SML — Strategic Minerals News Story

0.000.00%

Last trade - 00:00

Basic MaterialsHighly SpeculativeMicro CapMomentum Trap

Market Cap
£6.70m
Enterprise Value
£6.98m
Revenue
$1.58m

All News

REG - Strategic Minerals - Financial Results for Year Ended 31 December 2017

Strategic MineralsAnnouncement

23/05/2018 07:35

RNS Number : 9857O

Strategic Minerals PLC

23 May 2018

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

23 May 2018

Strategic Minerals plc

("Strategic Minerals", "SML", the "Company" or the "Group")

Financial Results for the Year Ended 31 December 2017

Strategic Minerals plc (AIM: SML: USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, is delighted to announce an audited 2017 annual profit after tax of $1.586m ($2.234m pre-tax profit).

Financial Highlights

· After tax profit from operations of $1.586m (2016: profit of $0.351m)

· Vesting of all existing options and exercise of a majority of the options

· Successful, oversubscribed, capital raise which was also used to remove potential overhang associated with options vesting

· Unrestricted Group cash position, as at 31 December 2017, of $3.706m (2016: $1.105m)

Operational Highlights

· Threefold increase in domestic sales at Cobre magnetite stockpile in New Mexico, USA ("Cobre") to $5.637m (2016: $1.552m)

· Acquisition of the remaining 50% of Central Australian Rare Earths Pty Ltd ("CARE") prospective for cobalt, gold, nickel and rare earths

· Drilling programme conducted at CARE's tenements at Hanns Camp, Western Australia resulting in findings of both cobalt and nickel sulphide

· Completion of acquisition of 50% of Cornwall Resources Limited ("CRL"), a brownfields tin/tungsten project in the historic tin mining region of Cornwall, United Kingdom. In accordance with shareholders' agreement the proceeds were applied to a drilling programme completed during 2017

· Entered into a binding term sheet for the acquisition of the Leigh Creek Copper Mine ("LCCM") in South Australia

· The Company is focusing its strategy on metals and minerals that the Board believes are likely to benefit from a perceived boom in the battery market

The Annual Report and Financial Statements for the year ended 31 December 2017 ("Annual Report") will be posted to shareholders on or around 24 May 2018 and will be available for download from the Company's website shortly. The Company will hold its Annual General Meeting ("AGM"), to be followed by a shareholders' meeting, at 6:00pm on Tuesday 19 June 2018 at the Rutland Arms, 15 Lower Mall, Hammersmith W6 9DJ. Details of the AGM are set out in the Notice of AGM which is being posted to shareholders along with the Annual Report and will also be available for download from the Company's website. Those wishing to attend the shareholders' meeting can register by emailing info@strategicminerals.net (limit of two per shareholder). The shareholders' meeting will not only provide shareholders with the opportunity to meet and talk to all four Directors but will also include a brief talk on Electrifying Flight by John Meyer, Partner and Head of Research at SP Angel.

The last three years have seen an outstanding turnaround in profitability reflecting the mercurial sales growth in the Company's US subsidiary, Southern Minerals Group ("SMG"). This has largely been associated with the acquisition of two major clients in late 2016 and mid-2017 respectively. While sales are principally based on a "take and pay basis", the Company is confident that SMG can continue to trade profitably, to such an extent that the Company believes that the Group will again be profitable in 2018.

The Board and Management, in enacting the Company's strategy, has reinvested cash flow from operations into existing projects as well as amassing reserves for the acquisition of the Leigh Creek Copper Mine which, while not settled until March 2018, was identified with a binding term sheet entered into in late 2017.

During 2017, existing Board and Management options vested and an oversubscribed equity raising in October 2017, for the settlement of Leigh Creek Copper Mine, was utilised to remove any potential overhang that may have resulted from the exercise of such options.

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

"The Company's stellar performance in 2017 has reflected concerted work from all of the SML team. In an attempt to round off our portfolio of projects, the Company actively sought a near-term copper/gold project and were delighted to locate and secure the highly prospective Leigh Creek Copper Mine. Not only does LCCM provide the Company with a near-term copper project, but, once it becomes operational again, will offer SML a valuable second income stream.

"The October fundraise, combined with profitability from Cobre throughout 2017 and into 2018, has placed the Company in a robust cash position and the Company believes that expected project development works during 2018 can be funded from existing reserves.

"The SML team looks forward to further progressing its projects throughout 2018, which it considers will be a year of consolidation after the rapid growth of 2017."

For further information, please contact: Strategic Minerals plc		+61 (0) 414 727 965
John Peters
Managing Director
www.strategicminerals.net

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

SP Angel Corporate Finance LLP		+44 (0)20 3470 0470
Nominated Adviser and Broker
Ewan Leggat
Laura Harrison

Yellow Jersey PR		+44 (0)20 3735 8825
Financial PR
Charles Goodwin		+44 (0)7747 788 221
Joe Burgess		+44 (0)7769 325 254
Henry Wilkinson		+44 (0)7951 402 336

Notes to Editors

Strategic Minerals Plc is an AIM-quoted, operating minerals company actively developing projects prospective for battery materials. It has an operation in the United States of America and 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 being sought in the burgeoning electric vehicle/battery market.

In September 2011, Strategic Minerals acquired 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 orientated to supplying the burgeoning electric vehicle/battery market.

In January 2016, the portfolio was expanded with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia and the Northern Territory that are prospective for cobalt, gold, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd.

In May 2016, an additional exploration asset was acquired when the Company entered into an agreement with New Age Exploration Limited to acquire up to 50% of the Redmoor Tin/Tungsten project in Cornwall, UK. This 50% acquisition was completed in February 2017 and a drilling programme completed in 2017 resulted in a significant upgrade of the resource.

In March 2018, the Company completed the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Australia and is currently working to bring this into operation in 2019.

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2017

I am pleased to present Strategic Minerals Plc's Annual Report ("SML", the "Company" or the "Group") for the year ended 31 December 2017. It was another stellar year for the Group, recording its first seven figure after tax profit. The Board and Management believe this reflects the Company's efforts to reposition itself in both an operational and strategic sense and focus on metals and minerals involved in the burgeoning battery market.

The Group made a total comprehensive income of $1,792,000 as compared to a comprehensive income in 2016 of $212,000, a 742% increase. This profit is particularly pleasing as it relates solely to operations whereas the profit in 2016 was largely attributed to a $675,000 rail settlement achieved during that year.

The Group had unrestricted cash of $3.706m as at 31 December 2017 (2016: $1.105m).

Throughout 2017, the Company executed its agreement to buy into Cornwall Resources Limited ("CRL") and acquired the remaining equity of Central Australian Rare Earths Pty Ltd ("CARE") held by the other joint venture party. With the upswing in resource stocks that occurred during 2017, it now appears that the 2016 and 2017 investments in CRL and CARE will prove timely. While, in 2017, the preferred selection of cobalt, gold, nickel sulphide and tin outperformed the broader commodity market, the Board identified the need to hold additional, near term cash generating metals and materials that would benefit from the bourgeoning battery market. In this regard, it actively sought and located a suitable copper investment.

In October 2017, the Company signed a term sheet for the acquisition of the Leigh Creek Copper Mine Pty Ltd ("LCCM"). This had been an operating copper mine that closed in 2011. After extensive due diligence, the Company proceeded to renegotiate terms and exchanged contracts for the acquisition in January 2018. The acquisition has since been completed. The purchase of LCCM provides the Company an opportunity to, in 2019, bring a second income stream into the Company and paves the way for broader possibilities, such as potential dividend payments.

The Board was particularly excited with the LCCM acquisition as it has 24,900 tonnes of JORC compliant copper metal at less than USD 100 per tonne and has an offtake agreement in place to take 100% of copper production. It is currently believed that a production rate of over 200 tonnes of copper per month is attainable and the Company has assembled an experienced and competent team to ensure that the project delivers cash flow in 2019.

To help fund the LCCM acquisition, the Company undertook a capital raise in October 2017. While the Company initially sought to raise £500,000, the placing was oversubscribed by some 400%. To satiate some of the market's appetite for SML stock, the Company organised to take its subscription up to £690,000 and arranged for Company personnel to exercise options and on sell £810,000 of these shares to quench some of the market's appetite. As a result of these arrangements, the Company received £1,050,000 from the placement and the exercise of options. Importantly, the placement was predominately made to institutional investors and this helped to diversify the Company's shareholder base and removed any employee option overhang concerns the market may have had.

The acquisition of LCCM completed a part of the Board's strategy of building a balanced portfolio consisting of cash generating and near term cash generating assets combined with exploration projects with exposure to the battery materials market (shown graphically as follows).

In February 2018, subsequent to year end, the Company added another Board member, Mr Jeffrey Harrison. Mr Harrison is a seasoned, highly experienced mining engineer who has been working with the Company for the past year through his involvement in CRL. Mr Harrison's appointment has added balance and depth to the Board's skills and will prove a vital asset in the development of the Company's projects.

The strong position the Company has found itself in at the end of 2017 and the development work scheduled for 2018 and early 2019 augurs well for the Board delivering shareholder value.

I look forward to working with my fellow Directors and the staff of the Company to ensure that the 2018 financial year is one of both operating and project growth for the Company.

Finally, I would like to acknowledge the support of our shareholders, suppliers, customers and other stakeholders and I look forward to your continued support during 2018 and beyond.

Alan Broome AM, Chairman

23 May 2018

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2017

The Directors of the Company and its subsidiaries (which together comprise the Group) present their Strategic Report on the Group for the year ended 31 December 2017.

Financial Performance

The Company and the Group's reporting currency is US dollars as, previously, the Group's revenues, expenses, assets and liabilities were predominately in US currency and the bulk of revenues continue to be denominated in US dollars.

The Group made a profit before tax for the financial year of $2.234m (2016: Profit of $0.351m) which, after making allowance for exchange rate movements, produced a total comprehensive income of $1.792m (2016: Income $0.212m). The profit in 2017 was directly related to the substantial turnaround the Company's subsidiary, Southern Minerals Group LLC ("SMG") achieved in 2017. Unlike the previous year's total comprehensive income of $0.212m, which was largely attributable to the $0.675m settlement of SMG's rail claim, this year's Group performance has been driven purely by operations.

During the year, the Company consolidated investments it had entered into in 2016, namely the investment in:

a) Cornwall Resources Limited ("CRL") a brownfields tin/tungsten exploration in Cornwall, England. Strategic Minerals completed its buy-in to the company increasing the Company's stake to 50%, the proceeds of which were primarily utilised to undertake an exploration drill programme.

b) Central Australian Rare Earths Pty Ltd ("CARE"), a company holding a number of greenfields exploration tenements prospective for Cobalt, Gold, Nickel Sulphide and Rare Earths. The initial funds invested by the Company to obtain a 50% interest in CARE were utilised for a drilling programme at CARE's Hanns Camp tenements. Subsequently in May 2017, the Company acquired the remaining 50% of CARE's equity from the shareholders of CARE.

In October 2017, the Board announced the signing of a term sheet for the acquisition of Leigh Creek Copper Mine Pty Ltd ("LCCM") a South Australian copper mine that had been inactive for a number of years. In March 2018, this acquisition was completed subject to a further issuance of the Company's shares which has now been completed.

In line with the increase in profit of 352% for the group, total overhead costs for the group have risen from $1.432m in 2016 to $2.113m in 2017. The Board and management continue to closely monitor overheads and administration costs to ensure they are appropriately in line with operations.

Head office expenses increased from $0.669m in 2016 to $1.086m in 2017 reflecting increased activities at Cobre, increased project activities at CARE and new acquisitions which resulted in additional directors' fees and consulting fees. Overheads in the Company's US subsidiary SMG, after deducting intercompany management fees, rose from $0.732m in 2016 to $1.016m in 2017 mainly due to an increase in equipment rental and salary and wages increases associated with sales growth.

In line with SMG's dramatic profitability turnaround, SMG has now absorbed its previous tax losses and has become a tax paying entity. In line with this, the Company has accrued a tax liability of $0.648m for the year. However, the remainder of the Group continues to be in a tax loss position.

Cash at the end of the year was $3.706m (2016: $1.105m). The increase in cash at year end is predominately due to the increased sales at Cobre resulting in improved operating cashflow of $2.882m (2016: cash outflow $0.495m). The increase in cash position in 2017 is also after investing $1.704m (2016: $0.563m) on investments in projects and property plant and equipment and raising $1.399m (2016: $1.340m) in financing cash flows through the issue of equity.

PROJECT REVIEW AND ACTIVITIES

Cobre Performance

2017 proved to be an outstanding year for domestic sales at Cobre. During the year, 84,980 short wet tons of magnetite were sold for $5.637m compared to the 2016 year when 25,385 short wet tons were sold for $1.552m. Operations at the mine continue to be closely managed while still ensuring adequate service to customers and safe operating conditions.

The three fold increase in sales reflected the addition of a large client in the second half of 2016 and another substantial client in June 2017.

As SMG repaid all debts in 2016, excess cash being generated from SMG is being applied to the repayment of intercompany balances accumulated when SMG was exporting product overseas and payment of management fees.

SMG's formal access to the Cobre mine magnetite stockpile was extended in 2017 until March 2018. Subsequently, this has now been "rolled over" to March 2019. The Company is currently unaware of any likelihood that SMG's access to the magnetite stockpile at Cobre will not be rolled over in the future.

SMG continues to have an exemplary safety record and has developed an enviable culture that reinforces the highest of safety standards.

Leigh Creek Copper Mine Pty Ltd ("LCCM") ^¹

In October 2017, the Company signed a term sheet in relation to the acquisition of LCCM which held the mining rights to a copper mine in the Flinders Ranges of South Australia which was subject to a number of conditions precedent including due diligence. The mine had not been operated since 2011 and the Company undertook extensive due diligence which resulted in it finalising the terms of the agreement and exchanging contracts in January 2018. The settlement of LCCM occurred on 6 March 2018 and therefore the acquisition of LCCM is deemed a post balance sheet event for accounting and disclosure purposes.

LCCM represents a substantial opportunity to increase the size of the Company and provide it with a second income stream.

The Leigh Creek Copper Mine Project is a historically mined copper oxide deposit based in the northern Flinders Ranges of South Australia. South Australia is one of the world's largest copper producers (Olympic Dam and Prominent Hill) and the northern Flinders Ranges have been a source of copper since the 1880s.

LCCM has three approved Mining Leases that cover a number of copper oxide deposits, including Lorna Doone, Lynda, Mountain of Light (Rosmann East and Paltridge North) and the Mount Coffin deposit. All the Mineral Resources are contained within the Mining Leases.

The previous owners completed a JORC 2012 compliant Mineral Resource estimate on Lynda, Lorna Doone and Paltridge North deposits in 2016. A total resource of 3.61mt @ 0.69% copper for 24,900 of copper metal forms the base of the project and includes the following Resource category breakdown.

Inferred			Indicated		Total Resource
Deposit	Tonnes	Copper Grade	Tonnes	Copper Grade	Tonnes	Copper Grade	Copper Metal (tonnes)
Paltridge North	41,000	0.49%	879,000	0.82%	920,000	0.81%	7,400
Lynda	-	-	1,349,000	0.65%	1,349,000	0.65%	8,800
Lorna Doone	66,000	0.68%	1,280,000	0.65%	1,346,000	0.65%	8,700
Total	107,000	0.61%	3,508,000	0.69%	3,615,000	0.69%	24,900

¹The competent persons statement relating to the LCCM project can be found at the back of this report

Additional exploration potential has been identified within the mining and exploration leases and will be followed up during 2018 with further proposed exploration.

An existing heap leach and copper processing facility is currently located at the Mountain of Light deposit although this has not operated since 2012. The treatment plant treats the copper solution extracted via a standard heap leach pad into a copper cement (>70% Cu) via two existing Kennecott cones. The Mountain of Light Processing plant is 100% owned by LCCM.

A Feasibility Study ("FS") for the Leigh Creek Copper Mine was completed by Terra Consulting in November 2016 and compiled geology, resources, mining, processing and marketing relating to the project. The FS focussed on treating oxide copper initially from two open pits (Lorna Doone and Lynda). This processing plant has a nominal capacity to produce 2,200 tonnes of copper per annum, but the feasibility study identified a very low capital cost option to increase capacity to 4,000 tonnes of copper per annum. Additional resources from the Paltridge North deposit were not included in this FS and will be assessed by SML for potential upside. The FS has demonstrated a robust economic return using conservative price assumptions.

The region around the LCCM project has excellent infrastructure with a modern town (Leigh Creek), sealed airstrip, sealed and all-weather roads, power, and water.

Additional to the Mining Leases, two approved Exploration Leases, covering an area of 692km² in the northern Flinders Ranges, are included in the LCCM project. These provide excellent opportunities for exploration of new copper oxide resources.

Copper prices have demonstrated a strong resilience during 2017 and an ongoing general decline in mine grades and increasing challenges for exploration success, places copper as a strategically attractive commodity.

An offtake agreement for all planned copper production, up to 300 tonnes per month at 85% LME price, is in place.

Extensive resources are being applied by the Company to restart operations at LCCM and it is anticipated that this should occur in 2019.

Central Australia Rare Earth Pty Ltd ("CARE") Tenements^{^[1]}

In early 2017, a review of previous drilling results at the Hanns Camp tenements indicated that there were significant cobalt deposits on the tenements. This then became a part of the focus the Company has for the development of these tenements.

Due to frustration associated with our then partner's, Rarus Pty Ltd, inability to fund additional exploration, the Company moved, in May 2017, to acquire the balance of the shares in CARE and provided as consideration 19 million ordinary shares in the Company issued at a price of £0.0275 per share.

In September 2017, a 49-hole air core drilling programme was completed across the extent of the known Hanns Camp ultramafic rocks. The drilling targeted a concentration of cobalt and nickel within the lateritic weathering profile. All holes were drilled vertically and drilled to the depth of weathering. A total of 1,915 metres were drilled with an average depth of 39 metres.

23 of the 49 holes drilled intersected mineralisation. Nickel equivalent grades were calculated on the following parameters: Ni equivalent (NiEq.) calculations based on a Nickel price of US$5.35/lb and a cobalt price of US$27.1/lb.

Assaying was initially completed on 4 metre composite intervals and, subsequently, utilising the 1 metre sample intervals in areas of higher grade.

The stronger intersections are included below:

· HCAC004: 10m @ 0.65% Ni and 0.05% Co (0.93% Ni eq. or 0.18% Co eq.) from 9m

· HCAC015: 10m @ 0.63% Ni and 0.04% Co (0.83% Ni eq. or 0.16% Co eq.) from 16m

· HCAC028: 17m @ 1.20% Ni and 0.07% Co (1.57% Ni eq. or 0.31% Co eq.) from 31m

· HCAC029: 4m @ 1.35% Ni and 0.16% Co (2.18% Ni eq. or 0.43% Co eq.) from 17m

· HCAC030: 6m @ 0.72% Ni and 0.10% Co (1.24% Ni eq. or 0.24% Co eq.) from 8m

· HCAC039: 3m @ 1.11% Ni and 0.23% Co (2.28% Ni eq. or 0.45% Co eq.) from 37m

· HCAC048: 12m @ 1.04% Ni and 0.06% Co (1.36% Ni eq. or 0.27% Co eq.) from 29m

· HCAC049: 16m @ 0.93% Ni and 0.07% Co (1.30% Ni eq. or 0.26% Co eq.) from 48m

A full listing of the significant intersections is included in Table 1 which follows.

Table 1 Significant Intersections

Hole	Easting	Northing	From	To	Interval	Nickel Grade (%)	Cobalt Grade (%)	Ni Eq. Grade (%Ni)	Co Eq. Grade (%Co)
HCAC004	452200	6837400	9	19	10	0.65	0.05	0.93	0.18
HCAC006	452100	6837600	16	23	7	0.52	0.08	0.91	0.18
HCAC008	452000	6837800	16	20	4	0.69	0.06	0.99	0.19
HCAC013	451600	6838900	16	21	5	0.74	0.05	0.97	0.19
HCAC014	451500	6839000	20	22	2	0.69	0.10	1.21	0.24
HCAC015	451591	6839094	16	26	10	0.63	0.04	0.82	0.16
HCAC024	451596	6839291	29	30	1	1.66	0.09	2.11	0.42
HCAC025	451511	6839181	29	34	5	0.86	0.08	1.24	0.25
HCAC025	451402	6839099	34	37	3	1.04	0.07	1.36	0.27
HCAC026	451907	6839801	21	24	3	0.62	0.05	0.86	0.17
HCAC027	451799	6839699	12	13	1	0.69	0.07	1.05	0.21
HCAC028	451699	6839598	31	48	17	1.20	0.07	1.57	0.31
HCAC029	451602	6839504	17	21	4	1.35	0.16	2.18	0.43
HCAC030	451403	6839300	8	14	6	0.72	0.10	1.24	0.24
HCAC032	451403	6839300	23	29	6	0.49	0.12	1.10	0.22
HCAC033	451302	6839199	25	28	3	0.70	0.16	1.52	0.30
HCAC037	451504	6839601	32	36	4	0.75	0.08	1.14	0.23
HCAC039	451501	6839793	37	40	3	1.11	0.23	2.28	0.45
HCAC040	451695	6839805	16	19	3	0.88	0.04	1.10	0.22
HCAC041	451600	6839902	12	20	8	No significant assays >0.5% Ni or 0.06% Co
HCAC042	451699	6839991	21	25	4	0.81	0.06	1.11	0.22
HCAC048	451291	6839991	29	41	12	1.04	0.06	1.36	0.27
HCAC049	451398	6839901	48	64	16	0.93	0.07	1.30	0.26

SML has commenced Phase 2 of its exploration programme with a review of the historical nickel sulphide potential. This was focused on EM generated targets and has initially reviewed the extensive database of geological information that was acquired from the previous owners.

During the second half of 2017, Dr Martin Gole, an internationally recognised nickel sulphide expert, was engaged by SML and has reviewed the prospectivity of the Hanns Camp tenements as well as the broader Laverton Project. The aim of this review has been to generate nickel sulphide targets both in the Hanns Camp area and for other known ultramafic host rocks within the CARE tenement holdings. On the back of this analysis, further drill programmes are planned in 2018.

Cornwall Resources Limited - Redmoor Tin/Tungsten Project

In the first half of 2016, SML negotiated, and entered an agreement, to acquire up to a 50% interest in Cornwall Resources Limited ("CRL") - formerly known as NAE Resources (UK) Limited - which was a wholly owned subsidiary of the Australian (ASX) listed company New Age Exploration Limited ("NAE"). This company holds an exploration licence and an option over 23km² in the Cornish tin-tungsten-copper mining district in the UK which had previously operated as the Redmoor Tin Mine.

The Company, during the period, increased its interest in CRL from 16.4% to 50% for cash of $1.068m (£843,649). As part of the acquisition, SML entered into a Shareholders' Agreement with NAE which ensures that CRL and the Redmoor project will be operated as a 50:50 joint venture. Equal joint venture contributions were made by both parties during the year equating to $0.260m (£196,003).

Safety

The Company is pleased to report that, during 2017, across its operations in United States and Australia, the Company had zero (2016: zero) safety incidents and incurred no environmental, regulatory, or operation violations.

Board and Management Changes

There have been no changes to the composition of the Board nor any changes in Management for the period. However, subsequent to the end of the financial year, Mr Jeff Harrison, a qualified and experienced mining engineer was added to the Board.

Key Risks and Uncertainties

The management of the business and the execution of the Group's strategy are subject to a number of risks. The Company regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact. There is the possibility that if more than one event occurs, that the overall effect of such events would compound the possible adverse effects on the Group.

Our principal risks and uncertainties are as follows:

Strategic risk

Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, the Group may be unable to acquire rights to exploit additional revenue generative assets such as Cobre and attractive mining development properties such as CARE, CRL and LCCM on terms it considers acceptable. Accordingly, there can be no assurance that the Group will acquire any interest in additional operations that would yield reserves or result in commercial mining operations. The Group expects to undertake sufficient due diligence where warranted to help ensure opportunities are subjected to proper evaluation. The Group has a skilled manager and director team who have deep sector experience and a history of taking projects through to development.

Resource risk

The mineral resource relating to CARE, CRL and LCCM are only estimates and no assurance can be given that the estimated resources will be recovered or that they will be recovered at the rates estimated. Resource estimates are based on sampling and, consequently, are uncertain because the samples may not be representative. Resource estimates may require revision (up or down) based on future actual production experience. The discovery of mineral deposits is dependent upon a number of factors including the technical skill of the exploration personnel involved.

The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. There can be no guarantee that a mineral deposit will be economically viable. The Group employs qualified personnel and a thorough evaluation of a range of possible outcomes are considered within the planning process to mitigate exposure.

Commodity prices and currency risk

Fluctuations in commodity markets are affected by numerous factors beyond the Group's control, including global demand and supply, international economic trends, currency exchange fluctuations, expectations for inflation, speculative activity, consumption patterns and global or regional political events. The aggregate effect of these factors is impossible to predict. Fluctuations in commodity prices, over the long term, may adversely impact the returns of the Group's investments. Price mitigation strategies the Group may pursue include sale of product under long-term contracts reducing exposure to short term fluctuations, enter into commodity price hedging contracts where possible and a robust budgetary planning process that considers operations over a range of commodity pricing scenarios.

The Group reports its results in US Dollars, whilst the functional currency of the parent company from which the Group derives the majority of its funding is Pound Sterling. This may result in additions to the Group's reported costs. Fluctuations in exchange rates between currencies in which the Group invest, reports or derives income may cause fluctuations in its financial results that are not necessarily related to the Group's underlying operations.

Dependence on key personnel

The Group and Company are dependent upon the executive and local management teams. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on the Company's ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. The Group continues to review and adopt attractive packages for both staff and contractors to ensure the Group remains competitive.

Operational risk

Mining operations are subject to hazards normally encountered in exploration, development and production. These include unexpected geological formations, rock falls, flooding, dam wall failure and other incidents or conditions which could result in damage to plant or equipment, people, or the environment and which could impact any future production throughout. Although it is intended to take adequate precautions to minimise risk, there is a possibility of a material adverse impact on the Group's operations and its financial results. The Group will develop and maintain policies appropriate to the stage of development of its various projects to ensure operational risk is continually monitored.

Funding risk

The Group needs funds, both to manage its working capital requirements and fund new projects, as it seeks to grow. If the Company is not able to obtain sufficient financial resources, it may not be able to develop new projects. There can be no assurance that such funds will continue to be available on reasonable terms, or at all in the future. The Directors regularly review cash flow requirements and the cash flow generated from its Cobre operation to ensure the Group can meet financial obligations as and when they fall due.

Uninsurable risk

The Group may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts which exceed policy limits. The Group mitigates its exposure to such risks by undertaking a prudent planning process to identify the risk/reward balance.

Customer risk

The level of profitability of the Group is currently dependant on the performance of the Company's Cobre operation in the United States. The Cobre operation has a number of major customers and should one or more of these customers choose to not to purchase product it may have a substantial impact on the performance of the Group. Management continuously seek opportunities to source new customers to avoid over-exposure to individual major customers.

Product risk

The Group has a contract for access to magnetite iron ore at the Cobre operation which automatically renews on the 1 March of each year unless either party terminates the agreement 30 days prior to renewal. There is a risk that the supplier may terminate the agreement in which case the Group would no longer have product to sell. The Group maintains continued dialogue with key suppliers to mitigate this risk.

Key Performance Indicators

The Board monitors the activities and performance of the Group on a regular basis. The principal KPI's monitored by the Company are domestic sales of product from Cobre, the cash position of the Group and the health, safety and environmental incidents of the Group. The sales of domestic product at Cobre increased by 263% during the year to 84,980 short wet tons as a result of an increase in the number of customers being served. The unrestricted cash position of the group as at 31 December 2017 was $3.706m which had increased $2.537m from the year before, principally as a result of the increased activity at Cobre and key transactions being settled in shares which preserved the Group's cash reserves. There were no health, safety and environmental incidents reported in the year.

Strategy

In early 2016, the Company adopted a strategy emphasising both an operating and investment strategy, which is still in force.

The Operating Strategy is centred on maintaining and improving cash flows from the Company's magnetite stockpile at the Cobre mine in New Mexico, USA, whilst also limiting corporate overheads in line with this profitability, thus ensuring operating self-sufficiency.

The Investment Strategy is built around a three-pronged approach which features bulk commodities with offtake arrangements, advanced materials with expected improvement in demand (Rare Earths, Cobalt, Graphite etc) and metals with expected pricing improvements over the next three to five years (Nickel Sulphide, Gold, Lithium etc).

The Company is well positioned with a sound cash flow foundation, self-funded drilling programmes and is examining a number of potential investments involving both existing and new projects.

Outlook and Prospects

The Company continues to maintain controls on its overheads, is focused on expanding Cobre's profitable domestic sales and is undertaking further drilling of the CARE and Redmoor projects. In addition, after year end, the Company purchased the Leigh Creek Cooper Mine ("LCCM") in South Australia which the Company expects to be in full production around mid-2019 and which is expected to be a net cash contributor to the Group.

The Board is confident that the outlook for the Company is encouraging as it now has a strong cash flow stream from Cobre, the potential upside from drilling programmes at CARE in Western Australia and Redmoor in Cornwall, England and the newly acquired LCCM copper project in South Australia which has the potential to provide a further cash generating opportunity for the Group.

The Strategic Report was approved and authorised for issue by the Board of Directors and was signed on its behalf by:

John Peters

Managing Director

23 May 2018

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2017

The Directors present their report and the audited financial statements for Strategic Minerals Plc ("the Company") and its wholly owned subsidiaries ("the Group") for the year ended 31 December 2017.

PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Company is a public limited company registered in the UK whose registered office is 27/28 Eastcastle Street, London, W1W 8DH.

The Principal activity of the Company is a holding company. The principal activity of the Group is the exploration, development and operation of mining projects.

A review of the Group's business during the financial year and its likely development is given in the preceding Chairman's Report and Strategic Review.

RESULTS AND DIVIDENDS

The Group recorded a profit after taxation for the year of $1,586,000 (2016: $351,000).

The Directors do not propose to recommend any distribution by way of dividend for the period ended 31 December 2017.

DIRECTORS

The Directors who served the Company during the period and prior to the release of this report were as follows:

Current Directors

Alan Broome	(appointed 2 July 2015)
John Peters	(appointed 21 January 2015)
Peter Wale	(appointed 12 July 2016)
Jeffrey Harrison	(appointed 7 February 2018)

DIRECTORS' INTEREST IN SHARES

The persons who held office at the year-end had the following interests in the issued share capital of the Company at year end:

Alan Broome	147,319
John Peters	20,500,000
Peter Wale	46,364,000

DIRECTORS' REMUNERATION AND SERVICE CONTRACTS

Under their respective service contracts the officers of the company received fees as detailed in the Directors' Remuneration table in Note 7.

SUBSTANTIAL SHAREHOLDERS

As at 30 April 2018 shareholdings of 3% or more of the issued share capital notified to the Company were:

	Number of 0.1p ordinary shares	Percentage of issued share capital
Charles and Alexandra Manners	48,829,534	3.55
Mr Peter Wale	48,359,467	3.51
Lenark Pty Ltd as trustee for Lenark Investment Trust and related parties	44,834,954	3.26

POLITICAL CONTRIBUTIONS

There were no political contributions made by the Group during the year ended 31 December 2017 (2016: Nil).

INFORMATION TO SHAREHOLDERS - WEBSITE

The Company has its own website (www.strategicminerals.net) for the purposes of improving information flow to shareholders, as well as to potential investors.

GOING CONCERN

These financial statements have been prepared on the assumption that the Group is a going concern.

When assessing the foreseeable future, the Directors have looked at the Group's working capital requirements for the period to 30 June 2019 being the period for which projections have been prepared and the minimum period the Directors are required to consider.

The Directors have reviewed the Group's current cash resources, funding requirements and ongoing trading of the operations. The Directors note that the Group's future funding position is reliant on the key customers with the Cobre operation fulfilling the requirements of the underlying sales agreements. As at the date of this report there is uncertainty as to whether these commitments will be fulfilled. If the Group loses a key customer then the directors will be required to raise further funding through debt or equity and cut the spending on the other group assets as appropriate. As at the date of this report there is no certainty regarding the group's ability to execute these transactions. These conditions indicate the existence of material uncertainties which may cast doubt as to the Group's ability to continue as a going concern. In the event that the Group is unable to raise sufficient funds, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

INDEMNITY OF OFFICERS

The Group currently maintains insurance to cover against legal action brought against its Directors and officers. It evaluates on the appointment of new directors whether an indemnity from the Company for the actions of previous directors is warranted. However, the Group may purchase and maintain, for any Director or officer, insurance against any liability in the near future pending the evolution and complexity of any further new projects undertaken by the Company.

FINANCIAL RISK MANAGEMENT

Refer to Note 3 to the financial statements for further details.

EVENTS AFTER THE END OF THE REPORTING PERIOD

Refer to Note 24 to the financial statements for further details.

PUBLICATION OF ACCOUNTS ON COMPANY WEBSITE

Financial statements are published on the Company's website. The maintenance and integrity of the website is the responsibility of the Directors. The Directors' responsibility also extends to the financial statements contained therein.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the Directors, at the time of approval of their report, are aware:

· there is no relevant audit information of which the Group's auditors are unaware; and

· the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

AUDITORS

In accordance with section 489 of the Companies Act 2006, a resolution proposing that BDO LLP be reappointed as auditors of the Group will be put to the Annual General Meeting.

By order of the Board

John Peters

Managing Director

23 May 2018

STRATEGIC MINERALS PLC

STATEMENT OF DIRECTORS' RESPONSIBILITIES

FOR THE YEAR ENDED 31 DECEMBER 2017

The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether the Group and parent Company financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

WEBSITE PUBLICATION

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website (www.strategicminerals.net) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

THE BOARD

The aim of the Board is to function at the head of the Group's management structures, leading and controlling its activities and setting a strategy for enhancing shareholder value. Meetings are held to review the Group's forward planning. The Board currently consists of one Executive and three Non-Executive Directors. The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Company and the interests of its shareholders and seek to comply in all material respects with the Corporate Governance Guidelines for small and mid-size quoted companies.

The Company as at the date of this report has three committees being the Remuneration Committee, Safety Committee and Audit Committee.

Members	Remuneration Committee	Safety Committee	Audit Committee
Mr Alan Broome AM - Non-Executive Chairman	X Chair	X
Mr Peter Wale - Non-Executive Director	X		X Chair
Mr Jeffrey Harrison -Non-Executive Director	X	X Chair
Mr John Peters - Managing Director			X

The purpose of the Audit Committee is to provide formal and transparent arrangements for considering how to apply the financial report and internal control principles set out in the Corporate Governance Guidelines for small and mid-size quoted companies, and to maintain an appropriate relationship with the Company's auditors. The key terms are as follows:

· to monitor the integrity of the financial statements of the Company and Group, and any formal announcement relating to the Company's performance;

· to monitor the effectiveness of the external audit process and make recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;

· to keep under review the relationship with the external auditors including (but not limited to) their independence and objectivity; and

· to keep under review the effectiveness of the Company's financial reporting and internal control policies and systems

BOARD MEETINGS

The Company held 5 (five) Board meetings during the reporting period and the number of meetings attended and eligible to attend by each of the Directors of the Company during the year to 31 December 2017 were:

	Number of meetings attended	Number of meetings eligible to attend

Alan Broome	5	5
John Peters	5	5
Peter Wale	5	5

SECURITIES TRADING

The Company has adopted a share dealing code for dealings in shares by Directors and senior employees which is compliant with the Market Abuse Regulation (EU) No 596/2014 ("MAR") and appropriate for an AIM company. The Directors will comply with MAR and AIM Rule 21 relating to dealings and will take all reasonable steps to ensure compliance by persons discharging managerial responsibility ("PDMR") and persons closely associated with them.

INTERNAL CONTROL

The Board has overall responsibility for ensuring that the Group maintains systems and internal financial controls that provide them with reasonable assurance regarding the financial information, both for use within the business and for external publication, and that the Group's assets are safeguarded. The Board is in the process of evaluating a means for identifying, evaluating and managing the principal risks faced by the Group. The Board will regularly review such a process.

RELATIONS WITH SHAREHOLDERS

The Board attaches great importance to maintaining good relationships with shareholders. The Board regards the Annual General Meeting as an opportunity to communicate directly with investors, who are encouraged to attend and participate. In the near term the Company will release an updated website to assist with shareholder and investor communication.

By order of the Board

John Peters

Managing Director

23 May 2018

STRATEGIC MINERALS PLC

INDEPENDENT AUDITOR'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2017

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATEGIC MINERALS PLC

Opinion

We have audited the financial statements of Strategic Minerals Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2017 which comprise the consolidated statement of comprehensive income, the consolidated and parent company statement of financial position, the consolidated and the parent company's statement of cash flows, the consolidated and the parent company's statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2017 and of the group's profit for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty in relation to going concern

We draw attention to Note 1 in the financial statements which explains that the future funding of the group is reliant on key customers fulfilling the requirements of the underlying sales agreements and there is uncertainty that these will be fulfilled. As described in note 1 these conditions give rise to the existence of a material uncertainty that may cast significant doubt about the group's and Parent Company's ability to continue as a going concern and therefore the group and Parent Company may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter.

Given the conditions and uncertainties noted above we considered going concern to be a Key Audit Matter. We have performed the following audit work:

· We have critically assessed the directors' and management's cash flow forecast, and the underlying assumptions, in particular the key sensitivity which analyses the impact of a key customer to the Cobre operations no longer being able to fulfil their obligations under the offtake arrangement.

· We have agreed key cash outflows to underlying budgets for the CRL and CARE to ensure commitments have been appropriately included.

· We have compared forecast operating cost cash flows to current run rates for the underlying business.

· We reviewed the disclosures in the financial statements.

Use of our report

This report is made solely to the parent company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Key audit matters

In addition to the matter described in the material uncertainty related to going concern section, key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

RISK

Carrying value of Exploration and Evaluation assets

As detailed in note 11 and 10, the group's significant non-current assets as at 31 December 2017 comprise its $1.6m investment in Cornwall Resources Limited ("CRL") and capitalised exploration expenditure of $1.2m related to the Central Australia Rare Earth Project ("CARE").

During the year the company acquired a further 34% interest in CRL. Previously CRL was treated as an investment in joint venture and there was consideration required by management as to whether the acquisition changed the nature of this investment and related accounting treatment.

The company also stepped up its interest in CARE to a 100% equity interest in the company. There was judgement required by management in determining whether this represents a business combination or acquisition of an asset and this impacts upon the underlying accounting.

The underlying assets which support the carrying value of CRL and CARE are exploration and evaluation assets, and the Directors are also required to assess whether there are any indications that these assets may be impaired in accordance with accounting standards.

The value of the Exploration and Evaluation asset and Investment in CRL are significant to the group and company balance sheets and there is management judgement applied to the accounting for each equity step up and impairment assessment. We therefore considered the risk around carrying value to be significant.

OUR RESPONSE

Our procedures included, but were not limited to the following:

CRL

· We verified the step up of the Groups investment in CRL and considered whether management's treatment of the step up is in accordance with accounting standards. This included reviewing the terms of the underlying Joint Venture agreement to confirm management's assessment that there was no change to the underlying accounting and joint control still existed was appropriate.

· We verified the consideration paid through to bank statements.

· We verified a sample of the capitalised exploration costs in CRLs' statement of financial positon to supporting documentation and assessed whether the appropriate recognition criteria had been met.

· We reviewed exploration reports to assess if there were any facts or results which would indicate that the project is uneconomic and unlikely to be developed.

· We reviewed future budgets and minutes of meetings held by CRL's management to confirm that there is an intention to continue to explore the project area.

· We verified tenement documentation to confirm that CRL has valid tenure over its area of interest.

CARE

· We considered management's assessment of whether the 100% acquisition of the issued share capital of CARE constituted a business combination or an asset acquisition in accordance with accounting standards and judgement that the transaction represented an asset acquisition.

· We verified the equity issued as consideration and verified the statutory documentation confirming the group's 100% equity holding.

· We reviewed the assets and liabilities held by CARE. The key underlying asset in the company is an exploration asset and the nature of operations corroborates management's assessment that CARE did not meet the definition of a business as defined by the accounting standards.

· We verified tenement documentation to confirm that the Group has valid tenure over its area of interest.

· We reviewed exploration activity undertaken during the year to assess if there are any facts or results which would indicate development of the asset is uneconomic.

· We reviewed future budgets and minutes of meetings to confirm that there is an intention to continue to explore the project area.

· We verified a sample of costs capitalised within CARE to supporting documentation and assessed whether these met the recognition criteria for capitalisation in accordance with accounting standards.

Our application of materiality

Group materiality FY 2017

Group materiality FY 2016

Basis for materiality

$120,000

$50,000

1.5% of total assets

(2016: 1.5% of total assets)

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Whilst materiality for the financial statements as a whole was $120,000, each significant component of the group was audited to a lower level of materiality. The parent company materiality was $60,000 (2016: $44,000) with the other components varying from $91,000 to $19,000. These materiality levels were used to determine the financial statement areas that are included within the scope of our audit work and the extent of sample sizes during the audit.

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. Performance materiality was set at 75% (2016: 75%) of the above materiality levels.

We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of $6,000 (2016: $3,000). We also agreed to report differences below these thresholds that, in our view warranted reporting on qualitative grounds.

An overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

Our group audit scope focused on the group's principal operating subsidiaries being Strategic Minerals Plc, Southern Minerals Group LLC and Central Australia Rare Earths Pty Ltd, which were subject to a full scope audit. We also performed specific testing on the underlying financial records of the group's joint venture investment in CRL. Together with the parent company and its group consolidation, which was also subject to a full scope audit, these represent the significant components of the group.

The remaining components of the group were considered non-significant and these components were principally subject to analytical review procedures, together with additional substantive testing over the risk areas detailed above where applicable to that component. We set out below the extent to which the group's total assets were subject to audit versus review procedures.

The audits of each of the components were performed in the United Kingdom. All of the audits were conducted by BDO LLP.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Matt Crane (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

23^rd May 2018

London

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

		Year to	Year to
		31 December	31 December
	Note	2017	2016
		$'000	$'000
Revenue	4	5,642	1,552
Raw materials and consumables used		(914)	(337)
		________	________

Gross profit		4,728	1,215

Other Income	5	-	691

Administration expenses	6	(2,431)	(1,555)
		________	________

Profit from operations		2,297	351
		________	________

Share of post-tax loss of equity accounted associates	11	(63)	-

Profit before taxation		2,234	351

Income tax charge	8	648	-
		________	________
Profit for the period attributable to the owners of the parent		1,586	351

Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange gain/(loss) arising on translation of foreign operations		206	(139)
		________	________
Total comprehensive income attributable to the owners of the parent		1,792	212
		________	________

Profit per share attributable to the ordinary equity holders of the parent:

Basic	9	$0.00152	$0.00034
Diluted		$0.00147	$0.00033

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

		2017	2016
	Notes	$'000	$'000
Assets
Non-current assets
Investments in associates	11	-	278
Investments in joint ventures- equity accounted	11	1,611	285
Deferred exploration and evaluation expenditure	10	1,242	-
Property, plant and equipment	12	257	141
Restricted cash	16	100	100
		________	________

		3,210	804
		________	________
Current assets
Inventories	13	7	13
Trade and other receivables	14	1,081	922
Cash and cash equivalents	15	3,706	1,105
		________	________

		4,894	2,040
		________	________

Total Assets		8,004	2,844
		________	________
Equity and liabilities
Share capital	19	2,009	1,873
Share premium reserve	19	45,935	43,865
Merger reserve		20,240	20,240
Foreign exchange reserve		(209)	(415)
Share options reserve	20	137	138
Other reserves		(23,023)	(23,023)
Retained earnings		(38,180)	(39,976)
		________	________

Total Equity		6,909	2,702
		________	________
Liabilities
Current liabilities
Income Tax payable	8	648	-
Trade and other payables	17	447	142
		________	________

		1,095	142
		________	________

Total Liabilities		1,095	142
		________	________

Total Equity and Liabilities		8,004	2,844
		________	________

These financial statements were approved and authorised for issue by the Board of Directors on 23 May 2018 and were signed on its behalf by:

John Peters

Director

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

	Notes	2017	2016
		$'000	$'000

Assets
Non-current assets
Investments in subsidiary undertakings	11	950	-
Investments in associates	11	-	278
Investments in joint ventures- equity accounted	11	1,611	285
		________	________

		2,561	563
		________	________
Current assets
Loans to subsidiary undertakings	11	456	1,360
Trade and other receivables	14	170	164
Cash and cash equivalents	15	1,651	685
		________	________

		2,277	2,209
		________	________

Total Assets		4,838	2,772
		________	________
Equity and liabilities
Share capital	19	2,009	1,873
Share premium reserve	19	45,935	43,865
Merger reserve		20,240	20,240
Foreign exchange reserve		(577)	(142)
Share options reserve	20	137	138
Retained earnings		(63,175)	(63,272)
		________	________

Total Equity		4,569	2,702
		________	________
Liabilities

Current liabilities
Trade and other payables	17	269	70
		________	________

Total Liabilities		269	70
		________	________

Total Equity and Liabilities		4,838	2,772
		________	________

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent Company is not presented as part of these financial statements. The parent Company made a loss for the year of $113,000 (2016: profit of $441,000).

These financial statements were approved and authorised for issue by the Board of Directors on 23 May 2018 and were signed on its behalf by:

John Peters

Director

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2017

	Notes	Year to	Year to
		31 December	31 December
		2017	2016
		$'000	$'000

Cash flows from operating activities

Profit/(loss) before tax		1,586	351
Adjustments for:

Depreciation of property, plant and equipment	12	74	48
Share of equity loss	11	63	-
(Increase)/ decrease in inventory		6	(9)
(Increase) / decrease in trade and other payables		1,088	(411)
Increase / (decrease) in trade and other receivables		(138)	(553)
(Increase)/ decrease in prepayments		(6)	38
Share based payment expense	20	209	41
		________	________

Net cash used in operating activities		2,882	(495)
		________	________

Investing activities
Increase in Deferred Exploration and Evaluation Expenditure	10	(186)	-
Acquisition of property, plant and equipment	12	(190)	-
Investments in associates and joint arrangements	11	(1,328)	(563)
Loans to third parties		(40)	-
		________	________

Net cash used in investing activities		(1,744)	(563)
		________	________

Financing activities
Net proceeds from issue of equity share capital		1,399	1,425
Repayment of borrowings		-	(85)
		________	________

Net cash from financing activities		1,399	1,340
		________	________

Net increase in cash and cash		2,537	282
Equivalents

Cash and cash equivalents at beginning of year		1,105	946
Effects of exchange rate changes on the balance of cash held in foreign currencies		64	(123)
		________	________

Cash and cash equivalents at end of year	15	3,706	1,105
		________	________

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2017

	Notes	Year to	Year to
		31 December	31 December
		2017	2016
		$'000	$'000


Cash flows from operating activities

(loss)/Profit before tax		(113)	441
Adjustments for:
(Write back) of receivables from subsidiary undertakings	11	(776)	(976)
(Increase) / decrease in trade and other receivables		(82)	(236)
Increase / (decrease) in trade and other payables		334	(222)
(Increase)/ decrease in prepayments		(6)	38
Share based payment expense		209	41
		________	________

Net cash used in operating activities		(434)	(914)
		________	________

Investing activities
Investments in associates and joint arrangements	11	(1,328)	(563)
Receipts from subsidiary undertakings	11	1,306	81
Loans to third parties		(40)	-
		________	________

Net cash used in investing activities		(62)	(482)
		________	________


Financing activities
Net proceeds from issue of equity share capital		1,399	1,425
		________	________

Net cash from financing activities		1,399	1,425
		________	________

Net increase in cash and cash equivalents		903	29

Cash and cash equivalents at beginning of year		685	782
Effects of exchange rate changes on the balance of cash held in foreign currencies		63	(126)
		________	________

Cash and cash equivalents at end of year	15	1,651	685
		________	________

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

	Share Capital	Share premium reserve	Merger reserve	Share options reserve	Other Reserves	Foreign exchange reserve	Retained earnings	Total equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000

Balance at 1 January 2016	1,430	42,883	20,240	97	(23,023)	(276)	(40,327)	1,024
	_______	_______	_______	_______	_______	_______	_______	_______

Profit/(Loss) for the year	-	-	-	-	-	-	351	351
Foreign exchange translation	-	-	-	-	-	(139)	-	(139)
	_______	_______	_______	_______	_______	_______	_______	_______
Total comprehensive income for the year	-	-	-	-	-	(139)	351	212

Share based payments	-	-	-	41	-	-	-	41

Shares issued in the year	443	1,069	-	-	-	-	-	1,512

Share issue costs	-	(87)	-	-	-	-	-	(87)
	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2016	1,873	43,865	20,240	138	(23,023)	(415)	(39,976)	2,702

Profit/(Loss) for the year	-	-	-	-	-	-	1,586	1,586
Foreign exchange translation	-	-	-	-	-	206	-	206
	_______	_______	_______	_______	_______	_______	_______	_______
Total comprehensive income for the year	-	-	-	-	-	206	1,586	1,792

Share based payments	-	-	-	209	-	-	-	209

Transfer	-	-	-	(210)	-	-	210	-

Shares issued in the year	136	2,113	-	-	-	-	-	2,249

Share issue costs	-	(43)	-	-	-	-	-	(43)
	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2017	2,009	45,935	20,240	137	(23,023)	(209)	(38,180)	6,909
	_______	_______	_______	_______	_______	_______	_______	_______

All comprehensive income is attributable to the owners of the parent Company.

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

		Share		Share
	Share	premium	Merger	Options	Foreign	Retained	Total
	Capital	reserve	reserve	Reserve	exchange reserve	earnings	equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000

Balance at 1 January 2016	1,430	42,883	20,240	97	62	(63,713)	999
	_______	_______	_______	_______	_______	_______	_______

Profit/(Loss) for the year	-	-	-	-	-	441	441
Foreign exchange translation	-	-	-	-	(204)	-	(204)

					_______	_______	_______
Total comprehensive income for the year					(204)	441	237

Share based payments	-	-	-	41	-	-	41

Shares issued in the year	443	1,069	-	-	-	-	1,512

Share issue costs	-	(87)	-	-	-	-	(87)
	_______	_______	_______	_______	_______	_______	_______

Balance at 31 December 2016	1,873	43,865	20,240	138	(142)	(63,272)	2,702

Profit/(Loss) for the year	-	-	-	-	-	(113)	(113)
Foreign exchange translation	-	-	-	-	(435)	-	(435)

					_______	_______	_______
Total comprehensive income for the year					(435)	(113)	(548)

Share based payments	-	-	-	209	-	-	209

Transfer	-	-	-	(210)	-	210	-

Shares issued in the year	136	2,113	-	-	-	-	2,249

Share issue costs	-	(43)	-	-	-	-	(43)
	_______	_______	_______	_______	_______	_______	_______

Balance at 31 December 2017	2,009	45,935	20,240	137	(577)	(63,175)	4,569
	_______	_______	_______	_______	_______	_______	_______

All comprehensive income is attributable to the owners of the parent Company.

The accompanying accounting policies and notes form an integral part of these financial statements.

Share capital is the amount subscribed for shares at nominal value.

Share premium reserve represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.

Merger reserve arises from the 100% acquisition of Ebony Iron Pty Limited on 2 September 2011 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve, in accordance with section 612 of the Companies Act 2006.

Share option reserve relates to increases in equity for services received in equity-settled share based payment transactions and on the grant of share options.

Other reserves consist of an adjustment arising from the Group reorganisation in 2011 being the formation of a new holding Company for Iron Glen Holdings Limited by way of a share for share issue and is the difference between consideration given and net assets of the Company at the date of acquisition.

Foreign exchange reserve occurs on consolidation of the translation of the subsidiaries balance sheets at the closing rate of exchange and their income statements at the average rate.

Retained earnings represent the cumulative loss of the Group attributable to equity shareholders.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

1. Significant accounting policies

Basis of preparation

In preparing these financial statements the presentational currency is US dollars. As the entire group's revenues and majority of its costs, assets and liabilities are denominated in US dollars it is considered appropriate to report in this currency.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

The financial statements have been prepared on a historical cost basis.

Going concern basis

These financial statements have been prepared on the assumption that the Group is a going concern.

Adoption of standards effective in 2017

There were no new standards adopted by the Group for periods beginning on or after 1 January 2017.

Issued IFRS that are not yet effective and have not been adopted early

Any standards and interpretations that have been issued but are not yet effective, and that are available for early application, have not been applied by the Group in these financial statements.

International Financial Reporting Standards that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ended 31 December 2017:

IFRS 15 Revenue from Contracts with Customers

IFRS 15 is intended to clarify the principles of revenue recognition and establish a single framework for revenue recognition. The core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for periods beginning on or after 1 January 2018.

IFRS 15 is intended to introduce a single framework for revenue recognition and clarify principles of revenue recognition. The Group generates its revenue from customers contracts in the Cobre operations. The nature of these contracts is simple and the directors do not anticipate any material impact to the recognition of revenue upon adoption of this standard based on these existing arrangements.

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement in its entirety. This standard is effective for periods beginning on or after 1 January 2018 with retrospective application.

IFRS 9 introduces significant changes to the classification and measurement requirements for financial instruments. As at 31 December 2017 the Group has not experienced credit losses in relation to the Cobre operations, however as disclosed in note 24, the Group has temporarily suspended a key customer contract in relation to the Cobre project. The customer remains within their payment terms. Management will continue to assess the overall credit risk of the debtor portfolio when calculating the ongoing bad debt provision.

All intercompany receivables on the Company statement of financial position are repayable on demand. In line with the requirements of IFRS 9 the directors and management have assessed the underlying liquid assets of each counterparty at the year end and has assessed the credit risk to be low at this stage. The directors and management will continue to monitor the credit risk attached to the sales contracts (Group and Company) and the credit risk of intercompany receivables and adopt an appropriate provision policy under the requirements of IFRS 9.

IFRS 16 Leases

IFRS 16 introduces a single lease accounting model, in which leases are capitalised as assets with an associated lease liability with the exception of certain low value leases and leases with a term under 12 months. This standard is effective for periods beginning on or after 1 January 2019. As at 31 December 2017 the Group does not have material operating leases but Management are continuing to assess the impact of IFRS 16 in relation to both the newly acquired LCCM and the Cobre project.

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

- The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights,

- substantive potential voting rights held by the company and by other parties,

- other contractual arrangements and

- historic patterns in voting attendance.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Investment in Associates

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. Subsequently associates are accounted for using the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other comprehensive income (except for losses in excess of the Group's investment in the associate unless there is an obligation to make good those losses).

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Any premium paid for an associate above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

When the Group takes control of an associate, either through acquiring further equity or a change to operating arrangements, equity accounting would cease and entity would now be consolidated. On step up, management need to assess whether this is an acquisition of a business under IFRS 3. Where it is deemed to be an acquisition of a business there accounting policy noted under the basis of consolidation will apply. Where the entity does not meet the definition of a business the transaction is deemed to be an asset purchase and all assets and liabilities will be consolidated at cost.

Investment in joint arrangements

The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

The group classifies its interests in joint arrangements as either:

· Joint ventures: where the group has rights to only the net assets of the joint arrangement

Joint operations: where the group has both the rights to assets and obligations for the liabilities of the joint arrangement.

In assessing the classification of interests in joint arrangements, the Group considers:

· The structure of the joint arrangement

· The legal form of joint arrangements structured through a separate vehicle

· The contractual terms of the joint arrangement agreement

· Any other facts and circumstances (including any other contractual arrangements).

The Group accounts for its interests in joint ventures in the same manner as investments in Associates (i.e. using the equity method - refer above).

Any premium paid for an investment in a joint venture above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the investment in joint venture. Where there is objective evidence that the investment in a joint venture has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations. In accordance with IFRS 11 Joint Arrangements, the Group is required to apply all of the principles of IFRS 3 Business Combinations when it acquires an interest in a joint operation that constitutes a business as defined by IFRS 3.

Impairment of non-financial assets (excluding inventories)

Impairment tests of intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest Group of assets to which it belongs for which there are separately identifiable cash flows: its cash generating units ('CGUs').

Impairment charges are included in the statement of comprehensive income, except to the extent they reverse gains previously recognised in other comprehensive income.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Exploration and evaluation assets

The Group has continued to apply the 'successful efforts' method of accounting for Exploration and Evaluation ("E&E") costs, having regard to the requirements of IFRS 6 'Exploration for the Evaluation of Mineral Resources'.

The successful efforts method means that only the costs which relate directly to the discovery and development of specific mineral reserves are capitalised. Such costs may include costs of license acquisition, technical services and studies; exploration drilling and testing but do not include costs incurred prior to having obtained the legal rights to explore the area. Costs are not allocated on a tenement-by-tenement basis but rather on the entire project as a whole which is considered as one area of interest. Under successful efforts accounting, exploration expenditure which is general in nature is charged directly to the statement of comprehensive income and that which relates to unsuccessful exploration operations, though initially capitalised pending determination, is subsequently written off. Only costs which relate directly to the discovery and development of specific commercial mineral reserves will remain capitalised and to be depreciated over the lives of these reserves. Exploration and evaluation costs are capitalised within intangible assets. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the statement of comprehensive income.

All lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration, evaluation and development are capitalised as intangible or property, plant and equipment according to their nature. Intangible assets comprise costs relating to the exploration and evaluation of properties which the Directors consider to be unevaluated until reserves are appraised as commercial, at which time they are transferred to tangible assets as 'Developed mineral assets' following an impairment review and depreciated accordingly. Where properties are appraised to have no commercial value, the associated costs are treated as an impairment loss in the period in which the determination is made. Management consider all tenements relating to each project to represent one asset when undertaking their impairment assessment.

Where Management acquires exploration and evaluation assets through a corporate acquisition an assessment is made as to whether this transaction meets the definition of a business combination and therefore accounted for under IFRS 3 or represents an asset purchase. The acquisition of CARE in the period is deemed an asset acquisition as Central Australian Rare Earths Pty Ltd does not meet the definition of a business.

Costs are amortised on a unit of production method based on commercial proven and probable reserves.

Contractual relationship

The contractual relationship recognised as a result of the acquisition of Ebony Iron Pty Limited in 2011 was valued at that time using estimated discounted cash flow. The value of the acquisition is fully impaired and management continues to assess whether there is evidence to reverse this impairment. However, due to the short-term nature of the contract to purchase iron ore at the Cobre operation it is not considered appropriate to reverse the impairment as at balance date.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

· Office equipment - 3 years straight line

· Plant and machinery (except screening equipment) - 5 to 10 years straight line basis

· Screening equipment - on a unit of production basis

· Rail infrastructure - on a per ton basis for inventory transported by rail in the year. This asset has been fully impaired in previous periods.

The carrying value of property, plant and equipment assets is assessed annually and any impairment is charged to the statement of comprehensive income.

Investments in subsidiaries - company only

Investments in subsidiaries are stated at cost less provision for any impairment in value.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held on call with banks. Restricted cash is not available for use by the Group and therefore is not considered highly liquid.

Revenue

Revenue from the sale of magnetite is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment. These criteria are considered to be met when the goods are delivered to the buyer, being the point of leaving the mine gate for domestic sales to the US market.

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Taxation

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the same income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

· investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the statement of financial position date approximated their fair values, due to the relatively short term nature of these financial instruments.

Share-based compensation

The fair value of the employee and suppliers' services received in exchange for the grant of options and warrants is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options and warrants granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options and warrants that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options and warrants that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options and warrants are exercised.

The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, and exercise restrictions. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience.

Equity instruments

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material.

Financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transactions costs.

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Financial assets

The Group classifies its financial assets as loans and receivables.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (eg trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to tier acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Financial liabilities

The Group classifies its financial liabilities as other financial liabilities at amortised cost.

Other financial liabilities are trade payables and loans and borrowings, consisting of finance lease obligations, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Foreign currencies

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. The functional currency of the Company is deemed to be GBP. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation, in which case exchange differences are recognised in other comprehensive income and accumulated in the foreign exchange reserve along with the exchange differences arising on the retranslation of the foreign operation.

On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.

Management of capital

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Group arise in respect of the costs of financing working capital as inventory is built up prior to sale.

The Board receives periodic cash flow projections as well as information on cash balances. The Board will not commit to material expenditure prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.

2. Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Carrying value of intangible assets

Management assess the carrying value of the exploration and evaluation assets for indicators of impairment based on the requirements of IFRS 6 which are inherently judgemental. This includes ensuring the Group maintains legal title, assessment regarding the commerciality of reserves and the clear intention to move the asset forward to development.

Both the CARE and Redmoor projects are early stage exploration projects and therefore Management have applied judgement in the period as to whether the results from exploration activity provide sufficient evidence to continue to move the asset forward to development. In relation to CARE there are 3 tenement licences that expire in the next 12 months. Management assesses for impairment on a one asset basis rather than tenement by tenement and considered that the expiry of these licences do not represent an indicator of impairment at 31 December 2017.

There are no indicators of impairment in the 31 December 2017 financial year. Further detail regarding the carrying value of exploration and evaluation can be found in note 10.

(b) Share based payments

The fair value of share based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model after taking into account market based vesting conditions and conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience. Further details are given in Note 20.

The loans to subsidiary undertakings have been impaired in previous years as the directors concluded that the net assets of the subsidiaries at reporting date were insufficient to recover the balances. Given the increase in net assets of the subsidiaries in the current year, the provision for impairment has been written back as certain balances previously impaired are now considered recoverable. Further details are given in Note 11.

(d) Investments in associates and joint arrangements

Refer to Note 11 for details of judgements in relation to investments in associates and joint arrangements.

3. Financial instruments - Risk management

The Group is exposed to the following financial risks:

· Credit risk

· Foreign exchange risk

· Commodity price risk

· Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from last year unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are:

· Trade and other receivables

· Cash and cash equivalents

· Restricted cash

· Trade and other payables

A summary of the financial instruments held by category is provided below:

Financial assets

	Loans and receivables
	2017	2016
Group	$'000	$'000

Cash and cash equivalents	3,706	1,105
Restricted cash	100	100
Trade and other receivables	1,043	830
	_______	_______

Total financial assets	4,849	2,035
	_______	_______

Financial liabilities
	Financial liabilities at amortised cost
	2017	2016
Group	$'000	$'000

Trade and other payables	371	113
Loans and borrowings	-	-
	_______	_______

Total financial liabilities	371	113
	_______	_______

Financial assets	Loans and receivables
	2017	2016
Company	$'000	$'000

Cash and cash equivalents	1,651	685
Trade and other receivables	146	72
Amounts owed by subsidiary undertakings	456	1,360
	_______	_______

Total financial assets	2,253	2,117
	_______	_______

Financial liabilities	Financial liabilities at
	amortised cost
	2017	2016
Company	$'000	$'000

Trade and other payables	125	42
Amounts owed to subsidiary undertakings	70	-
	_______	_______

Total financial liabilities	195	42
	_______	_______

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit assessments are taken into account by local business practices.

The loans to subsidiary undertakings have been impaired in previous years as the directors concluded that the net assets of the subsidiaries at reporting date were insufficient to recover the balances. Given the increase in net assets of the subsidiaries in the current year, the provision for impairment has been written back by $776,000 as certain balances previously impaired are now considered recoverable. All trade receivables are considered as being fully recoverable as at 31 December 2017.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Further disclosures regarding trade and other receivables, which are neither past due nor impaired other than shown, are provided in Note 14.

At 31 December 2017, the Group had no external borrowings.

Foreign exchange risk

Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their own functional currency (being Pound Sterling, US dollar and Australian dollar) with the cash generated from their own operations where possible in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.

The parent Company maintains US dollar and Pounds sterling bank accounts.

All receivables and payables are settled at the prevailing spot rate; no forward contracts or other hedging instruments are currently entered into. The Board monitors the total foreign exchange risk on a periodic basis but given the major in and out flows of cash are in US dollars there is a natural hedge in place which minimises the overall exposure.

As of 31 December the net exposure to foreign exchange risk was as follows:

		Functional currency of individual Entity
	US dollar		Sterling		Australian dollar		Total
	2017	2016	2017	2016	2017	2016	2017	2016
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Group

Net foreign currency financial assets/(liabilities)

US dollar	2,479	1,095	179	23	305	-	2,963	1,218
Sterling	-	-	1,460	692	-	-	1,460	692
Australian dollar	-	-	40	-	15	12	55	12
	_______	_______	_______	_______	_______	_______	_______	_______

Total net exposure	2,479	1,095	1,679	715	320	12	4,478	1,922
	_______	_______	_______	_______	_______	_______	_______	_______

The effect of a 20% strengthening of the Sterling against US Dollar at the reporting date on the Sterling net financial assets carried at that date would, all other variables held constant, have resulted in an increase in the post-tax profit for the year of US$292,000 (2016: US$133,000) and an increase of the net assets of US$292,000. A 20% weakening in the exchange rate would, on the same basis, have decreased post-tax profit and decreased net assets by US$292,000 (2016: US$133,000).

	Functional currency of individual entity
		Sterling		Total
		2017	2016	2017	2016
		$'000	$'000	$'000	$'000
Company

Net foreign currency financial assets/(liabilities)
US dollar		179	1,421	179	1,421
Sterling		1,839	654	1,839	654
Australian dollar		40	-	40	-
		_______	_______	_______	_______

Total net exposure		2,058	2,075	2,058	2,075
		_______	_______	_______	_______

Commodity price risk

Typically the sale of magnetite to the export market, as opposed to US domestic customers, is priced by reference to the market quoted Platts IODEX 62% Fe CFR China price over which the Group has no influence. There were no exports of product in the 2017 year, hence, there is no exposure to market price risks in the current year.

Liquidity risk

Liquidity risk arises from the Group's management of working capital.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 30 days.

The Board receives periodic cash flow projections as well as information regarding cash balances. The Group does not have any overdraft or credit lines in place. The liquidity risk of each Group entity is managed centrally by the finance function.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

		Between	Between	Between
Group	Up to 3	3 and 12	1 and 2	2 and 5	Over
	months	Months	Year	Years	5 years
At 31 December 2017	$'000	$'000	$'000	$'000	$'000

Trade and other payables	371	-	-	-	-
	_______	_______	_______	_______	_______

Total	371		-	-	-
	_______	_______	_______	_______	_______

		Between	Between	Between
Group	Up to 3	3 and 12	1 and 2	2 and 5	Over
	months	months	Year	years	5 years
At 31 December 2016	$'000	$'000	$'000	$'000	$'000

Trade and other payables	113	-	-	-	-
	_______	_______	_______	_______	_______

Total	113	-	-	-	-
	_______	_______	_______	_______	_______

		Between	Between	Between
Company	Up to 3	3 and 12	1 and 2	2 and 5	Over
	months	months	year	years	5 years
At 31 December 2017	$'000	$'000	$'000	$'000	$'000

Trade and other payables	125	-	-	-	-
Loans from subsidiary undertakings	70	-	-	-	-
	_______	_______	_______	_______	_______

Total	195	-	-	-	-
	_______	_______	_______	_______	_______

		Between	Between	Between
Company	Up to 3	3 and 12	1 and 2	2 and 5	Over
	months	months	year	years	5 years
At 31 December 2016	$'000	$'000	$'000	$'000	$'000

Trade and other payables	42	-	-	-	-
	_______	_______	_______	_______	_______

Total	42	-	-	-	-
	_______	_______	_______	_______	_______

Capital Disclosures

The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital, share premium, merger reserve, and retained earnings).

The Group's objectives when maintaining capital are:

• to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

• to provide an adequate return to shareholders by pricing products with the level of risk.

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

4. Segment information

The Group has four main segments during the period:

• Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to both the US domestic market and historically transported magnetite to port for onward export sale.

• Head Office - This segment incurs all the administrative costs of central operations and finances the Group's operations. A management fee is charged for completing this service and other certain services and expenses. The investment in the Redmoor project in Cornwall, United Kingdom is held by this segment.

• Australia - This segment holds the Central Australian Rare Earths Pty Ltd tenements in Australia and incurs all related operating costs.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that carry out different functions and operations and operate in different jurisdictions.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the board and management team which includes the Board and the Chief Financial Officer.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with EU Adopted IFRS but excluding non-cash losses, such as the effects of share-based payments.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments in which the borrowings are held. Details are provided in the reconciliation from segment assets and liabilities to the Group's statement of financial position.

	SMG	Head Office		Australia		Intra Segment Elimination		Total
	2017	2017		2017		2017		2017
	$'000	$'000		$'000		$'000		$'000

Revenues	5,637	5		-		-		5,642

Cost of sales	(914)	-		-		-		(914)
	_______	_______		_______		-_______		_______

Gross profit	4,723	5		-		-		4,728

Overhead expenses	(1,016)	(1,086)		(11)		-		(2,113)
Management fee income/(expense)	(400)	391		-		9		-
Share based payments	-	(209)		-		-		(209)
Depreciation	(74)	-		-		-		(74)
Share of net loss from associates	-	(63)		-		-		(63)
Write back of intercompany provisions	-	776		-		(776)		-
Foreign exchange gain/(loss)	-	73		-		(108)		(35)
	_______	_______		_______		_______		_______
Segment profit /
(loss) before taxation	3,233		(113)		(11)		(875)		2,234
	_______		_______		_______		_______		_______

	SMG	Head Office	Australia	Intra Segment Elimination	Total
	2016	2016	2016	2016	2016
	$'000	$'000	$'000	$'000	$'000

Revenues	1,552		-	-	1,552

Cost of sales	(337)	-	-	-	(337)
	_______	_______	_______	-_______	_______

Gross profit	1,215	-	-	-	1,215

Other income (Note 5)	675	16	-	-	691

Overhead expenses	(732)	(669)	(31)	-	(1,432)
Management fee income/(expense)	(200)	193	-	7	-
Share based payments	-	(41)	-	-	(41)
Depreciation	(48)	-	-	-	(48)
Write back of intercompany provisions	-	976	-	(976)	-
Foreign exchange gain/(loss)	-	(34)	-	-	(34)
	_______	_______	_______	_______	_______
Segment profit /
(loss) before taxation	910	441	(31)	(969)	351
	_______	_______	_______	_______	_______

		Head
	SMG	Office	Australia	Total
As at 31 December 2017	$'000	$'000	$'000	$'000

Additions to non-current assets (excluding deferred tax)	190	1,328	186	1,704
	_______	_______	_______	_______

Reportable segment assets (excluding deferred tax)	3,065	3,339	1,600	8,004
	_______	_______	_______	_______

Reportable segment liabilities	870	199	26	1,095
	_______	_______	_______	_______

Deferred tax liabilities				-
				_______

Total Group liabilities				1,095
				_______

		Head
	SMG	Office	Australia	Total
As at 31 December 2016	$'000	$'000	$'000	$'000

Additions to non-current assets (excluding deferred tax)	-	563	-	563
	_______	_______	_______	_______

Reportable segment assets (excluding deferred tax)	1,469	1,362	13	2,844
	_______	_______	_______	_______

Reportable segment liabilities	71	70	1	142
	_______	_______	_______	_______

Deferred tax liabilities					-
					_______

Total Group liabilities					142
					_______

	External revenue by		Non-current assets
	location of customers		by location of assets
	2017	2016	2017	2016
	$'000	$'000	$'000	$'000

United States	5,637	1,552	357	241
United Kingdom	5	-	1,611	563
Australia	-	-	1,242	-
	_______	_______	_______	_______

	5,642	1,552	3,210	804
	_______	_______	_______	_______

Revenues from Customer A totalled $577,000 (2016: $496,000), which represented 10% (2016: 32%) of total domestic sales in the United States, Customer B totalled $1,439,000 (2016: $473,000) which represented 26% (2016: 30%) of total sales and Customer C totalled $2,587,000 (2016: Nil) which represented 46% (2016: 0%). There were no export sales in the year (2016: Nil)

5	Other income

Included in other income in the 2016 financial year is the settlement of a rail dispute for $675,000 with a previous rail operator in relation to works they had undertaken on SMG's behalf for rail access to the Cobre mine

6	Operating Profit/(loss)

Group	Year to	Year to
	31 December	31 December
Costs by nature	2017	2016
	$'000	$'000
Operating Profit/(loss) is stated after charging:

Directors' fees and emoluments (Note 7)	497	262
Fees payable to the company's auditor for the	34	27
audit of the parent company and consolidated financial statements
Staff costs (Note 7)	557	398
Equipment rental	300	147
Equipment maintenance	70	15
Legal, professional and consultancy fees	341	373
Travelling and related costs	121	79
Other expenses	193	131
	________	________
Overhead Costs	2,113	1,432

Foreign exchange (gain)/loss	35	34
Share based payments charge	209	41
Depreciation	74	48
Share of net loss from associates	63	-
	________	_______
	2,494	1,155

7	Directors and employees
	Group	Year to	Year to
		31 December	31 December
	Staff costs during the year	2017	2016
		$'000	$'000

	Directors' remuneration including consultancy fees	497	262
	Wages and salaries including consulting fees for management	557	398
	Share based payments	209	41
		________	________

	Total staff costs	1,263	701
		________	________

The average number of people (including Directors) employed by the Group during the year was:

	2017	2016
	Number	Number

Total	8	8
	________	________

Directors and employees (continued)

Company	Year to	Year to
	31 December	31 December
Staff costs during the year	2017	2016
	$'000	$'000

Directors' remuneration including consultancy fees	497	262
Wages and salaries	62	59
Social security and other costs	-	-
Share based payments	209	41
	________	________

Total staff costs	768	362
	________	________

The average number of people (including Directors) employed by the Company during the year was:

	2017	2016
	Number	Number

Total	4	4
	________	________

Remuneration of the Directors and other key management personnel in the period is summarised as follows:

	Directors' fees	Salary and consultancy fees	Bonus	Share based payments	Total
	2017	2017	2017	2017	2017
	$'000	$'000	$'000	$'000	$'000

A Broome	86	-	-	19	105
J Peters	-	216	129	84	429
P Wale	66	-	-	12	78
	________	________	________	________	________

Total	152	216	129	115	612
	________	________	________	________	________


	Directors' fees	Salary and consultancy fees	Loss of office	Share based payments	Total
	2016	2016	2016	2016	2016
	$'000	$'000	$'000	$'000	$'000

A Broome	67	-	-	-	67
J Peters	-	144	-	32	176
P Wale	24	-	-	-	24
Lyle Hobbs	18	-	9	-	27
	________	________	________	________	________

Total	109	144	9	32	294
	________	________	________	________	________

Directors and key management personnel remuneration shown above comprises all of the salaries, Directors' fees, consultancy fees and other benefits and emoluments paid to the Directors and key management personnel.

Each Director is also paid all reasonable expenses incurred wholly, necessarily and exclusively in the proper performance of his duties.

8	Taxation
		Year to	Year to
		31 December	31 December
		2017	2016
		$'000	$'000

	Current tax expense	648	-


		________	________

		648	-
		________	________

	Reconciliation of effective tax rates	$'000	$'000

	Profit before tax	2,234	351
	Tax using UK domestic rates of corporation tax of 19% (2016 - 20%)	424	70

	Effect of:
	Expenses not deductible for tax purposes	41	8
	Tax losses utilized	136	-
	Losses carried forward	(274)	(214)
	Difference in overseas tax rates	321	136
		________	________

		648	-
		________	________

The Group has excess management expenses of $nil (2016: $534,000) and unused losses to carry forward of $16,516,000 (2016: $15,216,000). No deferred tax asset has been recognised for losses as their full recovery is not probable in the foreseeable future.

9	Earnings per share

Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial year. The weighted average number of shares in issue during the year was basic 1,040,199,989 (2016: 1,008,103,186). Fully diluted earnings are based on 1,080,199,989 (2016: 1,070,436,519) shares and the profit for the financial period was $1,586,000 (2016: $351,000).

10	Intangible Assets

Group	Exploration/	Other
	evaluation	intangible
	costs	asset	Total
Cost	$'000	$'000	$'000

At 1 January 2016	1,149	25,772	26,921
Disposals (iii)	(1,149)	-	(1,149)
	________	________	________

At 31 December 2016	-	25,772	25,772

At 1 January 2017	-	25,772	25,772
Additions on Acquisition of Central Australian Rare Earths Pty Limited (i)	1,056		1,056
Additions in the year (ii)	186	-	186
	________	________	________

At 31 December 2017	1,242	25,772	27,014
	________	________	________

Amortisation and impairment

At 1 January 2016	(1,149)	(25,772)	(26,921)
Disposal (iii)	1,149	-	1,149
	________	________	________

At 31 December 2016	-	(25,772)	(25,772)

At 1 January 2017	-	(25,772)	(25,772)
	________	________	________

At 31 December 2017	-	(25,772)	(25,772)
	________	________	________

Net book value

At 31 December 2016	-	-	-
	________	________	________

At 31 December 2017	1,242	-	1,242
	________	________	________

Mining tenements and exploration and evaluation costs

(i) Exploration and evaluation ("E&E") costs as at 31 December 2017 are the costs associated with the exploration tenements in Western Australia held by Central Australian Rare Earths Pty Ltd ('CARE'). During the year ended 31 December 2016 the Group acquired a 50% interest in Central Australia Rare Earths Pty Ltd for £202,738 ($278,000) and this was accounted as an investment in associate, as the Group determined that significant influence was present (see note 11). On 5 May 2017, the Group acquired the remaining 50% equity of CARE held by Rarus Limited for £522,500 ($672,000). Management have deemed the acquisition of CARE to fall outside the scope of IFRS 3 Business combinations as the company does not meet the definition of business. The additions to Exploration and Evaluation assets in the period represents the carrying value of the E&E asset at cost. Transaction details regarding the CARE acquisition detailed below:

		$000
Intangible assets		800
Less:
Current assets less current liabilities		(106)
Excess consideration provided over net assets acquired		256*
		________
Consideration transferred		950

*As the CARE acquisition has been treated as an asset acquisition the excess consideration provided over net assets acquired has been recorded within the cost base of the CARE asset.

(ii) The additions to Exploration and Evaluation assets in the period represents the expenditure incurred post 100% acquisition of CARE.

(iii) In the 31 December 2016 year the Company disposed of the Tatu Project.

Other intangible assets

The other intangible asset arises from the contractual relationship entered into by Southern Minerals Group LLC ('SMG'), an entity wholly owned by Ebony Iron Pty Limited, with a third party for the rights to a magnetite stockpile held at that party's Cobre mine in New Mexico, USA. The intangible asset was fully amortised at the end of 31 December 2016.

11	Investments

Investment in associates, joint ventures and subsidiaries

The group had investments in Central Australian Rare Earths Pty Ltd ("CARE") an associate which holds tenements in Western Australia and in Cornwall Resources Ltd ("CRL") a joint venture that holds the Redmoor Tin Project in the United Kingdom. During the period the Company purchased the remaining interest in CARE resulting in an increase in ownership from 50% to 100%. Hence, the CARE investment has been consolidated at the year end (see note 10 for details). The Company increased its investment in Cornwall Resources Ltd to 50% (2016: 16.4%) during the period.

Group	Investment in	Investment in
	joint ventures	associates	Total
Cost	$'000	$'000	$'000

At 1 January 2016	-	-	-
Additions	285	278	563
	________	____________	________

At 31 December 2016	285	278	563

At 1 January 2017	285	278	563
Additions	1,328	672	2,000
Share of equity loss in joint ventures	(63)	-	(63)
Investment in associates (CARE) consolidated (see note 10)	-	(950)	(950)
Foreign exchange difference	61	-	61
	________	________	________

At 31 December 2017	1,611	-	1,611
	________	________	________

Investment in associates, joint ventures and subsidiaries (continued)

Company	Investment in	Loans to	Shares in
	associates and	subsidiary	subsidiary
	joint ventures	undertakings	undertakings	Total
Cost		$'000	$'000	$'000

At 1 January 2016	-	6,027	45,752	51,779
Movement in the year	563	(81)	-	482
	_________	_________	_________	_________

At 31 December 2016	563	5,946	45,752	52,261

At 1 January 2017	563	5,946	45,752	52,261
Movement in the year	-	(1,306)	-	(1,306)
Acquisition of joint venture interests	1,328	-	-	1,328
Acquisition of associated interest	672	-	-	672
Reclassification	(950)	-	950	-
Share of equity loss in joint ventures	(63)	-	-	(63)
Foreign exchange difference	61	(905)	-	(844)
	_________	_________	_________	_________

At 31 December 2017	1,611	3,735	46,702	52,048
	_________	_________	_________	_________

Impairment

At 1 January 2016	-	(5,562)	(45,752)	(51,314)
Write back/(charge) for the year	-	976	-	976
	_________	_________	_________	_________

At 31 December 2016	-	(4,586)	(45,752)	(50,338)

At 1 January 2017	-	(4,586)	(45,752)	(50,338)
Write back/(charge) for the year	-	776	-	776
Foreign exchange difference	-	531	-	531
	_________	_________	_________	_________

At 31 December 2017	-	(3,279)	(45,752)	(49,031)
	_________	_________	_________	_________
Carrying Value

At 31 December 2016	563	1,360	-	1,923
	_________	_________	_________	_________

At 31 December 2017	1,611	456	950	3,017
	_________	_________	_________	_________

Investment in associates, joint ventures and subsidiaries
			2017	2016
Company			$'000	$'000

Investments in subsidiary undertakings - CARE			950	-
Investments in associates - CARE			-	278
Investments in joint ventures - CRL			1,611	285
			_________	_________

			2,561	563
			_________	_________

Investment in associates, joint ventures and subsidiaries (continued)

Central Australian Rare Earths Pty Ltd

The Company held a 50% interest in Central Australia Rare Earths Pty Ltd ("CARE") as at 31 December 2016 and the Group determined at that time that it held a significant influence over CARE under the shareholder agreement which required:

- a minimum of three (3) Directors to be appointed with each shareholder owning in excess of 20% allowed to appoint one (1) Director and with the remaining director to be independent.

- All decisions of the Board or the Shareholders were to be made by simple majority vote unless a decision of the Board is made by circular resolution which is in writing and signed by each Director, in which case it must be by unanimous vote.

Based on this, as at 31 December 2016, the investment is treated as an associate as the company had no joint control but could assert significant influence.

During the period the company acquired the 50% remaining balance of CARE held by Rarus Limited for £522,500 ($672,000). The acquisition was financed by the issue of 19,000,000 ordinary shares in the Company at an issue price of £0.0275. This resulted in CARE becoming a 100% owned subsidiary of the Company and hence is now consolidated in the accounts.

Summarised financial information in relation to CARE has only been presented for the 31 December 2016 financial year as the investment is no longer treated as an associate at 31 December 2017.

		2016
		$'000
As at 31 December 2016

Current assets		54
Non-current assets		732
Current liabilities		135
Non-current liabilities		-

Net assets		651

Strategic Minerals PLC share of net assets (2016: 50%)		326

Deferred exploration expenditure capitalised		(33)

Goodwill relating to associate		(15)

Carrying value of investment in consolidated financial statements		278

Period ended 31 December 2016

Revenues		-

Profit from continuing operations		-
Other comprehensive income		-

Total comprehensive income		-

Dividends received from associate		-

Investment in associates, joint ventures and subsidiaries (continued)

Cornwall Resources Limited

During the period the Company paid $1,068,000 (£843,649) in cash to acquire an additional 33.6% interest in Cornwall Resources Limited ("CRL) (CRL was previously New Age Exploration Limited) which holds the Redmoor tin/tungsten project in Cornwall taking the Company's interest in CRL from 16.4% as at 30 June 2016 to 50% as at 30 June 2017. In addition, both the Company and NAE each subscribed for further shares in CRL of $260,000 (£196,003) which maintained a 50% interest held by each party.

Under the shareholders agreement with NAE, CRL is operated as a 50:50 joint venture with each party being entitled to appoint one Director. Based on this, the Group considers that they have joint control over the arrangement. Under IFRS 11, this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method.

	2017	2016
	$'000	$'000
As at 31 December

Current assets	210	86
Non-current assets	1,829	378
Current liabilities	45	38
Non-current liabilities	-	-

Included in the above amounts are:
Cash and cash equivalents	139	82
Current financial liabilities (excluding trade payables)	12	11
Non-current financial liabilities (excluding trade payables)	-	-

Net Assets (100%)	1,994	426
Strategic Minerals PLC share of net assets 50% (2016: 16.4%)	997	70

Goodwill relating to joint venture	614	215

Carrying amount of investment in consolidated financial statements	1,611	285

Period ended 31 December

Revenues	-	-

Profit/(loss) from continuing operations	(136)	(12)
Other comprehensive income	-	-

Total comprehensive income (100%)	(136)	(12)
Group share of total comprehensive income 50% (2016: 16.4%)	(63)	-

Included in the above amounts are:
Depreciation and amortisation	-	-
Interest income	-	-
Interest expense	-	-
Income tax expense	-	-

Shares and loans in subsidiary undertakings

The shares and loans in subsidiary undertakings have been impaired in previous years as the directors concluded that the net assets of the subsidiaries at the reporting date were insufficient to recover the balances. Given the increase in net assets of the subsidiaries in the current year, the provision for impairment has been written back as certain balances previously impaired are now considered recoverable.

In the opinion of the Directors, the aggregate value of the Company's investment in its subsidiary undertakings is not less than the amount included in the statement of financial position.

Holdings of more than 20%

The Company holds more than 20% of the share capital of the following companies:

Subsidiary undertakings	Country of	Principal	Class of	%
	Incorporation	activity	share	Owned

Central Australian Rare Earths Pty Ltd	Australia (iii)	Holding Company	Ordinary	100%

Iron Glen Holdings Pty Limited	Australia (iii)	Holding Company	Ordinary	100%

Southern Minerals Group LLC (ii)	USA (iv)	Sale of magnetite	Ordinary	100%

Ebony Iron Pty Limited	Australia (iii)	Holding Company	Ordinary	100%

Leigh Creek Copper Mine Pty Ltd (ii) (v)	Australia (iii)	Exploration and development	Ordinary	100%

Iron Glen Pty Ltd (i)	Australia (iii)	Dormant Company	Ordinary	100%

Jotanooka Iron Pty Limited (i)	Australia (iii)	Dormant Company	Ordinary	100%

Dragon Rock Minerals Pty Limited (i)	Australia (iii)	Dormant Company	Ordinary	100%

(i) Held by Iron Glen Holdings Pty Limited

(ii) Held by Ebony Iron Pty Limited

(iii) Registered office - 3 Laundess Avenue, Panania NSW 2213

(iv) Registered office - 303 Fierro Road, Hanover, New Mexico, USA, 88041

(v) Leigh Creek Copper Mine Pty Ltd was purchased post balance date on 6 March 2018 and is held by Ebony Iron Pty Ltd

12	Property, plant and equipment
		Railway	Plant and
		infrastructure	machinery	Total
	Group	$'000	$'000	$'000

	Cost

	At 1 January 2016	3,498	200	3,698
	Disposals in the year	-	(1)	(1)
		________	________	________

	At 31 December 2016	3,498	199	3,697

	Additions in the year	-	190	190
		________	________	________

	At 31 December 2017	3,498	389	3,887
		________	________	________

	Depreciation

	At 1 January 2016	(3,498)	(10)	(3,508)
	Charge in the year	-	(48)	(48)
		________	________	________

	At 31 December 2016	(3,498)	(58)	(3,556)

	Charge in the year	-	(74)	(74)
		________	________	________

	At 31 December 2017	(3,498)	(132)	(3,630)
		________	________	________

	Carrying value

	At 31 December 2016	-	141	141
		________	________	________

	At 31 December 2017	-	257	257
		________	________	________

13	Inventories
		2017	2016
		$'000	$'000

	Finished goods held for sale	7	13
	Less stock provision	-	-
		________	________

		7	13
		________	________

There are no finished goods included at their fair value less cost to sell in 2017 (2016: Nil).

No inventories have been written off to profit or loss in the year (2016: Nil).

14	Trade, other receivables and prepayments
		2017	2016
	Group	$'000	$'000

	Trade receivables	997	825
	Less: provision for impairment of trade receivables	-	-
		_________ 997	_________ 825
	Prepayments	12	6
	Other receivables	46	5
	VAT/GST Receivable	26	86
		________	________

		1,081	922
		________	________
	Company

	Trade receivables	100	67
	Prepayments	12	6
	Other receivables	46	5
	VAT/GST Receivable	12	86
		________	________

		170	164
		________	________

There were no Trade or other receivables that were past due or impaired beyond the charge reflected above. The Trade and other receivables are categorised as loans and other receivables and are not materially different to their carrying values.

15	Cash and cash equivalents
		2017	2016
	Group	$'000	$'000

	Bank current accounts - unrestricted	3,706	1,105

		________	________

	Cash and cash equivalents in the statement of cash flows	3,706	1,105
		________	________

	2017	2016
Company	$'000	$'000

Bank current accounts - unrestricted	1,651	685
	________	________

Cash and cash equivalents in the statement of cash flows	1,651	685
	________	________

The Group's balances are held with well-known and highly rated UK, USA and Australian banks.

16	Restricted cash
		2017	2016
	Group	$'000	$'000

	Bank - restricted	100	100
		________	________

The restricted cash related to a cash deposit held for a Standby Letter of Credit as security for a supplier.

17	Trade and other payables
		2017	2016
	Group	$'000	$'000

	Trade payables	277	113
	Other payables	94	-
	Accruals and deferred income	76	29
		________	________

		447	142
		________	________

	Company	$'000	$'000

	Trade payables	34	42
	Other payables	91	-
	Intercompany loans from Shareholder	70	-
	Accruals and deferred income	74	28
		________	________

		269	70
		________	________

Book values approximate to fair value at 31 December 2017 and 2016.

18	Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2016: 20%). However, the deferred tax asset and liability as at 31 December 2017 was nil (2016: nil) as the tax losses were not expected to be recovered in the foreseeable future (see note 8 for details).

19	Share Capital and Premium
		Number	Issue Price	Share Capital $,000	Share Premium $,000	Total $'000

	At 1 January 2016	890,492,227		1,430	42,883	44,313

	Placement on 8 June 2016	25,000,000	0.30p	36	73	109
	Placement on 21 June 2016	143,000,000	0.30p	211	421	632
	Placement on 11 July 2016	10,000,000	0.30p	13	27	40
	Placement on 27 October 2016	150,000,000	0.40p	183	550	733

	Issue Costs on placements				(89)	(89)
				_______	_______	_______
	At 31 December 2016 Ordinary shares (par value of 0.1 pence each)	1,218,492,227		1,873	43,865	45,738

	Exercise of options on 3 March 2017	8,333,333	0.60p	10	51	61
	Placement on 1 June 2017	19,000,000	2.75p	24	648	672
	Exercise of options on 21 September 2017	10,000,000	1.00p	14	121	135
	Exercise of options on 30 October 2017	36,000,000	1.00p	48	426	473
	Placement on 30 October 2017	30,666,667	2.25p	40	867	907

	Issue Costs on placements					(43)
		__________		_______	_______	_______

	At 31 December 2017 Ordinary shares of 0.1 pence each	1,322,492,227		2,009	45,935	47,944
		__________		_______	_______	_______

During the financial year, the Company issued 19,000,000 shares at 2.75 pence being $672,000 (£522,000) to purchase the remaining interest in Central Australian Rare Earths Pty Ltd that it did not own. 54,333,333 Options were exercised at issue prices of 0.60 pence and 1.00 pence which raised $669,000 (£510,000) during the year. The Company also completed a capital raise of $907,000 (£690,000) by placing 30,666,667 shares at a subscription price of 2.25 pence.

20	Share based payments

The Group has a share-ownership compensation scheme for senior executives of the Group whereby senior executives may be granted options to purchase ordinary shares in the Company. There were 32,000,000 (2016: nil) options issued to directors and senior executives during the year and 54,333,333 (2016: nil) options were exercised during the year.

The Group historically issued options and/or warrants to third parties in settlement of liabilities to strategic suppliers. Each share option or warrant converts into one ordinary share of Strategic Minerals Plc upon exercise. No amounts are paid or payable by the recipient of the options or warrants. The options and warrants carry neither rights to dividends nor voting rights at shareholders meetings.

Warrants and Options

Number of outstanding warrants and options at 31 December 2017 and a reconciliation of their movements during the year were:

Date of	Granted at	Issued	Lapsed/	Granted at	Exercise	Exercise Period
grant	31.12.16		Cancelled/ Exercised	31.12.17	price
						From	To

10.04.15	27,000,000	-	(25,000,000)	2,000,000 (i)	1.0p	10.04.15	30.06.18
10.04.15	27,000,000	-	(15,000,000)	12,000,000 (ii)	1.0p	10.04.15	30.06.19
14.07.15	8,333,333	-	(8,333,333)	-	0.6p	14.07.15	16.07.18
06.01.17	-	16,000,000	(3,000,000)	13,000,000 (i)	1.0p	06.01.17	30.06.18
06.01.17	-	16,000,000	(3,000,000)	13,000,000 (ii)	1.0p	06.01.17	30.06.19
	_________	_________	_________	_________

	62,333,333	32,000,000	(54,333,333)	40,000,000
	_________	_________	_________	_________

(i) Market based vesting condition of 1.5p volume weighted average share price over 5 consecutive days and which vested in April 2017.

(ii) Market based vesting condition of 3.0p volume weighted average share price over 5 consecutive days and which vested in May 2017.

The warrants and options outstanding at 31 December 2017 had an exercise price of 1.0p, a weighted average exercise price of 1.00p (2016: 0.95p) and a remaining contractual life of 409 days (2016: 706 days). The weighted average exercise price of warrants and option lapsed, cancelled or exercised during the year was 0.94p.

Of the total number of warrants and options outstanding at 31 December 2017, 40,000,000 (2016: 62,333,333) had vested and were exercisable.

The following information is relevant in the determination of the fair value of share based payments by the Group.

	April 2015 options	April 2015 options	July 2015 options	January 2017 options	January 2017 options

Share price at date of grant	0.55p	0.55p	0.40p	0.52p	0.52p
Exercise price	1.00p	1.00p	0.60p	1.00p	1.00p
Market vesting condition	1.50p	3.00p	N/A	1.50p	3.00p
Expected volatility	96%	96%	96%	144%	128%
Expected dividend	Nil	Nil	Nil	Nil	Nil
Contractual life	3.2 years	4.2 years	3.0 years	1.5 year	2.5 years
Risk free rate	0.79%	0.79%	0.79%	0.42%	0.42%
Estimated fair value of each option	0.26p	0.27p	0.21p	0.25p	0.26p

Expected volatility was determined based on the historic volatility of the Company's shares and other peer companies. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

21	Commitments

(a) Operating lease commitments

At 31 December 2017, there were no non-cancellable operating leases (2016: Nil).

(b) Capital expenditure commitments

At 31 December 2017, no capital commitments existed (2016: Nil).

So as to maintain current rights to tenure of exploration tenements, the group will be required to outlay amounts in respect of tenement rent to the relevant governing authorities and to meet certain annual exploration expenditure commitments. These expected outlays (exploration expenditure and rent), which arise in relation to granted tenements are as follows:

	2017	2016
Group	$'000	$'000

due within one year	353	-
due after one year and within five years	410	-
due after five years	66	-
	________	________

	829	-
	________	________

22	Controlling party

There is no ultimate controlling party of the Group.

23	Related party transactions

Director and key management personnel remuneration has been disclosed in Note 7. There were no other relevant transactions with Directors or other related parties.

Events after the reporting period

Acquisition of Leigh Creek Copper Mine

In October 2017, the Company signed a term sheet with Resilience Mining Australia Ltd ("RMA") for the acquisition of 100% of the Leigh Creek Copper Mine Pty Ltd ("LCCM") which was subject to a number of conditions precedent including due diligence. This had been an operating copper mine that closed in 2011. After extensive due diligence, the Company proceeded to renegotiate terms and exchanged contracts for the acquisition in January 2018. The acquisition was settled on 6 March 2018.

The purchase price for LCCM was approximately US$2,340,000 (AUD $3,000,000) to be paid by way of:

(i) approximately US$1,176,000 (AUD $1,500,000) in cash; and

(ii) approximately US$1,164,000 (AUD $1,500,000) to be paid by way of debt assumption of AUD $50,000 and the issue of AUD $1,450,000 in new ordinary shares of SML (the "Consideration Shares").

Events after the reporting period (continued)

The number of Consideration Shares to be issued was calculated based on the volume weighted average share price ("VWAP") for the month of March 2018. This resulted in a total of 41,567,630 shares in the Company to be issued to RMA.

The bulk of the Consideration Shares being 38,700,900 were issued on 10 April 2018 with 12,900,300 shares being subject to a voluntary escrow of three months from issue and a further 12,900,300 shares being subject to a voluntary escrow of six months from issue.

The balance of the Consideration Shares being 2,866,730 shares will be issued in January 2019, based on the March 2018 VWAP, with these shares to be retained to support warranties provided by RMA.

The Group has acquired a number of assets including mining asset, plant and equipment, consumables and an off take agreement. However, at the time that these financial statements were authorised for issue the Company was in the process of determining the fair values of the identifiable assets acquired and the liabilities and contingent liabilities to be assumed, as well as identifying all transaction costs. At present, the Directors are therefore unable to provide the IFRS3 disclosures for this transaction. These disclosures are anticipated to be provided in the interim financial statements at 30 June 2018.

Cobre Sales Contract

The Company announced on 26^th April 2018 that its wholly owned subsidiary, Southern Minerals Group ("SMG"), operator of SML's Cobre magnetite stockpile in New Mexico, USA ("Cobre"), has agreed to a temporary (three month) suspension of the minimum tonnage requirement under its contract with a key customer. The minimum tonnage requirement is 4,000 tons of magnetite per month.

SMG's customer has indicated that it is awaiting an environmental planning approval which has taken longer than expected and has requested that the minimum tonnage requirement be suspended for March, April and May of 2018. Given the substantial importance of this customer to SMG, having already taken and paid for circa 40,000 tons of magnetite, SMG has agreed to such a temporary suspension of this aspect of its contract. SMG reports that the customer is currently within its payment arrangements with SMG and has, in escrow, a US $250,000 deposit securing its contract.

Competent Persons Statement

The information in this report that relates to the LCCM project is based on information compiled by Mr. David Larsen, who is a Member of the Australian Institute of Geoscientists (Member No. 1976). Mr. Larsen is the Principal Geologist at Terra Consulting Pty Ltd and is a consultant to the Company. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012) and a qualified person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr. Larsen has over 30 years' Australia and international experience in exploration, mining geology and resource estimation for gold, base metals and iron ore deposits.

The information in this report relating to the CARE project is based on information compiled by Mr. Graeme Purcell, who is a Member of the Australasian Institute of Geoscientists. Mr. Purcell is the Principal of Petrichor Geological and is a consultant to the Company. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a qualified person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr. Purcell has over 20 years' Australia and international experience in exploration for precious and base metals.

[1] The competent persons statement relating to the CARE project can be found at the back of this report

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR KMGZKKFFGRZG

SML — Strategic Minerals News Story

REG - Strategic Minerals - Financial Results for Year Ended 31 December 2017

Recent news on Strategic Minerals

REG - Strategic Minerals - Leigh Creek – Extension to Purchaser Payment

REG - Strategic Minerals - Redmoor Critical Minerals Project Update

REG - Strategic Minerals - Upgrade of Historical Tungsten Results at Redmoor

REG - AIM - AIM Notice - 06/05/2025

REG - Strategic Minerals - Result of General Meeting