Strategic Minerals* (SML LN) 0.75p, Mkt Cap £11m – Resumption of regular sales at Cobre magnetite in the US
Strategic Minerals reports the resumption of regular demand from existing Cobre clients sales at it’s Cobre magnetite operation in New Mexico through the last quarter to end-September.
This does not include the major client where Strategic Minerals is pursuing a claim with arbitration now scheduled.
Q3 sales were 26.3% higher yoy.
Cash rose to US$765,000m at end-September from US$319.000m at end-June forcing management to slow expenditure and conserve cash while the company pursues its arbitration in the US.
September sales also include the forfeiture of US$375,000, relating to deposits from the major Cobre client bringing the total deposits forfeited to US$750,000 for the year.
Management are growing sales in the absence of the major client as seen in the Q3 sales recovery.
Cobre magnetite: sales recovered to US$1.130m in Q3 vs US$0.598 yoy and to US$3,158 for FY 2019 vs US$4.856 for 2018 and US$4.032 for 2017.
Leigh Creek: project received A$269,564 as a research grant and reimbursement of expenditure. The company produced and sold an initial consignment of copper cement and is working to bring the mine back into full scale production in late 2019 / early in 2020/
Redmoor scoping study: outlines a potential 600tpd underground mine with a ten year mine life. Capital costs estimated at US$89m are expected to generate an NPV8% of US$94m and IRR of 19.4% using prices of US$22,000/tonne for tin, US$330/mtu for tungsten trioxide and US$3.18/lb for copper.
Conclusion: Management continue to advance the future of Leigh Creek copper production and are stepping forward with full ownership of the Redmoor tin, tungsten, copper, project in Cornwall. While the setback at the Cobre magnetite operation in the US has slowed progress cash reserves are recovering and the company should continue to add value on each of its three key fronts.
*SP Angel acts as Nomad and Broker to Strategic Minerals