Big picture - Why invest in Strategic Minerals Plc
Strategic Minerals Plc Snapshot
Strategic Minerals plc is a minerals production and development company registered in the UK and listed on the AIM market (AIM: SML) of the London Stock Exchange.
Our strategy is to:
Expand domestic sales at the Company’s existing Cobre magnetite project in New Mexico (USA) and create long-term relationships that allow the operation to generate positive cash returns in all magnetite price scenarios.
Build a portfolio of cash generating high quality operations and near term mining projects in jurisdictions where returns are commensurate with risk.
Diversify the Company’s revenue stream into other commodities such as tin, copper, silver, gold and industrial minerals (e.g silica sand).
Operate all assets with a focus on safety and respect for environment and the communities in which we operate.
This is undertaken through operating and investment strategies as follows:
Operating Strategy – Self Sufficient
As a operator of a magnetite tailings business in the US, SML, unlike many of its compatriots, has an underlying cash flow. The SML Board has committed to ensuring that corporate overheads, required for a listed company, are maintained within this cash flow and that any share issues are raised for project investment.
Investment Strategy – Three pronged approach to diversified minerals
1.Coal and Bulk Materials- focused on potential projects in this sector that are tied to current contracts and further offtake arrangements at attractive prices.
2.Advanced Materials- considering project opportunities in materials where it expects demand to increase over the coming years (such as Rare Earths, Lithium and Graphite).
3.Metals- identify those projects exposed to metals that it expects to have price improvements over the next three to five years such as Nickel, gold, copper and tin/tungsten.
The Cobre operation currently sells magnetite through the Company’s wholly owned subsidiary Southern Minerals Group LLC. Cobre is a reliable high-capacity supplier of magnetite to industries throughout North America, in markets such as
- coal cleaning
- paint pigment
- dense media/medium
- water jet cutting
In 2011 the Company acquired the rights to the Cobre magnetite operation in New Mexico, United States and currently holds, through its wholly owned subsidiary Southern Minerals Group LLC, access to a market ready stockpile of magnetite. Initially the Company sold magnetite product to export iron ore markets but due to the decline in the iron ore price has now refocused its efforts on domestic sales to customers in the United States.
The magnetite material has previously been a treated by-product of copper mining and milling activities with the material recovered by a magnetic separation process to produce the magnetite product which is now available for sale. The product has been processed through ball mills to grind the rock down to a P80 of 90 microns. The magnetite is non-hazardous and there is a full environmental permit at Cobre that enables the free scoop, screen and logistics operation to be undertaken.
The product is ideal for markets such as cement, fertilizer, dense media/medium, paint pigment, water jet cutting, ballast, magnets, toner, coal cleaning and landscaping. The price of magnetite product sold to these markets is not linked to iron ore prices. Detailed specification of our magnetite product is available on our subsidiary website.
The Company has also been working to increase the value of the Cobre asset by reviewing sales opportunities including the opportunity to produce a higher value product for sale to the dense media market and other markets. Improving coinditions in the US provide opportunity to expand our customer base and unlock the value from the existing magnetite stockpile.
Cash flow generated from Cobre has been instrumental in the Company being one of the few listed resources companies that does not require regular raising to cover operating overheads.
CARE Nickel Sulphide Exploration
Central Australian Rare Earths Pty Ltd ("CARE")
In September 2012, Rarus Limited (oue partner in CARE) conducted a moving loop electromagnetic (‘MLTEM’ or ‘EM’) survey at the Hanns Camp Prospect. It identified three conductivity anomalies co-incident with anomalous Ni-Cu regolith geochemistry in komatiitic channel-facies geological settings considered extremely prospective for massive nickel-sulphide mineralisation.
In order of priority these newly identified exploration targets are called ‘Forrest’, ‘Stirling’ and ‘Canning’. The Forrest target is considered particularly prospective due to its location at the base of the Hanns Camp Ultramafic Belt’s main lava channel pathway. In addition to the massive nickel-sulphide targets identified at Hanns Camp, a weak conductivity anomaly extending about 900m north from and stratigraphically above the Forrest target points to potential for disseminated nickel-sulphide mineralisation in the centre of the main lava channel. Collectively the Forrest, Stirling and Canning targets make Hanns Camp one of the most compelling greenfields nickel-sulphide exploration opportunities in the Yilgarn Craton and as such they warrant immediate drill testing by Rarus.
In 2016, SML entered arrangements to acquire up 50% of the ownership of CARE from Rarus Limited ("Rarus"), which holds or has an agreement to acquire tenements with nickel sulphide and rare earth element exploration potential in Western Australia and the Northern Territory of Australia.
The bulk of the Company's investment is to be used to fund a nickel sulphide exploration programme at the highly prospective Hanns Camp Prospect located within CARE's Laverton Project expected to commence in the second quarter of 2016.
The Directors of SML considered the investment in CARE attractive given:
Proven Exploration Province - The Laverton Project is located in the emerging "Eastern Yilgarn Crafton Sulphide Province" in Western Australia that is notable for hosting a number of nickel sulphide projects.
Proximity to Infrastructure - The project is closely located to Laverton, its airport, electrical infrastructure, sealed highway access to Glencore's Murrin Murrin nickel processing plant and the Malcolm railway siding.
Advanced Planning Stage - Over the past three years, Rarus has spent considerable time and money in securing the tenements and preparing a drilling programme.
Nickel Price Outlook - Along with a number of market pundits, the Directors of the Company consider that the falling Nickel stockpiles and likely demand for Nickel bodes well for future prices.
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Alan Broome Non-Executive Chairman
Alan Broome, AM (I.Eng, F AusIMM, FAICD, FICME, MInstD (NZ)) is a metallurgist with over 40 years'experience in mining and metals. A well-known figure in the Australian mining industry, Alan has extensive board experience, both as a director and chairman of a number of listed and unlisted mining and mining technology companies. Allan commenced his career in the Port Kembla Steelworks before joining the Australian Coal Industry Research Laboratories, which he ran for over a decade. Over the past 20 years, Alan has had in-depth experience in coal mining, mining technology, equipment, services and research sectors internationally.
John Peters John Peters Managing Director
John Peters FCPA, FFINSIA, is a CEO with over 30 years'corporate finance experience at senior levels whose expertise crosses a number of industries including natural resources. John is experienced in publicly listed companies on the AIM and ASX stock markets and was the CEO of Ebony Iron Pty Ltd, which negotiated the acquisition of the rights to the Cobre magnetite stockpile. From his experience managing over £7bn for the Commonwealth Bank of Australia, he understands capital raising, mergers and acquistions and how they are percieved by professional investors. He is experienced in acquisition strategies, mining project evaluation, commercial arrangements, statutory and management reporting and compliance and governance obligations of public companies.
Lyle Hobbs Lyle Hobbs Non-Executive Director
Lyle Hobbs holds a B.Sc in Engineering (Mining and Petroleum) and an MBA, both from the University of Alberta, Canada. He has a wealth of experience in operational/project and corporate/strategic roles, with an emphasis on project management roles including a remote mine and infrastructure in Northern British Columbia, a coal port redevelopment in Washington State, alternative fuel projects in the United States, and oil sands projects in Northern Alberta. His mine operational roles have included senior roles in the Canadian oil sands, and Engineering Manager at operating coal mines. Previously, Lyle was the CEO for Atrum Coal during the initial project scoping. Currently Lyle is the VP Business Development, North America for RCT.
Julien McInally Chief Financial Officer
Julien McInally holds a CPA and MBA, and is a CFO/Company Secretary with over 15 years of resource industry experience with public listed companies on the TSX, AIM and ASX stock exchanges. He has expertise in capital raising, mergers and acquisitions, mining project evaluation, strategy, commercial agreements, statutory and management reporting and compliance and governance obligations of publicly listed companies. He has been CEO of a number of private exploration companies and has worked for BHP Billiton, Gladstone Pacific Nickel Limited (AIM and TSX: GPN), Robust Resources Ltd (ASX:ROL) and Reliance Resources Limited (TSX:RI) in commercial roles. Julien is currently CFO/Company secretary of Fertoz Ltd (ASX:FTZ).
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