Strategic Minerals (SML ) provided an update this morning on its cash position, sales at the Cobre magnetite operation in New Mexico (Cobre), and other projects in Q2 2022.
Cobre Magnetite Project
Strategic Minerals said it had met with Cobre's largest client in New Mexico to discuss expected demand. It confirmed there would not be a repeat of the limited demand experienced from October 2021 to January 2022, but rather the client would maintain historical levels of demand for the rest of the year and beyond.
In March, Strategic Minerals received an extension of its access to the magnetite stockpile in New Mexico until 31 March 2027. "This extension should underpin the Company’s future profitability and provides scope to broaden Cobre’s clientele, which is expected to lead to higher sales in the future., said Managing Director John Peters at the time.
Sales and Cash Position
Additionally, Strategic Minerals notified its clients in June that it would increase prices by 20% over the following six months, the first price increase in four years. Customers understood the need for the increase in light of soaring inflation and higher operational costs, and demand remained the same as of July 2022, the company said.
Quarterly and annual sales to June were US$0.7m and US$2.4m respectively, slightly weaker than in previous years. While recession concerns and increased transportation costs have moderated expectations slightly, the company remains optimistic about maintaining future demand.
Strategic Minerals had US$0.43m in cash on 30 June 2022, slightly down from US$0.615m a year ago. The company attributes the fall to consultant costs associated with receiving a final PEPR approval for its South Australian asset, as well as slightly lower seasonal Cobre revenues, which are expected to recover in the current quarter.
Leigh Creek Copper Mine (LCCM)
Strategic Minerals also updated markets on its LCCM project in South Australia. The company received final PEPR approval for oxide mining at the Paltridge North deposit, and is currently discussing potential funding to restart production with interested parties. Sentiment has been negatively impacted by the fall in copper prices and recession fears, but positively impacted by recent moves in the AUD/USD exhcnage rate. Initial prep work is underway ahead of anticipated restart of production.
Deep Digital Cornwall (DDC)
Strategic Minerals also reported on its Joint Venture, Cornwall Resources Limited (CRL), which has now completed the first year of the Deep Digital Cornwall (DDC) project. DDC survey results will be released once data analyses and modelling are complete.
DDC represents one of the most detailed soil sampling programmes implemented in Cornwall, with further data gathering currently planned for the second year of the project. Approvals for a 4-hole drilling campaign have been received, targeting a previously identified tin prospect to the west of Strategic Minerals' existing Redmoor Tin/Tungsten/Copper resource.
In related news, the UK Critical Minerals list via the British Geological Survey now includes tungsten and tin. This underlines the importance of the various ongoing projects in the Southwest of Britain. The move is expected to be a first step in the UK Government's Critical Minerals Strategy, set to be released soon.
View from Vox
While today's update contained some words of caution, it was overall a positive reaffirmation of the company's growth strategy. The extension of access at Cobre to March 2027 and confirmation from the project's largest customer that demand would return to historical levels are encouraging.
Receipt of PEPR approval at LCCM has set the project up for reopening. Regarding recent declines in the price of copper, Managing Director John Peters commented: "It is the Board's view that this negative sentiment, particularly around copper, will be short lived as the underlying demand and supply factors demonstrate the expected copper shortage in the years ahead."
And progress in Cornwall, including the addition of tin and tungsten to the UK Critical Minerals list, underlines optimism around the DDC project.
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