focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
“Cornish Lithium has signed a deal with the Crown Estate to prospect for lithium and other precious metals off the coast of Cornwall
A fast growing lithium prospecting company has signed a deal with the Crown Estate so it can start hunting for the precious metal off the coast of Cornwall.
Cornish Lithium, which last year raised more than £5 million in equity with a Crowdcube campaign, has been granted rights by the Crown Estate to explore for lithium within geothermal waters in areas off both the Duchy’s north and south coasts.
The Crown Estate manages the seabed and much of the foreshore around England, Wales and Northern Ireland and pays its entire net revenue to HM Treasury. It works closely with the Government and industry leaders to optimise the potential for the seabed.”
For those who are unaware, Cornwall is creating quite a ripple in the metals sector, which all bodes well for our £2.5b resource at Redmoor. A couple of recent press articles:
“High-purity lithium discovery set to boost Cornish Economy. High purity lithium carbonate which can be used in electric car batteries has been successfully produced from mines in Cornwall and Scotland for the first time – a major step forward for the UK’s burgeoning lithium industry and a potential boost for the Cornish economy.
The Faraday Battery Challenge Project Li4UK produced the first lithium carbonate in the UK from Cornish Lithium’s Trelavour project site in Cornwall and from another site in Scotland. High-purity lithium carbonate is a raw material for lithium-ion battery cells, such as those used in electric vehicles.
The breakthrough was achieved following an 18-month project which involved a scoping study covering sites hosting potentially suitable lithium mineralisation in hard rock and geothermal waters.
The project, under the patronage of UKRI (UK Research and Innovation), was by a consortium comprising mining consultancy Wardell Armstrong International Limited (WAI), the world-famous Natural History Museum and Cornish Lithium Ltd.”
The Redmoor NPV is circa £70m (calculated on the current 11.7mt resource). An accepted industry benchmark to ascertain the Mcap value for resources in the ground at predevelopment stage is around 10% to 15% of the NPV. So, if we assume a mid point at 12%, then the Mcap for Redmoor alone should be £8m.
We know that the Mcap for Cobre is also around £8m.
LCCM is a bit more difficult to calculate, but I would suggest it to be at above £10m once the PEPR and funding is in place. This is calculated on profits for the project over the initial 8 year lifespan of £25m which when discounted at say 5% = £15m profits over the project life. I accept a JV would reduce this valuation to between £8m and £10m.
So, if we assume an approximate Mcap valuation of £8m for each of our 3 assets then that equates to a £24m Mcap which gives an SP of 1.25p. This I would suggest is a realistic short term target. Any significant media coverage and or a ‘free carry’ deal to PFS at Redmoor should push the SP up to nearer 2p. I’m trying to be optimistic but at the same time be realistic.
The new Directors options are set at 1p, so I would expect their expectations to be aligned with a 1.5p to 2p SP in the short term.
TWIS said 25p
I say somewhere between 1.25p to 2.5p
IMO. DYOR
$2.5 billion in the ground.
Mine build costs could be less than $50m if we’re prepared to Juggernaut the Ore for processing across the Tamar Bridge. Final top ups this week I think. Maybe Juggernaut has been the code word all along!
Big boys - I’m alright jack. PI’s shafted once again.
Shocking stuff here. Placement after placement and every time the shares were quickly rinsed back into the market. The II’s got their 10% and moved on and all of the time the small PI’s unwittingly picked up millions of the newly issued shares. So instead of a dozen II’s with egg on their face this morning, there’s thousands of PI’s sat on huge losses. Reminds me of Angs and Ukog. The writing was on the wall really when you look at the 3 month SP decline. IMO
Lupi - Agreed, the publicity / marketing of our assets appears to have been poor and we’ve had two or three ‘radio silences’ over the last year or two. (But we don’t know what has been going on behind the scenes).
Over promise and under deliver was an issue here between 2017 and early last year. Unfortunately what’s happened more recently is a reluctance by the Board to promise anything now of any substance presumably in case they are unable to deliver on time and on budget. However, competency, trust, goodwill and respect are earned by sticking your head above the parapet even if it doesn’t work out right every time. I expect our BOD to go on a positive marketing spree over the coming weeks when the PEPR is approved and developments at Redmoor are made public. IMO. Good luck all.
Lupi - I agree that very little has happened in the last two years on this Asset which was badged as ‘near term’ 3 years ago.
However, I stick with my view that from a shareholder point of view it would be better to go it alone at LCCM from an ownership and funding perspective and then still contract out the actual mining operations elements etc. It makes no sense whatsoever to me to give up circa 30% to 50% ownership for the sake of $2m. I do think however that it would be prudent to sub contract out the day to day operations.
Worst case scenario raise 250m shares at say 1p post PEPR and we’re fully funded with only a 12% overall dilution. Would really make much difference if we had 2.16b shares in issue as opposed to the current 1.91b DYOR
Redmoor reminder to follow ....
Lupi - I understand what you were saying earlier ‘Sammy if they have not already got a plan for funding or a partner conditional on PEPR approval, we may just as well all sell up.’
I don’t doubt that they will have partners lined up and they will have a plan or plans in place, but they might also be hedging their bets to see how the market reacts to the PEPR approval. If the SP rockets then a raise at 1p might be a good option, (some investors might even pay a slight premium). whereas if the market is Luke warm after the PEPR approval then a JV might be the fall back position. A perfectly timed decent RNS in relation to Redmoor would also help. We can ‘go it alone ‘ at LCCM from an ownership and funding perspective and then still contract out the actual mining operations elements etc. GLA
Let me put it another way and set it into context if it were an individual investment decision you were faced with; let’s scale it down:
The question is simple really - Would you invest £2k to generate £100k of income? - I know I would!
That’s the very straightforward choice for our Company - Invest $2m to generate $100m of revenue over the next 8 years;
Hopefully the SP will go ‘boom’ once the PEPR is approved. The amount of investment needed to get LCCM up and running is minuscule.
Only $2.2m is needed to commence operations. Once up and running, the lifespan of the operations currently stands at around 8 years. $2.2m spent now should generate total sales revenue of approximately $105m (16,000 tonnes of Copper at 85% of LME @ $7750).
From the $105m income, it is expected that $35m of profits will be generated (over $4m profit on average each year).
Admittedly, profits may be lower (proportionately) in years 1 and 2, as the plan is to reinvest early profits towards the construction of the second plant at Lynda and Lorna Doone.
If we can retain 100% ownership from the outset then ongoing future profits can be directed towards Redmoor, new acquisitions and also exploration of other areas within the massive LCCM tenements we have.
Plan A - PEPR approval and 1p SP then a £2m raise at 0.90p into ‘sticky hands’ or a rights issue. Then 1.5p and beyond later in the year; and that’s without any positive news from the Juggernaut!
That’s my prediction anyway-Mystic Peg signing out for a butty and a cuppa.
Hawkmoon - Great find:
“The Tasmanian Government will put $10million towards helping to revive a King Island mine to produce tungsten, a mineral seen as critical to national security.
China currently controls about 83 per cent of the world's tungsten production - a near monopoly on global supply.
The Trump administration in 2018 declared tungsten one of 35 minerals 'essential' to the United States' economic and national security, though the country does not have a mine producing tungsten.
Australia meanwhile currently only has a small working deposit, located in Tasmania, leaving the two countries vulnerable to controls on exports.
The price of tungsten, the second hardest mineral after diamonds, has rebounded in recent years with the mineral used widely in automotive and aerospace industries.Tungsten is used to manufacture passenger vehicles, fighter jets, weapons, drill bits used in the mining industry and in mobile phone screens.
'Tungsten is a strategically significant metal and a key input to industries that are vital to national security,' King Island Scheelite Executive Chairman Johann Jacobs said.”
I did say a couple of weeks ago that PW will need to dust down his smart shirt and waistcoat for a second presentation to the House of Commons.
UK Government financial support for our Redmoor mine would send the SP through the roof.
Fira - be on your guard over the coming days as I will be moving into full ‘ramp up’ mode as our SP heads north.
Now back to the real stuff. Does anyone know what our book value was at the end of 2019 and what it might be at the end of 2020 with 100% of Redmoor ownership now in place and the liability (loan) cleared against that asset? + cash in hand as at 31/12/20.
I’m trying to get a proper book value and then try to determine a New Mcap value to include LCCM etc.