TIDMSML
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 12 months to 3 months to 12 months to
June June June 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:
+61 (0) 414 727
Strategic Minerals plc 965
John Peters
Managing Director
Website: www.strategicminerals.net
Email: info@strategicminerals.net
Follow Strategic Minerals on:
Vox Markets: https://www.voxmarkets.co.uk/company/SML/
Twitter: @SML_Minerals
LinkedIn: https://www.linkedin.com/company/strategic-minerals-plc
+44 (0) 20 3470
SP Angel Corporate Finance LLP 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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