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 September 30, 2023. Strategic Minerals’ third quarter 2023 (“Q3 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.
- Production reached 209 tonnes of primary concentrate, increasing 1% compared to Q3 2022. July 2023 production was 96 tonnes, the largest for a single month. For the first nine months of 2023, total production was 574 tonnes, a 32% increase from the same period in 2022 and surpassing the twelve months production of the year before.
- Cassiterite concentrate production was 174 tonnes with 70.5% tin content for the third quarter and 477 tonnes with 70.0% tin content for the first nine months of the year.
- Tantalite/columbite concentrate production during the third quarter was 35 tonnes, with 26.1% tantalite content and 26.2% columbite content. For the first nine months of 2023, production totalled 97 tonnes with 24.1% tantalite content and 25.3% columbite content.
- The Company achieved record sales of 234 tonnes of concentrates and 158 tonnes of contained minerals in Q3, an increase of 23% for both figures compared to the same period in 2022. Sales for the first nine months of the year reached 600 tonnes of concentrates and 398 tonnes of contained minerals, 49% and 47%, respectively, higher than the year before.
- Cassiterite contributed 84% of the mix of sales for Q3 2023 and 82% for the first nine months of 2023.
- Revenues increased 29% to $4.8 million compared to Q3 2022. The increase in revenue was a result of the improvement in plant efficiency, quality, optimization of recovery factors, and a slight increase in the sales price of cassiterite. Prices per tonne of tin during the third quarter increased 14% compared to the same period the year before, from $23,333 to $26,696. The price per pound of tantalite decreased 10% from $81 to $73 from the third quarter of 2022 to the same period this year.
- Revenue in the first nine months of 2023 increased by 30% to $12.3 million due to the increased production from processing plant improvements.
- Net loss of $0.563 million ($0.002 per share) compared to net income of $0.175 million ($0.001 per share) in Q3 2022. The increase in net loss for the quarter was partially a result of the halt of production for the second half of September due to the unusual drought in Spain and continued mine development to access higher mineralization areas. Net loss for the first nine months of 2023 was $1.9 million (loss of $0.008 per share) compared to a net loss of $0.624 million (loss of $0.003 per share) during the same period of 2022.
- On July 27, 2023, Electric Royalties Ltd. (TSXV: ELEC) (OTCQB: ELECF) (“Electric Royalties”) exercised its option to increase its 0.75% 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 the production of the Penouta Project.
- On September 28, 2023, the Company reached an agreement with IberAmerican Lithium Corp (Cboe: IBER) (“IberAmerican”) for its 30% interest in the investigation permit No 5186 and the application for investigation permit No 5191 related to the Alberta II and Carlota lithium projects, respectively, located in Spain (the “Lithium Project”). IberAmerican acquired the Company’s remaining interest for CA$1 million, paid in cash.
- After the end of the reporting period, on October 19, 2023, the Superior Court of Xustiza of Galicia (the “TSXG”) decided to provisionally suspend the section C permit for the Company’s Penouta Project after a complaint filed against the local mining authority Xunta de Galicia (the “Xunta”), requesting a revocation of the section C permit granted to the Company in May 2022. In the Company’s opinion, the claim, and therefore TSXG’s decision, is based on inaccurate assertions that exploitation activities at the Penouta Project are affecting irrigation and the immediate area. The Company and the Xunta are exploring all available legal avenues, and on October 23, 2023, the Company presented an appeal to reverse TSXG´s decision.
|Q3 2023||Q3 2022||%
|Tonnes||209||206||1.5 %||574||436||31.7 %|
|Tonnes||196||161||21.7 %||494||343||44.0 %|
|Tonnes||38||30||26.7 %||106||59||79.7 %|
|Revenue||$’000||4,769||3,687||29.3 %||12,299||9,459||30.0 %|
expenses & other
|$’000||2,263||3,036||(25.5 %)||6,618||6,874||(3.7 %)|
(Loss) Per Share
|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.|
“With the improvements we’ve made in plant efficiency, quality, and optimization of recovery factors, our production continues to grow, with July’s production reaching a historic record,” said Jaime Perez Branger, CEO of Strategic Minerals. “Since commencing production at Penouta, we have built a highly efficient mine that not only produces the critical minerals needed for the green economy but provides valuable jobs and benefits the local economy.”
“We are exploring all legal avenues for addressing the suspension of the section C permit for the Penouta Project,” continued Jaime Perez Branger, “We believe that the complaint filed against the local mining authority Xunta de Galicia holds no merit. On October 23, 2023, we presented an appeal to reverse the decision and will continue our efforts to resolve these inaccurate claims.”
Operational and Financial Performance
Production rates continued to improve despite the unusual drought affecting Spain in September as July’s production of primary concentrate reached the highest volume for a single month. Production in Q3 2023 was 209 tonnes, an increase of 1% from the same period of 2022 (206 tonnes). During the first nine months of the year, production reached 574 tonnes, a 32% increase compared to the same period in the prior year.
The quality of the concentrate also improved during the third quarter. Production during the third quarter consisted of 174 tonnes of cassiterite concentrate with 70.5% tin content (with no change from the same period in 2022) and 38 tonnes of tantalite/columbite concentrate with 26.1% tantalite content and 26.2% columbite content (30 tonnes with 24.3% tantalite and 25.2% columbite content the year before).
Sales in Q3 2023 reached 234 tonnes of concentrates and 158 tonnes of contained minerals, an increase of 23% for both figures over the same period of 2022. During the first nine months of the year, sales of concentrates amounted to 600 tonnes and sales of contained minerals reached 398 tonnes, increasing 49% and 47% from the first nine months of 2022.
Contained minerals sales breakdown was 138 tonnes for Q3 2023 and 346 tonnes for the first nine months of 2023 of contained cassiterite (cassiterite concentrate multiplied by tin grade percentage). Tantalite and columbite (tantalite and columbite concentrate multiplied by the corresponding grade percentage) sales were 20 tonnes for the third quarter and 52 tonnes for the first nine months of contained tantalite and columbite. Cassiterite contributed 84% of the mix of sales for the third quarter, and 82% for the first nine months of the year.
International prices per tonne of tin during the third quarter increased 14% compared to the same period the year before, from $23,333 to $26,696. The price per pound of tantalite decreased 10% from $81 to $73 from the third quarter of 2022 to the same period this year.
Revenues in Q3 2023 totalled $4.8 million, an increase of 29% compared to Q3 2022, primarily due to increased production and improved quality. During the first nine months of the year, revenues reached $12.3 million, an increase of 30% in terms of dollars from Q3 2022, with an increase of 49% in volume sold.
At the end of the period, cash and cash equivalents were $1.0 million compared to $0.9 million on December 31, 2022. The cash balance will be used for working capital purposes in the following months.
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 third quarter of 2023:
Phase 1: Development of the Penouta Project
- The Company continued to strengthen its balance sheet through the sale of its 30% interest in the Lithium Project for CA$1 million.
- 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. July’s production reached the highest volume for a single month in the history of the Company.
- Due to the low levels of water in Spain caused by an unusual drought affecting the country, production halted from September 18 to October 2 of 2023. The company is investing €0.9 million in new equipment to improve water recirculation and decrease freshwater consumption. The new equipment is expected to be ready at the beginning of next year and will prevent production interruption in case of future droughts. The Company has continued working on its mine development plan by carrying out the necessary stripping to access the higher mineralization areas.
The Company continues to work with 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.
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. 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. 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.
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, gain on disposal of investment in associate 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:
|($ thousands)||Q3 2023||Q3 2022||YTD 2023||YTD 2022|
|Net income (loss)||(563)||175||(1,876)||(623)|
|Gain on settlement of
|Change in fair value of
|Income tax expense||75||—||137||—|
|Gain on sale of assets
and investment in
|Loss from investment