REG - Strategic Minerals - Interim Results - Half Year to 30 June 2023
28/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230928:nRSb8682Na&default-theme=true
RNS Number : 8682N Strategic Minerals PLC 28 September 2023
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.
28 September 2023
Strategic Minerals plc
("Strategic Minerals", "SML", the "Group" or the "Company")
Interim Results
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company
actively developing critical minerals focused projects, is pleased to announce
its unaudited interim profit for the half year ended 30 June 2023.
Financial Highlights
· Maintained operating profitability with interim six-month pre-tax
profit of US$54,000 (H1 2022: US$248,000) despite reduced sales in the period.
· Continued after tax profit for the interim six months of US$38,000
(H1 2022: US$127,000) consistent with the drop in sales and tight control of
overheads being maintained.
· Through its wholly owned subsidiary, Cornwall Resources Limited
("CRL"), the Company lodged claims with the Deep Digital Cornwall project for
US$114,000, with US$45,000 received in the first week of July.
· US$347,000 invested in development projects during the period - Leigh
Creek Copper Mine ("LCCM") US$188,000 and Redmoor Tin and Tungsten Mine
("Redmoor") US$159,000.
· Unrestricted cash at 30 June 2023 was US$129,000 (31 Dec 2022:
US$341,000), prior to the receipt of the US$45,000 DDC claim in the first week
of July.
Corporate Highlights
In light of the reduced income from Cobre, management and Directors' cash
remunerations have continued to be adjusted to ensure maintenance of cash
balances at prudent operating levels. Currently, cash balances at the end of
September are expected to be in line with the 30 June 2023 balance but to
ensure these balances remain at reasonable operating levels for the remainder
of the year, the Board is in advanced discussions with at least one supportive
counterparty to provide a short-term working capital facility.
During the quarter, Shipleys LLP assumed the role of the Company's auditor
after Jeffreys Henry vacated the position, due to staffing losses. This
situation impacted a number of our AIM peers. However, the Company, with a
highly organised and professional effort from Shipleys, was able to complete
the audit before 30 June and meet the standard regulatory deadline.
As reported in the last quarterly RNS, Jeff Harrison, Non-Executive Board
member, retired as a Board member at the end of April 2023 with no replacement
appointed yet.
June Quarter Cobre Sales
In line with the "Update on Projects" released on 14 July 2023, there will be no June Quarter report this year, or in the future. However, to maintain reporting to shareholders on the sales at Cobre, sales comparisons on quarterly and annual periods to 30 June 2023, along with associated volume details, are shown in the table below:
Tonnage Sales (US$'000)
Year 3 months to June 12 months to June 3 months to June 12 months to June
2023 4,162 23,856 367 1,898
2022 10,711 38,825 666 2,429
2021 12,130 48,964 740 2,890
Commenting, John Peters, Managing Director of Strategic Minerals, said:
"The Company continues to respond to the impact on Cobre sales from the dip in
US economic growth. In line with this, the Company has maintained a tight
control on overheads and is looking to source short term funding to ensure
adequate cash balances are available for planned operations, thus avoiding
unnecessary dilution.
"The recent significant investment secured by Cornish Lithium ("CL") has
focused attention on the revival in Cornish mining and helps to highlight the
underlying value of the Redmoor project. CRL continues to work together with
CL on the Deep Digital Cornwall project, we congratulate them and look forward
to continuing collaborations with them.
"Despite the disappointment of not achieving grant funding on the first
attempt, the CRL team made a significant, credible submission which has
provided valuable experience for its subsequent application. Engagement
continues with both Cornwall Council and other local stakeholders. Recent
encouraging discussions with various parties leave us confident of progress.
"The sterling effort of our auditors, Shipleys, and of our CFO, Karen
Williams, in masterfully executing the Company's audit, despite substantial
time constraints, should be applauded.
"The Board looks forward to a more active period of news flow during the final
quarter of 2023."
For further information, please contact:
Strategic Minerals plc +61 (0) 414 727 965
John Peters
Managing Director
Website: www.strategicminerals.net (http://www.strategicminerals.net)
Email: info@strategicminerals.net
Follow Strategic Minerals on:
Vox Markets: https://www.voxmarkets.co.uk/company/SML/
(https://www.voxmarkets.co.uk/company/SML/)
Twitter: @SML_Minerals (https://twitter.com/SML_Minerals)
LinkedIn: https://www.linkedin.com/company/strategic-minerals-plc
(https://www.linkedin.com/company/strategic-minerals-plc)
SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Nominated Adviser and Broker
Matthew Johnson
Charlie Bouverat
NOTES TO EDITORS
Strategic Minerals is an AIM-quoted, profitable operating minerals company
actively developing projects tailored to materials expected to benefit from
strong demand in the future. It has an operation in the United States of
America along with development projects in the UK and Australia. The Company
is focused on utilising its operating cash flows, along with capital raisings,
to develop high quality projects aimed at supplying the metals and minerals
likely to be highly demanded in the future.
In September 2011, Strategic Minerals acquired the distribution rights to the
Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating
asset, which it brought into production in 2012 and which continues to provide
a revenue stream for the Company. This operating revenue stream is utilised to
cover company overheads and invest in development projects aimed at supplying
the metals and minerals likely to be highly demanded in the future.
In May 2016, the Company entered into an agreement with New Age Exploration
Limited and, in February 2017, acquired 50% of the Redmoor Tin/Tungsten
project in Cornwall, UK. The bulk of the funds from the Company's investment
were utilised to complete a drilling programme that year. The drilling
programme resulted in a significant upgrade of the resource. This was followed
in 2018 with a 12-hole 2018 drilling programme has now been completed and the
resource update that resulted was announced in February 2019. In March 2019,
the Company entered into arrangements to acquire the balance of the Redmoor
Tin/Tungsten project which was settled on 24 July 2019 by way of a vendor loan
which was fully repaid on 26 September 2020.
In March 2018, the Company completed the acquisition of the Leigh Creek Copper
Mine situated in the copper rich belt of South Australia and brought the
project temporarily into production in April 2019. In July 2021, the project
was granted a conditional approval by the South Australian Government for a
Program for Environmental Protection and Rehabilitation (PEPR) in relation to
mining of its Paltridge North deposit and processing at the Mountain of Light
installation. In late September 2022, an updated PEPR, addressing the
conditions associated with the July 2021 approval, was approved.
CHAIRMAN'S STATEMENT
It is well documented that 2022 and the first half of 2023 has been a
difficult time on AIM. Despite this uncertainty, I am pleased that the Company
has been able to maintain profitable trading, despite a significant drop in
sales at Cobre. This is a particularly challenging period for markets, and the
world, but I have faith that Strategic Minerals is well placed to weather this
storm and that the Board and Management will help the Company capitalise on
the valuable assets it has secured and developed.
Financial results
The Company continued its underlying profitable performance in the first half
of 2023, when many businesses succumbed to cash flow and profitability impacts
arising from the pandemic overhang, Ukraine war and evaporation of funding
support on the AIM market.
With the drop in sales at Cobre and coupled with a challenging equity market
environment, the Company's ability to secure funding to progress its
development projects and general development processes have been impacted.
Adjustments to operations have been made with the Company successfully
reducing overheads by 13% in the first half of the year before allowing for
capitalisation of director fees associated with projects.
Unrestricted cash on hand at 30 June 2023 was US$129,000 with a further
US$45,000 re-imbursement from the DDC project dropping into the Company's
account in the first week of July. However, in acknowledging the need to
maintain prudent cash flow, the Company is seeking short-term debt financing.
It is considered that this is the least dilutive approach to maintain prudent
operating cash levels, at this time.
Strategic Focus
The current drop in sales at Cobre has caused a greater focus on bringing
strategic investors (Joint venture/purchasers) to the table in relation to
both Redmoor and LCCM. Significant efforts have been made in this area for
over a year and more recent interactions have been particularly positive in
relation to Redmoor.
Cobre Operations
During the first six months of 2023, sales at Cobre were still profitable
despite a significant fall in sales compared to prior periods, due to its
major client suspending orders. Adjustments were made in personnel hours and
SMG continues to deal with enquiries in relation to its magnetite product,
although increased transport costs, caused by higher oil prices, does impact
potential new sales.
The first half of the year also saw the receiver for CV Investments making
progress towards the first distribution in relation to the Receivership,
however, it now appears that any payment to SMG will not be a material amount.
Leigh Creek Copper Mine ("LCCM")
Currently, the Company is working with two unrelated parties who have
expressed an interest in the sulphide exploration potential of the project.
These parties have signed confidentiality agreements, accessed our data room
and have undertaken their own due diligence, although no site visit has been
undertaken as yet.
Additionally, we have recently been approached by a party that is proposing an
alternative approach to treating the copper oxide and we are currently
investigating the feasibility of this approach.
Redmoor Tin-Tungsten Project ("Redmoor")
After feedback received on our comprehensive application for grant funds from
the Shared Prosperity Fund ("SPF"), the CRL team, under tight time frame
requirements, resubmitted a revised grant application which is currently being
assessed, alongside other applications, by Cornwall and Isles of Scilly
Council ("CIoS").
During the second half of 2023, the team at Redmoor have/are intending to
undertake:
· Historic relogging and sampling on Redmoor's library of 14,000m
of drill core which is expected to add to the understanding of the geology and
mineral resource at Redmoor and potentially add to the existing JORC (2012)
resource through additional sampling and modelling, without the need for
expensive drilling.
· Follow-up and expansion on work completed as part of Deep Digital
Cornwall, with target generation and infill sampling underway.
· Continued research and negotiation in consolidating and expanding
CRL's mineral rights footprint in the highly prospective Cornwall region
· Collaboration with other parties on agreements which will utilise
CRL's expertise and IP
· To work with an interested party currently accessing the CRL data
room, answering further questions and providing requested information.
· Follow up on the revised grant funding application lodged in
early August and prepare for the proposed scope of works, and work to maximise
the potential for a positive funding decision.
· Attendance, by CRL's Project Manager and Senior Geologist, at the
Society of Economic Geologists ("SEG") Conference in London and hosting the
SEG field trip afterwards to Redmoor, as part of a wider Cornwall field trip
of industry professionals.
· Attendance, by CRL's Project Manager and Senior Geologist, at the
Cornish Mining Conference in Falmouth and hosting a related site visit by
industry professionals.
· Hosting, in September 2023, a visit from HM Treasury which is part of
a wider south west England visit to UK mining projects. The objective is to
feedback to Government a better understanding of the extent of mining
activities in the UK, as well as how best the Government can assist in the
development of the returning industry.
· Hosting a local community update event in October 2023.
Safety
The Company has a strong focus on safety issues and continues to maintain a
high level of performance when it comes to safety. In the first half of 2023,
there was an incident involving an employee receiving a "jolt" from a pothole
at the Cobre pit. As a precaution, the employee was sent home for the
afternoon and returned to work the next morning.
Again, I would like to take this opportunity to thank my fellow Directors, our
management and staff in New Mexico, South Australia and Cornwall, along with
our advisers, for their support and hard work on our behalf during the period.
Additionally, I would like to thank our clients, contractors, suppliers and
partners for their continued backing.
I look forward to further progressing our key strategic goals in 2023 and
pushing onto a brighter 2024.
Alan Broome
AM
Non-Executive Chairman
28 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Continuing operations
Revenue 782 1,329 2,446
Raw materials and consumables used. (137) (256) (494)
_________ _________ _________
Gross profit 645 1,073 1,952
Other income 1 - 13
Overhead expenses (457) (637) (1,252)
Amortisation (116) (139) (278)
Depreciation (8) (16) (16)
Share based payment - (12) (12)
Foreign exchange gain/(loss) (6) (5) (17)
_________ _________ _________
Profit from operations 59 264 390
Finance expense (4) -
Lease Interest (5) (12) (18)
_________ _________ _________
Profit/ (loss) before taxation 54 248 372
Income tax (expense)/credit (16) (121) (288)
_________ _________ _________
_________ _________ _________
Profit for the period attributable to:
Owners of the parent 38 127 84
_________ _________ _________
Other comprehensive income
Exchange gains/(losses) arising on translation 22 (902) (1,027)
of foreign operations
_________ _________ _________
_________ _________ _________
Total comprehensive (loss)/income attributable to:
Owners of the parent 60 775 (943)
_________ _________ _________
Profit/ (loss) per share attributable to the ordinary equity holders of the
parent:
Continuing activities - Basic ¢0.02 ¢0.08 ¢0.05
¢0.02 ¢0.08 ¢0.05
- Diluted
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Assets
Non-current assets
Intangible Asset 533 553 544
Deferred Exploration and evaluation costs 5,367 4,886 4,983
Other Receivables 133 139 136
Property, plant and equipment 8,203 7,301 8,223
Right of Use Assets 469 568 544
_________ _________ _________
14,705 13,447 14,470
_________ _________ _________
Current assets
Inventories 5 2 5
Trade and other receivables 391 435 319
Income Tax prepaid 13 - 88
Cash and cash equivalents 129 430 341
Prepayments - 1 25
_________ _________ _________
538 868 779
_________ _________ _________
Total Assets 15,243 14,315 15,248
_________ _________ _________
Equity and liabilities
Share capital 2,916 2,916 2,916
Share premium reserve 49,387 49,397 49,387
Share options reserve - - -
Merger reserve 21,300 21,300 21,300
Warrant Reserve - 153 -
Foreign exchange reserve (1,312) (1,209) (1,334)
Other reserves (23,023) (23,023) (23,023)
Accumulated loss (36,365) (36,512) (36,403)
_________ _________ _________
Total Equity 12,903 13,012 12,843
_________ _________ _________
Liabilities
Non-Current Liabilities
Lease Liabilities 230 317 305
Provisions 1,166 405 1,191
_________ _________ _________
1,396 722 1,496
_________ _________ _________
Current liabilities
Income Tax Payable 148 6 261
Trade and other payables 580 309 366
Lease Liabilities 216 266 282
_________ _________ _________
944 581 909
_________ _________ _________
Total Liabilities 2,340 1,303 2,405
_________ _________ _________
Total Equity and Liabilities 15,243 14,315 15,248
_________ _________ _________
CONSOLIDATED STATEMENT OF CASH FLOW
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Cash flows from operating activities
Profit/ (loss) after tax 38 127 84
Adjustments for:
Depreciation of property, plant, and equipment 8 16 16
Amortisation of Right of Use asset 116 139 278
Finance expense - 4 -
Income Tax expense 16 121 288
(Increase) / decrease in inventory - 2 (1)
(Increase) / decrease in trade and other receivables (149) 12 212
(Increase) / decrease in prepayments 25 3 (19)
Increase / (decrease) in trade and other payables 213 48 (42)
Increase /(decrease) in prepaid income tax 75 - (25)
Income tax paid (53) (52) (27)
Share based payment expense - 12 11
_________ _________ _________
Net cash flows from operating activities 289 432 775
_________ _________ _________
Investing activities
Increase in PPE Development Asset (188) (253) (490)
Increase in PPE - - -
Increase in deferred exploration and evaluation asset (159) (201) (226)
_________ _________ _________
Net cash used in investing activities (347) (454) (717)
_________ _________ _________
Financing activities
Net proceeds from issue of equity share capital - - -
Lease Payments (146) (151) (320)
_________ _________ _________
Net cash from financing activities (146) (151) (320)
_________ _________ _________
Net increase / (decrease) in cash and cash equivalents (204) (173) (262)
Cash and cash equivalents at beginning of period 341 611 611
Exchange gains / (losses) on cash and cash equivalents (7) (8) (8)
_________ _________ _________
Cash and cash equivalents at end of period 129 430 341
_________ _________ _________
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium reserve Merger Reserve Warrant Share options reserve Initial Re-structure Foreign Exch. Retained earnings Total equity
Warrant Reserve Reserve reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 2,916 49,387 21,300 153 97 (23,023) (307) (36,748) 13,775
1 January 2022
_______ _______ _______ _______ _______ _______ _______ _______ _______
Profit for the year - - - - - - - 84 84
Foreign exchange translation - - - - - - (1,027) - (1,027)
_______ _______ _______
Total comprehensive income/(loss) for the year - - - - (1,027) 84 (943)
- -
Share based payments - - - - 11 - - - 11
Transfer - - - (153) (108) - - 261 -
_______ _______ _______ _______ _______ _______ _______ _______ _______
Balance at 2,916 49,387 21,300 - - (23,023) (1,334) (36,403) 12,843
31 December 2022
Profit for the period - - - - - - - 38 38
Foreign exchange translation - - - - - - 22 - 22
_______ _______ _______
Total comprehensive income for the year - - - - 22 38 60
- -
_______ _______ _______ _______ _______ _______ _______ _______ _______
Balance at 2,916 49,387 21,300 - - (23,023) (1,312) (36,365) 12,903
30 June 2023
_______ _______ _______ _______ _______ _______ _______ _______ _______
All comprehensive income is attributable to the owners of the parent Company.
NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General Information
Strategic Minerals Plc ("the Company") is a public company incorporated in
England and Wales. The consolidated interim financial statements of the
Company for the six months ended 30 June 2023 comprise the Company and its
subsidiaries (together referred to as the "Group").
2. 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 Standards and UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006.
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, except
for the acquisition of LCCM and the valuation of certain investments which
have been measured at fair value, not historical cost.
Going concern basis
The Directors have given careful consideration to the Group and Parent
Company's (together "the Group") ability to continue as a going concern
through review of cash flow forecasts prepared by management for the period to
31 March 2025, and a review of the key assumptions on which these are based
and sensitivity analysis.
The Group's forward commitments include corporate overhead, which is actively
managed in line with cash generated from the Cobre asset and costs associated
with keeping exploration licences and mining leases current.
Group forecasts are based on Management's expectations of a recovery in sales,
in the second half of 2023 and 2024, to 2021 levels. For the purposes of the
consideration of the Group's ability to operate as a going concern, only
non-discretionary expenditure on projects is included in the cash flow
forecasts.
The Company forecasts that in order to have sufficient funds to meet all
operating costs until March 2025, the Group is reliant on cash being generated
from the Cobre asset in line with forecast and a funding by way of debt/equity
or a combination of both would be required in the last quarter of 2023.
However, the Board considers additional funds will be required to progress the
development of the Leigh Creek Copper Mine and Redmoor projects. It is the
intention of the group that the LCCM asset will be developed during Q1 2024
and management are actively pursuing such funding and envisage that this will
be sourced at the asset level.
These conditions indicate a material uncertainty which may cast significant
doubt as to the Group's ability to continue as a going concern and therefore
it may be unable to realise its assets and discharge its liabilities in the
normal course of business.
If further funds are required, the Directors have reasonable expectation based
on the ability of the Company to raise funds in the past that the Group will
have access to sufficient resources by way of debt or equity markets to meet
all non-discretionary expenditure. Consequently, the consolidated financial
statements have been prepared on a going concern basis.
The financial report does not include adjustments relating to the
recoverability and classification of recorded asset amounts or to the amounts
and classification of liabilities that might be necessary should the Group not
continue as a going concern.
New standards, interpretations, and amendments effective 1 July 2023:
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods and which have not been adopted early.
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 (in any other contractual
arrangements).
The Group accounts for its interests in joint ventures initially at cost in
the consolidated statement of financial position. Subsequently joint ventures
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 joint
ventures are recognised only to the extent of unrelated investors' interests
in the joint venture. The investor's share in the joint ventures' profits and
losses resulting from these transactions is eliminated against the carrying
value of the joint venture.
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.Where there is an increase in
the stake of the joint venture entity from an associate to a subsidiary and
the acquisition is considered as an asset acquisition and not a business
combination in accordance with IFRS3, this step up transaction is accounted
for as the purchase of a single asset and the cost of the transaction is
allocated in its entirety to that asset with no gain or loss recognised in the
income statement. The step-up acquisition of CRL in 2019 has been accounted
for as a purchase of a single asset and the cost of the transaction is
allocated in its entirety to that balance sheet.
3. 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.
Estimates
(a) Carrying value of intangible assets
Management assesses 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.
i) The 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. There are no indicators of impairment
for the Redmoor project in the period to 30 June 2023.
(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.
(c) Carrying value of amounts owed by subsidiary undertakings.
IFRS9 requires the parent company to make certain assumptions when
implementing the forward- looking expected credit loss model. This model is
required to be used to assess the intercompany loan receivables from its
subsidiaries for impairment. Arriving at an expected credit loss allowance
involved considering different scenarios for the recovery of the intercompany
loan receivables, the possible credit losses that could arise and
probabilities for these scenarios.
The following were considered: the exploration project risk, the future
sales potential of product, value of potential reserves and the resulting
expected economic outcomes of the project.
(d) Carrying Value of Development Assets
Management assesses the carrying value of development assets for indicators of
impairment based on the requirements of IAS36 which are inherently
judgemental.
The following are the key assumptions used in this assessment of Carrying
value.
i) Mineable reserves over life of project
ii) Forecasted Copper pricing
iii) Capital and operating cost assumptions to deliver the mining schedule
iv) Foreign exchange rates
v) Discount rate
vi) Estimated project commencement date.
If the carrying amount of the Development asset exceeds the recoverable
amount, the asset is impaired. The Group will reduce the carrying amount of
the asset to its recoverable amount and recognise an impairment loss. The
assessment is carried out twice per year - end of half year reporting period
and end of annual reporting period.
(e) Determination of incremental borrowing rate for leases
Under IFRS 16, where the interest rate implicit in the lease cannot be readily
determined the incremental borrowing rate is used. The incremental borrowing
rate is defined as the rate of interest that a lessee would have to pay to
borrow, over a similar term and with a similar security, the funds necessary
to obtain an asset of a similar value to the cost of the right-of-use asset in
a similar economic environment.
Judgements
(a) Investments in subsidiaries
Investment in subsidiaries comprises of the cost of acquiring the shares in
subsidiaries.
If an impairment trigger is identified and investments in subsidiaries are
tested for impairment, estimates are used to determine the expected net return
on investment. The estimated return on investment takes into account the
underlying economic factors in the business of the Company's subsidiaries
including estimated recoverable reserves, resources prices, capital investment
requirements, and discount rates among other things.
(b) Contingent consideration as part of Asset acquisition
Judgement was required in determining the accounting for the contingent
consideration payable as per of the CRL acquisition. The group has an
obligation to pay A$1m on net smelter sales arising from CRL production
reaching A$50m and a further A$1m on net smelter sales arising from CRL
production reaching A$100m.
Whilst a possible obligation exists in relation to the consideration payable,
given the early stage of the project it was concluded that at reporting date
it is not probable that an outflow of resources embodying economic benefits
will be required to settle the obligation.
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.
· Development Asset - This segment holds the Leigh Creek Copper
Mine Development Asset in Australia and incurs all related operating costs.
· United Kingdom - The investment in the Redmoor project in
Cornwall, United Kingdom is held by this segment.
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 International Accounting Standards.
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.
6 Months to 30 June 2023 SMG Head United Kingdom Development Asset Intra Total
(Unaudited) Office Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
Revenues 782 - - - - 782
_______ _______ _______ _______ _______ _______
Gross profit 782 - - - - 782
Other Income 1 - - - - 1
Raw materials/consumables (137) - - - - (137)
Overhead expenses (242) (215) - - - (457)
Management fee income/(expense) (200) 197 - 3 -
Share based payments - - - - - -
Amortisation (116) - - - - (116)
Depreciation (8) - - - - (8)
Foreign exchange gain/(loss) - 78 - - (84) (6)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) from operations 80 60 - - (81) 59
_______ _______ _______ _______ _______ _______
Lease Interest (4) (1) (5)
Finance Expense - - - - - -
_______ _______ _______ _______ _______ _______
Segment profit /(loss) before taxation 76 60 (1) - (81) 54
_______ _______ _______ _______ _______ _______
6 Months to 30 June 2022 SMG Head United Kingdom Development Asset Intra Total
(Unaudited) Office Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
Revenues 1,329 - - - - 1,329
_______ _______ _______ _______ _______ _______
Gross profit 1,329 - - - 1,329
Raw materials/consumables (256) - - - - (256)
Overhead expenses (281) (380) (6) - 30 (637)
Management fee income/(expense) (200) 206 - (6) -
Share based payments - (12) - - - (12)
Amortisation (139) - - - - (139)
Depreciation (16) - - - - (16)
Foreign exchange gain/(loss) - 63 - - (68) (5)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) from operations 437 (123) (6) - (44) 264
_______ _______ _______ _______ _______ _______
Lease Interest (10) (2) (12)
Finance Expense - - - (4) - (4)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) before taxation 427 (123) (8) (4) (44) 248
_______ _______ _______ _______ _______ _______
Year to 31 December 2022 SMG Head United Kingdom Development Asset Intra Total
(Audited) Office Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
2,446 - - - - 2,446
Revenues
_______ _______ _______ _______ _______ _______
Total Revenue 2,446 - - - 2,446
Othe Revenue - - 13 - - 13
Raw Materials/Consumables (494) - - - - (494)
Overhead expenses (563) (684) (33) - 29 (1,251)
Management fee income/(expense) (250) 253 - (3) -
Share based payments - (11) - - - (11)
Amortisation- right of use asset (278) - - - - (278)
Depreciation (16) - - - - (16)
(Loss)/ gain on intercompany loans - (707) - - 707 -
Foreign exchange gain/(loss) - (65) - - 46 (19)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) from operations 845 (1,214) (20) - 779 390
_______ _______ _______ _______ _______ _______
Lease Interest (16) - (2) - - (18)
Finance Expense - - - - - -
_______ _______ _______ _______ _______ _______
829 (1,214) (22) - 779 372
Segment profit /(loss) before taxation
_______ _______ _______ _______ _______ _______
As at 30 June 2023 SMG Head United Kingdom Development Asset Total
(Unaudited) Office
$'000 $'000 $'000 $'000 $'000
Additions to non-current assets - - 159 188 347
_______ _______ _______ ______ _______
Reportable segment assets 901 42 5,517 8,783 15,243
_______ _______ _______ ______ _______
Reportable segment liabilities 690 359 86 1205 2340
_______ _______ _______ _______ _______
As at 30 June 2022 SMG Head United Kingdom Development Asset Total
(Unaudited) Office
$'000 $'000 $'000 $'000 $'000
Additions to non-current assets - - 201 253 454
_______ _______ _______ ______ _______
Reportable segment assets 1,181 160 5,068 7,906 14,315
_______ _______ _______ ______ _______
Reportable segment liabilities 651 172 31 449 1,303
_______ _______ _______ _______ _______
As at 31 December 2022 SMG Head United Kingdom Development Asset Total
Office
(Audited)
$'000 $'000 $'000 $'000 $'000
Additions to non-current assets - - 226 490 717
_______ _______ _______ _______ _______
Reportable segment assets 1,166 84 5,185 8,813 15,428
_______ _______ _______ _______ _______
Reportable segment liabilities 910 220 41 1,233 2,405
_______ _______ _______ _______ _______
External revenue by Non-current assets by
location of assets
location of customers
30 June 2023 30 June 2022 30 June 2023 30 June 2022
$'000 $'000 $'000 $'000
United States 782 1,329 535 648
United Kingdom - - 5,387 4,905
Australia - - 8,783 7,894
_______ _______ _______ _______
782 1,329 14,705 13,447
_______ _______ _______ _______
Revenues from Customer A totalled $273,114 (2022: $188,315), which represented
35% (2022: 14%) of total domestic sales in the United States, Customer B
totalled $nil (2022: $506,503) which represented 0% (2022: 38%) and Customer C
totalled $417,642 (2022: $ 436,587) which represented 53% (2022: 33%).
5. Operating Loss
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited)
(Unaudited)
(Audited)
$'000 $'000 $'000
Operating gain/loss is stated after charging/(crediting):
Other Income (1) - (13)
Directors' fees and emoluments 86 197 276
Equipment rental 2 2 3
Equipment maintenance 13 12 33
Fees payable to the company's auditor for the - - 74
audit of the parent company and consolidated financial statements
Non- Audit Services - - 15
Salaries, wages, and other staff related costs 203 248 485
Legal, professional and consultancy fees 82 96 198
Other Expenses 71 82 168
_______ _______ _______
Overhead Expenses 457 637 1,252
_______ _______ _______
Lease Interest 5 12 18
Finance Fee - 4 -
Foreign exchange 6 5 18
Amortisation of Right of use assets 116 139 278
Depreciation 8 16 16
Share based payments - 12 11
_______ _______ _______
Total 591 825 1,580
_______ _______ _______
6. Intangible assets - exploration and evaluation costs
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited)
(Unaudited)
(Audited)
$'000 $'000 $'000
Cost
Opening balance for the period 4,983 5,228 5,228
Additions for the period 236 201 400
Grant Reimbursement (69) (123) (174)
Research and development incentive (8) - -
Foreign exchange difference 225 (420) (471)
_______ _______ _______
Closing balance for period 5,367 4,886 4,983
_______ _______ _______
7. Property, plant and equipment
Development Asset Plant and Machinery Total
$'000 $'000 $'000
Group
Cost
At 1 January 2022 (audited) 7,027 746 7,773
Additions 253 - 253
Foreign exchange difference (403) (18) (421)
________ ________ ________
At 30 June 2022 (unaudited) 6,877 728 7,605
Additions for period 237 - 237
Bond Uplift 797 797
Foreign exchange difference (104) (5) (109)
________ ________ ________
At 31 December 2022 (audited) 7,807 723 8,530
________ ________ ________
Additions 188 - 188
Foreign exchange difference (193) (7) (200)
_______ ________ _______-
At 30 June 2023 (Unaudited) 7,802 716 8,518
________ ________ ________
Depreciation
At 1 January 2022 (audited) - (288) (288)
Charge for the period - (16) (16)
Foreign exchange difference -
________ ________ ________
At 30 June 2022 (unaudited) - (304) (304)
Charge for the period - - -
Foreign exchange difference - (3) (3)
________ ________ ________
At 31 December 2022 (audited) - (307) (307)
________ ________ ________
Charge for the period - (8) (8)
Foreign exchange difference - - -
________ ________ ________
As at 30 June 2023(unaudited) - (315) (315)
________ ________ ________
Carrying Value
As at 30 June 2023 (unaudited) 7,802 401 8,203
________ ________ ________
As at 31 December 2022(audited) 7,807 416 8,223
________ ________ ________
As at 30 June 2022 (unaudited) 6,877 424 7,301
________ ________ ________
8. Leases
The Group has leases for an office, plant and machinery and a vehicle. Each
lease is reflected on the balance sheet as a right-of-use asset and a lease
liability. The Group classifies its right-of-use assets in a consistent manner
to its property, plant and equipment.
Office Lease Plant, Machinery and Vehicles Total
$'000 $'000 $'000
Right of Use Assets $'000 $'000 $'000
As at 1 January 2022 (audited) 20 697 717
Additions - - -
Amortisation(capitalised) (9) (1) (10)
Amortization - (139) (139)
________ ________ ________
As at 30 June 2022 (unaudited) 11 557 568
________ ________ ________
Additions - 167 167
Amortisation(capitalised) - (2) (2)
Amortization (10) (139) (149)
________ ________ ________
As at 31 Dec 2022 (Audited) 1 583 584
________ ________ ________
Additions - - -
Amortisation(capitalised) - - -
Amortization (1) (115) (116)
________ ________ ________
As at 30 June 2023 (unaudited) - 469 469
________ ________ ________
Office Lease Plant, Machinery and Vehicles Total
Lease Liabilities
As at 1 January 2022 (audited) 22 700 722
Additions - - -
Interest Payments 1 11 12
Lease Payments (5) (146) (151)
________ ________ ________
As at 30 June 2022 (unaudited) 18 565 583
________ ________ ________
Additions - 167 167
Interest Payments 1 6 7
Lease Payments (15) (155) (170)
________ ________ ________
As at 31 Dec 2022 (Audited 4 583 587
________ ________ ________
Interest Payments - 5 5
Lease Payment (4) (142) (146)
________ ________ ________
As at 30 June 2023 (unaudited) - 446 446
________ ________ ________
Lease June June December
Liability
2023 2022 2022
Current 216 266 282
Non-Current 230 317 305
________ ________ ________
446 583 587
________ ________ ________
9. Dividends
No dividend is proposed for the period.
10. Earnings per share
Earnings per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial year as provided
below.
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
(Unaudited)
(Unaudited)
(Audited)
$'000 $'000 $'000
Weighted average number of shares - Basic 1,593,558,030 1,593,558,030 1,593,558,030
Weighted average number of shares - Diluted 1,593,558,030 1,593,558,030 1,593,558,030
Earnings for the period $38,000 $127,000 $84,000
Earnings per share in the period - Basic ¢0.02 ¢0.08 ¢0.05
Earnings per share in the period - Diluted ¢0.02 ¢0.08 ¢0.05
11. Share capital and premium
30 June 30 June 30 June 30 June
2023 2023 2022 2022
No $'000 No $'000
Allotted, called up and fully paid
Ordinary shares 2,015,964,616 52,303 2,015,964,616 52,303
____________ ____________ ____________ ____________
Share options and warrants
As at 30 June 2023 all share options and warrants have expired.
Copies of this interim report will be made available on the Company's website,
www.strategicminerals.net (http://www.strategicminerals.net) .
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UBAARORUKUARRecent news on Strategic Minerals
See all newsREG - Strategic Minerals - Cobre Quarterly Sales Update and Issue of Warrants
AnnouncementREG - Strategic Minerals - Duchy of Cornwall Mineral Rights Agreement
AnnouncementREG - Strategic Minerals - Cobre Sales Update
AnnouncementREG - Strategic Minerals - Cobre Sales Update and Cash Management
AnnouncementREG - Strategic Minerals - Cobre Update
Announcement