Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Rogue_rader
RR Assuming you mean a bid from VBR to buy the shares they do not own...........
Apart from its shareholding, VBR also owns a large number of warrants (138,888,889) which are exercisable at 27 pence. If VBR exercised its warrants its resultant holding would be around 40-42 %.
If every holder of warrants exercised, the VBR shareholding would become around 36% of the fully diluted total.
"20p payback" ==> i.e. to make a bid at 30p, VBR would expect that all warrants it doesn't hold would be exercised as the warrant exercise price would be below the bid price. So the cost to VBR would be around £150m.
However, VBR would then benefit from CUSN having just received £21m cash from the other warrant holders, so the net cost could be argued to be £129m.
To this VBR would have to allow for the cost of building and equipping the process plant which might be around £100m.
So all in at 30p, VBR would be looking at around £220m to own the whole thing and be up and ready for mining/processing.
My view is that we could find CUSN is worth many times that figure, (£bns) if further exploration proves the wide formation (WF) is a district scale reserve of similar quality to the GFL. Then as you say, there is considerable potential in the other mineral rights around Cornwall, the potential for profit from processing ore from WF etc and ore from other exploration companies such as Cornish Tin and Godolphin, plus the value in the arrangements with Cornish Lithium.
CUSN might become the hub of all Cornish mining and a major mining company.
As they have board representation VBR will have a very well informed idea about the value in all these parts.
If a bid was in prospect, I would think it would be appropriate to make sure all shareholders had received the same information to evaluate the business as had been received by VBR.
One thing is for sure, there will be a lot of interest in the drilling results and the tin price over the next 24 months.
Rogue_rader
Thank you for a very interesting and worthwhile overview of CUSN. Yours is the best post I have seen on any company since I started using this website. It must have taken you several weeks to research all the facts and figures you brought out. The points about the history of the mine and being at peak tonnage output when it closed, I have not seen before, are well found and support the view that there is a huge amount of tin still to come out of the mine.
Like you, I am not seeing the investment in Cornish Lithium shares as a major plus, especially after the recent dilutive fund raise bringing in the UKIB, EMG and Techmet, on very favourable terms (terms which were not made available to existing shareholders -CUSN being one), but the royalties may be worthwhile if Cornish Lithium gets into production.
One point on your narrative is that the end of de-watering is estimated to be 18 months after the start so that would be end April 2025 not April 2024 as stated verbally. The completion of the feasibility study probably comes after that, as I think the FS may need info from drilling within the mine after de-watering is completed. Once the FS is completed the company can then make a decision re production and if positive, proceed to raising finance for the process plant. Hopefully by then, raising finance will be easier and the tin price may have made more upwards progress.
It should be remembered that the points you made about management remuneration are stated in Canadian $ not US$ or £, so although the figures look large in Ca $, in £ they are reasonable for such well qualified and experienced people. £1 = Ca $1.705. As you point out the news for a long period has been positive and that does not happen if monkeys are employed being paid peanuts. One does not have to look far to see the devastating results of a monkey-led experience.
Otherwise it might be worth considering that the NPV figures you mention from the 2017 PEA, will benefit from a higher tin price, but also the introduction of Tomra ore sorters at the beginning of processing and possibly higher throughput as a result of higher indicated and inferred figures, offset to some extent by increases in the cost of plant. The sensitivity analysis -summarised on p22 of the PEA -suggests that a 10% move in the tin price adds about US $57.6m to the NPV. Indeed the tin price now is about 10% higher than the base case scenario in the PEA.
Re your point about VBR taking a stake; if VBR (who have board representation) wish to increase their holding above 30% they will have to make a bid. VBR did raise US$ 650m earlier this year. For Sir Mick Davis and his team to have taken the stake they have, huge due diligence must have taken place, all of which must give other investors great confidence in the outlook even at a share price of 18p - the price VBR paid.
Hopefully we are at a good point on the Lassonde curve for your interest to have been aroused. I look forward to you
Buysellfredmcfc
In the past when the mine was working I think about 6k-7k tonnes of water were pumped out per day, so about that amount must seep in. At present up to 25k tonnes are pumped out every day, so I guess around a net 18k-19k tonnes are disappearing.
Page 33 of
https://cornishmetals.com/site/assets/files/4930/cusn_october_2023_corp_ppt.pdf
shows the de-watering plan. (I think the numbers displayed are fathoms.i.e. 6 feet equal to 1.8288 metres.) The water level started at around the 60 fathom mark, where its drained away via the adit.
The Dec 6th RNS stated "On December 5th the water level stood at approximately 155 metres below the surface" which equates to 84.75 fathoms. This is below sea level. So around about 24.75 fathoms had been drained by then. The first stage - hoped to be completed after about 9 months of pumping, will have taken the water level down to about 200 fathoms. i.e. another 115.25 fathoms.
As the water level drops and reaches voluminous workings , the amount of water to be pumped out for each fathom will increase, as the volume of the workings rises. So progress through the fathoms is fast to begin with but slower as big volume workings are hit.
Https://www.lse.co.uk/rns/IES/invinity-awarded-16311m-for-30-mwh-flow-battery-h3knshm5snxe2fx.html
The key paragraph in the announcement states
"The award is structured as matched-funding and is conditional on the Company executing a sales contract with a project partner, who is expected to provide the balance of funding then develop, own, operate and optimise the battery project. The Company has already signed a heads of terms agreement with its preferred project partner and will provide a further update upon conclusion of definitive contracting. Upon completion of that step the build and commissioning phase of the project will commence subject to necessary planning and connection approvals being received."
What ever the balance is, the partner pays it. if the final price is not known I guess we cannot work out the percentage the £11m represents. It is a little unsettling that there appears not to have been an announcement of who the partner will be.
Https://www.ft.com/content/ce18cc79-b501-440e-a12a-1473fd85d88e
The vast tracts of desert in Western Australia, which have yielded gold, nickel and iron ore to prospectors in decades past, have now become a major battleground for miners of lithium, a key raw material for batteries as the world transitions to greener energy. A struggle for control of the resource has been ignited this year as multinational companies have clashed with Australian mining billionaires over a series of takeover attempts in two of the remotest parts of the state. A section of desert near the mining town of Kalgoorlie in the Goldfields region has become known as the “lithium corridor of power”, while merger moves in the Pilbara in the state’s north-west have triggered memories of the iron ore boom there in the 1960s and Western Australia’s nickel rush in the 1970s. “These exciting periods don’t come around too often, these prolonged periods of demand for a commodity. It is driving a frenzy,” said Tom Reddicliffe, a 40-year mining veteran and executive director of GreenTech Metals, whose exploration rights in the Pilbara have buoyed its share price amid heightened deal activity. “There’s only so many seats at the table. It’s like musical chairs — you don’t want to miss out,” he added. The “land grab” for mining rights in the lithium corridor kicked off in September, when US company Albemarle, the largest producer in the world, agreed to pay $4.3bn for Liontown Resources, an emerging project that has struck supply deals with Tesla and Ford. However, the takeover was foiled by Gina Rinehart, Australia’s richest person, who stealthily built a 19.9 per cent stake in Liontown, forcing the US suitor to walk away. Rinehart, an iron ore magnate, then moved to spoil another lithium takeover, this time in the Pilbara. Chile’s SQM had agreed to pay about $1bn to buy out early-stage lithium player Azure Minerals before Rinehart pounced again by buying an 18 per cent blocking stake. Chris Ellison, who controls A$12bn ($8bn) miner Mineral Resources and is a shareholder in Azure, said this month that SQM’s bid looked “dead in the water”. Rinehart and Ellison have become increasingly active investors in a host of small lithium projects in both parts of the state, where foreign companies including Albemarle, SQM and China’s Tianqi Lithium have previously been among the biggest investors. Ian Hansen, head of the chemicals division of Perth-based retail-to-chemicals conglomerate Wesfarmers, which has partnered with SQM on lithium assets, said the recent flurry of activity represented a “growing belief in the fundamentals of Western Australian lithium”.
“Similar to the way that iron ore production has grown in the north-west of the state, players in the lithium sector may want to be in control of a large portion of the resources to consolidate their position,” he said. Rio Tinto, which was blocked in its attempts to open a lithium mine in Serbia last year, also has an eye on Western Australia’s potential, having applied for a range of tenements — licences to explore a block of land for resources — covering about 130,000 hectares in the lithium corridor. Small explorers such as St George Mining are also being courted. It had originally established tenements in the Goldfields region in the hope of finding nickel, until the operator of a neighbouring tenement discovered spodumene — the hard rock containing lithium — two years ago. That company renamed itself Delta Lithium and now counts Ellison and Rinehart as major shareholders. In recent weeks, St George has benefited, despite not yet finding any spodumene deposits. Amperex Technology, TDK’s lithium-ion battery-making division, invested A$3mn in a joint venture with the Australian miner. In addition, Shanghai Jayson New Energy Materials, a supplier to lithium battery makers in China, has put A$3mn into the company. John Prineas, executive chair of St George, said the investments showed that companies in the battery supply chain were following the lead of carmakers such as Tesla in backing early-stage Australian miners. “Big players are taking a ...........
....position early as it is very expensive to do so after discovery. That’s definitely a positive sign for the future of the lithium industry here,” he said. The deal frenzy has also come at a time when the lithium price has crashed as much as 70 per cent compared with highs seen last year, as expectations of electric vehicle demand in key markets such as China have been lowered. Prineas said the investment in his company showed demand remained robust. “All the talk is oversupply of lithium, but it's not what we’re seeing from the end users,” he said. Western Australia already supplies about half of the world’s raw lithium and is seen as a stable place to invest compared with parts of Africa, where there has been political instability, and Chile, where the state has moved to take control of lithium projects. Local expectations are high. A report by Australia’s chief economist said lithium product exports should exceed A$20bn in the year to June 2023, up from A$5bn in the previous year. The report added that by 2028, the value of lithium exports should exceed those of coal, a staple of Australia’s economy for decades. Australia has ambitions to step up its efforts to refine spodumene to keep more of the value onshore rather than shipping all of its resources to China, which has a commanding share of the refining process. Refining creates higher-value lithium hydroxide, a chemical compound used in EV batteries. Western Australia now has two refineries, with a third due to be opened by SQM and Wesfarmers next year. Recommended News in-depth Gina Rinehart Australia’s ‘iron lady’ Gina Rinehart takes a big bet on lithium Gina Rinehart Australia’s resources minister Madeleine King said critical minerals such as lithium and rare earths required more processing than coal and iron ore, which Australia has historically focused on. “We have high ambitions and we want to compete with those who currently dominate the market,” she said. However, the push into refining has been plagued by delays, cost overruns, technical challenges and a lack of skills, meaning Australia’s challenge to China’s position has made slower progress than anticipated. Mineral Resources backed out of an Australian refinery joint venture with Albemarle this year, citing the difficulty in competing with Chinese companies on cost. Ellison said his strategy was to now focus on “gathering up rock wherever I can”, including in the Goldfields, which he said was “known as the most prospective lithium ground in the world”. Reddicliffe said companies such as Liontown and Azure, which had looked set to be swallowed up, now needed to prove that the value of their deposits lived up to industry expectations. “Geology is geology, but the big challenge is figuring out the economics of it,” he said
Good to see you back on the board, Bubble. I hope that indicates re-entry is anticipated/underway.
I agree, Q1 may bring info on the feasibility study. If interest rates have peaked, Tomra is as transformative as hoped, and the tin price moves as anticipated, we could be in for a period of success.
We may have further exploration news/analysis in Q2 Q3 to add further spice.
Updates coming through.
https://cornishmetals.com/site/assets/files/4930/cusn_october_2023_corp_ppt.pdf
Analysts from the International Tin Association are currently in Cornwall visiting Cornish Metals' South Crofty mine. They have been underground to see the historical workings at the mine, and have seen the surface operations including the Mine Water Treatment Plant in action. Further details to follow.
The Autumn statement brought in permanent full expensing, allowing business to offset full capital costs against tax liability.
This could not have come at a better time for CUSN as it will make the economics of its SC feasibility study much more attractive, boosting the NPV and making financing easier to achieve.
Thanks MO
I am so sorry to hear of your PSA diagnosis. Hopefully they got it early and can do something to arrest it/remove it or slow it. The sooner you act the better to cut the risk of it spreading. Good luck
Good morning MO hope you are well.
Did you see this?
https://northvolt.com/articles/northvolt-sodium-ion/
As resident expert on all things lithium, how do you think this compares with the best lithium batteries? There are so many attributes to compare. Power density, recharge times, life of battery, cost, cost per kwh etc. I guess each battery type has advantages/disadvantages versus the others.
I was surprised that it was Northvolt that developed it. Any thoughts?
Thank you BP.
BP Isn't it a lot more complicated than that?
Cash now is worth more than cash later. ANGS's DCF models must use quite a high discount rate as its cost of capital is high.
Quite apart from that, the price of gas moves up and down and is likely to be a lot higher in the Winter - coming up.
So on two counts there must be strong temptation to up the output now at the cost of lower output later.
If the discount rate is say 15% and gas is say 20% higher now than in 6 months time the extra value now (35+%) may be a lot higher than the expected cost of increased condensates later. You would know -and I wouldn't- what the cost of higher levels of condensates might be, so it would be interesting to hear your response.
Shocking! Its enough to make one wonder if there is a conspiracy to stop the mine re-opening.
More cheap power perhaps?