Strategic Minerals (SML) released a portfolio update detailing progress at its Redmoor project in Cornwall UK, and Leigh Creek Copper Mine in South Australia.

Strategic's wholly-owned Cornwall Resources Limited (CRL) continued to advance the Redmoor tin and tungsten project in Cornwall through the Deep Digital Cornwall data collection initiative, grant funding applications, re-logging and sampling of existing Redmoor drill core, as well as negotiations for the expansion of mineral rights.

The Deep Digital Cornwall (DDC) project has been one of the most detailed soil sampling programmes ever implemented in the region. The formal working period of DDC closed at the end of June, with project partners CRL, CSM, and Cornish Lithium having now ceased all new data collection and moved into a reporting and project closure stage.

DDC still has 3 months of funding left. Strategic said the project partners would spend the time compiling a case study of all data collected for publication and presentation to interested parties. Furthermore, CRL will be combining the datasets into a new study on Redmoor with the intention of highlighting potential new areas of exploration.

Strategic also commented on CRL's recent application for grant funds from the CIoS's Shared Prosperity Fund to undertake its planned work programme at Redmoor. Ultimately, CRL's application was unsuccessful, although a new modified grant application for the round ending on 4 August 2023 will be submitted.

Strategic said CRL is in active discussions with third parties concerning collaboration on the Redmoor project, and is currently making formal development arrangements.

Regarding the Leigh Creek Copper Mine (LCCM) in South Australia, Strategic said it is making arrangements with two interested parties that wish to acquire equity interest in the project. One is a copper focused ASX-listed entity and the other the Australian Critical Minerals arm of a major international energy company.

Strategic also said that it does not yet have an answer from South Australia's Department of Energy and Mining in relation to the Programme for Environmental Protection and Rehabilitation (PEPR) lodged in December 2022. Strategic's interactions with the regulator have indicated that the latter has been focused on another large project and not prioritised LCCM's application. However, this is not an issue for Strategic as the PEPR is not time critical.

 

Summary and Analysis

In summary, Strategic's wholly-owned Cornwall Resources Limited (CRL) continues to advance the Redmoor project and seek expansion in the resource rich Cornwall area, expecting to report progress in H2 2023. CRL is also working on submitting a modified application for a grant from the CIoS's Shared Prosperity Fund prior to the next application deadline of 4 August 2023. CRL has been negotiating with interested parties to join in on the project.

Regarding LCCM, Strategic's presentation at Austmine's "Copper to the World" conference in Adelaide in May resulted to 2 parties interested in acquiring equity in the project and exchanging confidentiality agreements with the company.

While markets have focused on CRL's unsuccessful grant application, there is good reason to believe that the company's revised application will be successful. The new application is built on feedback from the Good Growth Team, supporting CIoS, and CIoS itself has shown prior enthusiasm regarding Redmoor.

Moreover, it is likely that at some stage the Redmoor project will benefit from Government funding given it falls within the UK Government's Critical  Minerals Strategy. Additionally, as Redmoor is expected to result in many well-paid jobs in East Cornwall, it is likely to benefit from the Government's Levelling Up policy.

Redmoor may also benefit from the US' expected classification of the UK as a "domestic" source of some critical minerals, including tungsten and tin. This may provide an opportunity for project funding from US budgets allocated to these arrangements. A further good sign is the US Department of Defense's recent direction to suppliers to source only non-Chinese/Russian tungsten in their products by 2027. With China supplying 85% of world tungsten, Russia supplying 5%, and the US consuming 45%, there is a positive outlook for the Redmoor project as a potential "domestic" source of tungsten.

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 LCCM copper project in Australia is also expected to materially boost Strategic's cashflow and profitability after operations restart by the end of this year or early next year. The potential second income stream from the project represents a inflection point for investors expecting LCCM's value to become reflected in Strategic's share price in the near term.

In its final results for FY22, Strategic reported 44% higher pre-tax profits to US$0.372m, 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.

Overall, the company's strategy to focus on metals and minerals likely to benefit from expected supply and demand imbalances has been validated in recent quarters as commodity prices, particularly tin and copper, continue to show strength.

 

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