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SML - Strategic Minerals

Discussion in 'General Share Chat (SML)' started by Cacher, Dec 18, 2016.

  1. Groucho

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    23 December 2021

    Strategic Minerals plc

    ("Strategic Minerals" or the "Company")

    Leigh Creek Copper Mine

    Funding and PEPR Update


    Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing mineral company, is pleased to provide the following update on the Company's progress in relation to funding of the Leigh Creek Copper Mine ("LCCM" or the "Project") and progress on addressing the conditional elements of the Project's Program for Environmental Protection and Rehabilitation ("PEPR").


    Highlights

    · Focus of funding sought, while still expected at the LCCM level, has moved to a convertible note/joint venture basis after debt negotiations with a top global bank ceased

    · Company seeking US$10m at the LCCM level - approximately US$6m for resumption of production and US$4m for copper oxide and sulphide exploration

    · LCCM level funding is still expected within the project's critical development path and is not considered likely to delay expected 2022 resumption of production

    · Negotiations have been based on the Company's internal forecasts of the Project's expected EBITDA of US$68m, reflecting a US$4-25 lb copper price and an AUD/USD exchange rate of 0.7500

    · LCCM has applied for a South Australian government grant to assist planned drilling in 2022

    · Resubmission of PEPR details to the South Australian Department of Energy and Mines ("DEM") almost complete and is expected to be submitted to DEM in January 2022

    · Company is confident that, on the basis of work completed for the PEPR resubmission, the Environmental Bond required is likely to be reduced by a significant amount, although there can be no assurances of this as the decision rests solely with DEM


    Funding Update

    As announced on 8 October 2021, the Company had been in negotiations for a substantial debt facility from a respected global bank. Ultimately, as a result of the high costs of a large approved undrawn facility and the Company's current low market capitalisation, these negotiations have now ceased. The advanced nature of these discussions and a belief, at the time, that an offer was imminent were announced by the Company to ensure all potential investors had the same information regarding the LCCM funding situation ahead of the equity raise in October.

    As attempts to raise pure debt-based funding for LCCM have not been successful thus far, the Company has shifted its emphasis to funding involving an equity component. Accordingly, marketing has refocused on a proposed US$10m convertible note facility at the subsidiary level.

    Marketing to potential investors is based on current market conditions utilising a copper price assumption of US$4-25 lb and an AUD/USD exchange rate of 0.7500. This produces an expected project EBITDA of US$68m according to the Company's internal forecasts.

    Initial marketing feedback has indicated that, in order to ensure broader appeal, a minimum funding size of US$10m needs to be sought and, with some investors, a planned liquidity event is preferred. Accordingly, LCCM is currently seeking US$10m by either a convertible note or equity investment and plans to apply such funding to recommence production (approximately US$6m) and for exploration costs (approximately US$4m).

    The US$6m earmarked to recommence production, prior to receipt of revenues, is made up of approximately:

    Capital items including new leach pads US$1.0m

    Mining prior to revenue commencement including pre-strip (4 months) US$2.5m

    Environmental bond US$2.5m

    The provision of additional funds will provide LCCM with the ability to bring forward planned exploration drilling.

    Drilling is expected to focus on two areas, namely:

    a) Copper Oxide confirmatory drilling around the Mount Coffin mineralisation, within LCCM's tenements. While there has been historical assessment of the mineralisation, such drilling does not qualify the mineralisation to the JORC (2012) standards. Twinning of existing known holes will assist with the definition of a JORC (2012) compliant resource which could extend the life of the oxide operating project. The Directors believe this additional resource could increase expected project EBITDA by up to US$40m.

    b) Copper Sulphide exploratory drilling around a significant intersection in a Bridge Minerals Pty Ltd's 1974 historical drill hole PDH38. The drill hole, close to the Paltridge North ("PN") deposit, was drilled to 183m and showed a high-grade copper sulphide intersection from 137.2m to 144.8m with a 15-20% sulphide component and copper grade of 1.34% (a PDF of the drill hole results can be viewed at https://www.strategicminerals.net/investors/presentations.html). While exploration for additional copper resources within the Adelaide Geosyncline in the northern Flinders Ranges has always been a key strategy for LCCM, the current expected funding package will provide the opportunity to undertake a staged exploration programme more quickly.

    Discussions with potential LCCM convertible note/equity investors, to date, has made Management confident that funding is likely to be achieved prior to final clearance of the PEPR for PN. However, timing of the commencement of production and exploration will be dependent on both regulatory approvals and sourcing funding.

    In anticipation of proposed drilling programmes at Mount Coffin and around PN, LCCM has lodged applications with the South Australian government for grant payments under its Accelerated Development Initiative ("ADI") programme. If approved, LCCM could receive grant payments of up to 50% of the drilling costs.


    PEPR Update

    Since July 2021, when LCCM received conditional approval for the PEPR associated with LCCM's PN deposit and its treatment of material at the adjacent Mountain of Light ("MoL") processing facility, considerable work has been undertaken to satisfy the conditions that DEM applied and LCCM anticipates that it will resubmit the requested information in January 2022.

    The work undertaken for this resubmission, through updating the pit design, has seen the Project's expected profitability increase through higher copper prices making more of the PN deposit economically viable. Further, from both work undertaken and consultation with members of DEM, it is the Company's strong belief that the amount of the Environmental Bond, currently A$3.5m, can be significantly reduced.


    Commenting, John Peters, Managing Director of Strategic Minerals, said:

    "The Company is confident that 2022 will see the recommencement of production at Leigh Creek.

    "Whilst it was felt that funding on a pure debt basis would have produced the best result for our shareholders, the market was not prepared to debt fund the Project at this time. Accordingly, discussions involving equity linked funding, at the LCCM level, have now commenced and considerable interest has been received to date. It is for this reason that we feel that these funding arrangements will be completed before the Project is "shovel ready".

    "Given that the response to the conditions of the July PEPR is being lodged shortly with the DEM, it is considered that the earliest LCCM will be in a position to recommence production is March 2022 and this would be subject to all regulatory clearances and funding being secured.

    "Strategic Minerals is excited by the prospect of undertaking drilling in 2022. Planned drilling at Mount Coffin is expected to lead to an increase in LCCM's reported copper oxide JORC resource and commence its long-term strategy to use cash flows from copper oxide production to locate a substantial copper sulphide deposit in this copper rich province."
     
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    5 January 2022

    Strategic Minerals plc

    ("Strategic Minerals" or the "Company")

    Leigh Creek Copper Mine

    Revised PEPR Submitted


    Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing mineral company, is pleased to advise the market that its wholly owned subsidiary Leigh Creek Copper Mine ("LCCM" or the "Project") has today re-lodged the Project's Program for Environmental Protection and Rehabilitation ("PEPR") to the Department of Energy and Mining ("DEM") of South Australia addressing the conditional elements of the DEM's July 2021 approval.

    The long lead time, in responding to the conditional PEPR approval, reflected the need to collect samples of cover for the waste rock dumps and the subsequent testing and analysis of this material in an erosion model to evaluate cover designs. This work was accelerated, as much as possible, by calling on existing networks and working closely with the consultants undertaking the work.

    The other major component of the work was the evaluation of the Potential Acid Forming ("PAF") nature of the ore and waste rock. This required selecting and then collecting samples from the 2019 drilling program and undertaking Acid Rock Drainage and kinetic testing. In a boost for the Project, this work identified that the waste rock at Paltridge North has a low capacity to produce acid, and this low capacity PAF material can be co-disposed with run of mine waste, which has adequate neutralising capability.

    This, version 9 of the PEPR, reflects the agreement arrived at early with DEM to submit this PEPR as a "oxide only" PEPR, with highlighted statements to easily adjust for the transitional ore case. The Company expects to receive DEM's approval for the oxide only case, which should cover the first 12+ months of production and then follow up with revision 10 of the PEPR, which will address only the additional mining of the transitional ore. The Company considers that this process will not impact the expected timing or economics for the Project, as previously disclosed to the market.

    Commenting, Alan Broome AM, Non-Executive Chairman of Strategic Minerals, said:

    "The Company has worked closely with the DEM and feels confident that its review of the submitted PEPR revision will be assessed in less than the maximum statuary requirement of three months.

    "Whilst no guarantees can be provided, the Company is hopeful that, after this revision has been assessed by the DEM and subject to receipt of Project funding, it will be in a position to commence operations at LCCM."
     
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    29 June 2022

    Strategic Minerals plc

    ("Strategic Minerals" or the "Company")

    PEPR Approved


    Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing mineral company, is pleased to announce that it has received approval for the planned mining activities of its wholly owned subsidiary. Leigh Creek Copper Mine ("LCCM"), accessing the Paltridge North ("PN") deposit to be processed at the nearby Mountain of Light ("MoL") plant.


    Highlights

    · PEPR approval ensures LCCM now "shovel ready", subject to finance

    · Approval relates to the processing of copper oxide

    · Rehabilitation Financial Assurance reduced by approximately AUD 800,000 to AUD 2,890,000

    · Native Vegetation Fund contribution increased by approximately AUD 50,000 to AUD 139,035

    · Requirement, as anticipated, to provide monitoring reports and to observe identified areas of historical significance to indigenous communities.


    LCCM has received notification from the South Australian Department of Energy and Mining ("DEM") under the Mining Act 1971 of approval of the Program for Environment Protection and Rehabilitation for Mineral Lease (ML) 5467 - Mountain of Light Copper Mine.

    The approval is in line with expectations and relates to the mining and processing of copper oxide from LCCM's PN deposit. From LCCM's previous drilling results, the PN deposit appears to have a layer of waste material that needs to be removed (approximately 6 weeks mining) followed by a layer of copper oxide material and then descending into transitional sulphide ore. It is anticipated that it will be over 12 months after mining commences before the transitional ore is reached.

    LCCM is confident that, by the time the transitional ore is reached, LCCM will have submitted, and had approved by DEM, procedures for extracting and processing the transitional ore. This is because the submission will largely consist of the existing PEPR documentation with minor variations in relation to the extraction and handling of the transitional sulphide ores. Work on the submission has commenced.

    As part of the negotiations with DEM in relation to the original conditional PEPR issued in July 2021, LCCM were able to reduce the rehabilitation bond by approximately AUD 800,000 from AUD 3,700,000 to AUD 2,890,000 reflecting reasoned proposals from the Company's mine manager John Speck. As LCCM currently has a AUD 200,000 deposit with DEM, this represents a net funding requirement of AUD 2,690,000.

    While reviewing further information supplied by LCCM in relation to the conditional requirements, DEM have increased the required contribution to the Native Vegetation Fund from AUD 81,398.52 to AUD 139,035.

    Also associated with the approval are a number of, expected, reporting requirements and observation of identified indigenous sacred sites.


    Commenting, John Peters, Managing Director of Strategic Minerals, said:

    "The approval, while having taken longer due to a number of factors, is welcomed, anticipated news. This provides a focal point by which to progress discussions currently underway with potential funders/joint venture partners.

    "With regard to funding of the LCCM project, the Company has had numerous parties review the project and, currently, has three interested parties who have signed the Company's Confidentiality Agreement and have been in our data room for a month or more. These parties reflect a European based, mining focused fund, a large, respected, global copper supplier with activities in South Australia and the equity investment and debt funding arms of a major Australian, internationally recognised bank.

    "While recent declines in the copper price, associated with fears of global recession, have impacted the forecasted profitability of the project, the associated drop in the Australian Dollar/US Dollar exchange rate has partially offset the impact on profitability ensuring that the project remains an extremely attractive one from an investors perspective."
     
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    #SML portfolio update ahead of the AGM - Leigh Creek, Cobre, Redmoor .......
     
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    20 July 2022

    Strategic Minerals plc

    ("Strategic Minerals" or the "Company")

    June Quarter 2022 Magnetite Sales and Cash Balances


    Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing mineral company, is pleased to provide the following update on the Company's cash position and ore sales at the Cobre magnetite operation in New Mexico, USA ("Cobre") for the quarter ended 30 June 2022.


    Highlights

    · Cobre's largest client maintains historical demand levels and confirms intention to do so

    · June quarter and annual sales of US$0.7m and US$2.4m respectively, slightly weaker than in previous years

    · Customers notified of a 20% sales price increase being progressively phased in from 1 July 2022

    · Initial July sales do not appear to be impacted by product price increases

    · Elevated transportation costs currently impacting sales expansion progress

    · Group cash balance of US$0.430m as at 30 June 2022

    · Programme for Environmental Planning and Rehabilitation ("PEPR") received for Paltridge North

    · Results of Deep Digital Cornwall ("DDC") survey work being finalised


    Sales update: Cobre magnetite tailings operations

    In the June quarter, the Company's wholly owned subsidiary, Southern Minerals Group ("SMG"), and the Company's Managing Director, met with Cobre's largest client, in New Mexico, to discuss expected demand. The client indicated that there was not likely to be a repeat of the reduced demand experienced from October 2021 through to January 2022 (inclusive) and that their expectations for the rest of the year and beyond was in line with previous demand

    During June, SMG's clients were notified of a planned 20% increase in prices to be phased in over the next six months. Given that it had been over four years since prices were increased and the high inflation rate currently being experienced in the US, this was understood by customers and early July 2022 sales seem to indicate no change in demand.

    While the extension of access to the stockpile until 31 March 2027 has provided a platform from which SMG hopes to increase future sales revenues, the current increase in transportation costs and recession concerns have moderated expectations accordingly.

    Sales comparisons on quarterly and annual periods to 30 June 2022, along with associated volume details, are shown in the table below:
    Screenshot_20220720_070641.jpg

    Further to previous updates, the CV Receiver established a Bar Date of 25 April 2022 by which claims against CV must be made. SMG formally lodged its US$21.9m arbitrated claim by this date. The Company is still waiting for the Receiver to make a recommendation for the distribution of the assets, and SMG continues to have dialogue with the Receiver. Currently the Receiver has indicated they are likely to prioritise, in this case, equity claims over creditors, which is permitted under US law. At this point, there remains no certainty of any payment to SMG, but the Management and Board expect there will be clarity later this year.

    Financials and Operations

    As at 30 June 2022, the Company's non-restricted cash balance, incorporating funds in transit, was US$0.430m (31 March 202: US$0.615m). The fall largely reflects consultant costs associated with the PEPR as well as slightly lower seasonal Cobre revenues, which are expected to recover in the current quarter.

    Leigh Creek Copper Mine ("LCCM")

    The Company received final PEPR approval for oxide mining at Paltridge North and is now discussing potential funding to restart production with parties who have indicated an interest. Recent fears of a global recession and the associated fall in copper prices have impacted sentiment, in part offset by the move in the A$/US$ exchange rate. Initial preparatory work and maintenance is being undertaken ahead of the anticipated restart of production.

    Cornwall Resources Limited ("CRL")

    CRL has completed the first year of the DDC project, having finished a detailed ground gravity survey and phase one of a soil sampling campaign. DDC survey results to-date will be released once data analyses and modelling are completed - there will also be a local community update event to share the outcomes. Further DDC work remains ongoing with the continuation of one of the most detailed soil sampling programmes Cornwall has ever witnessed, with further data gathering currently being planned for the next year of the grant-funded project.

    Planning approvals for a 4-hole drilling campaign, targeting a previously identified tin prospect, to the west of the existing Redmoor Tin-Tungsten-Copper resource, have been received. However, high activity in the region by other companies means there is a shortage of available drill rigs and crews. At this time CRL's drilling plans may be deferred until this situation changes.

    The recent release of the UK Critical Minerals list via the British Geological Survey has the welcome inclusion of Tungsten and Tin. This helps underwrite the importance of the various projects in the South West of the Country. This is expected to be the first step in major initiative by the UK Government to secure critical minerals supply, with its Critical Minerals Strategy expected to be released soon.

    Commenting, John Peters, Managing Director of Strategic Minerals, said:

    "Confirmation from the largest Cobre client that demand is expected to be maintained at historical levels, is significantly reassuring in relation to the outlook for cash flow for the years to come.

    "The receipt of the long awaited PEPR for LCCM has prepared us for re-opening of the Mountain of Light facility although the market's mood has changed in line with fears of a global recession. It is the Board's view that this negative sentiment, particularly around copper, will be short lived as the underlying demand and supply factors demonstrate the expected copper shortage in the years ahead.

    "We are encouraged by the release of the UK Critical Minerals list, which includes tin and tungsten. After a productive meeting with the local Cornish Member of Parliament in June, we understand this to be the first step in a major initiative by the UK Government to focus on securing domestic critical minerals supply.

    "Thank you to all our shareholders that attended the in-person AGM, we are grateful for your support and appreciated the opportunity to answer all of your questions"
     

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