TIDMSML
RNS Number : 0597A
Strategic Minerals PLC
18 January 2024
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has
been incorporated into UK law by the European Union (Withdrawal)
Act 2018.
18 January 2024
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Major Client Returns and 2023 Magnetite Sales
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable
producing mineral company , is pleased to announce that the major
client for the Company's ore sales at the Cobre magnetite operation
in New Mexico, USA ("Cobre") has returned, and also provides sales
data for the year ended 31 December 2023.
Highlights
-- Major client returns with a purchase order for 30,000 tons in 2024.
-- Shipments commenced with billing bi-monthly and payments within 15 days.
-- Approximate halving of sales volumes in 2023, due to absence
of major client, partly offset by increased sales prices (volumes
down approx. 50%, revenues down approx. 35%).
-- Advanced talks continue with a separate third party seeking
to secure similar volumes as major client.
-- Closing Company cash position at 31 December 2023 of US$0.107m (US$0.129m at 30 June 2023).
-- Group operational after-tax cash surplus expected in 2024.
Sales update: Cobre magnetite tailings operations
The 2023 calendar year saw the absence of the Company's major
client which resulted in the sales volume for the year at Cobre
dropping to approximately 50% of the previous year's sales. This
was partly offset by the price rise instigated in 2022. As a
result, despite volumes dropping around 50% on the previous year,
revenues fell by only around 35% year on year.
In mid-December 2023, the previous major client requested
pricing on a significant volume of ore over the next twelve months
(approximately 50% more than taken by the client in previous
years). Subsequently, a purchase order was agreed for the provision
of 30,000 tons in 2024. Shipments against this order commenced on
16 January 2024 with bi-monthly billing terms and 15-day payment
arrangements.
Additionally, over the past four months, discussions have been
held with a potential new client that is looking for large volume
shipments. They have purchased around 100 tonnes of ore for
calibrating their machinery to ensure that the larger order would
fulfil their requirements. The Company will update the market
should a contract be signed with the potential new client.
Sales comparisons on an annual basis to 31 December 2023, along
with associated volume details, are shown in the table below:
Year Tonnage Sales USD '000s
2023 17,965 $1,576
2022 36,281 $2,446
2021 42,637 $2,611
In November 2023, the President of Southern Minerals Group Llc
("SMG"), the Company's 100% owned subsidiary which operates Cobre,
resigned and was replaced by Tim Klumker who has been with SMG for
over six years and has been running the operational side of Cobre
for several years (see Company website for Tim's bio). In line with
this change, the Company has taken the opportunity to rearrange
elements of the financial management of SMG through more extensive
use of the Company's CFO Karen Williams.
Financials and Operations
On 31 December 2023, the Company's cash balance was US$0.102m
(31 December 2022: US$0.341m, 30 June 2023: US$0.129m). Given the
absence of the major client in 2023, this cash reduction of US
$0.239m for the year is a positive reflection of management's
ability to continue developing projects (circa US$0.489m project
expenditure), reduce costs and forgo cashflow associated with their
remuneration.
The one-year commitment, provided by the major client at Cobre,
should result in an improved cash position throughout 2024.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"2023 has proven to be a tough environment for junior miners in
general. Whilst, normally, the Company would be protected from such
conditions through the operational cash flows at Cobre, the hiatus
of sales to Cobre's major client has placed significant strain on
both the Company and management.
"The welcome return of Cobre's major client, bigger and better
than before, augurs well for cash flow throughout 2024 and could
ensure a group wide operational cash surplus in 2024. The potential
of another major client would only further enhance the outlook for
operational cash flow.
"While, on both Redmoor and Leigh Creek Copper Mine, work has
continued and progress has been made, the Company was not in a
position at the end of 2023, as we had initially hoped, to update
the market on progress. The Company is continuing to actively
engage with the Cornwall and Isles of Scilly Good Growth Team in
relation to progressing its application for grant funding from the
Shared Prosperity Fund. This remains a live process, which is
expected to conclude soon.
"Accordingly, the Company is hopeful it can deliver positive
news on both projects during Q1 2024"
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 aimed at supplying the
metals and minerals likely to be highly demanded in the future. The
access to this stockpile has been extended until 31 March 2027 and
is likely to be rolled over again at that time.
In May 2016, the Company entered into an agreement with New Age
Exploration Limited and, in February 2017, acquired 50% of Cornwall
Resources Limited (CRL) which holds 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 arrangements to acquire the balance of CRL which
was settled on 24 July 2019 by way of a vendor loan, subsequently
fully repaid on 26 September 2020. Since this time, CRL has been
progressing the development of the Redmoor Tin/Tungsten project
through its involvement in the EU funded Deep Digital Cornwall
exercise and the placement of Tin and Tungsten on the Critical
Minerals List of both the UK and USA.
In March 2018, the Company completed the acquisition of the
Leigh Creek Copper Mine situated in the copper rich belt of South
Australia and brought the project temporarily into production in
April 2019. In July 2021, the project was granted a conditional
approval by the South Australian Government for a Program for
Environmental Protection and Rehabilitation (PEPR) in relation to
mining of its Paltridge North deposit and processing at the
Mountain of Light installation. In late September 2022, an updated
PEPR, addressing the conditions associated with the July 2021
approval, was approved. The Company continues seeking capital to
commence operations.
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