REG - Strategic Minerals - Interim Results - Half Year to 30 June 2024
26/09/2024 07:00
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RNS Number : 6631F Strategic Minerals PLC 26 September 2024
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.
Strategic Minerals plc
("Strategic Minerals", "SML", the "Group" or the "Company")
Interim Results
US$950,000 Pre-Tax Profit
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company
actively developing critical minerals focused projects, is pleased to announce
its unaudited interim results for the half year ended 30 June 2024.
Financial Highlights
· The return of Southern Minerals Group's major client has positively
impacted cash flow and helped sales for the six months climb to US$2.136m, the
highest six month revenue since 2017. This provides an outlook for 2024 sales
of more than US$4.5m.
· With increased sales has come increased operating profitability, with
the after-tax profit in this period rising to 31% from 5% last year. The
pre-tax profit for the period was US$950,000 (H1 2023: US$54,000).
· After tax profit for the interim six months was US$667,000 (H1 2022
US$38,000), consistent with the increase in sales.
· In the same period, US$325,000 was invested in the Company's
development projects (Redmoor Tungsten and Tin Mine - US$233,000 and Leigh
Creek Copper Mine - US$25,000).
· US$258,000 of accrued creditors were repaid in the period.
· Executive Directors' fees were temporarily reduced in 2024 reflecting
undertakings associated with 2023.
· Unrestricted cash as of 30 June 2024 was US$280,000 (31 Dec 2023:
US$112,000).
Corporate Highlights
Cash flow considerations restricted much corporate activity during the first
half of 2024. Despite tight funding, the Company managed to keep the Redmoor
team intact and, after four years effort, secured mineral exploration rights
to a substantial portion of lands owned by the Duchy of Cornwall, as well as
other strategically important mineral rights. Accordingly, the Company was
able to expand its footprint in this mineral rich area four-fold and looks
forward to demonstrating the benefit such access provides.
Shortly after the end of the interim 2024 period, the Company's then Chairman,
Alan Broome AM, retired and both Charles Manners and Mark Burnett were
appointed to the Board, resulting in the Company's top four shareholders being
represented on the Board. Subsequently, Charles Manners was elected Chairman
at the Board's first meeting following his appointment.
Commenting, John Peters, Managing Director of Strategic Minerals, said:
"The rapid recovery in Cobre sales, from January 2024, placed serious cash
flow pressure on the Company's working capital at a time when depressed sales
volumes had already left the Company in an unhealthy cash position. To
alleviate the cash flow pressure, the Company, was able to raise short term
funding in the form of two loans. Subsequently, as the need for working
capital abated, cash flow has predominately been directed to the repayment of
external creditors and one of the short-term loans raised.
"I am pleased to report that creditor payments are now being met within
regular terms and that, after the interim period, payment of accrued Directors
and Management fees has begun.
"The Company continues to pursue investment in the Leigh Creek Copper Mine by
way of either joint venture or outright sale. Similarly, the Company continues
to seek funding for the Redmoor Tungsten and Tin Mine through government-based
grants or joint venture.
"Subsequent to the end of the period, the retirement of Alan Broome, provided
the opportunity for Charles Manners, one of our largest shareholders, and Mark
Burnett, representing Philip Richards, to both join the Board with Charles
Manners subsequently assuming the role of Chairman."
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 plc is an AIM-quoted, profitable operating minerals company
actively developing projects tailored to materials expected to benefit from
strong demand in the future. It has an operation in the United States of
America along with development projects in the UK and Australia. The Company
is focused on utilising its operating cash flows, along with capital raisings,
to develop high quality projects aimed at supplying the metals and minerals
likely to be highly demanded in the future.
In September 2011, Strategic Minerals acquired the distribution rights to the
Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating
asset, which it brought into production in 2012 and which continues to provide
a revenue stream for the Company. This operating revenue stream is utilised to
cover company overheads and invest in development projects aimed at supplying
the metals and minerals likely to be highly demanded in the future.
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
The Company, along with many other junior miners, weathered an extremely
difficult 2023 but has come through this challenging period with brighter
prospects for the remainder of 2024 and into 2025.
As the new Chairman, and largest shareholder, I believe the Company is well
placed to realise the underlying value built up in its projects, in particular
its Redmoor Tungsten and Tin mine which has the potential to be of strategic
importance in global affairs.
Financial results
The rebound in the Company's profitability in the first half of 2024 has been
welcomed and largely reflects the return of Cobre's major client after a
14-month hiatus. To survive the rigors of 2023, the Company extended terms on
its suppliers and paid only a small portion of the remuneration due to the
Board and Management in 2023 and the beginning of 2024. Accordingly, after
working capital stabilised, the Company prioritised repayment of external
creditors which are now in line with market norms.
Early in 2023, as the largest shareholder in Strategic Minerals, I pressed the
Board on the lack of progress at its projects and the effect this was having
on the Company's share price. The then Board acknowledged the difficulties it
was encountering in securing investors/buyers at the asset level for the Leigh
Creek Copper Mine ("LCCM") and the Redmoor Tungsten and Tin mine ("Redmoor").
The Board then volunteered that, should certain milestones around funding and
share price not be met in 2023, the Board would forgo 50% of its remuneration.
As one of the key potential funding sources dragged onto Q1 2024, some leeway
was provided and the 2023 financial accounts reflected the full amount of
Directors remuneration, accruing unpaid amounts to which an 8% per annum
interest rate was applied. This rate was agreed by the then Board.
As the proposed funding was not forthcoming, the Board, after the AGM in July,
agreed to a temporary adjustment being made in the 2024 remuneration to
Executive Directors that ensures 50% of the total Board's base remuneration in
2023 is recouped by the Company. These adjustments, as they relate to the
first six months of 2024, are reflected in these interim results.
Repayment of short-term funding facilities, raised for working capital
purposes during the first quarter of 2024, along with amounts and interest
accrued to Directors, are expected to be cleared in the second half of 2024.
With sales at Cobre exceeding our previous expectations, we are confident on
continued positive momentum for the second half of 2024, and the Company is
actively working on securing similar arrangements for 2025.
Strategic Focus
Whilst the current improvement in the Company's profitability is a welcome
development, cash flow from this profitability is not substantial enough to
fund significant progress at LCCM or Redmoor. With the recent additions to the
Board, the Company is hopeful that their extended investment networks will
result in greater potential for partnerships or access to funding pools.
The current share price all but rules out funding these projects through the
issue of new equity and the Board is focussed on how best to re-establish
momentum in the share price. We believe the strategic nature of tungsten, as a
critical mineral, in the current political climate will make Redmoor the key
focus of the Company moving forward.
Cobre Operations
The substantial increase in demand at Cobre, associated with the return of its
major client, has resulted in the best six months of sales revenue since
December 2017. At present, the Board believes that the second half Cobre sales
for 2024 may outperform H1 2024 sales.
Directors and Management are currently progressing negotiations in relation to
demand for the remainder of this year and into next and are confident that
sales levels will remain high throughout 2025. It is not expected that the
result of the US presidential elections will have a major impact on this
demand.
The Company still awaits news from the receiver for CV Investments LLC as to
quantum and timing for the first distribution in relation to the receivership,
although it now appears that any payment to the Company will be minor in
nature.
Leigh Creek Copper Mine ("Leigh Creek" or "LCCM")
Over the first half of 2024, the Company has worked with several parties who
have expressed an interest in acquiring/investing in LCCM. At the time of
writing, there are two parties in our data room actively reviewing the LCCM
project.
Whilst the LME copper price has been the subject of fluctuations, the
Australian dollar equivalent has remained strong and, generally, above that
employed in our feasibility worksheets.
Redmoor Tin-Tungsten Project ("Redmoor")
Disappointingly, after a considerable amount of excellent work had been
completed in relation to the provision of grant funding via the Shared
Prosperity Fund, and a conditional funding offer being received, the Company
was unable to provide sufficient evidence of its ability to complete on its
match funding co-investment during the deconditioning period, and as such the
opportunity lapsed.
Initially, following an extensive consideration of an investment, including
meetings, a site visit and due diligence activities, the Company had received
a strong letter of support, submitted as part of the grant funding
application, from a party developing similar deposits as Redmoor, confirming
their interest in an investment into CRL to provide the match funding.
However, when the conditional funding offer, from the Shared Prosperity Fund,
was received, the matched funding was not forthcoming due to external factors.
While attempts were made to substitute other parties for this co-investment
role, these efforts proved unsuccessful in part due to the short notice and
restricted project timelines.
During the first half of the year, the team at Redmoor have directed much of
their time to concluding lengthy mineral rights agreements (including the
historic milestone agreement with the Duchy of Cornwall which quadrupled CRL's
minerals rights), seeking grant funding, both from the Shared Prosperity Fund
and other sources, and developing a strategy to re-examine previous 2017 and
2018 drill core in a cost-efficient manner expecting to significantly
strengthen and add calibre to Redmoor's existing JORC (2012) compliant mineral
resource estimate.
In the second half of 2024, the team at Redmoor is undertaking the following
activity:
· Further historic relogging and sampling on Redmoor's library of
14,000m of drill core.
· Field sampling and identification of potential exploration
opportunities on the recently acquired Duchy of Cornwall license.
· Continuing involvement in, and advancing new, collaborative research
funding opportunities with Camborne School of Mines and the Cornish mining
community.
· Gaining membership of the US Defense Industry Base Consortium (DIBC)
(Completed) and attending the DIBC symposium, in San Diego (Completed), which
outlined the format and nature of current Defense Production Act Investment
(DPAI) funding opportunities made available via White Papers open
announcements from the Department of Defense for strategic and critical
minerals projects.
· Preparing and submitting a White Paper application to an open
announcement via the DIBC.
· Preparing for an application to the EU for Strategic Project Status
which could, ultimately, lead to greater project support and increased
prospects for funding.
· Continuing engagement with Government, the Critical Minerals Association,
and other parties on the upcoming Critical Minerals List refresh.
· Attending Mines and Money conference in December 2024, as part of a
"Cornish Pavillion" of Southwest-based mining development projects and
representatives, to promote CRL and the growing importance of critical
minerals mining to the Cornish and U.K. economy.
· Hosting site visits by investors, research analysts and various other
counterparties and stakeholders, including the two new SML directors.
· Hosting local community and stakeholder updates.
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 2024
there was no safety issues reported.
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 progressing our key strategic goals in 2024 and an even
brighter 2025.
Charles Manners
Non-Executive Chairman
26 September 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Continuing operations
Revenue 2,136 782 1,577
Raw materials and consumables used. (393) (137) (262)
_________ _________ _________
Gross profit 1,743 645 1,315
Other income - 1 4
Overhead expenses (583) (457) (1,186)
Amortisation (158) (116) (277)
Depreciation (8) (8) (16)
Impairment (25) - (8,898)
Share based payment - - (5)
Foreign exchange gain/(loss) (10) (6) (5)
_________ _________ _________
Profit from operations 959 59 (9,068)
Lease Interest (9) (5) (14)
_________ _________ _________
Profit/ (loss) before taxation 950 54 (9,082)
Income tax (expense)/credit (283) (16) (107)
_________ _________ _________
_________ _________ _________
Profit for the period attributable to:
Owners of the parent 667 38 (9,189)
_________ _________ _________
Other comprehensive income
Exchange gains/(losses) arising on translation (205) 22 189
of foreign operations
_________ _________ _________
_________ _________ _________
Total comprehensive (loss)/income attributable to:
Owners of the parent 462 60 (9,000)
_________ _________ _________
Profit/ (loss) per share attributable to the ordinary equity holders of the
parent:
Continuing activities - Basic ¢0.042 ¢0.02 (¢0.58)
- Diluted ¢0.042 ¢0.02 (¢0.58)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Assets
Non-current assets
Intangible Asset - 533 -
Deferred Exploration and evaluation costs 5,592 5,367 5,568
Other Receivables 133 133 136
Property, plant and equipment 72 8,203 80
Right of Use Assets 594 469 453
_________ _________ _________
6,391 14,705 6,237
_________ _________ _________
Current assets
Inventories 4 5 4
Trade and other receivables 519 391 219
Income Tax prepaid - 13 31
Cash and cash equivalents 280 129 112
_________ _________ _________
803 538 366
_________ _________ _________
Total Assets 7,194 15,243 6,603
_________ _________ _________
Equity and liabilities
Share capital 2,916 2,916 2,916
Share premium reserve 49,387 49,387 49,387
Share options reserve 5 - 5
Merger reserve 21,300 21,300 21,300
Warrant Reserve - - -
Foreign exchange reserve (1,350) (1,312) (1,145)
Other reserves (23,023) (23,023) (23,023)
Accumulated loss (44,925) (36,365) (45,592)
_________ _________ _________
Total Equity 4,310 12,903 3,848
_________ _________ _________
Liabilities
Non-Current Liabilities
Lease Liabilities 375 230 302
Provisions 1,171 1,166 1,192
_________ _________ _________
1,546 1,396 1,494
_________ _________ _________
Current liabilities
Income Tax Payable 333 148 101
Trade and other payables 714 580 972
Loans and Borrowings 68 - 35
Lease Liabilities 223 216 153
_________ _________ _________
1,338 944 1,261
_________ _________ _________
Total Liabilities 2,884 2,340 2,755
_________ _________ _________
Total Equity and Liabilities 7,194 15,243 6,603
_________ _________ _________
CONSOLIDATED STATEMENT OF CASH FLOW
6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Cash flows from operating activities
Profit/ (loss) after tax 667 38 (9,189)
Adjustments for:
Depreciation of property, plant, and equipment 8 8 16
Amortisation of Right of Use asset 158 116 277
Impairment charge 25 - 8,898
Income Tax expense 283 16 107
Lease Interest 9 - 14
(Increase) / decrease in inventory - - 1
(Increase) / decrease in trade and other receivables (300) (149) 45
(Increase) / decrease in prepayments - 25 25
Increase / (decrease) in trade and other payables (258) 213 610
Increase /(decrease) in prepaid income tax - 75 (57)
Income tax paid (20) (53) (154)
Share based payment expense - - 5
_________ _________ _________
Net cash flows from operating activities 572 289 598
_________ _________ _________
Investing activities
Increase in PPE Development Asset (25) (188) (203)
Increase in PPE - - -
Increase in deferred exploration and evaluation asset (233) (159) (366)
_________ _________ _________
Net cash used in investing activities (258) (347) (569)
_________ _________ _________
Financing activities
Proceeds from borrowings 67 - 34
Repayment of borrowings (39) - -
Lease Payments (174) (146) (296)
_________ _________ _________
Net cash from financing activities (146) (146) (262)
_________ _________ _________
Net increase / (decrease) in cash and cash equivalents 168 (204) (233)
Cash and cash equivalents at beginning of period 112 341 341
Exchange gains / (losses) on cash and cash equivalents - (7) 4
_________ _________ _________
Cash and cash equivalents at end of period 280 129 112
_________ _________ _________
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 - - (23,023) (1,334) (36,403) 12,843
1 January 2023
_______ _______ _______ _______ _______ _______ _______ _______ _______
Profit for the year - - - - - - - (9,189) (9,189)
Foreign exchange translation - - - - - - 189 - 189
_______ _______ _______
Total comprehensive income/(loss) for the year - - - - 189 (9,189) (9,000)
- -
Share based payments - - - 5 - - - - 5
_______ _______ _______ _______ _______ _______ _______ _______ _______
Balance at 2,916 49,387 21,300 5 - (23,023) (1,145) (45,592) 3,848
31 December 2023
Profit for the period - - - - - - - 667 667
Foreign exchange translation - - - - - - (205) - (205)
_______ _______ _______
Total comprehensive income for the year - - - - (205) 667 462
- -
_______ _______ _______ _______ _______ _______ _______ _______ _______
Balance at 2,916 49,387 21,300 5 - (23,023) (1,350) (44,925) 4,310
30 June 2024
_______ _______ _______ _______ _______ _______ _______ _______ _______
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 2024 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 considered 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 December 2025 and a
review of the key assumptions on which these are based and sensitivity
analysis.
The Company forecasts that to have sufficient funds to meet all operating
costs until December 2025, the Group is reliant on cash being generated from
the Cobre asset in line with forecast.
As outlined by the Board, it is intended that any funds required to progress
either the Leigh Creek Copper Mine and/or Redmoor projects will be sourced at
the asset level and Management are actively pursuing such funding.
The Directors have reasonable expectation that the Group will have access to
sufficient resources by way of debt or equity markets should the need arise.
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 2024:
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.
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 2024.
(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 2024 SMG Head United Kingdom Development Asset Intra Total
(Unaudited) Office Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
Revenues 2,136 - - - - 2,136
_______ _______ _______ _______ _______ _______
Gross profit 2,136 - - - - 2,136
Raw materials/consumables (393) - - - - (393)
Overhead expenses (342) (214) (5) - - (561)
Management fee income/(expense) (200) 200 - - -
Interest - (13) (8) - - (21)
Share based payments - - - - - -
Amortisation (158) - - - - (158)
Impairment - - (25) - (25)
Depreciation (8) - - - - (8)
Foreign exchange gain/(loss) - 227 - - (238) (11)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) from operations 1,035 200 - (25) (238) 959
_______ _______ _______ _______ _______ _______
Lease Interest (9) - (9)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) before taxation 1,026 200 (13) (25) (238) 950
_______ _______ _______ _______ _______ _______
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
_______ _______ _______ _______ _______ _______
Year to 31 December 2023 SMG Head United Kingdom Development Asset Intra Total
(Audited) Office Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
1,577 - - - - 1,577
Revenues
_______ _______ _______ _______ _______ _______
Total Revenue 1,577 - - - - 1,577
Othe Revenue 1 - 3 - - 4
Raw Materials/Consumables (262) - - - - (262)
Overhead expenses (478) (627) (56) - - (1,161)
Management fee income/(expense) (250) 250 - - -
Share based payments - (5) - - - (5)
Impairment - - - (8,898) - (8,898)
Amortisation- right of use asset (277) - - - - (277)
Interest (6) (18) - - - (24)
Depreciation (16) - - - - (16)
(Loss)/ gain on intercompany loans - (3,377) - - 3,377 -
Foreign exchange gain/(loss) - (227) - - 221 (6)
_______ _______ _______ _______ _______ _______
Segment profit /(loss) from operations 289 (4,004) (53) (8,898) 3,598 (9,068)
_______ _______ _______ _______ _______ _______
Lease Interest (14) - - - - (14)
Finance Expense - - - - - -
_______ _______ _______ _______ _______ _______
275 (4,004) (53) (8,898) 3,598 (9,082)
Segment profit /(loss) before taxation
_______ _______ _______ _______ _______ _______
As at 30 June 2024 SMG Head United Kingdom Development Asset Total
(Unaudited) Office
$'000 $'000 $'000 $'000 $'000
Additions to non-current assets - - 233 25 258
_______ _______ _______ ______ _______
Reportable segment assets 1,358 56 5,640 140 7,194
_______ _______ _______ ______ _______
Reportable segment liabilities 1,065 495 116 1,208 2,884
_______ _______ _______ _______ _______
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 31 December 2023 SMG Head United Kingdom Development Asset Total
Office
(Audited)
$'000 $'000 $'000 $'000 $'000
Additions to non-current assets - - 366 203 569
_______ _______ _______ _______ _______
Reportable segment assets 837 30 5,599 137 6,603
_______ _______ _______ _______ _______
Reportable segment liabilities 656 730 127 1,242 2,755
_______ _______ _______ _______ _______
External revenue by Non-current assets by
location of assets
location of customers
30 June 2024 30 June 2023 30 June 2024 30 June 2023
$'000 $'000 $'000 $'000
United States 2,136 782 650 535
United Kingdom - - 5,608 5,387
Australia - - 133 8,783
_______ _______ _______ _______
2,136 782 6,391 14,705
_______ _______ _______ _______
Revenues from Customer A totalled $323,163 (2023: $273,114), which represented
15% (2023: 35%) of total domestic sales in the United States, Customer B
totalled $1,022,442 (2023: nil) which represented 48% (2023: 0%) Customer C
totalled $404,104 (2023: $ 417,642) which represented 19% (2023: 53%), and
Customer D totalled $334,977 (2023: nil) which represented 16% (2023: 0%).
5. Operating Loss
6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
(Unaudited)
(Unaudited)
(Audited)
$'000 $'000 $'000
Operating gain/loss is stated after charging/(crediting):
Other Income - (1) (4)
Directors' fees and emoluments 39 86 257
Equipment rental - 2 2
Equipment maintenance 31 13 30
Fees payable to the company's auditor for the - - 81
audit of the parent company and consolidated financial statements
Non- Audit Services 6 - -
Salaries, wages, and other staff related costs 336 203 405
Legal, professional and consultancy fees 53 82 189
Other Expenses 76 71 198
_______ _______ _______
Overhead Expenses 541 457 1,158
_______ _______ _______
Lease Interest 9 5 14
Interest 21 - 24
Foreign exchange 10 6 5
Amortisation of Right of use assets 158 116 277
Depreciation 8 8 16
Share based payments - - 5
Impairment 25 - 8,898
_______ _______ _______
Total 772 591 10,397
_______ _______ _______
6. Intangible assets - exploration and evaluation costs
6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
(Unaudited)
(Unaudited)
(Audited)
$'000 $'000 $'000
Cost
Opening balance for the period 5,568 4,983 4,983
Additions for the period 234 236 486
Grant Reimbursement - (69) (112)
Research and development incentive - (8) (8)
Foreign exchange difference (211) 225 219
_______ _______ _______
Closing balance for period 5,592 5,367 5,568
_______ _______ _______
7. Property, plant and equipment
Development Asset Plant and Machinery Total
$'000 $'000 $'000
Group
Cost
At 1 January 2023 (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
Additions for period 15 - 237
Impairment (8,033) (328) (8,531)
Foreign exchange difference 216 7 233
________ ________ ________
At 31 December 2023 (audited) - 395 395
________ ________ ________
Additions 25 - 25
Impairment (25) - (25)
Foreign exchange difference - - -
_______ ________ _______-
At 30 June 2024(Unaudited) - 395 395
________ ________ ________
Depreciation
At 1 January 2023 (audited) - (307) (307)
Charge for the period - (8) (8)
Foreign exchange difference -
________ ________ ________
At 30 June 2023 (unaudited) - (315) (315)
Charge for the period - - -
Foreign exchange difference - - -
________ ________ ________
At 31 December 2023 (audited) - (315) (315)
________ ________ ________
Charge for the period - (8) (8)
Foreign exchange difference - - -
________ ________ ________
As at 30 June 2024(unaudited) - (323) (323)
________ ________ ________
Carrying Value
As at 30 June 2024(unaudited) - 72 72
________ ________ ________
As at 31 December 2023(audited) - 80 80
________ ________ ________
As at 30 June 2023 (unaudited) 7,802 401 8,203
________ ________ ________
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 2023 (audited) 1 583 584
Additions - - -
Amortisation(capitalised) (1) - (1)
Amortization - (115) (115)
________ ________ ________
As at 30 June 2023 (unaudited) - 469 469
________ ________ ________
Additions - 150 150
Amortisation(capitalised) - (3) (3)
Amortization - (162) (162)
________ ________ ________
As at 31 Dec 2023 (Audited) - 453 453
________ ________ ________
Additions - 301 301
Amortisation(capitalised) - (2) (2)
Amortization - (159) (159)
________ ________ ________
As at 30 June 2024 (unaudited) - 594 594
________ ________ ________
Office Lease Plant, Machinery and Vehicles Total
Lease Liabilities
As at 1 January 2023 (audited) 4 583 587
Additions - - -
Interest Payments - 5 5
Lease Payments (4) (142) (146)
________ ________ ________
As at 30 June 2023 (unaudited) - 446 446
________ ________ ________
Additions - 150 150
Interest Payments - 9 9
Lease Payments (150) (150)
________ ________ ________
As at 31 Dec 2023 (Audited - 455 455
________ ________ ________
Additions - 301 301
Interest Payments - 9 9
Lease Payment - (166) (166)
________ ________ ________
As at 30 June 2024 (unaudited) - 598 598
________ ________ ________
Lease Liability June June December
2024 2023 2023
Current 223 216 153
Non-Current 375 230 302
________ ________ ________
598 446 455
________ ________ ________
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
2024 2023 2023
(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 (loss) for the period $557,000 $38,000 ($9,189,000)
Earnings per share in the period - Basic ¢0.042 ¢0.02 ¢(0.58)
Earnings per share in the period - Diluted ¢0.042 ¢0.02 ¢(0.58)
11. Share capital and premium
30 June 30 June 30 June 30 June
2024 2024 2023 2023
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 2024 all share options and warrants have expired.
12. Post balance date events
Post the balance sheet date, the then Company chairman, Alan Broome AM, chose
to retire and, subsequently, Charles Manners and Mark Burnett were added to
the Board. Charles Manners was then elected Chairman,
Copies of this interim report will be made available on the Company's website,
www.strategicminerals.net (http://www.strategicminerals.net) .
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