TIDMSML
RNS Number : 3588X
Strategic Minerals PLC
25 April 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.
25 April 2023
Strategic Minerals plc
("Strategic Minerals" or the "Company")
March Quarter 2023 Magnetite Sales, Cash Balances and
Directorate Change
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 March 2023.
Highlights
-- March quarter revenue of US$0.415m (2022: US$0.663m)
reflected the anticipated reduced demand from some customers,
associated with the dip in US economic activity.
-- Group cash balance was US$0.281m as at 31 March 2023 (US$0.341m as at 31 December 2022).
-- Jeffreys Henry vacated its newly appointed auditor role and was replaced by Shipleys.
-- Increased mining costs and negative market sentiment has
impacted proposed debt-based funding for restart of production at
the Leigh Creek Copper Mine ("LCCM"), previously reported, and has
required a re-examination of blended debt and LCCM equity
funding.
-- The assessment of the grant application lodged by Cornwall
Resources Limited ("CRL") in December has been delayed by the
assessing body.
-- Jeff Harrison, Non-Executive Board member, provided
notification of his intention to retire as a Board member at the
end of April.
Sales update: Cobre magnetite tailings operations
Slower US economic growth continues to impact demand for the
magnetite product provided at Cobre in New Mexico, USA. While sales
to the Company's "fertilizer" customers appear somewhat unaffected,
sales to "cement" customers have been notably impacted with the
Company's largest client continuing to suspend purchases whilst it
runs down its existing stockpile.
The reduction in demand has been partially offset by the 20%
price increase in July 2022.
Sales comparisons on quarterly and annual periods to 31 March
2023, along with associated volume details, are shown in the table
below:
Tonnage Sales (US$'000)
----------------------------- ----------------------------
Year 3 months to 12 months to 3 months to 12 months to
Mar Mar Mar Mar
2023 4,734 30,405 415 2,198
2022 10,609 40,244 663 2,502
2021 13,002 51,567 771 3,032
During the quarter, there has been no formal 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 March 2023, the Company's cash balance was US$0.281m
(30 September 2022: US$0.341m). The marginal reduction is
consistent with Cobre operations in the March quarter and reflects
continuing activity at both the Leigh Creek and Redmoor projects.
In light of the reduced income from Cobre, management and
Directors' cash remunerations have been adjusted to ensure
maintenance of healthy cash balances.
During the quarter, the new auditor, Jeffreys Henry informed the
Company that, due to staffing losses, they would be unable to
undertake the Company's 2022 audit as well as a number of its other
existing clients. Accordingly, the Company has now appointed
Shipleys as its new auditor. The Company and Shipleys believe that,
despite the late notice from Jeffreys Henry, the audit can be
completed and audited statements signed off prior to 30 June 2023.
However, this is likely to potentially postpone this year's AGM
into the latter part of July 2023.
Leigh Creek Copper Mine ("LCCM")
Prior to Christmas, the Company executed an exclusive,
non-binding Heads of Agreement ("HoA") for funding the
re-commencement of operations at the LCCM project. The proposed
debt facility was with a specialist resource focused investor,
subject to technical due diligence and appropriate legal
documentation. While the project passed technical due diligence,
the Company also undertook to refresh anticipated costs and obtain
quotes from contractors to commence mining and processing
operations.
Whilst the Company was aware of the impact of cost rises in the
industry and was factoring an element of that into forecasts, the
refreshed firm cost/quote enquiries indicated further material
increases in mining costs. Despite copper prices and exchange rates
continuing to favour the LCCM project, the level of profitability
has been reduced and, while it remains attractive, the level of
profitability no longer supports the lending ratios associated with
a pure debt facility. This, combined with the particularly negative
sentiment in investment markets, saw the HoA no longer apply and
the Company entering into discussions with the investor on the
possibility of a mixed debt/equity approach. As the Company is no
longer bound by exclusivity constraints, the Company has also begun
revisiting parties that have previously shown an equity interest in
LCCM.
Part of the reduction in the Company's cash balance, during the
March quarter, reflects the circa US $30,000 spent as part of this
due diligence process.
As yet, there has been no correspondence from the South
Australia's Department of Energy and Mining (DEM) in relation to
the Programme for Environmental Protection and Rehabilitation
(PEPR) lodged in December 2022. The Company's staff remain in
contact with DEM concerning this lodgement and expect that this is
likely to be cleared sometime in the second quarter. It should be
noted that, at present, this is not time critical.
Cornwall Resources Limited ("CRL")
During the March quarter, as part of its involvement in the Deep
Digital Cornwall ("DDC") project, CRL was involved in:
-- An aerial survey over the Redmoor Tungsten and Tin Project
("Redmoor" or the "Project") which collected electromagnetic and
magnetic data. Initial processed data from the aerial survey is
expected to be available to project partners during the June
quarter.
-- Continued DDC soil sampling across its license area, with 500
soil samples shipped to testing laboratories in Ireland. A final
set of soil samples are expected to be shipped in the June
quarter.
-- Accessed equipment used to scan over 400m of existing drill
core from a previously reported borehole, CRD032. Initial analysis
highlights areas of interest within the borehole section, outside
of the existing resource, for follow up and further investigation.
This has the potential to expand the inferred resource without
additional drilling.
As previously noted, in December, CRL submitted an application
to Cornwall and Isles of Scilly Council ("CIoS") for grant funds
from CIoS's Shared Prosperity Fund to undertake the planned
development of Redmoor. 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.
The Company had expected to receive feedback on the application
during the March quarter. However, the assessment body is
continuing to review applications and the final review meeting is
now expected in late June. CRL has supplied additional information
which was recently requested and continues to respond to any
further queries. Currently, the Company considers it will be
informed of whether it is successful in receiving grant funding in
the September quarter.
While there can be no certainty on the allocation of a grant,
the Directors believe that the strategic nature of the Project
within East Cornwall provides reason to be confident that some
grant funding will be forthcoming.
Commenting, Jeffrey Harrison, Non-Executive Director of
Strategic Minerals, said:
" After seven years involvement with Strategic Minerals, five as
a Non-Executive Director, I am retiring as a director for personal
reasons.
"I will continue to support the Cornwall Resources Project, as a
consultant, as I remain passionate about the return of mining to
Cornwall and believe the Redmoor Tungsten and Tin project is a key
element of this revival.
"My thanks and greatest respect to my fellow Directors for their
considerable efforts over the years and I remain confident in their
ability to successfully carry forward SML's projects in the future
."
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"The Company has responded to the impact on Cobre sales from the
dip in US economic growth and reorganised overheads in line with
the still substantial revenues expected from Cobre in 2023.
"It has been disappointing to have come so far with a potential
debt funding of Leigh Creek only to have circumstances changed. We
continue to seek funding for Leigh Creek and feel that commodity
prices may yet enhance the project's profitability further.
"The Company now awaits the outcome of its grant application to
assess the scope of its operations at Redmoor in 2023.
"On behalf of the Board and Management at Strategic Minerals, we
would like to acknowledge the key role Jeff Harrison has played in
the development of the Redmoor Tungsten and Tin project in
Cornwall, along with his substantial contribution to the safety
culture within the Company and his operational advice in respect of
LCCM. Undoubtably, Jeff has played a key role in the revival of
mining in Cornwall and we hope to still call upon his vast
expertise, in a consulting capacity, in the future. We wish Jeff
all the very best in finally retiring."
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
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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END
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