Beowulf shares fall on discounted fundraising – Creamer Media’s Mining Weekly

Aim-listed Beowulf has announced it will raise £9.1-million in a discounted fundraising to progress the Kallak iron-ore project, in Sweden.

The net proceeds from the capital raise, estimated to be about £7.8-million, will be used mainly to finance the continued development of Kallak North in Norrbotten county, as well as to progress at pace the preparation of the environmental permit application for Kallak North, and to sufficiently fund resource drilling for Kallak South.

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Beowulf says it will proceed with a previously communicated plan to conduct a preferential rights issue of up to 316.7-million Swedish depository receipts (SDRs) with a PrimaryBid retail offer of up to 104-million ordinary shares in the capital of the company in the UK. In addition, members of the board and executive management have agreed to subscribe for a total of 8.8-million new ordinary shares, equivalent to about £181 000.

The SDR offer price of SEK0.27 and the UK offer price of 2.06p represent about a 46% discount to the average daily weighted average price for the SDRs and the ordinary shares during a trading period of 15 business days ending on and including January 23, 2023.

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The company’s share price plunged 22% on the news of the discounted offer to trade at 3.10p each.

The SDRs represent interests in ordinary shares and the preferential rights issue of SDRs will amount to about SEK85.5-million before deduction for transaction-related costs.

The PrimaryBid retail offer of ordinary shares in the UK will amount to a maximum of about SEK27.1-million before deduction for transaction-related costs.

New SDRs in the rights issue will also be offered for subscription without preferential rights to institutional investors, other professional investors and the general public in Sweden.

Beowulf has received underwriting commitments for the rights issue which in aggregate amount to about SEK60-million, or 70% of the rights issue.

A prospectus relating to the rights issue is expected to be published on or around February 2 subject to final regulatory approval.

In March 2022, Jokkmokk Iron was granted a mining concession for Kallak North. Kallak North is Beowulf’s most advanced project, and the company’s top priority. The main objective for Jokkmokk Iron is to become a supplier of net-zero carbon dioxide emission iron concentrates for developing green steel producers in the Nordic region.

Beowulf has just completed a scoping study for Kallak North, showing positive economic results in support of continuing development.

Importantly, Kallak North is only part of the larger Kallak project. Kallak South has defined mineral resources and an exploration target, and the company has an exploration target for its contiguous licences further south.

The company is now considering the possibility of integrating Kallak North and Kallak South, following completion of 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.

The main purpose of the rights issue will be to finance the continued development of Kallak North, as well as to progress at pace the preparation of the environmental permit application for Kallak North. The rights issue will also repay bridge loan financing and with sufficient funding available, possible resource drilling for Kallak South, and capital for Grafintec and Vardar’s development and exploration programmes.

“Significant progress across all Beowulf’s business areas has been made during the last quarter, with very promising developments in Kosovo and Finland, and with the scoping study that was just completed for Kallak North in Sweden, I believe that the timing of this capital raise is just right.

“The completed scoping study is in itself a huge step forward for Beowulf and Jokkmokk Iron, showing positive economics and massive upside potential. . . ,” says CEO Kurt Budge

“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.

“With a strengthened team in place and the completed scoping study as a road-map ahead, the Beowulf investment case should be a lot clearer to our investors,” he adds.

Budge highlights major value inflection points for Kallak North as the delivery of a prefeasibility study, planned to begin in the second quarter 2023, and an application for the environmental permit due to be submitted in the fourth quarter.

“With sufficient funding available, further drilling could see the conversion of the current exploration target to mineral resources and we can continue to press forwards with Grafintec and Vardar’s development and exploration programmes,” Budge notes.

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