leadf
logo-loader
RNS
viewStrategic Minerals PLC

Strategic Minerals - Interim Results - Half Year to 30 June 2020

RNS Number : 8855Y
Strategic Minerals PLC
15 September 2020
 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

15 September 2020

 

Strategic Minerals plc

("Strategic Minerals", "SML", the "Group" or the "Company")

Interim Results - Profitable Half Year to 30 June 2020

Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, is pleased to announce its unaudited interim results for the half year ended 30 June 2020 which reflect a profitable period for the Company.

Financial Highlights:

·    Interim six-month pre-tax profit of US$261,000 (H1 2019: Loss of US$1,026,000) reflecting strong sales in the first half of the year at Cobre operations, reduced overheads and a reduction in impairment charges.

·     After tax profit for the interim six months to 30 June 2020 of US$77,000 (H1 2019: Loss of US$1,182,000).

·   Strong underlying sales growth saw Gross Profit increase 18% on the same period last year despite the cessation of sales to CV Investments LLC ("CV Investments") and Covid-19. Excluding CV Investments income and US$47,000 Covid-19 related assistance received from the US government, Gross Profit increased 68% on the same period last year.

·    Overhead expenses reduced 25% across all aspects of the Company's corporate operations compared to the same period last year.

·    US$97,000 of Share based payment expense for the interim six-month period reflects the final charge relating to options which expired on 30 June 2020.

·    In March 2020, the Managing Director, John Peters, purchased 3,464,286 shares on market at an average of 0.5348 pence per share taking his beneficial holding in the Company to 57,000,000 new ordinary shares of 0.1 pence each ("Ordinary Shares").

·    The Company undertook an equity fundraising in June 2020 and issued 266,666,667 new Ordinary Shares at 0.45 pence per share, raising US$1,485,000 after costs.

·   Repayment of principal and interest on loan (US$1,632,000) used to finance the acquisition of balance of Cornwall Resources Limited shares, holder of the Redmoor Tin and Tungsten project.

·    Unrestricted cash and cash equivalents at 30 June 2020 were US$533,000 (31 Dec 2019: US $519,000). 

 

Corporate Highlights:

·    Maintenance of uninterrupted operations at Cobre despite the impact of Covid-19.

·    Access to the Cobre magnetite stockpile was rolled over for the 8th time.

·    Naming of CV Investments as major client at Cobre.

·    Completion of arbitration process confirming a US$21.9m claim against CV investments which has since had a receiver appointed by the US Securities Exchange Commission.

·    Copper prices rebounding from a Covid-19 nadir of US$2-11 lb to close at US$2-74 lb at 30 June 2020. In early September 2020, copper prices have been trading at US$3-07 lb with upward pressure being forecasted.

 

Commenting, John Peters, Managing Director of Strategic Minerals, said:
 

"The first half of 2020 has been globally trying. However, through prudent management, the Company has been able to maintain and improve underlying operations and has raised funds, in a difficult environment, to complete payment for the acquisition of the balance of the Redmoor project.

"With the Program for Environment Protection and Rehabilitation ("PEPR") submitted for the Leigh Creek Copper Mine project and the Company's appointed advisor on the Redmoor project, NRG Capital, intending to complete an expressions of interest program in the December 2020 quarter, the Company considers the prospect for the market to, once again, value the Company's projects in line with the Board's view as highly likely.

"The second half of the year is expected to see continued demand at Cobre as well as expected  reductions in both US legal costs (over $100,000 in the first half of 2020) and the charge for share based payments which were reflecting the options which expired at 30 June 2020 ($97,000 in the first half of 2020).

"The Board looks forward to both the results from the expressions of interest program at Redmoor and seeing the long sought after second income stream commence from the Leigh Creek Copper Mine in 2021."

For further information, please contact:

 

 

 

Strategic Minerals plc

+61 (0) 414 727 965

John Peters

 

Managing Director

 

Website:

www.strategicminerals.net

Email:

[email protected]

 

 

Follow Strategic Minerals on:

 

Vox Markets:

https://www.voxmarkets.co.uk/company/SML/

Twitter:

@SML_Minerals

LinkedIn:

https://www.linkedin.com/company/strategic-minerals-plc

 

 

 

 

SP Angel Corporate Finance LLP

+44 (0) 20 3470 0470

Nominated Adviser and Broker

 

Ewan Leggat

 

Charlie Bouverat 

 

 

 

     

Notes to Editors

Strategic Minerals plc is an AIM-quoted, operating minerals company actively developing projects prospective for battery materials. It has an operation in the United States of America and Australia along with development projects in the UK and Australia. The Company is focused on utilising its operating cash flows, along with capital raisings, to develop high quality projects aimed at supplying the metals and minerals being sought in the burgeoning electric vehicle/battery market.

In September 2011, Strategic Minerals acquired the distribution rights to the Cobre magnetite tailings dam project in New Mexico, USA, a cash-generating asset, which it brought into production in 2012 and which continues to provide a revenue stream for the Company. This operating revenue stream is utilised to cover company overheads and invest in development projects orientated to supplying the burgeoning electric vehicle/battery market.

In January 2016, the portfolio was expanded with the acquisition of shares in Central Australian Rare Earths Pty Ltd, which holds tenements in Western Australia prospective for cobalt, nickel sulphides and rare earth elements. The Company has since acquired all shares in Central Australian Rare Earths Pty Ltd ("CARE"). In September 2018, the Company entered contracts for the sale of certain CARE tenements identified as gold targets.

In May 2016, the Company entered into an agreement with New Age Exploration Limited and, in February 2017, acquired 50% of the Redmoor Tin-Tungsten project in Cornwall, UK. The bulk of the funds from the Company's investment were utilised to complete a drilling programme that year. The drilling programme resulted in a significant upgrade of the resource. This was followed in 2018 with a 12-hole 2018 drilling programme which has now been completed and the resource update that resulted was announced in February 2019. In March 2019, the Company entered into arrangements to acquire the balance of the Redmoor Tin-Tungsten project in Cornwall. This was completed on 24 July 2019.

In March 2018, the Company completed the acquisition of the Leigh Creek Copper Mine situated in the copper rich belt of South Australia and brought the project into limited production in April 2019, with full production expected in 2021.

 

 

Chairman's Statement

I am pleased with the Company's achievements, in what has been a particularly challenging period for the Company and the world.

 

Financial results

The Company continued its underlying profitable performance in the first half of 2020, when many businesses were forced to shut down operations which is a credit to both our local management and the Management team as a whole. The combination of difficulties, associated with our dealings with CV Investments at Cobre and the general impact on development processes associated with the impact of the Convid-19 virus has slowed our progress on projects, as well as access to capital to undertake this forward movement. However, the Company forsees improved financial performance once full scale production commences at the Leigh Creek Copper Mine ("Leigh Creek") expected in 2021, subject to the Company receiving financing to restart operations at Leigh Creek.

Despite the high level of principal and interest repayments made on the Redmoor acquisition in the six months to 30 June 2020, unrestricted cash on hand at 30 June 2020 was US$533,000.

Corporate overheads of US$902,000 were down significantly on the same period last year (H1 2019: US$1,211,000) and the Board keeps a close watch on these expenditures.

 

Strategic Focus

The continued organic growth in sales at the Cobre operations provides comfort in relation to coverage of operating costs and allowed the Company to continue its strategic investment focus on investments in metals (such as Nickel, Copper and Tin/Tungsten) and advanced materials (such as Cobalt, Rare Earths, Lithium and Graphite) which it expects are likely to see significant price improvements over the next three to five years driven by battery/electronic vehicle demand.  

On the back of this strategy, the Company continues to invest in development programmes, particularly those associated with the Leigh Creek Copper Mine (copper) and Redmoor (tin/tungsten/copper focused).

 

Cobre Operations

During 2020, the management at our Cobre operations adapted excellently to the challenges associated with the disruption to world markets arising from the Covid-19 virus. As an essential service, they were allowed to continue trading and arrangements were modified which ensured a contactless service protecting both our clients and our personnel.

The first half of the year also saw the Company's arbitration claim on CV Investments settled in its favour. However, whether the Company will receive any funds from this claim will be dependent on the outcome of the receivership of CV Investments.

 

Leigh Creek Copper Mine

The significant work conducted at Leigh Creek throughout 2019, which resulted in a draft PEPR being submitted and a feasibility study being completed, has moved the project along to the point where it currently awaits the final sign off of the formal PEPR and financing to commence operations. The strong performance of the copper price in recent times has improved the project's forecasted profitability and the Board feels confident that 2021 will see full scale production re-commence at Leigh Creek.

 

Redmoor Tin-Tungsten Project

2020 has seen the final payment for the acquisition of the balance of Redmoor. With the project fully in the Company's control and with the overhang associated with repayment removed, the Company has appointed an external consultant, NRG Capital, to assist in progressing the Redmoor project.

It is expected that an expressions of interest program to identify future joint venture partners for the project will be concluded by the end of the year and that the significant work undertaken to date in identifying the size and potential of the Redmoor resource will be recognised and rewarded.

CARE

As a result of the inability to locate an economically feasible deposit on existing tenements, the exploration assets were fully written off in the 2019 financial year and the Company has begun winding up the subsidiary.

 

Issue of Capital

During the half year, the Company issued a total of 266,666,667 new Ordinary Shares at 0.45 pence per share which raised US$1,485,000 after costs.

 

Safety

The Company continues to maintain a high level of safety performance with SML and its subsidiaries having no reportable environmental or personnel incidents recorded in the period.

 

The first half of the year has proven challenging and I would like to take this opportunity to thank my fellow Directors, our management and staff in New Mexico, South Australia and Cornwall, along with our advisers, for their support and hard work on our behalf during the period. Additionally, I would like to thank our clients, contractors, suppliers and partners for their continued backing. I look forward to further progressing our key strategic goals in 2020 and pushing onto a brighter 2021.

 

Alan Broome AM

Non-Executive Chairman

14 September 2020

 

 

STRATEGIC MINERALS PLC

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2020

 

 

 

 

 

 

6 months to

6 months to

Year to

 

30 June

30 June

31 December

 

2020

2019

2019

 

(Unaudited)

(Unaudited)

(Audited)

 

$'000

$'000

$'000

Continuing operations

 

 

 

 

 

 

 

Revenue

1,645

1,020

2,488

Other revenue

47

375

900

Cost of sales

(314)

(229)

(511)

 

_________

_________

_________

 

 

 

 

Gross profit

1,378

1,166

2,877

 

 

 

 

Overhead expenses

(902)

(1,211)

(2,266)

Depreciation

(6)

(19)

(17)

Share based payment

(149)

(163)

(275)

Profit on financial assets held at fair value through profit or loss

-

1

13

Impairment charge

(17)

(760)

(1,122)

Foreign exchange gain/(loss)

(43)

(2)

35

 

_________

_________

_________

 

 

 

 

Profit/ (loss) from operations

261

(988)

(755)

 

 

 

 

Finance expense

-

-

(52)

Share of net losses of associates and joint ventures

-

(38)

(38)

 

_________

_________

_________

 

 

 

 

Profit/ (loss) before taxation

261

(1,026)

(845)

 

 

 

 

Income tax (expense)/credit

(184)

(156)

(385)

 

_________

_________

_________

 

 

 

 

Profit/ (loss for the period)

77

(1,182)

(1,230)

 

_________

_________

_________

Profit/ (loss) for the period attributable to:

 

 

 

Owners of the parent

77

(1,182)

(1,230)

 

_________

_________

_________

 

 

 

 

Other comprehensive income

 

 

 

Exchange gains/(losses) arising on translation

of foreign operations

(359)

(62)

227

 

_________

_________

_________

 

 

 

 

Total comprehensive (loss)/ Income

(282)

(1,244)

(1,003)

 

_________

_________

_________

 

 

 

 

Total comprehensive (loss)/income attributable to:

 

 

 

Owners of the parent

(282)

(1,244)

(1,003)

 

_________

_________

_________

 

 

 

 

Profit/ (loss) per share attributable to the ordinary equity holders of the parent:

$

$

$

Continuing activities - Basic

0.000052

(0.000850)

(0.000858)

                                    -- Diluted

0.000049

(0.000850)

(0.000858)

 

STRATEGIC MINERALS PLC

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

 

 

30 June

30 June

31 December

 

2020

2019

2019

 

(Unaudited)

(Unaudited)

(Audited)

 

$'000

$'000

$'000

Assets

 

 

 

Non-current assets

 

 

 

Intangible Asset

549

562

560

Deferred Exploration and evaluation costs

4,390

342

4,567

Other Receivables

137

140

140

Property, plant and equipment

6,877

7,026

6,898

Investments in joint ventures- equity accounted

-

2,264

-

 

_________

_________

_________

 

11,953

10,334

12,165

 

_________

_________

_________

Current assets

 

 

 

Inventories

6

7

3

Financial Assets held at fair value through profit and loss

-

21

-

Trade and other receivables

477

1,302

948

Cash and cash equivalents

533

319

519

Prepayments

16

119

132

 

_________

_________

_________

 

1,032

1,768

1,602

 

_________

_________

_________

 

 

 

 

Total Assets

12,985

12,102

13,767

 

_________

_________

_________

 

 

 

 

Equity and liabilities

 

 

 

Share capital

2,551

2,202

2,203

Share premium reserve

48,552

48,454

47,415

Share options reserve

692

431

543

Merger reserve

21,300

20,240

21,300

Foreign exchange reserve

(1,026)

(956)

(667)

Other reserves

(23,023)

(23,023)

(23,023)

Accumulated loss

(37,723)

(37,752)

(37,800)

 

_________

_________

_________

Total Equity

11,323

9,596

9,971

 

_________

_________

_________

Liabilities

 

 

 

Non-Current Liabilities

 

 

 

Provision for Mining Royalties

424

435

433

Environmental Liability

387

361

395

 

_________

_________

_________

 

811

796

828

 

 

 

 

Current liabilities

 

 

 

Income Tax Payable

492

156

406

Trade and other payables

359

1,029

451

Loans and other borrowings

-

-

2,111

Deferred revenue

-

525

-

 

 

 

 

 

_________

_________

_________

 

851

1,710

2,968

 

_________

_________

_________

Total Liabilities

1,662

2,506

3,796

 

_________

_________

_________

 

 

 

 

Total Equity and Liabilities

12,985

12,102

13,767

 

_________

_________

_________

 

 

 

STRATEGIC MINERALS PLC

 

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE PERIOD ENDED 30 JUNE 2020

 

 

 

 

 

6 months to

6 months to

Year to

 

30 June

30 June

31 December

 

2020

2019

2019

 

(Unaudited)

(Unaudited)

(Audited)

 

$'000

$'000

$'000

Cash flows from operating activities

 

 

 

Profit/ (loss) after tax

77

(1,182)

(1,230)

Adjustments for:

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

6

19

17

Loss on financial assets held at fair value through profit and loss

-

(1)

(13)

Impairment of deferred exploration and expenditure

17

760

1,122

Share of net loss / (profit) losses from associates

-

38

38

Finance expense

-

-

52

(Increase) / decrease in inventory

(3)

(3)

1

(Increase) / decrease in trade and other receivables

(256)

(50)

(119)

(Increase) / decrease in prepayments

18

(87)

(33)

Increase / (decrease) in trade and other payables

(92)

251

438

Increase /(decrease) in deferred revenue

-

(375)

(900)

(Decrease)/ Increase in income tax payable

184

156

339

Share based payment expense

149

163

275

 

_________

_________

_________

Net cash flows from operating activities

100

(311)

(13)

 

_________

_________

_________

 

 

 

 

Investing activities

 

 

 

Increase in PPE Development Asset

(96)

(1,212)

(2,293)

Sale of tenements

80

-

-

Receipt of research and development incentive

595

-

515

Increase in deferred exploration and evaluation

(96)

(91)

(316)

Acquisition of PPE

-

(57)

(265)

Acquisition of exploration and evaluation intangible asset

-

-

(205)

Investment in joint arrangements

-

(40)

(33)

Sale of financial assets held at fair value through profit or loss

-

-

33

 

_________

_________

_________

Net cash used in investing activities

483

(1,400)

(2,564)

 

_________

_________

_________

 

 

 

 

Financing activities

 

 

 

Net proceeds from issue of equity share capital

1,485

91

1,059

Proceeds from borrowings

68

-

400

Finance expenses paid

(96)

-

-

Repayment of borrowings

(2,026)

-

(206)

 

_________

_________

_________

 

 

 

 

Net cash from financing activities

(569)

91

1,253

 

_________

_________

_________

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

14

(1,620)

(1,324)

 

 

 

 

Cash and cash equivalents at beginning of period

519

1,840

1,840

Release of restricted cash

-

100

-

Exchange gains / (losses) on cash and cash equivalents

-

(1)

3

 

_________

_________

_________

 

 

 

 

Cash and cash equivalents at end of period

533

319

519

 

_________

_________

_________

 

 

 

STRATEGIC MINERALS PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2020

 

 

Share

capital

Share

premium

reserve

Merger

reserve

Share

options reserve

Initial Restructure

reserve

Foreign

exchange

reserve

Retained earnings

Total

Equity

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

     $'000

 

________

________

________

________

________

Balance at

1 January 2019 - audited

2,095

46,213

21,232

330

(23,023)

(894)

(36,632)

9,321

 

________

________

________

________

________

________

________

________

Gain/(Loss) for the period

-

-

-

-

-

-

(1,230)

(1,230)

Foreign exchange translation

-

-

-

-

-

227

-

227

 

________

________

________

________

________

________

________

________

Total comprehensive income for the year

-

-

-

-

-

227

(1,230)

(1,003)

 

 

 

 

 

 

 

 

 

Shares issued in the year

108

1,273

68

-

-

-

-

1,449

Expenses of share issue

 

(71)

-

-

-

-

-

(71)

Transfer

-

-

-

(62)

-

-

62

-

Share based payments

-

-

-

275

-

-

-

275

 

________

________

________

________

________

________

________

________

Balance at

31 December 2019- audited

2,203

47,415

21,300

543

(23,023)

(667)

(37,800)

9,971

 

________

________

________

________

________

________

________

________

Profit for the period

-

-

-

-

-

-

77

77

Foreign exchange translation

-

-

-

-

-

(359)

-

(359)

 

________

________

________

________

________

________

________

________

 

 

 

 

 

 

 

 

 

Total comprehensive income for the half year

-

-

-

-

-

(359)

77

(282)

 

 

 

 

 

 

 

 

 

Shares issued in the year

348

1,217

-

-

-

-

-

1,565

Expenses of share issue

-

(80)

-

-

-

-

-

(80)

Share based payments

-

-

-

149

-

-

-

149

 

________

________

________

________

________

Balance at

30 June 2020 - Unaudited

2,551

48,552

21,300

692

(23,023)

(1,026)

(37,723)

11,323

 

________

________

________

________

________

________

________

________

 

All comprehensive income is attributable to the owners of the parent.

 

The accompanying accounting policies and notes form an integral part of these financial statements

 

STRATEGIC MINERALS PLC

 

NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2020

 

1.   General information

Strategic Minerals Plc ("the Company") is a public company incorporated in England and Wales.  The consolidated interim financial statements of the Company for the six months ended 30 June 2020 comprise the Company and its subsidiaries (together referred to as the "Group").

 

 

2.   Accounting policies

Basis of preparation

 

These consolidated financial statements have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. IAS 34 is not required to be adopted by the Company and has not been applied in the preparation of this interim information. The consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2019 Annual Report. The financial information for the half years ended 30 June 2020 and 30 June 2019 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

 

The annual financial statements of Strategic Minerals Plc are prepared in accordance with IFRSs as adopted by the European Union. The comparative financial information for the year ended 31 December 2019 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2019 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2019 was unqualified, and included an emphasis on matter paragraph regarding the Group's ability to continue as a going concern and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

Going concern basis

These financial statements have been prepared on the assumption that the Group is a going concern.

When assessing the foreseeable future, the Directors have looked at the Group's working capital requirements for the period to September 2021 being the period for which projections have been prepared and the minimum period the Directors are required to consider.

 

The Directors have reviewed the Group's current cash resources, funding requirements and ongoing trading of the operations. The Company forecasts that it has sufficient funds until September 2021 however the Group is reliant on cash being generated from the Cobre asset in line with forecast which includes the assumption that access to the Cobre asset will be rolled over in March 2021 as it has since entering into the underlying offtake agreement. Should Cobre not meet cash expectations the Directors would need to raise further funds.

 

In addition, there is a risk that, due to the impact of Covid-19 on global markets, a greater degree of uncertainty currently exists in relation to cashflows from Cobre being generated in line with forecast and the ability to raise additional funds if these are required. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

The financial statements do not include the adjustments that would result if the Group and Company was unable to continue as a going concern.

 

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Group's latest annual audited financial statements except for policies stated below.

 

 

 

Joint arrangements

 

Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Strategic Minerals Limited as at 30 June 2019 had one joint venture being Cornwall Resources Ltd (CRL) after which the Company purchased the remaining 50% interest it did not own in CRL. Upon obtaining 100% ownership of CRL the entity was consolidated.

 

Joint Ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have the rights to the net assets of the joint arrangement. Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position.

 

Business Combinations

Business Combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of identifiable assets acquired and liabilities (including contingent liabilities assumed) is recognised.

 

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument are recognised as expenses in profit and loss when incurred

 

The acquisition of a business may result in the recognition of goodwill or gain from a bargain purchase.

 

New, revised or amending accounting standards and interpretations

 

IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. The following amendments are effective for the period beginning 1 January 2020:

 

IAS 1 Presentation of Financial Statements.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material).

IFRS 3 Business Combinations (Amendment - Definition of Business).

Revised Conceptual Framework for Financial Reporting.

 

The adoption of these amendments does not have an impact on the Group's financial statements.

 

3.   Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Judgements

 

(a)  Joint arrangement and joint operation

 

The Company as at 30 June 2019 held a 50% interest in Cornwall Resources Limited ("CRL") which owns the Redmoor Tin-Tungsten project in the United Kingdom with the other shareholder being New Age Exploration Limited ("NAE").  Under the shareholders agreement with NAE, CRL is operated as a 50:50 joint venture with each party being entitled to appoint one Director. Based on this, the Group considers that they have joint control over the arrangement. Under IFRS 11, this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method. In July 2019, the Company purchased the remaining 50% interest in CRL at which point the entity was consolidated.

 

 

 

(b)  Contingent consideration as part of Asset acquisition

 

Judgement was required in determining the accounting for the contingent consideration payable as part of the CRL acquisition. The group has an obligation to pay AUD $1m on net smelter sales arising from CRL production reaching AUD $50m and a further AUD $1m on net smelter sales arising from CRL production reaching AUD $100m.

 

Whilst a possible obligation exists in relation to the consideration payable, given the early stage of the project it was concluded that at reporting date it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Therefore, in accordance with IAS 37, this obligation is considered to be a contingent liability.

 

(c)  Contingent liabilities as part of Business Combination

 

Under the terms of the various agreements in relation to the LCCM, the Company would have the following contingent liabilities:

 

- 1% royalty on copper sales payable over the life of the project; and

- AUD $100,000 following 3,000 tonnes of copper sales from the project.

 

In accordance with IFRS3 the Group has recognised for the estimated fair value of the mining royalty in these financial statements.

 

Estimates and assumptions

 

(a)  Carrying value of intangible assets

 

In assessing the continuing carrying value of the exploration and evaluation costs carried the Company has made an estimation of the value of the underlying tenements and exploration licenses held.

 

(b)  Share based payments, warrants and options

 

The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model after taking into account market based vesting conditions and conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience.

 

(c)  Carrying value of amounts owed by subsidiary undertakings

 

IFRS9 requires the parent company to make assumptions when implementing the forward- looking expected credit loss model. This model is required to be used to assess the intercompany loan receivables from its subsidiaries for impairment. Arriving at an expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the possible credit losses that could arise and probabilities for these scenarios.

 

The following were considered; the exploration project risk, the future sales potential of product, value of potential reserves and the resulting expected economic outcomes of the project.

 

(d)  Carrying Value of Development Assets - LCCM

 

Management assessed the carrying value of Development assets for indicators of impairment based on the requirements of IAS36 which are inherently judgemental.

The following are the key assumptions used in this assessment of Carrying value.

i)  Mineable reserves over life of project

ii)  Forecasted Copper pricing

iii) Capital and operating cost assumptions to deliver the mining schedule

iv) Foreign exchange rates

v) Discount rate

vi) Estimated project commencement date.

 

 

 

4.

Segment information

 

The Group has five main segments during the period:

·     Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to both the US domestic market and historically transported magnetite to port for onward export sale. 

·     Head Office - This segment incurs all the administrative costs of central operations and finances the Group's operations.  A management fee is charged for completing this service and other certain services and expenses.

·     Australia - This segment holds the Central Australian Rare Earths Pty Ltd tenements in Australia and incurs all related operating costs.

·     Development Asset - This segment holds the Leigh Creek Copper Mine Development Asset in Australia and incurs all related operating costs.

·     United Kingdom - The investment in the Redmoor project in Cornwall, United Kingdom is held by this segment.

 

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that carry out different functions and operations and operate in different jurisdictions.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the board and management team which includes the Board and the Chief Financial Officer.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with EU Adopted IFRS but excluding non-cash losses, such as the effects of share-based payments.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments in which the borrowings are held. Details are provided in the reconciliation from segment assets and liabilities to the Group's statement of financial position.

 

 

 

6 Months to 30 June 2020 (Unaudited)

SMG

Head

Office

Australia

United Kingdom

Development Asset

Intra

Segment

Elimination

Total

 

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

 

Revenues

1,645

-

-

-

-

-

1,645

 

Other Revenue

47

-

-

-

-

-

47

 

Cost of sales

(314)

-

-

-

-

-

(314)

 

 

_______

_______

_______

_______

_______

_______

_______

 

Gross profit

1,378

-

-

-

 

-

1,378

 

 

 

 

 

 

 

 

 

 

Overhead expenses

(516)

(237)

(135)

(14)

-

-

(902)

 

Management fee income/(expense)

(450)

441

-

 

-

9

-

 

Share based payments

-

(149)

-

-

-

-

(149)

 

Depreciation

(6)

-

-

-

-

-

(6)

 

(Loss)/ gain on intercompany loans

-

 

-

-

-

 

-

 

Impairment of DEE

-

-

(17)

-

-

-

(17)

 

Foreign exchange gain/(loss)

-

145

(23)

-

-

(165)

(43)

 

 

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Segment profit /(loss) from operations

406

200

(175)

(14)

-

(156)

261

 

 

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Segment profit /(loss) before taxation

406

200

(175)

(14)

-

(156)

261

 

_______

_______

_______

_______

_______

_______

_______

 

 

6 Months to 30 June 2019 (Unaudited)

SMG

Head Office

Australia

Development Asset

Inter

Segment Elimination

Total

 

 

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

Revenue

1,395

-

-

-

-

1,395

 

Cost of sales

(229)

-

-

-

-

(229)

 

 

______

_______

_______

_______

_______

_______

 

 

Gross Profit

1,166

-

-

-

-

1,166

 

 

 

 

 

 

 

 

 

Depreciation

(16)

-

(3)

-

-

(19)

 

Overhead expenses

(475)

(552)

(184)

-

-

(1,211)

 

Management fee

(100)

100

-

-

-

-

 

Impairment Charge

-

-

(760)

-

-

(760)

 

Share based expense

-

(163)

-

-

-

(163)

 

Write back of provisions

 

1,744

-

-

(1,744)

-

 

Equity accounting profit(loss)

-

(38)

-

-

-

(38)

 

Foreign Exchange

-

-

(2)

-

 

-

(2)

 

Gain on Shares available for resale

-

-

1

-

-

1

 

 

 

________

________

________

________

________

________

 

Segment profit/(loss) from operations

575

1,091

(948)

-

(1,744)

(1,026)

 

 

________

________

________

________

________

________

 

Segment profit/(loss) before taxation

575

1,091

(948)

-

(1,744)

(1,026)

 

 

________

________

________

________

________

________

 

 

 

Year to 31 December 2019 (Audited)

SMG

Head

Office

Australia

United Kingdom

Development Asset

Intra

Segment

Elimination

Total

 

 

2019

2019

2019

2019

2019

2019

2019

 

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

 

Revenues

2,488

-

-

-

-

-

2,488

 

Other Revenue

900

-

-

-

-

-

900

 

Cost of sales

(511)

-

-

-

-

-

(511)

 

 

 

 

 

 

 

 

 

 

Gross profit

2,877

-

-

-

 

-

2,877

 

 

 

 

 

 

 

 

 

 

Overhead expenses

(1,026)

(923)

(295)

(22)

-

-

(2,266)

 

Management fee income/(expense)

(393)

362

35

 

-

(4)

-

 

Share based payments

-

(275)

-

-

-

-

(275)

 

Depreciation

(16)

-

-

(1)

-

-

(17)

 

Gain on available

 for sale assets

-

-

13

 

-

-

13

 

Share of net loss

from joint venture

-

(38)

-

-

-

-

(38)

 

(Loss)/ gain on

intercompany loans

-

(1,014)

-

-

-

1,014

-

 

Impairment of DEE

-

-

(1,122)

-

-

-

(1,122)

 

Foreign exchange gain/(loss)

-

(141)

(27)

-

-

203

35

 

 

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Segment profit /(loss) from operations

1,442

(2,029)

(1,396)

(23)

-

1,213

(793)

 

 

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Finance Expense

-

-

(52)

-

-

-

(52)

 

 

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Segment profit /(loss) before taxation

1,442

(2,029)

(1,448)

(23)

-

1,213

(845)

 

_______

_______

_______

_______

_______

_______

_______

 

 

As at 30 June 2020 (Unaudited)

 

Head

 

United

Development

 

 

 

SMG

Office

Australia

Kingdom

Asset

Total

 

 

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

Additions to non-current  assets

-

-

16

80

96

192

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment assets

1,066

95

15

4,414

7,395

12,985

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment liabilities

591

121

93

14

843

1662

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

Total Group Liabilities

 

 

 

 

 

1,662

 

 

 

 

 

 

 

_______

 

 

 

 

As at 30 June 2019 (Unaudited)

 

 

 

 

 

 

 

 

SMG

Head Office

Australia

United Kingdom

Development Asset

Total

 

 

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

Additions to non-current  assets

-

37

91

-

1,272

1,400

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment assets

579

3,324

2,350

-

5,849

12,102

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment liabilities

762

108

108

-

1,528

2,506

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

Total Group Liabilities

 

 

 

 

 

2,506

 

 

 

 

 

 

 

_______

 

 

As at 31 December 2019 (Audited)

 

 

 

 

 

 

 

 

SMG

Head Office

Australia

United Kingdom

Development Asset

Total

 

 

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

Additions to non-current  assets

-

-

94

460

2,558

3,112

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment assets

1,023

43

601

4,672

7,428

13,767

 

 

_______

_______

_______

_______

______

_______

 

 

 

 

 

 

 

 

 

Reportable segment liabilities

529

1,802

484

8

973

3,796

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

Total Group Liabilities

 

 

 

 

 

3,796

 

 

 

 

 

 

 

_______

 

 

 

External revenue by
location of customers

Non-current assets
by location of assets

 

 

30 June 2020

30 June 2019

30 June 2020

30 June 2019

 

 

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

United States

1,645

1,020

171

177

 

United Kingdom

-

-

4,391

2,264

 

Australia

-

-

7,391

7,893

 

 

_______

_______

_______

_______

 

 

1,645

1,020

11,953

10,334

 

 

_______

_______

_______

_______

 

Revenues from Customer A totalled $281,805 (2019: $351,140), which represented 17% (2019: 34%) of total domestic sales in the United States, Customer B totalled $795,125 (2019: $$563,945) which represented 48% (2019: 55%).  There were no export sales in the year (2019: Nil).

 

 

5.

Operating loss

 

Administration costs by nature

 

 

6 months to

6 months to

Year to

 

 

30 June

30 June

31 December

 

 

2020

2019

2019

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

$'000

$'000

$'000

 

Operating gain/loss is stated after charging/(crediting):

 

 

 

 

 

 

 

 

 

Directors' fees and emoluments

146

401

573

 

Depreciation

6

19

17

 

Equipment rental

131

145

276

 

Equipment maintenance

21

26

46

 

Share of net loss (profit) from joint operations

-

38

38

 

Auditors' remuneration

-

13

96

 

Salaries, wages and other staff related costs

260

274

559

 

Insurance

28

15

 

 

Legal, professional and consultancy fees

273

178

420

 

Loss on sale of tenements

-

-

-

 

Impairment charge

17

760

1,122

 

Loss (gain)on financial assets held at fair value through profit and loss

-

(1)

(13)

 

Travelling and related costs

-

51

5

 

Foreign exchange

43

2

(35)

 

Share based payments

149

163

275

 

Other expenses

43

108

291

 

6.

Intangible assets - exploration and evaluation costs

 

 

 

6 months to

6 months to

6 months to

 

 

30 June

31 December

30 June

 

 

2020

2019

2019

 

 

 

 

 

 

Cost

$'000

 

 

 

 

 

 

 

 

Opening balance for the period

4,567

342

1,037

 

 

 

 

 

 

Additions for the period

96

163

 91

 

Acquired through assets acquisition of CRL (ii)

-

4,392

-

 

Interest and borrowings costs - CRL

33

62

-

 

Research and development incentive

-

(317)

-

 

Sale of mineral rights

(80)

 

-

 

Foreign exchange difference

(209)

287

(26)

 

Impairment Charge - CARE (i)

(17)

(362)

(760)

 

 

_______

_______

_______

 

 

 

 

 

 

Closing balance for period

4,390

4,567

342

 

 

_______

_______

_______

 

 

 

 

 

(i)   The Company has recognised an impairment charge in relation to the CARE assets due to their lower strategic value and that there is no intention, in the short term, to spend additional funds on these assets.

 

(ii)   In July 2019 the Company purchased the remaining 50% interest of CRL it did not own and recorded the transaction as an asset acquisition. Hence, the additions represent the carrying value of the exploration and evaluation assets at cost.

 

 

8.  Property, plant and equipment

 

 

 

 

 

 

 

 

Development

Plant and

 

 

 

 

Asset

Machinery

Total

 

Group

 

 

$'000

$'000

$'000

Cost

 

 

 

 

 

At 1 January 2019 (audited)

 

 

4,907

461

5,368

Additions for period

 

 

1,834

57

1,891

Foreign exchange difference

 

 

(16)

-

(16)

 

 

 

________

________

________

 

 

 

 

 

 

At 30 June 2019 (unaudited)

 

 

6,725

518

7,243

 

 

 

 

 

 

Acquired on acquisition of CRL

 

 

-

7

7

Additions for period

 

 

459

208

667

Research and development incentive

 

 

(796)

-

(796)

Foreign exchange difference

 

 

3

2

5

 

 

 

________

________

________

 

 

 

 

 

 

At 31 December 2019 (audited)

 

 

6,391

735

7,126

 

 

 

________

________

________

 

 

 

 

 

 

Additions

 

 

96

-

96

Interest and borrowings costs

 

 

27

-

27

Foreign exchange difference

 

 

(132)

(6)

(138)

 

 

 

_______

________

_______-

 

 

 

 

 

 

At 30 June 2020 (Unaudited)

 

 

6,382

729

7,111

 

 

 

________

________

________

 

Depreciation

 

 

 

 

 

At 1 January 2019 (audited)

 

 

-

(198)

(198)

Charge for the period

 

 

-

(16)

(16)

Foreign exchange difference

 

 

 

(3)

(3)

 

 

 

________

________

________

 

 

 

 

 

 

At 30 June 2019 (unaudited)

 

 

-

(217)

(217)

 

 

 

 

 

 

Charge for the period

 

 

-

(1)

(1)

Acquired on acquisition of CRL

 

 

-

(4)

(4)

Foreign exchange difference

 

 

-

(6)

(6)

 

 

 

________

________

________

 

 

 

 

 

 

At 31 December 2019 (audited)

 

 

-

(228)

(228)

 

 

 

________

________

________

 

 

 

 

 

 

Charge for the period

 

 

-

(6)

(6)

 

 

 

________

________

________

 

 

 

 

 

 

As at 30 June 2020 (unaudited)

 

 

-

(234)

(234

 

 

 

 

 

 

 

 

 

________

________

________

 

 

 

 

 

 

Carrying Value

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2019 (unaudited)

 

 

6,725

301

7,026

 

 

 

________

________

________

 

 

 

 

 

 

As at 31 December 2019 (audited)

 

 

6,391

507

6,898

 

 

 

________

________

________

 

 

 

 

 

 

As at 30 June 2020 (unaudited)

 

 

6,382

495

6,877

 

 

 

________

________

________

 

 

 

9.

Loans and borrowings

 

 

 

 

 

Loan R&D Tax Incentive

Loan CRL Acquisition

Total

 

Cost

$'000

$'000

$'000

 

 

 

 

 

 

At 30 June 2019 (unaudited)

-

-

-

 

 

 

 

 

 

Loan Advance

403

1,858

2,261

 

Loan repayments

-

(206)

(206)

 

Interest

16

21

37

 

Foreign exchange difference

-

19

19

 

 

________

________

________

 

 

 

 

 

 

As at 31 December 2019 (audited)

419

1,692

2,111

 

 

 

 

 

 

Loan Advance

68

-

68

 

Loan repayments

(447)

(1579)

(2,026)

 

Interest accrued

27

33

60

 

Interest paid

(43)

(53)

(96)

 

 

 

 

 

 

Foreign exchange difference

(24)

(93)

(117)

 

 

________

________

________

 

 

 

 

 

 

As at 30 June 2020 (unaudited)

-

-

-

 

 

________

________

________

 

 

 

 

 

Loan CRL Acquisition

In July 2019 SML entered into a Convertible Note with NAE to finalise the purchase of CRL.

SML made an initial payment totalling AUD $300,000 and entered into an 11 month payment schedule for the balance of AUD $2,700,000 (US$1,858,000). A payment of AUD $300,000 (US$206,000) was paid on or around 31 October 2019. During the six months to 30 June 2020 the remaining principal of AUD $2,400,000 (US$1,579,000) was repaid along with interest of AUD $80,000 (US$53,000).

Loan R&D tax incentive

In September 2019 SML entered into a loan agreement against the anticipated receipt of a Research and Development Tax Incentive (RDTI) from the Australian Tax Office. A drawdown on the loan of $68,000 occurred in February 2020 while the principal of $447,000 and interest of $43,000 was paid in May 2020 which fully extinguished the debt.

 

10.

Dividends

 

No dividend is proposed for the period. 

 

 

11.

Earnings per share

 

Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial year as provided below.

 

 

6 months to

6 months to

Year to

 

 

30 June

30 June

31 December

 

 

2020

2019

2019

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

Weighted average number of shares - Basic

1,485,627,639

1,391,249,064

1,434,077,744

 

Weighted average number of shares - Diluted

1,557,127,639

1,391,249,064

1,434,077,744

 

 

 

 

 

 

(Loss)/earnings for the period

$77,000

($1,182,000)

($1,230,000)

 

 

 

 

 

 

(Loss)/earnings per share in the period - Basic

$0.000052

($0.000850)

($0.000858)

 

(Loss)/earnings per share in the period - Diluted

$0.000049

($0.000850)

($0.000858)

           

 

12.

Share capital and premium

 

 

 

 

 

 

30 June

2020

30 June

 2020

30 June

2019

30 June

 2019

 

 

No

$'000

No

$'000

 

Allotted, called up and fully paid

 

 

 

 

 

Ordinary shares

1,734,297,948

51,103

1,467,631,282

50,656

 

 

__________

__________

__________

__________

 

As a result of a placement in June 2020 the Company issued 266,666,666 ordinary shares at a price of GBP 0.045. The total proceeds of the placement after fees was GBP 1,139,100 ($1,485,000).

 

Share options and warrants

 

The number of options and warrants as at 30 June 2020 and a reconciliation of the movements during the half year are as follows:

 

 

Date of Grant

 

Granted as at 31 December 2019

Expired/

Exercised

Granted as at 30 June 2020

Exercise price

Date of vesting

Date of expiry

10.04.15

-

 

-

1.00p

19.05.17

30.06.19

06.01.17

-

 

-

1.00p

19.05.17

30.06.19

15.02.18

72,000,000

(72,000,000)

-

2.75p

01.04.20

30.06.20

15.02.18

38,500,000

-

38,500,000

3.75p

01.01.21

30.06.21

15.02.18

17,500,000

-

17,500,000

     5.00p

01.01.22

30.06.22

 

 

09.08.18

35,250,000

(35,250,000)

-

2.75p

01.04.20

30.06.20

 

09.08.18

10,750,000

-

10,750,000

3.75p

01.01.21

30.06.21

3030

09.08.18

4,750,000

-

4,750,000

5.00p

01.01.22

30.06.22

 

178,750,000

(107,250,000)

71,500,000

 

 

 

 

 

13.

Post balance date events

 

The Company has appointed NRG Capital to assist in progressing the Redmoor Tin and Tungsten project and it has begun a process to identify interest in the project which is expected to complete by the end of the year.

 

In September 2020, the Company lodged a full PEPR in relation to the Leigh Creek Copper Mine and anticipates this being approved prior to year end.

 

Copies of this interim report will be made available on the Company's website, www.strategicminerals.net.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR USSWRRUUKARR

Quick facts: Strategic Minerals PLC

Price: 0.381

Market: AIM
Market Cap: £6.61 m
Follow

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

New Age Exploration advancing Redmoor and Otago, exploring Lochinvar options

New Age Exploration Ltd (ASX:NAE) chairman Alan Broome provides Proactive Investors with a thorough update on the company's international portfolio of assets. The UK Redmoor project, being developed in JV with Strategic Mineral PLC (LON:SML), is advancing at an opportune time with respect...

on 15/2/19

78 min read