Strategic Minerals Regulatory News (SML)

29 September 2016

Strategic Minerals Plc

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

Unaudited Interim Results

Strategic Minerals Plc (AIM: SML; USOTC: SMCDY), the diversified mineral development and production company, is pleased to announce its unaudited interim results for the half year ended 30 June 2016.

Financial Highlights:

· Profits from the Company's Cobre operation of US$62,000 (H1 2015: US$162,000) continues to underpin corporate cash flow and reflects one off costs associated with acquiring equipment and legal fees associated with successful rail claim

· £429,000 raised in June 2016 at 0.30 pence per share with the issue of 168,000,000 shares

· £75,000 raised in June 2016 at 0.30 pence per share with the issue of 25,000,000 shares with proceeds being invested in the Redmoor project

· Cash and cash equivalents at 30 June 2016 was US $837,000 (31 December 2015: US $1,049,000) with further funds expected to be forthcoming from rail settlement and increased sales at Cobre

Corporate Highlights:

· Acquisition of an interest in Central Australian Rare Earths Pty Ltd ("CARE"), an Australian exploration company prospecting for Nickel Sulphide, Rare Earths and Gold. This interest now stands at 50% of CARE.

· Acquisition of a stake in NAE Resources (UK) Limited ("Redmoor") which is a brownfields tin/tungsten project in Cornwall, UK. As part of the investment, the Company has an option to take up further equity to bring it to a 50% ownership position.

· Progression of rail claim to an agreed negotiation meeting in July 2016, which subsequently resulted in the Company agreeing to receive US $675,000 to settle its claim.

· Marked progress on seeking to secure additional clients at Cobre to substantially increase sales. This was successfully achieved in August 2016.

· Refocusing of corporate strategy on both an operational and investment level. Operationally, focus has been shifted to increase sales while attempting to limit corporate overheads to profitability from operations. From an investment perspective, a three-pronged approach has been adopted built around coal and bulk materials, advanced materials expected to be in high demand and metals expected to benefit most from a recovery in resource prices.

· Withdrawal from the Tatu and Wanbao coal projects due to changes in the market no longer making these financially viable/fundable.

· Successful drilling of CARE's Hanns Camp tenement in Western Australia for Nickel Sulphide.

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

"The first half of the year has seen the Company focus its attention on increasing underlying profitability through increased sales at Cobre and refocusing its investment activities in line with a revamped strategy focusing on metals and advanced materials likely to benefit by a rebound in the resources market.

"The entering of two new projects and the progression of the rail claim have put the Company in a good position to exercise its interest in the Redmoor project at a time when the market is starting to become aware of the likely value of the resurgence of the tin mining industry in Cornwall.

"In line with accounting standards, the rail settlement of US$675,000 is to be treated as income and this combined with the increase in sales at Cobre from the acquisition of a new major client, gives the Board reason to have a positive outlook for the full year results."

For further information, please contact:

Notes to Editors:

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

In September 2011, Strategic Minerals purchased its first cash generating asset, the Cobre magnetite tailings dam project in New Mexico, USA, which it brought into production in 2012 and which continues to provide a revenue stream for the Company. The portfolio was expanded in January 2016 with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia and the Northern Territory that are prospective for nickel sulphides, platinum and rare earths. Strategic Minerals has completed drill-testing the highest priority nickel sulphide targets within the tenements and has successfully intersected nickel sulphide and platinum. In May 2016, the Company entered arrangements to buy up to 50% of the Redmoor tin/tungsten exploration project in Cornwall, UK.

Chairman's Statement

Financial results

The results for the first half of 2016 showed a loss of US$322,000 (H1 2015: loss US$320,000).

Cash on hand as at 30 June 2016 was US$837,000 with a further US$43,000 from share issues in July 2016 and US$100,000 received in August 2016 from the Cobre rail settlement.

While operating profit (US$62,000) from our Cobre magnetite stockpile was down on the first half of 2015 (US$162,000), this reflected non-recurring costs associated with financing the purchase of equipment at Cobre and additional legal fees relating to our successful rail claim.

Overheads continue to be tightly controlled, with corporate overheads falling by around US$100,000 in comparison with the first half of 2015.

Cobre Operations

The Cobre operations and the US economy in general, have benefited from the fall in oil prices making the mine gate sales effectively cheaper for local clients. This has provided the Company the opportunity to market its magnetite product more widely and has now resulted with the addition of a substantial new client.

Throughout the first half of 2016, the Company continued to follow on its claim for compensation relating to rail works. While this took considerable management time, the ultimate agreement in July 2016 to settle this for US$675,000 has proven the effort worthwhile.With sales having increased substantially in recent months, the Board and Management will be focussing on ensuring that resources are available to service the new level of activity and that overheads are controlled during this growth period.

Strategy Refocus

In line with changing market conditions, the Board and Management reviewed the outlook for the Company and revised its strategy concentrating on an operational strategy designed to provide self-sustainability by limiting corporate overheads in line with profitability from Cobre operations. With respect to the investment side of the Company's operations, the Company adopted a three-pronged approach to diversified materials concentrating on:

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

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

3. Metals- identify those projects exposed to metals that it expects to have price improvements over the next three to five years such as Nickel, Gold, Copper and Tin/Tungsten.

On the back of this strategy, the Company entered two projects which focused on tin/tungsten and nickel respectively.

Redmoor Tin/Tungsten project

The first half of the year saw the Company take an interest in the Redmoor project located in the world class Cornwall tin-tungsten-copper mineralised district. This is a 'mining friendly' region with Imerys and Wolf Minerals currently operating open pit mines (China Clay and Tungsten).

The project has access to excellent local infrastructure including roads and a port being only 40km by road from the recently commissioned Drakelands Tungsten mine and processing plant owned by Wolf Minerals.

There is an existing mineral licence covering a large area (23 sq km) that contained a number of historic tin-tungsten-copper mines. The licence is valid for 15 years with a further option for a 25 year (plus a further 25 years) mining lease. Modest annual licence payments exist and revert to a 3% NSR vendor royalty on mining commencement.

Tin, Tungsten and Copper mineralisation of the region is spatially related to granite intrusions, which caused mineral containing fluids to be mobilised along fractures and faults. Redmoor is located adjacent to the Kit Hill Granite - source of mineralised fluids and presents two styles of mineralisation:

• Lode style - high grade tungsten, tin and copper mineralisation within discrete veins or lodes (eg Johnsons, Great South and Kelly Bray Lodes)

• Sheeted Vein System (SVS) - wide zone of numerous closely spaced sub-parallel narrow quartz veins

Encouraging results from an internal evaluation of the Redmoor project (stand alone and toll processing options) have drawn the Company to the project and our joint venture investment will aim to convert a portion of the Exploration Target to Inferred Resource and at upgrading a portion of the resource from Inferred to Indicated Mineral Resource status.

Phase 1 of this has commenced with key activities including:

• Final hole location design to optimise the return from each borehole, estimated to be 19 boreholes

• Land access

• Permitting

• Geological controls and procedures

• Drilling contractor selection

• Safety procedures

CARE

The Company began the acquisition of 50% of CARE in the first half of the year and has now completed it. These funds were utilised to undertake a drilling program at CARE's Hanns Camp tenements which were believed to be prospective for Nickel Sulphide.

Drilling intersected Nickel Sulphide and the Company, in conjunction with its joint venture partner, is looking to review data from the drilling and downhole electro-magnetic surveys to define the most appropriate strategy to for the future. This is not limited to the Hanns Camp area alone and may take into consideration the Mount Weld tenements which are considered prospective for rare earths and gold.

Tatu and Wanbao projects

In line with changing market conditions, the Board and Management considered it unlikely that these projects could be funded from either equity or a combination of equity and debt. Accordingly, rather than expend further shareholder resources, the Board took the view to withdraw.

Board Changes

While no board changes occurred during the first half of 2016, in July 2016 we welcomed Peter Wale, the Company's second largest shareholder, onto the Board. Peter replaced Lyle Hobbs whose escalating business interests resulted in him having to leave the Board.Apart from his financial acumen, Peter's appointment provides a UK based Director and is considered instrumental in the Board understanding shareholder requirements.

Capital Raisings

During the half year, the Company raised £504,000 (US $723,000) before costs at 0.3 pence per share through the placing of 168,000,000 ordinary shares, taking the total ordinary shares in issue to 1,058,492,227. In July 2016, a further £30,000 (US $43,000) was raised at 0.3 pence per share as part of the Redmoor project.

Safety

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

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

Alan Broome

Executive Chairman

29 September 2016

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE PERIOD ENDED 30 JUNE 2016

STRATEGIC MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2016

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

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

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

1. General information

Strategic Minerals Plc ("the Company") is a public company incorporated in England and Wales. The consolidated interim financial statements of the Company for the six months ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the "Group").

2. Accounting policies

Basis of preparation

These consolidated financial statements have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. IAS 34 is not required to be adopted by the Company and has not been applied in the preparation of this interim information. The consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2015 Annual Report. The financial information for the half years ended 30 June 2016 and 30 June 2015 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Strategic Minerals Plc are prepared in accordance with IFRSs as adopted by the European Union. The comparative financial information for the year ended 31 December 2015 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2015 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2015 was unqualified, and included an emphasis on matter paragraph regarding the Group's ability to continue as a going concern and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

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

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

Joint arrangements

Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Strategic Minerals Limited has no joint operations or joint ventures as at 30 June 2016.

Joint operations

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

Joint Ventures

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

New, revised or amending accounting standards and interpretations

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

3. Critical accounting estimates and judgements

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

Judgements

(a) Joint arrangement and joint operation

On 31 March, 2015 the company acquired a 51% interest in King Country Mining Limited (KCM) with the balance of KCM owned by another party (see note 9). The contractual nature of this joint arrangement entitles both shareholders of KCM to the representation of one director each on the two director board of KCM. Furthermore, all decisions at the board of directors must be unanimously agreed upon. Hence, this joint arrangement has been included in the financial statements as a joint operation which recognises Strategic Minerals Plc's 51% share of any jointly held or incurred assets, liabilities, revenues and expenses.

Participation in this joint operation is considered to be a distinct segment with respect to disclosing segment information (see note 4).

Estimates and assumptions

(a) Fair value of assets and liabilities of joint operations

The Company has valued the exploration assets of KCM being the joint operation at acquisition, at their fair value being the consideration paid by Strategic Minerals Plc plus the expected discounted value of future royalties to be paid by KCM. In addition, the fair value of the royalties has been recognised as a non-current provision at the expected discounted value of the future royalties.

(b) Carrying value of intangible assets

In assessing the continuing carrying value of the exploration and evaluation costs carried the Company has made an estimation of the value of the underlying tenements and exploration licenses held. In the six months ended 30 June 2016, the Company has written off, the previously fully impaired, exploration and evaluation costs in relation to the Tatu Project in New Zealand due to the Company deciding to dispose of its interests in the project in February 2016.

(c) Share based payments, warrants and options

The fair value of warrants and options recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience.

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

The Group has five main segments:

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

· Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to the US domestic market. In prior years this segment also shipped magnetite to port for onward export sale.

· UK - Holds the Company's investment in the UK which included the acquisition of the Redmoor Tin/Tungsten project in Cornwell.

· Australia - This segment holds the tenements in Australia and the Company's investment in Central Australia Rare Earths Limited.

· New Zealand - The Company acquired a 51% interest in the King County Mining joint operation being a coal mine development in the north island of New Zealand which was consequently sold back to the vendor for a nominal sum in February 2016.

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

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

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

Measurement of operating segment profit or loss, assets and liabilities

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

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

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

Administration costs by nature

STRATEGIC MINERALS PLC

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2016

In the six months ending 30 June 2016 the Company has written off the, previously fully impaired, exploration and evaluation costs in relation to the Tatu Project in New Zealand due to the Company deciding to dispose of the project in February 2016.