RNS Number : 2214C
Strategic Minerals PLC
15 October 2020
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Replacement RNS - September Quarter 2020 Magnetite Sales and Cash Balances
The following announcement replaces the announcement released by the Company at 7.00 a.m. on 12 October 2020 under RNS number 6875B. In the sales update section, the previous announcement incorrectly stated that sales volumes (tonnage) had increased 55% year on year, rather than the correct increase being 46%. Also, in the same section, the note to the table of results incorrectly stated that US$0.75m forfeited by CV Investments LLC had been excluded from the sales figues, when it has been included in the sales for the 12 months to September 2020. The amended text is shown below, all other details remain unchanged.
Strategic Minerals - Replacement RNS - Q3 Cobre Sales & Cash Balance #SML @SML_Minerals https://www.voxmarkets.co.uk/rns/announcement/68882134-7bd7-4806-81df-c734b314c5e7 #voxmarkets
15 September 2020
Strategic Minerals plc
("Strategic Minerals", "SML", the "Group" or the "Company")
Interim Results - Profitable Half Year to 30 June 2020
Strategic Minerals plc (AIM: SML; USOTC: SMCDY),a producing mineral company actively developing projects prospective for battery materials, is pleased to announce its unaudited interim results for the half year ended 30 June 2020 which reflect a profitable period for the Company.
· Interim six-month pre-tax profit of US$261,000 (H1 2019: Loss of US$1,026,000) reflecting strong sales in the first half of the year at Cobre operations, reduced overheads and a reduction in impairment charges.
· After tax profit for the interim six months to 30 June 2020 of US$77,000 (H1 2019: Loss of US$1,182,000).
· Strong underlying sales growth saw Gross Profit increase 18% on the same period last year despite the cessation of sales to CV Investments LLC ("CV Investments") and Covid-19. Excluding CV Investments income and US$47,000 Covid-19 related assistance received from the US government, Gross Profit increased 68% on the same period last year.
· Overhead expenses reduced 25% across all aspects of the Company's corporate operations compared to the same period last year.
· US$97,000 of Share based payment expense for the interim six-month period reflects the final charge relating to options which expired on 30 June 2020.
· In March 2020, the Managing Director, John Peters, purchased 3,464,286 shares on market at an average of 0.5348 pence per share taking his beneficial holding in the Company to 57,000,000 new ordinary shares of 0.1 pence each ("Ordinary Shares").
· The Company undertook an equity fundraising in June 2020 and issued 266,666,667 new Ordinary Shares at 0.45 pence per share, raising US$1,485,000 after costs.
· Repayment of principal and interest on loan (US$1,632,000) used to finance the acquisition of balance of Cornwall Resources Limited shares, holder of the Redmoor Tin and Tungsten project.
· Unrestricted cash and cash equivalents at 30 June 2020 were US$533,000 (31 Dec 2019: US $519,000).
· Maintenance of uninterrupted operations at Cobre despite the impact of Covid-19.
· Access to the Cobre magnetite stockpile was rolled over for the 8th time.
· Naming of CV Investments as major client at Cobre.
· Completion of arbitration process confirming a US$21.9m claim against CV investments which has since had a receiver appointed by the US Securities Exchange Commission.
· Copper prices rebounding from a Covid-19 nadir of US$2-11 lb to close at US$2-74 lb at 30 June 2020. In early September 2020, copper prices have been trading at US$3-07 lb with upward pressure being forecasted.
Commenting, John Peters, Managing Director of Strategic Minerals, said:
"The first half of 2020 has been globally trying. However, through prudent management, the Company has been able to maintain and improve underlying operations and has raised funds, in a difficult environment, to complete payment for the acquisition of the balance of the Redmoor project.
"With the Program for Environment Protection and Rehabilitation ("PEPR") submitted for the Leigh Creek Copper Mine project and the Company's appointed advisor on the Redmoor project, NRG Capital, intending to complete an expressions of interest program in the December 2020 quarter, the Company considers the prospect for the market to, once again, value the Company's projects in line with the Board's view as highly likely.
"The second half of the year is expected to see continued demand at Cobre as well as expected reductions in both US legal costs (over $100,000 in the first half of 2020) and the charge for share based payments which were reflecting the options which expired at 30 June 2020 ($97,000 in the first half of 2020).
"The Board looks forward to both the results from the expressions of interest program at Redmoor and seeing the long sought after second income stream commence from the Leigh Creek Copper Mine in 2021."
I am pleased with the Company's achievements, in what has been a particularly challenging period for the Company and the world.
The Company continued its underlying profitable performance in the first half of 2020, when many businesses were forced to shut down operations which is a credit to both our local management and the Management team as a whole. The combination of difficulties, associated with our dealings with CV Investments at Cobre and the general impact on development processes associated with the impact of the Convid-19 virus has slowed our progress on projects, as well as access to capital to undertake this forward movement. However, the Company forsees improved financial performance once full scale production commences at the Leigh Creek Copper Mine ("Leigh Creek") expected in 2021, subject to the Company receiving financing to restart operations at Leigh Creek.
Despite the high level of principal and interest repayments made on the Redmoor acquisition in the six months to 30 June 2020, unrestricted cash on hand at 30 June 2020 was US$533,000.
Corporate overheads of US$902,000 were down significantly on the same period last year (H1 2019: US$1,211,000) and the Board keeps a close watch on these expenditures.
The continued organic growth in sales at the Cobre operations provides comfort in relation to coverage of operating costs and allowed the Company to continue its strategic investment focus on investments in metals (such as Nickel, Copper and Tin/Tungsten) and advanced materials (such as Cobalt, Rare Earths, Lithium and Graphite) which it expects are likely to see significant price improvements over the next three to five years driven by battery/electronic vehicle demand.
On the back of this strategy, the Company continues to invest in development programmes, particularly those associated with the Leigh Creek Copper Mine (copper) and Redmoor (tin/tungsten/copper focused).
During 2020, the management at our Cobre operations adapted excellently to the challenges associated with the disruption to world markets arising from the Covid-19 virus. As an essential service, they were allowed to continue trading and arrangements were modified which ensured a contactless service protecting both our clients and our personnel.
The first half of the year also saw the Company's arbitration claim on CV Investments settled in its favour. However, whether the Company will receive any funds from this claim will be dependent on the outcome of the receivership of CV Investments.
Leigh Creek Copper Mine
The significant work conducted at Leigh Creek throughout 2019, which resulted in a draft PEPR being submitted and a feasibility study being completed, has moved the project along to the point where it currently awaits the final sign off of the formal PEPR and financing to commence operations. The strong performance of the copper price in recent times has improved the project's forecasted profitability and the Board feels confident that 2021 will see full scale production re-commence at Leigh Creek.
Redmoor Tin-Tungsten Project
2020 has seen the final payment for the acquisition of the balance of Redmoor. With the project fully in the Company's control and with the overhang associated with repayment removed, the Company has appointed an external consultant, NRG Capital, to assist in progressing the Redmoor project.
It is expected that an expressions of interest program to identify future joint venture partners for the project will be concluded by the end of the year and that the significant work undertaken to date in identifying the size and potential of the Redmoor resource will be recognised and rewarded.
As a result of the inability to locate an economically feasible deposit on existing tenements, the exploration assets were fully written off in the 2019 financial year and the Company has begun winding up the subsidiary.
Issue of Capital
During the half year, the Company issued a total of 266,666,667 new Ordinary Shares at 0.45 pence per share which raised US$1,485,000 after costs.
The Company continues to maintain a high level of safety performance with SML and its subsidiaries having no reportable environmental or personnel incidents recorded in the period.
The first half of the year has proven challenging and I would like to take this opportunity to thank my fellow Directors, our management and staff in New Mexico, South Australia and Cornwall, along with our advisers, for their support and hard work on our behalf during the period. Additionally, I would like to thank our clients, contractors, suppliers and partners for their continued backing. I look forward to further progressing our key strategic goals in 2020 and pushing onto a brighter 2021.
Alan Broome AM
14 September 2020
Strategic Minerals - Interim Results - Half Year to 30 June 2020 #SML @SML_Minerals https://www.voxmarkets.co.uk/rns/announcement/53821462-13e1-42f6-acad-3f5e86a580d0 #voxmarkets