Beowulf Mining keen to restart drilling

Beowulf Mining’s chairman says the company will start more drilling on its Kallak iron ore deposit as soon as it receives the proceeds of its recent placing.

Sweden-focused Beowulf raised £6.7 million through a placing at 15p per share last week, which will fund up to seven times more drilling than it has carried out historically at Kallak, according to executive chairman Clive Sinclair-Poulton.

The firm posted a maiden JORC resource for the northern portion of its Kallak iron ore deposit in Sweden earlier in the month and ahead of the share issue.

Independent consultant GeoVista estimated the Kallak North resource to be 131.6 million tonnes grading 28 per cent iron.

Those initial resource estimates were based on 800 metres of mineralised strike from a total 3.7 kilometres, but Mr Sinclair-Poulton said the next phase of drilling will cover up to 57,000 metres and include both the north and south parts of the deposit. 

Two drill rigs are planned for the north with initially one in the south, though the exact number is still be finalised, he added.

“The aim is to complete Kallak north as quickly as possible and to determine where the ore body ends at the northern tip of the Kallak.”

“We also need to drill down to a depth of 250- 300 metres,” he said. 

The initial resource estimate for the north of the site was modelled at a 15 per cent iron cut off down to a vertical depth of 200 to 300 metres.

But the group believes there is more iron in the north section and further drilling could take the total up to 200 million tonnes as the JORC reports showed mineralisation occurs at a width of between 100m and 300m while the deposit remained open in all directions.

Beowulf did not have enough data to compile a maiden resource figure for Kallak South, which is expected to occur after the next phase of drilling.

Initial data suggests the Kallak South resource could be in the order of at least 200 to 230 million tonnes grading at 30-32% iron, which Sinclair-Poulton said was encouraging.

The Kallak deposit is located just north of the Arctic Circle in the municipality of Jokkmokk in northern Sweden.

The area covers 11,250 hectares in the north and 1,680 hectares in the south, which with Beowulf's existing licences give it a mining region covering approximately 163.5km2. In total, it is estimated that two Kallak deposits may contain between 500- 600 million tonnes of iron ore.

The first stage of the drilling programme is expected to be completed by the second quarter of 2012, with the full programme finished by the end of 2012.

Sinclair-Poulton also said the group intends to provide a stream of newsflow as the drilling programme progresses.

“We intend to release as much information as possible so people know the drilling plan and can see the progress against this,” he said.

Swedish drilling companies Ludvika BorrTeknik and Dala Prospektering have been retained for the Kallak programme.  Both companies have been directly involved with all the previous drilling of Beowulf’s deposits.

Beowulf also owns a 50% stake in the Ballek copper-gold prospect, also located in northern Sweden in the municipality of Arjeplog, where the Lulepotten deposit currently has a JORC inferred resource estimate of 5.4 million tonnes, grading 0.8 percent copper and 0.3 grammes per tonne (g/t) gold. 

This represents a total of 43,000 tonnes of contained copper metal and 52,000 ounces of contained gold. The emphasis at Ballek in coming months will be to prove this up further, Sinclair-Poulton said.

Alongside its placing, Beowulf also revealed it had signed a non-binding letter of intent with a third party that wanted to conduct six months of due diligence and analysis of the iron ore projects at Kallak and Ruoutevare.

That could be ahead of a proposal to acquire a majority stake or all of the iron ore assets, Beowulf said, though it added there was no certainty any proposal would be forthcoming as terms are still being discussed.

Beowulf will issue a total of 44.6 million new shares at 15p each through the placing, equal to 21.2 per cent of its enlarged share capital.

Shares in the group rallied on news of the price of the issue, as reports, which were refuted by the company, had suggested it could be as low as 12p per share.

They now stand at 16.5p, which would value the group at about £32 million including the new shares to be issued.

“With continued strong prices coupled with the increasing demand for iron ore as a raw material in Europe and further afield, we believe that further investment in drilling and analysis will demonstrate the quality and strength of our asset base," Sinclair-Poulton said when he announced the fund raising.