Member Info for southwesterner

"I don't think you've said an awful lot different to what I said there, when I said its a hypothesis and there's only one way to prove it, I certainly wasn't referring to Geophys or chem."

Since writing out those posts, I've become somewhat curious what exactly the grant funding can be spent on. £450k is a lot to spend on collecting and analysing some soil and playing around with geophysical gadgets... maybe there is a possibility they could do some sampling on the western extension between Redmoor and Blogsters, and then say they need to drill it to allow them interpret the results.... after all what use is geochemical/geophysical data if no one knows what it means?

I can't find any small print for the grant, and it'd be somewhat surprising if they could use it for drilling given the Press Release was all about digital data flowery crap, and Brett & Peter Wale never thought it prescient to mention potential drilling. So wishful thinking perhaps. But thats what they need. 8 holes of 400m average length would be a fairly decent test for the shallow western tin extension concept. Around £500k would do for that.

Or maybe CRL should tell Cornish Lithium that someone found some lithium brines down Redmoor back in the 19th century, and they could pay for the drilling... worked for Strongbow....!

"Anyhow, I get the impression you were around when the 1985 crash happened. This week has to be the closest there has been to the reverse of that, its been nuts."

Nope, I wasn't actually! I must have spoke to too many miners that were in the industry then for you to think I was too haha! But yeah, its been a big week for tin, and I wouldn't be surprised to see the 2011 record of $32k broken in the near future... and then if thats sustained for a while, and some money flows into exploration, it'll just be a matter of time before we have a new generation of miners in Cornwall...

"At the moment the proven resources are heavily tungsten - that doesn't nessecarily mean redmoor is a tungsten project - Brett covered it quite well in the video. At the end of the last drilling campaign, they put a hole out to the west of the current resource model, which hit high grade tin - at the moment thats an outlier, but the nature of zonation of Cornish deposits, leads to a hypothesis that the ore body becomes a principally tin ore body along strike and dip. However therecis only one way to prove that"

Right now, Redmoor is a tungsten project, based on the inferred resources. Is there a tin project out to the West? Maybe. But how will we ever know?

I agree there may be some potential for tin out to the West. But we've been over this before - overall the project is not strong for tin, there are only 3 intersections (excluding sub-intercepts) in the entire resource model above 0.8% tin. That is frankly, not indicative of a tin project. There is a single intersection of 1m at 5% tin in hole CRD029, but its outside both the resource model and the projected sheeted vein system, so its not really clear what this is part of. Another lode perhaps? Or just the vein system becomes more divided to the West, so its a stringer of the main system? It's certainly worth exploring further I agree, but right now its a 1 metre intersection of an unknown entity.

There is only one way to prove whether there is any tin worth mining at Redmoor. And it isn't geochemical/geophysical data analysis. Its drilling. The Deep Digital Cornwall project with its £450k of grant funding might help to identify new exploration drill targets, but that is all it can do. It cannot define new resources.

Meanwhile, the reality is right now SML have no money to drill at Redmoor. This is a big problem, because no drilling = no newsflow = no more resources = project is dormant = no market value. Its no good just having potential, you have to have a mechanism to realise it, for the market to assign any value to this, especially as a tin project. This is a big drag on Redmoor. They desperately need a JV partner on Redmoor to provide finance to get this back on track. Or alternatively they could act like the junior mining company they are, put their money where their mouth is in that interview, and raise £500k to drill test the western tin extension of Redmoor. I think the market would be up for that at the moment.

If that comes good, maybe they can justifiably claim to have a tin project. Until then, this is a tungsten project. The only way of realising value for the tungsten deposit they actually have, rather than a tin deposit they might hypothetically have, in the current pricing environment, is a partnership with the people across the Tamar.

I don't want to put SML down, because its got some decent assets and plenty of potential, despite all the frustrations with the bonuses and the unrealised promises over the years. If they can prove a development pathway and finance for Leigh Creek, then it could open up a lot of value here in the short term. On the flip side, if they can't move Leigh Creek into production at current copper prices, then it will never happen. So yes, without pronouncing an overall judgement on SML, I want to address comments made by CornishKnocker specifically on Redmoor.

"South Crofty and Redmoor both have Scoping studies, which currently show redmoor with the better investment case, mainly due to the high capital cost at crofty, and the flooded working and urbanised environment making proving reserves difficult."

If you actually plug in current tin, copper and tungsten prices into the two studies cashflow models - Crofty is considerably better, despite the (real) challenges you outlined. For illustration purposes... Redmoor's NPV at base case $30k/t tungsten, $20k/t tin and $7/t copper, is around $90m and IRR is 23%. If you use spot prices... so big increases in tin to $30k/t and copper to $9k/t, but a slight drop in tungsten to $25k/t - then it actually drops the NPV to just $70m and IRR to 19% in my model. This is simply because tungsten is the vast majority of total revenues, even at spot prices. Meanwhile Crofty is running a 23% IRR and $130m NPV, at $22k/t tin... based on the 2017 PEA. If you increase that to current spot prices, you are looking at almost doubling the IRR/NPV. So at current prices, Crofty's economics are vastly superior to Redmoor - on paper. Largely as a function of the recent increased tin price. Thats for the projects as outlined in their respective Scoping Study/PEA's - of course then you have to consider CUSN also have United Downs, which offers massive upside and they are fully financed to drill there commencing shortly.

"In short, Redmoor at present has the better investment case, with significant upside. Cornish metals has quite frankly huge potential upside- Crofty survived for years at crazy low tin prices, because it is a top quality asset and is today ultimately a shovel ready project."

I agree with you Cornish Metals has huge potential upside. Crofty & the intersection at United Downs are both extremely high grade. For more info see my post there "Plenty of upside @ Today 21:20". But the biggest difference between CUSN and SML, is the former have imminent drilling and newsflow, whereas Redmoor is stuck in stasis. I outlined a development pathway that would be a gamechanger for Redmoor, that is a JV with a processing plant across the Tamar - if that happened, that would completely change the capital cost structure and move Redmoor back into pole position to commence production, in my opinion, despite the permitting required, etc.

Almost finished that in two posts.... so just to conclude....

Cornish Metals not only have a proven tin project that could come back into play at current tin prices; South Crofty - but they are also cashed up for drilling, with newsflow to follow over the coming months on United Downs.

If either of those two projects come good, with Crofty relying on tin prices being sustained and a PFS being initiated, and United Downs on the exploration drilling program, they are both potentially worth £100m. Two £100m bets on a company with a £27m market capital. Thats a lot of upside.

Plus some other projects, such as the other mineral rights they own in Cornwall, and their Agreement with Cornish Lithium. I ascribe no value to these right now, but people seem to love Cornish Lithium - and CUSN have a highly advantageous agreement with them wherein they have a 25% free carried interest in any brine project on their mineral rights, and a 2% royalty. As its a free carried interest, there is no capital at stake, so this definitely should be a selling point - anyone wanting exposure to Cornish Lithiums brine production concept, which seems fairly farfetched, but people seem to love it based on the crowdfunding performance, would be as well off investing here.

Oh and just in case anyone has any doubts - the Canadians like this, and they know a fair bit about valueing junior miners. Its trading for 13p on the TSXV, so its at a significant discount here still. That disparity will close up sooner or later. Given the tin price rises have occurred since the listing, yet there has been no price response here, I would suggest maybe the brokers are offloading placement shares which is holding the price down, but once that is done and they have found them a new home - there could be a significant rerating. So I'm in.

I'm not known for my optimism on these boards, but I think the upside here is on two fronts.

Firstly, the drilling program at United Downs should start in April, and there will likely be a sustained newsflow of results from June onwards. If they can expand on historical tin stockwork mineralisation there and add more semi-massive sulphides from this new structure, it will soon become apparent whether there is scope here to build a mine. If there is, the NPV of this project alone could easily be triple the current market capital of £27m. And this would not be a hypothetical NPV like with many mining companies, but something that could be realised near term. The paybacks and IRR on such high grade near surface mineralisation will be extremely strong, ensuring rapid development and thus realisation of the NPV. So newsflow at United Downs, and potential to rerate based on whether lateral and vertical continuity of mineralisation occurs.

But then as well, there is South Crofty. This is a project less popular with the market. I think it suffers somewhat from the fact the project has been out there and reopenings touted many times over the past 15 years or so. Its become a bit of a romanticised revival with pictures of the Crofty headgear against sunsets, and investors don't like a romanticised narrative. They like making money.

But, frankly, Crofty isn't romantic at tin prices in excess of $30k/tonne - its extremely profitable. If tin prices sustain their current rise, or even rise further, South Crofty comes into play, without a doubt. The capital costs to bring it back into production are large ($120m) because the mineralisation is deep underground, the shafts need re-equipping and water pumping out. But the permitting has been done. This is one of the highest grade tin projects in the world, and the resources are largely indicated. There is nothing else on the market comparable to South Crofty in terms of high grade tin. Some people have mentioned Redmoor (SML) - but the reality is that is largely a tungsten project, the published resources there are grading 0.16% Sn, and they are all inferred. Meanwhile the Lower South Crofty resource is grading over 10 times that at 1.8% Sn, and over 2/3 of it is in the indicated category.

In terms of tin projects, whilst South Crofty is capital intensive, it is highly attractive at these higher tin prices, and has fairly low operating costs due to the high grade of ore. It may come to a point where it is decided to progress this project in tandem with exploration of United Downs... in which case again, there is another £100m of NPV at a $22k/tonne tin price, based on the 2017 PEA Study.

So thats two potential £100m+ projects basically in CUSN, without looking at the other assets at all.

Firstly, the deposit at United Downs. Secondly, on sustained tin price rises leading to a development pathway for South Crofty.

Two £100m bets on a company with a £27m market capital. Thats a lot of ups

I really like this as a tin & copper play, the best on AIM - not that there is a lot of choice. But this company really is what it says on the tin, if you'll pardon the pun... the ticker symbol... CuSn... is made from the chemical symbols for copper and tin... and basically says it all regarding what they have.

I would have liked it even more at the 7p placing price which was offered on NR Private Markets (Minexia), if they'd have approved new accounts a bit quicker! It's crazy they only raised £205k of the £500k target there, when the main SP Angel/Hannam placing was massively oversubscribed raising £8m compared to the original planned £5m.

So whats that telling you? Well the professionals really like this. A broker note published by the Director of Mining Research for Hannam & Partners, does an economic analysis, which gives a project NPV in excess of £100m for a phased development of United Downs followed by South Crofty at tin price of $20k/tonne, and copper of $7k/tonne. Bear in mind cash price of tin is now approaching $30k, and copper $9k.

Personally, I think the report focuses on the wrong areas. Its more or less irrelevant what the exact operating costs or capital requirements of an operation at United Downs are at this point - the far greater, and completely unknown at this stage, variable - is the quantity and grade of mineralisation. Right now there is one drill intersection, spectacular in grade, at 8.5% copper and 1.2% tin. But the nature of this structure is largely unknown. It could be analogous to the semi-massive sulphide mineralisation to the East at Mt Wellington and Wheal Jane, which produced over 4 million tonnes of ore from 1971-1991. Or it could be a very localised structure. But not very much mineralisation of these grades is required to have an economic prospect. In addition to the new mineralisation intersected, there are some tin prospects at Whiteworks and Tregarlands, which could add easily accessible lower grade tonnes when drilled.

For those that want the full story, the admission document goes into a lot more detail about the geology and prospects;
https://www.cornishmetals.com/site/assets/files/5388/cornish_metals_inc_-_admission_document_final_10-02-21.pdf

But the long story short is if they find more of this stuff at United Downs, the development of a mine, trucking the ore to a fully permitted processing plant to be constructed at South Crofty - will become an inevitability. That is simply because the value of ore with these grades of copper/tin mineralisation is so high, margins on production are very large and will pay back capital costs very rapidly. An additional advantage is the Wheal Maid decline, a 660m long tunnel developed in the 1980s by Rio Tinto, comes very close to this potential structure, and could make development rapid and low cost. The brokers report estimates capital costs to production at $74m, and this is realistic in my opinion.

https://investegate.co.uk/anglesey-mining-plc/prn/final-results/20110728070000P78F3/
From the above link; "33% interest in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian company.... the market value of the group's investment in LIM at 31 March 2011 was £156 million"

Remember that? It must surely be one the AYM board's greatest mistakes that part of the stake wasn't sold to develop Parys Mtn back in 2011. Surely it would not have raised any eyebrows to have done that. If that had occurred, we would be mining well into the deeper high grade copper mineralisation now and bringing in huge profits every year and AYM would be sitting at 10x or more its current share price, probably having paid dividends along the way. Instead we now hold a 12% interest in LIM Holdings, which now only owns 51% of LIM, and isn't even TSX listed anymore. Our effective stake of 6% won't ever be worth anywhere near what the 33% was back then. But that's history now, the important thing is to do something different this time. Long term and going forwards, Parys Mtn is a better asset than an iron ore operation that is only viable 1/3 of the time when prices are above $100/t, which won't be sustained indefinitely.

On the subject of copper, obviously the rise of copper to $4/lb and beyond does no harm to the overall Parys Mtn economics, it does add significantly to NPV. But it isn't as beneficial as one might think, particularly to IRR/payback which are key project weaknesses as things stand, because copper is a minor constituent of initial production. It will only be around 1/6 of total revenues in the opening few years, as production will be focussed on the White Rock Zone. This is just due to the zonation of the deposit, with the copper-rich mineralisation only starting at the deeper parts of the deposit, and only being reached several years into production. This is a limiting factor on copper's value to the project, once you are looking at revenues several years into the project, the discount factor means every $ of profit is worth a lot less in a discounted cashflow analysis. If zinc/lead prices go on a run, then Parys Mtn will start to look really attractive though. The biggest impediment to market recognition of value in Parys Mtn though is the lack of a clear plan and drive to take it forwards in my opinion. The market isn't recognising much value in Parys Mtn at all currently, and that probably won't change unless a clear structured (and financed) plan to move the project to a PFS emerges.

But I think this is almost worth a punt again at these prices/market conditions, as finance to move Parys Mtn forwards could be derived from sale of part of the stake in LIM. It would really be encouraging to see a plan though and a statement to this effect from the Board, as last time LIM was worth a lot (2011-13), AYM did not benefit from it at all because they failed to sell any of their stake. At the peak of LIM back then they could have fully financed Parys Mtn to production with less than 1/2 of their stake in LIM. The current situation is mainly driven by the iron ore price, which just hit new records for this run yesterday, with 62% fines trading for $175/tonne. The LIM PEA is imminent and that could easily rerate to $1 or more based on delivery of a PEA and a plan to achieve production in the next 12 months, and then we have the majority of the value tied up in LIM. Grangesberg also could come into play if people take the view higher iron ore prices will be sustained. It's a really difficult one because no one believes iron ore prices are going to stay at these levels forever - its almost certain they won't due to the cost curve of production, but unless people believe they will stay at reasonable levels and not crash sub $100/t again, for a certain amount of time, extra production won't be developed, and then higher prices being sustained becomes a self-fulfilling prophecy.

Clarifications;
- "I was actually trying to make a positive case for investment based on there being a backstop of "solid value" at around 2/3 of the current share price, but oh well." -> "I was actually trying to make a positive case for investment based on there being a backstop of "solid value" at around 2/3 of the current share price, in addition to the opportunity of exploration success adding further speculative value, but oh well."

- "Have you read Mr Market by Graham?" -> "have you read about Mr Market, in The Intelligent Investor, by Benjamin Graham"

Sorry I bodged that last post, meant to put in a different thread, nevermind.

Tommymech; "This is why I have repeatedly pointed out that SW's (SW being the mining guru of many on this and those who visit this board to hear his views) views are misleading because he is looking at things far too much from the 'rock face' so to speak. I'm not critical of his analysis from a very short term perspective at all - he knows far more about the nitty gritty of mining economics, costs and returns than I do - but he doesn't seem to me to be seeing past the trees to see the woods though his response to Brentharg yesterday indicates that he might be moving away from his pessimism about AYM and starting to look at the bigger picture. I hope he gets back in (he previously sold 95% + of his holding he tells us which has always made be suspicious of his motives for a relentless series of highly negative posts about AYM and LIM) before the price rises too high for him to do so."

Have you read Mr Market by Graham? I see a lot of that on these boards. Analysing projects based on 3 year trailing prices etc, is flawed obviously, but is it any less flawed than making macro economic predictions and narratives that often turn out to be bunkum? If you could predict commodity prices in advance, then surely you are a genius and should take out deriviatives or CFDs on the commodity price changes. Of course, its easy to say commodity price rises/falls were inevitable after they have happened, but can you do it before? If you can, you will make a tax-free fortune - if you are wrong, you could be bankrupted, but hey you seem pretty sure! Why invest in a company like AYM wherein you are dependent on the actions and success of a Board who may or may not achieve progress, when if commodity prices rising is inevitable to you, then you can make a guaranteed fortune from instruments specifically on them, leveraged as much as you want/dare.

I analyse on consensus commodity prices, or trailing prices - thats also how the institutions that will provide the debt funding that major mining projects require work. It might not be how the market works, particularly at the speculative AIM level, I get that - but I'm looking at long term value and trading based on new information/newsflow, not pure sentiment. If you want to analyse based on a narrative of ever rising prices, a new ever-lasting commodity supercycle for whatever else, then go ahead - you can put your money on the line. I'll continue to look for undervalued assets and analyse projects the way debt funders will.

As for the Spenfold conspiracy theories... I don't know what possesses people to engage is such hysteria, but its not something unique to AYM. I recently posted some analysis on GGP of their main asset, Havieron, and several people (including some of the top recommended posters on this site) went absolutely nuts at me, because my numbers were too low for them. They accused me of being an "paid assassin" and part of a "targeted disruption" operation. I am apparently a "manipulative nasty fellow" and a paid deramper working for a gold mining major trying to take them over, or JPM/hedge funds! Isn't that fantastic... I mean I kind of wish I was now, sadly not haha... I was actually trying to make a positive case for investment based on there being a backstop of "solid value" at around 2/3 of the current share price, but oh well.

Look, the facts are my analysis on AYM has *consistently* been optimistic, not conservative. For the 2017 AYM Scoping Study, I significantly overpredicted an "NPV of $50-100m" (post @ 25 Jun 2017 15:45), when it turned out to be $41m. And then for the 2021 PEA, I predicted "$150m NPV and 45% IRR" (post @ 09 Dec 2020 21:48) - when the real numbers turned out lower at $120m and 26% IRR. I pointed out LIM was worthless at iron prices sub $100, but if they stay over $160, it will pay back in a matter of a few months of production - so its a binary bet on iron ore prices staying high. These are just facts, I don't know why people that seemingly have little idea what they are doing take so much offence at them.

If they can get a multi-million ounce resource to JORC or NI-43-101 standard, then yeah, might get the debt. A very strong PEA (IRR > 60% @ $1500/oz gold) then that would probably do. I think everyone recognises that this is a narrow vein deposit and that delineating an indicated resource will be very expensive, and thus it would be better just spending the capital on a processing plant and underground development. But that doesn't mean you shouldn't still have a fully costed plan and engineering studies, and at least an inferred resource and PEA, preferably with indicated resources for the first payback period. I imagine they will realise this sooner or later when they start asking for the debt, if they haven't already.

"Southwesterner, would you please reiterate what you wrote about LIM's breakeven point? Back in 2011 I estimated that BEP at $110/T, and actually put that figure to Bill Hooley during the Parys Mountain visit. He replied, "I don't recognize that figure", but I could see that LIM was eating cash by selling into the spot market at maybe $70/T. What with technology improvements and an older-but-wiser management team, isn't $110/T an over-pessimistic high figure today?"

I'm not really sure there have been any "technology improvements" which will reduce the price - like, tangibly, what exactly? You know this is just going to be whatever hired mining equipment the contractors have going, this isn't going to be a state of the art operation with Automated self-driving vehicles or whatever. I don't see many reasons costs will have changed really.

Also there are two ways of looking at this whole costs business. There is the spot price minus costs way of doing it - in which case your costs need to include shipping and quality penalties. Or there is the received price minus costs method, wherein the received price take account of the shipping costs and quality penalties - this is how their historic accounting worked. If you look back through the 2011-14 annual reports and statements, the shipping costs and quality penalties were really crippling - the profits were never anywhere near on paper what they would have been had you just taken the spot price minus their nominal operating costs.

So... yeah... if we go with the first method of taking the spot price minus mining costs + rail costs + shipping costs + quality penalties... I think all of the latter costs/penalties will add up to somewhere in the US$90-120/tonne region. So you want to take the spot price (62% iron ore fines CFR China) minus $100/t roughly I would say. Basically currently it would generated $60/t profit and be enormously profitable, pay back in a matter of months. But its very dependent on the iron ore price staying above $100/t, if it goes back anywhere near there, its probably game over. Very good asset, in high iron ore price environment. Almost a binary bet on iron ore prices basically.

"The flotation circuit is - for me - a harder question. If this is such a good idea, why wasn’t it in the original plan?"

I mean basically there wasn't an original plan. There were a few rough assumptions, a lot of hype - but no breakdown of the costs involved, nor detailed timeframes to execute, nevermind engineering plans etc. One has to assume that the reason there are no published plans is because they don't exist, which begs the question I asked back then to be asked in the CRUX interview - how do we know the funding raised will be enough to reach production? Turns out its not.

Back in July last year when this was floated, anything with Gold in the name was getting money thrown at it. And high grade gold - well you just got a blank cheque. In this case they wrote a fairly big sum of money on the cheque, no doubt thinking it will be ample to build a mine, but in reality, they obviously didn't have detailed costings as it won't be enough. On the flip side of the negatives, as I said originally there is high grade resource potential, that means high margins - which means $$$. If they can prove they have a credible plan, they will get the money they need, and if its as profitable as it should be - they could get it from debt without equity funding. But you won't get debt funding based on a hunch, you will need a proper detailed feasibility study. I don't think getting to a point of sustainable production is going to be as easy as these people think. I know there were some very accomplished mining people involved in Angel Mining, and as we know - they made a hash of it. But this young CEO with no real mining experience thinks this is going to be easy? Lots of alarm bells going off.

Agree on all your points leehardcastle.

"Southwesterner , Go away now. You have taken enough space up on here."

If you don't like my analysis, then use the filter. No need to try and bully me off here. It won't work.

I know I am correct in saying the entire ovoid zone of 450 million tonnes is not mineralised above cut-off, just from reading the JORC Statement, and certainly not at 5-10x Telfer's current grades...

"SW. that's why I used an average of 1g per ton, lots of it will be well over that and some below but as an average it won't be far off ! And if you care to look at the latest drilling results you will see a lot of the blank areas are now being filled in as mineable resources ! And 5 to 10 times current Telfer grades would support this !"

What? No! Telfer is running at 0.6g/t openpit grade. 5-10x the grade of Telfer is the mineralisation in the crescent zone which is 4-5g/t. It is not the mineralisation in the entire ovoid, most of which is sub cut off. Have a look again at the block models in the resource statement from December. Note that most of the block model is below the $50/NSR cut-off (which could be too high for some bulk caving methods), and that the drill intercepts outside the block model are *mainly* sub 0.5g/t for the bulk of the ovoid volume. There is not going to be 450 Million Tonnes @ 2-2.5g/t. Its just not possible looking at the JORC statement. You are just plain wrong and if people like Bamps back you up they are being very dishonest, because its clear from their posts they know better.

Its not a block of gold ore. Its a block that contains zones of gold ore... currently there are 50Mt of inferred resources within it. Its perfectly plausible it will expand, and it is cut-off dependant, so lower cut-off, more mineralisation. But fundamentally it is not all going to be above cut-off, a lot is going to be sub 0.2g/t, and the majority sub 0.5g/t, you can see that from the block models. You have to have some working assumptions, even if they put a whole train of the Telfer mill onto Havieron, at 12Mtpa, the cut-off is still going to be in the 0.5-1g/t sort of area...

"Here are some figures for you .. current estimated size of Havieron 650 x 350 x 1000 = 227,500,000 cubic meters @ an average of 2T per cubic meter = 455m tons even taking a low average of 1g per ton that is still 16m Oz as we stand at the moment and we are still open on 4 fronts !! That's as good a guess as yours, probably better and those size figures are not made up they are fact !"

lol Jag I knew you'd come up with that, had already done that and figured thats where you got the ~10% known mineralisation shapes from. I've already explained, not all the mineralisation within the ovoid is above cut-off. That is a zone that contains some high grade mineralisation, some breccias, and some gangue/waste. Its not a block of gold ore.

"So did Sandeep say 5-10% or 5-10x - which are orders of magnitude different?"

He said 5-10x. Telfer openpit is 0.5-1g/t, crescent zone is 3-5g/t Au eq. Thats what he is looking at for the PFS later this year I am sure.