TIDMSML
RNS Number : 1725I
Strategic Minerals PLC
25 August 2016
25 August 2016
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Update for the quarter to 30 June 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 June 2016.
Highlights:
-- Potential to significantly increase Cobre sales volumes
Underlying sales are on the rise in Cobre with a new large
client commencing shipments in August. Base sales in the June
quarter were strong, bouncing back from a subdued 2015, and reflect
increasing demand for the magnetite held at Cobre. During the
quarter, discussions continued with two parties concerning the
potential to undertake larger more regular purchases with one of
them commencing purchases in August. Should other sales remain
unaffected, and the new client maintains their expected demand,
sales volumes could significantly increase in the coming year;
-- Nickel sulphide intersected
Successful completion of drilling at Central Australian Rare
Earth Pty Ltd ("CARE") Hanns Camp tenements and the associated
subscription of 50% of the equity in CARE. Nickel sulphide
intercepted and further analysis being undertaken to ascertain
future development plans;
-- Investment in Cornwall tin/tungsten project
Acquisition of shares in the "brownfields" Redmoor Tin/Tungsten
project in Cornwall, England. During the quarter, the Company
issued capital to New Age Explorations Limited ("NAE") and invested
the proceeds of the issue into acquiring a minority stake in NAE's
subsidiary which is undertaking a tin/tungsten project in Cornwall.
At the same time, the Company acquired the option, until 31
December 2016, to subscribe for additional equity in the subsidiary
which would take the Company's shareholding up to 50% of the equity
in the subsidiary. This is to be a cash subscription, with proceeds
from this subscription being applied to a drilling program to
further confirm the resource;
-- Equity raising
An equity raising of GBP429,000 was conducted in June in
preparation for completing the acquisition of a 50% interest in the
Redmoor Tin/Tungsten project and for potential CARE tenement
related exploration;
-- Rail dispute
During the quarter, negotiations were held with the rail
provider at the Cobre mine concerning a claim made in relation to
previous works undertaken. In July, an agreement to settle this was
reached and reported to the market; and
-- Cash
The Company had cash of US$0.837m as at 30 June 2016.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"The Directors are encouraged by the performance of the Company
over the quarter. This, combined with the Company's recent rail
settlement, has provided the Board with a positive outlook for the
Company's financial performance in 2016. It continues to be in a
fortunate position with cash flow from Cobre underpinning
operations and recent activity suggesting significant sales volume
growth.
Capital raisings have been undertaken and targeted to fund
exploration.
Over the next quarter, Management and the Board intend to focus
on securing additional sales in Cobre, looking to extend, if
possible, the formal access period to the Cobre magnetite
stockpile, work on securing funding of the Redmoor option and
develop plans for exploration of the CARE tenements."
Cobre magnetite tailings operations
In the June quarter of 2016, sales significantly improved on the
previous year's performance. On an annual basis, domestic sales are
now starting to outperform our best previous levels. Comparative
sales data is shown in the following table outlining sales and
volume data:
Tonnage Sales (US$'000)
---------------------------- --------------------
Year 3 mths to 12 mths to June 3 mths 12 mths
June to June to June
2016 4,839 19,474 $327 $1,318
2015 2,540 13,101 $170 $ 887
2014 5,722 19,021 $381 $1,276
As previously advised, sales prices have stabilised around the
$66 per ton level despite falls in global iron ore prices.
Throughout the quarter, the Company's subsidiary, Southern
Minerals Group ("SMG"), continued its negotiations with two
client's looking to undertake large volume purchases from the
stockpile at discounted rates. In August, one of these clients
began purchasing material. As sales at Cobre are on an "on demand"
basis, there is the potential for considerable variability in sales
volumes period to period. However, should all other sales perform
as they have to date and the new client undertake demand as
outlined in discussions and confirmed in their first week of
shipments, sales volumes are likely to significantly increase in
the coming year. Sales of this magnitude will also attract a volume
discount which is likely to bring down the average sales price,
increase costs but significantly increase profitability.
SMG continues to work with the other client, with a view to
potentially add them also as a "bulk" client and believes existing
infrastructure can support such arrangements for the foreseeable
future. Additionally, SMG continues to work with the mine owners to
secure longer term access to the Cobre magnetite stock pile and
feels confident that such a mutually beneficial arrangement can be
reached in 2016.
Central Australian Rare Earth ("CARE") Exploration
In the June quarter, the Company worked with CARE on the
implementation and monitoring of CARE's drilling plans at Hanns
Camp. The programme, built around results from previous
electromagnetic surveys of the area, consisted of drilling three
holes to a depth of approximately 1,050 metres in total. Hand held
XRF analysis indicated that nickel sulphide was present. Subsequent
lab assays confirmed the presence of nickel sulphide in the samples
although these were not to the same concentration as evident in the
hand held XRF analysis.
As the mineral occurrence of such deposits are thin, location is
difficult and the positive indications received to date are
encouraging. However, additional analysis is required before plans
can be formulated to further delineate the potential resource. The
Company and Rarus, its joint venture partner in CARE, are working
together on such plans and hope to have agreed arrangements in the
second half of 2016.
As part of the assay review, it was identified that the
tenements also held traces of platinum and palladium and that this
should be further examined.
In funding the drill programme, the Company took up 50%
ownership of CARE and its rights it holds to the 23 exploration
tenements. Apart from the four tenements making up the Hanns Camp
area, which has now been initially drilled, there are a number of
other tenements of interest and CARE is currently formulating a
potential drilling plan in relation to the tenement at Mount Weld
adjoining Lynas Corporation's Mount Weld REE Mine, which is thought
to be prospective for both rare earths and gold.
Investment in Redmoor Tin/Tungsten mine
During the June quarter, the Company subscribed GBP104,998.47 in
shares in NAE Resources (UK) Limited ("Redmoor") to acquire
approximately 9% of the company and received an option, until 31
December 2016, to subscribe an additional GBP945,348.96, which
would result in the Company holding a 50% interest in Redmoor's
enlarged share capital.
The initial Redmoor subscription was funded by Redmoor's parent
New Age Exploration Limited ("NAE") subscribing for 35,000,000
shares in Strategic Minerals plc at GBP0-003.
Should the Company not exercise the option, NAE has the right,
after 31 December 2016, to purchase the Company's shares in Redmoor
for GBP1.
Redmoor, through an exploration licence and mining lease option
arrangement undertaken in October 2012, acquired effective
ownership over a 23km2 area surrounding the Redmoor deposit in the
Cornish tin-tungsten-copper mining district in the UK. The
exploration licence provides the rights to explore over the entire
licence area for a period of 15 years and the mining lease option
provides the right for Redmoor to enter into a 25-year mining lease
(renewable for a further 25 years) over any part of the licence
area.
The licence area had previously supported a number of historic
tin-tungsten-copper mines and there is a number of operating mines
(china clay and tungsten) located in the region. As well, there is
excellent local infrastructure for roads and ports and it is less
than 40km by road to the Wolf's recently commissioned Drakelands
tungsten mine and processing plant.
As a "brownfields" site, there already exists data on the likely
resource which indicate the:
1) Mineral Resource, as defined by the JORC code, of 13.3Mt @
0.37% tungsten equivalent (WO3Eq) (0.56% tin equivalent
(SnEq)).
2) Identification of a number of high grade lodes at Redmoor and
definition of a high grade sub-set of the above Inferred Mineral
Resource of 2.3Mt @ 0.80% WO3Eq (1.19% SnEq).
3) Identification of an additional high grade Exploration
Target, also defined by the JORC code, of 4Mt to 6Mt with an
estimated grade of between 0.6% and 1.0% WO3Eq (0.9% to 1.5% SnEq)
- two to three times the size of the above High Grade Resource
noted in 2) above (at a similar expected grade).
It should be noted that the above Exploration Target is
conceptual in nature and there has been insufficient exploration to
define a Mineral Resource. It is uncertain if further exploration
will result in the determination of a Mineral Resource.
In March 2016, NAE also completed a preliminary mineral
processing review, which showed that Redmoor is a coarse grained,
simple to process ore with expected high recoveries and low
processing costs.
An evaluation of the Redmoor project has recently been
undertaken by NAE based on the results of the mining and processing
studies. The results of both stand-alone Redmoor development and
toll processing options have been encouraging.
An initial drilling programme has been planned, aiming primarily
at converting the significant Exploration Target to an Inferred
Resource and also at upgrading a portion of the resource from
Inferred to Indicated Mineral Resource status. Funds from the
Company exercising its option to take its ownership up to 50% of
Redmoor are primarily earmarked to fund the initial drilling plan.
This plan is currently being reviewed by both NAE and the Company
to ensure that the maximum benefit can be obtained for Redmoor.
Current plans for Redmoor are consistent with the Company being
in a position to exercise its option and CARE being in a position
to undertake drilling in the first half of 2017. The Company will
keep the market updated on this as events transpire.
Financials
Over the period, the Company continued to maintain a tight
control on overheads in line with its corporate strategy to
maintain this within the operating profits from its US
operations.
In preparation of exercising its option in the Redmoor project,
and for potential additional CARE drilling, the Company raised
GBP429,000 in June. This funding, when combined with the expected
proceeds from the rail dispute settlement, places the Company in a
good position to exercise its option over 50% of the Redmoor
project.
At the end of the June 2016 quarter, the Company had US$837,814
in cash compared to US$1,048,058 as at the end of March 2016.
The Directors believe that cash flows from Cobre's operations
and the reduction in corporate overheads should ensure that
adequate reserves exist to progress existing operations.
Near term objectives
Over the near term, the Directors of Strategic Minerals plan
to:
-- Progress sales opportunities and tenure at the Cobre mine;
-- Formulate drilling and testing plans for CARE;
-- Secure funding to exercise the Company's option to take up a
50% interest in the Redmoor Tin/Tungsten project; 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 +61 (0)414 727 965
Allenby Capital Limited
Nominated Adviser and Broker
John Depasquale
Jeremy Porter
James Reeve +44 (0)20 3328 5656
Yellow Jersey PR Limited
Financial PR
Dominic Barretto +44 (0)7825 916
Alistair de Kare-Silver +44 (0)7768 537 739 715
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 stock exchange listing rules, 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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