Strategic Minerals Reports First Quarter 2022 Financial Results

2022-05-12 13:40:13

TORONTO, May 12, 2022 /CNW/ – Strategic Minerals Europe Corp. (NEO: SNTA) (FRA: 26K0) (“Strategic Minerals” or the “Company”), a company focused on the production, development, and exploration of cassiterite concentrate, tantalite, and columbite concentrate, today announced its results for the three months ended March 31, 2022. Strategic Minerals’ first quarter 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.

  • $1.08 million of revenue in Q1 2022 – an increase of $0.781 million or 258% from the same period in 2021.
  • 63% profit before expenses and other as a percentage of revenue was achieved in Q1 2022, compared to 51% in the prior year. The increase results from processing materials from the open pit, as commissioning of the new primary crushing plant got under way, and obtaining higher grades of commercial concentrate.
  • The Company’s new primary crushing plant began the commissioning process in the third week of January 2022 using softer material from the surface of the pit, with final authorization for blasting received in the second week of March 2022.
  • In Q1 2022, cassiterite concentrate sales increased by 4.2 times compared to sales in Q1 2021, with further gains expected from the plant improvements made in Q1 2022.
  • During the commissioning process and adjustments to operations, tantalite and columbite concentrate production was lower than in the past due to mineralization on the pit’s surface, resulting in a decrease in tonnes sold during the quarter of 37% from Q1 2021. The Company expects production to be approximately 75% cassiterite concentrate and 25% tantalite columbite concetrate as it continues work on the open pit.
  • The longer than expected wait for blasting authorization required more expensive mechanical excavation initially and the normal commissioning process of the new primary crushing plant, along with the significant increase in the workforce (18 more employees in the quarter than in Q1 2021) to be trained and begin commissioning work, resulted in a net loss of $1.612 million in the quarter, 41% greater than the net loss of $1.142 million ($0.01 per share) in Q1 2021.

Operational and Financial Summary for the Quarter ended March 2022












Description

Units

Actual

   

Q1 2022

Q1 2021

% Change

Total Concentrate Production

Tonnes

47

15

213.3%

Cassiterite Concentrate Sold

Tonnes

42

10

320.0%

Tantalite Concentrate Sold

Tonnes

5

8

(37.5%)

Revenue

$’000

1,084

303

257.8%

Profit before expenses & other

$’000

679

156

335.3%

Adjusted EBITDA1

$’000

(1,297)

(592)

(119.0%)

Net Loss Per Share

$

(0.01)

(0.01)

0.0%




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.

“We are very pleased with the progress achieved in Q1 2022. The commencement of open pit production and the start of processing materials with our new primary crushing plant represent key landmarks in our efforts to build out operations at the Penouta Project,” said Jaime Perez Branger, CEO of Strategic Minerals. “We are extremely confident in our abilities to continue to optimize and expand production and meet increasing demand in the new green economy.”

Operational and Financial Performance

Q1 2022 revenue was $1.08 million, up $0.78 million or 258% from the same period in 2021. The increase was primarily due to the rise in production, tonnes sold and a continued increase in the average prices of minerals, mainly driven by the demand for electronic devices and further affected by the geopolitical crisis in Ukraine affecting all industries.

After production of concentrates from the remaining tailings was completed in mid-January, the Company began working within the open pit, improving the quality of the concentrate. At that time, the new primary crushing plant started processing material from mechanical excavation while awaiting the permit for blasting. Once approved in the second week of March, blasting trials began and production has consistently increased since then, reaching 10 tonnes in January, 18 tonnes in February and 19 tonnes in March, for a total output of 47 tonnes of primary concentrate during the first quarter of 2022, 3.1 times the production of the same period in 2021.

Strategic Minerals’ cassiterite concentrate sold in Q1 2022 was 42 tonnes, and tantalite concentrate accounted for sales of 5 tonnes; in total in Q1 2022, 47 tonnes of concentrate were sold. In Q1 2021 18 tonnes were sold between cassiterite concentrate and tantalite concentrate, an increase of 161%.

In Q1 2022, cassiterite concentrate grade was 68.9% tin, up 4.8 percentual points from Q1 2021. For Q1 2022, tantalite and columbite concentrate grades increased by 1.6 and 3.3 percentual points from Q1 2021, respectively. The increase in grades of commercial concentrates was primarily driven by the commencement of open pit activities, and using the new primary crushing plant for processing material.

Adjusted EBITDA1 for Q1 2022 was ($1.3 million), a decrease of 119% from Q1 2021. The reduction in Q1 2022 was due to the increased cost of raw materials (such as ball bearings and certain mining costs), additional operating expenses related to the beginning of exploration in Section C of the Penouta Project, and the commencement of the crushing facility and using blasting material from the open pit. Also, in Q1 2021 the plant was mostly closed because of inclement weather conditions.

At the end of the period, cash reached $0.89 million, down 60% from the previous quarter’s cash balance of $2.24 million, mainly a result of an increase in cash used in operations, the repayment of debt and commissioning of the equipment recently installed.

At the end of Q1 2022, the Company had a deficiency in working capital of $0.918 million compared to a working capital surplus of $0.641 million at the end of 2021. This was primarily attributable to the highly working capital-intensive process of commissioning the recently installed equipment and fulfilling financial commitments, including making the the first repayment of the Government grant (RETOS program.) Management is confident that working capital requirements will be covered during the ongoing course of business.

Outlook

Strategic Minerals focuses on increasing production, reducing unitary costs, reinvesting profits to achieve organic and sustainable growth, and looking to expand production, improve recovery levels and initiate downstream projects. The most important strategic project underway is the production expansion of the Penouta Project.

When the new crushing plant became operational in the third week of January 2022, the Company began the testing and commissioning process of certain equipment to allow it to work with material from the open pit. This process enables the Company to increase production and the quality of the concentrate.

Authorization for blasting was given in the second week of March 2022. Production has been increasing steadily, and the Company believes this will allow for increased production and quality of the concentrate. The Company expects to reach a production level of between 75 and 90 tonnes of concentrate per month by the end of the second quarter of 2022.

The Company continues to increase its monthly production; in April the Company increased its primary concentrate production to 42.6 tonnes, as well as the quality of such production.  34.1 tonnes were cassiterite concentrate with 70% tin content and 8.52 tonnes of tantalite/columbite concentrate with 19% tantalite content and 21.5% columbite content.

The Company is currently in the final phase of obtaining exploration approval for Section C of the Penouta Project, which would allow the related permit to be converted into a concession.

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 cassiterite concentrate and tantalite 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 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.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 of to continue to meet working capital requirements, its ability to increase the quality of the concentrate, and the Company’s expectation that it will reach a production level of between 75 and 90 tonnes of concentrate per month by the end of the second quarter of 2022, 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 recent outbreak of illness caused by COVID-19. It is not possible to accurately predict the impact COVID-19 will have on operations and the ability of others to meet their obligations, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect operations and the ability to finance its operations.

USE OF NON-IFRS FINANCIAL MEASURES

This announcement refers to the following non-IFRS financial performance measures:

Adjusted EBITDA

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. Please also see the Company’s MD&A dated May 12, 2022 for a reconciliation of Adjusted EBITDA for the quarter ended March 31, 2022 and corresponding prior periods to its most directly comparable financial measure contained in the Company’s financial statements.

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