Fiscal Year and Q4 2023 Highlights
- On
October 19, 2023 , theSuperior Court of Xustiza of Galicia (the "TSXG") decided to provisionally suspend the section C permit for theCompany's Penouta Project after a complaint filed against the regional mining authority Xunta de Galicia (the "Xunta"), requesting a revocation of the section C permit granted to the Company inMay 2022 . OnOctober 23, 2023 , the Company submitted an appeal of the Decision to theAdministrative Court of the High Court of Justice of Galicia (the "High Court "). OnDecember 13, 2023 , the Company was notified of theHigh Court's decision to maintain the Decision and continue the provisional suspension of thePenouta Project until the main proceeding is decided. As of the date of this release, no resolution has been reached, and operations at thePenouta Project continue to be suspended. - In 2023, production reached a record high of 603 tonnes, and the quality of concentrate improved during the year. Fourth-quarter production halted on
October 14, 2023 , at 28 tonnes of primary concentrate production. - Cassiterite concentrate production reached 501 tonnes in 2023 with 70.0% tin content.
- Tantalite/columbite concentrate production reached 102 tonnes in 2023 with 24.1% tantalite content and 25.4% columbite content.
- The Company achieved record sales of 629 tonnes of concentrates and 418 tonnes of contained minerals in 2023, an increase of 20% and 19%, respectively, compared to 2022. Sales during Q4 2023 amounted to 29 tonnes of concentrates and 20 tonnes of contained minerals before the temporary suspension of operations. This represented a decrease of 76% and 75%, respectively, compared to the same period in 2022, although the production time decreased by 86%.
- Cassiterite contributed 83% of the sales mix for 2023 and 86% for Q4 2023.
- Revenues totaled
$12.8 million in 2023, an increase of 10% compared to 2022. At the halt of operations, revenues for Q4 2024 reached$0.5 million , a reduction of 77% from the same period of 2022. - During the year, the Company's share price declined such that the carrying value of its net assets exceeded its market capitalization, operations at the
Penouta Project were suspended due to the aforementioned court decision, and, subsequent toDecember 31, 2023 , the Company entered into a business combination agreement where all of the issued and outstanding common shares in the capital of the Company would be acquired by IberAmerican Lithium Corp (Cboe: IBER) ("IberAmerican"). As a result, the Company recorded an impairment loss of$13.1 million as the recoverable amount of the assets is less than carrying amount as ofDecember 31, 2023 . - Net loss of
$16.9 million ($0.071 per share) in 2023 compared to a net loss of$1.4 million ($0.006 per share) in 2022. Net loss for Q4 2023 was$15.1 million (loss of$0.063 per share) compared to a net loss of$0.796 million (loss of$0.003 per share) in Q4 2022. The reason for the net loss in Q4 2023 compared to Q4 2022 was the production halt onOctober 14, 2023 and the recording of the impairment described above. - On
January 24, 2023 , the Company closed the Gross Revenue Royalty Transaction with Electric Royalties Ltd. ("Electric Royalties"), (TSXV: ELEC) (OTCQB: ELECF), which acquired a 0.75% gross revenue royalty on the production of thePenouta Project in exchange for a cash payment of CA$1.0 million and the issuance of 500,000 common shares in the capital of Electric Royalties to the Company. OnJuly 27, 2023 , Electric Royalties exercised its option to increase its 0.75% gross revenue royalty on theCompany's Penouta Project by a further 0.75% in exchange for a cash payment of CA$1.25 million. Electric Royalties now holds an aggregated 1.5% gross revenue royalty on the production of thePenouta Project and the royalty rates will be reduced to 1.25% and 1.0%, respectively, once CA$1.67 million and CA$3.34 million in royalty revenues have been paid. - On
September 28, 2023 , the Company reached an agreement with 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 inSpain (the "Lithium Project "). IberAmerican acquired the Company's remaining interest for CA$1 million, paid in cash.
Operational and Financial Summary for the fourth quarter and full year ended
Description | Units | Actual | |||||
Q4 2023 | Q4 2022 | % Change | FY2023 | FY2022 | % Change | ||
Total Concentrate Production | Tonnes | 28 | 105 | (73.3 %) | 603 | 541 | 11.5 % |
Tin Concentrate Sold | Tonnes | 25 | 100 | (75.0 %) | 519 | 444 | 16.9 % |
Tantalite and Columbite Concentrate Sold | Tonnes | 4 | 21 | (81.0 %) | 110 | 80 | 37.5 % |
Revenue | $'000 | 507 | 2,200 | (77.0 %) | 12,806 | 11,659 | 9.8 % |
Profit before expenses & other | $'000 | (570) | 326 | NM | 4,773 | 6,118 | (22.0 %) |
Adjusted EBITDA1 | $'000 | (1,239) | (1,234) | NM | (2,104) | (578) | NM |
Net Income (Loss) Per Share | $ | (0.063) | (0.003) | NM | (0.071) | (0.006) | NM |
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 financial results for the fourth quarter and full year of 2023 were significantly impacted by the court-ordered suspension of production in October," said
Operational and Financial Performance
Total production for 2023 reached a record of 603 tonnes, an increase of 11.5% from 2022, despite production having halted on
Quality of concentrate improved during 2023. Cassiterite concentrate production reached 501 tonnes with 70.0% tin content (455 tonnes with 70.4% tin content in 2022), and tantalite/columbite concentrate production reached 102 tonnes with 24.1% tantalite content and 25.4% columbite content (86 tonnes with 23.3% tantalite and 24.6% columbite content in 2022).
Production during the fourth quarter of 2023 consisted of 24 tonnes of cassiterite concentrate with 71.0% tin content (87 tonnes with 69.9% tin concentrate in 2022), and 4 tonnes of tantalite/columbite concentrate with 24.8% tantalite content and 26.2% columbite content (18 tonnes with 24.3% tantalite and 25.3% columbite content in Q4 2022).
Total sales for 2023 amounted to 629 tonnes of concentrates and 418 tonnes of contained minerals, which are 20% and 19% higher than in 2022, respectively. Sales of contained cassiterite for the year reached 363 tonnes, an increase of 16% from 313 tonnes in 2022. Sales of contained tantalite and columbite reached 54 tonnes, a 42% increase from the 38 tonnes sold during 2022. Cassiterite contributed 83% of the mix of sales for the full year 2023.
Sales during the fourth quarter reached 29 tonnes of concentrates and 20 tonnes of contained minerals, a decrease of 76% and 75%, respectively, over the same period of 2022 as a consequence of the suspension of production as per the Decision. The contained minerals sales breakdown was 18 tonnes of contained cassiterite (cassiterite concentrate multiplied by tin grade percentage) and 2 tonnes of contained tantalite and columbite (tantalite and columbite concentrate multiplied by the corresponding grade percentage). Cassiterite contributed 86% of the mix of sales for the fourth quarter.
In 2023, the average price of tin decreased 12% from 2022, and the average price of tantalum concentrate decreased 1% from 2022 to 2023.
Revenues for 2023 totaled
At the end of the period, cash and cash equivalents were
Outlook
The Company is currently focused on appealing the Decision by the
Once the Decision is resolved, subject to the Company being able to raise the necessary funds, the Company will concentrate 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.
To execute the above, the Company has formulated a strategic plan described below, which is not based on a technical report filed under National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Development of the
The Company will continue to work on operational improvements to increase its recovery and output in production and optimize energy consumption. This will include improvements in machinery and equipment, which will allow the Company to install backup equipment in certain critical areas to minimize interruptions in the production process and configure subprocess systems through standby equipment, thereby curbing downtime and operational inefficiencies that result from mechanical and equipment malfunctions.
- The Company will invest in new equipment to improve water recirculation and decrease freshwater consumption. This investment will prevent production interruptions in case of future droughts in
Spain . - The Company will also adapt the tailing ponds to better manage the water used in the production process and install a filter press stage for more efficient and safer tailings handling.
- The Company will work on the mine development by carrying out the necessary stripping to get access to the higher mineralization areas.
- The Company intends to establish a state-of-the-art cassiterite foundry plant. This innovative initiative aims to add significant value to its products by enhancing the recovery of strategic minerals such as tantalum and niobium from smelting residues. Not only does this project promise to boost our overall mineral recovery, but it also underscores the critical role of tin as a strategic metal across diverse industries.
- Given the volume of reserves, the Company will evaluate whether to seek additional financing to expand the plant's capacity to increase concentrate production.
Proposed Transaction
On
The company's board of directors has unanimously approved the Business Combination Agreement and determined that the Amalgamation is fair to shareholders and in the best interest of the Company. The board recommends that shareholders vote in favor of the Proposed Transaction.
The Company intends to call a special meeting of the shareholders to be held in
For more information on the Proposed Transaction, please refer to the Company's Q4 2023 MD&A filed on SEDAR at sedarplus.ca.
About
Strategic Minerals' wholly-owned subsidiary,
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, and the Proposed Transaction as proposed to be affected pursuant to the Business Combination Agreement, the ability of the parties to satisfy the conditions to closing of the Proposed Transaction, the mailing of the management information circular in connection with the Meeting, delisting of the Company from Cboe Canada and the timing thereof and the anticipated timing of closing of the Proposed Transaction. 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
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, 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) | Q4 2023 | Q4 2022 | FY2023 | FY2022 |
Net income (loss) | (15,065) | (796) | (16,941) | (1,419) |
Finance income | (86) | 0 | (233) | (178) |
Finance costs | 268 | 75 | 779 | 263 |
Gain on settlement of debt | — | — | (8) | — |
Change in fair value of investment | (13) | — | 39 | — |
Income tax expense | 0 | — | 137 | — |
Impairment loss on property, plant and equipment | 13,144 | — | 13,144 | — |
Depreciation and amortization expense | 513 | 474 | 1,997 | 1,724 |
EBITDA | (1,239) | (247) | (1,086) | 391 |
RTO Transaction cost | — | — | — | 836 |
Gain on sale of assets and investment in associate | — | (988) | (1,319) | (988) |
Loss from investment in associate | — | — | 42 | — |
Share-based payments | — | — | 259 | 19 |
Adjusted EBITDA | (1,239) | (1,234) | (2,104) | 1,184 |
SOURCE
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