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Cornish Metals working towards re-opening the iconic South Crofty tin mine

Cornish Metals looks well positioned to capitalise on rising tin prices

Cornish Metals Inc -

Mining in Cornwall is a matter of history, isn’t it? A thing of the past?

Not if you talk to Richard , CEO of Cornish Metals Inc (AIM:CUSN)(TSX-V:CUSN). Williams is from a Welsh mining family that goes back generations, and has worked all over the world in the industry.

At first he was skeptical about the idea too.

But Osisko Gold Royalties (TSX:OR)(NYSE:OR) had asked him in 2015 to identify advanced tin and tungsten projects, with a long term view to finding projects that would pay a royalty to Osisko.

And in one sense, there isn’t a tin project in the world that’s more advanced than South Crofty in Cornwall, which up until 1998 had a virtually unbroken 400-year record of tin mining.

“We looked at various opportunities,” says Williams, “but what really stood out was this opportunity in Cornwall which included South Crofty.”

Williams was, he says, struck by the scale of the old mine at South Crofty, which comprises 26 former producing copper and tin mines, and the potential opportunity. But he was still cautious.

“Before I went there I thought there’s no way you’re going to re-open a mine in Cornwall,” he says.

Cornwall used to be one of the great mining hubs of the world, and in the nineteenth century, in times of lower local commodity prices, sent miners all over the world to start up nascent industries wherever they ended up.

It’s a place of mining museums now, and mining generally is out of favour. Or is it?

Certainly, in much of the mainstream media, rather than recognize the importance of mining to modern society, it is frowned upon. But to the locals in Cornwall the issue is more nuanced. For a start, they’ve got mining in their heritage, and like many areas with a history of mining, there’s a familiarity which mitigates the more hostile attitudes.

Then there’s the practical side of things. According to Williams, a re-start at South Crofty would create 275 direct, highly-skilled and well-paying jobs, and each of those jobs is likely to generate a further three-to-five others out in the wider local economy. Given that Cornwall is one of the most deprived areas not just in the UK but in Europe, this is not small beer.

Furthermore, the mine and the plant are both already permitted, with the mining licence valid for 50 years and the permit for the plant stipulating that construction must be completed within 60 years.

All of a sudden the barriers to a re-start have dropped away, and all that remains is a cold-hearted assessment of the economics.

In that regard, there are a couple of moving parts. First off, it seems pretty clear now that a new commodities boom is underway, and tin is already proving to be a significant beneficiary – the tin price has risen to USD30,000 per tonne, an increase of  more than a 100% from a year ago. A report from MIT released a couple of years ago highlighted how tin is likely to experience a bigger boost in demand than almost any other commodity as the world continues to go green and electronics become more and more sophisticated.

So, the tin price is on the move, and Cornish Metals is beginning to think about getting South Crofty back into production. The biggest initial challenge will be getting all the water that’s accumulated in the mine over the twenty-odd years since it shut down out.

That in itself will require a significant capital outlay, reckoned currently at around £15mln, and up to two years to complete  In preparation for this exercise, the company has completed all water trails, secured Environment Agency permits for the exercise, bought the pumps and pipes, and laid the groundworks for the new water treatment plant.

Once the mine is dewatered, Cornish Metals will have a relatively clear run.

The question that remains is: how much money will it make? Well, back in 2017, when Cornish Metals put together its initial economic study for the project, a tin price of US$10 per pound was used. The price now is around US$15 per pound, 50% higher, and that’s likely to have a hugely significant impact on any updated modelling.

South Crofty grades can run very high, as a recent intercept of 2.5 metres at 10% tin shows. A back-of-the-envelope calculation gives ore at that grade a value of over US$3,300 per tonne. Putting it another way, the value of those tin grades would equate to around two ounces of gold per tonne of rock in a gold mine.

It’s grades like that which allowed South Crofty to keep going for thirteen years after the tin price collapsed in 1985. And it’s grades like that which make it a compelling proposition now. As it stands there’s over 44,000 tonnes of contained tin in the inferred and indicated category in the lower mine, complemented by a smaller polymetallic resource in the upper mine.

Using that lower US$10 tin price, Cornish Metals reckoned the internal rate of return of the project back in 2017 at 23.5% on a relatively modest capital outlay of US$118mln. Perhaps the key number in that study, though, was the estimated all-in sustaining cash cost per pound of tin produced. That rang in at a modest US$4.44 per pound. When set against the current ebullient tin price, it’s no wonder that Williams is talking about the possibility of funding the next stage of South Crofty’s development.

“It’s a tremendous project,” he says. “South Crofty is really iconic in the eyes of most Cornish people. It should be a mine, and we will do everything we can to see it happen.”

Quick facts: Cornish Metals Inc


Price: 11.65 GBX

Market Cap: £31.39 m

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