Strategic Minerals (SML) reported 44% higher pre-tax profits to US$0.372m in its final results for FY22, compared to US$0.257 in FY21. The company generated net cash from operating activities of US$0.774m from US$0.61m in FY21, resulting in an unrestricted cash position of US$0.341m on 31 December 2022, from US$0.61m a year ago.
After successful lobbying, Strategic secured long-term access to the Cobre magnetite stockpile in New Mexico in March 2022, which has now been extended until 31 March 2027. While July 2022 saw Cobre customer sales prices progressively increase by 20%, Cobre's largest client reduced in Q4 2022 due to recessionary concerns impacting the US west coast construction industry. Strategic expressed confidence in their return as a client, but could not confirm timing.
Overall, the July price increase offset lower Q4 sales, resulting in similar annual sales from Cobre of US$2.446m, compared to last year's US$2.611m.
Elsewhere at Strategic's Leigh Creek Copper Mine (LCCM) in South Australia, LCCM submitted to the government a second Program for Environment Protection and Rehabilitation (PEPR) for copper oxide operations at the Mountain of Light plant at Leigh Creek in December 2022. Approval of the new PEPR is expected soon, paving the way for re-opening of LCCM later in 2023.
Strategic expects cash flow and profitability to improve significantly after operations restart at LCCM. The potential second income stream from the project represents a near-term inflection point for investors expecting LCCM's value to become reflected in Strategic's share price later this year.
Strategic has owned 50% of the Redmoor Tin and Tungsten Mine in southeast Cornwall since 2016. Subsequent drilling programmes and resource upgrades have indicated the project has long-term potential, particularly as tin and tungsten are now classified as "critical minerals" by the Government. Last autumn, Strategic's exploration license at Redmoor was extended by 25 years until 2037. Currently on the agenda for Redmoor is the preparation of a pre-feasibility study, to be followed by a bankable feasibility study.
The inclusion of both tungsten and tin on the UK Government's critical minerals list in July 2022, has opened up grant-based funding opportunities with which to progress Redmoor to a pre-feasibility stage. The likelihood of funding has been further enhanced by the US government instructing its defence contractors that their products must be free of tungsten sourced from China or Russia (currently supplying 90% of the world market) and current indications that the US is about to classify the UK as a domestic source, hence eligible for government grants to develop critical minerals such as tungsten and tin.
To the west of the existing Redmoor resource, Strategic's wholly-owned Cornwall Resources Limited (CRL) has spearheaded the Deep Digital Cornwall (DDC) project, one of the most detailed soil sampling programmes implemented in Cornwall. Led by the University of Exeter's Camborne School of Mines, the project is funded by the European Regional Development Fund through HM Department for Levelling Up, Housing and Communities. Throughout 2022, CRL continued work on DDC, in which CRL and Cornish Lithium are delivery partners. The project is expected to complete in June 2023.
In summary, Strategic Minerals remains focused on restarting production at Leigh Creek in 2023, securing and expanding Cobre's domestic sales, and progressing the Redmoor tin and tungsten mine to a pre-feasibility stage.
Overall, the company's strategy to focus on metals and minerals likely to benefit from expected supply and demand imbalances was validated in 2022 and H1 2023 as commodity prices, particularly tin and copper, continued to show strong growth.
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