Strategic Minerals Regulatory News (SML)

1 May 2015

Strategic Minerals Plc

("Strategic Minerals" or the "Company")

Corporate Update

The Board of Strategic Minerals Plc (AIM: SML; USOTC: SMCDY) is pleased to provide the following update on the Company's operations through the March quarter 2015.

Highlights

· Secured a share option agreement to acquire the entire Tatu coal project in New Zealand, recently completed the acquisition of 51% of the project

· Entered into a culturally significant Memorandum of Understanding in relation to the Wanbao Coal Mine China

· Subdued reduction in sales revenue of domestic product at Cobre, despite significant falls in global iron ore prices

· Expected reduction in corporate overheads 62% from the annualised overheads reported in the June 2014 half year

· Cash of US$0.859m as at 31March 2015

· Relinquishment of Jotanooka iron ore tenements in line with strategy to focus on cash generative assets

· Target in the next six months is to both complete the acquisition of the Tatu coal project, including securing the requisite funding, and to undertake the acquisition of an additional project matching the Company's investment parameters.

Mr John Peters said "The Board and management have identified some good acquisition opportunities during a difficult time for global mineral markets. Unlike a number of junior resource companies, Strategic Minerals has both an ongoing cashflow stream and the expertise to thoroughly review potential projects on both their technical merits and economic viability. The Directors and management believe that these strengths, and the recent contract to purchase 100% of the Tatu coal project, have rekindled interest in the Company and we eagerly anticipate maintaining this heightened level of momentum by completing the Tatu coal acquisition and adding similar transactions to the Company's portfolio, to the benefit of all shareholders."

Strategy Focus

The Company's strategy in seeking new projects is focused around the following criterion:

· Near Term Cash Flows Projects that are expected to commence cash flow from operations within 18 to 24 months of acquisition.

· Local Market Demand Local demand should exist for products in order to provide logistical competitive advantage to protect both demand and ensure sustainable profit margins.

· Substantial Resource Upside Projects should have additional resource potential to ensure that the project can take advantage of market upswings.

· Financially Attractive Pre-tax IRR rates and payback hurdles to be met with low upfront expenditure to secure the project. IRR rates utilised to reflect risk profile of project. Project to be within the Company's perceived funding capacity.

Acquisition of Tatu Coal Mine

During the March quarter, the Company secured a low upfront cash contract to purchase 100% of the Tatu coal project by acquiring King Country Mine Limited ("KCM") in New Zealand for NZ$255,000 up front and the majority of the purchase price payable via a royalty of up to US$2 per tonne of product sold. Following the announcement to acquire the project on 31 March 2015, the Company has completed the purchase of 51% of KCM for a total of NZ$132,500 (including a NZ$5,000 signing fee). Strategic Minerals has until 31 January 2016 to purchase the remaining 49%, for NZ$122,500 (the "Option"). The exercise of the Option is subject to:

 a) Regulatory approvals by the New Zealand authorities for change of control of the mining permits held by KCM; and

 b) Strategic Minerals providing to the vendors of KCM with proof of financial capacity to commence operations at the mine. Should the Company not proceed with the Option, the vendors of KCM will acquire back the 51% interest in KCM held by Strategic Minerals for NZ $1.

The Tatu mine was a state owned and operated mine which ceased production in 1970. Historical exploration reports indicate a resource of 7.3 million tonnes of high quality thermal coal which the Company is currently looking to confirm with a JORC resource as soon as possible. The project is located near Ohura, in the north island of New Zealand and is approximately 400 metres above sea level. Access to the mine is via road and there is potential for a rail siding from a reasonably close location.

Based on historical reports, average coal seam thickness appears to be greater than 2 metres which has been based on outcrop at surface, 7 drill holes within 250m of the proposed new mine entrance, old workings and other coal outcrop in close proximity to the project. The energy value of the Tatu coal is expected to be 24.43 Mj/kg (5,835 kcal/kg) and it has similar or better energy coal characteristics to coal currently being supplied to the north island of New Zealand.

The north island of New Zealand imports a significant quantity of thermal coal for energy generation and domestic lime and concrete production. The Directors believe that a number of potential large customers exist within a 150 kilometre radius from Tatu. The Company has engaged local coal marketers who are undertaking sales enquiries to assess demand and progress discussions to support the sale of coal from Tatu.

Recent feedback from sales enquiries supports the Company's aim of securing a US$10 per tonne after tax profit margin.

In line with Strategic Minerals' refocused strategy, the acquisition of the Tatu coal mine ticks all the strategy boxes as follows:

Cobre magnetite tailings operations

The domestic magnetite markets in the United States have proven to be resilient to the significantly depressed global iron ore prices. Domestic sales for the 12 months to the end of the March quarter 2015 were down 7% compared to the preceding 12 months and derive from the fact that, in the March quarter 2014, there was an unusually large spike in domestic demand. This reflected the establishment of an inventory stockpile created by one of Strategic Metals Group's (our 100% subsidiary) customers. Over the same period, world iron ore fines prices fell from over $110 a tonne to under $70 a tonne. Tonnage and sales values for domestic sales over the past 12 months to March 2015 are:

Tonnage Sales (US $'000)

Qtr March 12 months to March Qtr March 12 months to March

2015 4,707 16,284 $313 $1,094

2014 7,203 17,364 $485 $1,175

2013 4,885 $326

Operations at the mine have been successfully streamlined to reduce costs, while still ensuring adequate service to customers and safe operating conditions.

The Company screened material this quarter to maintain sufficient stock levels to supply customers, while continuing its initiatives to increase volumes to customers, secure additional potential customers and improve profit margins.

Although investigations into producing a heavy dense media ("HDM") product last year showed that the Cobre product can be processed into a high quality HDM product suitable for coal washing, in line with the Company's strict capital investment criteria, the HDM project is on hold until further market improvements can be seen or customers strategically located to Cobre can be secured.

Wanbao Memorandum of Understanding

During the quarter, the Company entered a culturally significant Memorandum of Understanding with the owners of the Wanbao Coal Mine. The Directors believe that undertaking of investment within China can be highly risky if not approached in a manner befitting the Chinese culture. In line with normal PRC cultural protocols, the Memorandum of Understanding provides Strategic Minerals the opportunity, over six months, to assess the underlying resource, its market logistics and to thereafter evolve a mutually agreeable acquisition of up to 49% of the mine.

The Wanbao Coal Mine has previously produced premium coking coal with historical mining methods resulting in a 50% recovery of saleable product. A JORC resource is being completed to help evaluate the mining lease and surrounding exploration areas after which a review of the most appropriate mining methods will be undertaken.

Like Tatu, the economic attractiveness of the Wanbao project benefits from access to local market users, which can result in sales prices in excess of current global markets and offers logistical advantages.

Unlike Tatu, the scale of the Wanbao project is much larger and, subject to the economic viability of the final proposition meeting Strategic Minerals' investment criterion, it is likely to involve the Company working in partnership with others.

Financials

Over the March quarter, the Company continued to reduce overheads in line with the lower sales turnover associated with Cobre since magnetite iron ore exports were terminated due to subdued iron ore prices. Overheads have now been reduced to under US$1 million (excluding project review costs) on an annualised basis which represents a reduction of 62% compared to the annualised overheads reported in the June 2014 half year results.

At the end of the March 2015 quarter, the Company had $US 859,000 in cash compared to $US 949,000 as at the end of December 2014.

During the quarter, the Company's management had, and continues to have, a continual dialogue with disputed creditors outside of normal credit terms. The Company remains committed to resolving a number of counter claims with these creditors and related suppliers. On balance, the Directors believe that the Company will potentially expunge or reach appropriate settlement for these outstanding creditor positions and, while it closely monitors its cash position, it believes that cash flows from Cobre's operations and the reduction in corporate overheads should ensure that adequate reserves exist to undertake existing operations (excluding acquisitions).

Exploration tenements

During the quarter, the Company agreed to relinquish the Jotanooka tenements. Whilst the Company believes there is good potential in these tenements, the significant fall in iron ore prices suggests that commercialisation of these resources is at least seven years away. Therefore, the Company has concluded that, while prospective, this tenement does not align with the Company's focus on near term cash flow opportunities.

Similarly, a review is currently being conducted on the Company's Iron Glen tenements.

Near term objectives

Over the next six months, the Directors and management of Strategic Minerals plan to:

· Complete the acquisition of Tatu Coal project

· Complete JORC resource of the Tatu Coal project

· Undertake a feasibility study for the Tatu coal project

· Arrange funding for the construction and operations of the Tatu Coal Mine

· Secure a second expansion project

· Increase profitability of Cobre through continued cost reductions and increased domestic sales

The Company looks forward to providing further updates in due course.

For further information, please contact:

Forward Looking Statements

This release includes forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements in this release include, but are not limited to, the capital and operating cost estimates and economic analyses from the Study.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of resources or reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements.

Forward looking statements in this release are given as at the date of issue only. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.