Member Info for Valuation-it-is

MO 17.49

Good thinking. I will have a search around TechMet and see what can be sniffed out. My understanding is that it is best to produce the Lithium batteries close to the car factories because of their fragility around the anodes/cathodes. Not good news for drivers bouncing around in the car once sold. But it does mean some more battery makers may tie up with UK car manufacturers and welcome a home produced supply.

Fira "Not a chance"

I must look up the exact date, but recent announcements are encouraging. Cornish Lithium has just brought forward its time line by 5 months with its funding announcement yesterday. That is good even if it has come at the price of upsetting its existing shareholders.

Dumbpunter
Great to follow that link. And good to see investment from an ally flowing in.

It does also raise the question - If "TechMet shall have a Right of First Offer to market lithium products from the Company’s projects" how will this ensure the UK's supply lines and resilience? As a US agency is the biggest shareholder in TechMet, clearly it will be pushing for scarce resources to be sent to the US. I think CL have some explaining to do.
Hopefully we will hear that the UK Government is also to provide finance to ensure the UK has a supply of Lithium too. Perhaps that is in the pipeline for the £200m raise................... Not sure that HMG / BEIS has the finance to spare.

https://www.grindingsolutions.com/latest-news/cornish-lithium-pilot-plant/

Fira Thurs 19.39
Agree with you. Asset focus is what underpins this share despite the lack of progress for whatever reason. Yes 3 at least gone.

Big money is now eyeing up Cornwall and its resources. My view is that capital is going to arrive sooner and faster in bigger quantities than we have seen to date. Those in the ground resources are now concentrated in a few hands, not as in the past many mine owners hands. But at present, the market cap's of the quoted companies are very low, and huge amounts of value can be unlocked by providing capital to the right management teams, or by takeover.

MO 11.59 2nd para "........and fully understanding documents from the 1950's Russian testing and extraction of the same mica geological structure that runs from North West Czech / Saxony Germany.................."

Do you have any knowledge of the Saxony mines Tellerhauser and Breitenbrunn ? Are they mined out - or if not do you have an idea of what is left behind? The condition of the mines? The likely costs to restore them to working order?

CK
Great information, thanks. Do you have any links to the planning applications or their reference numbers?
GEL (Geothermal Engineering Ltd) and CL in their 10:90 JV, indeed have gone to 5km and found high levels of Lithium in brine from that level. However CL, separately, are considering going to just 2km and taking a hit on the Lithium concentration but reducing the cost of the hole from £20m to £200k. CL will not disclose the Lithium percentage at the 2km level as it is commercially sensitive. Currently testing is underway to determine which of these two approaches is better. Another factor being considered in the economics is the value of the heat from both types of hole and to what extent that can bridge the cost difference. CL have four developments HR at Trelavour, HR JV with Imerys, Brine JV with GEL, and Brine - their own. All seem to be testing /analysing/evaluating at the moment, and it is hoped the results of these four lines of enquiry will be available before and enable/enhance the IPO.
One of the attractive features of CL is that it has so many "irons in the fire".

Great post MO.
A couple of comments
1."How long can CL last on tailings ?"
CL have a JV with Imerys and if Imerys bring their tailings into the JV, then those tailings will probably last decades. Imerys will undoubtedly want something for the tailings, so that is yet to be evaluated/published. But as CL have tested a multitude of extraction techniques and settled on one (Lepidico's), I think Imerys will probably want to go with that technique too, because others may be more risky/costly/less efficient. CL have exclusivity over the Lepidico technique I understand, and as I think you stated have a right to buy into Lepidico too. Watch developments here closely, because if Imerys go their own way with their tailings, CL become much less attractive in my opinion.

Another comment is about the depth of the extraction holes for Lithium in brine. My understanding is that a 5km deep hole costs £20m while a 2km hole costs £200k. The percentage of Lithium in bine is greater the deeper the hole but the cost rises with depth hugely. So there is a trade off. There is probably a step function in the depth cost relationship, but the sweet spot i.e. best trade off may be around 2 km. Time will tell.

Pawgee 11.21 Good luck - and thanks for making the effort.

Major Oak 11.13
"The more you hold (i.e. CUSN) the more CL you get."

Its appealing, but where has this idea come from MO? Has CUSN communicated to you that they will be exchanging their royalty agreement for shares in CL, which they then will distribute to CUSN shareholders? I have not heard anything on those lines...... I would have thought CUSN would have welcomed the cash flow, and would be loathe to give it up.....

Investors have been considering resilience of supply largely in terms of the political aims of the politicians in the countries hosting the mines. S America, giving particular cause for concern. That has expanded to consideration of the supply chain, and the need to secure strategic supplies - noting the dominance of China in the supply chain.
A not so new factor may carry more importance from now on, the resilience of supply to covid outbreaks/ new variants.
The DRC hosts Bisie, Alphamin's tin mine, which has the third largest resource of contained tin. DRC is outside the area for the new travel ban, but for how long? Whilst travel difficulties may not be a problem, another outbreak of covid may be as it may affect production/processing/transport.

Major Oak
Good to hear you were in good voice last night.
I agree with you about the first revenue for CUSN coming from CL royalties. The timeline for CL's development of Lithium appears to be much shorter than that for CUSN's tin or copper.
Lithium from hard rock has available huge waste tips of already mined material which can be processed using the Lepidico process. It is just a case of setting up a test plant, testing the process, then setting up the real deal.
For Lithium from brine, it is a case of drilling 2km deep holes and using a simple and cheap direct extraction process. I could see that up and running in a short time period.
Whereas, for tin and copper it is a case of proving the resources, with drill rigs and analysis, then raising finance, then de-watering SC, then restoring/setting up the mine. So, likely 4 years. Although that seems a long way off, the potential value when it happens is huge. We are likely to be talking of billions. So every small step of the way through that 4 years, could see a significant rise in the market cap/share price of CUSN, currently only £52m.

Major Oak. Sounds like you had a good night out.

Re your question about another Crowdcube deal for Cornish Lithium (not CUSN), please see my post of last night at 21.26 pm. The deal between Cornish Lithium and TechMet has left me feeling dismayed. Whilst I am yet to read about what TechMet can bring to the table that others cannot, so I may turn more positive, I cannot escape the thought that either the last Crowdcube raise by CL was at too high a price, i.e. 16p/share, or that the raise now being put forward to shareholders is at too low a price 13.5p /share. Given the offer being made to TechMet involves also giving them board representation, warrants and what looks like the decision as to where production goes, I am yet to find enthusiasm for this deal. Like you there are other Crowdcube investors who would probably have invested further money without all the extras being offered to TEchMet. After all since the last Crowdcube raise, public perception of the need for Lithium has increased with COP26, so another Crowdcube raise should have been easier perhaps at a higher price, albeit rather soon after the last one.
Whatever you or I might think, it looks as if the deal will go through, as the directors are recommending it, and they (currently) have over 50% of the shares.
Fortunately for CUSN shareholders i.e. the main readers of this board, the fact that CL has got access to more funding and sooner, is good news as it brings forward the time when CUSN might receive royalties, and it brings forward the likely IPO at which point CUSN can liquidate its shareholding if it then so wishes.

Crowdcube raises $8m + June 2021 TechMet offers £9m Nov 2021
Shareholders pay 16p per share price per share 13.5p
No board representation, TechMet gets Board representation
no warrants TechMet gets 13.5m warrants (conditions apply)
No side deals offered TechMet shall have a Right of First Offer to market lithium ....................................................................................................products from the Company’s projects. (conditions apply)
Pre-emption rights to be waived for 5 years Pre-emption rights - situation not clear.

CK 21.06
Good point, 3 locations xtwo - i.e. 6 holes! This presumably will just give an indication as to whether further exploration is worthwhile?

Pawgee 20.53

At their AGM CL indicated that they would raise £20m-£25m after three or four key sets of results hoped for in Q1. i,e, they were looking at early Q2 for the next raise. They have brought this forward from May to November, but have only raised £9m with possibly another £9m to come - IF - Techmet wish to go ahead. So I think they are short of between £2m and £14m, depending on whether Techmet buy the second tranche or pull out. That suggests to me that an IPO/fundraise is still probably on. The company I would have thought would tell you if you ask.
As regards the funding for the main production plant, £200m was estimated to be needed. That was to be raised in 2023.
Given the extreme urgency needed to get the whole thing up and running ( in order to save our car industry) I guess everything possible is being done to bring this forward if possible. So I would not be surprised if the main fund raise £200m is brought forward into late 2022. But better to ask the company for guidance.
Whilst I am positive about bringing Techmet in as a partner, existing shareholders should watch out carefully for the terms.
Signing away pre-emption rights is like giving the board the right to reduce the value and representation you have in your own company. My understanding is that CL are seeking shareholders to sign away their rights for five years. Many times have shareholders rued the day they signed away their pre-emption rights.
This deal will if my calculations are correct mean that directors's interests will fall below the 50% level.
Furthermore there is a question over how many shares will be created by the warrants that it is proposed are given to Techmet when CL either IPO's or authorises "the commencement of construction of one of its projects at a commercial scale. "
Techmet have also negotiated board representation.
It seems to me Techmet have got a lot for their £9m. Perhaps when I have looked into their record I will be more positive about it.

CK

I think they plan to drill just 3 holes.
https://docs.planning.org.uk/20210825/5/QYE7S1FG0IW00/dnggscvp1wdj1d7m.pdf
The holes seem to be about 200 metres apart in a L shape. I guess that is insufficient to establish a resource of any kind, but would just give an indication. If that were positive I guess it would require further investigation. But that alone could excite considerable further interest in CUSN - as did the hole at UD drilled by CL.

Pawgee
The shares are tightly held. Not a lot of buying pushes the price up. And there are two markets, UK and Canada, both gradually becoming more aware that this minnow could grow into something really large. I am sure I am not alone on this board in thinking that there are very exciting times ahead.

MajorOak 13.38
I think CL are going to be publishing a resource statement fairly soon. It may be overdue. Hopefully it will be cracking news.
Meanwhile the fund raise for CL has happened a lot sooner than I expected. This itself is good news for CUSN shareholders as it accelerates CL's potential development programme and perhaps brings forward the time when CUSN will start to see royalties.
Otherwise, looking at the deal itself.................................
The C Lithium fund raising (which has to be approved by shareholders) with Techmet was done at 13.5p per share for the initial tranche. Disappointingly this is below the 16p of the most recent raise through Crowdcube. Not only that, but existing shareholders were not given the opportunity to take part. Existing shareholders are not only being diluted in terms of the percentage of the company they own, but the value they hold in the company is being reduced by this deal. Not a good precedent to set prior to an IPO.
Worse still, it appears Techmet can decide not to put in the second tranche at all, if they don't want to. Existing shareholders do not have such options. Techmet is also getting " Right of First Offer to market lithium products from the Company’s projects" if they exercise their second tranche option and stay above 15% . How this right of first offer to market" works is not spelled out, and could contain a bag of worms for existing shareholders. It could be extremely valuable. I do wonder if CL could have done much better.
The Telegraph article heralds this deal for the UK, but I am far from sure how it will go down with their loyal existing shareholders, CUSN being one of them. Hopefully founder, Jeremy Wrathall has a big enough stake in the company to stop anything truly horrible happening, so shareholders will wait to hear more from him about benefits which Techmet may bring to the table other than the announced fund raising.

CK
Given drilling has been going on at Carnkie for some time now, cores will have been seen and I guess, some now analysed. I think the share price is telling us that there is something to look forward to. The market appears to be gradually waking up to the prospects in Cornwall. An announcement cannot be far away.