Croissant
Having looked quite closely at the UKIB's first equity investment - into Cornish Lithium,- I dread its future involvement in any of the companies in which I am invested. Indeed I tried to sell my shares in CL when I got the details. What has been billed as the UKIB investing at the same price per share as Crowdcube investors, existing and new, is true, it is not the whole truth. In reality the financing is a highly skewed deal in UKIB's favour. The full truth starts to emerge when shareholders look to see how many new shares CL have sought permission to issue to the new investors UKIB and EMG. Take a look. Up to 813m shares will be issued in return for the £53.6m raised from UKIB, EMG and TechMet. Price per share? Perhaps as low as 6.7p versus the Crowdcube price of 20p. Worse still options for further shares are being made available to the big three.
This situation has been made extremely difficult to discover. Try it and see how far you get.
It is not unexpected that initial investors do not achieve success. But if more funding is required, they should at least be allowed to participate in that funding on the same terms as new investors.
The UKIB is supposed to be participating in the drive to level up. In its first equity deal, up to £46m of existing shareholders' value - many of those shareholders being Cornish pensioners - is being transferred to the 3 new investors - a US based private equity fund "EMG", Techmet - a fund with big US connections and UKIB. It is a case of the resource curse revisited- the opposite of levelling up.
HMG needs to re-set UKIB's operating guidelines. At least the UKIB should not invest where the finance deal is different for existing shareholders. Equity should mean equitable for all shareholders.
Great work MO, Thanks, Vii
LB - another cracking find!
I would think this may mean an RNS beforehand. Given that the RNS has not already been issued (as RNSs should be issued promptly if anything price sensitive becomes known), it suggests that they are expecting some news in the intervening period. I haven't worked out the dates, but I guess feedback from the EA and council are due in the next few weeks. There is also the possibility of news of funding from the US Department of Defense or others..................
LB
Good spot! If I remember correctly Techmet secured marketing rights over CL production when it invested its first £9m. This time, it seems to me that Techmet has secured rights to supply the chemicals needed to produce the Lithium Carbonate. One wonders if the supply will have to be at an arms length price, or if this is a way of giving a superior return to a large investor.
Apart from the Mining conference in Falmouth this week, CUSN appears later this month to be about to do a roadshow/number of presentations with Hannam & Partners.
The company has just produced a new fact sheet which has appeared on their website:-
https://cornishmetals.com/investors/fact-sheet/
The graph on the RHS of page two is particularly interesting. It shows the potential to increase just the South Crofty resource 5 fold to 20m tonnes or around 325,000 tonnes of contained tin. At the current $25,000 per tonne that is a lot of potential value! Compare the NPV of that after expenses, with the market cap of £68m !
MO
Good morning.
I posted on CUSN about my visit to British Lithium/ Imerys yesterday. There might be the odd useful point there for you.
LovelyBoy
Key points from trip around British Lithium/Imerys pilot plant
The BL of extracting Lithium from the rock is one of the simplest and most efficient. Several of the processes are patented by BL. They expect to be producing 20,000 tonnes of Lithium Carbonate per annum when their main plant comes on stream. At full scale they expect the production cost to be around $6-7,000 per tonne. This compares well with other rock production methods, but may be more than the cost of production from brine (underground brine not seawater)
BL expect that the gaining of planning permission will take 4 years! The general election and council elections are expected to cause delays and the EA is short staffed. (Surely HMG should do something about that! )
The site is well located, an electricity supply runs nearby as does a road link. The jv with Imerys gives 1500 acres of already industrialised land, not only ore bearing but also for waste disposal. One advantage that Bl's process has is not producing any unpleasant waste products.
To begin with the proven 40m tonnes of ore can produce 2m tonnes per annum for 20 years which will give around 20,000 tonnes of carbonate per annum. But BL thinks it can boost its reserves 4x up to 160m tonnes. The Cornish Alps are unlikely to be a source of ore as the amount of mica in the waste tipped varies considerably . The other potential by product- China Clay- is not thought likely to have a significant value.
It seems to me the UK has just what it needs here,- a critical metal in abundance and if the authorities could get their act together it could come on stream when needed by the likes of JLR, Nissan and Mini. On present form it will arrive in 2029......earliest.
Natrg
I too hope CL is a great success.
However, the "big boys" are also being offered options so if the business is a huge success, the benefits will not accrue pro- rata to shareholders.
The concerning matter is that the UKIB (UK infrastructure bank ) has shown its hand. This is its first equity deal. It appears to be looking for returns of multiples of its investment - whilst leaving not a lot on the table for small or existing shareholders. All other SW mining company shareholders should watch out. If their company is seeking finance from this state body, they can expect an inequitable ride. The moral of this story is to ask your BoD if, when raising finance, they intend to offer the same deal to all existing and new shareholders alike. If they say no, or do not answer, expect severe dilution/wipeout.
I hope the new Crowdcube investors have read and understood the deal being offered to new investors EMG, UKIB aswell as Techmet an existing shareholder. What these "big boys" get is a far superior deal vs existing shareholders and new crowdcube investors. For every pound the big boys put in to their deal, they get up to three times as many shares as existing investors or new crowdcube investors.
In my book it is called value transfer and value dilution. BEWARE
The Cornish Mining conference delegates have been invited to see the BL/I pilot plant this afternoon.
This will arouse interest in the UK Lithium sector.
Represents another big chunk of UK demand for lithium and batteries following on from the JLR announcement.
Another reason to fund TVL.
i have to admit a **** up. it is emg (and ukib) that are new investors in cornish lithium not erm. there are no representatives of emg as far as i know at the conference.
BP You might be short/ not invested, just as the Australian strikers are pushing up the gas price.
HI LB
I am trying to go to a couple of meetings. Will take a few notes to share.
I see ERM (Investors in CL) are sending a couple of representatives- Simon Tillotson and Michael Cronwright - Might be interesting to hear their views on extracting lithium from brine.
For your TUN interest Adrian Bougourd from Lansdowne will be there, and Ex TUN James McFarlane too.
Maybe some people have got that news?
Dr Anomaly 30 Aug 2023 11:55
Frankly, this STINKS. This uses DA's voice or our recognition of it, without his permission.
It devalues the clear case we have for promoting DMG/PHE. Who will listen to PHE if you pull stunts like this?
If you wanted to promote the case using DA, you should have asked him first. Shame on you.
Your disclosure is totally inadequate. Many will not even see it.
It raises the question what other tricks will you try in your quest?
Fantastic news. Great to see all the images which bring home the huge effort that all are making to bring back South Crofty.
Thanks LB.
Sickening they did not make the offer to existing shareholders. Crowdcube could have helped them.
Too often at the moment we are seeing existing shareholders not being looked after equitably by the BoDs. There is a statutory duty of care which increasingly is being circumvented. Is the FCA asleep at the wheel?
Https://www.londonstockexchange.com/news-article/ALK/first-lithium-sulphate-plant-study/16095046
Great find bitcoinbuyer. "Would it want Redmoor Pay dirt... ?"
The answer is probably no, it would not want input from Redmoor. It is having difficulty getting the lorry movements it needs for its own cut-back production levels. If those lorry mvts were to massively increase it might be a different matter,but we have waited months to hear if TUN can operate at a very low level.