ANNUAL REPORT 2015
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Beowulf Mining plc Annual Report 2015 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 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
Company Information
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Beowulf Mining plc Annual Report 2015 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). At the
time of writing this report approximately 46 per cent of the
shares in issue were owned by Swedish shareholders.
The Company’s most advanced project is the Kallak North
iron ore deposit located approximately 40 kilometres
(“km”) west of Jokkmokk in the County of Norrbotten,
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 40 km to the
east. This railway line is connected at Gällivare with the
‘Ore Railway Line’, used by Luossavaara-Kiirunavaara
(“LKAB”) for delivery of its iron ore material to the Atlantic
harbour at Narvik (Norway) or to the Botnian Sea harbour
at Luleå (Sweden).
In addition, on 8 January 2016, (post year end) we added
five early stage graphite projects in Finland following
the acquisition of Oy Fennoscandian Resources AB
(“Fennoscandian”).
Henrik Nygård
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Beowulf Mining plc Annual Report 2015 The management team’s approach is to build strong working relationships and partnerships with key stakeholders,
encapsulated in the following 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”
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Rasmus Blomqvist
Beowulf Mining plc Annual Report 2015 Company Strategy
Beowulf’s strategy is to build a sustainable Nordic focused
mining company, that creates shareholder value through
project development into production and cash flow, while
remaining opportunistic for mergers and acquisitions
(“M&A”); preserving the Company’s low sovereign
risk profile and rewarding its investors in London and
Stockholm.
The development of the Kallak North iron ore project
is at a point now where the Company is considering
the introduction of a strategic partner and associated
investment; a partner that understands the value of Kallak
North as a high quality producing asset within five years,
supplying high grade concentrate with 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 award of the
Exploitation Concession is a key milestone for running a
credible and disciplined strategic process.
In addition to Kallak North, Beowulf is focussing its efforts
on attractive exploration opportunities in the Nordic
group of countries. In 2015, the Company rationalised
its existing portfolio, and has now added five graphite
projects following the Fennoscandian acquisition in
January 2016. The Company is also applying for
additional exploration licences in base metals. With
magnetite iron ore in Sweden and graphite in Finland,
Beowulf is developing a high quality portfolio of assets in
a well-established mining region.
The Board of Directors continues to look beyond the
Company for value creation opportunities.
Chairman's Statement
Introduction
I am very pleased to present my second Chairman’s
Statement to shareholders, stakeholders and employees
of the Company. First I would like to take this opportunity
to thank Jan Ola Larsson who retired during 2015, for
his contribution to the development of the Company over
many years. It was with great sadness that we reported,
in our Q3 interims, the passing of Dr. Robert (“Bob”)
Douglas Young. I didn’t personally know Bob, but he was
Executive Chairman of Beowulf when the Company was
admitted to AIM on 9 May 2005, and one of its founders.
I don’t say this lightly but your Company has been
transformed over the past year. A year ago we were
suffering from a low share price, difficult image, weak
cash position, limited project portfolio, and the fact
that our key project, Kallak, had a lack of support from
Swedish stakeholders. A year on we are in a much
stronger position. We have worked hard to rebuild the
Company’s reputation in Sweden to one which is based
on respect and to ensure Beowulf is seen as a responsible
local partner. I stress the word local as your Chief
Executive Officer (“CEO”) Kurt Budge has spent much of
his time in Sweden, engaging with stakeholders, listening
to their concerns and working hard to move Kallak
forward.
What helped us during the more challenging times was
our knowledge that in Kallak we have a great project – a
project recognised by the Swedish Geological Society
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(SGU) as an Area of National Interest (“ANI”) that can
produce a super high grade magnetite concentrate,
with over 71 per cent iron content and with low levels
of deleterious elements. We have strengthened our cash
position with the fundraisings announced in late February
and early March 2016, delivered in challenging market
conditions. We have reviewed the exploration portfolio
that we inherited from the previous management,
rationalised these projects, and looked for additional
value creating opportunities for our shareholders. We
have also added five early stage graphite projects with
the acquisition of Fennoscandian announced in January
2016 and have made two applications for exploration
licences in Sweden, for which we await a decision. We
have also won the support of the County Administrative
Board (“CAB”) and the recommendation of the Mining
Inspectorate of Sweden for our application for an
Exploitation Concession at Kallak.
2016 is a new year with new challenges. The key
milestone remains the award of the Exploitation
Concession for Kallak. We are confident about the
quality of our application but frustrated with the time
it is taking for the Government of Sweden to reach a
decision as we have tried to make it as easy as possible
for the Government to say ‘yes’ to our application.
However, we are definitely not sitting idle while we wait.
We engaged a Swedish public relations firm in August
2015 to ensure that we left no stone unturned, we
have been communicating with Swedish members of
Beowulf Mining plc Annual Report 2015 parliament, the British Embassy in Stockholm and we have
continued discussions with the CAB, Mining Inspectorate
and Jokkmokks Kommun. We have also met with
representatives of the Sami villages and will continue our
efforts to create an ongoing dialogue as we are confident
that mining, reindeer herding and tourism can all co-exist
for the betterment of the lives of those in and around
Jokkmokk, the County of Norrbotten and the country of
Sweden.
I would like to take you through some of the key events
that have shaped Beowulf during the year, give you my
observations on these events and discuss the financial
performance in 2015 and the outlook for the Company.
Last year I discussed iron ore prices in general and the
difficulties of the AIM market. I do not intend to touch on
these again as nothing has really changed – iron ore,
like many commodities is still facing difficult times, as is
the AIM market with fewer listings and limited secondary
funding opportunities for junior mining companies.
However, despite challenges on several fronts, your
Company has gained in strength over the last year.
Lanstead Capital LLP (“Lanstead”)
The year began with the announcement on 7 January
2015, that we had accelerated the settlement of our
outstanding equity swap agreements with Lanstead,
receiving a final settlement of £150,000. We took this
course of action to bring funds into the Company.
The accelerated settlement left Lanstead with a
significant shareholding, which in May last year was
78.4 million shares (approximately 21 per cent of the
Company). However, Lanstead proved themselves to be a
responsible shareholder, disposing of the majority of their
shareholding between September and December 2015,
with most of their shares being sold into the Swedish
AktieTorget to meet local demand. We are very grateful to
our Swedish shareholders for their support.
Shareholder base
Beowulf is 100 per cent owned by retail shareholders
in Sweden and the UK. In current market conditions it
is difficult to bring institutions onto your share register if
you are a junior exploration and development company
meaning that our retail shareholders have a greater
influence on resolutions proposed to them. We had
our AGM in June 2015 and a general meeting in
February 2016 and there was an excellent turnout at
both meetings. The meetings gave our shareholders the
opportunity to pose questions, on the state of our business
and our future plans, directly to the management team.
The major change in our shareholder base over the
last 12 months is the growth in the number of Swedish
shareholders. Today our Swedish shareholders account for
approximately 46 per cent of our shares in issue whereas
at 31 December 2014 the figure was only 14 per cent.
Having strong support in Sweden will hopefully make
the Government of Sweden sit up and take notice of the
growing number of Swedes that believe that a mine at
Kallak is good for Jokkmokk, the County of Norrbotten
and the country of Sweden. We will be continuing to make
determined efforts in 2016 to engage with our Swedish
shareholders.
Raising Finance
Having sufficient funding is the biggest challenge for
exploration and development companies like Beowulf
and the adage that ‘cash is king’ remains. The market
for secondary fundraisings is very difficult on AIM and
has been for some years now which is why, when Kurt
and I joined the Company, one of our first jobs was to
review the Company’s overheads and identify where cost
savings could be made. Since then we have operated
a lean board and focused our efforts on what mattered
most - Kallak. We also took a salary sacrifice from
October 2014 until May 2015 which was invested in the
Company’s shares in July 2015 which demonstrated to
shareholders that we believe in the future prospects of the
Company.
We raised funds in 2015 in March at 1.20p (£350,000
before expenses) and July at 1.25p (£650,000 before
expenses) and in 2016 in late February and early March
at 3.25p (£1,500,000 before expenses). Due to the
challenging market conditions, we are exposed to what
the market is prepared to pay for our shares when we
fundraise and as such we have been disappointed that
despite the turnaround and expanded business interests,
we have been faced with significant discounts and
consequential dilution. We have fought ‘tooth and nail’
for shareholder interests, but have had limited success
in influencing the price expectations of the market. The
Directors will consider the best way to structure the
Company’s future fundraisings, and introduce competitive
tension into the process, having regard to, inter alia,
prevailing market conditions and access to capital, the
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Beowulf Mining plc Annual Report 2015 Chairman's Statement
level of the Company’s share price and the importance
of pre-emptions rights to shareholders. The Directors
are grateful for the support they have received from
shareholders.
Kallak Exploitation Concession
On 8 July 2015, the Company announced that the CAB
commented on the national economic assessment of
Kallak North. They found that mining is economically
relevant and that the Kallak North project generates
economic benefits at local, regional and national levels.
In addition, the CAB stated that the Concession area
applied for by the Company creates no conflicts where
national interests are considered.
In a letter dated 9 October 2015, the Mining Inspectorate
of Sweden wrote to the Government of Sweden and
recommended that the Exploitation Concession for Kallak
North be granted. The recommendation was delivered in
response to the Department of Enterprise and Innovation’s
invitation for the Mining Inspectorate to give its views on
the findings made by the CAB when commenting on the
national economic assessment for Kallak North.
The Company has always maintained that its application
satisfies the requirements of the Swedish regulations,
and that the Environmental Impact Assessment for Kallak
North has comprehensively studied all aspects of a future
mining operation, including mining, waste rock handling,
processing, tailings management, water management and
transport, and their associated environmental impacts.
Since Beowulf received notification in February 2015
that the Mining Inspectorate had referred the decision
regarding the Exploitation Concession to the Government
of Sweden the process has lacked transparency and been
very frustrating for shareholders and the management
team. The Company has written on two occasions to the
Minister of Enterprise and Innovation, once in November
and more recently in March 2016 for an update on the
process for awarding our Exploitation Concession. We
have received no response to either letter. Our advisors
have told us that this is not unusual, however, it is
disappointing.
In terms of partner identification, the strategic process for
Kallak has started, but a credible and disciplined process
can only be run once the Company has been awarded
the Exploitation Concession, as the Company can then
approach key targets from a position of strength and
therefore deliver the best possible deal for shareholders.
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Fennoscandian – Graphite Acquisition
On 11 January 2016, post the year end, the Company
announced the acquisition of Fennoscandian, a privately
owned Finnish company with a portfolio of four early-
stage graphite exploration projects located in Finland. The
Company has subsequently been awarded a fifth Claim
Reservation, so now has five projects.
Graphite, a naturally formed polymer of carbon, is an
excellent conductor of electricity and heat. It is mostly
used for refractories, in foundry facings, steel making and
as lubricants. More recently, however, the use of graphite
in lithium - ion - batteries has seen a surge in the global
demand for graphite, in particular, for the use in electric
powered vehicles, mobile technology and utility storage.
Beowulf acquired 100 per cent of the share capital
of Fennoscandian in consideration for a total of 2.55
million ordinary shares in the capital of the Company.
In addition, two equal tranches of shares will be issued
on achievement of certain performance milestones. The
total number of ordinary shares that may be issued, if
all performance milestones are achieved, is 6.75 million
ordinary shares.
I believe this is a good deal for shareholders, as it
diversifies our exploration risk into a strong mining
jurisdiction, namely Finland, and strengthens the
management team with the appointment of an
experienced geologist in Rasmus Blomqvist. It also
has the potential to be value accretive in the near
term, if we can develop our resource position and
prove the commercial prospects of our graphite
assets. Management believe the potential value of the
graphite portfolio is not currently reflected in our share
price.
Workplans for 2016 include desktop studies and fieldwork
across all projects. Geophysical surveys have already
begun on Piippumäki and Haapamäki, with the purpose
of defining targets for drilling which will be undertaken
later in the year.
The Fennoscandian transaction was the culmination
of an active M&A workstream in 2015, during which
we reviewed several opportunities and undertook due
diligence on one other target, only for that transaction
to fail because of unrealistic valuation expectations. We
will continue to look for M&A opportunities in a highly
disciplined way.
Beowulf Mining plc Annual Report 2015
Financial Performance
Corporate
Loss before and after taxation attributable to the owners
of the parent company at £1.48 million is significantly
down on the loss recorded in 2014 of £3.06 million
while the basic loss per share of 0.38p also improved
over last year (2014: loss per share of 1.00p). The lower
level of loss in the year was due to reduced administrative
overheads (£0.38 million below 2014) especially
directors’ remuneration and professional fees. There was
an allocation in the year of executive director salaries
and fees to Jokkmokk Iron Mines AB (“JIMAB”), Beowulf’s
wholly owned subsidiary, for Kallak exploration costs of
approximately £68,000 (2014: Nil).
There were nil losses on derivative financial assets (2014:
£2.03 million) following the accelerated settlement of
Equity Swap Agreements in January 2015. However, these
reductions were partly offset by higher impairment charges
of £1.12 million (£3,187 in 2014) as the exploration
portfolio was rationalised. The main projects impaired
were Ballek (£0.84m) and Grundträsk (£0.28 million).
The decision to fully impair these projects followed a
detailed review of all available data by independent
consultants. The review confirmed that further exploration
work could be undertaken, but there was no certainty
that either project could deliver the scale to support a
standalone mine. No work is planned on either project
during the next 12 months. The Company still maintains
the licences and will look at ways of monetising the work
carried out to-date. For the right partner these projects
may provide an interesting opportunity.
Approximately £0.35 million in cash was held at the year
end. This was before the fundraising in late February and
early March 2016 where the Company raised £1.50
million (before expenses). Total assets at £6.11 million are
£0.93 million below 2014. This is principally due to the
reduction in intangible assets to £5.59 million following
the impairment of projects mentioned above. Equity
reduced by £0.85 million at the 31 December 2015
to £5.89 million. This included share capital and share
premium +£1.03 million; accumulated losses -£1.44
million; translation reserves -£0.16 million; and non-
controlling interest -£0.29 million. The non-controlling
interest was impacted by the impairment of Ballek.
On 11 January 2016, it was announced that the founder
of Fennoscandian Rasmus Blomqvist had joined the
Company as Exploration Manager and will be responsible
for the development of Beowulf’s graphite projects. Since
2012, Rasmus has been exploring for flake graphite
within the Fennoscandian shield and is one of the most
experienced graphite geologists in the Nordic region.
Rasmus holds a MSc in Geology and Mineralogy and
is a member of the Australasian Institute of Mining and
Metallurgy.
On 4 April 2016, post the year end, Chris Davies joined
the Company as a Non-Executive Director and I would
like to take this opportunity to welcome him to the Board.
Chris, who has many years’ experience in the exploration
sector, is a geologist by training and has international
experience in graphite and base metals. He brings with
him a wealth of experience which is relevant to Beowulf’s
ambitions, and his skill set complements the current
management team.
Outlook
The Company is in a stronger position than it was
12 months ago, but for your management team the
journey is only beginning. Kallak is our prime focus
and we continue to engage at all levels to ensure a
positive decision is forthcoming. Additionally, whilst
we are looking to develop organically we are also
identifying potential M&A targets, but only strike on
an opportunity if these targets can deliver shareholder
value.
The key milestones in 2016 for your Company are:
(i) The granting of the Kallak North Exploitation
Concession;
(ii) Advancing the strategic partner process for Kallak once
the Exploitation Concession is awarded;
(iii) Developing the resource position and the commercial
prospects of our graphite portfolio; and
(iv) The award of a large exploration permit in a mining
district in central Sweden and commencement of
exploration.
Bevan Metcalf
Non-Executive Chairman
6 May 2016
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Beowulf Mining plc Annual Report 2015 Review of Operations
and Activities
SWEDEN
Introduction
Sweden continues to be a prominent mining country and
it is the largest iron ore (mostly magnetite) producer in the
European Union. 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.
Beowulf has been active in northern Sweden for more
than ten years, focussing its activities on areas with
high exploration potential for iron, copper and gold.
The Kallak project, in the County of Norrbotten has
been the principal focus of the Group’s exploration and
development work in recent years.
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 1999. The Act accords that an
exploration permit is granted for an initial period of three
years from the date of issue and can be subsequently
extended for up to a further three years by way of annual
extensions. The longest possible period of validity for any
one permit is 15 years, after which an application for an
exploitation concession must be made.
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Figure 1. Beowulf’s Current Exploration Permits
Beowulf Mining plc Annual Report 2015 Current exploration permits
Beowulf, via its subsidiaries, currently holds 13 exploration permits together with one registered application for an
exploitation concession (Kallak North), 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 (Cu)*
Ballek nr6 (Cu) *
Jokkmokk Region:
Parkijaure nr3 (Fe)**
Parkijaure nr2 (Fe)**
Kallak nr1 (Fe)**µ
Kallak nr2 (Fe)**
Kallak nr3 (Fe)**
Parkijaure nr4 (Cu)**+
Parkijaure nr5 (Fe)**
2005:69
2015:45
2011:135
2008:20
2006:197
2011:97
2012:100
2012:59
2013:36
Nautijaure nr1 (Cu)**+
Ågåsjiegge nr2 (Fe)**+
2012:57
2014:10
Malå Mining District:
Grundträsk nr6 (Au)^+
Grundträsk nr7 (Au)^
2010:161
2015:91
TOTAL:
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.
21/04/2005
21/04/2017
23/03/2015
23/03/2018
11/08/2011
11/08/2017
18/01/2008
18/01/2018
28/06/2006
28/06/2016
22/06/2011
22/06/2017
09/08/2012
09/08/2018
04/05/2012
04/05/2017
Lodged
Awaiting grant
24/2/2016
of licence
04/05/2012
04/05/2017
24/02/2014
24/02/2017
04/11/2010
04/11/2016
05/08/2015
05/08/2018
5.57
3.15
4.17
2.85
5.00
22.19
5.56
7.60
12.97
8.80
11.14
4.17
4.13
97.31
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, since the County
**held by the Company’s wholly owned subsidiary, Jokkmokk
of Administrative Board has not developed their opinion on this in
Iron Mines AB (“JIMAB”).
a satisfactory way.
^ held by the Company’s wholly owned subsidiary, Norrbotten
+ areas have been reduced on renewal.
Mining AB (“Norrbotten Mining”).
The Company has reduced the total licence area held to 97.31 km2. The area has reduced by approximately 65 per cent
since January 2015. This reduction has enabled the Company to focus on the most prospective areas and reduce overall
holding costs.
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Beowulf Mining plc Annual Report 2015
Review of Operations
and Activities
An overview of Beowulf’s principal projects and exploration activities is provided below.
Kallak Iron Ore Project
Introduction
The Kallak project is located in the Jokkmokk municipality
north of the Arctic Circle, approximately 40 km west of
Jokkmokk city centre and 80km southwest of the major
iron ore mining centre of Malmberget in Norrbotten
County, northern Sweden. LKAB’s Kiruna iron ore mine,
the world’s second largest underground mine, is located
approximately 120 km to the northeast.
Iron mineralisation was first discovered in the Kallak
area by the 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. This led to the discovery of the Kallak North
and Kallak South deposits which are separated by only a
few hundred metres in distance and, as the deposits are
located in the same geological structures, the deposits
may well be connected at depth. 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 2.
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 intermediate
volcanics and metavolcanics as well as gabbro, diorite,
ultramafic rocks and their metamorphic equivalents. The
bedrock of the area is thus predominantly mafic. Only
smaller areas with felsic rocks are found in the northeast,
northwest and southwest. These areas consist of granites,
syenites and their metamorphic equivalents, pegmatites
and other felsic to intermediate rocks.
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Figure 2: Magnetic field anomaly map for the Kallak
area. Composite from airborne and ground surveys.
The outlines of Kallak North and South marked with
green.
Beowulf Mining plc Annual Report 2015 The deposits are outcropping and consist of quartz
banded magnetite haematite iron ore, comprised of
fine grained banded magnetite and minor haematite,
interlayered with quartz, feldspar and some hornblende.
The dominant host rock is a grey, altered volcanic unit.
The deposits occur in a north-south oriented syncline
of altered sediments and felsic volcanic rocks of early
Proterozoic age within granitic gneisses. The deposits
are up to 300m wide at surface 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 2 km. Drilling has confirmed, in single
drillholes, mineralised vertical depth extensions to more
than 300m at both deposits. The mineralised structures at
both Kallak North and Kallak South are almost vertically
dipping, generally covered by only shallow (<2m)
glacial overburden and, as such, are highly amenable
to potential open pit mining. Some sections of the Kallak
South deposit have, however, been found to be covered
by more extensive glacial overburden covering the
outcropping mineralised structures.
The project area now covers approximately 80 km2,
comprising nine separate licences (Kallak nr1, Kallak
nr2, Kallak nr3, Parkijaure nr2, Parkijaure nr3, Parkijaure
nr4, Parkijaure nr5). The project area has steadily been
rationalised in 2015, cutting back areas to focus on
targets and reduce licence holding costs.
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Figure 3: Current Kallak exploration licenses (blue
line) and the outcropping area of Kallak North and
Kallak South (red line).
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Beowulf Mining plc Annual Report 2015 Review of Operations
and Activities
Area description and accessibility
The Kallak project area 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.
Local infrastructure is excellent with all-weather gravel
roads passing through the project area and all parts
are easily reached by well used forestry tracks. A major
hydroelectric power station with associated electric power-
lines is located only a few kilometres to the south east.
There are no settlements within the project area, with the
closest villages being Björkholmen, approximately
2 km to the northwest, and Randijaur approximately
3 km the east. The nearest railway (the ‘Inland Railway
Line’) passes approximately 40 km to the east. This
railway line is connected at Gällivare with the ‘Ore
Railway Line’, which is used by LKAB for delivery of its ore
material to the Atlantic harbour at Narvik (Norway) or to
the Botnian Sea harbour at Luleå (Sweden).
Kallak Resource
The Kallak North and Kallak South orebodies are centrally
located and cover an area approximately 3,700m in
length and 350m in width, as defined by drilling. The
mineral resource estimate for Kallak North and South is
based on drilling conducted between 2010-2014, a total
27,895m drilled, including 131 drillholes.
The latest resource statement for the Kallak project was
finalised on 28 November 2014, following the guidelines
of the JORC Code 2012 edition, summary as follows:
ProjectCategory
Tonnage
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Kallak North
Kallak South
Global
Notes:
Fe
Mt
105.9
17.0
12.5
16.8
118.5
33.8
P
%
27.9
28.1
24.3
24.3
27.5
26.2
S
%
0.035
0.037
0.041
0.044
0.036
0.040
%
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% Fe has been used.
4. Mineral Resources which are not Mineral Reserves have no demonstrated economic viability.
5. An exploration target of 90-100Mt at 22-30% Fe represents potential ore below the pit shells modelled for this resource statement,
and in the gap between drilling defined Kallak South mineralised zones.
6. The resource statement has been prepared and categorised for reporting purposes by Mr. Thomas Lindholm, of GeoVista AB, Fellow
of the MAusIMM, following the guidelines of the JORC Code, 2012 edition.
12
Beowulf Mining plc Annual Report 2015
An overview of the interpreted mineralisation is shown in
Figure 4.
The mineralised area at Kallak North is approximately
1,100m long, from south to north, and, at its widest part
in the center, approximately 350m wide.
The deepest drillhole intercept is located some 350m
below the surface in the central part of the mineralisation.
In the southern and northern parts, the intercepts are
shallower at 150-200m. However, in the northern
part, there are no barren holes below them, so the
mineralisation could continue at depth.
The investigations in Kallak South have been divided into
two parts, the northern and southern ends respectively. In
the northern part the mineralisation extends approximately
750m from north to south and has an accumulated width
of 350m. The deepest drillhole intercept is located some
350m below the surface in the southernmost part of the
mineralisation. In the southern part the mineralisation
extends approximately 500m from north to south and has
a maximum width of just over 300m. The deepest drillhole
intercept is located some 200-250m below the surface in
the central part of the mineralisation.
Approximately 800m in between the southern and
northern parts of Kallak South has not been investigated
by systematic drilling. An exploration target of 90 million
tonnes (“Mt”) to 100Mt at 22-30 per cent iron has been
assigned to the area between the southern and northern
parts.
Further to the south, within the Parkijaure exploration
permits controlled by JIMAB, there are further known
magnetite occurrences, but the current level of
investigation does not permit the estimation of mineral
resources.
Figure 4: Isometric view of Kallak North and South. Background grid 250m.
Red = Haematite dominated, Blue = Magnetite dominated with >95%
magnetite, Brown = Magnetite dominated with 5-10% haematite.
12
13
Beowulf Mining plc Annual Report 2015 Review of Operations
and Activities
Operations in 2015
2015 Testwork
The impetus for the 2015 programme was the belief
that even higher grade magnetite concentrate could be
produced through the application of reverse flotation, and
that the results would prove the suitability of the Kallak
North magnetite concentrate for use in Direct Reduction
Iron (“DRI”) facilities and as chemical grade raw material.
Kallak North has three main ore types, classified as
follows:
‘Blue’ ore - magnetite rich;
‘Green’ ore - magnetite rich with haematite; and
‘Red’ ore - haematite rich.
The work at GTK (Geological Survey of Finland) applied
reverse flotation on two of the three ore types, Blue and
Green.
Head assays for the samples used were performed using
X-Ray Fluorescence (“XRF”) analysis for Green, Blue and
Red samples. The main elements of interest are shown
below:
Element
Green
Blue
Red
Fe %
SiO2 %
Al2O3 %
CaO %
MgO %
P2O5 %
MnO %
31.9
47.7
2.92
1.2
2.37
0.068
0.229
36.5
40.6
2.41
2.51
2.58
0.096
0.51
37.9
40.8
1.84
1.05
2.59
0.081
0.296
This work was carried out by Labtium, who have a geo-analytical laboratory in Outokumpu City and are accredited
according to ISO/IEC 17025 by FINAS (Finnish accreditation service).
Concentrate product results:
The table below shows detailed product specifications for concentrates produced in 2015, and in italics the results
from the previous programme in 2014:
Fe
%
SiO2
%
S
%
CaO MgO
%
%
Al2O3
%
TiO2 Na2O
%
%
K2O
%
P2O5 MnO
%
%
Magnetite
(SGS certified,
2015)
71.5
0.62 <0.01
0.03
0.03
0.10 <0.01 <0.01
0.01 <0.01
0.48
Magnetite
(GTK, 2014)
69+
3.9 0.003 0.109
0.11
0.24 0.010
0.03
0.19 0.009 0.444
Haematite
(GTK, 2015)
68.3
2.03 0.005
0.15
0.25
0.20
0.26
0.02 0.019
0.04 0.023
Haematite
(GTK, 2014)
66.6
3.29 0.016
0.45
0.39
0.37
n/r
0.03 0.022 0.081 0.165
Key:
Key: Fe – Iron, SiO2 – Silica, S – Sulphur, CaO – Calcium Oxide, MgO – Magnesium Oxide
Al2O3 - Alumina, TiO2 – Titanium Dioxide, Na2O – Sodium Oxide, K2O – Potassium Oxide, P2O5 – Phosphorous,
MnO – Manganese Oxide, n/r – not replaced
14
Beowulf Mining plc Annual Report 2015
Earlier metallurgical testing
2010
Metallurgical bench scale tests, including Davis Tube
Recovery (DTR) tests were completed in 2010 by
MINPRO AB (“MINPRO”) of Stråssa, Sweden (www.
minpro.se) on ore grade material from drill holes on the
Kallak North deposit. The tests were directed towards
the production of a high grade magnetite pellet feed
product. Traditional treatment of the ore material by
fine grinding and wet magnetic 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, 0.57 per cent manganese,
0.09 per cent phosphorous, 0.10 per cent titanium 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.
2012
In 2012, JIMAB, Beowulf’s Swedish subsidiary,
commissioned MINPRO to perform further DTR tests, as
well as bench scale grinding and magnetic separation, on
composite samples extracted from six separate sections
across the Kallak North deposit guided by advice from
consultants 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, laboratory and pilot scale, conducted in
early 2014.
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 pellets.
2013/2014 - Pilot scale test work on Kallak North
material
In late 2013, approximately 500 tonnes 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 their respective
occurrence.
GTK’s initial report in respect of its test work was
received in Q1 2014. Approximately 60 tonnes of the
general composite bulk sample were 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
magnetite to haematite in the sample was established to
be approximately 3.4:1.
The magnetite beneficiation circuit was conventional and
straightforward consisting of rod milling with rougher-
scavenger cobbing low-intensity magnetic separation
(“LIMS”) 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 of dry magnetite concentrate
produced for downstream testwork was approximately
2.7 tonnes, grading at 69.4 per cent iron at a magnetite
recovery of approximately 95 per cent. Average silica
content in the final product was 3.9 per cent and the
levels of sulphur and phosphorous were insignificant,
being below 0.01 per cent. The end product fineness was
80 per cent passing 25 microns.
The secondary objective, to produce a concentrate of
the haematite content, was successful in respect of the
quality aspect. A sample of 0.36 tonnes of dry haematite
iron concentrate was produced, at an average grade
of 66.6 per cent iron, containing 3.3 per cent silica,
0.08 per cent phosphorous and less than 0.02 per
cent sulphur. The fineness was 80 per cent passing 175
microns. Several different flow sheet options were tested
in order to maximise the haematite recovery, without fully
reaching optimised levels. The best beneficiation result
was achieved using a combination of spiral separators,
supported by SLon High-Gradient Intensity Magnetic
Separator (“HGIMS”), recovery remained at below 30
per cent. The short test work programme did not enable
optimisation of the haematite beneficiation section.
Process mineralogy studies proved that the haematite
losses were mostly occurring in the very fine particle sizes.
15
Fe
%
SiO2
%
S
%
CaO MgO
Al2O3
TiO2 Na2O
K2O
P2O5 MnO
%
%
%
%
%
%
%
%
2015)
71.5
0.62 <0.01
0.03
0.03
0.10 <0.01 <0.01
0.01 <0.01
0.48
(GTK, 2014)
69+
3.9 0.003 0.109
0.11
0.24 0.010
0.03
0.19 0.009 0.444
(GTK, 2015)
68.3
2.03 0.005
0.15
0.25
0.20
0.26
0.02 0.019
0.04 0.023
(GTK, 2014)
66.6
3.29 0.016
0.45
0.39
0.37
n/r
0.03 0.022 0.081 0.165
Magnetite
(SGS certified,
Magnetite
Haematite
Haematite
14
Beowulf Mining plc Annual Report 2015
Review of Operations
and Activities
Application for an Exploitation Concession for
Kallak North
History
In April 2013, JIMAB 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 the 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 the CAB’s queries was submitted to the Mining
Inspectorate.
JIMAB added certain supplements to the EIA, along
with further technical description and commentary. The
enhanced report comprised 164 pages, including various
figures and tables, with an additional 16 appendices of
more than 200 pages in length covering various technical
and specialist aspects based on work performed by the
Company’s expert team of Swedish consultants.
The EIA was supplemented in the following principal
areas:
• The reindeer husbandry section was complemented by
further analysis commissioned from consultants Swedish
Geological AB. It was also supplemented and revised
based on certain comments and information received
from the local Sami villages.
• Additional investigations regarding safety aspects for
hydroelectric power dams were conducted by Ramboll
Sweden AB.
• Questions raised regarding security issues surrounding
any tailings dams for the project were further
investigated and addressed by Tailings Consultants
Scandinavia AB.
• Various comments received on the socio-economic
aspects were responded to by Luleå University of
Technology.
• Additional investigations concerning local hunting and
fishing activity and specialist environmental aspects,
including water ecology and water chemistry, were
conducted by Pelagia Miljökonsult AB based in Umeå.
16
• Additional information was gathered regarding Areas
of National Interest and other interests of importance
in respect of general water management and military
defence aspects.
• Additional studies and inventories on the existing
natural water sources in the project area were compiled
by Hifab International AB, together with reports on dust
and air quality issues.
• Further information was obtained on the Laponia World
Heritage site located more than 40 km away from the
Kallak North deposit, as well as on the general tourism
industry in the Jokkmokk region sourced from the
Destination Jokkmokk organisation.
The methodologies utilised in the enhanced EIA report
were developed and conducted in accordance with
the comments received from the CAB, and reflected
the feedback from a constructive meeting held with
representatives of Norrbotten County in March 2014.
In a letter to the Chief Mining Inspector, dated 1 October
2014, the CAB expressed the belief that the effects of
possible transport routes, from the future mine through
areas used for reindeer husbandry could be detrimental
and that the Exploitation Concession should therefore
not be granted by the Mining Inspectorate at that time. In
response to the CAB’s concern the Company eliminated
a specific route passing in a north/north-easterly direction
through the Jelka-Rimakåbbå Natura 2000 area and any
future interaction with important reindeer herding business
in that area. This change was communicated in a written
submission to the Mining Inspectorate in November 2014.
Activities and Developments in 2015
In February 2015, after further investigation, the Chief
Mining Inspector concluded as follows:
• 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 discovery of iron ore
has been found, and is likely to be commercially viable.
• In the Chief Mining Inspector’s opinion, the
environmental impact study, with the supplements which
have been made, meets the requirements set forth in
Chapter 6 of the Environmental Code.
Beowulf Mining plc Annual Report 2015 • However, in the view of the Chief Mining Inspector, as
the 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.
Since the notification on 13 February 2015 that the
Mining Inspectorate had referred the decision regarding
the Exploitation Concession for Kallak North to the
Swedish Government, Kurt Budge has visited Sweden
regularly to meet with officials at the CAB, the municipality
(Jokkmokks Kommun) and other key stakeholders,
including the landowners’ association in Jokkmokk, the
Mining Inspectorate and representatives of the Sami
villages.
During these meetings Kurt Budge has explained the
changes that have taken place within Beowulf and
its subsidiary JIMAB since October 2014, in terms of
leadership and approach to stakeholders. He has also
provided an update on the Company’s understanding of
the process being followed by the Swedish Government,
and provided supporting arguments for the award of the
Exploitation Concession, including:
• Kallak’s designation, in February 2013, by the Swedish
Geological Society as an ANI for minerals, affording it
protection against competing land use and measures
that may hinder future potential mineral extraction.
• The Chief Mining Inspectorate finding, in February
2015, that the prerequisites for an Exploitation
Concession have been fulfilled.
• The definition of a high quality resource at Kallak,
including an Indicated Resource of 118.5Mt at 27.5 per
cent iron and an Inferred Resource of 33.8Mt at 26.2
per cent iron (JORC, 2012 edition), plus an exploration
target of 90-100Mt at 22-30 per cent iron.
• Jokkmokk Kommun’s independent socio-economic
study, completed in April 2014, on Kallak shows that
a mining development will create direct and indirect
jobs, increase tax revenues and slow down population
decline, demonstrating that mining at Kallak can
provide a much needed economic stimulus for the
region.
• The Company has and continues to demonstrate its
commitment to Jokkmokk’s economic future as a direct
investor in the mining project, with SEK 67 million
having been spent to date and through its partnership
with the landowners’ association, Jokkmokks
Allmänning, to support the development of small and
medium enterprises in the wider community, to which
the Company has, to date, funded SEK 300,000.
In July 2015, the CAB was asked by the Swedish
Government to provide comments on the national
economic assessment of Kallak North. The CAB’s findings
were that:
• Mining is economically relevant and that the Kallak
North project generates economic benefits at local,
regional and national levels, including direct and
indirect jobs, tax revenues, and more broadly across
mining equipment and services sectors in Sweden.
• The Concession area applied for by the Company
creates no conflicts where national interests are
considered.
• The Concession is designated as an Area of National
Interest (“ANI”) for minerals.
• The Company should work with communities that could
be affected by the development of a mining project, in
order to eliminate or mitigate any impacts, including
reindeer herders and Sami villages.
• The Company should consider in its ongoing studies the
potential impact of its mining activities on tourism and
transport infrastructure.
In October 2015, the Mining Inspectorate wrote to
the Swedish Government and recommended that the
Exploitation Concession for Kallak North be granted,
letter dated 9 October 2015.
The recommendation was delivered in response to the
Department of Enterprise and Innovation’s invitation for
the Mining Inspectorate to give its views on the findings
made by the CAB on Kallak North, as published in the
CAB’s announcement dated 7 July 2015.
16
17
Beowulf Mining plc Annual Report 2015 Review of Operations
and Activities
Post reporting period end events
Other Swedish Projects in the Portfolio
The Company has written two letters to the Government
on 18 November 2015 and on 16 March 2016 to get an
update on the process and the timeline to a final decision,
but to date no response has so far been received.
On 15 April 2016, JIMAB responded to a letter from
the Government of Sweden, requesting our opinion on
the judgement of the Supreme Administrative Court of
Sweden (“SAC”) dated 22 February 2016 regarding
Tasman Metal’s (“Tasmin”) Norra Kärr project (Case
2047-14), and how it relates to the Company’s Kallak
North application for an Exploitation Concession.
On 23 February 2016, Tasman announced that it had
been notified of a decision by the SAC to cancel its Norra
Kärr Mining Lease (“ML”). The ML was granted to Tasman
in May 2013 by the Mining Inspectorate of Sweden and
has remained in force since that time.
On the basis of a review of the process of granting of the
ML, the SAC determined that the decision by the Mining
Inspectorate was incorrect, as the decision to grant the ML
was not adequately supported by environmental studies
into a future mining operation. As a result, the Norra Kärr
ML was cancelled and the project reverts to an Exploration
Licence. The SAC decision to cancel the ML cannot be
appealed, but Tasman is free to re-apply for a ML.
Working practice in Sweden up until the SAC judgement
has been to focus on the concession area and activities
within it, with aspects of a future mining operation
outside of the concession area being dealt with under
Environmental Permitting.
With respect to our response to the Government we
have stated that our exploitation concession application
has been completed in accordance with the recent
SAC judgement, comprehensively studying all aspects
of a future mining operation and their associated
environmental impacts, with a detailed technical
description and site plan. We also suggested to the
Government that the Kallak North application should be
returned to the Mining Inspectorate, such that a review of
the EIA in the context of the SAC judgement can be made.
Ballek Copper-Gold Project
The Ballek project, where Beowulf acts as operator, is in
the Arjeplog municipality in northern Sweden. The Group
has an interest of 65.25 per cent in Wayland Copper
Limited (“Wayland”), further to the terms of a joint venture
agreement with Energy Ventures Limited. Wayland became
a subsidiary of Beowulf 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 43,000
tonnes 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 in April 2014. This was solely
funded by the Company. Five drillholes all located within
one of the selected targets, show abundant, mostly
fracture type copper mineralisation present in quartz
veins at relatively shallow levels with assays ranging up
to 3.70 per cent of copper over a one metre section and
0.5 per cent of copper over a 13.2m section. The copper
mineralisation identified at this target is located on the
Lulepotten trend less than 3 km to the north east directly
along strike and with similar geological structures as those
of the Lulepotten deposit.
A desktop review of all historical data, including
significant geophysical work, was completed in August
2015 by independent consultants. Based on the findings
of the review, discussions with Energy Ventures, and, in
light of market conditions, it was decided to keep the
project on care and maintenance and to fully impair
the carrying value of the asset. No additional work was
carried out during the year and no budget has been
prepared for 2016. The Company will look at ways to
monetise this project.
18
Beowulf Mining plc Annual Report 2015 Grundträsk Gold Project
The Grundträsk Project, focused solely on gold is located
in the Skellefteå Mining District of northern Sweden. There
is little 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 Skellefteå to Malå, which passes through
the licence area. Water and electricity supplies are also
both available locally. Grundträsk has potential for a
shallow depth gold resource, with gold bearing sulphide
mineralisation starting at shallow 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.
A desktop review of all historical data was completed in
August 2015 by independent consultants. Based on the
findings of the review and in light of market conditions, it
was decided to keep the project on care and maintenance
and fully impair the carrying value of the asset. No
additional work was carried out during the year. An
approach was received during the year and interest
remains, which the Company will consider if and when a
firm offer is made.
Nautijaure IOCG (“Iron Oxide Copper Gold”) Project
Nautijaure lies directly north of and adjacent to Kallak.
Based on regional geological and geophysical evidence,
Nautijaure shows exploration potential for IOCG style
mineralisation. We have defined large volumes of iron
present at Kallak, and there could be associated copper
mineralisation in close proximity. Fieldwork during the
2014 season identified several copper sulphide rich
boulders. No work was undertaken during 2015.
Ågåsjiegge Iron Ore Project
Ågåsjiegge lies in close proximity to the northeast of
Kallak, and shows exploration potential to host the same
geological structures for iron mineralisation as those
seen at Kallak. The SGU has a historic resource estimate
of 74-75Mt of magnetite, grading 30 per cent iron and
almost free of impurities. Historic logs on two holes show
mineralisation in drill hole 72601 (west position) from
a depth of 16m, and in drill hole 72602 (east position)
from a depth of 8.5m. Logging of the drill holes revealed
quartz-feldspar-amphibole magnetite iron formation
intersected with pegmatite. The holes are 202.5m and
214m in length respectively. No work was undertaken
during 2015.
POST REPORTING PERIOD END EVENTS
FINLAND
Overview
On 11 January 2016 the Company announced the
acquisition of Fennoscandian, a privately owned graphite
exploration company with projects in Finland. Graphite is
a strategic mineral declared supply-critical by both the US
and the EU, and it is an important ingredient in advanced
technology manufacturing. There is potential long term
growth in demand for large flake graphite in the electric
car battery, aerospace, sensor and solar industries.
Throughout 2015, the Company assessed various
acquisition targets, looking beyond solely delivering
exploration success and towards production. The
acquisition of Fennoscandian was the end-result,
providing the Company with assets that can be put into
production in a shorter timeframe than Kallak, given their
smaller scale and lower order of complexity and capital
requirements.
Beowulf has acquired 100 per cent of the share capital
of Fennoscandian in consideration for a total of 2.55
million ordinary shares in the capital of the Company. In
addition, two equal tranches of shares will be issued on
achievement of certain performance milestones. The
total number of ordinary shares that may be issued, if
all performance milestones are achieved, is 6.75 million
ordinary shares.
Through the acquisition, the Company acquired a
portfolio of four early-stage graphite exploration
projects located in Finland, with all projects being held
by Fennoscandian under 100 per cent owned Claim
Reservations. A fifth Claim Reservation has been awarded
18
19
Beowulf Mining plc Annual Report 2015 Review of Operations
and Activities
since the acquisition. The graphite projects include:
• Haapamäki – A high grade graphitic carbon (“Cg”)
project with attractive flake sizes. Historic studies have
reported visually estimated flake sizes ranging 0.1-2.0
millimetres in length.
• Viistola – A potentially high grade deposit with historical
results indicating a grade in the region of 20-35 per
cent Cg.
• Piippumäki – Has shown evidence of high quality
graphite flakes with visible hexagonal growth, and
physical characteristics reportedly comparable with
synthetic graphite.
• Kolari – A single diamond drillhole R1 intersected 170m
of mineralisation starting from surface, with an average
grade of 8.9 per cent Cg. The graphite at the project
has been described as very fine to fine microcrystalline.
• Saarenpudas – Situated in the prospective ground
Kolari graphite district, immediately to the west of the
Kolari Claim Reservation already held by the Company.
Previous exploration work in the 1970s identified an
electromagnetic (“EM”) conductor over 1.5 km in
length, associated with graphitic schist. Based on a
combination of drilling and EM data, Mattila (1978)
estimated an exploration target of 3Mt ranging 15-30
per cent Cg.
Each of the projects has been explored historically, with
exploration data readily available, especially for the
Viistola project. The FennoFlake project, a collaborative
group with partners representing the entire graphite value
chain, from identification to exploration and mining,
processing to end products and market applications,
has carried out additional exploration. Fennoscandian
is a partner in FennoFlake and will continue to play an
important role in the project, which will in turn provide the
Company with access to market insight, and will help the
Company allocate resources to projects that demonstrate
the greatest commercial potential.
Beowulf’s workplan for its graphite projects in 2016
will include ranking projects in the portfolio, before the
prioritisation of exploration funds. An immediate priority
is the selection of the most favourable project(s) for
generating a maiden resource statement. In addition, the
Company will be working with its partners in FennoFlake
to generate sample material from each of the projects for
testwork and assessment against applications in potential
end-markets.
Beowulf has also signed a Memorandum of
Understanding (“MoU”) with Oy Fennoscandian
Investment Group, a Finnish company which is
wholly owned by Mr. Blomqvist to evaluate nickel and
polymetallic exploration assets across the Nordic region
for which Mr. Blomqvist has secured exploration rights.
20
Beowulf Mining plc Annual Report 2015 Board of Directors
Bevan Metcalf
BMS ACA (NZ) - Non-Executive Chairman, Age 58
Mr Metcalf was appointed a Non-Executive Director of Beowulf in September 2014, became Senior Non-Executive
Director in December 2014 and Non-Executive Chairman in May 2015.
Bevan served as the Chief Financial Officer of Afferro Mining Inc. from January 2008 until the sale of the Company in
December 2013. He joined African Eagle Resources plc in July 2004 and served as Finance Director and Company
Secretary. Bevan has over 30 years of financial management experience including international companies, such as ICI,
Glaxo SmithKline and Orion Corporation.
Bevan holds a Management Studies degree from the University of Waikato, Hamilton New Zealand and is a qualified
accountant (ACA NZ).
Kurt Budge
MBA MEng ARSM - Chief Executive Officer, Age 46
Mr Budge was appointed Chief Executive Officer of Beowulf Mining in October 2014 after joining the Company as a
Non-Executive Director in September 2014.
Kurt has over 20 years’ experience in the mining sector during which he spent five years as a Business Development
Executive in Rio Tinto’s Business Evaluation Department, here he was engaged in mergers and acquisitions, divestments
and evaluated capital investments. He has also been an independent advisor to junior mining companies on
acquisitions and project development as well as a General Manager of Business Development, where he developed
strategic growth and M&A options for iron ore assets.
Kurt was Vice President of Pala Investments AG, a mining focused private equity firm based in Switzerland and has
worked as a mining analyst in investment research.
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.
Kurt holds an M.Eng (Hons) degree in Mining Engineering from The Royal School of Mines, Imperial College London and
an MBA from London Business School.
Christopher Davies (appointed post year end)
BSc Hons Geology, MSc DIC Mineral Exploration, Non-Executive Director, Age 58
Mr Davies joined the board of Beowulf as a Non-Executive Director in April 2016. Chris, who is a Fellow of the
Australasian Institute of Mining and Metallurgy, is an exploration/ economic geologist with more than 30 years’
experience in the mining industry. He has substantial knowledge of graphite and base metals, a particular skill set which
will be complimentary to Beowulf’s existing team, and was Manager for the exploration and development of a graphite
deposit in Tanzania.
Chris has worked as a geologist in many different parts of the world including Africa, Australia, Yemen, Indonesia and
Eastern Europe. His most recent role was as a Consultant to an Australian Group seeking copper-gold assets in Africa
where he carried out technical due diligence and negotiated commercial terms for joint venture partnerships. Chris was
Operations Director of African Eagle until March 2012 and Country Manager for SAMAX Resources in Tanzania, which
was acquired by Ashanti Goldfields in 1998 for US$135m.
20
21
Beowulf Mining plc Annual Report 2015 Strategic Report
The Directors present their strategic report for the year
ended 31 December 2015.
PRINCIPAL ACTIVITY
The principal activities of the Group are the exploration
and development for iron ore, graphite and other
prospective minerals in the Nordic Region. A detailed
review of the mining activities can be found under Review
of Operations and Activities. The Group is controlled,
financed and administered within the United Kingdom
which remains the principal place of business.
REVIEW OF THE BUSINESS
The results of the Group for the year are set out in the
consolidated income statement and show a loss after
taxation attributable to the owners of the parent for
the year of £1,477,109 (2014: £3,060,482 loss). A
comprehensive 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:
1. The ability to raise sufficient funds to continue with its
principal activities.
2. Long-term adverse changes in commodity prices
could affect the viability of exploration and extraction
projects.
3. 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.
4. Licences may be subject to conditions which, if not
satisfied, may lead to the revocation of the licences.
5. 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.
RISK MANAGEMENT
The Company manages risk from an operational
perspective, where it assesses and weighs up the
financial effect of risk and opportunity on the goals of the
Company. The Company has set a risk tolerance level
of £50,000 and reviews on a quarterly basis those risks
above this level.
22
Beowulf Mining plc Annual Report 2015 The Company’s top four risks at 31 December 2015 are:
Description
Risk
Risk rating
pre-mitigation
Mitigating action
Risk rating
post-mitigation
Unable to raise
sufficient funds
The risk is that Beowulf
would be unable to
raise sufficient funds
to continue to invest
in exploration and
evaluation of its project
portfolio
HIGH
Work closely with
our broker to identify
new investors.
Communicate
effectively with
investors. Ensure
expenditure controls
are in place and
forecasting is accurate
to optimise cash
resources. In the
current market it
is hard to mitigate
this risk which is the
biggest single risk
facing exploration
and development
companies.
HIGH
Description
Risk
Risk rating
pre-mitigation
Mitigating action
Risk rating
post-mitigation
Long term adverse
changes in
commodity prices
The risk is that adverse
changes in prices for
graphite and iron ore
may affect the viability
of the Company’s
projects
HIGH
The Company
identifies projects
that have a high
quality resource so it
can attract premium
pricing. The Company
will effectively manage
both capital and
operating expenses to
maximise returns. With
respect to Kallak, a
mine is approximately
five years away from
completion and the
Company believes
that in the medium
term iron ore prices
will recover from their
current levels.
MEDIUM
22
23
Beowulf Mining plc Annual Report 2015 Strategic Report
Description
Risk
Risk rating
pre-mitigation
Mitigating action
Risk rating
post-mitigation
Foreign
Jurisdictions
There are a number of
risks including social,
political and economic.
MEDIUM
The Company has
chosen to operate in
Sweden and Finland,
countries that appear
high up on the Fraser
Institute’s ranking for
investor attractiveness.
The Company is
a member of the
Swedish Association
of Mines, Mineral
and Metal Producers
which lobbies on
behalf of the industry.
The Company also
meets government
representatives on a
regular basis.
MEDIUM
Description
Risk
Risk rating
pre-mitigation
Mitigating action
Risk rating
post-mitigation
Revocation of
licences
Licences may be
subject to conditions
which, if not satisfied,
may lead to the
revocation of the
licence
MEDIUM
The Company uses
external consultants
to manage its licences
with the Mining
Inspectorate to
ensure compliance.
The Company keeps
in regular contact
with the Mining
Inspectorate
LOW
PERFORMANCE MEASUREMENT
The ongoing performance of the Company is managed and monitored using a number of key performance indicators.
The Company monitors the following key performance indicators on a monthly basis:
i. Actual overhead expenditure versus budget
ii. Loss before tax
iii. Actual cash performance versus the 12-month budget/forecast
iv. Actual monthly cash movements by subsidiary
v. Exploration spend by project
vi. Iron ore and graphite prices
vii. Share prices and share split between Sweden and London
viii. Currencies including the Euro and Swedish Krona
ON BEHALF OF THE BOARD:
Mr B Metcalf
Director
6 May 2016
24
Beowulf Mining plc Annual Report 2015 Report of Directors
The Directors present their report together with the audited
financial statements of the Group for the year ended 31
December 2015.
announced on the 25 February 2016 that it had raised
£1.25m before expenses and on 2 March 2016 a further
£0.25m before expenses.
DIRECTORS
Since 1 January 2015 the following Directors have held
office:
Mr B Metcalf
Mr K R Budge
Dr Jan-Ola Larsson
(Resigned 12 June 2015)
Mr Christopher Davies
(Appointed 4 April
2016)
DIVIDENDS
No dividends will be distributed for the year ended 31
December 2015 (2014: £nil).
GOING CONCERN
In common with many exploration companies, the group
raises finance for its operations in discrete tranches. At
31 December 2015 the Company had a cash balance
of £352,914. The Company successfully raised finance
in March and July 2015. Post period end the Company
The Directors have prepared cash flow forecasts for the
Group covering a period through to the end of April
2017. The cash flow forecasts indicate that whilst the
Group has sufficient cash to cover its anticipated working
capital requirements for the next twelve months, the
Group will need to raise further funds shortly after the
period of review.
On this basis the Directors have concluded it is
appropriate to prepare the financial statements on a
going concern basis. However, whilst the Directors are
confident they are taking all 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
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 would
result if the Company was unable to continue as a going
concern.
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 30 March 2016:
Shareholders
TD Direct Investing Nominees (Europe) Limited
Barclayshare Nominees Limited
HSDL Nominees Limited
HSBC Client Holdings Nominee (UK) Limited
Shares
33,944,510
22,778,561
17,680,158
16,645,303
%
7.08
4.75
3.69
3.47
24
25
Beowulf Mining plc Annual Report 2015 Report of Directors
AUTHORITY TO ISSUE SHARES
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). At the AGM held on 29 June
2015, shareholders gave authority for the Directors to
allot equity securities for cash up to an aggregate nominal
value of £561,639 (2014: £530,991). A General
Meeting of the Company was held on 5 February 2016 at
which time shareholders gave authority for the Directors to
allot equity securities for cash up to an aggregate nominal
value of £865,000 provided that the authority granted
by this resolution shall expire on the conclusion of the
Company’s next annual general meeting (unless renewed,
varied or revoked prior to or on such a date).
SIGNIFICANT AGREEMENTS
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
Information relating to events since the end of the year is
given in note 22 to the financial statements.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES
Financial risk management policies and objectives for
capital management are provided within note 20.
The entry into Finland came about through the
acquisition, in January 2016, of Fennoscandian.
The Company is currently evaluating the graphite
projects it acquired from Fennoscandian and will make
announcements when it has results to disclose. The
Company will grow the business organically, but will also
look for M&A opportunities. A number of exploration
assets were rationalised in 2015 and the Company has
plans to acquire further attractive licences as it rebuilds its
exploration portfolio.
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 the Group and
Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the Group 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.
In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
FUTURE DEVELOPMENTS WITHIN THE BUSINESS
• make judgements and accounting estimates that are
The Company explores for and evaluates iron ore
and graphite in Sweden and Finland respectively. The
Company is focussed on its application for an Exploitation
Concession at its Kallak iron ore project which was
submitted three years ago. The Company is waiting for
the Government to make a decision on granting the
Concession. The Company believes it will be awarded
the Concession as it has fulfilled all the necessary
requirements in line with the Mining Act.
reasonable and prudent;
• state whether they have been prepared in accordance
with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in
the financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
26
Beowulf Mining plc Annual Report 2015 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 requirements of
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
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 the steps that
he ought to have taken as a Director in order to make
himself aware of any relevant audit information and to
establish that the Group’s auditors are aware of that
information.
WEBSITE PUBLICATION
AUDITOR
The Directors are responsible for ensuring the annual
report and financial statements are made available on
a website. Financial statements are published on the
Company’s website in accordance with legislation in
the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other 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.
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.
ANNUAL GENERAL MEETING
The Group’s Annual General Meeting will be held at
10.30 a.m. (BST) on 29 June 2016 and full details of the
proposed resolutions at that meeting will be posted to
shareholders and will appear on the Company’s website.
ON BEHALF OF THE BOARD:
Mr B Metcalf
Director
6 May 2016
26
27
Beowulf Mining plc Annual Report 2015
Remuneration Report
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 the
Director’s contract/letter of appointment. In the event of
a reconstruction, merger, takeover, acquisition, change of
control of the Company, whereby a Directors’ agreement
is terminated or they are 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.
Compensation for loss of office
Under Mr Sinclair-Poulton’s settlement agreement, he
was to receive a payment of £20,000 contingent on the
Company’s cumulative funds raised post his departure
exceeding £500,000. This was disclosed as a contingent
liability in last year’s annual report and was paid on 5
August 2015.
Mr Scutt received £3,500 during the year in relation to
services he performed as a Director in 2014.
Executive Directors’ terms of engagement
Mr Budge is the sole executive director and Chief
Executive Officer, his annual salary of £120,000 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 resigned as a Director on the 12 June 2015.
He received fees as a Director of £39,329 including
salary sacrifice. He stayed with the Company until 30
September 2015 to ensure all outstanding matters were
completed. The fees he received from 12 June 2015 up
to his departure on 30 September 2015 amounted to
£18,829. In total he received £58,228 including salary
sacrifice during the year. The fees he received were
invoiced through his business, Geoexperten.
Non-Executive directors’ terms of engagement
The Non-Executive Director(s) 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 as Non-Executive Chairman. 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.
Remuneration in equity rather than cash
The Board of Directors agreed to forgo salary and fees
for equity in the Company between October 2014 and
May 2015. On the 8 June 2015 the Directors converted
the cumulative salary sacrifice net of tax of £45,798 for
2,035,457 shares at 2.25p. The proportion sacrificed in
2015 amounted to £31,356 (2014: £14,442) net of tax.
The gross salary sacrifice from January 2015 to May
2015 was £43,219.
28
Beowulf Mining plc Annual Report 2015 Aggregate Directors’ Remuneration
The remuneration paid to the Directors in accordance with their agreements, during the years ended 31 December 2015
and 31 December 2014, was as follows:
Executive/
Non-Executive
Salary & Fees1 Salary Sacrifice Share- based
Payments2
2015
Total
2014
Total
Mr B Metcalf3
Non-Executive
Mr K R Budge
Executive
£
66,264
101,667
£
13,301
18,333
£
£
£
30,918 110,483
22,358
34,457 154,457
30,881
Dr Jan-Ola Larsson4 Executive
27,744
11,585
-
39,329
87,817
Notes:
1. Does not include expenses reimbursed to the Directors.
2. In relation to options granted in 2014 & 2015.
3. Mr Metcalf’s Chairman’s fee is £35,000. Mr Metcalf also earned fees under his consultancy contract in relation to financial
advice as the Company does not yet have a Finance Director.
4. Dr Larsson invoiced fees of £58,228 during the period 1 January 2015 to 30 September 2015, through Geoexperten a
business owned by Dr Larsson. The fees above are for the period 1 January 2015 to 12 June 2015, the date Dr Larsson
resigned.
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 2015 in the issued share capital of the
Company were as follows:
ORDINARY SHARES
31 December 2015
31 December 2014
Mr B Metcalf
Mr K R Budge
2,165,841
2,249,759
333,333
333,333
Mr Metcalf and Mr Budge were awarded 8,000,000 and 9,000,000 options respectively in the year ended 31
December 2015. One third of these options vested on issue, with one third after the first anniversary and the last third
after the second anniversary.
ORDINARY SHARES
UNDER OPTION
Mr B Metcalf
Mr K R Budge
Mr B Metcalf
Mr K R Budge
NUMBER
EXERCISE PRICE
EXPIRY DATE
500,000
500,000
8,000,000
9,000,000
4 pence
4 pence
1.66 pence
1.66 pence
9 October 2019
9 October 2019
17 July 2020
17 July 2020
28
29
Beowulf Mining plc Annual Report 2015
Corporate Governance Report
Corporate Governance and Board composition
Audit Committee
The overall purpose of the Audit Committee is:
(1) To ensure that the Company’s management has
designed and implemented an effective system of
internal financial controls;
(2) To review and report on the integrity 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
approximately four times a year.
The members of the Committee are Chris Davies
(Chairman) and Bevan Metcalf.
Remuneration 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.
The members of the Committee are Bevan Metcalf
(Chairman) and Chris Davies.
As an AIM-listed company, Beowulf Mining plc is not
required to comply with the UK Corporate Governance
Code (2014). However, the Directors support high
standards of corporate governance and have established
a set of corporate governance principles based on the
QCA (Quoted Companies Alliance) Guidelines, which
they regard as appropriate for the size, nature and stage
of development of the Company.
Corporate governance is a key value driver for investors
and an important determinant of investment decision-
making. For this reason, 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 shareholdings 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 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.
30
Beowulf Mining plc Annual Report 2015 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
In order to discourage illegal activity and unethical
business conduct in the Company, the Board has
developed a Whistleblower Policy. It is the responsibility of
all Directors, officers and employees (including contract
employees and consultants), to comply with the law and
the Company’s policies, and to report any wrongdoing or
violations or suspected violations, including those relating
to accounting, internal accounting controls, questionable
accounting or auditing matters, securities law, the laws
and regulations of any jurisdiction in which the Company
operates, in accordance with its 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 website at www.beowulfmining.
com and the interim and Annual Reports. Shareholders
can also sign up to receive news releases directly from
the Group by email. Annual General Meetings of the
Company give the Directors the opportunity to report to
shareholders on current and proposed operations and
enable shareholders to express their views on the Group’s
business activities.
Nominations Committee
The Board has not established a Nominations Committee
as the Board considers that a separately established
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.
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.
Anti-Bribery Policy
The Company has in place appropriate guidance, training
and implementation of procedures to ensure compliance
with the UK Bribery Act. The Company is committed
to the highest standards of personal and professional
ethical behaviour. This must be reflected in every
aspect of the way in which we operate. We take a zero-
tolerance approach to bribery and corruption and we are
committed to act professionally, fairly and with integrity
in all our business dealings. Any breach of this policy will
30
31
Beowulf Mining plc Annual Report 2015 Independent Auditor's Report
We have audited the financial statements of Beowulf
Mining plc for the year ended 31 December 2015
which comprise the consolidated income statement, the
consolidated statement of other comprehensive income,
the 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 permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
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
financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Financial
Reporting Council’s (FRC’s) Ethical Standards for Auditors.
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/auditscopeukprivate.
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 2015 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;
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Emphasis of Matter – Going concern
In forming our opinion on the financial statements which
is not modified, we have considered the adequacy of the
disclosures made in Note 1 to the financial statements
concerning the Group’s ability to continue as a going
concern.
The Directors have prepared cash flow forecasts covering
the period through to the end of April 2017 which
indicates that whilst the Group has sufficient cash to cover
its anticipated working capital requirements for the next
twelve months, the Group will need to raise further funds
shortly after the period of review.
The Directors are satisfied that they will be able to raise
further funding in the required timeframe. 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’s ability to continue as a going concern.
The financial statements do not include the adjustments
that would result if the Group was unable to continue as a
going concern.
32
Beowulf Mining plc Annual Report 2015 Opinion on other matters prescribed by the
Companies Act 2006
In our opinion the information given in the Strategic
Report and Directors’ Report for the financial year for
which the financial statements are prepared is consistent
with the financial statements.
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
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Stuart Barnsdall (senior statutory auditor)
For and on behalf of BDO LLP,
statutory auditor
London
United Kingdom
6 May 2016
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
32
33
33
Beowulf Mining plc Annual Report 2015 Consolidated Income Statement
Note
2015
£
2014
£
CONTINUING OPERATIONS
Administrative expenses
Impairment of exploration costs
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
3
3
4
5
Loss per share attributable to the ordinary equity
holder of the parent: Basic and diluted (pence)
7
(647,268)
(1,029,168)
(1,123,892)
(3,187)
(1,771,160)
(1,032,355)
-
(2,552)
(139)
(2,032,835)
1,982
6,397
(1,769,317)
(3,061,345)
-
-
(1,769,317)
(3,061,345)
(1,477,109)
(3,060,482)
(292,208)
(863)
(1,769,317)
(3,061,345)
(0.38)
(1.00)
The notes on pages 44-65 form part of these financial statements
34
Beowulf Mining plc Annual Report 2015
Consolidated Statement Of Comprehensive Income
LOSS FOR THE YEAR
(1,769,317)
(3,061,345)
2015
£
2014
£
OTHER COMPREHENSIVE INCOME
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
Revaluation of investments
(157,900)
(758,807)
-
(8,021)
(20,550)
986
(178,450)
(765,842)
TOTAL COMPREHENSIVE INCOME
(1,947,767)
(3,827,187)
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
(1,660,172)
(3,819,849)
(287,595)
(7,338)
(1,947,767)
(3,827,187)
34
35
The notes on pages 44-65 form part of these financial statements
Beowulf Mining plc Annual Report 2015
Consolidated Statement of Financial Position
Note
2015
£
2014
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investments
Loans and other 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 Based Payment reserve
Translation reserve
Accumulated losses
Non-controlling interests
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
8
9
10
11
12
13
14
16
18
18
18
18
18
18
15
19
5,588,270
31,551
-
51,938
6,538,752
42,394
20,550
53,262
5,671,759
6,654,958
82,330
-
352,914
42,445
150,000
186,889
435,244
379,334
6,107,003
7,034,292
4,303,138
3,452,598
15,187,112 15,009,812
(9,450)
46,451
69,318
(927,835)
(12,466,046) (11,025,834)
(30,000)
46,451
97,796
(1,090,348)
6,048,103
(158,461)
6,615,060
129,134
5,889,642
6,744,194
217,361
290,098
217,361
290,098
TOTAL EQUITY AND LIABILITIES
6,107,003
7,034,292
The financial statements were approved and authorised for issue by the Board of Directors on 6 May 2016 and were
signed on its behalf by:
Mr B Metcalf - Director
Company Number 02330496
The notes on pages 44-65 form part of these financial statements
36
Beowulf Mining plc Annual Report 2015
Company Statement of Financial Position
Note
2015
£
2014
£
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Investments
Loans and other 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 Based Payment reserve
Accumulated losses
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
9
10
11
12
13
14
16
18
18
18
18
18
19
1,118
4,909
7,068,102
1,493
255,254
7,486,994
7,074,129
7,743,741
74,102
-
349,013
39,012
150,000
165,398
423,115
354,410
7,497,244
8,098,151
4,303,138
3,452,598
15,187,112 15,009,812
(35,114)
46,451
69,318
(12,180,655) (10,622,412)
(55,664)
46,451
97,796
7,398,178
7,920,653
99,066
177,498
99,066
177,498
TOTAL EQUITY AND LIABILITIES
7,497,244
8,098,151
The financial statements were approved and authorised for issue by the Board of Directors on 6 May 2016 and were
signed on its behalf by:
Mr B Metcalf - Director
Company Number 02330496
36
37
The notes on pages 44-65 form part of these financial statements
Beowulf Mining plc Annual Report 2015
Consolidated Statement of Changes in Equity
Share
Revaluation
Capital
Share based
Translation
Accumulated
Total
Share
capital
premium
reserve
contribution
£
£
£
reserve
£
payments
reserve
£
reserve
losses
£
£
£
Balance at 1 January 2014 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
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2014
3,452,598
15,009,812
(9,450)
46,451
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
Release of charge for lapsed options
-
-
-
-
-
-
-
-
-
-
(20,550)
(20,550)
850,540
-
-
-
232,757
(55,457)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2015
4,303,138
15,187,112
(30,000)
46,451
-
-
-
-
-
-
1,558
-
69,318
-
-
-
-
-
-
65,375
(36,897)
97,796
-
(3,060,482)
(3,060,482)
(760,353)
-
-
-
(760,353)
986
(760,353)
(3,060,482)
(3,819,849)
(7,338)
(3,827,187)
-
-
-
-
-
-
-
-
1,872,975
(317,304)
1,558
-
(927,835)
(11,025,834)
6,615,060
-
-
-
136,472
129,134
1,872,975
(317,304)
1,558
136,472
6,744,194
-
(1,477,109)
(1,477,109)
(292,208)
(1,769,317)
(162,513)
-
-
-
(162,513)
(20,550)
4,613
-
(157,900)
(20,550)
(162,513)
(1,477,109)
(1,660,172)
(287,595)
(1,947,767)
-
-
-
-
-
-
-
36,897
1,083,297
(55,457)
65,375
-
-
-
-
-
1,083,297
(55,457)
65,375
-
(1,090,348)
(12,466,046)
6,048,103
(158,461)
5,889,642
Non
controlling
interest
£
-
(863)
(6,475)
-
Total
equity
£
8,877,680
(3,061,345)
(766,828)
986
The notes on pages 44-65 form part of these financial statements
38
39
Beowulf Mining plc Annual Report 2015
Company Statement of Changes in Equity
Balance at 1 January 2014 as restated
2,828,273
14,078,466
(36,100)
Share
capital
£
Share
premium
£
Revaluation
reserve
£
Capital
contribution
reserve
£
46,451
Share based
Accumulated
payments
reserve
£
losses
£
Total
equity
£
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
Balance at 31 December 2014
Loss for year
Revaluation of 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
Release of charge for lapsed options
Balance at 31 December 2015
-
-
-
624,325
-
-
-
-
-
1,248,650
(317,304)
-
-
986
986
-
-
-
-
-
-
-
-
-
3,452,598
15,009,812
(35,114)
46,451
-
-
-
850,540
-
-
-
-
-
-
232,757
(55,457)
-
-
-
(20,550)
(20,550)
-
-
-
-
-
-
-
-
-
-
-
4,303,138
15,187,112
(55,664)
46,451
-
-
-
-
-
1,558
69,318
-
-
-
-
-
65,375
(36,897)
97,796
(2,976,058)
(2,976,058)
-
986
(2,976,058)
(2,975,072)
-
-
-
(10,622,412)
(1,595,140)
-
(1,595,140)
-
-
-
36,897
(12,180,655)
1,872,975
(317,304)
1,558
7,920,653
(1,595,140)
(20,550)
(1,615,690)
1,083,297
(55,457)
65,375
-
7,398,178
The notes on pages 44-65 form part of these financial statements
40
41
Beowulf Mining plc Annual Report 2015
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
Share of post-tax losses of equity accounted joint venture
Gain on asset acquisition arising on reclassifying joint venture as a subsidiary
Expenses financed by issue of shares
Finance costs
Finance income
(Increase)/decrease in trade and other receivables
Decrease 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
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
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
2015
£
2014
£
(1,769,317)
(3,061,345)
9,553
65,375
1,123,892
-
-
58,298
8,227
1,558
3,187
2,552
(59,891)
-
139
2,032,835
(1,982)
(6,397)
(514,042)
(1,079,274)
(39,803)
200,747
(77,040)
(242,953)
(630,885)
(1,121,480)
(323,545)
(1,375,121)
-
(48,631)
119
49,205
-
-
1,838
(294,639)
1,168
6,397
(321,588)
(1,661,621)
1,024,999
887,975
(55,457)
(182,304)
150,000
312,775
1,119,542
1,018,446
167,069
(1,764,655)
186,889
1,983,616
(1,044)
(32,072)
Cash and cash equivalents at end of year
352,914
186,889
The notes on pages 44-65 form part of these financial statements
42
Beowulf Mining plc Annual Report 2015
Company Statement of Cash Flows
Cash flows from operating activities
Loss before income tax
Depreciation charges
Equity-settled share-based transactions
Finance costs
Finance income
Expenses financed by issue of shares
Impairment of intercompany share capital
Impairment of intercompany loans
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
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
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
2015
£
2014
£
(1,595,140)
(2,976,058)
375
65,375
497
1,558
-
2,032,835
(1,978)
58,298
229,795
787,396
(6,031)
-
-
-
(455,879)
(947,199)
(35,090)
(78,432)
68,721
127,193
(569,401)
(751,285)
(368,504)
(1,525,253)
-
(307,712)
1,978
6,031
(366,526)
(1,826,934)
1,024,999
887,975
(55,457)
(182,304)
150,000
312,775
1,119,542
1,018,446
183,615
(1,559,773)
165,398
1,725,171
Cash and cash equivalents at end of year
349,013
165,398
42
43
The notes on pages 44-65 form part of these financial statements
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
1.
ACCOUNTING POLICIES
Nature of operations
Beowulf Mining plc (the “Company”) is domiciled in England. The Company’s registered office is 201 Temple
Chambers, 3-7 Temple Avenue, London, EC4Y 0DT. These consolidated financial statements comprise the
Company and its subsidiaries (collectively the ‘Group’ and individually ‘Group companies’). 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
In common with many exploration companies, the group raises finance for its operations in discrete tranches.
At 31 December 2015 the Company had a cash balance of £352,914. In addition to this the Company
announced on the 25 February 2016 and 2 March 2016 that it had raised a total of £1.5 million before
expenses.
The Directors have prepared cash flow forecasts for the Group covering a period through to the end of April
2017. The cash flow forecasts indicate that whilst the Group has sufficient cash to cover its anticipated working
capital requirements for the next twelve months, the Group will need to raise further funds shortly after the
period of review.
On this basis the Directors have concluded it is appropriate to prepare the financial statements on a going
concern basis. However, whilst the Directors are confident they are taking all 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 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 statements that would result if the
company was unable to continue as a going concern.
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, interpretations and amendments issued not yet effective
It is not anticipated that the adoption in the future of the new or revised standards or interpretations that have
been issued by the International Accounting Standards Board but are not yet effective will have a material
impact on the Group’s earnings or shareholders’ funds. The Company has not adopted any new standards in
advance of the effective dates.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
44
Beowulf Mining plc Annual Report 2015
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, and the estimation of share-based payment costs. In respect of these items:
(i)
(ii)
The Group determines whether there are any indicators of impairment of intangible assets on an annual
basis (see note 8); and
The estimation of share-based payments 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 (see note 17).
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 recognised where
an investor is expected, or has rights, to variable returns from its investment with investee, and has the ability to
affect these returns through its power over the investee.
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.
(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 – deferred 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.
44
45
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
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)
unexpected geological occurrences that render the resource uneconomic;
title to the asset is compromised;
(iii)
variations in mineral prices that render the project uneconomic;
(iv)
substantive expenditure on further exploration and evaluation of mineral resources is neither budgeted nor
planned; and
(v)
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.
46
Beowulf Mining plc Annual Report 2015
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.
Investments
Investments in listed companies are classified as available for sale. The revaluation adjustment is taken to the
revaluation reserve and reclassified to the income statement for objective evidence of impairment.
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
46
47
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
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.
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.
48
Beowulf Mining plc Annual Report 2015
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.
2.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
2015
£
199,565
22,127
2014
£
99,659
10,361
221,692
110,020
The average monthly number of employees and Directors during
the year was as follows:
Number
Number
Directors
3
5
Wages and salaries exclude amounts paid to related parties in respect of director’s services during the year
which amounted to £39,329 (2014: £354,348). Including these amounts, the Directors’ remuneration is as
follows:
Directors emoluments, including salary and fees
Compensation to directors and past directors for loss of office
2015
£
238,894
23,500
2014
£
454,007
30,000
262,394
484,007
The remuneration of the highest paid director during the year was £120,000 (2014: £182,713).
No contributions were made by the Company to money purchase pension schemes.
48
49
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
3.
FINANCE INCOME AND COSTS
Finance income:
Deposit account interest
Finance costs:
Fair value loss on derivative financial assets
Interest
4.
LOSS BEFORE TAX AND AUDITORS REMUNERATION
a. The loss before tax is stated after charging/(crediting):
Depreciation - owned assets (note 9)
Foreign exchange differences
Impairment of exploration costs (note 8)
2015
£
2014
£
1,982
6,397
1,982
6,397
£
-
139
£
2,032,835
-
2015
£
9,553
(5,865)
1,123,892
2014
£
8,227
14,941
3,187
Fair value loss on derivative financial assets (note 13)
-
2,032,835
b. Auditor’s remuneration
Fees payable to the Group’s auditor for the audit of the
consolidated financial statements
Fees payable to the Group auditor for other services:
- audit of subsidiaries pursuant to legislation
- tax compliance services
2015
£
2014
£
21,250
21,250
3,750
2,500
3,750
-
27,500
25,000
5.
INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2015 or for the
year ended 31 December 2014.
50
Beowulf Mining plc Annual Report 2015
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:
Loss on ordinary activities before income tax
(1,769,317)
(3,061,345)
2015
£
2014
£
Tax thereon at a UK corporation tax rate
of 20% (2014 - 21.50%)
Effects of:
Expenses not deductible for tax purposes
Tax losses not recognised
Losses of overseas subsidiaries carried forward
(353,863)
(658,189)
224,778
116,063
13,022
-
-
627,524
30,665
-
The main rate of UK corporation tax changed from 21% to 20% on 1 April 2014 giving an effective rate for the
year of 20%.
The Group has estimated UK losses of £9,441,376 (2014: £8,861,064) and foreign losses of £450,247
(2014: £437,225) available to carry forward against future trading profits. The value of unrecognised deferred
tax assets in respect of the UK losses amounts to £1,888,275 (2014: Loss £1,905,059). 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
£1,595,140 (2014: £2,976,058).
7.
LOSS PER SHARE
Basic loss per share
The calculation of basic loss per share at 31 December 2015 was based on the loss attributable to ordinary
shareholders of £1,477,109 (2014: £3,060,482) and a weighted average number of Ordinary Shares
outstanding during the period ended 31 December 2015 of 392,759,984 (2014: 304,755,824) calculated as
follows:
Loss attributable to ordinary shareholders
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
2015
2014
£
£
1,477,109
3,060,482
Number
Number
Number of shares in issue at the beginning of the year
304,755,824
282,827,365
Effect of shares issued during year
88,004,070
21,928,459
Weighted average number of ordinary shares in issue for the year
392,759,894
304,755,824
50
51
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
Subsequent to the year ended 31 December 2015, the Company has issued 48,983,174 Ordinary Shares.
There is no difference between the basic and diluted loss per share.
8.
INTANGIBLE ASSETS - Group
COST
At 1 January 2014
Additions for the year
Acquisition of subsidiary
Impairments recognised
Foreign exchange movements
At 31 December 2014
At 1 January 2015
Additions for the year
Impairments recognised
Foreign exchange movements
At 31 December 2015
NET BOOK VALUE
At 31 December 2015
At 31 December 2014
Exploration
costs
£
4,948,978
1,375,499
838,216
(3,187)
(620,754)
6,538,752
6,538,752
323,545
(1,123,892)
(150,135)
5,588,270
5,588,270
6,538,752
The net book value of exploration costs is comprised of expenditure on the following projects:
2015
£
2014
£
5,565,328
5,416,587
22,942
-
-
-
-
285,543
6,836
829,786
5,588,270
6,538,752
Kallak
Nautijaur
Grundtrask
Munka
Ballek
52
Beowulf Mining plc Annual Report 2015
Total Group exploration costs of £5,588,270 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. An amount of £68,292 was invoiced to the Kallak project during the year for services provided by Kurt
Budge and Jan Ola Larsson.
During the year an impairment provision of £1,123,892 (2014: £3,187) was made against costs incurred on
Ballek (£838,493), Grundträsk (£278,948) and on Munka (£6,451) on the basis that no further exploration
would be carried out on those projects. The impairment is charged as an expense and included within the
consolidated income statement.
9.
PROPERTY, PLANT AND EQUIPMENT
COST
At 1 January 2014
Additions
Group
Company
£
£
5,521
48,631
5,521
-
At 31 December 2014
54,152
5,521
At 1 January 2015
Foreign exchange movements
54,152
(1,157)
5,521
-
At 31 December 2015
52,995
5,521
DEPRECIATION
At 1 January 2014
Charge for year
3,531
8,227
3,531
497
At 31 December 2014
11,758
4,028
At 1 January 2015
Charge for year
Foreign exchange movements
At 31 December 2015
NET BOOK VALUE
At 31 December 2015
At 31 December 2014
11,758
9,553
133
4,028
375
-
21,444
4,403
31,551
1,118
42,394
1,493
52
53
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
10.
INVESTMENTS
Group
Interest
in joint
venture
Listed
investments
Total
£
£
£
COST OR VALUATION
At 1 January 2014
206,935
19,564
Share of post-tax losses of equity accounted joint venture
(2,552)
Revaluation of listed investment
Exchange differences
Reclassification as subsidiary
At 31 December 2014
At 1 January 2015
Revaluation of listed investment
At 31 December 2015
Company
-
(8,021)
(196,362)
-
-
-
-
-
986
-
-
226,499
(2,552)
986
(8,021)
(196,362)
20,550
20,550
20,550
(20,550)
20,550
(20,550)
-
-
Shares in
group
undertakings
£
Interest
in joint
venture
£
Listed
investments
£
Totals
£
COST OR VALUATION
At 1 January 2014
Revaluation of listed investments
9,704
-
225,000
-
Reclassification as subsidiary
225,00
(225,000)
At 31 December 2014
234,704
At 1 January 2015
Revaluation of investments
234,704
-
Impairment of investments
(229,795)
At 31 December 2015
4,909
-
-
-
-
-
19,564
254,268
986
-
986
-
20,550
255,254
20,550
(20,550)
-
-
255,254
(20,550)
(229,795)
4,909
In the financial year ended 31 December 2015, the Directors have taken the view that the share capital of
Norrbotten Mining, Wayland Copper, Wayland Copper AB and Iron of Sweden should be fully impaired. The
Directors have adopted this view as the underlying exploration assets of these companies are unlikely to yield
future economic benefits.
54
Beowulf Mining plc Annual Report 2015
The Group consists of the following subsidiary undertakings:
Name
Incorporated
Activity
% holding
% holding
Iron of Sweden Limited
UK
Dormant
Jokkmokk Iron Mines AB
Norrbotten Mining AB
Sweden
Sweden
Mineral exploration
Mineral exploration
100%
100%
100%
100%
100%
100%
Wayland Copper Limited
UK
Holding company
65.25%
65.25%
Wayland Sweden AB
Sweden
Mineral exploration
(1)(2)65.25%
(1)(2)65.25%
2015
2014
(1) indirectly held
(2) effective interest
Details on the non-controlling interest in subsidiaries is given in note 15.
11.
LOANS AND OTHER FINANCIAL ASSETS - Group
Loans to
Joint
ventures
£
141,751
307,712
Financial
fixed
assets
£
Totals
£
116,588
-
258,339
307,712
At 1 January 2014
Advances made in the year
Disposals in the year
Reclassification as intra-group loan
-
(49,205)
following acquisition
Foreign exchange movements
At 31 December 2014
At 1 January 2015
Foreign exchange movements
Disposal in the year
At 31 December 2015
(449,463)
-
-
-
-
-
-
-
(14,121)
(49,205)
(449,463)
(14,121)
53,262
53,262
53,262
(1,205)
(119)
53,262
(1,205)
(119)
51,938
51,938
54
55
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
11.
LOANS AND OTHER FINANCIAL ASSETS - Company
Loans to
group
undertakings
£
At 1 January 2014
5,509,494
Advances made in the year
1,525,253
Loans
to joint
ventures
£
141,751
307,712
Reclassification as intra-group
loan following acquisition
449,463
(449,463)
At 31 December 2014
7,484,210
At 1 January 2015
7,484,210
Advances made in the year
368,504
Impairment of investments
(787,396)
At 31 December 2015
7,065,318
-
-
-
-
-
Financial
assets
£
2,784
-
-
Totals
£
5,654,029
1,832,965
-
2,784
7,486,994
2,784
7,486,994
-
-
368,504
(787,396)
2,784
7,068,102
In the financial year ended 31 December 2015, the Directors have taken the view that the loans due from of
Norrbotten Mining, Wayland Copper, and Wayland Copper AB should be fully impaired. The Directors have
adopted this view as the underlying exploration assets of these companies are unlikely to yield future economic
benefits. All intercompany loans are interest free and repayable on demand. The loans are classified as non-
current assets of the Company as there is there is no expectation of recovery at this time.
Further details of the transactions in the year are shown within related parties disclosure note 21.
12.
TRADE AND OTHER RECEIVABLES
Other receivables
VAT
Prepayments and accrued income
13.
DERIVATIVE FINANCIAL ASSETS
Group
2014
£
992
17,846
23,607
2015
£
2,204
15,716
64,410
Company
2015
2014
£
-
£
-
9,692
64,410
15,405
23,607
82,330
42,445
74,102
39,012
In August 2014, as part of a two stage subscription to raise, in aggregate, £1.738 million (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.
56
Beowulf Mining plc Annual Report 2015
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 £1 million 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.
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.
14.
CASH AND CASH EQUIVALENTS
Group
2015
£
2014
£
Company
2015
£
2014
£
Bank accounts
352,914
186,889
349,013
165,398
352,914
186,889
349,013
165,398
15.
NON-CONTROLLING INTERESTS
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:
Administrative expenses
Impairment of intangibles
2015
£
(2,395)
(838,493)
2014
£
(2,485)
-
Loss after tax
(840,888)
(2,485)
Loss allocated to NCI
Other comprehensive income allocated to NCI
(292,208)
4,613
(864)
(6,475)
Total comprehensive income allocated to NCI
(287,595)
(7,339)
Non-current assets
Current assets
Current liabilities
-
9,405
829,786
2,067
(465,408)
(460,245)
Net (liabilities)/assets
(456,003)
371,608
57
56
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
16.
SHARE CAPITAL
Allotted, called up
and fully paid
2015
2014
Number
£
Number
£
At 1 January
345,259,849
3,452,598
282,827,365
2,828,273
Issued during the year
85,053,975
850,540
62,432,484
624,325
At 31 December
430,313,824
4,303,138
345,259,849
3,452,598
The par value of all Ordinary Shares in issue is £0.01.
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 2015
In March 2015, the Company raised £350,000 before fees and expenses by way of a subscription of
29,166,666 new ordinary shares of 1p each at a premium of 0.2p per share. This was fully paid in cash.
In June 2015, the Company issued 2,035,457 new ordinary shares of 1p each at a premium of 1.25p per
share in accordance with a salary sacrifice arrangement with Directors. The total value of these shares was
£45,798.
In July 2015, the Company raised £650,000 before fees and expenses by way of a subscription of 52,000,000
new ordinary shares of 1p each at a premium of 0.25p per share. This was fully paid in cash.
In July 2015, the Company issued 617,284 ordinary shares of 1p at a premium of 1.025p to its joint broker in
lieu of their broker fees for six months.
In October 2015, the Company received notification from its joint broker that it wanted to exercise 617,284
warrants at an exercise price of 2.025p for which the Company received proceeds of £12,500 and issued
617,284 new ordinary shares.
In December 2015, the Company received notification from its joint broker that it wanted to exercise 617,284
warrants at an exercise price of 2.025p for which the Company received proceeds of £12,500 and issued
617,284 new ordinary shares.
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.
58
Beowulf Mining plc Annual Report 2015
17.
SHARE-BASED PAYMENTS
Reconciliation of outstanding share options
The number and weighted average exercise prices of share options are as follows:
Weighted
average
exercise
price
2015
27.253p
1.660p
24.498p
Number of
options
2015
5,054,222
17,000,000
(2,024,222)
Weighted
average
exercise
price
2014
27.253p
4.000p
-
Number of
options
2014
4,054,222
1,000,000
-
Outstanding at 1 January
Granted during the year
Lapsed during the year
Outstanding at 31 December
4.649p
20,030,000
22.652p
5,054,222
Exercisable at 31 December
8.544p
8,696,667
27.253p
4,054,222
During the year 17,000,000 (2014: 1,000,000) options were granted to acquire ordinary shares at an exercise
price of 1.66p per share. The options have vesting period of one third vesting immediately, one third on the first
anniversary and one third on the second anniversary.
The options outstanding as at 31 December 2015 have an exercise price in the range of 1.66p to 30.00p
(2014: 4.00p to 45.00p) and a weighted average remaining contractual life of 4.14 years (2014: 2.37 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
0.708p
1.25p
1.66p
170.90%
5 years
1.58%
The expected volatility was determined by reviewing the actual volatility of the Company’s share price in the five
years preceding the date of granting the option.
There is an equity-settled share-based payments expense for the options of £63,375 (2014: £1,558) for the
year.
The fair value of options granted in 2014 and vesting in 2015 were as follows:
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%
58
The expected volatility was determined by reviewing the actual volatility of the Company’s share price in the five
years preceding the date of granting the option.
59
Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
Reconciliation of outstanding share warrants
Outstanding at 1 January
Granted during the year
Exercised during the year
Outstanding and Exercisable at 31 December 2015
Weighted
average
exercise
price
2015
2.025p
2.025p
Number of
Warrants
2015
-
1,234,568
(1,234,568)
-
During the year warrants were issued to Beaufort Securities Limited, the Company’s joint broker, in accordance
with their letter of engagement. No expense has been recognised with respect to these warrants as warrants
were issued and exercised immediately. The fair value of the warrants was £25,000.
18.
RESERVES
The following is a description of each of the reserve accounts that comprise equity shareholders’ funds:
Share capital
Share premium
Revaluation reserve
Capital contribution reserve
Share based payments reserve
Translation reserve
Accumulated losses
19.
TRADE AND OTHER PAYABLES
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.
Gains/losses arising on the revaluation of the Group’s listed investments.
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.
Group
2015
£
2014
£
Company
2015
£
2014
£
Current:
Trade payables
Amounts owed to participating
interests re Ballek Joint Venture
Social security and other taxes
Other payables
Accruals and deferred income
85,520
173,686
21,773
96,123
9,658
7,989
5,081
109,113
9,658
11,608
40,594
54,552
-
6,080
933
70,280
-
7,716
29,642
44,017
217,361
290,098
99,066
117,498
60
Beowulf Mining plc Annual Report 2015
20.
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 hold the following financial instruments:
Group
Company
Fair value
Through
profit
or loss
At 31 December 2015
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans to group undertakings
Other financial assets
Financial liabilities
Trade and other payables
£
-
-
-
-
-
-
Held at
amortised
cost
£
Fair value
through
Held at
profit amortised
Total
or loss
£
cost
£
Total
£
349,013
349,013
64,410
64,410
£
-
-
352,914
352,914
82,330
82,330
-
-
- 7,065,318 7,065,318
51,938
51,938
-
2,784
2,784
487,182
487,182
- 7,481,525 7,481,525
209,473
209,473
-
92,986
92,986
Group
Company
Fair value
Fair value
through
Held at
profit
amortised
through
Held at
profit amortised
cost
£
Total
And loss
£
and loss
At 31 December 2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans to group undertakings
£
-
-
-
Derivative financial assets 150,000
cost
£
Total
£
165,398
165,398
23,607
23,607
£
-
-
186,889
186,889
174,599
174,599
-
-
-
- 7,484,210 7,484,210
150,000
150,000
-
150,000
Other financial assets
-
53,262
53,262
-
2,784
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
60
61
Beowulf Mining plc Annual Report 2015
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 Krona and Sterling.
The Group’s and Company’s net exposure to foreign currency risk at the reporting date is as follows:
Group
Company
2015
£
2014
£
Net foreign currency financial
(liabilities)/assets
Swedish Krona
(86,332)
(72,634)
Total net exposure
(86,332)
(72,634)
2015
£
5,656
5,656
2014
£
917
917
Sensitivity analysis
A 10 per cent strengthening of sterling against the Swedish Krona at 31 December 2015 would have increased/
(decreased) equity and profit or loss by the amounts shown below:
Group
Swedish Krona
Company
Swedish Krona
Profit or loss
Equity
2014
£
7,263
2015
£
2014
£
8,633
7,263
Profit or loss
Equity
2014
£
(92)
2015
£
(566)
2014
£
(92)
2015
£
8,633
2015
£
(566)
A 10 per cent weakening of sterling against the Swedish Krona at 31 December 2015 would have an equal but
opposite effect on the amounts shown above.
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Beowulf Mining plc Annual Report 2015
ii) Commodity Price Risk
The principal activity of the Group is the exploration for iron ore in Sweden and graphite in Finland, and the
principal market risk facing the Group is an adverse movement in the price of such commodities/industrial
minerals. Any long term adverse movement in market prices would affect the commercial viability of the Group’s
various projects.
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 (2014 only),
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. In the financial year ended 31 December 15, the parent company impaired loans to
subsidiaries of £787,395, representing the total loaned to Norbotten Mining AB, Wayland Copper AB and
Wayland Copper Limited, further details are provided in Note 21.
2015
£
2014
£
Jokkmokk Iron Mines AB
Norrbotten Mining AB
Wayland Copper Limited and its subsidiary Wayland Sweden AB
7,065,318
-
-
6,699,971
334,776
449,463
7,065,318
7,484,210
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:
Level 3:
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
Inputs for the asset or liability that are not based on observable market data
62
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Beowulf Mining plc Annual Report 2015
Notes To The Consolidated Financial Statements
Level 2 fair value measurement of derivative financial assets at 31 December 2015:
At 1 January 2015
Value recognised on inception (notional)
Consideration received
Loss on revaluation of derivative financial asset
2015
£
2014
£
150,000
-
(150,000)
-
1,645,610
850,000
(312,775)
(2,032,835)
-
150,000
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.
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.
21.
RELATED PARTY DISCLOSURES
Transactions with subsidiaries
During the year, cash advances of £368,502 (2014: £1,525,253) 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 £7,065,318 (2014: £6,699,971).
The company has previously transacted with Norrbotten Mining AB creating an interest free inter-group loan
which has no terms for repayment. The inter-group loan balance of £337,933 (2014: £334,776) was fully
impaired in the year, in-line with the impairment of the entity’s exploration asset.
During the year, cash advances of £Nil (2014: £307,712) were made to Wayland Copper Group, formerly a
joint venture entity which became 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 £nil as
the existing loan of £449,463 was impaired in accordance the impairments of the exploration assets of both
entities within the Wayland Copper Group (2014: £449,463).
Transactions with other related parties
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
64
2015
£
2014
£
221,692
23,500
464,368
30,000
245,192
494,368
Beowulf Mining plc Annual Report 2015
Mr Metcalf, a Director who served during the year had fees outstanding of £1,757 (2014: £nil) in relation to
fees incurred during the year.
In addition, aggregate consideration paid to related parties in respect of director’s services during the year
was £69,029 (2014: £354,348). In respect of the termination benefits, £23,500 was paid during the year,
representing the last instalment due under the termination arrangement.
22.
EVENTS AFTER THE REPORTING DATE
Acquisition of Fennoscandian
On 11 January 2016, the Company announced it had acquired 100% of the share capital of Fennoscandian,
a privately owned company based in Finland with a portfolio of four early-stage graphite exploration projects.
The total consideration for the acquisition is 2.55 million ordinary shares in the capital of the Company. The
transaction will consist of an initial payment of 2.1 million shares with a deferred payment of 450,000 shares.
In addition, two equal tranches of shares will be issued on achievement of certain performance milestones. The
total number of ordinary shares that may be issued, if all performance milestones are achieved, is 6.75 million
ordinary shares.
Share Issues post year end
On 11 February 2016, the Company issued 729,329 new ordinary shares of 1p each. This included the issue
of 450,000 new ordinary shares being the deferred payment in connection with its acquisition of Fennoscandian
and 279,329 new ordinary shares in satisfaction of the professional fees due to our joint broker.
Subscription to raise £1.25 million
On 25 February 2016, the Company announced that it had raised £1.25 million before expenses and issued
38,461,538 new ordinary shares at a price of 3.25 pence per new ordinary share.
Exercise of over-allotment option
On 2 March 2016, the Company announced that the over-allotment option announced on 25 February 2016,
was exercised on 29 March by the Company in respect of 7,692,307 new ordinary shares at a price of 3.25
pence per new ordinary share raising £0.25 million before expenses.
Appointment of Non-Executive Director
On 4 April 2016, Chris Davies joined the Company as a Non-Executive Director. Details of Chris’ background
can be found under Board of Directors.
64
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Beowulf Mining plc Annual Report 2015
Company Information
Directors
Mr B Metcalf
Mr K R Budge
Mr C Davies
Secretary
Mr L O’Donoghue
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Public Relations UK
Blytheweigh Communications Limited
4-5 Castle Court
London
EC3V 9DL
Registered Number & Office
Nominated Adviser & Broker
Public Relations Sweden
02330496 (England & Wales)
Cantor Fitzgerald Europe
Diplomat Communications
Beowulf Mining plc
201 Temple Chambers
3-7 Temple Avenue
London EC4Y 0DT
1 Churchill Place
Level 20
Canary Wharf
London
E14 5RB
Kungsgatan12-14
SE-111 35
Stockholm
Sweden
Finnish Office
Swedish Custodian Bank
Solicitors
Spearing Waite LLP
34 Pocklingtons Walk
Leicester
LE1 6BU
Website
www.beowulfmining.com
Oy Fennoscandian Resources AB
Plåtslagarevägen 35 A 1
Skandinaviska
Banken AB
SEB Securities Services
106 40 Stockholm
Sweden
UK Bank
The Royal Bank of
Scotland
Piccadilly Circus Branch
48 Haymarket
London
SW1Y 4SE
20320 Turku
Finland
Swedish Office
JokkMokk Iron Mines AB
Storgatan 36
SE - 921 31
Lycksele
Sweden
Registrars
Neville Registrars Ltd
Neville House,18 Laurel Lane
Halesowen
West Midlands
B63 3DA
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Beowulf Mining plc Annual Report 2015
Notes
66
67
Beowulf Mining plc Annual Report 2015 Notes
68
Beowulf Mining plc Annual Report 2015 68
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Beowulf Mining plc Annual Report 2015 www.beowulfmining.com