Q1 Cobre Magnetite Sales and Cash Balance Update

RNS Number : 5647J

Strategic Minerals PLC

15 April 2020

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

15 April 2020

Strategic Minerals plc

("Strategic Minerals" or the "Company")

March Quarter 2020 Magnetite Sales and Cash Balances

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials , 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 March 2020.

Highlights

· Magnetite sales maintained with organic growth

· Underlying sales revenue growth of 8.8% year on year

· Sales activity continuing during copper mine suspension

· Protocols have been established to ensure effective zero contact between on-site personnel and trucks arriving at the site

· Arbitration verdict for dispute with major client expected no later than 30 May 2020

· Group cash balance of US $0.351m as at 31 March 2020

Sales update: Cobre magnetite tailings operations

Sales volumes at Cobre continued to improve during the quarter to March 31 2020. Due to the factory maintenance undertaken by two of Cobre's clients in the quarter to March 31 2019, the 2020 March quarterly sales performance is exaggerated when compared to the March quarter 2019.  However, the 8.8% increase in annual sales highlights the solid organic growth being generated at Cobre. This is a credit to its President, Clovis Hooper, and his tight- knit team.  As noted, sales revenue shown here for the annual period to 31 March 2020 excludes deposits received and forfeited by the major Cobre client.  As legal action has commenced in relation to this client, expectations for future sales growth are focused on those arising from new customers and other existing customers

Sales comparisons on quarterly and annual periods to 31 March 2020, along with associated volume details, are shown in the table below:

	Tonnage			Sales (US$'000)
Year	3 months to March	12 months to March		3 months to March	12 months to March
2020	12,953	45,998*		764	2,698*
2019	9,471	42,401		554	2,480
2018	21,646	92,351		1,423	6,228

* For comparison purposes, US $0.75m forfeited by the major Cobre client has been excluded from sales figures.

On Sunday 12 April 2020, the copper mine, where the magnetite stockpile operates from, temporarily suspended operations as a few employees tested positive for Covid-19.  While the incidence of the virus has not been considered widespread, the mine operator deemed it appropriate to undertake a temporary suspension of its operations.  However, because of the early introduction of social distancing at the magnetite stockpile, operations have been permitted to continue and protocols have been adopted to, effectively, operate with a zero contact both between on-site employees and with trucks arriving at the site. This is being achieved through arrangements, established by the Office Manager Stan Brown, for contactless provision of load dockets, forgoing of cleanliness inspections and communication with truck drivers through CB radios .

In this manner Southern Minerals Group LLC personnel and their clients can effectively ensure zero contact and responsible social distancing. Sales post 31 March continue in line with Company expectations.

Arbitration in relation to our claim under the contract with the major client continues to follow the timetable disclosed in the Company's Update released on 2 March 2020 with a result expected by 30 May 2020.

Financials and Operations

At 31 March 2020, the Group's non-restricted cash balance was US$0.351m (31 December 2019: US$0.520m). During the three months to 31 March 2020, the Company made payments of interest and a scheduled capital reduction payment of AUD 0.3m (circa USD 0.2m) which related to the purchase of the balance of Cornwall Resources Limited.

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

"During this period, the Company greatly appreciates both the continuity of activity at Cobre, due to its identification as an essential service provider, and the organic growth seen in sales over the past year.  We expect this growth trend to continue in 2020 despite the unusual market conditions. Operations at Cobre have always provided the highest level of safety for employees and these efforts have been lifted again to ensure all employees are safe in this work environment.

Our arbitration process remains on track and we expect a favourable outcome for the Company to be confirmed later in May.

Efforts continue to move our projects forward and, whilst the current environment has slowed the pace of some engagements, the Board and Management remain confident of future progress."

For further information, please contact:
Strategic Minerals plc		[phone]
John Peters
Managing Director
Website:	www.strategicminerals.net
Email:	[e-mail]
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SP Angel Corporate Finance LLP		[phone]
Nominated Adviser and Broker
Ewan Leggat
Charlie Bouverat

Notes to Editors

Strategic Minerals plc is an AIM-quoted, operating minerals company actively developing projects prospective for battery materials. It has an operation in the United States of America and Australia 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 being sought in the burgeoning electric vehicle/battery market.

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 orientated to supplying the burgeoning electric vehicle/battery market.

In January 2016, the portfolio was expanded with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia prospective for cobalt, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd. In September 2018, the Company entered contracts for the sale of certain CARE tenements identified as gold targets.

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.  This was completed on 24 July 2019.

In March 2018, the Company completed the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Austra lia and brought the project into production in April 2019.

 

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