REG - Strategic Minerals - Q4 2022 Magnetite Sales and Cash Balances

Strategic MineralsAnnouncement

09/02/2023 07:00

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RNS Number : 3593P  Strategic Minerals PLC  09 February 2023

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.

9 February 2023

Strategic Minerals plc

("Strategic Minerals" or the "Company")

December 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 31 December 2022.

 

Highlights

·   December quarter revenue of US$0.464m (2021: US$0.493m) reflected the
20% July price increase passed on to customers

·   Reduced demand from some customers, associated with the dip in US
economic growth, has impacted sales volumes for this quarter

·   Group cash balance was US$0.341m as at 31 December 2022 (US$0.381m as
at 30 September 2022)

·   Negotiations on planned funding for the restart of production at the
Leigh Creek Copper Mine ("LCCM") are at an advanced stage with a party which
has substantially completed its due diligence and visited the LCCM site

·   In December, Cornwall Resources Limited (CRL) lodged an application for
grant funds in relation to the Redmoor project

Sales update: Cobre magnetite tailings operations

The current dip in US economic growth has impacted demand for the magnetite
product provided at Cobre in New Mexico, USA.  While sales to our
"fertilizer" customers appear unaffected, sales to our "cement" customers have
been notably impacted with our largest client having currently suspended
purchases whilst it runs down its existing stockpile.

The reduction in demand has been partially offset by the 20% price increase in
July 2022.

Sales comparisons on quarterly and annual periods to 31 December 2022, along
with associated volume details, are shown in the table below:

       Tonnage                                       Sales (US$'000)
 Year  3 months to Dec       12 months to Dec        3 months to Dec  12 months to Dec
 2022  5,638                 36,281                  464                2,446
 2021  7,245                 42,637                  493                2,611
 2020  12,845                51,518                  747                 3,045

 

During the quarter, there has not been any further update on distributions
from the CV Investments LLC ("CVI") receivership. Accordingly, the Company has
not included any potential receipt of funds from the Receiver in its cash flow
projections.

 

Financials and Operations

As at 31 December 2022, the Company's cash balance was US$0.341m (30 September
2022: US$0.381m). The marginal reduction is consistent with Cobre operations
in the December quarter and reflects continuing activity at both the Leigh
Creek and Redmoor projects.

The quarter also saw the replacement of existing auditors BDO with Gravita,
which incorporates the Company's original auditors, Jeffreys Henry. This was
driven by economic considerations.

Leigh Creek Copper Mine ("LCCM")

The Company is pleased to provide the following updates regarding the LCCM:

1.    In December 2022, the Company lodged a Programme for Environmental
Protection and Rehabilitation (PEPR) with South Australia's Department of
Energy and Mining (DEM) for the handling of transitional ore (from copper
oxide to copper sulphide) at Paltridge North; and

 

2.    a specialist resource focused investor has continued its due
diligence for the provision of funding for the restart of the LCCM.  The
potential investor has undertaken in depth external due diligence on the
project, which is currently progressing, and updating of the Company's
previous costings are underway with a view to entering into a binding funding
agreement.

 

Cornwall Resources Limited ("CRL")

In December, CRL submitted an application to Cornwall and Isle of Scilly
Council ("CIS") for grant funds from CIS's Shared Prosperity Fund to undertake
the planned development of the Redmoor Tungsten and Tin project. The Company
considers that, whether it is successful with this application or not, at some
stage the project is likely to 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.

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

"Whilst it is disappointing to see the impact of the dip in US economic growth
resulting in lower sales volumes at Cobre, the Company is reassured by the
fact that Cobre is expected to continue to contribute substantial revenues to
cover the Company's overall costs in 2023.

"The recommencement of operations at Mountain of Light, Leigh Creek, subject
to confirmation of the intended financing, should place the Company in a
strong position for the remainder of the year.

"With a potential LCCM funding pathway identified, the Company now awaits the
outcome of its grant application to assess the scope of its operations at
Redmoor in 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 (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.  In December
2022, the Company signed a Term Sheet for funding of operations at Leigh Creek
and is progressing documentation.

 

 

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