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Strongbow Exploration all set to revive Cornish tin production

Published: 12:56 07 Dec 2016 GMT

Tin-nuggets
The tin market looks set to revive

Anyone who still needs convincing that the mining markets are now on the turn need only take a look at what Strongbow Exploration Inc (CVE:SBW) has been up to this year.

For a while, during the great mining downturn of the past decade, Strongbow was a company looking for a purpose. Assets in Ireland and in Eastern Europe were a fading memory.

In 2013 and 2014, the company released hardly any news at all, and even in 2015, when activity did pick up a little bit and the company completed a deal, there were only a paltry eight news releases all year.

However, they were significant stories.

Firstly, Strongbow acquired the Sleitat and Coal Creek tin properties in Alaska. As part of that deal, Osisko Gold Royalties came onto the register in a major way, with over 27% of the company.

Pivotally, mid-way through that process, new director Richard Williams and CFO Zara Boldt were appointed.

So clearly 2016 was cued up to be a bit more interesting than 2013 and 2014 had been.

And so it proved.

“In March, we bought two tungsten royalties on Mactung and Cantung,” says chief executive Richard Williams. These are North America’s best known tungsten projects, although a weak tungsten price in recent years has meant that Cantung has ceased production and Mactung continues to be the world’s largest, highest grade undeveloped tungsten project.

But aside from the timing, which showed an interesting opportunism in striking at the bottom of the market, the most interesting aspect of this deal was probably how it was financed – by a C$1.5 mln non-interest bearing loan from Osisko Gold Royalties (TSE:OR).

The marker had been laid down: Strongbow has backing, and on favourable terms too.

What would be next?

The answer was tin, although the destination was perhaps surprising.

“In August 2015 we went to look at South Crofty,” says Richard Williams. “And we left thinking it was a world class deposit with a lot of potential.”

Once-upon-a-time, South Crofty was one of the most famous names in English mining. It has a history that goes back hundreds of years and even managed to survive Mrs Thatcher’s wider assault on the mining industry in the 1980s.

What it could not survive though, was the collapse of the International Tin Agreement and the corresponding collapse in market prices.

Now though, tin is coming back. No new significant sources of supply are likely to come on stream any time soon.

“All the easy to mine, near-surface tin mineralisation has been mined out,” says Richard Williams. “The new projects come with more risk and they are more capital intensive.”

And at Strongbow, where the team had already shown willingness to buy tungsten on a major dip in the market, they sensed another opportunity.

“We felt that the market was setting itself up for a rebound in the tin space,” continues Williams. “At the depths of the bear market we felt that tin and tungsten were good places to start.”

How tungsten will play out remains to be seen. But tin is already on the move, with SP Angel predicting a rocketing of the price to US$30,000 within 12 months.

That’s quite some time to be getting back in to one of the most famous tin mines in a jurisdiction that’s low-risk.

“What stood out about South Crofty,” says Williams, “is that it has a mining permit that’s valid till 2071. Its history is a known geological component. It’s got very good grades. The metallurgy is well known. There’s 400 years of know-how there. Even in the 1990s recoveries were running at 89%-90%.”

Other, more recent developments may come into play now too. Brexit has meant that foreign investors get more for their money in the UK, following the drop in the value of the pound. What’s more, local councils in places like Cornwall, hardly economic powerhouses anyway and often the recipients of sizeable EU grants, are now scrambling around desperately looking for alternative sources of income and job creation opportunities.

Reviving a historic industry would play well, both with Brexiteers in general and with the locals who would gain the employment.

And the UK is awash with capital looking to follow a local story, there just aren’t enough about – Williams points to the success of Sirius and Dalradian as the sole examples with any scale.

So what will happen next?

“We’ve started a PEA,” says Williams. “We should have the main points of the PEA announced early in January.”

A previous study indicated US$150 mln as the likely cost of redeveloping South Crofty, but Strongbow’s mining plan, using existing mine infrastructure,  could possibly shave a considerable amount off that.

“We expect to have the full PEA and a discharge permit by June,” continues Williams. “And we will use that as listing criterion to get admission on Aim.”

With new money, new management and new assets, this is clearly a company on the move.

 

 

 

 

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