Q2 Cobre Magnetite Sales and Cash Balance Update

RNS Number : 8838S

Strategic Minerals PLC

14 July 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.

14 July 2020

Strategic Minerals plc

("Strategic Minerals" or the "Company")

June 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 June 2020.

Highlights

· Excellent organic sales growth in the quarter despite Covid-19 impact on markets.

· Quarterly sales up 89% on quarter end June 2019 and 38% year on year.

· Sales activity continuing during copper mine suspension with effective zero contact on-site.

· Arbitration verdict with CV Investments confirms US $21.9m plus interest due under contract.

· SEC receiver appointed to CV Investments highlighting uncertainty of payment.

· Equity raising of £ 1.2m (US $1.422m net of fees).

· Repayment of NAE Redmoor loan of US $1.253m.

· Group cash balance of US $0.533m as at 30 June 2020.

Sales update: Cobre magnetite tailings operations

Sales volumes at Cobre continued to grow strongly in the June 2020 quarter, up a further 15% on the March 2020 quarter, which itself showed a 7% improvement on the December 2019 quarter results. Year on year sales at Cobre have shown an impressive increase of 89%.

Sales comparisons on quarterly and annual periods to 30 June 2020, along with associated volume details, are shown in the table below:

	Tonnage			Sales (US$'000)
Year	3 months to June	12 months to June		3 months to June	12 months to June
2020	14,733	52,593*		881	3,114*
2019	8,139	38,846		466	2,251
2018	11,646	89,599		695	6,001

* For comparison purposes, US $0.75m forfeited by the CV Investments has been excluded from sales figures.

Despite the suspension of mining activities at the adjacent copper mine, operations at Cobre continue to operate under protocols established to ensure contactless sales and have been successful in safeguarding both our employees and our clients to date.

At the end of May 2020, the arbitrator in relation to our dispute with CV Investments, confirmed that CV Investments had an obligation to pay US $21.9m plus interest under its contract.  The US Securities Exchange Commission, who had frozen the assets of CV Investments in relation to an investigation of a related entity, sought to appoint a receiver and subsequently appointed Kevin D. Kent, Esq of Conrad O'Brien 1500 Market Street, Central Square, West Tower, Suite 3900, Philadelphia PA. While the Board continues to pursue payment for breach of contract from CV Investment's receiver, it acknowledges that the amount of payment, if any, is highly uncertain at this time.

Financials and Operations

At 30 June 2020, the Group's non-restricted cash balance was US$0.533m (31 March 2020: US$0.351m). During the three months to 30 June 2020, the Company raised equity, net of fees, of US$1.422m and paid off the balance of the NAE loan associated with acquiring total control of the Redmoor project of AUD 1.821m (principal AUD1.800m and interest of AUD0.021m) - US$1.253m.  Additionally, during the quarter the Company invested circa US 0.180m in progressing its projects.

During the June quarter, the company submitted a draft program for environment protection and rehabilitation ("PEPR") to the South Australian government and has just received some initial feedback. While this does not appear to raise any major concerns, it does suggest that the current pandemic may have a delaying effect on the overall approval process. A noticeable increase in interest in the Leigh Creek project has been observed as the copper price has recovered to above pre-pandemic levels.  Not only do these higher prices support the long-term economic attractiveness of the project but they also highlight the economic potential for the project to enter into production within a year.  This makes the Leigh Creek Copper Mine one of the quickest, if not the quickest, near production copper project in the world.

In the June quarter at Redmoor, the team continued to work on processing and analysing historical data.  This is designed to strengthen our understanding of the resource and further develop the conclusions of the last Scoping Study to improve the robustness of the expected project economics to be used at the corporate level in discussions with potential joint venture partners.

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

"The encouraging performance at Cobre during the June 2020 quarter, particularly given the more challenging global overlay, has underwritten both operations and minimised funding required to repay the loan associated with taking full ownership of Redmoor.

The Company's key focus is on moving both the Leigh Creek and Redmoor projects forward in a manner that avoids dilution at the parent level. The strong copper price rebound, and sustained positive commodities outlook, bodes well for Leigh Creek's potential economic returns and strengthens its attractiveness to potential joint venture partners. Work by the Cornwall Resources team, during the quarter to June 2020, has helped to further emphasise that the Redmoor project is world class and the Board is in discussions with organizations to assist the Company secure a suitable joint venture partner to take the project forward to a Pre-Feasibility Study and beyond, while also confirming the credentials of and the inherent value of the Redmoor project. "

For further information, please contact:
Strategic Minerals plc		[phone]
John Peters
Managing Director
Website:	www.strategicminerals.net
Email:	[e-mail]
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
Facebook:	https://www.facebook.com/search/top/?q=strategic%20minerals%20plc
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 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 Austra lia and brought the project into production in April 2019.

 

END

 

 

UPDKZGMNMFLGGZZ