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Cornish Metals Up 15% Yesterday, 10% Today – Momentum?

Tim Worstall
Tim Worstall trader
Updated 3 Dec 2021

Cornish Metals (CVE:CUSN) (LON:CUSN) was up 15% yesterday and 10% today. The price has been moving nicely upwards since the middle of November and this is a break up out of the previous trading range. So, are we looking at a momentum stock here?

We should note that Cornish Metals is not the same as Cornish Lithium. Cornish Lithium is concentrating upon extracting that lithium from the geothermal waters underneath Cornwall It’s definitely there, getting it out is the trick. Cornish Metals is a hard rock miner looking for more conventional deposits. There is an agreement between the two companies. Both Cornwalls – Lithium and Metals- offering access to the other for their respective types of deposit. One for the geothermal deposits under hard rock ones and vice versa.

Having said that the tin and copper/tin mineralisations that Cornish Metals is pursuing (South Crofty and United Downs) are often known to have lithium values which look interesting. The very similar deposits in the Ore Mountains of Germany are being considered as a source for example.

It’s also possible for people to slightly misunderstand mining reports. Rubidium (and caesium too) are also often found in such mineralisations. While the rubidium price is exotically pleasing at some $12 a gramme according to an old estimation the market is tiny, tonnes a year globally. It doesn’t constitute a recoverable part of the metals value in a tin or copper mine. Or not until someone discovers a new use for it it doesn’t.

The renewed interest in Cornish Metals started a month ago. Reports from the United Downs programme showed some instances of high grade tin mineralisation. This isn’t unusual in Cornwall, people have been mining tin there for at least 3000 years. The bigger question is whether any specific deposit will be worth mining – can they compete with the alluvial deposits in SE Asia?

This is what gears, or leverages, Cornish Metals so highly with respect to their drilling programme and other results. The electrification of everything ie leading to a resurgence in interest in tin. But it’s necessary to get over the hurdle of beating those low cost producers to be able to mine profitably. So, indications that this might be possible have an outsized influence upon the share price.

We as traders therefore need to make a decision. Is this sufficient news and interest to drive that price still further and higher? Or is this an excess of optimism about still incomplete information? Our decision making process over Cornish Metals is then complicated by the need to take everyone else’s views into account. If other market participants think this is good news then they’ll be in – that’s a momentum trade. If they don’t well then, recent peaks will be just those, peaks.

The very gearing and leverage of the share price to those drilling results and more general opinions about EV minerals makes Cornish Metals an interesting trading target.  Being on the right side of the next price movement is the task.

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