Member Info for Valuation-it-is

Cornish Lithium will be publishing its maiden resource statement in early November. It will then be in a good position for its next capital raise of around £25m to fund two pilot plants, (Trelavour and United Downs) and the feasibility study.
Let us hope they offer existing shareholders, new shares at the same price as new shareholders.

Many thanks Dr A. Let us hope these come through soon. I would take that news as a buy more signal.

Bed and ISA?

Can you help with:-
How deep did Vulcan drill to obtain its samples that were graded at 181 parts per million? ( That is key to the cost)
What other minerals did Vulcan manage to extract using their DLE process and in what concentration i.e. ppm?

Major Oak
Thanks again for the links. I have followed the links within the links to Canaccord's initiation of coverage report.
Looking at that one thing struck me - C is taking 50% ( and now 60%) of the NPV of their model of cash flows to arrive at a risk adjusted valuation. i.e. 40% off for risk. The share price now seems to be in that ball park.
CUSN has an NPV model for South Crofty alone ( i.e.the potential from UD, Gwinear, the value of share in Cornish Lithium etc are all excluded from that model) The model is based on the PEA - so its a detailed look- suggests a net present valuation of around £347m at a tin price of $30k/tonne (current price is $37k + so its conservative). The market cap of CUSN now is around £40m - so the market is valuing CUSN using only 12.5% of its NPV , taking out 87.5% of the NPV of SC for risk) versus the market valuation of Vulcan of around 60% of its NPV.
Given there are a number of reasons to think that CUSN is worth a lot more than just the NPV of SC, the difference between the two is remarkable.
So I have a question to ask you. Has Vulcan raised enough capital to see it through to production, i.e. is the development to production stage now significantly de-risked? That might explain a big part of the difference between Vulcan's risk and CUSN's risk. CUSN has still to raise both finance for de-watering/feasibility study and bringing SC back into production.
Even allowing for that, the difference in risk assessment seems large.

Carefulbunny
Apologies - not that there were any bad intentions. You are right I did not read the bit about discounting for risk. Must have skipped a line of text. New glasses needed!

CK
Thanks for the info. They really are intent on scoping out the tin at lower levels. And why not? This just emphasises the potential from unexplored areas which were rich in copper at higher levels in the past and the value that may be in CUSN other than at SC

Major Oak Thanks for the links
That is a hefty valuation increase! I note Vulcan will have no revenues up to 2024, so again similar to the expectation for Cornish Lithium. Vulcan has raised a lot of cash A$ 203m and has the potential to increase its resources. I wonder if HMG will want to safeguard the UK's supply chain i.e. BL and CL ?

CK - I agree he will be a huge help in that aim, as a NON EXECUTIVE director.

Major Oak
I have looked at the presentation on Vulcan's website:-

https://v-er.eu/wp-content/uploads/2021/10/2021-October-Corporate-Presentation-Vulcan-Energy11.pdf

The initial conclusion I come to is that Vulcan is perhaps some way ahead of Cornish Lithium in its development, but CL is not far behind. The tonnages of Lithium Carbonate that both companies intend to produce are similar for their initial stages. One difference is that Vulcan is already listed and we can see how the market is valuing the business. At a share price of Aus $ 12.9, it has an undiluted mkt cap of around £700m (at 1Aus $ = 54p).
We must be careful though to assess whether the two companies are similar in their profitability. It appears both are going to extract Li using a very environmentally friendly process using little energy, and perhaps even generating some from Geo thermal sources as a by product. Whilst Vulcan gives a guide as to its cost of making Li I do not have that for CL, so cannot yet work out if they will be similarly profitable per tonne produced. If they are, then CL may see a big rise in share value. It may even be that CL becomes more valuable than Vulcan if its costs/kg are lower.
And on the back of that CUSN will benefit from its shareholding in CL. So far we know that CL has found the richest brine, but that may be by going deeper than Vulcan - which is more expensive to do. We also know that the impurities in CL's brine are very low, so the cost of extracting them is also low, which may indicate that CL has a cost advantage over Vulcan.

Given the EU rules ( that must be obeyed if the UK car industry is to avoid tarrifs on exports to the EU), there will be huge pressure on CL to speed up its development and start producing Lithium ASAP. Same goes for British Lithium. The gap with Vulcan my therefore close.

The corporate presentation has been updated in October - probably for the conference.
https://cornishmetals.com/site/assets/files/4930/202110-cusn_corp__pres__web.pdf

Anyone got screen splitting software so we can spot the changes?

It is very good news to hear that CUSN have been able to make this appointment.
The time line that was discussed can be seen on the CUSN website in the investors section, within the presentation on page 14.
I guess the start point comes with the raising of funds to enable the drilling which if I remember correctly was in February this year.

Another very encouraging snippet from the conference concerned the impact on the PEA of the rise in tin prices and the increased resources. Using a tin price of $30k/tonne and a US$ exchange rate of 1.36 the NPV of the PEA would be around £347m. Tin prices at $39k/tonne would obviously make this number much higher again. Just using $30k /tonne and the £347m estimate gives an NPV of over 8 times the current market capitalisation. So given UD, Carnkie, Wheal Alfred, shares in Cornish Lithium and exploration rights over '000's of hectares more are not in that after tax net present value, there is cause to think the shares are very cheap at present.

CK
I have more feedback on what will be done underground.
Of the 500,000 tonnes of rock mined underground, only 300,000 will be hoisted. The 500k will be crushed underground - a very noisy business which would be unappreciated if done on the surface. Sorting of the crushed rock will take place underground, with about 200k tonnes of that going to backfill. That leaves 300k tonnes to be hoisted to the surface for processing in the to-be-built plant.

TUN has raised the finance, so the market has already been re-assured sufficiently to part with £75m ( equity+debt+take-offs).
It produced a BFS earlier this year and has used its own testwork combined with operating and geological data from the previous owners to produce a new flowsheet.
As something like £200m was spent by previous owners, on the process plant and stripping, not a lot of extra capex is needed. They talk about starting production in July-Sept 2022, but I think it is likely they are being cautious in that estimate. So not long to wait. There are plenty of ways in which TUN could do better than expected, not least if mineral prices continue to rise. We will know about that as it happens...........

Carefulbunny
I think you need to multiply all your present value calculations by the probability of that outcome happening.
So, for instance, if you think there is a 50:50 chance of success, then your first present value would be 38.5p not 77p etc.
As it stands your figures suggest there is no chance of DMG failing to be a huge success.

Lupi
We cannot go to a broker to arrange finance for SML because we are not officers of the company, therefore the broker would not deal with us. JP is there to decide which brokers to go to and which of their offers if any, to run with.

Prop and Lovely
Lassonde Curve It seems to me we are the beginning of stage 4. So a steep upward trend in the share price may be expected. Why wait until Q2 2022?
https://kuchling.com/the-lassonde-curve-a-wild-ride/

Agree with you about MT. He is leaving managing the mine to someone else who he says is better able to do the job. That suggests he knows where his strengths are and the strengths of others in management - a very good quality to have.

MajorOak
Your views are certainly helpful and thanks for posting them. This board is frankly a pleasure to visit and very informative, thanks to some knowledgeable and enthusiastic posters.
I will take a look at what Vulcan is doing. I expect mineral rights are a bit different in Germany but I don't know. CL has gained exploration rights from CUSN for its acreage (30k+) and a summary of the arrangement is available on the CUSN website. I can't remember who the exploration rights at Trelavour were gained from - it might be Imerys. The Crown Estate has provided exploration rights to CL for offshore exploration. Presumably the favoured 2 km deep holes could start on land and go offshore some way - by not being so deep - i.e. angled.
It is the latter that will be on stream soonest with the biggest output. This operation is highly likely to use the Lepidico process, for which CL paid £2m for exclusive rights to use it in the UK I understand. This is a low energy process which fits with the ESG credentials that will be so important.
Geolithe's process is one of the front runners for selection to bring into use at UD.

It is slightly puzzling to me that CL takes people to see the UD site, which at the moment is planned to have a fraction of the output of the Trelavour site, rather than the latter. Perhaps if is a longer drive, perhaps there are things going on which are commercially sensitive............................................ any thoughts or news on Trelavour therefore is most welcome.

If HMG steps in and classifies Mining+ smelting as energy intensive industry then a lower cost of energy could be delivered.
It sounds to me as if this is under consideration.
As to volumes, if some tonnage from Africa and the Iberian peninsula are added to the possible production in Cornwall it begins to stack up.
Perhaps other helpful factors are that it is now very expensive to send containers to China and that a resilient supply chain is sought. China is struggling to find enough power to smelt at present, though I doubt whether that situation will last long.