Interactive Investor

Cornish Metals becomes latest IPO on AIM, Kanabo triples on debut 

16th February 2021 15:24

Graeme Evans from interactive investor

Two new company flotations had a great reception, justifying their decision to brave the public markets. 

Cornish Metals (LSE:CUSN) put the once-dominant mining region on the stock market map today when its AIM debut drew investors excited by its potential for supplying metals for the tech sector.

The company believes its United Downs project in Cornwall is one of the most exciting in the country, given the chance to find the copper, tin and lithium that will be fundamental to the green economy in the form of e-vehicles, battery power and renewable energy.

Its shares were today priced at 7p after an oversubscribed placing among institutions raised £8 million rather than £5 million originally hoped for. The shares were later trading at 9.67p in a fast start for the company, which is also listed on the TSX Venture Exchange in Canada.

The IPO proceeds will be used to fund exploration drilling from March or April at the United Downs copper-tin project and near to South Crofty, which was once the most important tin project in the UK.

The company, which used to be known as Strongbow Exploration, completed its acquisition of South Crofty and United Downs in 2016, when it also gained additional mineral rights covering 15,000 hectares across Cornwall.

It also has an agreement giving privately-funded Cornish Lithium the right to explore for lithium in brines and associated geothermal energy on all mineral rights owned by Cornish Metals. 

Cornish mining: not like the old days

There are over 2,000 documented mines in Cornwall, but the company says there has been very little modern exploration since discovery of four new mines in the 1960s.

Cornwall was regarded as the mining centre of the world in the 18th century, but copper prices crashed in 1866 and with new resources being discovered elsewhere only a small number of mines survived by the late 19th century.

Now copper is much in demand as the shift to electric vehicles, roll-out of 5G networks and growth in the internet of things continues.

Market analysts point to a growing deficit of copper supply from 2025, as well as for the lithium market from 2025 to 2027 and from the tin market over the next four to five years. 

There is also no primary tin production in Europe or North America and security of a supply is a key issue with tin being listed as a critical mineral by the US government.

Chief executive Richard Williams said last month: “United Downs is one of the most exciting exploration projects in the country.

“The commencement of a drilling programme will mark the start of a strategy to create a mining company with a Cornwall focus. There is an opportunity for Cornish Metals to become a domestic source of metals to the UK's high-tech sector, where copper, tin and lithium are important."

Kanabo share price triples on debut

Cornish Metals was not the only stock market newcomer flourishing on its debut, with Kanabo Group (LSE:SOP) rocketing on London's main market from an issue price of 6.5p to more than 20p.

The Israel-based company, which is focused on the distribution of cannabis-derived products for medical patients, is the first from the fast-growing sector to IPO on the London Stock Exchange after the City regulator relaxed rules on such listings last year. Kanabo secured £6 million through its oversubscribed fundraising. 

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