Strategic Minerals PLC (AIM:SML, OTC:SMCDF) remains reassured that its Cobre magnetite operation in New Mexico, USA is expected to continue to contribute substantial revenues to cover the company's overall costs in 2023 although the past quarter saw a dip in sales volumes.
The company said it generated revenue of $0.464mln in the quarter ended 31 December 2022, a decline from $0.493mln in the same quarter of 2021, reflecting reduced demand from some customers as a dip in US economic growth impacted sales volumes for its Cobre magnetite product.
While sales to 'fertilizer' customers appear unaffected, sales to its 'cement' customers have been notably impacted with the company's largest client having currently suspended purchases whilst it runs down its existing stockpile, Strategic Minerals said, noting that the reduction in demand has been partially offset by a 20% price increase passed on to customers in July 2022.
In the statement, Strategic Minerals managing director, John Peters, commented: "Whilst it is disappointing to see the impact of the dip in US economic growth resulting in lower sales volumes at Cobre, the company is reassured by the fact that Cobre is expected to continue to contribute substantial revenues to cover the company's overall costs in 2023."
The group had a cash balance of $0.341mln as of 31 December 2022, down from $0.381mln as of 30 September 2022. The company said the decline is consistent with the company's Cobre operations during the December quarter and reflects continuing activity at both its Leigh Creek and Redmoor projects.
Regarding its Leigh Creek Copper Mine (LCCM), the company reported that negotiations on planned funding for the restart of production at LCCM are at an advanced stage with a party that has substantially completed its due diligence. A specialist resource-focused investor has continued its due diligence for the provision of funding for the restart of the LCCM.
Strategic Minerals also reported that Cornwall Resources Limited (CRL) has submitted an application for grant funds from the Cornwall and Isle of Scilly Council's Shared Prosperity Fund to undertake the planned development of the Redmoor Tungsten and Tin project.
Peters said: "With a potential LCCM funding pathway identified, the company now awaits the outcome of its grant application to assess the scope of its operations at Redmoor in 2023."