What read across can we make for Cornish Lithium, in the light of Vulcan Energy’s stellar share pric
Cornish Lithium is well-supported. We know that already.
Every time it goes out for funding on CrowdCube it’s faced with the same dilemma: close out the offering early, or boost the total amount coming in?
After all, the last crowdfund raised £5.2 million in three days, and that was before lithium prices started to rise again.
So, a nice problem to have, and one that many a mining company might wish for.
But for those scratching their heads and wondering just exactly how Cornish Lithium can manage to crowdfund a mining company, never mind do it so well, there is actually a read-across on a listed exchange that’s gaining a huge amount of attention right now.
Vulcan Energy Resources Ltd (ASX:VUL) has assets in Germany and offers, from the roster of quoted companies at least, a unique business opportunity. It will produce lithium with zero carbon emissions.
Is that so hard, you ask?
The lithium that’s extracted from spodumene hard rock has to be roasted out of it, and that’s a very carbon-intensive process. In fact, according to calculations cited by Vulcan, if the world’s vehicle fleet were to be fully electrified using lithium from spodumene hard rock, among the side-effects would be carbon emissions equivalent to the entire annual emissions of France, the UK, and Italy combined.
This is not small potatoes
At the same time, lithium from the famous South American brines involves significant water evaporation over long periods of time and can lead to significant environmental stress to eco-systems and local communities.
Only in the case of a company like Vulcan Resources, which can power all of its operations from geothermal sources, is a lithium mining operation capable of being totally green.
In a market that’s been growing increasingly sensitive to ESG issues in recent years, it’s a compelling proposition. Especially because governments like it too, thus making permitting that much easier. That’s partly why Vulcan has attracted funding and assistance from the EU.
No surprise, then that shares in Vulcan Energy Resources have risen by upwards of twenty times in the space of the past 12 months, a move that has taken the market capitalisation close to A$400mln, and counting.
On Monday 11 January alone, the shares put on 23%, and the market really seems have swung behind the story.
But note, that although Vulcan appears fairly unique amongst listed stocks, there is an analogue in the UK.
Cornish Lithium has been intricately involved in geothermal drilling in Cornwall, to the extent that its successful search for brines there follows in the footsteps of a major new geothermal well that was completed last year.
The company has also completed its own drilling and testing of geothermal waters and is now actively looking at processing methods, ahead of building Europe’s first lithium pilot extraction plant– a project that has in turn been grant funded by the UK Government.
This pilot lithium extraction plant is being constructed in collaboration with Geothermal Engineering Ltd with the aim of producing a lithium hydroxide product with – you guessed it – “a net zero carbon footprint.”
And what’s more, this project too, like it’s analogue in Germany, is government-backed
Cornish Lithium is also targeting hard rock deposits, and recently invested in the only known process that does not involve roasting of lithium bearing mica minerals – the process developed by Australian company Lepidico.
That said, the brine remains very much at the core of the company’s vision.
So, taking all this into consideration, it’s hardly surprising that new investors keep turning up at Cornish Lithium’s door. How much could the company raise now if it wanted to? That’s a pure hypothetical since the last raise brought in £5.2mln in new money.
But given that there’s so much opportunity and the market has suddenly realized the significance of what’s going on, maybe the company will seek to raise further funding in the near future.
But note that when new money has previously come into Cornish Lithium, the shares have always been sold at a higher price than was set in the round before. That’s a trend that looks set to continue, and if the success of Vulcan is anything to go by, the true worth of Cornish Lithium is a lot higher than any marked-to-market valuation currently in use by existing investors.
These are exciting times.