pence
9 October 2019
Dr Jan-Ola Larsson
700,000
30 pence
7 December 2016
21
Beowulf Mining plc Annual Report 2014
Corporate Governance Report
Corporate Governance and Board
composition
The Board acknowledges the importance
of the guidelines set out in the UK
Corporate Governance Code and the
Quoted Companies Alliance (QCA)
published Corporate Governance
Guidelines and complies with these so
far as is appropriate having regard to the
size and nature of the Company.
Corporate governance is a key value
driver for investors and an important
determinant of investment decision-
making. For this reason, minority
shareholders must be able to rely on
appropriate corporate governance
structures, risk management systems
and Board processes to safeguard
their interests and ultimately enhance
shareholder value.
Some basic safeguards that help reduce
investment risk include confidence that
the board and management will:
(1) release timely and reliable
information about the Company, so
as to allow shareholders to react to
changing circumstances;
(2) deliver on the stated strategy and
performance targets;
(3) take decisions in the interests of all
investors – in other words, without
favouring insiders and controlling
shareholders;
(4) ensure that share holdings will not
be significantly and unexpectedly
diluted through non-pre-emptive
issues; and
(5) guard against shareholder value
being destroyed through significant
transactions or material related-party
transactions that investors have not
had a chance to evaluate and approve.
Clearly, corporate governance alone will
Remuneration Committee
not make an investment attractive if the
business model itself is not convincing.
But all other things being positive,
particularly the business acumen and
experience of the management team,
investor attention will turn to the
calibre, expertise and integrity of the
Non-Executive Directors, and therefore
their ability to oversee, challenge and
advise the management in order both to
drive value creation and to protect the
interests of shareholders at all times.
Audit Committee
The Remuneration Committee’s role
is to assist the Board of Directors to
discharge its responsibilities in relation
to remuneration of the Company’s
Executive Directors, Non-Executive
Directors and senior executives
including share and benefit plans
and make recommendations as and
when it considers it appropriate. The
Remuneration Committee meets as and
when required.
As the Company currently only has one
Non-Executive Director the duties of the
The overall purpose of the Audit
Committee are discharged by the Board
Committee is:
in consultation with the nominated
(1) To ensure that the Company’s
management has designed and
Nominations Committee
adviser.
implemented an effective system of
internal financial controls;
The Board has not established a
Nominations Committee as the Board
(2) To review and report on the integrity
considers that a separately established
of the consolidated financial
statements of the Company and
related financial information; and
(3) To review the Company’s compliance
with regulatory and statutory
requirements as they relate to
financial statements, taxation
matters and disclosure of financial
information.
In performing its duties, the Committee
will maintain effective working
relationships with the Board of Directors,
management, and the external auditors
and monitor the independence of
those auditors. To perform his or
her role effectively, each committee
member will obtain an understanding
of the responsibilities of committee
membership as well as the Company’s
business, operations and risks. The Audit
Committee meets at least four times a
year.
As the Company currently only has one
Non-Executive Director the duties of the
Committee are discharged by the Board.
committee is not yet necessary as its
functions and responsibilities can be
adequately and efficiently discharged
by the Board as a whole. The Board
assesses the experience, knowledge
and expertise of potential Directors
before any appointment is made and
adheres to the principle of establishing
a Board comprising Directors with
a blend of skills, experience and
attributes appropriate to the Group
and its business. The main criterion
for the appointment of Directors is an
ability to add value to the Group and
its business. All Directors appointed
by the Board are subject to election by
shareholders at the next Annual General
Meeting of the Company following their
appointment. The Board will review the
need for a Nominations Committee
as the Company evolves and one will
be established if and when considered
appropriate.
22
Beowulf Mining plc Annual Report 2014 Share Dealing
The Group has adopted a code which
establishes rules governing dealings by
the Directors of the Company, certain
employees and persons connected with
them. The Directors will comply with
Rule 21 of the AIM Rules for Companies
relating to Directors’ dealings and will
take all reasonable steps to ensure
compliance. The purpose of the dealing
restrictions is to ensure that Directors,
persons connected with them and
certain employees do not abuse, and do
not place themselves under suspicion of
abusing, price-sensitive information that
they may have or be thought to have,
especially in periods leading up to an
announcement of results.
to the highest standards of personal
violations, including those relating to
and professional ethical behaviour. This
accounting, internal accounting controls,
must be reflected in every aspect of
questionable accounting or auditing
the way in which we operate. We take
matters, securities law, the laws and
a zero-tolerance approach to bribery
regulations of any jurisdiction in which
and corruption and we are committed
the Company operates, in accordance
to act professionally, fairly and with
with its Whistleblower Policy.
integrity in all our business dealings. Any
breach of this policy will be regarded as
a serious matter by the Company and is
likely to result in disciplinary action and
potentially the involvement of the police.
Whistleblower Policy
Relations with Shareholders
The Board recognises that it is
accountable to shareholders for the
performance and activities of the
Group. Beowulf communicates with
its shareholders principally through its
In order to discourage illegal activity
website at www.beowulfmining.com
and unethical business conduct
and the interim and Annual Reports.
in the Company, the Board has
Shareholders can also sign up to receive
developed a Whistleblower Policy. It
news releases directly from the Group
is the responsibility of all Directors,
by email. Annual General Meetings of
Anti-Bribery Policy
officers and employees (including
the Company give the Directors the
The Company has in place appropriate
guidance, training and implementation
of procedures to ensure with the UK
Bribery Act. The Company is committed
contract employees and consultants),
opportunity to report to shareholders
to comply with the law and the
on current and proposed operations and
Company’s policies, and to report any
enable shareholders to express their
wrongdoing or violations or suspected
views on the Group’s business activities.
23
23
Beowulf Mining plc Annual Report 2014 Independent Auditor’s Report
We have audited the financial
permitted by law, we do not accept or
auditscopeukprivate.
statements of Beowulf Mining plc for
assume responsibility to anyone other
the year ended 31 December 2014 which
than the Company and the Company’s
comprise the consolidated income
members as a body, for our audit work,
statement, the consolidated statement
for this report, or for the opinions we
and other comprehensive income, the
have formed.
Opinion on financial statements
In our opinion:
• the financial statements give a true
and fair view of the state of the Group’s
and the parent company’s affairs as at
31 December 2014 and of the Group’s
loss for the year then ended;
• the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
Respective responsibilities of
Directors and auditors
As explained more fully in the Directors’
Responsibilities Statement, the Directors
are responsible for the preparation
of the financial statements and for
being satisfied that they give a true
and fair view. Our responsibility is to
audit and express an opinion on the
• the parent company financial
financial statements in accordance
statements have been properly
with applicable law and International
prepared in accordance with IFRSs as
Standards on Auditing (UK and Ireland).
adopted by the European Union and
Those standards require us to comply
as applied in accordance with the
with the Financial Reporting Council’s
provisions of the Companies Act 2006;
(FRC’s) Ethical Standards for Auditors.
and
Scope of the audit of the financial
statements
A description of the scope of an audit
of financial statements is provided on
the FRC’s website at www.frc.org.uk/
• the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
consolidated and company statements
of financial position, the consolidated
and company statements of changes in
equity, the consolidated and company
statements of cash flows and the
related notes. The financial reporting
framework that has been applied in
their preparation is applicable law
and International Financial Reporting
Standards (IFRSs) as adopted by the
European Union and, as regards the
parent company financial statements,
as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the
Company’s members, as a body, in
accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit
work has been undertaken so that we
might state to the Company’s members
those matters we are required to state
to them in an auditor’s report and for
no other purpose. To the fullest extent
24
24
Beowulf Mining plc Annual Report 2014 Emphasis of Matter – Going concern
In forming our opinion, which is not
modified, we have considered the
adequacy of disclosures made in Note 1
to the financial statements concerning
the Group and Company’s ability to
Opinion on other matters prescribed
by the Companies Act 2006
• certain disclosures of Directors’
remuneration specified by law are not
In our opinion the information given
in the Strategic Report and Directors’
Report for the financial year for which
made; or
• we have not received all the
information and explanations we
the financial statements are prepared is
require for our audit.
continue as a going concern. The Group
consistent with the financial statements.
has identified a requirement to raise
additional funds before the end of
2015 to meet corporate overheads and
exploration-related costs. The Board
has a reasonable expectation that the
required, new funds will be secured
from existing or potential investors.
However, these conditions, along with
the other matters explained in Note
1 to the financial statements indicate
the existence of a material uncertainty
which may cast significant doubt
about the Group and Company’s ability
to continue as a going concern. The
Matters on which we are required to
report by exception
We have nothing to report in respect
of the following matters where the
Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not
been kept by the parent company, or
returns adequate for our audit have
not been received from branches not
visited by us; or
Stuart Barnsdall
(senior statutory auditor)
For and on behalf of BDO LLP, statutory
auditor
London
United Kingdom
29 May 2015
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
financial statements do not include the
• the parent company financial
adjustments that would result if the
Group and the Company was unable to
continue as a going concern.
statements are not in agreement with
the accounting records and returns; or
25
25
Beowulf Mining plc Annual Report 2014 Consolidated Income Statement
CONTINUING OPERATIONS
Administrative expenses
OPERATING LOSS
Share of post-tax losses of equity accounted
joint venture
Finance costs
Finance income
LOSS BEFORE INCOME TAX
Income tax expense
LOSS FOR THE YEAR
Loss attributable to:
Owners of the parent
Non-controlling interests
Loss per share attributable to the ordinary
equity holder of the parent:
Basic and diluted (pence)
Note
3
3
4
5
7
2014
2013
as restated
£
£
(1,032,355)
(1,115,988)
(1,032,355)
(1,115,988)
(2,552)
(4,559)
(2,032,835)
(1,109,028)
6,397
43,061
(3,061,345)
(2,186,514)
-
-
(3,061,345)
(2,186,514)
(3,060,482)
(2,186,514)
(863)
-
(3,061,345)
(2,186,514)
(1.00)
(0.91)
The notes form part of these financial statements
26
Beowulf Mining plc Annual Report 2014
Consolidated Statement Of Other Comprehensive Income
2014
2013
as restated
£
£
LOSS FOR THE YEAR
(3,061,345)
(2,186,514)
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss:
Revaluation of listed investments
Item that may be reclassified subsequently to profit or loss:
Exchange losses arising on translation of foreign operations
Share of other comprehensive income of equity accounted joint venture
986
986
(5,785)
(5,785)
(758,807)
(134,984)
(8,021)
-
(766,828)
(134,984)
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX
(765,842)
(140,769)
TOTAL COMPREHENSIVE INCOME
(3,827,187)
(2,327,283)
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
(3,819,849)
(2,327,283)
(7,338)
-
(3,827,187)
(2,327,283)
The notes form part of these financial statements
27
Beowulf Mining plc Annual Report 2014
Consolidated Statement of Financial Position
Note
2014
2013 1 January 2013
as restated
as restated
£
£
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investment in equity accounted
Joint ventures
Investments
Loans and other financial assets
Derivative financial assets
CURRENT ASSETS
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Revaluation reserve
Capital contribution reserve
Share option reserve
Translation reserve
Accumulated losses
Non-controlling interests
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
9
10
11
11
12
14
13
14
15
18
20
20
20
20
20
20
16
6,538,752
4,948,978
3,101,402
42,394
1,990
769
-
20,550
53,262
-
206,935
19,564
258,339
635,603
211,494
25,349
306,722
-
6,654,958
6,071,409
3,645,736
42,445
150,000
186,889
261,612
150,695
1,010,007
-
1,983,616
3,697,771
379,334
3,255,235
3,848,466
7,034,292
9,326,644
7,494,202
3,452,598
2,828,273
2,104,273
15,009,812
14,078,466
10,858,905
(9,450)
46,451
69,318
(10,436)
46,451
67,760
(4,651)
46,451
67,760
(927,835)
(167,482)
(32,498)
(11,025,834)
(7,965,352)
(5,778,838)
6,615,060
8,877,680
7,261,402
129,134
-
-
6,744,194
8,877,680
7,261,402
21
290,098
448,964
232,800
290,098
448,964
232,800
TOTAL EQUITY AND LIABILITIES
7,034,292
9,326,644
7,494,202
The financial statements were approved and authorised for issue by the Board of Directors on 29 May 2015 and were signed on its
behalf by:
Mr B Metcalf - Director
Company Number 02330496
28
The notes form part of these financial statements
Beowulf Mining plc Annual Report 2014
Company Statement of Financial Position
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Investments
Loans and other financial assets
Derivative financial assets
CURRENT ASSETS
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Revaluation reserve
Capital contribution reserve
Share option reserve
Accumulated losses
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
Note
2014
2013 1 January 2013
as restated
as restated
£
£
£
10
11
12
14
13
14
15
18
20
20
20
20
20
1,493
1,990
769
255,254
254,268
260,053
7,486,994
5,654,029
3,839,063
-
635,603
-
7,743,741
6,545,890
4,099,885
39,012
150,000
165,398
354,410
107,733
101,393
1,010,007
1,725,171
2,842,911
-
3,340,218
3,441,611
8,098,151
9,388,801
7,541,496
3,452,598
2,828,273
2,104,273
15,009,812
14,078,466
10,858,905
(35,114)
(36,100)
46,451
69,318
46,451
67,760
(30,315)
46,451
67,760
(10,622,412)
(7,646,354)
(5,566,059)
7,920,653
9,338,496
7,481,015
21
177,498
50,305
60,481
177,498
50,305
60,481
TOTAL EQUITY AND LIABILITIES
8,098,151
9,388,801
7,541,496
These financial statements were approved and authorised for issue by the Board of Directors on 29 May 2015 and were signed on its
behalf by:
Mr B Metcalf - Director
Company Number 02330496
The notes form part of these financial statements
29
Beowulf Mining plc Annual Report 2014
Consolidated Statement of Changes in Equity
Share
capital
Share
premium
Revaluation
reserve
£
£
£
Capital
contribution
reserve
£
Share
option
reserve
£
Translation
reserve
Accumulated
losses
Total
£
£
£
Non-
controlling
interest
£
Balance at 1 January 2013 as restated
2,104,273
10,858,905
(4,651)
46,451
67,760
(32,498)
(5,778,838)
7,261,402
Loss for the year
Foreign exchange translation
Revaluation of listed investments
Total comprehensive income
Transactions with owners
Issue of share capital
Costs associated with the issue of new shares
-
-
-
-
-
-
-
-
724,000
-
3,801,000
(581,439)
-
-
(5,785)
(5,785)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,186,514)
(134,984)
-
-
-
(2,186,514)
(134,984)
(5,785)
(134,984)
(2,186,514)
(2,327,283)
-
-
-
-
4,525,000
(581,439)
Balance at 31 December 2013 as restated
2,828,273
14,078,466
(10,436)
46,451
67,760
(167,482)
(7,965,352)
8,877,680
-
-
-
-
-
-
-
-
Loss for the year
Foreign exchange translation
Revaluation of listed investments
Total comprehensive income
Transactions with owners
Issue of share capital
Costs associated with the issue of new shares
Equity-settled share-based payment transactions
Acquisition of subsidiary
-
-
-
-
-
-
-
-
624,325
-
-
-
1,248,650
(317,304)
-
-
-
-
986
986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,558
-
-
(3,060,482)
(760,353)
-
-
-
(3,060,482)
(760,353)
986
(863)
(6,475)
-
(760,353)
(3,060,482)
(3,819,849)
(7,338)
(3,827,187)
-
-
-
-
-
-
-
-
1,872,975
(317,304)
1,558
-
-
-
-
136,472
1,872,975
(317,304)
1,558
136,472
Total
equity
£
7,261,402
(2,186,514)
(134,984)
(5,785)
(2,327,283)
4,525,000
(581,439)
8,877,680
(3,061,345)
(766,828)
986
Balance at 31 December 2014
3,452,598
15,009,812
(9,450)
46,451
69,318
(927,835)
(11,025,834)
6,615,060
129,134
6,744,194
The notes form part of these financial statements
30
31
Beowulf Mining plc Annual Report 2014Beowulf Mining plc Annual Report 2014
Company Statement of Changes in Equity
Share
capital
£
Share
premium
Revaluation
reserve
£
£
Capital
contribution
reserve
£
Share
option
reserve
£
Accumulated
losses
£
Total
equity
£
Balance at 1 January 2013 as restated
2,104,273
10,858,905
(30,315)
46,451
67,760
(5,566,059)
7,481,015
Loss for year
Revaluation of listed investments
Total comprehensive income
Transactions with owners
Issue of share capital
Costs associated with the issue of new shares
-
-
-
-
-
-
724,000
-
3,801,000
(581,439)
-
(5,785)
(5,785)
-
-
-
-
-
-
-
-
-
-
-
-
(2,080,295)
-
(2,080,295)
(5,785)
(2,080,295)
(2,086,080)
-
-
4,525,000
(581,439)
Balance at 31 December 2013 as restated
2,828,273
14,078,466
(36,100)
46,451
67,760
(7,646,354)
9,338,496
Loss for year
Revaluation of listed investments
Total comprehensive income
Transactions with owners
Issue of share capital
Costs associated with the issue of new shares
Equity-settled share-based payment transactions
-
-
-
-
-
-
624,325
-
-
1,248,650
(317,304)
-
-
986
986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,558
(2,976,058)
-
(2,976,058)
986
(2,976,058)
(2,975,072)
-
-
-
1,872,975
(317,304)
1,558
Balance at 31 December 2014
3,452,598
15,009,812
(35,114)
46,451
69,318
(10,622,412)
7,920,653
The notes form part of these financial statements
32
33
Beowulf Mining plc Annual Report 2014Beowulf Mining plc Annual Report 2014
Consolidated Statement of Cash Flows
Cash flows from operating activities
Loss before income tax
Depreciation charges
Equity-settled share-based transactions
Impairment of exploration costs
Impairment of related party loan
Share of post-tax losses of equity accounted joint venture
Gain on asset acquisition arising on reclassifying joint venture as a subsidiary
Finance costs
Finance income
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Purchase of investments
Sale of investments
Funding of joint venture
Acquisition of subsidiary cash
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Settlement of derivative financial asset
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
The notes form part of these financial statements
34
2014
2013
as restated
£
£
(3,061,345)
(2,186,514)
8,227
1,558
3,187
-
2,552
(59,891)
664
-
-
184,558
4,559
-
2,032,835
1,109,028
(6,397)
(43,061)
(1,079,274)
(930,766)
200,747
(242,953)
(141,351)
103,684
(1,121,480)
(968,433)
(1,375,121)
(1,867,054)
(48,631)
-
49,205
(1,885)
(57,023)
-
(294,639)
(29,966)
1,168
6,397
-
23,611
(1,661,621)
(1,932,317)
887,975
(182,304)
312,775
800,000
(56,439)
445,362
1,018,446
1,188,923
(1,764,655)
(1,711,827)
1,983,616
3,697,771
(32,072)
(2,328)
186,889
1,983,616
Beowulf Mining plc Annual Report 2014
Company Statement of Cash Flows
Cash flows from operating activities
Loss before income tax
Depreciation charges
Equity-settled share-based transactions
Impairment of related party loan
Finance costs
Finance income
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Loans to subsidiaries
Funding of joint venture
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Settlement of derivative financial asset
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes form part of these financial statements
2014
2013
as restated
£
£
(2,976,058)
(2,080,295)
497
1,558
664
-
-
184,558
2,032,835
1,109,028
(6,031)
(42,188)
(947,199)
(828,233)
68,721
127,193
(36,448)
(10,176)
(751,285)
(874,857)
-
(1,885)
(1,525,253)
(1,920,000)
(307,712)
6,031
(29,966)
22,738
(1,826,934)
(1,929,113)
887,975
(182,304)
312,775
800,000
(56,439)
445,362
1,018,446
1,188,923
(1,559,773)
(1,615,047)
1,725,171
3,340,218
165,398
1,725,171
35
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
1.
ACCOUNTING POLICIES
Nature of operations
Beowulf Mining plc (the “Company”) is a company registered in England and Wales. The address of the Company’s registered
office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT.The Group is engaged in the acquisition, exploration
and evaluation of natural resources assets and has not yet generated revenues.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below:
Going concern
The Group is engaged in the acquisition, exploration and evaluation of natural resources assets and has not yet generated
revenues. During the year the Company incurred a loss of £3,061,345.
In common with many exploration companies, the group raises finance for its working capital, acquisition, exploration and
evaluation activities in discrete tranches and further funding will be required before the end of 2015. Based on current
discussions the Directors have a reasonable expectation that the required, new funds will be secured from existing or potential
investors. On this basis the Directors have therefore concluded it is appropriate to prepare the financial statements on a going
concern basis. However, whilst the Directors are confident that they are taking all the necessary steps to ensure that the
required finance will be available, there can be no certainty that this will be the case. These conditions indicate the existence
of a material uncertainty which may cast significant doubt over the Group’s and the Company’s ability to continue as a going
concern and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The financial statements do not include any adjustments that may be necessary should the Company be unsuccessful in
raising the required finance.
Basis of preparation
The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting
Standards as adopted by the European Union (“IFRS”) and with those parts of the UK Companies Act 2006 applicable to
companies reporting under IFRS as adopted by the European Union. The financial statements are presented in GB Pounds
Sterling. They are prepared on the historical cost basis or the fair value basis where the fair valuing of relevant assets and
liabilities has been applied.
New standards and interpretations applied
In preparing these financial statements the Company has reviewed all new standards and interpretations.
New standards, interpretations and amendments effective from 1 January 2014
The Group adopted all relevant new standards, interpretations and amendments effective from 1 January 2014. One new
standard adopted had an impact on the financial statements. The nature and effect of the new standard and amendment
adopted by the Group is detailed below. No other standards, interpretations or amendments had an effect on the financial
statements for the year ended 31 December 2014.
IFRS 11 – Joint arrangements
During the year ended 31 December 2014, the Group adopted IFRS 11 ‘Joint Arrangements’ which was effective for periods
beginning on 1 January 2014. The Directors have considered the factors specified within IFRS 11 and classified the interest in
the jointly controlled entity, Wayland Copper Limited as a joint venture. Under the requirements of IFRS 11, joint ventures are
accounted for using the equity accounting method. Joint ventures are initially recognised at cost and subsequently adjusted
for the Group’s share of the profit or loss and other comprehensive income in the joint venture.
The accounting policy adopted prior to the implementation of IFRS 11 followed the requirements of IAS 31 ‘Financial reporting
of Interests in Joint Ventures’ under which the Group had accounted for the interest in the jointly controlled entity using the
proportional consolidation method.
36
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
The Group has retrospectively restated the 2013 figures to reflect this change in accounting policy.
New standards, interpretations and amendments issued not yet effective
The Group has not adopted any standards, interpretations and amendments issued, but which are not yet effective, in advance
of their effective date. None of those issued are expected to have a material effect on the Group’s future financial statements.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the amounts reported for income and expenses during the year and the amounts reported for assets and liabilities at the
balance sheet date. However, the nature of estimation means that the actual outcomes could differ from those estimates.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of
assets and liabilities within the next financial year are the measurement of any impairment of intangible assets, the estimation
of share-based payment costs, treatment of Wayland Copper Limited and its copper-gold project and valuation of derivative
financial assets. In respect of these items:
(i)
(ii)
(iii)
(iv)
The Group determines whether there are any indicators of impairment of intangible assets on an annual basis.
The estimation of share-based payment costs requires the selection of an appropriate model, consideration as
to the inputs necessary for the valuation model chosen and the estimation of the number of awards that will
ultimately vest.
The Company has placed shares with Lanstead Capital L.P. and at the same time entered into equity swap and
interest rate swap agreements in respect of the subscriptions for which consideration will be received monthly
over 12 and 24 month periods as disclosed in the notes to these financial statements. The amount receivable each
month is dependent on the Company’s share price performance. The Directors have made assumptions in the
financial statements about funds receivable at the year end. However, there is significant uncertainty underlying
these assumptions due to the unpredictable nature of the Company’s share price.
During the year Beowulf Mining plc sole-funded exploration work undertaken on the Ballek copper-gold project
through the joint venture entity Wayland Copper Limited and its subsidiary Wayland Sweden AB. In the view of the
Directors, Beowulf Mining plc has the ability to control the joint venture entity and has therefore consolidated the
results of the joint venture entity within the results of the Group from 1 October 2014.
Basis of consolidation
(i) Subsidiaries and acquisitions
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of
acquisition. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is recognised
as goodwill. If the cost of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is
recognised directly in profit or loss.
The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Non-controlling interests in subsidiaries are presented separately from the equity attributable to equity owners of the parent
company. When changes in ownership in a subsidiary do not result in a loss of control, the non-controlling shareholders’
interests are initially measured at the non-controlling interests’ proportionate share of the subsidiaries net assets. Subsequent
to this, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-
controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests having a deficit balance.
37
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Intangible assets - exploration costs
All costs incurred prior to the application for the legal right to undertake exploration and evaluation activities on a project are
expensed as incurred.
Exploration and evaluation costs arising following the application for the legal right are capitalised on a project-by-project
basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include
appropriate technical and administrative overheads.
Exploration and evaluation activity includes:
• researching and analysing historical exploration data;
• gathering exploration data through topographical, geochemical and geophysical studies;
• exploratory drilling, trenching and sampling;
• determining and examining the volume and grade of the resource;
• surveying transportation and infrastructure requirements; and
• conducting market and finance studies.
Administration costs that are not directly attributable to a specific exploration area are expensed as incurred.
Deferred exploration costs are carried at historical cost less any impairment losses recognised. When a project is deemed to
no longer have commercially viable prospects to the Group, deferred exploration costs in respect of that project are deemed to
be impaired and written off to the statement of comprehensive income.
Impairment
Whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable an asset is
reviewed for impairment. An asset’s carrying value is written down to its estimated recoverable amount (being the higher of the
fair value less costs to sell and value in use) if that is less than the asset’s carrying amount.
Impairment reviews for deferred exploration and evaluation expenditure are carried out on a project by project basis, with each
project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment
arise such as:
(i)
(ii)
(iii)
(iv)
(v)
unexpected geological occurrences that render the resource uneconomic;
title to the asset is compromised;
variations in mineral prices that render the project uneconomic;
substantive expenditure on further exploration and evaluation of mineral resources is neither budgeted nor
planned; and
the period for which the Group has the right to explore has expired and is not expected to be renewed.
Property, plant and equipment
Items of property, plant and equipment are stated at historical cost less accumulated depreciation.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Plant and machinery - 25% on reducing balance
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
38
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Investments
Investments in listed companies are stated at fair value. The revaluation adjustment is taken to the revaluation reserve and any
impairments are shown in the income statement for the year.
Investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are
recognised at cost less any provision for impairment.
Fixed asset investments in subsidiary undertakings and joint venture interests are stated at cost less provision for any
impairment in value.
Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets and
liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables
Trade and other receivables are recorded at their nominal amount less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of the receivable. Bad debts are written off when identified.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short term highly liquid
investments with original maturities of three months or less.
Trade payables
Trade payables are stated at amortised cost using the effective interest method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Where equity
instruments are issued as part of an acquisition they are recorded at their fair value on the date of acquisition.
Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss comprise derivative financial instruments. Subsequent to initial
recognition financial assets at fair value through profit or loss are stated at fair value. Movements in fair values are recognised
in profit or loss, unless they relate to derivatives designated and effective as hedging instruments, in which event, the timing of
the recognition in profit or loss depends on the nature of the hedging relationship. The Group does not currently have any such
hedging instruments.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the
Group’s assets and liabilities and their tax base.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Any remaining
deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there
will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary
difference can be utilised.
39
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability
settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Current and deferred tax is recognised in the profit or loss, except when the tax relates to items charged or credited directly in
equity, in which case the tax is also recognised directly in equity.
Foreign currencies
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and
financial position of each entity are expressed in GB Pounds Sterling which is the presentation currency for the Group and
Company financial statements. The functional currency of the Company is the GB Pounds Sterling.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
Exchange differences arising on the settlement of monetary items and on the retranslation of monetary items is included in the
statement of comprehensive income for the period.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are expressed in GB Pounds Sterling using exchange rates prevailing at the balance sheet date. Income and expense items
are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as other
comprehensive income and are transferred to the Group’s translation reserve.
Foreign currency movements arising from the Group’s net investment, which comprises equity and long-term debt, in
subsidiary companies whose functional currency is not the GB Pounds Sterling are recognised in the translation reserve,
included within equity until such time as the relevant subsidiary company is sold, whereupon the net cumulative foreign
exchange difference relating to the disposal is transferred to profit and loss.
Share-based payment transactions
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to
the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into
the fair value of all options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of
whether market vesting conditions are satisfied. The cumulative expense 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.
40
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
2.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
The average monthly number of employees and Directors during the year was as follows:
Directors
2014
£
99,659
10,361
2013
£
86,000
9,744
110,020
95,744
Number
Number
5
5
Wages and salaries excludes amounts paid to third parties in respect of director’s services during the year which amounted to
£354,348 (2013: £419,148). Including these amounts, the Directors’ fees are as follows:
Salaries and fees
Compensation to director for the loss of office
Equity-settled share-based payments
2014
£
2013
£
454,007
505,148
30,000
1,558
-
-
485,565
505,148
The remuneration of the highest paid director during the year was £182,713 (2013: £174,996). No contributions were made by
the Company to money purchase pension schemes.
During the year, no Directors were entitled to accrue retirement benefits under money purchase pension schemes.
3.
FINANCE INCOME AND COSTS
Finance Income:
Deposit account interest
Other interest
Finance Costs:
2014
£
6,397
-
2013
£
23,611
19,450
6,397
43,061
Fair value loss on derivative financial assets
2,032,835
1,109,028
41
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
4.
LOSS BEFORE TAX AND AUDITORS REMUNERATION
a. The loss before tax is stated after charging/(crediting):
Depreciation - owned assets (note 10)
Foreign exchange differences
Impairment of exploration costs (note 9)
Impairment of convertible loan (note 12)
Impairment of accrued interest receivable
2014
£
8,227
14,941
3,187
-
-
2013
£
664
(3,707)
-
135,000
49,558
Fair value loss on derivative financial assets (note 14)
2,032,835
1,109,028
b. Auditor’s remuneration
Fees payable to the Group’s auditor for the audit of the consolidated
financial statements (2013: Price Bailey LLP)
Fees payable to the Group auditor for other services:
- audit of subsidiaries pursuant to legislation
2014
£
2013
£
21,250
18,670
3,750
3,335
25,000
22,005
During the year ended 31 December 2014 the Group changed its auditor.
The amount shown as a comparative for 2013 was paid to the Group’s former auditor, Price Bailey LLP.
5.
INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2014 or for the year ended 31
December 2013.
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate of corporation tax in the UK.
The difference is explained below:
2014
£
2013
£
Loss on ordinary activities before income tax
(3,061,345)
(2,186,514)
Loss on ordinary activities
multiplied by the standard rate of corporation tax in the
UK of 21.50% (2013 - 23.25%)
Effects of:
(658,189)
(508,365)
Potential tax losses carried forward on tax adjusted loss for the year
627,524
452,281
Provision against convertible loan
Losses of overseas subsidiaries
Loss arising in joint venture
42
-
30,665
-
-
31,388
23,636
1,060
-
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
The main rate of UK corporation tax changed from 24% to 23% on 1 April 2013 and from 23% to 21% on 1 April 2014 giving
an effective rate for the year of 21.50% (2013: 23.25%).
The Group has estimated UK losses of £8,861,064 (2013: £5,882,694) and foreign losses of £437,225 (2013: £297,084)
available to carry forward against future trading profits. The value of unrecognised deferred tax assets in respect of the UK
losses amounts to £1,905,059 (2013: £1,367,595). The Directors believe that it would not be prudent to recognise such tax
assets before such time as the Group generates taxable income.
6.
LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part
of these financial statements. The parent company’s loss for the financial year was £2,976,058 (2013: £2,080,295 loss).
7.
LOSS PER SHARE
Basic loss per share
The calculation of basic loss per share at 31 December 2014 was based on the loss attributable to ordinary shareholders of
£3,060,482 (2013: £2,186,514) and a weighted average number of Ordinary Shares outstanding during the period ended 31
December 2014 of 304,755,824 (2013: 241,137,381) calculated as follows:
Loss attributable to ordinary shareholders
2014
£
2013
as restated
£
Loss attributable to ordinary shareholders
3,060,482
2,186,514
Weighted average number of ordinary shares
Number of shares in issue at beginning of year
Effect of shares issued during year
Weighted average number of ordinary shares in issue
for the year
2014
Number
2013
Number
282,827,365
210,427,365
21,928,459
30,710,016
304,755,824
241,137,381
There is no difference between the basic and diluted loss per share.
8.
PRIOR YEAR ADJUSTMENT
During the year the interpretation of IFRS 11 Joint Arrangements has been reviewed and amended. Previously, joint
arrangements were accounted for using proportional consolidation but under the new interpretation joint arrangements are
accounted for using equity accounting. The effect of the new interpretation is presentational affecting the consolidated income
statement and consolidated statement of financial position. The amendment is shown as a prior year adjustment within these
financial statements.
43
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Extracts of the financial statements of Wayland Copper Limited and its subsidiary Wayland Sweden AB previously used for the
proportional consolidation within these consolidated statements are as follows:
STATEMENT OF PROFIT OR LOSS
CONTINUING OPERATIONS
Administrative expenses
OPERATING LOSS
Finance costs
Finance income
LOSS BEFORE INCOME TAX
Income tax expense
LOSS FOR THE YEAR
STATEMENT OF FINANCIAL POSITION
ASSETS
NON-CURRENT ASSETS
Intangible assets
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Translation reserve
Accumulated losses
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
2013
£
2012
£
(9,118)
(23,830)
(9,118)
(23,830)
-
-
-
-
(9,118)
(23,830)
-
-
(9,118)
(23,830)
2013 1 January 2013
£
£
576,324
548,333
576,324
548,333
100
100
449,900
449,900
(4)
-
(36,129)
(27,011)
413,867
422,989
162,457
125,344
162,457
125,344
576,324
548,333
Under proportional consolidation, 50% of these figures were previously consolidated within the Group financial statements.
In 2012 a full provision was made in the Revaluation Reserve in respect of a £95,000 investment in Agricola Resources Plc
following its de-listing from the PLUS market. A prior year adjustment has been made to transfer this impairment in value of
the investment from Revaluation Reserve to Accumulated Losses to reflect the permanent diminution of value following the de-
listing.
44
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
9.
INTANGIBLE ASSETS - Group
COST
At 1 January 2013 as restated
Additions for the year
Foreign exchange movements
At 31 December 2013 as restated
At 1 January 2014 as restated
Additions for the year
Acquisition of subsidiary (note 16)
Impairments recognised
Foreign exchange movements
At 31 December 2014
NET BOOK VALUE
At 31 December 2014
At 31 December 2013
At 1 January 2013
Exploration
costs
£
3,101,402
1,867,054
(19,478)
4,948,978
4,948,978
1,375,499
838,216
(3,187)
(620,754)
6,538,752
6,538,752
4,948,978
3,101,402
The net book value of exploration costs is comprised of expenditure on the following projects:
Kallak
Grundtrask
Majves
Munka
Norrbotten
Ballek
2014
£
2013
£
5,416,587
4,610,704
285,543
325,762
-
6,836
-
829,786
2,875
7,804
763
1,070
6,538,752
4,948,978
Total Group exploration costs of £6,538,752 are currently carried at cost in the financial statements. The Group will need
to raise funds and/or bring in joint venture partners to further advance exploration and development work and take it through
to development. If insufficient funds are raised then some of the assets may require impairment.
During the year an impairment provision of £3,187 (2013: £nil) was made against costs incurred on Majves and Norrbotten on
the basis that no further exploration would be carried out on those sites. The impairment is charged as an expense and
included within the consolidated income statement.
45
Beowulf Mining plc Annual Report 2014
Group
£
Company
£
3,636
1,885
3,636
1,885
5,521
5,521
5,521
48,631
5,521
-
54,152
5,521
2,867
664
2,867
664
3,531
3,531
3,531
8,227
3,531
497
11,758
4,028
42,394
1,493
1,990
1,990
769
769
Notes to the consolidated financial statements
10.
PROPERTY, PLANT AND EQUIPMENT
COST
At 1 January 2013
Additions
At 31 December 2013
At 1 January 2014
Additions
At 31 December 2014
DEPRECIATION
At 1 January 2013
Charge for year
At 31 December 2013
At 1 January 2014
Charge for year
At 31 December 2014
NET BOOK VALUE
At 31 December 2014
At 31 December 2013
At 1 January 2013
46
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
11.
INVESTMENTS - Group
COST OR VALUATION
At 1 January 2013
Share of post-tax losses of equity accounted joint venture
Interest
in joint
venture
as restated
£
211,494
(4,559)
Listed
investments
£
Total
£
25,349
236,843
-
(4,559)
(5,785)
Revaluation of listed investment
-
(5,785)
At 31 December 2013
206,935
19,564
226,499
At 1 January 2014
Share of post-tax losses of equity accounted joint venture
Revaluation of listed investment
Exchange differences
Reclassification as subsidiary
206,935
(2,552)
-
(8,021)
(196,362)
19,564
-
986
-
-
226,499
(2,552)
986
(8,021)
(196,362)
At 31 December 2014
-
20,550
20,550
Interest in joint venture
The Group’s share of joint ventures is as follows:
Non-current assets
Current assets
Share of gross assets
Share of non-current liabilities
Share of current liabilities
Share of net assets
Administrative expenses
Loss before income tax
Loss for the year
2014
£
-
-
-
-
-
-
-
-
-
2013
as restated
£
288,163
66,045
354,208
-
(147,273)
206,935
(4,559)
(4,559)
(4,559)
During the year ended 31 December 2014 the Company sole funded exploration work in the joint venture. In line with the joint
venture arrangement, the Company’s interest in Wayland Copper Limited was adjusted such that the Company took control.
Further details are provided in note 17.
47
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
11.
INVESTMENTS - Company
Shares in
group
undertakings
£
Interest
in joint
venture
£
Listed
investments
£
Totals
£
COST OR VALUATION
At 1 January 2013
Revaluation of listed investments
9,704
225,000
-
-
25,349
(5,785)
260,053
(5,785)
At 31 December 2013
9,704
225,000
19,564
254,268
At 1 January 2014
Revaluation of listed investment
Reclassification as subsidiary
9,704
225,000
19,564
254,268
-
-
225,000
(225,000)
986
-
986
-
At 31 December 2014
234,704
-
20,550
255,254
The Group consists of the following subsidiary undertakings:
Name
Incorporated
Activity
2014
% holding
2013
% holding
Iron of Sweden Limited
Jokkmokk Iron Mines AB
Norrbotten Mining AB
Wayland Copper Limited
Wayland Sweden AB
(1) indirectly held
(2) effective interest
UK
Sweden
Sweden
UK
Sweden
Dormant
Mineral exploration
Mineral exploration
Holding company
Mineral exploration
100%
100%
100%
65.25%
(1)(2)65.25%
100%
100%
100%
50%
-
Details on the non-controlling interest in subsidiaries is given in note 16.
Other investments
The Group and the Company have an investment in the mining company Agricola Resources Plc (“Agricola”). Agricola’s shares
were withdrawn from PLUS markets on 1 November 2012 to ensure that its shareholders were properly protected whilst the
company reviews its operations and future plans. Because of the current uncertainty over the future of Agricola, the Directors
have re-valued the investment to £nil (2013: £nil).
48
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
12.
LOANS AND OTHER FINANCIAL ASSETS - Group
At 1 January 2013
Advances made in the year
Additions in the year
Impairment of loan
Foreign exchange movements
At 31 December 2013
At 1 January 2014
Advances made in the year
Disposals in the year
Loans to
Joint
ventures
£
111,785
29,966
-
-
-
141,751
141,751
307,712
-
Reclassification as intra-group loan following acquisition
(449,463)
Foreign exchange movements
At 31 December 2014
-
-
Other
loans
£
Financial
assets
£
135,000
59,937
-
-
57,023
Totals
£
306,722
29,966
57,023
(135,000)
-
(135,000)
-
-
-
-
-
-
-
-
(372)
(372)
116,588
258,339
116,588
-
(49,205)
-
(14,121)
258,339
307,712
(49,205)
(449,463)
(14,121)
53,262
53,262
Beowulf Mining plc has loaned £20,000 to Agricola Resources Plc under terms set out in a convertible loan note, whereby the
loan accrues interest at 3 per cent above the Bank of England Base Rate.
Beowulf Mining plc has also loaned £250,000 to Agricola Resources Plc under terms set out in convertible loan notes, whereby
the loan accrues interest at 7 per cent above the Bank of England Base Rate and is convertible into ordinary shares of Agricola
at par until 30 June 2017.
The convertible loan notes are repayable on 30 June 2017 or, at Beowulf’s option, immediately upon a fundraising of more than
£400,000 being completed by Agricola, or any time thereafter. At Agricola’s option, the convertible loan notes were redeemable
early without penalty on 30 June 2012 or at six monthly intervals thereafter. Beowulf is entitled at its sole discretion to convert
all or part of the £250,000 loan into new ordinary shares in Agricola at a conversion price of 1 pence per ordinary share at any
time. The notes are transferable subject to certain limited restrictions.
In addition, Beowulf was granted warrants to subscribe for up to 21,000,000 additional new ordinary shares in Agricola at an
exercise price of 1 pence per new Agricola ordinary share at any time prior to 30 June 2014. These options were fair valued at
the date of grant using a Black-Scholes model and have now expired unexercised.
Following Agricola de-listing from the PLUS markets on 1 November 2012, the Directors consider the recovery of the above
loans to be in doubt and a full impairment provision has been made in previous years against the loans of £270,000 and
accrued interest of £49,558. No provision has been made for interest accrued during the year (2013: £19,450).
During the year loans of £307,712 (2013: £29,996) were made to the Wayland Copper Limited Group to fund further
exploration. At the balance sheet date the total loans made to the Wayland Copper Limited Group amounted to £449,463
(2013: £141,751). On 1 October 2014 the Group’s interest in Wayland Copper Limited changed from that of a joint venture to a
subsidiary undertaking and the loans have been reclassified accordingly. Further details are provided in note 17.
49
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
12.
LOANS AND OTHER FINANCIAL ASSETS - Company
Loans to
group
undertakings
£
Loans
to joint
ventures
£
3,589,494
1,920,000
111,785
29,966
Other
loans
£
Financial
assets
£
135,000
2,784
-
-
-
Totals
£
3,839,063
1,949,966
(135,000)
-
-
(135,000)
At 1 January 2013
Advances made in the year
Impairment of loans
At 31 December 2013
5,509,494
141,751
At 1 January 2014
Advances made in the year
Reclassification as intra-group loan
following acquisition
5,509,494
1,525,253
141,751
307,712
449,463
(449,463)
At 31 December 2014
7,484,210
-
-
-
-
-
-
2,784
5,654,029
2,784
-
-
5,654,029
1,832,965
-
2,784
7,486,994
Further details of the transactions in the year are shown within related parties disclosure note 23.
13.
TRADE AND OTHER RECEIVABLES
Current:
Other receivables
VAT
Prepayments and accrued income
14.
DERIVATIVE FINANCIAL ASSETS
Group Company
2014
£
2013
as restated
£
992
17,846
23,607
124,338
123,130
14,144
2014
2013
£
-
15,405
23,607
£
35,500
58,089
14,144
42,445
261,612
39,012
107,733
In July 2013, as part of a two stage subscription to raise, in aggregate, £4.125m (before expenses) from certain new
shareholders, the Company issued 28,694,000 new ordinary shares of 1p each in the capital of the Company (“Ordinary
Shares”) at a price of 6.25p per share to Lanstead Capital L.P. (“Lanstead”) for £1,793,375. The Company simultaneously
entered into an equity swap with Lanstead for 75 per cent of these shares with a reference price of 8.3333p per share (the
“Reference Price”). The equity swap is for a 24 month period. All 28,694,000 Ordinary Shares were allotted with full rights on
the date of the transaction.
In August 2013, following the receipt of shareholders’ approval at a duly convened general meeting, the Company issued a
further 35,306,000 new Ordinary Shares at a price of 6.25p per share to Lanstead for £2,206,625. The Company entered into a
further equity swap on the same basis and with the same Reference Price as that outlined above. All 35,306,000 shares were
allotted with full rights on the date of the transaction.
50
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Accordingly, pursuant to the above arrangements, of the aggregate subscription proceeds of £4m received from Lanstead,
£3.2m (80 per cent) was invested by the Company in the equity swap agreements with the remaining £0.8m (20 per cent)
available for general working capital purposes.
To the extent that the Company’s share price was greater or lower than the Reference Price at each swap settlement, the
Company received greater or lower consideration calculated on a pro-rata basis. The valuation for each settlement was
determined to be the volume weighted average share price for the preceding 5 trading days up to the relevant settlement date.
As the amount of the effective consideration receivable by the Company from Lanstead under the swap agreements was
variable subject to the movement in the Company’s share price and settled in the future, the receivable is treated for
accounting purposes as a derivative financial asset and has been designated at fair value through profit or loss.
The Company also issued, in aggregate, a further 6,400,000 Ordinary Shares to Lanstead as a value payment in connection
with the equity swap agreements.
The fair value of the derivative financial assets entered into in 2013 as at 31 December 2014 has been determined by reference
to the Company’s then prevailing share price and has been estimated as follows:
Notional
number of
shares
outstanding
Share price
Fair value
£
Value recognised on inception (notional)
Consideration received to 31 December 2013
Loss on revaluation of derivative financial asset at 31 December 2013
8.3333p
48,000,000
3,200,000
(8,896,690)
(445,362)
(1,109,028)
Value of derivative financial asset at 31 December 2013
5.8750p
39,103,310
1,645,610
Consideration received in the year
Loss on revaluation of derivative financial asset recognised in the year
(10,000,000)
(298,608)
(1,402,754)
Value of derivative financial asset at 31 December 2014
1.4750p
29,103,310
(55,752)
51
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
The settlements scheduled for June 2014 under the equity swap agreements were not completed, and the Company and
Lanstead have mutually agreed to defer all further settlements until the completion of a new 12 month equity swap agreement
entered into in August 2014.
In August 2014, as part of a two stage subscription to raise, in aggregate, £1.738m (before expenses) from certain new
shareholders, the Company issued 17,924,000 Ordinary Shares at a price of 3p per share to Lanstead with a value of £537,720.
The Company simultaneously entered into an equity swap price mechanism with Lanstead for 75 per cent of these shares with
a reference price of 4p per share. All 17,924,000 Ordinary Shares were allotted with full rights on the date of the transaction.
In September 2014, following the receipt of shareholders’ approval at a duly convened general meeting, the Company issued a
further 15,409,333 Ordinary Shares at a price of 3p per share to Lanstead with a value of £462,280. The Company entered into
an equity swap price mechanism on the same basis as in August 2014. All 15,409,333 shares were allotted with full rights on
the date of the transaction.
Accordingly, pursuant to the above arrangements, of the aggregate subscription proceeds of £1m received from Lanstead,
£850,000 (85 per cent) was invested by the Company in the equity swap agreements with the remaining £150,000 (15 per cent)
available for general working capital purposes.
The Company also issued, in aggregate, a further 4,500,000 Ordinary Shares to Lanstead as a value payment in connection
with the equity swap agreements.
The fair value of the derivative financial assets entered into in 2014 as at 31 December 2014 has been determined by reference
to the Company’s then prevailing share price and has been estimated as follows:
Notional
number of
shares
outstanding
Share price
Value recognised on inception (notional)
Consideration received in the year
4.0000p
25,000,000
(1,120,250)
Loss on revaluation of derivative financial asset recognised in the year
Fair value
£
850,000
(14,167)
(626,884)
Value of derivative financial asset at 31 December 2014
1.4750p
23,879,750
208,949
On 7 January 2015, it was mutually agreed to accelerate all settlements under the Equity Swap Agreements between Lanstead
and the Company for an amount of £150,000 which equated to the approximate total fair value of the derivative financial asset
at 31 December 2014 as shown in the table below:
Fair value of derivative financial assets
Derivative financial asset issued 2013
Derivative financial asset issued 2014
Value of derivative financial asset at 31 December 2014
£
(55,752)
208,948
153,196
52
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
The fair value loss on derivative financial assets shown in the Consolidated Income Statement for the year amounted to
£2,032,835 (2013: £1,109,028). The carrying value of the derivative financial assets at 31 December 2014 in the Statement
of Financial Position is £150,000 (2013: £1,645,610).
Due within one year
Due after more than one year
15.
CASH AND CASH EQUIVALENTS
Cash in hand
Bank deposit account
Bank accounts
16.
NON-CONTROLLING INTERESTS
2014
£
2013
£
150,000
1,010,007
-
635,603
150,000
1,645,610
Group
Company
2014
£
2013
£
2014
£
-
250
-
2013
£
250
146,106
1,713,101
146,106
1,713,101
40,783
270,265
19,292
11,820
186,889
1,983,616
165,398
1,725,171
Wayland Copper Limited, a 65.25% owned subsidiary of the Company that has material non-controlling interests (NCI).
Summarised financial information reflecting 100% of the underlying subsidiary’s relevant figures is set out below:
For the period ended 31 December 2014
Administrative expenses
Profit after tax
Profit/(loss) allocated to NCI
Other comprehensive income allocated to NCI
Total comprehensive income allocated to NCI
As at 31 December 2014
Non-current assets
Current assets
Current liabilities
Net assets
£
(2,485)
(2,485)
(864)
(6,475)
(7,339)
£
829,786
2,067
(460,245)
371,608
53
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
17.
ACQUISITIONS
During the year ended 31 December 2014, Beowulf Mining plc sole funded exploration work undertaken on the Ballek copper-
gold project through the joint venture entity, Wayland Copper Limited and its subsidiary, Wayland Sweden AB.
Under the terms of the joint venture agreement, following this contribution to the joint venture, Beowulf Mining plc had the right
to change the composition of the Board from the point that the funding was made and also took over the role of operator for
the project. The controlling interest held by each of the joint venture partners has been adjusted to represent their effective
contributions. As a result, Beowulf Mining plc increased its effective control in the joint venture, Wayland Copper Limited, to
65.25% from 1 October 2014.
In the view of the Directors, Beowulf Mining plc has the ability to control the joint venture entity and has therefore consolidated
the results of the joint venture entity within the results of the Group from 1 October 2014. The acquisition of Wayland Copper
Limited has been treated within the financial statements as an asset acquisition and not as a business combination under IFRS
3 Business Combinations (“IFRS 3”).
At 1 October 2014, the assets and liabilities of Wayland Copper Limited and its subsidiary Wayland Sweden AB were:
Non-current assets
Current assets
Current liabilities
Net assets
18.
SHARE CAPITAL
£
838,216
1,865
(447,356)
392,725
2014
2013
Number
£
Number
£
Allotted, called up and fully paid
At 1 January
Issued during the year
282,827,365
2,828,273
210,427,365
2,104,273
62,432,484
624,325
72,400,000
724,000
At 31 December
345,259,849
3,452,598
282,827,365
2,828,273
The Company has removed the limit on the number of shares that it is authorised to issue in accordance with the Companies
Act 2006.
Shares issued in 2014
In August 2014 the Company raised £1,600,000 before fees and expenses by way of a subscription of 53,333,333 new
Ordinary Shares of 1p each at a premium of 2p per share. £850,000 of the proceeds was satisfied by the issue of derivative
financial instruments with the balance of £750,000 being issued for cash.
In August 2014 the Company issued 4,500,000 new Ordinary Shares of 1p each allotted as fully paid at a premium of 2p per
share, in settlement of fees in respect of the above subscription.
In September 2014 the Company raised £137,974 before fees and expenses by way of a subscription of 4,599,151 new
Ordinary Shares of 1p each allotted as fully paid for cash at a premium of 2p per share.
54
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Shares issued in 2013
In July and August 2013, the Company raised £4,000,000 before fees and expenses by way of a subscription of 64,000,000
new Ordinary Shares of 1p each at a premium of 5.25p per share. £3,200,000 of the consideration was satisfied by the issue of
derivative financial instruments with the balance of £800,000 being issued for cash.
In July and August 2013, the Company issued 6,400,000 new Ordinary Shares of 1p each allotted as fully paid at a premium of
5.25p per share, in settlement of fees in respect of the above subscription.
In August 2013, the Company issued 2,000,000 new Ordinary Shares of 1p each allotted as fully paid for cash at a premium of
5.25p per share.
19.
SHARE-BASED PAYMENTS
The Group has a share option scheme for employees that entitles the holders to purchase shares in the Company with the
options exercisable at the price determined at the date of grant. The terms and conditions of the grants are as follows; all
options are to be settled by the issue of shares, with the 2014 options having a 12 month vesting period before they can be
exercised.
The number and weighted average exercise prices of share options are as follows:
2014
2013
Weighted
average
exercise Number of
options
price
Weighted
average
exercise
price
Number of
options
Outstanding at 1 January
Granted during the year
27.2531p
4,054,222
27.2531p
4,054,222
4.0000p
1,000,000
-
-
Outstanding at 31 December
22.6523p
5,054,222
27.2531p
4,054,222
Exercisable at 31 December
27,2531p
4,054,222
27,2531p
4,054,222
During the year 1,000,000 (2013: nil) options were granted to acquire ordinary shares at an exercise price of 4p per share. The
options expire after five years and have a vesting period of one year. The options outstanding at 31 December 2014 have an
exercise price in the range of 4p to 45p (2013: 7p to 45p) and a weighted average remaining contractual life of 2.374 years
(2013: 2.781 years).
The fair value of services received during the year in return for share options granted is based on the fair value of share options
granted, measured using the Black-Scholes model, with the following inputs:
Fair value at grant date
Share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
0.677p
2.45p
4.00p
48.01%
5 years
0.46%
The expected volatility was determined by reviewing the actual volatility of the Company’s share price since its listing on AIM
to the date of granting the option. In calculating the fair value, consideration was given to the market trends at the grant date of
the option.
There is an expense of £1,558 (2013: £nil) for the year in respect of equity-settled share-based payment transactions.
55
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
20.
RESERVES
The following is a description of each of the reserve accounts that comprise equity shareholders’ funds:
Share capital
Share premium
The share capital comprises the issued ordinary shares of the Company at par.
The share premium comprises the excess value recognised from the issue of ordinary
shares at par.
Revaluation reserve
Gains/losses arising on the revaluation of the Group’s listed investments.
Capital contribution reserve
Share scheme reserve
Translation reserve
Accumulated losses
The capital contribution reserve represents historic non-cash contributions to the
Company from equity holders.
Cumulative fair value of options charged to the consolidated income statement net of
transfers to the profit or loss reserve on exercised and cancelled/lapsed options.
Cumulative gains and losses on translating the net assets of overseas operations to the
presentation currency.
Accumulated losses comprise the Group’s cumulative accounting profits and losses
since inception.
21.
TRADE AND OTHER PAYABLES
Current:
Trade payables
Amounts owed to participating interests
re Ballek Joint Venture
Social security and other taxes
Other payables
Accruals and deferred income
Group
2014
£
2013
as restated
£
Company
2014
2013
£
£
173,686
285,992
96,123
16,990
9,658
11,608
40,594
54,552
-
1,903
855
160,214
-
7,716
29,642
44,017
-
1,809
955
30,551
290,098
448,964
177,498
50,305
56
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
22.
FINANCIAL INSTRUMENTS
The Group and Company’s financial instruments comprise cash and cash equivalents, loans and investments, derivative
financial assets, trade receivables and trade payables that arise directly from its operations.
The Group and Company’s derivative financial assets relate to equity swap and interest rate swap agreements entered into in
respect of share subscriptions for which the consideration is receivable over 12 and 24 months.
The Group and Company hold the following financial instruments:
Fair value
through
profit
or loss
£
Group
Held at
amortised
cost
£
Fair value
through
profit
or loss
£
Total
£
Company
Held at
amortised
cost
£
Total
£
At 31 December 2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans to group undertakings
Derivative financial assets
150,000
150,000
150,000
Other financial assets
-
53,262
53,262
-
186,889
186,889
174,599
174,559
-
-
-
-
-
-
165,398
23,607
165,398
23,607
7,484,210
7,484,210
-
2,784
150,000
2,784
150,000
414,750
564,750
150,000
7,675,999
7,825,999
Financial liabilities
Trade and other payables
-
278,490
278,490
-
169,782
169,782
At 31 December 2013
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans to group undertakings
Loans to joint ventures
Fair value
through
profit
or loss
£
Group
Held at
amortised
cost
£
Fair value
through
profit
or loss
£
Total
£
Company
Held at
amortised
cost
£
Total
£
1,983,616
1,983,616
138,482
138,482
-
-
-
-
-
-
-
-
-
1,725,171
1,725,171
49,644
49,644
5,509,494
5,509,494
141,751
141,751
Derivative financial assets
1,645,610
1,645,610
1,645,610
-
1,645,610
Other financial assets
-
116,588
116,588
-
2,784
2,784
1,645,610
2,238,686
3,884,296
1,645,610
7,428,844
9,074,454
Financial liabilities
Trade and other payables
-
447,061
447,061
-
48,496
48,496
57
-
-
-
-
-
-
-
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
The main purpose of these financial instruments is to finance the Group’s and Company’s operations. The Board regularly
reviews and agrees policies for managing the level of risk arising from the Group’s financial instruments as summarised below.
a) Market Risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates, interest rates and
equity prices will affect the Group’s and Company’s income or the value of its holdings in financial instruments.
i) Foreign Exchange Risk
The Group operates internationally and is exposed to currency risk arising on cash and cash equivalents, receivables and
payables denominated in a currency other than the respective functional currencies of the Group entities, which are primarily
Swedish Kroner and Sterling.
The Group’s and Company’s net exposure to foreign currency risk at the reporting date is as follows:
Net foreign currency financial assets/(liabilities)
Swedish Kroner
Total net exposure
Sensitivity analysis
Group
Company
2014
£
2013
£
2014
£
2013
£
(72,634)
(296,405)
917
15,042
(72,634)
(296,405)
917
15,042
A 10 per cent strengthening of sterling against the Swedish Kroner at 31 December 2014 would have increased/(decreased)
equity and profit or loss by the amounts shown below:
Group
Swedish Kroner
Company
Profit or loss
Equity
2014
£
2013
£
2014
£
2013
£
7,263 29,641
7,263
29,641
Profit or loss
Equity
2014
£
2013
£
2014
£
2013
£
Swedish Kroner
(92)
(1,504)
(92)
(1,504)
A 10 per cent weakening of sterling against the Swedish Kroner at 31 December 2014 would have an equal but opposite effect
on the amounts shown above.
ii) Commodity Price Risk
The principal activity of the Group is the exploration for iron, copper and gold in Sweden, and the principal market risk facing
the Group is an adverse movement in the price of such commodities. Any long term adverse movement in the commodity
prices would affect the commercial viability of the Group’s various projects.
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Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
iii) Interest Rate Risk
The Group’s and Company’s policy is to retain its surplus funds on the most advantageous term of deposit available up to
twelve month’s maximum duration. Given that the Directors do not consider that interest income is significant in respect of the
Group’s and Company’s operations no sensitivity analysis has been provided in respect of any potential fluctuations in interest
rates.
b) Credit Risk
The Group’s principal financial assets are the cash and cash equivalents, derivative financial assets, loans and receivables, as
recognised in the statement of financial position, and which represent the Group’s maximum exposure to credit risk in relation
to financial assets. The Group and Company policy for managing its exposure to credit risk with cash and cash equivalents is
to only deposit surplus cash with financial institutions that hold acceptable credit ratings.
The Company has made unsecured interest-free loans to its subsidiaries. Although they are repayable on demand, they are
unlikely to be repaid until the projects becomes successful and the subsidiaries start to generate revenues. Details of bad
debts and amounts written off are provided in Note 12.
Jokkmokk Iron Mines AB
Norrbotten Mining AB
Wayland Copper Limited and its subsidiary
Wayland Sweden AB
2014
£
2013
£
6,699,971
5,174,718
334,776
334,776
449,463
-(1)
7,484,210
5,509,494
(1) Loans of £141,751 were made prior to Wayland Copper Limited becoming a subsidiary
c) Liquidity Risk
To date the Group and Company have relied on shareholder funding to finance its operations. As the Group and Company
have finite cash resources and no material income, the liquidity risk is significant and is managed by controls over expenditure
and cash resources. In addition, the Group and Company do not have any borrowings and only have trade and other payables
with a maturity of less than one year.
d) Classes of Financial Instruments
The Group measures the fair value of its financial assets and liabilities in the statement of financial position in accordance with
the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs
used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
Level 1:
Level 2:
Quoted prices (unadjusted) in active markets for identical assets and liabilities;
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
59
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Level 2 fair value measurement of derivative financial assets at 31 December 2014:
At 1 January 2014
Value recognised on inception (notional)
Consideration received
Loss on revaluation of derivative financial asset
2014
£
1,645,610
2013
£
-
850,000
3,200,000
(312,775)
(445,362)
(2,032,835)
(1,109,028)
150,000
1,645,610
As the consideration is variable depending upon the Company’s share price, the derivative financial asset is revalued through
the income statement with reference to the Company’s closing share price. The valuation methodology and inputs are
described in note 16.
Capital Management
The Company’s capital consists wholly of ordinary shares. The Board’s policy is to preserve a strong capital base in order to
maintain investor, creditor and market confidence and to safeguard the future development of the business, whilst balancing
these objectives with the efficient use of capital.
23.
RELATED PARTY DISCLOSURES
Transactions with subsidiaries
During the year, cash advances of £1,525,253 (2013: £1,920,000) were made to Jokkmokk Iron Mines AB. The advances are
held on an interest free inter-group loan which has no terms for repayment. At the year end the inter-group loan amounted to
£6,699,971 (2013: £5,174,718).
The Company has previously transacted with Norrbotten Mining AB creating an interest fee inter-group loan which has no
terms for repayment. At the year end the inter-group loan amounted to £334,776 (2013: £334,776).
During the year, cash advances of £307,712 (2013: £29,996) were made to Wayland Copper Group, formerly a joint venture
entity but becoming a subsidiary on 1 October 2014. The advances are held on an interest free inter-group loan which has no
terms for repayment. At the year end the inter-group loan amounted to £449,463 (2013: £141,751).
Transactions with other related parties
During the year, the Company was charged fees and expenses amounting to £41,719 (2013: £41,155) by Tearne Foulsham
Limited, a company of which Mr E Taylor is a director and shareholder. Expenses of £579 (2013: £330) were outstanding at the
year end.
During the year, the Company was charged fees and expenses of £97,396 (2013: £108,990) by Geoexperten in respect of the
director’s services of Dr Jan-Ola Larsson. Fees of £4,746 (2013: nil) were outstanding at the year end.
During the year, the Company was charged fees and expenses of £127,212 (2013: £119,421) by Merchant Adventurers
Company Limited, a company of which Mr C Sinclair-Poulton is a director and shareholder, in respect of the director’s services
of Mr C Sinclair-Poulton. Fees of £7,283 (2013: nil) were outstanding at the year end.
During the year, the Company was charged consultancy fees of £112,334 (2013: £153,162) to FHB AB, a Swedish company of
which Mr Fred Boman is a director and shareholder. Fees of £6,165 (2013: £12,167) were outstanding at the year end.
60
Beowulf Mining plc Annual Report 2014
Notes to the consolidated financial statements
Beowulf Mining plc holds Convertible loan notes of £20,000 and £250,000 issued by Agricola Resources plc accruing interest
at 3 per cent and 7 per cent above Bank of England Base Rate respectively. Following Agricola de-listing from the PLUS
markets on 1 November 2012, the Directors consider the recovery of the above loans to be in doubt and a full impairment
provision has been made in previous years against the loans of £270,000 and accrued interest of £49,558. No provision has
been made for interest accrued during the year (2013: £19,450).
Key management personnel compensation
The key management personnel of the Company during the year were the Directors. The aggregate compensation paid to key
management personnel of the Company is set out below:
Short-term employee benefits (including employers’
national insurance contributions)
Termination benefits
Share-based payment expense
2014
£
2013
as restated
£
464,368
514,892
30,000
1,558
-
-
495,926
514,892
In addition, aggregate consideration paid to third parties in respect of director’s services during the year was £354,348 (2013:
£419,148). In respect of the termination benefits, £15,000 was paid during the year and the balance of £15,000 is included in
other payables and has been paid since the year end.
24.
CONTINGENT LIABILTIES
Under the terms of the Settlement agreement entered into with Clive Sinclair-Poulton, a former director of the Company, and
Merchant Adventurers Company Limited, the Company is required to pay a consultancy termination fee of £20,000 contingent
on the Company’s cumulative fundraising since his departure from the Company reaching £500,000. To date £350,000 has
been raised by the Company.
25.
EVENTS AFTER THE REPORTING DATE
On 7 January 2015, it was mutually agreed to accelerate all settlements under the Equity Swap Agreements between Lanstead
and the Company for an amount of £150,000 which equated to the approximate total fair value of the derivative financial asset
at 31 December 2014 as described in note 14.
On 10 March 2015 the company undertook a placing of 29,166,666 new ordinary shares of 1 pence each at a placing price of
1.2 pence per share, raising £350,000 before expenses.
61
Beowulf Mining plc Annual Report 2014
Beowulf Mining plc
GROUP OF COMPANIES
www.beowulfmining.com