Strategic Minerals Regulatory News (SML)

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16th May 2019

Strategic Minerals plc

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

Redmoor mining scoping study leads to positive financial assessment

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, is pleased to announce that Cornwall Resources Limited ("CRL"), the joint venture vehicle developing the Redmoor Tin/Tungsten project, has received an updated scoping study it commissioned from mining consultants Wardell Armstrong International ("WAI"), following on from the recent Mineral Resource Estimate update.

On the basis of this study, CRL has carried out a preliminary assessment of the potential returns from an underground mining project at Redmoor in Cornwall. This assessment suggests, based on a nominal plant feed rate of 600ktpa, an IRR of 19%, and an NPV of $94m, based on a capex of $89m. Further work will now be carried out to continue to advance and further optimise the project as it heads towards a pre-feasibility study ("PFS").

Highlights:-

· Positive outcome from scoping level underground mining study completed by regionally based consultants WAI; resultant indicative mine schedule confirms economic potential of project.

· Study suggests an indicative production rate of 600ktpa; potential mine life of 10+ years.

· Life of Mine production schedule indicates 7.1Mt @ 1.09% tin equivalent grade.

· The results of the study have been modelled internally by CRL and already show strong positive returns, together with potential for further optimisation.

· Metallurgical testwork carried out in parallel confirms amenability of ore to gravity pre-concentration with good potential recoveries and grades.

· Significant upside has been identified with exploration target likely to extend the existing mine life as well as targeting high margin ores early in the production schedule.

John Peters, Managing Director of Strategic Minerals, commented:

"The recently completed mining study, while still based on an Inferred Mineral Resource, provides SML confidence that a major portion of the recently announced resource of 11.7Mt at 1.17% SnEq can potentially be economically mined.

"Using the results of this study, SML believes it has confirmed its view that Redmoor has the potential to be a world class tin and tungsten mine which will deliver attractive returns on investment.

"SML looks forward to continuing to add value to the project as it advances towards a PFS."

Introduction

SML's 50% owned joint venture vehicle CRL has, through consultant WAI, recently completed an underground mining scoping study for its Redmoor Tin/Tungsten project located in Cornwall, UK. These studies have been based on the updated Inferred Mineral Resource of 11.7 million tonnes @ 0.56% tungsten (WO₃), 0.16% tin and 0.50% copper¹ for a 1.17% tin equivalent grade², as announced by SML in February 2019.

A scoping study and preliminary economic assessment for the Redmoor project was completed in May 2018. This was based on the known mineral resource at the time of 4.5Mt @ 1.0% SnEq. The exploration drilling completed in 2018 and early 2019 resulted in an increased resource of 11.7Mt @ 1.17% SnEq. The updated scoping study was focussed on updating the mine study to include the effect of the significant increase in resource.

Mining Study

WAI was engaged to carry out a preliminary mine design, conceptual life of mine schedule, and mining capital and operating cost estimates for the Redmoor project based on the updated Inferred Mineral Resource announced in February 2019.

The completed mining study focusses on a processing plant and mine surface infrastructure fed from an underground mine accessed via a decline.

WAI selected long-hole stoping with backfill as the most suitable mining method. This assessment was based on the size and geometry of mineralisation and environmental considerations. The preliminary mine design includes a decline from surface (portal), with a central access to the resource from which ore drives can be developed along strike. A return air rise and an escape way system were also included in the design.

Mining stope designs were optimised using Mineable Shape Optimiser ("MSO") software using design criteria based on a cut-off value assessment of Net Smelter Return ("NSR") in combination with a geotechnical assessment and mining equipment constraints.

15% dilution with a diluting grade of 0% SnEq and a 95% mining recovery were assumed in the mining study.

The conceptual life of mine schedule developed by WAI shows a significant increase in equivalent grade (SnEq) with depth and mine life.

Key results of the mining study include;

· Life of mine schedule includes 7.1Mt @ 0.58% WO3, 0.10% Sn, 0.38% Cu for a Tin equivalent grade of 1.09%

· Average mining cost of US$46.9/tonne ore

· Initial underground development length of 2.0 km

· Capital development cost estimated at US$2,770/metre

CRL Economic analysis

An economic evaluation of the project has been completed by CRL based on:

· The mining scoping study results completed by WAI

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

· Estimates of other project costs made by CRL

The key modelling parameters are:

SML has utilised the schedule and contractor-operated mining capital and operating costs estimated in the WAI Scoping Mining Study and the inputs from the scoping study as presented in May 2018 as the basis for an updated financial evaluation of the potential returns from the Redmoor project.

An economic evaluation of the project has been completed by CRL based on:

· The mining study results completed by Mining One

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

· Estimates of other project costs made by CRL

Preliminary evaluation indicates the following key (after tax) results:

· NPV (@8%): US$94M

· IRR (%): 19.4%

· Life of Mine operating margin: 46%

· Payback time (from first ore): 3.4 years

The results of the scoping study, as well as substantial upside, provides SML confidence that Redmoor can deliver sufficient returns for investors and potentially deliver a world class project.

Cautionary Statement and Forward Looking Statements

The results of the mining, processing and surface infrastructure studies recently completed, and the economic assessment results based on these studies DO NOT constitute a Scoping Study as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC). This is primarily due to the fact that these studies are based upon a purely an Inferred Mineral Resource which is by its nature, uncertain. Any valuation results contained in this announcement are therefore illustrative only and should not be relied upon for investment purposes.

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

Competent Person's Statement

Mining Scoping Study

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

CRL Economic Analysis

The information in this announcement that relates to the Preliminary Economic Evaluation is based on information compiled and/or reviewed by Jonathan Reynolds B.ASc., a Member of the Australasian Institute of Mining and Metallurgy, and who is employed by Reynolds Consultant as Principal Consultant. Mr Reynolds has sufficient experience which is relevant to the valuations of the type of deposit and mining method under consideration.

Notes to Editors

Strategic Minerals Plc is an AIM-quoted, operating minerals company actively developing projects prospective for battery materials. It has an operation in the United States of America and Australia along with development projects in the UK and Australia. The Company is focused on utilising its operating cash flows, along with capital raisings, to develop high quality projects aimed at supplying the metals and minerals being sought in the burgeoning electric vehicle/battery market.

In September 2011, Strategic Minerals acquired the distribution rights to the Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating asset, which it brought into production in 2012 and which continues to provide a revenue stream for the Company. This operating revenue stream is utilised to cover company overheads and invest in development projects orientated to supplying the burgeoning electric vehicle/battery market.

In 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.