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.

6 October 2020

Strategic Minerals plc

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

Redmoor Update

Positive Review of Mining Scoping Study Upgrades Project Economics

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing prospective battery materials projects, is pleased to announce that its 100% owned subsidiary Cornwall Resources Limited ("CRL") has received a positive updated mining scoping study and financial assessment from mining consultants Wardell Armstrong International ("WAI").

Highlights:

· Significant uplift to the project's economic results when compared with 2019 results, now at 29% IRR (previously 19%) and US$128M NPV8% using consistent metal price assumptions.

· Additional robust results using more conservative metal pricing, post-tax IRR is 23.4% with post-tax NPV at US$91M.

· Confirmation by Cornwall-based WAI that changes to the proposed mining scheduling can successfully bring forward high-grade production from mineralisation defined during CRL's most recent drill programme and mineral resource estimate.

· Indicative production rate proposed at 600k tonnes per annum (tpa), with a potential mine life of 10+ years based on 7.2 million tonnes (Mt) of feed.

· WAI's updated Mining Scoping Study demonstrates the potential for the Redmoor to be a significant deposit in respect of grades and contained metal.

· Material upside exists with a high grade, 4 - 8Mt exploration target not yet included in this analysis.

· NRG Capital is working with the Company to develop options to advance the Redmoor tungsten and tin project.

CRL and WAI have optimised the mine plan through prioritising the high-grade mineralisation identified in CRL's most recent drill programme as announced in early 2019, based on the development of an initial deeper access to the orebody. As a result of this work, the economics of the project have improved significantly.

Based on a nominal plant feed rate of 600ktpa, and using the pricing prevalent at the time of CRL's May 2019 study, the post-tax IRR has increased to 29% (previously 19%), and the post-tax NPV8% has considerably increased by around 35% to US$128M (previously US$94M).

Using more conservative pricing of US$300/metric ton unit (MTU) Tungsten trioxide (WO3), US$20,000/tonne (t) tin (Sn), and US$7,000/t Copper (Cu) reflective of the current market, the economic outcome of the project continues to be robust with a post-tax IRR and NPV8% of 23% and US$91M respectively.

The study is based on 7.2Mt of production. However, CRL notes that the orebody remains open at depth and to the west, where, work to date indicates, a high-grade exploration target of 4 - 8Mt. This additional target is not included in WAI's analysis.

Commenting, Peter Wale, Executive Director of Strategic Minerals and Director of CRL, said:

"Wardell Armstrong's updated independent financial model and mining study clearly validate the resilience of the project to variations in metal price, as well as illustrating the improved economics associated with mining high grade feed early in the project life.

These results spotlight Redmoor's potential as a world-class tungsten and tin mine, delivering attractive returns on investment.

The Company looks forward to working with NRG Capital to develop options for the development of the Redmoor tungsten and tin project that deliver value for shareholders."

Introduction

In August 2020, CRL, SML's wholly owned subsidiary, commissioned consultant WAI to conduct an update to the mining schedule and to produce an independent financial model on CRL's planned Redmoor tungsten & tin project located in Cornwall, UK. This update augments WAI's previous underground mining scoping study completed April 2019. These studies have been based on the existing JORC compliant Inferred Mineral Resource of 11.7 million tonnes @ 0.56% tungsten trioxide (WO₃), 0.16% tin and 0.50% copper for a 1.17% tin equivalent resource grade[1], as announced by SML in February 2019.

Mining Study

In 2019, WAI was engaged to carry out a preliminary mine design, conceptual life of mine schedule, and mining capital and operating cost estimates for the Redmoor project based on the JORC Compliant Inferred Mineral Resource announced in February 2019. In August 2020, CRL engaged WAI to conduct an updated iteration of the mine schedule, utilising a concept of bringing forward high-grade production.

Both the 2019 and 2020 mining studies envisage a processing plant and mine surface infrastructure fed from an underground mine accessed via a decline.

WAI in each study selected long-hole stoping with backfill as the most suitable mining method. This assessment was based on the size and geometry of mineralisation and environmental considerations. The preliminary mine design includes a decline from surface (portal), with a central access to the resource from which ore drives can be developed along strike. A return air shaft and an escapeway system were also included in the design. In addition, 15% dilution with a diluting grade of 0% and a 95% mining recovery were assumed.

The 2020 scope of work comprised:

· A review of opportunities for reduction in operating costs compared with the April 2019 mine design.

· Using the April 2019 mine design:

o A redesign/sequence to enable high-grade material to be processed early.

o Preparation of an updated mining schedule based on high-grade redesign.

o Updating the mining engineering model based on high-grade redesign.

· Preparation of an independent economic model based on this high-grade redesign schedule.

CRL provided associated non-mining capex/opex inputs, with the principle elements of this provided by a 2018 process and infrastructure study conducted for CRL by Fairport Engineering Limited, a UK based company recently involved in construction of tungsten projects in Europe.

Key results of the 2020 mining study include;

· The successful rescheduling of high-grade material to the first half of the mine's life.

· A life of mine schedule that includes 7.2Mt @ 0.59% WO3, 0.10% Sn, 0.39% Cu.

· A reduced mining cost of US$40.40/t ore RoM (owner operated).

· An initial underground mine development capex of US$5.8M.

Independent Economic analysis

For the 2020 study update, an optimised financial model was produced by WAI, based on an updated view of metal prices of US$300/mtu WO3, US$20,000/t Sn, and US$7,000/t Cu. Pre-production capex exclusive of pre-development study costs stands at US$85.5M, inclusive of mine development capex. This analysis supersedes the 2019 evaluation carried out internally by CRL.

This utilised;

· The September 2020 mining scoping study results completed by WAI.

· The 2018 processing and infrastructure study results completed by Fairport Engineering; and

· Estimates of other project costs made by CRL.

The key modelling parameters (revised figures are in italics) are:

Utilising the revised consensus 2020 prices in the table above, the WAI financial model indicates that the Redmoor project will have a post-tax IRR of 23.4% and a post-tax NPV8% of US$90.8M; demonstrating the robustness of the updated project to metal prices.

For the purposes of making a direct comparison; at the higher prices used in the 2019 study of US$330/mtu WO3, US$22,000/t Sn, and US$7,000/t Cu, the 2020 WAI model shows an increase in post-tax IRR from 19% to 28.6%, and an increase in post-tax NPV(8) from US$94m to US$128m.

The results of the updated study and model successfully demonstrate the opportunity for superior returns from development of this high-quality asset located in a low-risk OECD jurisdiction.

Forward Looking Statements

This report contains "forward-looking information" that is based on the Company's expectations, estimates and forecasts as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to the Company's business strategy, plans, objectives, performance, outlook, growth, cash flow, earnings per share and shareholder value, projections, targets and expectations, mineral reserves and resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, commodity prices and demand, and currency exchange rates. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as "outlook", "anticipate", "project", "target", "likely", "believe", "estimate", "expect", "intend", "may", "would", "could", "should", "scheduled", "will", "plan", "forecast" and similar expressions. The forward-looking information is not factual but rather represents only expectations, estimates and/or forecasts about the future and therefore need to be read bearing in mind the risks and uncertainties concerning future events generally.

Competent Person's Statement

Stephen Holley

The information in this announcement that relates to the Mining Scoping Study is based on information compiled and/or reviewed by Stephen Holley CEng., a Member of the Institute of Materials, Minerals and Mining (MIMMM), and who is employed by Wardell Armstrong International (WAI) as Associate Director - Mining. Stephen Holley has sufficient experience which is relevant to the type of deposit and mining method under consideration and to the activity which he is undertaking to qualify as a Competent Person "as defined in the "Note for Mining and Oil & Gas Companies" which form part of the AIM Rules for Companies". Stephen Holley has reviewed and consented to the inclusion in the announcement of the matters relating solely to the Mining Scoping Study based on his information in the form and context in which it appears.

Veronika Luneva

The information in this announcement that relates to the Mining Scoping Study is based on information compiled and/or reviewed by Veronika Luneva, Dip Economist, an IMC member of Chartered Financial Institute UK (CFA UK), and who is employed by Everest Mining Solutions Ltd as the Director and Senior Mining Financial Analyst. Mrs Luneva has sufficient experience which is relevant to the valuations of the type of deposit and mining method under consideration.

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 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 12-hole 2018 drilling programme has now been completed and the resource update that resulted 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 temporarily brought the project into production in April 2019. Recommencement of full scale processing is expected in 2021.