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 and nine months ended September 30, 2022. Strategic Minerals’ third quarter 2022 (“Q3 2022”) financial statements and MD&A have been filed on SEDAR (www.sedar.com). Unless otherwise indicated, all currency amounts are in U.S. dollars.
Q3 2022 Highlights
- Primary concentrate production increased 18% from the third quarter of 2021, reaching 206 tonnes, with September’s production reaching 80.2 tonnes, the largest volume for a single month.
- Sales reached a record 191 tonnes of concentrates and 128 tonnes of contained minerals, the highest volume for a single quarter, and an increase of 23% and 37%, respectively, compared to the same period in 2021.
- $3.7 million of revenue, a decrease of 11% compared to the same quarter last year, primarily due to a reduction in international prices of metals offsetting the higher volume sold and higher content of tin, tantalite and columbite in produced concentrates.
- 3% profit before expenses and other as a percentage of revenue, compared to 93.9% in the same period the prior year.
- Cassiterite concentrate sales increased by 33.1% to 161 tonnes compared to 121 tonnes in Q3 2021.
- Tantalite and columbite concentrate sales were 30 tonnes compared to 34 tonnes for the same period in 2021.
- The combination of lower sales prices driven by international prices of minerals, inflationary trends, and higher costs of utilities at the same time as the Company is growing its operations, increasing depreciation of assets, and hiring more qualified employees, has resulted in net income of $0.2 million, compared to a net income of $2.0 million in Q3 2021.
- On October 13, 2022, after the end of the reporting period, the Company closed the first tranche of a non-brokered private placement offering for aggregate gross proceeds of approximately $0.74 million (CA$1.017 million) to pay for the financial guarantee relating to the Penouta Project and for general working capital purposes.
Operational and Financial Summary for the Quarter ended September 30, 2022
|Q3 2022||Q3 2021||% Change|
|Total Concentrate Production||Tonnes||206||175||17.7%|
|Tin Concentrate Sold||Tonnes||161||121||33.1%|
|Tantalite Concentrate Sold||Tonnes||30||34||(11.8%)|
|Profit before expenses & other||$’000||3,036||3,902||(22.2%)|
|Net Income (Loss) Per Share||$||0.001||0.009||(88.9%)|
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.
“Despite adverse weather conditions and macroeconomic headwinds, our steadily increasing production highlights the continued successful application of our strategy to advance our operations at the Penouta mine,” said Jaime Perez Branger, CEO of Strategic Minerals. “Based on the solid production and levels of efficiency we are seeing, we remain confident that these positive trends will continue. We expect to maintain stable production levels for the rest of 2022 and position Strategic Minerals as the key ethical supplier of the metals that support the new green economy.”
Operational and Financial Performance
In the first quarter of 2022, the Company’s focus was on preparing for production in the open pit. This included installing the new crushing plant and associated equipment. The testing for the new crushing plant began in January, and blasting permits were awarded in March. As such, production levels did not commence to normalize until the second quarter of 2022.
During the third quarter of 2022, the Company continued to strengthen its open pit mining efforts, increasing its year-over-year primary concentrate production by 18% to 206 tonnes. September’s production of primary concentrate reached a record 80.2 tonnes, the largest volume for a single month and 2.9 times the average monthly production of 2021. Year to date, the total production of primary concentrate reached 436 tonnes, increasing 47% from the same period last year, primarily due to an increase in the production of cassiterite concentrate.
Quality of concentrate improved during the third quarter compared to the same quarter last year. Production consisted of 174 tonnes of cassiterite concentrate with 70.5% tin content, and 32 tonnes of tantalite/columbite concentrate with 24.3% tantalite content and 25.2% columbite content.
During the first nine months of the year, revenues totalled $9.5 million, 54% higher than the revenues of the first nine months of 2021, which is consistent with the increase in production in 2022. Revenues for Q3 2022 were $3.7 million, decreasing 11% from Q3 2021, primarily driven by a reduction of international prices of metals, offsetting the higher volume sold and the higher content of tin, tantalite and columbite in produced concentrates.
Adjusted EBITDA was $0.7 million or 20.2% as a percentage of sales for the third quarter, a decrease of $1.6 million from the same period of 2021 ($2.4 million or 57.3% as a percentage of sales). By keeping operating expenses under control while increasing production and quality of the concentrates, adjusted EBITDA was $0.7 million during the first nine months of 2022, offsetting the accumulated loss for the first half of the year when open pit activities were initially starting.
At the end of the period, cash and cash equivalents were $0.5 million compared to $2.2 million on December 31, 2021, reflecting the increase in cash used in operations, debt repayment and the commissioning of new equipment.
At the end of Q3 2022, the Company had a deficiency in working capital of $1.0 million compared to a working capital surplus of $0.6 million at the end of 2021. This was primarily attributable to the transition to open pit mining, commissioning of the new primary crushing plant and fulfilling financial commitments.
Strategic Minerals focuses on increasing production, reducing unitary costs, reinvesting profits to achieve organic and sustainable growth, and looking for new external financing opportunities to expand production, improve recovery levels and initiate downstream projects. The most prevalent strategic project underway is the full exploitation of Section C at the Penouta Project.
After being granted the definitive concession allowing the Company to exploit mineral resources such as cassiterite (tin), tantalum, niobium, quartz, feldspars, and micas, the Company has continued to advance its open pit mining operations in the Penouta Mine.
Concentrate quality improved during the third quarter of 2022 as production consisted of 174 tonnes of cassiterite concentrate with 70.5% tin content and 32 tonnes of tantalite/columbite concentrate with 24.3% tantalite content and 25.2% columbite content. The Company’s target is to maintain this trend for the remainder of the year.
The Company’s average sale price was reduced due to lower international price of metals, offsetting the higher content of tin, tantalite and columbite in its concentrates. As of the date of this press release, international prices of minerals have continued to decline due to fears of a global recession, inflation pressure on the leading economies and the continuation of the military conflict between Russia and Ukraine.
About Strategic Minerals Europe Corp.
Strategic Minerals’ wholly-owned subsidiary, Strategic Minerals Spain, S.L. (“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, which allows the Company to produce and conduct exploration, and an investigation permit at the Alberta II Project, allowing it to conduct exploration work already underway. SMS is the largest producer of tin and tantalum 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. 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.sedar.com.
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. 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 29, 2022, which is available for view on SEDAR at www.sedar.com. Forward-looking statements contained herein, including but not limited to the Company’s ability to optimize and expand production, the increase in demand in the new green economy, the ability to continue to meet working capital requirements, and its ability to increase the quality of the concentrate, 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.
Strategic Minerals’ operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the outbreak of illness caused by COVID-19. In addition, the global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, Russia began a full-scale military invasion of Ukraine. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets and interest rates. These factors could negatively impact the Company’s ability to access liquidity needed for the Company’s business in the longer term. These factors may impact the Company’s future ability to obtain equity, debt or bank financing on terms favourable to the Company, or at all.
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 and 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.
|($ thousands)||Three Months ended
September 30, 2022
|Three Months ended
September 30, 2021
|Changes in inventories of finished goods & work in progress||606||204|
|Raw materials and consumables used||(291)||(222)|
|Other operating expenses||(1,741)||(1,039)|
|Other income (expense)||68||(21)|
For further information regarding Strategic Minerals, please contact:
Elena Terrón, Corporate Secretary
Strategic Minerals Europe Corp.
NATIONAL Capital Markets