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.

25 January 2018

Strategic Minerals plc

("Strategic Minerals", "SML" or the "Company")

Binding Exchange of Contracts for Leigh Creek Copper Mine, South Australia

Settlement expected in approximately one month

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), the diversified mineral development and production company, is pleased to announce that Ebony Iron Pty Ltd ("EI"), a wholly owned subsidiary of SML, has completed the binding exchange of contracts for the acquisition of Leigh Creek Copper Mine Pty Ltd ("LCCM") from Resilience Mining Australia Pty Ltd ("RMA"). LCCM owns the exploration and mining rights and associated copper processing assets at the Leigh Creek Copper Mine in South Australia ("the Project").

Highlights

· Binding contracts exchanged subject to conditions precedent

· Final settlement expected in approximately one month

· 24,900 tonnes of JORC compliant resource copper metal acquired

· Offtake Agreement for 100 per cent of production is part of conditions precedent

· Outlook for copper prices very strong, with current prices at or near 12 month highs

The Board believes the Project represents a near-term, low-capex copper production opportunity with the potential for early cash flow generation. Additionally, the Project will allow the Company to significantly expand its current resource base.

As previously announced, under the contract there are a small number of conditions precedent to be completed before final settlement, including approval from the Australian Foreign Investment Review Board. The Board of SML ("the Board") considers that, given the size and nature of the contracts, these conditions precedents are mainly procedural, and that settlement is expected to occur in approximately one month.

Managing Director of Strategic Minerals, Mr John Peters, commented:

"We are delighted to have completed and exchanged contracts for the acquisition of the Leigh Creek Copper Mine. I believe we have once again proven our ability to identify projects that can be rapidly developed to deliver returns to shareholders. We are already formulating our development plans for LCCM and see the project as having potential to deliver cash flows in 2019.

"I am also pleased to note that with the exchange of contracts complete, key technical staff associated with the project are now free from any conflict of interest and can commence working within the SML group.

"The Management and Board are very much of the opinion that Leigh Creek is a project that will become a key asset in the SML portfolio and we are excited to get underway with development once the transaction is settled."

The Transaction

On 25 January 2018, EI entered into binding contracts to acquire LCCM from RMA for a total consideration of AUD $3,000,000 (approximately GBP 1,710,000) to be paid by way of:

i. AUD $1,500,000 (approximately GBP 855,000) either in cash or by way of debt assumption on settlement; and

ii. the remaining AUD $1,500,000 to be paid by way of debt assumption of AUD $50,000 and the issue of AUD $1,450,000 in new ordinary shares of SML (the "Consideration Shares").

The bulk of the Consideration Shares (valued at AUD $1,350,000) are to be issued in the first week of April 2018, based on the volume weighted average share price ("VWAP") for the month of March 2018. AUD $450,000 of these Consideration Shares will be subject to a voluntary escrow of three months from issue and a further AUD $450,000 will be subject to a voluntary escrow of six months from issue.

The balance of the Consideration Shares (AUD $100,000) will be issued in January 2019, based on the March 2018 VWAP and has been retained to support warranties provided by RMA. Should SML fail to deliver RMA the shares, excluding the AUD $100,000 worth of issue held back for security purposes, by the end of April 2018, RMA will have the right to re-acquire LCCM for AUD $1.

As part of the exchange of contracts, AUD $100,000 will be deposited with RMA and will not be refundable in the unlikely event that Foreign Investment Review Board consent is not granted for the transaction. The balance of the cash will be paid at settlement.

Leigh Creek Copper Mine Project

The Leigh Creek Copper Mine Project is a historically mined copper oxide deposit that was last operated in 2011. The Project is based in the northern Flinders Ranges of South Australia. South Australia is one of the world's largest copper producers (Olympic Dam and Prominent Hill) and the northern Flinders Rangers has been a source of copper since the 1880s.

LCCM has three approved Mining Leases that cover a number of copper oxide deposits, including Lorna Doone, Lynda, Mountain of Light (Rosmann East and Paltridge North) and the Mount Coffin deposit. All the Mineral Resources are contained within the Mining Leases.

The previous owners completed a JORC 2012 compliant Mineral Resource estimate on Lynda, Lorna Doone and Paltridge North deposits in 2016. A total resource of 3.61mt @ 0.69% copper for 24,900 of copper metal forms the base of the project and includes the following Resource category breakdown.

Additional exploration potential has been identified within the mining and exploration leases and will be followed up during 2018 with further proposed exploration.

An existing heap leach and copper processing facility is currently located at the Mountain of Light deposit and has been in care and maintenance since 2012. The treatment plant treats the copper solution extracted via a standard heap leach pad into a copper cement (>70% Cu) via two existing Kennecott cones. The Mountain of Light Processing plant is 100% owned by LCCM.

A Feasibility Study ('FS') for the Leigh Creek Copper Mine was completed by Terra Consulting in November 2016 and compiled geology, resources, mining, processing and marketing relating to the Project. The FS focussed on treating oxide copper initially from two open pits (Lorna Doone and Lynda). This processing plant has a nominal capacity to produce 2,200 tonnes of copper per annum, but the feasibility study identified a very low capital cost option to increase capacity to 4,000 tonnes of copper per annum. Additional resources from the Paltridge North deposit was not included in this FS and will be assessed by SML for potential upside. The FS has demonstrated a robust economic return using conservative price assumptions.

The region around the Project has excellent infrastructure with a modern town (Leigh Creek), sealed airstrip, sealed and all-weather roads, power, and water.

Additional to the Mining Leases, two approved Exploration Leases, covering an area of 686km2 in the northern Flinders Ranges are included in the Project. These provide excellent opportunities for exploration of new copper oxide resources.

SML intends to complete a review of the development options during February with a forward work programme to be completed in the second quarter of 2018.

Copper Marketing

Copper prices have demonstrated a strong resilience during 2017 and copper is currently trading at or near to 12-month price highs. Current spot price is reported as US$3.24/lb copper. This steady rise in spot copper price has been driven by a decline in world copper production of around 2.5% during the first 9 months of 2017 (ISGS, 20th Dec 2017) and an ongoing general decline in mine grades and increasing challenges for exploration success. This has resulted in copper being a strategically attractive commodity.

Terms for an offtake agreement for all planned copper production, up to 300 tonnes per month has been agreed.

Competent Persons Statement

Information in this announcement that relates to Mineral Resource Estimates are based on information compiled by Mr. David Larsen, who is a Member of the Australian Institute of Geoscientists (Member No. 1976). Mr. Larsen is the Principal Geologist at Terra Consulting Pty Ltd. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a qualified person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr. Larsen has over 30 years' Australia and international experience in exploration, mining geology and resource estimation for gold, base metals and iron ore deposits.

For further information, please contact:

Notes to Editors

Strategic Minerals Plc is an AIM-quoted, diversified mineral development and production company with projects in the United States of America, the UK and Australia. The Company is focused on acquiring and developing cash generative, high quality projects which meet local market demand for commodities and utilising this cash flow to undertake value added exploration. 

In September 2011, Strategic Minerals purchased its first cash-generating asset; the Cobre magnetite tailings dam project in New Mexico, USA which it brought into production in 2012 and which continues to provide a revenue stream for the Company. The portfolio was expanded in January 2016 with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia that are prospective for cobalt, gold, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd. In May 2016, an additional exploration asset was acquired when the Company entered into an agreement with New Age Exploration Limited to acquire up to 50% of the Redmoor Tin/Tungsten project in Cornwall, UK. This 50% acquisition was completed in February 2017 and drilling at the project has commenced. The Company is also currently in the process of finalising the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Australia.