Unaudited Financial Statements For Q1 2024
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CORNISH METALS RELEASES UNAUDITED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED 31 MARCH 2024
Vancouver, May 22, 2024
Cornish Metals Inc. (TSX-V/AIM: CUSN) ("Cornish Metals" or the "Company"), a mineral exploration and development company focused on its 100% owned and permitted South Crofty tin project in Cornwall, United Kingdom, is pleased to announce that it has released its unaudited financial statements and management, discussion and analysis ("MD&A") for the three months ended March 31, 2024. The reports are available under the Company's profile on SEDAR+ (www.sedarplus.ca) and on the Company's website (www.cornishmetals.com).
Highlights for the three months ended March 31, 2024 and for the period ending May 22, 2024
(All figures expressed in Canadian dollars unless otherwise stated)
- South Crofty Preliminary Economic Assessment ("PEA") completed, validating the South Crofty tin project's economic viability (news release dated April 30, 2024):
o After-tax Net Present Value ("NPV") of US$201 million and Internal Rate of Return ("IRR") of 29.8%;
o Average annual tin production of over 4,700 tonnes for years two through six, totaling 49,310 tonnes over a 14-year Life of Mine;
o Total after-tax cash flow of approximately US$626 million from start of production.
- Purchase of land totaling 7.7 acres located immediately adjacent to South Crofty surface infrastructure (news release dated May 21, 2024):
- Refurbishment of NCK shaft has commenced:
o Rephasing shaft refurbishment will improve the functionality of New Cook's Kitchen ("NCK") shaft and enable larger equipment to access the mine at an earlier stage in its re-development (news release dated March 3, 2024);
o Winders and cages are now installed, fully commissioned and certified to allow for safe transport of equipment and workers within NCK shaft.
- Mine dewatering continues with the submersible pumps and Water Treatment Plant ("WTP") operating to specifications:
o Water level in NCK shaft is being maintained at approximately 280 meters below surface with the rate of dewatering being reduced to allow shaft refurbishment and dewatering to proceed concurrently;
o Treated water being discharged to the Red River continues to exceed the standards permitted by the Environment Agency.
- The Company announced the appointment of Ken Armstrong, a non-executive director, as Interim Chief Executive Officer ("CEO") effective March 31, 2024, replacing Richard Williams, who also stepped down from the Company's Board:
o Patrick Anderson, Chairman of the Board, became the Executive Chairman of the Company for the transition period until a permanent CEO is appointed (news release dated March 15, 2024);
o The process for the appointment of a permanent CEO has commenced with the assistance of an appointed executive search consultant.
Ken Armstrong, Interim CEO and Director of Cornish Metals, stated, "The Cornish Metals team has recently accomplished an important milestone for the Company, completing a Preliminary Economic Assessment of the South Crofty project that confirms the Project's potential to be a low-cost and long-life tin mining operation. The PEA results are compelling with a post-tax NPV8% of US$201 million and IRR of about 30%, representing a strong foundation for further evaluation of the Project and enabling the Company to move forward with additional preparation work and progress towards a construction decision."
Financial highlights for the three months ended March 31, 2024 and April 30, 2023
Three months ended (unaudited)
| March 31, 2024 | April 30, 2023 | |
|---|---|---|
| (Expressed in Canadian dollars) | ||
| Total operating expenses | 2,759,198 | 924,120 |
| Loss for the period | 2,561,669 | 206,802 |
| Net cash used in operating activities | 1,148,564 | 1,030,901 |
| Net cash used in investing activities | 7,895,388 | 7,027,003 |
| Net cash used in financing activities | 85,646 | 723 |
| Cash at end of the period | 17,015,749 | 49,078,875 |
- Increase in operating expenses impacted by higher travel and marketing expenditure arising from increased investor engagement and termination settlement payable to the former CEO;
- Expenditure of $1.0 million on new or replacement equipment for the mine, including the final payments for the permanent pumps for the underground pump station, cages and the new winders;
- Dewatering costs of $1.3 million for power, reagents, sludge disposal and maintenance of the WTP;
- Other project related expenditure of $2.5 million relating to the advancement of South Crofty to a potential construction decision, primarily for the ongoing feasibility study and NCK shaft re-access;
- Costs of $0.8 million incurred for the continuation of the exploration program at Carn Brea; and
- Cash decreased by $9.1 million to $17.0 million at the period end mainly due to ongoing development activities at the South Crofty tin project.
The Company changed its financial year end from January 31 to December 31 with effect from December 31, 2023 with the result that the current period of reporting is the three months ended March 31, 2024. The comparative period of reporting is the three months ended April 30, 2023.
The Company has allocated funding for near term opportunities to progress the project, the most significant being the purchase of the land located immediately adjacent to South Crofty surface infrastructure. As a consequence of pursuing these opportunities, additional financing will be required before the end of 2024.
Outlook
The Company is advancing the South Crofty tin project to a potential construction decision. The Company's objectives are as follows:
- Dewater South Crofty mine and refurbish NCK shaft by September 2025;
- Advancing all stages of the Feasibility Study;
- Complete the 14-hole / 9,000 metre Wide Formation exploration drill programme, and
- Commence basic and detailed engineering studies, construction of the processing plant, refurbishment of underground facilities and other on-site early works.
The follow-up exploration drill programme at the Wide Formation target will also continue subject to the receipt of satisfactory drill results.
o US$201 million after-tax NPV8% and 29.8% IRR
o 3-year after-tax payback
o 4,700 tonnes average annual tin production in years two through six
o Life of mine all-in sustaining cost of US$13,700 /tonne of payable tin
o Total after-tax cash flow of US$626 million from start of production
- Tin is a Critical Mineral as defined by the UK, American, and Canadian governments;
- Approximately two-thirds of the tin mined today comes from China, Myanmar and Indonesia;
- There is no primary tin production in Europe or North America;
- South Crofty benefits from strong local community, regional and national government support.
TECHNICAL INFORMATION
ON BEHALF OF THE BOARD OF DIRECTORS
"Kenneth A. Armstrong"
Kenneth A. Armstrong P.Geo.
Engage with us directly at our investor hub. Sign up at: https://investors.cornishmetals.com/link/WrAnXP
Caution regarding forward looking statements
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in Canadian dollars)
| March 31, 2024 | December 31, 2023 | |
|---|---|---|
| ASSETS | ||
| Current | ||
| Cash | $ 17,015,749 | $ 25,791,552 |
| Marketable securities | 2,795,644 | 2,665,454 |
| Receivables | 1,092,930 | 1,112,638 |
| Prepaid expenses | 686,699 | 591,264 |
| Deferred financing fees | 224,867 | 135,242 |
| 21,815,889 | 30,296,150 | |
| Deposits | 87,380 | 85,954 |
| Property, plant and equipment | 24,235,161 | 23,788,325 |
| Exploration and evaluation assets | 56,705,272 | 50,050,323 |
| $ 102,843,702 | $ 104,220,752 | |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities | $ 4,434,411 | $ 5,063,940 |
| 4,434,411 | 5,063,940 | |
| NSR liability | 9,286,879 | 9,064,817 |
| 13,721,290 | 14,128,757 | |
| SHAREHOLDERS' EQUITY | ||
| Capital stock | 128,394,652 | 128,394,652 |
| Capital contribution | 2,007,665 | 2,007,665 |
| Share-based payment reserve | 889,839 | 711,690 |
| Foreign currency translation reserve | 2,783,083 | 1,369,146 |
| Deficit | (44,952,827) | (42,391,158) |
| 89,122,412 | 90,091,995 | |
| $ 102,843,702 | $ 104,220,752 | |
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Expressed in Canadian dollars)
Three months ended
| March 31, 2024 | April 30, 2023 | |
|---|---|---|
| EXPENSES | ||
| Travel and marketing | $ 214,138 | $ 89,590 |
| Insurance | 203,063 | 172,430 |
| Office, miscellaneous and rent | 56,505 | 51,613 |
| Professional fees | 275,093 | 200,735 |
| Generative exploration costs | 1,191 | 2,607 |
| Regulatory and filing fees | 29,265 | 33,274 |
| Share-based compensation | 123,799 | - |
| Salaries, directors' fees and benefits | 1,856,144 | 373,871 |
| Total operating expenses | (2,759,198) | (924,120) |
| Interest income | 265,666 | 388,384 |
| Foreign exchange gain (loss) | (18,900) | 370,892 |
| Unrealized loss on marketable securities | (49,237) | (41,958) |
| Loss for the period | (2,561,669) | (206,802) |
| Foreign currency translation | 1,413,937 | 2,963,722 |
| Total comprehensive income (loss) for the period | $ (1,147,732) | $ 2,756,920 |
| Basic and diluted income (loss) per share | $ (0.00) | $ 0.01 |
| Weighted average number of common shares outstanding: | 535,270,712 | 535,265,094 |
| CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS | ||
| (Unaudited) | ||
| (Expressed in Canadian dollars) | ||
| For the three months ended | ||
| March 31, 2024 | April 30, 2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss for the period | $ (2,561,669) | $ (206,802) |
| Items not involving cash: | ||
| Share-based compensation | 123,799 | - |
| Unrealized loss on marketable securities | 49,237 | 41,958 |
| Foreign exchange loss (gain) | 18,900 | (370,892) |
| Changes in non-cash working capital items: | ||
| Decrease (increase) in receivables | 19,706 | (528,374) |
| Increase in prepaid expenses | (16,527) | (167,194) |
| Increase in accounts payable and accrued liabilities | 1,217,990 | 200,403 |
| Net cash used in operating activities | (1,148,564) | (1,030,901) |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of property, plant and equipment Acquisition of exploration and evaluation assets Increase in deposits | (2,369,406) (5,525,982) - | (3,179,655) (3,818,598) (28,750) |
| Net cash used in investing activities | (7,895,388) | (7,027,003) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Increase in deferred financing fees | (85,646) | - |
| Lease payments | - | (723) |
| Net cash used in financing activities | (85,646) | (723) |
| Change in cash during the period | (9,129,598) | (8,058,627) |
| Cash, beginning of the period | 25,791,552 | 55,495,232 |
| Impact of foreign exchange on cash | 353,795 | 1,642,270 |
| Cash, end of the period | $ 17,015,749 | $ 49,078,875 |
| Cash paid during the period for interest | $ - | $ - |
| Cash paid during the period for income taxes | $ | $ - |
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Expressed in Canadian dollars)
| Share | Foreign | |||||||
|---|---|---|---|---|---|---|---|---|
| Capital stock | subscriptions | Share-based | currency | |||||
| Number of | received in | Capital | payment | translation | Shareholders' | |||
| shares | Amount | advance | contribution | reserve | reserve | Deficit | equity - total | |
| Balance at January 31, 2023 | 535,020,712 | $128,377,152 | $ 17,500 | $ 2,007,665 | $ 384,758 | $ (648,962) | $ ( 39,677,003 ) | $ 90,461,110 |
| Warrant exercise | 250,000 | 17,500 | (17,500) | - | - | - | - | - |
| Foreign currency translation | - | - | - | - | - | 2,963,722 | - | 2,963,722 |
| Loss for the period | - | - | - | - | - | - | (206,802) | (206,802) |
| Balance at April 30, 2023 | 535,270,712 | $128 ,394,652 | $ - | $ 2,007,665 | $ 384,758 | $2,314,760 | $ (39,883,805) | $ 93,218,030 |
| Balance at December 31, 2023 | 535,270,712 | $128 ,394,652 | $ - | $ 2,007,665 | $ 711,690 | $ 1,369,146 | $ (42,391,158) | $ 90,091,995 |
| Foreign currency translation | - | - | - | - | - | 1,413,937 | - | 1,413,937 |
| Share-based compensation | - | - | - | - | 178,149 | - | - | 178,149 |
| Loss for the period | - | - | - | - | - | - | (2,561,669) | ( 2,561,669 ) |
| Balance at March 31, 2024 | 535,270,712 | $128 ,394,652 | $ - | $ 2,007,665 | $ 889,839 | $ 2,783,083 | $ (44,952,827) | $ 89,122,412 |
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