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DB
The Cornish Lithium offer to TechMet is not being made to anyone other then TechMet as far as I know.
…again. Many thanks for the information and thoughts.
Reading this does suggest that CUSN will benefit ..particularly if it means CL are able to “get
On with it” quicker
Cheers
Dumbpunter
I think you may find this link helpful.
https://www.hcrlaw.com/blog/pre-emption-rights/
Within "So, where can pre-emption rights be found? There is a statutory pre-emption right contained within the Companies Act 2006 which states that on an issue of shares, all existing shareholders of the company will be entitled to purchase a number of those new shares which are pro-rata to their existing shareholding."
Tyson
For CUSN, the deal Cornish Lithium has announced is mostly good news.
All of the impacts on CUSN are small, but to go through them
1.Impact on CUSN revenues :- likely to be positive as this appears to bring forward by about 5 months CL's timetable for starting operations. So Royalties may kick in a bit sooner.
2. Impact on free carry projects - as 1 above - the value CUSN may derive from its stake in projects set up on CUSN's mineral rights areas may arrive sooner.
3. Impact on CUSN's holding in CL shares. Because the holding is small the impact is immaterial to CUSN. The dilution of the interest and the transfer of value is small (£100k perhaps) offset hopefully by expertise TechMet may bring to CL. I cannot be more definite than that because the terms of the warrant given to TEchMet are unclear.
4. Another multi-million pound investment in minerals /mining in Cornwall will only help to raise the profile of Cornish miners generally,( e.g. Telegraph article) making finance providers more aware of what is developing in Cornwall. CL's JeremyWrathall is very good at publicity/communications and this is another example.
Thanks VII very well explained. This highlights why you need to keep your wits about you in the smaller company sphere where insiders may own the majority of shares.
Looking at the Cornish Metals website the significant shareholders do add up to over 50%, but I’m assuming some of them are institutions who would not take kindly to a CL style new shares/ pre-emption waiver proposal.
On the face of it CM has a decent holding in CL the value of which might be affected by the TechMet proposal, but CM also has a royalty agreement with CL which might begin to flow cash sooner with TechMet on board at CL.
So, maybe a lose/win for CUSN.
atb
A good example and an appalling possibility.
I know there are “ties” between CUSN and CL, but would this vote affect CUSN much.. I’m not in CL yet am invested in CUSN so selfishly looking at the effect there.
Thanks Rooky and DDumbpunter
DP Shareholders in Cornish Lithium currently have pre-emption rights - i.e. if the company wishes to issue shares it must go to its shareholders first and offer the new shares to them. This is the way of protecting ownership. If it did not exist the BoD could issue a load of shares to new people and the ownership of the company would change. So pre emption rights are there to protect ownership, and the value held by shareholders in the company.
What CL is doing is asking shareholders to vote away pre-emption rights so the BoD can sell shares, at a lower price than recently achieved, to some new influential shareholders. This they consider will benefit the company.
My view is they could offer the shares to existing shareholders first and any not taken up could be sold to the newcomers. That would be likely to achieve a higher price as well as there would be more buyers for the same amount of shares. So also less dilution.
Matters are complicated by the fact that directors own just over half of the current shares, so it seems they can vote this resolution through despite what the other 40+% think.
After the share issues the BoD would no longer have more than 50%. So they would not be able to disadvantage the minority in the future. That is until you read the resolution, which cleverly asks if shareholders will vote away their pre- emption rights for 5 years. So clearly the BoD are considering further issues to outsiders, keeping existing shareholders out of the share sales.
I think the above is an appalling way to treat those people who have risked their savings to support the company through its earliest and riskiest stages. No doubt the directors can make up for the dilution they suffer by way of incentive schemes warrants or bonus plans. But their existing shareholders do not have these possibilities.
Then there is the question of value transfer.
For example imagine a company that issues 100 shares at £1 each for cash. After the issue the company is worth the £100 it has in the bank. Then let us say it issues another 100 shares to a newcomer that it likes at a price of 1p each. The company then has 200 shares and is worth £101. But consider what has happened to the initial shareholders. They now own 50% of the company rather than 100%. The value of what they own has dropped from £100 to £50.50p, whilst those who paid £1 for their shares have seen their value rise from £1 to £50.50p. This example, whilst exaggerating the impact, demonstrates how value is transferred from the original to the new shareholders. Clearly the original shareholders would not like it, and that is why pre-emption rights are so important to guard carefully and not give up lightly.
In Cl's case its last raise was at 16p. It is proposing with its new issue to sell its shares at 13.5p. Whilst not so large as in my example there will still be a transfer of value from the old, to the new shareholders. Not much fun
Hi Valuation-it-is,
The article has all the same detail, but additional info re the possible value of the area covered, especially mentioning the fact re most valuable area in the world by size in 1800's.
Its more or less the same article, but enhanced.
I would think that over the next few months Cornish Metals will appear more and more in the media.
More thoughts on Cornish Lithium NOT Cornish Metals.
(Posted here as CUSN has a very small stake in Cornish Lithium and a royalty agreement with them.)
I think the shares in the raise should first have been offered to existing shareholders and if more money was needed than offered , then TechMet should have been introduced into the equation.
This company belongs to its shareholders. Their percentage ownership is being reduced, and some of their value is being given away. And they are being asked that the directors be able to do this again perhaps repeatedly over the next 5 years.
Why five years? Because this change will take the shareholding the directors have personally below the 50% level. So unless they get this through now, they may not be able to ram it through in the future.
MO Hope you get down from that tree OK.
Whilst TechMet may bring a lot of expertise and financial backing to Cornish Lithium, it is coming at a significant cost to existing shareholders.
Existing shareholders are being asked to sign away their pre-emption rights for 5 years. That means they can be and likely will be, cut out of financing rounds which may offer cut price shares. An example of which we are currently contemplating. CL will have to raise £200m in the not too distant future, if the pilot plants work well. So existing holders may find their interest in the company severely diluted. Not only that but a lot of the upside in their shares may be lost. Given existing holders have shouldered the financing of the most risky period, any high returns that arise should rightfully accrue to them.
The argument that it is difficult to raise finance and so a lot has to be given away to attract further finance, does simply not ring true. Lithium producing companies are some of the hottest stock market property at the moment.
I do not know if a a 50% plus or a 75% plus aceptance vote swings the proposal. If it is 50% and the directors are for it, then shareholders other than the board will lose their pre-emption rights whether they like it or not.
The amount being raised from TechMet is not significantly different to that last raised by Crowdcube. My view is that existing shareholders should have been given the right of first refusal in this offering. But no, the discounted offer is only to TechMet who are also being offered board representation, warrants and a distribution agreement. The details of which have not been disclosed.
Rooky
Is the full page article you refer to, the same or different to this one published on line on Thursday?
https://www.telegraph.co.uk/business/2021/11/25/cornish-lithium-hunt-makes-funding-breakthrough-bid-power-electric/
Almost a full page article the The Telegraph today re lithium/tin/silver and copper being mined in Cornwall.
Cornish Lithium was named, but as we well know the connection with Cornish Metals is important, plus of course CM's separate entities.
The Cornwall area being mined, was in the 1800's known as the richest area, by size in the world.
Be nice if a similar comparison is made in the next few years.
Pretty great backers imho.
Work today - boo. Not long now and i will pack up. Snowing in Sherwood Forest and I'm freezing sitting in my tree. All the best today from MajorOak. Solid, strong and ....old. lol
Will they increase their tin and add copper exposures?
From one of their announcements.............
-------------------------------------------------------------------------------------
About TechMet
TechMet is a private company building world class projects that produce, process and re-cycle "technology metals" critical to EVs, renewable energy systems and energy storage. TechMet's target metals include: lithium, cobalt, nickel, rare earth metals, tin, tungsten, and vanadium. TechMet's core investments include:
Brazilian Nickel PLC – nickel and cobalt production in Brazil
Li-Cycle – lithium-ion battery recycling.
US Vanadium – vanadium specialty chemicals production in Arkansas (USA).
Tinco – the largest tin and tungsten mines in Rwanda
TechMet also has an interest in a producing Rare Earths metals project and is developing TechMet Ventures to invest in new opportunities across the supply-chain.
TechMet was privately backed until late 2020, when it received a major investment from The US International Development Finance Corporation, a US Government funding agency, which now holds a 25% equity interest.
----------------------------------------------------------------------------------------------------------------------
Ding
MO 17.49
Good thinking. I will have a search around TechMet and see what can be sniffed out. My understanding is that it is best to produce the Lithium batteries close to the car factories because of their fragility around the anodes/cathodes. Not good news for drivers bouncing around in the car once sold. But it does mean some more battery makers may tie up with UK car manufacturers and welcome a home produced supply.
vis 16:48 today.
Good this isn't it. Having a break from driving.
Have you thought to look at it from a different angle ?
May be a very large US company might be coming to the UK .... Tick !
I know of one who wants all the lithium in the world along with a shedload of copper. Bristol factory muted. Exeter main junction redeveloped to take extra freight so inc the freetrade port , maybe a few thousand tons of lith carb ?
In austin , said company is building hydroxide plant onsite .... Now that is really leftfield specilation BUT there are several other companies within the Li-cycle sphere who could easily set up in the UK.
'IF' cornwalls CL & BL can produce enough tonnage of lc then as we see in central europe ( no lithium direct supply for years yet 25 gigafactories built / building ) the factories will come.
Coventry is getting the Jag Landrover battery factory? Who else might want to use Uk lith ?
Over to those who have time to look for US / UK linked companies in ev cars , haulage , energy storage. Given 30 mins I think I could go back through my TechMet / US lith research and find 5 more from memory...
Look and you may find your answers.
Li-cycle are going to be SO big in the US , who are they selling the recycled metals too ? The have to sell it on at profit. ;-)))
As I said earlier I am well happy with yesterday.
We just need to get used to local county level to EUROPEAN company size from now. A bigger wider mentality. They will be selling to THE BIGGEST of lithium sector so they had better raise their game along with all our thinking.
Think B I G
Dumbpunter
Great to follow that link. And good to see investment from an ally flowing in.
It does also raise the question - If "TechMet shall have a Right of First Offer to market lithium products from the Company’s projects" how will this ensure the UK's supply lines and resilience? As a US agency is the biggest shareholder in TechMet, clearly it will be pushing for scarce resources to be sent to the US. I think CL have some explaining to do.
Hopefully we will hear that the UK Government is also to provide finance to ensure the UK has a supply of Lithium too. Perhaps that is in the pipeline for the £200m raise................... Not sure that HMG / BEIS has the finance to spare.
Sorry vis, my russian info was czech border and saxony to my knowledge wasnt in E Germany.
I will however look and see what type of lithium they were dealing with? I sm sure if it was viable , the Ozzie companies who bought cinovec and euro lith would have had a good go at any other major options?
Not to say they do not have geotherm brines ?
As I say , out for the day , coffee break now the slog home in friday traffic.
Will look when i can
MO 11.59 2nd para "........and fully understanding documents from the 1950's Russian testing and extraction of the same mica geological structure that runs from North West Czech / Saxony Germany.................."
Do you have any knowledge of the Saxony mines Tellerhauser and Breitenbrunn ? Are they mined out - or if not do you have an idea of what is left behind? The condition of the mines? The likely costs to restore them to working order?
CK
Great information, thanks. Do you have any links to the planning applications or their reference numbers?
GEL (Geothermal Engineering Ltd) and CL in their 10:90 JV, indeed have gone to 5km and found high levels of Lithium in brine from that level. However CL, separately, are considering going to just 2km and taking a hit on the Lithium concentration but reducing the cost of the hole from £20m to £200k. CL will not disclose the Lithium percentage at the 2km level as it is commercially sensitive. Currently testing is underway to determine which of these two approaches is better. Another factor being considered in the economics is the value of the heat from both types of hole and to what extent that can bridge the cost difference. CL have four developments HR at Trelavour, HR JV with Imerys, Brine JV with GEL, and Brine - their own. All seem to be testing /analysing/evaluating at the moment, and it is hoped the results of these four lines of enquiry will be available before and enable/enhance the IPO.
One of the attractive features of CL is that it has so many "irons in the fire".
On Imerys "tailings" - its not really tailings, its waste, the mica is removed in the China clay extraction process - but there are literally hundreds of millions of tonnes stored.
On depth of the geothermal Wells, its pretty irrelevant to the Lithium extraction, GELhave to go to 5km + so that's the depth the water comes from. At present GEL have planning applications in for a further 4 sites,at least one of which is on CUSN mineral rights.
Great post MO.
A couple of comments
1."How long can CL last on tailings ?"
CL have a JV with Imerys and if Imerys bring their tailings into the JV, then those tailings will probably last decades. Imerys will undoubtedly want something for the tailings, so that is yet to be evaluated/published. But as CL have tested a multitude of extraction techniques and settled on one (Lepidico's), I think Imerys will probably want to go with that technique too, because others may be more risky/costly/less efficient. CL have exclusivity over the Lepidico technique I understand, and as I think you stated have a right to buy into Lepidico too. Watch developments here closely, because if Imerys go their own way with their tailings, CL become much less attractive in my opinion.
Another comment is about the depth of the extraction holes for Lithium in brine. My understanding is that a 5km deep hole costs £20m while a 2km hole costs £200k. The percentage of Lithium in bine is greater the deeper the hole but the cost rises with depth hugely. So there is a trade off. There is probably a step function in the depth cost relationship, but the sweet spot i.e. best trade off may be around 2 km. Time will tell.
Rationale ? Money baby. You are talking about a company who 'want' in. They are involved in one of THE lithium businesses in the US that will be a billion dollar company. They are looking at the future metals only as it is pretty much nailed on anything to do with lithium will x3 in asset value 'if' and a big if fir some , the asset and management are up to it.
By doing that research you pinpoint an asset that should come to fruition. My history of investing revolved around making contacts with cinovec, having boots on the ground in Cinovec and fully understanding documents from the 1950's Russian testing and extraction of the same mica geological structure that runs from North West Czech / Saxony Germany ( Vulcan are hitting the same structure for brines so thats a tick to our lithium brines ) under France ( Eramet brines once again going forward it looks like being proven up as good investment has been made in to the project by non Eramet investors ) and then comes towards surface in Cornwall , Scilies and onward in to S Ireland with both rock and I would highly say likely more brines at depth.
Draw the line , do the research all alone that 600-800 mile Westphalian strata is lithium without much variation ie its not generally spodumene or 4-6% lithium at source. No , more like low grade on average across the 800 m length with pools of volcanic influence to nudge up lithium grades in just a few places.
Interesting in brines as E3 8m ton lith carb presentation shows and vis can add in the guys at CL say at depth the concentration increases. First targets will be the high grades at depth for both.
In the next 15 ish trading days E3 announce testing on brines results. This should give us guidence but the ones to watch are Vulcan and Eramet. Those are direct links to the same system.
The rock mica aspect is a little more complicated here with a huge amount of tailings , again thanks to vis for his knowledge. In ground is going to be very different with lower grades = much more dirt to dig out per ton of actual lith carb. This will be the cost flex point. How long can CL last on tailings ?
Cinovec has tons of tailings that they cannot use due to the village being basically on it and the other pile is privately owned. At the time in 2018 the plan was to extract in ground along with adding in the tailings by ratio to bulk up enough to make initial mining viable. Whilst this process would allow them a runway of about 2 years , that would give time to widen the mine tunnels and prep for more and wider extraction and supplying more to surface thus reducing the tailings feedstock needed.
Having this plan WAS to allow big money to come in for provision of CAPEX. Alas the Czech gov knackered all that up big time. Tech has changed - for the better and the tailings were taken off the table so its straight to digging dirt. Dewatering is a long process from mid way down snd the water comes in to the mine in cinovec from saxony so its an
Pawgee 11.21 Good luck - and thanks for making the effort.