Cornish Metals Inc [LON:CUSN] the Vancouver-headquartered, dual-listed TSXV:CUSN mineral exploration and development company has doubled-down on its commitment to the South West of Britain, selling its royalty interests in Mactung and Cantung tungsten projects in Canada.
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Although not yet quite declaring ‘Rydhsys rag Kernow lemmyn!’ (Freedom for Cornwall!), the AIM-listed exploration company has firmly tied its future prospects to the white cross on a black background of Saint Piran’s Flag.
As previously reported, Cornish Metals acquired the county’s last operational tin mine, South Crofty, which closed in 1998, with a view to reopening the mine by 2027. Cornish Metals believes that South Crofty is one of the highest-grade tin resources globally, and with modern mining technology, has the potential to become one of the world’s most significant low-cost tin producers.
Cornish Metals also holds other mineral rights in Cornwall with potential for discovery of tin, copper, lithium, tungsten, zinc and silver mineralisation.
Cornish Metals hopes to start mining by 2027
South Crofty has a long history of mining, with over 400 years of recorded production. Existing mine infrastructure, including multiple shafts, can be used for future operations. Cornish Metals says that the project possesses an underground mining permit to 2071, planning permission to construct a new processing plant and all necessary site infrastructure, and an environmental permit to dewater the mine. The explorer said that South Crofty benefits from strong local community and regional and national government support.
Cornish Metals raised USD5.4m from the sale of Mactung and Cantun, with USD3m already banked and the balance set to be paid a year from now. Cornish Metals also raised another CAD8m (GBP4.5m) through the sale of its Nickel King properties in Canada in June. The company is backed by Vision Blue Resources, led by Sir Mick Davies, the driving force behind Xstrata, building the company from a South African miner worth around USD500m to a USD60bn multinational company that was ultimately acquired by Glencore LON:GLEN in 2013.
Vision Blue has already invested GBP25m and owns 26% of the company. Cornish Metals isn’t quite in the Glencore/Xstrata leagues yet, but its focus on tin, with the rising importance of the metal in the energy transition story with applications in EV batteries, robotics, telecommunications and renewable energy, bodes well for the long-term outlook for the company – if it can get into producing metal.
Mineral resource estimate up by one-third
In the last calendar year Cornish Metals updated its mineral resource estimate for South Crofty, increasing its tin estimate by 31% to 49,310 tonnes of tin with a life-of-mine (LOM) of 14-years and an anticipated average annual output from Year Two to Year Six of 4,700 tonnes of tin. The company also built and commissioned a water treatment plant and installed submersible pumps in one shaft and started dewatering the mine.
This year Cornish Metals hopes to dewater the mine to at least 360 metres below ground level and refurbish its pumping station in order to dewater the lower levels of the existing mineworks and start infill drilling. The company also hopes it will make significant progress with its feasibility study on South Crofty.
Cornish Metals submitted a positive independent Preliminary Economic Assessment for the project, validating South Crofty’s economic viability producing a base case after-tax net present value of USD201m and internal rate of return (IRR) of 29.8%, and confirming the project’s potential to be a low-cost and long-life tin mining operation with a current 14-year LOM.
Development phase has hit the share price
Obviously at this point Cornish Metals is going through the ‘burny’ phase of development, where a lot of cash is going out of the business and not much coming in. In its latest financial highlights for the three months ended March 31st 2024 and April 30th 2023, Cornish Metals reported total operating expenses of CAD2.8m (GBP1.6m), an increase of nearly 200% on the three months to end-April 2023. Losses for the three months to end-March 2024 were CAD2.6m up 1,100% when compared for the three months to end-April 2023. Cash was down to CAD17m from CAD49m.
However, in the development process of an operational mine spikes in expenditure and rapidly widening losses should be expected, and are actually a positive sign that the exploration company is actually doing significant things on the ground and in the office, as long as the expenses are justified and progressive and controlled, and that a clear roadmap has been outlined; all boxes that Cornish Metals ticks.
Understandably with so much red ink deployed on its financials, the company’s share price has taken a bit of a battering as it goes through the high-cost phase of development. Cornish Metals opened the week in London at 5.54p, down 58% from where it was a year ago. Over the year-to-date, shares are down 43%. The company has a market capitalisation of GBP29m.
Tin is going to become a significant metal in the coming decades. Cornwall has been producing the stuff since Jesus was a boy, and Cornish Metals hopes that it can extend that history and bring another ‘tin rush’ to the county.
