Beowulf ups iron ore estimate at Ruoutevare project

Tue Feb 23, 2010 3:24pm GMT

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* May hold up to 250 mln tonnes vs current 140 million

* Nearby Kallak deposit also to be upgraded-company

By Julie Crust

LONDON, Feb 23 (Reuters) - Mineral explorer Beowulf Mining Plc (BEM.L) has lifted iron ore estimates for its flagship Ruoutevare deposit in northern Sweden to as much as 250 million tonnes from the current 140 million.

"We believe that with the work we have done, and with the work that the Geological Survey of Sweden have done, that Ruoutevare contains around 200-250 million tonnes," Chairman Clive Sinclair-Poulton told Reuters during a recent trip to the facility.

"Every 10 million tonnes is an extra $200 million," he said.

Shares in the micro miner jumped as much as 25 percent this month after a study by Swedish-based consultancy Raw Materials Group showed the project to have potential cash flows of $3 billion over a 15-year mine life and that it could support an open pit operation. [ID:nLDE61E0AE]

A resource of 250 million tonnes would extend the life of Ruoutevare - which means Iron Mountain - to 25 years.

AIM-listed Beowulf is currently valued at about $6 million.

Beowulf said it could start drilling at Ruoutevare this year and hopes to begin production in three to five years.

Another upcoming report by Raw Materials Group on Beowulf's Kallak iron ore deposit, around 85 km from Ruoutevare, was expected to show a rise in its resource to 150 million tonnes from 120 million, Sinclair-Poulton said.

Beowulf is looking at constructing a processing plant at Ruoutevare, which would be able to process Kallak ore, and to build a slurry pipe to carry the resulting concentrate to the Norwegian port of Narvik, the company said.

IRON ORE POTENTIAL

The two projects are among the largest known iron ore resources in Sweden yet to be commercially developed. Sweden's state-owned LKAB, one of the world's top producers of iron ore pellets, traditionally has a strong presence in the area, making it a strong potential partner or future buyer of the deposits.

The properties are inside the Arctic Circle but are close to good infrastructure, due to the presence of the mining and timber industry.

Many of the roads and frozen lakes are used by automakers to test cars in harsh winter conditions.

The Raw Materials Group said environmental permitting could be a sensitive issue in the area which is used for reindeer herding by the Sami community.

Beowulf has switched its focus towards iron ore production as it seeks to take advantage of rising demand from Chinese steelmakers, the world's biggest users of iron ore.

Steelmakers are looking to diversify supply to reduce their reliance on the world's three top iron ore miners: BHP Billiton (BHP.AX)(BLT.L), Rio Tinto (RIO.L)(RIO.AX) and Vale (VALE5.SA).

Beowulf last year signed an outline supply pact with China Hua Dong Corp. Ltd.

(Editing by David Cowell)

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