TIDMSML
RNS Number : 0804D
Strategic Minerals PLC
25 June 2021
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.
25 June 2021
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Leigh Creek Copper Mine Update
Approval Process, Funding Progress and Appointment of Mine
Manager
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable,
producing mineral company is pleased to confirm that its wholly
owned subsidiary, Leigh Creek Copper Mine ("LCCM"), has received
notification from the Department of Energy and Mining of South
Australia ("DEM") of its intention to finalise its assessment on
the Paltridge North deposit ("Paltridge North") Programme for
Environmental Protection and Rehabilitation ("PEPR") during July
2021.
Highlights
-- DEM is currently assessing the latest element of the PEPR
submission and has informed the Company of its intention to
finalise the assessment during July (providing previous feedback
has been adequately addressed).
-- Appointment of John Speck as LCCM's Mine Manager.
-- The Board has elected to seek additional funding to conduct
both production at Paltridge North and exploration simultaneously,
as well as preparing LCCM for a potential listing on the Australian
Stock Exchange ("ASX").
-- Aetas Global Capital Pte Ltd ("Aetas") has been appointed to
assist the Company in its endeavours to raise, preferably by way of
debt at the LCCM level, AUD $10m to fund production at Paltridge
North, exploration work and pre-listing costs.
PEPR Approval Process
Based on discussions with the DEM, the Board understands they
are currently in the latter stages of finalising their assessment
and the approval process should conclude during July.
In light of the Board's expectation that this approval will be
forthcoming in July 2021, the Company has appointed Mr John Speck
as Mine Manager for LCCM.
Mr Speck's career in the mining industry spans over 25 years in
commodities that include copper, gold, iron ore and nickel. He has
worked for both contractors and mining companies in a variety of
technical roles as well as in supervisory and management roles. He
is experienced with in-house project management of pre-feasibility
and definitive feasibility studies as well as a range of
consultancy roles. His areas of expertise include mine
optimisation, design and scheduling and he holds a Western
Australian Quarry Manager's Certificate.
Mr Speck will commence his position in the first week of July
and the timing of Mr Speck's appointment reflects;
1. Management and the Board's confidence that LCCM will be
undertaking production in the second half of 2021 subject to the
receipt of required funding; and
2. The need to commence work on tendering, reviewing, executing
and managing both the mining and processing sub-contractors
expected to be employed in operating the Mountain of Light
plant.
Financials and Funding
For over a year, the Company has been engaged in discussion with
either potential joint venture partners or funders to develop LCCM.
Progress on this has been partly hampered by the COVID-19 depressed
copper price in early 2020 and the relatively small size of funding
sought. With the strong rebound in copper prices, which Macquarie
Bank forecast to remain largely at the higher levels in both the
medium to longer term, the funding emphasis has shifted to a
stronger debt focus, but also to underwrite the future development
of LCCM via exploration. To understand the change in underlying
financials, the following table shows forecast values one year ago,
at time of acquisition and under current internal management
expectations for long term pricing:
Measure Unit June 2020 Acquisition (March June 2021
Copper US $2-50 2018) Copper US $4-00
AUD/USD 0.6500 Copper US $3-00 AUD/USD 0.7800
AUD/USD 0.7000
Sold Copper Tonnes 15,976 15,976 15,976
------------- ----------------- ------------------- -----------------
Life Of Mine ("LOM") Months 110 110 110
------------- ----------------- ------------------- -----------------
US$/lb
Cost of production Cu 1.17 1.26 1.41
------------- ----------------- ------------------- -----------------
Pre-Tax Cash USD Million 24.65 35.43 58.47
------------- ----------------- ------------------- -----------------
EBITDA Margin % 45% 51% 59%
------------- ----------------- ------------------- -----------------
NPV Before tax
@ 8% USD Million 18.11 26.73 44.47
------------- ----------------- ------------------- -----------------
Incremental %
change in NPV
compared to June
2020 % 48% 66%
------------- ----------------- ------------------- -----------------
The Company has recently engaged Aetas Global Capital Pte Ltd
("Aetas") ( http://aetas-global.com/ ) to assist it in introducing
suitable counterparties. Aetas has a strong track record of having
successfully raised funding for other resource projects closely
known to the Company. Aetas has had considerable success with
project funding and has an extensive Asia-Pacific investor
network.
Prior to their appointment, Aetas undertook a due diligence
review of LCCM and from this identified that;
a) the target funding level to attract appropriate engagement
was likely to be above the level LCCM was seeking to solely restart
production at Paltridge North; and
b) that the project's resource upside needed to be augmented via
an additional exploration program for both copper oxide and
sulphide deposits.
In light of these conclusions, the Board decided to mandate a
funding brief for AUD $10m to include funding required to get into
production at Paltridge North and conduct a new exploration
program. In light of the project's increased profitability, the
Board considered it appropriate to concentrate on debt funding,
where possible.
In order to ensure the greatest flexibility to obtain funding,
Aetas has recommended that the Company target the potential listing
of the LCCM project on the ASX within a year. This is consistent
with the Board's broad strategy as previously announced in November
2020 and, once funding is obtained, work will commence on this
approach.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"Although the Company has been anticipating an expected PEPR
approval by the end of June 2021, the slight delay into July still
ensures that plans continue unchanged, with the recent appointment
of a mine manager and the engagement of Aetas.
"Aetas have begun making introductions and, given the current
favourable market conditions for copper projects, the Board feels
confident that a funding solution to recommence LCCM production and
advance exploration will be secured.
"Sensitivity analysis for LCCM clearly demonstrate the expected,
significant returns from the project. The use of the funds to
undertake production and new exploration, continue to de-risk LCCM
and further enhance its future prospects
"The planned undertaking of an ASX listing for a South
Australian Copper project seeks to further secure the overall
position of the parent Company. "
For further information, please contact:
+61 (0) 414 727
Strategic Minerals plc 965
John Peters
Managing Director
Website: www.strategicminerals.net
Email: info@strategicminerals.net
Follow Strategic Minerals on:
Vox Markets: https://www.voxmarkets.co.uk/company/SML/
Twitter: @SML_Minerals
LinkedIn: https://www.linkedin.com/company/strategic-minerals-plc
+44 (0) 20 3470
SP Angel Corporate Finance LLP 0470
Nominated Adviser and Broker
Matthew Johnson
Ewan Leggat
Charlie Bouverat
Notes to Editors
Strategic Minerals plc is an AIM-quoted, profitable operating
minerals company actively developing projects tailored to materials
expected to benefit from strong demand in the future. It has an
operation in the United States of America along with development
projects in the UK and Australia. The Company is focused on
utilising its operating cash flows, along with capital raisings, to
develop high quality projects aimed at supplying the metals and
minerals likely to be highly demanded in the future.
In September 2011, Strategic Minerals acquired the distribution
rights to the Cobre magnetite tailings dam project in New Mexico,
USA, a cash-generating asset, which it brought into production in
2012 and which continues to provide a revenue stream for the
Company. This operating revenue stream is utilised to cover company
overheads and invest in development projects orientated to
supplying the burgeoning electric vehicle/battery market.
In May 2016, the Company entered into an agreement with New Age
Exploration Limited and, in February 2017, acquired 50% of the
Redmoor Tin/Tungsten project in Cornwall, UK. The bulk of the funds
from the Company's investment were utilised to complete a drilling
programme that year. The drilling programme resulted in a
significant upgrade of the resource. This was followed in 2018 with
a 12-hole 2018 drilling programme has now been completed and the
resource update that resulted was announced in February 2019. In
March 2019, the Company entered into arrangements to acquire the
balance of the Redmoor Tin/Tungsten project which was settled on 24
July 2019 by way of a vendor loan which was fully repaid on 26 June
2020.
In March 2018, the Company completed the acquisition of the
Leigh Creek Copper Mine situated in the copper rich belt of South
Austra lia and brought the project temporarily into production in
April 2019. The project currently awaits clearance from the South
Australian Government of its lodged Program for Environmental
Protection and Rehabilitation (PEPR).
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