New Cobre Magnetite Contract
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
10 April 2017
Strategic Minerals plc
("Strategic Minerals" or the "Company" or "SML")
New Substantial Cobre Magnetite Contract to Commence 1 June 2017
Strategic Minerals PLC (AIM: SML; USOTC; SMCDY), the diversified mineral production and development company, is pleased to announce that its subsidiary Southern Minerals Group ("SMG"), the operator of the Cobre magnetite stockpile, entered into a new contract on Friday 7 April with a private company for the supply of up to 400,000 tons of magnetite at a market based price over several years, subject to availability ("Contract"). This Contract was entered into after the agreement referred to in the 13 March 2017 RNS ("Agreement") was terminated for not having met prerequisites in nominated timeframes.
A US $10,000 deposit on the Contract has been transferred to SMG's bank account and a substantial security deposit of US $250,000 is to be lodged into solicitor's trust accounts by US close of business 14 April 2017. The contract calls for a minimum purchase of 4,000 tons per month, which is to commence from 1 June 2017.
As previously noted, logistics at the mine site would result in a maximum supply, above existing client demand, of 6,000 tons per month. This Contract is likely to more than double annual sales from Cobre, which is likely to be achieved without affecting SMG's effective net profit margin of between 40% to 45% of sales revenue. The Contract will terminate if, at any time, SMG loses access to the magnetite stockpile.
Commenting, John Peters, Managing Director of Strategic Minerals, said:
"Management have a high confidence that this Contract will progress and note that it is, compared to the Agreement we have just terminated, for a greater total quantity and has doubled minimum monthly purchases. We will inform the market when we receive the solicitor's confirmation that the $250,000 security deposit has been lodged into their trust account and that they hold an irrevocable order to release the funds upon a claim by Southern Minerals Group.
The impact of the Contract on the Company is not to be underestimated as it is likely to materially boost the expected profitability of the Cobre operation in 2017."
For further information, please contact:
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Strategic Minerals plc John Peters Managing Director Follow Strategic Minerals on:
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+61 (0) 414 727 965 |
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SP Angel Corporate Finance LLP Nominated Adviser and Joint Broker Ewan Leggat Laura Harrison |
+44 (0)20 3470 0470 |
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Optiva Securities Limited Joint Broker Graeme Dickson
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+44 (0)20 3411 1880 |
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Yellow Jersey PR Financial PR Felicity Winkles Alistair de Kare-Silver Joe Burgess
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+44 (0)7825 916 715 |
Notes to Editors
Strategic Minerals Plc is an AIM-quoted, diversified mineral development and production company with projects in the United States of America, the UK and Australia. The Company is focused on acquiring and developing cash generative, high quality projects which meet local market demand for commodities and utilising this cash flow to undertake value added exploration.
In September 2011, Strategic Minerals purchased its first cash generating asset; the Cobre magnetite tailings dam project in New Mexico, USA which it brought into production in 2012 and which continues to provide a revenue stream for the Company. The portfolio was expanded in January 2016 with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia and the Northern Territory that are prospective for cobalt, gold, nickel sulphides and rare earths. In May 2016, an additional exploration asset was acquired when the company entered into an agreement with New Age Exploration Limited to acquire up to 50% of the Redmoor Tin/Tungsten project in Cornwall, UK. This 50% acquisition has now been completed and drilling at the project has commenced.
This information is provided by RNS
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