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Beowulf Mining PLC in pole position once government permits come in

Beowulf Mining has its foot on a sizeable iron ore project in Sweden, and is now waiting for the requisite government permits

Beowulf Mining PLC in pole position once government permits come in
Drill core from Kallak

The iron ore price has staged an unexpected recovery over the past couple of months, ticking up nicely from lows of below US$40 per tonne hit before Christmas, to a current price of over US$51.

It’s not exactly a bull market, but a recent upward burst, a move of more than 10% in Asian trading actually took the price over US$60 a couple of weeks ago. That sort of activity is certainly welcome in a sector that has been battered to the point of near submission over the past few years.

The strength comes as Chinese policymakers underscored their commitment to support growth by increasing the money supply and running a deficit at record levels.

The world’s iron ore miners, what’s left of them, responded well to the news. Most notable was a 24% rise from Fortescue Metals Group (ASX:FMG), which closed at A$2.49.

Shares in Beowulf Mining plc (LON:BEM) also ticked up, but in the case of Beowulf the near-nine month rally that has been going on in its shares has deeper roots.

Beowulf is a survivor. The plethora of iron ore promotors with dreams of giant West African infrastructure projects have now largely vacated the field.

IMIC has now de-listed, Bellzone Mining PLC (LON:BZM) is now in the hands of the Chinese, Ferrex has changed its name to Keras Resources PLC (KRS) and refocussed as an Australian gold producer, West African Mining (LON:WAFM) has gone very quiet, while London Mining and African Minerals have both gone out of business.

Against that background it’s testament to both the quality of Beowulf’s Swedish assets and its management that the company is not only still alive and kicking, but actively pressing ahead with development plans.

The one big unknown at the moment is neither the iron ore price, nor the state of the equities markets, according to Beowulf chief executive Kurt Budge, but whether or not the relevant Swedish authorities wave through the company’s latest permitting application.

In one sense, this should be relatively straightforward. Beowulf has put in for an exploitation concession for its Kallak project in the north of Sweden, and given that Sweden is a country with a strong history of mining, not to mention an equally strong ongoing economic interest, there’s plenty of precedent in favour.

Northland Resources got an iron ore mine up and running a couple of years ago not far from Beowulf, with the full blessing of the Swedish authorities, albeit that the company did run into financial difficulties later on.

And Beowulf itself has already received the backing of the Mining Inspectorate of Sweden, which wrote to the government in early October recommending that the exploitation concession be granted.

The problem is though, that there is a history. Under the previous management regime, prior to Kurt Budge’s appointment, relations with the local Sami reindeer herders soured to the point where the subsequent protests became major news.

Since his appointment in 2014 Budge has spent a great deal of time on the ground trying to fix this issue. Local authorities are now all on side. He is in communication with the Sami chiefs. And he is hopeful that the new Beowulf will have come across as the responsible corporate citizen it aspires to be, to the point where the concession comes through.

Still, when all is said and done, the company isn’t exactly a one trick pony. When Budge came in he had to clean house a little, impairing a swathe of base and precious metals exploration assets across Sweden and starting again.

As he said earlier this year: “Kallak is the focus.”

Nevertheless, when opportunity knocks, Beowulf is ready to open the door. Which is why early in January it acquired a privately held graphite company with a suite of assets in Finland.

These assets are actually quite variable, according to Budge – some have high grade, some have scale, some have interesting flake sizes. “It’s enough to say that this is an attractive set of assets,” he says. “And it didn’t cost us much to acquire.” Indeed, it was an all-share transaction, with much of the consideration deferred until certain milestones are reached.

But the question then arises? – is this deal a hedge against the iron ore portfolio?

Budge’s answer to that is unequivocal. “No. We are not in the business of hunkering down,” he says. “We went through the stabilisation of the business last year. It’s up to us to generate investment ideas and then go to investors to raise more funds. The idea is that we’ll hit our milestones and earn the right to raise more money.”

But Kallak remains the main game in town, and investors will be watching with interest the results of the Swedish government’s deliberations.

Quick facts: Beowulf Mining PLC

Price: 5 GBX

Market: AIM
Market Cap: £30.11 m

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