REG - Strategic Minerals - Cobre Quarterly Sales Update and Issue of Warrants

Strategic MineralsAnnouncement

10/04/2024 07:00

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RNS Number : 9183J  Strategic Minerals PLC  10 April 2024

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ('MAR') which has been incorporated into UK law by the
European Union (Withdrawal) Act 2018.

10 April 2024

Strategic Minerals plc

("Strategic Minerals" or the "Company")

Cobre Quarterly Sales Update and Issue of Warrants

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing
mineral company, is pleased to provide the following update on quarterly Cobre
sales and the issue of warrants associated with short term funding.

 

Highlights

·   March quarter sales revenue of US $0.841m, up over 100% on March
quarter 2023.

·   New client, with expected volume of circa 5,000-7,000 tons pa,
confirmed.

·   Trackhoe acquired and operating minimising weather disruptions to truck
loading.

·   Sales in line with expectations that 2024 full year revenues will
exceed US $3.5m.

·   Additional small short-term working capital funding facility agreed
with warrants.

 

Cobre Sales

The return of Cobre's major client and the addition of a new client, expected
to take between 5,000 to 7,000 tons pa, have resulted in a strong March
quarter performance. Not unexpectedly, this is an impressive 103% increase on
the March 2023 quarter when Cobre's major client was not purchasing magnetite.
However, this is also an impressive 27% increase on March 2022 sales, when the
major client was active.

 

March
        Quarter Sales
 
           Annual Sales

Quarter
$'000
Volume
$000
Volume

 

2024
841
12,393
2,002                     25,625

2023
415
4,733
2,198                     30,405

2022
663
10,610
2,502                     40,244

To ensure minimal weather disruptions during the US winter and early spring
seasonal weather, the Company acquired a Trackhoe as shown below, which came
into operation in March.

Pictured from left to right; Kyle Drye (Pit Manager), Nick Contor (Office
Manager) and Tim Klumker (President)

 

The March quarter results have reinforced the Company's view that the 2024
Cobre full year sales volumes will exceed 50,000 tons (17,965 tons in 2023)
with revenues expected to exceed US $3.5m (US $1.6m in 2023).

Cash Management and Issue of Warrants

Given the substantial reduction in sales during 2023, the Company maintained
operations, including project development, through creditor management and
from the Board's election to take substantially lower cash payments.

Considering future sales volumes, and the Company's historical creditor
balances, the Company has augmented its previous AUD $100,000 short-term
financing facilities, from an individual investor, with a further six-month
AUD $50,000 funding, from another individual investor. This funding is at an
interest rate of 12% per annum and has attached 10,000,000 warrants, which
have the same warrant terms as those previously agreed (exercise price 0.5p
and maturity 31 December 2025). Again, these unsecured loans have been
undertaken through the Company's 100% owned subsidiary Ebony Iron Pty Ltd.

The additional 10,000,000 warrants, over new ordinary shares of 0.1 pence each
in the Company with an exercise price of 0.5p maturing 31 December 2025, have
now been issued (along with those previously notified to the market on 8
February 2024). No funds raised under these facilities will be applied to
balances outstanding to the Directors or CFO and, currently, it is not
envisaged that additional short-term funding will be required.

 

 

Commenting, John Peters, Managing Director of Strategic Minerals, said:

"The quarter's sales have confirmed our expectations for a strong performance
at Cobre in 2024 and a likely annual result exceeding US $3.5m. The team at
our New Mexico, USA operations have managed the resurgence in demand and
rebuilt the team after having to contract operations during the 2023 downturn.
New, fully externally funded, equipment has assisted to ensure smooth
operation during inclement weather.

"Management remains focused on short term cash flow and believes that the
Company remains committed to avoiding the need for a dilutive capital raise,
which the Board and Management, currently, considers will be unnecessary. With
after tax cash flow in 2024 being applied to normalising creditor balances,
built up during the sales downturn in 2023, the Company expects 2025 will see
after tax balances accruing."

 

 For further information, please contact:

 Strategic Minerals plc                                   +61 (0) 414 727 965
 John Peters
 Managing Director
 Website:               www.strategicminerals.net (http://www.strategicminerals.net)
 Email:                 info@strategicminerals.net (mailto:info@strategicminerals.net)

 Follow Strategic Minerals on:
 Vox Markets:           https://www.voxmarkets.co.uk/company/SML/
                        (https://www.voxmarkets.co.uk/company/SML/)
 Twitter:               @SML_Minerals (https://twitter.com/SML_Minerals)
 LinkedIn:              https://www.linkedin.com/company/strategic-minerals-plc
                        (https://www.linkedin.com/company/strategic-minerals-plc)

 SP Angel Corporate Finance LLP                           +44 (0) 20 3470 0470
 Nominated Adviser and Broker
 Matthew Johnson
 Ewan Leggat
 Charlie Bouverat

 

 

Notes to Editors

Strategic Minerals plc is an AIM-quoted, profitable operating minerals company
actively developing projects tailored to materials expected to benefit from
strong demand in the future. It has an operation in the United States of
America along with development projects in the UK and Australia. The Company
is focused on utilising its operating cash flows, along with capital raisings,
to develop high quality projects aimed at supplying the metals and minerals
likely to be highly demanded in the future.

In September 2011, Strategic Minerals acquired the distribution rights to the
Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating
asset, which it brought into production in 2012 and which continues to provide
a revenue stream for the Company. This operating revenue stream is utilised to
cover company overheads and invest in development projects aimed at supplying
the metals and minerals likely to be highly demanded in the future. The access
to this stockpile has been extended until 31 March 2027 and is likely to be
rolled over again at that time.

In May 2016, the Company entered into an agreement with New Age Exploration
Limited and, in February 2017, acquired 50% of Cornwall Resources Limited
(CRL) which holds the Redmoor Tin/Tungsten project in Cornwall, UK. The bulk
of the funds from the Company's investment were utilised to complete a
drilling programme that year. The drilling programme resulted in a significant
upgrade of the resource. This was followed in 2018 with a 12-hole 2018
drilling programme has now been completed and the resource update that
resulted was announced in February 2019. In March 2019, the Company entered
arrangements to acquire the balance of CRL which was settled on 24 July 2019
by way of a vendor loan, subsequently fully repaid on 26 September 2020.
Since this time, CRL has been progressing the development of the Redmoor
Tin/Tungsten project through its involvement in the EU funded Deep Digital
Cornwall exercise and the placement of Tin and Tungsten on the Critical
Minerals List of both the UK and USA.

In March 2018, the Company completed the acquisition of the Leigh Creek Copper
Mine situated in the copper rich belt of South Australia and brought the
project temporarily into production in April 2019. In July 2021, the project
was granted a conditional approval by the South Australian Government for a
Program for Environmental Protection and Rehabilitation (PEPR) in relation to
mining of its Paltridge North deposit and processing at the Mountain of Light
installation. In late September 2022, an updated PEPR, addressing the
conditions associated with the July 2021 approval, was approved.  The Company
continues seeking capital to commence operations.

 

 

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