Strategic Minerals Regulatory News (SML)

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

2 March 2020

Strategic Minerals plc

("Strategic Minerals" or the "Company")

Cobre Access Rollover Confirmed Update on Projects

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, is pleased to provide the following update on the Company's activities.

Highlights

·; Continuity of revenue stream confirmed through 8th yearly roll over of access to Cobre stockpile

·; US Arbitrator agrees to providing a decision on claim against Cobre major client by 30 May 2020

·; Leigh Creek Copper Mine (LCCM) PEPR (approved program for environment protection and rehabilitation) to be submitted end March 2020

·; Timing of LCCM commencement of operations dependent on both funding progress and copper prices, but remains an attractive project at current prices

·; Board reiterates it, currently, considers LCCM unlikely to be funded by a (dilutive) parent level raise

·; Operations at CRL (Redmoor project) likely to be largely self-funded by CRL during 2020

·; Repayments on NAE loan continue to be made in line with existing arrangements

·; Corporate overheads reduced in last quarter 2019 by circa 20-25%

·; Board confirms its desire for strategic, medium term, exposure to copper production and longer term tin and tungsten development and acknowledges the bullish nature of long-term forecasts for these commodities

Cobre operations: Access maintained, valuable cashflow continues, arbitration progressing

As no notification has been received by the end of February 2020, access to the magnetite stockpile at Cobre in New Mexico, USA, by Southern Minerals Group (SMG) has been rolled over until 31 March 2021. The initial access was in 2010 for three years with annual extensions thereafter. Accordingly, the 2020 roll over represents the 8th roll over of access and, as relationships with the owner remain strong, the Board expects roll overs to continue on an annual basis in the future. With circa 700,000 tons of inventory and current consumption levels of 40,000+ tons per annum, the Board considers that Cobre will continue to provide, at least, the Company's fixed corporate overheads and minimum commitments made by it for the foreseeable future. Active marketing continues to seek organic growth in sales.

In relation to the arbitration action with its major client, a single Arbitrator has been appointed and he has agreed to undertake the process by written submissions which should result in the cost of pursuing the action being lower. In light of adopting a written submissions approach, the arbitrator has set a series of action milestone dates as follows:

1) 20 February 2020 - Service of written discovery requests. No depositions may be taken and there shall be no more than 7 document requests by each party (each party has completed this part of the process).

 2) 5 March 2020 - Responses to written discovery requests.

3) 10 March 2020 - Discovery deadline.

4) 20 March 2020 - SMG shall submit in writing its affirmative case which may include a statement of facts, affidavit or verified statements, memorandum of law, exhibits and other relevant material.

5) 15 April 2020 - The Cobre client shall submit its written reply which may include a statement of facts, affidavit or verified statements, memorandum of law, exhibits and other relevant material.

6) 20 April 2020 -SMG may submit a brief written rebuttal of the other party's case which may not merely reiterate points previously made or argued.

7) 25 April 2020-The Cobre client may submit its final written submission which may not merely reiterate points previously made or argued.

8) Not later than 30 May 2020 - A reasoned decision of Arbitrator shall be issued.

SMG will be submitting a claim for in excess of US$ 21 million.

Once an arbitration decision has been made in favour of SMG, the Company will still have to apply to the courts for enforcement of payment, and the Board expects such court decision would be in favour of the Company. Payment would then be subject to the Cobre client's financial capacity to meet the claim.

Leigh Creek Copper Mine: Advancing towards production

As previously reported, an internal feasibility study on developing the Paltridge North deposit was completed Q4 2019. This feasibility study and the restart of operations, conducted last year, identified that profitability of the project revolved around taking production quickly to in excess of 200 tons of contained copper per month. While a mining license currently exists for this area, new mining activity in South Australia requires an approved program for environment protection and rehabilitation (PEPR) to be in place prior to the commencement. Progress on the application has been impacted by the requirement to increase initial anticipated levels of production and the concomitant impacts on a range of associated supporting reports required. However, SML is preparing a draft PEPR application to be submitted by the end of March 2020. The usual procedure is for the draft to be circulated to relevant government departments for feedback prior to formal submission. Accordingly, approval is expected late June quarter/early September quarter.

Upon receipt of a PEPR approval, the project requires approximately two months to establish suitable leach pads, source processing plant equipment and a mining mobile fleet, followed by up to a further three months until revenue commences. A PEPR approval is valid for the life of the approved activity, subject to routine annual review, and commencement of operations will be dependent on two major factors.

Firstly, our feasibility study was been based on a copper price of US $3/lb and, 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. Currently, the Board believes that this is best sourced at the project level by either debt, trade related financing, joint venture with suitable parties or a combination of these. The Company is in discussions with various parties and all funding options will continue to be investigated. To further clarify, the Board's intention is not to fund the route to production at LCCM by a capital raise at the parent level, given this would likely result in significant dilution were it to occur given the Company's current low valuation. Fundraising at the parent company level is not an attractive option for the Company or its shareholders at this time.

Cornwall Resources Limited - Redmoor Project Development continues

SML continues to meet its financial arrangements for the outright purchase of New Age Exploration's 50% share in Cornwall Resources Limited (CRL), the holder of the Redmoor mine project. Financing of payments has been assisted by R & D tax credit refunds received to date, which have also funded ongoing operations.

The CRL team continues to develop the world class resource at Redmoor, by building awareness of the project, building/maintaining relationships with stakeholders (including landowners) and generating strategies to obtain the greatest value for the Company's investment. An option to complete a limited exploration drilling program aimed at testing the potential to expand the significant resource already developed is being assessed.

CARE

In light of cash requirements associated with both the Leigh Creek and Redmoor projects, the Company has curtailed expenditure on the projects of Central Australian Rare Earths Pty Ltd ("CARE") and this is expected to be the case throughout 2020.

Options to increase shareholder value are currently being assessed.

Strategy and Corporate Activities

The Board has reviewed the Company's strategy and remains satisfied that its current portfolio of development projects, especially those focused on copper, tin and tungsten, are placing the Company in an excellent strategic position for the future. The Board considers having full control over both a near term copper production asset, with substantial upside, and a world-class developing tin and tungsten resource, along with the flexibility to maintain these without dilutive raisings, encapsulates the unique and highly attractive value proposition of the Company.

Internally, the Company has undertaken a full review of its operations and has, during the December quarter 2019, reduced corporate overheads by 20 to 25%. Accordingly, after tax operational cash flow from Cobre is now materially higher than corporate overheads.

Commenting, John Peters, Managing Director of Strategic Minerals, said:

"Progress continues across all the Company's projects and, although this has necessarily slowed, this reflects both changes in market conditions and a cautious approach by the Board.

We are encouraged to see the Arbitration process move forward at minimal cost, and remain of the opinion that we have a strong claim in respect of the contract value in excess of US$21 million, although we remain cautious on the ultimate outcome.

SML has full control over three exceptional projects, one of which provides sufficient cashflow to cover the Company's fixed corporate overheads and minimum commitments. This provides the Company considerable optionality to monetise each at the most appropriate time in commodity price cycles. The Board considers this sustainable flexibility an enviable position to be in with a solid platform for future growth"

Notes to Editors

Strategic Minerals plc is an AIM-quoted, operating minerals company actively developing projects prospective for battery materials. It has an operation in the United States of America and Australia along with development projects in the UK and Australia. The Company is focused on utilising its operating cash flows, along with capital raisings, to develop high quality projects aimed at supplying the metals and minerals being sought in the burgeoning electric vehicle/battery market.

In September 2011, Strategic Minerals acquired the distribution rights to the Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating asset, which it brought into production in 2012 and which continues to provide a revenue stream for the Company. This operating revenue stream is utilised to cover company overheads and invest in development projects orientated to supplying the burgeoning electric vehicle/battery market.

In January 2016, the portfolio was expanded with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia prospective for cobalt, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd. In September 2018, the Company entered contracts for the sale of certain CARE tenements identified as gold targets.

In May 2016, the Company entered into an agreement with New Age Exploration Limited and, in February 2017, acquired 50% of the Redmoor Tin/Tungsten project in Cornwall, UK. The bulk of the funds from the Company's investment were utilised to complete a drilling programme that year. The drilling programme resulted in a significant upgrade of the resource. This was followed in 2018 with a successfully completed 12-hole 2018 drilling programme, and which resulted in a resource update, that was announced in February 2019. In March 2019, the Company entered into arrangements to acquire the balance of the Redmoor Tin/Tungsten project. This was completed on 24 July 2019.

In March 2018, the Company completed the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Australia and brought the project into production in April 2019.