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.

24 June 2020

STRATEGIC MINERALS PLC

("Strategic Minerals" or the "Company")

Financial Results for the Year Ended 31 December 2019

Financial Highlights

· Group 2019 before tax loss was $0.845m (2018: pre tax profit of $1.933m), and generated a marginal operating cash deficit of $0.013m (2018: operating cash surplus $0.971m). 

· Impairment of $1.122m was made in relation to Central Australian Rare Earths Pty Ltd ("CARE"). Exclusion of this non-cash write off would result in a 2019 pre-tax operating profit of $0.277m (2018: pre-tax loss of $0.229m after excluding the non-cash recognition of the bargain LCCM purchase). 

· Before tax profits for 2019 also include a non-cash share based payment expense of $0.275m (2018 $0.268m) and after excluding this and both the CARE impairment and the bargain LCCM purchase the 2019 pre-tax operating profit would be $0.552m (2018: pre-tax operating profit of $0.039m).  

· Completion of the acquisition of the remainder (50%) of the Cornwall Resources Limited ("CRL") Redmoor Tin and Tungsten project. Funding provided by a vendor loan with regular capital repayments.

· Directors took up all remaining vested options and continue to support the stock in the open market. 

· A capital raise producing $1.059m was completed in mid 2019 (2018: Nil). 

· The Company continued a high level of investment in its projects including PPE in 2019 of $2.564m (2018: $2.817m). While a portion of this was funded by the capital raise and increase in net debt $0.194m (2018: Nil), $1.311m was funded by internal funds. As no equity or debt finance was undertaken in 2018, this highlights the investment, over 2 years, of $4.128m into investments from internal Company funds. 

· First revenues achieved at Leigh Creek Copper Mine, ('LCCM") validating offtake arrangements.  

· $1.113m received in R & D Tax Rebates which have been offset against the Development Asset and Deferred Exploration and Evaluation in accordance with the relevant IFRS standard (2018: Nil). 

· Unrestricted cash position of the Group as at 31 December 2019 was $0.519m (2018: $1.840m). 

Operational Highlights

· Continued strong underlying sales at Cobre of $2.488m (2018: $3.355m) despite cessation of payments from major client (2018 $0.506m) and a reduction in sales due to two clients having temporary operational issues in the first part of the year.

· Commencement of arbitration of in excess of $20m claim against Cobre major client for breach of magnetite sales agreement. 

· For a limited period, operations were restarted at LCCM in April 2019 demonstrating operating capacity and identifying existing capacity constraints as a precursor to commencing full operations. 

· Continued progress on, and submission of, a draft Program for Environment Protection and Rehabilitation ("PEPR") to the South Australian government to restart full operations at LCCM in 2020, subject to finance of circa $5.0m.

· Early 2019 announcement confirmed the world class potential of the Redmoor Tin and Tungsten project located in the historic tin mining region of Cornwall, United Kingdom. Drilling to date has indicated a resource of 11.7mt at a tin equivalent of 1.17% Sn (previously 4.5mt at 1.00% Sn) and has demonstrated potential to increase the resource, subject to further drilling. 

· The Company continues to focus its strategy on metals and minerals likely to benefit from an expected boom in the battery market over the longer term.

Notice of Annual General Meeting

SML will hold its Annual General Meeting ("AGM"), at 10:00am on Tuesday 28 July 2020 a 27/28 Eastcastle Street, London W1W 8DH. Given the current Coronavirus (COVID-19) situation, and to ensure adherence to current Government requirements, attendance in person at the meeting will not be possible this year. Shareholders are requested to appoint the Chairman of the meeting as his or her proxy as any other person so appointed will not be permitted to attend the meeting. Shareholders are encouraged to submit any questions that they may have to the Company by using the "Contact Us" tool on the Company's website (https://www.strategicminerals.net/contact-us.html) and the Company will seek to answer these, where possible, as part of the Chairman's comments at the AGM.

Copies of the Annual Report and accounts for the year ended 31 December 2019, together with the Notice of Annual General Meeting ("AGM"), will be posted to shareholders this week.

 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 January 2016, the portfolio was expanded with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia prospective for cobalt, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd. In September 2018, the Company entered contracts for the sale of certain CARE tenements identified as gold targets.

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 2018, the Company completed the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Australia and brought the project into production in April 2019.

The Company, in March 2019, entered into arrangements to acquire the balance of the Redmoor Tin/Tungsten project in Cornwall, UK. 

STRATEGIC MINERALS PLC

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FORWARD-LOOKING STATEMENT

This Report and Financial Statements for the year ended 31 December 2019 ("Annual Report") contains 'forward-looking information', which may include, but is not limited to, statements with respect to the future financial and operating performance of Strategic Minerals Plc, its subsidiaries, production and exploration operations and affiliated companies, the future price of magnetite/iron ore, the estimation of mineral resources, the realisation of mineral resource estimates, costs of production, capital and exploration expenditures, costs and timing of the development of new deposits, costs and timing of the development of new mines, costs and timing of future exploration, requirements for additional capital, governmental regulation of mining operations and exploration operations, stockpile and tailings dam operations, timing and receipt of approvals, licenses, permits, conversions and ongoing approvals to operate exploration activities, stockpile and tailings dam operations under the United States of America, Australia and other applicable mineral legislation and environmental legislation, environmental risks, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters.

Often, but not always, forward-looking statements can be identified by the use of words such as 'plans', 'expects', 'is expected', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates' or 'believes', or variations (including negative variations) of such words and phrases, or state that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved. Forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strategic Minerals Plc and/or its subsidiaries, investment assets and/or its affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; stockpile processing/tailings dam operations; conclusions of economic evaluations and studies; fluctuations in the value of UK pounds sterling relative to the United States Dollar, Australian Dollar and other foreign currencies; changes in project parameters as plans continue to be refined; future prices of magnetite/iron ore; possible variations of ore grade or recovery rates; failure of plant, logistics providers, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, insurrection or war; the effect of illness on labour force availability and turnover; delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although Strategic Minerals Plc has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may well be other factors that cause actions, events or results to differ from those currently anticipated, estimated or intended.

Forward-looking statements contained herein are made as of the date of this Annual Report and Strategic Minerals Plc disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

STRATEGIC MINERALS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2019

I am pleased to present Strategic Minerals Plc's Annual Report for the year ended 31 December 2019 The Company continues to follow the strategy laid out by the Board and has undertaken and developed projects that are focused on metals and minerals expected to be sought in bourgeoning battery market. The Group continues to invest heavily in its projects while undertaking minimal shareholder dilution.

The Group made a total comprehensive after tax loss of $1.003m as compared to a comprehensive after tax profit in 2018 of $0.788m.

The Group had unrestricted cash of $0.519m as at 31 December 2019 (2018: $1.840m).

In 2019, the Company recommenced limited operations at Leigh Creek Copper Mine Pty Ltd ("LCCM") and acquired the balance of the joint venture vehicle Cornwall Resources Limited ("CRL") which holds the Redmoor Tin and Tungsten Mine.

Due to the activity associated with CRL and LCCM, activities at Central Australian Rare Earths Pty Ltd ("CARE") were limited. After an assessment of the carrying value of the CARE, the book value of the CARE assets have been fully impaired ($1.122m) as at 31 December 2019. CARE remains part of the board's strategic plans, as noted in the infographic below, but in the near to medium term it sits behind our other three key projects.

During the year, the Company's highly experienced team executed the restart of LCCM's operations with the retreatment of heaps which resulted in a significant de-risking of the project by successfully proving the production process. The retreatment of the heaps also culminated in the production and sale of copper in an at specification cement product. After taking into account the outcomes of the retreatment process the Company completed a 300 tonne per month feasibility study which reassured the Board of the attractiveness of proceeding with the project. Since the end of the financial year the Company has lodged a draft Program for Environment Protection and Rehabilitation ("PEPR") application with the South Australian government for the commencement of mining of the Paltridge North deposit, situated at the Mountain of Light processing plant area. The Board continues to be excited with the LCCM acquisition, having obtained 24,900t of JORC compliant copper metal at less than USD 100 a tonne and believes that, subject to finance, the project will move into production at the end of 2020 providing a much sought after second income stream.

The acquisition of the balance of CRL is consistent with the Board's strategy of achieving a balanced portfolio of cash generating, near term cash generating and exploratory projects with good exposure to the battery market that provide the Company the opportunity to develop projects from internally generated cash flows with minimum equity dilution (shown graphically as follows). It is noted that, as a result of the contract dispute at Cobre, and the concomitant reduction in cash flow, funding has been prioritised to the nearer term cash flow generating projects, specifically Leigh Creek and Redmoor.

In early 2019 an updated resource statement was published by CRL that indicated the inferred resource at Redmoor had significantly increased to 11.7mt at a tin equivalent (SnEq) of 1.17% (previously 4.5mt at 1.00% SnEq).

The improvement in inferred resource represented increases, since the previous March 2018 resource estimate, of 200% in contained metal, 160% in resource tonnes and 17% in the tin equivalent grade. Which, when put in a global context as shown in the chart below, which potentially makes it one of the world's premier undeveloped tin/tungsten mine prospects.

In line with the release of the updated resource statement, the Board considered it an opportune time to acquire the balance of the equity in CRL and on 18 March 2019 announced the acquisition of the balance of CRL shares for cash of AUD $3m and a capped royalty/deferred payment from Redmoor of AUD $2m. The Board believes this project has the potential to produce a world class mining operation and has begun discussions with mining investment houses who have indicated an interest to be involved once prefeasibility and bankable feasibility studies are complete. Due to deteriorating capital market conditions during 2019, the Board negotiated the transfer of CRL to the Company and provision of vendor finance in relation to cash payments.

2019 has proven to be a challenging year for the Company due to deteriorating capital market conditions and the extraordinary challenges to world markets in 2020, due to Covid-19. The priority has been the safety and health of our people and the continued resilience of the Group's operations. Despite these challenges the demand for product from our Cobre operations remains steady and the Company is in a position to move forward with operations at LCCM and the exploration and development of Redmoor. The uncertainty in the global capital and commodity markets will continue to cause difficulties in raising funds to progress the projects but the underlying economics and value remain strong. The continued cashflow from our Cobre asset along with the developed nature of our projects, puts the Company in a good position to benefit from an improvement in world markets. A concluded fund raise in early June now reassures the Company of its ability to repay the balance of the Redmoor acquisition by its due date of 26 June 2020.

I look forward to working with my fellow Directors and the staff of the Company to ensure that the 2020 financial year delivers both operating and project growth for the Company.

Finally, I would like to acknowledge the support of our shareholders, suppliers and other stakeholders and I look forward to your continued support during 2020 and beyond. 

Alan Broome AM

Chairman

24 June 2020

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2019

The Directors of the Company and its subsidiaries (which together comprise the Group) present their Strategic Report on the Group for the year ended 31 December 2019.

Financial Performance

The Company and the Group's reporting currency is US dollars reflecting that, previously, the Group's revenues, expenses, assets and liabilities were predominately in US currency and, currently, the bulk of revenues continue to be sourced in US dollars.

The Group made a before tax operating loss for the 2019 financial year of $0.845m (2018: before tax operating profit $1.933m) which, after making allowance for exchange rate movements, produced a total comprehensive after tax loss of $1.003m (2018: comprehensive after tax profit $0.788m). The loss in 2019 largely reflects the non-cash impairment of $1.122m (2018: nil) in relation to the Central Australian Rare Earths Pty Ltd ("CARE") and its tenement holdings This has been ameliorated by the continued profitable performance of the Company's subsidiary, Southern Minerals Group LLC ("SMG") which operates the Cobre mine.

Before tax profits for 2019, after adjusting for non-cash expenses for both the CARE impairment ($1.122m) and share based payments ($0.275m) would represent a 2019 pre-tax operating profit of $0.552m. In 2018, the comparable pre-tax operating profit would have been $0.039m, after adjusting for non-cash items profit on bargain LCCM purchase ($2.162m) and share based payment expense (2018 $0.268m).

During the year, the Company made significant investments into its development projects as follows:

a) Leigh Creek Copper Mine Pty Ltd ("LCCM") a near production brownfields copper oxide project in the North Flinders Ranges in South Australia. During 2018, the Company acquired LCCM for $2.338m (AUD $3.0m) by a combination of cash $1.214 (AUD $1.550m) and the issuance of shares $1.124m (AUD $1,450m) and in 2019, invested a further $2.558m in recommencing limited production in 2019 and preparing a PEPR submission for commencement of full scale operations in 2020.

b) Acquired the balance of Cornwall Resources Limited ("CRL") a brownfields tin/tungsten project in Cornwall, England for AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time). Apart from the acquisition, during 2019 the Company invested $0.193m to support operations.

c) Activity at CARE, a company holding a number of greenfields exploration tenements in Western Australia prospective for Cobalt, Nickel Sulphide and Rare Earths, were curtailed in order to direct funding to both LCCM and CRL.

As a result of its investment activities, the Company received $1.113m in R & D Tax Rebates which have been offset against the Development Asset and Deferred Exploration and Evaluation in accordance with the relevant IFRS standard (2018: Nil).

Group overheads for 2019 of $2.266m were maintained in line with last year's levels ($2.324m in 2018). The Board and management continue to closely monitor overheads and administration costs to ensure they are appropriately in line with operations. In line with tighter conditions, the Board and management agreed to a 25% reduction in remuneration from 1 October 2019.

SMG has now absorbed its previous tax losses and has become a tax paying entity. In line with this, the Company incurred a tax expense of $0.385m (2018: $0.460m) for the year. However, the remainder of the Group continues to generate tax losses.

Cash at the end of the year was $0.519m (2018: $1.840m). This was due to net cash outflows from operations for the year of $0.013m (2018: inflows $971) which was reduced mainly due to the loss of a key customer. Investing activities for the year was $2.564m (2018: $2.817m) and financing activities were $1,253m (2018: nil) mainly due to a net capital raise of $1.059m supporting by net proceeds from loans of $0.194m.

PROJECT REVIEW AND ACTIVITIES

Cobre Performance

The 2019 year continued to be a profitable year for domestic sales at Cobre despite a reduction in sales as compared to last year. A total of 42,517 short wet tons of magnetite were sold resulting in $2.488m in sales compared to 2018 when 54,565 short wet tons were sold for $3.350m. Operations at the mine continue to be closely managed while still ensuring adequate service to customers and safe operating conditions.

Other Revenue of $900k reflects the reversal of cash prepayments from SMG's major client which did not result in physical movement of material and could be released to the income statement in line with the terms of the underlying contract.

In light of the failure of SMG's major client to fulfil its minimum obligations under its sales contract with SMG, SMG issued the major client with a letter of demand and has, as required under the contract with the major client, entered into arbitration. The appointed arbitrator has indicated a timing of late May 2020 to rule on the arbitration. While SMG is seeking in excess of $20m for the breach of this contract, it is uncertain as to the capacity of the major client to pay any amount deemed appropriate by the arbitrator.

SMG's formal access to the Cobre mine magnetite stockpile has now been extended until March 2021 making this the eighth roll over to date. The Company is currently unaware of any likelihood that SMG's access to the magnetite stockpile at Cobre will not be rolled over in the future.

SMG continues to have an exemplary safety record and has developed an enviable culture that reinforces the highest of safety standards.

Leigh Creek Copper Mine Pty Ltd ("LCCM")

On 6 March 2018, the Company acquired LCCM which holds the mining rights to a copper mine in the Flinders Ranges of South Australia.

The LCCM project is a historically mined copper oxide deposit based close to one of the world's largest copper producers (Olympic Dam and Prominent Hill) and is located in the northern Flinders Ranges of South Australia which has been a source of copper since the 1880s. The South Australian government has a stated policy to assist in making this the third largest copper producing area in the world.

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.

An existing heap leach and copper processing facility is located at the Mountain of Light deposit (adjacent to Rosmann East and nearby Paltridge North) 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. Refurbishment works to the plant began in 2018 and the plant became operational in April 2019. 

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

In addition 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.

Copper prices have performed excellently during 2018 and into 2019. This reflects an ongoing general decline in mine grades of existing projects and increasing challenges for exploration success, which places copper as a strategically attractive commodity. This trend continued into early 2020 until impacts of Convid-19 shattered world markets. The Board remains confident of a resumption of attractive copper prices at some time in the near future.

In the first half of 2019, considerable effort was employed to restart limited operations at LCCM through the retreatment of existing heaps. This culminated in our first sale of product as announced in early May 2019. However, due to the high cost of production and the poor yield from previously utilised heaps, production only continued for a few months. Since that time, the Company has focused on obtaining the approvals and funding required to take the project into production by the end of 2020 and has now lodged a draft PEPR application with the South Australian government which should, subject to finance, see full operations commence in Leigh Creek before the end of 2020.

The undertaking of a limited restart was important as it: 

· Demonstrated the capacity of the plant to operate and identified future capacity constraints that needed addressing prior to achieving production levels in excess of 150t per month. 

· Proved that metallurgical assessment of the material was correct. 

· Accessed and demonstrated the operations of LCCM's offtake agreement. This agreement is for all planned copper production of up to 300 tonnes per month from the LCCM project. 

· Identified to the South Australian government our intent to develop this mine in a depressed area of the state.

Cornwall Resources Limited - Redmoor Tin/Tungsten Project

In July 2019, SML acquired from its joint venture partner, New Age Exploration Limited ("NAE"), the balance of the joint venture vehicle, Cornwall Resources Limited ("CRL").

On 14 February 2019, CRL released assay results which exceeded Management's expectations and led to a resource update being published. This resource update demonstrated that the overall inferred resource had increased from 4.5m tonnes at a tin equivalent ("SnEq") of 1.00% to 11.7m tonnes at 1.17% SnEq. The result is a 200% increase in contained metal, 160% in resource tonnes and 0.17% in the tin equivalent grade.

Not only has the resource been significantly expanded but, as shown in the diagram following, the mineralisation has been discovered in discrete locations giving rise to the ability to tailor mining and processing to preferred mineralisation at the time of extraction.

It is as a result of these excellent grades that the Company moved to acquire full ownership of CRL which was completed in July 2019. SML settled the acquisition of the other 50% of CRL for AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time) with half of the royalty payable on a net smelter revenue of AUD $50m and the balance on a net smelter revenue of AUD $100m.

During 2020, the CRL team has continued, and will continue, to develop the world class resource at Redmoor, by building awareness of the project, building/maintaining relationships with stakeholders (including landowners) and generating strategies to obtain the greatest value for the Company's investment. An option to complete a limited exploration drilling program aimed at testing the potential to expand the significant resource already developed is being assessed.

Central Australia Rare Earth Pty Ltd ("CARE") Tenements

Due to cash demands on the Company associated with the development of LCCM and the acquisition of the other 50% of CRL, the Company minimised expenditure on CARE during 2019. Having assessed the carrying value of this asset, the Company has impaired the full value of CARE holding in the Company's books ($1.122m). The Company considers that there may still be substantial value in these tenements but acknowledges that it may take time to realise this value.

Safety

The Company is pleased to report that, during 2019, there were no safety incidents (2018: one) across its operations in United States, England and Australia. The late 2018 safety incident at LCCM resulted in a prohibition notice which was subsequently lifted and incurred no environmental, regulatory, or other operation violations.

Board and Management Changes

There has been no change to the composition of the Board during 2019 and the current Board does not currently envisage a need for change. Management changes have been made in line with normal operations although all such changes are based around consultancy, rather than direct employment contracts.

Key Risks and Uncertainties 

The management of the business and the execution of the Group's strategy are subject to a number of risks. Strategic Minerals regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact. There is the possibility that if more than one event occurs, that the overall effect of such events would compound the possible adverse effects on the Group.

Our principal risks and uncertainties are as follows:

Strategic risk

Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, the Group may be unable to acquire rights to exploit additional revenue generative assets such as Cobre and attractive mining development properties such as CRL and LCCM on terms it considers acceptable. Accordingly, there can be no assurance that the Group will acquire any interest in additional operations that would yield reserves or result in commercial mining operations. The Group expects to undertake sufficient due diligence where warranted to help ensure opportunities are subjected to proper evaluation.

Reserve and resource risk

The Mineral reserve and resource relating to CRL and LCCM are only estimates and no assurance can be given that the estimated reserves and resources will be recovered or that they will be recovered at the rates estimated. Reserve and resource estimates are based on sampling and, consequently, are uncertain because the samples may not be representative. Reserve and resource estimates may require revision (up or down) based on future actual production experience. The discovery of mineral deposits is dependent upon a number of factors including the technical skill of the exploration personnel involved.

The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. There can be no guarantee that a mineral deposit will be economically viable. The Group undertakes studies in order to mitigate this risk.

Commodity prices and currency risk

Although the Group's strategy is primarily focused on localised markets which minimises the impact of global commodity prices, global commodity prices will generally affect the markets in which it operates. Fluctuations in commodity markets are affected by numerous factors beyond the Group's control, including global demand and supply, international economic trends, currency exchange fluctuations, expectations for inflation, speculative activity, consumption patterns and global or regional political events. In addition, the COVID-19 pandemic may increase price volatility. The aggregate effect of these factors is impossible to predict. Fluctuations in commodity prices, over the long term, may adversely impact the returns of the Group's investments. The Group monitors commodity prices and structures its portfolio of assets with commodities that are likely to appreciate in the medium to long term.

The Group reports its results in US Dollars, whilst the functional currency of the parent company from which the Group derives the majority of its funding is Pound Sterling. This may result in additions to the Group's reported costs. Fluctuations in exchange rates between currencies in which the Group invest, reports or derives income may cause fluctuations in its financial results that are not necessarily related to the Group's underlying operations. The Groups converts funds to a currency in which funds will be utilised on an as needed basis.

Dependence on key personnel risk

The Group and Company are dependent upon the executive and local management teams. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on the Company's ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. The Group incentivises executives and management with market based remuneration packages, short term and long term incentive schemes.

Operational risk

Mining operations are subject to hazards normally encountered in exploration, development and production. These include unexpected geological formations, rock falls, flooding, dam wall failure and other incidents or conditions which could result in damage to plant or equipment, people, or the environment and which could impact any future production throughput. Although it is intended to take adequate precautions to minimise risk, there is a possibility of a material adverse impact on the Group's operations and its financial results. The Group will develop and maintain policies appropriate to the stage of development of its various projects.

Funding risk

Strategic Minerals needs funds, both to manage its working capital requirements and fund new projects, as the Company seeks to grow. If the Company is not able to obtain sufficient financial resources, it may not be able to develop new projects. There can be no assurance that such funds will continue to be available on reasonable terms, or at all in the future. The Directors regularly review cash flow expenditure requirements and the cash flow generated from its Cobre operation to ensure the Group can meet financial obligations as and when they fall due. Covid 19 has placed additional risk around the ability of the Group to access capital and debt markets.

Uninsurable risk

The Group may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts which exceed policy limits.

Customer risk

The level of profitability of the Group is currently dependant on the performance of the Company's Cobre operation in the United States. The Cobre operation has a number of major customers and should one or more of these customers choose to not to purchase product it may have a substantial impact on the performance of the Group. The Group continues to look for additional customers at Cobre to address this risk and in addition will develop other projects such as Leigh Creek Copper Mine to reduce the risk of dependence on any one customer.

Coronavirus Pandemic Risk.

The implications of the COVID-19 pandemic remain difficult to predict given the evolving nature of this issue and the varying reactions of governments around the world. The Board and management are continually reviewing the potential implications and the contingency planning that the Group can invoke to mitigate the risk. At the Company's Cobre operation the company introduced a policy whereby drivers of trucks picking up material do not exit the vehicle on site and screens have been put up for the transfer of documents to protect staff. A working at home policy has been introduced at the Company's operations in the United Kingdom and Australia, in line with those country requirements. The company is actively talking to advisors and potential partners to move the Company's projects forward.

Product risk

The Group has a contract for access to magnetite iron ore at the Cobre operation which automatically renews on the 1 March of each year unless either party terminates the agreement 30 days prior to renewal. There is a risk that the supplier may terminate the agreement in which case the Group would no longer have product to sell. So as to minimise this risk to the Group's management actively engages with its supplier throughout the year to proactively address any concerns that the supplier may raise.

An off take arrangement is in place for the LCCM project which is subject to minimum product specifications. The Company was able to produce at specification material in its recent retreatment of heaps thereby substantially reducing the product specification risk.

Key Performance Indicators

The Board monitors the activities and performance of the Group on a regular basis. The principal KPIs monitored by the Company are domestic sales of product from Cobre, the cash position of the Group, the investment in project activities, the share price of the Company and the health, safety and environmental incidents of the Group.

The sales of domestic product at Cobre have been impacted by the major SMG client not honouring their contract to acquire a minimum monthly purchase (4,000 short wet tons) and has led to SMG seeking compensation for this through arbitration.

The unrestricted cash position of the group as at 31 December 2019 was $0.519m which decreased by $1.321m from the previous year, principally as a result of the increased investment in project activities which saw a net $3.080m (2018: $2.817m) invested in LCCM, CRL and CARE.

The share price of the Company at year end was 0.68p (2018: 1.30p). Directors have indicated their confidence in the future performance of the Company through on market acquisition of shares along with their take up of all vested options.

Strategy

In early 2016, the Company adopted a strategy emphasising both an operating and investment strategy which is continued today.

The Operating Strategy is centred on maintaining and improving cash flows from the Company's magnetite stockpile at the Cobre mine in New Mexico, USA, whilst also limiting corporate overheads in line with this profitability, thus ensuring operating self-sufficiency.

The Investment Strategy is built around a three-pronged approach focused on supplying the burgeoning battery materials market. The strategy features bulk commodities with offtake arrangements, advanced materials with expected improvement in demand (Rare Earths, Cobalt, Graphite etc) and metals with expected pricing improvements over the next three to five years (Nickel Sulphide, Lithium etc).

The Company is well positioned to execute its plans to restart full LCCM production and commence a Pre-Feasibility Study at Redmoor, subject to available funds and improvement in commodity markets.

Outlook and Prospects

The Company continues to maintain controls on its overheads, is focused on restarting production at Leigh Creek, expanding Cobre's profitable domestic sales, developing its wholly owned Redmoor Tin and Tungsten mine and undertaking a strategic review of potential future sale of the CARE tenements

The Board is confident that the outlook for the Company is encouraging having weathered trying times in 2019 and early 2020. The June 2020 capital raising ensures the Company's capacity to meet its commitment on the final payment for Redmoor (AUD $1.8m), due at the end of June, and to explore both joint venture and debt style funding to progress LCCM, Redmoor and CARE. The low holding cost of these projects, the June 2020 capital raising and the strong cash flow stream from Cobre, provides the Company the timing luxury to extract maximum value from these investments.

Current expectations are that funding for LCCM can be sourced in line with the completion of the PEPR process and that production can commence prior to the end of 2020. With regard to the Redmoor project, expected time frames here are longer with the next goal being the preparation of a pre-feasibility study to be followed by a bankable feasibility study. This is expected to take 4 to 5 years to complete both.

The start of 2020 has proven to be a challenging year for the Company due to deteriorating capital market conditions and the challenges to world markets due to Covid-19. A more detailed analysis of the impact of COVID 19 is include as part of the corporate governance statement.

Directors' section 172 statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's employees and other stakeholders, the impact of its activities on the community, the environment and the Company's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term. We explain in this annual report, and referenced below, how the Board engages with stakeholders.

Likely consequence of any decision in the long term

The Chairman's Statement on page 1 and 2, Strategic Report at pages 3 to 6 and, Business Strategy at page 5 and the Corporate Governance Statement under Principal 1 at page 15 set out the Company's long term rationale and strategy.

Interests of employees

The Employee section of the Company's Corporate Governance Statement on page 16 of this Annual Report sets out the Company processes in place to safeguard the interests of employees.

Foster business relationships with suppliers, customers and others

The Company's approach to business relationships with business relationships with stakeholders are set out in the Company's Corporate Governance Statement on page 16 of this Annual Report. The Company's approach to Shareholders is set out in the Corporate Governance Statement at page 15.

Community and environment

The Company's approach to the community is set out in the Corporate Governance Statement at page 16 and to the environment at page 19.

Maintain high standards of business conduct

The Corporate Governance Statement of this Annual Report at pages 15 - 20 sets out the Board and Committee structures and extensive Board and Committee meetings held during 2019, together with the experience of executive management and the Board and the Company's policies and procedures.

Act fairly between shareholders

The Corporate Governance Statement of this Annual Report at pages 15 sets out the process the Company follows to ensure it all shareholder interests are preserved and enhanced.

Principal decisions by the board during the period.

We define principal decisions as both those that have long-term strategic impact and are material to the Group, but also those that are significant to our key stakeholder groups. In making the following principal decisions, the Board considered the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company:

a) Control of CRL

During the period the Company agreed to acquire the remaining 50 per cent of CRL which holds the Redmoor Tin/Tungsten project for AUD $5.0m (estimated at US$3.563m at the time) payable by way of a loan from NAE of AUD $3.0m (estimated at US$2.100m at the time) and a capped royalty of AUD $2.0m (estimated $1.400m at the time). The Board believes that the acquisition is aligned with the Company's strategy it provides access to a one of the world's premier undeveloped tin/tungsten projects. It provides the Company with the greater control and optionality moving forward in the development of this advanced stage project for the benefit of all its stakeholders.

b) Leigh Creek Copper Mine progressed

During the period the Company decided to retreat the heaps at its LCCM project and complete a feasibility study. The decision to progress the project has allowed the Company to apply for a draft Program for Environment Protection and Rehabilitation ("PEPR") application with the South Australian government. The progression of the LCCM project is in the interest of the its shareholders, communities and suppliers associated with the project

In making the above principal decisions, the Directors believe that they have considered all relevant stakeholders, potential impact and conflicts, the Company's business model and its long-term strategic objectives, and have acted accordingly to promote the success of the Company for the benefit of its members as a whole.

The Strategic Report was approved and authorised for issue by the Board of Directors and was signed on its behalf by:

John Peters

Managing Director

24 June 2020 

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2019

The Directors present their report and the audited financial statements for Strategic Minerals Plc ("the Company") and its wholly owned subsidiaries ("the Group") for the year ended 31 December 2019.

PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The Company is a public limited company registered in the UK whose registered office is 27/28 Eastcastle Street, London, W1W 8DH.

The Principal activity of the Company is a holding company. The principal activity of the Group is the exploration, development and operation of mining projects.

A review of the Group's business during the financial year and its likely development is given in the preceding Chairman's Report and Strategic Review.

RESULTS AND DIVIDENDS

The Group recorded a loss after taxation for the year of $1,230,000 (2018 profit $1,473,000).

The Directors do not propose to recommend any distribution by way of dividend for the period ended 31 December 2019.

DIRECTORS

The Directors who served the Company during the period and prior to the release of this report were as follows:

Current Directors

DIRECTORS' INTEREST IN SHARES AND OPTIONS

The persons who held office during the year or at the year-end had the following interests in share capital and options of the Company as detailed below.

The following are the shares held as at the reporting date and as at 31 December 2019 for all Directors and their related parties:

The following are the options held as at the reporting date and as at 31 December 2019 for all Directors:

DIRECTORS' REMUNERATION AND SERVICE CONTRACTS

Under their respective service contracts the officers of the company received fees as detailed in the Directors' Remuneration table in Note 7.

SUBSTANTIAL SHAREHOLDERS

As at 19 June 2020 shareholdings of 3% or more of the issued share capital notified to the Company were:

Based on the total issued share capital of 1,734,297,949.

POLITICAL CONTRIBUTIONS

There were no political contributions made by the Group during the year ended 31 December 2019 (2018: Nil).

INFORMATION TO SHAREHOLDERS - WEBSITE

The Company has its own website (www.strategicminerals.net) for the purposes of improving information flow to shareholders, as well as to potential investors.

GOING CONCERN

The Directors have given careful consideration to the Group and Parent Company's (together "the Group") ability to continue as a going concern through review of cash flow forecasts prepared by management for the period to 30 June 2021 and a review of the key assumptions on which these are based and sensitivity analysis.

The Group cut costs during 2019 to reduce its overhead expenditure and is maintaining vigilance in preserving cash in response to depressed market conditions due to Covid-19 and its associated impact on commodity prices and capital markets.

The Group included in its cash flow forecast the June 2020 capital raise being primarily for the settlement, in June 2020, of the outstanding loan to New Age Exploration Ltd (NAE) which is currently AUD $1.8m (approximately US$1.2m). After repayment of the NAE loan, the Company forecasts that it has sufficient funds until June 2021 however the Group is reliant on cash being generated from the Cobre asset in line with forecast which includes the assumption that access to the Cobre asset will be rolled over in March 2021 as it has since entering into the underlying offtake agreement. Should Cobre not meet cash expectations the Directors would need to raise further funds.

However, there is a risk that, due to the impact of Covid-19 on global markets, a greater degree of uncertainty currently exists in relation to cashflows from Cobre being generated in line with forecast and the ability to raise additional funds if these are required. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

In the event that the further funds are required, the Directors have reasonable expectation that the Group will have access to sufficient resources by way of debt or equity markets. Consequently, the consolidated financial statements have been prepared on a going concern basis.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

INDEMNITY OF OFFICERS

The Group currently maintains insurance to cover against legal action brought against its Directors and officers. It evaluates on the appointment of new directors whether an indemnity from the Company for the actions of previous directors is warranted. However, the Group may purchase and maintain, for any Director or officer, insurance against any liability in the near future pending the evolution and complexity of any further new projects undertaken by the Company.

FINANCIAL RISK MANAGEMENT

Refer to Note 3 to the financial statements for further details.

EVENTS AFTER THE END OF THE REPORTING PERIOD

Refer to Note 30 to the financial statements for further details.

PUBLICATION OF ACCOUNTS ON COMPANY WEBSITE

Financial statements are published on the Company's website. The maintenance and integrity of the website is the responsibility of the Directors. The Directors' responsibility also extends to the financial statements contained therein.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the Directors, at the time of approval of their report, are aware:

· there is no relevant audit information of which the Group's auditors are unaware; and

· the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

AUDITORS

In accordance with section 489 of the Companies Act 2006, a resolution proposing that BDO LLP be reappointed as auditors of the Group will be put to the Annual General Meeting.

By order of the Board

John Peters

Director

24 June 2020

STATEMENT OF DIRECTORS' RESPONSIBILITIES

FOR THE YEAR ENDED 31 DECEMBER 2019

The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether the Group and parent Company financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

WEBSITE PUBLICATION

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website (www.strategicminerals.net) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

CORPORATE GOVERNANCE STATEMENT

Board of Directors

The aim of the Board is to function at the head of the Group's management structures, leading and controlling its activities and setting a strategy for enhancing shareholder value. Regular meetings are held to review the Group's forward planning. The Board currently consists of a Non-Executive Chairman, a Managing Director, an Executive Director and a Non-Executive Director.

The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Company and the interests of its shareholders and, in 2018, formally adopted The QCA Corporate Governance Code (the 'QCA") after noting that it had, effectively, implemented its content in its previous arrangements.

In addition to the details provided below, governance disclosures can be found at the company's website at www.strategicminerals.net

Principle 1: Establish a strategy and business model which promote long-term value for shareholders

The Board has developed and enunciated a strategy and business model as detailed on the Company's website at https://www.strategicminerals.net/company/strategy.

The Board considers the Company's strategy provides a framework for medium to longer term growth in shareholder value.

The major risks to the Company's overall strategy stem from the potential failure to maintain access to the Cobre magnetite stockpile and over extending its cash requirements. 

With respect to the exposure to operating cash flow only from the Cobre magnetite stockpile, the Board actively embarked on a search for a near term cash flow asset in our preferred mineral suite. With the addition of Leigh Creek Copper Mine, the Board feels it has, to a large extent, mitigated this risk, although it has now developed a new risk associated with the re-commencement of operations at Leigh Creek Copper Mine. Again, Management and the Board have sought to address such concerns through ensuring that sufficient resources are allocated to the project to give it the greatest chance of success.

In relation to cash flow management of the Company, Management and the Board closely monitor existing and expected cash flow resources and plans for committing these to project development and covering of corporate overheads. Additional to this, the Board regularly is in contact with market participants to ensure that sufficient interest is maintained in the market and that the Company can, generally, raise funding as required.

A consideration of broader risks of the Company can also be found at pages 8 to 9 of this report and the financial instruments note 3 of these financial statements.

Principle 2: Seek to understand and meet shareholder needs and expectations

Shareholder input and communication has been actively sought by the Board through direct contact with shareholders at both the Annual General Meeting, shareholder information evenings (sometimes combined with the Annual General Meeting), monitoring of social media platforms, regular RNS releases, interviews on both Proactive Investors and Vox Markets (including occasional shareholder Q & A sessions) and direct one on one meetings with larger investors. At all times, due regard is given to the price sensitive nature of comments.

All shareholders are encouraged to attend the Company's Annual General Meeting and investors have access to current information on the Company through its website and via the info@strategicminerals.net email address.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

As the Company is involved in the mining industry, the Board is highly cognisant of its responsibility not only to shareholders but in the broader community. As such, it has adopted a policy to ensure adequate community consultation is undertaken in the areas where we operate. Notably, in New Mexico USA, Cornwall UK and Leigh Creek Australia, communication with local residents and active involvement in the community has been encouraged. Additionally, the Company has a policy to, where possible, employ local residents when undertaking operations. To date, this has proven highly successful with all locations recording either none or extremely low levels of community dissent.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

The management of the business and the execution of the Group's strategy are subject to a number of risks. The Company regularly reviews the principal risks that face the business and assesses appropriate responses to mitigate and, where possible, eliminate potential adverse impact.

The Board is constantly undertaking a review of risk and, as a mining company, has adopted and engendered a safety culture within the Company to ensure that personnel safety is considered above financial reward.

Information in relation to the Key Risks and Uncertainties that are relevant to the group are set on page 8 - 9 of this report.

Board Committees

The Board has established separate sub-committees around audit (chaired by Alan Broome) and remuneration within the Company (chaired by Alan Broome) shared by the entire Board, excluding the Managing Director. Additionally, a separate safety sub-committee (chaired by Alan Broome) operates with both Alan Broome and Jeffrey Harrison comprising its membership.

Given the composition of the Board and the size of the Company, it is felt a separate Nomination Committee is not yet warranted. However, as the Company's operations expand, the Board will monitor this aspect of operations and will respond accordingly. The Board collectively undertakes the function of such a committee and where conflicts arise the Directors exclude themselves from voting on such matters.

Further information on the Company's Remuneration, Safety and Audit Committees and their policies are set out under Principle 9 below.

Member details of the sub committees as at the date of this report are:

Principle 5: Maintaining the Board as a well-functioning, balanced team led by the chair

There are currently four (4) Board Directors (two of which are non-executive) and the Board considers that, at this time, this is appropriate to the Company's current level of operations, although this is reviewed formally at least annually. The Board is considered well balanced in that:

- Mr Alan Broome, the Non-Executive Independent Chairman, provides a sounding board for corporate strategy, a wealth of mining experience, is a metallurgist by training and is highly experienced in corporate governance. As such Alan is not involved with the day to day operations of the Company and provides guidance at the Board level. It is Management (notably John Peters and Peter Wale) who have the responsibility to formulate overall strategy, propose it to the Board, adjust the strategy for Board feedback and then enact the approved strategy.

- John Peters, the Managing Director, brings in-depth strategic management and investment banking experience. His practical management has helped to focus the Company and its consultants on the overall strategy while managing the hands on, day to day management.

- Peter Wale, the Executive Director, provides an invaluable bridge to shareholders providing insights into shareholder requirements as well as monitoring and handling media aspects. Peter, along with John Peters, manage the Company's interface with shareholders, media and the investment community. Peter has also undertaken an executive role in the management of Cornwall Resources Limited.

- Jeffrey Harrison, the Non-Executive Director, provides practical mining operational skills to ensure appropriate review of development plans and has contributed to the safety culture within the Company and maintains complete independence in reviewing decisions. Jeff performs this role divorced from the running of the Company and, as such, is considered independent when performing his duties as a Director.

All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.

Attendance at Board and Committee Meetings

The Board aims to meet at least eight times a year and as required from time to time to consider specific issued required for decision by the board.

The Company held 7 Board meetings and a number of sub-committee meetings during the reporting period and the number of meetings attended by each of the Directors of the Company during the year to 31 December 2019 were:

The directors attended all board meetings and committee meetings that they were eligible and required to attend.

Directors' conflict of interest

The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

Time Commitment of Directors.

The Managing Director is employed by the Group on a full time basis, whereas Mr Wale (Executive Director) and the Non- Executive Directors are remunerated on fixed fee part time basis and are remunerated for hours over and above their normal duties.

Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

Biographies for the Directors can be found in the 'Board of Directors and Corporate Management' section of the company website at https://www.strategicminerals.net/company/our-team.html

The Board is not dominated by one person or group of people.

The Board undertakes regular reviews of its capacity to guide the Company in seeking to implement the Company's strategy. The appointment of Jeff Harrison in February 2018 illustrates how the Board, realising the need to increase its collective mining operational experience added a fourth Director with such skills. The Board also reviews periodically the appropriateness and opportunity for continuing professional development whether formal or informal.

Independent advice

All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company's expense. In addition, the Directors have direct access to the advice and services of the Company Secretary, Chief Financial Officer, Company's NOMAD, lawyers and auditors.

Re-election of Directors

The Company's Articles of Association require that one-third of the Directors must stand for re-election by shareholders annually in rotation and that any new Directors appointed during the year must stand for election at the AGM immediately following their appointment.

Principle 7: Evaluate the Board performance based on clear and relevant objectives, seeking continuous improvement

Given the size of the Company and the small but critical nature of the roles of the Directors, board performance measures have not been independently developed. The Company relies upon the market and shareholder feedback to assess the Board's performance.

Principle 8: Promote a culture that is based on ethical values and behaviours

The Directors recognise that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board seeks to embody and promote a corporate culture that is based on sound ethical values as it believes the tone and culture set by the Board impacts all aspects of the Company, including the way that employees and other stakeholders behave.

The Company has adopted a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

The formation of the Safety Committee and the manner in which options are allocated to Directors and key management/consultants has created a team environment in which the running of the company is aligned with medium to longer term shareholder goals.

These measures enable the Company to determine that ethical values and behaviours are recognised and respected.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

As a resource development company, the Board considers the crucial governance structures and processes revolve around Safety and Audit.

Safety Committee

Safety is a critical matter, particularly given the capacity for harm to employees and consultants. The purpose of the Safety committee is to ensure that our vision, to provide a safe workplace where no harm comes to anyone, is applied at all of the Company's locations and that a culture of Safety purveys throughout the organisation.The Company believes that all reasonable efforts should be undertaken to ensure incidents are prevented, management have ultimate accountability for health and safety but everyone on site has a responsibility to ensure no one comes to harm and employees have the responsibility to stop any job or activity they believe is unsafe and could cause harm to people.

The Safety Committee attempts to monitor, and report to the full Board, on the achievement of the Company in devoting the necessary resources needed to create a working environment, both physically and supervisorial, in which our people and others under our influence and control can work without sustaining injury or suffering ill health; ensuring no business target takes priority over health and safety; using risk assessments to identify hazards and unsafe behaviours and introduce actions to reduce the risk to acceptable levels; investigating and reporting all accidents and dangerous occurrences and preventing future incidents; setting safety targets with the aim of preventing incidents and accidents and communicate the performance to all employees; ensuring all employees are competent to carry out the tasks assigned to them by providing the relevant information, instruction, training and supervision required; encouraging everyone to contribute to working safely and preventing accidents; designing, constructing, operating and maintaining all equipment, buildings and structures to ensure a safe operation; and comply with all current legislation and codes of practice.

Audit Committee

The purpose of the Audit Committee is to provide formal and transparent arrangements for considering how to apply the financial reporting and internal control principles set out in the QCAC and to maintain an appropriate relationship with the Company's auditors. The key terms are as follows: 

- to monitor the integrity of the financial statements of the Company and Group, and any formal announcement relating to the Company's performance;

- to monitor the effectiveness of the external audit process and make recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;

- to keep under review the relationship with the external auditors including (but not limited to) their independence and objectivity; and

- to keep under review the effectiveness of the Company's financial reporting and internal control policies and systems.

- to review key judgements and estimates relating to the impairment assessment of project assets - LCCM, CRL and CARE

- to assess the ability of the group to remain a going concern.

Further details of board committees are given under Principle 5 above.

Securities Trading

The Company has adopted a share dealing code for dealings in shares by Directors and senior employees which is compliant with the Market Abuse Regulation (EU) No 596/2014 ("MAR") and appropriate for an AIM company. The Directors will comply with MAR and AIM Rule 21 relating to dealings and will take all reasonable steps to ensure compliance by persons discharging managerial responsibility ("PDMR") and persons closely associated with them.

Suitability of governance structures

The Board intends that the Company's governance structures evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.

Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Directors believe a healthy dialogue exists between the Board, the Company's shareholders and other stakeholders. The Board regularly has reports on shareholder feedback through summary of social media comments, shareholder information evenings and undertakes site visits and customer visits throughout the year.

In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. The outcomes of all shareholder votes are disclosed in a clear and transparent manner via a regulatory information service, such as RNS of the London Stock Exchange.

The Company includes historical annual reports, notices of general meetings and RNS announcements over the last five years on its website. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board.

The Company intends to include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.

Impact on the Group of Covid-19

The global, social and economic impact of Covid-19 have been significant. Uncertainty remains as to the long-term implications of the pandemic as the Company continues to closely monitor governmental guidance to the crisis in our various locations.

The Directors recognise that the current macro-economic environment may result in limited or more expensive sources of funding. However, as per its adoption of a going concern concept for the financial statements, the Board considers that funding required to maintain operations is available but notes that development capital may need to be deferred.

As per its strategy, the Board has invested in projects that it considers taps into the bourgeoning battery market. In line with the spread of Convid-19, commodity prices have suffered a sharp decline. While this has had no impact on our Cobre, due to our ability to operate contact less on site, it has, due to lower copper prices, reduced the ability of the Group to immediately progress the Leigh Creek project. However, this impact has been significantly ameliorated by the fall in the Australian exchange rate to the US dollar. Despite these market gyrations, the Board considers that, by the time Leigh Creek is in full operations, with approvals in place and funding obtained (circa US$5m), the copper price and the Australian exchange rate will be at levels further demonstrating the attractiveness of the project.

Operations at Cobre have been adjusted to ensure contactless supply to our customers and, as at the end of May 2020, demand remains strong. Accordingly, it is not currently thought that there will be a need to curtail Cobre's operations due to the pandemic.

The Company's early efforts to reduce costs and enable the Company to best position itself to manage the potential longer term impacts of the pandemic, have been successful although the Company continues to focus on near term fiscal, operational and regulatory matters.

The Group will consequently carefully review any capital asset investment decisions and take further action to reduce costs if necessary. In these unprecedented times, clearly the priority for the Company remains the safety, health and wellbeing of our employees and wider stakeholders.

STRATEGIC MINERALS PLC

AUDIT COMMITTEE REPORT

This report addresses the responsibilities, the membership and the activities of the Audit Committee in 2019 up to the approval of the 2019 Annual Report and 2019 year-end Financial Statements.

Responsibilities

The main responsibilities of the Audit Committee are the following:

1. monitor the integrity of the annual and interim financial statements;

2. Review the effectiveness of financial and related internal controls and associated risk management;

3. Manage the relationship with our external auditors including plans and findings, independence and assessment regarding reappointment.

Membership

Members of the of the Audit Committee are Alan Broome, Peter Wale (Chairman) and Jeffrey Harrison.

Activities in 2019

With regard to the 2019 year-end Audit, the committee has reviewed the following key audit matters:

1. Going Concern

The Directors have given careful consideration to the Group and Parent Company's (together "the Group") ability to continue as a going concern through review of cash flow forecasts prepared by management for the period to 30 June 2021 and a review of the key assumptions on which these are based and sensitivity analysis.

The Group cut costs during 2019 to reduce its overhead expenditure and is maintaining vigilance in preserving cash in response to depressed market conditions due to Covid-19 and its associated impact on commodity prices and capital markets.

The Group included in its cash flow forecast the June 2020 capital raise being primarily for the settlement, in June 2020, of the outstanding loan to New Age Exploration Ltd (NAE) which is currently AUD $1.8m (approximately US$1.2m). After repayment of the NAE loan, the Company forecasts that it has sufficient funds until June 2021 however the Group is reliant on cash being generated from the Cobre asset in line with forecast which includes the assumption that access to the Cobre asset will be rolled over in March 2021 as it has since entering into the underlying offtake agreement. Should Cobre not meet cash expectations the Directors would need to raise further funds.

However, there is a risk that, due to the impact of Covid-19 on global markets, a greater degree of uncertainty currently exists in relation to cashflows from Cobre being generated in line with forecast and the ability to raise additional funds if these are required. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

In the event that the further funds are required, the Directors have reasonable expectation that the Group will have access to sufficient resources by way of debt or equity markets. Consequently, the consolidated financial statements have been prepared on a going concern basis.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

2. Acquisition of CRLThe Committee has reviewed the accounting treatment for the acquisition of CRL. The Committee is satisfied that the acquisition can be regarded as an Asset acquisition. In making this assessment the committee considered a number of factors which differentiate the acquisition from a Business Combination including:

- the resource is inferred and, as such, geological uncertainty exists.

- CRL has not yet undertaken any substantive processes with current work practices established around exploration activities and administering tenure of licences.

- CRL does not produce any outputs.

3. Impairment Assessments

The Committee has reviewed the judgements surrounding the impairment assessments required under IAS36 for CARE, CRL and LCCM.

Conclusion

In 2020 and beyond, the Committee will continue to adopt the new reporting and regulatory requirements and ensure that the system of internal controls is both maintained and regularly reviewed for improvement. The Committee will also continue to review group assets for triggers that may indicate impairment and closely monitor the financial risks faced by the business and progress made towards mitigating these.

For and on behalf of the Audit Committee

Alan Broome

24 June 2020

Chair of Audit Committee

REMUNERATION COMMITTEE REPORT

This remuneration report has been prepared by the Remuneration Committee and approved by the Board. The report for 2019 sets out the details of remuneration for the Directors and discloses the amounts paid during the year.

Membership

Members of the of the Remuneration Committee are Alan Broome (Chairman) Peter Wale and Jeffrey Harrison. Other Directors are invited to attend as appropriate provided they do not have a conflict of interest. The aim of the Remuneration Committee is to attract, retain and motivate the executive management of the Company and to offer the opportunity for employees to participate in share option schemes to incentivise employees to enhance shareholder value.

Director Remuneration

Compensation for Directors who held office during the year is as follows:

* J Harrison was appointed on 7 February 2018.

** During 2018 Mr A Broome applied $40,000 of cash remuneration to the exercise price of vested options.

During 2019, Directors took a significant amount of their cash remuneration by applying this to the exercise price of their vested options (J Peters $205,000, A Broome $16,000). Additionally, in 2019, P Wale purchased, on market, 3,514,942 shares @ 0.71p and, in early March 2020 J Peters acquired, on market, 3,464,286 at 0.5348p

Going forward into 2020 and beyond, the Committee and I will remain focused on ensuring that reward at the Company continues to be closely aligned with the delivery of long term shareholder value.

For and on behalf of the Remuneration Committee

Alan Broome

24 June 2020

Chair of Remuneration Committee

STRATEGIC MINERALS PLC

INDEPENDENT AUDITOR'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2019

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATEGIC MINERALS PLC

Opinion

We have audited the financial statements of Strategic Minerals Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income, the consolidated and parent company statement of financial position, the consolidated and the parent company's statement of cash flows, the consolidated and the parent company's statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in their is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2019 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1 to the financial statements which indicates that the group's funding position is reliant on the Cobre operations continuing to trade in line with forecast. The impact of COVID-19 on global markets has created uncertainty in both future trading and the ability of the parent company to raise any further funds if these were required. As stated in note 1, these events or conditions, along with other matters set out in note 1, indicate a material uncertainty exists that may cast significant doubt on the group and parent company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

The financial statements do not include the adjustments that would result if the group were unable to continue as a going concern.

We identified going concern as a key audit matter based on our assessment of the significance of the risk and the effect on our audit strategy.

Our audit procedures in response to this key audit matter included the following:

· We discussed the potential impact of Covid-19 with the directors and the Audit Committee, including their assessment of potential risks and uncertainties associated with the current and any future trading at the group's only cash generating asset in the US. We have compared post balance sheet sales information to budgets which support director's conclusion that the Cobre operations in the US have continued to trade through the current crisis.  

· We assessed the directors' sensitised base case analysis which was performed to determine the point at which liquidity breaks and considered whether such scenarios, including aninability to service customers at Cobre and failure to secure further funding to meet any forecast shortfalls were possible.

· We critically assessed director's base case cash flow forecasts and the underlying key assumptions. In doing so, we compared forecast operating cost cash flows to current run rates for the underlying business. We evaluated commitments on the group's key assets or projects to ensure commitments have been appropriately included, reviewed board minutes and market announcements for indications of any additional cash requirements.

· We verified documentation to evidence that the funds from the £1.2m raised in June 2020 had flowed to the parent company and these funds would be adequate to settle the outstanding liability due to New Age Exploration Ltd, which is due to mature at the end of June.

· We reviewed and considered the adequacy of the disclosure within the financial statements relating to the directors' assessment of the going concern basis of preparation and the disclosure of the material uncertainties.

Key audit matters

In addition to the matter described in the material uncertainty related to going concern section, key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Total assets was determined as an appropriate basis as the principal focus of the group remains fundamentally focussed on the development of its exploration and development assets.

Materiality for the parent company was set at $108,000 (2018: $90,000) and was restricted to 75% of group materiality (2018: 75% of group materiality).

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality was set at 75% (2018: 75%) of the above materiality levels for both group and Company on the basis that we have not identified high volumes or values of misstatements in prior year audits.

We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified during the course of our audit in excess of $4,000 (2018:$8,000).

Whilst materiality for the financial statements as a whole was $200,000 each significant component of the group was audited to a lower level of materiality ranging from $100,000 to $140,000 (2018: $90,000 to $120,000) which was used to determine the financial statement areas that were included within the scope of the component audits and the extent of sample sizes used during the audit.

An overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

Our group audit scope focused on the group's principal operating subsidiaries being Strategic Minerals Plc, Southern Minerals Group LLC, Leigh Creek Copper Mine Pty Ltd and Cornwall Resources Ltd, which were subject to a full scope audits. Together with the parent company and its group consolidation, which was also subject to a full scope audit, these represent the significant components of the group.

The remaining components of the group were considered non-significant and these components were principally subject to analytical review procedures, together with additional substantive testing over the risk areas detailed above where applicable to that component. The full scope audits covered 98% of the group's total assets.

The audits of each of the components were performed in the United Kingdom. All of the audits were conducted by BDO LLP.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the parent company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Matt Crane (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London

24 June 2020

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Loss) / profit per share attributable to the ordinary equity holders of the parent:

The accompanying accounting policies and notes form an integral part of these financial statements.STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

1 Refer note 26

These financial statements were approved and authorised for issue by the Board of Directors on 24 June 2020

and were signed on its behalf by:

John Peters

Director

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

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

1 Refer note 26

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent Company is not presented as part of these financial statements. The parent Company made a loss for the year of $2,091,000 (2018: profit of $588,000).

These financial statements were approved and authorised for issue by the Board of Directors on 24 June 2020

and were signed on its behalf by:

John Peters

Director

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

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

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

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

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

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

1 Refer note 26

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

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

STRATEGIC MINERALS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019