Strategic Minerals* (SML LN) 1.35p, Mkt Cap £19.8m – Settlement of acquisition
• Strategic Minerals reports that it has now settled the acquisition of New Age Exploration’s (NAE) 50% holding in Cornwall Resources which holds the Redmoor tin/tungsten project in Cornwall.
• Strategic Minerals has made an initial A$290,000 payment, which takes total cash paid to date to A$300,000, and agreed to make three further cash payments each of A$300,000 quarterly “before 31 October 2019, 31 January 2020 and 30 April 2020. The balance is then to be paid on or before26 June 2020.”
• Interest on the balance of the outstanding A$2.7m is charged at “5%pa calculated on a daily balance basis, payable at the end of each calendar quarter”.
• Commenting on the revised acquisition arrangements for Cornwall Resources and the Redmoor project which he said would enable the company to build on “this potentially world class mining opportunity over the coming years”, Managing Director, John Peters, explained that “The provision of a vendor loan has assisted the Company in managing its cash flow while ensuring that any future arrangements can be planned with the knowledge that the Company has total control of Cornwall Resources Limited.”
• In our opinion, consolidating full ownership of Cornwall Resources should benefit the project through a simpler management structure while the revised schedule of payments to NAE should more closely match the expected addition of a second source of cash generation from Strategic Minerals’ Leigh Creek copper project in South Australia, where, following initial sales of copper cement which were announced in May, full production is scheduled for commencement in late 2019 / early in 2020.
Conclusion: The revised payment schedule for the acquisition of NAE’s 50% interest in Cornwall Resources should simplify the future exploration management of the Redmoor tin/tungsten project and assist Strategic Minerals in matching the staged payments to NAE with the expected build up of copper production from its Leigh Creek operation in South Australia.
*SP Angel act as Nomad and Broker to Strategic Minerals