The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has been incorporated into UK law by the European Union (Withdrawal) Act 2018.

20 July 2022

Strategic Minerals plc

("Strategic Minerals" or the "Company")

June Quarter 2022 Magnetite Sales and Cash Balances

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 June 2022.

Highlights

·   Cobre's largest client maintains historical demand levels and confirms intention to do so

·   June quarter and annual sales of US$0.7m and US$2.4m respectively, slightly weaker than in previous years

·   Customers notified of a 20% sales price increase being progressively phased in from 1 July 2022

·   Initial July sales do not appear to be impacted by product price increases

·   Elevated transportation costs currently impacting sales expansion progress

·   Group cash balance of US$0.430m as at 30 June 2022

·   Programme for Environmental Planning and Rehabilitation ("PEPR") received for Paltridge North

·   Results of Deep Digital Cornwall ("DDC") survey work being finalised

Sales update: Cobre magnetite tailings operations

In the June quarter, the Company's wholly owned subsidiary, Southern Minerals Group ("SMG"), and the Company's Managing Director, met with Cobre's largest client, in New Mexico, to discuss expected demand.  The client indicated that there was not likely to be a repeat of the reduced demand experienced from October 2021 through to January 2022 (inclusive) and that their expectations for the rest of the year and beyond was in line with previous demand

During June, SMG's clients were notified of a planned 20% increase in prices to be phased in over the next six months.  Given that it had been over four years since prices were increased and the high inflation rate currently being experienced in the US, this was understood by customers and early July 2022 sales seem to indicate no change in demand.

While the extension of access to the stockpile until 31 March 2027 has provided a platform from which SMG hopes to increase future sales revenues, the current increase in transportation costs and recession concerns have moderated expectations accordingly.

Sales comparisons on quarterly and annual periods to 30 June 2022, along with associated volume details, are shown in the table below:

* For comparison purposes, the US$0.75m of deposits forfeited by CV Investments LLC ("CV"), in October 2019, has been excluded.

Further to previous updates, the CV Receiver established a Bar Date of 25 April 2022 by which claims against CV must be made. SMG formally lodged its US$21.9m arbitrated claim by this date. The Company is still waiting for the Receiver to make a recommendation for the distribution of the assets, and SMG continues to have dialogue with the Receiver. Currently the Receiver has indicated they are likely to prioritise, in this case, equity claims over creditors, which is permitted under US law. At this point, there remains no certainty of any payment to SMG, but the Management and Board expect there will be clarity later this year.

Financials and Operations

As at 30 June 2022, the Company's non-restricted cash balance, incorporating funds in transit, was US$0.430m (31 March 202: US$0.615m). The fall largely reflects consultant costs associated with the PEPR as well as slightly lower seasonal Cobre revenues, which are expected to recover in the current quarter.

Leigh Creek Copper Mine ("LCCM")

The Company received final PEPR approval for oxide mining at Paltridge North and is now discussing potential funding to restart production with parties who have indicated an interest. Recent fears of a global recession and the associated fall in copper prices have impacted sentiment, in part offset by the move in the A$/US$ exchange rate. Initial preparatory work and maintenance is being undertaken ahead of the anticipated restart of production.

Cornwall Resources Limited ("CRL")

CRL has completed the first year of the DDC project, having finished a detailed ground gravity survey and phase one of a soil sampling campaign. DDC survey results to-date will be released once data analyses and modelling are completed - there will also be a local community update event to share the outcomes. Further DDC work remains ongoing with the continuation of one of the most detailed soil sampling programmes Cornwall has ever witnessed, with further data gathering currently being planned for the next year of the grant-funded project.

Planning approvals for a 4-hole drilling campaign, targeting a previously identified tin prospect, to the west of the existing Redmoor Tin-Tungsten-Copper resource, have been received. However, high activity in the region by other companies means there is a shortage of available drill rigs and crews. At this time CRL's drilling plans may be deferred until this situation changes.

The recent release of the UK Critical Minerals list via the British Geological Survey has the welcome inclusion of Tungsten and Tin. This helps underwrite the importance of the various projects in the South West of the Country. This is expected to be the first step in major initiative by the UK Government to secure critical minerals supply, with its Critical Minerals Strategy expected to be released soon.

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

"Confirmation from the largest Cobre client that demand is expected to be maintained at historical levels, is significantly reassuring in relation to the outlook for cash flow for the years to come. 

"The receipt of the long awaited PEPR for LCCM has prepared us for re-opening of the Mountain of Light facility although the market's mood has changed in line with fears of a global recession. It is the Board's view that this negative sentiment, particularly around copper, will be short lived as the underlying demand and supply factors demonstrate the expected copper shortage in the years ahead.

"We are encouraged by the release of the UK Critical Minerals list, which includes tin and tungsten. After a productive meeting with the local Cornish Member of Parliament in June, we understand this to be the first step in a major initiative by the UK Government to focus on securing domestic critical minerals supply.

"Thank you to all our shareholders that attended the in-person AGM, we are grateful for your support and appreciated the opportunity to answer all of your questions"

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 aimed at supplying the metals and minerals likely to be highly demanded in the future.

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. In July 2021, the project was granted a conditional approval by the South Australian Government for a Program for Environmental Protection and Rehabilitation (PEPR) in relation to mining of its Paltridge North deposit and processing at the Mountain of Light installation. In late June 2022, an updated PEPR, addressing the conditions associated with the July 2021 approval, was approved.