Cornish Metals’ UK tin project worth over $200 million

South Crofty, about 390km west of London on the Celtic Sea Coast, was the last tin mine in Europe when it closed in 1998. (Image courtesy of Cornish Metals.)

Cornish Metals (LON, TSX-V: CUSN) said on Wednesday the results of a new preliminary economic assessment (PEA) for its flagship South Crofty tin asset, in the UK, lay down a promising financial outlook for the project.

The Canadian company, which has been working on bringing a past-producing tin mine back to life since 2016, said the PEA revealed a post-tax net present value of $201 million for the Cornwall mine. 

The assessment also showed an internal rate of return of 29.8%, confirming the potential of the project as “a low-cost and long-life tin operation” with a current 14-year life of mine.  

The estimate is based on a tin price of $31,000 per tonne, Cornish Metals said, slightly below its current valuation of $32,275 per tonne.

The PEA pegged the expected post-tax cash flow from the operation at $626 million, from the start of production, peaking at $82 million in the second year.

Once operational, the project will produce average annual earnings before interest, tax, depreciation, and amortization of $83 million at a 62% margin in years two through six.

Cornish Metals’ UK tin project worth over $200 million
South Crofty after-tax free cash flow profile. (Source: Cornish Metals.)

Cornish Metals chief operating officer, Owen Mihalop, said that the project’s net present value (NPV) provided a solid foundation for further evaluation, allowing the company to move forward with additional preparation work and progress towards a construction decision.

South Crofty is expected to produce 49,310 tonnes of tin metal in concentrate over its productive life, peaking at over 5,000 tonnes in year four. 

The goal is achieving first tin production by 2027.

Critical metals focus

Tin is part of the UK’s critical metals list and its importance has also been recognized by other European Union governments, as well as the US 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. Several companies attempted to revive the flooded mines between 2001 and 2013, but due 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.