REG - Beowulf Mining PLC - GAMP PFS Demonstrates Robust Project Economics

Beowulf MiningAnnouncement

10/03/2025 07:00

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RNS Number : 9774Z  Beowulf Mining PLC  10 March 2025

 

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 (as amended). Upon the publication of this announcement,
through the agency of the contact person of the Company set out below, this
inside information is now considered to be in the public domain.

 

 

10 March 2025

 

Beowulf Mining Plc

 

("Beowulf" or the "Company")

 

Pre-Feasibility Study Demonstrates Robust Project Economics from Graphite
Anode Materials Plant

 

Beowulf (AIM: BEM; Spotlight: BEO) and its wholly owned Finnish subsidiary
Grafintec Oy ("Grafintec") are pleased to announce the successful conclusion,
and robust economics of the Pre-Feasibility Study ("PFS") from the Graphite
Anode Materials Plant ("GAMP" or the "Project"). The Company also provides a
further update on its current financing position.

 

 

Highlights

 

Positive economics from initial Phase 1 development:

·    Post-tax Net Present Value using a discount rate of 8% ("NPV(8)") of
€924 million and post-tax Internal Rate of Return ("IRR") of 37% over 25
years

·    Pre-tax NPV(8) of €1.2 billion and pre-tax IRR of 42% over 25 years

·    Initial capital cost of €225 million with a pay-back period of 3
years from initial production

·    Based on production of 25,000 tonnes per year of Coated Spherical
Purified Graphite ("CSPG")

·    Generates €120 million of Free Cash Flow ("FCF") per year and
€150 million of Earnings before Interest, Tax, Depreciation and Amortisation
("EBITDA") per year when in full production

 

Future expansion in Phase 2 offers further upside:

·    Post-tax NPV(8) of €2.2 billion and post-tax IRR of 38% over 25
years

·    Pre-tax NPV(8) of €2.8 billion and pre-tax IRR of 42% over 25 years

·    Based on expansion to 75,000 tonnes per year of CSPG with
construction beginning in third year of Phase 1 production

·    Generates €361 million of FCF per year and €451 million of EBITDA
per year when in full production

 

Further potential upside from:

·    Vertical integration of Grafintec's graphite projects

·    Government and EU support through grant funding schemes and tax
incentives aimed at large industrial investments supporting the transition to
a net-zero economy

 

 

Ed Bowie, Chief Executive Officer of Beowulf, commented:

 

"The conclusion of the GAMP PFS is a major milestone for the Company. The
study, which was led by consultants Anzaplan, has demonstrated the technical
and financial viability of the GAMP project and supports Grafintec's ambition
to be a critical player in the European battery materials supply chain.

 

"The continued strong support from local and national government in Finland
and the potential to create a vertically integrated graphite business presents
an exciting future for the project."

 

Rasmus Blomqvist, Managing Director of Grafintec, commented:

 

"Through extensive test-work, we have demonstrated that we can produce high
grade CSPG suitable for the battery sector, and the robust project economics
suggests that GAMP can be a low cost and highly profitable producer."

 

 

GAMP Development Strategy

 

The strategy for the development of the GAMP is to establish an independent
producer of anode material to supply the growing lithium-ion sector in Europe.
The Company intends to develop the plant in Finland which has the benefit of
access to a highly skilled workforce, low-cost renewable energy, strong local
and government support and proximity to the European customer base. Grafintec
held a plot reservation in the GigaVaasa industrial hub, although as
previously noted, this reservation lapsed in August 2024. Grafintec continues
to engage in dialogue with GigaVaasa and the municipality of Korsholm, and a
number of other potential sites for the future development of the GAMP.

 

Whilst Grafintec, through the Aitolampi project, has one of Europe's largest
flake graphite resources, the plan is to initially import material from a
third-party mine. The test-work undertaken for the PFS was completed using a
six-tonne sample sourced from our preferred supplier, a miner with a
multi-decade track record of producing high grade concentrate. Longer term,
the Company will assess the viability of developing its own graphite mining
projects and creating a European vertically integrated graphite business.

 

The PFS anticipates an initial Phase 1 development to produce 25,000 tonnes
per year of CSPG with the potential to increase output in Phase 2 to 75,000
tonnes per year. The planned annual production capacity can provide anode
material for an estimated 357,000 electric vehicles per year in Phase 1 or
1,071,000 electric vehicles per year for Phase 2.

 

 

GAMP Process

 

 

 

The process for converting graphite concentrate into CSPG is as follows:

·    Spheronisation: milling process to convert concentrated flake
graphite into uniform particles, spherical graphite ("SG"). The process
produces two SG products, a medium SG product of 18 microns ("SG-18") with a
yield of 47% and a fine SG product of 8 microns ("SG-8") with a yield of 13%.
The remaining material is high grade fine graphite which may have a number of
industrial applications.

·    Purification: upgrading SG from approximately 95% to greater than
99.95% graphitic carbon ("Cg") content through hydrometallurgical process to
produce SPG-18 and SPG-8. This process involves caustic (sodium hydroxide)
baking with a series of caustic and sulphuric acid leaching processes.

·    Coating: the purified SPG is blended with petroleum needle coke and
heated in a furnace to form a thin layer of carbon material around the
purified SPG, producing CSPG. The coating process enhances the physical and
electrochemical properties of the anode material.

 

The final PFS report is currently being drafted and reviewed and is
anticipated to be released to the Company in the coming weeks and a further
technical update will be provided to the market.

 

 

GAMP Economic Analysis

 

The GAMP economic analysis was prepared by Anzaplan based on the test-work
results and supported by quotes from third-party suppliers.

 

 Parameter                         Unit                Phase 1  Phase 2
 Summary economics
 Pre-tax NPV(8)                    € million           1,173    2,763
 Post-tax NPV(8)                   € million           924      2,178
 Pre-tax IRR                       %                   42%      42%
 Post-tax IRR                      %                   37%      38%
 Project payback                   Years               2.9      N/A
 Project parameters (based on full years of production)
 Capital expenditure               € million           225      675
 Life of operation                 Years               25       25
 Plant throughput                  tonnes/ annum       42,000   126,000
 Production of CSPG-18             tonnes/ annum       19,743   59,229
 Production of CSPG-8              tonnes/ annum       5,379    16,137
 Production of by-product fines    tonnes/ annum       16,878   50,634
 Financials (based on full years of production)
 Revenue                           € million/ annum    218      653
 Operating cost                    € million/ annum    60       179
 EBITDA                            € million/ annum    150      451
 Free cash flow                    € million/ annum    120      361
 Unit prices and costs
 Concentrate purchase price        €/ tonne            568
 Operating cost per tonne feed     €/ tonne            1,424
 Operating cost per tonne product  €/ tonne            2,381
 CSPG-18 realised price            €/ tonne            7,800
 CSPG-8 realised price             €/ tonne            10,260
 Fines realised price              €/ tonne            500

 

Construction of the GAMP is assumed to comprise a single module for Phase 1
with throughput of 42,000 tonnes per year with Phase 2 comprising two
additional modules, each with the same throughput and capital expenditure as
the Phase 1 module. The construction of each phase is assumed to take two
years with 60% of the capital expenditure being incurred in the first year and
the balance in the second year. The capital expenditure breakdown per 42,000
tonne module is set out below.

 

 Cost centre                       € million
 Micronisation and Spheronisation  20.8
 Caustic Baking                    16.3
 Leaching and Filtration           15.7
 Coating                           66.0
 Waste Water treatment             15.0
 Other                             13.8
 Direct total                       147.6
 Engineering                        23.6
 Construction facilities            2.6
 Commissioning                      1.5
 Owners cost                        5.6
 Contingency                        36.9
 Indirect total                     70.2
 Working Capital                   7.2
 Total Capital Expenditure         225.0

 

Significant progress was made during 2024 in optimising the process flow
sheet, reducing both the energy requirements and, through recycling reagents,
reducing reagent costs. These factors have contributed to the GAMP
demonstrating an extremely competitive operating cost. The breakdown of
operating costs per annum and per tonne of concentrate feed are presented
below.

 

 Parameter                   Operating Cost            Unit Cost              % of Total

                             (€ million per annum)     (€/ tonne of feed)
 Power                       7.1                       283                    12%
 Water                       2.6                       102                    4%
 Supply of concentrate       24.7                      983                    41%
 Reagents                    8.2                       327                    14%
 Labour                      3.3                       132                    6%
 Maintenance                 4.0                       159                    7%
 Laboratory                  2.8                       113                    5%
 Other                       0.4                       15                     1%
 Sustaining Capital          6.7                       268                    11%
 Total Plant Operating Cost  59.8                      2,381                  100%

 

 

Further Upside Potential

 

As mentioned above, the Company's resource projects offer further potential
upside. The Aitolampi project in Eastern Finland has an Indicated and Inferred
Resource of 26.7 million tonnes ("Mt") at 4.8% graphite for 1.275Mt of
contained graphite, making it one of Europe's largest flake graphite deposits.
Geophysical testing, and specifically electro-magnetics ("EM") which can be
used to indicate graphitic schist, suggests the potential for the Aitolampi
resource to be extended with further drilling. In addition, the Rääpysjärvi
project, which lies 8 kilometres from Aitolampi, has at least as much EM
anomaly, and surface sampling has identified higher grades of graphite than
are found at Aitolampi. Rääpysjärvi, which has never been drilled,
therefore has the potential to add significant additional resources.

 

Metallurgical test-work on samples from both projects suggests they are
amenable to concentrating and then further purifying to battery-grade material
and therefore are expected to be suitable future feedstocks for the GAMP.
Developing these projects would create a fully integrated European graphite
anode supply chain. In addition to improved supply chain security, accessing a
domestic supply of concentrate would reduce both the costs and the carbon
dioxide ("CO(2)") emissions associated with transportation and energy mix. The
integration of the mining projects therefore has the potential to further
improve the overall project economics and the CO(2) emission intensity.

 

The EU classifies Natural Graphite as a critical raw material and
battery-grade Natural Graphite as a strategic raw material. As such, there are
a number of incentives to support the development of industrial operations
that support the transition to a net-zero economy and improve supply chain
resilience. Grafintec has already benefited from the Business Finland
BATCircle2.0 and BATCircle3.0 grant funding schemes (see press releases dated
31 October 2024 and 26 November 2024) in support of its research and
development activities. Additional grant funding schemes are available,
including the EU Innovation Fund which supports up to 60% of the relevant
capital and operational costs for projects that demonstrate innovative
low-carbon technologies.

 

Further economic benefits may be realised from tax incentives proposed by the
Finnish Government to stimulate industrial investments supporting the
transition to a net-zero economy. This tax credit is available for projects
with total capital expenditure of greater than €50 million, is proposed to
be no more than 20% of the investment costs and would be capped at €150
million per company. The companies entitled to the investment credit could
start deducting the credit from their corporate income tax from 2028 onwards.
The proposal is awaiting final approval from the European Commission, ensuring
it aligns with EU State Aid rules. Once the final approval is granted,
Business Finland aims to open the investment credit application process. The
right to the tax credit must be applied for and granted by the end of 2025.

 

Whilst the Company may not be in a position to avail itself for all funding
schemes, this illustrates the breadth and scale of support for innovative
businesses such as Grafintec. Grafintec is carefully evaluating these
different opportunities and aims to apply for those which fit the Company's
strategic plans and have best chances of success.

 

Grafintec intends to apply for Strategic Project status for the GAMP under the
EU's Critical Raw Materials Act, during the next application window.
Designation as a Strategic Project allows a project to benefit from
streamlined permitting processes, access to funding, and priority treatment to
expedite its development.

 

Grafintec has also been engaged with a number of potential strategic partners
with respect to the future development of GAMP. These discussions will
continue following the completion of the PFS.

 

 

Current financial position

 

Further to the Company's preliminary results announcement of 28 February 2025,
the Company is continuing to progress discussions in relation to a potential
financing. The Board cautions that the Company will need to secure additional
financing in the very near term in order to progress its projects and provide
working capital for its operations.

 

While discussions are at an advanced stage, there can be no certainty that
such financing can be obtained or on the terms of any financing. In addition
to work to progress the planned financing, the Board is considering
contingency plans and potential sources of alternative short-term capital.
Further updates will be provided as appropriate.

 

 

Qualified Person Review:

 

The technical information contained in this news release has been reviewed and
approved by Derick R. de Wit, B-Tech. (Chem Eng), FSAIMM, FAusIMM, an
independent qualified person ("QP", as defined in NI 43-101) from Anzaplan,
responsible for the overall PFS of the GAMP.

 

Anzaplan specialises in process design and engineering services for graphite
beneficiation projects. The Company offers advanced graphite evaluation
services for high value applications including strongly growing markets such
as anode materials in lithium-ion batteries. Starting with the initial
characterization of the graphite ore through development of a beneficiation
process to obtain a high- quality flake graphite concentrate, shaping and
purification into battery grade spherical graphite, characterization of
electrochemical performance and testing of lithium-ion cells.

 

 

Enquiries:

 

 Beowulf Mining plc
 Ed Bowie, Chief Executive Officer          ed.bowie@beowulfmining.com

 SP Angel
 (Nominated Adviser & Joint Broker)
 Ewan Leggat / Stuart Gledhill / Adam Cowl  Tel: +44 (0) 20 3470 0470

 Alternative Resource Capital
 (Joint Broker)
 Alex Wood                                  Tel: +44 (0) 20 7186 9004

 BlytheRay
 Tim Blythe / Megan Ray                     Tel: +44 (0) 20 7138 3204

 

 

About Beowulf Mining plc

 

Beowulf Mining is a mining company with main activities in exploration and
development in Sweden, Finland, and Kosovo. Beowulf's portfolio is diversified
by commodity, geography, and stage of development of the projects, and
consists primarily of iron ore, graphite, gold, and base metals. Beowulf
Mining is headquartered in London, England.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This RNS contains forward-looking statements. Forward-looking statements are
subject to risks, uncertainties and assumptions. Forward looking statements
include, among other things, statements concerning the construction and
operation of the GAMP production facility and the costs and sales associated
with them. The Company cautions that there are certain factors that could
cause actual results to differ materially from the forward-looking information
that has been provided. The reader is cautioned not to put undue reliance on
this forward-looking information, which is not a guarantee of future
performance and is subject to a number of uncertainties and other factors,
many of which are outside the control of the Company; accordingly, there can
be no assurance that such suggested results will be realized.

 

The Company's ability to successfully construct and operate a commercial-scale
plant capable of producing CSPG in quantities consistent with the GAMP`s
business plan is subject to (a) the Company's ability to raise additional
capital in the future including the ability to utilize existing financing
facilities; (b) spot price and long-term contract price of CSPG; (c) risks
associated with our operations and the operations of our partners; (d)
government regulation of the graphite and energy storage battery industry; (e)
world-wide graphite and anode materials supply and demand, including the
supply and demand for energy storage  batteries; (f) regulatory and legal or
other problems the Company may encounter in the jurisdictions where the
Company operates or intends to operate, including but not limited to Finland;
(g) the ability of the Company to enter into and successfully close
acquisitions or other material transactions.

 

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 and mineral prices, particularly as
regards graphite. 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 forecast.

 

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