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Is Cornish Metals a good investment or a hit-it-and-hope stock?

By Adrian Holliday

11:57, 13 July 2022

Yellow protection helmet, rope and metal bars
Mining protection hat on bench - Photo: Getty

Mark Twain once quipped a mine was a hole in the ground owned by a liar. Many have tried their hands at mining over the years and failed.

What of dual-listed Cornish Metals (CUSN), down almost 40% year-to-date? Should investors dig into this Vancouver-backed dual listed stock? 

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What it says on the tin: Cornish Metals share price chart

Kleiner miner?

Tin prices hit more than $47,000 per ton last year. This was driven in part by the tech ‘supercycle’ as smart phone sales soared during the pandemic, now bought low by a crash in growth stocks.

Though tin’s price-per-ton has now almost halved, the reviving Cornish tin mine industry, backed by new shareholder cash, is sucking water out of ancient, flooded mines. Engineers are digging and flowsheets are being prepped.

Earlier this year this AIM-listed stock, up almost 15% over 12 months, saw mining veteran and ex Tory party Treasurer Sir Mick Davis take a 25% stake via his Vision Blue Resources fund. 

Mining major backing

Davis was the CEO of mining titan Xstrata until its Glencore merger back in 2013. 

A qualified accountant, he will have done the mining maths; Cornish Metals believes there could be as much as 70,000 tons of the stuff in the South Crofty mine, near the village of Pool, which it hopes to re-open after closing in 1998. 

It is more than 900 metres deep at points.

Extraction economics

What percentage of this estimate is economically extractable is another thing. Witness Cornish Metals – it has a £92m market cap – recent £40m fund raise for feasibility studies and water extraction. 

Oil - Crude

77.41 Price
-0.010% 1D Chg, %
Long position overnight fee 0.0383%
Short position overnight fee -0.0602%
Overnight fee time 21:00 (UTC)
Spread 0.040

Natural Gas

2.16 Price
-1.050% 1D Chg, %
Long position overnight fee -0.0733%
Short position overnight fee 0.0514%
Overnight fee time 21:00 (UTC)
Spread 0.0050

Oil - Brent

80.77 Price
-0.070% 1D Chg, %
Long position overnight fee 0.0236%
Short position overnight fee -0.0455%
Overnight fee time 21:00 (UTC)
Spread 0.090

Silver

28.92 Price
-1.150% 1D Chg, %
Long position overnight fee -0.0201%
Short position overnight fee 0.0119%
Overnight fee time 21:00 (UTC)
Spread 0.040

Talk of a Cornish mining revival though is as old as much of the former industry expertise, now decamped or sadly dead.

Once shafted

Yet longer term the UK is still aiming to be carbon neutral by 2050 and the arguments for a domestic supply on the doorstep look plausible enough. 

There’s a strong local jobs, local expertise argument too. 

While the feasibility study is under way, the company said earlier this week, a plan for processing is also on the cards. 

Cyclical gusts

But the commodities market is super-cyclical and the first whiff of a downturn can see investors race for the elevator cage. 

Yet drilling results can be a game-changer too – as well as safety and production reports.

Car makers are also investing in miners. In June Stellantis (STLArevealed it had become the second largest shareholder in Vulcan Energy Resources, investing €50m. It is reasonable to expect that tin demand may rise as vehicle electrification picks up.

For now, Cornish Metals is 20% down on the month at 17p. Hit it and hope?

Mobile minerals

  • If you use a smartphone it’s probably part-soldered together by tin, although much of tin is recyclable. 
  • Tin is widely used in solar panels and power generation. It is part of the ‘energy transition’.
  • Cornish Metals’ investment argument – there are several – claims few primary tin European or US production sites and that it’s a Critical Mineral designated by the US government. 
  • Processing is claimed to be 'low impact'.

Markets in this article

STLAM
Stellantis
18.29 USD
-0.08 -0.440%

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