Record revenues from its iron ore tailings operation in New Mexico and a one-off rail dispute payment meant a maiden annual profit from Strategic Minerals Plc (LON:SML).
Cobre, the business in New Mexico, saw revenues rise to US$1.55mln (US$1.25mln), but since the year end a new contract has been signed that is expected to double revenues in the current year.
John Peters, managing director, said Cobre’s record breaking performance had continued in the first quarter of 2017.
WATCH: 'There's everything in our favour', say Strategic Minerals' John Peters & Peter Wale
“The substantial new contract, due to commence in June, augurs well for a profitable 2017 and beyond.
“With overheads being closely controlled and net profit margins on incremental sales at Cobre being 50%+, much of this performance goes straight to the bottom line. Added to this profitable outlook is the potential increase in resource lodes associated with our 2017 drilling programme. “
Profits for the year were US$0.351mln (loss US$0.880mln), which included US$675,000 received for the settlement of the contract dispute over the rail link built to the Cobre deposit.
In addition to Cobre, Strategic Minerals now has a 50% stake in tin and tungsten group Cornwall Resources and had taken majority control of the Hans Camp nickel/lithium prospect in Western Australia.
“As it now appears that 2016 may have been the bottom of the commodity cycle, the timing has been superb,” added chairman Alan Broome.
Cash at the end of year was US$1.1mln (2015:US$0.95mln) and going forward Peters said the focus will be on projects with offtake arrangements for bulk material minerals; advanced materials such as rare earths, lithium and graphite with demand upside; and metals expecting significant price improvement over three to five years such as nickel, gold, tin.
“Early indications are that 2017 is likely to see an increase in profitability, solid cash flows, self-funded drilling programmes in both CARE and Cornwall Resources and the Company continuing to review several potential projects. The Board looks to 2017 with much confidence," Broome added.