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.
23 September 2019
Strategic Minerals plc
("Strategic Minerals", "SML" or the "Company")
Cobre Arbitration Claim Lodged
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, announces that its wholly owned subsidiary, Southern Minerals Group ("SMG"), on Friday 20 September lodged a notice for Arbitration in connection with the contract with its major client at Cobre. Under its existing contract, a claim through Arbitration must first be made and the name of the client is not to be disclosed unless required by law, which is not deemed to be the case here.
The claim consists of three elements, namely:
1) in excess of $2,300,000 in relation to payments outstanding to date;
2) in excess of $19,000,000 in relation to lost profits for the balance of the contract; and
3) punitive damages as permitted by law.
The protracted nature of making such a claim and the uncertainty of the final outcome have encouraged the Company to adopt a low-cost approach to the claim. Accordingly, the Board, in forming its future funding plans, has taken a conservative view and excluded any potential payment from the client and incorporated expected legal fees.
John Peters, Managing Director of Strategic Minerals, commented:
"The claim against the major Cobre client has been meticulously reviewed prior its issuance and comes after the breakdown in negotiations with the client.
"While the SML group will actively seek suitable compensation from the client, the Board and Management believe that its operations should not rely on any future payments due under this contract until received. Accordingly, the Board is continuing to review its projects and examining the preferred methods of funding such development.
"The Company remains in the fortunate position wherein the profits from the Cobre operation continue to fund overheads and contribute, albeit at a lower level, to project development. Further, as 100% owners, the Company can dictate the pace of progress on each project, as holding costs on each are relatively minor."
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. 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 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 2020.
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.
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