Not content with blazing a trail in opening up the UK to the potential of mining lithium Cornish Lithium now looks set to blaze a trail in mining finance too.
The company is actively considering raising its next round of exploration finance via CrowdCube, a crowdfunding site based, appropriately enough, in the West Country.
If Cornish Lithium goes ahead with its plans to raise around £1mln through CrowdCube it will be the first time a UK-based mining company has raised funds in this manner.
Cornish Lithium chief executive Jeremy Wrathall has yet to make the final decision on the matter, but he’s very clear in his own mind as to what the potential benefits would be.
First and foremost is the opportunity a crowdfunding campaign would provide for local people in Cornwall and the West Country to invest, at any level they choose. This is a crucial difference between crowdfunding and the more usual methods of funding used by junior mining companies.
In the case of CrowdCube the minimum investment allowed on the platform is just £10.00, effectively opening up the opportunity to everyone, rather than just the usual coterie of investment specialists and those in the know.
Aside from widening the funding pool for Cornish Lithium, this type of investment has the added effect of underpinning the company’s social license in Cornwall.
Because although Cornish Lithium is already well supported across Cornwall at various levels, as an experienced mining executive Wrathall is very mindful that local community support can make or break a project. One way to get support from locals is to hold out the offer of new employment, as Scotgold Resources (LON:SGZ) has done very effectively at its Cononish project in the Grampians. Wrathall has also closely monitored the positive effect that community engagement has had for Sirius Minerals PLC (LON:SXX) with their polyhalite project in north Yorkshire.
But another way, hitherto untried, is to open up ownership in the company literally to everyone in the community. It’s a trail that Wrathall is more than happy to blaze, although he is keen to ensure that potential new investors are aware that there are some risks involved.
Exploration is an uncertain business, scientifically-based to be sure, but also a matter of judgments and interpretations based on extremely complex and sometimes hard to read data.
Cornish Lithium is pretty confident that it will be able to drill three holes into geological structures believed to contain lithium-bearing brines at a depth of around 1,000 metres this summer, in order to extract samples and data. But as is the way with mining exploration, nothing is certain.
And it’s partly in the context of that uncertainty that Wrathall has picked an FCA-regulated crowdfunding site like CrowdCube as the potential platform for the funding.
“This whole exercise is being done properly,” he says. “And we are using well-respected mining consultant SRK as our competent person and they will be reviewing our exploration programme and methodologies. We’re going through the process almost as if it’s a listing. At some stage we may wish to list and it is important to me to set the ground rules now.”
That should provide potential investors who might not be quite sure what they’re getting into with a fair measure of reassurance. Competent persons are commonly used by exchange-listed companies to provide regulatory cover for claims they might make about assets. Or to put it another way, they provide respectable independent scrutiny.
Cornish Lithium is clearly cognisant that, as has so often happened in the history of mining speculation, there is potential in the emerging world of mining crowdfunding for unscrupulous elements to creep in. But if that does end up happening elsewhere, it’s not going to happen with Cornish Lithium.
Wrathall himself is well-known and well-liked in UK mining finance circles. He’s spent time working at major investment banks as well as on the boards of several junior listed mining companies. Now though, Cornish Lithium is his sole focus, and he is somewhat evangelical about it.
Cornish Lithium is going to help reinvigorate the Cornish mining scene, and thereby help stimulate British industry at a time when Brexit-related issues mean that Cornwall needs all the help it can get. What’s more, as possibly the only serious lithium exploration opportunity in Britain, Cornish Lithium will be at the forefront of Britain’s move into the newly emerging world of next-generation batteries and electric vehicles.
And although it may sound evangelical, Wrathall has his hearers, and at very high levels too. The company has been selected as a key member of the Faraday Electric Battery Challenge, a government implemented and funded scheme to promote electric vehicle battery technology in the UK. Its partners in this initiative are the Natural History Museum and Wardell Armstrong, a mining industry consultant similar to SRK.
Potential investors may be interested to know too that the company has qualified for EIS, with all the tax benefits for investors that implies.