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.
8 February
2024
Strategic Minerals
plc
("Strategic Minerals" or the "Company")
Cobre Sales Update and Cash
Management
Strategic Minerals plc (AIM: SML;
USOTC: SMCDY), a profitable producing
mineral company, is pleased to provide the
following update on Cobre clients and corporate cash
management.
Highlights
· Additional new client added
with expected volume of circa 5,000-7,000 tons
pa.
· Existing major client's
payments commenced in line with tonnage
collected.
· Expected 2024 revenues,
incorporating the new and major client, to exceed US
$3.5m.
· Short-term working capital
funding facility undertaken.
Cobre Sales
In mid-January 2024, the new major
client (as announced in the RNS of 19 January) began collecting
tonnage from the mine gate at a rate consistent with its 30,000-ton
2024 purchase order. In line with this, payments from the major
client have commenced with a fourteen-day billing cycle.
Early February has seen the addition
of a new client expected to take between 5,000 to 7,000 tons
pa. Unlike the major client's arrangements, this
is on a take and pay basis without a purchase
order. Discussions also continue with
another potential new client that is seeking large volume
shipments. However, recent arrangements with the major client and
the additional new client may impact our capacity to fulfil a large
order.
Given the substantial increase in
expected sales, the Company anticipates that the 2024 Cobre sales
volumes will be over 50,000 tons (17,965 tons in 2023) with
revenues expected to exceed US $3.5m (US $1.6m in 2023).
Cash Management
Given the substantial reduction in
sales during 2023, the Company maintained operations, including
project development, through creditor management and from the
Board's election to take substantially lower cash
payments.
Considering future sales volumes,
and the elongated nature of creditor balances, the Company has
entered into short-term financing facilities totalling AUD
$100,000, with an individual investor. The facilities comprise AUD
$50,000 maturing early May 2024 and AUD $50,000 maturing early
October 2024. These unsecured loans have been undertaken through
the Company's 100% owned subsidiary Ebony Iron Pty Ltd. The
weighted average interest rate on the financing is c19% pa and
includes the grant of 10,000,000 warrants over new ordinary shares
of 0.1 pence each in the Company with an exercise price of 0.5p
maturing 31 December 2025 (to be issued before 1 March 2024). No
funds raised under these facilities will be applied to balances
outstanding to the Directors or CFO.
Commenting, John Peters, Managing
Director of Strategic Minerals, said:
"Encouraging sales trends at our Cobre operation have
continued with the addition of a further new client, amid a clearly
positive backdrop for the renewed demand for magnetite. There may
yet be scope to further augment the existing sales expectations,
either during 2024 or beyond.
"The Company remains focused on cash flow management that
seeks to avoid the need for a dilutive capital raise at the Company
level and we are concentrating on joint venture and potential grant
funding to move development projects forward.
"The Leigh Creek Copper Mine is currently subject to potential
interest from a new group who are based in the same region as the
project and have access to sufficient funds to get the project into
operations. Discussions are ongoing to explore how the Company may
collaborate with this group in moving the project forward.
Meanwhile, the team at Cornwall Resources continues to
advance the project on several fronts, including progressing its
application for grant funding from the Shared Prosperity Fund and
the enabling works for an associated 2024 work program, relogging
and sampling of existing core from previous drilling, and
negotiations to expand CRL's mineral rights footprint in
Cornwall.
"At present, we anticipate an active period of news flow
across all projects during Q1 2024 and beyond."
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. The access to this
stockpile has been extended until 31 March 2027 and is likely to be
rolled over again at that time.
In May 2016, the Company entered
into an agreement with New Age Exploration Limited and, in February
2017, acquired 50% of Cornwall Resources Limited (CRL) which holds
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 arrangements to acquire the balance
of CRL which was settled on 24 July 2019 by way of a vendor loan,
subsequently fully repaid on 26 September 2020. Since this
time, CRL has been progressing the development of the Redmoor
Tin/Tungsten project through its involvement in the EU funded Deep
Digital Cornwall exercise and the placement of Tin and Tungsten on
the Critical Minerals List of both the UK and USA.
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. The
Company continues seeking capital to commence
operations.