Cornish Metals Strategic Investment and Proposed Fundraising of a minimum of £56 million

Share:

Cornish Metals Inc. (AIM/TSX-V: CUSN), a mineral exploration and development company focused on the advancement and restart of its 100% owned-and-permitted South Crofty high-grade tin project in Cornwall, the United Kingdom, is pleased to announce that it is undertaking a proposed fundraising to raise a minimum of £56 million (the “Fundraising“).
 
As part of the Fundraising, the Company today announces that it has conditionally raised up to £28.75 million by way of a strategic investment by the National Wealth Fund Limited (“NWF“), a company wholly-owned by HM Treasury (the “NWF Subscription“), pursuant to which NWF has conditionally agreed to subscribe for up to 359,375,000 new common shares of no par value each (“Common Shares“) (the “NWF Subscription Shares“) at 8 pence per share (the “Issue Price“). The NWF Subscription Shares are subject to the scale back arrangements as described below, subject to NWF investing a minimum of £25 million (before expenses).
 
Vision Blue Resources Limited (“Vision Blue” or “VBR”), which currently holds approximately 25.95 per cent. of the issued share capital of the Company, has also conditionally agreed to subscribe at the Issue Price (the “VBR Subscription”) as follows: (i) for such number of new Common Shares which are required in order to maintain its c. 25.95 per cent. ownership interest in the Company following the results of the Fundraising pursuant to the exercise of its Participation Right (as more fully described below) (the “VBR Participation Right Shares”); and (ii) in addition and separately from its Participation Right, such further number of Common Shares as shall be required in order for the VBR Subscription to raise, in aggregate, up to a maximum of £18,280,550 (before expenses) for the Company (the “VBR Additional Subscription Shares” and, together with the VBR Participation Right Shares, the “VBR Subscription Shares”).  The VBR Additional Subscription Shares are subject to the scale back arrangements as described below, subject to VBR subscribing for a minimum number of Common Shares to maintain its c. 25.95% ownership interest in the Company immediately following the completion of the Fundraising.
 
The Company also announces that it has engaged each of H&P Advisory Ltd (“Hannam & Partners“) and SP Angel Corporate Finance LLP (“SP Angel“)  as joint bookrunners (“Joint Bookrunners“)  and Canaccord Genuity Limited (“Canaccord Genuity“) as co-manager  (“Co-Manager“) (the Joint Bookrunners and the Co-Manager, together, the “Placing Agents“) to raise c.£8.8 million (before expenses) by way of a conditional placing to both new and existing institutional and other investors (the “Placing“) at the Issue Price. The Company has also granted the Placing Agents a broker option pursuant to which an additional up to c.£5.9 million may be raised at the Issue Price subject to demand following the release of this Announcement (the “Broker Option“). The Broker Option may be exercised at any time by the Placing Agents prior to the release of the announcement of the results of the Fundraising by the Company.
 
In addition, all of the Directors other than John McGloin (the “Participating Directors“) have conditionally subscribed with the Company or participated in the Placing for, in aggregate, 1,597,561 new Common Shares (the “Director Participation Shares“) at the Issue Price, raising £127,805 for the Company (before expenses) (the “Director Participations“).
 
In order to provide the Company’s existing retail shareholders the opportunity to participate in the Fundraising, the Company also intends to carry out a separate retail offer to raise further gross proceeds of up to £3.0 million at the Issue Price via the BookBuild Platform (the “Retail Offer“). A separate announcement will be made shortly regarding the Retail Offer and its terms. The Retail Offer is expected to close on 31 January 2025. Accordingly, the final results of the Fundraising, including VBR’s and NWF’s final participation, will be confirmed and announced following the results of the Retail Offer.
 
Capitalised terms in the announcement which are not otherwise defined shall have the meaning as set out in Appendix II.
Highlights of the Fundraising:
 
The Fundraising will raise a minimum gross proceeds of approximately £56 million (before expenses) comprising:
 

  • the NWF Subscription, raising up to £28.75 million (before expenses) through the issue of up to 359,375,000 NWF Subscription Shares (subject to scaleback) at the Issue Price;
  • the VBR Subscription to raise up to £18,280,550 (before expenses), comprising: (i) the subscription by VBR at the Issue Price for such number of VBR Participation Right Shares as shall be required in order to maintain its percentage ownership interest (approximately 25.95 per cent.) in the Company following the Fundraising pursuant to its Participation Right; and (ii) the separate and additional subscription for the VBR Additional Subscription Shares (subject to scaleback);
  • the Placing to raise c.£8.8 million (before expenses) at the Issue Price together with the Broker Option to accommodate any additional demand following the release of this announcement;
  • the Director Participations to raise £127,805 (before expenses) through the issue of 1,597,561 Director Participation Shares at the Issue Price;
  • the Retail Offer to raise up to £3.0 million (before expenses) through the issue of up to 37,500,000 new Common Shares (the “Retail Offer Shares“) at the Issue Price. A further announcement will be made shortly in connection with the Retail Offer.
  • The proceeds of the Fundraising will be principally used to ensure that the Company can continue with its path to development through competing the shaft refurbishment and de-watering process, the start of early project works, ordering long lead items and completion of the project finance process and up to the point of the formal final investment decision at its South Crofty Tin Mine.
  • The Issue Price of 8p (converted into Canadian dollars at the Bank of Canada’s closing exchange rate for January 24, 2025 of C$1.7873/£1) represents a discount of approximately 3.61 per cent. to the closing middle market price of 8.3 pence per Common Share on 27 January 2025, being the latest practicable date prior to the date and time of this Announcement, and a discount of approximately 1.39 per cent. to the closing price of C$0.145 per Common Share on 27 January 2025, being the last closing price of the Common Shares trading on the TSX Venture Exchange (“TSX-V”) prior to the date and time of this Announcement.
  • The Placing will be effected by way of an accelerated bookbuild process (the “Bookbuild“). The Placing Agents will commence the Bookbuild immediately following the release of this announcement and will be conducted in accordance with the terms of conditions set out in Appendix I to this announcement. The number of Placing Shares (including any new Common Shares to be issued pursuant to the Broker Option (the “Broker Option Shares“) in the event there is excess demand which can be accommodated) will be determined at the end of the Bookbuild.  A further announcement confirming closing of the Bookbuild and the number of Placing Shares to be issued pursuant to the Placing is expected to be made in due course.
  • Any Broker Option Shares issued shall scale back both the NWF Subscription Shares and the VBR Additional Subscription Shares on an equal basis as follows: for every 1 (one) Broker Option Share subscribed for; the number of NWF Subscription Shares shall be reduced by 0.5 (i.e. half a share) and the number of VBR Additional Subscription Shares shall be reduced by 0.5 (half a share) with the number of shares being subscribed for being rounded up in each case to a full share) provided that: (i) NWF shall invest a minimum of £25 million; and (ii) VBR shall, in accordance with its Participation Right, subscribe for at least such number of VBR Participation Right Shares as shall ensure it maintains its c. 25.95% ownership interest in the Company immediately following completion of the Fundraising. Given the results of the Retail Offer will only be announced following the results of the Placing (and any exercise of the Broker Option), the Company will confirm the final results of the Fundraising (including the number of NWF Subscription Shares and VBR Subscription Shares subscribed for once the results of the Retail Offer are confirmed.)
  • The VBR Subscription, the Placing and the Director Participations are being undertaken in two tranches as the Company, at the date of this announcement, has insufficient authorities from its shareholders to issue all of the VBR Subscription Shares, Placing Shares and Director Participation Shares.  Accordingly, the Company plans to utilise the share issuance authorities that it was granted at its annual general and special meeting held on June 4, 2024 to issue the First Tranche New Shares (being up to a maximum of 133,817,678 new common shares and comprising: (i) 34,722,222 of the VBR Subscription Shares, representing a portion of the VBR Participation Right Shares (“First Tranche VBR Subscription Shares“); (ii) 97,698,902 of the Placing Shares (“First Tranche Placing Shares”); and (iii) 1,396,554 of the Director Participation Shares (“First Tranche Director Participation Shares”)). For further details regarding the Company’s share issuance authorities, please refer to the Company’s management information circular dated April 19, 2024 for the annual general and special meeting held on June 4, 2024, a copy of which is available on the Company’s profile on SEDAR+ at www.sedarplus.ca.
  • Any new Common Shares of the Company which are not issuable by the Company in the first tranche of the Fundraising pursuant to the Company’s existing share issuance authorities shall be issued by the Company conditional upon the Company obtaining new share issuance authorities from shareholders at a special meeting of shareholders of the Company (the “Special Meeting”) to be held on or about March 18, 2025. The Company has filed a notice of meeting and record date in respect of the Special Meeting, a copy of which is available on the Company’s profile on SEDAR+ at www.sedarplus.ca.
  • Subject to receipt of all necessary approvals, including approvals from the shareholders at the Special Meeting and the approval of the TSX-V, the Company expects to issue the remaining VBR Subscription Shares, representing the remaining portion of the VBR Participation Right Shares plus the VBR Additional Subscription Shares (“Second Tranche VBR Subscription Shares“); remaining Placing Shares (“Second Tranche Placing Shares”); remaining Director Participation Shares (“Second Tranche Director Participation Shares”); all of the Retail Offer Shares; and all of the NWF Subscription Shares (together the “Second Tranche New Shares“) and expects such remaining shares to be admitted to trading on AIM and the TSX-V shortly after the Special Meeting.
  • It is important to note that the First Tranche New Shares shall be issued on First Admission of those shares to trading on AIM, which, subject to TSXV Conditional Approval, is expected to occur at 8.00 a.m. on 06 February 2025 (or such later date as the Company and the Placing Agents may agree). If the conditions to the issue of the Second Tranche New Shares are not subsequently satisfied (including the passing of the necessary shareholder resolutions at the Special Meeting, TSXV Conditional Approval and the NWF Subscription Agreement becoming unconditional in all respects), the Second Tranche New Shares will not be issued by the Company and neither the NWF Subscription nor the Retail Offer will proceed, notwithstanding the fact that the First Tranche New Shares will already be in issue. None of the NWF Subscription Shares nor the Retail Offer Shares will be issued in the first tranche of the Fundraising. 

Neither the Placing, Director Participations nor the Retail Offer are underwritten.
The Placing is subject to the terms and conditions set out in Appendix I to this Announcement (which forms part of this Announcement).
 
Don Turvey, CEO of Cornish Metals, commented: “We are very pleased to welcome NWF as a major shareholder in Cornish Metals and to lead this fundraise alongside Vision Blue, demonstrating support for the Company and our plans to bring tin mining back to Cornwall. 

Tin is a critical mineral that is essential for the energy transition and anything electronic. South Crofty is a strategic asset with the ability to responsibly provide a secure, high grade long-term supply of tin, reviving Cornwall’s rich mining history and contributing to the local economy and the UK’s transition to net zero.

The Cornish Metals team has achieved many important milestones over the last couple of years as we rapidly advance South Crofty towards a restart of production. This financing will enable the Company to maintain this strong momentum and further unlock the project’s potential by delivering crucial milestones expected in the coming year including the completion of mine dewatering and shaft refurbishment, the start of early project works, placing orders for long-lead items, and concluding the project finance process.”
 
John Flint, CEO of NWF, commented: “Critical minerals are not only an important driver of the UK’s transition to net zero, but also of the UK’s growth mission, providing opportunities to anchor important supply chains in the UK.

This is our second investment in critical minerals in Cornwall, and indicative of our ability to mobilise private investment into local economies, creating skilled and long-term employment.”
 
Rationale for the Fundraising

Subject to shareholder approval and the issue of the Second Tranche New Shares, the Fundraising will enable the Company to further de-risk the South Crofty Project and advance it towards a formal final investment decision by:

  • bringing the South Crofty Project nearer to production by funding approximately £20m of the South Crofty Project’s initial capital expenditure requirements;
  • commencing early project works, including initial construction of the groundworks for the processing plant;
  • placing orders for long-lead items of plant and equipment; and
  • advancing detailed project engineering studies;

 Use of proceeds

In addition to the Company’s current cash balances (being £5.3 million as at 31 December 2024), the proceeds of the Fundraising will be allocated towards the following workstreams:
 

  • £13.3 million for mining and related works and dewatering;
  • £17.2 million for early works and long-lead items;
  • £5.1 million for project engineering studies;
  • £7.8 million for the repayment of the credit facility plus accrued interest provided by Vision Blue to the Company, details of which were announced on 15 October 2024;
  • £12.6 million for South Crofty site costs, facilities and land purchase, financing fees associated with the Fundraising and corporate costs.

The Fundraising is expected to provide financial runway through to the end of Q1 2026 with project debt finance to be arranged before then and a final investment decision expected at that time.

The proceeds from the Retail Offer Shares issued and any Broker Option Shares issued in excess of the scale back of NWF and VBR will provide additional working capital to the Company.

Read the announcement in full at: https://investors.cornishmetals.com/announcements/6766659

Subscribe to our newsletter