ANNUAL REPORT 2018
Beowulf projects and Scandinavian
mineral deposits/mines
Projects
Fennoscandian Resources
JIMAB
Beowulf Mining Sweden
Major nearby active mines/deposits
Base metals, large
Base metals, medium
Ferrous metals
Precious metals
Special metals
Murmansk
Suurikuusikko Au
Kiirunavaara Fe
Kallak
Malmberget Fe
Kevitsa
Merivaara
Joutsijärvi
Kemi Cr
Kristineberg
Karhunmäki
Polvela
Kylylahti
Siilinjärvi
Pho
Pitkäjärvi
(Aitolampi)
Rääpysjärvi
Tammijärvi
HELSINKI
TALINN
SAINT PETERSBURG
Garpenbergsfältet
OSLO
Zinkgruvan
STOCKHOLM
Åtvidaberg
COPENHAGEN
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Beowulf Mining plc Annual Report 2018 Contents
Company Profile
Company Strategy
Chairman’s Statement
Review of Operations and Activities
Board of Directors and Senior Management
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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1
Beowulf Mining plc Annual Report 2018 In southern Sweden, the Company has its Åtvidaberg nr 1
(“Åtvidaberg”) exploration licence, which is prospective for
polymetallic discoveries, mainly copper and zinc.
The Company has a portfolio of graphite exploration
prospects in Finland, which are controlled by its wholly
owned subsidiary Oy Fennoscandian Resources AB
(“Fennoscandian”). In August 2018, the Company
produced a Maiden Resource Estimate (“MRE”) for its
Aitolampi project and is pursuing a strategy to develop
a ‘resource footprint’ of natural flake graphite prospects
that can provide ‘security of supply’ to Finland’s emerging
lithium ion battery sector.
In November 2018, the Company made an initial
investment in Vardar Minerals Ltd (“Vardar”). Vardar is
a UK registered exploration company with a focus on
the metal endowed Balkan region and one of the first
companies to be awarded exploration licences in Kosovo.
To date, the Company has invested £1,000,000 in Vardar
and has a 37.55 per cent interest in the company. The
funds invested have been used to complete exploration
activities in 2018 and for exploring Vardar’s Mitrovica
and Viti licences in 2019.
Beowulf Mining plc Annual Report 2018
(cid:36)o(cid:78)pan(cid:90) (cid:49)rofile
Beowulf Mining plc (“Beowulf” or the “Company”) is
listed on London’s Alternative Investment Market (“AIM”)
(Ticker: BEM) and Stockholm’s Spotlight exchange (Ticker:
BEO).
The Company’s most advanced project is the Kallak
magnetite iron ore deposit located approximately 40
kilometres (“km”) west of Jokkmokk in the County of
Norrbotten, Northern Sweden, 80km southwest of
the major iron ore mining centre of Malmberget, and
approximately 120km to the southwest of LKAB’s Kiruna
iron ore mine.
The Company is currently going through the process of
obtaining an Exploitation Concession for Kallak North (the
“Exploitation Concession”). Testwork on Kallak ore has
proved that a ‘super’ high grade magnetite concentrate
can be produced, yielding over 71 per cent iron content,
with low levels of deleterious elements, including
phosphorous and sulphur, lending itself to pelletisation
and consumption in Direct Reduction Iron (“DRI”) facilities
in Europe and the Middle East, and attracting a potential
price premium.
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
powerlines is located only a few kilometres to the south
east. The nearest railway (the Inlandsbanan or ‘Inland
Railway Line’) passes approximately 40km to the east.
This railway line is connected at Gällivare with the ‘Ore
Railway Line’, used by LKAB for delivery of its iron ore
material to the Atlantic harbour at Narvik (Norway) or to
the Botnian Sea harbour at Luleå (Sweden).
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Beowulf Mining plc Annual Report 2018
The management team’s approach is to build strong working relationships and work in partnership with local
communities and key stakeholders wherever it operates, and this strategy is encapsulated in the following mission
statements:
“Visar respekt fôr alla intressenter”
“Vill samverka lokalt”
“Står fôr ansvarsfull utveckling”
“Kunnioittaa kaikkia sidosryhmiä”
“Toimia yhteistyössä paikallisten kanssa”
“Vastuullisuus”
“Showing respect to all our stakeholders”
“Becoming a local partner”
“Delivering responsible development”
2
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Beowulf Mining plc Annual Report 2018
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In November 2018, the Company invested in Vardar,
a UK registered exploration company with a focus on
the metal endowed Balkan region and one of the first
companies to be awarded exploration licences in Kosovo.
Based on the geological setting and analysis of historical
archive data, Vardar holds exploration licences for the
Mitrovica and Viti projects. Both projects are located
within the Tethyan Belt, a major orogenic metallogenic
province for gold and base metals which extends from the
Alps (Carpathians/Balkans) to Turkey, Iran and Indochina,
and contains several world class discoveries. The Tethyan
Belt of south-east Europe can be regarded as Europe’s
chief copper-gold (lead-zinc-silver) province.
Beowulf is developing a high-quality asset base, which is
diversified by geography and commodity, enabling it to
simultaneously advance several projects up the mining
value curve and create shareholder value.
Additionally, the Board of Directors continues to look
beyond the Company for value creation opportunities.
The Company’s first priority remains the award of the
Exploitation Concession for Kallak North, and thereafter
completing the Scoping Study. The introduction of a
strategic partner/investor who understands the value
of Kallak as a high-quality asset, which could be in
production within four to five years, is an ongoing
consideration, but does not preclude the Company from
continuing to add value to Kallak in the meantime.
Fennoscandian, the Company’s graphite business, is
pursuing a strategy to develop a ‘resource footprint’ of
natural flake graphite prospects that can provide ‘security
of supply’ and enable Finland to achieve its ambition of
self-sufficiency in battery manufacturing. The Company
is a recipient of Business Finland funding, which is
supporting Fennoscandian to move downstream, and
develop its know-how in processing and manufacturing
value-added graphite products.
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Beowulf Mining plc Annual Report 2018
(cid:36)(cid:73)air(cid:78)an(cid:8)(cid:84) (cid:52)tate(cid:78)ent
Dear Shareholders
Introduction
During the year, we have made good progress in
developing our various business areas.
Most importantly, delivering a Mineral Resource
Estimate (“MRE”) for our Aitolampi graphite project, and
strengthening our position as a future supplier of natural
flake graphite to Finland’s emerging battery sector.
We have also widened the Company’s geographical and
commodity reach, investing in Vardar Minerals, a base
and precious metals exploration company with assets
in Kosovo. We believe this to be an exciting opportunity
for Beowulf that allows exposure to highly prospective
exploration licences in the Tethyan Belt, and the chance to
work with a highly regarded management team.
For Kallak, it seems we are finally approaching a decision
point on our application for an Exploitation Concession.
In 2018, progress was thwarted, first by preparations for
a Swedish general election, and second by the protracted
negotiations to form a new Government. The Government
is now back to business and we are assured that our
application is being prioritised.
It is the Board’s opinion, that the Company’s Kallak
application fully satisfies the requirements of the Swedish
Mining Act and Environmental Code and should be
granted an Exploitation Concession, therefore enabling
the Company to advance the project in partnership with
all sections of the community in Jokkmokk.
Kallak
Throughout 2018 and in the months prior to the Swedish
general election, the Company continued to communicate
with the Swedish Government. Now that a new
Government has been formed, the Company believes that
an Exploitation Concession should be awarded for Kallak
North without further delay. It is now over 3.5 years since,
in October 2015, the Mining Inspectorate recommended
to the Government that the Concession be awarded.
In February 2018, the CEO participated in a meeting
in Stockholm to discuss land use and engagement
processes between Sami reindeer herding communities
and mining companies, as part of the Organisation for
Economic Cooperation and Development’s (“OECD”)
project ‘Linking Indigenous Communities with Regional
Development in Sweden’, supported by the Swedish
Government. In March 2019, the CEO attended the
seminar launching the report of the OECD’s Review.
The Company is extremely proud that it participated in
the Review and that we attended the seminar in Luleå.
We are studying the report in detail and, as we develop
our Kallak project, we will seek to find ways in which we
can implement the report’s findings in our operations and
build cooperative working relationships with Sami reindeer
herders.
So far, Kallak’s potential impact on Sami culture and
reindeer herding rather than jobs and finances has
dominated the debate. Our view, which has been shared
by past Ministers in the Government, is reindeer herding
and mining can prosper side-by-side, which has proven to
be the case across Sweden.
In October 2018, the Company re-published, in Swedish,
the Copenhagen Economics study of Kallak’s potential
economic benefits that was completed in September
2017 and drawing attention to the ‘big picture’ economic
opportunity that Kallak represents to Jokkmokk and
Norrbotten; that it is ‘not just about a mine’, with Kallak’s
direct economic influence extending to rail, port, power
and other industries, supporting mutual investments and
economic growth.
Highlights of the study include:
• A mining operation at Kallak has the potential to create
250 direct jobs and over 300 indirect jobs in Jokkmokk,
over the period that a mine is in operation
• These jobs could be sustained over a period of 25
years or more, if the Kallak South deposit is mined after
the Kallak North deposit, and further deposits can be
defined
• The Company will seek to establish a ‘Task Force’ with
Jokkmokks Kommun and local employment agencies so
that between now and the start of operations, plans are
developed and implemented to make sure as many jobs
as possible are available to people living in Jokkmokk
• These tax revenues would help to develop and sustain
public services and infrastructure in Jokkmokk, which
are at risk due to a lack of new investment and job
creation in the community, a declining population and
an ageing population
In its November 2017 statement, the County
Administrative Board (“CAB”) for the County of Norrbotten
recommended that an Exploitation Concession for
Kallak North is not awarded, but failed to use the socio-
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Chairman's Statement
economic assessment criteria set out in the Environmental
Code for applications such as ours, which put emphasis
on safeguarding investment and job creation, and giving
consideration for the municipalities’ financial health. The
CAB also contradicted its July 2015 position, when it
supported the economic case for Kallak.
Today Jokkmokk municipality struggles with a
deteriorating economy and, in March 2019, declared
a need for drastic budget cuts of SEK 28 million over
the coming two years. A major mining investment would
contribute to turning around that trend.
During the early part of 2019, the mining industry in
Sweden has been in renewed focus, with other mining
companies, the industry association SveMin and the
union IF Metall, raising the issues of uncertain permitting
processes for mining projects and unacceptable delays in
decision making by authorities.
In April 2019, I wrote to the new Minister for Enterprise
and Innovation, Mr. Ibrahim Baylan, to highlight these
issues and the problems that Beowulf has faced.
The mining industry is crucial for Sweden’s future. Mines
contribute to growth, strengthen local communities and
are an engine for development, especially in northern
Sweden. Swedish mining companies’, LKAB and Boliden
long-standing businesses prove this.
Many therefore received LKAB’s warning, in October
2018, that the ore in the Kiruna mine will be depleted
earlier than expected, with astonishment and concern. The
media spotlight put on the future of LKAB’s operations,
and with this the attention paid to the importance of
iron ore to Sweden, has highlighted the absurdity of the
Kallak North situation. Swedish authorities have found
themselves unable to permit Europe’s largest drill defined
iron ore deposit, having issued exploration permits and
watched the Company invest SEK 77 million, drill 27,895
metres (“m”), define a significant resource, and develop
the Kallak project to where it is today.
Taking all this into consideration, new Ministers, a debate
on the importance of mining and iron ore to Sweden,
and Sweden wishing to portray itself as an attractive
destination for mining investors, we have renewed
optimism that a Concession for Kallak North will be
forthcoming, without further delay.
Graphite Portfolio
During 2018, we made significant progress at
Fennoscandian.
6
Starting the year, in January 2018, we announced
metallurgical testwork results showing that graphite
concentrates from Aitolampi could meet the purity
specification of 99.95 per cent Total Graphitic Carbon
(“TGC”) required for the lithium ion battery market,
using alkaline and acid purification with some process
optimisation.
In April 2018, the Company published its involvement in
a Cooperation Network of existing and new entrant raw
materials suppliers to the emerging battery manufacturing
industry in Finland.
The Cooperation Network includes the cities of Vaasa
and Kokkola; Freeport Cobalt, the world’s largest cobalt
refinery and producer of battery chemicals; Nornickel, the
producer of world-class nickel metals and nickel chemicals
in Harjavalta; Terrafame Group, the parent company
of Terrafame, producing nickel, zinc, cobalt and copper
in Sotkamo; Keliber, which is preparing to start lithium
production in Kaustinen and Kokkola; as well as Beowulf,
the 100 per cent owner of the Aitolampi graphite deposit.
In addition, Fennoscandian was granted Euros 161,000
by Business Finland for a research project entitled “Green
Minerals - Graphite, Exploration to Products”. The project
runs from 1 January 2018 to 31 December 2019 and
has a total budget of Euros 323,750. The Company will
contribute the balance of the funding.
In May 2018, the Company presented assays for
intersected mineralisation at Aitolampi, and followed this
in August 2018, announcing a maiden MRE for Aitolampi,
highlights as follows:
• A global Indicated and Inferred Resource (JORC Code,
2012 edition) of 19.3 million tonnes (“Mt”) at 4.5
per cent TGC for 878,000 tonnes (“t”) of contained
graphite, comprising eastern and western lenses above a
3.0 per cent TGC cut-off grade
• A higher-grade Western Zone with an Indicated and
Inferred Resource of 9.8 Mt at 5.0 per cent TGC for
490,000 t of contained graphite
• An Eastern Zone with an Indicated and Inferred Resource
of 9.5 Mt at 4.1 per cent TGC for 388,000 t of
contained graphite.
Further drilling at Aitolampi has taken place in 2019,
targeting both higher-grade mineralisation and high-
priority geophysical anomalies, with full results yet to be
received.
Beowulf Mining plc Annual Report 2018 Beowulf Mining plc Annual Report 2018
Vardar Minerals (“Vardar”)
Shareholder Base
Vardar is a private UK registered exploration company
with a focus on the metal endowed Balkan region and
one of the first companies to be awarded exploration
licences in Kosovo.
On 6 November 2018, Beowulf announced that
it had acquired a 14.1 per cent interest in Vardar
for the consideration of £250,000, satisfied in cash.
The Company’s investment enabled Vardar to complete
its 2018 exploration programme.
Vardar is exploring the Mitrovica and Viti projects, both
of which are located within the Tethyan Belt, a major
orogenic metallogenic province for gold and base metals
which extends from the Alps (Carpathians/Balkans) to
Turkey, Iran and Indochina, and contains several world
class discoveries.
Stepping into a new geography, like Kosovo, only makes
sense if you are collaborating with a competent team,
which we have in Vardar’s founders, with experienced
technical and support personnel in Kosovo.
Beowulf is approximately 99 per cent owned by retail
shareholders in Sweden and the UK. The number of
Swedish shareholders on the share register continued
to grow during the year end, at 30 April 2019,
approximately 62.36 per cent of the Company was
owned by Swedish shareholders. I would like to take the
opportunity to thank our existing and new shareholders for
their continued support.
Raising Finance
Maintaining sufficient funding to continue to invest
in projects is the biggest challenge for any mining
exploration and development company, and without
investment funds we cannot create shareholder value.
During the year we undertook a single fundraising. On
17 May 2018, Beowulf completed a subscription for new
ordinary shares to raise £1.5 million before expenses.
Post year-end, the Company announced two fundraisings,
on 1 April 2019 and 16 April 2019, raising a total
amount of £1.25 million before expenses.
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Financial Performance
Staff
Loss before and after taxation attributable to the owners
of the parent at £1.37 million is higher than the loss
recorded in 2017 of £1.04 million, this increase is
largely attributable to impairment costs incurred of £0.57
million. The impairment costs assessed relate to projects
Haapamäki (£249,646), Kolari1 (£158,727) and Viistola
(£163,083).
Basic loss per share of 0.25 pence increased by 25 per
cent on last year (2017: loss per share of 0.20 pence).
Approximately £1.53 million in cash was held at the year
end (2017: £1.59 million). During the year £0.78 million
(2017: £0.94 million) was spent on exploration and
capitalised.
Corporate
On 22 February 2018, the Company announced that
it had issued 2.1 million ordinary shares of 1.0 pence
each to Rasmus Blomqvist, the Company’s Exploration
Manager, as the first tranche of deferred consideration
pursuant to the acquisition of Fennoscandian as
announced via RNS on 11 January 2016 (the “Further
Consideration Shares”). The second, and final, tranche of
2.1 million deferred consideration shares will be issued
subject to completion of a bankable feasibility study
on one of the graphite projects in the Fennoscandian
portfolio.
On 16 May 2018, the Company announced that it had
completed a subscription for new ordinary shares to raise
£1.5 million before expenses, with the funds being used
for general working capital purposes and to support
activities across Beowulf’s three main business areas,
which are graphite exploration, the Åtvidaberg exploration
license, and Kallak.
On 1 October 2018, the Company appointed SP Angel
as Nominated Adviser and Broker.
On behalf of the Board, I would like to express my sincere
thanks to our staff in Sweden and Finland for their hard
work and continued support during the past 12 months.
Outlook
2019 will be a busy year for the Company, as we push
forward with Kallak, our graphite business, and see what
Vardar can deliver.
Since January 2019, Sweden has a new Government, and
the Company believes that an Exploitation Concession
should be awarded for Kallak North without further delay.
In that scenario, the Company will restart and complete
the Scoping Study for Kallak and work with Jokkmokks
Kommun to establish the ‘Development Taskforce’,
essential for maximising the benefits that will come from a
mine at Kallak and flow to the community.
With Fennoscandian, we will continue to pursue a
strategy of developing a ‘resource footprint’ of natural
flake graphite prospects that can provide ‘security of
supply’ and enable Finland to achieve its ambition of
self-sufficiency in battery manufacturing. Fennoscandian’s
exploration team continues to evaluate and build our
knowledge for each graphite prospect in the portfolio,
and we are putting Business Finland’s funding to
good use, conducting testwork, as we seek to move
downstream, and develop know-how in processing and
manufacturing value-added graphite products.
Already in 2019, the Company has increased its
commitment to Vardar Minerals with a further £750,000
investment, satisfied in cash, taking its interest in Vardar
to 37.55 per cent. This will finance intensive exploration
programmes at the Mitrovica and Viti licences over the
course of the year and produce what we hope is exciting
newsflow for shareholders.
Göran Färm
Non-Executive Chairman
30 May 2019
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Beowulf Mining plc Annual Report 2018 Review of Operations
and Activities
SWEDEN
Permits
Beowulf, via its subsidiaries, currently holds seven exploration permits, together with one registered application for an
Exploitation Concession, as set out in the table below:
Permit Name/Minerals
Permit ID
Area (km2)
Valid From
Valid Until
Kallak nr2 (Fe)1,4
2011:97
22.19
22/06/2011
22/06/2017
Parkijaure nr3 (Fe)1,4
2011:135
4.17
11/08/2011
11/08/2017
Åtvidaberg nr1 (Pb,Zn,Cu, Ag)2
2016:51
125.32
30/05/2016
30/05/2019
Sala nr10 (Pb,Ag,Zn)2
Ågåsjiegge nr2 (Fe)1
Kallak nr1 (Fe)1,3
Parkijaure nr2 (Fe)1
Notes:
2016:64
2014:10
2006:197
2008:20
10.49
29/06/2016
29/06/2019
11.14
24/02/2014
24/02/2020
5.00
2.85
28/06/2006
28/06/2021
18/01/2008
18/01/2023
(1) held by the Company’s wholly owned subsidiary, Jokkmokk Iron Mines AB (“JIMAB”).
(2) held by the Company’s wholly owned subsidiary, Beowulf Mining Sweden AB.
(3) an application for the Exploitation Concession was lodged on 25 April 2013 (Mines Inspector Official Diary nr 559/2013) and an
updated, revised and expanded application was submitted in April 2014. On 21 September 2016, the Company submitted a letter
to the Mining Inspectorate of Sweden, revising its application boundary to encompass both the Concession Area, delineated by the
Kallak North orebody, and the activities necessary to support a modern and sustainable mining operation.
(4) JIMAB has appealed the Mining Inspectorate’s decision not to extend these licences. The legal process is ongoing.
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Beowulf Mining plc Annual Report 2018
Review of Operations
and Activities
Introduction
The Company’s most advanced project is the Kallak
magnetite iron ore deposit located approximately 40
kilometres (“km”) west of Jokkmokk in the County of
Norrbotten, Northern Sweden, 80km southwest of
the major iron ore mining centre of Malmberget, and
approximately 120km to the southwest of LKAB’s Kiruna
iron ore mine.
The Company is currently going through the process of
obtaining an Exploitation Concession for Kallak North (the
“Exploitation Concession”). Testwork on Kallak ore has
proved that a ‘super’ high grade magnetite concentrate
can be produced, yielding over 71 per cent iron content,
with low levels of deleterious elements, including
phosphorous and sulphur, lending itself to pelletisation
and consumption in Direct Reduction Iron (“DRI”) facilities
in Europe and the Middle East, and attracting a potential
price premium.
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
powerlines is located only a few kilometres to the south
east. The nearest railway (the Inlandsbanan or ‘Inland
Railway Line’) passes approximately 40km to the east.
This railway line is connected at Gällivare with the ‘Ore
Railway Line’, used by LKAB for delivery of its iron 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 3,700 metres
(“m”) 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 of 27,895m were 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:
Project
Category
Kallak North
Kallak South
Global
Notes:
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Tonnage
Mt
105.9
17.0
12.5
16.8
118.5
33.8
Fe
%
27.9
28.1
24.3
24.3
27.5
26.2
P
%
0.035
0.037
0.041
0.044
0.036
0.040
S
%
0.001
0.001
0.003
0.005
0.001
0.003
(1) The effective date of the Mineral Resource Estimate is 28 November 2014.
(2) Resources have been classified as Indicated or Inferred, following the guidelines of the JORC Code, 2012 edition.
(3) Cut-off grade of 15 per cent Fe has been used.
(4) Mineral Resources, which are not Mineral Reserves, have no demonstrated economic viability.
(5) An exploration target of 90-100 Mt at 22-30 per cent 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.
10
Beowulf Mining plc Annual Report 2018
An overview of the interpreted mineralisation is shown in the diagram below.
The mineralised area at Kallak North is approximately
1,100m long, from south to north, and, at its widest part
in the centre, is approximately 350m wide.
by systematic drilling. An exploration target of 90 Mt to
100 Mt at 22-30 per cent iron has been assigned to the
area between the southern and northern parts.
The deepest drill hole 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 at 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 southern-most 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 200m to 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
2018 Update
Throughout 2018 and in the months prior to the Swedish
general election, the Company continued to communicate
with the Swedish Government.
In February 2018, the CEO participated in a meeting in
Stockholm to discuss land use and engagement processes
between Sami reindeer herding communities and mining
companies, as part of the OECD’s project ‘Linking
Indigenous Communities with Regional Development’,
supported by the Swedish Government.
On 16 May 2018, the Company learnt that the
Administrative Court in Luleå had rejected the Jokkmokk
Iron Mine’s AB (“JIMAB”) appeal of the Mining
Inspectorate’s decision not to extend Kallak nr 2 and
Parkijaure nr 3 exploration licences, in a judgement dated
7 May 2018 and sent to JIMAB by regular post. The two
licences are not part of the Kallak Exploitation Concession
application.
11
10
Beowulf Mining plc Annual Report 2018 Review of Operations
and Activities
JIMAB applied to the Administrative Court of Appeal in
Sundsvall for its case to be heard, arguing that the court
judgement is wrong, and that JIMAB’s decision not to
invest in further exploration of these two licences, while
the Kallak application is being handled, is valid, given
the time taken and the performance of the authorities
involved. JIMAB has an approved workplan for Parkijaure
nr 3, and intends to drill, with one objective being to
identify an exploration target for iron ore mineralisation.
Proceedings are ongoing.
In July 2018, Almedalen again provided an excellent
opportunity for the CEO to engage with Swedish
Government ministers, members of the Swedish
Parliament, regional politicians from Norrbotten and its
new Governor.
In its interactions in Sweden, the Company is ensuring
that the Kallak project stays front-of-mind, that key
decision makers are cognisant of the facts, the handling
of the Company’s application by the Swedish authorities,
and principally that the Company has fully satisfied the
Swedish legal requirements to be granted an Exploitation
Concession.
On 22 October 2018, the Company re-published, in
Swedish, the Copenhagen Economics study of Kallak’s
potential economic benefits that was completed in
September 2017. It can be found on the Company’s
website:
https://beowulfmining.com/wp-content/
uploads/2018/10/Copenhagen-Economics_Presentation_
SEP17_Swedish.pdf
Post-Year end
Now that a new Government has been formed,
the Company remains positive that an Exploitation
Concession for Kallak North will be awarded, even more
so given that the Mining Inspectorate recommended to
the Government that the Concession be awarded over
three years ago in October 2015.
On 1 April 2019, Göran Färm wrote to Mr. Ibrahim
Baylan, the Minister for Enterprise and Innovation. A copy
of letter and an English translation can be found on the
Company’s website:
https://polaris.brighterir.com/public/beowulf_mining_plc/
news/rns/story/xq4on2w
Åtvidaberg nr 1 Exploration Licence
The exploration licence for Åtvidaberg nr 1 is in southern
Sweden, to the southern end of Bergslagen, one of
Europe’s oldest mining areas. Bergslagen contains one of
the world’s main volcanogenic massive sulphide (“VMS”)
districts with deposits characterised by high contents of
zinc, lead, copper, and sometimes silver and gold, the
majority of which are small deposits. Bergslagen yielded a
substantial portion of Sweden’s mineral wealth during the
1800s to 1900s, with several large mines and hundreds
of smaller mines producing copper, zinc, lead, gold,
and silver. Current operating mines in the area include
Boliden’s Garpenberg and Lundin Mining’s Zinkgruvan
mines.
Bergslagen has seen little modern exploration, yet it hosts
Bersbo, one of Sweden’s largest early copper mines, and
Zinkgruvan, Sweden’s most important zinc mine. Other
than at Zinkgruvan, exploration activity in Bergslagen
has predominantly focused on finding new outcropping
ore bodies, with some historic mining areas not being
explored since the 1900s.
Åtvidaberg represents early stage exploration, but offers
real potential for Beowulf, as signified by past discoveries
and historic mines.
12
Beowulf Mining plc Annual Report 2018
12
1313
Beowulf Mining plc Annual Report 2018 Review of Operations
and Activities
FINLAND
Finnish Exploration Permits
Beowulf, via its wholly-owned subsidiary, Fennoscandian, currently holds one exploration permit and has applied for a
further two exploration permits. The Company has relinquished permits for Viistola 1, Kolari 1 and Haapamäki 1, and
made appropriate impairments.
Permit Name/Minerals
Permit ID
Area (km2)
Valid From
Valid Until
Approved Exploration Permits
Pitkäjärvi 1
2016:0040
10.00
07/12/2016
07/12/2020
Applied for Exploration Permits
Rääpysjärvi 1
Joutsjärvi 1
2017:0104
2017:0122
7.16
5.79
Applied for 08/08/2017
Applied for 16/10/2017
Aitolampi/Pitkäjärvi – Graphite
2018 Summary
Introduction
The Aitolampi and Pitkäjärvi graphite prospects were
discovered in 2016 and are eastern extensions to the
Haapamäki prospect. Aitolampi and Pitkäjärvi are areas
of graphitic schists on a fold limb, coincidental with an
extensive electro-magnetic (“EM”) anomaly. Many of
the EM zones are obscured by glacial till, but graphite
observations in road cuttings and outcrops are also
associated with abundant EM anomalies. Haapamäki is
in eastern Finland approximately 40km southwest of the
well-established mining town of Outokumpu.
The Company made significant progress with
Fennoscandian in 2018, specifically with its Aitolampi
project, part of the Company’s 100 per cent owned
Exploration Permit, Pitkäjärvi 1. Metallurgical testwork
has demonstrated the potential to produce battery grade
graphite products and further to completing a second
drilling campaign, the Company announced a Maiden
Mineral Resource Estimate (“MRE”).
Drilling confirmed wide graphite lenses extending along
strike, at least 350m along the main conductive zone (EM
anomaly extends for 700m), and at depth.
For the two parallel higher-grade zones previously
identified, mineralisation has a strike length of at least
150m (the two parallel conductive zones extend for 300m
and 250m), and these zones seem to merge to form one
body of mineralisation.
14
Beowulf Mining plc Annual Report 2018
Metallurgical Testwork/Market Assessment
Highlights of the MRE are as follows:
Concentrates from the SGS testwork conducted in
2017 were sent to ProGraphite Gmbh (“ProGraphite”)
based in Germany. ProGraphite specialises in the
processing and evaluation of graphite materials. The
results were as follows:
• Alkaline purification produced 99.86 per cent Total
Carbon (“C(t)”) for +100-mesh concentrate and
99.82 per cent C(t) for -100-mesh concentrate.
• Results from acid purification were also promising
and reached 99.6 per cent C(t) for the +100-
mesh and 99.41 per cent C(t) for the -100-mesh
concentrate.
• The alkaline and acid purification results indicate
that, with some process optimisation, Aitolampi
concentrates may meet the purity specification of
99.95 per cent C(t) required for the lithium ion
battery market.
• Aitolampi graphite shows high crystallinity, with the
degree of graphitisation measuring approximately
98 per cent, which is almost perfect crystallinity, an
important prerequisite for high tech applications,
such as lithium ion batteries.
• Volatiles are low, which is an attractive product
attribute in many applications, including refractories,
lubricants, crucibles, and foundries.
• Specific Surface Area (“SSA”) is comparable to that
of high-quality flake graphite from China.
• Oxidation behaviour is comparable with Chinese
graphite of the same flake size, used for refractories,
and other high temperature applications.
• A global Indicated and Inferred Mineral Resource
(reported in accordance with the JORC Code (2012
edition)) of 19.3 Mt at 4.5 per cent Total Graphitic
Carbon (“TGC”) for 878,000 t of contained
graphite, reported from all material within the
eastern and western lenses which are interpreted
above a nominal 3.0 per cent TGC cut-off grade;
• A higher-grade Western Zone with an Indicated and
Inferred Mineral Resource of 9.8 Mt at 5.0 per cent
TGC for 490,000 t of contained graphite;
• An Eastern Zone with an Indicated and Inferred
Mineral Resource of 9.5 Mt at 4.1 per cent TGC for
388,000 t of contained graphite;
• Reporting above a 4.0 per cent TGC cut-off grade
based on the grade-tonnage curve for Aitolampi,
gives an Indicated and Inferred Mineral Resource of
12.8 Mt at 5.0 per cent TGC for 639,000 t; and
• The Mineral Resource was estimated by CSA Global
PTY Ltd (“CSA Global”) of Australia.
Other Developments
In April 2018, Beowulf signed a Graphite
Collaboration Agreement between Fennoscandian,
and Åbo Akademi University (“Åbo”), located in
Turku, Finland and joined a Cooperation Network of
existing and new entrant raw materials suppliers to the
emerging battery manufacturing industry in Finland.
The Cooperation Network includes the cities of Vaasa
and Kokkola; Freeport Cobalt, the world’s largest
cobalt refinery and producer of battery chemicals;
Nornickel, the producer of world-class nickel metals
and nickel chemicals in Harjavalta; Terrafame Group,
the parent company of Terrafame, producing nickel,
zinc, cobalt and copper in Sotkamo; Keliber, which is
preparing to start lithium production in Kaustinen and
Kokkola; as well as Fennoscandian.
Also, Fennoscandian was granted Euros 161,000 by
Business Finland for a research project entitled “Green
Minerals - Graphite, Exploration to Products”. The
project runs from 1 January 2018 to 31 December
2019 and has a total budget of Euros 323,750. The
Company will contribute the balance of the funding.
14
15
Beowulf Mining plc Annual Report 2018 1616
Beowulf Mining plc Annual Report 2018 The drilling programme will also generate sample
material to support baseline environmental studies for
Aitolampi, for graphite purification and spheroidization
testwork, and the further assessment of Aitolampi graphite
for battery applications as part of the Business Finland
funded BATCircle Project.
The Company’s exploration team continues to evaluate
each prospect in the Company’s portfolio, with the
objective of establishing a ‘resource footprint’ of graphite,
that could support the developing battery manufacturing
sector in Finland and satisfy the country’s ambition to be
self-sufficient in the production of battery minerals.
Post-Year End
In March 2019, the Company announced that
Fennoscandian is to receive additional funding from
Business Finland, 50 per cent contribution to a budget
of Euros 224,900, for graphite purification and
spheroidization testwork, and the further assessment
of Fennoscandian’s graphite for battery applications.
Business Finland has been granted Euro 10 million
funding for a project titled “BATCircle - the development
of a Finland-based Circular Ecosystem of Battery Metals”.
A new drilling campaign at Aitolampi also got underway,
targeting both higher-grade mineralisation and high-
priority geophysical anomalies.
The drill plan includes seven holes for an approximate
total of 1,040m. Four holes, 620m of drilling, are
planned to test potential higher-grade mineralised zones
to the south-east of drill hole AITDD18018 (completed
in 2018 and which intersected 92.5m at 6.19 per cent
TGC. The three remaining holes will target high-priority
geophysical anomalies untested by previous drilling.
16
16
17
Beowulf Mining plc Annual Report 2018 Review of Operations
and Activities
KOSOVO
Mitrovica
Vardar Minerals Limited
During the year, Beowulf announced an initial
investment of 14 per cent in Vardar Minerals Limited
(“Vardar”), a UK registered private exploration
company with interest in the Balkans, for the
consideration of £250,000, satisfied in cash. The
Company’s investment enabled Vardar to complete its
2018 exploration programme, including geological
mapping, specifically hydrothermal alteration, the
presence of which is an indicator of possible porphyry-
related metal deposition, and reconnaissance rock
chip and geochemical soil sampling.
Overview
Based on the geological setting and analysis of
historical archive data, Vardar has previously identified
the Mitrovica and Viti projects as attractive. Both
projects are located within the Tethyan Belt, a major
orogenic metallogenic province for gold and base
metals which extends from the Alps (Carpathians/
Balkans) to Turkey, Iran and Indochina, and contains
several world class discoveries.
The Tethyan Belt of south-east Europe can be regarded
as Europe’s chief copper-gold (lead-zinc-silver)
province. Mitrovica and Viti occur within calc-alkaline
magmatic arc(s) which developed during the closure
of the Neotethys Ocean, primarily targeting epithermal
gold, lead-zinc-silver replacement deposits and
porphyry related copper-gold mineralisation.
The lack of modern-day exploration in the Balkans
presents a real opportunity for new discoveries, such
as the Kiseljak porphyry copper deposit in the Lece
magmatic complex in neighbouring Serbia, 459 Mt at
0.22 per cent copper, 0.2 grammes per tonne (“g/t”)
gold, acquired by Dundee Precious Metals in February
2016.
The Mitrovica project is situated in northern Kosovo,
covers 55 square kilometres (“km2”), and lies
immediately to the west and northwest of the Stan Terg
lead-zinc-silver mine which dates back to the 1930’s
(34 Mt at 3.45 per cent lead, 2.30 per cent zinc and
80 g/t silver).
The licence area exhibits lead, zinc, silver and copper
anomalies associated with iron stockworks and
gossans, anomalous gold and silver associated with
advanced argillic alteration zones, and alteration
typical of epithermal gold systems. The project
is prospective for both high sulphidation gold
mineralisation and vein/replacement related base
metal targets.
On a regional scale, the area is located within the late
Alpine Tethyan Orogenic Belt and more specifically
within the External Vardar Sub-zone of the Vardar
Zone. The basement is comprised of ophiolites
and a metasedimentary mélange affected by a
polymetamorphic overprint (not exceeding greenschist
facies conditions). A series of felsic to intermediate sub-
volcanic and pyroclastic rocks of Oligocene to Early
Miocene age represents the cover sequence.
In early 2018, mapping identified an extensive lead-
zinc mineralised gossan, Wolf Mountain target, in the
central part of Mitrovica, with associated hydrothermal
breccias and silicification on the central-eastern margin
of the licence area, along with copper mineralisation
associated with trachyte dykes intruding into basement
rocks.
In November 2018, fieldwork continued with
trenching/channel sampling, geological mapping
and ground magnetic geophysical surveys over Wolf
Mountain. In addition, detailed geological mapping
and sampling were carried out in the Mitrovica South
and Majdan Peak areas in the southern part of the
licence area, targeting potential porphyry copper and
epithermal gold mineralisation.
18
Beowulf Mining plc Annual Report 2018 Beowulf Mining plc Annual Report 2018
Highlights
The Wolf Mountain lead-zinc target (Vllahi Zone) forms a
prominent outcropping gossan, with strike length of more
than 4km and width ranging from approximately 20m to
greater than 300m. The target is located approximately
4km from the Stan Terg mine, highlighting the potential
for significant lead-zinc mineralisation;
• All assays from the exposed gossan zone have
returned anomalous metal contents averaging 0.71
per cent zinc and 0.73 per cent lead;
Discovery of potential porphyry-epithermal related
mineralisation in the southern part of the Mitrovica licence
including:
• A large hydrothermal breccia associated with
trachyte sills with significant metal anomalies,
including consistent zinc values in excess of 1.0 per
cent, along with elevated gold of 1.25 g/t and silver
of 57 g/t;
• Copper mineralisation, up to 3500 ppm, associated
with altered trachyte dykes; and
• Channel samples show continuity of mineralisation
and zones of intense silicification and hydrothermal
breccias;
• Significant gold recoveries from advanced argillic
samples (up to 7.0 g/t) on Majdan peak in the
south-eastern portion of the licence area.
• Highest combined lead-zinc assays from channel
sampling returned 2.8 per cent over 26m. Other
samples returned lead-zinc assays of 2.34 per cent
over 27m, 1.4 per cent over 11m and 0.6 per cent
over 22m;
• Elevated silver content averaging 6.0 g/t across the
mineralised zone, with individual samples returning
up to 93 g/t; and
• Elevated nickel content averaging of 0.15 per cent
across the mineralised zone.
18
1(cid:26)
Review of Operations
and Activities
Wolf Mountain
Mitrovica South
The Wolf Mountain target forms a prominent outcropping
feature, with strike length of more than 4km and width
ranging from almost 20m to greater than 300m. It
represents a hydrothermal breccia zone with stockworks,
which outcrop as a gossan, with iron-manganese oxides
and hydroxides. The peripheral parts of the zone are
characterised by intense silicification corresponding to
fold structures which control the development of the
hydrothermal breccia.
The mineralisation is structurally controlled, and for most
of the target mineralisation is developed in the basement,
broadly following a tectonic contact between ultramafic
rocks and phyllite, with the bulk of mineralisation
developed within the ultramafic units. Mineralisation
is likely vein/replacement-type related to Oligocene
magmatic activity responsible for the hydrothermal systems
mapped in the southern portion of the licence area.
202 samples have been analysed over the extent of the
area, including 118 composite channel samples, and rock
grab samples that were cut along traverses perpendicular
to the strike of the outcropping gossan. All samples were
analysed using 48 element ICP-MS with gold fire assay
ICP-AES at ALS Global (“ALS”) in Serbia and Ireland.
Detailed alteration mapping and sampling have been
carried out across the southern half of the licence area.
Of interest is a sub-volcanic sill like body of trachytic
composition associated with a hydrothermal breccia zone
and with abundant iron oxides. Several samples collected
from the breccia zone returned significant metal anomalies
including consistent zinc values in excess of 1.0 per cent,
along with gold (1.25 g/t) and silver (57 g/t) anomalies.
One kilometre south of the above target, interpretation
of magnetic airborne geophysical data has led to the
identification of a prominent circular magnetic anomaly
with magnetised and demagnetised concentric rings,
displaying a typical signature of porphyry targets.
Geological mapping in this area has identified
hydrothermal breccias which have returned significant
copper assays in grab samples (0.21 per cent and 0.35
per cent). The presence of the magnetic anomaly and
associated copper mineralisation is of interest as it may
suggest the potential for porphyry style mineralisation at a
deeper structural level in basement rocks.
Higher up in the system, at Madjan Hill, also in the
southern part of the licence area, several historic gold
workings/pits have been discovered, thought to be of
20
20
Beowulf Mining plc Annual Report 2018 Saxon or Roman age. Rock chip sampling on the slopes
of the hill, in an area of advanced argillic alteration,
has returned significant gold anomalies of up to 7.0 g/t,
suggesting potential for epithermal gold mineralisation.
Viti
The Viti project is situated in south-eastern Kosovo and
is made up of three adjacent licences covering 213
km2. The licences cover an interpreted circular intrusive
from regional airborne magnetic data. There is evidence
of intense alteration typically associated with porphyry
systems, with several copper occurrences and stream
sample anomalies in proximity to, and within the project
area. In addition, Viti is prospective for lithium-boron
mineralisation, with a geological setting like Rio Tinto’s
Jadar deposit in Serbia.
In the south-east of the project area, reconnaissance
mapping identified several zones of intense argillic
alteration, hydrothermal breccias and iron oxide
stockworks. The interpretation of regional magnetic
data suggests that alteration is located on the margin
of a large caldera structure, which supports the case for
porphyry mineralisation. Recent geological mapping has
identified prominent silicified gossans, breccias and iron
oxide stockworks with intense argillic alteration, often
associated with trachyte dykes.
The target area includes a gossanous zone, approximately
300m by 200m, surrounded by a zone of intense argillic
alteration, approximately 1.5km in diameter. Sampling
over the gossan has returned encouraging results, with
anomalous copper (0.99 per cent) and gold (0.16 g/t),
along with elevated molybdenum and zinc, potentially
related to the deeper part of an uplifted porphyry system
with associated phyllic alteration.
Post-Year End
In April 2019, Beowulf announced a follow-on investment
in Vardar of £750,000, increasing Beowulf’s stake in
the company from 14.1 per cent to 37.55 per cent. The
investment will fund Vardar’s 2019 Kosovan exploration
programme, diamond drilling, geophysical surveys
and other activities, at the Mitrovica project, targeting
lead-zinc-silver, copper and gold mineralisation, and
at the Viti project, targeting copper-gold, lithium-boron
mineralisation.
20
20
21
21
Beowulf Mining plc Annual Report 2018 Board of Directors
Göran Färm - Non-Executive Chairman
Mr Färm joined Beowulf as Non-Executive Chairman in October 2017.
Göran, born in 1949, was an elected Member of European Parliament (“MEP”) from 1999 to 2004 and, then again,
from 2007 to 2014. Göran was also Deputy Mayor of Norrköping during the 1990s.
Göran has experience in industrial policy as a former Head of the Swedish Trade Union Confederation’s unit for
economic policy and investigation, as head of business issues in the City of Norrköping and as former MEP of the
Committee of Industry, Research, and Energy of the European Parliament.
Göran has extensive experience in communications as a former journalist, Director of Information at Riksbyggen,
and as a public affairs advisor.
In 2015, Göran was elected as Chairman of Kommuninvest, a public development bank owned by Swedish
municipalities, cities, and regions.
Kurt Budge - Chief Executive Officer
MBA MEng ARSM
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 merger and acquisition 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 (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 - Non-Executive Director
BSc Hons Geology, MSc DIC Mineral Exploration
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. He was Manager for the exploration and development of a graphite
deposit in Tanzania and has been involved with due diligence studies on graphite deposits in East Africa and Sri Lanka.
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$135 million.
22
Beowulf Mining plc Annual Report 2018 Senior Management
Liam O’Donoghue - Company Secretary
Mr O’Donoghue is a qualified corporate lawyer and director of the AIM specialist advisory and administration firm, ONE
Advisory Group Limited.
Rasmus Blomqvist - Exploration Manager
Mr. Blomqvist, the founder of Fennoscandian, was appointed Exploration Manager in January 2016. Mr. Blomqvist has
been working in exploration and mining geology for over 11 years and holds an MSc in Geology and Mineralogy from
Åbo Akademi University, Turku Finland.
Since 2012, Mr. Blomqvist has been exploring for flake graphite within the Fennoscandian shield and is one of the most
experienced graphite geologists in the Nordic region. Prior to Fennoscandian, Mr. Blomqvist was Chief Geologist for
Nussir ASA, managing its exploration team and achieving significant exploration success for the company.
Prior to Nussir, Mr. Blomqvist worked as an independent consultant for several international mining companies including
Mawson Resources, Tasman Metals and Agnico Eagle and has experience in graphite, gold, base metals and iron ore,
within the Nordic region.
Mr Blomqvist is a member of the Australasian Institute of Mining and Metallurgy (“AusIMM”).
22
23
23
Beowulf Mining plc Annual Report 2018 Strategic Report
The Directors present their strategic report for the year
ended 31 December 2018.
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 and Kosovo.
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 £1,373,936 (2017: Loss of £1,038,248). A
comprehensive review of the business is given under the
Chairman’s Statement and Review of Operations and
Activities.
2424
24
Beowulf Mining plc Annual Report 2018 PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties facing the Group are detailed below
Description
Risk
Risk rating
pre-
mitigation
Mitigating action
Not
obtaining an
Exploitation
Concession
at Kallak
North
The Company
does not meet
the requirements
of the prescribed
process for an
Exploitation
Concession
HIGH
In July 2015, the CAB supported the Company’s
application, and in October 2015 the Mining
Inspectorate recommended that the concession
be awarded. In its November 2017 statement,
the CAB recommended that a Concession is not
awarded, but failed to use the socio-economic
assessment criteria set out in the Environmental
Code for applications such as ours, which put
emphasis on safeguarding investment and
job creation, and giving consideration for the
municipalities’ financial health. The CAB also
contradicted its July 2015 position, when it
supported the economic case for Kallak. It is
the Board’s opinion that the Company has
fully met the requirements of the prescribed
application process, Swedish Minerals Act and
Environmental Code. The Company has the
support of the Mayor of Jokkmokk, landowners’
association and local entrepreneurs who have
lobbied the Government for the award of the
Concession. Kallak would have a positive
transformational economic effect on Jokkmokk,
the importance of which the Government has
acknowledged.
Risk
rating
post-
mitigation
MEDIUM
Revocation of
licences
Unable
to raise
sufficient
funds
Licences are
subject to
conditions which,
if not satisfied,
may lead to the
revocation of the
licence
Unable to raise
sufficient funds to
invest in project
portfolio and
cover corporate
costs
MEDIUM
The Company diligently manages its licences to
ensure full compliance. A monthly status report is
generated for monitoring purposes and action.
LOW
MEDIUM
Effectively communicate to the market. Raise
capital in a timely manner, as record of
accomplishment shows. Ensure forecasting is
accurate, and expenditure controls are in place
to optimise cash resources.
MEDIUM
24
2424
25
Beowulf Mining plc Annual Report 2018 Beowulf Mining plc Annual Report 2018
(cid:52)trategic Report
Long term
adverse
changes in
Commodity
prices
Prices for iron
ore, graphite, and
other commodities
may affect the
viability of the
Company’s
projects
MEDIUM
The Company identifies and invests in high
quality projects that are attractive to the market.
The Company will manage capital and operating
expenditures to maximise shareholder returns.
MEDIUM
Not
discovering
an economic
mineral
deposit
Very few projects
go through to be
developed into
mines
HIGH
Early studies and testwork give confidence that
the Company is allocating capital appropriately.
In Kallak and Aitolampi we have potential
quality resources, benefitted by excellent local
infrastructure, and established low-risk mining
countries.
MEDIUM
TO LOW
Revocation of
licences
Licences are
subject to
conditions which,
if not satisfied,
may lead to the
revocation of the
licence
MEDIUM
The Company diligently manages its licences to
ensure full compliance. A monthly status report is
generated for monitoring purposes and action.
LOW
2(cid:23)
Long term
adverse
changes in
Commodity
prices
Prices for iron
ore, graphite, and
other commodities
may affect the
viability of the
Company’s
projects
MEDIUM
The Company identifies and invests in high
quality projects that are attractive to the market.
The Company will manage capital and operating
expenditures to maximise shareholder returns.
MEDIUM
Not
discovering
an economic
mineral
deposit
Very few projects
go through to be
developed into
mines
HIGH
Early studies and testwork give confidence that
the Company is allocating capital appropriately.
In Kallak and Aitolampi we have potential
quality resources, benefitted by excellent local
infrastructure, and established low-risk mining
countries.
MEDIUM
TO LOW
Revocation of
licences
Licences are
subject to
conditions which,
if not satisfied,
may lead to the
revocation of the
licence
The Company diligently manages its licences to
MEDIUM
ensure full compliance. A monthly status report is
LOW
generated for monitoring purposes and action.
PERFORMANCE MEASUREMENT
The ongoing performance of the Company is managed and monitored using a number of key financial and non-
financial indicators (“KPIs”) on a monthly basis:
Financial:
i. Administration Expenses
Overheads are managed versus budget and forecast on a monthly basis. The Company has a history of tightly
managing its expenses. The underlying group overhead expenses decreased in the year to £794,851 (2017:
£861,669), which was comparable to managements overall forecasts for the year.
ii. Cash position
Cash is vital for an exploration company and it must be managed accordingly. Monthly, the Company, analyses
the expenditure of each subsidiary. It also manages monthly cash flow for the Group versus budget and forecast.
The financial strategy is to ensure that wherever possible there are sufficient funds to cover corporate overheads
and exploration expenditure for a 12-month period. The Group demonstrates a commitment to financial stability as
shown by a year end cash position of £1.53 million (2017: £1.59 million) and fundraises subsequent to year end
that have raised £1.25 million before expenses.
iii. Exploration expenditure by project
The Company controls its exploration spend by project versus budget and in relation to its available cash resources.
If the results of exploration do not meet expectations, then budgeted activities are re-evaluated or even cancelled.
Evaluation of early stage projects is approached in a cost-effective way. The Group determines whether there are any
indicators of impairment of its exploration assets on an annual basis. This approach is best evidenced through the
decision to impair several early stage projects in the current year, in order to preserve resources.
Non-financial:
iv. Licence renewal compliance
It is important from a risk management perspective that the Company monitors the expiry dates of its exploration
permits. This is managed internally for its Finnish graphite permits while, in Sweden, the Company uses an external
service provider to report on the status of its permits and assist with renewal applications.
ON BEHALF OF THE BOARD:
Mr K Budge
Director
30 May 2019
26
27
Beowulf Mining plc Annual Report 2018
Report of the Directors
The Directors present their report, together with the
audited financial statements of the Group, for the year
ended 31 December 2018.
DIRECTORS
Since 1 January 2018 the following Directors have held
office:
Mr K R Budge
Mr Christopher Davies
Mr G Färm
DIVIDENDS
No dividends will be distributed for the year ended
31 December 2018 (2017: £nil).
GOING CONCERN
At 31 December 2018, the Group had a cash balance of
£1.53 million (2017: £1.59 million)
Management have prepared cash flow forecasts which
indicate that although there is no immediate funding
requirement, the Group will need to raise further funds
in the next 12 months for corporate overheads and
to advance its projects. Subsequent to year end, the
Company has raised £1.25 million (before expenses)
cumulatively through two successful subscriptions.
The Directors are confident they are taking all necessary
steps to ensure that the required finance will be available
and they have successfully raised equity finance in the
past. They have therefore concluded that it is appropriate
to prepare the financial statements on a going concern
basis. However, while they are confident of being able
to raise the new funds as they are required, there are
currently no agreements in place, and there can be no
certainty that they will be successful in raising the required
funds within the appropriate timeframe.
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.
28
Beowulf Mining plc Annual Report 2018
SUBSTANTIAL SHAREHOLDINGS
The Directors are aware of the following interests, directly or indirectly, in three per cent or more of the Group’s ordinary
shares on 31 December 2018:
Shareholders
Shares
Interactive Investor Services Nominees Limited – A/C SMKTNOMS 30,968,094
Hargreaves Lansdown (Nominees) Limited
HSDL (Nominees) Limited
24,003,244
23,467,074
Interactive Investor Services Nominees Limited – A/C SMKTISAS
18,353,009
%
5.47
4.24
4.14
3.24
28
29
29
Beowulf Mining plc Annual Report 2018 Report of the 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
2018, shareholders gave authority for the Directors to
allot equity securities for cash up to an aggregate nominal
value of £1,340,768 (2017: £1,314,268).
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 23 to the financial statements.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES
Financial risk management policies and objectives for
capital management are provided within Note 19 to the
financial statements.
FUTURE DEVELOPMENTS WITHIN THE BUSINESS
Beowulf’s strategy is to build a sustainable and innovative
mining company, which creates shareholder value by
developing mining assets, delivering production and
generating cash flow, and in so doing meets society’s
ongoing need for minerals, metals and economic
prosperity.
Beowulf is developing a high-quality asset base, which is
diversified by geography and commodity, enabling it to
simultaneously advance several projects up the mining
value curve and create shareholder value.
Additionally, the Board of Directors continues to look
beyond the Company for value creation opportunities.
The Company’s first priority remains the award of the
Exploitation Concession for Kallak North, and thereafter
completing the Scoping Study. The introduction of a
strategic partner/investor who understands the value
of Kallak as a high-quality asset, which could be in
30
production within four to five years, is an ongoing
consideration, but does not preclude the Company from
continuing to add value to Kallak in the meantime.
Fennoscandian, the Company’s graphite business, is
pursuing a strategy to develop a ‘resource footprint’ of
natural flake graphite prospects that can provide ‘security
of supply’ and enable Finland to achieve its ambition of
self-sufficiency in battery manufacturing. The Company
is a recipient of Business Finland funding, which is
supporting Fennoscandian to move downstream, and
develop its know-how in processing and manufacturing
value-added graphite products.
The Company’s investment in Vardar Minerals provides
diversification, in geography and commodity exposure, to
prospective exploration opportunities in the Balkan region
in Kosovo. Mitrovica and Viti projects are both located
within the Tethyan Belt, a major orogenic metallogenic
province for gold and base metals which extends from the
Alps (Carpathians/Balkans) to Turkey, Iran and Indochina,
and contains several world class discoveries. The Tethyan
Belt of south-east Europe can be regarded as Europe’s
chief copper-gold (lead-zinc-silver) province.
The Company’s investment priorities across its portfolio
remain subject to funding being available.
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.
WEBSITE PUBLICATION
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.
Beowulf Mining plc Annual Report 2018 DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the strategic
report, annual report and the financial statements in
accordance with applicable laws 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 AIM and the rules
of the Spotlight Exchange in Sweden.
In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance
with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in
the financial statements; and
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
they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and
to establish that the Group’s auditors are aware of that
information.
AUDITOR
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
11.00 a.m. (BST) on 28 June 2019 at the offices of
BDO, 55 Baker Street, W1U 7EU, London. The Notice of
Meeting including details of the proposed resolutions will
be posted to shareholders in due course and will appear
on the Company’s website.
ON BEHALF OF THE BOARD:
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
Mr K Budge
Director
30 May 2019
30
31
Beowulf Mining plc Annual Report 2018 Remuneration Report
The Directors have chosen to voluntarily present an
audited remuneration report although is not required by
the Companies Act 2006. Details of the Remuneration
Committee’s composition and responsibilities are set out
in the Corporate Governance Report on page 34 and its
terms of reference can be found on the Group’s website:
beowulfmining.com
duties. Mr Davies has a one month notice period under
his letter of appointment.
Mr Färm was appointed as Non-Executive Chairman
on 30 October 2017. Under Mr Färm’s letter of
appointment, he is paid an equivalent fee in Swedish
Krona of £33,975 per annum. Mr Färm has a one month
notice period under his letter of appointment.
Executive Directors’ terms of engagement
Mr Budge is the sole Executive Director and Chief
Executive Officer. His annual salary was increased from
£130,000 to £138,000 on 27 December 2018.
Mr Budge has a notice period of 12 months.
Non-Executive Directors’ terms of engagement
The Non-Executive Directors have specific terms of
engagement under a letter of appointment. Their
remuneration is determined by the Board. In the event
that a Non-Executive Director undertakes additional
assignments or work for the Company, this is covered
under a separate consultancy agreement.
Mr Davies annual fee was increased from £25,000
to £30,000 per annum. Mr Davies has a consultancy
agreement with the Company for the provision of
exploration advice over and above his Non-Executive
Name
Position
Mr B Metcalf3 Non-Executive Chairman
Salary
& Fees1
£
-
Mr K R Budge Chief Executive Officer
130,667
Indemnity Agreements
Pursuant to the Companies Act 2006 and the Company’s
articles of association, the Board may exercise the powers
of the Company to indemnify its Directors against certain
liabilities, and to provide its Directors with funds to meet
expenditure incurred, or to be incurred, in defending
certain legal proceedings or in connection with certain
applications to the court. In exercise of that power, and by
resolution of the Board on 26 July 2016, the Company
has agreed to enter into this Deed of Indemnity with each
Director.
Aggregate Directors’ Remuneration
The remuneration paid to the Directors in accordance with
their agreements, during the years ended 31 December
2018 and 31 December 2017, was as follows:
Share- Benefits4
based
Payments2
£
£
Pension5
2018
Total
2017
Total
£
-
£
£
- 439,682
-
-
-
720
13,000 144,387 151,750
-
-
- 140,561 133,669
-
27,351
4,674
Mr C Davies Non-Executive Director
31,417
109,144
Mr G Färm
Non-Executive Chairman
27,351
-
Total
Notes:
189,435
109,144
720
13,000 312,299 729,775
(1) Does not include expenses reimbursed to the Directors.
(2) In relation to options granted in year ended 31 December
2017.
(3) Mr Metcalf retired on 30 October 2017. Remuneration
includes gain on exercise of options of £378,450 in the
year ended 31 December 2017.
(4) Personal life insurance policy
(5) Employer contributions to personal pension.
Each Director is also paid all reasonable expenses incurred wholly, necessarily and exclusively in the proper performance of his duties.
32
Beowulf Mining plc Annual Report 2018
Beowulf Mining plc Annual Report 2018
The beneficial and other interests of the Directors holding office on 31 December 2018 in the issued share capital of the
Company were as follows:
ORDINARY SHARES
31 December 2018
31 December 2017
Mr K R Budge
2,249,759
2,249,759
As 31 December 2018, 2,250,000 options have not yet vested.
ORDINARY SHARES
UNDER OPTION
NUMBER
EXERCISE PRICE
EXPIRY DATE
Mr K R Budge
Mr K R Budge
Mr C Davies
500,000
9,000,000
2,500,000
4 pence
9 October 2019
1.66 pence
17 July 2020
12 pence
26 January 2022
ON BEHALF OF THE REMUNERATION COMMITTEE
Göran Färm
Non-Executive Chairman
30 May 2019
(cid:20)2
(cid:20)(cid:20)
Corporate Governance Report
Corporate Governance Statement
It is the responsibility as Chairman of the Board of
Directors of the Company to ensure that the Group
has both sound corporate governance and an effective
Board. The Chairman’s principal responsibilities are to
ensure that the Group and the Board are acting in the
best interests of shareholders, and by making sure that
the Board discharges its responsibilities appropriately. This
includes creating the right Board dynamic and ensuring
that all important matters, in particular strategic decisions,
receive adequate time and attention at Board meetings.
The Company formally adopted the Quoted Companies
Alliance Corporate Governance (“QCA Code”)
in September 2018, in line with the London Stock
Exchange’s changes to the AIM Rules earlier in the
year. This report follows the QCA Code guidelines and
explains how we have applied the guidance. The Board
considers that the Group complies with the QCA Code
so far as it is practicable having regard to the size, nature
and current stage of development of the Company.
The Board recognises that the Company does not fully
comply with the 10 principles and general provisions
of the QCA Code but does use it as a benchmark in
assessing its corporate governance standards. Areas of
non-compliance are disclosed in the text below. Details of
the Company’s compliance with the QCA code can be
found below and in the Corporate Governance section of
the Company’s website.
The Board believes that application of the QCA
Code supports the Company’s medium to long-term
development whilst managing risks, as well as providing
an underlying framework of commitment and transparent
communications with stakeholders. It also seeks to
develop the knowledge shared between the Company and
its stakeholders.
During the year, the Company decided to adopt the QCA
Code and save this there have been no other changes to
the Company’s governance arrangements.
Strategy, Risk Management and Responsibility
A description of the Company’s business model and
strategy can be found on pages 2 and 3, and the key
challenges in their execution can be found on page 25.
The Board is responsible for the monitoring of financial
performance against budget and forecast and the
formulation of the Group’s risk appetite including
the identification, assessment and monitoring of the
Company’s principal risks. The Audit Committee (see
page 36) has delegated responsibility for the oversight of
the Company’s risk management and internal controls
and procedures and for determining the adequacy
and efficiency of internal control and risk management
systems. The Board continuously monitors and upgrades
its internal control procedures and risk management
mechanisms and conducts an annual review, when it
assesses both for effectiveness. This process enables the
Board to determine if the risk exposure has changed
during the year and these disclosures are included on
pages 25 and 26.
In setting and implementing the Company’s strategies, the
Board, having identified the risks, seeks to limit the extent
of the Company’s exposure to them having regard to both
its risk tolerance and risk appetite.
Directors
The Board comprises the Independent Non-Executive
Chairman, Göran Färm; the CEO, Kurt Budge; and
Independent Non- Executive Director, Chris Davies.
Chris Davies holds no Ordinary Shares and holds
2,500,000 options over Ordinary Shares. Chris Davies
has a consultancy agreement in place with the Company.
Neither Chris Davies nor the other Directors believe his
options are significant in assessing his independence.
All Directors are encouraged to challenge and to bring
independent judgement to bear on all matters, both
strategic and operational. Biographical details of the
Directors can be found on the Group’s website
www.beowulfmining.com.
As a Non-executive Director, Chris Davies commits
approximately between two to four days per month.
As the Independent Non-Executive Chair, Göran Färm
dedicates approximately between two and four days per
month.
34
Beowulf Mining plc Annual Report 2018 The Board is satisfied that each of the Directors are able to allocate sufficient time to the Group to discharge their
responsibilities effectively. The number of meetings of the Board and its Committees are outlined below:
Attendance
by directors
Board
(8 meetings held)
Audit
(1 meeting held)
Remuneration
(1 meeting held)
Mr K R Budge
Mr C Davies
Mr G Färm
8
8
8
-
1
1
-
1
1
The Directors believe that the Board, as a whole, has
a broad range of commercial and professional skills,
enabling it to discharge its duties and responsibilities
effectively and that the Non-Executive Directors have a
sufficient range of experience and skills to enable them
to provide the necessary guidance, oversight and advice
for the Board to operate effectively. All Directors are
encouraged to use their independent judgement and to
challenge all matters, whether strategic or operational.
The Board annually reviews the appropriateness and
opportunity for continuing professional development,
whether formal or informal. The Directors also endeavour
to ensure that their knowledge of best practices and
regulatory developments is continually up to date by
attending relevant seminars and conferences.
The Directors consider that the Company and Board are
not yet of a sufficient size for a full Board evaluation to
make commercial and practical sense. Therefore, the
Board accepts that the Company does not comply with
this aspect of the QCA Code, although in the frequent
Board meetings/calls, the Directors can discuss any areas
where they feel a change would be beneficial for the
Company, and the Company Secretary remains on hand
to provide impartial advice. As the Company grows, it
intends to expand the Board and, with expansion, re-
consider the need for a formal Board evaluation.
Advisers
ONE Advisory Limited has been contracted by the
Company to act as Company Secretary and has been
given the responsibility for ensuring that Board procedures
are followed and that the Company complies with all
applicable rules, regulations and obligations governing
its operation, including assistance with Board and
shareholder meetings and Market Abuse Regulations
(“MAR”) compliance. ONE Advisory Limited also supports
the Board in its development of the Company’s corporate
governance responsibilities, assisting with the Company’s
application of the QCA Code and amendments in
relation to AIM Rule 26.
The Company’s Nomad is consulted on all matters and
all Directors have access to independent professional
advice, if required.
Neither the Board nor it’s Committees have sought
external advice on a significant matter.
Culture
The Board recognises that its decisions regarding strategy
and risk will impact the corporate culture of the Company
as a whole and that this will impact the performance
of the Company. The Board is aware that the tone and
culture set by the Board will greatly impact all aspects
of the Company as a whole. The corporate governance
arrangements that the Board has adopted are designed
to ensure that the Company delivers long-term value to its
shareholders, and that shareholders have the opportunity
to express their views and expectations for the Company
in a manner that encourages open dialogue with the
Board.
A large part of the Company’s activities are centred
upon an open and respectful dialogue with shareholders,
contractors, regulators and other stakeholders. Therefore,
the importance of sound ethical values and behaviours
is crucial to the ability of the Company to successfully
achieve its corporate objectives. The Board places great
importance on this aspect of corporate life and seeks to
ensure that this flows through all that the Company does.
The Directors consider that at present the Company has
35
34
Beowulf Mining plc Annual Report 2018
an open culture facilitating comprehensive dialogue
and feedback and enabling positive and constructive
challenge.
In addition, the Company makes a point of meeting with
local communities including local tribes and adjacent
landowners. Furthermore, in the last year the Board
supported a research paper exploring mining best
practice, engagement with local people and natural
resource development.
Remuneration Committee
The Remuneration Committee comprises Chris Davies
and Göran Färm, is chaired by Göran Färm, and meets
as required each year. The Committee is responsible for
the review and recommendation of the scale and structure
of remuneration for senior management, including any
bonus arrangements or the award of share options
with due regard to the interests of shareholders and the
performance of the Company. A Remuneration Committee
Report is included on page 32 and 33.
Audit Committee
Audit Committee comprises Chris Davies and Göran
Färm, who chairs the committee. The Audit Committee is
responsible for ensuring that the financial performance,
position and prospects of the Group are properly
monitored and reported on and for meeting the auditor
and reviewing audit reports relating to the accounts.
Meetings of the Audit Committee are held at least twice
a year, at appropriate times in the reporting and audit
cycle. The Audit Committee is required to report formally
to the Board on its proceedings after each meeting on all
matters for which it has responsibility.
The Board notes that additional information supplied
by the Audit Committee has been disseminated across
the whole of this Annual Report, rather than included as
separate Committee Reports.
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, it is considered appropriate.
ON BEHALF OF THE BOARD OF DIRECTORS
Göran Färm
Non-Executive Chairman
30 May 2019
36
Beowulf Mining plc Annual Report 2018 Independent Auditor's Report
Opinion
Basis for opinion
We have audited the financial statements of Beowulf
Mining PLC (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2018
which comprise the consolidated income statement,
the consolidated statement of 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 notes to the financial
statements including a summary of significant accounting
policies.
The financial reporting framework that has been applied
in the preparation of the financial statements is applicable
law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and as regards
to the Parent Company financial statements as applied
in accordance with the provisions of the Companies Act
2006.
In our opinion:
• the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 December 2018 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.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We
are independent of the group and the parent company
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 1 to the financial statements
which explains that the group will need to raise further
funds in the next twelve months to enable it to meet its
corporate overheads and to advance its projects.
The matters explained in note 1 indicate that a material
uncertainty exists that may cast significant doubt on the
group’s and the parent company’s ability to continue as a
going concern. Our opinion is not modified in respect of
this matter.
Given the conditions and uncertainties noted above we
considered going concern to be a Key Audit Matter. We
critically assessed management’s financial forecasts and
the underlying key assumptions, including operating and
capital expenditure. In doing so, we considered factors
such as commitments under licences, historical operating
expenditure and the group’s ability to raise funding in the
near future. Our assessment also included:
• Making enquiries of management of the future
financing plans and options and considered this in the
light of management’s track record of raising funds.
• Assessing the reasonableness of key assumptions
underpinning the forecasts by referencing to current
expenditure and commitments.
36
37
Beowulf Mining plc Annual Report 2018 Independent Auditor's Report
• We evaluated the adequacy of disclosure made in the
financial statements in respect of going concern.
We found the key underlying assumptions to be within
an acceptable range and the disclosures in the financial
statements in respect of going concern to be appropriate.
Key audit matters
In addition to the matter described in the material
uncertainty related to going concern section, key audit
matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these
matters.
38
38
Beowulf Mining plc Annual Report 2018 Carrying value of exploration assets
Key Audit Matter
The group’s exploration assets represent its most significant assets and amount to £8.3
million as at 31 December 2018. Of this £7.1m relates to the Kallak North project, for
which the application for the exploitation concession is currently being reviewed by the
Swedish government.
As explained in note 1 to the financial statements the assessment of whether there are
indicators of impairment in relation to the exploration assets requires the exercise of
significant judgement by management.
Given the significance of the carrying value of the Kallak North project, the delays in the
grant of the exploitation concession and the decision in November 2017 by the County
Administrative Board (“CAB”) not to support the grant of the concession, the assessment
of whether there are indicators of impairment for exploration assets and in particular the
Kallak North project represented a key audit matter for our audit.
The directors have assessed whether there is an indicator of impairment for the Kallak
North project and have concluded that this is not the case. Refer to note 7 for details of
Management’s assessment.
Audit Response
• We reviewed and challenged Management’s assessment and consideration of the
evidence to support the grant of exploitation concession for Kallak North, the delays in
the grant and the decision by the CAB not to support the grant of the concession. This
included review of correspondence with the various Swedish authorities involved in the
process and assessment of their views and conclusions, review of CAB’s points raised
during the application process and Management’s response and actions thereof and
critical assessment of Management’s views on CAB’s decision to not support the award
of the concession.
• In addition, we made inquiries of management, reviewed minutes of meetings, RNS
announcements and press releases to identify any additional information on the Kallak
North concession application and any other factors which may indicate a potential
indictor of impairment.
• We reviewed Management’s assessment of indicators of in respect of each of the licence
areas, including the validity of all licences, planned expenditure on each area and
management’s intention to continue exploration work on each licence area.
• We evaluated the adequacy and appropriateness of the disclosures provided within the
financial statements in notes 1 and 7.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce
to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
38
38
39
Beowulf Mining plc Annual Report 2018
Independent Auditor's Report
We consider total assets to be the most significant
determinant of the group’s financial performance used
by shareholders, as the group is engaged in exploration
activities and the principal focus of the users is likely to be
the gross assets of the group. The benchmark percentage
for calculating materiality has remained consistent in the
current year at 1.5% of total assets.
Whilst materiality for the financial statements as a whole
was £150,000 (2017: £150,000) (2017: £10m), each
significant component of the group was audited to a lower
level of materiality. The parent company materiality was
£100,000 (2017: £112,500) with the other significant
components’ materiality set at £100,000 (2017:
£85,000). These materiality levels were used to determine
the financial statement areas that are included within the
scope of our audit work and the extent of sample sizes
during the audit.
Performance materiality is the application of materiality at
the individual account or balance level set at an amount
to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality. Performance materiality
was set at 75% (2017: 75%) of the above materiality
levels.
We agreed with the Audit Committee that we would report
to the committee all individual audit differences identified
during the course of our audit in excess of £3,500. We
also agreed to report differences below these thresholds
that, in our view warranted reporting on qualitative
grounds.
No revisions were made to materiality levels during the
course of the audit.
An overview of the scope of our audit
Our group audit scope focussed on the group’s principal
operating locations and legal structure. The group has
operating entities based in the UK, Sweden and Finland.
We assessed there to be two significant components being
the Parent Company, Beowulf Mining Plc, with operations
in UK and Jokkmokk Iron Mines AB with operations in
Sweden.
The parent Company was subject to a full scope audit by
the group auditor.
A full scope audit for group reporting purposes was
performed by a non-BDO network firm on the significant
component in Sweden, Jokkmokk Iron Mines AB. Specific
40
procedures were completed by a non-BDO network
firm in Finland on Oy Fennoscandian Resources AB,
which holds the Finnish assets. Detailed group reporting
instructions for the testing of the significant areas were
sent to the component auditors. For Jokkmokk Iron Mines
AB we have reviewed the audit files and we discussed
the findings with the component audit partner. We also
reviewed the audit testing performed in respect of Oy
Fennoscandian Resources AB. In addition, the group
audit team also performed audit procedures over the
significant risk areas and the consolidation. The remaining
non-significant subsidiaries of the group were subject to
analytical review procedures.
Other information
The Directors are responsible for the other information.
The other information comprises the information included
in the Annual Report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact. We have nothing to report in
this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
Beowulf Mining plc Annual Report 2018 • the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
• 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
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
• certain disclosures of directors’ remuneration specified
by law are not made; or
Use of report
• we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
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, and for such
internal control as the directors determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or
the parent company or to cease operations, or have no
realistic alternative but to do so.
This report is made solely to the parent 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 parent
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 parent company’s members as a body,
for our audit work, for this report, or for the opinions we
have formed.
Stuart Barnsdall (Senior Statutory Auditor)
For and on behalf of BDO LLP,
London, UK
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
40
41
Beowulf Mining plc Annual Report 2018 Consolidated Income Statement
CONTINUING OPERATIONS
Administrative expenses
Impairment of exploration costs
Share of loss in associates
OPERATING LOSS
Finance income
LOSS BEFORE INCOME TAX
Income tax expense
LOSS FOR THE YEAR
Loss attributable to:
Owners of the parent
Non-controlling interests
Note
2018
£
2017
£
3
4
5
(794,851)
(861,669)
(571,456)
(183,131)
(19,880)
-
(1,386,187)
(1,044,800)
11,603
5,234
(1,374,584)
(1,039,566)
-
-
(1,374,584)
(1,039,566)
(1,373,936)
(1,038,248)
(648)
(1,318)
(1,374,584)
(1,039,566)
Loss per share attributable to the ordinary equity holder of the parent:
Basic and diluted (pence)
6
(0.25)
(0.20)
The notes on pages 52 to 79 form part of these financial statements
42
Beowulf Mining plc Annual Report 2018
Consolidated Statement Of Comprehensive Income
Note
2018
£
2017
£
LOSS FOR THE YEAR
(1,374,584)
(1,039,566)
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently to profit or loss:
Exchange losses arising on translation of foreign operations
(123,265)
67,862
(123,265)
67,862
TOTAL COMPREHENSIVE LOSS
(1,497,849)
(971,704)
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interests
(1,497,133)
(970,426)
13
(716)
(1,278)
(1,497,849)
(971,704)
42
43
The notes on pages 52 to 79 form part of these financial statements
Beowulf Mining plc Annual Report 2018
Consolidated Statement of Financial Position
Note
2018
£
2017
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investment in associate
Loans and other financial assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Capital contribution reserve
Share based payment reserve
Merger reserve
Translation reserve
Accumulated losses
7
8
9
10
11
12
14
16
16
16
16
16
16
8,285,547
16,083
230,120
5,462
8,191,232
28,580
-
5,530
8,537,212
8,225,342
62,956
1,533,232
65,032
1,589,897
1,596,188
1,654,929
10,133,400
9,880,271
5,663,072
5,342,072
19,266,271 18,141,271
46,451
575,078
137,700
(397,060)
(15,311,933) (14,079,747)
46,451
612,465
137,700
(520,257)
Non-controlling interests
13
(160,587)
(159,871)
9,893,769
9,765,765
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Deferred income
TOTAL LIABILITIES
9,733,182
9,605,894
17
18
208,013
192,205
274,377
-
400,218
274,377
TOTAL EQUITY AND LIABILITIES
10,133,400
9,880,271
The financial statements were approved and authorised for issue by the Board of Directors on 30 May 2019 and were
signed on its behalf by:
Mr K Budge - Director
Company Number 02330496
The notes on pages 52 to 79 form part of these financial statements
44
Beowulf Mining plc Annual Report 2018
Company Statement of Financial Position
ASSETS
NON-CURRENT ASSETS
Investments
Loans and other financial assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Capital contribution reserve
Share based payment reserve
Merger reserve
Accumulated losses
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Deferred income
TOTAL LIABILITIES
Note
2018
£
2017
£
9
10
11
12
14
16
16
16
16
16
17
18
732,988
479,311
8,222,217
8,953,625
8,955,205
9,432,936
24,401
40,101
1,470,087
1,508,321
1,494,488
1,548,422
10,449,693 10,981,358
5,663,072
5,342,072
19,266,271 18,141,271
46,451
612,465
137,700
46,451
575,078
137,700
(15,535,429) (13,384,494)
10,190,530 10,858,078
66,958
123,280
192,205
-
259,163
123,280
TOTAL EQUITY AND LIABILITIES
10,449,693 10,981,358
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 £609,186 (2017: Loss
£704,470).
These financial statements were approved and authorised for issue by the Board of Directors on 30 May 2019 and were
signed on its behalf by:
Mr K Budge - Director
Company Number 02330496
The notes on pages 52 to 79 form part of these financial statements
44
45
Beowulf Mining plc Annual Report 2018
payments
reserve
£
203,059
134,216
-
-
-
-
-
-
-
-
-
-
-
14
14
15
9
14
14
15
9
-
(1,038,248)
(1,038,248)
(1,318)
(1,039,566)
67,822
67,822
40
67,862
67,822
(1,038,248)
(970,426)
(1,278)
(971,704)
1,652,800
(75,000)
203,059
134,216
-
25,664
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,652,800
(75,000)
203,059
134,216
-
1,500,000
(75,000)
196,460
Consolidated Statement of Changes in Equity
Note
Share
Share
Revaluation
capital
premium
reserve
Merger
reserve
Capital
contribution
Note
Share based
Translation
Accumulated
Totals
reserve
losses
£
£
£
£
reserve
£
£
£
£
Non-
controlling
interest
£
Totals
£
At 1 January 2017
5,026,302
16,879,241
25,664
137,700
46,451
237,803
(464,882)
(13,067,163)
8,821,116
(158,593)
8,662,523
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
137,700
46,451
575,078
(397,060)
(14,079,747)
9,765,765
(159,871)
9,605,894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,373,936)
(1,373,936)
(123,197)
(123,197)
(648)
(68)
(1,374,584)
(123,265)
(123,197)
(1,373,936)
(1,497,133)
(716)
(1,497,849)
196,460
(159,073)
141,750
- 3,677
1,500,000
(75,000)
196,460
3,677
137,700
46,451
612,465
(520,257)
(15,311,933)
9,893,769
(160,587)
9,733,182
Loss for the year
Reclassification of revaluation reserve
Foreign exchange translation
Total comprehensive income
Transactions with owners
Issue of share capital
Cost of issue
Equity settled share based transactions
Issues of shares
9
Transfer to accumulated losses
-
-
-
-
-
-
-
-
315,770
1,337,030
-
-
-
-
(75,000)
-
-
-
At 31 December 2017
5,342,072
18,141,271
Loss for the year
Foreign exchange translation
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
Issue of share capital
14 300,000
1,200,000
Cost of issue
14
Equity settled share based transactions
Issues of shares
-
-
21,000
(75,000)
-
-
At 31 December 2018
5,663,072
19,266,271
-
-
-
-
-
-
-
-
(25,664)
-
-
-
-
-
-
-
-
-
The notes on pages 52 to 79 form part of these financial statements
46
Beowulf Mining plc Annual Report 2018
Note
Share
Share
Revaluation
capital
premium
reserve
Merger
reserve
Capital
contribution
£
£
£
£
reserve
£
Note
Share based
Translation
Accumulated
Totals
payments
reserve
£
reserve
losses
£
£
£
Non-
controlling
interest
£
Totals
£
At 1 January 2017
5,026,302
16,879,241
25,664
137,700
46,451
237,803
(464,882)
(13,067,163)
8,821,116
(158,593)
8,662,523
-
-
-
-
-
203,059
134,216
-
14
14
15
9
-
(1,038,248)
(1,038,248)
(1,318)
(1,039,566)
67,822
-
67,822
40
67,862
67,822
(1,038,248)
(970,426)
(1,278)
(971,704)
-
-
-
-
-
-
-
-
-
25,664
1,652,800
(75,000)
203,059
134,216
-
-
-
-
-
-
1,652,800
(75,000)
203,059
134,216
-
At 31 December 2017
5,342,072
18,141,271
137,700
46,451
575,078
(397,060)
(14,079,747)
9,765,765
(159,871)
9,605,894
-
-
-
-
-
196,460
(159,073)
14
14
15
9
-
(1,373,936)
(1,373,936)
(123,197)
-
(123,197)
(648)
(68)
(1,374,584)
(123,265)
(123,197)
(1,373,936)
(1,497,133)
(716)
(1,497,849)
-
-
-
-
-
-
-
141,750
1,500,000
(75,000)
196,460
3,677
-
-
-
1,500,000
(75,000)
196,460
- 3,677
At 31 December 2018
5,663,072
19,266,271
137,700
46,451
612,465
(520,257)
(15,311,933)
9,893,769
(160,587)
9,733,182
315,770
1,337,030
(75,000)
(25,664)
Loss for the year
Reclassification of revaluation reserve
Foreign exchange translation
Total comprehensive income
Transactions with owners
Issue of share capital
Cost of issue
Equity settled share based transactions
Issues of shares
9
Transfer to accumulated losses
Loss for the year
Foreign exchange translation
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
Issue of share capital
14 300,000
1,200,000
Cost of issue
14
(75,000)
Equity settled share based transactions
Issues of shares
21,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
47
Company Statement of Changes in Equity
Note
Share
capital
Share
premium
£
£
Merger
reserve
£
Share based
Accumulated
Totals
payments
reserve
£
losses
£
At 1 January 2017
5,026,302
16,879,241
137,700
237,803
(12,680,024)
9,647,473
Loss for the year
Reclassification of revaluation reserve
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
Issue of share capital
Cost of issue
14
14
Equity settled share-based transactions 15
Issue of shares
9
315,770
-
-
-
1,337,030
(75,000)
-
-
-
-
-
-
-
-
-
At 31 December 2017
5,342,072
18,141,271
137,700
46,451
575,078
(13,384,494)
10,858,078
Restatement of opening balances
-
-
-
(1,521,643)
(1,521,643)
At 1 January 2018 (restated)
5,342,072
18,141,271
137,700
46,451
575,078
(14,906,137)
9,336,435
Loss for the year
Foreign exchange translation
Total comprehensive income
Transactions with owners
Issue of share capital
Cost of issue
14
14
Equity settled share-based transactions 15
-
-
-
300,000
-
-
Issue of shares
9
21,000
-
-
-
1,200,000
(75,000)
-
-
-
-
-
-
-
-
-
At 31 December 2018
5,663,072
19,266,271
137,700
46,451
612,465
(15,535,429)
10,190,530
Capital
contribution
reserve
£
46,451
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(704,470)
(704,470)
(704,470)
(704,470)
£
-
1,652,800
(75,000)
203,059
134,216
-
-
-
-
-
-
-
-
-
(771,042)
(771,042)
-
(771,042)
(771,042)
196,460
(159,073)
141,750
1,500,000
(75,000)
196,460
3,677
203,059
134,216
-
-
-
-
-
-
-
-
-
-
-
The notes on pages 52 to 79 form part of these financial statements
48
Beowulf Mining plc Annual Report 2018
Note
Share
capital
Share
premium
£
£
Merger
reserve
£
At 1 January 2017
5,026,302
16,879,241
137,700
Capital
contribution
reserve
£
46,451
Share based
Accumulated
Totals
payments
reserve
£
losses
£
£
237,803
(12,680,024)
9,647,473
Loss for the year
Reclassification of revaluation reserve
Total comprehensive income
Transactions with owners
Issue of share capital
Cost of issue
Issue of shares
Equity settled share-based transactions 15
Restatement of opening balances
Loss for the year
Foreign exchange translation
Total comprehensive income
Transactions with owners
Issue of share capital
Cost of issue
Equity settled share-based transactions 15
Issue of shares
14
14
9
14
14
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
315,770
1,337,030
(75,000)
1,200,000
(75,000)
300,000
21,000
At 31 December 2017
5,342,072
18,141,271
137,700
At 1 January 2018 (restated)
5,342,072
18,141,271
137,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46,451
-
46,451
-
-
-
-
-
-
-
-
-
-
-
-
203,059
134,216
(704,470)
-
(704,470)
-
(704,470)
(704,470)
-
-
-
-
1,652,800
(75,000)
203,059
134,216
575,078
(13,384,494)
10,858,078
-
(1,521,643)
(1,521,643)
575,078
(14,906,137)
9,336,435
-
-
-
-
-
196,460
(159,073)
(771,042)
-
(771,042)
-
(771,042)
(771,042)
-
-
-
141,750
1,500,000
(75,000)
196,460
3,677
At 31 December 2018
5,663,072
19,266,271
137,700
46,451
612,465
(15,535,429)
10,190,530
48
49
Consolidated Statement of Cash Flows
Note
8
7
3
Cash flows from operating activities
Loss before income tax
Depreciation charges
Equity-settled share-based transactions
Impairment of exploration costs
Finance income
Share of loss in associate
Decrease/(increase) in trade and other receivables
(Increase)/decrease in trade and other payables
2018
£
2017
£
(1,374,584)
(1,039,566)
14,696
196,460
571,456
(11,603)
19,880
15,890
203,059
183,131
(5,234)
-
(583,695)
(642,720)
2,603
(12,760)
(72,740)
15,673
Net cash used in operating activities
(653,832)
(639,807)
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Sale of investments
Acquisition of associate
Grant receipt
Interest received
Net cash used in investing activities
7
8
9
9
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
14
14
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
(778,495)
(943,599)
(2,515)
(20,367)
13
(250,000)
192,205
11,603
14
-
-
5,234
(827,189)
(958,718)
1,500,000
1,652,800
(75,000)
(75,000)
1,425,000
1,577,800
(56,021)
(20,725)
1,589,897
1,609,219
(644)
1,403
Cash and cash equivalents at end of year
1,533,232
1,589,897
The notes on pages 52 to 79 form part of these financial statements
50
Beowulf Mining plc Annual Report 2018
Company Statement of Cash Flows
Cash flows from operating activities
Loss before income tax
Depreciation charges
Equity-settled share-based transactions
Finance income
Note
8
3
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
2018
£
2017
£
(609,186)
(704,472)
-
139
196,460
203,059
(11,603)
(5,234)
(424,329)
(506,508)
15,700
135,883
(5,524)
17,251
Net cash used in operating activities
(272,746)
(494,781)
Cash flows from investing activities
Loans to subsidiaries
Acquisition of associate
Interest received
9
(952,091)
(1,147,702)
(250,000)
-
11,603
5,234
Net cash used in investing activities
(1,190,488)
(1,142,468)
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
14
14
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
1,500,000
1,652,800
(75,000)
(75,000)
1,425,000
1,577,800
(38,234)
(59,449)
1,508,321
1,567,770
Cash and cash equivalents at end of year
1,470,087
1,508,321
50
51
The notes on pages 52 to 79 form part of these financial statements
Beowulf Mining plc Annual Report 2018
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
At 31 December 2018, the Group had a cash balance of £1.53 million and the Company had a cash
balance of £1.47 million. Subsequent to year end, the Company has raised £1.25 million (before expenses)
cumulatively through two successful subscriptions.
Management have prepared cash flow forecasts which indicate that although there is no immediate funding
requirement, the Group will need to raise further funds in the next twelve months for corporate overheads and
to advance its projects.
The Directors are confident they are taking all necessary steps to ensure that the required finance is available,
and they have successfully raised equity finance subsequent to year end. They have therefore concluded that it
is appropriate to prepare the financial statements on a going concern basis. However, while they are confident
of being able to raise the new funds as they are required, there are currently no agreements in place, and there
can be no certainty that they will be successful in raising the required funds within the appropriate timeframe.
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 Group and Company were 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 and amended standards, and interpretations issued and effective for the financial year
beginning 1 January 2018
IFRS 15 Revenue from Contracts with Customers (effective in accounting periods beginning 1 January 2018)
is intended to clarify the principles of revenue recognition and establish a single framework for revenue
recognition. The Company has reviewed this standard and consider this to have no material impact on the
financial statements.
IFRS 9 replaces all phases of the financial instruments project and IAS 39 ‘Financial Instruments: Recognition
and Measurement’. The standard is effective from periods beginning on or after January 2018 and introduces
new requirements for the classification and measurement of financial assets and financial liabilities; and a new
model for recognising provisions based on expected credit losses (“ECLs”). The impact of IFRS 9 has been
assessed at a Group level, and there is no material impact on the consolidated results of the Group, as assets
other than cash are immaterial and the ECL impairment is minimal.
52
Beowulf Mining plc Annual Report 2018
The adoption of IFRS 9 has impacted the Parent company. This is a result of the existing incurred loss approach
under IAS 39 being replaced by the forward-looking ECL model approach of IFRS 9. The ECL model is required
to be applied to the intercompany loan receivable which is classified as held at amortised cost. Please refer to
note 22 for the detail on the impact and the financial assets accounting policy included in this note on page 46.
The Company has opted to transition method requires a retrospective application for the first time adoption of
IFRS 9, however the standard allows the Company a policy choice to not restate the comparative information
with differences being recorded in opening retained earnings, these changes have been processed at the
date of initial application (i.e. 1 January 2018), and presented in the statement of changes in equity as at 31
December 2018.
New and amended standards, and interpretations issued but not yet effective for the financial year
beginning on or after 1 January 2018 and not early adopted
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the financial
statements are listed below. The Group intends to adopt these standards, if applicable, when they become
effective. Unless stated below, there are no IFRSs or IFRIC interpretations that are not yet effective that would be
expected to have a material impact on the Group.
Standard
IFRS 16 Leases
Effective Date
01-Jan-19
The impact of adopting IFRS 16 is not expected to have a material effect on the Group at this stage of the
Group’s operations.
Amendments to Existing Standards
Annual Improvements to IFRS’s
Effective Date
01-Jan-19
Amendments to References to the conceptual framework in IFRS standards
01-Jan-20
Definition of Material – Amendments to IAS 1 and IAS 8
01-Jan-20
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the amounts reported for income and expenses during the year and the amounts
reported for assets and liabilities at the balance sheet date. However, the nature of estimation means that the
actual outcomes could differ from those estimates.
The principal source of risk and judgement is that the exploitation concession for Kallak North will not be
awarded. The board has considered the impairment indicators as outlined in the Company’s accounting
policies and having done so is of the opinion that the current situation does not qualify as an impairment
indicator and therefore no impairment provision is required for this permit (see note 7).
The other key areas of judgement and 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
assessment of any impairment of intangible assets and the estimation of share-based payment costs.
(i) The Group determines whether there are any indicators of impairment of intangible assets on an
annual basis (see note 7);
52
53
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
The Parent Company in applying the ECL model under IFRS 9 must make assumptions when implementing the
forward-looking ECL model. This model is required to be used to assess the intercompany loans receivable from
subsidiaries for impairment.
Estimations were made regarding the credit risk of the counterparty and the underlying probability of default
in each of the credit loss scenarios. The scenarios identified by management included Production, Divestment,
Fire-sale and Failure. These scenarios considered technical data, necessary licences to be awarded, the
Company’s ability to raise finance, and ability to sell the project.
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 exposed, or has rights, to variable returns from its investment with the 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) Equity accounted investees
Associates
Associates are entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but not the ability to control or jointly control those
policies. Investments in Associates are accounted for using the equity method of accounting.
Equity method of accounting – Associates
Under the equity method of accounting, interests in Associates are initially recognised at cost. The Group’s
share of Associates post acquisition profits or losses after tax are recognised in the ‘Share of results of Equity
accounted investees’ in the Group income statement. The Group’s share of Associates post acquisition
movement in reserves is recognised in other comprehensive income. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment less any impairment in value. Where
indicators of impairment arise, the carrying amount of the Associate is tested for impairment by comparing its
54
Beowulf Mining plc Annual Report 2018
recoverable amount against its carrying value. Unrealised gains arising from transactions with Associates are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are similarly eliminated to the
extent that they do not provide evidence of impairment of a transferred asset. When the Group’s share of losses
in an Associate equal or exceeds its interest in the Associate, the Group does not recognise further losses unless
the Group has incurred obligations or made payments on behalf of the or Associate. When the Group ceases
to have or significant influence, any retained interest in the entity is re-measured to its fair value at the date
when or significant influence is lost with the change in carrying amount recognised in the income statement. The
Group also reclassifies any movements previously recognised in other comprehensive income to the income
statement.
(iii) 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. Each asset is evaluated annually at 31 December, to determine whether
there are any indications that impairment exists.
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 employee costs and costs pertaining to 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. Deferred
exploration costs will be depreciated if the asset becomes productive.
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:
54
55
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
(i) unexpected geological occurrences that render the resource uneconomic;
(ii) 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.
Plant and machinery - 25 per cent on reducing balance
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet
date.
Investments in subsidiaries
Fixed asset investments in subsidiary undertakings are stated at cost less provision for any impairment in value.
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.
Financial assets
The Group classifies all of its financial assets at amortised cost. Management determines the classification
of its financial assets at initial recognition
Amortised cost
The Group’s financial assets held at amortised cost comprise trade and other receivables and cash and cash
equivalents in the consolidated statement of financial position.
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They arise principally through the provision of goods and services to customers (e.g. trade
receivables), but also incorporate other types of financial assets where the objective is to hold their assets in
order to collect contractual cash flows and the contractual cash flows are solely payments of the principal and
interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9
using the lifetime ECLs. During this process the probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine
the lifetime ECL for the trade receivables. For trade receivables, which are reported net; such provisions are
recorded in a separate provision account with the loss being recognised within administrative expenses in
the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for other receivables are recognised based a forward looking expected credit loss
model. The methodology used to determine the amount of the provision is based on whether there has been
a significant increase in credit risk since initial recognition of the financial asset. For those where the credit
56
Beowulf Mining plc Annual Report 2018
risk has not increased significantly since initial recognition of the financial asset, twelve month expected
credit losses along with gross interest income are recognised. For those for which credit risk has increased
significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that
are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis
are recognised.
Financial liabilities
The Group classifies its financial liabilities in the category of financial liabilities at amortised cost. All financial
liabilities are recognised in the statement of financial position when the Group becomes a party to the
contractual provision of the instrument.
Financial liabilities measured at amortised cost include:
- Trade payables and other short-dated monetary liabilities, which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest rate method.
- Bank and other borrowings are initially recognised at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured
at amortised cost using the effective interest rate method, which ensures that any interest expense over
the period to repayment is at a constant rate on the balance of the liability carried in the consolidated
statement of financial position. For the purposes of each financial liability, interest expense includes initial
transaction costs and any premium payable on redemption, as well as any interest or coupon payable
while the liability is outstanding.
Unless otherwise indicated, the carrying values of the Group’s financial liabilities measured at amortised cost
represents a reasonable approximation of their fair values.
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.
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.
56
57
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
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 are
included in the statement of comprehensive income for the period.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are expressed in GB Pounds Sterling using exchange rates prevailing at the balance sheet date.
Income and expense items are translated at the average exchange rates for the period. Exchange differences
arising, if any, are classified as other comprehensive income and are transferred to the Group’s translation
reserve.
Foreign currency movements arising from the Group’s net investment, which comprises equity and long-term
debt, in subsidiary companies whose functional currency is not the GB Pounds Sterling are recognised in the
translation reserve, included within equity until such time as the relevant subsidiary company is sold, whereupon
the net cumulative foreign exchange difference relating to the disposal is transferred to profit and loss.
Share-based payment transactions
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant
is charged to the income statement over the vesting period. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair value of all options granted. As long as all
other vesting conditions are satisfied, a charge is made irrespective of whether market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the income statement over
the remaining vesting period.
Where equity instruments are granted to persons other than employees, the income statement or share premium
account, if appropriate, are charged with the fair value of goods and services received.
Government grant
Government grants received on capital expenditure are generally deducted in arriving at the carrying amount of
the asset purchased. Grants for revenue expenditure are netted against the cost incurred by the Group. Where
retention of a government grant is dependent on the Group satisfying certain criteria, it is initially recognised as
deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to
the consolidated statement of comprehensive income or netted against the asset purchased.
58
Beowulf Mining plc Annual Report 2018
2.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
Other benefits
Group
Company
2018
£
356,719
29,111
18,843
404,673
2017
£
395,252
112,520
18,203
525,975
2018
£
2017
£
189,435
229,602
20,149
13,720
75,842
11,133
223,304
316,577
Directors’ remuneration is as follows:
Directors emoluments, including salary and fees
Share-based payments
Gain in exercise of share options
2018
£
203,155
109,144
-
312,299
2017
£
229,602
121,723
378,450
729,775
The remuneration of the highest paid Director who served during the year was £130,667 (2017: £439,682)
The average monthly number of employees and Directors during the year was as follows:
Group
Company
2018
Number
3
3
2017
Number
3
2
2018
2017
Number
Number
3
-
3
-
Directors
Employees
58
59
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
3.
FINANCE INCOME AND COSTS
Finance income:
Deposit account interest
2018
2017
£
£
11,603
5,234
11,603
5,234
4.
LOSS BEFORE TAX AND AUDITOR’S REMUNERATION
a. The loss before tax is stated after charging/(crediting):
Depreciation - owned assets
Foreign exchange differences
Impairment of exploration costs
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
Note
2018
2017
8
7
£
14,696
2,088
£
15,890
(8,015)
571,456
183,131
2018
2017
£
£
28,970
26,675
5,000
5,300
5,000
4,851
39,270
36,526
5.
INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2018 or for the
year ended 31 December 2017.
60
Beowulf Mining plc Annual Report 2018
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:
2018
£
2017
£
Loss on ordinary activities before income tax
(1,374,584)
(1,039,566)
Tax thereon at a UK corporation tax rate
of 19% (2017 – 19.25%)
Effects of:
Expenses not deductible for tax purposes
Tax losses not recognised
Share of loss of associates
Losses of overseas subsidiaries carried forward
(261,171)
(200,116)
145,903
80,841
3,777
30,650
-
77,213
95,693
-
27,210
-
The main rate of UK corporation tax during the year ended 31 December 2018 was 19.00 per cent (2017:
19.25 per cent). The Group has estimated UK losses of £10,632,410 (2017: £10,206,937) and foreign
losses of £1,522,939 (2017: £870,263) available to carry forward against future trading profits. The value
of unrecognised deferred tax assets in respect of the UK losses amounts to £2,020,157 (2017: £1,964,835).
The Directors believe that it would not be prudent to recognise such tax assets before such time as the Group
generates taxable income.
6.
BASIC AND DILUTED LOSS PER SHARE
The calculation of basic and diluted loss per share at 31 December 2018 was based on the loss attributable to
ordinary shareholders of £1,373,936 (2017: £1,038,248) and a weighted average number of Ordinary Shares
outstanding during the period ended 31 December 2018 of 554,716,045 (2017: 518,728,856) calculated as
follows:
2018
£
2017
£
Loss attributable to ordinary shareholders
(1,373,936)
(1,038,248)
Weighted average number of ordinary shares
Number
Number
Number of shares in issue at the beginning of the year
534,207,254
502,630,331
Effect of shares issued during year
20,508,791
16,098,525
Weighted average number of ordinary shares in issue
for the year
554,716,045
518,728,856
The diluted earnings per share is identical to the basic earnings per share as the exercise of warrants and
options would be anti-dilutive.
60
61
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
7.
INTANGIBLE ASSETS - Group
COST
At 1 January 2017
Additions for the year
Foreign exchange movements
Impairment
At 31 December 2017
At 1 January 2018
Additions for the year
Foreign exchange movements
Impairment
At 31 December 2018
NET BOOK VALUE
At 31 December 2018
At 31 December 2017
The net book value of exploration costs is comprised of expenditure on the following projects:
Kallak
Åtvidaberg
Ågåsjiegge
Sala
Haapamäki
Kolari1
Viistola
Pitkäjärvi
Joutsijärvi
Karhunmaki
Rääpysjärvi
2018
£
7,079,806
303,565
17,121
8,444
-
-
-
817,986
25,002
13,685
19,938
Exploration
Costs
£
7,186,576
1,077,815
109,972
(183,131)
8,191,232
8,191,232
782,437
(116,666)
(571,456)
8,285,547
8,285,547
8,191,232
2017
£
6,979,844
253,778
7,365
2,634
231,132
151,706
147,784
414,372
2,617
-
-
8,285,547
8,191,232
Total Group exploration costs of £8,285,547 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 £139,594 was recorded against the projects for services provided by the Directors during
the year (2017: £156,862).
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Beowulf Mining plc Annual Report 2018
Accounting estimates and judgements are continually evaluated and are based on a number of factors,
including expectations of future events that are believed to be reasonable under the circumstances.
In accordance with its accounting policies and processes, each asset is evaluated annually at 31 December, to
determine whether there are any indications impairment exist, the Board considers the indications as outlined in
IFRS 6.
On 30 November 2017, the County Administrative Board (“CAB”) for the County of Norrbotten made
the decision to not recommend that an Exploitation Concession for Kallak North be awarded. It should be
noted that the CAB does not have the final decision, that rests with the Government. The CAB’s decision
included information not based on fact, flawed analysis, and biased conclusions that contradicted its previous
representations provided in July 2015. The key biases include:
• Operating outside their mandate with respect to assessing transport matters at this stage of permitting
and suggesting the need for State investment should Kallak be built. The Company has never stated
that State support would be needed. The CAB ignored infrastructure projects that are already under
consideration e.g. Inlandsbanan Railway, the Ore Railway and the Port of Luleå, all of which will bring
additional capacity to regional infrastructure, which could be utilised by Kallak.
• Disregarding Kallak’s designation as an Area of National Interest (“ANI”) awarded by the SGU in
February 2013.
• Disregarding the strong economic case for Kallak that the CAB presented in July 2015, that a mine
would have local, regional and national benefits.
The Directors considered that the CAB’s November 2017 statement was not an impairment indicator, as the
comments and findings of the CAB represent a recommendation to Government that should have limited to
no persuasive impact due to the inaccuracies, flawed analysis and biased conclusions the CAB has presented.
At the date of approval of the financial statements the Government’s consideration of the application was
ongoing.
The most significant risk is that an Exploitation Concession is declined for Kallak North. The Directors have
considered the impairment indicators as outlined in the Company’s accounting policies and having done so are
of the opinion that the current situation does not qualify as an impairment indicator and hence no impairment
provision is required for the Kallak permitting situation. In addition, no other impairment indicators per IFRS 6
have been identified.
Kallak is included in financial statements as at 31 December 2018 as an intangible exploration licence with
a carrying value of £7,079,806. Management are required to consider whether there are events or changes
in circumstances that indicate that the carrying value of this asset may not be recoverable. Management have
considered the status of the application for the Exploitation Concession and in their judgement, they believe it
is appropriate to be optimistic about the chances of being awarded the Exploitation Concession and thus have
not impaired the project.
In the year an impairment provision of £571,456 (2017: £183,131) was made against costs incurred on
Haapamäki (2018: £249,646), Kolari 1 (2018: £158,727) and Viistola (2018: £163,083) on the basis that no
further exploration would be carried out on those projects. In respect of the other license areas, no impairment
indicators have been identified. The impairment is charged as an expense and included within the consolidated
income statement.
62
63
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
8.
PROPERTY, PLANT AND EQUIPMENT
Group
£
Company
£
59,183
20,367
1,044
6,383
-
-
80,594
6,383
80,594
2,515
(667)
6,383
-
-
82,442
6,383
35,672
15,890
452
6,244
139
-
52,014
6,383
52,014
14,696
(351)
6,383
-
-
66,359
6,383
16,083
28,580
-
-
COST
At 1 January 2017
Additions
Foreign exchange movements
At 31 December 2017
At 1 January 2018
Additions
Foreign exchange movements
At 31 December 2018
DEPRECIATION
At 1 January 2017
Charge for year
Foreign exchange movements
At 31 December 2017
At 1 January 2018
Charge for year
Foreign exchange movements
At 31 December 2018
NET BOOK VALUE
At 31 December 2018
At 31 December 2017
64
Beowulf Mining plc Annual Report 2018
9.
INVESTMENTS
Group
Shares in
associates
Company
Shares in
subsidiaries
Shares
in
associates
COST
At 1 January 2017
Acquisitions
At 31 December 2017
£
-
-
-
At 1 January 2018
Acquisitions
Shares of loss of associates
250,000
(19,880)
£
345,015
134,296
479,311
479,311
3,677
-
£
-
-
-
-
250,000
-
Total
£
345,015
134,296
479,311
479,311
253,677
-
At 31 December 2018
230,120
482,988
250,000
732,988
Investments in associates is initially recorded at cost plus any equity share of post-acquisition profit or loss after-
tax. An investment in an associate is largely determined as an associate based on voting interests and presence
on the investee’s board of directors.
In the year ended 31 December 2018, the Company acquired a 14 per cent interest in Vardar Minerals Ltd,
a private exploration company with interest in the Balkans, for the consideration of £250,000, settled in cash.
The Company also has an option to make a further investment and increase its ownership in Vardar.
The remaining investment represents 100 per cent of the share capital of Fennoscandian, that was acquired
during the year ended 31 December 2016 and holds a portfolio of four early-stage graphite exploration
projects. At the time of acquisition, Beowulf paid for 100 per cent of the share capital of Fennoscandian by
issuing 2.55 million ordinary shares in the Company, with two further tranches of 2.1 million ordinary shares
to be issued on achievement of certain performance milestones.
The first tranche of 2 million ordinary shares was issued on the anniversary of 24 months from the date of the
acquisition, in accordance and Mr Blomqvist having worked for the Company as a full-time employee during
that period. The second tranche of shares will be issued on completion of a bankable feasibility study on one
of the graphite projects in the portfolio.
The total number of ordinary shares that may be issued, if all performance milestones are achieved, is 6.75
million ordinary shares. Beowulf will issue up to a further 2.1 million additional consideration shares in the form
of a share-based payment transaction to the former owner, Rasmus Blomqvist. The share-based payments fall
within the scope of IFRS 2 and are fair valued at the grant date based on the estimated number of shares that
will vest. The fair value has been prepared using a Black-Scholes pricing model including a share price of 6.4
pence, option life of two years, volatility of 49.79 per cent and a risk-free rate of 0.698 per cent.
The consideration recognised in the financial statements as at 31 December 2018 is £484,441, (2017:
£480,764) and has been recorded in intangible assets evenly across the four acquired graphite projects. The
share-based payment charge is spread over the two-year option life, therefore, in the 12 months ended 31
December 2018, £3,677 (31 December 17: £134,216) has been recognised under intangibles.
64
65
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
Name
Incorporated
Activity
% holding % holding
2018
2017
Oy Fennoscandian Resources AB
Finland
Mineral exploration
Jokkmokk Iron Mines AB
Beowulf Mining Sweden AB
Wayland Copper Limited
Wayland Sweden AB
Vardar Minerals Ltd
Sweden
Sweden
UK
Sweden
UK
Mineral exploration
Mineral exploration
100%
100%
100%
100%
100%
100%
Holding company
65.25%
65.25%
Mineral exploration
(1)(2)65.25%
(1)(2)65.25%
Mineral Exploration
14%
-
The Group consists of the following subsidiary undertakings:
Name
Registered office
Oy Fennoscandian Resources AB
Plåtslagarevägen 35 A 1, 20320 Turku, Finland
Jokkmokk Iron Mines AB
Beowulf Mining Sweden AB
Wayland Copper Limited
Wayland Sweden AB
(1) Indirectly held
(2) Effective interest
Storgatan 36, 921 31, Lycksele, Sweden
Storgatan 36, 921 31, Lycksele, Sweden
201 Temple Chambers, 3-7 Temple Avenue, London
Storgatan 36, 921 31, Lycksele, Sweden
Details on the non-controlling interest in subsidiaries is given in note 13.
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Beowulf Mining plc Annual Report 2018
10.
LOANS AND OTHER FINANCIAL ASSETS
Group
At 1 January 2017
Foreign exchange movements
Disposals
At 31 December 2017
At 1 January 2018
Foreign exchange movements
Disposals
At 31 December 2018
Company
Financial
fixed
Assets
£
5,503
41
(14)
5,530
5,530
(55)
(13)
5,462
Totals
£
Loans to
group
undertakings
£
Financial
assets
£
At 1 January 2017
Advances made in the year
7,803,139
1,147,702
2,784
7,805,923
-
1,147,702
At 31 December 2017
8,950,841
2,784
8,953,625
At 1 January 2018
Opening ECLs restated through
opening retained earnings
8,950,841
2,784
8,953,625
(1,521,643)
-
(1,521,643)
Restated balances at 1 January 2018
7,429,198
2,784
7,431,982
Advances made in the year
ECLs in year
952,091
(161,856)
-
-
952,091
(161,856)
At 31 December 2018
8,219,433
2,784
8,222,217
Details of the calculation of ECLs on the loans to group undertakings can be found in note 22. Further details of
the transactions in the year are shown within related parties disclosure note 21.
66
67
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
11.
TRADE AND OTHER RECEIVABLES
Other receivables
VAT
Prepayments and accrued
income
2018
£
29,437
20,210
Group
2017
£
22,189
15,006
Company
2018
2017
£
-
£
-
11,092
12,264
13,309
27,837
13,309
27,837
62,956
65,032
24,401
40,101
Included in other receivables is a deposit of £18,027 held by Finnish regulatory authorities (2017: £19,017).
12.
CASH AND CASH EQUIVALENTS
Group
2018
£
2017
£
Company
2018
£
2017
£
Bank accounts
1,533,232
1,589,897
1,470,087
1,508,321
1,533,232
1,589,897
1,470,087
1,508,321
13.
NON-CONTROLLING INTERESTS
Wayland Copper Limited, a 65.25 per cent owned subsidiary of the Company that has material non-controlling
interests (“NCI”).
Summarised financial information reflecting 100 per cent of the underlying subsidiary’s relevant figures is set out
below:
Administrative expenses
Loss after tax
Loss allocated to NCI
Other comprehensive income allocated to NCI
2018
£
(1,863)
2017
£
(3,793)
(1,863)
(3,793)
(648)
68
(1,318)
40
Total comprehensive loss allocated to NCI
(580)
(1,278)
Current assets
Current liabilities
Net liabilities
6,599
(468,718)
8,922
(468,982)
(462,119)
(460,060)
NCI at 34.75 per cent
(160,587)
(159,871)
68
Beowulf Mining plc Annual Report 2018
14.
SHARE CAPITAL
Allotted, called up and fully paid
At 1 January
Issued for cash
2018
Number
2018
£
2017
Number
2017
£
534,207,254
5,342,072
502,630,331
5,026,302
30,000,000
300,000
23,076,923
230,770
85,000
-
Issued in option exercise
-
-
8,500,000
Issued for acquisition of subsidiary
2,100,000
21,000
-
At 31 December
566,307,254
5,663,072
534,207,254
5,342,072
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 2018
On 22 February 2018, the Company announced that it has issued 2,100,000 ordinary shares of £0.01 to
Rasmus Blomqvist, the Company’s Exploration Manager, as the first tranche of deferred considerations pursuant
to the acquisition of Oy Fennoscandian Resources AB.
On 16 May 2018, the Company announced to issue 30,000,000 new ordinary shares to raise approximately
£1.5 million at a price of £0.05 per new ordinary share.
Shares issued in 2017
On 17 October 2017, the Company announced that Bevan Metcalf a Director, had been issued 8,500,000
new ordinary shares, as a result of the exercise of options.
On 17 May 2017, the Company announced a subscription to raise £1.5m (before expenses) through the issue
of 23,076,923 new ordinary shares of 6.5 pence each.
68
69
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
15.
SHARE-BASED PAYMENTS
During the year ended 31 December 2018, no options were granted (2017: 4,500,000). The options
outstanding as at 31 December 2018 have an exercise price in the range of 1.66 pence to 12.00 pence
(2017: 1.66 pence to 12.00 pence) and a weighted average remaining contractual life of 2 years (2017: 3
years).
The equity-settled share-based payments expense for the options for the year ended 31 December 2018 was
£196,460 (2017: £203,059).
Reconciliation of options in issue
Outstanding at 31 December 2018
Exercisable at 31 December 2018
Number
14,000,000
11,750,000
Weighted
average
exercise
price (£’s)
0.051
0.037
No warrants were granted during the year (2017: Nil).
16.
RESERVES
The following is a description of each of the reserve accounts that comprise equity shareholders’ funds:
Share capital
Share premium
The share capital comprises the issued ordinary shares of the Company
at par.
The share premium comprises the excess value recognised from the issue
of ordinary shares above par value.
Revaluation reserve
Gains/losses arising on the revaluation of the Group’s listed investments.
Prolonged declines in value at transferred to profit and loss.
Capital contribution
reserve
The capital contribution reserve represents historic non-cash contributions
to the Company from equity holders.
Share-based payments
reserve
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.
Translation reserve
Cumulative gains and losses on translating the net assets of overseas
operations to the presentation currency.
Merger reserve
The balance on the merger reserve represents the fair value of the
consideration given in excess of the nominal value of the ordinary
shares issued in an acquisition made by the issue of shares where the
transaction qualifies for merger relief under the Companies Act 2006.
Accumulated losses
Accumulated losses comprise the Group’s cumulative accounting profits
and losses since inception.
70
Beowulf Mining plc Annual Report 2018
17.
TRADE AND OTHER PAYABLES
Current:
Trade payables
Social security and other taxes
Other payables
Accruals
18.
DEFERRED INCOME
Grants
Group
Company
2018
£
122,892
8,968
9,761
66,392
2017
£
165,775
4,321
7,614
96,667
2018
£
11,997
6,457
1,758
46,746
2017
£
53,263
6,393
1,725
61,899
208,013
274,377
66,958
123,280
2018
£
192,205
2017
£
-
Deferred income is recognised from both capital and revenue grants from government bodies.
70
71
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
19.
FINANCIAL INSTRUMENTS
The Group and Company’s financial instruments comprise cash and cash equivalents, loans and investments,
trade receivables and trade payables that arise directly from its operations.
The Group and Company hold the following financial instruments:
Group
Company
Held at
amortised
cost
£
Total
£
Held at
amortised
cost
£
Total
£
At 31 December 2018
Financial assets
Cash and cash equivalents
1,533,232
1,533,232
1,470,087
1,470,087
Trade and other receivables
29,437
29,437
-
-
Loans to group undertakings
-
-
9,902,932
9,902,932
Other financial assets
5,462
5,462
2,784
2,784
1,568,131
1,568,131
11,375,803 11,375,803
Financial liabilities
Trade and other payables
199,046
199,046
60,499
60,499
Group
Company
Held at
amortised
cost
£
Total
£
Held at
amortised
cost
£
Total
£
At 31 December 2017
Financial assets
Cash and cash equivalents
1,589,897
1,589,897
1,508,321
1,508,321
Trade and other receivables
22,189
22,189
-
-
Loans to group undertakings
-
-
8,950,841
8,950,841
Other financial assets
5,530
5,530
2,784
2,784
1,617,616
1,617,616
10,461,946 10,461,946
Financial liabilities
Trade and other payables
270,056
270,056
116,887
116,887
72
Beowulf Mining plc Annual Report 2018
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, Euro and Sterling. The Group’s and Company’s net
exposure to foreign currency risk at the reporting date is as follows:
Group
Company
Net foreign currency financial
2018
(liabilities)/assets
£
Swedish Krona
Euro
10,355
107,160
2017
£
(9,784)
19,543
2018
£
9,450
126,838
2017
£
24,636
15,476
Total net exposure
117,515
9,759
136,288
40,112
Sensitivity analysis
A 10 per cent strengthening of sterling against the Swedish Krona at 31 December 2018 would have increased/
(decreased) equity and profit or loss by the amounts shown below:
Group
Swedish Krona
Euro
Total
Profit or loss
Equity
2018
£
(1,035)
(10,716)
2017
£
978
(1,954)
2018
£
(1,035)
(10,716)
2017
£
978
(1,954)
(11,751)
(976)
(11,751)
(976)
72
73
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
Company
Swedish Krona
Euro
Total
Profit or loss
Equity
2018
£
(945)
(11,966)
2017
£
(2,464)
(1,548)
2018
£
(945)
(11,966)
2017
£
(2,464)
(1,548)
(12,911)
(4,012)
(12,911)
(4,012)
A 10 per cent weakening of sterling against the foreign currencies at 31 December 2018 would have an equal
but opposite effect on the amounts shown above.
ii) Commodity Price Risk
The principal activity of the Group is the exploration for iron 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 a 12-month 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 and 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 a Standard &
Poor’s, BBB- rating as a minimum.
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. An assessment of the expected credit loss arising on intercompany loans is detailed in note
22.
The amounts used by the subsidiaries are as follows:
Jokkmokk Iron Mines AB
Beowulf Sweden AB
Wayland Copper Ltd
Oy Fennoscandian Resources AB
Gross
74
2018
£
2017
£
8,349,344
361,657
-
1,191,931
8,006,577
243,535
-
700,728
9,902,932
8,950,840
Beowulf Mining plc Annual Report 2018
c) Liquidity Risk
To date the Group and Company have relied on shareholder funding to finance 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. The rationale for the
preparation of the accounts on a going concern basis is detailed in the Report of the Directors.
Reconciliation of liabilities arising from ECLs.
Restated amount
31 December
at 1 Current year
31 December
2017
£
January 2018
£
movement
£
2018
£
ECLs
Total liabilities arising from ECLs
-
-
1,521,643
161,856
1,683,499
1,521,643
161,856
1,683,499
d) Capital Management
The Groups capital structure consists of issued capital and reserves, accumulated losses and non-controlling
interest. 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.
Net debt
Group
Cash and cash equivalents
Trade payables
Grant income
Net cash
Total equity
2018
£
1,533,232
(208,014)
(192,205)
2017
£
1,589,897
(274,377)
-
1,133,013
1,315,520
9,733,182
10,858,078
Net cash to equity ratio
11.64%
12.12%
74
75
Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
20.
SEGEMENT REPORTING
The Group’s only reportable segment is the exploration for, and the development of iron ore, graphite and
other mineral deposits. The Group also reports by geographical reportable segment in the countries in
which it operates. The Group’s exploration and development activities are focused on two countries, Sweden
and Finland, with support provided from the UK headquarters. In presenting information on the basis of
geographical reportable segments, the loss for the year, key statement of financial position data, property,
plant and equipment additions and deferred exploration additions is based on the geographical location of
the assets. The Group has adopted IFRS 8 ‘Operating Segments’. IFRS 8 requires operating segments to be
identified on the basis of internal reports that are regularly reviewed by the chief operating decision maker to
allocate resources and assets.
2018
Sweden
Finland
Kosovo
£
£
£
UK
£
Total
£
Licence and Exploration 7,408,275
4,986
Other non-current assets
51,536
Current assets
(50,530)
Liabilities
(124,908)
Expenses
Loss for the year
(124,908)
Other comprehensive
income
(258,997)
2017
Licence and Exploration 7,243,622
15,745
Other non-current assets
47,978
Current assets
(83,286)
Liabilities
(136,073)
Expenses
Loss for the year
(136,073)
Other comprehensive
income
91,353
877,272
13,775
49,334
(76,188)
(607,862)
(607,862)
-
-
-
-
(19,880)
(19,880)
-
2,784
1,495,318
(273,500)
(633,537)
(621,934)
8,285,547
21,545
1,596,188
(400,218)
(1,386,187)
(1,374,584)
(597,040)
(19,880)
(621,934)
(1,497,851)
947,610
15,581
57,639
(67,961)
(188,409)
(188,409)
947,610
15,581
57,639
(67,961)
(188,409)
(188,409)
-
2,784
1,549,312
(123,130)
(720,318)
(715,084)
8,191,232
34,110
1,654,929
(274,377)
(1,044,800)
(1,039,566)
(23,493)
(23,493)
-
67,860
76
Beowulf Mining plc Annual Report 2018
21.
RELATED PARTY DISCLOSURES
Transactions with subsidiaries
During the year, cash advances of £259,192 (2017: £369,390) were made to Jokkmokk Iron Mines AB and
incurred costs of £96,167 that were paid on behalf by the Company (2017: £236,938). 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 £8,352,377 (2017: £8,006,577).
Beowulf Sweden AB received cash advances of £88,221 (2017: £13,192) and incurred costs of £29,901
(2017: £67,379) that were paid on behalf by the Company. 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 £361,657
(2017: £243,535).
OY Fennoscandian AB received cash advances of £457,103 (2017: £433,181) and incurred costs of £41,275
(2017: £29,923) that were paid on behalf by the Company. 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 £1,199,107
(2017: £700,728).
In accordance with its service agreement, Fennoscandian charges Beowulf Mining plc for time incurred by its
staff on exploration projects held by other entities in the Group. In turn Beowulf Mining plc recharges the other
entities involved. In addition, Beowulf Mining plc charges entities in the Group for time and expenses spent by
Directors on providing services. An arm’s length margin has been included, but subsequently eliminated on
consolidation.
Transactions with other related parties
The aggregate compensation paid to key management personnel of the Company is set out below:
Short-term employee benefits (including
employers’ national insurance contributions)
Post-retirement benefits
Share based payments
Insurance
2018
£
2017
£
298,288
29,710
200,137
720
362,985
26,782
337,275
300
528,855
727,342
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Beowulf Mining plc Annual Report 2018
Notes to the Consolidated Financial Statements
Mr Rasmus Blomqvist, who currently acts as Exploration Manager is included within key management personnel
and incurred a share-based payment charge of £3,677 (2017: £134,216) as a result of the fair valuing of
shares to be issued in respect of the acquisition of Fennoscandian.
Mr Blomqvist incurred a separate charge of £87,316, with respect to the 2,000,000 options granted during the
year (2017: £81,335, with respect to the 2,000,000 options granted during the year).
Mr Rasmus Blomqvist is the Managing Director of Oy Fennoscandian Investment Group AB (‘FIG’), which during
the year, the Company paid £Nil (2017: £16,775), in accordance with a memorandum of understanding
between FIG and the Company, that the Company would have the right of first refusal to develop several assets
under investigation by FIG.
Mr Budge, a Director who served during the year had no amounts outstanding in relation to reimbursement,
(2017: £Nil).
22.
EFFECTS OF CHANGES IN ACCOUNTING POLICY – Company
The Parent adopted IFRS 9 with a transition date of 1 January 2018. The Parent has chosen not to restate
comparatives on adoption of IFRS 9 and, therefore, are not reflected in the restated prior year financial
statements. Rather, these changes have been processed at the date of initial application (i.e. 1 January 2018)
and recognised in the opening equity balances. The increase in loss allowance resulted in a reduction to
opening reserves, at 1 January 2018, as follows:
Accounts affected
At 1 January 2018
Loans from group undertakings
(opening balances as presented under IAS 39)
Total current assets
Cumulative transition adjustment
Retained earnings
At 31 December 2018
Restated total current assets balance (in accordance with IFRS 9)
£
8,950,840
8,950,840
(1,521,643)
(1,521,643)
7,429,197
The increase in the loss allowance is only as a result of the application of the ECL model. This is a result of the
existing incurred loss approach under IAS 39 being replaced by the forward-looking ECL model approach of
IFRS 9. No loss allowance had previously been recognised, as no loss event had previously occurred.
The impairment assessment of the loan has been performed using a lifetime ECL model.
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Beowulf Mining plc Annual Report 2018
The loan to group undertakings are classified as repayable on demand. IFRS 9 requires consideration of the
expected credit risk associated with the loan. As the subsidiary companies do not have any liquid assets to sell
to repay the loan, should it be recalled, the conclusion reached was that the loan should be categorised as
stage 3.
The Directors have also assessed the cash flow scenarios of the above considerations. Estimations were made
regarding the credit risk of the counterparty and the underlying probability of default in each of the credit loss
scenarios. The scenarios identified by management included Production, Divestment, Fire-sale and Failure.
These scenarios considered technical data, necessary licences to be awarded, the Company’s ability to raise
finance, and ability to sell the project. The credit risk of the intercompany loan was assessed at the date of initial
application of IFRS 9, being 1 January 2018, and again at the current year-end. There had been no change in
the significant credit risk at year-end.
23.
EVENTS AFTER THE REPORTING DATE
On 14 January 2019, Beowulf granted 9,250,000 options to the directors and employees of the Company.
The exercise price of the options are 7.35 pence per share, with a vesting period of one year. The options are
valid for five years from the date of grant.
On the 1 April 2019, the Company announced a subscription to issue 13,636,364 new ordinary shares to
raise approximately £750,000 (before expenses) at a price of 5.5 pence per new ordinary share. The funds
were used to increase the investment in Vardar Minerals Ltd by exercising the option to acquire additional shares
in the company, increasing its share in Vardar from 14.1 per cent to 31.3 per cent for cash consideration of
£500,000. On the 15 April 2019, a further investment was committed to increase the Company’s holding 31.3
per cent to 37.55 per cent for cash consideration of £250,000. The Company has an option to invest a further
£115k, bring the Company’s ownership to 40.1 per cent.
On 16 April 2019, Beowulf announced a subscription of 8,695,652 new ordinary shares of £0.01 each at
5.75p per share to raise £500,000 before expenses.
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Beowulf Mining plc Annual Report 2018
Beowulf Mining plc Annual Report 2018
(cid:36)o(cid:78)pan(cid:90) (cid:42)nfor(cid:78)ation
Directors
Mr K R Budge
Mr Christopher Davies
Mr G Färm Davies
Secretary
Mr L O’Donoghue
Registered Number & Office
Incorporated in England and Wales
02330496 (England & Wales)
Beowulf Mining plc
201 Temple Chambers
3-7 Temple Avenue
London EC4Y 0DT
Finnish Office
Swedish Registered Address
Registrars
Oy Fennoscandian Resources AB
Akademigatan 1,
20500 Åbo
Finland
All subsidiary companies
Storgatan 36,
921 31 LYCKSELE
Sweden
Neville Registrars Ltd
Neville House,18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Nominated Adviser & Broker
Swedish Custodian Bank
SP Angel
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Skandinaviska Enskilda
Banken AB
ST M7
106 40 Stockholm
Sweden
UK Bank
Public Relations UK
Public Relations Sweden
Blytheweigh Communications Limited
4-5 Castle Court
London
EC3V 9DL
Diplomat Communications
Kungsgatan 12-14
111 35 Stockholm
Sweden
Website
www.beowulfmining.com
The Royal Bank of Scotland
Piccadilly Circus Branch
48 Haymarket
London
SW1Y 4SE
Solicitors
BHW Solicitors
1 Smith Way
Grove Park
Enderby
Leicestershire
LE19 1SX
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Beowulf Mining plc Annual Report 2018
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www.beowulfmining.com