Strategic Minerals (AIM: SML ) has unveiled a report of the Leigh Creek Copper Mine ("LCCM") project reducing the anticipated capital and operating costs associated with planned production at the Lynda/Lorna Doone deposits within the project.
The producing mineral company said the results showed that the project’s funding requirement has now been reduced to US$2.2 million as a result of the adoption of an alternate mine schedule for processing and use of external contractors to undertake mining.
The LCCM project’s total pre-tax cash has increased by over $5m to $35.4m (US$26.7m NPV 8%) due to earlier commencement and shorter processing of Lynda/Lorna Doone deposits.
Strategic has also received confirmation from PPM Global, a project portfolio management provider that undertook the report, that forecast capital requirements and operating costs for the planned production at both the Lynda/Lorna Doone deposits are ‘reasonably based.’
Accordingly, this has provided the opportunity to both bring forward commencement of operations at Lynda/Lorna Doone by around 18 months and process 300 tonnes of copper per month in copper cement. This shortens the time to produce the expected copper from Lynda/Lorna Doone, ‘thus significantly reducing overheads and increasing profitability.’
LCCM comprises a number of copper oxide deposits located in the North Flinders ranges of South Australia. There is an existing mining license and processing plant, Mountain of Light.
Within existing tenements there are four identified deposits, three of which are JORC compliant; Paltridge North, adjacent to the Mountain of Light processing plant, and the Lynda/Lorna Doone deposits, located 75km from the Mountain of Light processing plant.
By reviewing the timing of anticipated processing of both the Paltridge North and Lynda/Lorna Doone deposits, SML said it has advanced the anticipated receipt of revenues from the Paltridge North deposit by a month and has also reduced capital expenditure.
"The reduced capital requirements, increased profitability and the market's bullish sentiment on copper prices, have strongly improved the attractiveness of the LCCM project and the Board and Management are confident that funding will be sourced after the Paltridge North PEPR has been confirmed, if not before,” said John Peters, MD of SML.
Peters noted that the group is also encouraged by the potential of producing copper sulphate at the Lynda/Lorna Doone site and the associated increase in profitability that may arise from a modest increase in capital cost. He said that management is “actively following up” on this.
“The Board considers that LCCM's robust economics will attract the funding required to commence operations in 2021,” he said, adding, “This, combined with further development of the Copper Sulphate processing option and compelling near-term cash generation from Paltridge North, is expected to produce meaningful added value in the Company."
Shares in Strategic Minerals have traded consistently in the past two weeks within a tight range of 0.35p and 0.42p to open 5.88% higher this morning at 0.4p following the news.
Reasons to Follow SML
Strategic Minerals is a minerals production and development company focused on developing projects prospective for battery materials.
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, the Company announced a positive updated scoping study undertaken by Wardell Armstong that reported improved economics for the Redmoor tungsten and tin project.
Sales Ramp Underway
In recent weeks, the producing mineral company has seen a 46% year-on-year boost in sales volumes at the Cobre magnetite operation in New Mexico, USA for the quarter ended 30 September 2020 with sales revenue up by 55% and sales growth continuing ‘organically.’
"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 Strategic Minerals.
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
The Company has lodged a Program for Environmental Protection and Rehabilitation for the Paltridge North deposit at the Leigh Creek Copper Mine project. The company said it expects this approval to be forthcoming in the December quarter 2020.
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