RNS Number : 7486P
Strategic Minerals PLC
10 June 2015
10 June 2015
Strategic Minerals Plc
('Strategic' or the 'Company')
Final results for the year ended 31 December 2014
Strategic Minerals Plc (AIM'SML; USOTC: SMCDY), the diversified mineral development and production company, is pleased to announce its final results for the year ended 31 December 2014.
Operational Highlights:
· Cobre Magnetite tailings operation ('Cobre') in New Mexico, USA completed its final export of product in February 2014 due to declining iron ore prices
· Export sales during the financial period were understandably down with 64,000 dry metric tonnes ('DMT') exported compared with 423,000 DMT in 2013
· Domestic sales were up by 25% to 18,800 short wet tons ('SMT') from 15,000 SMT in 2013
· Cobre operations now focused on domestic sales and operational costs reduced at site
· The Company renewed its agreement with Freeport extending its rights at Cobre until February 2016
· Focus has been on streamlining overheads which resulted in a 52% reduction in administration costs in the period
· New Board and management appointments made in May 2014 to transform the business' strategy and direction, the results of which are coming into fruition post year-end
Post year-end Highlights
· Relinquishment of the Jotanooka tenements in Australia; currently reviewing the Iron Glen tenements
· Secured low upfront acquisition of the Tatu Coal Project in New Zealand for NZ$255,000 in cash and a royalty of up to US$2 per tonne of product sold
· Subsequently, the Company has completed the purchase of 51% of Tatu
· Raised £1M before expenses through a conditional placing to progress the Tatu project
· Entered into a Memorandum of Understanding with the owners of the Wanbao Metallurgical Coal Mine, China to assess the underlying resource with the aim of purchasing up to 49% of the mine
Financial Highlights
· Loss before tax for the financial year of $6.1M (2013: $29.0M)
· Revenue was down from $37.2M to $6.08M
· Administration costs decreased during this period to $1.7M (2013: $3.5M)
John Peters, Executive Chairman, commented: 'The Company has substantially improved its position from where it was a year ago. The changes to the Board and management have resulted in significant reductions in overheads, whilst other improvements have been made with a focus at Cobre on profitable domestic sales, the conditional acquisition of Tatu Energy Coal Project and the potential investment in the Wanbao Coking Coal Project in China.
'The Company is confident it now has low overheads, an existing cash flow stream form Cobre and the potential near term cash flow opportunity from Tatu. Further it anticipates possible growth opportunities through the Wanbao Project in China and potential expansion of the Tatu Project to surrounding areas.'
Copies of the Annual Report and Accounts will be posted to shareholders and made available on the Company's website later today.
The financial information of the Group set out in this statement does not constitute 'statutory accounts' for the purposes of Section 435 of the Companies Act 2006. The financial information for the year ended 31 December 2014 has been extracted from the Group's audited financial statements which were approved by the Board of directors on 10 June 2015 and will be delivered to the Registrar of Companies for England and Wales in due course.
For further information, please contact:
Strategic Minerals plc
John Peters
Executive Chairman
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+61 414 727 965
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Allenby Capital Limited
Nominated Adviser and Joint Broker
Jeremy Porter
James Reeve
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+44 (0)20 3328 5656
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Cornhill Capital Limited
Joint Broker
James Sheehan
Colin Rowbury
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+44 (0)20 3700 2516
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Yellow Jersey PR
Financial PR
Kelsey Traynor
Dominic Barretto
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+44 (0)779 900 3220
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CHAIRMAN'S REPORT
It is my pleasure to present Strategic Minerals Plc's Annual Report for the period ending 31 December 2014. During the past 12 months and the beginning of this year, the Company overcame some significant challenges and I am pleased to say that, following substantial changes made within the business, the Company is now positioned for growth with a steady foundation of cash flow, a new acquisition and other potential opportunities.
Following Board and management changes in both May 2014 and January 2015, the new team, with demonstrable track records in both capital markets and mining resources, is now focused on unlocking shareholder value in this new environment of depressed mining prices.
The new Board has successfully transitioned the Company's Cobre operation ('Cobre') in the United States from an export focused business to a smaller volume but higher margin business. This change was necessary due to a significant reduction in global iron ore prices which made, and continues to make, export from Cobre unprofitable. The focus on domestic sales of magnetite product means that the Company is now focused on products which are generally not linked to iron ore prices. The Company's Cobre operation is now a cash flow positive business which we expect to continue to support our growth ambitions into the future.
Significant reductions in overheads have been achieved in the second half of the year, resulting in current overheads, excluding project review and development costs, of less than US$1 million on an annualised basis.
Further, the Board reviewed a number of select and potential project acquisitions during the 2014 year which resulted in the Company securing an agreement to acquire 100% of the Tatu energy coal project ('Tatu Project') in the North Island of New Zealand in March 2015. Historical reports have indicated that the Tatu Project has 7.3 million tonnes of coal. The Company is preparing an updated JORC resource estimate, which we will announce the results of in the near future. The Tatu Project is expected to meet all of the Board's strategic criteria; having expected near term cash flow, local market demand where local supply is limited, substantial resource upside potential and attractive financial economics. The selection of Tatu reflected the ability of the Board and Management to identify and negotiate a transaction with a low upfront cost of NZ$255,000, and a royalty of up to US$2 per tonne of product sold.
In addition, the Company has signed a Memorandum of Understanding with the owners of the Wanbao coal project ('Wanbao Project') in China. A JORC resource is currently being completed for this project, which will set the framework for discussions on a potential acquisition of up to 49% of the project. The Wanbao Project has the potential to be a significant project which could supply local large scale steel mills in the area. As the Company is cognitive of the risks associated with an investment in China, it has undertaken an approach designed to ameliorate these risks and, once the JORC resource review is completed, the Company will undergo significant due diligence to ensure any investment is de-risked and appropriately managed.
In line with the Company's strategy of securing projects with near term cash flow potential and the drop in iron ore prices the Company decided, in the January 2015, to relinquish the Jotanooka iron ore exploration assets. In addition, the Company is reviewing its position with respect to Iron Glen which is a magnetite iron ore, lead and silver tenement.
On 8 June 2015 the Group announced an equity placing which will raise approximately ~US$1,526,000 (£1,000,000) in two Tranches. The First Tranche is unconditional (except for the Admission of the shares to trading on AIM and will raise ~US$750,000 (£492,000) of gross proceeds with the issue of 82,000,000 ordinary shares at a price of 0.6 pence per share. The Second Tranche of funds, which is subject to shareholder approval at the forthcoming AGM, will raise a further ~US$776,000 (£508,000) of gross proceeds. It should be noted that there is no guarantee that shareholder approval will be given in relation to the Second Tranche and the Company will adjust its activities in relation to development of the Tatu Project accordingly.
The Company made a gross loss of $629,000 as compared to a gross profit in 2013 of $2,005,000. This was mainly due to a drop in iron ore prices which resulted in the Company ceasing export of iron ore from Cobre in February 2015. Overheads were substantially reduced in the period by 52% to $1,684,000 (2013:$3,486,000) The Company made a loss before tax for the financial year of $6,042,000 (2013: $28,298,000). The loss for the period was mainly attributable to non-cash related charges of $3,912,000 (2013: $26,762,000). The total after tax loss for the year was $5,732,000 (2013: $23,879,000).
I would like to thank our management and staff for their hard work, as well as my fellow Board members for their contributions. The foundations for growth have been set and the Company looks forward to continuing to deliver significant shareholder value in the future.
Finally, I would like to acknowledge the support of our shareholders, suppliers and other stakeholders and I look forward to your continued support.
John Peters
Chairman
10 June 2015
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