Strategic Minerals Regulatory News (SML)

30 September 2014

Strategic Minerals Plc

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

Interim results for the six months ended 30 June 2014

Strategic Minerals Plc (AIM: SML; USOTC: SMCDY), the magnetite iron ore producer and exploration company, announces its interim results for the six months ended 30 June 2014.

Highlights

Financial 

· Total revenues generated: US$5.7 million (H1 2013: US$21.5 million);

· EBITDA level loss for the period: US$2.0 million (H1 2013: US$0.7 million);

· Total comprehensive loss for the period: US$2.7 million (H1 2013: US$5.5 million);

· Cash and cash equivalents at 30 June 2014 was US$1.3 million (31 Dec 2013: US$1.2 million).

· Raised US$1.5 million (net of expenses) at 0.8 pence per share with the issue of 125 million shares;

· Issued 45 million shares to a creditor in exchange for obligations owed to them.

Operational 

· Significant decline in Platts IODEX 62% Fe price resulted in the cessation of iron ore exports with final export of material occurring in February 2014;

· Total export sales of 64,000 dry metric tonnes ("DMT") (H1 2013: 247,000 DMT );

· Domestic Sales of 12,850 short wet ton ("SWT") (H1 2013: 8,900 SWT);

· Average net FOB price achieved: US$76.23/DMT (H1 2013: US$84.73/DMT).

Julien McInally, Executive Chairman of Strategic Minerals, said:

"The drop in iron ore price has made it a challenging half year which resulted in the decision to cease the export of iron ore and focus on domestic sales that are not linked to iron ore price. The Company reduced its losses in spite of significantly reduced revenue and there will be a further positive impact to our cost structure with the focus purely on our higher margin domestic sales business and the corporate overhead reductions which will take effect in the second half of this year."

"The Company is in a good position to add value for shareholders, with a restructured Board, focused strategy on US domestic growth from our existing Cobre asset and the continued focus on securing additional near term cash flow opportunities. I am pleased with the significant cost reductions to corporate overheads in the last few months and our board is confident that our new strategy will result in significant financial and operational improvements in the medium term. I am grateful to our shareholders for their support and I look forward to updating you during the months to come."

For further information:

About Strategic Minerals

The strategy for Strategic Minerals PLC (AIM: SML) is to build a diversified portfolio of cash generating high quality strategic minerals operations and near term mining projects in jurisdictions where returns are commensurate with risk. Strategic Minerals currently produces magnetite iron ore from its operation in New Mexico in the United States and holds exploration properties in Australia. The Company is continuing to add value to its existing Cobre operation while it evaluates a number of acquisition opportunities in commodities such as tin, copper, iron ore, gold and other high value strategic minerals with a focus on projects that can be monetised quickly. The Company will also consider larger projects in these strategic minerals that the Company believes can be funded via joint venture arrangements. www.strategicminerals.net

Chairman's Statement

The six months to the end of June 2014 has been a challenging period for the business. The significant decline in the iron ore price to historic lows of around $80/tonne has resulted in the Company ceasing the export of iron ore magnetite, focusing instead on broadening its base of domestic sales from our Cobre operation in New Mexcio, USA. The Board has undergone a restructure and, since that took place in the later part of the period, the Company has focused on new acquisition opportunities while continuing to improve the value to its existing operation.

Financial results

Strategic Minerals generated revenues of $5.7 million for the six-month period ended 30 June 2014 (2013: $21.5 million). Revenues were generated from our New Mexican operations, primarily through magnetite export sales which totalled $4.8 million (H1 2013: 20.9 million). Domestic sales in the USA totalled $0.9 million (H1 2013: $0.6 million).

The Company incurred a comprehensive loss for the financial period of $2.7 million as compared to a loss of $5.5 million for the six-month period ended 30 June 2013. During the half year, revenues were significantly reduced by $15.8 million - mainly due to a reduction in export sales volumes from 247,000 DMT to 64,000 DMT when compared to 30 June 2013 period. In addition, the FOB price dropped, when compared to the same period last year, from US$84.73/DMT to US$76.23/DMT. The cost of goods sold reduced in line with sales volumes during the half year but this was offset by an increase of $10/DMT on a per unit basis due to an increase in rail and mining costs during the period. In addition, the cost of goods sold included a write down of inventory located at the port of Guaymas in Mexico amounting to $0.2 million. Rail infrastructure and intangible assets were largely written off at the end of 31 December 2013, which resulted in $0.8 million of amortisation for the period.

Basic and fully diluted loss per share for the period was 0.4 cents (1.1 cents for the six months ended 30 June 2013).

Operations

New Mexican Operations

The Company's change in strategy from a largely export focused business to a domestic sales focus has progressed well during the half year, with the Cobre operation servicing domestic magnetite customers in markets such as the concrete and fertilizer industries.

A total of 12,850 SWT was sold in the last six months which represented a 44% increase over the same period last year. Sales started the year very well but softened in the last three months of the period, due mainly to operational issues at one of our customer's sites and seasonal issues where trucks are deployed on agricultural haulage during the North American summer months. We expect the seasonal interruptions to cease in the near term, which should result in an increase of sales orders.

In addition to focusing on securing longer term contracts with existing and new domestic customers, the Company commenced test work on the potential to produce a Heavy Dense Media ("HDM") product in order to add value to its Cobre operation. The price of HDM product is not directly linked to the iron ore price and generally sells at a significant premium to the Platts price. HDM product is sold into the coal, water filtration, sintering, magnet and other industries. The Company expects to receive the results of that test work in the coming months, which will assist with market and process design reviews.

Exploration

During the half year, the Company started the process of obtaining approval for an exploration programme on its Jotanooka project in Western Australia. This work will allow the Company to initiate an exploration programme to evaluate the near surface high grade haematite potential for a Direct Shipping Ore (DSO) project. The Jotanooka project is ideally located 300 kilometres from a deep water port which has existing modern rail infrastructure nearby. The project is neighboured by Sinosteel Midwest Corporation's Koolanooka project, which delivered 4Mt of DSO to the Chinese steel markets over a three-year mine life before closing in 2013 after the project sold all of its DSO material. A decision on whether to initiate the exploration programme will be made in light of the Company's cash position.

The Iron Glen project in Queensland Australia continues to be maintained and rehabilitation work was commenced on the site during the period and has now been completed. Further work on this project will be conditional on further funding and subject to prioritisation of project initiatives.

New Acquisitions

The Company has a cash flow generating business which allows us to be selective in securing new near-term cash flow generating projects. Since May 2014 and the restructure of the board, the Company has reviewed and been in detailed discussions on a number of acquisitions in tin, gold, iron ore and other strategic minerals. We will keep the market updated as opportunities progress.

Safety

The Company continues to maintain a high level of safety performance with no reportable environmental or personnel incidents being recorded.

Other Matters

In May 2014 the Board underwent a restructure which resulted in the appointment of myself as Executive Chairman and Mr Lyle Hobbs as our United States based Executive Director. Mr Patrick Griffiths agreed to remain on the board and provides important corporate continuity for the Company. The Company intends to appoint a non-executive Chairman based in the United Kingdom, at which point I will take on the role of Managing Director. A number of potential candidates are being evaluated and an appointment will be made in due course.

Immediately following the new Director appointments in May, the Company completed a corporate overhead review which identified a number of potential savings. The corporate overhead review resulted in a reduction of directors fees and other overheads and the Company is on track to reduce overall corporate overheads to less than US$1.2M on an annualised basis going forward excluding costs associated with reviewing new opportunities and other exceptional items.

Finally, I would like to take this opportunity to thank my fellow Directors, our management and staff in New Mexico, and our advisers for their support and hard work on your behalf during the period. Additionally, I would like to thank our contractors, suppliers and partners for their on-going support.

Julien McInally

Executive Chairman

30 September 2014

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE PERIOD ENDED 30 JUNE 2014

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2014

All comprehensive income is attributable to the owners of the parent.

The accompanying accounting policies and notes form an integral part of these financial statements

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

1. General information

Strategic Minerals Plc ("the Company") is a public company incorporated in England and Wales. The consolidated interim financial statements of the Company for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the "Group").

2. Accounting policies

Basis of preparation

These consolidated financial statements have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. IAS 34 is not required to be adopted by the Company and has not been applied in the preparation of this interim information. The consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2013 Annual Report. The financial information for the half years ended 30 June 2014 and 30 June 2013 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Strategic Minerals Plc are prepared in accordance with IFRSs as adopted by the European Union. The comparative financial information for the year ended 31 December 2013 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The Company has amended its reporting currency since 30 June 2013 to US dollars as the Company's revenues, expenses, assets and liabilities are predominately in US currency. Hence, the 30 June 2013 financial statement comparatives are noted as being restated.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly consolidated financial statements.

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Group's latest annual audited financial statements.

In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these will have a material impact on the Group.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

3. Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Judgements

(a) Revenue recognition

The eventual price invoiced for export sales is determined based on a formula linked to the Platts IODEX 62% Fe CFR China in months following the month of sale and quality analysis post loading. For this period the amount recorded as revenue was the final agreed invoice value so no judgement has been applied in recording revenue for the year.

Estimates and assumptions

(b) Carrying value of intangible assets

In assessing the continuing carrying value of the exploration and evaluation costs carried the Company has made an estimation of the value of the underlying tenements and exploration licenses held.

In assessing the continuing carrying value of the other intangible asset, being the contractual relationship acquired on the acquisition of Ebony Iron Pty Limited, the key estimate and assumption made in the valuation model adopted has been the expected level of product which the Company will be able to sell.

(c) Share based payments, warrants and options

The fair value of warrants and options recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience. There were no options issued in the current period.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

The Group has three main segments:

· Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to both the US domestic market and shipment of magnetite to port for onward export sale.

· Head Office - This segment incurs all the administrative costs of central operations and finances the Group's operations.

· Australia - This segment holds the tenements in Australia and incurs all related operating costs.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that carry out different functions and operations and operate in different jurisdictions.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Executive Chairman and Executive Directors.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with EU Adopted IFRS but excluding non-cash losses, such as the amortisation of intangible assets, and the effects of share-based payments.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments in which the borrowings are held. Details are provided in the reconciliation from segment assets and liabilities to the Group's statement of financial position.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2014

Administration costs by nature

No dividend is proposed for the period.

Losses per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial year as provided below.