Member Info for Valuation-it-is

The PEA NBV is $201m at a tin price of $31k. With a significant contingency already deducted.

For me two key points are those highlighted by OM the Chief Operating Officer:-

The low all-in sustaining cost of about US$13,700 per tonne of payable tin is an important metric and potentially positions the project within the lowest quartile of the global tin industry cost curve.

“We believe the opportunities for mineral resource expansion at South Crofty, and beyond, are significant and this will come into focus when the current mine dewatering and shaft refurbishment project is complete by Q3 2025.”

The first point indicates that South Crofty once up and running, will be one of the least vulnerable producers of tin if there is a downturn in the tin price. More likely though according to most commentators is a shortage of tin which will cause a rise in the in price. SC will make large extra profits if that occurs, and be one of the biggest beneficiaries as its cost of production is expected to be low.

The second comment highlights that shareholders should not just think about the value of SC when considering the value of the CUSN business. There is likely a lot more to come from mine development - a particularly promising aspect will be the exploratory drilling from within the mine once de-watered allied to the prospects of large value in the Wide Formation. And all that is before we think about the prospects for United Downs Gwinear etc.

It will take a while for investors to get to grips with all the positives but we seem set for a good run in the period up to a production start.

Croissant

Perhaps also worth noting that the tungsten and tin prices are denoted in strengthening dollars and are rising, whilst our cost base is denoted in £.

"How a global race to secure copper supplies sparked a £31bn bid for a FTSE giant-

Heightened demand for net zero minerals could trigger a wave of dealmaking in mining"

https://www.telegraph.co.uk/business/2024/04/25/how-global-race-copper-supplies-sparked-anglo-american-bid/

Is this the lighting of the blue touch paper for the sector? The BoD can see the potential ahead, it is likely others will follow.

VBR will be aware of the holding in CL , and also the royalty arrangements and annual fee. In the whole valuation of CUSN the exposure to CL is a small component but may become much larger if CL goes into production. It has the backers to do so.............................

.. is reacting to the re-armament drive. TUN to benefit perhaps................

Natnrg

3 to 4 times his buy in price of 18p would equal 54p to 72p. That would be before the impact of the rise in the tin price.

Sir Mick's game plan......................

Here s an extract from an interview with Sir Mick Davis, whose Vision Blue Resources put £25m into CUSN

Question :- Generally speaking, what kind of investment criteria are you using to look for these opportunities?

Sir Mick:-

It all starts with the rocks in the ground, just to be very simplistic. I'm looking for the best quality resources that I can find. I look for resources that have been well-defined.

Then, I'm looking for high-value, low-volume commodities. My experience in the past running large mining companies is one of the big drains on the value proposition because is if you have to establish a large logistics system. You can only make it pay if you have a very large mine.

I want to be in geographies in which I understand how to operate. They can be complex geographies ... but I need to know how to operate in them. I need to know that I can identify and mitigate the risks.

The third thing is [that] I want to be able to know that I can enter into that project at a 0.2x, maybe 0.3x net present value. Then, put in the capital required for the project to progress either to feasibility, or feasibility to construction, etc. and inject my team into the investee, so that I can make sure that they are managing the risks associated with bringing up the value curve.

By the time we get into early-stage production, which is the time I would like to exit and hand over to the major mining companies, I consider maybe 0.8x to 1.0x NPV and therefore make my 3x to 4x without having to make an assumption about what commodity prices are going to be.

I'm looking for commodities that essentially talk to the energy transformation and the [environmental, social and governance investing] narrative. There is a hell of a lot of institutions that want to fund those sorts of projects. I essentially want to be the person who feeds the ducks that are quacking for that.

Its now or never, for fund raising that is.

The Gawthorpe gap? Please explain.

Https://markets.businessinsider.com/commodities/tin-price?op=1

Https://markets.businessinsider.com/commodities/tin-price?op=1

How long will it last?

If the US decides to re-build its strategic stockpile, it could be a long time. If investors agree that the market is going to be short of tin, they will buy in droves too. If Indonesia and Myanmar continue as they are that will also increase the shortage. In any case there has been a little investment in bringing new tin mines on stream in recent years.

Tiny amounts of tin are used in billions of items. The cost of making those items is hardly affected by the tin price. i.e. demand for those items is little affected by the tin price. You have a number of driving forces which could send the tin price much much higher as we have seen happen before.

CUSN as an investment has a highly geared exposure to the tin price. The conclusion is obvious....................

Https://markets.businessinsider.com/commodities/tin-price?op=1

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.