TIDMSML
RNS Number : 5728N
Strategic Minerals PLC
10 August 2017
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.
10 August 2017
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Q2 Update and Record July Monthly Sales at Cobre
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), the diversified
mineral development and production company, is pleased to provide
the following update on the Company's operations for the three
months to June 2017 and to inform the market of record July
domestic sales at its Cobre magnetite stockpile in New Mexico,
USA.
Operational Highlights:
Cobre
-- Transport issues in June see Cobre quarter sales dip before posting record sales in July
-- New customer contract commenced June 2017 bolstering cash balances
-- Profit margin at Cobre for half year to June quarter maintained around 50%
-- Final rail settlement payment (US $175,000) received
Redmoor
-- Drilling programme progressed at Redmoor
CARE
-- Acquisition of balance of Central Australian Rare Earths Pty Ltd (CARE) completed
Financial Highlights:
-- Cash of US$1.359m as at 30 June 2017 (US$0.695m at 31 March 2017)
-- All Directors' and Management's options now fully vested
-- Board targets a market capitalisation of GBP100m over the next five years
Commenting, Alan Broome, Non-Executive-Chairman of Strategic
Minerals, said:
"Strategic Minerals continues to establish itself as a viable,
long term, global minerals company with a diversified portfolio.
With further strong performance at Cobre and sales ensuring that
the Company is cash generative, the Company took the opportunity to
acquire the balance of CARE and to push ahead with self-funded
exploration at both Redmoor and Hanns Camp, as well as actively
considering new projects.
"The cash balance at the end of June highlights the commencement
of the new customer contract at Cobre. This reinforces our view
that 2017 is likely to be materially profitable and we are excited
about SML's potential for increasing earnings and profitability.
The Board and Management continue to review both internal and
external opportunities to ensure that cash resources are utilised
most effectively in order to provide maximum value to
shareholders."
Cobre magnetite tailings operations
In June 2017, delays relating to both major clients' road
transport slowed movements out of Cobre. As Cobre's newest customer
has a minimum monthly sales requirement, the customer made a
prepayment for sales not transported which helped to bolster cash
balances but was not reflected in the June quarter sales.
Currently, it is expected that the tonnage associated with this
prepayment will be fully absorbed within the September quarter.
As a result of the resolution of these transport problems, the
July 2017 sales reached a record for domestic sales in any month -
$486,560 (7,206 tons). Sales and volumes details for the June
quarter are as follows:
Tonnage Sales (US $'000)
Year 3 months to June 12 months to June 3 months to June 12
months to June
2017 10,446 41,828 $602 $2,430
2016 4,839 19,474 $329 $1,320
2015 2,540 13,101 $170 $888
The management at Cobre has not only been able to increase sales
but also maintain profit margins at around 50% for the six months
to June 2017. This, combined with expected further improvements in
sales over the remainder of the year, bodes well for profitability
in 2017.
The quarter also saw receipt of the final payment (US $175,000)
under the rail settlement agreement.
Management at Cobre continues to negotiate with the mine owners
for extended guaranteed access to the magnetite stockpile. At
present, the lack of progress indicates that the mine owners are
reluctant to commit to a "locked in" longer term (3-5 years)
contract. However, the mine owners have asked us to join them in
relocating our offices at Cobre, which indicates that they are
anticipating our involvement for an extended period.
During the quarter, the SML Board visited the Cobre operations,
were introduced to all staff, visited its largest client and
conducted the first SML Board Meeting to be held in New Mexico.
Additionally, the Managing Director met with the newest client in
New York to discuss and help implement their contract.
Cornwall Resources Limited ("CRL") Operations
The June quarter saw the drilling programme begin in earnest. As
reported in the Company's RNS dated 31 July 2017, a number of drill
holes were completed and laboratory testing is being undertaken on
the cores obtained. On the basis of the holes drilled to date, the
joint venture has concluded that a further two holes would be added
to Phase 1 of the drilling programme to better define the existing
resource and provide further insight to the appropriate design and
positioning of Phase 2 holes.
In line with comments made during the June quarter, interim
drill results are to be released in the September quarter, which
should also see completion of Phase 1 of the drilling programme.
Full results from Phase 1 are expected to be released in the
December quarter during which Phase 2 drilling may be
undertaken.
Local council and the community in general continue to be
supportive of CRL's operations. The SML Board visited the CRL
operations during the June quarter and SML's Chairman Alan Broome
presented the Callington Council with a painting of local landmark
Kit Hill in appreciation of their support.
Central Australian Rare Earths ("CARE") Operations
During the quarter, SML completed the acquisition of the
remainder of the ownership of CARE. This was considered desirable
from both a value perspective and from SML's desire to control the
pace at which development is progressed.
As reported in the Company's RNS of 26 June 2017, the Company
formulated, during the June quarter, its development plans for the
remainder of 2017. In relation to Hanns Camp, the Company outlined
and is currently making good progress with plans to undertake a
substantial number of air core holes, drilling some 2,000 metres.
This programme is aimed at outlining the tenements' potential for
producing Cobalt and to a lesser extent Nickel from a laterite
source. It is considered that this first stage will provide insight
into a second stage drilling programme to drill deeper in search of
Nickel Sulphide.
While air core drilling should be completed at Hanns Camp during
the September quarter, results are not likely to be released until
the December quarter.
Recent historical information sourced on the Mount Weld tenement
have caused a re-appraisal of the plans to undertake soil sampling
and to review the best use of SML's funds in relation to
exploration of this tenement.
Financials and Operations
Over the period, the parent entity continued to maintain a tight
control on overheads which remain, on an annualised basis, under
US$1 million (excluding variable project review costs, foreign
currency movements and non-cash adjustments).
With sizeable cash flows and receipt of the final rail
settlement payment, the Company has a healthy cash balance, which
at 30 June 2017 was USD 1.359m (31 March 2017: USD 0.695m). Given
the level of profitability being currently generated from the Cobre
project, these balances are expected to build throughout the year
despite committing funds to development projects.
During the June quarter, the remainder of Directors and
Management options became vested as the share price had a sustained
period above the final vesting requirement of 3p per share.
As SML's market value was circa GBP25m to GBP30m, the Board met
in June to consider SML's likely potential value, over the next
five years. It concluded that SML is well positioned with a range
of assets;
-- Operating - revenue producing (Cobre - magnetite):
-- Brownfields - advanced exploration (Redmoor - tin/tungsten); and
-- Greenfields - early stage exploration (Hanns Camp - featuring
a variety of highly sought-after commodities, including: nickel,
cobalt, rare earths and gold).
This diversity provides SML a high degree of flexibility and
opportunity for growth and is likely to be coupled with further
acquisitions.
In light of these factors, the Board adopted a target of
achieving a GBP100m market capitalisation within this five-year
timeframe. In line with this target, the Board is reviewing the
potential to issue further options as a profit sharing
incentive.
The Company looks forward to providing further updates in due
course.
For further information, please contact:
+61 (0) 414
Strategic Minerals plc 727 965
John Peters
Managing Director
www.strategicminerals.net
Follow Strategic Minerals on:
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+44 (0)7825
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Financial PR
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Joe Burgess
Notes to Editors
Strategic Minerals Plc is an AIM-quoted, diversified mineral
development and production company with projects in the United
States of America, the UK and Australia. The Company is focused on
acquiring and developing cash generative, high quality projects
which meet local market demand for commodities and utilising this
cash flow to undertake value added exploration.
In September 2011, Strategic Minerals purchased its first cash
generating asset; the Cobre magnetite tailings dam project in New
Mexico, USA which it brought into production in 2012 and which
continues to provide a revenue stream for the Company. The
portfolio was expanded in January 2016 with the acquisition of
shares in Central Australian Rare Earths Pty Ltd, which holds
tenements in Western Australia and the Northern Territory that are
prospective for cobalt, gold, nickel sulphides and rare earth
elements. The Company has since acquired all shares in Central
Australian Rare Earths Pty Ltd. In May 2016, an additional
exploration asset was acquired when the Company entered into an
agreement with New Age Exploration Limited to acquire up to 50% of
the Redmoor Tin/Tungsten project in Cornwall, UK. This 50%
acquisition has now been completed and drilling at the project has
commenced.
This information is provided by RNS
The company news service from the London Stock Exchange
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