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Cornish Metals Stock Rises Again On United Downs Copper Results

Tim Worstall
Tim Worstall trader
Updated 7 Dec 2021

Cornish Metals (LON: CUSN) share price jumped to 27 pence on the back of results from the drilling programme at United Downs. As the company said the results showed high-grade copper mineralisation and the possibility of an underlying tin deposit similar to that of South Crofty.

The Cornish Metals share price is up 20% since we looked at it only last week following the 15 and 10% rises it had already enjoyed.

It’s necessary to be very clear that Cornish Lithium and Cornish Metals are not the same company. Cornish Lithium is looking for that metal in the geothermal waters which underlie the county – and the other metals deposits. On a geological scale, the metals from the hard rock deposits which have dissolved away. Cornish Metals is a hard rock miner looking for those initial deposits. There is a cross-agreement between the two companies. Cornish Metals allow access to geothermal waters to Cornish Lithium in their claims and vice versa to hard rock deposits. The two stock prices are not going to move in tandem, or at least not necessarily.

The background here is that Cornwall has long been a well-known mining area. Tin has been produced for millennia and the area was once also one of the world’s leading copper sources. The task today is to find out whether modern prospecting techniques, combined with modern mining and processing, can find again economic deposits. This is a standard mining technique, to re-examine areas known to hold mineral deposits to see whether updates to technology make previously overlooked, or sub-economic, deposits now make sense.

This is exactly what Cornish Metals is now doing. The results from United Downs just announced indicate that there is very high-grade copper there. The next question will be in what quantity is it there? It’s the combination of quality and volume that makes the economic deposit – large quantities of low grade and small of high have much the same effect on the economy of mining.

There is also the surmise that underlying that deposit there is more tin, similar to what is found at the nearby South Crofty.

Future drivers of the price will include the surrounding economic environment. Tin and copper prices are likely to remain strong given the EV and electrical revolution concerning renewables and climate change. There is uncertainty about how many other mines might come to market of course. Then there’s the value of these specific deposits themselves. As the drilling programme completes more knowledge about what is there and recoverable will become known.

A likely result is continued volatility in the share price for Cornish Metals. There might be continued momentum as the news flow continues, might not be, that depends upon the details of the news itself. The trading opportunity is to be on the right side of those price movements. Uncertainty about that future is exactly what gives rise to the opportunity to trade those price movements.

Should you invest in Cornish Metals shares?

Cornish Metals shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Cornish Metals shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.