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Strategic Minerals upbeat on expected demand for Cobre magnetite

Published: 03:34 20 Jul 2022 EDT

Strategic Minerals PLC -

Strategic Minerals PLC (AIM:SML, OTC:SMCDF) reported lower tonnage and sales from its Cobre magnetite operation in New Mexico, US, pulling its shares down 9% in London.

Tonnage volumes for the quarter to end-June fell 12% year on year and sales declined 10% to US$666,000, while tonnage for the year to end-June dropped 21% from the previous year and sales were down 16% at US$2.43mln.

On a more positive note, the company said it met with Cobre's largest customer to discuss expected demand. The client indicated that there was not likely to be a repeat of the reduced demand seen between October 2021 and January 2022 and that their expectations for the rest of the year and beyond was in line with previous demand.

"Confirmation from the largest Cobre client that demand is expected to be maintained at historical levels, is significantly reassuring in relation to the outlook for cash flow for the years to come,” said managing director John Peters.

The AIM-traded company had around US$430,000 in cash as of end-June, partly due to slightly lower seasonal Cobre revenues, which are expected to recover in the current quarter, said Strategic Minerals.

In June, the company’s clients were notified of a planned 20% increase in prices to be phased in over the next six months from July 1. 

“Given that it had been over four years since prices were increased and the high inflation rate currently being experienced in the US, this was understood by customers and early July 2022 sales seem to indicate no change in demand,” it said.

At the Leigh Creek copper mine in Australia, the company received final Programme for Environmental Planning and Rehabilitation (PEPR) approval for oxide mining at Paltridge North and is now discussing potential funding to restart production with parties who have indicated an interest.

Shares in Strategic Minerals were down 9% at 0.25 pence in early London trading.

 

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