Strategic Minerals (SML) , an exploration and mining company focused on critical minerals, announced unaudited interim results for the 6 months ended June 30 2023.

Strategic maintained operating profitability, recording a 6-month pre-tax profit of US$54k despite reduced sales from its US asset Cobre. After-tax profit also continued, though at a reduced US$38k compared to H1 2022, consistent with the drop in sales and tight control of overheads.

Through its wholly-owned subsidiary Cornwall Resources Limited (CRL), Strategic lodged claims with the Deep Digital Cornwall project for US$114k, with US$45k received in the first week of July. The company invested US$347k in development projects during the period, notably in its Leigh Creek Copper Mine (US$188k) in Australia, and Redmoor Tin and Tungsten Mine in Cornwall (US$159k). Cash on 30 June 2023 was US$129k prior to the receipt of the DDC claim.


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Strategic managed to remain profitable in H1 2023 despite lower sales from its New Mexico, US asset Cobre, which was negatively affected by reduced economic activity in the sector in the US during the period. As of September 2023, the small-cap mining company maintains approximately the same cash balance as reported for 30 June 2023 thanks in part to its tight control on overheads, and is in advanced talks with a lender to provide short-term working capital if needed.

Strategic's other assets continued to deliver, however. The recent significant investment secured by Cornish Lithium refocused efforts on the revival of Cornish mining, helping highlight the underlying value of Strategic's Redmoor project. Strategic's subsidiary CRL continues to work with Cornish Lithium on the Deep Digital Cornwall project and we expect its revised grant application to be successful.

Moreover, it is likely that at a future 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.

 

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