TIDMSML
RNS Number : 6015Q
Strategic Minerals PLC
01 March 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.
1 March 2021
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Cobre Access Rollover Confirmed - Update on LCCM Project
Financials
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable,
producing mineral company is pleased to confirm the rollover of
access to the magnetite stockpile in New Mexico and updates the
market on the impact of the recent significant rise in copper
prices on the financial evaluation of the Leigh Creek Copper Mine
("LCCM") project.
Cobre Access Maintained
The 9(th) yearly rollover of access to the Cobre magnetite
stockpile ensures continuity of profitable operations for the year
ahead. Despite the pandemic, sales in 2020 grew, excluding sales
relating to CV Investments LLC, by 21.6% to US $3.025m, and the
Company expects it will maintain, if not increase, this level in
2021.
Southern Minerals Group, the Company's wholly owned subsidiary,
is currently undertaking a survey of the existing stockpile, as
part of the process of managing the stockpile's dam wall, and the
result will be communicated to the market upon receipt.
Leigh Creek Copper Mine Financial Update
The recent surge in copper prices has had a significant impact
on the forecasted profitability associated with current plans to
monetise the Paltridge North and Lynda/Lorna Doone deposits within
the LCCM project. The impact on the Company's internally projected
financials, employing the same model used in the Company's RNS
statement of 9 November 2020 but adjusted only for the current
copper price of US $4/lb (US $3/lb previously) and the AUD/USD
exchange rate of 0.7900 (0.7000 previously), indicates that the
implied project value is around three times that assessed at the
time of acquisition of LCCM.
The following table identifies this significant growth in
forecast value since the acquisition of LCCM in March 2018 and
reflects processing improvements developed and the Company's
strategic decision to seek out and secure a near term copper
project on its expectation that copper prices would rise:
Acquisition 9 Nov 20 RNS Current Market
Copper Price USD/lb $3.00 $3.00 $4.00
Exchange Rate AUD/USD 0.7200 0.7000 0.7900
Pre-Tax Cash
Flow US $m 19.2 35.4 56.5
Pre-Tax NPV
@ 8% US $m 9.9 26.7 42.9
Acquisition 9 Nov 20 RNS Current Market
Operating Margin % 39% 51% 58%
per Lb of
Operating Cost Cu $1.56 $1.26 $1.42
The commencement of the project remains subject to the receipt
from the South Australian Department of Energy and Mining of a
Programme for Environmental Protection and Rehabilitation ("PEPR")
approval for the Paltridge North deposit and funding of the AUD
$3.1m project and start up working capital required.
The financial analysis provided by the Company is limited to the
existing JORC resources and does not take into account additional
material within the LCCM tenements or the possibility of processing
the Lynda/Lorna Doone deposits as copper sulphate, as opposed to
the copper cement product, historically produced. Inclusion of
either of these is likely to add further valuation upside.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"The Company continues to differentiate itself from other junior
AIM listed mining stocks through its access to a regular cash flow
that covers overheads and contributes to funding project
developments.
"Recent significant rises in the copper price to over US
$4.00/lb. from a low of near US $2.00/lb in March 2020, have
greatly increased the potential valuation of LCCM. This has
occurred at a time when the Company is closing in on the regulatory
approval for accessing the Paltridge North deposit.
"The increasing interest in copper and projects which offer a
quick route to production, due to the continued rise in copper
prices, has proven timely as the Company progresses discussions
with potential LCCM joint venture partners. Given the material
changes in the project economics, this update was deemed
appropriate to highlight to the market the impact of the copper
price rise ahead of completing any joint venture on LCCM. "
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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