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.

29 September 2017

Strategic Minerals Plc

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

Interim Results - Half Year to 30 June 2017

Tenfold Increase in Cobre Profits

Strategic Minerals Plc (AIM: SML; USOTC: SMCDY), the diversified mineral development and production company, is pleased to announce its unaudited interim results for the half year ended 30 June 2017.

Financial Highlights:

· 1013% increase in operating profit to $690,000 (H1 2016: $62,000) from the Company's Cobre operation, prior to intercompany management charges, continues to underpin corporate cash flow and is expected to accelerate in the second half of 2017 in line with the commencement of the new and substantial contract in June 2017.

· As June sales from the new contract were not shipped until July and August 2017, a deferred revenue liability has been reflected in the June accounts and material relating to this purchase has now been shipped.

· During the period, payments of $575,000 were received in relation to the settlement agreement for the rail dispute, now completing arrangements.

· Investment of £843,649 ($1,068,000) in Cornwall Resources Limited ("CRL"), the owner of the Redmoor tin/tungsten project, increasing the Company's interest to 50%.

· Provision of 19,000,000 SML shares, in May 2017, issued at 2.75 pence per share to acquire the balance of the shares in Central Australian Rare Earths ("CARE").

· Exercise of 8,333,333 warrants by the Company's previous broker at £0.006.

· Cash and cash equivalents at 30 June 2017 of $1,259,000 (31 Dec 2016: $1,105,000). These cash balances have been maintained despite having no substantial public raising during the period and further funds are expected from the strong cashflows being generated by increased Cobre sales.

Corporate Highlights:

· Completion of the acquisition of a 50% stake in CRL which holds a brownfield tin/tungsten project in Cornwall, UK. As part of the investment, the funds subscribed were invested in a drilling programme that commenced in March 2017.

· Acquisition of the balance of the ownership of CARE an Australian exploration company prospecting for Cobalt, Gold, Nickel Laterites, Nickel Sulphide and Rare Earths.

· Signing of a substantial new client at Cobre which, when combined with the addition of another substantial client (cement producer CalPortland) in the second half of 2016, has seen new domestic sales records set during the period.

· Vesting of existing Directors and Managements' options, reflecting the Company's robust performance throughout the first half of 2017.

· Holding of the Annual General Meeting and a separate shareholder meet and greet with management 

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

"The first half of the year has seen the Company on the move, consolidating corporate project acquisitions and adding strategically important clients and I couldn't be more pleased with the Company's performance. As Cobre sales have increased, the resultant underlying profitability has transformed the Company and provided it the luxury of being able to self-fund value adding exploration programmes, without diluting shareholders.

"The Board and Management considers prospects from its Cornwall Resources and CARE investments to be very encouraging. We continue to look to further expand our three core projects through exploration, development and corporate activities as part of our primary focus on providing shareholder returns with the ambition of increasing market capitalisation to £100m in the near-term."

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 and the Northern Territory that are prospective for cobalt, gold, nickel sulphides and rare earths. 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 has now been completed and drilling at the project has commenced.

Chairman's Statement

Financial results

The results for the first half of 2017 marked a substantial turnaround in profitability with a profit of $158,000 (H1 2016: loss of $322,000).

Cash in hand as at 30 June 2017 was $1,259,000 and continues to grow in line with substantial cash flows being generated at Cobre operations.

Operating profit from our Cobre magnetite stockpile, prior to intercompany transfers, ($690,000) marked a tenfold increase in profitability from the first half of 2016 ($62,000).

Overheads continue to be tightly controlled, with corporate overheads being kept at US $440,000 for the half year despite the substantial increase in activities compared with the first half of 2016 ($348,000).

Cobre Operations

The Company's efforts in securing key clients are beginning to be reflected in substantial sales and concomitant profits.

With record domestic sales in recent months, the Board and Management will be focussing on ensuring that resources are available to service the new level of activity and that overheads are controlled during this growth period.

Maintenance of Strategy Focus

The increased profitability of the Cobre operations has provided comfort in relation to coverage of operating costs and allowed the Company to continue its three-pronged approach to diversified materials concentrating on:

1. Coal and Bulk Materials - potential projects in this sector that are tied to current contracts and further offtake arrangements at attractive prices.

2. Advanced Materials - considering project opportunities in materials where it expects demand to increase over the coming years (such as Rare Earths, Lithium and Graphite).

3. Metals - identify those projects exposed to metals that it expects to have price improvements over the next three to five years such as cobalt, nickel, gold, copper and tin/tungsten.

On the back of this strategy, the Company continues to invest in drilling programmes for its two main projects - CARE (cobalt, nickel and gold focused) and Redmoor (tin, tungsten and copper focused).

CARE

During the first half of 2017, re-examination the 2016 drill holes identified the existence of a potential cobalt deposit at Hanns Camp.

Subsequent to the indication of a potential cobalt deposit, the Company acquired the balance of the ownership in CARE which is now a wholly owned subsidiary of the Company. This provided the Company the freedom to undertake further, self-funded, exploration, at an accelerated pace.

In line with this freedom, the Company prepared a phased drilling programme for the second half of 2017 and beyond. The first phase of this programme has been completed and we are awaiting assay results.

Redmoor tin/tungsten project

In March 2017, the Company, through its 50% investment in CRL began a drilling programme at the Redmoor project located in the world class Cornwall tin-tungsten-copper mineralised district.

Reports on assay results for the first portion of the programme have been released and provide encouragement for our goal to define a resource capable of justifying construction of an underground mine.

Prior to undertaking the drill programme, an extensive community relations programme was enacted and the local community and Council are working closely with CRL in a highly collaborative manner.

Issues of Capital

During the period, the Company issued a total of $734,000 (£572,500) of shares by way of the exercise of warrants by Cornhill Capital being $61,000 (£50,000) and a scrip purchase of the balance of the CARE shares of $673,000 (£522,000).

Safety

The Company continues to maintain a high level of safety performance with SML and its subsidiaries having no reportable environmental or personnel incidents recorded in the period.

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

Alan Broome AM

Non Executive Chairman

29 September 2017

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE PERIOD ENDED 30 JUNE 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2017

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

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

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 2017 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 2016 Annual Report. The financial information for the half years ended 30 June 2017 and 30 June 2016 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 2016 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2016 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2016 was unqualified, and included an emphasis on matter paragraph regarding the Group's ability to continue as a going concern and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

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 except for policies stated below.

Joint arrangements

Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Strategic Minerals Limited has one joint operation at 30 June 2017.

Joint operations

A joint operation is a joint arrangement whereby the parties have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. Strategic Minerals Plc recognises its direct right to the assets, liabilities, revenues and expenses of the joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses.

Joint Ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have the rights to the net assets of the joint arrangement. Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position.

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

Accounting policies (continued)

New, revised or amending accounting standards and interpretations

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.

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) Joint arrangement and joint operation

The Company holds a 50% interest in Cornwall Resources Limited ("CRL") which owns the Redmoor Tin-Tungsten project in the United Kingdom with the other shareholder being New Age Exploration Limited ("NAE"). Under the shareholders agreement with NAE, CRL is operated as a 50:50 joint venture with each party being entitled to appoint one Director. Based on this, the Group considers that they have joint control over the arrangement. Under IFRS 11, this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method.

Prior to 1 June 2017 the Company held a 50% interest in Central Australia Rare Earths Pty Ltd ("CARE") with the balance of CARE held by Rarus Limited. Under the shareholders agreement a minimum of three directors are appointed to the board of CARE with each party having the right to appoint one director and an independent director mutually agreed by the parties. All decisions of the board are by simple majority vote unless a decision of the board is made by circular resolution which is in writing and unanimously signed by all directors. Based on this the CARE investment up to the 1st June 2017 is treated as an associate as the Company has no joint control but can assert significant influence and hence has been included in the consolidated financial statements using the equity method. On the 1st June 2017 the Company purchased the remaining 50% owned by Rarus Limited at which point CARE became a 100% owned entity of the Group and at which point CARE was included as a consolidated entity of the Group.

Estimates and assumptions

(a) Fair value of assets and liabilities of associates

The Company has valued the assets and liabilities of CARE at acquisition at fair value. The estimated deferred exploration and evaluations assets were estimated to be the previous expenditure on the tenements within CARE.

(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.

(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.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

The Group has four main segments:

· Head Office - This segment holds all the United Kingdom (UK) administrative costs for central operations, finances the Group's operations.

· SMG - This segment is involved in the sale of magnetite to the US domestic market through the Company's wholly owned subsidiary Southern Minerals Group LLC (SMG).

· UK - This segment holds the Company's investment in the UK being the Redmoor Tin/Tungsten project in Cornwall which is held by Cornwall Resources Limited and which is 50% owned by the Company.

· Australia - This segment holds the tenements in Australia through the Company's wholly owned subsidiary, Central Australia Rare Earths Limited.

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 2017

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

Administration costs by nature

In the six months ending 30 June 2017 the Company purchased the remaining 50% of Central Australian Rare Earths Pty Ltd which resulted in the addition of deferred exploration and evaluation costs at acquisition which were recognised at fair value.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

* During the period the Company paid $1,068 in cash to acquire an additional 33.6% interest in Cornwall Resources Limited ("CRL) (CRL was previously New Age Exploration Limited) which holds the Redmoor tin/tungsten project in Cornwall taking the Company's interest in CRL to 50%.

** During the period the company acquired the balance of 50% of CARE from joint venture partner Rarus Limited for £522,500 ($672,000). The acquisition was financed by the issue of 19,000,000 ordinary shares in the company at an issue price of £0.0275. This resulted in CARE becoming a 100% own subsidiary of the Company and hence is now consolidated in the accounts.

.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

In June 2017, the company settled the purchase of the remaining 50% interest in Central Australian Rare Earths Pty Ltd ("CARE") which owns exploration tenements in the Northern Territory and Western Australia. The Company paid £522,500 ($672,000) via the issue of 19,000,000 ordinary shares in the Company at an issue price of £0.0275. Hence, CARE is now a wholly owned subsidiary of the Company.

The Company valued the deferred exploration and evaluation at the historical expenditure on the tenements within CARE. Details of the fair value of identifiable assets and liabilities acquired, purchase consideration

and goodwill are as follows:

* The group previously held a 50% equity interest in CARE prior to the acquisition of the remaining 50% interest. Upon the remeasuring the equity interest already held to fair value a gain of $58,000 has been recognised on the investment in the period.

No dividend is proposed for the period.

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

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2017

In March 2017, the Company issued 8,333,333 ordinary shares due to options being exercised at an exercise price of 0.60 pence.

In June 2017, the Company issued 19,000,000 ordinary shares to shareholders in Rarus Limited, pursuant to its agreement to acquire the balance of Rarus' shares in Central Australian Rare Earths Pty Ltd.

Share options and warrants

The number of options and warrants as at 30 June 2017 and a reconciliation of the movements during the half year are as follows: