Strategic Minerals (SML ) has stated that annual sales from the Cobre magnetite operation in New Mexico continue to exceed US$3m with revenues rising by over 12% year-on-year.
The producing mineral firm said ore sales at Cobre continued to grow during the quarter ended 31 March 2021. The Cobre operation has been able to continue "contactless" during the pandemic, enabling the project to maintain an important income stream for the Group.
The Group said sales remained robust and the positive annual growth highlights both the strong underlying demand and the Southern Minerals Group ("SMG") team's ability to maintain "contactless" operations, therein protecting both our personnel and clients.
In the three months to 31 March 2021, the Cobre operation produced 13,002 tonnes of ore, up from 12,953 tonnes in 2020 and 9,471 tonnes in 2019. Meanwhile, sales from the ore in 2021 came to $0.771m, increasing from $0.764m in 2020 and $0.553m in 2019.
Strategic acquired the distribution rights to the Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating asset back in September 2011. The site, which was brought into production in 2012 continues to provide a revenue stream for the Company.
This operating revenue stream is used to cover company overheads and invest in development projects orientated to supplying the burgeoning EV/battery market. The global EV battery market is projected to grow at a compound annual rate of 52% by 2025.
By period-end, the Group’s non-restricted cash balance was US$0.686m (31 December 2021: US$0.833m). The Company highlighted that it continues discussions relating to the funding of both Leigh Creek Copper Mine and the Redmoor Tin and Tungsten project.
It said interest in Leigh Creek has risen as copper prices rise and that subject to funding, final arrangements to recommence production are anticipated in conjunction with the approval of the Paltridge North Programme for Environmental Protection and Rehabilitation.
The Board considers that the current copper price, of circa US $4/lb, is likely to endure and is also encouraged by feedback from the Company's recent meeting with the South Australian Minister for Energy and Mining on the Leigh Creek Copper Mine project.
Accordingly, the Company is confident that 2021 will begin to unlock the substantial value inherent in the Leigh Creek Copper Mine project and provide a valuable, significant second income stream before the end of the year,” said John Peters, MD of Strategic Minerals.
Shares in Strategic Minerals have increased by over 7% since the beginning of 2021. Last month, the Group confirmed the ninth yearly rollover of access to the magnetite stockpile in New Mexico, meaning it had secured yet another year of profitable operations at the site. The site has continued to exceed US$3m with revenues rising by over 12% year-on-year.
Reasons to SML
Strategic Minerals is a minerals production and development group focused on developing projects prospective for battery materials. In September 2020, it reported a swing to profit in the six months ended 30 June 2020 after posting a pre-tax profit of $0.26m.
Multiple Projects and Minerals
It is currently undertaking four major spheres of operations; the Cobre magnetite stockpile operation, the Leigh Creek Copper Mine, the Redmoor tin/tungsten exploration project and the Central Australian Rare Earths project.
In October 2020, SML announced a positive updated scoping study undertaken by Wardell Armstong that reported improved economics for the Redmoor tungsten and tin project.
Sales Ramp Underway
Today’s ‘strong’ December quarter follows a trajectory of recent growth at the Cobre magnetite operation in New Mexico after the group reported strong sales last quarter.
"Sales at Cobre continue to show excellent annual growth providing the Company the opportunity to repay outstanding liabilities and benefit from surplus cash generated from operations,” said John Peters, Managing Director of SML said in October 2020.
He added, “With copper prices around $3lb and the recent emphasis on the strategic nature of tungsten, the Board is confident that the underlying value in its projects will be realized."
Positive Newsflow Expected
Last week, the Company said its 100%-owned subsidiary Cornwall Resources ("CRL") is to start a trenching and auger exploration program the Redmoor Tin and Tungsten project.
To date, multiple prospective targets for tin and copper have already been identified as a result of a review of historic exploration data taken to the west of the Redmoor deposit.
The planned program, which will utilise a combination of powered-auger sampling and trenching techniques and assess defined targets, represents a practical test of the local viability of these methods. The program is expected to lead to the definition of a series of further targets suitable for reconnaissance drilling at a later stage should it be successful.
Work is planned for early April 2021, Covid-19 controls permitting, and to last for around three months, leading up to the expected start of the ‘Deep Digital Cornwall’ summer project where SML will work to generate new data for the project as a delivery partner.
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