REG - Cornish Metals Inc. - UNAUDITED FINANCIAL STATEMENTS AND MD&A
15/12/2022 13:15
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RNS Number : 7662J Cornish Metals Inc. 15 December 2022
CORNISH METALS RELEASES UNAUDITED FINANCIAL STATEMENTS AND MANAGEMENT'S
DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED 31 OCTOBER 2022
Vancouver, December 14, 2022
Cornish Metals Inc. (TSX-V/AIM: CUSN) ("Cornish Metals" or the "Company"), a
mineral exploration and development company focused on its projects 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 October 31, 2022. The reports are
available under the Company's profile on SEDAR (www.sedar.com
(http://www.sedar.com) ) and on the Company's website (www.cornishmetals.com
(http://www.cornishmetals.com/) ).
Highlights for the nine months ended October 31, 2022 and for the period
ending December 14, 2022
(All figures expressed in Canadian dollars unless otherwise stated)
· Completion of 10,159 meters of drilling at the United Downs
exploration project with assay results from the program confirming
management's belief in the potential to develop a Mineral Resource in the
United Downs project area subject to the availability of further funding;
· Four main targets were drill-tested: UD Lode, United Mines, Mount
Wellington and Trenares Lode, with all four targets returning results
warranting further follow-up drilling;
· Completion of financing for gross proceeds of £40.5 million ($65.1
million based on closest available exchange rate), including a strategic
investment by Vision Blue Resources of £25.0 million ($40.1 million), to
advance the South Crofty tin project ("South Crofty") to a construction
decision (news releases dated March 27, 2022
(https://www.cornishmetals.com/news/2022/cornish-metals-to-raise-up-to-40.5-million-through-a-25-million-strategic-investment-by-sir-mick-davis-vision-blue-resources/)
and May 23, 2022
(https://www.cornishmetals.com/news/2022/cornish-metals-successfully-closes-40.5-million-financing/)
);
· Issuance of second tranche of common shares pursuant to the
restructuring of the deferred consideration relating to the acquisition of the
South Crofty tin project and associated mineral rights (news release dated May
29, 2022
(https://www.cornishmetals.com/news/2022/cornish-metals-issues-shares-as-deferred-consideration-for-cornwall-assets/)
);
· Commencement of an 8,000 to 12,000 meter drill program in July 2022
to collect samples for metallurgical testwork as part of the South Crofty
Feasibility Study (news release dated July 10, 2022
(https://cornishmetals.com/site/assets/files/5519/2022-07-10_sc_met_drilling.pdf)
);
· Key positions appointed to the South Crofty project management team,
including Project Manager for the construction and commissioning of the water
treatment plant ("WTP"), Feasibility Study Manager, Project Engineer, Health
& Safety Officer and Human Resources Advisor, with additional employees
appointed to the mining team to support greater mining related activities
(news release dated November 7, 2022
(https://cornishmetals.com/site/assets/files/5548/2022-11-07_project_update.pdf)
);
· Construction of the WTP is continuing including the completion of the
installation of the treated water discharge duct and the pouring of the
concrete foundations for the WTP nearing completion;
· Detailed design of the water treatment plant substantially completed
with all major components of the water treatment plant ordered in anticipation
of planned commissioning in June 2023 at a cost estimated to be between £6.5
million and £7.0 million;
· Pump and pipe handling infrastructure installed in readiness of the
lowering of the pumps and pipes into New Cook's Kitchen shaft with the first
pump expected to be in place by the end of February 2023;
· Initial work on the Feasibility Study underway with completion
planned by the end of 2024; and
· Mr. Tony Trahar nominated by Vision Blue Resources as its
representative on the Company's board of directors (news release dated June 5,
2022
(https://www.cornishmetals.com/news/2022/vision-blue-resources-nominates-mr-tony-trahar-to-cornish-metals-board-of-directors/)
).
Richard Williams, CEO of Cornish Metals, stated, "Work is continuing at pace
at South Crofty on all areas of the project which is a marked contrast to just
six months ago. Enabling works for the construction of the water treatment
plant are complete and erection of the plant itself will commence shortly.
In the meantime, we are making good progress on the metallurgical drill
programme, and the Feasibility Study is advancing its various workstreams.
The pumps will be lowered into the mine shaft in early 2023 ahead of the
expected commissioning of the water treatment plant and dewatering in early
summer 2023. Planning is underway for the refurbishment of those parts of
the mine workings to allow underground Mineral Resource drilling to commence
as soon as water levels permit.
It is an exciting period of change for South Crofty, and we are particularly
pleased with the positive engagement and support of the local community and
the wider population in Cornwall to the visible progress at South Crofty."
Financial highlights for the nine months ended October 31, 2022 and October
31, 2021
Nine months ended (unaudited)
(Expressed in Canadian dollars) October 31, 2022 October 31, 2021
Total operating expenses 2,616,299 2,396,849
Loss for the period 3,557,556 2,052,403
Net cash (used in) operating activities (3,047,818) (2,451,288)
Net cash (used in) investing activities (5,760,776) (2,740,937)
Net cash provided by financing activities 61,456,627 13,064,465
Cash at end of the period 57,840,129 7,887,537
· Higher promotional and corporate expenses relating to increased
media/investor activities following last year's AIM listing, preparatory work
for the successful fundraise cornerstoned by Vision Blue Resources and
progression of the South Crofty tin project;
· Unrealized gain of $512,204 largely arising from increased valuation
of holding in Cornish Lithium following its most recent fundraising completed
in June 2022;
· Costs of $674,405 and $221,168 capitalized in connection with the
exploration programs at United Downs and Carn Brea, respectively (excluding
capitalized depreciation and other non-cash items);
· Project related costs of $2,658,570 incurred since the closing of the
Offering relating to the advancement of the South Crofty tin project to a
potential construction decision, primarily for the metallurgical drill program
and planning activities for the WTP and the associated dewatering of the mine;
· Gross proceeds raised from the Offering of £40.5 million ($65.1
million), following gross proceeds raised from the AIM listing in comparative
period of £8.2 million ($14.4 million); and
· Recognition of foreign currency translation loss of $2,365,115 for
those assets located in the UK when translated into Canadian dollars for
presentational purposes.
Outlook
The proceeds raised from the Offering completed in May 2022 are being used to
advance the South Crofty tin project to a potential construction decision
within 30 months from closing of the Offering (December 2024). The planned
use of the proceeds from the Offering is to complete the dewatering program
and Feasibility Study at South Crofty, evaluate downstream beneficiation
opportunities and commence potential on-site early works in advance of a
potential construction decision.
Within 30 months from the closing of the Offering, the Company's plans are as
follows:
· Construct and commission the WTP in the first half of 2023 and
thereafter complete the dewatering of the mine within 18 months;
· Complete drill programs for metallurgical studies and to produce an
updated JORC compliant Mineral Resource estimate for a Feasibility Study;
· Complete a Feasibility Study using all reasonable commercial efforts
by the end of 2024; and
· Commence basic and detailed engineering studies, construction of the
processing plant, refurbishment of underground facilities and other on-site
early works.
Subject to the availability of financing, consideration will also be given to
continuing with the Company's exploration program at United Downs and
evaluating other near-surface, high potential, exploration targets within
transport distance of the planned processing plant site at South Crofty.
ABOUT CORNISH METALS
Cornish Metals completed the acquisition of the South Crofty tin and United
Downs copper / tin projects, plus additional mineral rights located in
Cornwall, UK, in July 2016 (see Company news release dated July 12, 2016
(https://www.cornishmetals.com/site/assets/files/5021/2016-07-12_nr.pdf) ).
The additional mineral rights cover an area of approximately 15,000 hectares
and are distributed throughout Cornwall. Some of these mineral rights cover
old mines that were historically worked for copper, tin, zinc, and tungsten.
TECHNICAL INFORMATION
The technical information in this news release has been compiled by Mr. Owen
Mihalop. Mr. Mihalop has reviewed and takes responsibility for the data and
geological interpretation. Mr. Owen Mihalop (MCSM, BSc (Hons), MSc, FGS,
MIMMM, CEng) is Chief Operating Officer for Cornish Metals Inc. and has
sufficient experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined under the JORC Code (2012) and as a
Qualified Person under NI 43-101. Mr. Mihalop consents to the inclusion in
this announcement of the matters based on his information in the form and
context in which it appears.
For additional information please contact:
In North America:
Irene Dorsman at (604) 200 6664 or by e-mail at irene@cornishmetals.com
(mailto:irene@cornishmetals.com)
In the UK:
SP Angel Corporate Finance LLP Tel: +44 203 470 0470
(Nominated Adviser & Joint Broker)
Richard Morrison
Charlie Bouverat
Grant Barker
Hannam & Partners Tel: +44 207 907 8500
(Joint Broker)
Matthew Hasson
Andrew Chubb
Ernest Bell
BlytheRay Tel: +44 207 138 3204
(Financial PR/IR-London)
Tim Blythe tim.blythe@blytheray.com (mailto:tim.blythe@blytheray.com)
Megan Ray megan.ray@blytheray.com (mailto:megan.ray@blytheray.com)
ON BEHALF OF THE BOARD OF DIRECTORS
"Richard D. Williams"
Richard D. Williams, P.Geo
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Caution regarding forward looking statements
This news release contains "forward-looking statements" including, but not
limited to, statements in connection with the expected use of proceeds of the
Offering, including in respect of certain work programs, expected
construction, including in respect of the WTP, and the potential completion of
a Feasibility Study on the South Crofty mine and the timing thereof, the
exploration program at United Downs and other exploration opportunities
surrounding the South Crofty tin project, expected recruitment of various
personnel, and expectations respecting tin pricing and other economic
factors. Forward-looking statements, while based on management's best
estimates and assumptions at the time such statements are made, are subject to
risks and uncertainties that may cause actual results to be materially
different from those expressed or implied by such forward-looking statements,
including but not limited to: risks related to receipt of regulatory
approvals, risks related to general economic and market conditions; risks
related to the COVID-19 global pandemic and any variants of COVID-19 which may
arise; risks related to the availability of financing when required and on
terms acceptable to the Company and the potential consequences if the Company
fails to obtain any such financing, such as a potential disruption of the
Company's exploration program(s); the timing and content of upcoming work
programs; actual results of proposed exploration activities; possible
variations in Mineral Resources or grade; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes, title
disputes, claims and limitations on insurance coverage and other risks of the
mining industry; changes in national and local government regulation of mining
operations, tax rules and regulations.
Although Cornish Metals has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause results not
to be as anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. Cornish Metals undertakes no obligation or responsibility to
update forward-looking statements, except as required by law.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in Canadian dollars)
October 31, 2022 January 31, 2022
ASSETS
Current
Cash $ 57,840,129 $ 6,922,704
Marketable securities 2,341,710 1,574,506
Receivables 672,638 107,230
Prepaid expenses 273,126 231,933
61,127,603 8,836,373
Deposits 51,658 42,448
Property, plant and equipment 7,751,022 6,437,175
Exploration and evaluation assets 27,860,166 20,772,029
$ 96,790,449 $ 36,088,025
LIABILITIES
Current
Accounts payable and accrued liabilities $ 1,404,328 $ 613,178
Lease liability 1,577 4,204
Commitment to issue shares - 6,041,525
1,405,905 6,658,907
Lease liability - 667
NSR liability 9,354,732 8,717,330
10,760,637 15,376,904
SHAREHOLDERS’ EQUITY
Capital stock 128,062,712 56,846,350
Share subscriptions received in advance 25,000 -
Capital contribution 2,007,665 2,007,665
Share-based payment reserve 630,265 630,265
Foreign currency translation reserve (2,539,238) (174,123)
Deficit (42,156,592) (38,599,036)
86,029,812 20,711,121
$ 96,790,449 $ 36,088,025
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
(Expressed in Canadian dollars)
Nine months ended
October 31, 2022 October 31, 2021
EXPENSES
Accretion $ - $ 15,764
Advertising and promotion 399,321 260,830
Depreciation 443 24,522
Finance cost - 3,895
Insurance 99,295 66,095
Office, miscellaneous and rent 74,615 60,882
Professional fees 500,737 842,183
Generative exploration costs 96,108 28,845
Regulatory and filing fees 144,468 114,452
Share-based compensation - 80,554
Salaries, directors' fees and benefits 1,301,312 898,827
Total operating expenses (2,616,299) (2,396,849)
Interest income 136,216 738
Foreign exchange loss (1,907,824) (387,196)
Gain on the disposal of royalty 318,147 -
Realized loss on marketable securities - (237)
Unrealized gain on marketable securities 512,204 733,120
Loss on the disposal of property, plant and equipment - (1,979)
Loss for the period (3,557,556) (2,052,403)
Foreign currency translation (2,365,115) (321,499)
Total comprehensive loss for the period $ (5,922,671) $ (2,373,902)
Basic and diluted loss per share $ (0.01) $ (0.01)
Weighted average number of common shares outstanding: 430,111,396 262,945,254
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in Canadian dollars)
Nine months ended
October 31, 2022 October 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (3,557,556) $ (2,052,403)
Items not involving cash:
Accretion - 15,764
Depreciation 443 24,522
Share-based compensation - 80,554
Finance cost - 3,895
Gain on the disposal of royalty (318,147) -
Realized loss on marketable securities - 237
Unrealized gain on marketable securities (512,204) (733,120)
Loss on the disposal of property, plant and equipment - 1,979
Foreign exchange loss 1,907,824 387,196
Changes in non-cash working capital items:
Increase in receivables (565,408) (113,356)
Decrease (increase) in prepaid expenses 69,395 (29,808)
Decrease in accounts payable and accrued liabilities (72,165) (36,748)
Net cash used in operating activities (3,047,818) (2,451,288)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (1,569,968) (197,084)
Acquisition of exploration and evaluation assets (4,181,597) (2,541,717)
Proceeds from the sale of marketable securities, net - 3,063
Increase in deposits (9,211) (5,199)
Net cash used in investing activities (5,760,776) (2,740,937)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from AIM listing - 14,244,206
Proceeds from the Offering 65,135,746 -
Proceeds from option and warrant exercises 227,000 235,750
Share issue costs (3,966,076) (1,162,613)
Proceeds from the disposal of royalty 63,147 -
Conversion of Royalty Option costs - (226,290)
Lease payments (3,190) (26,588)
Net cash provided by financing activities 61,456,627 13,064,465
Impact of foreign exchange on cash (1,730,608) (338,304)
Change in cash during the period 50,917,425 7,533,936
Cash, beginning of the period 6,922,704 353,601
Cash, end of the period $ 57,840,129 $ 7,887,537
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Expressed in Canadian dollars)
Number of shares Amount Share subscriptions received in advance Capital contribution Share-based payment reserve Foreign currency translation Deficit Total
reserve
Balance at January 31, 2021 149,918,585 $ 40,737,065 $ 189,902 $ 2,007,665 $ 846,212 $ 239,028 $ (35,687,896) $ 8,331,976
Share issuance pursuant to 117,226,572 14,434,108 (189,902) - - - - 14,244,206
AIM listing
Shares issued pursuant to property option agreement 7,000,000 1,288,000 - - - - - 1,288,000
Share issue costs - (1,506,824) - - - - - (1,506,824)
Warrant exercises 2,575,000 205,750 - - - - - 205,750
Option exercises 200,000 30,000 - - - - - 30,000
Share-based compensation - - - - 80,554 - - 80,554
Foreign currency translation - - - - - (321,499) (321,499)
-
Loss for the period - - - - - - (2,052,403) (2,052,403)
Balance at October 31, 2021 276,920,157 $ 55,188,099 $ - $ 2,007,665 $ 926,766 $ (82,471) $ (37,740,299) $ 20,299,760
Balance at January 31, 2022 285,850,157 $ 56,846,350 $ - $ 2,007,665 $ 630,265 $ (174,123) $ (38,599,036) $ 20,711,121
Share issuance pursuant to the Offering 225,000,000 65,135,746 - - - - - 65,135,746
Share issue costs - (3,966,076) - - - - - (3,966,076)
Warrant exercises 900,000 87,000 25,000 - - - - 112,000
Option exercises 575,000 115,000 - - - - - 115,000
Shares issued pursuant to property option agreement 20,298,333 9,844,692 - - - - - 9,844,692
Foreign currency translation - - - - - (2,365,115) (2,365,115)
-
Loss for the period - - - - - - (3,557,556) (3,557,556)
Balance at October 31, 2022 532,623,490 $128,062,712 $ 25,000 $ 2,007,665 $ 630,265 $(2,539,238) $ (42,156,592) $ 86,029,812
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