Ensures minimum payment of $1.125m over nine months
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing mineral company actively developing projects prospective for battery materials, announces that it has, in conjunction with its subsidiary Southern Minerals Group (“SMG”), amended its contract (the “Contract”) with SMG’s major client (the “Client”) at the Cobre magnetite stockpile in New Mexico, USA. The amended Contract provides the Client sufficient time to put in place the necessary environmental approvals and operating procedures to resume the offtake of magnetite material, while at the same time ensuring that SMG is in a similar after-tax cash position as per the previous contract.
SMG has agreed the following arrangements in relation to the Contract:
· The Client is to pay, quarterly in advance, a non-refundable prepayment of US $375,000 against future deliveries (payments are due in June, September and December 2018)
· The minimum 4,000 tons per month sales requirement, currently stipulated in the Contract, will be suspended until 1 March 2019, offset by the US $375,000 quarterly prepayment
· A maximum of US $125,000 can be applied to sales in any month provided a minimum of 4,000 tons is taken during that month
· Should the material not be collected by the Client within 12 months from the prepayment invoice date any prepayment amount, relating to this invoice, will be forfeited
Commenting, John Peters, Managing Director of Strategic Minerals, said:
“We consider this arrangement to be mutually beneficial for both the Company and our Client. The amendments to the Contract have been agreed to support our Client whilst it seeks the necessary approvals. This will reduce the impact on their cash flow, and ensure that, from a cash perspective, the SML group will be unaffected.
“The underwriting of these cash flows reinforces our expectations that we will be in a position to internally fund current exploration and development programmes across SML’s portfolio of projects.”
