Strategic Minerals Regulatory News (SML)

19 May 2016

Strategic Minerals plc

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

Update for the quarter to 31 March 2016

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 31 March 2016 ("Q1 2016").

Highlights:

· Quarterly sales at the Cobre operations continued to reflect an annual turnover of 17,000+ tons per annum. While sales of US$0.227m in Q1 2016 were lower than in the same period in 2015, this appears consistent with the variability of demand within annual periods;

· Acquired up to 50% of Central Australian Rare Earth Pty Ltd ("CARE"). During the quarter, documentation was finalised and personnel and plans were prepared to commence drilling on 18 May 2016;

· Termination and exiting of Tatu coal project in February 2016; 

· Withdrawal from Wanbao Coal Mine project; 

· Corporate overheads continue to be tightly controlled with the Managing Director reducing his remuneration by a little over 15% and the CFO being moved to an hourly consulting bais. The Board continues to seek to control these overheads in line with the Company's likely operating profits;

· The Company updated its website; and

· The Company had cash of US$0.641m as at 31 March 2016.

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

"The refinement of the Company's strategy, undertaken in Q1 2016, highlights its emphasis on producing and exploring. The Company's production at the Cobre mine continues to underpin its operating costs and the Board and management team are focused on seeking to contain corporate overheads within the current operating profit of the mine. At the same time, our strategy recognises the need for substantial wealth creation through exploration/investment. In this regard, investment reviews have centred on projects with either tied offtake arrangements or ones based on exploration for minerals/metals expected to have strong demand/price upside in a three to five year time horizon.

"The emphasis on exploration upside has been reflected in our agreement to purchase up to 50% of CARE with its mining tenements in Western Australia and our commitment to drill the identified prospective anomalies at Laverton.

"The Board continues to focus on securing additional sales in Cobre, progressing legal claims associated with the rail upgrades undertaken at Cobre, monitoring the drill programme at the Laverton project and progressing its current negotiations seeking an additional project opportunity."

Cobre magnetite tailings operations

In the first quarter of 2016, sales were below the same period in the previous year but were up on an annualised basis. This reflects the variability of demand for the magnetite product which, generally, we would expect to even out over an annual period as shown in the following table outlining sales and volume data:

___________Tonnage_____________ ____________Sales-_(US$'000)_________

Year 3 mths to March 12 mths to March 3 mths to March 12 mths to March

2016 3,427 17,175 $227 $1,160

2015 4,707 16,284 $318 $1,099

2014 7,202 17,354 $485 $1,271

As can be seen from the table, sales prices have stabilised around the $66 per ton level despite falls in global iron ore prices. While this pricing level is generally expected to be maintained, we are in discussions with two parties, who have previously taken material from Cobre, about large orders which, should they progress, would involve price discounts and not impact sales until the second half of the year.

SML continues to hold discussions on extending its tenure at Cobre for a longer period and is hopeful that some mutually beneficial arrangement can be achieved in this regard.

The Company's wholly owned subsidiary Southern Minerals Group llc has now filed a legal claim for re-imbursement of funds expended on the rail upgrade as it believes that the history of derailments and "go slow" on the line breached the warranties given and is seeking to mediate this claim with the railroad company.

Acquisition of 50% of Central Australian Rare Earth ("CARE")

In the March quarter, the Company completed the negotiations, due diligence and legal documentation on a right to acquire, from Rarus Limited ("Rarus"), up to 50% of CARE for AUD 380,000 (approximately USD 270,000 or £190,000) with an initial subscription of 25.5% acquired for AUD 130,000 completed on 1 February 2016.

With drilling having commenced on 18 May 2016, SML is preparing to make a series of AUD 50,000 subscriptions to fund the drilling programme over the four of CARE's tenements, known as the Laverton Project. These tenements are subject to a farm-in joint venture with ASX-listed Focus Minerals Limited ('Focus') under which CARE has the right to explore Focus' tenements near the Western Australian Goldfields town of Laverton for 90% ownership of, nickel and other commodities discovered in the tenements excluding gold, copper (where it is the dominant commodity present) and silver to which Focus maintains 100% ownership rights. Further details on the geology of the site can be found in SML's RNS announcement dated 1 February 2016 and more information on CARE's Laverton Project, including the Hanns Camp drilling proposal, maps and previous drilling results are available on the Strategic Minerals website.

Exiting of involvement with Tatu coal mine

During the March quarter, the Board took the decision not to proceed with the Tatu project and terminated arrangements, transferring the Company's interest in King Country Mining ("KCM") back to the previous owners for a nominal sum.

All costs associated with the Tatu project have been expensed and are reflected in the 2015 Annual Report to be released shortly.

Wanbao project

During the March quarter, the Company officially withdrew from a potential involvement in the proposed re-opening of the Wanbao coal mine. Expenses associated with our involvement, less than USD 5,000, were written off in the 2015 Annual Report to be released shortly.

Financials

Over the period, the Company continued to maintain a tight control on overheads, especially in light of the termination of the Tatu project. Planned overheads, on an annualised basis, continue to remain under US$1 million (excluding variable project review costs and foreign currency movement).

Overheads have been pruned further with a reduction of over 15% in the Managing Director's remuneration and the CFO being moved to a consulting basis based on an hourly rate. The overheads of being a listed company have been trimmed as much as possible and, it is intended that, remuneration of Management and Directors, when combined with the listing overheads, will be maintained within the operating profitability of the Cobre mine. Accordingly, any use of funds above this are expected to be, specifically, project orientated.

At the end of the March 2016 quarter, the Company had US$640,525 in cash compared to US$1,048,058 as at the end of December 2015. Of this US$407,533 reduction in cash, US$234,479 related to the CARE acquisition, payments due on the Tatu project and foreign exchange adjustments on cash. Further, during this period, the Group made payments, which will not be required to be made in future periods, of US$181,265 relating to purchased equipment and repaying previous debts.

On balance, the Directors believe that cash flows from Cobre's operations and the reduction in corporate overheads should ensure that adequate reserves exist to progress existing operations.

Near term objectives

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

· Progress sales opportunities and tenure at the Cobre mine;

· Undertake drilling and testing at the Laverton project;

· Progress the railroad claim associated with the Cobre mine;

· Monitor and control corporate overheads in line with operating profits; and

· Seek another expansion project.

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.