Strategic Minerals sees 9th annual roll-over of profitability at Cobre magnetite project
(SML ) has confirmed the ninth yearly rollover of access to the magnetite stockpile in New Mexico, thereby securing another year of profitable operations at the site.
The producing mineral company 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 used to cover company overheads and invest in development projects orientated to supplying the burgeoning EV/battery market. The global EV battery market is projected to grow at a compound annual rate of 52% by 2025.
Despite the pandemic, sales in 2020 grew, excluding sales relating to CV Investments LLC, by 21.6% to $3.025m, and SML said it expects to maintain, if not increase, this level in 2021.
The Company said the recent surge in copper prices has had ‘a significant impact’ on the forecasted profitability associated with the current plans to monetise the Paltridge North and Lynda/Lorna Doone deposits within the Leigh Creek Copper Mine (“LCCM”) project.
SML’s internally projected financials adjusted for the current copper price of US$4/lb ($3/lb previously) and the AUD/USD exchange rate of 0.7900 (0.7000 previously), indicates that the project value is around three times that assessed at the time of acquisition of LCCM.
"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,” commented John Peters, Managing Director of Strategic Minerals.
Peters added that the enhanced project value has occurred “at a time when the Company is closing in on the regulatory approval for accessing the Paltridge North deposit.”
He added, "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.”
Meanwhile, Southern Minerals Group, Strategic’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. This result will be communicated to the market upon receipt.
Shares in Strategic Minerals have increased by over 25% in value since the beginning of the year. The stock was trading 0.96% higher this morning at 0.525p as a result of the news. Today’s announcement marks the Group’s ninth yearly rollover of access to the Cobre magnetite stockpile and ensures continuity of profitable operations for the year ahead.
Today’s announcement follows the recent news that SML’s 100% owned Cornwall Resources is to start a trenching and auger exploration program the Redmoor Tin and Tungsten project. Should this initial exploration work prove successful, it is expected to lead to the definition of a series of further targets suitable for reconnaissance drilling at a later stage.
Reasons to follow SML
Strategic Minerals is a minerals production and development group focused on developing projects prospective for battery materials. In September 2020, it reported a swing to profit in the six months ended 30 June 2020 after posting a pre-tax profit of $0.26m.
Multiple Projects and Minerals
It is currently undertaking four major spheres of operations; the Cobre magnetite stockpile operation, the Leigh Creek Copper Mine, the Redmoor tin/tungsten exploration project and the Central Australian Rare Earths project.
In October 2020, SML announced a positive updated scoping study undertaken by Wardell Armstong that reported improved economics for the Redmoor tungsten and tin project.
Sales Ramp Underway
Today’s ‘strong’ December quarter follows a trajectory of recent growth at the Cobre magnetite operation in New Mexico after the group reported strong sales last quarter.
"Sales at Cobre continue to show excellent annual growth providing the Company the opportunity to repay outstanding liabilities and benefit from surplus cash generated from operations,” said John Peters, Managing Director of SML said in October 2020.
He added, “With copper prices around $3lb and the recent emphasis on the strategic nature of tungsten, the Board is confident that the underlying value in its projects will be realized."
Positive Newsflow Expected
Last week, the Company said its 100%-owned subsidiary Cornwall Resources ("CRL") is to start a trenching and auger exploration program the Redmoor Tin and Tungsten project.
To date, multiple prospective targets for tin and copper have already been identified as a result of a review of historic exploration data taken to the west of the Redmoor deposit.
The planned program, which will utilise a combination of powered-auger sampling and trenching techniques and assess defined targets, represents a practical test of the local viability of these methods. The program is expected to lead to the definition of a series of further targets suitable for reconnaissance drilling at a later stage should it be successful.
Work is planned for early April 2021, Covid-19 controls permitting, and to last for around three months, leading up to the expected start of the ‘Deep Digital Cornwall’ summer project where SML will work to generate new data for the project as a delivery partner.
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