Cornish Metals (LON: CUSN) (TSX: CUSN) shares are down 7% today on the announcement that they've got one of the pumps installed. That sounds like an odd reason for a share price to fall - that a mine has managed to install equipment early, to cost and without accident. We have a feeling that what happens here is that every time Cornish Metals says something this then reminds everyone of the base problem.
We are not experts in tin but we do know our way around quite a lot about mines. And it's easy to list the things that are right about Cornish Metlas and South Crofty. The announcement today: “Richard Williams, CEO and Director, stated; "A big 'proper job' well done to the team at South Crofty for achieving this milestone in less time than planned. This pump installation is a technical exercise and the team did a fantastic job, completing the task safely with no incidents. We anticipate the second pump to be installed by the end of July."” OK, they're competent, in that they do indeed employ competent engineers. That's more than many mining operations can claim.
We also have no doubt that there's tin at South Crofty. That it's possible to mine it, process it, sell the resulting tin. We're absolutely fine with all of those things - again, more than many a mining operation can claim.
Cornish Metals share price from London Stock Exchange
So why's the CUSN share price performing so dreadfully? Well, we think it's for the same reason the South Crofty mine closed in the first place. Which is the global tin price. Hard rock tin mining in Cornwall is expensive compared to the alluvial operations in, say, Indonesia. Therefore Cornish - even European, like First Tin - mines like South Crofty, or Tungsten West's idea at Hemerdon, require high global tin prices to be profitable. And that global tin price isn't conforming to that ideal. Sure, it's difficult to be entirely confident about such statements but it's not obvious - to say the least - that any of the proposed European tin operations will be profitable at current prices.
And, while, you know, being able to mine tin, from a known mine, with identified resources and all that, with a decent engineering team is just great, there's still that one more thing we're looking for. That the revenue will be greater than the costs, that profit will be made. Not something that is entirely obvious here at Cornish Metals - or, more generally, for tin in Europe.
