Strategic Minerals Regulatory News (SML)

9 November 2015

Strategic Minerals plc

("Strategic Minerals" or the "Company")

Update for the quarter to 30 September 2015

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), the diversified mineral development and production company, is pleased to provide the following update on the Company's operations for the three months to September 2015.

Highlights:

· Completed the £1 million capital raising announced on 8 June 2015 following shareholder approval at the Annual General Meeting ("AGM") in July;

· Obtained the government of New Zealand's approval for the transfer of the mining license for the Tatu coal mine project and continued to progress plans for the development of the mine and potential funding sources;

· Targeting by end of December to complete Tatu bulk sample and to have further progressed the completion of the acquisition of the remaining 49% of the project;

· Progressed discussions on a potential involvement in the Wanbao Coal Mine in China, subject to project specific funding being sourced;

· Sales revenue of domestic product at Cobre rebounded in September and October after falling through the months of May and June, due to transport and logistical issues, with some recovery through July and August. Despite significant falls in global iron ore prices, mine gate prices have held, reflecting the servicing of local markets;

· Corporate overheads continue to be tightly controlled with any increases reflecting the addition of the new Chairman, increased workload associated with project development (Tatu) and new project assessment;

· Cash of US$1.347m as at 30 September 2015; and

· Strategic Minerals' strategy has been clarified as a diversified mineral company, to counter perception of the Company focussing solely on coal.

Commenting, Alan Broome, Non-Executive-Chairman of Strategic Minerals, said:

"The Company continues to carefully utilise the funds received from its June capital raise to help progress the Tatu coal mine project. The Board has identified some interesting acquisition opportunities during a difficult time for global mineral markets and is looking forward to positioning the Company as a diversified minerals company with underlying cash flow from existing mining operations.

"The Board looks forward to a busy period ahead. Over the next quarter, the Board will be focussed on completing the extraction and analysis of bulk sampling from the planned Tatu coal mine, as well as completing the acquisition of the remaining 49% interest in King Country Mining, the owner of the mine, including securing the requisite funding and sales interest. The Board will also be finalising the work conducted to date on the Tatu coal mine feasibility study. Finally, we will be looking to secure a second expansion project and undertake negotiations for the extension of the Company's existing operations at Cobre."

Successful funding

On 8 June 2015, the Company announced a placing of 166,666,667 shares at 0.60 pence ("Placing Shares"), organised through Cornhill Capital, to raise £1 million before expenses. The fundraising was completed in July 2015 following shareholder approval of the issue of the second tranche of the Placing Shares at the AGM held on 2 July 2015.

Progression of Tatu coal mine

Planning for the commencement of the development of the Tatu coal mine project has progressed with the detailing of a prudent development plan, contingent upon the approval of, and execution of, extraction of a bulk sample and laboratory testing, as well as a market review and sourcing of funding.

The three months to September involved considerable work being undertaken in formulating the appropriate development plan and marshalling appropriate physical and human resources to complete this stage of the mine development. Weather conditions during the latter part of the quarter, and into October, have caused some delays.

In July the government of New Zealand provided consent to the effective transfer of the Tatu coal mining license to Strategic Minerals via its 51% ownership of King Country Mining. As previously announced, the Company has until 31 January 2016 to exercise its option to acquire the remaining 49%, failing which the vendor can acquire Strategic Minerals' 51% interest for NZ$1. The Board is progressing discussions with various parties to secure funding to develop the mine in order for the Company's option to be exercised.

The September period saw significant events within the New Zealand domestic coal market with the announcement of Solid Energy moving into voluntary administration; NZ Steel indicating a need to cut costs; and the announcement, in early October, of Solid Energy's intention to close, and not sell off, the Huntly East mine on the North Island of New Zealand.

It is considered that the closure of the Huntly East mine will be good for potential sales from the proposed Tatu mine given that it is expected to produce coal consistent with that produced by the Huntly East mine. Many of the North Island coal users have their coal burning processes configured around the characteristics of this coal.

Wanbao project

During the period under review, the Company visited the existing Wanbao coal mine and the site identified for future operations, meeting with the owners of the mine, the local authorities and consultants likely to operate the future mine.

While the directors of Strategic Minerals believe the dynamics of the project, both operationally and financially, are strong, the Company has observed a reticence in the market to fund both coal and projects in China. Accordingly, the Company has been following private equity sources to assist in funding any interest in the project. The Board of Strategic Minerals recently confirmed that funding of this nature would need to be secured before any firm commitment could be made to the project.

Cobre magnetite tailings operations

Sales prices in the domestic magnetite markets in the United States have proven to be resilient to the significantly depressed global iron ore prices. At our Cobre operation, we have been able to maintain sales around the US$67 per short wet tonne level. However, sales volumes for the 12 months to the end of September fell significantly reflecting both the stock piling by clients in the first half of 2014 and a transport problem suffered by a major client which saw sales volumes fall through May and June before some recovery through July and August 2014. Since this time, new trucking arrangements have been instituted and sales rebounded in September and October. Sales and volumes details are as follows:

Tonnage Sales (US $'000)

Year 3 months to Sept. 12 months to Sept. 3 months to Sept. 12 months to Sept.

2015 3,696 13,960 $250 $ 950

2014 2,765 18,182 $193 $1,228

2013 3,604 $247

The Board has begun negotiations to extend operations at Cobre past the current maturity date of the existing sales contract (28 February 2016) and feels confident that this will occur. 

Financials

Over the period, the Company continued to maintain a tight control on overheads although increased activity and the appointment of a new Chairman have had some impact. Overheads continue to remain under US$1 million (excluding variable project review costs and foreign currency movement) on an annualised basis.

At the end of the September 2015 quarter, the Company had US$1,347,240 in cash compared to US$1,090,240 as at the end of June 2015. This also reflects the receipt of US$792,632 in July from the second tranche of the June equity fundraising.

During the period, the Company's management negotiated the repayment of a significant creditor of US$386,000, which arose from the Company's previous export sales from Cobre. This has been undertaken through a payment plan being funded by Cobre operations over the 12 months to June 2016.

On balance, the Directors believe that expected cash flows from Cobre's operations and the reduction in corporate overheads should ensure that adequate reserves exist to progress existing operations (excluding acquisitions and the completion of the Tatu development).

Diversified objective

The Board has become aware that many investors are beginning to categorise Strategic Minerals principally as a coal company. While the Tatu coal mine project met all of Strategic Minerals' investment criteria, it should not imply that the Company's acquisition strategy is coal centric. At a recent Board meeting, the Board voted to consider a number of development projects that were neither magnetite nor coal based. While these are more development orientated, their size and scope would add a significant diversification and potential upside for value generation if pursued successfully.

Near term objectives

Over the near term, the Directors of Strategic Minerals plan to:

· Complete the extraction and analysis of a bulk sample from the planned Tatu coal mine;

· Complete the acquisition of the remaining interest in the Tatu coal mine;

· Finalise the work conducted to date on the feasibility study for the Tatu coal mine;

· Arrange funding for the construction and operations of the Tatu coal mine;

· Secure a second expansion project; and

· Continue negotiations for the extension, again, of operations at Cobre beyond February 2016.

The Company looks forward to providing further updates in due course.

For further information, please contact:

Forward Looking Statements

This release includes forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements in this release include, but are not limited to, the capital and operating cost estimates and economic analyses from the Study.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of resources or reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements.

Forward looking statements in this release are given as at the date of issue only. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.