BEM Beowulf Mining Plc

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% ("NPV₈") of €924 million and post-tax Internal Rate of Return ("IRR") of 37% over 25 years

·    Pre-tax NPV₈ 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 NPV₈ of €2.2 billion and post-tax IRR of 38% over 25 years

·    Pre-tax NPV₈ 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.

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.

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.

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 ("CO₂") 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 CO₂ 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.

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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.