REG - Strategic Minerals - Q3 2022 Magnetite Sales and Cash Balances

Strategic MineralsAnnouncement

20/10/2022 07:01

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RNS Number : 4601D  Strategic Minerals PLC  20 October 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 October 2022

Strategic Minerals plc

("Strategic Minerals" or the "Company")

September 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 September 2022.

Highlights

·   July price increases boost September quarter revenue to US$0.653m
(2021: US$0.607m)

·   Annual sales to the end of September 2022 (US$2.475m) were slightly
weaker than in the previous year (US$2.85m) reflecting lower revenues prior to
agreed pricing increases

·   Elevated transportation costs continuing to restrict geographical sales
expansion

·   Group cash balance of US$0.381m as at 30 September 2022

·   Discussions with both equity and debt funders for Leigh Creek Copper
Mine continue

·   Tungsten and Tin named as Critical Minerals and encompassed within the
UK Government strategy, providing the potential for government assistance in
developing the Redmoor mine

Sales update: Cobre magnetite tailings operations

On 1 July 2022, prices for material from the Cobre magnetite stockpile were
increased and are now reflecting in sales revenues. There appears to be no
adverse effect on sales volumes from the price increase.

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 has moderated those expectations.

Sales comparisons on quarterly and annual periods to 30 September 2022, along
with associated volume details, are shown in the table below:

 

       Tonnage                                        Sales (US$'000)
 Year  3 months to Sept       12 months to Sept       3 months to Sept  12 months to Sept
 2022   9,322                 37,884                  653                 2,475
 2021  10,259                 48,237                  607                 2,865
 2020  10,987                  50,875*                632                   2,991*

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

With regards to the claim on CV Investments LLC ("CVI"), the Receiver has not
taken any action yet on the likely distribution of assets from CVI and has yet
to file their "Omnibus Motion for Order Resolving Disputed Creditor Claims",
which they indicated was the next step in the last status report of 1 August
2022. While the Company initially felt it would receive a meaningful payment
from the distribution, given its position as an established creditor, it now
appears that, as the assets in CVI arose from the proceeds of crime, the
Company's claim and rank may not be as strong as originally anticipated. As
previously noted, the Company is not including funds from the Receiver in its
cash flow projections.

Financials and Operations

As at 30 September 2022, the Company's cash balance was US$0.381m (30 June
2022: US$0.430m). The marginal fall reflects continuing activity at both the
Leigh Creek and Redmoor projects.

Leigh Creek Copper Mine ("LCCM")

After receiving final PEPR approval for the mining of copper oxide at
Paltridge North, the Company has continued discussions with potential debt and
equity funders. While copper prices have fallen around 22% from earlier in the
year (US$4-50 lb to US$3-50 lb) this has been partially offset by the fall in
the A$/US$ exchange rate (0.7300 to 0.6300). Accordingly, the net drop in the
forecasted Australian dollar revenue has been only 10% from the peak of
earlier this year.

Initial preparatory work and maintenance is being undertaken ahead of the
anticipated restart of production at LCCM subject to receipt of funding.

Cornwall Resources Limited ("CRL")

With the inclusion of Tungsten and Tin on the UK Government's Critical
Minerals list, CRL has focused attention on funding programs associated with
the UK Government's Critical Minerals Strategy. It appears that the Redmoor
project can, potentially, benefit from Governmental funding given it:

·    Falls within the UK Government's Critical Minerals Strategy;

·    Is anticipated to result in many well-paid jobs for decades in East
Cornwall; and

·    East Cornwall being an area likely to benefit from the UK
Government's "Levelling Up" policy.

At present, CRL is following up on potential sources of government funding for
the Redmoor project. Current plans for Redmoor have been built around the
Company's previously disclosed limited drill plans, although these may be
rapidly expanded should additional funding be forthcoming.

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

"Sales revenue levels continue to provide operational support, despite price
increases.

"Efforts continue to secure funding for the LCCM restart but, as yet, no
binding commitments have been made.

"We are studiously preparing submissions for possible government funding of
the Redmoor mine and believe that this project aligns well with the UK
Government's plans for the Critical Minerals sector."

 

 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 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.

 

 

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