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 October 2022

Strategic Minerals plc

("Strategic Minerals" or the "Company")

September 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 September 2022.

Highlights

·   July price increases boost September quarter revenue to US$0.653m (2021: US$0.607m)

·   Annual sales to the end of September 2022 (US$2.475m) were slightly weaker than in the previous year (US$2.85m) reflecting lower revenues prior to agreed pricing increases

·   Elevated transportation costs continuing to restrict geographical sales expansion

·   Group cash balance of US$0.381m as at 30 September 2022

·   Discussions with both equity and debt funders for Leigh Creek Copper Mine continue

·   Tungsten and Tin named as Critical Minerals and encompassed within the UK Government strategy, providing the potential for government assistance in developing the Redmoor mine

Sales update: Cobre magnetite tailings operations

On 1 July 2022, prices for material from the Cobre magnetite stockpile were increased and are now reflecting in sales revenues. There appears to be no adverse effect on sales volumes from the price increase.

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 has moderated those expectations.

Sales comparisons on quarterly and annual periods to 30 September 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, in October 2019, has been excluded.

With regards to the claim on CV Investments LLC ("CVI"), the Receiver has not taken any action yet on the likely distribution of assets from CVI and has yet to file their "Omnibus Motion for Order Resolving Disputed Creditor Claims", which they indicated was the next step in the last status report of 1 August 2022. While the Company initially felt it would receive a meaningful payment from the distribution, given its position as an established creditor, it now appears that, as the assets in CVI arose from the proceeds of crime, the Company's claim and rank may not be as strong as originally anticipated. As previously noted, the Company is not including funds from the Receiver in its cash flow projections.

Financials and Operations

As at 30 September 2022, the Company's cash balance was US$0.381m (30 June 2022: US$0.430m). The marginal fall reflects continuing activity at both the Leigh Creek and Redmoor projects.

Leigh Creek Copper Mine ("LCCM")

After receiving final PEPR approval for the mining of copper oxide at Paltridge North, the Company has continued discussions with potential debt and equity funders. While copper prices have fallen around 22% from earlier in the year (US$4-50 lb to US$3-50 lb) this has been partially offset by the fall in the A$/US$ exchange rate (0.7300 to 0.6300). Accordingly, the net drop in the forecasted Australian dollar revenue has been only 10% from the peak of earlier this year.

Initial preparatory work and maintenance is being undertaken ahead of the anticipated restart of production at LCCM subject to receipt of funding.

Cornwall Resources Limited ("CRL")

With the inclusion of Tungsten and Tin on the UK Government's Critical Minerals list, CRL has focused attention on funding programs associated with the UK Government's Critical Minerals Strategy. It appears that the Redmoor project can, potentially, benefit from Governmental funding given it:

·    Falls within the UK Government's Critical Minerals Strategy;

·    Is anticipated to result in many well-paid jobs for decades in East Cornwall; and

·    East Cornwall being an area likely to benefit from the UK Government's "Levelling Up" policy.

At present, CRL is following up on potential sources of government funding for the Redmoor project. Current plans for Redmoor have been built around the Company's previously disclosed limited drill plans, although these may be rapidly expanded should additional funding be forthcoming.

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

"Sales revenue levels continue to provide operational support, despite price increases. 

"Efforts continue to secure funding for the LCCM restart but, as yet, no binding commitments have been made.

"We are studiously preparing submissions for possible government funding of the Redmoor mine and believe that this project aligns well with the UK Government's plans for the Critical Minerals sector."

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 September 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 September 2022, an updated PEPR, addressing the conditions associated with the July 2021 approval, was approved.