Strategic Minerals Europe Corp. (NEO: SNTA, FRA: 26K0, OTCQB: SNTAF) (“Strategic Minerals” or the “Company”), a company focused on the production, development, and exploration of tin, tantalum and niobium, announces the results for the three months ended June 30, 2023. Strategic Minerals’ second quarter 2023 (“Q2 2023”) financial statements and MD&A have been filed on SEDAR (www.sedarplus.ca). Unless otherwise indicated, all currency amounts are in U.S. dollars.
Q2 2023 Highlights
- In Q2 2022, the Company achieved production and efficiency benefits from the major overhaul of the main ball mill at its Penouta Project, completed in February.
- The Company achieved record production, increasing 36% to 246 tonnes of primary concentrate compared to Q2 2022. June 2023 production was 90 tonnes, the largest for a single month. For the first six months of 2023, total production was 366 tonnes, a 60% increase from the same period in 2022.
- Cassiterite concentrate production was 206 tonnes with 69.7% tin content and 303 tonnes with 69.6% tin content for the first half of the year.
- Tantalite/columbite concentrate production was 40 tonnes, with 24,7% tantalite content and 26.4% columbite content. For the first six months of 2023, production totalled 63 tonnes with 23.0% tantalite content and 24.8% columbite content.
- The Company achieved record sales of 231 tonnes of concentrates and 154 tonnes of contained minerals, an increase of 40% and 38%, respectively, compared to the same period in 2022. Sales for the first six months of the year reached 365 tonnes of concentrates and 239 tonnes of contained minerals, 72% and 68%, respectively, higher than the year before.
- Cassiterite contributed 84% of the mix of sales for Q2 2023 and 82% for the first six months of 2023.
- Revenues of $4.6 million, 1% below Q2 2022. The relatively flat year-over-year revenue resulted from the increased production achieved by overhauling the ball mill at Penouta despite lower metals prices. The average prices per tonne of tin in the LME decreased from $42,252 in Q1 2022 to $26,412 in Q1 2023 and from $34,598 to $25,701 in Q2 2022 and 2023, respectively. The price per pound of tantalite increased from $76 to $96, comparing Q1 2022 to Q1 2023 and decreased from $95 to $78 from Q2 2022 to Q2 2023.
- Revenue in the first six months of 2023 increased by 30% to $7.5 million due to the increased production from processing plant improvements.
- Adjusted EBITDA of $0.6 million or 13.1% as a percentage of sales. For the first six months of 2023, Adjusted EBITDA was ($0.5 million).
- Net income of $0.008 million ($0.000 per share) compared to $0.816 million ($0.006 per share) in Q2 2022. Net loss for the first six months of 2023 was $1.3 million (loss of $0.006 per share) compared to a net loss of $0.798 million (loss of $0.003 per share) during the same period of 2022.The increase in net loss in the first six months of 2023 was partially a result of the halt in production during the month of February to facilitate the mill overhaul.
- The Company entered into a cassiterite offtake agreement for the remainder of 2023 with Traxys Europe S.A. (“Traxys”), which includes an advance payment facility and entered into a loan agreement (the “Term Loan”) for $1.075 million with two officers or directors of the Company. The Term Loan bears interest at a rate of 10% per annum and is set to mature on April 11, 2025.
- After quarter end, Electric Royalties Ltd. (TSXV: ELEC) (OTCQB: ELECF) (“Electric Royalties”) exercised its option to increase its 75% gross revenue royalty on the Company’s Penouta Project by a further 0.75% in exchange for a cash payment of C$1.25 million. Electric Royalties now holds an aggregated 1.5% gross revenue royalty on Penouta.
Operational and Financial Summary for the Quarter and six months ended June 30, 2023
|Q2 2023||Q2 2022||%
|YTD 2023||YTD 2022||%
|Total Concentrate Production||
|Tin Concentrate Sold||Tonnes||193||141||36.9%||298||183||62.8%|
|Tantalite and Columbite Concentrate Sold||
|Profit before expenses & other||$’000||3,143||3,158||(0.5%)||4,355||3,838||13.5%|
|Net Income (Loss) Per Share||$||0.000||0.003||(100%)||(0.006)||(0.003)||100%|
1This is not a standardized financial measure and may not be comparable to similar financial measures of other issuers. See “Use of Non-IFRS Financial Measures” below for the composition and calculation of this financial measure.
“The second quarter of 2023 was the first quarter of full production after we completed the major overhaul of our main ball mill in February,” said Jaime Perez Branger, CEO of Strategic Minerals. “The strong results continued through the month of June. For the rest of 2023 and forward, we expect to continue to benefit from this increased production and efficiency.”
Operational and Financial Performance
Production in Q2 2023 was 246 tonnes, an increase of 36% from the same period of 2022 (181 tonnes), when the primary crushing plant was recently commissioned, and the operations at the Penouta Project were transitioning to open pit mining. During the first half of the year, production reached 366 tonnes, a 60% increase compared to the same period in the prior year.
The quality of the concentrate was maintained as production increased. Production during the second quarter consisted of 206 tonnes of cassiterite concentrate with 69.7% tin content (153 tonnes with 71.2% tin content in 2022) and 40 tonnes of tantalite/columbite concentrate with 24.7% tantalite content and 26.4% columbite content (28 tonnes with 23.0% tantalite and 25.0% columbite content the year before).
Sales in Q2 2023 reached 231 tonnes of concentrates and 154 tonnes of contained minerals, an increase of 40% and 38%, respectively, over the same period of 2022. During the first half of the year, sales of concentrates amounted to 365 tonnes and sales of contained minerals reached 239 tonnes, increasing 72% and 68% from the first half of 2022.
Contained minerals sales breakdown was 135 tonnes for Q2 2023 and 207 tonnes for the first half of 2023 of contained cassiterite (cassiterite concentrate multiplied by tin grade percentage) and 19 tonnes for the second quarter, and 32 tonnes for the first half of contained tantalite and columbite (tantalite and columbite concentrate multiplied by the corresponding grade percentage). Cassiterite contributed 84% of the mix of sales for the second quarter and 82% for the first half.
International prices of metals decreased during 2022 as a consequence of, among other things: (i) intensified fears of a global recession which affected demand; (ii) inflation pressure driving tighter monetary policies on the leading economies; and (iii) the continuation of the military conflict between Russia and Ukraine. The average prices per tonne of tin in the LME decreased from $42,252 in Q1 2022 to $26,412 in the same period this year and from $34,598 to $25,701 in Q2 2022 and 2023, respectively. The price per pound of tantalite increased from $76 to $96, comparing Q1 2022 to Q1 2023 and decreased from $95 to $78 from Q2 2022 to Q2 2023.
Revenues in Q2 2023 totalled $4.6 million, a slight decrease of 1% compared to Q2 2022. The lower prices of minerals offset the increase in tonnes sold. During the first six months of the year, revenues reached $7.5 million, an increase of 30% in terms of dollars from Q2 2022, with an increase of 72% in volume sold.
At the end of the period, cash and cash equivalents were $0.6 million compared to $0.9 million on December 31, 2022. Most of the cash reduction was applied to the operations of the Company.
The Company is focused on improving its operations by increasing production to reduce unit costs, reinvesting profits to achieve organic and sustainable growth, and looking for new external financing opportunities.
The Company described the two phases of its strategic plan in the Company’s MD&A for the year ended December 31, 2022, and in its Annual Information Form dated March 30, 2023, both of which are available on the Company’s website and www.sedarplus.ca. The following are the most significant developments during the second quarter of 2023:
Phase 1: Development of the Penouta Project
- The Company continued to secure financing for working capital and improvement of the capacity production at the plant, including the Royalty Transaction and the Term Loan.
- After the major overhaul of the main ball mill performed between mid-February and early March 2023, the Company has continued to work on improvements to the operation to increase recovery and throughput and to optimize energy consumption, resulting in a significant increase in production, particularly during the second quarter of this year.
- The analysis of critical equipment spare parts has been revised, and components have been acquired to avoid downtime and improve preventive maintenance.
- Investments are being made to improve recirculation and decrease fresh water consumption.
- The Company has continued working on its mine development plan by carrying out the necessary stripping to access the higher mineralization areas.
Phase 2: Expand exploration work on the Lithium Project
Progress is being made within the Spanish Mining authorities with respect to advancing the transfer of the permits related to the Lithium Project as described in the Company’s MD&A for the year ended December 31, 2022, and in its Annual Information Form dated March 30, 2023, both of which are available on the Company’s website and www.sedarplus.ca.
About Strategic Minerals Europe Corp.
Strategic Minerals’ wholly-owned subsidiary, Strategic Minerals Spain, S.L.U. (“SMS”), produces, identifies, explores, and develops mineral resource properties critical to the green economy, predominantly in Spain. SMS holds permits and a license for the Penouta Project and a 30% carried joint venture interest in the Alberta II/Carlota Lithium Project. SMS is the largest cassiterite concentrate and tantalite producer in the European Union and has been recognized within the EU as an exemplary company of good practices in the circular economy. The Company is well-positioned as a major producer of sustainable and conflict-free tin, tantalum, and niobium and, through the Alberta II/Carlota Joint Venture, is exploring for lithium. Strategic Minerals is a “reporting issuer” under applicable securities legislation in the provinces of British Columbia, Alberta, and Ontario.
Additional information on Strategic Minerals can be found by reviewing its profile on SEDAR at www.sedarplus.ca.
Cautionary Note Regarding Forward-Looking Information:
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release, including, without limitation, management’s beliefs regarding maintaining the current levels of production and meeting guidance targets. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strategic Minerals to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption “Risks Factors” in the Company’s Annual Information Form dated March 30, 2023, which is available for view on SEDAR at www.sedarplus.ca. These risks include but are not limited to, the risks associated with the mining and exploration industry, such as operational risks in development or capital expenditures, the uncertainty of projections relating to production, and any delays or changes in plans with respect to the exploitation of the site. Forward-looking statements contained herein, are made as of the date of this press release, and Strategic Minerals disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management’s estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
RECONCILIATION OF NON-IFRS FINANCIAL MEASURES
This announcement refers to the following non-IFRS financial performance measures:
Adjusted EBITDA represents earnings before interest, income taxes, depreciation, and amortization (“EBITDA”), adjusted to exclude share-based payments, gain on retained investment in associate, gain on sales of assets and reverse takeover (“RTO”) transaction costs. Adjusted EBITDA provides insight into our overall business performance (a combination of cost management and growth) and is intended to provide additional information for the reader as we believe certain investors could use this information to evaluate the Company’s underlying performance of its core operations and its ability to generate cash flow and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to other issuers.
The following table provides a reconciliation of adjusted EBITDA to net income (loss) as reported in the Financial Statements:
|Q2 2023||Q2 2022||YTD 2023||YTD 2022|
|Net income (loss)||8||813||(1,313)||(798)|
|Gain on settlement of debt||(2)||—||(9)||—|
|Change in fair value of investment||—||—||15||—|
|Income tax expense||0||—||62||—|
|Depreciation and amortization expense||489||321||959||721|
|Gain on sale of assets||—||—||(529)||—|
|Loss from investment in associate||22||—||22||—|
For further information regarding Strategic Minerals, please contact: Elena Terrón, Corporate Secretary
Craig MacPhail NATIONAL (416) 525-5709