TIDMBEM
RNS Number : 6163N
Beowulf Mining PLC
24 January 2023
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law
by the European Union (Withdrawal) Act 2018. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain.
24 January 2023
Beowulf Mining plc
("Beowulf" or the " Company ")
Kallak North Scoping Study Delivers Positive Economics
Beowulf (AIM: BEM; Spotlight : BEO), the mineral exploration and
development company, is pleased to announce positive economic
results from the Scoping Study for Kallak North, part of the Kallak
Iron Ore Project ("KIOP") being developed by the Company's 100 per
cent owned subsidiary Jokkmokk Iron Mines AB ("Jokkmokk Iron"),
which boost the Company's plans to begin producing high-grade iron
concentrate in 2026.
The Scoping Study was initiated last summer following the award
of the Kallak North Exploitation Concession on 22 March 2022. The
Scoping Study gives confidence in the underlying value of the
Kallak North project, providing appropriate analyses and
interpretations to support the Company's key project decisions and
development strategies, optimising the project development plan
while minimising risks.
The Scoping Study includes design considerations to minimise
negative environmental and social impacts. Looking ahead to
Pre-feasibility, planned to begin in Q2 2023, these concepts will
be developed further along with other innovations to maximise the
value of the mined material from the Project, such as producing
construction materials as by-products.
The Scoping Study presents a 'Base Case' which is solely focused
on the Kallak North deposit. It incorporates a Mineral Resource
Estimate ("MRE") with effective date of 9 May 2021 and an economic
assessment for a mining operation producing up to 2.7 million
tonnes per annum ("Mtpa") of high-grade iron concentrate over a
production life of 14 years.
Importantly, Kallak North is only part of the KIOP. Kallak South
has defined Mineral Resources and an exploration target, and the
Company has an exploration target for its contiguous licences
further south. Pending completion of additional exploration and, if
justified, further technical work, this provides an opportunity for
expansion beyond that currently assumed in the 14 years 'Base
Case', which would utilise the fixed assets paid for by Kallak
North, such as the processing plant and other project
infrastructure.
The Company is now considering the possibility of integrating
Kallak North and Kallak South, following completion of a successful
exploration drilling on Kallak South, which could take place this
year, in combination with further technical work, and thereafter an
application for an Exploitation Concession.
Scoping Study - Economic Highlights:
-- Net Present Value ("NPV(8) ") of US$177 million, Internal
Rate of Return ("IRR") of 14.5 per cent and a Payback Period of 4.5
years from commencement of construction activity.
-- The modelled iron concentrates should find appeal with
end-users in traditional Blast Furnace ("BF") (pellet plant or
sinter plant) customers, direct reduction ("DR") route customers
(DR-grade pellet production), or with newer steel production
process routes to process BF (higher silica) grade ores with a
lower carbon footprint.
The 'Base Case' assumes 67 per cent of Kallak production is sold
to the BF market and 33 per cent is sold to the DR market
consistent over the 14 years production life.
It has been assumed for the purposes of the 'Base Case' that 100
per cent of BF-grade production will be exported to international
markets, split equally between Luleå and Narvik ports, and DR-grade
will be sold domestically to steel producers in Sweden. Suitable
steel producers may include Hybrit or H2 Green Steel. Swedish
domestic steel production regularly exceeds 4Mtpa, however it is
noted that current "green steel" production capacity within Sweden
is only at demonstration scale.
The Marketing Study completed by Vulcan Technologies Pty Ltd
("VulcanTech") noted a potential upside in producing a higher
proportion of DR-grade, through the reduction in silica content by
reverse flotation of the iron concentrate. The Company will be
investigating this opportunity in Pre-feasibility, to both maximise
potential revenues and enhance product acceptance in the
anticipated growth of DR-based steel making projects.
-- The economic assessment uses long-term prices of US$109/dry
metric tonne ("dmt") for BF and US$125/dmt for DR which have been
derived by VulcanTech incorporating various value in use
adjustments based on a review of Consensus Economics and Wood
Mackenzie data, and a long-term consensus reference benchmark of
Platts62 Fe IODEX of US$80/dmt (USc129/dmtu) where all prices are
assumed as real terms and dated 1 January 2023. BF product point of
sale is considered CFR Rotterdam, and DR product point of sale is
assumed to be an in-country off-taker in Norrbotten.
-- Kallak concentrates are viewed as high-grade concentrates
that will yield significant premiums over and above the Platts65
iron ore index pricing in the long term. The desire to reduce steel
making carbon emissions presents a unique opportunity for
Beowulf.
Using current spot prices to calculate US$161/dmt for BF and
US$177/dmt for DR and still assuming the conservative production
split of 67 per cent being sold to BF and 33 per cent being sold to
DR the NPV(8) increases by 479 per cent to US$852 million.
However, it should be noted that current spot prices
significantly exceed the current long-term consensus market
forecasts for iron ore, and current spot prices are unlikely to be
maintained throughout the production life.
-- 'Base Case' Total Sales Revenue exclusive of any realisation
costs of US$3.7 billion, Operating Costs of US$2.2 billion, an
EBITDA of US$1.5 billion. All values are in real terms as on 1
January 2023. A 20 per cent contingency is applied to mining
operating costs and all capital costs only. No contingencies have
been allowed for in other operating costs.
-- Total cash costs at the point of sale (CFR Rotterdam or
in-country off-taker) average US$87.3 dmt sold (USc127.1/dmtu).
-- Total capital costs of US$602 million (including 20 per cent
contingency applied to all capital costs), split US$463 million
pre-production capital and US$138 million sustaining capital.
Excluding contingency, total capital is US$501 million, split
US$386 million pre-production and US$115 million sustaining.
-- Post-tax Pre-finance Net Free Cash Flow of US$667 million.
The financial metrics reported are derived from real-terms (1
January 2023) post-tax pre-finance cashflows at a real discount
factor of 8 per cent. The Scoping Study assumes a capital
construction and ramp-up to full production period of three years,
following completion of further technical studies (Pre-feasibility,
Feasibility and environmental studies), associated stakeholder
engagement process, successful permit applications, and financing
arrangements. The Company is planning to begin producing in
2026.
Kurt Budge, Chief Executive Beowulf Mining commented:
"This is a huge step forward for Beowulf and Jokkmokk Iron, to
have a Scoping Study with positive economics and massive upside
potential, especially the positive sensitivity to price, which
increases the NPV(8) from US$177 million to US$852 million using
current spot prices.
"Beowulf's commitment to Kallak has so far lasted 16 years,
getting the work done, being undaunted by political impasse, to
emerge on the other side with an Exploitation Concession and now a
Scoping Study with positive economics.
"Last year, the Company's application was found to have met the
requirements for an Exploitation Concession, and this is testament
to the depth and quality of the work completed by Jokkmokk Iron's
Swedish technical team. The same attention to detail is now being
applied to the Environmental Permit application.
"The Scoping Study results give the Company a solid foundation
on which to build the most modern and sustainable mining operation
possible. Ulla Sandborgh is leading our efforts towards our goal of
bringing the Kallak North mine into production in 2026 and has
brought new energy to the project, directly engaging with different
groups in the community and re-establishing Jokkmokk Iron as one of
Jokkmokk's key local businesses.
"We know there will be challenges ahead and that not everyone
supports the development of a mine, but our employees are listening
to everyone, including those who don't necessarily agree with us.
All we hope for is constructive and inclusive dialogue with all key
stakeholders, and for all voices to be heard and all opinions
listened to.
"With the Scoping Study complete, we can now focus on completing
a successful Capital Raising to support the next steps, including
completion of our work programme and really get moving on Kallak.
We are seriously excited about the future and all the
possibilities. "
Ulla Sandborgh, Chief Executive Jokkmokk Iron commented:
"Swedish mining is crucial in the transition to a sustainable
society. New, climate-smart technology requires a greater amount of
minerals than fossil-based technologies. The demand for minerals
will thus clearly increase. Kallak is excellently positioned as a
potential sustainable supplier of high-quality iron concentrate
needed in the Swedish, Nordic, and European growing green
steelmaking sector.
"We will be a natural part of the development of Jokkmokk as a
society by building partnerships with other companies and bringing
new jobs into this area of Norrbotten. For Jokkmokk, a mine will
create about 700 jobs over a potential long period of time. This is
done with an integration of Kallak North and Kallak South and the
synergies that would create.
"We look forward to continuing the work with the environmental
permit and the planning of the area with huge respect for the
environment, nature, culture and reindeer husbandry."
Scoping Study Details
The Scoping Study was prepared by independent consulting firm
SRK Consulting (UK) Ltd ("SRK") and is based on the Mineral
Resource Estimate prepared by Baker Geological Services Ltd,
effective 9 May 2021, according to Pan-European Reserves and
Resources Reporting Committee ("PERC") Standard, 2017. PERC is a
member of CRIRSCO, the Committee for Mineral Reserves International
Reporting Standards, and the PERC Reporting Standard is fully
aligned with the CRIRSCO Reporting Template. The PERC standards are
internationally recognised and allow the reader to compare the
Mineral Resource with that reported for similar projects.
From 1 January 2023, disclosures in accordance with the PERC
Standard must be made to PERC Standard 2021. As previously
envisaged, the Scoping Study was largely complete by the end of
2022 and it is only the announcement of results that has fallen
into 2023. To be fully compliant, the Company is now assessing the
changes in standards and performing a reconciliation to demonstrate
that the MRE, as it supports all other aspects noted in the Scoping
Study, remains current and valid.
The reader is advised that the Scoping Study summarised in this
press release is preliminary in nature and is intended to provide
an initial, high-level review of the Kallak North project's
economic potential and development options. The Scoping Study mine
schedule and economic model include numerous assumptions and the
use of Inferred Mineral Resources. Inferred Mineral Resources are
considered to be too speculative geologically to have economic
considerations applied to them that would enable them to be
categorised as Mineral Reserves, and there is no certainty that the
Scoping Study will be realised. Mineral Resources that are not
Mineral Reserves do not have demonstrated economic viability.
Economic Sensitivity
Generic sensitivities to NPV and IRR have been tested,
reflecting changes in sales prices (revenue), operating costs and
capital costs, the results of which are shown below. The project is
most sensitive to concentrate sales prices.
Marketing
An independent marketing study was completed by VulcanTech, an
Australian company, to support the pricing assumptions used in the
Scoping Study, and to model the potential premiums for Kallak's
high-grade magnetite concentrate. VulcanTech considered traditional
and non-traditional market opportunities that might be served by
Kallak concentrates. VulcanTech specialises in the modelling of
iron and steel making processes.
In the Kallak North Scoping Study, it has been assumed that
high-grade magnetite concentrate sales will be split with 67 per
cent sold as BF-grade (higher silica) and the remainder 33 per cent
sold as DR-grade (at lower silica).
The proposed chemistries for these two products are detailed in
the table below. Kallak has the potential to produce two BF-grade
products, with one containing up to 10 per cent hematite.
DR-grade BF-grade 1 BF-grade 2
-------- ---------- ----------
Proportion of production 33 % 67 % 67 %
------------------------- -------- ---------- ----------
Fe 70.08 68 68
------------------------- -------- ---------- ----------
Fe(2) O(3) * 2.17 10 0
------------------------- -------- ---------- ----------
Fe(3) O(4) * 94.75 84.3 94.0
------------------------- -------- ---------- ----------
SiO(2) 1.77 4.4 4.7
------------------------- -------- ---------- ----------
Al(2) O(3) 0.15 0.15 0.15
------------------------- -------- ---------- ----------
P 0.002 0.002 0.002
------------------------- -------- ---------- ----------
S 0.001 0.001 0.001
------------------------- -------- ---------- ----------
Mn 0.382 0.382 0.382
------------------------- -------- ---------- ----------
CaO 0.08 0.08 0.08
------------------------- -------- ---------- ----------
MgO 0.12 0.12 0.12
------------------------- -------- ---------- ----------
TiO(2) 0.03 0.03 0.03
------------------------- -------- ---------- ----------
In addition to the high iron grades, the Kallak products show
ultra-low phosphorus and sulphur content, low alumina and titania,
and slightly-elevated manganese. The manganese in correct
proportions can be considered as advantageous to steel makers,
since most steel grades require manganese additions in the steel
refining processes, normally added via expensive ferro-manganese
wire.
Fluoride content is very low at 70 ppm, chemical elements not
noted are of levels deemed below threshold levels for steel making
operations.
The VulcanTech study noted the potential upside in the
proportion of the DR-grade production through the reduction in the
silica content through reverse flotation of the concentrate.
The modelled concentrates are expected to target traditional BF
customers, pellet plant or sinter plant, BR route customers,
DR-grade pellet production, or with newer process routes to process
BF, higher silica grade ores with a lower carbon footprint.
The forecast Kallak concentrates are viewed as high grade
concentrates that will yield significant premiums over and above
the Platts65 iron ore index pricing in the long term.
Process models of the BF and Electric Arc Furnace ("EAF") steel
production routes were used to calculated breakeven Value In Use
("VIU") for the different concentrate grades with premiums of
US$10-14/dmt for BF-grade product and US$16-39/dmt for DR-grade
product.
The Kallak North 'Base Case' uses long-term Platts62 price of
US$80/dmt (USc129/dmtu); a Platts65 price of US$99/t (USc160/dmtu);
and assumes a price of US$109/dmt (USc176/dmtu) for BF product
(US$10/dmt premium over Platts65) and US$125/dmt (USc202/dmtu) for
DR-grade product (US$26/dmt premium over Platts65). All prices are
in real terms as of 1 January 2023.
Platts62 and Platts65 refer to the Platts Iron Ore Index for 62
per cent Fe and 65 per cent Fe products, a benchmark assessment by
S&P Global Commodity insights of the spot price of physical
iron ore. The Platts62 assessment (IODBZ00) is based on a standard
specification of iron ore fines with 62 per cent iron, 8 per cent
moisture, 2.25 per cent alumina, 4 per cent silica, 0.02 per cent
sulphur and 0.09 per cent phosphorous, amongst other gangue
elements. The Platts65 (IOPRM00) assessment is based on a standard
specification of iron ore fines with 65 per cent iron, 8.5 per cent
moisture, 3.5 per cent silica, 1 per cent alumina and 0.075 per
cent phosphorous. Point of sale is for both products is CFR
Qingdao, China.
At this time, Jokkmokk Iron has no offtake agreements.
Environmental, Social, Governance
The vision for the KIOP is to provide iron concentrates to feed
the burgeoning low-carbon steel industry in Sweden and Europe. The
energy transition currently underway requires a step-change in raw
material production - both primary (mining) and secondary
(recycling). Wind turbines, solar panels, electric vehicles, along
with the electrical infrastructure required to allow these
low-carbon technologies to function, are reliant on high-quality
steel.
Beowulf and Jokkmokk Iron understand that developing Kallak
North will come with environmental and social challenges. The land
on which the deposit sits is used by indigenous reindeer herding
communities of the Jåhkågasska tjiellde Sámi village (sameby). The
Sámi community - including the Sámi council (Sámirá i) - have
objections to a mining development, being concerned that Kallak
will affect reindeer herding in terms of a loss of grazing lands,
creating a barrier to free movement and other social and
environmental impacts.
As part of the Scoping Study, SRK and the Company have made a
preliminary identification of the bio-physical, socio-economic and
cultural issues potentially arising from the Project and how this
may affect the reindeer herding communities. Definition of the
associated impacts will be the subject of ongoing dialogue with
potentially affected stakeholders, including the Sami villages, as
part of the updated environmental and social impact assessment
(ESIA, or miljökonsekvensbeskrivning [MKB]) that is currently being
planned to update the preliminary MKB produced as part of the
Kallak K nr 1 Exploitation Concession (Bearbetningskoncession)
application in 2013.
At this stage of study, during early Project planning, the focus
is on avoiding potential impacts as far as practicable and starting
to identify the design and operational controls that can mitigate
impacts, which cannot be avoided.
The Scoping Study has included the following design
considerations to minimise negative environmental and social
impacts:
-- Assessment of alternative tailings storage facility locations
to reduce surface footprint and potential community health
risks.
-- Fully electric mining and concentrate transport fleet from start-up of operations, including trolley-assisted charging. This will take advantage of the low-intensity greenhouse gas emissions of the Swedish national grid, dominated by hydroelectric power and wind.
-- Optimisation of the pit to balance value from extracted ore
with waste rock production, not simply focussed on maximising
profitability. This has minimised the surface footprint of the
planned waste rock dumps along with post-processed tailings
waste.
-- Concentrate transport route planned to avoid the Laponia World Heritage site to the north.
-- Concentrate transport using battery electric heavy good's
vehicles and existing rail infrastructure.
-- Abatements around the pit crest to reduce noise, dust and visual impacts.
As part of the Pre-feasibility Study, planned to begin in Q2
2023, these concepts will be developed further along with other
innovations to maximise the value of the mined material, such as
producing construction materials as by-products.
It is the Company's aim to operate the Kallak North mine
alongside Sámi reindeer husbandry and local landowners, and the
Company is committed to ensuring land is restored and rehabilitated
on closure suitable for those that will use it. This requires close
communication and sharing of ideas, which has been achieved for
other projects across the Sápmi area of Sweden, Finland and Norway.
Jokkmokk Iron has re-initiated the stakeholder engagement process
with local Sámi communities through consultation and held meetings
in Jokkmokk, with both the Sámi communities and other local
stakeholders.
Stakeholder Engagement
Recognising the historical and current opposition to the
Project, the presence of indigenous people and the risk to the
permitting processes, the Company intends to undertake close
communication and sharing of ideas with key stakeholders. Jokkmokk
Iron has re-initiated the stakeholder engagement process with local
Sámi communities and held meetings in Jokkmokk with both the Sámi
communities and other local stakeholders. Since the Kallak North
Exploitation Concession was awarded, there has been one information
meeting in Jokkmokk held in December 2022, with more meetings
planned before formal consultation on the draft Environmental
Permit begins. An initial meeting with reindeer herders took place
in autumn 2022, though the most impacted Sami village abstained
from attendance, and four meetings per year are planned in the
future. Meetings with authorities are ongoing.
Permitting
The MRE declared in May 2021 (Baker, 2021) for the Kallak North
area and used in the 'Base Case' of the Scoping Study is covered by
the Kallak K nr 1 Exploitation Concession granted to Jokkmokk Iron
on 22 March 2022. Beowulf also owns Exploration Permits (Swedish:
Undersökningstillstånd) surrounding and adjacent to the
Exploitation Concession (Kallak nr 1 and Parkijaure nr 2), along
with 3km to the south (Parkijaure nr 6 and 7) and 15km northeast
(Ågåsjiegge nr 3).
Beowulf's Exploration Permits include defined Mineral Resources
at Kallak South, along with Exploration Targets (as defined by
PERC) within Parkijaure nr 2, 6 and 7 permits. This identified
additional iron mineralisation, in the Company's view supports the
possibility, following completion of successful exploration and
additional technical studies, of a longer life and sustainable
mining operation beyond the current Kallak North 'Only' 'Base
Case'. In addition, the Company has the Agåsjiegge nr 3 licence,
which the Swedish Geological Survey ("SGU") has previously
estimated contains magnetite iron mineralisation (not
classified).
EXPLOITATION CONCESSION
----------- ----------- ----------- ----------- -----------
NAME LICENCE ID AREA (km2) APPL_DATE VALID FROM VALID TO
-------------------------- ----------- ----------- ----------- ----------- -----------
Kallak K nr 1 BK-2022:1 1.03 25/04/2013 22/03/2022 22/03/2047
-------------------------- ----------- ----------- ----------- ----------- -----------
EXPLORATION LICENCES
-------------------------- ----------- ----------- ----------- ----------- -----------
NAME LICENCE ID AREA_HA VALID FROM VALID TO
-------------------------- ----------- ----------- ----------- ----------- -----------
Kallak nr 1 2006:197 5.00 28/06/2006 28/06/2023
-------------------------- ----------- ----------- ----------- ----------- -----------
Parkijaure nr 2 2008:20 2.85 18/01/2008 18/01/2025
-------------------------- ----------- ----------- ----------- ----------- -----------
Parkijaure nr 6 2019:81 9.99 10/10/2019 10/10/2024
-------------------------- ----------- ----------- ----------- ----------- -----------
Parkijaure nr 7 2021:47 22.12 16/06/2021 16/06/2024
-------------------------- ----------- ----------- ----------- ----------- -----------
Ågåsjiegge nr 3 2021:73 27.71 27/10/2021 27/10/2024
-------------------------- ----------- ----------- ----------- ----------- -----------
The Kallak North Exploitation Concession provides Jokkmokk Iron
with exclusive mining rights in the defined areas for a period of
25 years; however, before operations can start three additional
permits are required:
1. Environmental Permit (Swedish: Miljötillstånd) will be
applied for following completion of an Environmental Social Impact
Assessment ("ESIA") and associated stakeholder engagement
process;
2. Land Designation Permit (Swedish: Markanvisning) will be
required to define the industrial area associated with the mining
operation (such as tailings, waste rock, processing plant) and also
involves stakeholder engagement; and
3. Building Permit (Swedish: Byggnadstillstånd) will be required prior to construction.
Mineral Resource Estimate
The Scoping Study is based on the MRE prepared by Baker
Geological Services Ltd, effective 9 May 2021, according to
Pan-European Reserves and Resources Reporting Committee ("PERC")
Standard, 2017. PERC is a member of CRIRSCO, the Committee for
Mineral Reserves International Reporting Standards, and the PERC
Reporting Standard is fully aligned with the CRIRSCO Reporting
Template. The PERC standards are internationally recognised and
allow the reader to compare the Mineral Resource with that reported
for similar projects.
From 1 January 2023, disclosures in accordance with the PERC
Standard must be made to PERC Standard 2021. As previously
envisaged, the Scoping Study was largely complete by the end of
2022 and it is only the announcement of results that has fallen
into 2023. To be fully compliant, the Company is now assessing the
changes in standards and performing a reconciliation to demonstrate
that the MRE, as it supports all other aspects noted in the Scoping
Study, remains current and valid.
The MRE defined resources for three separate deposits, Kallak
North, Kallak South North and Kallak South South and included
exploration targets across the Company's permit areas.
The Scoping Study 'Base Case' only includes the Kallak North
deposit, 111Mt of Measured and Indicated Resource grading 28 per
cent iron ("Fe(Total) ") and 25Mt of Inferred Resources grading
28.3 per cent Fe(Total) .
See below for (a) Plan, (b) Cross Section and (c) Isometric
views of Kallak North and Kallak South (North and South):
Mineral Resource :
Notes:
(1) Mineral Resources, which are not Mineral Reserves, have no
demonstrated economic viability.
(2) The effective date of the Mineral Resource is 9 May
2021.
(3) The Open Pit Mineral Resource Estimate was constrained
within lithological and grade-based solids and within an optimised
pit shell defined by the following assumptions; base case metal
price of USD130 / tonne for a 65% Fe concentrate; Fe recovery of
71% at Kallak North, 86% at Kallak South North and 94% at Kallak
South South; Fe concentrate grades of 68% at Kallak North, 70% at
Kallak South North and 69% at Kallak South South; Processing costs
of USD6.8 / t wet; Selling cost of USD21.0 / t wet concentrate;
Mining cost of Ore of USD3.3 / t, mining cost of waste of USD3.0 /
t and an incremental mining cost per 10 m bench of USD0.05 / t;
Wall angles of 30deg within the overburden and 47.5deg in the fresh
rock.
(4) Regarding the KSS Pit only, the Parkijaure lake boundaries
with a 50m offset have been used as an input constraint for the
optimisation process.
(5) Mineral Resources have been classified according to the PERC
Standards 2017, by Howard Baker (FAusIMM(CP)), an independent
Competent Person as defined in the PERC Standard 2017.
Exploration Targets
In addition to the MRE, BGS updated the Exploration Target for
KIOP with inclusion of the Parkijaure permit areas.
At Kallak North, material has been modelled below the currently
classified resource. This material is unclassified at present but
represents a valid target for future exploration. Based on the
geological model created, along with the grades seen in Kallak
North, BGS has reported an Exploration Target of between 3 Mt and
7.5 Mt grading between 20-30 per cent Fe(Total) . The potential
quantity and grade are conceptual in nature as there has been
insufficient exploration to estimate a Mineral Resource; and that
it is uncertain if further exploration will result in the
estimation of a Mineral Resource.
In the Kallak licence area, a 'Gap' exists between Kallak South
North and Kallak South South and represents a prospective untested
mineralisation target. BGS estimated an approximate tonnage and
grade of material lying between Kallak South North and Kallak South
South. A simple wireframe was generated to allow for an approximate
volume of mineralised material to be estimated with the thickness
and orientation of this wireframe being based on the continuation
of the mineralised units modelled at Kallak South North and Kallak
South South along with the geophysical signature observed. Two
drillholes exist in this area; both are shallow and did not
intercept any mineralisation of material width or grade, although
the southern drillhole, KAL10044, within the gap, did encounter
some of reported copper/gold mineralisation. Given the geophysical
signature within the gap and the overall synform structure
proposed, it is possible that the iron bearing lithologies lie
below the two drillholes completed within this area.
Based on the wireframe created, along with the grades seen in
Kallak South North and Kallak South South, BGS report an
Exploration Target of between 25 Mt and 75 Mt grading between 20-30
per cent Fe(Total) . The potential quantity and grade are
conceptual in nature as there has been insufficient exploration to
estimate a Mineral Resource; and that it is uncertain if further
exploration will result in the estimation of a Mineral
Resource.
In the Parkijaure licence areas, mapping, sampling, geophysical
surveys and SGU historical drilling has indicated the presence of
further iron mineralisation and an extension to the mineralisation
observed at Kallak.
Limited outcrop exists within the Parkijaure area and in
general, the magnetic anomaly data is less intense than in the
Kallak area. This is possibly a factor of the deeper glacial till
material in the southern permits or potentially a more disseminated
style of mineralisation.
BGS assessed all available data for the Parkijaure areas and
created simple trace lines along the magnetic anomalies considered
strong enough to be related to significant iron mineralisation.
Based on the trace lines created, having a total strike length
of 4.5km, limiting the depth of mineralisation to 200m and the
width of mineralisation to 30m, BGS has reported an Exploration
Target of between 45Mt and 135Mt grading between 20-30 per cent
Fe(Total) . The potential quantity and grade are conceptual in
nature as there has been insufficient exploration to estimate a
Mineral Resource; and that it is uncertain if further exploration
will result in the estimation of a Mineral Resource.
In total, BGS has reported an Exploration Target of between 73Mt
and 218Mt grading between 20-30 per cent Fe(Total) . The potential
quantity and grade are conceptual in nature as there has been
insufficient exploration to estimate a Mineral Resource; and that
it is uncertain if further exploration will result in the
estimation of a Mineral Resource.
For further details follow link to Company announcement on 25
May 2021 titled 'Kallak Iron Ore Project - Mineral Resource
Estimate and Exploration Target Upgrade':
https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/x8q5k9x
Mining
The Mining method selected for Kallak North will be open pit
conventional mining. To identify the economic limit of the open pit
mine, a pit optimisation study was conducted. Within the pit
optimisation, multiple scenarios were tested in a trade-off study
with varying production rates and equipment choices. From the pit
optimisation - pit shells were selected which optimise extraction
and minimise Waste Rock stripping.
The Company selected a smaller revenue factor ("RF") pit shell
(RF 0.76 corresponding to an assumed long-term price of
Usc123/dmtu)) which reduced the Waste Rock Dump size by 25 per cent
relative to the RF1 pit (corresponding to Usc161/dmtu) and only
reducing the total Mineral Resources Mined by 5.5%, thereby
reducing the impact on the environment. The pit optimisation study
also identified an opportunity to stockpile low grade ore and feed
higher grade ore earlier in the life of the mine, thereby
optimising cashflow. A stockpiling capacity of up to 10.7Mt was
assumed for the mine.
The pit optimisation results guided staged pit designs
comprising of one (1) cutback design and a final pit design which
was based on preliminary geotechnical bench geometry and 35m width
haul ramps to accommodate trolley-assist infrastructure. The pit
was designed such that the overall slope angle not exceeding 47.5
degrees for fresh rock and 30 degrees for overburden. The final pit
design physicals include 117.7Mt of Ore of which 16.8Mt (14 per
cent) is classified as Inferred mineral resources. The final pit
will be 270m deep, 0.6km wide and 1km in length as shown in the
figures below:
Guided by the pit optimisation study strategic scheduling, a
Life of Mine Plan ("LoMp") production schedule was developed to
provide optimised throughput to the processing plant. Within the
LoMp an effective sink rate was set to not exceed 100m per annum.
The LoMp utilises stockpiles to optimise feed to the processing
plant during Years 6 and 7 (Y6 & Y7) where a drop of ore
tonnage mined occurs. The LoMp schedule ramps up to a total ex-pit
tonnes mined of 20Mtpa mined over 13 years. A steady state of 9Mtpa
Magnetite Ore feed to the processing plant over 14 years was
scheduled by a combination of feed from the stockpiles and the pit.
The Kallak North Mining LoMp and Processing tonnage delivered is
shown in the graphs below:
The mining cost assumes a contractor mining model, which reduces
the up-front mining capital expenditure to the Company but includes
a contractor mark-up on the mining operating cost. A conceptual
haulage analyses identified that at 20Mtpa ex-pit moved, two (2)
electric Hitachi EX2600-7 Primary Excavators matched with seven (7)
Trolley-assist Battery-electric Hitachi EH3500 AC-3 Dump Trucks
will be required. The Hitachi dump trucks are fitted with large
batteries which are being charged whilst the truck is powered by
overhead trolley lines. These units were selected to meet the
Company's design objectives of a Net Zero mining operation,
utilising renewable energy and reducing Scope 1 carbon
emissions.
The approach to costing the mining aspects of the Scoping Study
was conceptual in nature, based on benchmark information and has an
approximate +/- 50 per cent accuracy level. For a Scoping Study,
SRK considers this approach to be suitable to prove the robustness
of the mine. Moving to Pre-feasibility, a first principles mining
cost calculation based on detailed equipment simulations will be
required.
Metallurgy and Processing
To date, testwork has demonstrated the potential to produce a
high-grade concentrate with very low levels of deleterious elements
from the magnetite-dominant ore from Kallak North, at high
magnetite recoveries using a conventional magnetite iron ore
processing circuit.
Achieving the high final concentrate grade requires a relatively
fine grind size and a final separation stage, which conventionally
might be by flotation, although as the 2021 testwork showed, might
also be achieved using a newly developed, non-flotation
process.
The magnetite ore Fe recovery figure of 71 per cent, used for
the Scoping Study, is based on Davis Tube testwork, and represents
the average Fe recovery from that testwork, and is expressed in
terms of the total head Fe grade. The hematite ore Fe recovery
figure of 27 per cent, used for the Scoping Study, is based on
pilot testwork with no further optimisation; additional testwork
may lead to potential higher hematite recoveries.
Waste Management
The Scoping Study included an assessment of the Tailings Storage
Facility ("TSF") solutions, including sub-aqueous and on-land
tailings storage options. A total of 10 alternatives were modelled
in proximity to the Kallak North open pit and processing plant
location.
The site selected for the 'Base Case' is located in close
proximity to the open pit and processing plant, occupies minimal
land space and ranked favourably, though not the highest, as part
of a multi-criteria assessment using environmental and social
criteria. The analysis demonstrated that sub-aqueous disposal of
the tailings from Kallak North ranked highest in the multi-criteria
assessment; while not being used for the 'Base Case', this option
will be studied further during Pre-feasibility.
For the purposes of the Scoping Study assessment, it was assumed
that thickened tailings ( 50 per cent solids w/w) is the preferred
dewatering technology for this Project; allowing considerably more
flexibility with regards to both sub-aqueous and on-land storage
options in the Kallak area.
The concept design for tailings deposition is a valley
impoundment structure, which will include an engineered liner
system to ensure environmental containment. A starter embankment
will be constructed of non-acid generating ("NAG") waste rock
material. This will provide sufficient storage capacity for up to
two years of tailings production. It has been assumed the
embankment will be raised throughout the LoM using the downstream
construction method.
The design aims to maximise waste rock usage in the outer shell,
whilst minimising the required volume of imported fill materials to
construct the seepage control elements. To provide seepage
containment, a layered system with a high-density polyethylene
("HDPE") liner, geosynthetic clay liners ("GCL") liner and filter
layer was allowed for on the upstream side of the TSF embankment
and across the base of the facility along with appropriate lined
diversion channels to divert clean run-off water around the
embankment.
Tailings are anticipated to be deposited into the facility via a
slurry delivery pipeline system which will be placed on the starter
embankment crest.
Infrastructure and Logistics
The Project is located in the Jokkmokk municipality, north of
the Arctic Circle, approximately 40km west of Jokkmokk city centre
and 80km southwest of the major iron ore mining centre of
Malmberget in the county of Norrbotten, northern Sweden. LKAB's
Kiruna iron ore mine, the world's second largest underground mine,
is located approximately 120km to the northeast.
Jokkmokk is located on the national road E45 which connects to
Gällivare with the major east-west route national road, the E10,
connecting Gällivare to Luleå, Boden, and Narvik. Access to the
Project area comprises all-weather gravel roads passing through the
project area and connecting to the E45; and all parts are easily
reached by well used forestry tracks.
By rail, Jokkmokk is located on the Inlandsbanan Railway, a
north-south railway connecting Gällivare in the north to Östersund
in the south. Gällivare is on the main west-east railway, the
Malmbanan line connecting Port of Narvik (Norway) and Port of
Luleå, which carries significant quantities of iron concentrate
predominantly to Narvik, but also through Luleå. Iron concentrate
can also be trucked by road to the Malmbanan line, which is within
100km of the Project, and which is the base-case for the project.
Battery electric heavy goods vehicles, which are already in
operation across the Nordic region, are proposed.
Kallak is well connected by road and rail infrastructure with
distance to major ports and cities presented below:
Route Options from Kallak North:
Destination Road Distance Road to Jokkmokk + Rail
Luleå, Sweden 205 349
-------------- ------------------------
Skellefteå, Sweden 298 458
-------------- ------------------------
Narvik, Norway 419 402
-------------- ------------------------
Boden, Sweden 169 309
-------------- ------------------------
The Parki hydroelectric power plant, capacity 85 MW, is only 6km
from Kallak connecting to the 400 kV power transmission line (the
main Swedish transmission grid). Jokkmokk Iron has commenced
discussions with the local power operator regarding allocation of
power for the project.
It has been assumed for the purposes of the 'Base Case' that 100
per cent of BF-grade production will be exported to international
markets, split equally between Luleå and Narvik ports, and DR-grade
will be sold domestically in Sweden.
Kallak Location and Regional Infrastructure:
Operating and Capital Expenditure
Capital and operating costs for the project have been estimated
from benchmark information for similar projects in the region. Cost
estimates from public domain sources have been scaled for the
production rate and escalated from their original dates to 2023
figures before being averaged to generate the estimated figure.
Where appropriate, costs have also been benchmarked against the
subscription CostMine database. The table below provides a summary
of the unit operating costs applied. A 20 per cent contingency has
been applied to mining costs only.
Operating Costs Units Unit Operating Cost Total Operating Cost (US$ millions)
Mining US$/t mined 2.85 516
--------------------------- ------------------ -------------------- ------------------------------------
Processing US$/ t processed 6.30 742
--------------------------- ------------------ -------------------- ------------------------------------
Site and Infrastructure US$/ t processed 0.27 32
--------------------------- ------------------ -------------------- ------------------------------------
Transport and Logistics US$/ t processed 7.07 832
--------------------------- ------------------ -------------------- ------------------------------------
Tailings Storage Facility US$/ t processed 0.16 19
--------------------------- ------------------ -------------------- ------------------------------------
Water Related Costs US$/ t processed 0.04 5
--------------------------- ------------------ -------------------- ------------------------------------
G&A US$/ t processed 0.50 59
--------------------------- ------------------ -------------------- ------------------------------------
Royalty (0.2%) US$/ t processed 0.06 7
--------------------------- ------------------ -------------------- ------------------------------------
Total Operating Cost US$/ t processed 18.79 2,212
--------------------------- ------------------ -------------------- ------------------------------------
Total cash costs at the point-of-sale average US$87.3 dmt sold
(USc127.1/dmtu) over the Life of Mine.
Capital costs are also shown below, split between pre-production
capital and sustaining capital. Contingency of 20 per cent is shown
as a line item.
Capital Costs Initial Capital (US$ millions) Sustaining Capital Total Capital
(US$ millions) (US$ millions)
Mining 54 0.2 54
--------------------------- ------------------------------- ------------------- ----------------
Processing 180 0 180
--------------------------- ------------------------------- ------------------- ----------------
Transport and Logistics 80 0 80
--------------------------- ------------------------------- ------------------- ----------------
Power 35 0 35
--------------------------- ------------------------------- ------------------- ----------------
Tailings Storage Facility 45 96 141
--------------------------- ------------------------------- ------------------- ----------------
Water Related Costs 2 1 3
--------------------------- ------------------------------- ------------------- ----------------
Closure 0 10 10
--------------------------- ------------------------------- ------------------- ----------------
Sub-total 386 115 501
--------------------------- ------------------------------- ------------------- ----------------
Contingency (20%) 77 23 100
--------------------------- ------------------------------- ------------------- ----------------
Total Capital Costs 463 138 602
--------------------------- ------------------------------- ------------------- ----------------
Glossary:
A Dry Metric Tonne Unit (dmtu) is the internationally
agreed-upon unit of measure for iron ore pricing. It has the same
mass value as a metric tonne, but the material has been dried to
decrease the moisture level. A dry metric tonne unit consists of 1
per cent of iron (Fe) contained in a tonne of ore, excluding
moisture. The price per tonne of a certain quantity of iron ore is
calculated by multiplying the cents/dmtu price by the percentage of
iron content. Iron ore contracts are quoted in US Cents.
Fe(Total) - Total iron content in all minerals present in the
mineralised material.
Fe(Mag) - I ron present as magnetite (or magnetic iron) or Fe
(2) O (3) - which is the commonly reported oxide of iron
Competent Person Review
The Scoping Study was prepared by independent consulting firm
SRK Consulting (UK) Ltd ("SRK").
The Scoping Study refers to the Mineral Resource Estimate
prepared by Baker Geological Services Ltd ("BGS") and announced on
25 May 2021. Follow the link to Company announcement 'Kallak Iron
Ore Project - Mineral Resource Estimate and Exploration Target
Upgrade':
https://polaris.brighterir.com/public/beowulf_mining_plc/news/rns/story/x8q5k9x
Howard Baker of BGS is a Competent Person ("CP") as defined by
the PERC Code. Mr Baker has reviewed the technical information as
it relates to the MRE referred to in this announcement and approves
the disclosure of technical information regarding the MRE in the
form and context in which it appears.
About Jokkmokk Iron and Kallak
The Kallak deposit is located west of Jokkmokk in the County of
Norrbotten. Kallak was discovered by The Swedish Geological Survey
("SGU") in the 1940s. The first exploration licence for Kallak was
awarded by the Mining Inspectorate of Sweden in 2006. Drilling was
conducted at Kallak North and Kallak South between 2010-2014, a
total of 131 holes and 27,895 metres. An Exploitation Concession
for Kallak North was applied for in April 2013 and was finally
awarded in March 2022; it is valid until 22 March 2047.
At Kallak, the iron mineralisation in the ground, that is to be
mined, contains approximately 28 per cent iron content ("Fe(Total)
") which, through enrichment, can be upgraded to a 'market leading'
concentrate containing 71.5 per cent Fe(Mag) . The high-grade
concentrate makes Kallak production attractive to downstream
markets, such as fossil-free steelmakers in the Nordic region and
the rest of Europe.
Kallak magnetite concentrate would reduce the carbon footprint
of traditional steel manufacturing, improve energy efficiency in
any downstream process and reduce waste; magnetite's inherent
energy content, ultimately results in lower energy demand for steel
manufacturing when compared to current common practice.
It is the Company's ambition for the operation at Kallak to be
one of Sweden's most sustainable mining operations, where the start
of fossil-free steel production begins with primary raw material
from Kallak.
The development of Kallak will also bring opportunities for the
local community in Jokkmokk. Investment and the creation of much
needed jobs at Jokkmokk Iron will indirectly create additional jobs
locally, encouraging the establishment of new companies and a
reversal of the depopulation that has afflicted Jokkmokk over
recent years. This will contribute to a strong and vibrant Jokkmokk
community in the years ahead.
The Kallak deposit is being developed by Jokkmokk Iron, a 100
per cent owned subsidiary of Beowulf Mining plc. The Jokkmokk Iron
CEO is Ulla Sandborgh, who is a civil engineer and has held senior
positions in the private sector as well as in public
administration, in the infrastructure, electricity and water
sectors. Ulla has extensive experience from managing application
procedures and, as part of this, experience in collaborating with
various stakeholders and ensuring that mutual interests and
benefits are shared and secured.
Enquiries:
Beowulf Mining plc
Kurt Budge, Chief Executive Officer Tel: +44 (0) 20 7583 8304
SP Angel
(Nominated Adviser & Broker)
Ewan Leggat / Stuart Gledhill Tel: +44 (0) 20 3470 0470
/ Adam Cowl
BlytheRay
Tim Blythe / Megan Ray Tel: +44 (0) 20 7138 3204
Cautionary Statement
Statements and assumptions made in this document with respect to
the Company's current plans, estimates, strategies and beliefs, and
other statements that are not historical facts, are forward-looking
statements about the future performance of Beowulf. Forward-looking
statements include, but are not limited to, those using words such
as "may", "might", "seeks", "expects", "anticipates", "estimates",
"believes", "projects", "plans", strategy", "forecast" and similar
expressions. These statements reflect management's expectations and
assumptions in light of currently available information. They are
subject to a number of risks and uncertainties, including, but not
limited to , (i) changes in the economic, regulatory and political
environments in the countries where Beowulf operates; (ii) changes
relating to the geological information available in respect of the
various projects undertaken; (iii) Beowulf's continued ability to
secure enough financing to carry on its operations as a going
concern; (iv) the success of its potential joint ventures and
alliances, if any; (v) metal prices, particularly as regards iron
ore. In the light of the many risks and uncertainties surrounding
any mineral project at an early stage of its development, the
actual results could differ materially from those presented and
forecast in this document. Beowulf assumes no unconditional
obligation to immediately update any such statements and/or
forecasts.
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