(Alliance News) - Strategic Minerals PLC will get a decision on legal proceedings related to the Cobre mine by the end of May, it said on Monday.
Strategic has also ruled out an equity raise to fund the Leigh Creek copper mine in South Australia. Shares were 28% higher on Monday afternoon in London at 0.54 pence each.
Strategic in September last year began legal proceedings against an unnamed major customer after a "breakdown in negotiations". Strategic sells magnetite from tailings operations at the Cobre mine in New Mexico.
The US arbitrator, Strategic confirmed, has agreed to provide a decision on the matter by May 30.
Elsewhere at Cobre, Strategic confirmed its access to the magnetite stockpile from the mine has been rolled over until the end of March next year. Initial access was granted in 2010 for three years, with annual extensions from then.
At the Leigh Creek copper mine, another of Strategic's projects, it hopes to submit an environmental protection & rehabilitation plan by the end of March. The start of operations at Leigh Creek will depend on both funding progress and copper prices, Strategic said, but it believes the project is still attractive.
Strategic says start-up relies on two factors, however. The feasibility study was based on a USD3 per pound copper price, and the company added: "While it was thought this would be a likely level prior to the PEPR approval, recent weakness in the copper price, may delay the commencement of operations.
"However, we note that, while the project is still attractive at current market prices, market forecasts continue to predict a much higher copper price, especially given that China is likely to restock as their economy heals from the economic shock caused by the Covid 19 virus."
"Secondly, while the project produces an excellent return on investment, the bulk of which is received within the first two years of production, it does require both start-up and working capital and this will need to be sourced prior to any commencement," Strategic continued.
"Currently, the board believes this is best sourced at the project level by either debt, trade-related financing, a joint venture with suitable parties, or a combination of these."
Strategic is currently in talks with various parties over funding, but confirmed there will be no capital raise "at a parent level".
By George Collard; georgecollard@alliancenews.com
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Strategic Minerals (SML)