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Strategic Minerals unit lodges US$21M claim against client at Cobre operations

Strategic Minerals PLC wholly owned unit Southern Minerals Group LLC filed for arbitration in connection with a contract with its major client at the Cobre iron ore operation in New Mexico after negotiations with the client broke down.

The claim is related to over US$2.3 million of outstanding payments, over US$19.0 million of lost profits for the balance of the contract, and punitive damages.

The company said Sept. 23 that it adopted a low-cost approach to the claim and will not include the potential payout from the client in its future funding plans. Shares were down almost 7.5% in late afternoon London trade.

"The protracted nature of making such a claim and the uncertainty of the final outcome have encouraged the company to adopt a low-cost approach to the claim," according to the release.

"While the SML group will actively seek suitable compensation from the client, the board and management believe that its operations should not rely on any future payments due under this contract until received," Strategic Minerals Managing Director John Peters said.

Strategic Minerals said the name of the client cannot be disclosed without a legal requirement.