TIDMSML
RNS Number : 5245P
Strategic Minerals PLC
18 November 2016
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.
18 November 2016
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Update for the quarter to 30 September 2016
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 30 September 2016.
Highlights:
-- Strong sales growth at Cobre, New Mexico
As previously reported, the management of Southern Minerals
Group (SMG), the wholly owned subsidiary of the Company, secured a
new key customer during the September quarter. Sales increased
significantly from mid-August when shipments to the new customer
commenced and have carried through for the remainder of the quarter
and into the December quarter;
-- Settlement of rail dispute
In July, the Company agreed to settle its claim against the rail
provider to the Cobre mine for US$675,000 to be paid in instalments
with the final payment being made by 30 June 2017;
-- Nickel Sulphide intersected at Central Australian Rare Earth
Pty Ltd ("CARE") Hanns Camp project in Western Australia;
Analysis of Nickel Sulphide intersection were undertaken and
negotiations entered into with joint venture partner to progress
further exploration of the Hanns Camp and Mount Weld tenements;
-- Investment in Cornwall tin/tungsten project
During the quarter, the Company, and its joint venture partner
New Age Explorations Limited ("NAE"), re-negotiated the timing of
planned share subscriptions in the joint venture vehicle to ensure
the project had sufficient working capital to function during the
Company's option period and to ensure that Strategic Minerals could
access the bulk of the rail settlement claim to enable it to
exercise its option over the project, thus minimising dilution to
existing shareholders; and
-- Cash
The Company had cash of US$0.506m as at 30 September 2016.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"The Directors are pleased by the performance of the Company
over the September quarter. The significant improvement in sales at
the Cobre operation, combined with the Company's settlement of the
rail dispute, has provided the Board with a positive outlook for
the Company's financial performance in 2016. A capital raising was
also undertaken subsequent to the September quarter, further
strengthening the Company's financial position. Net proceeds from
the placing are to be invested in improving the understanding of
underlying assets through drill programmes, while cash flows at
Cobre continue to underpin the Company's working capital
requirements.
Over the December quarter, Management and the Board intend to
continue to increase sales at Cobre; progress discussions to
extend, if possible, the formal access period to the Cobre
magnetite stockpile; co-ordinate funding of the Redmoor option and
develop plans for the exploration of the CARE tenements, in
particular the Hanns Camp and Mount Weld project areas."
Cobre magnetite tailings operations
In the September quarter of 2016, sales significantly improved
on the previous year's performance. On an annual basis domestic
sales are now starting to outperform our best previous levels.
Comparative sales data is shown in the following table outlining
sales and volume data:
___________Tonnage_____________ ____________Sales-_(US$'000)_________
Year 3 mths to Sept 12 mths to Sept 3 mths to Sept 12 mths to
Sept
2016 7,686 23,477 $462 $1,530
2015 3,684 13,960 $250 $ 946
2014 2,825 18,242 $192 $1,221
The introduction of a large new customer has seen average sales
prices reduced due to "bulk" discount pricing being applied.
However, overall net profitability is expected to be maintained at
the historical average level of 45% of sales.
As sales at Cobre are on an "on demand" basis, there is the
potential for considerable variability in sales volumes period to
period. However, sales in September were over 3,000 tons as was
October. The Company's subsidiary, Southern Minerals Group ("SMG"),
continues to work with other customers with a view to further
increasing sales and the Board believes existing infrastructure can
support a significant growth in sales volumes.
SMG continues to discuss the potential to extend the minimum
access term at Cobre and believes it is making headway in this
regard.
During the quarter, the President of SMG and the Managing
Director of SML, met with representatives of the railroad in an
attempt to mediate SMG's proposed legal claim. As previously
announced, these negotiations resulted in SMG agreeing to receive a
total of US$675,000 to be met under a payment plan with the last
payment to be made in June 2017. Under accounting convention, the
full amount of this payment, will be reported as income in the 2016
financial year.
Central Australian Rare Earth ("CARE") Exploration
In the September quarter, the Company took its ownership of CARE
up to 50% and worked with Rarus Limited ("Rarus") (its joint
venture partner in CARE) in reviewing the results of the Hanns Camp
drilling program. This analysis was released to the market and the
Board of CARE considers that the results are consistent with those
initially received by the Rosie mine which operates in this area.
Review of the results has led to the Company negotiating with Rarus
on a "go forward" plan in relation to Hanns Camp and Mount Weld
tenements. The Mount Weld tenement is considered prospective for
rare earths and gold and is adjacent to the Lynas Mount Weld
project. Subsequent to the period end, Strategic Minerals agreed,
in conjunction with Rarus, to provide funding to CARE for further
exploration drilling of both the Hanns Camp and Mount Weld
tenements.
Investment in Redmoor Tin/Tungsten project
During the September quarter, the Company re-negotiated its
option arrangements in connection with the Redmoor tin/tungsten
project so as to ensure;
1. The Redmoor joint venture had sufficient working capital to
undertake preparation works needed for a scheduled commencement of
drilling in the first half of 2017; and
2. That the option exercise period was extended past the time
when the Company would receive the bulk of the rail settlement
proceeds, thus minimising dilution to shareholders associated with
this investment.
During the quarter the Company subscribed for a total of 38,849
shares in the joint venture vehicle at a cost of c.US171,200
GBP131,700) taking the Company's stake in the joint venture to
16.4%. The Company has a further option to increase its stake to
50% by paying a further GBP846,648.96. As a result of the
oversubscribed equity raise completed at the end of October 2016,
the Directors are confident of completing the balance of the option
before its maturity date of 15 February 2017.
The appointment of a Redmoor Community Liaison Adviser and the
recent attention the area has been attracting, associated with Wolf
Mineral Limited's Drakelands operations and Strongbow Exploration
Inc.'s plans to resurrect South Crofty, place the Company in a good
position to maximise value depending on the results of the 2017
drilling program.
As the Redmoor project is a "brownfield" site, the drill program
is designed to confirm the existing deposits and, hopefully, extend
the resource size, most notably the size of the high grade
deposits.
Financials
Over the period, the Company continued to maintain a tight
control of overheads in line with its corporate strategy to
maintain this within the operating profits from its Cobre
operations.
In preparation of exercising its option in the Redmoor project,
and for additional exploration of the CARE tenements, the Company
raised GBP600,000 in a placing in October 2016. This funding, when
combined with the expected proceeds from the rail dispute
settlement and improved Cobre revenue, places the Company in a good
position to;
-- Record a maiden profit;
-- Fully exercise its option taking its share in the Redmoor project to 50%; and
-- Undertake further drilling/exploration within the CARE tenements.
At the end of the September 2016, the Company had US$506,399 in
cash compared to US$837,814 as at the end of June 2016. This is
after investing c.US$323,200 in projects during the quarter being
c.US$152,000 (AU$200,000) in CARE and c.US$171,200 (GBP131,700) in
Redmoor (US$39,000 funded by issue of the Company's shares). Also,
in the quarter, the Company received US$100,000 from the rail
settlement and paid out c.US$73,000 in legal fees.
The Directors believe that cash flows from Cobre's operations,
the capital raising in October, proceeds from the rail dispute
expected in January 2017 and the continued tight corporate overhead
structure should ensure that adequate reserves exist to progress
the Company's existing operations.
Near term objectives
Over the near term, the Directors of Strategic Minerals plan
to:
-- Progress sales opportunities and tenure at the Cobre operation;
-- Agree and undertake further drilling and exploration of CARE
tenements, in particular Hanns Camp and Mount Weld;
-- Organise for exercise and settlement, in the new year, of the
Company's option to take up its stake in the Redmoor Tin/Tungsten
project to 50%; and
-- Monitor and control corporate overheads in line with operating profits.
The Company looks forward to providing further updates in due
course.
For further information, please contact:
Strategic Minerals plc
John Peters
Managing Director
www.strategicminerals.net
Follow Strategic Minerals on:
Twitter: @SML_Minerals
LinkedIn: www.linkedin.com/company/strategic-minerals-plc +61 (0) 414 727 965
SP Angel Corporate Finance LLP
Nominated Adviser and Joint
Broker
Ewan Leggat
Laura Harrison +44 (0)20 3470 0470
Optiva Securities Limited
Joint Broker
Graeme Dickson +44 (0)20 3411 1880
Yellow Jersey PR
Financial PR
Dominic Barretto +44 (0) 7825 916
Alistair de Kare-Silver 715
Forward Looking Statements
This release includes forward looking statements. Often, but not
always, forward looking statements can generally be identified by
the use of forward looking words such as "may", "will", "expect",
"intend", "plan", "estimate", "anticipate", "continue", and
"guidance", or other similar words and may include, without
limitation statements regarding plans, strategies and objectives of
management, anticipated production or construction commencement
dates and expected costs or production outputs. Forward looking
statements in this release include, but are not limited to, the
capital and operating cost estimates and economic analyses from the
Study.
Forward looking statements inherently involve known and unknown
risks, uncertainties and other factors that may cause the Company's
actual results, performance and achievements to differ materially
from any future results, performance or achievements. Relevant
factors may include, but are not limited to, changes in commodity
prices, foreign exchange fluctuations and general economic
conditions, increased costs and demand for production inputs, the
speculative nature of exploration and project development,
including the risks of obtaining necessary licences and permits and
diminishing quantities or grades of resources or reserves,
political and social risks, changes to the regulatory framework
within which the company operates or may in the future operate,
environmental conditions including extreme weather conditions,
recruitment and retention of personnel, industrial relations issues
and litigation.
Forward looking statements are based on the Company and its
management's good faith assumptions relating to the financial,
market, regulatory and other relevant environments that will exist
and affect the Company's business and operations in the future. The
Company does not give any assurance that the assumptions on which
forward looking statements are based will prove to be correct, or
that the Company's business or operations will not be affected in
any material manner by these or other factors not foreseen or
foreseeable by the Company or management or beyond the Company's
control.
Although the Company attempts to identify factors that would
cause actual actions, events or results to differ materially from
those disclosed in forward looking statements, there may be other
factors that could cause actual results, performance, achievements
or events not to be anticipated, estimated or intended, and many
events are beyond the reasonable control of the Company.
Accordingly, readers are cautioned not to place undue reliance on
forward looking statements.
Forward looking statements in this release are given as at the
date of issue only. Subject to any continuing obligations under
applicable law or any relevant AIM Rules for Companies, in
providing this information the company does not undertake any
obligation to publicly update or revise any of the forward looking
statements or to advise of any change in events, conditions or
circumstances on which any such statement is based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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