TIDMSML
RNS Number : 1693O
Strategic Minerals PLC
30 September 2019
Market Abuse Regulation (MAR) Disclosure
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.
30 September 2019
Strategic Minerals plc
("Strategic Minerals", "SML", the "Group" or the "Company")
Interim Results - Half Year to 30 June 2019
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing
mineral company actively developing projects prospective for
battery materials, is pleased to announce its unaudited interim
results for the half year ended 30 June 2018.
Financial Highlights:
-- Accounting after tax loss of US$1,182,000 (H1 2018 profit of
US$2,406,000). Cash after tax loss of US$256,000 (H1 2018 profit of
US$35,000).
-- Pre-tax profit of US$675,000 (H1 2018: US$1,246,000) from the
Company's Cobre operation, prior to intercompany management
charges, continues to underpin corporate cash flow. The contracted
profit level reflects the impact of the major Cobre client
suspending shipments and maintenance works conducted at other
client operations. While sales from other clients have begun to
rebound, it is not anticipated that the major client will resume
taking shipments and the Company has initiated legal proceedings
against the major client. In line with anticipated lower sales
levels, cost reduction measures have been implemented in the second
half of 2019.
-- Directors exercised 17.5m options (John Peters, 16m and Alan
Broome, 1.5m) and acquired further stock in the company.
-- Investment of US$39,784 into Cornwall Resources Limited
("CRL"), the owner of the Redmoor Tin-Tungsten project.
-- Issue of 2,866,730 SML shares, in March 2019, at a deemed
price of 1.9067 pence per share as part payment for the acquisition
of Leigh Creek Copper Mine Pty Ltd ("Leigh Creek" or "LCCM").
-- In September 2019, the Board of SML undertook a review of the
CARE tenements and those at Hanns Camp. In light of this review,
the Company is considering exiting its involvement and, in
anticipation of this, an impairment of US$760,000 has been included
in the six month period to 30 June 2019.
-- In June 2019, the Company undertook an equity fundraising
that saw it issue 63,571,425 shares at 1.40 pence per share and
netting US$1,059,000. Only US$91,000 of this amount was received
prior to 30 June 2019 with the balance, US$968,000, received post
30 June 2019.
-- Unrestricted cash and cash equivalents at 30 June 2019 were
US$319,000 (31 Dec 2018: US$1,988,000). The reduction in cash
balances reflects the lower than expected cash flows from Cobre and
the cost of re-commencing operations at Leigh Creek.
Corporate Highlights:
-- Leigh Creek successfully brought back into production, involving:
o retreatment of leach pads;
o US$1,834,000 spent on refurbishment of plant, testing and
preparing the site for full time operations; and
o activation of the off-take agreement.
-- Entering into contracts for the acquisition of the balance of
the Redmoor Tin-Tungsten project. This was subsequently settled on
25 July 2019.
-- Access to the Cobre magnetite stockpile was rolled over in
mid-January ahead of the normal roll over at the end of
February.
-- Redmoor scoping study update completed indicating NPV (@8%)
of US $94m, IRR 19.4% Life of Mine Operating Margin 46% and payback
in less than 4 years.
Commenting, John Peters, Managing Director of Strategic
Minerals, said:
"The first half of 2019 has offered some challenges, with the
major client at Cobre suspending payments, affecting cash reserves.
However, the Company has shown resilience and remains on track to
deliver the Board's strategy.
"During the period, significant investment has been made in
restarting treatment of leach pads at Leigh Creek Copper Mine. This
was critical in demonstrating the Company's ability to resurrect
operations ahead of expected government approval to mine the larger
Paltridge North deposit. Additionally, funding which was originally
allocated for exploration of the Hanns Camp site, that has not
proved as prospective for nickel sulphide as expected, has now been
redirected towards the development of Leigh Creek.
"Also during the period, the Company entered into arrangements
to acquire the balance of the Redmoor Tin-Tungsten project. Full
ownership of Redmoor will allow SML to gain control on project
timing and investment in this potentially world class mining
opportunity.
"The Board has been mindful of the change in expected cash flow
and has been putting into place strategies to provide for
continuity of progress on the Company's key projects. It is
expected that the working capital position will be addressed in
2020 once regular sales commence at Leigh Creek. In the meanwhile,
the Board continues to exercise strict financial and technical
discipline. Furthermore, the Company now believes that it has
consolidated three excellent operating/near-operating/brownfields
projects, all likely to significantly add to the Companies
perceived net value."
For further information, please contact:
+61 (0) 414 727
Strategic Minerals plc 965
John Peters
Managing Director
Website: www.strategicminerals.net
Email: info@strategicminerals.net
Follow Strategic Minerals on:
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Twitter: @SML_Minerals
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+44 (0) 20 3470
SP Angel Corporate Finance LLP 0470
Nominated Adviser and Broker
Ewan Leggat
Lindsay Mair
Stephen Wong
Notes to Editors
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.
Chairman's Statement
I am satisfied with the Company's achievements, in what has been
a particularly challenging period.
Financial results
The results for the first half of 2019 reflect a tougher stage
of development for the Company, as difficulties with our major
client at Cobre emerged and projects took longer to develop. It is
not expected that these conditions will change dramatically over
the remainder of 2019. However, despite these obstacles, I am
confident in the ability of the Board and management team to
deliver the Company's strategy. In 2020, the Company expects cash
flow and profitability to improve dramatically, as full scale
production commences at Leigh Creek Copper Mine.
As at 30 June 2019, unrestricted cash on hand was US$319,000,
prior to the receipt of a further US$968,000 from the late June
equity raise. In the interests of preserving cash and ensuring that
each of our projects are appropriately funded, the Board has been
actively developing a capital plan and allocation policy to move
the Company forward.
Operating profit of US$675,000 from the Cobre magnetite
stockpile, prior to intercompany management fees, marked a
significant decrease from the first half of 2018 (US$1,246,000) and
reflected the drop in sales volumes associated with Cobre's major
client not purchasing product in accordance with its contract.
Corporate overheads of US$1,211,000 were down on the same period
last year (H1 2018 US$1,386,000) and the Board has implemented a
series of cost-reduction initiatives in light of reduced sales at
Cobre.
Strategic Focus
The continued profitability of the Cobre operations, even
without the sales associated with the major client, provides
comfort in relation to coverage of operating costs and allowed the
Company to continue its three-pronged approach to diversified
materials concentrating on:
1. Coal and Bulk Materials- 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- identifying those projects exposed to metals that it
expects to have price improvements over the next three to five
years such as Cobalt, Nickel, Gold, Copper and Tin/Tungsten.
On the back of this strategy, the Company continues to invest in
development programmes, particularly those associated with Leigh
Creek Copper Mine (copper) and Redmoor (tin/tungsten/copper
focused).
Cobre Operations
During 2018, the major client at Cobre ceased taking material
and entered into arrangements that compensated the Company in lieu
of delivery. However, in 2019, the Company has received no payment
from the client and is currently undertaking legal recourse.
The first half of the year's sales at Cobre were also impacted
by plant maintenance works by a further two clients, although this
now appears to have been cleared and non-major client sales now
appear to have been restored to previous levels.
Leigh Creek Copper Mine
Significant resources have been funnelled into testing and
preparing the site for full scale operation. The restarting of the
heaps, while not providing the flow of copper hoped for, was a
strategically important occurrence. It demonstrated the ability of
the existing plant to treat the planned production from the
Paltridge North Deposit with the Company seeking to develop this
project in 2020.
In preparing to fund this production, the Company has entered
discussions with various funding sources and is confident that 2020
will see full scale production commence at Leigh Creek.
Redmoor Tin-Tungsten Project
2018 saw a full drilling program and a substantial increase in
the inferred resource base. In this half year, a scoping/mining
plan study was completed which highlighted how potentially
lucrative the project could be.
With this in mind, the Company negotiated to acquire the other
half of the project, with completion taking place in July 2019.
Control of the full project places the Company in an ideal position
to direct the timing and funding of the Redmoor Tin-Tungsten
project.
CARE
During the first half of 2019, development at Hanns Camp was
minimised to ensure availability of cash for the Leigh Creek Copper
Mine project.
After further desktop review, the suspected nickel sulphide
anomalies do not appear as strong as thought and the Company has
taken a conservative approach in these financials and written down
the value of the Hanns Camp tenements.
Issue of Capital
During the half year, the Company issued a total of 63,571,425
shares at 1.40 pence per share and netting US$1,059,000.
Safety
The Company continues to maintain a high level of safety
performance with SML and its subsidiaries having no reportable
environmental or personnel incidents recorded in the period.
This year marks a pace change for the organisation. I would like
to take this opportunity to thank my fellow Directors, our
management and staff in New Mexico, South Australia, Cornwall and
Western Australia, along with our advisers, for their support and
hard work on our behalf during the period. Additionally, I would
like to thank our clients, contractors, suppliers and partners for
their continued backing. I look forward to further progressing our
key strategic goals in 2020.
Alan Broome AM
Non-Executive Chairman
30 September 2019
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 30 JUNE 2019
6 months 6 months Year to
to to
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Continuing operations
Revenue 1,395 2,120 3,355
Cost of sales (229) (391) (650)
_________ _________ _________
Gross profit 1,166 1,729 2,705
Bargain purchase gain on LCCM Acquisition - 2,464 2,162
Administrative expenses (1,211) (1,386) (2,569)
Depreciation (19) (36) (64)
Share based payment (163) (92) (268)
Share of net losses of associates and
joint ventures (38) 1 (27)
Profit on financial assets held at 1 - -
fair value through profit or loss
Impairment charge (760) - -
Foreign exchange gain/(loss) (2) 7 (6)
_________ _________ _________
(Loss)/ profit from operations (1,026) 2,687 1,933
_________ _________ _________
(Loss)/ profit before taxation (1,026) 2,687 1,933
Income tax (expense)/credit (156) (281) (460)
_________ _________ _________
Profit/(loss) for the period (1,182) 2,406 1,473
Other comprehensive income
Exchange gains/(losses) arising on
translation
of foreign operations (62) (93) (685)
_________ _________ _________
Total comprehensive (loss)/ Income (1,244) 2,313 788
_________ _________ _________
(Loss)/ profit for the period attributable
to:
Owners of the parent (1,244) 2,313 788
_________ _________ _________
Total comprehensive (loss)/income attributable
to:
Owners of the parent (1,244) 2,313 788
_________ _________ _________
(Loss)/ profit per share attributable $ $ $
to the ordinary equity holders of the
parent:
Continuing activities - Basic (0.08) 0.19 0.11
-- Diluted (0.08) 0.17 0.11
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Assets
Non-current assets
Intangible Asset 562 - 564
Deferred Exploration and evaluation
costs 342 6,174 1,037
Other Receivables 140 111 141
Property, plant and equipment 7,026 295 5,170
Investments in joint ventures- equity
accounted 2,264 1,755 2,248
Restricted cash - 100 100
_________ _________ _________
10,334 8,435 9,260
_________ _________ _________
Current assets
Inventories 7 3 4
Financial Assets held at fair value
through profit and loss 21 - 20
Trade and other receivables 1,302 1,204 285
Cash and cash equivalents 319 1,988 1,840
Prepayments 119 81 32
_________ _________ _________
1,768 3,276 2,181
_________ _________ _________
Total Assets 12,102 11,711 11,441
_________ _________ _________
Equity and liabilities
Share capital 2,202 2,087 2,095
Share premium reserve 48,454 47,118 47,205
Merger reserve 20,240 20,240 20,240
Foreign exchange reserve (956) (302) (894)
Share options reserve 431 (29) 330
Other reserves (23,023) (23,023) (23,023)
Accumulated loss (37,752) (35,515) (36,632)
_________ _________ _________
Total Equity 9,596 10,576 9,321
_________ _________ _________
Liabilities
Non-Current Liabilities
Provision for Mining Royalties 435 - 435
Environmental Liability 361 - 361
________ ________
796 - 796
Current liabilities
Deferred Consideration - 74 70
Trade and other payables 1,029 356 354
Environmental Liability - 111 -
Deferred revenue 525 594 900
Income Tax Payable 156 - -
_________ _________ _________
1,710 1,135 1,324
_________ _________ _________
Total Liabilities 2,506 1,135 2,120
_________ _________ _________
Total Equity and Liabilities 12,102 11,711 11,441
________ ________ ________
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE PERIODED 30 JUNE 19
6 months 6 months Year to
to to
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Cash flows from operating activities
(Loss)/profit after tax (1,182) 2,406 1,473
Adjustments for:
Bargain purchase of Leigh Creek Copper
Mine Pty Ltd - (2,464) (2,162)
Loss on sale of tenements - - 245
Gain on financial assets held at fair
value through profit and loss (1) - 12
Impairment charge 760 - -
Depreciation of property, plant and
equipment 19 36 64
Share of net loss / (profit) losses
from associates 38 (1) 27
Non Cash Director Remuneration - 213 -
(Increase) / decrease in inventory (3) 4 3
(Increase) / decrease in trade and
other receivables (50) (193) 690
Increase / (decrease) in trade and
other payables 251 (91) 119
(Increase) / decrease in prepayments (87) (69) (20)
Increase /(decrease) in deferred revenue (375) 594 900
(Decrease)/ Increase in income tax
payable 156 (648) (648)
Share based payment expense 163 92 268
_________ _________ _________
Net cash flows from operating activities (311) (121) 971
_________ _________ _________
Investing activities
Acquisition of PPE Development Asset - - (1,214)
Increase in PPE Development Asset (1,212) - (797)
Increase in deferred exploration and
evaluation (91) (1,443) (237)
Sale of tenements - - 70
Investment in joint arrangements (40) (107) (639)
Acquisition of PPE (57) (26) -
_________ _________ _________
Net cash used in investing activities (1,400) (1,576) (2,817)
_________ _________ _________
Financing activities
Net proceeds from issue of equity share
capital 91 - -
_________ _________ _________
Net cash from financing activities 91 - -
_________ _________ _________
Net increase / (decrease) in cash and
cash equivalents (1,620) (1,697) (1,846)
Cash and cash equivalents at beginning
of period 1,840 3,706 3,706
Release of restricted cash 100 - -
Exchange gains / (losses) on cash and
cash equivalents (1) (21) (20)
_________ _________ _________
Cash and cash equivalents at end of
period 319 1,988 1,840
_________ _________ _________
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2019
Share Share Foreign
Share premium Merger options Other exchange Retained Total
capital reserve reserve reserve reserves reserve earnings Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
________ ________ ________ ________ ________ ________ ________ ________
Balance at
1 January 2018
- audited 2,009 45,935 20,240 137 (23,023) (209) (38,180) 6,909
________ ________ ________ ________ ________ ________ ________ ________
Gain/(Loss) for
the period - - - - - - 1,473 1,473
Foreign exchange
translation - - - - - (685) - (685)
________ ________ ________ ________ ________ ________ ________ ________
Total
comprehensive
income for the
year - - - - - (685) 1,473 788
Shares issued in
the year 86 1,270 - - - - - 1,356
Expenses of
share
issue - - - - - - -
Transfer - - - (75) - - 75 -
Share based
payments - - - 268 - - - 268
________ ________ ________ ________ ________ ________ ________ ________
Balance at
31 December
2018-
audited 2,095 47,205 20,240 330 (23,023) (894) (36,632) 9,321
________ ________ ________ ________ ________ ________ ________ ________
Profit for the
period - - - - - - (1,182) (1,182)
Foreign exchange
translation - - - - - (62) - (62)
________ ________ ________ ________ ________ ________ ________ ________
Total
comprehensive
income for the
half year - - - - - (62) (1,182) (1,244)
Shares issued in
the year 107 1,322 - - - - - 1,429
Expenses of
share
issue - (73) - - - - - (73)
Transfer - - - (62) - - 62 -
Share based
payments - - - 163 - - - 163
________ ________ ________ ________ ________ ________ ________ ________
Balance at
30 June 2019 -
Unaudited 2,202 48,454 20,240 431 (23,023) (956) (37,752) 9,596
________ ________ ________ ________ ________ ________ ________ ________
All comprehensive income is attributable to the owners of the
parent.
The accompanying accounting policies and notes form an integral
part of these financial statements
STRATEGIC MINERALS PLC
NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE PERIODED 30 JUNE 2019
1. General information
Strategic Minerals Plc ("the Company") is a public company
incorporated in England and Wales. The consolidated interim
financial statements of the Company for the six months ended 30
June 2019 comprise the Company and its subsidiaries (together
referred to as the "Group").
2. Accounting policies
Basis of preparation
These consolidated financial statements have been prepared using
policies based on International Financial Reporting Standards (IFRS
and IFRIC interpretations) issued by the International Accounting
Standards Board ("IASB") as adopted for use in the EU. IAS 34 is
not required to be adopted by the Company and has not been applied
in the preparation of this interim information. The consolidated
financial statements do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 2018 Annual Report. The
financial information for the half years ended 30 June 2019 and 30
June 2018 does not constitute statutory accounts within the meaning
of Section 434(3) of the Companies Act 2006 and is unaudited.
The annual financial statements of Strategic Minerals Plc are
prepared in accordance with IFRSs as adopted by the European Union.
The comparative financial information for the year ended 31
December 2018 included within this report does not constitute the
full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2018 have been filed with the
Registrar of Companies. The Independent Auditors' Report on that
Annual Report and Financial Statement for 2018 was unqualified, and
included an emphasis on matter paragraph regarding the Group's
ability to continue as a going concern and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
Going concern basis
These financial statements have been prepared on the assumption
that the Group is a going concern.
When assessing the foreseeable future, the Directors have looked
at the Group's working capital requirements for the period to
October 2020 being the period for which projections have been
prepared and the minimum period the Directors are required to
consider.
The Directors have reviewed the Group's current cash resources,
funding requirements and ongoing trading of the operations. As the
Group has lost a key customer, the directors have been required to
raise further funding through debt and cut the spending on the
other group assets as appropriate. As at the date of this report,
there is no certainty regarding the group's ability to execute
these transactions. These conditions indicate the existence of
material uncertainties which may cast significant doubt as to the
Group and Company's ability to continue as a going concern. In the
event that the Group is unable to raise sufficient funds, the Group
may be unable to realise its assets and discharge its liabilities
in the normal course of business. The financial statements do not
include the adjustments that would result if the Group and Company
was unable to continue as a going concern.
The same accounting policies, presentation and methods of
computation are followed in these condensed consolidated financial
statements as were applied in the Group's latest annual audited
financial statements except for policies stated below.
Joint arrangements
Under IFRS 11 Joint Arrangements, investments in joint
arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights and
obligations of each investor, rather than the legal structure of
the joint arrangement. Strategic Minerals Limited has one joint
operation at 30 June 2019.
Joint operations
A joint operation is a joint arrangement whereby the parties
have joint control of the arrangement have rights to the assets and
obligations for the liabilities, relating to the arrangement.
Strategic Minerals Plc recognises its direct right to the assets,
liabilities, revenues and expenses of the joint operations and its
share of any jointly held or incurred assets, liabilities, revenues
and expenses.
Joint Ventures
A joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have the rights to the net
assets of the joint arrangement. Interests in joint ventures are
accounted for using the equity method, after initially being
recognised at cost in the consolidated statement of financial
position.
Business Combinations
Business Combinations occur where an acquirer obtains control
over one or more businesses. A business combination is accounted
for by applying the acquisition method unless it is a combination
involving entities or businesses under common control. The business
combination will be accounted for from the date that control is
obtained, whereby the fair value of identifiable assets acquired
and liabilities (including contingent liabilities assumed) is
recognised.
All transaction costs incurred in relation to business
combinations, other than those associated with the issue of a
financial instrument are recognised as expenses in profit and loss
when incurred
The acquisition of a business may result in the recognition of
goodwill or gain from a bargain purchase.
New, revised or amending accounting standards and
interpretations
IASB has issued a number of IFRS and IFRIC amendments or
interpretations since the last annual report was published. It is
not expected that any of these will have a material impact on the
Group.
IFRS "16 Leases" (effective for periods beginning on or after 1
January 2019) requires lessees to use single on-balance sheet model
and recognise all lease assets and liabilities on the balance
sheet. Management have completed an internal review of existing
leases and operating contracts. All existing arrangements are
short-term in nature and as such have not been accounted for under
IFRS 16. The adoption of IFRS 16 does not have an impact on the
Group's financial statements.
3. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Judgements
(a) Joint arrangement and joint operation
The Company holds a 50% interest in Cornwall Resources Limited
("CRL") which owns the Redmoor Tin-Tungsten project in the United
Kingdom with the other shareholder being New Age Exploration
Limited ("NAE"). Under the shareholders agreement with NAE, CRL is
operated as a 50:50 joint venture with each party being entitled to
appoint one Director. Based on this, the Group considers that they
have joint control over the arrangement. Under IFRS 11, this joint
arrangement is classified as a joint venture and has been included
in the consolidated financial statements using the equity
method.
Estimates and assumptions
(a) Carrying value of intangible assets
In assessing the continuing carrying value of the exploration
and evaluation costs carried the Company has made an estimation of
the value of the underlying tenements and exploration licenses
held.
(b) Share based payments, warrants and options
The fair value of share-based payments recognised in the
statement of comprehensive income is measured by use of the Black
Scholes model after taking into account market based vesting
conditions and conditions attached to the vesting and exercise of
the equity instruments. The expected life used in the model is
adjusted based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour based on past experience.
(c) Carrying value of amounts owed by subsidiary
undertakings
IFRS9 requires the parent company to make assumptions when
implementing the forward- looking expected credit loss model. This
model is required to be used to assess the intercompany loan
receivables from its subsidiaries for impairment. Arriving at an
expected credit loss allowance involved considering different
scenarios for the recovery of the intercompany loan receivables,
the possible credit losses that could arise and probabilities for
these scenarios.
The following were considered; the exploration project risk, the
future sales potential of product, value of potential reserves and
the resulting expected economic outcomes of the project.
4. Segment information
The Group has four main segments during the period:
-- Southern Minerals Group LLC (SMG) - This segment is involved
in the sale of magnetite to both the US domestic market and
historically transported magnetite to port for onward export
sale.
-- Head Office - This segment incurs all the administrative
costs of central operations and finances the Group's operations. A
management fee is charged for completing this service and other
certain services and expenses. The investment in the Redmoor
project in Cornwall, United Kingdom is held by this segment.
-- Australia - This segment holds the Central Australian Rare
Earths Pty Ltd tenements in Australia and incurs all related
operating costs.
-- Development Asset - This segment holds the Leigh Creek Copper
Mine Development Asset in Australia and incurs all related
operating costs.
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that carry out different functions and operations and operate in
different jurisdictions.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the board
and management team which includes the Board and the Chief
Financial Officer.
Measurement of operating segment profit or loss, assets and
liabilities
The Group evaluates segmental performance on the basis of profit
or loss from operations calculated in accordance with EU Adopted
IFRS but excluding non-cash losses, such as the effects of
share-based payments.
Segment assets exclude tax assets and assets used primarily for
corporate purposes. Segment liabilities exclude tax liabilities.
Loans and borrowings are allocated to the segments in which the
borrowings are held. Details are provided in the reconciliation
from segment assets and liabilities to the Group's statement of
financial position.
6 Months to 30 June Head Office SMG Australia Development Inter Total
2019 (Unaudited) Asset Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
Revenue - 1,395 - - - 1,395
Cost of sales - (229) - - - (229)
_______ ______ _______ _______ _______ _______
Gross Profit - 1,166 - - - 1,166
Depreciation - (16) (3) - - (19)
Overhead expenses (552) (475) (184) - - (1,211)
Management fee 100 (100) - - -
Impairment Charge - - (760) - - (760)
Share based expense (163) - - - - (163)
Write back of provisions 1,744 - - (1,744) -
Equity accounting
profit(loss) (38) - - - - (38)
Foreign Exchange - - (2) - - (2)
Gain on Shares available
for resale - - 1 - - 1
________ ________ ________ ________ ________ ________
Segment profit/(loss)
from operations 1,091 575 (948) - (1,744) (1,026)
________ ________ ________ ________ ________ ________
Segment profit/(loss)
before taxation 1,091 575 (948) - (1,744) (1,026)
________ ________ ________ ________ ________ ________
6 Months Head Office SMG Australia UK Inter Total
to Segment
30 Elimination
June
2018
(Unaudited)
$'000 $'000 $'000 $'000 $'000 $'000
Revenue 2 2,118 - - - 2,120
Cost
of
sales - (391) - - - (391)
_______ ______ _______ _______ _______ _______
Gross
Profit 2 1,727 - - - 1,729
Other
Income - - 2,464 - - 2,464
Depreciation - (36) - - - (36)
Overhead
expenses (838) (445) (103) - - (1,386)
Management
fee 200 (200) - - - -
Share
based
expense (92) - - - - (92)
Write
back
of
provisions (379) - - - 379 -
Equity
accounting
loss 1 - - - - 1
Foreign
Exchange 8 - - - (1) 7
________ ________ ________ ________ ________ ________
(1,098) 1,046 2,361 - 378 2,687
Segment
profit/(loss)
from
operations (1,098) 1,046 2,361 - 378 2,687
________ ________ ________ ________ ________ ________
Segment
profit/(loss)
before
taxation (1,098) 1,046 2,361 - - 2,687
________ ________ ________ ________ ________ ________
Year to 31 December Head SMG Australia Development Intra Total
2018(Audited) Office Asset Segment
Elimination
$'000 $'000 $'000 $'000 $'000 $'000
Revenue 3 3,350 2 - - 3,355
Cost of sales - (650) - - - (650)
________ _______ ________ ________ ________ ________
Gross profit 3 2,700 2 - - 2,705
Other Income - - - 2,162 - 2162
Depreciation - (64) - - - (64)
Overhead expenses (1,250) (850) (224) - - (2,324)
Management fee 380 (380) - - - -
Loss on available
for sale assets - - (12) - - (12)
Loss on sale of tenements - - (245) - - (245)
Share-based payments
charge (268) - - - - (268)
(Loss)/ gain on intercompany
loans 1,899 - - - (1,899) -
Share of net loss
from associates (27) - - - - (27)
Foreign exchange
gain (loss) (149) - - - 155 6
________ ________ ________ ________ ________ ________
Segment profit /
(loss) from operations 588 1406 (479) 2,162 (1,744) 1,933
________ ________ ________ ________ ________ ________
As at 30 June 2019 (Unaudited) Head Office SMG Development Australia Total
Asset
$'000 $'000 $'000 $'000 $'000
Additions to non-current
assets (excluding deferred
tax) 37 - 1,272 91 1,400
________ ________ ________ ________ ________
Reportable segment assets
(excluding deferred
tax) 3,324 579 5,849 2,350 12,102
Reportable segment liabilities 108 762 1,528 108 2,506
________ ________ ________ ________ ________
Total Group Liabilities 2,506
________
As at 30 June 2018 (Unaudited) Head Office SMG Development Australia Total
Asset
$'000 $'000 $'000 $'000 $'000
Additions to non-current
assets (excluding deferred
tax) 107 - - 1,469 1,576
________ ________ ________ ________ ________
Reportable segment assets
(excluding deferred
tax) 3,098 2053 - 6,560 11,711
Reportable segment liabilities 189 680 - 266 1,135
________ ________ ________ ________ ________
Total Group Liabilities 1,135
________
As at 31 December 2018(Audited) Head Office SMG Development Australia Total
Asset
$'000 $'000 $'000 $'000 $'000
Additions to non-current
assets (excluding deferred
tax) 639 - 2,011 237 2,887
________ ________ ________ ________ ________
Reportable segment assets
(excluding deferred
tax) 2,576 1,511 5,722 1,632 11,441
________ ________ ________ ________ ________
Reportable segment liabilities 129 978 901 112 2,120
________ ________ ________ ________ ________
Total Group liabilities 2,120
________
External revenue by Non-current assets
location of customers by location of assets
2019 2018 2019 2018
$'000 $'000 $'000 $'000
United States 1,395 2,118 177 395
United Kingdom - 2 2,264 1,755
Australia - - 7,893 6,285
_______ _______ _______ _______
1,395 2,120 10,334 8,435
_______ _______ _______ _______
Revenues from Customer A totalled $351,140 (2018: $362,051),
which represented 25% (2018: 17%) of total domestic sales in the
United States, Customer B totalled $563,945 (2018: $627,977) which
represented 40% (2018: 30%) of total sales and Customer C totalled
$375,000 (2018: $506,186) which represented 27% (2018: 24%). There
were no export sales in the year (2018: Nil).
5. Operating loss
Administration costs by nature
6 months 6 months
to to Year to
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Operating gain/loss is stated after
charging/(crediting):
Directors' fees and emoluments 401 414 665
Depreciation 19 36 64
Equipment rental 145 130 248
Equipment maintenance 26 34 46
Share of net loss (profit) from
joint operations 38 (1) 27
Auditors' remuneration 13 8 76
Salaries, wages and other staff
related costs 274 276 514
Insurance 15 11 -
Legal, professional and consultancy
fees 178 329 476
Loss on sale of tenements - - 245
Impairment charge 760 - -
Loss (gain)on financial assets held
at fair value through profit and
loss (1) - 12
Travelling and related costs 51 69 95
Foreign exchange 2 (7) (6)
Share based payments 163 92 268
Other expenses 108 126 204
6. Intangible Assets
Exploration/
evaluation
costs
Cost $'000
At 1 January 2018 1,242
Additions to 30 June 2018* 4,932
At 30 June 2018 ( unaudited) 6,174
Reallocation to Development Asset* (4,932)
Disposals (347)
Additions in the year 237
Foreign exchange difference (95)
At 31 December 2018 ( audited) 1,037
Additions to 30 June 2019 91
Foreign exchange difference (26)
Impairment Charge* (760)
At 30 June 2019 (unaudited) 342
At 30 June 2019, the Group has raised an impairment assessment
based on its decision to exit a number of CARE tenements.
7. Investments in Associates Investments
(Unaudited)
Cost $'000
At 1 January 2019 2,248
Acquisition of joint venture interests 40
Share of equity (loss)profit in joint ventures (38)
Foreign exchange difference 14
As at 30 June 2019 2,264
On 25 July 2019, the Company settled the acquisition of New Age
Exploration Limited's ("NAE") 50% holding in Cornwall Resources Ltd
("CRL"). Details of the settlement are included in Note 12.
8. Property, plant and
equipment
Railway Development Plant and
infrastructure Asset Machinery Total
$'000 $'000 $'000 $'000
Group
Cost
At 1 January 2018 3,498 - 199 3,697
Additions for period - - 190 190
Acquired in business combination - - 74 74
________ ________ ________ ________
At 30 June 2018 3,498 - 463 3,961
Acquired in business combination - 4,559 - 4,559
Additions - 797 - 797
Disposals (3,498) - - (3,498)
Foreign exchange difference - (449) (2) (451)
________ ________ ________ ________
At 31 December 2018 - 4,907 461 5,368
________ ________ ________ ________
Additions - 1,834 57 1,891
Disposals - - - -
Foreign exchange difference - (16) - (16)
________ ________ ________ ________
At 30 June 2019 - 6,725 518 7,243
________ ________ ________ ________
Depreciation
At 1 January 2018 (3,498) - (132) (3,630)
Charge in the six months - - (36) (36)
________ ________ ________ ________
At 30 June 2018 (3,498) - (168) (3,666)
Charge in the year - - (28) (28)
Disposals 3,498 - - 3,498
Foreign exchange difference - - (2) (2)
________ ________ ________ ________
At 31 December 2018 - - (198) (198)
________ ________ ________ ________
Charge for the period - - (19) (19)
________ ________ ________ ________
As at 30 June 2019 - - (217) (217)
________ ________ ________ ________
Carrying Value
At 30 June 2018 - - 295 295
________ ________ ________ ________
At 31 December 2018 - 4,907 263 5,170
________ ________ ________ ________
At 30 June 2019 - 6,725 301 7,026
________ ________ ________ ________
9. Dividends
No dividend is proposed for the period.
10. Earnings per share
Earnings per ordinary share have been calculated using the
weighted average number of shares in issue during the relevant
financial year as provided below.
6 months 6 months Year to
to to
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Weighted average number of shares-Basic 1,391,249,064 1,275,230,925 1,366,949,045
(Loss)/earnings for the period ($1,182,000) $2,406,000 $1,473,000
(Loss)/earnings per share in the
period-Basic ($0. 0008) $0.0019 $0.0011
11. Share capital and premium
2019 2019 2018 2018
No $'000 No $'000
Allotted, called up and
fully paid
Ordinary shares 1,467,631,282 50,656 1,376,193,127 49,205
__________ __________ __________ __________
In February 2019, the Company issued 17,500,000 ordinary shares
due to options being exercised at an exercise price of 1 pence.
In March 2019, the Company issued 2,866,730 ordinary shares at a
price of GBP 0.19 to Resilience Mining Australia Ltd, in respect of
its acquisition of Leigh Creek Copper Mine Pty Ltd.
As a result of a placement in June 2019 the Company issued
63,571,425 ordinary shares at a price of GBP 0.14. The total
proceeds of the placement after fees was GBP 834,375 ($1,059,000).
Of this amount $91,000 was received in June 2019, with the balance
$968,000 received in July 2019.
Share options and warrants
The number of options and warrants as at 30 June 2019 and a
reconciliation of the movements during the half year are as
follows:
Date of Granted as Exercised Granted as Exercise Date of Date of
Grant at 31 December at 30 June price vesting expiry
2018 2019
10.04.15 8,000,000 (8,000,000) - 1.00p 19.05.17 30.06.19
06.01.17 9,500,000 (9,500,000) - 1.00p 19.05.17 30.06.19
15.02.18 72,000,000 - 72,000,000 2.75p 01.04.20 30.06.20
15.02.18 38,500,000 - 38,500,000 3.75p 01.01.21 30.06.21
15.02.18 17,500,000 - 17,500,000 5.00p 01.01.22 30.06.22
09.08.18 35,250,000 - 35,250,000 2.75p 01.04.20 30.06.20
09.08.18 10,750,000 - 10,750,000 3.75p 01.01.21 30.06.21
3030
09.08.18 4,750,000 - 4,750,000 5.00p 01.01.22 30.06.22
----------------- -------------- -------------
19,250,000 (17,500,000) 178,750,000
----------------- -------------- -------------
12. Post balance date events
On 25 July 2019, the Company settled the acquisition of New Age
Exploration Limited's ("NAE") 50% holding in Cornwall Resources Ltd
("CRL"). Details of the settlement are:
-- An initial A$290,000 payment, taking total cash paid to
A$300,000 and agreeing an 11 month payment schedule for the balance
of A$2,700,000.
-- Payments of A$300,000 to made quarterly before 31 October
2019, 31 January 2020 and 30 April 2020 with balance to be paid on
or before 26 June 2020.
-- The interest rate on the balance of A$2,700,000 is 5% pa,
calculated on a daily balance basis, payable at the end of each
calendar quarter to allow for early repayment.
-- SML has provided NAE with a charge over the Company's shares
in CRL, a debenture charge over CRL's property and, in the event of
default, NAE has the option to convert any outstanding balances to
SML shares at 90% of the VWAP for SML shares in the 10 trading days
prior to the issue of the conversion notice.
Copies of this interim report will be made available on the
Company's website, www.strategicminerals.net.
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 rns@lseg.com or visit www.rns.com.
END
IR URAARKRAKOAR
(END) Dow Jones Newswires
September 30, 2019 07:47 ET (11:47 GMT)
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