Results for the Year Ended 31 December 2019

RNS Number : 8597Q

Strategic Minerals PLC

24 June 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.

24 June 2020

STRATEGIC MINERALS PLC

("Strategic Minerals" or the "Company")

Financial Results for the Year Ended 31 December 2019

Financial Highlights

· Group 2019 before tax loss was $0.845m (2018: pre tax profit of $1.933m), and generated a marginal operating cash deficit of $0.013m (2018: operating cash surplus $0.971m).

· Impairment of $1.122m was made in relation to Central Australian Rare Earths Pty Ltd ("CARE"). Exclusion of this non-cash write off would result in a 2019 pre-tax operating profit of $0.277m (2018: pre-tax loss of $0.229m after excluding the non-cash recognition of the bargain LCCM purchase).

· Before tax profits for 2019 also include a non-cash share based payment expense of $0.275m (2018 $0.268m) and after excluding this and both the CARE impairment and the bargain LCCM purchase the 2019 pre-tax operating profit would be $0.552m (2018: pre-tax operating profit of $0.039m).

· Completion of the acquisition of the remainder (50%) of the Cornwall Resources Limited ("CRL") Redmoor Tin and Tungsten project. Funding provided by a vendor loan with regular capital repayments.

· Directors took up all remaining vested options and continue to support the stock in the open market.

· A capital raise producing $1.059m was completed in mid 2019 (2018: Nil).

· The Company continued a high level of investment in its projects including PPE in 2019 of $2.564m (2018: $2.817m). While a portion of this was funded by the capital raise and increase in net debt $0.194m (2018: Nil), $1.311m was funded by internal funds. As no equity or debt finance was undertaken in 2018, this highlights the investment, over 2 years, of $4.128m into investments from internal Company funds.

· First revenues achieved at Leigh Creek Copper Mine, ('LCCM") validating offtake arrangements.

· $1.113m received in R & D Tax Rebates which have been offset against the Development Asset and Deferred Exploration and Evaluation in accordance with the relevant IFRS standard (2018: Nil).

· Unrestricted cash position of the Group as at 31 December 2019 was $0.519m (2018: $1.840m).

Operational Highlights

· Continued strong underlying sales at Cobre of $2.488m (2018: $3.355m) despite cessation of payments from major client (2018 $0.506m) and a reduction in sales due to two clients having temporary operational issues in the first part of the year.

· Commencement of arbitration of in excess of $20m claim against Cobre major client for breach of magnetite sales agreement.

· For a limited period, operations were restarted at LCCM in April 2019 demonstrating operating capacity and identifying existing capacity constraints as a precursor to commencing full operations.

· Continued progress on, and submission of, a draft Program for Environment Protection and Rehabilitation ("PEPR") to the South Australian government to restart full operations at LCCM in 2020, subject to finance of circa $5.0m.

· Early 2019 announcement confirmed the world class potential of the Redmoor Tin and Tungsten project located in the historic tin mining region of Cornwall, United Kingdom. Drilling to date has indicated a resource of 11.7mt at a tin equivalent of 1.17% Sn (previously 4.5mt at 1.00% Sn) and has demonstrated potential to increase the resource, subject to further drilling.

· The Company continues to focus its strategy on metals and minerals likely to benefit from an expected boom in the battery market over the longer term.

Notice of Annual General Meeting

SML will hold its Annual General Meeting ("AGM"), at 10:00am on Tuesday 28 July 2020 a 27/28 Eastcastle Street, London W1W 8DH. Given the current Coronavirus (COVID-19) situation, and to ensure adherence to current Government requirements, attendance in person at the meeting will not be possible this year. Shareholders are requested to appoint the Chairman of the meeting as his or her proxy as any other person so appointed will not be permitted to attend the meeting. Shareholders are encouraged to submit any questions that they may have to the Company by using the "Contact Us" tool on the Company's website ( https://www.strategicminerals.net/contact-us.html ) and the Company will seek to answer these, where possible, as part of the Chairman's comments at the AGM.

Copies of the Annual Report and accounts for the year ended 31 December 2019, together with the Notice of Annual General Meeting ("AGM"), will be posted to shareholders this week.

For further information, please contact: Strategic Minerals plc		+61 (0)414 727 965
John Peters
Managing Director
www.strategicminerals.net

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SP Angel Corporate Finance LLP		+44 (0)20 3470 0470
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 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.

The Company, in March 2019, entered into arrangements to acquire the balance of the Redmoor Tin/Tungsten project in Cornwall, UK.

STRATEGIC MINERALS PLC

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FORWARD-LOOKING STATEMENT

This Report and Financial Statements for the year ended 31 December 2019 ("Annual Report") contains 'forward-looking information', which may include, but is not limited to, statements with respect to the future financial and operating performance of Strategic Minerals Plc, its subsidiaries, production and exploration operations and affiliated companies, the future price of magnetite/iron ore, the estimation of mineral resources, the realisation of mineral resource estimates, costs of production, capital and exploration expenditures, costs and timing of the development of new deposits, costs and timing of the development of new mines, costs and timing of future exploration, requirements for additional capital, governmental regulation of mining operations and exploration operations, stockpile and tailings dam operations, timing and receipt of approvals, licenses, permits, conversions and ongoing approvals to operate exploration activities, stockpile and tailings dam operations under the United States of America, Australia and other applicable mineral legislation and environmental legislation, environmental risks, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters.

Often, but not always, forward-looking statements can be identified by the use of words such as 'plans', 'expects', 'is expected', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates' or 'believes', or variations (including negative variations) of such words and phrases, or state that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved. Forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strategic Minerals Plc and/or its subsidiaries, investment assets and/or its affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; stockpile processing/tailings dam operations; conclusions of economic evaluations and studies; fluctuations in the value of UK pounds sterling relative to the United States Dollar, Australian Dollar and other foreign currencies; changes in project parameters as plans continue to be refined; future prices of magnetite/iron ore; possible variations of ore grade or recovery rates; failure of plant, logistics providers, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, insurrection or war; the effect of illness on labour force availability and turnover; delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although Strategic Minerals Plc has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may well be other factors that cause actions, events or results to differ from those currently anticipated, estimated or intended.

Forward-looking statements contained herein are made as of the date of this Annual Report and Strategic Minerals Plc disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

STRATEGIC MINERALS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2019

I am pleased to present Strategic Minerals Plc's Annual Report for the year ended 31 December 2019 The Company continues to follow the strategy laid out by the Board and has undertaken and developed projects that are focused on metals and minerals expected to be sought in bourgeoning battery market. The Group continues to invest heavily in its projects while undertaking minimal shareholder dilution.

The Group made a total comprehensive after tax loss of $1.003m as compared to a comprehensive after tax profit in 2018 of $0.788m.

The Group had unrestricted cash of $0.519m as at 31 December 2019 (2018: $1.840m).

In 2019, the Company recommenced limited operations at Leigh Creek Copper Mine Pty Ltd ("LCCM") and acquired the balance of the joint venture vehicle Cornwall Resources Limited ("CRL") which holds the Redmoor Tin and Tungsten Mine.

Due to the activity associated with CRL and LCCM, activities at Central Australian Rare Earths Pty Ltd ("CARE") were limited. After an assessment of the carrying value of the CARE, the book value of the CARE assets have been fully impaired ($1.122m) as at 31 December 2019. CARE remains part of the board's strategic plans, as noted in the infographic below, but in the near to medium term it sits behind our other three key projects.

During the year, the Company's highly experienced team executed the restart of LCCM's operations with the retreatment of heaps which resulted in a significant de-risking of the project by successfully proving the production process. The retreatment of the heaps also culminated in the production and sale of copper in an at specification cement product. After taking into account the outcomes of the retreatment process the Company completed a 300 tonne per month feasibility study which reassured the Board of the attractiveness of proceeding with the project. Since the end of the financial year the Company has lodged a draft Program for Environment Protection and Rehabilitation ("PEPR") application with the South Australian government for the commencement of mining of the Paltridge North deposit, situated at the Mountain of Light processing plant area. The Board continues to be excited with the LCCM acquisition, having obtained 24,900t of JORC compliant copper metal at less than USD 100 a tonne and believes that, subject to finance, the project will move into production at the end of 2020 providing a much sought after second income stream.

The acquisition of the balance of CRL is consistent with the Board's strategy of achieving a balanced portfolio of cash generating, near term cash generating and exploratory projects with good exposure to the battery market that provide the Company the opportunity to develop projects from internally generated cash flows with minimum equity dilution (shown graphically as follows). It is noted that, as a result of the contract dispute at Cobre, and the concomitant reduction in cash flow, funding has been prioritised to the nearer term cash flow generating projects, specifically Leigh Creek and Redmoor.

In early 2019 an updated resource statement was published by CRL that indicated the inferred resource at Redmoor had significantly increased to 11.7mt at a tin equivalent (SnEq) of 1.17% (previously 4.5mt at 1.00% SnEq).

The improvement in inferred resource represented increases, since the previous March 2018 resource estimate, of 200% in contained metal, 160% in resource tonnes and 17% in the tin equivalent grade. Which, when put in a global context as shown in the chart below, which potentially makes it one of the world's premier undeveloped tin/tungsten mine prospects.

In line with the release of the updated resource statement, the Board considered it an opportune time to acquire the balance of the equity in CRL and on 18 March 2019 announced the acquisition of the balance of CRL shares for cash of AUD $3m and a capped royalty/deferred payment from Redmoor of AUD $2m. The Board believes this project has the potential to produce a world class mining operation and has begun discussions with mining investment houses who have indicated an interest to be involved once prefeasibility and bankable feasibility studies are complete. Due to deteriorating capital market conditions during 2019, the Board negotiated the transfer of CRL to the Company and provision of vendor finance in relation to cash payments.

2019 has proven to be a challenging year for the Company due to deteriorating capital market conditions and the extraordinary challenges to world markets in 2020, due to Covid-19. The priority has been the safety and health of our people and the continued resilience of the Group's operations. Despite these challenges the demand for product from our Cobre operations remains steady and the Company is in a position to move forward with operations at LCCM and the exploration and development of Redmoor. The uncertainty in the global capital and commodity markets will continue to cause difficulties in raising funds to progress the projects but the underlying economics and value remain strong. The continued cashflow from our Cobre asset along with the developed nature of our projects, puts the Company in a good position to benefit from an improvement in world markets. A concluded fund raise in early June now reassures the Company of its ability to repay the balance of the Redmoor acquisition by its due date of 26 June 2020.

I look forward to working with my fellow Directors and the staff of the Company to ensure that the 2020 financial year delivers both operating and project growth for the Company.

Finally, I would like to acknowledge the support of our shareholders, suppliers and other stakeholders and I look forward to your continued support during 2020 and beyond.

Alan Broome AM

Chairman

24 June 2020

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2019

The Directors of the Company and its subsidiaries (which together comprise the Group) present their Strategic Report on the Group for the year ended 31 December 2019.

Financial Performance

The Company and the Group's reporting currency is US dollars reflecting that, previously, the Group's revenues, expenses, assets and liabilities were predominately in US currency and, currently, the bulk of revenues continue to be sourced in US dollars.

The Group made a before tax operating loss for the 2019 financial year of $0.845m (2018: before tax operating profit $1.933m) which, after making allowance for exchange rate movements, produced a total comprehensive after tax loss of $1.003m (2018: comprehensive after tax profit $0.788m). The loss in 2019 largely reflects the non-cash impairment of $1.122m (2018: nil) in relation to the Central Australian Rare Earths Pty Ltd ("CARE") and its tenement holdings This has been ameliorated by the continued profitable performance of the Company's subsidiary, Southern Minerals Group LLC ("SMG") which operates the Cobre mine.

Before tax profits for 2019, after adjusting for non-cash expenses for both the CARE impairment ($1.122m) and share based payments ($0.275m) would represent a 2019 pre-tax operating profit of $0.552m. In 2018, the comparable pre-tax operating profit would have been $0.039m, after adjusting for non-cash items profit on bargain LCCM purchase ($2.162m) and share based payment expense (2018 $0.268m).

During the year, the Company made significant investments into its development projects as follows:

a) Leigh Creek Copper Mine Pty Ltd ("LCCM") a near production brownfields copper oxide project in the North Flinders Ranges in South Australia. During 2018, the Company acquired LCCM for $2.338m (AUD $3.0m) by a combination of cash $1.214 (AUD $1.550m) and the issuance of shares $1.124m (AUD $1,450m) and in 2019, invested a further $2.558m in recommencing limited production in 2019 and preparing a PEPR submission for commencement of full scale operations in 2020.

b) Acquired the balance of Cornwall Resources Limited ("CRL") a brownfields tin/tungsten project in Cornwall, Englandfor AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time). Apart from the acquisition, during 2019 the Company invested $0.193m to support operations.

c) Activity at CARE, a company holding a number of greenfields exploration tenements in Western Australia prospective for Cobalt, Nickel Sulphide and Rare Earths, were curtailed in order to direct funding to both LCCM and CRL.

As a result of its investment activities, the Company received $1.113m in R & D Tax Rebates which have been offset against the Development Asset and Deferred Exploration and Evaluation in accordance with the relevant IFRS standard (2018: Nil).

Group overheads for 2019 of $2.266m were maintained in line with last year's levels ($2.324m in 2018). The Board and management continue to closely monitor overheads and administration costs to ensure they are appropriately in line with operations. In line with tighter conditions, the Board and management agreed to a 25% reduction in remuneration from 1 October 2019.

SMG has now absorbed its previous tax losses and has become a tax paying entity. In line with this, the Company incurred a tax expense of $0.385m (2018: $0.460m) for the year. However, the remainder of the Group continues to generate tax losses.

Cash at the end of the year was $0.519m (2018: $1.840m). This was due to net cash outflows from operations for the year of $0.013m (2018: inflows $971) which was reduced mainly due to the loss of a key customer. Investing activities for the year was $2.564m (2018: $2.817m) and financing activities were $1,253m (2018: nil) mainly due to a net capital raise of $1.059m supporting by net proceeds from loans of $0.194m.

PROJECT REVIEW AND ACTIVITIES

Cobre Performance

The 2019 year continued to be a profitable year for domestic sales at Cobre despite a reduction in sales as compared to last year. A total of 42,517 short wet tons of magnetite were sold resulting in $2.488m in sales compared to 2018 when 54,565 short wet tons were sold for $3.350m. Operations at the mine continue to be closely managed while still ensuring adequate service to customers and safe operating conditions.

Other Revenue of $900k reflects the reversal of cash prepayments from SMG's major client which did not result in physical movement of material and could be released to the income statement in line with the terms of the underlying contract.

In light of the failure of SMG's major client to fulfil its minimum obligations under its sales contract with SMG, SMG issued the major client with a letter of demand and has, as required under the contract with the major client, entered into arbitration. The appointed arbitrator has indicated a timing of late May 2020 to rule on the arbitration. While SMG is seeking in excess of $20m for the breach of this contract, it is uncertain as to the capacity of the major client to pay any amount deemed appropriate by the arbitrator.

SMG's formal access to the Cobre mine magnetite stockpile has now been extended until March 2021 making this the eighth roll over to date. The Company is currently unaware of any likelihood that SMG's access to the magnetite stockpile at Cobre will not be rolled over in the future.

SMG continues to have an exemplary safety record and has developed an enviable culture that reinforces the highest of safety standards.

Leigh Creek Copper Mine Pty Ltd ("LCCM")

On 6 March 2018, the Company acquired LCCM which holds the mining rights to a copper mine in the Flinders Ranges of South Australia.

The LCCM project is a historically mined copper oxide deposit based close to one of the world's largest copper producers (Olympic Dam and Prominent Hill) and is located in the northern Flinders Ranges of South Australia which has been a source of copper since the 1880s. The South Australian government has a stated policy to assist in making this the third largest copper producing area in the world.

LCCM has three approved Mining Leases that cover a number of copper oxide deposits, including Lorna Doone, Lynda, Mountain of Light (Rosmann East and Paltridge North) and the Mount Coffin deposit. All the Mineral Resources are contained within the Mining Leases.

The previous owners completed a JORC 2012 compliant Mineral Resource estimate on Lynda, Lorna Doone and Paltridge North deposits in 2016. A total resource of 3.61mt @ 0.69% copper for 24,900 of copper metal forms the base of the project and includes the following Resource category breakdown.

Inferred			Indicated		Total Resource
Deposit	Tonnes	Copper Grade	Tonnes	Copper Grade	Tonnes	Copper Grade	Copper Metal (tonnes)
Paltridge North	41,000	0.49%	879,000	0.82%	920,000	0.81%	7,400
Lynda	-	-	1,349,000	0.65%	1,349,000	0.65%	8,800
Lorna Doone	66,000	0.68%	1,280,000	0.65%	1,346,000	0.65%	8,700
Total	107,000	0.61%	3,508,000	0.69%	3,615,000	0.69%	24,900

An existing heap leach and copper processing facility is located at the Mountain of Light deposit (adjacent to Rosmann East and nearby Paltridge North) and has been in care and maintenance since 2012. The treatment plant treats the copper solution extracted via a standard heap leach pad into a copper cement (>70% Cu) via two existing Kennecott cones. The Mountain of Light Processing plant is 100% owned by LCCM. Refurbishment works to the plant began in 2018 and the plant became operational in April 2019.

The region around the project has excellent infrastructure with a modern town (Leigh Creek), sealed airstrip, sealed and all-weather roads, power and water utilities.

In addition to the Mining Leases, two approved Exploration Leases, covering an area of 686km² in the northern Flinders Ranges, are included in the project. These provide excellent opportunities for exploration of new copper oxide resources.

Copper prices have performed excellently during 2018 and into 2019. This reflects an ongoing general decline in mine grades of existing projects and increasing challenges for exploration success, which places copper as a strategically attractive commodity. This trend continued into early 2020 until impacts of Convid-19 shattered world markets. The Board remains confident of a resumption of attractive copper prices at some time in the near future.

In the first half of 2019, considerable effort was employed to restart limited operations at LCCM through the retreatment of existing heaps. This culminated in our first sale of product as announced in early May 2019. However, due to the high cost of production and the poor yield from previously utilised heaps, production only continued for a few months. Since that time, the Company has focused on obtaining the approvals and funding required to take the project into production by the end of 2020 and has now lodged a draft PEPR application with the South Australian government which should, subject to finance, see full operations commence in Leigh Creek before the end of 2020.

The undertaking of a limited restart was important as it:

· Demonstrated the capacity of the plant to operate and identified future capacity constraints that needed addressing prior to achieving production levels in excess of 150t per month.

· Proved that metallurgical assessment of the material was correct.

· Accessed and demonstrated the operations of LCCM's offtake agreement. This agreement is for all planned copper production of up to 300 tonnes per month from the LCCM project.

· Identified to the South Australian government our intent to develop this mine in a depressed area of the state.

Cornwall Resources Limited - Redmoor Tin/Tungsten Project

In July 2019, SML acquired from its joint venture partner, New Age Exploration Limited ("NAE"), the balance of the joint venture vehicle, Cornwall Resources Limited ("CRL").

On 14 February 2019, CRL released assay results which exceeded Management's expectations and led to a resource update being published. This resource update demonstrated that the overall inferred resource had increased from 4.5m tonnes at a tin equivalent ("SnEq") of 1.00% to 11.7m tonnes at 1.17% SnEq. The result is a 200% increase in contained metal, 160% in resource tonnes and 0.17% in the tin equivalent grade.

Not only has the resource been significantly expanded but, as shown in the diagram following, the mineralisation has been discovered in discrete locations giving rise to the ability to tailor mining and processing to preferred mineralisation at the time of extraction.

It is as a result of these excellent grades that the Company moved to acquire full ownership of CRL which was completed in July 2019. SML settled the acquisition of the other 50% of CRL for AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time) with half of the royalty payable on a net smelter revenue of AUD $50m and the balance on a net smelter revenue of AUD $100m.

During 2020, the CRL team has continued, and will continue, to develop the world class resource at Redmoor, by building awareness of the project, building/maintaining relationships with stakeholders (including landowners) and generating strategies to obtain the greatest value for the Company's investment. An option to complete a limited exploration drilling program aimed at testing the potential to expand the significant resource already developed is being assessed.

Central Australia Rare Earth Pty Ltd ("CARE") Tenements

Due to cash demands on the Company associated with the development of LCCM and the acquisition of the other 50% of CRL, the Company minimised expenditure on CARE during 2019. Having assessed the carrying value of this asset, the Company has impaired the full value of CARE holding in the Company's books ($1.122m). The Company considers that there may still be substantial value in these tenements but acknowledges that it may take time to realise this value.

Safety

The Company is pleased to report that, during 2019, there were no safety incidents (2018: one) across its operations in United States, England and Australia. The late 2018 safety incident at LCCM resulted in a prohibition notice which was subsequently lifted and incurred no environmental, regulatory, or other operation violations.

Board and Management Changes

There has been no change to the composition of the Board during 2019 and the current Board does not currently envisage a need for change. Management changes have been made in line with normal operations although all such changes are based around consultancy, rather than direct employment contracts.

Key Risks and Uncertainties

The management of the business and the execution of the Group's strategy are subject to a number of risks. Strategic Minerals regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact. There is the possibility that if more than one event occurs, that the overall effect of such events would compound the possible adverse effects on the Group.

Our principal risks and uncertainties are as follows:

Strategic risk

Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, the Group may be unable to acquire rights to exploit additional revenue generative assets such as Cobre and attractive mining development properties such as CRL and LCCM on terms it considers acceptable. Accordingly, there can be no assurance that the Group will acquire any interest in additional operations that would yield reserves or result in commercial mining operations. The Group expects to undertake sufficient due diligence where warranted to help ensure opportunities are subjected to proper evaluation.

Reserve and resource risk

The Mineral reserve and resource relating to CRL and LCCM are only estimates and no assurance can be given that the estimated reserves and resources will be recovered or that they will be recovered at the rates estimated. Reserve and resource estimates are based on sampling and, consequently, are uncertain because the samples may not be representative. Reserve and resource estimates may require revision (up or down) based on future actual production experience. The discovery of mineral deposits is dependent upon a number of factors including the technical skill of the exploration personnel involved.

The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. There can be no guarantee that a mineral deposit will be economically viable. The Group undertakes studies in order to mitigate this risk.

Commodity prices and currency risk

Although the Group's strategy is primarily focused on localised markets which minimises the impact of global commodity prices, global commodity prices will generally affect the markets in which it operates. Fluctuations in commodity markets are affected by numerous factors beyond the Group's control, including global demand and supply, international economic trends, currency exchange fluctuations, expectations for inflation, speculative activity, consumption patterns and global or regional political events. In addition, the COVID-19 pandemic may increase price volatility. The aggregate effect of these factors is impossible to predict. Fluctuations in commodity prices, over the long term, may adversely impact the returns of the Group's investments. The Group monitors commodity prices and structures its portfolio of assets with commodities that are likely to appreciate in the medium to long term.

The Group reports its results in US Dollars, whilst the functional currency of the parent company from which the Group derives the majority of its funding is Pound Sterling. This may result in additions to the Group's reported costs. Fluctuations in exchange rates between currencies in which the Group invest, reports or derives income may cause fluctuations in its financial results that are not necessarily related to the Group's underlying operations. The Groups converts funds to a currency in which funds will be utilised on an as needed basis.

Dependence on key personnel risk

The Group and Company are dependent upon the executive and local management teams. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on the Company's ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. The Group incentivises executives and management with market based remuneration packages, short term and long term incentive schemes.

Operational risk

Mining operations are subject to hazards normally encountered in exploration, development and production. These include unexpected geological formations, rock falls, flooding, dam wall failure and other incidents or conditions which could result in damage to plant or equipment, people, or the environment and which could impact any future production throughput. Although it is intended to take adequate precautions to minimise risk, there is a possibility of a material adverse impact on the Group's operations and its financial results. The Group will develop and maintain policies appropriate to the stage of development of its various projects.

Funding risk

Strategic Minerals needs funds, both to manage its working capital requirements and fund new projects, as the Company seeks to grow. If the Company is not able to obtain sufficient financial resources, it may not be able to develop new projects. There can be no assurance that such funds will continue to be available on reasonable terms, or at all in the future. The Directors regularly review cash flow expenditure requirements and the cash flow generated from its Cobre operation to ensure the Group can meet financial obligations as and when they fall due. Covid 19 has placed additional risk around the ability of the Group to access capital and debt markets.

Uninsurable risk

The Group may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts which exceed policy limits.

Customer risk

The level of profitability of the Group is currently dependant on the performance of the Company's Cobre operation in the United States. The Cobre operation has a number of major customers and should one or more of these customers choose to not to purchase product it may have a substantial impact on the performance of the Group. The Group continues to look for additional customers at Cobre to address this risk and in addition will develop other projects such as Leigh Creek Copper Mine to reduce the risk of dependence on any one customer.

Coronavirus Pandemic Risk.

The implications of the COVID-19 pandemic remain difficult to predict given the evolving nature of this issue and the varying reactions of governments around the world. The Board and management are continually reviewing the potential implications and the contingency planning that the Group can invoke to mitigate the risk. At the Company's Cobre operation the company introduced a policy whereby drivers of trucks picking up material do not exit the vehicle on site and screens have been put up for the transfer of documents to protect staff. A working at home policy has been introduced at the Company's operations in the United Kingdom and Australia, in line with those country requirements. The company is actively talking to advisors and potential partners to move the Company's projects forward.

Product risk

The Group has a contract for access to magnetite iron ore at the Cobre operation which automatically renews on the 1 March of each year unless either party terminates the agreement 30 days prior to renewal. There is a risk that the supplier may terminate the agreement in which case the Group would no longer have product to sell. So as to minimise this risk to the Group's management actively engages with its supplier throughout the year to proactively address any concerns that the supplier may raise.

An off take arrangement is in place for the LCCM project which is subject to minimum product specifications. The Company was able to produce at specification material in its recent retreatment of heaps thereby substantially reducing the product specification risk.

Key Performance Indicators

The Board monitors the activities and performance of the Group on a regular basis. The principal KPIs monitored by the Company are domestic sales of product from Cobre, the cash position of the Group, the investment in project activities, the share price of the Company and the health, safety and environmental incidents of the Group.

The sales of domestic product at Cobre have been impacted by the major SMG client not honouring their contract to acquire a minimum monthly purchase (4,000 short wet tons) and has led to SMG seeking compensation for this through arbitration.

The unrestricted cash position of the group as at 31 December 2019 was $0.519m which decreased by $1.321m from the previous year, principally as a result of the increased investment in project activities which saw a net $3.080m (2018: $2.817m) invested in LCCM, CRL and CARE.

The share price of the Company at year end was 0.68p (2018: 1.30p). Directors have indicated their confidence in the future performance of the Company through on market acquisition of shares along with their take up of all vested options.

Strategy

In early 2016, the Company adopted a strategy emphasising both an operating and investment strategy which is continued today.

The Operating Strategy is centred on maintaining and improving cash flows from the Company's magnetite stockpile at the Cobre mine in New Mexico, USA, whilst also limiting corporate overheads in line with this profitability, thus ensuring operating self-sufficiency.

The Investment Strategy is built around a three-pronged approach focused on supplying the burgeoning battery materials market. The strategy features bulk commodities with offtake arrangements, advanced materials with expected improvement in demand (Rare Earths, Cobalt, Graphite etc) and metals with expected pricing improvements over the next three to five years (Nickel Sulphide, Lithium etc).

The Company is well positioned to execute its plans to restart full LCCM production and commence a Pre-Feasibility Study at Redmoor, subject to available funds and improvement in commodity markets.

Outlook and Prospects

The Company continues to maintain controls on its overheads, is focused on restarting production at Leigh Creek, expanding Cobre's profitable domestic sales, developing its wholly owned Redmoor Tin and Tungsten mine and undertaking a strategic review of potential future sale of the CARE tenements

The Board is confident that the outlook for the Company is encouraging having weathered trying times in 2019 and early 2020. The June 2020 capital raising ensures the Company's capacity to meet its commitment on the final payment for Redmoor (AUD $1.8m), due at the end of June, and to explore both joint venture and debt style funding to progress LCCM, Redmoor and CARE. The low holding cost of these projects, the June 2020 capital raising and the strong cash flow stream from Cobre, provides the Company the timing luxury to extract maximum value from these investments.

Current expectations are that funding for LCCM can be sourced in line with the completion of the PEPR process and that production can commence prior to the end of 2020. With regard to the Redmoor project, expected time frames here are longer with the next goal being the preparation of a pre-feasibility study to be followed by a bankable feasibility study. This is expected to take 4 to 5 years to complete both.

The start of 2020 has proven to be a challenging year for the Company due to deteriorating capital market conditions and the challenges to world markets due to Covid-19. A more detailed analysis of the impact of COVID 19 is include as part of the corporate governance statement.

Directors' section 172 statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's employees and other stakeholders, the impact of its activities on the community, the environment and the Company's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term. We explain in this annual report, and referenced below, how the Board engages with stakeholders.

Likely consequence of any decision in the long term

The Chairman's Statement on page 1 and 2, Strategic Report at pages 3 to 6 and, Business Strategy at page 5 and the Corporate Governance Statement under Principal 1 at page 15 set out the Company's long term rationale and strategy.

Interests of employees

The Employee section of the Company's Corporate Governance Statement on page 16 of this Annual Report sets out the Company processes in place to safeguard the interests of employees.

Foster business relationships with suppliers, customers and others

The Company's approach to business relationships with business relationships with stakeholders are set out in the Company's Corporate Governance Statement on page 16 of this Annual Report. The Company's approach to Shareholders is set out in the Corporate Governance Statement at page 15.

Community and environment

The Company's approach to the community is set out in the Corporate Governance Statement at page 16 and to the environment at page 19.

Maintain high standards of business conduct

The Corporate Governance Statement of this Annual Report at pages 15 - 20 sets out the Board and Committee structures and extensive Board and Committee meetings held during 2019, together with the experience of executive management and the Board and the Company's policies and procedures.

Act fairly between shareholders

The Corporate Governance Statement of this Annual Report at pages 15 sets out the process the Company follows to ensure it all shareholder interests are preserved and enhanced.

Principal decisions by the board during the period.

We define principal decisions as both those that have long-term strategic impact and are material to the Group, but also those that are significant to our key stakeholder groups. In making the following principal decisions, the Board considered the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company:

a) Control of CRL

During the period the Company agreed to acquire the remaining 50 per cent of CRL which holds the Redmoor Tin/Tungsten project for AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time). The Board believes that the acquisition is aligned with the Company's strategy it provides access to a one of the world's premier undeveloped tin/tungsten projects. It provides the Company with the greater control and optionality moving forward in the development of this advanced stage project for the benefit of all its stakeholders.

b) Leigh Creek Copper Mine progressed

During the period the Company decided to retreat the heaps at its LCCM project and complete a feasibility study. The decision to progress the project has allowed the Company to apply for a draft Program for Environment Protection and Rehabilitation ("PEPR") application with the South Australian government. The progression of the LCCM project is in the interest of the its shareholders, communities and suppliers associated with the project

In making the above principal decisions, the Directors believe that they have considered all relevant stakeholders, potential impact and conflicts, the Company's business model and its long-term strategic objectives, and have acted accordingly to promote the success of the Company for the benefit of its members as a whole.

The Strategic Report was approved and authorised for issue by the Board of Directors and was signed on its behalf by:

John Peters

Managing Director

24 June 2020

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2019

The Directors present their report and the audited financial statements for Strategic Minerals Plc ("the Company") and its wholly owned subsidiaries ("the Group") for the year ended 31 December 2019.

PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Company is a public limited company registered in the UK whose registered office is 27/28 Eastcastle Street, London, W1W 8DH.

The Principal activity of the Company is a holding company. The principal activity of the Group is the exploration, development and operation of mining projects.

A review of the Group's business during the financial year and its likely development is given in the preceding Chairman's Report and Strategic Review.

RESULTS AND DIVIDENDS

The Group recorded a loss after taxation for the year of $1,230,000 (2018 profit $1,473,000).

The Directors do not propose to recommend any distribution by way of dividend for the period ended 31 December 2019.

DIRECTORS

The Directors who served the Company during the period and prior to the release of this report were as follows:

Current Directors

Alan Broome

John Peters

Peter Wale

Jeffrey Harrison

(appointed 2 July 2015)

(appointed 21 January 2015)

(appointed 12 July 2016)

(appointed 7 February 2018)

DIRECTORS' INTEREST IN SHARES AND OPTIONS

The persons who held office during the year or at the year-end had the following interests in share capital and options of the Company as detailed below.

The following are the shares held as at the reporting date and as at 31 December 2019 for all Directors and their related parties:

Director	Shares held at reporting date	Shares held 31 December 2019	Shares held 31 December 2018



Peter Wale	58,017,266	58,017,266	50,359,467
John Peters	57,000,000	53,535,714	34,500,000
Alan Broome	6,147,319	6,147,319	4,647,319
Jeffrey Harrison	1,669,642	1,669,642	812,500

The following are the options held as at the reporting date and as at 31 December 2019 for all Directors:

Director	Options held at reporting date	Options held 31 December 2019	Options held 31 December 2018	Exercise Price pence	Performance milestone 5 day VWAP pence	Expiry Date	Grant Date

Alan Broome	-	-	1,500,000	1.00	3.00	30/06/2019	6/01/2017
Alan Broome	24,000,000	24,000,000	24,000,000	2.75	5.50	30/06/2020	15/02/2018
Alan Broome	11,000,000	11,000,000	11,000,000	3.75	7.50	30/06/2021	15/02/2018
Alan Broome	5,000,000	5,000,000	5,000,000	5.00	10.00	30/06/2022	15/02/2018
John Peters	-	-	8,000,000	1.00	3.00	30/06/2019	10/04/2015
John Peters	-	-	8,000,000	1.00	3.00	30/06/2019	6/01/2017
John Peters	36,000,000	36,000,000	36,000,000	2.75	5.50	30/06/2020	15/02/2018
John Peters	16,500,000	16,500,000	16,500,000	3.75	7.50	30/06/2021	15/02/2018
John Peters	7,500,000	7,500,000	7,500,000	5.00	10.00	30/06/2022	15/02/2018
Peter Wale	12,000,000	12,000,000	12,000,000	2.75	5.50	30/06/2020	15/02/2018
Peter Wale	11,000,000	11,000,000	11,000,000	3.75	7.50	30/06/2021	15/02/2018
Peter Wale	5,000,000	5,000,000	5,000,000	5.00	10.00	30/06/2022	15/02/2018
Peter Wale	12,000,000	12,000,000	12,000,000	2.75	5.50	30/06/2020	9/08/2018
Jeffrey Harrison	12,000,000	12,000,000	12,000,000	2.75	5.50	30/06/2020	9/08/2018
Jeffrey Harrison	5,500,000	5,500,000	5,500,000	3.75	7.50	30/06/2021	9/08/2018
Jeffrey Harrison	2,500,000	2,500,000	2,500,000	5.00	10.00	30/06/2022	9/08/2018

DIRECTORS' REMUNERATION AND SERVICE CONTRACTS

Under their respective service contracts the officers of the company received fees as detailed in the Directors' Remuneration table in Note 7.

SUBSTANTIAL SHAREHOLDERS

As at 19 June 2020 shareholdings of 3% or more of the issued share capital notified to the Company were:

	Number of 0.1p ordinary shares	Percentage of issued share capital
Charles and Alexandra Manners	78,630,742	4.53
Peter Wale	58,017,266	3.35
John Peters	57,000,000	3.29

Based on the total issued share capital of 1,734,297,949.

POLITICAL CONTRIBUTIONS

There were no political contributions made by the Group during the year ended 31 December 2019 (2018: Nil).

INFORMATION TO SHAREHOLDERS - WEBSITE

The Company has its own website (www.strategicminerals.net) for the purposes of improving information flow to shareholders, as well as to potential investors.

GOING CONCERN

The Directors have given careful consideration to the Group and Parent Company's (together "the Group") ability to continue as a going concern through review of cash flow forecasts prepared by management for the period to 30 June 2021 and a review of the key assumptions on which these are based and sensitivity analysis.

The Group cut costs during 2019 to reduce its overhead expenditure and is maintaining vigilance in preserving cash in response to depressed market conditions due to Covid-19 and its associated impact on commodity prices and capital markets.

The Group included in its cash flow forecast the June 2020 capital raise being primarily for the settlement, in June 2020, of the outstanding loan to New Age Exploration Ltd (NAE) which is currently AUD $1.8m (approximately US$1.2m). After repayment of the NAE loan, the Company forecasts that it has sufficient funds until June 2021 however the Group is reliant on cash being generated from the Cobre asset in line with forecast which includes the assumption that access to the Cobre asset will be rolled over in March 2021 as it has since entering into the underlying offtake agreement. Should Cobre not meet cash expectations the Directors would need to raise further funds.

However, there is a risk that, due to the impact of Covid-19 on global markets, a greater degree of uncertainty currently exists in relation to cashflows from Cobre being generated in line with forecast and the ability to raise additional funds if these are required. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

In the event that the further funds are required, the Directors have reasonable expectation that the Group will have access to sufficient resources by way of debt or equity markets. Consequently, the consolidated financial statements have been prepared on a going concern basis.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

INDEMNITY OF OFFICERS

The Group currently maintains insurance to cover against legal action brought against its Directors and officers. It evaluates on the appointment of new directors whether an indemnity from the Company for the actions of previous directors is warranted. However, the Group may purchase and maintain, for any Director or officer, insurance against any liability in the near future pending the evolution and complexity of any further new projects undertaken by the Company.

FINANCIAL RISK MANAGEMENT

Refer to Note 3 to the financial statements for further details.

EVENTS AFTER THE END OF THE REPORTING PERIOD

Refer to Note 30 to the financial statements for further details.

PUBLICATION OF ACCOUNTS ON COMPANY WEBSITE

Financial statements are published on the Company's website. The maintenance and integrity of the website is the responsibility of the Directors. The Directors' responsibility also extends to the financial statements contained therein.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the Directors, at the time of approval of their report, are aware:

· there is no relevant audit information of which the Group's auditors are unaware; and

· the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

AUDITORS

In accordance with section 489 of the Companies Act 2006, a resolution proposing that BDO LLP be reappointed as auditors of the Group will be put to the Annual General Meeting.

By order of the Board

John Peters

Director

24 June 2020

STATEMENT OF DIRECTORS' RESPONSIBILITIES

FOR THE YEAR ENDED 31 DECEMBER 2019

The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether the Group and parent Company financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

WEBSITE PUBLICATION

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website (www.strategicminerals.net) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

STRATEGIC MINERALS PLC

CORPORATE GOVERNANCE STATEMENT

Board of Directors

The aim of the Board is to function at the head of the Group's management structures, leading and controlling its activities and setting a strategy for enhancing shareholder value. Regular meetings are held to review the Group's forward planning. The Board currently consists of a Non-Executive Chairman, a Managing Director, an Executive Director and a Non-Executive Director.

The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Company and the interests of its shareholders and, in 2018, formally adopted The QCA Corporate Governance Code (the 'QCA") after noting that it had, effectively, implemented its content in its previous arrangements.

In addition to the details provided below, governance disclosures can be found at the company's website at www.strategicminerals.net

Principle 1: Establish a strategy and business model which promote long-term value for shareholders

The Board has developed and enunciated a strategy and business model as detailed on the Company's website at https://www.strategicminerals.net/company/strategy.

The Board considers the Company's strategy provides a framework for medium to longer term growth in shareholder value.

The major risks to the Company's overall strategy stem from the potential failure to maintain access to the Cobre magnetite stockpile and over extending its cash requirements.

With respect to the exposure to operating cash flow only from the Cobre magnetite stockpile, the Board actively embarked on a search for a near term cash flow asset in our preferred mineral suite. With the addition of Leigh Creek Copper Mine, the Board feels it has, to a large extent, mitigated this risk, although it has now developed a new risk associated with the re-commencement of operations at Leigh Creek Copper Mine. Again, Management and the Board have sought to address such concerns through ensuring that sufficient resources are allocated to the project to give it the greatest chance of success.

In relation to cash flow management of the Company, Management and the Board closely monitor existing and expected cash flow resources and plans for committing these to project development and covering of corporate overheads. Additional to this, the Board regularly is in contact with market participants to ensure that sufficient interest is maintained in the market and that the Company can, generally, raise funding as required.

A consideration of broader risks of the Company can also be found at pages 8 to 9 of this report and the financial instruments note 3 of these financial statements.

Principle 2: Seek to understand and meet shareholder needs and expectations

Shareholder input and communication has been actively sought by the Board through direct contact with shareholders at both the Annual General Meeting, shareholder information evenings (sometimes combined with the Annual General Meeting), monitoring of social media platforms, regular RNS releases, interviews on both Proactive Investors and Vox Markets (including occasional shareholder Q & A sessions) and direct one on one meetings with larger investors. At all times, due regard is given to the price sensitive nature of comments.

All shareholders are encouraged to attend the Company's Annual General Meeting and investors have access to current information on the Company through its website and via the info@strategicminerals.net email address.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

As the Company is involved in the mining industry, the Board is highly cognisant of its responsibility not only to shareholders but in the broader community. As such, it has adopted a policy to ensure adequate community consultation is undertaken in the areas where we operate. Notably, in New Mexico USA, Cornwall UK and Leigh Creek Australia, communication with local residents and active involvement in the community has been encouraged. Additionally, the Company has a policy to, where possible, employ local residents when undertaking operations. To date, this has proven highly successful with all locations recording either none or extremely low levels of community dissent.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

The management of the business and the execution of the Group's strategy are subject to a number of risks. The Company regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact.

The Board is constantly undertaking a review of risk and, as a mining company, has adopted and engendered a safety culture within the Company to ensure that personnel safety is considered above financial reward.

Information in relation to the Key Risks and Uncertainties that are relevant to the group are set on page 8 - 9 of this report.

Board Committees

The Board has established separate sub-committees around audit (chaired by Alan Broome) and remuneration within the Company (chaired by Alan Broome) shared by the entire Board, excluding the Managing Director. Additionally, a separate safety sub-committee (chaired by Alan Broome) operates with both Alan Broome and Jeffrey Harrison comprising its membership.

Given the composition of the Board and the size of the Company, it is felt a separate Nomination Committee is not yet warranted. However, as the Company's operations expand, the Board will monitor this aspect of operations and will respond accordingly. The Board collectively undertakes the function of such a committee and where conflicts arise the Directors exclude themselves from voting on such matters.

Further information on the Company's Remuneration, Safety and Audit Committees and their policies are set out under Principle 9 below.

Member details of the sub committees as at the date of this report are:

Members	Remuneration Committee	Safety Committee	Audit Committee
Mr Alan Broome AM - Non-Executive Chairman	X Chair	X Chair	X Chair
Mr Peter Wale - Executive Director	X		X
Mr Jeffrey Harrison -Non-Executive Director	X	X	X
Mr John Peters - Managing Director

Principle 5: Maintaining the Board as a well-functioning, balanced team led by the chair

There are currently four (4) Board Directors (two of which are non-executive) and the Board considers that, at this time, this is appropriate to the Company's current level of operations, although this is reviewed formally at least annually. The Board is considered well balanced in that:

- Mr Alan Broome, the Non-Executive Independent Chairman, provides a sounding board for corporate strategy, a wealth of mining experience, is a metallurgist by training and is highly experienced in corporate governance. As such Alan is not involved with the day to day operations of the Company and provides guidance at the Board level. It is Management (notably John Peters and Peter Wale) who have the responsibility to formulate overall strategy, propose it to the Board, adjust the strategy for Board feedback and then enact the approved strategy.

- John Peters, the Managing Director, brings in-depth strategic management and investment banking experience. His practical management has helped to focus the Company and its consultants on the overall strategy while managing the hands on, day to day management.

- Peter Wale, the Executive Director, provides an invaluable bridge to shareholders providing insights into shareholder requirements as well as monitoring and handling media aspects. Peter, along with John Peters, manage the Company's interface with shareholders, media and the investment community. Peter has also undertaken an executive role in the management of Cornwall Resources Limited.

- Jeffrey Harrison, the Non-Executive Director, provides practical mining operational skills to ensure appropriate review of development plans and has contributed to the safety culture within the Company and maintains complete independence in reviewing decisions. Jeff performs this role divorced from the running of the Company and, as such, is considered independent when performing his duties as a Director.

All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.

Attendance at Board and Committee Meetings

The Board aims to meet at least eight times a year and as required from time to time to consider specific issued required for decision by the board.

The Company held 7 Board meetings and a number of sub-committee meetings during the reporting period and the number of meetings attended by each of the Directors of the Company during the year to 31 December 2019 were:

Director	Capacity	Board Meetings	Remuneration Committee	Audit Committee	Safety Committee
A Broome	Non-Executive	7	1	1	5
J Peters	Executive	7	n/a	n/a	n/a
P Wale	Executive	7	1	1	n/a
J Harrison (appointed 7/2/2018)	Non-Executive	7	1	1	5

The directors attended all board meetings and committee meetings that they were eligible and required to attend.

Directors' conflict of interest

The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

Time Commitment of Directors.

The Managing Director is employed by the Group on a full time basis, whereas Mr Wale (Executive Director) and the Non- Executive Directors are remunerated on fixed fee part time basis and are remunerated for hours over and above their normal duties.

Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

Biographies for the Directors can be found in the 'Board of Directors and Corporate Management' section of the company website at https://www.strategicminerals.net/company/our-team.html

The Board is not dominated by one person or group of people.

The Board undertakes regular reviews of its capacity to guide the Company in seeking to implement the Company's strategy. The appointment of Jeff Harrison in February 2018 illustrates how the Board, realising the need to increase its collective mining operational experience added a fourth Director with such skills. The Board also reviews periodically the appropriateness and opportunity for continuing professional development whether formal or informal.

Independent advice

All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company's expense. In addition, the Directors have direct access to the advice and services of the Company Secretary, Chief Financial Officer, Company's NOMAD, lawyers and auditors.

Re-election of Directors

The Company's Articles of Association require that one-third of the Directors must stand for re-election by shareholders annually in rotation and that any new Directors appointed during the year must stand for election at the AGM immediately following their appointment.

Principle 7: Evaluate the Board performance based on clear and relevant objectives, seeking continuous improvement

Given the size of the Company and the small but critical nature of the roles of the Directors, board performance measures have not been independently developed. The Company relies upon the market and shareholder feedback to assess the Board's performance.

Principle 8: Promote a culture that is based on ethical values and behaviours

The Directors recognise that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board seeks to embody and promote a corporate culture that is based on sound ethical values as it believes the tone and culture set by the Board impacts all aspects of the Company, including the way that employees and other stakeholders behave.

The Company has adopted a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

The formation of the Safety Committee and the manner in which options are allocated to Directors and key management/consultants has created a team environment in which the running of the company is aligned with medium to longer term shareholder goals.

These measures enable the Company to determine that ethical values and behaviours are recognised and respected.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

As a resource development company, the Board considers the crucial governance structures and processes revolve around Safety and Audit.

Safety Committee

Safety is a critical matter, particularly given the capacity for harm to employees and consultants. The purpose of the Safety committee is to ensure that our vision, to provide a safe workplace where no harm comes to anyone, is applied at all of the Company's locations and that a culture of Safety purveys throughout the organisation.

The Company believes that all reasonable efforts should be undertaken to ensure incidents are prevented, management have ultimate accountability for health and safety but everyone on site has a responsibility to ensure no one comes to harm and employees have the responsibility to stop any job or activity they believe is unsafe and could cause harm to people.

The Safety Committee attempts to monitor, and report to the full Board, on the achievement of the Company in devoting the necessary resources needed to create a working environment, both physically and supervisorial, in which our people and others under our influence and control can work without sustaining injury or suffering ill health; ensuring no business target takes priority over health and safety; using risk assessments to identify hazards and unsafe behaviours and introduce actions to reduce the risk to acceptable levels; investigating and reporting all accidents and dangerous occurrences and preventing future incidents; setting safety targets with the aim of preventing incidents and accidents and communicate the performance to all employees; ensuring all employees are competent to carry out the tasks assigned to them by providing the relevant information, instruction, training and supervision required; encouraging everyone to contribute to working safely and preventing accidents; designing, constructing, operating and maintaining all equipment, buildings and structures to ensure a safe operation; and comply with all current legislation and codes of practice.

Audit Committee

The purpose of the Audit Committee is to provide formal and transparent arrangements for considering how to apply the financial reporting and internal control principles set out in the QCAC and to maintain an appropriate relationship with the Company's auditors. The key terms are as follows:

- to monitor the integrity of the financial statements of the Company and Group, and any formal announcement relating to the Company's performance;

- to monitor the effectiveness of the external audit process and make recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;

- to keep under review the relationship with the external auditors including (but not limited to) their independence and objectivity; and

- to keep under review the effectiveness of the Company's financial reporting and internal control policies and systems.

- to review key judgements and estimates relating to the impairment assessment of project assets - LCCM, CRL and CARE

- to assess the ability of the group to remain a going concern.

Further details of board committees are given under Principle 5 above.

Securities Trading

The Company has adopted a share dealing code for dealings in shares by Directors and senior employees which is compliant with the Market Abuse Regulation (EU) No 596/2014 ("MAR") and appropriate for an AIM company. The Directors will comply with MAR and AIM Rule 21 relating to dealings and will take all reasonable steps to ensure compliance by persons discharging managerial responsibility ("PDMR") and persons closely associated with them.

Suitability of governance structures

The Board intends that the Company's governance structures evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.

Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Directors believe a healthy dialogue exists between the Board, the Company's shareholders and other stakeholders. The Board regularly has reports on shareholder feedback through summary of social media comments, shareholder information evenings and undertakes site visits and customer visits throughout the year.

In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. The outcomes of all shareholder votes are disclosed in a clear and transparent manner via a regulatory information service, such as RNS of the London Stock Exchange.

The Company includes historical annual reports, notices of general meetings and RNS announcements over the last five years on its website. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.

The Company intends to include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.

Impact on the Group of Covid-19

The global, social and economic impact of Covid-19 have been significant. Uncertainty remains as to the long-term implications of the pandemic as the Company continues to closely monitor governmental guidance to the crisis in our various locations.

The Directors recognise that the current macro-economic environment may result in limited or more expensive sources of funding. However, as per its adoption of a going concern concept for the financial statements, the Board considers that funding required to maintain operations is available but notes that development capital may need to be deferred.

As per its strategy, the Board has invested in projects that it considers taps into the bourgeoning battery market. In line with the spread of Convid-19, commodity prices have suffered a sharp decline. While this has had no impact on our Cobre, due to our ability to operate contact less on site, it has, due to lower copper prices, reduced the ability of the Group to immediately progress the Leigh Creek project. However, this impact has been significantly ameliorated by the fall in the Australian exchange rate to the US dollar. Despite these market gyrations, the Board considers that, by the time Leigh Creek is in full operations, with approvals in place and funding obtained (circa US$5m), the copper price and the Australian exchange rate will be at levels further demonstrating the attractiveness of the project.

Operations at Cobre have been adjusted to ensure contactless supply to our customers and, as at the end of May 2020, demand remains strong. Accordingly, it is not currently thought that there will be a need to curtail Cobre's operations due to the pandemic.

The Company's early efforts to reduce costs and enable the Company to best position itself to manage the potential longer term impacts of the pandemic, have been successful although the Company continues to focus on near term fiscal, operational and regulatory matters.

The Group will consequently carefully review any capital asset investment decisions and take further action to reduce costs if necessary. In these unprecedented times, clearly the priority for the Company remains the safety, health and wellbeing of our employees and wider stakeholders.

STRATEGIC MINERALS PLC

AUDIT COMMITTEE REPORT

This report addresses the responsibilities, the membership and the activities of the Audit Committee in 2019 up to the approval of the 2019 Annual Report and 2019 year-end Financial Statements.

Responsibilities

The main responsibilities of the Audit Committee are the following:

1. monitor the integrity of the annual and interim financial statements;

2. Review the effectiveness of financial and related internal controls and associated risk management;

3. Manage the relationship with our external auditors including plans and findings, independence and assessment regarding reappointment.

Membership

Members of the of the Audit Committee are Alan Broome, Peter Wale (Chairman) and Jeffrey Harrison.

Activities in 2019

With regard to the 2019 year-end Audit, the committee has reviewed the following key audit matters:

1. Going Concern

2. Acquisition of CRL

The Committee has reviewed the accounting treatment for the acquisition of CRL. The Committee is satisfied that the acquisition can be regarded as an Asset acquisition. In making this assessment the committee considered a number of factors which differentiate the acquisition from a Business Combination including:

- the resource is inferred and, as such, geological uncertainty exists.

- CRL has not yet undertaken any substantive processes with current work practices established around exploration activities and administering tenure of licences.

- CRL does not produce any outputs.

3. Impairment Assessments

The Committee has reviewed the judgements surrounding the impairment assessments required under IAS36 for CARE, CRL and LCCM.

CARE:

There are significant indicators of impairment for the CARE project. The Group has reduced the carrying amount of the asset to nil and recognised an impairment loss.

CRL:

The Redmoor projects are early stage exploration projects. The Committee is satisfied that results from exploration activity provide sufficient evidence to continue to move the asset forward to development.

LCCM:

The Committee is satisfied that the carrying value of the Development Asset is greater than or equal to its fair value, therefore no impairment is provided.

The assessment of the financial model for the project included review of the following key elements.

i) Mineable reserves over life of project

ii) Forecasted Copper pricing

iii) Capital and operating cost assumptions to deliver the mining schedule

iv) Foreign exchange rates

v) Discount rate

vi) Estimated project commencement date

Conclusion

In 2020 and beyond, the Committee will continue to adopt the new reporting and regulatory requirements and ensure that the system of internal controls is both maintained and regularly reviewed for improvement. The Committee will also continue to review group assets for triggers that may indicate impairment and closely monitor the financial risks faced by the business and progress made towards mitigating these.

For and on behalf of the Audit Committee

Alan Broome

24 June 2020

Chair of Audit Committee

STRATEGIC MINERALS PLC

REMUNERATION COMMITTEE REPORT

This remuneration report has been prepared by the Remuneration Committee and approved by the Board. The report for 2019 sets out the details of remuneration for the Directors and discloses the amounts paid during the year.

Membership

Members of the of the Remuneration Committee are Alan Broome (Chairman) Peter Wale and Jeffrey Harrison.Other Directors are invited to attend as appropriate provided they do not have a conflict of interest. The aim of the Remuneration Committee is to attract, retain and motivate the executive management of the Company and to offer the opportunity for employees to participate in share option schemes to incentivise employees to enhance shareholder value.

Director Remuneration

Compensation for Directors who held office during the year is as follows:

2019	Directors' Salary and fees	Consultancy fees	Bonus	Share based payments	Total
	2019	2019	2019	2019	2019
	$'000	$'000	$'000	$'000	$'000

A Broome	78	-	-	76	154
J Peters	13	173	191	114	491
P Wale	77	-	-	59	136
J Harrison	12	29	-	13	54
J Harrison - Capitalised Fee		6	-	-	6
	________	________	________	________	________

Total	180	208	191	262	841

20 2018	Directors' Salary and fees	Consultancy Fees	Bonus	Share based payments	Total
	2018	2018	2018	2018	2018
	$'000	$'000	$'000	$'000	$'000

A Broome	147**	-	-	80	227
J Peters	7	206	133	120	466
P Wale	69	52	-	57	178
J Harrison*	22	28	-	6	56
	________	________	________	________	________

Total	245	286	133	263	927

* J Harrison was appointed on 7 February 2018.

** During 2018 Mr A Broome applied $40,000 of cash remuneration to the exercise price of vested options.

During 2019, Directors took a significant amount of their cash remuneration by applying this to the exercise price of their vested options (J Peters $205,000, A Broome $16,000). Additionally, in 2019, P Wale purchased, on market, 3,514,942 shares @ 0.71p and, in early March 2020 J Peters acquired, on market, 3,464,286 at 0.5348p

Going forward into 2020 and beyond, the Committee and I will remain focused on ensuring that reward at the Company continues to be closely aligned with the delivery of long term shareholder value.

For and on behalf of the Remuneration Committee

Alan Broome

24 June 2020

Chair of Remuneration Committee

STRATEGIC MINERALS PLC

INDEPENDENT AUDITOR'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2019

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATEGIC MINERALS PLC

Opinion

We have audited the financial statements of Strategic Minerals Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income, the consolidated and parent company statement of financial position, the consolidated and the parent company's statement of cash flows, the consolidated and the parent company's statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in their is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2019 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1 to the financial statements which indicates that the group's funding position is reliant on the Cobre operations continuing to trade in line with forecast. The impact of COVID-19 on global markets has created uncertainty in both future trading and the ability of the parent company to raise any further funds if these were required. As stated in note 1, these events or conditions, along with other matters set out in note 1, indicate a material uncertainty exists that may cast significant doubt on the group and parent company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

The financial statements do not include the adjustments that would result if the group were unable to continue as a going concern.

We identified going concern as a key audit matter based on our assessment of the significance of the risk and the effect on our audit strategy.

Our audit procedures in response to this key audit matter included the following:

· We discussed the potential impact of Covid-19 with the directors and the Audit Committee, including their assessment of potential risks and uncertainties associated with the current and any future trading at the group's only cash generating asset in the US. We have compared post balance sheet sales information to budgets which support director's conclusion that the Cobre operations in the US have continued to trade through the current crisis.

· We assessed the directors' sensitised base case analysis which was performed to determine the point at which liquidity breaks and considered whether such scenarios, including aninability to service customers at Cobre and failure to secure further funding to meet any forecast shortfalls were possible.

· We critically assessed director's base case cash flow forecasts and the underlying key assumptions. In doing so, we compared forecast operating cost cash flows to current run rates for the underlying business. We evaluated commitments on the group's key assets or projects to ensure commitments have been appropriately included, reviewed board minutes and market announcements for indications of any additional cash requirements.

· We verified documentation to evidence that the funds from the £1.2m raised in June 2020 had flowed to the parent company and these funds would be adequate to settle the outstanding liability due to New Age Exploration Ltd, which is due to mature at the end of June.

· We reviewed and considered the adequacy of the disclosure within the financial statements relating to the directors' assessment of the going concern basis of preparation and the disclosure of the material uncertainties.

Key audit matters

In addition to the matter described in the material uncertainty related to going concern section, key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter

Carrying value of the Leigh Creek Copper mine

As detailed in note 2 and 13, the carrying value of the group's Property, plant and equipment assets amounted to US$6.8 million and represents capitalised development expenditure on the Leigh Creek Copper Mine ("LCCM"), ("Development asset").

Management are required to assess at least annually, whether there is any indication that the group's development assets may be impaired. Management are required to perform a detailed assessment if there are indicators of potential impairment.

The delays in project commencement and the continued decline in copper prices were identified by management as impairment indicators and accordingly performed an impairment test. The preparation of the impairment models requires management to make critical judgements and estimates including in particular the level of mineral reserves, methods and rates of production, forecast copper prices, forecast costs discount rate, foreign exchange rates and the timing of project commencement.

Given that significant judgement and estimation is required in determining the carrying value, this is considered to be a key audit matter and a significant audit risk.

How we addressed the key audit matter in our audit

Our procedures in relation to management's assessment of the carrying value of LCCM included, but were not limited to the following:

· We critically challenged the key estimates and assumptions applied in the valuation model prepared by management's expert. This included the following:

- Comparing mineral reserve estimates and production profiles back to LCCM's feasibility studies.

- Comparing forecast copper pricing against market consensus pricing.

- Analysing key cost estimates to feasibility studies and overall development plans. We made specific inquiries of management's internal expert to understand the enhancement work undertaken in-house on the feasibility study and associated basis for changes to the cost estimates against the original feasibility study.

- Critically analysing management's discount rate. We engaged BDO valuation specialists to assess the reasonableness of management's discount rate and challenged management's discount rate by benchmarking against industry peers.

- Comparing foreign exchange rate assumptions to market consensus forecasts

- Assessing the methodology applied and is the consistency of the fair value less cost to sell method used against the requirements of International Accounting Standards ("IAS") 36 Impairment of Assets, and the mathematical accuracy of management's model.

· Assessing the objectivity and competence of management's internal expert who prepared the valuation model.

· We reviewed management's sensitivity analysis and performed our own sensitivity analysis over individual key inputs, together with a combination of sensitivities over such inputs.

· We assessed the adequacy of the disclosures contained within notes 1 and 2 of the financial statements against the requirements of the relevant underlying framework and confirmed that related policies, judgements and estimates were adequately disclosed.

Key observations:

Based on the work performed we found management's assessment of the carrying value of LCCM to be reasonable.

We found the disclosures in the financial statements to be appropriate.

Our application of materiality

Group materiality FY 2019

Group materiality FY 2018

Basis for materiality

$200,000

$175,000

1.5% of total assets

(2018: 1.5% of total assets)

We apply the concept of materiality both in planning and performing our audit and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Total assets was determined as an appropriate basis as the principal focus of the group remains fundamentally focussed on the development of its exploration and development assets.

Materiality for the parent company was set at $108,000 (2018: $90,000) and was restricted to 75% of group materiality (2018: 75% of group materiality).

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality was set at 75% (2018: 75%) of the above materiality levels for both group and Company on the basis that we have not identified high volumes or values of misstatements in prior year audits.

We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified during the course of our audit in excess of $4,000 (2018:$8,000).

Whilst materiality for the financial statements as a whole was $200,000 each significant component of the group was audited to a lower level of materiality ranging from $100,000 to $140,000 (2018: $90,000 to $120,000) which was used to determine the financial statement areas that were included within the scope of the component audits and the extent of sample sizes used during the audit.

An overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

Our group audit scope focused on the group's principal operating subsidiaries being Strategic Minerals Plc, Southern Minerals Group LLC, Leigh Creek Copper Mine Pty Ltd and Cornwall Resources Ltd, which were subject to a full scope audits. Together with the parent company and its group consolidation, which was also subject to a full scope audit, these represent the significant components of the group.

The remaining components of the group were considered non-significant and these components were principally subject to analytical review procedures, together with additional substantive testing over the risk areas detailed above where applicable to that component. The full scope audits covered 98% of the group's total assets.

The audits of each of the components were performed in the United Kingdom. All of the audits were conducted by BDO LLP.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

·adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the parent company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Matt Crane (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London

24 June 2020

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

		Year to	Year to
		31 December	31 December
	Note	2019	2018
		$'000	$'000

Revenue	4	2,488	3,355
Other Revenue	5	900	-
Raw materials and consumables used		(511)	(650)
		________	________

Gross profit		2,877	2,705

Bargain purchase gain on LCCM Acquisition	12	-	2,162
Impairment Charge	6	(1,122)	-
Overhead expenses	6	(2,266)	(2,324)
Other expenses	6	(244)	(583)
		________	________

(Loss) profit from operations		(755)	1,960
		________	________

Finance Expense		(52)	-
Share of post-tax loss of equity accounted joint arrangements	11	(38)	(27)
		________	________

Profit (loss) before taxation		(845)	1,933

Income tax charge	8	(385)	(460)
		________	________
(Loss) profit for the period attributable to the owners of the parent		(1,230)	1,473

Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange gain/(loss) arising on translation of foreign operations		227	(685)
		________	________
Total comprehensive (Loss) income attributable to the owners of the parent		(1,003)	788
		________	________

(Loss) / profit per share attributable to the ordinary equity holders of the parent:

Basic	9	($0.000858)	$0.00108
Diluted		($0.000858)	$0.00106

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

		2019	2018
	Notes	$'000	$'000 (Restated)¹
Assets
Non-current assets
Intangible Asset	10	560	564
Deferred exploration and evaluation expenditure	10	4,567	1,037
Investments in joint ventures- equity accounted	11	-	2,248
Property, plant and equipment	13	6,898	5,170
Other Receivables	15	140	141
Restricted cash	17	-	100
		________	________
		12,165	9,260
Current assets
Inventories	14	3	4
Financial assets held at fair value through profit and loss		-	20
Trade and other receivables	15	948	285
Prepayments	15	132	32
Cash and cash equivalents	16	519	1,840
		________	________
		1,602	2,181
		________	________
Total Assets		13,767	11,441
		________	________
Equity and liabilities
Share capital	23	2,203	2,095
Share premium reserve	23	47,415	46,213
Share options reserve	24	543	330
Merger reserve		21,300	21,232
Foreign exchange reserve		(667)	(894)
Other reserves		(23,023)	(23,023)
Retained earnings		(37,800)	(36,632)
		________	________
Total Equity		9,971	9,321
		________	________
Liabilities
Non-current Liabilities
Provision	20	828	796
		________	________
		828	796
Current liabilities
Income Tax payable	8	406	-
Trade and other payables	18	451	354
Loans and other borrowings	19	2,111	-
Deferred Revenue	21	-	900
Deferred consideration		-	70
		________	________
		2,968	1,324
		________	________
Total Liabilities		3,796	2,120
		________	________
Total Equity and Liabilities		13,767	11,441
		________	________

¹ Refer note 26

These financial statements were approved and authorised for issue by the Board of Directors on 24 June 2020

and were signed on its behalf by:

John Peters

Director

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

		2019	2018
	Notes	$'000	$'000 (Restated)¹

Assets
Non-current assets
Investments in subsidiary undertakings	11	4,397	1,038
Investments in joint ventures- equity accounted	11	-	2,248
Loans to subsidiary undertakings	11	2,782	2,441
		________	________

		7,179	5,727
		________	________
Current assets
Trade and other receivables	15	40	25
Cash and cash equivalents	16	3	304
		________	________

		43	329
		________	________

Total Assets		7,222	6,056
		________	________
Equity and liabilities
Share capital	23	2,203	2,095
Share premium reserve	23	47,415	46,213
Share options reserve	24	543	330
Merger reserve		21,300	21,232
Foreign exchange reserve		(1,500)	(1,508)
Retained earnings		(64,541)	(62,512)
		________	________

Total Equity		5,420	5,850
		________	________
Liabilities

Current liabilities
Loans and Borrowings	19	1,692	-
Trade and other payables	18	110	206
		________	________

Total Liabilities		1,802	206
		________	________

Total Equity and Liabilities		7,222	6,056
		________	________

¹ Refer note 26

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent Company is not presented as part of these financial statements. The parent Company made a loss for the year of $2,091,000 (2018: profit of $588,000).

These financial statements were approved and authorised for issue by the Board of Directors on 24 June 2020

and were signed on its behalf by:

John Peters

Director

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

	Notes	Year to	Year to
		31 December	31 December
		2019	2018
		$'000	$'000
Cash flows from operating activities

Profit/(loss)		(1,230)	1,473
Adjustments for:

Depreciation of property, plant and equipment	13	17	64
Bargain purchase of Leigh Creek Copper Mine Pty Ltd	12	-	(2,162)
Loss on sale of tenements		-	245
Profit/Loss on financial assets held at fair value through profit or loss		(13)	12
Impairment of Deferred Exploration and Expenditure	10	1,122	-
Share of equity loss	11	38	27
Finance expense		52	-
Income Tax expense	8	385	460
Decrease in inventory		1	3
(Increase) / decrease in trade and other receivables		(119)	690
(Increase) in prepayments		(33)	(20)
Increase in trade and other payables		438	118
Increase / (decrease) in deferred revenue		(900)	900
Income tax paid		(46)	(1,107)
Share based payment expense	24	275	268
		________	________
Net cash (used in) \ generated from operating activities		(13)	971
		________	________
Investing activities
Acquisition of PPE development asset	12	-	(1,214)
Increase in PPE development asset	13	(2,293)	(797)
Receipt of research and development incentive		515	-
Increase in deferred exploration and evaluation expenditure	10	(316)	(237)
Sale of tenements		-	70
Increase in PPE	13	(265)	-
Acquisition of exploration and evaluation intangible asset	11	(205)	-
Investments in joint arrangements	11	(33)	(639)
Sale of financial assets held at fair value through profit or loss		33	-
		________	________
Net cash used in investing activities		(2,564)	(2,817)
		________	________
Financing activities
Net proceeds from issue of equity share capital	23	1,059	-
Proceeds from borrowings		400	-
Finance expenses paid		-	-
Repayment of borrowings	19	(206)	-
		________	________
Net cash generated from financing activities	25	1,253	-
		________	________

Net (decrease) \ increase in cash and cash equivalents		(1,325)	(1,846)
Cash and cash equivalents at beginning of year		1,840	3,706
Effects of exchange rate changes on the balance of cash held in foreign currencies		4	(20)
		________	________

Cash and cash equivalents at end of year	16	519	1,840
		________	________

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

	Notes	Year to	Year to
		31 December	31 December
		2019	2018
		$'000	$'000


Cash flows from operating activities

Profit / (loss)		(2,091)	588
Adjustments for:
Impairment to investment in subsidiary undertakings		1,033	300
Write back of receivables from subsidiary undertakings	11	(19)	(2,199)
Decrease in trade and other receivables		234	162
Increase in trade and other payables		223	150
Increase in prepayments		(16)	(2)
Share based payment expense		275	268
		________	________

Net cash used in operating activities		(361)	(733)
		________	________

Investing activities
Investments in joint arrangements	11	(33)	(639)
Acquisition of subsidiary undertaking	11	(206)
Receipts from \ (advances to) subsidiary undertakings		(557)	41
		________	________

Net cash used in investing activities		(796)	(598)
		________	________


Financing activities
Net proceeds from issue of equity share capital	23	1,059	-
Repayment of Borrowings	19	(206)	-
		________	________
Net cash generated from financing activities	25	853	-
		________	________

Decrease in cash and cash equivalents		(304)	(1,331)

Cash and cash equivalents at beginning of year		304	1,651
Effects of exchange rate changes on the balance of cash held in foreign currencies		3	(16)
		________	________

Cash and cash equivalents at end of year	16	3	304
		________	________

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

	Share capital	Share premium reserve	Merger Reserve	Share options reserve	Initial Restructure Reserve	Foreign exchange reserve	Retained earnings	Total equity
	$'000	$'000 (Restated)¹	$'000 (Restated)¹	$'000	$'000	$'000	$'000	$'000

Balance at 1 January 2018	2,009	45,935	20,240	137	(23,023)	(209)	(38,180)	6,909
	_______	_______	_______	_______	_______	_______	_______	_______

Profit for the year	-	-	-	-	-	-	1,473	1,473
Foreign exchange translation	-	-	-	-	-	(685)	-	(685)
	_______	_______	_______	_______	_______	_______	_______	_______
Total comprehensive income for the year	-	-	-	-	-	(685)	1,473	788

Share based payments	-	-	-	268	-	-	-	268

Transfer	-	-	-	(75)	-	-	75	-

Shares issued in the year	86	278	992	-	-	-	-	1,356

Share issue costs	-	-	-	-	-	-	-	-
	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2018	2,095	46,213	21,232	330	(23,023)	(894)	(36,632)	9,321

Loss) for the year	-	-	-	-	-	-	(1,230)	(1,230)
Foreign exchange translation	-	-	-	-	-	227	-	227
	_______	_______	_______	_______	_______	_______	_______	_______
Total comprehensive loss for the year	-	-	-	-	-	227	(1,230)	(1,003)

Share based payments	-	-	-	275	-	-	-	275

Transfer	-	-	-	(62)	-	-	62	-

Shares issued in the year	108	1,273	68	-	-	-	-	1,449

Share issue costs	-	(71)	-	-	-	-	-	(71)
	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2019	2,203	47,415	21,300	543	(23,023)	(667)	(37,800)	9,971
	_______	_______	_______	_______	_______	_______	_______	_______

¹ Refer note 26

All comprehensive income is attributable to the owners of the parent Company.

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

		Share		Share
	Share	Premium	Merger	Options	Foreign	Retained	Total
	capital	Reserve	reserve	Reserve	exchange reserve	Earnings	equity
	$'000	$'000 (Restated)¹	$'000 (Restated)¹	$'000	$'000	$'000	$'000

Balance at 1 January 2018	2,009	45,935	20,240	137	(577)	(63,175)	4,569

	-	-	-	-	-	588	588
Profit for the year	-	-	-	-	(931)	-	(931)
Foreign exchange translation
					_______	_______	_______
Total comprehensive loss for the year					(931)	588	(343)

Share based payments	-	-	-	268	-	-	268

Transfer	-	-	-	(75)	-	75	-

Shares issued in the year	86	278	992	-	-	-	1,356

Share issue costs	-	-	-	-	-	-	-
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2018	2,095	46,213	21,231	330	(1,508)	(62,512)	5,850

(Loss) for the year	-	-	-	-	-	(2,091)	(2,091)
Foreign exchange translation	-	-	-	-	8	-	8

					_______	_______	_______
Total comprehensive loss for the year					8	(2,091)	(2,083)

Share based payments	-	-	-	275	-	-	275

Transfer	-	-	-	(62)	-	62	-

Shares issued in the year	108	1,273	68	-	-	-	1,449

Share issue costs	-	(71)	-	-	-	-	(71)
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2019	2,203	47,415	21,300	543	(1,500)	(64,541)	5,420
	_______	_______	_______	_______	_______	_______	_______

¹ Refer note 26

All comprehensive income is attributable to the owners of the parent Company

The accompanying accounting policies and notes form an integral part of these financial statements.

STRATEGIC MINERALS PLC

CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

Share capital is the amount subscribed for shares at nominal value.

Share premium reserve represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.

Merger reserve arises from the 100% acquisition of Ebony Iron Pty Limited in September 2011 and LCCM In April 2018 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve, in accordance with section 612 of the Companies Act 2006.

Share option reserve relates to increases in equity for services received in equity-settled share based payment transactions and on the grant of share options.

Initial restructure reserve consist of an adjustment arising from the Group reorganisation in 2011 being the formation of a new holding Company for Iron Glen Holdings Limited by way of a share for share issue and is the difference between consideration given and net assets of the Company at the date of acquisition.

The group foreign exchange reserve occurs on consolidation of the translation of the subsidiaries balance sheets at the closing rate of exchange and their income statements at the average rate.

The company foreign exchange reserve recognise the exchange differences arising on translating the closing net assets of the Company at the closing rate at the balance sheet date, and the results of Company's operations at average exchange rate for the year.

Retained earnings represent the cumulative loss of the Group attributable to equity shareholders.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

1. Significant accounting policies

Basis of preparation

In preparing these financial statements the presentational currency is US dollars. As the entire group's revenues and majority of its costs, assets and liabilities are denominated in US dollars it is considered appropriate to report in this currency.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

The financial statements have been prepared on a historical cost basis, except for the acquisition of LCCM and the valuation of certain investments which have been measured at fair value, not historical cost.

Going concern basis

Adoption of standards effective in 2019

A number of new and amended standards became mandatory and are effective for annual periods beginning on or after 1 January 2019. Below is a list of the new standards which impacted the Group; where appropriate these new standards have been incorporated into the Financial Statements:

IFRS 16 leases

The Group has adopted IFRS16 from 1 January 2019 using the modified retrospective approach. Accordingly, the information for 2018 is not restated because it remains as previously reported under IAS 17 and related interpretations.

The Group had no operating lease commitments as at 1 January 2019 and did not enter into any operating lease commitments during the year. Therefore, based on the assessment made, no operating arrangements qualified to be recognised under the standard.

New standards, interpretations and amendments not yet effective:

There are a number of standards, amendments to standards, and interpretations which have

been issued by the IASB that are effective in future accounting periods that the group has

decided not to adopt early. The following amendments are effective for the period beginning

1 January 2020:

- IAS 1 Presentation of Financial Statements

- IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

- IFRS 3 Business Combinations (Amendment - Definition of Business)

- Revised Conceptual Framework for Financial Reporting

The group is currently assessing the impact of these new accounting standards and amendments and does not believe they will have a material impact on the financial statements.

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

- The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights,

- substantive potential voting rights held by the company and by other parties,

- other contractual arrangements and

- historic patterns in voting attendance.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Investment in joint arrangements

The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

The group classifies its interests in joint arrangements as either:

· Joint ventures: where the group has rights to only the net assets of the joint arrangement

· Joint operations: where the group has both the rights to assets and obligations for the liabilities of the joint arrangement.

In assessing the classification of interests in joint arrangements, the Group considers:

· The structure of the joint arrangement

· The legal form of joint arrangements structured through a separate vehicle

· The contractual terms of the joint arrangement agreement

· Any other facts and circumstances (in any other contractual arrangements).

The Group accounts for its interests in joint ventures initially at cost in the consolidated statement of financial position. Subsequently joint ventures are accounted for using the equity method where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other comprehensive income (except for losses in excess of the Group's investment in the associate unless there is an obligation to make good those losses)

Profits and losses arising on transactions between the Group and its joint ventures are recognised only to the extent of unrelated investors' interests in the joint venture. The investor's share in the joint ventures' profits and losses resulting from these transactions is eliminated against the carrying value of the joint venture.

Any premium paid for an investment in a joint venture above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the investment in joint venture. Where there is objective evidence that the investment in a joint venture has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations. In accordance with IFRS 11 Joint Arrangements, the Group is required to apply all of the principles of IFRS 3 Business Combinations when it acquires an interest in a joint operation that constitutes a business as defined by IFRS 3.

Where there is an increase in the stake of the joint venture entity from an associate to a subsidiary and the acquisition is considered as an asset acquisition and not a business combination in accordance with IFRS3, this step up transaction is accounted for as the purchase of a single asset and the cost of the transaction is allocated in its entirety to that asset with no gain or loss recognised in the income statement. The step up acquisition of CRL in the year has been accounted for as a purchase of a single asset and the cost of the transaction is allocated in its entirety to that balance sheet.

Listed equity investments

Listed equity investments in an active market are usually valued at the mid-price on the valuation date.

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method under IFRS3 Business Combinations ("IFRS3"). The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group and the Company in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the relevant conditions for recognition are recognised at their fair values at the acquisition date. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the fair value of the consideration paid over the Group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities acquired. If the Group's interest in the fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss. Transaction costs incurred directly in connection with business combinations are expensed.

Impairment of non-financial assets (excluding inventories)

Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest Group of assets to which it belongs for which there are separately identifiable cash flows: its cash generating units ('CGUs').

Impairment charges are included in the statement of comprehensive income, except to the extent they reverse gains previously recognised in other comprehensive income.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).

An intangible asset was recognised in the acquisition of Leigh Creek Copper Mine Pty Ltd and represents the fair value of the offtake agreement that was in place at acquisition date (Refer note 10).

Exploration and evaluation assets

The Group has continued to apply the 'successful efforts' method of accounting for Exploration and Evaluation ("E&E") costs, having regard to the requirements of IFRS 6 'Exploration for the Evaluation of Mineral Resources'.

The successful efforts method means that only the costs which relate directly to the discovery and development of specific mineral reserves are capitalised. Such costs may include costs of license acquisition, technical services and studies, exploration drilling and testing but do not include costs incurred prior to having obtained the legal rights to explore the area. Under successful efforts accounting, exploration expenditure which is general in nature is charged directly to the statement of comprehensive income and that which relates to unsuccessful exploration operations, though initially capitalised pending determination, is subsequently written off. Only costs which relate directly to the discovery and development of specific commercial mineral reserves will remain capitalised and to be depreciated over the lives of these reserves. Exploration and evaluation costs are capitalised within intangible assets. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the statement of comprehensive income.

All lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration, evaluation and development are capitalised as intangible or property, plant and equipment according to their nature. Intangible assets comprise costs relating to the exploration and evaluation of properties which the Directors consider to be unevaluated until reserves are appraised as commercial, at which time they are transferred to tangible assets as 'Developed mineral assets' following an impairment review and depreciated accordingly. Where properties are appraised to have no commercial value, the associated costs are treated as an impairment loss in the period in which the determination is made. Management consider all tenements relating to each project to represent one asset when undertaking their impairment assessment.

Costs are amortised on a unit of production method based on commercial proven and probable reserves.

Where Management acquires exploration and evaluation assets through a corporate acquisition an assessment is made as to whether this transaction meets the definition of a business combination and therefore accounted for under IFRS 3 or represents an asset purchase. When it is an asset acquisition, any contingent deferred consideration relating to the transaction is accounted for in accordance with IAS37. On the acquisition date an assessment is made as to whether the consideration payable is probable, possible or remote. Unless the possibility of an outflow of economic resources is remote, a contingent liability is disclosed in the notes. The contingent deferred consideration on the CRL acquisition is considered to be a possible obligation. Accordingly, a contingent liability is disclosed in note 27.

Contractual relationship

The contractual relationship recognised as a result of the acquisition of Ebony Iron Pty Limited in 2011 was valued at that time using estimated discounted cash flow. The value of the acquisition is fully impaired and management continues to assess whether there is evidence to reverse this impairment. However, due to the short-term nature of the contract to purchase iron ore at the Cobre operation it is not considered appropriate to reverse the impairment as at balance date.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

· Plant and machinery (except screening equipment) - 5 to 10 years straight line basis

· Development assets - on a unit of production basis

The carrying value of property, plant and equipment assets is assessed annually and any impairment is to the statement of comprehensive income.

Investments in subsidiaries - company only

Investments in subsidiaries are stated at cost less provision for any impairment in value.

If circumstances indicate that impairment may exist, investments in subsidiary undertakings of the Company are evaluated using market values, where available, or the discounted expected future cash flows of the investment.

If these cash flows are lower than the Company's carrying value of the investment an impairment charge is recorded in the Company.

Loans to subsidiaries - company only

Loans to subsidiaries are stated at cost less provision for any impairment in value.

If circumstances indicate that impairment may exist, loans to subsidiary undertakings of the Company are evaluated using market values, where available, or the discounted expected future cash flows of the investment. If these cash flows are lower than the Company's carrying value of the investment or loan amount due, an impairment charge is recorded in the Company.

Evaluation of impairments on such loans involves significant management judgement and may differ from actual results.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held on call with banks. Restricted cash is not available for use by the Group and therefore is not considered highly liquid.

Revenue

Revenue from the sale of magnetite is recognised when the group passes control of the product to the customer and it is probable the group will receive the funds. Control is considered to have passed when the goods are passed to the buyer, being the point of leaving the mine gate for domestic sales to the US markets. This is point in time when revenue is recognised.

Where a contract allows the group to advance bill ahead of delivery, a contract liability in relation to the outstanding performance obligation is only recognised on the date when payment is received. In those cases, the entity recognises revenue only after it transfers the goods to the buyer.

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Taxation

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the same income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

·the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The Group has not recognised any deferred tax at balance date.

When an asset or liability is raised the amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the statement of financial position date approximated their fair values, due to the relatively short term nature of these financial instruments.

Share-based compensation

The fair value of the employee and suppliers' services received in exchange for the grant of options and warrants is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options and warrants granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options and warrants that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options and warrants that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options and warrants are exercised.

The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model or other appropriate models, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, and exercise restrictions. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience.

Equity instruments

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date and are discounted to present value where the effect is material.

Provisions for decommissioning costs are recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Provisions are recorded at the present value of the expenditures expected to be required to settle the Group's future obligations. Provisions are reviewed at each reporting date to reflect the current best estimate of the cost at present value. Any change in the date on which provisions fall due will change the present value of the provision. These changes are treated as an administration expense. The unwinding of the discount is reflected as a finance expense.

Financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transactions costs and are subsequently carried at amortised cost.

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Financial assets

All financial assets other than an immaterial investment in listed equity shares, which are measured at fair value through profit or loss, are classified as financial assets at amortised cost. The Group determines the classification of its financial assets at initial recognition.

The Group's financial assets include cash and cash equivalents, trade receivables and other receivables.

The Company's financial assets include cash and cash equivalents and loans receivable due from subsidiaries.

The Company recognises a loss allowance for expected credit losses ("ECL") on intercompany loans which are measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument

If the credit risk on a financial instrument has increased significantly since initial recognition, the loss allowance is equal to the lifetime expected credit losses. If the credit risk has not increased significantly, the loss allowance is equal to the twelve month expected credit losses.

The Company recognises an ECL on intercompany loans, based on management's assessment and understanding of the credit risk attaching to each asset, changes in the level of credit risk between periods an assessment of the scenarios under which management expect the assets to be repaid. Any credit loss will be calculated as the net present value of the difference between the contractual and expected cash flows and the ECL will represent the weighted average of those credit losses based on the respective risks of each scenario. If the credit risk on an on intercompany loan has increased significantly since initial recognition, the loss allowance is equal to the lifetime expected credit losses. If the credit risk has not increased significantly, the loss allowance is equal to the twelve month expected credit losses.

The Group applies the IFRS 9 simplified approach to measuring credit losses using a lifetime expected credit loss provision for trade receivables.

Further details of the reviews undertaking during the year are set out in Note 2 below.

Financial liabilities

Financial liabilities refer to trade payables, other payables and loans and borrowings (including the host debt

in a convertible instrument) and are initially recognised at fair value net of any transaction costs directly

attributable to the issue of the instrument. Such liabilities are subsequently measured at amortised cost

using the effective interest rate method.

All loans and borrowings which are financial instruments are initially recognised at the present value of cash payable to the lender (including interest). After initial recognition they are measured at amortised cost using the effective interest rate method. The effective interest rate amortisation is included in finance costs in the income statement.

Where there is a significant modification to a financial liability, the financial original liability is de-recognised and a new financial liability is recognised at fair value in accordance with the Group's policy.

Convertible loan notes are assessed in accordance with IAS 32 Financial Instruments: Presentation to

determine whether the conversion element meets the fixed-for-fixed criterion. Where this is met, the instrument is accounted for as a compound financial instrument with appropriate presentation of the liability and equity components. Where the fixed-for-fixed criterion is not met, the conversion element is accounted for separately as an embedded derivative which is measured at fair value through profit or loss. On issue of a convertible borrowing, the fair value of embedded derivative is determined and the residual is recorded as a host liability initially at fair value and subsequently at amortised cost. Issue costs are apportioned between the components based on their respective carrying amounts when the instrument was issued. The finance costs recognised in respect of the convertible borrowings includes the accretion of the liability.

As disclosed in Note 10 (iii) the CRL acquisition consideration payable was restructured to allow the lender the right to convert the outstanding loan balance and accrued interest to new ordinary shares should the facility be in default. Refer note 2(b) for key judgements relating to the restructuring of the facility.

Foreign currencies

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. The functional currency of the Company is deemed to be GBP. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation, in which case exchange differences are recognised in other comprehensive income and accumulated in the foreign exchange reserve along with the exchange differences arising on the retranslation of the foreign operation.

On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.

Management of capital

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Group arise in respect of the costs of financing working capital as inventory is built up prior to sale.

The Board receives periodic cash flow projections as well as information on cash balances. The Board will not commit to material expenditure prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.

Research and Development Tax Incentive (RDTI)

The Group's policy is that any RDTI should be recognised as a government grant, in accordance with IAS20 Accounting for Government Grants. This means it will be recognised as part of profit before tax, either as income or as a reduction of the associated costs.

Where the Group capitalises development costs, then the RDTI amounts received that relate to these costs will be offset against the capitalised development costs or deferred exploration expenditure as the case may be.

2. Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimates

(a) Carrying value of intangible assets

Management assess the carrying value of the exploration and evaluation assets for indicators of impairment based on the requirements of IFRS 6 which are inherently judgemental. This includes ensuring the Group maintains legal title, assessment regarding the commerciality of reserves and the clear intention to move the asset forward to development.

i) The Redmoor projects are early stage exploration projects and therefore Management have applied judgement in the period as to whether the results from exploration activity provide sufficient evidence to continue to move the asset forward to development. There are no indicators of impairment for the Redmoor project in the 31 December 2019 financial year.

ii) The carrying value of the CARE project has been assessed based on a fair value measurement. Based on the requirements of IFRS6, there are indicators of impairment for the CARE project at 31 December 2019. The Group has reduced the carrying amount of the asset to nil, and recognised an impairment loss.

Further detail regarding the carrying value of exploration and evaluation can be found in note 10.

(b) Share based payments

The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model after taking into account market based vesting conditions and conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience. Further details are given in Note 24.

IFRS9 requires the parent company to make certain assumptions when implementing the forward- looking expected credit loss model. This model is required to be used to assess the intercompany loan receivables from its subsidiaries for impairment. Arriving at an expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the possible credit losses that could arise and probabilities for these scenarios.

The following were considered; the exploration project risk, the future sales potential of product, value of potential reserves and the resulting expected economic outcomes of the project. Further details are given in Note 11.

(d) Business combinations.

Significant estimates were made in determining the fair value of assets acquired in the groups acquisition of Leigh Creek these are described in note 12.

(e) Carrying Value of Development Assets - LCCM

Management assess the carrying value of Development assets for indicators of impairment based on the requirements of IAS36 which are inherently judgemental.

The following are the key assumptions used in this assessment of Carrying value.

i) Mineable reserves over life of project

ii) Forecasted Copper pricing

iii) Capital and operating cost assumptions to deliver the mining schedule

iv) Foreign exchange rates

v) Discount rate

vi) Estimated project commencement date.

If the carrying amount of the Development asset exceeds the recoverable amount, the asset is impaired. The Group will reduce the carrying amount of the asset to its recoverable amount, and recognise an impairment loss. The assessment is carried out twice per year - end of half year reporting period and end of annual reporting period.

The assessment of the recoverable amount was conducted with a forecasted copper price of US$2.50/lb and US$:AU$ exchange rate of 0.65 and after tax discount rate of 11%. The forecasts indicated that the carrying value of the asset is sensitive to reasonable changes in key assumptions, given the project was acquired at fair value in 2018 and the reduction in copper prices since that date. In conducting the assessment, a number of copper price and exchange rate scenarios were considered along with sensitivities on operating costs and discount rates which indicated the following changes to Net Present Value (NPV) of the project:

· At a copper price of US$2.75 and exchange rate of 0.70 the NPV of the project was increased by $0.6m,

· At a copper price of US$2.25 and exchange rate of 0.60 the NPV of the project was decreased by $0.7m,

· A +/- 10% in operating costs resulted in a -/+ $1.8m adjustment to NPV, and

· A -/+ 1% change in discount rate resulted in a +/- $0.4m adjustment to NPV.

Judgements

(a) Asset Acquisitions

In July 2019, the company acquired the balance 50% of CRL from NAE. Judgement was required in assessing whether the acquisition represented an asset acquisition or a business combination.

The company has assessed that the acquisition of CRL is an Asset Acquisition and not a Business Combination based on the review of the following factors.

Inputs:

The CRL project comprises an inferred resource. As such there is level of geological uncertainty associated with the resource. The CRL project can be classified as an early stage exploration project with limited inputs

Existence of Substantive Processes:

CRL employees a small number of geological staff to manage the exploration activities of the company, At this stage the company has does not have a sufficiently organised, skilled workforce that has the necessary skills, knowledge or experience to develop an operating project. It does not have a substantive process.

Outputs:

The project does not have any outputs.

(b) Amendments to the CRL acquisition consideration payable

Judgement was required in determining the accounting for the CRL acquisition consideration payable which was restructured during the year- refer note 10(iii). The restructure was considered to represent a significant modification with the facility restructured to allow the lender the right to convert the outstanding loan balance and accrued interest to new ordinary shares should the facility be in default. Judgement was required in assessing the compound financial instrument in accordance with IAS32 Financial Instruments: Presentation. Management concluded that as the likelihood of default is low the value attached to the potential feature is immaterial. Accordingly, the loan is presented at its face value with no value attributed to the conversion feature.

Investment in subsidiaries comprises of the cost of acquiring the shares in subsidiaries

If an impairment trigger is identified and investments in subsidiaries are tested for impairment, estimates are used to determine the expected net return on investment. The estimated return on investment takes into account the underlying economic factors in the business of the Company's subsidiaries including estimated recoverable reserves, resources prices, capital investment requirements, discount rates among other things. Refer to Note 11 for further details in respect of the recoverability of the investment in subsidiaries.

(d) Contingent consideration as part of Asset acquisition

Judgement was required in determining the accounting for the contingent consideration payable as per of the CRL acquisition. The group has an obligation to pay AUD $1m on net smelter sales arising from CRL production reaching AUD $50m and a further AUD $1m on net smelter sales arising from CRL production reaching AUD $100m.

Whilst a possible obligation exists in relation to the consideration payable, given the early stage of the project it was concluded that at reporting date it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Therefore, in accordance with IAS 37, a contingent liability, relating to this possible obligation is disclosed in Note 27.

(e) Contingent liabilities as part of Business Combination

Under the terms of the various agreements in relation to the LCCM, the Company would have the following contingent liabilities:

- 1% royalty on copper sales payable over the life of the project; and

- AUD $100,000 following 3,000 tonnes of copper sales from the project.

In accordance with IFRS3 the Group has recognised for the estimated fair value of the mining royalty in these financial statements as disclosed in Note 20.

(f) Investments in joint arrangements

Under the shareholders agreement with NAE, CRL operated as a 50:50 joint venture with each party being entitled to appoint one Director. Based on this, the Group considered that they had joint control over the arrangement. Under IFRS 11, this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method for the period to July 2019.

In July 2019, the company acquired the balance 50% of CRL from NAE.

Refer to Note 11 for details in relation to investments in joint arrangements.

3	Financial instruments - Risk management

The Group is exposed to the following financial risks:

· Credit risk

· Foreign exchange risk

· Commodity price risk

· Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from last year unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are:

· Trade and other receivables

· Cash and cash equivalents

· Restricted cash

· Trade and other payables

· Borrowings

A summary of the financial instruments held by category is provided below:

Financial assets

	Financial assets at Fair value through profit and loss		Financial assets at Amortised cost
	2019	2018	2019	2018
Group	$'000	$'000	$'000	$'000

Cash and cash equivalents	-	-	519	1,840
Restricted cash	-	-	-	100
Trade and other receivables	-	-	317	232
Investments in quoted equity securities	-	20	-	-
	_______	_______	_______	_______

Total financial assets	-	20	836	2,172
	_______	_______	_______	_______

Financial liabilities
	Financial liabilities at amortised cost
	2019	2018
Group	$'000	$'000

Trade and other payables	403	266
Loans and borrowings	2,111	-
	_______	_______

Total financial liabilities	2,514	266
	_______	_______

Financial assets at Amortised cost
	2019	2018
Company	$'000	$'000

Cash and cash equivalents	3	304
Trade and other receivables	-	-
Amounts owed by subsidiary undertakings	2,782	2,442
	_______	_______

Total financial assets at Amortised cost	2,785	2,746
	_______	_______

Financial liabilities at Amortised cost

	2019	2018
Company	$'000	$'000

Trade and other payables	107	65
Loans and Borrowings	1,692
Amounts owed to subsidiary undertakings	-	77
	_______	_______

Total financial liabilities at Amortised cost	1,799	142
	_______	_______

Financial instruments measured at fair value

Financial assets held at fair value through profit or loss

	2019	2018
Group	$'000	$'000

Investments in quoted equity securities	-	20
	_______	_______

Total financial assets held at fair value through profit or loss	-	20
	_______	_______

The investments in quoted equity securities are valued based on the price of the quoted securities converted to US dollars at the balance date. As a quoted security this investment falls within Level 1 of the Fair Value Hierarchy as per IFRS13.

The reconciliation of opening and closing values of available for sale assets is provided below.

	2019	2018
Group	$'000	$'000

At 1 January	20	-

Purchases	-	32
Sales	(33)
Change in Fair value	13	(12)
	_______	_______

At 31 December	-	20
	_______	_______

The sensitivity of the available for sale assets are not material to the group.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit assessments are taken into account by local business practices. Further disclosures regarding trade and other receivables, which follow IFRS 9 including expected credit losses, are provided for in Note 15.

The Company is exposed to credit risk through amounts due from its subsidiary undertakings. Refer to Note 1 for details on the credit loss allowance made.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Foreign exchange risk

Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their own functional currency (being Pound Sterling, US dollar and Australian dollar) with the cash generated from their own operations where possible in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.

The parent Company maintains US dollar and Pounds sterling bank accounts, whilst subsidiaries may hold either these currency accounts or their local currency.

All receivables and payables are settled at the prevailing spot rate; no forward contracts or other hedging instruments are currently entered into. The Board monitors the total foreign exchange risk on a periodic basis but given the major in and out flows of cash are in US dollars there is a natural hedge in place which minimises the overall exposure.

As of 31 December, the net exposure to foreign exchange risk was as follows:

		Functional currency of individual Entity
	US dollar		Sterling		Australian dollar		Total
	2019	2018	2019	2018	2019	2018	2019	2018
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Group

Net foreign currency financial assets/(liabilities)

US dollar	352	1,218	-	4	-	300	352	1,522
Sterling	-	-	(6)	235	-	-	(6)	235
Australian dollar	-	-	(1,692)	-	(19)	127	(1,711)	127
	______	______	______	______	______	______	______	______

Total net exposure	352	1,218	(1,698)	239	(19)	427	(1,365)	1,884
	______	______	______	______	______	______	______	______

The effect of a 20% strengthening of the Sterling and Australian Dollar against US Dollar at the reporting date on the corresponding net financial assets carried at that date would, all other variables held constant, have resulted in an decrease in the post-tax profit for the year of US$343,000 (2018:increase US$47,000) and an decrease of the net assets of US$343,000. A 20% weakening in the exchange rate would, on the same basis, have increased post-tax profit and increased net assets by US$343,000 (2018:decrease US$47,000).

	Functional currency of individual entity
		Sterling		Total
		2019	2018	2019	2018
		$'000	$'000	$'000	$'000
Company

Net foreign currency financial assets/(liabilities)
US dollar		-	4	-	4
Sterling		2,686	2,611	2,686	2,611
Australian dollar		(1,692)	-	(1,692)	-
		_______	_______	_______	_______

Total net exposure		994	2,615	994	2,615
		_______	_______	_______	_______

Commodity price risk

Typically, the sale of magnetite to the export market, as opposed to US domestic customers, is priced by reference to the market quoted Platts IODEX 62% Fe CFR China price over which the Group has no influence. There were no exports of product in the 2019 year. As domestic sales prices are determined more by local supply/demand factors and transportation costs, they do not, generally fluctuate with changes in global prices., Hence, there is no significant exposure to market price risks expected in the coming year.

Liquidity risk

Liquidity risk arises from the Group's management of working capital.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 30 days.

The Board receives periodic cash flow projections as well as information regarding cash balances. The Group does not have any overdraft or credit lines in place. The liquidity risk of each Group entity is managed centrally by the finance function.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

		Between	Between	Between
Group	Up to 3	3 and 12	1 and 2	2 and 5	Over
	Months	Months	Year	Years	5 years
At 31 December 2019	$'000	$'000	$'000	$'000	$'000

Trade and other payables	819	-	-	-	-
Loans and borrowings	-	2,111	-	-	-
	_______	_______	_______	_______	_______

Total	819	2,111	-	-	-
	_______	_______	_______	_______	_______

		Between	Between	Between
Group	Up to 3	3 and 12	1 and 2	2 and 5	Over
	Months	months	Year	years	5 years
At 31 December 2018	$'000	$'000	$'000	$'000	$'000

Trade and other payables	288	-	-	-	-
	_______	_______	_______	_______	_______

Total	288	-	-	-	-
	_______	_______	_______	_______	_______


		Between	Between	Between
Company	Up to 3	3 and 12	1 and 2	2 and 5	Over
	Months	months	year	years	5 years
At 31 December 2019	$'000	$'000	$'000	$'000	$'000

Trade and other payables	110	-	-	-	-
Loans and borrowings	-	1,692	-	-	-
Loans from subsidiary undertakings	-	-	-	-	-
	_______	_______	_______	_______	_______

Total	110	1,692	-	-	-
	_______	_______	_______	_______	_______

		Between	Between	Between
Company	Up to 3	3 and 12	1 and 2	2 and 5	Over
	Months	months	year	years	5 years
At 31 December 2018	$'000	$'000	$'000	$'000	$'000

Trade and other payables	65	-	-	-	-
Loans from subsidiary undertakings	77	-	-	-	-
	_______	_______	_______	_______	_______

Total	142	-	-	-	-
	_______	_______	_______	_______	_______

Capital Disclosures

The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital, share premium, merger reserve, and retained earnings).

The Group's objectives when maintaining capital are:

· to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

· to provide an adequate return to shareholders by pricing products with the level of risk.

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

4	Segment information

The Group has four main segments during the period:

· Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to both the US domestic market and historically transported magnetite to port for onward export sale.

· Head Office - This segment incurs all the administrative costs of central operations and finances the Group's operations. A management fee is charged for completing this service and other certain services and expenses.

· Australia - This segment holds the Central Australian Rare Earths Pty Ltd tenements in Australia and incurs all related operating costs.

· Development Asset - This segment holds the Leigh Creek Copper Mine Development Asset in Australia and incurs all related operating costs.

· United Kingdom - The investment in the Redmoor project in Cornwall, United Kingdom is held by this segment.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that carry out different functions and operations and operate in different jurisdictions.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the board and management team which includes the Board and the Chief Financial Officer.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with EU Adopted IFRS.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments in which the borrowings are held. Details are provided in the reconciliation from segment assets and liabilities to the Group's statement of financial position.

4		Segment information(continued)

			SMG	Head Office	Australia	United Kingdom	Development Asset	Intra Segment Elimination	Total
			2019	2019	2019	2019	2019	2019	2019
			$'000	$'000	$'000	$'000	$'000	$'000	$'000

	Revenues		2,488	-	-	-	-	-	2,488
	Other Revenue		900	-	-	-	-	-	900
	Cost of sales		(511)	-	-	-	-	-	(511)

	Gross profit		2,877	-	-	-		-	2,877

	Overhead expenses		(1,026)	(923)	(295)	(22)	-	-	(2,266)
	Management fee income/(expense)		(393)	362	35		-	(4)	-
	Share based payments		-	(275)	-	-	-	-	(275)
	Depreciation		(16)	-	-	(1)	-	-	(17)
	Gain on available for sale assets		-	-	13		-	-	13
	Share of net loss from joint venture		-	(38)	-	-	-	-	(38)
	(Loss)/ gain on intercompany loans		-	(1,014)	-	-	-	1,014	-
	Impairment of DEE		-	-	(1,122)	-	-	-	(1,122)
	Foreign exchange gain/(loss)		-	(141)	(27)	-	-	203	35
			_______	_______	_______	_______	_______	_______	_______

	Segment profit /(loss) from operations		1,442	(2,029)	(1,396)	(23)	-	1,213	(793)
			_______	_______	_______	_______	_______	_______	_______

	Finance Expense		-	-	(52)	-	-	-	(52)
			_______	_______	_______	_______	_______	_______	_______

	Segment profit /(loss) before taxation		1,442	(2,029)	(1,448)	(23)	-	1,213	(845)
	Segment profit /(loss) before taxation		_______	_______	_______	_______	_______	_______	_______

4	Segment information(continued)

	SMG	Head Office	Australia	Development Asset	Intra Segment Elimination	Total
	2018	2018	2018	2018	2018	2018
	$'000	$'000	$'000	$'000	$'000	$'000

Revenues	3,350	3	2	-	-	3,355

Cost of sales	(650)	-	-	-	-	(650)
	_______	_______	_______	______	-_______	_______

Gross profit	2,700	3	2	-	-	2,705

Other income	-	-	-	2,162	-	2,162
Overhead expenses	(850)	(1,250)	(224)	-	-	(2,324)
Management fee income/(expense)	(380)	380	-	-	-	-
Share based payments	-	(268)	-	-	-	(268)
Depreciation	(64)	-	-	-	-	(64)
Loss on available for sale assets	-	-	(12)	-	-	(12)
Share of net loss from Joint venture	-	(27)	-	-	-	(27)
(Loss)/ gain on intercompany loans	-	1,899	-	-	(1,899)	-
Loss on sale of tenements	-	-	(245)	-	-	(245)
Foreign Exchange gain (loss)	-	(149)	-	-	155	6
	_______	_______	_______	_______	_______	_______
Segment profit/(loss) before taxation	1,406	588	(479)	2,162	(1,744)	1,933
	_______	_______	_______	_______	_______	_______

4	Segment information(continued)

		Head	Development
	SMG	Office	Asset	Australia	United Kingdom	Total
As at 31 December 2019	$'000	$'000	$'000	$'000	$'000	$'000

Additions to non-current assets	-	-	2,558	94	460	3,112
	_______	_______	______	_______	_______	_______

Reportable segment assets	1,023	43	7,428	601	4,672	13,767
	_______	_______	______	_______	_______	_______

Reportable segment liabilities	529	1,802	973	484	8	3,796
	_______	_______	_______	_______	_______	_______

						_______

Total Group Liabilities						3,796
						_______

Head

Development

SMG

Office

Asset

Australia

Total

As at 31 December 2018

$'000

Additions to non-current assets

639

2011

237

2,887

_______

______

_______

Reportable segment assets

1,511

2,576

5,722

1,632

11,441

_______

______

_______

Reportable segment liabilities

978

129

901

112

2,120

_______

______

_______

Total Group liabilities

2,120

_______

	External revenue by		Non-current assets
	location of customers		by location of assets
	2019	2018	2019	2018
	$'000	$'000	$'000	$'000

United States	2,488	3,350	177	293
United Kingdom	-	3	4,568	2,248
Australia	-	2	7,420	6,719
	_______	_______	_______	_______

	2,488	3,355	12,165	9,260
	_______	_______	_______	_______

Revenues from Customer A totalled $689,000 (2018: $695,000), which represented 21% (2018: 21%) of total domestic sales in the United States, Customer B totalled $1,323,000 (2018: $1,225,000) which represented 51% (2018 36%) of total sales and Customer C totalled $353,000 (2018: $507,000) which represented 14% (2018: 15%). There were no export sales in the year (2018: Nil).

5	Other income

Included in other income is the conversion of deferred revenue to income (refer note 21 for further detail)

6	Profit/(loss) before tax

Group	Note	Year to	Year to
		31 December	31 December
Costs by nature		2019	2018
	Notes	$'000	$'000
Operating Profit/(loss) is stated after charging:

Directors' fees and emoluments (Note 7)		573	665
Fees payable to the company's auditor for the		96	76
audit of the parent company and consolidated financial statements
Staff costs (Note 7)		559	514
Equipment rental		276	248
Equipment maintenance		46	46
Legal, professional and consultancy fees		420	476
Travelling and related costs		5	95
Other expenses		291	204
		________	________
Overhead Expenses		2,266	2,324

Foreign exchange (gain)/loss		(35)	(6)
Share based payments charge		275	268
Depreciation		17	64
Loss on sale of tenements		-	245
(Gain )Loss on financial assets held at fair value through profit and loss		(13)	12
Finance Fee		52	-
Share of net loss from joint arrangements		38	27
Other Expenses		372	610
Impairment of Exploration and Evaluation Asset	10	1,122	-
		________	________

		3,722	2,934
		________	________

7	Directors and employees
	Group	Year to	Year to
		31 December	31 December
	Staff costs during the year	2019	2018
		$'000	$'000

	Directors' remuneration expense including consultancy fees	573	665
	Directors fees capitalised including consulting fees	6	-
	Wages and salaries including consulting fees for management	559	514
	Share based payments	275	268
		________	________

	Total staff costs	1,413	1,447
		________	________

The average number of people (including Directors) employed by the Group during the year was:

	2019	2018
	Number	Number

Total	10	11
	________	________

Company	Year to	Year to
	31 December	31 December
Staff costs during the year	2019	2018
	$'000	$'000

Directors' remuneration including consultancy fees	496	665
Wages and salaries	-	18
Social security and other costs	-	-
Share based payments	275	268
	________	________

Total staff costs	771	951
	________	________

The average number of people (including Directors) employed by the Company during the year was:

	2019	2018
	Number	Number

Total	4	5
	________	________

Remuneration of the Directors and other key management personnel in the period is summarised as follows:

	Directors' Salary and fees	Consultancy fees	Bonus	Share based payments	Total
	2019	2019	2019	2019	2019
	$'000	$'000	$'000	$'000	$'000

A Broome*	78	-	-	76	154
J Peters*	13	173	191	114	491*
P Wale*	77	-	-	59	136
J Harrison	12	29	-	13	54
J Harrison* Capitalise Fee	-	6	-	-	6
	________	________	________	________	________

Total	180	208	191	262	841
	________	________	________	________	________

* During 2019, Directors took a significant amount of their cash remuneration by applying this to the exercise price of their vested options (J Peters $205,000, A Broome $16,000). Additionally, in 2019, P Wale purchased, on market, 3,514,942 shares @ 0.71p and, in early March 2020 J Peters acquired, on market, 3,464,286, at 0.5348p

Director Options

17,500,000 director options (2018:22,500,000) options were exercised during the year.

7	Directors and employees (continued)

		Directors' Salary and fees	Consultancy fees	Bonus	Share based payments	Total
		2018	2018	2018	2018	2018
		$'000	$'000	$'000	$'000	$'000

	A Broome	147	-	-	80	227
	J Peters	7	206	133	120	466*
	P Wale	69	52	-	57	178
	J Harrison	22	28	-	6	56
		________	________	________	________	________

	Total	245	286	133	263	927
		________	________	________	________	________

*J Peters is the highest paid director in 2019 and 2018.

Directors and key management personnel remuneration shown above comprises all of the salaries, Directors' fees, consultancy fees and other benefits and emoluments paid to the Directors and key management personnel.

Each Director is also paid all reasonable expenses incurred wholly, necessarily and exclusively in the proper performance of his duties.

Director Remuneration : Gains on exercise of share options		Year to		Year to
			31 December		31 December
			2019		2018
			$'000		$'000

	J Peters		158		274
	A Broome		15		79
	P Wale		-		56
			________		________

	Total		173		409
			________		________

The gain on exercise of share options is based on the difference between the exercise price of the options and the market value of the shares on the date they were exercised.

It should be noted that the Directors of the Company have, since becoming Directors, not sold any shares and that, as at the date of this report, all implied gains on options have not materialised and implied losses exist.

8	Taxation
		Year to	Year to
		31 December	31 December
		2019	2018
		$'000	$'000

	Current tax expense - Overseas Tax (USA)	385	460
		________	________

		385	460
		________	________

	Reconciliation of effective tax rates	$'000	$'000

	(Loss) Profit before tax	(845)	1,933
	Tax using UK domestic rates of corporation tax of 19% (2018 - 19%)	(151)	367

	Effect of:
	Income not assessable for tax purposes	-	(559)
	Expenses not deductible for tax purposes	245	65
	(Over)/under provisions in respect of previous years	(21)	44
	Previously unrecognised Tax losses utilised	-	-
	Losses carried forward/ (utilised)	193	407
	Difference in overseas tax rates	119	136
		________	________

		385	460
		________	________

The Group has unused losses to carry forward of $21,256,171 (2018: $18,000,606). No deferred tax asset has been recognised for losses as their full recovery is not probable in the foreseeable future.

Different tax rates applied in overseas jurisdictions reflect the different tax rates applicable in the various jurisdictions in which the Group operates. The current tax expense and over provision in respect of prior year relates to operations in the USA. The combined state, federal and branch rate of corporate tax in USA is approx.31%

9	Earnings per share

	Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial year. The weighted average number of shares in issue during the year was basic 1,434,077,744 (2018: 1,366,949,045). Fully diluted earnings are based on 1,434,077,744 (2018: 1,384,449,045) shares and the loss for the financial period was $1,230,000 (2018 profit: $1,473,000 ).

10	Intangible Assets

Group	Exploration/	Other
	evaluation	intangible
	costs	asset	Total
Cost	$'000	$'000	$'000

At 1 January 2018	1,242	25,772	27,014
Acquired through business combination of Leigh Creek Copper Mine Pty Limited (vi)	-	625	625
Disposals (ii)	(347)	-	(347)
Additions in the year	237	-	237
Foreign exchange difference	(95)	(61)	(156)
	________	________	________

At 31 December 2018	1,037	26,336	27,373
	________	________	________

At 1 January 2019	1,037	26,336	27,373
Acquired through asset acquisition of CRL (iii)	4,392	-	4,392
Interest and Borrowing Costs- CRL	62		62
Additions in the year	254	-	254
Research and development incentive	(317)		(317)
Foreign exchange difference	261	(4)	257
	________	________	________

At 31 December 2019	5,689(i)	26,332(v)	31,954
	________	________	________

Amortisation and impairment
At 1 January 2018	-	(25,772)	(25,772)
	________	________	________

At 31 December 2018	-	(25,772)	(25,772)

At 1 January 2019	-	(25,772)	(25,772)
Impairment of exploration and evaluation costs (iv)	(1,122)	-	(1,122)
	________	________	________

At 31 December 2019	(1,122)	(25,772)	(26,894)
	________	________	________
Net book value

At 31 December 2017	1,242	-	1,242
	________	________	________

At 31 December 2018	1,037	564	1,601
	________	________	________

At 31 December 2019	4,567	560	5,127
	________	________	________

10	Intangible Assets (continued)

Mining tenements and exploration and evaluation costs

(i) Exploration and evaluation ("E&E") costs as at 31 December 2019 are the costs associated with the exploration tenements in Western Australia held by Central Australian Rare Earths Pty Ltd ('CARE') and exploration tenements in the UK held by Cornwall Resources Ltd ('CRL').

(ii) In September 2018 the Group sold four tenements owned by its 100% owned subsidiary Central Australian Rare Earths Pty Ltd for US$102,000 (AUD $145,000). The tenements had a cost base of US$347,000 at the time of sale which resulted in a loss on sale of US$245,000.

(iii) During 2019, the Group acquired the remaining 50% equity of CRL held by NAE for a total consideration of AUD $5.0m

The original sale agreement (May 2019) provided for consideration of $5m to be paid progressively with $A2m due on 30 May 2019, AUD $1m on 29 November 2019 and a further $1m on Net smelter sales from the project reaching $A50m. The final $A1m to be paid on net smelter sales from the project reaching $A100m.

The sales agreement was amended in July 2019 via a convertible note agreement. The convertible note agreement provided for the initial consideration of $A3m to be paid progressively with an initial payment of $A0.3m in July 2019 and the balance of $A2.7m repaid via an 11 month payment schedule.

Payments of $A.0.3m were due on 31 October 2019, 31 January 2020, 30 April 2020 with balance $A1.8m due on 26 June 2020.

Interest on the outstanding loan balance at 5% p.a. was calculated daily with payment due at the end of each quarter. A further $1m is payable for on Net smelter sales from the project reaching $A50m. The final $A1m to be paid on net smelter sales from the project reaching $A100m.

SML has provided NAE with a charge over the Company's shares in CRL and a debenture charge over CRL's property.

In the event of default, NAE has the option to convert any outstanding balances to SML shares at 90% of the VWAP for SML shares in the 10 trading days prior to the issue of the conversion notice.

The restructure was considered to represent a significant modification with the loan restructured to allow the lender the right to convert the outstanding loan balance and accrued interest to new ordinary shares should the facility be in default. It has been concluded that as the likelihood of default is low the value attached to the potential feature is immaterial. Accordingly, the loan is categorised at its face value with no value attributed to the conversion feature.

Refer Note 1 on the accounting policies for modification of a financial liability and accounting for derivative instruments.

Management have deemed the acquisition of CRL as an asset acquisition.

The additions to Exploration and Evaluation assets in the period represents the carrying value of the E&E asset at cost.

		$000
Equity accounted investment at acquisition		2,281
Consideration on acquisition of remaining 50%		2,064
Share of equity loss in joint venture		(38)
Foreign Exchange		85
Additions to Exploration and Evaluation		4,392

As the CRL acquisition has been treated as an asset acquisition the excess consideration provided over net assets acquired has been recorded within the cost base of the CRL asset.

10	Intangible Assets (continued)

(iv) Impairment of Exploration of Evaluation Costs

The recoverable amount of the CARE project is assessed to be lower than its carrying value, such that impairment charge of $1,122,000 has been recognised.

Whilst CARE have completed a number of preliminary exploration programs these are far from exhaustive and exploration potential remains. The drilling completed by CARE in 2018 highlighted extensive zones of moderate grade nickel laterite deposits. They continue to represent an area of nickel mineralisation in the region.

These assets have lower strategic value and there is no intention to spend on these assets in the short term. This is considered to be an indicator of impairment under IFRS 6. Given that the project is an early stage exploration project and the inherent difficulty to define value for ventures at this very early stage Management have therefore taken the decision to impair the asset.

Having assessed the carrying value of the asset based on its fair value less cost to sell, the Company has impaired the full value of CARE holding in the Company's books ($1.122m)

The impairment charge has reduced the carrying value of the CARE project from $1,122,000 to nil.

Other intangible assets

(v) An intangible asset arises from the contractual relationship entered into by Southern Minerals Group LLC ('SMG'), an entity wholly owned by Ebony Iron Pty Limited, with a third party for the rights to a magnetite stockpile held at that party's Cobre mine in New Mexico, USA. The intangible asset was fully amortised at the end of 31 December 2017.

(vi) The other intangible asset arises from the acquisition of Leigh Creek Copper Mine Pty Ltd and is the fair value of the offtake agreement that was in place at acquisition date.

11	Investments

Investment in associates, joint ventures and subsidiaries

The Company maintained its 50% (2018: 50%) interest in its investment in Cornwall Resources Ltd during the period to July 19 by making equal contributions with its joint venture partner. In July 19, the Company purchased the remaining interest in CRL resulting in an increase in ownership from 50% to 100%. Hence, the CRL investment has been consolidated in the year ended 2019 (see note 10 for details).

The acquisition of CRL has been treated as an Asset Acquisition.

Under this treatment the balance of the investment in the joint venture has been transferred to Deferred Exploration and Evaluation Expenditure.

Group	Investment in
	joint ventures	Total
Cost	$'000	$'000

At 1 January 2018	1,611	1,611
Additions	705	705
Share of equity loss in joint ventures	(27)	(27)
Foreign exchange difference	41	41
	________	________
At 31 December 2018	2,248	2,248

At 1 January 2019	2,248	2,248
Additions	33	33
Acquisition of remaining 50% Joint Venture interest*	2,064	2,064
Share of equity loss in joint ventures	(38)	(38)
Foreign exchange difference	85	85
Transferred to Deferred Exploration and Evaluation Expenditure.	(4,392)	(4,392)
	________	________

At 31 December 2019	-	-
	________	________

*The CRL Sale agreement (July 2019) provided for the initial consideration of $A3,000,000 (US $2.064.000) to be paid progressively with an initial payment of $A 300.000 ($US 206,000) in July 2019 and the balance of $A2.700.000 (US$1.858.000) repaid via an 11 month payment schedule.

Refer Note 10(iii) for further details of sale agreement.

Company	Investment in	Loans to	Shares in
	associates and	subsidiary	subsidiary
	joint ventures	Undertakings (ii)	Undertakings (i)	Total
Cost		$'000	$'000	$'000

At 1 January 2018	1,611	3,735	46,702	52,048
Movement in the year	-	997	-	997
Acquisition of joint venture interests	705	-	-	705
	_________	_________	_________	_________

At 31 December 2018	2,248	4,510	46,702	53,460
	_________	_________	_________	_________

At 1 January 2019	2,248	4,510	46,702	53,460
Movement in the year	33	448	-	481
Acquisition of remaining 50 % joint venture interests	2,064	-	-	2,064
Share of equity loss in joint ventures	(38)	-	-	(38)
Transfer to Deferred Exploration and Evaluation Expenditure	(4,392)		4,392	-
Foreign exchange difference	85	-	-	85
	_________	_________	_________	_________

At 31 December 2019	-	4,958	51,094	56,052
	_________	_________	_________	_________
Impairment

At 1 January 2018	-	(3,279)	(45,752)	(49,031)
Write back/(charge) for the year	-	2,199	(300)	1,899
Foreign exchange difference	-	(988)	388	600
	_________	_________	_________	_________

At 31 December 2018	-	(2,068)	(45,664)	(47,732)

At 1 January 2018	-	(2,068)	(45,664)	(47,732)
Write back/(charge) for the year		19	(1,033)	(1,014)
Foreign exchange difference		(127)	-	(127)
	_________	_________	_________	_________

At 31 December 2019		(2,176)	(46,697)	(48,873)
	_________	_________	_________	_________
Carrying Value

At 31 December 2018	2,248	2,442	1,038	5,728
	_________	_________	_________	_________

At 31 December 2019	-	2,782	4,397	7,179
	_________	_________	_________	_________

(i) Shares in subsidiary undertakings are assessed for impairment and are carried at the net asset position of the subsidiary. Refer Note 1 for further information in respect to the accounting policy.

(ii) Loans to subsidiary undertakings are assessed for impairment in accordance with IFRS9. Under IFRS9, provisions for impairment of loans in subsidiary undertakings is based on an expected credit loss assessment (refer note 1 for further detail).

IFRS9 requires the parent company to make assumptions when implementing the forward- looking expected credit loss model. This model is required to be used to assess the intercompany loan receivables from its subsidiaries for impairment. The model also assesses the Investment in Subsidiaries for impairment.

Arriving at an expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the possible credit losses that could arise and probabilities for these scenarios and an assessment of the net asset position of the subsidiary

The following were considered; the exploration project risk, the future sales potential of product, value of potential reserves and the resulting expected economic outcomes of the project.

Refer Note 1 for further information in respect to the accounting policy and Note 2 (c) in relation to the accounting judgements.

Investment in joint ventures and subsidiaries
	2019	2018
Company	$'000	$'000

Investments in subsidiary undertakings - CARE	5	826
Investments in subsidiary undertakings - IGH	-	212
Investments in subsidiary undertakings - CRL	4,392
Investments in joint ventures - CRL	-	2,248
	_________	_________

	4,397	3,286
	_________	_________

Cornwall Resources Limited

In March 2019, both the Company and New Age Exploration ("NAE") each subscribed for further shares in CRL of $32,562 (£25,001) which maintained a 50% interest held by each party. The subscription was prior to the CRL acquisition.

Under the shareholders agreement with NAE, CRL operated as a 50:50 joint venture with each party being entitled to appoint one Director. Based on this and up to the time of acquisition, the Group considered that they had joint control over the arrangement. Under IFRS 11, this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method to the date of acquisition.

During the period the company acquired the remaining 50% remaining balance of CRL held by NAE

Details of the consideration are given in Note 10 (iii)

Summarised financial information in relation to CRL has only been presented for the 31 December 2018 financial year as the investment is no longer treated as an associate at 31 December 2019.

		2018
		$'000
As at acquisition
Current assets		427
Non-current assets		3,179
Current liabilities		23
Non-current liabilities		-
Included in the above amounts are:
Cash and cash equivalents		108
Current financial liabilities (excluding trade payables)		-
Non-current financial liabilities (excluding trade payables)		-

Net Assets (100%)		3,583
Strategic Minerals PLC share of net assets 50% (2018: 50%)		1,792

Goodwill relating to joint venture		456

Carrying amount of investment in consolidated financial statements		2,248

Period ended 31 December
Revenues		12

Profit/(loss) from continuing operations		(68)
Other comprehensive income		-

Total comprehensive income (100%)		(56)

Group share of total comprehensive income 50% (2018: 50%)		(27)

Holdings of more than 20%

The Company holds more than 20% of the share capital of the following companies:

Subsidiary undertakings	Country of	Principal	Class of	%
	Incorporation	Activity	share	Owned

Central Australian Rare Earths Pty Ltd	Australia (ii)	Exploration and development	Ordinary	100%

Iron Glen Holdings Pty Limited	Australia (ii)	Holding Company	Ordinary	100%

Southern Minerals Group LLC (i)	USA (iii)	Sale of magnetite	Ordinary	100%

Ebony Iron Pty Limited	Australia (ii)	Holding Company	Ordinary	100%

Leigh Creek Copper Mine Pty Ltd (i)	Australia (ii)	Exploration and development	Ordinary	100%

Iron Glen Pty Ltd	Australia (ii)	Dormant Company	Ordinary	100%

Cornwall Resources Limited	United Kingdom (iv)	Exploration and development	Ordinary	100%

(i) Held by Ebony Iron Pty Limited

(ii) Registered office - 3 Laundess Avenue, Panania NSW 2213

(iii) Registered office - 303 Fierro Road, Hanover, New Mexico, USA, 88041

(iv) Registered office - 10 John St, London WC1N2EB

12	Business Combination (2018)

In April 2018, the company acquired a 100% interest in Leigh Creek Copper Mine Pty Ltd ("LCCM") which owns mining rights and associated copper processing assets in South Australia. The purchase adds copper exposure to company's portfolio of strategic projects. The company believes that demand and supply factors for copper over the next five years will lead to price increases going forward, which in turn will add substantial shareholder value.

The fair values of the identifiable assets acquired and liabilities assumed are provisional.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

(a) Purchase consideration

					$'000

	Cash				1,175
	Loan conversion (cash advanced during period)				39
	Equity Instruments (38,700,900 ordinary shares) (i)				1,046
	Deferred equity instruments (2,866,730 ordinary shares) (ii)				78
					_________

	Total purchase consideration				2,338
					_________

i. The fair value of the ordinary shares issued was based on the share price of GBP 0.01907. Of the 38,700,900 shares being issued, voluntary escrow arrangements ensure that one third is escrowed for three months after issue and another one third is escrowed for six months after issue. At 31 December 2018 there were no shares subject to any lock-in arrangements.

ii. The group has agreed to issue additional 2,866,730 ordinary shares, subject to no warranty claims being by the Group against the vendor, within a 12 month period from acquisition date hence the shares were issued to the vendor on 4 March 2019. The fair value of the shares for the additional consideration is GBP 0.01907 based on acquisition date price.

(b) Acquisition related costs

The group incurred acquisition related costs of $84,000 on legal fees and due diligence. The costs have been included in 'administrative expenses'.

					$'000
	Development Asset - Mining information/ tenement				4,559
	Intangible Asset - Offtake agreement				625
	Property Plant and Equipment				78
	Non-current trade and other receivables				117
	Other receivables				4
	Environmental liability				(401)
	Provision for mining royalty				(482)
					_________

	Fair value of net assets acquired				4,500
					_________

The valuation techniques used for measuring the fair value of material assets and liabilities acquired were as follows:

Asset Acquired	Valuation technique
Property plant and equipment	Depreciated replacement cost: Depreciated replacement cost reflects adjustment for physical deterioration as well as functional and economic obsolescence.
Development Asset	Discounted Cash Flow
Intangible Asset	Discounted Cash Flow
Environmental provision	Refer note 20
Provision for mining royalty	Refer note 20

(d) Gain from bargain purchase.

Gain from bargain purchase arising from the acquisition has been included in "Other income" in the profit and loss with the amount calculated as follows:

				$'000
Purchase Consideration				(2,338)
Fair Value of net assets acquired				4,500
				_________
Gain on bargain purchase				2,162
				_________

A gain of $2.16 million has been recognised. LCCM had been placed under care and maintenance by its previous owners Resilience Mining Australia Pty Ltd ("RMA") due to multiple factors including high operating cost, poor contractor management, poor leach pad design and processing recovery issues. Strategic minerals purchased LCCM from RMA as the Project represents a near-term low-capex copper production opportunity with early cashflow generation potential.

13	Property, plant and equipment
		Development	Plant and
		Asset	Machinery	Total
	Group	$'000	$'000	$'000
	Cost
	At 1 January 2018	-	389	389
	Acquired in business combination (i)	4,559	78	4,637
	Additions in the year	797	-	797
	Foreign exchange difference	(449)	(6)	(455)
		________	________	________

	At 31 December 2018	4,907	461	5,368

	Additions **	2,293	265	2,558
	Acquired on acquisition	-	7	7
	Research and development incentive	(796)	-	(796)
	Foreign exchange difference	(13)	2	(11)
		________	________	________

	At 31 December 2019	6,391	735	7,126
		________	________	________
	Depreciation
	At 1 January 2018	-	(132)	(132)
	Charge in the year	-	(64)	(64)
	Foreign exchange difference	-	(2)	(2)
		________	________	________

	At 31 December 2018	-	(198)	(198)

	Charge in the year	-	(17)	(17)
	Disposals	-	-	-
	Acquired on acquisition of CRL	-	(4)	(4)
	Foreign exchange difference	-	(9)	(9)
		________	________	________

	At 31 December 2019	-	(228)	(228)
		________	________	________
	Carrying value

	At 31 December 2017	4,559	257	4,816

	At 31 December 2018	4,907	263	5,170
		________	________	________

	At 31 December 2019	6,391	507	6,898
		________	________	________

(i) In April 2018, the company acquired a 100% interest in Leigh Creek Copper Mine Pty Ltd ("LCCM") which owns mining rights and associated copper processing assets in South Australia. See note 12 for further details.

(ii) During the year $127,000 of pre-production revenue was offset against costs incurred on the Development Asset. Common convention during commissioning and test production phases of operation is such that all revenues and operating costs are capitalised to the cost of the asset in the Statement of Financial Position until commercial production is achieved.

14	Inventories
		2019	2018
		$'000	$'000

	Finished goods held for sale	3	4
		________	________

		3	4
		________	________

No inventories have been written off to profit or loss in the year (2018: Nil).

15	Trade, other receivables and prepayments
		2019	2018
	Group	$'000	$'000
	Current
	Trade receivables	317	232
	Less: provision for impairment of trade receivables	-	-
		_________ 317	_________ 232

	Prepayments	132	32
	Other receivables	598	-
	VAT/GST Receivable	33	53
		________	________

		1,080	317
		________	________
	Non Current
	Rehabilitation bond	140	141
		________	________

		140	141
		________	________
	Financial assets held at fair value through profit and loss
	Investments in quoted equity securities	-
		________	________
	Company
	Current
	Prepayments	29	14
	VAT/GST Receivable	11	11
		________	________

		40	25
		________	________

The Group's trade receivables are derived from magnetite customers at Cobre, whose credit quality is assessed by considering the customers financial position, past experience and other factors. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. Within 45 days of the year end, the Group had collected 100% of the trade receivables outstanding at 31 December 2019. The Group did not recognise any impairment and believes that credit risk is limited as customers pay within a short period of time. Other receivables includes $598,000 receivable from the Australian Tax office being a Research and Development Tax incentive, which was received May 2020 and applied to the repayment of the associated loan (Refer note 19).

The Group applies the IFRS 9 simplified approach to measuring credit losses using a lifetime expected credit loss provision for trade receivables. Based on the assessment, the carrying value of trade receivables, classified at amortised cost, approximated the fair value.

16	Cash and cash equivalents
		2019	2018
	Group	$'000	$'000

	Bank current accounts - unrestricted	519	1,840
		________	________

	Cash and cash equivalents in the statement of cash flows	519	1,840
		________	________

	2019	2018
Company	$'000	$'000

Bank current accounts - unrestricted	3	304
	________	________

Cash and cash equivalents in the statement of cash flows	3	304
	________	________

The Group's balances are held with well-known and highly rated UK, USA and Australian banks.

17	Restricted cash
		2019	2018
	Group	$'000	$'000

	Bank - restricted	-	100
		________	________

The restricted cash related to a cash deposit held for a Standby Letter of Credit as security for a supplier. This was removed during 2019.

18	Trade and other payables
		2019	2018
	Group	$'000	$'000

	Trade payables	403	266
	Other payables	47	22
	Accruals	1	66
		________	________

		451	354
		________	________

	Company

	Trade payables	107	43
	Other payables	3	22
	Subsidiary payable	-	77
	Accruals	-	64
		________	________

		110	206
		________	________

Book values approximate to fair value at 31 December 2019 and 2018.

19	Loans and Borrowings
		Loan	Loan
		R&D	CRL
		Grant	Acquisition	Total
		$'000	$'000	$'000
	Group

	As at 1 January 2019	-	-	-
	Loan Advance	403	1,858	2,261
	Loan repayments	-	(206)	(206)
	Interest	16	21	37
	Foreign exchange	-	19	19
		________	________	________

		419	1,692	2,111
		________	________	________
	Company

	As at 1 January 2019	-	-	-
	Loan Advance	-	1,858	1,858
	Loan repayments	-	(206)	(206)
	Interest	-	21	21
	Foreign exchange	-	19	19
		________	________	________

		-	1,692	1,692
		________	________	________

The terms and conditions of the loans are as follows:

Loan - CRL acquisition

In July 2019 SML entered into a Convertible Note with NAE to finalise the purchase of CRL.

SML made an initial payment totalling AUD $300,000 and entered into an 11 month payment schedule for the balance of AUD $2,700,000 (US$1,858,000). A payment of AUD $300,000 (US$206,000) was paid on or around 31 October 2019. Further payments of AUD $300,000 (being approximately US$206,000) are payable on 31 January 2020 and 30 April 2020. The balance of AUD $1,800,000 (being approximately US$1,200,000) plus interest is payable on or before 26 June 2020.

The interest rate on the loan of AUD $2,700,000 (US$1,858,000) is 5% pa, calculated on a daily balance basis, payable at the end of each calendar quarter to allow for early repayment.

SML has provided NAE with a charge over the Company's shares in CRL, a debenture charge over CRL's property and, in the event of default, NAE has the option to convert any outstanding balances to SML shares at 90% of the VWAP for SML shares in the 10 trading days prior to the issue of the conversion notice.

Loan - R&D Grant

In September 2019 SML entered into a loan agreement against the anticipated receipt of a Research and Development Tax Incentive (RDTI) from the Australian Tax Office.

The loan represents approx. 80% of the anticipated RDTI calculated at the time of submission to the Loan provider. Interest at 15% per annum accrues to the loan and the Loan is repaid upon receipt of the RDTI.

The group received AUD $575,000 (US$403,000) in September 2019. The group received a further AUD $102,000 (US$72,000) in Jan 2020 based a revised RDTI. The loan was repaid in May 2020 (refer note 30)

20	Non Current Liabilities
		Provision for	Provision for
		environmental	mining
		Liability¹	Royalty²	Total
		$'000	$'000	$'000
	Group

	At 1 January 2018
	Acquired in business combination	401	482	883
	Foreign exchange	(40)	(47)	(87)

	At 1 January 2019	361	435	796

	Finance Charges	35	-	35
	Foreign exchange	(1)	(2)	(3)
		________	________	________

	At 31 December 2019	395	433	828
		________	________	________

¹ LCCM's operations are subject to specific environmental regulations. The Group has conducted an assessment of the environmental rehabilitation provision arising from these regulations and has recognised an amount, which reflects the fair value of such liabilities.

² Under the terms of the various agreements in relation to the LCCM, the Company would have the following contingent liabilities:

- 1% royalty on copper sales payable over the life of the project; and

- AUD $100,000 following 3,000 tonnes of copper sales from the project.

In accordance with IFRS3 the Group has recognised for the estimated fair value of the mining royalty in these financial statements.

21	Deferred revenue
		2019	2018
	Group	$'000	$'000

	Deferred revenue	-	900
		________	________

		-	900
		________	________

The Group currently recognises revenue when the control of product is transferred. Control of goods is transferred at the point of time, when product is passed to the buyer at the gate.

Deferred revenue represents advance payments received for future product deliveries. Revenue will be recognised in the profit and loss statement when the product is passed to the buyer at the gate.

During 2019, deferred revenue of $900,000 was deemed to be income and was released to Profit and Loss.

The right to ownership of the product (for which the advance payments had been received) had lapsed.

As a result, the revenue was deemed as earned. This revenue is classified as 'other income".

22	Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using the tax rate applicable for losses in the relevant jurisdiction. However, the deferred tax asset as at 31 December 2019 was nil (2018: nil) as the tax losses were not expected to be recovered in the foreseeable future (see note 8 for details).

23	Share Capital and Premium
		Number	Issue Price	Share Capital $,000	Share Premium $,000	Total $'000
	At 1 January 2018 Ordinary shares (par value of 0.1 pence each)	1,322,492,227		2,009	45,935	47,944

	Exercise of options on 30 January 2018	2,000,000	1.00p	3	26	29
	Exercise of options on 30 January 2018	3,000,000	1.00p	4	38	42
	Exercise of options on 30 January 2018	10,000,000	1.00p	14	128	142
	Placement on 12 April 2018	38,700,900	1.91p	55	-	55
	Exercise of options on 9 August 2018	3,000,000	1.00p	4	35	39
	Exercise of options on 9 August 2018	2,000,000	1.00p	3	23	26
	Exercise of options on 9 August 2018	1,500,000	1.00p	2	17	19
	Exercise of options on 19 December 2018	1,000,000	1.00p	1	12	13
		____ ______		_______	_______	_______

	At 31 December 2018 Ordinary shares of 0.1 pence each	1,383,693,127		2,095	46,213	48,308
		_____ _____		_______	_______	_______

	Exercise of options on 19 February 2019	1,000,000	1.00p	1	13	14
	Exercise of options on 19 February 2019	15,000,000	1.00p	20	192	212
	Exercise of options on 19 February 2019	1,500,000	1.00p	2	19	21
	Non Cash Share Consideration - LCCM*	2,866,730	1.91p	4	-	4
	Share Issue**	63,571,425	1.40p	81	1,049	1,130

	Issue Costs on Placement				(71)	(71)
		_ _________		_______	_______	_______

	At 31 December 2019 Ordinary shares of 0.1 pence each	1,467,631,282		2,203	47,415	49,618
		__ _______		_______	_______	_______

17,500,000 director options (2018:22,500,000) were exercised during the year.

* During the 2019 year, the Company issued 2,866,730 shares at 1.91 pence being $72,000(£54,669) as balance consideration for purchase of 100% of Leigh Creek Copper Mine Pty Ltd.

** During the 2019 year, the Company issued 63,571,425 shares at 1.4 pence raising $1,130,000 (£890,000). Issue costs on placement were $71,000 ((£56,000)

24	Share based payments

The Group has a share-ownership compensation scheme for senior executives of the Group whereby senior executives may be granted options to purchase ordinary shares in the Company. There were nil (2018: 178,750,000) options issued to directors and senior executives during the year and 17,500,00 (2018: 22,500,000) options were exercised during the year.

The Group historically issued options and/or warrants to third parties in settlement of liabilities to strategic suppliers. Each share option or warrant converts into one ordinary share of Strategic Minerals Plc upon exercise. No amounts are paid or payable by the recipient of the options or warrants. The options and warrants carry neither rights to dividends nor voting rights at shareholders meetings.

Warrants and Options

Number of outstanding warrants and options at 31 December 2019 and a reconciliation of their movements during the year were:

Date of	Granted at	Issued	Lapsed/	Granted at	Exercise		Exercise Period
grant	31.12.18		Cancelled/ Exercised	31.12.19	price		From	To

10.04.15	8,000,000 (i)	-	(8,000,000)	-	1.00p	10.04.15		30.06.19
06.01.17	9,500,000 (i)	-	(9,500,000)	-	1.00p	06.01.17		30.06.19
15.02.18	72,000,000 (ii)	-	-	72,000,000	2.75p	15.02.18		30.06.20
15.02.18	38,500,000 (iii)	-	-	38,500,000	3.75p	15.02.18		30.06.21
15.02.18	17,500,000 (iv)	-	-	17,500,000	5.00p	15.02.18		30.06.22
09.08.18	35,250,000 (ii)	-	-	35,250,000	2.75p	09.08.18		30.06.20
09.08.18	10,750,000 (iii)	-	-	10,750,000	3.75p	09.08.18		30.06.21
09.08.18	4,750,000 (iv)	-	-	4,750,000	5.00p	09.08.18		30.06.22
	_________	_________	_________	_________

	196,250,000	-	(17,500,000)	178,750,000
	_________	__________	__________	__________

(i) Market based vesting condition of 3.0p volume weighted average share price over 5 consecutive days and which vested in May 2018.

(ii) Market based vesting condition of 5.5p volume weighted average share price over 5 consecutive days.

(iii) Market based vesting condition of 7.5p volume weighted average share price over 5 consecutive days.

(iv) Market based vesting condition of 10.0p volume weighted average share price over 5 consecutive days.

The warrants and options outstanding at 31 December 2019 had an exercise price of between 2.75p and 5.00p, a weighted average exercise price of 3.30p (2018: 2.92p) and a remaining weighted average contractual life of 374 days (2018: 689 days). The weighted average exercise price of warrants and option lapsed, cancelled or exercised during the year was 1.00p (2018: 1.00).

Of the total number of warrants and options outstanding at 31 December 2019, nil (2018: 17,500,000) had vested and were exercisable.

The following information is relevant in the determination of the fair value of options granted during the 2018 year.

	15.02.18 options	15.02.18 Options	15.02.18 options	09.08.18 options	09.08.18 options	09.08.18 Options

Share price at date of grant	2.00p	2.00p	2.00p	1.27p	1.27p	1.27p
Exercise price	2.75p	3.75p	5.00p	2.75p	3.75p	5.00p
Market vesting condition	5.50p	7.50p	10.00p	5.50p	7.50p	10.00p
Expected volatility	60%	60%	60%	60%	60%	60%
Expected dividend	Nil	Nil	Nil	Nil	Nil	Nil
Contractual life	2.4 years	3.4 years	4.4 years	1.9 years	2.9 years	3.9 years
Risk free rate	0.79%	0.79%	0.79%	0.79%	0.79%	0.79%
Estimated fair value of option	0.39p	0.40p	0.41p	0.11p	0.13p	0.15p

Expected volatility was determined based on the advice of an independent expert and recent historic volatility of the Company's shares. Had a longer term historical volatility of 100% been used the value of the options would have been 0.87p, 0,97p, 1.05p, 0.41p, 0.49p and 0.56p respectively based on the above table. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

25	Notes supporting statement of cash flows - Financing activities

	Loan CRL	Loan R&D
	Acquisition	Grant	Total
	$'000	$'000	$'000
Group	(Note 19)	(Note 19)

At 1 January 2018	-	-
Cash Flows	-	-	-
Non Cash Flows
	-	-	-
	_______	_______	_______
At January 2019	-	-

Cash Flows	(206)	400	184
Non Cash Flows
	-	-
Recognised on asset acquisition	1,858	-	1,858
Interest accruing in period	21	17	38
Effect of Foreign Exchange	19	2	21
	________	________	________
At December 2019	1,692	419	2,111
	________	________	________
Company

As at 1 January 2018	-	-	-
Cash Flows	-	-	-
Non Cash Flows
	-	-	-
	_______	_______	_____
As at 1 January 2019	-	-	-

Cash Flows	(206)	-	(206)
Non Cash Flows
	-	-	-
Recognised on asset acquisition	1,858	-	1,858
Interest accruing in period	21	-	21
Effect of Foreign Exchange	19	-	19
	________	________	________
At 31 December 2019	1,692	-	1,692
	________	________	________

26	Prior year restatement

The prior year restatement relate to the reallocation of US$992,000 recognised in share premium for the share issue on the acquisition of LCCM on 12 April 2018 over to the merger reserve. This is due to merger relief being available for the transaction in accordance with section 612 of the Companies Act 2006.

27	Commitments

(a) Capital expenditure commitments

At 31 December 2019, no capital commitments existed (2018: Nil).

(b) Exploration commitments

So as to maintain current rights to tenure of exploration tenements, the group will be required to outlay amounts in respect of tenement rent to the relevant governing authorities and to meet certain annual exploration expenditure commitments. These expected outlays (exploration expenditure, rent and licence fees), which arise in relation to granted tenements are as follows:

	2019	2018
Group	$'000	$'000

due within one year	549	195
due after one year and within five years	2,270	779
due after five years	1,984	-
	________	________

	4,802	974
	________	________

As part of the terms of agreement in relation to the purchase of CRL, the company had a commitment of AUD $1m on net smelter sales arising from CRL production reaching AUD $50m and a further AUD $1m on net smelter sales arising from CRL production reaching AUD $100m.

These milestone events triggering deferred consideration payments are considered to be uncertain. When the payments become probable, the group will raise a liability.

28	Controlling party

There is no ultimate controlling party of the Group.

29	Related party transactions

Director and key management personnel remuneration has been disclosed in Note 7.

Directors interest in Shares and Options have been disclosed in the Directors remuneration. Report.

The Group held a 50% holding in Cornwall Resources Ltd to July 2019 as disclosed in Note 11. P. Wale is both a director of the group and chairman of Cornwall Resources Ltd ('CRL'). Fees paid by CRL for services provided by P. Wale to the Group were nil (2018: $3,000).

J Harrison is a director of the group and a consultant to CRL. Fees paid by CRL for services provided by J Harrison up to July 2019 were $29,000 (2018: $50,742)

There were no other relevant transactions with Directors or other related parties.

30	Events after the reporting period

Covid-19

At the date of this report, SML Board and senior management continue to monitor government advice and to plan around the rapidly evolving situation regarding the spread of Covid-19. Whilst the Company has been taking action to mitigate the potential impact on colleagues, clients and contacts, the Company's operations are currently unaffected.

The Company's priorities are safeguarding the safety, health and wellbeing of our colleagues and clients. We have established a safe work plan that will allow continued operations during this period. Staff and contractors are equipped for remote working, with access to secure systems.

In line with the spread of Convid-19, commodity prices have suffered a sharp decline. While this has had no impact on our Cobre, due to our ability to operate contact less on site, it has, due to lower copper prices, reduced the ability of the Group to immediately progress the Leigh Creek project. However, this impact has been significantly ameliorated by the fall in the Australian exchange rate to the US dollar.

The potential impact of COVID-19 is discussed further in principal risks and uncertainties.

Brexit

It is the view of the Board that, given the Group's focus on the UK, Australia and the USA the Company will not be materially affected by the exit from the European Union by the UK. The Board will continue to monitor the situation while the implementation period is underway.

R and D Tax Refunds and Associated Loans

During 2019, the Company borrowed against expected entitlements to Research and Development Tax Refunds associated with its activities. The refunds have now been received in May 2020 and all associated loans cleared.

Result of Arbitration with Cobre Client

In 2019, the Company's wholly owned subsidiary, Southern Minerals Group ("SMG"), demanded payment from its major Cobre client for breach of its contract with SMG. As payment was not made, SMG commenced an arbitration process, as required under the contract, which resulted in a finding in SMG's favour for $21.9m plus interest. As the Company is uncertain as to the credit capacity of the client to meet such a payment, the Company has adopted a view that potential income will only be recorded when it is certain that funds will be received.

June 2020 Fund Raise

In the first week of June 2020, the Company undertook an equity raising of £1,200,000 before expenses by way of a private placement and the exercise of broker options which in combination resulted in the subscription of 266,666,667 new ordinary shares of 0.1p each in the Company at a price of 0.45p per share.

STRATEGIC MINERALS PLC

Competent Persons Statement

The information in this report that relates to Redmoor Project is based on information compiled and reviewed by Paul Gribble C.Eng. a Fellow of the Institute of Materials, Minerals and Mining (FIMMM), and who is Principal Geologist of Geologica UK (Geologica). Paul Gribble has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Paul Gribble is also a Competent Person as defined in the Note for Mining and Oil & Gas Companies which form part of the AIM Rules for Companies.

The information in this report that relates to the LCCM project is based on information compiled by Mr. David Larsen, who is a Member of the Australian Institute of Geoscientists (Member No. 1976). Mr. Larsen is the Principal Geologist at Terra Consulting Pty Ltd and is a consultant to the Company. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012) and a qualified person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr. Larsen has over 30 years' Australia and international experience in exploration, mining geology and resource estimation for gold, base metals and iron ore deposits.

The information in this report relating to the CARE project is based on information compiled by Mr. Graeme Purcell, who is a Member of the Australasian Institute of Geoscientists. Mr. Purcell is the Principal of Petrichor Geological and is a consultant to the Company. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a qualified person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr. Purcell has over 20 years' Australia and international experience in exploration for precious and base metals.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR UORURRUUNUUR

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Strategic Minerals (SML)

Thursday, 21st November 2024

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Results for the Year Ended 31 December 2019

STRATEGIC MINERALS PLC

STRATEGIC MINERALS PLC

FOR THE YEAR ENDED 31 DECEMBER 2019

STRATEGIC MINERALS PLC

STRATEGIC MINERALS PLC

FOR THE YEAR ENDED 31 DECEMBER 2019

STRATEGIC MINERALS PLC

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR THE YEAR ENDED 31 DECEMBER 2019

STRATEGIC MINERALS PLC

FOR THE YEAR ENDED 31 DECEMBER 2019

(iv) Impairment of Exploration of Evaluation Costs

The recoverable amount of the CARE project is assessed to be lower than its carrying value, such that impairment charge of $1,122,000 has been recognised.

The impairment charge has reduced the carrying value of the CARE project from $1,122,000 to nil.

2018

$'000

As at acquisition

Current assets

427

Non-current assets

3,179

Current liabilities

23

Non-current liabilities

-

Included in the above amounts are:

Cash and cash equivalents

108

Current financial liabilities (excluding trade payables)

-

Non-current financial liabilities (excluding trade payables)

-

Net Assets (100%)

3,583

1,792

Goodwill relating to joint venture

456

Carrying amount of investment in consolidated financial statements

2,248

Period ended 31 December

Revenues

12

Profit/(loss) from continuing operations

(68)

Other comprehensive income

-

Total comprehensive income (100%)

(56)

Group share of total comprehensive income 50% (2018: 50%)

(27)

STRATEGIC MINERALS PLC

Competent Persons Statement

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