Beowulf Mining* (BEM LN) 8p, Mkt Cap £5.5m – Update Note – Transformational recapitalisation provides pathway to Kallak PFS
BUY: Target price updated to 27p
- We have published an update note on Beowulf Mining following their now binding Strategic Investment from Bacchus Capital and affiliates.
- The Transaction, which is set to raise gross proceeds of c.£4.3m, will provide a funding pathway through to the end of 2027, and support the delivery of crucial workstreams for the Kallak PFS.
- This will include an infill drilling programme to upgrade the Inferred MRE at Kallak to the Indicated category.
- Beowulf will deliver an updated Scoping Study in advance of the PFS, with expected economic improvements to the original 2023 Study.
- Funds will also be allocated to Grafintec, intended to support the submission of the Environmental Impact Assessment.
- Beowulf will also see a strengthened board and management, with Peter Bacchus joining as Chair, Shea O’Callaghan joining as CFO. Bacchus will also help establish an Advisory Board, with strong experience in critical minerals and mining project development/financing.
- The investment will, on completion, provide funds for key workstreams through to 2027-end and a reinforcement of the Company’s balance sheet following an extended period of uncertainty.
- To us, Kallak remains a highly strategic asset offering a future supply of high-grade concentrate into the growing European and Middle Eastern green steel markets.
Valuation: Given recent market uncertainty, Beowulf shares suffered a sharp derating to lows of 3p. This funding overhang has now been cleared, with the Company set to be cashed up on closing of the Strategic Investment. We update our target price for Beowulf to 27p following the issuance of 147m new shares from the transaction. Our target price is conditional on the proposed investment closing and reflects a 0.2x P/NAV risked multiple for our Kallak post-tax NPV10 of $338m and 0.1x risked multiple for the GAMP project using an EV/EBITDA approach. Ultimately, Beowulf shares are now too cheap given its robust project portfolio, spearheaded by an increasingly derisked Kallak, and expected strong cash position to fund project advancement through to the end of 2027.
*SP Angel acts as Nomad and Broker to Beowulf Mining
Analysts
Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476
John Meyer –John.Meyer@spangel.co.uk – 0203 470 0490
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne –Abigail.Wayne@spangel.co.uk – 0203 470 0534
Rob Rees –Rob.Rees@spangel.co.uk – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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