Member Info for southwesterner

Was tempted to just let this go... but I thought I'd bite...

Bubble; "RNS out great news permits secured and pumps getting ready"

What on earth has this RNS got to do with that? Its a statement saying the detailed NI43-101 report on the new mineral resource that was released to the market on the 9th June has been filed. It is not price sensitive, its of technical interest only really. The share price is on an upward trajectory due to positive tin and copper price movements, not due to this RNS.

Did you just read the last line below the template statement called "ABOUT CORNISH METALS". Which has been the same for every RNS in reference to South Crofty since the company IPOed?

Bubble; "Natnrg,those graphs tell you there's lots of rare minerals imho"

You've not seen any "graphs" telling you there are "lots of rare minerals."

This is a tin deposit, what "rare minerals" are there in the resource other than tin? You just seem to be talking a lot of rubbish really... and then posting "Strong Buy" next to it.

I'm not convinced you know what you are talking about at all, and I'd caution others to beware of meaningless ramping statements with no understanding or substance behind them.

LLInv: "Bubble, apologies for perhaps the silly question, but I had thought it was already known that the project was fully permitted? Or were those permits exclusive to United Downs?"

No don't worry LLInv, your understanding is correct. South Crofty has been fully permitted and the pumps delivered since well before it listed on AIM.

The value of the silver is around 6% of the total value of the metals in the intersection. And thats without taking into account losses associated with metallurgical recoveries into the copper concentrate, and then the smelter payable metal deductions for silver credits in the copper concentrate, you will likely end up with well under half of the metal value. So the silver is really of academic interest.

Basically the exact same model they released for the IPO in February, run at $25k/t instead of $20k/t tin price... no other underlying assumptions changed, not even attempted to re-run South Crofty PEA with the new resource. Its a good thing the "updated analysis" is free, lets put it like that. I actually think their NPV calcs for Crofty are a tad pessimistic, and for United Downs a tad optimistic. Based on the latest info available (the drill update + new resource) I would keep the same grade but halve the UD tonnage, and increase Crofty tonnage by 40% but at 10% lower grade. Certainly can't argue with upgrading the long term tin price, that seems reasonable.

Overall though, I think we've hit a decent level for now with this share, and I've booked a good profit on this (c.70%) - I think it'll take a while to delineate the extent of United Downs in more detail, although it is still an exciting prospect. The big factor now is what they do next with dewatering Crofty - and driving a decline in parallel as well, if CK is correct. The dilutive risk to financing the next stage of development at Crofty is going to hold this down I suspect until its resolved what the plan is, and how its being paid for. If they do commit to dewatering, and manage to raise the finance to dewater, without offering shares at a massive discount, then that will actually boost prospects significantly.

CK; "The biggest issue with that plan is the pumping philosophy that has actually been adopted, which is very different to that stated in the PFS and drives a coach and horses through the plan as it takes half of NCK out of commission during the dewatering stage."

I think maybe your reading into that too much, why does it matter that half of NCK is out of commission during the initial dewatering phase? Isn't the whole point to dewater to 195fm, then establish a permanent pumping station underground. I'm not seeing anything inconsistent with the PEA (there has never been a PFS) in this strategy... in fact I'm not sure where you are getting all these details about south and north winders from the PEA, it doesn't mention that much detail anywhere in it. I think the Rising Mains and Shaft Lifting Frame etc, were all manufactured in Ireland, 3 years ago, based on the PEA, so I'm not sure there's anything indicative of a change in strategy from this, although I do think a change in strategy would be preferable from a technical risk point of view.

CK; "That puts the decline development at $4.2 million, which is considerably cheaper than installing a new south winder and gives you far better access, solving many of the problems. But I guess we will find out."

Whilst I agree that relying on the shaft imposes huge constrictions and impracticalities on the operations, and that a decline would be vastly preferable. I would also highlight that there is little doubt the PEA (not PFS) was based on accessing the highest grade deepest parts of the orebody first, from the NCK shaft.

I think the costings of driving ramp to access stopes underground, and a permanent LOM decline, are significantly different, due to the size and amount of ground support installed. I also think the costs utilised in the PEA are pretty ambitious. I think your 180m advance per month in a 1:6 decline is hugely optimistic, even compared to industry standards in Australia, when benchmarked for this kind of small scale operation. 120m/month would be more of a realistic prediction for this situation, to take account of mechanical breakdowns, ground control delays, etc.

So I think realistically your looking at at least 3 years, not 2 years, to access the bottom of the shaft with a decline from surface. And I also think the capital cost of doing this will be more like $20m, than $4m.

The upshot is, if they do change strategy and drive a decline in parallel with dewatering, I think they'll need to raise at least double the planned $15m. As you said, I guess we will find out!

This RNS is keeping the cards fairly close, but it does tell us a bit. What it tells us primarily, is that the true width of this structure "lithium lode" at this point of intersection - is no greater than 2.6m. In fact its very likely around 2m. That is consistent with a steeply dipping lode, analogous with the mineralisation mined to the north and south at Consolidated and United Mines. This is no great surprise really, however I would note there was talk of it being "similar style" mineralisation to that of Wheal Jane & Mt Wellington, ie. more shallowly dipping wider structures, it is now certain that is not the case.

This then means we are almost certainly dealing with a sub 2Mt resource potential in this lode, and most likely sub 1Mt. Thats ok, can make something of that, at these grades its worth a significant amount still even as narrow vein mineralisation, if there is continuity of grade laterally over a decent distance. The RNS talks of 180m of vertical extent being proved, what they appear to mean is that the lode has been intersected at a depth of 180m in this borehole. It was intersected at around 80m in the original hole, so in fact only 100m of mineralised vertical extent has been proven. I'm unclear how far away UD21_001 is from GWDD_002 in lateral extent, but it could be very near, CK may know more about the positioning of the hole collars. But its possible hole 001 is extremely close to the discovery hole and not much continuity has really been proven at all, the only thing proven is the width is around 2m at this point.

Overall not enough information supplied to draw any massive conclusions, but certainly we now know we are dealing with mineralisation that is analogous to that mined around it, not some kind of bonanza deposit that is both high grade and large in extent. That was never likely to be the case though. The total mined copper ore from United & Consolidated Mines is well under 2Mt of ore to put it in perspective, the scale of mining back in the 18th and 19th centuries was tiny compared to today. So yes this will be a small deposit, but potentially a high grade one, that could be mined over a few years as a starter operation to South Crofty. Further drilling is required to delineate its extent and look for repeat orebodies and branch lodes etc, which they are highly likely to find, and may well have already in hole 7.

Confirmation that this is a steeply dipping Hot lode style deposit, not a Wheal Jane/Mt Wellington style deposit, means this hasn't and isn't going to set the markets alight, but its certainly not bad news either, it just means we will have to wait to prove the extent of the vein laterally and vertically, and see what else there is in this promising patch. Stepping up the drilling campaign to prove it out quicker would show a higher degree of confidence that the end goal is worth delineating.

The ball now moves to the CEO's court though, as to what the next move is with South Crofty.

I thought I didn't dream this up. Read the announcement at the time of the PEA;

"The South Crofty mine is expected to be accessed via the existing New Cook’s Kitchen shaft which will serve as the primary access to the mine for personnel and materials and for transporting mill feed to the plant site. The existing Tuckingmill decline will be extended in the second half of the mine life and eventually provide an alternative haulage route from the upper levels as well as access and ventilation. The existing New Roskear shaft will provide ventilation and secondary egress during development and early mine life."

https://www.cornishmetals.com/site/assets/files/5007/2017-02-16-nr-sbw-1zu9el.pdf

So that shows the PEA is predicated on accessing the orebody initially from NCK, with New Roskear as the return ventilation circuit, and the decline isn't completed till later in the mine life. Also, I think your decline advance rates are hugely optimistic from my industry experience, I'd be very surprised if they coudld get down to 700m in much less than 3 years.

CK; "I'm in no doubt that if a mine is viable then the Wheal Maid decline will be used, the point I was making is its not as straightforward as opening a gate and you're in. I'm guessing you're familiar with the ground in the area and it's instability, from opening the portal to getting to the end where last years discovery was is likely to take at least 6 months of refurbishment work, compared to about 2 weeks that was required on the Tuckingmill decline in 2008."

Yeah, I mean, 6 months refurbishment though, not the end of the world, compared to the task at Crofty anyway.

CK; "With regards to South Crofty access, I actually think you are missing the plan there, the plan is not for access from NCK but from the Tuckingmill decline - nck is being used for rock hoisting (the most economic form of ore transport for deeper ore bodies), to a conveyor Drift to the mill (to avoid tipping skips on surface). The decline can be advanced quicker than the water can be drained, so straight away every level will have air circulation (down NCK and up the decline), so no there will be no need to hoist equipment down the shaft. The first reopened level will be 195 for establishment of the permanent pump station, which will be approximately 9- 12 months after the start of pumping."

That does sound a lot more practical than taking equipment down the shaft. But I'm struggling to match it up with what is laid out here; https://cornishmetals.com/site/assets/files/4962/2017-03-31-scrofty-pea-c84ol6.pdf

Firstly, I'm really surprised at the decline being advanced quicker than water will be drained. I thought it was only going to take 2 years to pump it out, and production starts in Year 3 on the 1350m EL, see Table 16.2, which is about 750m below surface, or 630m beneath the existing decline. So thats 4km of additional decline to reach there, that will take at least 3 years surely. I also see no Capital costs allocated to the ramp development to get to these depths in Table 1.3. And Table 16.3 only allocates 1.8km of ramp development pre-production, which won't get them to 750m depths. It very much looks like production commences near the bottom of the mine without a decline there: "Mine development will be carried out using trackless rubber tire equipment using ramps and horizontal accesses from the NCK shaft".

Additionally, if they are going to put a decline in at the same time as pumping out, they will need to raise a good deal more than $15m. So, yeah hard to square off all these things with the Tuckingmill decline being extended to the lower production levels upon the commencement of production. It very much looks from the PEA like they plan to use the shaft to access the lower levels, and build ramps off the shaft in various places to access various lodes, and then eventually they will join up the ramp infrastructure, but to start with there is no ramp to the bottom. How do they get a ramp from surface (or 120m) to 750m depth in 2 years?

CK: I'm more optimistic about the reuse of the Wheal Maid decline, should significant quantities of ore be found in the vicinity of it, it should prove very useful despite the condition. I think anything in excess of 3x3m will be adequate for operations up to about 800tpd or 250ktpa, as you can fit 20 tonne trucks in quite comfortably for haulage, and thats all you need really. If I was going to be in charge of starting up one of these projects, United Downs or South Crofty - I'd know which one would be easiest, by a long way. Even if you had to set all new rings in the Wheal Maid decline, that would be a nice problem to have compared to some of the challenges at Crofty. Crofty is going to be a monumental technical, engineering and compliance challenge to reopen from all sorts of perspectives, I'm not going to go into them all, but just the fact its shaft access only initially, will be one of them. If I had to pick between an orebody at 100-400m depths with a 3x3 decline from the 1980s, or an orebody mainly at 500-800m depths accessed from a 100+ year old 6x2.5m rectangular shaft (NCK), as the primary production means, I'd pick the former. Every single piece of large machinery or equipment that goes down Crofty will have to be chopped up and put back together in underground workshops. Yes this was the norm 50 years ago, and yes its still done in some operations, but generally with much larger shafts and underground facilities. It will be "interesting" to say the least, with modern regulations, mining equipment and manufacturers. Any challenge can be overcome though, if you have the right calibre of people, and a strong enough economic case, which I'm sure such a project will attract.

I think its great for the PR and promotion, but the reality of supply chains, especially for something like copper or tin, is any mining operations are largely irrelevant to the building of EVs in the UK. Yes, EV's do contain copper and tin - but in the form of complex components, not metal concentrates. The metal concentrates from any mining operation in the UK will be exported to smelters abroad, likely in Asia for the case of tin, mixed in with concentrates all around the world to produce metal, and then made into components which go into vehicles. So there are several processing and manufacturing steps beyond the initial mining, and unless you bring the entire supply chain in-house, you haven't really gained anything. If you have to make the refined copper into a motor in China still, or the tin solder into circuit boards in China, then there is no additional security of supply. It would be the same for lithium unless a lithium hydroxide product is produced which can be directly used by battery manufacturers. People are oversimplifying what is an incredibly complex global supply chain, and fixing that requires more than just a few mines, it requires a total rethink of strategic supply chain security well beyond the comprehension of most western companies/governments. Realistically, it will be impossible for most items to totally bring the supply chain within the UK, but it may be possible to bring it within a group of countries which are deemed more favourable. Even this though will require massive subsidisation and incentivisation to achieve, and an acceptance in the short term that costs will be higher than just buying things from China etc. I'm not sure we're there yet, and I'm not convinced that western companies/governments want to do anything more than window dressing at this stage, although I guess if that enables mining in cornwall to restart though that would still be a positive. But a few mines aren't going to create an integrated supply chain for EV's without a total rethinking of how we do business.

Given the Crofty ore is high grade, the tin recoveries at Hemerdon are fairly poor, the Capex for the processing plant is less than half of the total Capex (from the PEA), planning permission for the processing plant at Crofty is already in place, copper isn't recoverable at Hemerdon so any ores from United Downs won't be processable, the distance from Crofty is 65+ miles so trucking costs will be high, and it would be hard to justify rail sidings for such a tiny volume of material - nothing really points towards this being a good option. I think it would make much more sense for Redmoor (SML) though than building their own plant, and we've had that discussion on their share chat some time ago.

Lenz, thats a gross simplification of how you would value this kind of asset. You need to be doing NPV modelling, not just back of the envelope calcs. The only way anywhere near to 20M Oz will be extracted, is through the development of Capex intensive block caves. That will take several years, and the resource will be extracted over many years beyond there, you have to take account of the time value of money.

Lets just put into perspective how ludicrous your method of valuation is, or rather, how at odds with normal market practise it is.

Newcrest own 100% of Cadia. The capital is sunk, it is running at 30Mtpa. Its operating costs per ounce of gold equivalent are negative, due to byproducts. Cadia has over 35 million ounces of resources. So at a gold price of US$1500/oz, that is A$70bn of "profit" by your method. Thats over triple Newcrests total market capital. So by your method of valueing GGP, Newcrest is undervalued by 3x just on one of its assets.

That all said, I do think GGP is a much stronger bet now with further drilling, at 17.5p, than it was when I first looked, there is a decent risk-reward ratio, because there isn't much downside. I think its a safe bet to say Havieron (on a 100% basis) is worth at least $2bn, or £1.5bn - which is just under 12p to GGP. Which means it can only fall about 30-40% from current levels, before someone will look to make an offer - likely Newcrest to take full ownership. Unless gold prices go down, or the AUD rises, of course - and the opposite is true as well for upside. But if more mineralisation is discovered and incorporated into the mine plan, either at Havieron or elsewhere on the exploration tenements, the upside is significantly greater than 40%. So on a risk-reward basis, any price in the teens is probably worth a punt, but you aren't going to get a "tenbagger" here anymore.

Bamps21;
"I’m of the opposite opinion that this is the only share that the luck of 2020 will be repeated in our lifetime.
When it got to 16p I remember saying to Hydrogen that from under a 1p to 16p is the same % increase from 16p to £4.32.
That is my sell target for those soothsayers out there having kittens I say disprove it cos I’ve done my own calcs to get to it"

This makes absolutely no sense. Do you realise how ludicrous that price target is. £4.32 would value GGP at £17 billion, or A$31 billion. That is more than the entirety of Newcrests market capital, at A$21 billion - which includes more than double of GGPs stake in Havieron! Along with Cadia, Lihir, Red Chris, etc.

Honestly, you have done a fantastic job of seeing the scale and potential of Havieron when it was a junior exploration penny stock, below the radar of mainstream mining and financial analysts, but now you are clearly out of your depth (pun not intended). I don't think you have the knowledge base to value this asset accurately at a feasibility level, if you did, you certainly wouldn't be coming out with 16x returns from the current valuation. I warned the then valuation six months ago was optimistic, and since then the share price has halved. If you applied your skills to other early exploration stage projects, that have only a few drill intercepts, and no resource modelling released to the market, that are thus below the radar of the market, and therefore not correctly valued, you may be able to get 16x returns again.

But GGP is not going to go up 16x again, not without new as yet completely undrilled discoveries beyond the current assets. It's also under the microscope of the larger mining analysts now. GGP market cap is £700m, so the whole Havieron asset (+ other exploration tenements) are valued at £2.3bn currently. Yes Havieron might be worth more than that when optimised for block caving potential, but that's some way down the road, and even then we're talking a few times over the current valuation absolute max, not 16x. If Havieron was worth 5x its current value, then Newcrest's stake in Havieron would be worth over 100% of their current market cap to put it in perspective.

In simple terms the RNS means instead of paying 25% of the after-tax NPV if South Crofty goes into production, they only have to pay $10m.

Given the revised after-tax NPV for the new resource, is likely to be at least $200m, then 25% of that is $50m. So its a saving of at least $40m.

NPV is very subjective cause it depends on what price you use. So CUSN would have been incentivised to use lower prices, to reduce the NPV, to make the 25% payment lower - which in turn would have detracted from the attractiveness of the project and likeliness to be financed. Now both that impediment, and a massive overhang, has been removed, which in turns makes it much more likely Galena will get something rather than nothing. So a good deal all round.

The big question though remains what, if anything, they have found following up at United Downs. Is the refocus on South Crofty a substitute for that exploration project not delivering, or will they be progressing them in tandem. If something has been found at United Downs, raising financing for pumping South Crofty will be a lot easier, and there is a lot of upside. If not, expect temporary setback in price. Expecting drill results next week, they must have the assays by now.

"Royalties!!,win win situation for CUSN !!:)imho Dumpunter"

The project is in Imerys operations, nothing to do with CUSN. There will be no royalties associated with either this china clay waste lithium mica recovery project, or the Trelavour hard rock lithium mica project, for CUSN.

I maintain the key drivers behind the current CUSN market value, and any future increase, are not related to lithium. The key value drivers are the United Downs drilling programme leading to a copper-tin resource being established there, and additionally the progression of South Crofty through further advancement towards development, leading to realisation of a higher % of the potential NPV for that project. Talk of achieving full funding for developing South Crofty at this stage though is premature. One step at a time, the next stage is progressing to a PFS, further drilling to upgrade inferred resources to indicated, in tandem with pumping out the mine if possible to bring forwards the critical path. If United Downs comes good, that could make the combined project a lot more attractive, lower Capex, and quicker to bring online - but realistically we're 2 years away from a development decision on the whole package.

And thanks for the local info CK, good stuff!

"It's looks like a significant step up in drilling is occurring as I said the other day a second diamond drill rig as arrived, now a third rig has a arrived ( a large combined DD/RC rig) The active rig is currently drilling on Site 4 (Tregarlands farm)."

Always hard to read into this stuff too much, but it sounds positive that they've gone from Site 3 to Site 4, if they'd hit nothing at Site 3 then why move further East. Site 4 looks to be near to the CL-001 borehole where they only hit low grade copper in the probable extension of Hot lode, but it was possibly started south of the new copper lode outcrop.

Hopefully we see some assays and drill core next week in combination with the G7 presentations, and this could fuel a significant rise.

"Extraction from brine does have great potential and advantages. Yes its unproven and quantifying the resource maybe impossible but lithium from mica is also a novel, unproven resource."

Lithium extraction from mica is operating on a commercial scale from lithium mica granites in Yichun, Jiangxi province, China, for several years now. No one is exactly sure what production levels are but we're talking in the thousands of tonnes of LCE/annum. The type of lithium mica they use mainly is called lepidolite. The zinnwaldite that EMH are looking to extract from is basically a higher-iron mineral version of this. The stuff in the St Austell region of Cornwall is half way between the two minerals in that it contains some iron, probably enough to allow magnetic concentration, but not as much as zinnwaldite. Technically the correct name for all these micas are polylithionites.

"Personally I think the direct lithium extraction-DLE - is far superior to open rock mining if and when it becomes a proven method. Check out standard lithium/ E3 metals to name two in the process of perfecting their own methods. If I still lived in the uk I would be invested in Cornish Lithium as their concentration levels are extremely high. Taxation/currency exchange makes it too much of a headache so I’m in E3 instead. The big selling point for DLE is the tiny environmental footprint. In simple terms you pump water out of one hole, extract the lithium only and return the spent brine back to the saMe aquifer."

Yeah this whole DLE business is definitely out of my normal area of expertise so there is a lot of uncertainty for me. It doesn't look to have been commercial applied directly to low concentration brines yet, there seems to be a preconcentration stage to bring the brine up to 2000+ mg/l of Li, in the existing commercial operations in Qinhai, China and Argentina. Thanks for those two companies though, had a read around their stuff. The key problem for me with Cornish Lithium, and I suspect perhaps the reason they don't have a definable resource is, they aren't in an aquifer. Standard Lithium (market cap $500m) are in an aquifer in Arkansas, and E3 Metals ($90m cap) are too, in Alberta. The former has 400mg/l, and the latter has 75mg/l - compared to Cornish Lithium at 200mg/l, so they appear to be in the right ballpark. But what volume of water can Cornish Lithium extract at that concentration, they are in granite, not an aquifer - so it might not be very much at all. Then you are reliant on injecting water to get water out, and presumably it wont take very much of that for the lithium concentration to come tumbling down. So there are a huge number of unresolved technical questions for me on Cornish Lithium, they don't seem to be particularly keen on providing anything except hype and fancy PR, and for those reasons I ascribe zero value to it currently. On the flip side, if the lithium brines at Cornish Lithium do go somewhere, its all upside for CUSN!

That said if it wasnt for Cornish Lithium's drilling on United Downs, CUSN would have never have found that copper lode... hoping for some assay results next week!

Yeah, basically another PR piece for Cornish Lithium. If they are 1/2 as good at exploring or mining as they are PR, they will do very well indeed. Very little substance so far though really.

Extract; "If Cornwall is experiencing a lithium rush, then Wrathall, 58, has declared himself prospector No 1. “We got there first. It would be very difficult for someone else to repeat what we’ve already done. We’ve tied up most of the mineral rights.”"

I mean this simply isn't true... British Lithium (Roderick and Andrew Smith) snaffled up the Gunheath/Hensbarrow area which has the highest grade outcrops of lithium mica granites in Cornwall, whilst Cornish lithium were still looking solely at the totally unproven brine prospects. Its pretty likely that British Lithium have the best hard rock lithium project in Cornwall by a country mile based on all the published data so far.