Unaudited Financial Statements For Q3 2024
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CORNISH METALS RELEASES UNAUDITED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2024
Vancouver, November 20, 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 nine months ended September 30, 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 nine months ended September 30, 2024 and for the period ending November 20, 2024
(All figures expressed in Canadian dollars unless otherwise stated)
- Appointment of Don Turvey as Chief Executive Officer ("CEO") (news release dated August 11, 2024):
o Mr. Turvey appointed as CEO and an executive director of the Company effective October 9, 2024, and who has since relocated to Cornwall where he is based;
o Mr. Turvey is an experienced mining executive with more than 40 years of experience, including successfully securing funding and advancing new projects and historic mines through to production;
o Upon Mr. Turvey's appointment, Ken Armstrong returned to the position of non-executive director and continues as Chair of the Company's Audit Committee;
o Patrick Anderson returned to the position of non-executive Chair of the Board of Directors of the Company effective September 30, 2024.
- US$9.1 million (equivalent to £7.0 million) credit facility arranged with Vision Blue Resources Limited ("Vision Blue") on October 15, 2024 (news release dated October 15, 2024):
o Non-dilutive secured credit facility to support the continued development of South Crofty;
o Proceeds of the credit facility are expected to be used for the Company's general operating and corporate purposes.
- Appointment of Endeavour Financial ("Endeavour") as the Company's financial adviser on October 9, 2024 (news release dated October 9, 2024):
o Endeavour appointed as financial adviser to secure project financing for the construction of South Crofty and advise the Company on funding options on the basis of the completed PEA and ongoing engineering studies;
o Various sources of funding will be assessed to deliver an optimal project financing solution in the second half of 2025.
- South Crofty Preliminary Economic Assessment ("PEA") completed, validating the 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, totalling 49,310 tonnes over a 14-year Life of Mine ("LOM");
o Total after-tax cash flow of approximately US$626 million from start of production.
- Near-mine Exploration Target at South Crofty (news release dated November 13, 2024):
o Exploration Target points to potential additional mineralisation upside of 6Mt to 13Mt, at a tin grade of 0.5% to 1.8%, above the current South Crofty Mineral Resource in the Lower Mine area;
o Potential to define additional mineralisation, which could expand the current Mineral Resource at the project.
- Commencement of second phase of refurbishment of New Cook's Kitchen ("NCK") shaft (news release dated July 10, 2024):
o Installation of the Phase 2 work platform, enabling faster replacement of old shaft timbers with new steel guides;
o Winders and cages installed, fully commissioned and in operation, and certified to allow for safe transport of equipment and workers within NCK shaft;
o Rephasing shaft refurbishment improves the functionality of NCK shaft and enables larger equipment to access the mine at an earlier stage in its re-development;
o Shaft refurbishment is progressing and now forecast to be completed in Q4-2025 alongside mine dewatering to the 400-fathom level, with no expected impact to the overall project schedule.
- Mine dewatering continues with the submersible pumps and Water Treatment Plant ("WTP") operating to specifications (news release dated July 10, 2024):
o Water level in NCK shaft 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 meet the standards permitted by the Environment Agency.
- Final drilling results from Wide Formation exploration program (news release dated August 18, 2024):
o The completed 14-hole / 9,000-meter drilling program successfully tested the geometry and continuity of tin mineralization within a 2,500 meter by 800 meter extent of the Wide Formation;
o Drilling also intersected tin mineralization associated with the Great Flat Lode and the Great Flat Lode Splay, as well as the interpreted eastern extension of the Great Condurrow Mine's Main Lode, and several strongly mineralized steeply dipping zones.
- Purchase of land totalling 7.7 acres located immediately adjacent to South Crofty surface infrastructure (news release dated May 21, 2024):
- Sale of Mactung and Cantung royalties for US$4.5 million in cash consideration (news release dated July 21, 2024):
o Completion of disposal of Company's royalty interests on the Mactung and Cantung tungsten projects located in Northern Canada to Elemental Altus Royalties Corp. ("Elemental Altus");
o Initial cash consideration of US$3.0 million received on August 1, 2024, with the balance of US$1.5 million due by August 1, 2025.
- Sale of Nickel King property announced for a total consideration of up to $8.0 million (news release dated June 16, 2024):
o Entered into a binding letter of intent with Northera Resources Ltd. ("Northera") for the sale of the Company's 100% interest in the Nickel King Property for a total consideration of up to $8 million;
o Initial cash consideration of $250,000 received to date.
- As at November 19, 2024 the Company's cash position was $12.5 million (equivalent to £7.1 million).
Don Turvey, CEO and Director of Cornish Metals, stated: "I am pleased to have joined Cornish Metals and will be working closely with the management and project teams to take South Crofty to production, to bring responsible tin mining back to Cornwall and to generate value by unlocking the project's potential as a long-term supplier of tin needed for electrical applications in the UK and Europe. Activity levels on-site are high as the NCK shaft refurbishment and mine dewatering progress, further derisking the project. We have also commenced the project finance process to secure the optimal funding solution for the construction of South Crofty."
Financial highlights for the nine months ended September 30, 2024 and October 31, 2023
Nine months ended (unaudited)
| September 30, 2024 | October 31, 2023 | |
|---|---|---|
| (Expressed in Canadian dollars) | ||
| Total operating expenses | 6,495,774 | 3,281,200 |
| Profit (loss) for the period | 482,935 | (1,571,831) |
| Net cash used in operating activities | 4,024,494 | 1,761,034 |
| Net cash used in investing activities | 19,339,613 | 23,335,112 |
| Net cash used in financing activities | 228,966 | 723 |
| Cash at end of the period | 3,301,452 | 31,579,386 |
- Increase in operating expenses impacted by higher travel and marketing expenditure arising from increased investor & media engagement and termination settlement payable to the former CEO;
- Gain of $4.7 million arising from the sale of the Mactung and Cantung royalties, of which US$1.5 million is deferred consideration due by August 2025;
- Expenditure of $2.2 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, and associated commissioning costs;
- Expenditure of $2.8 million on land adjacent to the surface infrastructure at South Crofty;
- Dewatering costs of $4.2 million for power, reagents, sludge disposal and maintenance of the WTP;
- Other project related expenditure of $9.2 million relating to the advancement of South Crofty, primarily relating to the ongoing project engineering studies and NCK shaft re-access & refurbishment;
- Costs of $1.6 million incurred for the completion of the exploration program at the Wide Formation; and
- Cash decreased by $23.6 million to $3.3 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 nine months ended September 30, 2024. The comparative period of reporting is the nine months ended October 31, 2023.
The credit facility arranged with Vision Blue, as described above, has a maturity date of 31 March 2025. As a consequence, additional financing will be required before the end of March 2025.
Outlook
As described above, the Company continues to advance and derisk the South Crofty tin project towards production. By the end of December 2025, the Company's objectives are as follows:
- Complete dewatering of South Crofty mine and refurbishment of NCK shaft;
- Advance basic and detailed project engineering studies;
- Place deposits for long lead items of plant and equipment;
- Arrange project financing for the South Crofty tin project.
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$13,660 /tonne of payable tin
o Total after-tax cash flow of US$626 million from start of production
TECHNICAL INFORMATION
ON BEHALF OF THE BOARD OF DIRECTORS
"Don Turvey"
Don Turvey
Engage with us directly at our investor hub. Sign up at: https://investors.cornishmetals.com/link/0y5Aly
Caution regarding forward looking statements
Caution regarding non-IFRS measures
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in Canadian dollars)
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| ASSETS | ||
| Current | ||
| Cash | $ 3,301,452 | $ 25,791,552 |
| Marketable securities | 2,927,438 | 2,665,454 |
| Receivables | 2,508,031 | 1,112,638 |
| Prepaid expenses | 439,722 | 591,264 |
| Deferred financing fees | 510,810 | 135,242 |
| 9,687,453 | 30,296,150 | |
| Deposits | 82,592 | 85,954 |
| Property, plant and equipment | 27,987,102 | 23,788,325 |
| Exploration and evaluation assets | 73,403,237 | 50,050,323 |
| $ 111,160,384 | $ 104,220,752 | |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities | $ 4,254,516 | $ 5,063,940 |
| Deferred income | 150,000 | - |
| 4,404,516 | 5,063,940 | |
| NSR liability | 9,250,363 | 9,064,817 |
| 13,654,879 | 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 | 1,084,152 | 711,690 |
| Foreign currency translation reserve | 7,927,259 | 1,369,146 |
| Deficit | (41,908,223) | (42,391,158) |
| 97,505,505 | 90,091,995 | |
| $ 111,160,384 | $ 104,220,752 | |
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Expressed in Canadian dollars)
| Three months ended | Nine months ended | |||
|---|---|---|---|---|
| September 30, 2024 | October 31, 2023 | September 30, 2024 | October 31, 2023 | |
| EXPENSES | ||||
| Travel and marketing | $ 216,556 | $ 242,737 | $ 664,044 | $ 488,797 |
| Insurance | 197,445 | 164,843 | 596,952 | 511,899 |
| Office, miscellaneous and rent | 48,515 | 40,883 | 166,722 | 148,925 |
| Professional fees | 523,478 | 257,854 | 1,332,245 | 794,167 |
| Generative exploration expense | 125 | 200 | 5,829 | 5,433 |
| Regulatory and filing fees | 26,358 | 17,749 | 78,019 | 73,171 |
| Share-based compensation | 93,098 | 104,587 | 223,897 | 130,136 |
| Salaries, directors' fees and benefits | 828,406 | 410,795 | 3,428,066 | 1,128,672 |
| Total operating expenses | (1,933,981) | (1,239,648) | (6,495,774) | (3,281,200) |
| Interest income | 61,950 | 649,403 | 470,504 | 1,456,697 |
| Foreign exchange gain | 350,703 | 13,101 | 322,663 | 394,980 |
| Gain (loss) on receipt of non-refundable deposit | (6,328) | - | 84,968 | - |
| Impairment reversal of royalties | 1,500,000 | - | 1,500,000 | - |
| Gain on disposal of royalties | 4,675,904 | - | 4,675,904 | - |
| Unrealized loss on marketable securities | (39,056) | (112,276) | (75,330) | (147,296) |
| Profit (loss) before income taxes | 4,609,192 | (689,420) | 482,935 | ( 1,576,819 ) |
| Income tax recovery | - | 4,988 | - | 4,988 |
| Profit (loss) for the period | 4,609,192 | (684,432) | 482,935 | (1,571,831) |
| Foreign currency translation | 4,166,641 | (1,010,502) | 6,558,113 | 1,619,065 |
| Total comprehensive income (loss) for the period | $ 8,775,833 | $ (1,694,934) | $ 7,041,048 | $ 47, 234 |
| Basic and diluted income (loss) per share | $ 0.02 | $ (0.00) | $ 0.01 | $ 0.00 |
| Weighted average number of common shares outstanding: | 535,270,712 | 535,270,712 | 535,270,712 | 535,268,881 |
| CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS | ||||
| (Unaudited) | ||||
| (Expressed in Canadian dollars) | ||||
| For the nine months ended | ||||
| September 30, 2024 | October 31, 2023 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Profit (loss) for the period | $ 482,935 | $ (1,571,831) | ||
| Items not involving cash: | ||||
| Share-based compensation | 223,897 | 130,136 | ||
| Unrealized loss on marketable securities Gain on receipt of non-refundable deposit | 75,330 (84,968) | 147,296 - | ||
| Impairment reversal of royalties | (1,500,000) | - | ||
| Gain on disposal of royalties | (4,675,904) | - | ||
| Foreign exchange loss | (322,663) | (394,980) | ||
| Income tax recovery | - | (4,988) | ||
| Income taxes paid | - | (11,012) | ||
| Changes in non-cash working capital items: | ||||
| Decrease (increase) in receivables | 530,148 | (348,196) | ||
| Decrease in prepaid expenses | 165,929 | 105,201 | ||
| Increase in accounts payable and accrued liabilities | 1,080,802 | 187,340 | ||
| Net cash used in operating activities | (4,024,494) | (1,761,034) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Acquisition of property, plant and equipment Acquisition of exploration and evaluation assets Proceeds on receipt of non-refundable deposits Proceeds from disposal of royalties Increase in deposits | (6,446,743) (17,224,234) 234,968 4,099,004 (2,608) | (11,817,289) (11,489,073) - - (28,750) | ||
| Net cash used in investing activities | (19,339,613) | (23,335,112) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Increase in deferred financing fees | (228,966) | - | ||
| Lease payments | - | (723) | ||
| Net cash used in financing activities | (228,966) | (723) | ||
| Change in cash during the period | (23,593,073) | (25,096,869) | ||
| Cash, beginning of the period | 25,791,552 | 55,495,232 | ||
| Impact of foreign exchange on cash | 1,102,973 | 1,181,023 | ||
| Cash, end of the period | $ 3,301,452 | $ 31,579,386 | ||
| Cash paid during the period for interest | $ - | $ - | ||
| Cash paid during the period for income taxes | $ - | $ 11,012 | ||
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 exercises | 250,000 | 17,500 | (17,500) | - | - | - | - | - |
| Foreign currency translation | - | - | - | - | - | 1,619,065 | - | 1,619,065 |
| Share-based compensation | - | - | - | - | 207,514 | - | - | 207,514 |
| Loss for the period | - | - | - | - | - | - | (1,571,831) | (1,571,831) |
| Balance at October 31, 2023 | 535,270,712 | $128 ,394,652 | $ - | $ 2,007,665 | $ 592,272 | $970,103 | $ (41,248,834) | $ 90,715,858 |
| 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 | - | - | - | - | - | 6,558,113 | - | 6,558,113 |
| Share-based compensation | - | - | - | - | 372,462 | - | - | 372,462 |
| Profit for the period | - | - | - | - | - | - | 482,935 | 482,935 |
| Balance at September 30, 2024 | 535,270,712 | $128 ,394,652 | $ - | $ 2,007,665 | $ 1,084,152 | $ 7,927,259 | $ (41,908,223) | $ 97,505,505 |
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