Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
Jeffus888
Your timing looks great. The recovery from the shock news of the resignation of the CEO is underway, and the more recent erroneous rumours about flooding in the mine have been addressed by the company broker.
Meanwhile the price of tin has had another boost rising 3% yeaterday to $32,775.
Plenty to look forward to:-
1. The publication of the PEA, with a revised NPV. This is expected to arrive before the end of June. In my opinion it will show a valuation for South Crofty alone, of multiples of the current market capitalisation. As discussed before, to that NPV, the value of rights elsewhere (e.g. UD) in the CUSN portfolios should be added, together with value inherent in the arrangements with Cornish Lithium, when comparing with the market cap.
2.Feedback from the exploration programme. This is likely to come before the new PEA, as results logically should be incorporated in the PEA. The exploration programme will give a good idea as to the extent of mineralisation in the newly discovered Wide Formation and Great Flat lode splay. This will have a bearing on the likely mine life.
In my view, there is a good chance that the mine life may be extended with a considerable benefit to the NPV.
3.Interest rates. Next month the Governor of the BoE expects inflation to fall sharply. This will increase expectations for the first interest rate cut. This is likely to be beneficial for valuations of companies cash flows. Also it will be likely to increase those cash flows as interest costs or expectation are reduced. As CUSN will be moving towards its production decision, this is coming at a very good time for shareholders.
What might have an adverse effect?
1.If the disruption in Myanmar is resolved and exports pick up, there might be some relief amongst tin traders and tin pries might fall. However at present the opposite appears to be the case.
2. Faster use of cash than expected - Await half year results in the Autumn for this. The company had a net cash balance of C$25.8m at the Dec 2023 year end. So appears to be well able to complete the tasks set out - PEA publication, drilling programme and perhaps also some preparations for mining such as dewatering and shaft refurbishment.
3. Any signs of management disruption. The loss of the President and CEO came as a shock to the market. As long as the operations management team settles - especially that of the COO, CFO and CDO, all should be well. Any sign of further disruption is likely to be taken very badly.
Bonkers99
Whilst a lot of costs are indeed up 50% don't forget that a big chunk of cost saving is likely to be achieved by using the XRT sorters. Their use will be likely to cut the cost of the the plant required very significantly, so big outflows of cash at the onset and thereafter will be removed from the NPV calculation. Hopefully, the saving both in capex and in opex will offset to a considerable degree the impact of cost inflation since 2017. All will hopefully be revealed shortly!
Argylerich
LovelyBoy is referring to the Tungsten West plc (TUN) tungsten/tin/aggregates project at Hemerdon, near Plymouth, which is awaiting the outcome of the public consultation over the Environment Agency's proposal to grant the operating permit.
The cut off date for comments is about 2 weeks away now. The permit has had the effect of creating a logjam in the process of obtaining finance to get up an running again. If the permit is granted there will be a huge sigh of relief from investors / those wishing to create a supply of a critical metal for the Western world
And perhaps any shorters have been taken to the cleaners. Hope so. Erroneous rumours on boards elsewhere have been firmly squashed.
Hi LovelyBoy
Good to hear from you. It is a case of "least said, soonest mended". I agree the outlook is really good. Not only good for investors, but the whole project is worthwhile for Cornwall, and the UK.
The news out of the Plymouth area is also very encouraging. At last. Everyone has high hopes now for the final piece of the jigsaw which will unlock an attractive picture. That may help sentiment in all SW miners.
Gingy - "Personally I don't think this will go into production under Cornish metal. One of the big outfits will swoop in and take us over."
Possible, but Vision Blue Resources- the major shareholder with 25% of the shares,- are a big outfit and have recently raised around $600m so have multiples of the firepower needed to see this into production. The upside is enormous and they know it having BoD representation. Selling out now before the expected tin price run is unlikely IMO.
Bonkers99 Also to consider, the value of CUSN is not just indicated by the NPV in the PEA. To that we should add, the value of UD , Gwinear etc and the value in the holding in and relationship with Cornish Lithium.
Bonkers99 "Can anyone float an expected NPV number for the PEA?"
Outsiders cannot, No. But here are some pointers.
The 2017 PEA* showed an NPV of $130.5m assuming a tin price of $10/lb around $22,000 per tonne.
• Source:- Https://minedocs.com/21/South-Crofty-PEA-02162017.pdf
In the sensitivity analysis (p22) it showed that if the tin price rose to $11/lb around $24,200/tonne- a 10% increase- the NPV rose to $188.1m i.e. an increase in NPV of 44%. i.e. highly sensitive.
Now the tin price is $32,320/ tonne or 47% up on the 2017 central estimate. All other things being equal, which they are not, would suggest an adjusted NPV of around $400m.
Much has changed since 2017 including the cost of building and running the plant, interest rates and thus the discount factor for the NPV calculation. So the $400m appears to need to be adjusted down considerably.
However there are also a number of other positive changes.
Because the indicated and inferred resources have increased very significantly it is reasonable to assume mine life has increased or the throughput could be increased. This would move the NPV up. See below***
Furthermore it looks as if the cut-off grade could be reduced as XRT ore sorters have been trialed by CUSN with very encouraging results. This would help to further increase the resources and boost the NPV. The same machines are likely to reduce the size of the plant required to process the ore- helping to reduce initial capex and opex – which also would help the NPV upwards.
And the discovery of the Wide Formation and Great Flat Lode Splay may well add to the resources, when fully assessed, which again would either enable CUSN to increase throughput or extend the mine life, both of which are likely to enhance NPV.
------------------------------------------------------------
***In the 2017 PEA the indicated and inferred resources were for the lower & upper mine respectively :
Indicated 1660+257 kt Inferred 738 +464kt
Total 2,398 + 721kt =3,119 kt
Indicated and Inferred at 5/2/24 for the upper and lower mines
Were :-
Indicated 2,896 kt +260 kt Inferred 2,626 kt + 465kt
Total 5,522 kt + 725kt = 6,247 kt
A significant 100% uplift, with the likelihood of more to come from the Wide Formation and GFL Splay.
-----------------------------------------------------------------------------
Not long to wait for the actual figures in a new PEA. Good Luck everyone.
Gingy Good point.
Some sort of fund raising can be expected if the preliminary economic estimate is supportive of a go ahead as expected. This would be to pay for the process plant.
I think there may be an element of an equity issue and if you want to take part I suggest you contact all the following people to let them know.
Fawzi Hanano and Irene Dorsmann at CUSN investors@cornishmetals.com
Matthew Hasson at Hannam and Partners cornish@hannam.partners
Derrick Lee at Cavendish Partners 0131 220 6939
Richard Morrison @SPAngel 0203 470 0470
Good luck, Vii
Gingy - I agree But lets look to see
1.if the price of tin stays above $30k/tonne.
2. If the exploration results continue to be encouraging
3. How the finance for the process plant is structured.
Given the rise in metal prices, other areas of exploration - UD, Gwinear may be worth bringing forward
And another report
https://www.msn.com/en-gb/money/other/lme-bans-russian-origin-metal-after-uk-us-impose-new-sanctions/ar-BB1lzrPg
Croissant
My understanding of the new plan is different to yours. Whereas the plan had been to ramp up slowly over several years, I think they are now aiming to go for a much quicker ramp up.
Actually the previous effort did work, finally in the company's last week or two giving the recovery rates targeted. Unfortunately the news came too late to raise the necessary finance and the company went bust.
This time around there will also be a number of improvements to the flow sheet................. assuming the permit is granted by the EA.
Good to see you back on the board MO. Good luck. Electrification metals seem to be having a run up in price at last.
The market will soon wake up to the impact of the higher tin price on the outllook and NPV of CUSN.
Metal prices are melting upwards..........................Share prices to follow.
Gingy
The difference it will make will be very significant, but as you say, not in the normal way for a producing company.
CUSN's future relies on being able to produce a positive economic assessment and then an attractive Feasibility study, for the investors who will fund the building of the processing plant. The 2017 Preliminary Economic Assessment (PEA), whilst now out of date, gave an idea of the sensitivity of the NPV to tin prices. Not surprisingly the NPV is very sensitive to tin prices. Section 22.4 of the PEA, (available on SEDAR) starting on page 170, discusses key sensitivities. The first line of table 22.3 shows that a 10% increase in the price of tin moved the NPV of the project up by 44%. Whilst it is almost certain that the figures have changed since 2017, that does give a guide as to what to expect.
Since its low in November the tin price, as reflected in the price of the tin driven ETC “TINM” has risen not 10%, but 40% and more today. That price move, if maintained, will make a huge difference to the NPV of the project and make its financing much more attractive and less risky, to providers of capital, be it project finance, off-take agreements, debt, equity etc. i.e. make the realisation of the value of the project much more likely, and give the realisation a much bigger NPV.