Q3 Cobre Magnetite Sales and Cash Balance Update

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12 October 2020

Strategic Minerals plc

("Strategic Minerals" or the "Company")

September Quarter 2020 Magnetite Sales and Cash Balances

Strong Sales Continue Despite Pandemic

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a profitable producing mineral company, is pleased to provide the following update on the Company's cash position and ore sales at the Cobre magnetite operation in New Mexico, USA ("Cobre") for the quarter ended 30 September 2020. 

Highlights

· Sustained solid sales growth continues organically.

· 55% year on year rise in sales revenue at Cobre.

· Uninterrupted operations continue at Cobre as a result of effective zero contact on-site due to processes and policies enacted in response to the Covid-19 pandemic.

· Appointment of NRG Capital to develop options to advance the Redmoor tungsten and tin project.

· Program for Environmental Protection and Rehabilitation ("PEPR") for the Paltridge North deposit at Leigh Creek Copper Mine lodged.

· Tax payments of over US$0.400m paid during the quarter, with all tax payments up to date.

· Group cash balance of US$0.264m as at 30 September 2020.

Sales update: Cobre magnetite tailings operations

Sales volumes at Cobre continued to grow strongly in the September 2020 quarter, up 55% year on year. Despite US activity slowing in this quarter, sales remained robust and the positive annual growth highlights the strength of demand being maintained despite the Covid-19 Pandemic.

Sales comparisons on quarterly and annual periods to 30 September 2020, along with associated volume details, are shown in the table below:

* For comparison purposes, US$0.75m forfeited by CV Investments LLC ("CV Investments") has been excluded from sales figures.

Despite the continued suspension of mining activities at the adjacent copper mine due to the Covid-19 pandemic, operations at Cobre continue to operate under protocols established to ensure contactless sales and have been successful in safeguarding both the Company's employees and its clients.

The Company's wholly owned subsidiary, Southern Minerals Group ("SMG"), is in contact with the Receiver appointed by the US Securities Exchange Commission in relation to CV Investments. It continues to push its claim in relation to the previously notified US $21.9m arbitration claim against CV Investments. The Company will update the market with details as, and when, they are provided by the Receiver.

Financials and Operations

At 30 September 2020, the Group's non-restricted cash balance was US$0.264m (30 June 2020: US$0.533m). This represents a strong underlying performance as, during the quarter, SMG paid over US$400,000 in taxes. During the first half of 2020, SMG took advantage of the US Government's offer to defer tax collections, due to Covid-19, and the Company used this cashflow flexibility to minimise the capital raise required in June 2020 to repay the loan from New Age Exploration Limited related to the acquisition of the Redmoor Project.

During the quarter, the Company appointed NRG Capital to provide strategic and financial advice regarding advancing the Redmoor tungsten and tin project. NRG is an independent advisory firm and merchant bank focused on the global metals and energy industries.

On the 6 October the Company announced a positive updated scoping study undertaken by Wardell Armstong that reported improved economics for the Redmoor tungsten and tin project.

The September quarter also saw the lodging of the PEPR for the Paltridge North deposit at the Leigh Creek Copper Mine project. It is expected that the PEPR approval should be forthcoming in the December quarter 2020.

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

"Sales at Cobre continue to show excellent annual growth providing the Company the opportunity to repay outstanding liabilities and benefit from surplus cash generated from operations.

"Steps have been taken to move both the Leigh Creek and Redmoor projects forward in a manner that avoids dilution at the parent level. With copper prices around US$3lb and the recent emphasis on the strategic nature of tungsten, the Board is confident that the underlying value in its projects will be realized."

Notes to Editors

Strategic Minerals plc is an AIM-quoted, profitable operating minerals company actively developing projects tailored to materials expected to benefit from strong demand in the future. It has an operation in the United States of America 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 likely to be highly demanded in the future.

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 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 2019, the Company entered into arrangements to acquire the balance of the Redmoor Tin/Tungsten project which was settled on 24 July 2019 by way of a vendor loan which was fully repaid on 26 June 2020.

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 temporarily into production in April 2019. The project currently awaits clearance from the South Australian Government of its lodged Program for Environmental Protection and Rehabilitation (PEPR).