Member Info for Valuation-it-is

Good to see one of the major investors in TUN increasing their holding. Surely a vote of confidence.

Quite a big change is shown on point 8 of page 7.

"Hydrogen storage tanks reduced in number from 3 to 1 and reduced in height from 15.1m to 5m"

Looks to me as if hydrogen storage is being reduced by 90%...............................
Any thoughts anyone?

Thanks for the tip MO. When the time comes I hope you will post your views as to the pricing...........

Which is your favourite - AYM, SML or CUSN?
The posters on SML appear to have given up on the BoD, delays,disappointment and broken deadlines seem to be behind their unease. Whilst it is a new man in at AYM that may shake things up.
I am investing in both CUSN and SML as I want to put my money into Cornish mining and its revival.

Cornish Metals Inc - i.e. our CUSN, was showing 20% down in Canada at 46 cents this afternoon (UK time) i.e. at the equivalent of 26.75p converted at 0.58152 £ per Canadian $. That is 1.25p different to the UK close of 28p. i.e. 4.5% different.
The big movement in Canada was caused by a late trade at 58 cents, which set the close price at the end of the previous days trading in Canada. I suspect but don't know, that was a bit of year end window dressing. So its more a question of who bought at 58cents and why?

NB. CUSN shares in Canada are fungible with CUSN shares traded on AIM .

Osisko Development - which owns 18.95% of the shares in Cornish Metals Inc see
https://cornishmetals.com/investors/significant-shareholders-1/
appears to be up 2.2% according to
https://www.stockopedia.com/share-prices/osisko-development-CVE:ODV/

Apologies - it is a BL British Lithium article.

https://www.telegraph.co.uk/business/2022/01/04/british-lithium-moves-step-closer-uk-production/

SW'er
I took a look as you suggested. I used the 5 year version of the chart found on
https://tradingeconomics.com/commodity/tin
The average price in 2019 appears to have been around $18,600, the average in 2020 appears to be around $17,000 a tonne and in 2021 around $30,500. Giving a 3 year average of around $22k.
So in a year's time, if we assumed the tin price stays around $40k/tonne, swapping out $18,600 of 2019 for $40,000 in 2022 would raise the average by $7.1k, to around $29k,
and in two year's time swapping out $17,000 of 2020 for $40,000 of 2023 would raise the average again by $7.7k from $29k to around $36.7k.
The PEA sensitivity suggests a 10% rise in the tin price is worth $57.6m on the NPV, so going from the PEA price of $22k to the then 3 year average of $36.7K would be a 67% rise worth an additional $385m, taking the total up from $130m to $515m.

Whilst most investors here might think there was some upside potential in the tin price over the next few years rather than a constant $40k price, they might also think the discount rate used in the NPV calculation should be higher. But sticking with $515m, with perhaps 380m shares in issue, ( allowing for an extra 100m shares at 25p to fund dewatering and FS to add to the current 280m shares), the valuation for SC alone - on just the 2017 resources - would be $1.355 per share,(515m/380m) or as you say £1. My belief is that there are considerably more resources to be found, and validated, as was indeed achieved in 2020, so I think there is considerable upside from £1 a share, not only from SC but from other prospects.
It seems to me, that prospect will make a fund raise at 25p very attractive, and underwrite the next phase of development.

trikidiki3
Government investment.
A grant to CUSN would tick at least 3 political aim boxes.
1.Levelling up - in the poorest county in the UK helping one of the most impoverished towns in that county.
2.The green agenda - Tin and copper are needed for the transition away from fossil fuels
3.Resiliance - Cutting reliance on dubious foreign supply chains.

However the magic money tree (QE) is being downplayed now so budgetary constraints are hitting likely government expenditures. Interest rates are on the turn, so Government borrowing will be more difficult.

The Government will probably argue that this company is well capable of finding its own finance for such attractive projects.

Having said that, HMG has already pumped in several million into the seed funding of pilot plants for the Lithium effort, and may be inclined to do something in areas which are less financially attractive but of strategic importance to the UK e.g. smelting.

Furthermore, the recent arrival of a US government connected organisation ( on Cornish Lithium's shareholder register), eager to procure strategic minerals for the US, may wake up HMG to the UK's needs.
Lord Grimstone (BEIS) did visit SC several months ago, but nothing has been heard of the result since....

Fingers crossed, but sometimes it is better to have no grants and no constraints or political demands which are associated with the funding.

SW'er Great to "chat"
"Metal prices can go down as well as up, standard practise reflects that reality. Check the graph, tin prices have only risen really since late 2020, hence why the 3 year trailing price is still only $22k, and every month at the current price level is lifting the trailing price by $0.8k or so. In a years time the trailing price will be >$30k, if current prices hold."

Agreed. So assuming no rise in the tin price from here, in 12 months the PEA would be showing an increase in the 3 yr trailing average tin price of around 43% which would add about $250m to the NPV * or >$20m a month. Given the market cap is around $160m that suggests, all else unchanged, an eighth or 12.5% on the company's value per month for the next 12 months. Stunning!
* Based on the PEA sensitivity analysis on page 171 of the PEA. where a 10% increase in the tin price used for the NPV calculation adds $57.6m to the NPV (Table 22.3 on page 171 of the PEA -https://cornishmetals.com/site/assets/files/4962/2017-03-31-scrofty-pea-c84ol6.pdf

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" CUSN shares would be worth up to £1. With dilution added to raise the funding, more like 70p."

To cause a drop of 30% in the share price, I guess you are expecting a big raise and a large discount. I would query that. I am thinking that at that point in time CUSN will be project financing the remainder of the capital needed. I see the financing panning out as follows. An equity raise of £25m in 2022 probably a 1 for three rights issue or a placing 100m shares at 25p.
The number of shares in issue would then be 380m. If we assume the tin price stays constant for 3 years the average trailing tin price would be $40k/tonne and the PEA's NPV north of $500m. At 1.35 $ to the £ that is >£370m or around £1 /share.
I would have thought project finance (e.g.£75m at 12%), would then be possible rather than financing involving 30% dilution in share price costing £84m value? Perhaps bond to be offered to shareholders at 12%? I would welcome that.

Southwesterner. Many thanks for your reply. It is pleasant to discuss a few thoughts with you.

" it simply isn't even worth drilling such potential to create a resource, until a date closer to when they can be mined, especially if they are lower grade than resources you have already delineated. "

My comments . 1. It does seem better to wait until closer to the time when mining could take place, as the mine would have been further developed, resulting in being able to get closer therefore do less drilling.
That is unless, by creating the resource CUSN is able to show that more value can be gained from putting extra volume through the process plant, so fixed costs would be spread out over a greater volume of ore. And unless, finance providers might consider that there are more assets to protect their investment, therefore less risk, and thus be prepared to lower the interest charges on their financing as a result.
2. My understanding is - and please correct me if I am wrong - but as the mine is developed at deeper levels, the ore grade tends to increase. I would be expecting the ore grade to rise compared to nearer surface historical experience. not fall. Is that the previous experience in SC?
3. IF CUSN believes it has 20m tonnes of resource and in say 3 years time it is up and running for the 4m indicated and inferred, it might not be necessary to be so exacting in proving the extra 16m tonnes. It would not have to do it to JORC standards for external financing purposes, it would merely have to prove to itself what was there and where. It would only have to justify the marginal revenue exceeded the marginal cost, rather than the set up costs and the marginal cost.

Your thoughts are most welcome.

Southwesterner
It is extremely helpful to have your insight and knowledge brought to bear on the matter.
I hope you do not think I was in any way criticising your previous post when I wrote that I was struck by the high level of caution? I was referring to accepted mining valuation approaches, to which you have alluded.
For instance, use of the 3 year average trailing price, rather than current prices. Sensible I agree, but given the high operational gearing, (and gearing to price) this makes a potentially hugely profitable project look marginal.
Then there is the volume effect. Again it is sensible to use indicated resources, but this may be cutting out 90% of the potential.
Also the cut-off point. Using a lower than market price, means that the cut-off point for what is deemed economic to extract is much higher, thus less metal is calculated to be worth extracting.
Re your point 2
How would you view this example calculation? If we assume Revenue starts at 100 then rises by 48% we would have 148.
Costs might plausibly be 50, and if those rose by 67% we would have 83.5 as a result.
Profit would rise from 100-50 = 50 to 148- 83.5= 64.5 . 14.5 extra on 50 is up 29%.

Your point 4
The 2017 PEA was conducted at $10 a lb or around $22400 per tonne. You state that a PEA now would need to use $22000 per tonne, which I am happy to believe. But it does suggest that no account is being taken of the rise in tin prices since 2017. Nor does it take into account the likely future impact of future shortages of supply on price. This standard practice seems over cautious to me.

Your last paragraph is enlightening as it suggests that there will have to be a period after the mine is pumped dry, in which underground drilling takes place to assess whether it is worth proceeding further. So not only would CUSN have to pump for 18 months to achieve a dry mine, but for longer to facilitate the drilling and then more to keep the mine dry whilst the Feasibility study (FS) and financing round was completed. The cost per month of pumping would fall once the mine is dry as there would not be a "backlog " of water to extract, but nevertheless it might be £5m a year - around half the initial cost per annum.
So perhaps CUSN will have to raise £15m for initial pumping dry, £3m for drilling, £2m for a FS and then £5m for another year's pumping, whilst funding is raised. What do you think about those figures?
Given SC has a huge amount and value (£x00m) of infrastructure in place, permissions already granted,, it must be one of the bigger resources, nearest to being able to re-start production. Seems like a very attractive proposition to me.
Every month that goes by raises the trailing 3 year average price even assuming constant prices from here on in. Thus the project looks more attractive every month. This perhaps is one reason for the gradual rise in the share price and the value of the company.

~Southwesterner
Great to read your thoughts. I am struck by the huge caution in all the figures. The 2017 PEA is based only on South Crofty, and only on the indicated resources of around 1.917m tonnes and 1.202m tonnes inferred, of ore.
(Mineral resource estimate page 177 PEA and table 1.1 on page 9)
See https://cornishmetals.com/site/assets/files/4962/2017-03-31-scrofty-pea-c84ol6.pdf

The 2017 calculations were, as you say based on $10 a pound or around $22000 per tonne for tin. Updating those for more recent pricing takes the NPV up very sharply to North of $500m. But if we think there is more like 20m tonnes of ore (page 17 slide presentation, see https://cornishmetals.com/investors/presentations/ ) there would clearly be a massive potential uplift (6x) from there.
And if we consider what has already been found by exploring United Downs, the above is far from the end of the story.
Investing in CUSN appears to offer many times the potential upside for the risk of one lot of downside.

Oneandonly1
This is a self - fulfilling spiral of benefit. As the share price rises, the ease of financing the re-opening of SC increases, as does the probability of doing so, and the chances of and amount of dilution diminishes. All of which increases the valuation of the company - triggering another cycle of rise in share price.
At 58cents the market cap is Can $ 162m or £96m. It would now only need a 1 for 3 rights issue to finance de-watering and the feasibility study. That would bring the market cap to around £128m giving those providing project finance considerable re-assurance.
It looks more and more likely to happen.

Happy New Year !

Dreamcatcher887

One of the key pieces of information is shown on page 17 of the slides the RHS graph, which shows that the company thinks there is a potential 17.5 to 21 million tonnes of ore at South Crofty. If this is at 1.6% tin content, approx 300,000 tonnes of tin may be contained. Allowing for a proportion to be lost in the mining and processing, if there was 200,000 tonnes to be gained that would be worth US$8000m at $40k per tonne. If costs were 50% of that the company might gain US $4,000m. Whilst there are a number of leaps of faith, and a number of years, to arrive at that point, it does demonstrate an exciting potential - and that is only considering the South Crofty asset. United Downs may also bring spectacular potential in both copper and tin. All of Cornish Metals is currently valued by the market at US $105m

Greenmole Take a look at this to get an idea of the potential here.
https://cornishmetals.com/investors/presentations/
This share is mostly driven by its prospects in tin (at the moment)
If all goes well the sky is the limit. ........................

Can $ 0.52
https://money.tmx.com/en/quote/CUSN
And look at the volume!

https://publicwire.com/lithium-iron-ore-getting-it-spot-wrong/

https://worldnewsera.com/news/finance/ecuadors-president-vows-indigenous-groups-will-not-block-mining-projects/

UK copper and tin mine opportunities have less political risk perhaps....................