A preliminary economic assessment (PEA) for Cornish Metals‘ (LSE: CUSN; TSX-V: CUSN) South Crofty tin project in England gives it a post-tax net present value (NPV) of US$201 million at pre-production costs of US$177.2 million.
The new assessment is based on a tin price of $31,000 per tonne, slightly below its current valuation of $32,275 per tonne, and gives the project an after-tax internal rate of return of 29.8%, according to a Tuesday news release. It’s expected to produce 49,310 tonnes of tin metal in concentrate over its 14-year life, peaking at over 5,000 tonnes in year four.
“This PEA is an important milestone for Cornish Metals and our goal of bringing responsible tin mining back to Cornwall and the United Kingdom,” Ken Armstrong, interim CEO and director of Cornish Metals, said. “South Crofty is a
strategic asset as tin is recognized as a critical metal by the United Kingdom and other national governments, while there is currently no primary tin production in Europe or North America.”
Armstrong added that the project in southeast England is boosted by already having a mine and process plant build permit before its PEA was published.
Critical metals focus
The PEA marks a significant milestone on the Canadian company’s path to restarting the centuries-old mine that produced tin, included on the U.K.’s critical metals list. The metal’s importance has also been recognized by other European Union governments, as well as the U.S. and China. The former South Crofty operation has been shut since 1998 following more than 400 years of almost continuous production. It was the last tin mine in Europe when it closed.
The PEA pegged the expected post-tax cash flow from the operation at US$626 million, from the start of production, peaking at US$82 million in the second year.
Once operational, the project will produce average annual earnings before interest, tax, depreciation, and amortization of US$83 million at a 62% margin in years two through six.
South Crofty after-tax free cash flow profile. Credit: Cornish Metals
Cornish Metals’ chief operating officer, Owen Mihalop, said that the project’s NPV provides a solid foundation for further evaluation, allowing the company to move forward with additional preparation work and progress towards a construction decision.
The company aims at its first tin production by 2027.
Several companies attempted to revive the flooded mines between 2001 and 2013, but due to persistent poor market conditions the assets were put into administration in 2013.
As part of Cornish plans to reopen the historic mine, the company has said it would build new processing facilities and all the necessary site infrastructure. It has already obtained permission for underground mining until 2071 and an environmental permit to dewater the mine.
Cornish’s ultimate goal is to secure a leading place in the development of an industry for the battery metal in the UK.
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