REG - Strategic Minerals - Q2 2022 Cobre Magnetite Sales and Cash Balances

Strategic MineralsAnnouncement

20/07/2022 07:00

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RNS Number : 0269T  Strategic Minerals PLC  20 July 2022

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

20 July 2022

Strategic Minerals plc

("Strategic Minerals" or the "Company")

June Quarter 2022 Magnetite Sales and Cash Balances

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing
mineral company, is pleased to provide the following update on the Company's
cash position and ore sales at the Cobre magnetite operation in New Mexico,
USA ("Cobre") for the quarter ended 30 June 2022.

Highlights

·   Cobre's largest client maintains historical demand levels and confirms
intention to do so

·   June quarter and annual sales of US$0.7m and US$2.4m respectively,
slightly weaker than in previous years

·   Customers notified of a 20% sales price increase being progressively
phased in from 1 July 2022

·   Initial July sales do not appear to be impacted by product price
increases

·   Elevated transportation costs currently impacting sales expansion
progress

·   Group cash balance of US$0.430m as at 30 June 2022

·   Programme for Environmental Planning and Rehabilitation ("PEPR")
received for Paltridge North

·   Results of Deep Digital Cornwall ("DDC") survey work being finalised

 

Sales update: Cobre magnetite tailings operations

In the June quarter, the Company's wholly owned subsidiary, Southern Minerals
Group ("SMG"), and the Company's Managing Director, met with Cobre's largest
client, in New Mexico, to discuss expected demand.  The client indicated that
there was not likely to be a repeat of the reduced demand experienced from
October 2021 through to January 2022 (inclusive) and that their expectations
for the rest of the year and beyond was in line with previous demand

During June, SMG's clients were notified of a planned 20% increase in prices
to be phased in over the next six months.  Given that it had been over four
years since prices were increased and the high inflation rate currently being
experienced in the US, this was understood by customers and early July 2022
sales seem to indicate no change in demand.

While the extension of access to the stockpile until 31 March 2027 has
provided a platform from which SMG hopes to increase future sales revenues,
the current increase in transportation costs and recession concerns have
moderated expectations accordingly.

Sales comparisons on quarterly and annual periods to 30 June 2022, 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
 2022  10,711                 38,825                  666                 2,429
 2021  12,130                 48,964                  740                 2,890
 2020  14,733                  52,593*                881                   3,114*

* For comparison purposes, the US$0.75m of deposits forfeited by CV
Investments LLC ("CV"), in October 2019, has been excluded.

Further to previous updates, the CV Receiver established a Bar Date of 25
April 2022 by which claims against CV must be made. SMG formally lodged its
US$21.9m arbitrated claim by this date. The Company is still waiting for the
Receiver to make a recommendation for the distribution of the assets, and SMG
continues to have dialogue with the Receiver. Currently the Receiver has
indicated they are likely to prioritise, in this case, equity claims over
creditors, which is permitted under US law. At this point, there remains no
certainty of any payment to SMG, but the Management and Board expect there
will be clarity later this year.

Financials and Operations

As at 30 June 2022, the Company's non-restricted cash balance, incorporating
funds in transit, was US$0.430m (31 March 202: US$0.615m). The fall largely
reflects consultant costs associated with the PEPR as well as slightly lower
seasonal Cobre revenues, which are expected to recover in the current quarter.

Leigh Creek Copper Mine ("LCCM")

The Company received final PEPR approval for oxide mining at Paltridge North
and is now discussing potential funding to restart production with parties who
have indicated an interest. Recent fears of a global recession and the
associated fall in copper prices have impacted sentiment, in part offset by
the move in the A$/US$ exchange rate. Initial preparatory work and maintenance
is being undertaken ahead of the anticipated restart of production.

Cornwall Resources Limited ("CRL")

CRL has completed the first year of the DDC project, having finished a
detailed ground gravity survey and phase one of a soil sampling campaign. DDC
survey results to-date will be released once data analyses and modelling are
completed - there will also be a local community update event to share the
outcomes. Further DDC work remains ongoing with the continuation of one of the
most detailed soil sampling programmes Cornwall has ever witnessed, with
further data gathering currently being planned for the next year of the
grant-funded project.

Planning approvals for a 4-hole drilling campaign, targeting a previously
identified tin prospect, to the west of the existing Redmoor
Tin-Tungsten-Copper resource, have been received. However, high activity in
the region by other companies means there is a shortage of available drill
rigs and crews. At this time CRL's drilling plans may be deferred until this
situation changes.

The recent release of the UK Critical Minerals list via the British Geological
Survey has the welcome inclusion of Tungsten and Tin. This helps underwrite
the importance of the various projects in the South West of the Country. This
is expected to be the first step in major initiative by the UK Government to
secure critical minerals supply, with its Critical Minerals Strategy expected
to be released soon.

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

"Confirmation from the largest Cobre client that demand is expected to be
maintained at historical levels, is significantly reassuring in relation to
the outlook for cash flow for the years to come.

"The receipt of the long awaited PEPR for LCCM has prepared us for re-opening
of the Mountain of Light facility although the market's mood has changed in
line with fears of a global recession. It is the Board's view that this
negative sentiment, particularly around copper, will be short lived as the
underlying demand and supply factors demonstrate the expected copper shortage
in the years ahead.

"We are encouraged by the release of the UK Critical Minerals list, which
includes tin and tungsten. After a productive meeting with the local Cornish
Member of Parliament in June, we understand this to be the first step in a
major initiative by the UK Government to focus on securing domestic critical
minerals supply.

"Thank you to all our shareholders that attended the in-person AGM, we are
grateful for your support and appreciated the opportunity to answer all of
your questions"

 

 For further information, please contact:

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

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

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

 

Notes to Editors

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

In September 2011, Strategic Minerals acquired the distribution rights to the
Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating
asset, which it brought into production in 2012 and which continues to provide
a revenue stream for the Company. This operating revenue stream is utilised to
cover company overheads and invest in development projects aimed at supplying
the metals and minerals likely to be highly demanded in the future.

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 June 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 June 2022, an updated PEPR, addressing the conditions
associated with the July 2021 approval, was approved.

 

 

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