Strategic Minerals (AIM:SML ) has swung to profit in the six months ended 30 June 2020 after reporting a pre-tax profit of $0.26m.
The producing mineral firm actively developing projects prospective for battery materials said its profits were attributable to strong sales from the Cobre magnetite US operations.
Over the period, Strategic maintained operations at Cobre despite the impact of COVID-19 and completed an arbitration process confirming a $21.9m claim against CV investments which has since had a receiver appointed by the US Securities Exchange Commission.
Gross Profit increased 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$0.047m Covid-19 related assistance received from the US government, Gross Profit increased 68% on the same period last year.
Costs were tightly managed during the period, with expenses reduced 25% across all aspects of the Company's corporate operations compared to the same period last year.
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$1.485m after costs.
Cash and cash equivalents as of 30 June 2020 was $0.533m (FY19: US $0.519m) post repayment of principal and interest on the loan used to finance the acquisition of the balance of Cornwall Resources Limited shares, holder of the Redmoor Tin and Tungsten project.
"The first half of 2020 has been globally trying,” said John Peters, MD of Strategic Minerals, adding “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.”
Shares in Strategic Minerals have traded within a tight range from 0.38p to 0.47p over the past month, opening this morning at 0.425p.
Outlook
The group said it expects to identify future joint venture partners for the Redmoor project by the end of the year. It added that significant work undertaken to date in identifying the size and potential of the Redmoor resource will be both ‘recognised and rewarded.’
Meanwhile, ‘significant work’ at the Leigh Creek copper mine throughout 2019 has resulted in a draft Program for Environment Protection and Rehabilitation report being submitted and a feasibility study being completed. The group has since advanced the project and is awaiting a final sign off before commencing operations.
The strong performance of the copper price in recent times has improved the project's forecasted profitability, Strategic noted. Copper prices have rebounded from a COVID-19 nadir of US$2-11 lb to close at US$2-74 lb at 30 June 2020 with upward pressure forecasted.
As a result, the board feels confident that 2021 ‘will see full scale production re-commence at Leigh Creek.’ Peters added that “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.”
‘I look forward to further progressing our key strategic goals in 2020 and pushing onto a brighter 2021,’ said Alan Broome, Non-Executive Chairman of Strategic Minerals.
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