Strategic Minerals (LON: SML), the AIM-listed mineral exploration and production company, swung to a $712,000 loss before tax for the six months to 30 June, from a $568,000 profit a year earlier. The swing was driven almost entirely by an $812,000 non-cash charge tied to share options granted in February.
Shares closed at 5.20p on Thursday and opened at 5.15p this morning, before slipping to 5.10p, down 1.92% intraday. The move cannot be reliably tied to the results, given other newsflow around the stock.
Revenue fell 20% to $1,594,000 from $2,001,000, due to a temporary dip in buyer volumes at its Cobre magnetite operation in January and February; volumes have since reverted to their long-term average. Cobre’s gross margin held at 86%, unchanged from a year earlier, underlining that the core cash-generative business remained intact through the period.
Strip out the $812,000 share-option charge and underlying profit before tax was $100,000, close to breakeven. The company raised £4.0m in January and £4.7m in March, £8.7m in total, principally to advance Redmoor, its tungsten-copper-tin project in Cornwall, through a pre-feasibility study. That lifted cash to $10.03m from $777,000 and net assets to $17.5m from $7.1m.
The proceeds are funding a 22,500-metre infill drilling programme at Redmoor, the largest continuous diamond drilling campaign from surface in Cornwall, and in Great Britain, this century, following a March resource estimate 49% larger by tonnage than 2019’s. A base-case valuation from Snowden Optiro put Redmoor’s net present value at $1.54bn, using a $1,200/mtu tungsten price assumption, well below the six- and twelve-month average APT prices of $2,960/mtu and $1,930/mtu as of 17 September, and above even the report’s Upside Case assumption of $1,800/mtu, which implies a $2.71bn NPV.
Executive chair Charles Manners said:
With £8.7m of cash raised in the first quarter, the Company is now fully funded to deliver the largest drilling programme in Cornwall this century and substantially funded to take Redmoor through pre-feasibility, backed by the cash flow from Cobre and the sale of Leigh Creek.
Charles Manners, Executive Chair, Strategic Minerals
Post-period, on the 3rd of September, the company agreed to sell its Leigh Creek copper mine in South Australia to Cuprum Metals, converting a legacy asset into further Redmoor funding. By the 17th of September, drilling had covered more than 5,000 metres across nine holes, with an early result of 1.03 metres at 5.90% tungsten trioxide.