Geology and resources

Geology

The Ruoutevare deposit is formed as an out-cropping, flat-lying to gently dipping magnetite rich layer about 150 m thick within an anorthositic gabbro. The iron mineralized outcrop is generally fresh looking with no significant signs of weathering noted. The magnetite ranges from massive to disseminated and is associated with fine grained forms of ilmenite.

The deposit consists of four lenticular pods of magnetite mineralization, which are interpreted to be the result of magmatic layering within the intrusive complex. The most significant mineralized body is approximately 1 500 m long and 200 m to 300 m wide. It is immediately obvious from field examination of the prospect that extraction of the magnetite ore body by open-pit methods would be favourable. The gentle dip of the ore body means that much of it is accessible directly with little or no waste rock stripping.

JORC Inferred Resource estimate.

Beowulf Mining has provided the data and information to an independent external consultant group specialized in iron ores for interpretation and to obtain updated resource estimates of the Ruoutevare deposit.

Based on total available data and completed by geological consultants Runge Limited of Perth, Australia, (2008), a JORC classified Inferred Mineral Resource of Ruoutevare has been estimated at 140 Mt holding 39.1 % iron (Fe), 5.7 % titanium (Ti) and 0.2 % vanadium (V) at a cut-off grade of 30 % Fe. This updated resource estimate is approximately 20 % higher than the original estimate of 117 Mt by SGU in the 1970s. The resource was estimated using standard block modelling and ordinary Kriging interpolation. The interpolation was constrained by resource outlines based on mineralization envelopes prepared using a nominal 30 % Fe cut-off grade. A rotated Surpac block model was created to encompass the full extent of the Ruoutevare deposit. The block model used a primary block size of 100 m NS by 50 m EW and 8m vertical with sub-cells of 25 m by 12.5 m and 2 m. The parent block size was selected on the basis of 50 % of the average drill hole spacing within the main mineralized zones.

A comprehensive review of all the drill data and geophysical information, together with the findings of the 2006 geological mapping report indicate that there is substantial additional tonnage of the Ruoutevare iron ore deposit extending beyond the area drilled by SGU. Based on these data the consultant group Mining Technical Solutions (MTS) of Australia in 2008 estimated there is an additional resource potential of the Ruoutevare deposit of 72-107 Mt. The additional resources are indicated in near surface extensions in both directions to the current resource model as well as of an interpreted deeper zone below the Ruoutevare resource. Thus the total tonnage of the Ruoutevare deposit as outlined by the Australian consultant groups Runge and MTS respectively, can be close to 250 Mt. These results compares well with a geophysical report in 1975 by the Geological Survey of Sweden, based on the interpretation of detailed gridline based, gravimetric data, which suggested that the total tonnage of the Ruoutevare iron ore deposit can be as high as 250 Mt.

The potential additional resources can only be verified by a future drilling program, an assumed 2 500 m of drilling for the near surface extensions and 2 500 m of drilling for the deeper extensions of the Ruoutevare deposit. The aim of such a drill program is to upgrade and significantly increase the existing resource and subsequently transfer the resource into JORC Code Indicated and Measured categories. The total expenditures for the drilling program is estimated at USD 700 000. Provided the drilling program will be adding tonnage and grades as assumed the Ruoutevare deposit would become an approximately 250 Mt iron-titanium ore (> 30 % iron) measured and indicated JORC classified deposit which would rank it as one of the largest not yet mined iron ore deposits in the Nordic countries.