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 twelve-month periods ended December 31, 2022. Strategic Minerals’ 2022 annual audited financial statements and associated MD&A have been filed on SEDAR (www.sedar.com). Unless otherwise indicated, all currency amounts are in U.S. dollars.

 

Fiscal Year 2022 Highlights

  • Successfully transitioned to open pit mining at the Penouta property (the “Penouta Project”) and commenced operating the primary crushing plant, improving primary concentrate production and quality of concentrate.

 

  • On May 23, 2022, the Company obtained the Concession C grant, which permits the Company to fully develop the open pit mine at the Penouta Project for 30 years, renewable for up to 75 It also allows Strategic Minerals to exploit cassiterite (tin), tantalum and niobium, as well as industrial minerals in the mine, such as quartz, feldspars and micas.

 

  • With only nine months of open pit operations, total production reached a record 541 tonnes, and the concentrate quality also improved during the Cassiterite concentrate production was 455 tonnes with 70.4% tin content, and tantalite/columbite concentrate production reached 86 tonnes with 23.3% tantalite content and 24.6% columbite content.

 

  • Sales reached 524 tonnes of concentrates and 351 tonnes of contained minerals, an increase of 52% and 76%, respectively, compared to 2021.

 

  • Revenues totalled $11.7 million, an increase of 54% compared to 2021.

 

  • Net loss narrowed to $1.4 million compared to a net loss of $3.0 million in 2021.

 

  • On December 28, 2022, the Company sold a 70% interest in the Alberta II investigation permit and the Carlota permit application (together, the “Lithium Project”) to IberAmerican Lithium Inc. (“ILI”) for total consideration of CA$2.0 million. The Company and ILI have also entered into a joint venture agreement (the “JV Agreement”) in respect of the Lithium Project.

 

  • On January 24, 2023, after the reporting period, Electric Royalties Ltd. (“Electric Royalties”) acquired a 0.75% gross revenue royalty on the production of the Penouta Project for a cash payment of CA$1.0 million and the issuance to the Company of 500,000 common shares in the capital of Electric. Electric Royalties may acquire an additional 0.75% royalty at the Penouta Project in consideration of a further cash payment of CA$1.25 million until August 24, 2023. The royalty rates will be reduced to 0.5% respectively once CA$1.67 million in royalty revenues have been paid to Electric Royalties.

 

  • The Company entered into a power purchase agreement for its Penouta Project, which provides for the supply to the Company of seven gigawatts per year of electricity for five years starting on January 1st, 2023. A significant portion of the power will be from renewable energy sources and is expected to generate substantial cost savings.

 

 

Fourth Quarter (“Q4 2022”) Highlights

  • Production reached 105 tonnes of primary concentrate production or 3.1 times that of the same period in 2021.

 

  • Sales reached 121 tonnes of concentrate and 80 tonnes of contained minerals, increasing 89% and 113%, respectively, compared to the same period in 2021.

 

  • Revenues were $2.2 million, an increase of 58% from the same period the prior year, primarily due to higher sales volume.

 

  • Net loss narrowed to $0.8 million compared to $3.6 million in Q4 2021.

 

 

Operational and Financial Summary for the Quarter and year ended December 31, 2022

 

Description Units Actual
Q4 2022 Q4 2021 Q4 %

Change

 FY2022 FY2021 FY %

Change
Total Concentrate Production Tonnes 105 33 318.2% 541 331 63.4%
Tin Concentrate Sold Tonnes 100 42 238.1% 444 253 75.5%
Tantalite Concentrate Sold Tonnes 21 22 (4.5%) 80 92 (13.0%)
Revenue $’000 2,200 1,391 58.2% 11,659 7,550 54.4%
Profit before expenses & other $’000 736 891 (17.4%) 7,609 6,084 25.1%
Adjusted EBITDA1 $’000 (1,234) (954) 29.4% (578) 1,184 NM
Net Income (Loss) Per Share $ (0.00) (0.02) (100.0%) (0.01) (0.02) (30.0%)

 

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.

“With the successful transition to open pit mining at our Penouta Project along with other operational improvements, we had a record year in terms of the production and quality of concentrates,” said Jaime Perez Branger, CEO of Strategic Minerals. “While adverse weather conditions and macroeconomic headwinds made 2022 a challenging year, our strong production and improving margins highlight the successful application of our strategy. Along with our expectation of increased production levels in 2023, we believe the royalty financing in place and the launch of the joint venture development of our lithium resources creates an even stronger company to support the goals of the new green economy.”

 

Operational and Financial Performance

Total production for 2022 reached 541 tonnes, a record high and an increase of 63.4% compared to 2021. Q4 2022 production of primary concentrate reached 105 tonnes, 3.1 times the production of the same period last year.

Quality of concentrate improved during 2022. Production comprised 455 tonnes of cassiterite concentrate with 70.4% tin content compared to 247 tonnes with 66.5% tin content in 2021. Tantalite/columbite concentrate production reached 86 tonnes with 23.3% tantalite content and 24.6 columbite content, up from 84 tonnes with 16.8% tantalite and 17.6% columbite content in 2021.

Revenue improved on a yearly and quarterly basis. Revenues for 2022 totalled $11.7 million, 54% higher than the revenues in 2021. Revenue for Q4 2022 was $2.2 million, an increase of 58% from the same period in 2021, primarily due to the higher volume of year-over-year sales.

Despite adverse weather conditions such as the severe electric storms during July and August and the drought throughout October and November that interrupted the operation of the mine from time to time, the Company consolidated and improved operations. Net loss was $1.4 million in 2022, an improvement from a net loss of $3.0 million in 2021. Profit before expenses and other reached $7.6 million, or 65.3% of sales in 2022, improving from $6.1 million or 80.6% of sales in 2021. EBITDA also improved to $0.4 million in 2022 from -$1.0 million in 2021. Adjusted EBITDA was -$0.6 million in 2022 compared to $1.2 million in 2021, primarily due to the low production while waiting for permits and adverse weather conditions throughout the year, further aggravated by the decrease of international prices of minerals.

At the end of the period, cash and cash equivalents were $0.9 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 Q4 2022, the Company had a deficiency in working capital of $2.0 million compared to a working capital surplus of $0.64 million at the end of 2021. This was primarily attributable to the transition to open pit mining, commissioning the new primary crushing plant, and fulfilling financial commitments. 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 for new external financing opportunities to expand production, improve recovery levels and initiate downstream projects.

The Company intends to set up a pilot plant to identify and separate industrial minerals such as feldspars, micas, and quartz. The Company is constantly having discussions with large distributors of industrial minerals to seek an agreement that, if successful, would allow these products to be distributed, thereby helping to reduce costs and increase cash flow. Additionally, the Company intends to undertake further exploration work in the permitted areas of the Penouta Project.

Following the stoppages of the Company’s mining operations due to the malfunctioning of the primary mill at the Penouta Project in Q4 2022, the Company completed a significant overhaul of the primary ball mill in March 2023. The Company believes this upgrade will renew the equipment’s useful lifetime and increase production by reducing maintenance downtime. The Company is also negotiating offtake agreements and actively considering alternative sources of financing, the proceeds of which will be used towards continuing mine development and improvements in machinery and equipment that will improve operational efficiencies in the future.

Given the strong market demand for lithium and in an effort to maximize the value of the Company’s assets, Strategic Minerals entered into the JV Agreement on December 28, 2022, to accelerate the exploration of the Lithium Project while retaining a 30% interest in the project. The JV Agreement has provided the Company with capital and allows Strategic Minerals to retain an important equity position in the Lithium Project.

 

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, which allows the Company to produce and conduct exploration. 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 holds a 30% carried joint venture interest in the Alberta II investigation permit and the Carlota application permit, located in the Galicia Region of northwestern Spain. 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 30, 2023, 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.

 

RECONCILIATION 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, gain on retained investment in associate, gain on sales of assets 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 December 31, 2022 Three Months ended December 31, 2021 Twelve Months ended December 31, 2022 Twelve Months ended December 31, 2021
Revenue 2,200 1,391 11,659 7,550
Changes in inventories of finished goods & work in progress  

64

  

(77)

  

726

  

(24)
Raw materials and consumables used (313) (221) (1,388) (660)
Supplies (1,215) (202) (3,387) (782)
Other operating expenses (1,363) (1,397) (5,938) (3,382)
Employee expenses (680) (400) (2,502) (1,681)
Other income (expense) 73 (47) 253 163
Adjusted EBITDA (1,234) (954) (578) 1,184

 

Further Information

For further information regarding Strategic Minerals, please contact: Elena Terrón, Corporate Secretary

Strategic Minerals Europe Corp.

 

Craig MacPhail NATIONAL (416) 525-5709