Investing in penny stocks is an exceptionally risky strategy. But as Strategic Minerals (LSE:SML) has just demonstrated, every once in a while, these tiny enterprises can deliver jaw-dropping returns.
Since the start of 2026, this mining enterprise has seen its share price explode by almost 190%. And when zooming out to the last 12 months, the stock’s up a game-changing 1,656%.
Just to put this in perspective, a £10,000 investment just over a month ago is now worth around £29,000. And anyone smart enough to put this money to work in February last year is now sitting on a staggering £175,600!
Yet despite all this explosive growth, the shares are still only trading at around 4p. So is there even more explosive growth just waiting around the corner? Or is now the time to start thinking about taking profits? Let’s find out.
What’s going on with Strategic Minerals
As mining enterprises go, Strategic Minerals is in a bit of a unique position. Its current flagship US Cobre project isn’t a mine, but rather a residual iron ore stockpile that was created as a byproduct of previous copper mining activity.
Management’s processing this ore into a sellable commodity, generating a small but significant $4.23m in revenue throughout 2025 – the third highest in 14 years. But that’s not what has investors excited.
The cash flow generated from Cobre’s being funnelled into a new, early-stage, Cornwall-based project called Redmoor. And it’s one of the highest-grade and undeveloped tungsten-tin-copper deposits in Europe.
The latest drilling tests have been showing extremely encouraging results that have expanded the estimated size of the ore body. And the company’s now on track to publish an updated mineral resource estimate (MRE) report before the end of March.
Apart from updating shareholders on the project’s estimated long-term profit potential, it also brings Redmoor one step closer towards commercial production. So it’s no surprise to see the penny stock skyrocket.
More growth on the horizon?
Strategic Minerals has a massive advantage over most early-stage exploration businesses. Having supportive cash flows from its Cobre project makes the group far less reliant on external financing. And with the UK government also awarding a £764,000 grant, the group’s financials are much stronger than many of its peers.
However, it’s important to recognise that most of the recent share price momentum is being driven by excitement rather than fundamentals. Even with an MRE report, Redmoor’s still years away from entering commercial production.
The company still needs to complete a pre-feasibility study and definitive feasibility study before securing regulatory permits and planning permission. This process could take years. And even with perfect execution, first production likely won’t start until as early as 2032.
With the penny stock now trading at over 30 times sales, the market appears to be pricing in some substantial long-term performance expectations. But if there’s any disruption along the way, Strategic Minerals could see its stock price come crashing down very quickly.
In other words, the risk’s exceptionally high. With that in mind, I think investors may be better off adding this stock to their watchlists and exploring other penny stock buying opportunities for now. Luckily, there are many promising options to choose from.
