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(Alliance News) - Strategic Minerals PLC on Wednesday said a large impairment charge relating to a Western Australia project resulted in a swing to a pretax loss for 2019.
Shares in the company were down 10% at 0.40 pence each in London.
For 2019, Strategic Minerals recorded a pretax loss of USD845,000 compared with pretax profit of USD1.9 million in the year ago period. Revenue fell 26% year-on-year to USD2.5 million from USD3.4 million.
"The loss in 2019 largely reflects the non-cash impairment of USD1.1 million in relation to the Central Australian Rare Earths Pty Ltd and its tenement holdings. This has been ameliorated by the continued profitable performance of the company's subsidiary, Southern Minerals Group LLC which operates the Cobre mine," the exploration company focused on battery materials said. No impairment charges were recorded in 2018.
The company's core Cobre magnetite tailings dam project located in the US state of New Mexico sold 42,517 short wet tons of magnetite in 2019 resulting in USD2.5 million in sales compared to 2018 when 54,565 short wet tons were sold for USD3.4 million.
Chair Alan Broome said: "2019 has proven to be a challenging year for the company due to deteriorating capital market conditions and the extraordinary challenges to world markets in 2020, due to Covid-19. Despite these challenges the demand for product from our Cobre operations remains steady and the company is in a position to move forward with operations at Leigh Creek copper mine and the exploration and development of Redmoor.
"The uncertainty in the global capital and commodity markets will continue to cause difficulties in raising funds to progress the projects but the underlying economics and value remain strong. The continued cashflow from our Cobre asset along with the developed nature of our projects, puts the Company in a good position to benefit from an improvement in world markets."
The Leigh Creek copper mine was acquired by the company in March 2018 and the was bought into production in April 2019. The project is situated in the copper-rich belt of South Australia.
Strategic Minerals owns a 50% stake in the Redmoor tin and tungsten project located in Cornwall, UK.
By Tapan Panchal; tapanpanchal@alliancenews.com
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