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Strategic Minerals* (SML LN) 0.879p, Mkt Cap £12.8m – Cobre Arbitration • Strategic Minerals reports that its wholly owned subsidiary, Souther Minerals Group, which operates the Cobre magneite sands project in New Mexico has lodged a notice of arbitration in its protracted dispute with the major, un-named, client at Cobre. • The claim is reported to consist of three main elements: o Over “$2.3m relating to payments outstanding to date” o Over “$19m in relation to lost profits for the balance of the contract”; and o “punitive damages as permitted by law”. • The company explains that it is taking a conservative view in respect of its future funding plans “and excluded any potential payment from the client and incorporated expected legal fees” • Managing Director, John Peters explained the background saying that “The claim against the major Cobre client has been meticulously reviewed prior its issuance and comes after the breakdown in negotiations with the client”. • He said that “the Board is continuing to review its projects and examining the preferred methods of funding such development.” In the light of events at Cobre but confirmed that “The Company remains in the fortunate position wherein the profits from the Cobre operation continue to fund overheads and contribute, albeit at a lower level, to project development. Further, as 100% owners, the Company can dictate the pace of progress on each project, as holding costs on each are relatively minor." Conclusion: The long-standing dispute with its main customer at Cobre has come to a head with the lodging of an arbitration claim. The timing of the company’s other projects may be adjusted to accommodate these events but the company is making the point that as it is sole owner it is in a position to make the required adjustments to its programme of work. *SP Angel act as Nomad and Broker to Strategic Minerals
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