Beowulf Mining

HOLD

17/10/2011 Robert Tyerman

Independent estimates suggest Beowulf Mining (BEM)'s Swedish iron ore projects could generate between $4.5bn (£2.8bn) and $9.8 bn revenues over 15 years.

A report from Sweden's Raw Materials Group (RMG) has come up with these estimates, contrasting the outcomes with an average iron ore price of $126 a tonne for AIM-quoted Beowulf's Ruoutevare project, holding an estimated 150m tonnes, and $133 a tonne for the company's Kallak venture, where it has assumed the same tonnage, with outcomes if iron ore prices average $88 a tonne for Ruoutevare's output and $91 a tonne for Kallak's.

RMG's report envisages combined operating and capital costs of nearly $7.7bn for both of the projects. Analysts point out that iron ore prices are now more than $170 a tonne and Beowulf has already indicated that Kallak could hold as much as 600m tonnes and have a potential mine life several times the 15 years envisaged.

Chaired by the entrepreneurial Clive Sinclair-Poulton, Beowulf commands an AIM price tag of £87.5m at 36.75p a share, having traded between 74.75p and 10.25p over the past year. Growth Company Investor recommended Beowulf at 2.38p in 2009, more recently suggesting partial profit-taking at 59p last April and adding some more at 25p in August.

Hold on, unless you think China's growth has already become a thing of the past.