Update lifts Cornish Metals’ UK tin mine value to $336M

An updated preliminary economic assessment (PEA) for Cornish Metals’ (LSE, TSXV: CUSN) South Crofty tin project in southern U.K., improves some of its economics while outlining higher initial capital costs compared to the initial PEA released in May last year.  

In the update, the after-tax net present value (NPV) at a 6% discount rate rises about 15% to £180 million (C$336.5 million), though it lowers the internal rate of return by more than 9% to 20%, according to the new PEA released Tuesday. The project is about 390 km southwest of London.

“Completion of the project review and updated study marks another important step for South Crofty as we advance towards first tin production by mid-2028,” CEO Don Turvey said in a release. “We look forward to restarting production and bringing significant value to Cornwall, including the creation of more than 300 direct jobs, and a further 1,000 indirect jobs.” 

Tin mining revival

South Crofty, once one of several tin mines in southern England, closed in 1998 after more than four centuries of near-continuous operation. It was Europe’s last tin mine when it closed down. Attempts to revive it between 2001 and 2013 faltered under weak market conditions, leaving the asset in administration until Cornish Metals stepped in. Cornish Metals has spent nine years advancing the restart of South Crofty.

The update raises pre-production capital costs about 40% to £198 million, with sustaining capital at £43 million. The all-in sustaining cost is pegged at about $13,400 per tonne in years two through six, placing the project in the lowest quartile globally.

Annual earnings before interest taxes depreciation and amortization (EBITDA) is forecast at £70 million annually during the same period, with margins above 60%.

Same mine life

The updated PEA leaves South Crofty’s mine life unchanged at 14 years, as well as its estimated output of 49,168 tonnes of tin over its life. Average annual output is pegged at about 4,700 tonnes between years two and six, which is equivalent to 1.6% of global mined tin.

The company estimates a 3.3-year payback period, cumulative after-tax cash flow of £558 million.

Cornish Metals has already begun site works, including shaft and pump station refurbishment, process plant site excavation, and construction of a workshop and utilities. Long-lead equipment such as production and service winders has been ordered. 

The company accelerated the project following a £57 million fundraise earlier this year that brought in the U.K.’s National Wealth Fund and further backing from Vision Blue Resources. The review was led by Cornish Metals’ strengthened management team and supported by consultants Technical Management Group and Worley.

Green, local focus

Cornish Metals highlighted the project’s role in U.K. supply chain security and its ESG profile. South Crofty will run on 100% renewable electricity, generate no surface tailings, and is expected to directly employ more than 300 people and create about 1,000 indirect jobs, the company said. A training centre is planned to upskill local workers.

Exploration upside remains significant, the company said. The mine’s resource is open at depth and along strike, with a near-mine exploration target of 6 to 13 million tonnes grading 0.5% to 1.8% tin. Historically, South Crofty consistently replaced mined tonnes, and Cornish Metals plans to restart underground drilling alongside construction to extend mine life.

The company already holds an underground mining licence valid until 2071 and an environmental permit to dewater the mine.

Cornish Metals’ shares gained 0.6% to 7 pence on Tuesday in London, for a market capitalization of £96.5 million. The stock has traded in a 12-month range of 6 to 10 pence.