Mr. Ken Armstrong reports

CORNISH METALS REPORTS POSITIVE PRELIMINARY ECONOMIC ASSESSMENT RESULTS FOR SOUTH CROFTY TIN PROJECT

Cornish Metals Inc. has released a positive independent preliminary economic assessment (PEA) for its 100-per-cent-owned-and-permitted South Crofty tin project located in Cornwall, United Kingdom.

The PEA validates South Crofty's economic viability, producing a base case after-tax net present value (NPV) of $201-million (U.S.) and internal rate of return (IRR) of 29.8 per cent, and confirms the project's potential to be a low-cost and long-life tin mining operation, with a current 14-year life of mine (LOM). South Crofty is expected to produce a clean, high-grade tin concentrate and to be an important tin producer in Europe, supplying into the growing demand for this critical metal that is essential for the energy transition.

Highlights:

• Attractive project economics and financial metrics:
  • $201-million (U.S.) after-tax NPV (at an 8-per-cent discount) and 29.8-per-cent IRR at base case tin price of $31,000 (U.S.)/tonne;
  • $235-million (U.S.) after-tax NPV (8-per-cent discount) and 32.8-per-cent IRR at the current $32,625 (U.S.)/tonne LME (London Metal Exchange) tin price;
  • Capital payback period of three years after-tax;
  • Total after-tax cash flow of approximately $626-million (U.S.) from start of production, peaking at $82-million (U.S.) in the second year of production;
  • Average annual earnings before interest, taxes, depreciation and amortization (EBITDA) of $83-million (U.S.) and 62.1-per-cent EBITDA margin in years 2 through 6.
• Considerable tin production with upside opportunities:
  • 49,310 tonnes of tin metal in concentrate produced over a 14-year LOM;
  • Average annual tin production of over 4,700 tonnes for years 2 through 6 (approximately 1.6 per cent of global mined tin production);
  • Peak tin production of over 5,000 tonnes in year 4;
  • Average LOM processed head grade of 1.83 per cent tin, upgraded from an average mined grade of 0.94 per cent tin through use of X-ray transmission (XRT) ore sorting and dynamic dense media separation (DMS);
  • Growth opportunities from additional in-mine and near-mine exploration with the potential to materially extend the mine life and increase production.
• Permitted project with low capital intensity and unit costs:
  • Preproduction capital requirement of $177-million (U.S.);
  • Fully permitted project with existing mine infrastructure, mining permission through 2071 and full planning permission to construct a processing plant to recover tin concentrate;
  • LOM average all-in sustaining cash cost (AISC) of $13,661 (U.S.)/tonne of payable tin, positioning South Crofty as a low-cost tin producer;
  • Average AISC of $12,375 (U.S.)/tonne of payable tin for years 2 through 6.
• Sustainable mining operation with strong ESG (environmental, social and governance) credentials:
  • Operations will use modern, trackless, mechanized underground mining methods and latest tin processing technologies;
  • Low-impact underground operation with paste backfilling of process tailings into existing, historic mine workings;
  • Use of 100 per cent renewable electricity supply and exploring options for renewable power generation;
  • Preference for using local supply chains, supporting the local economy, and building on the existing capability and knowledge still present in Cornwall;
  • Potential to directly employ up to 320 people with permanent high-skilled and well-paid jobs, and create up to 1,000 indirect jobs.
• Cornish Metals will host a PEA presentation on May 1, 2024, at 3 p.m. London time. Please register on-line.
• A technical report prepared in accordance with National Instrument 43-101 will be filed on SEDAR+ within 45 days of this announcement.

Ken Armstrong, interim chief executive officer and director of Cornish Metals, stated: "Congratulations to Cornish Metals' technical team on completion of this preliminary economic assessment of the South Crofty tin project. This PEA is an important milestone for Cornish Metals, and our goal of bringing responsible tin mining back to Cornwall and the United Kingdom. South Crofty is a strategic asset as tin is recognized as a critical metal by the United Kingdom and other national governments, while there is currently no primary tin production in Europe or North America.

"Most often, PEAs are completed prior to entering the mine permitting process. South Crofty has the advantage of having already cleared these hurdles, and benefits from an existing mine permit and process plant construction permissions, as well as existing mining, transportation and renewable energy infrastructure."

Owen Mihalop, chief operating officer of Cornish Metals, stated: "The PEA results are compelling, with a posttax NPV [8-per-cent] of $201-million and IRR of about 30 per cent at a tin price of $31,000 (U.S.). This represents a strong foundation for further evaluation of the project, enabling the company to move forward with additional preparation work and progress towards a construction decision, with planned first tin production in 2027.

"The low all-in sustaining cost of about $13,700 (U.S.) per tonne of payable tin is an important metric and potentially positions the project within the lowest quartile of the global tin industry cost curve. We believe the opportunities for mineral resource expansion at South Crofty, and beyond, are significant, and this will come into focus when the current mine dewatering and shaft refurbishment project is complete by Q3 2025, and new mineral resource definition and exploration drilling can be undertaken in parallel with a potential construction decision for the project."

The evaluation at a PEA-level of study includes indicated and inferred blocks, and, consequently, it is not possible to define a mineral reserve. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized.

Sensitivity analysis

A sensitivity analysis was performed on the base case pretax NPV to examine project sensitivity to metal prices, capital and operating costs, grades and, process recoveries.

South Crofty project economics are well supported at a range of tin price assumptions and discount rates. The PEA base-case tin price of $31,000 (U.S.)/tonne provided by Project Blue, a global consultancy that provides market intelligence on critical materials for the energy transition, reflects anticipated supply shortfalls that will drive the market into a deficit from later this decade.

Project description

South Crofty is a former-producing tin mine located in the historic central tin mining district of Cornwall, United Kingdom. The current project comprises the former-producing South Crofty and Dolcoath mines, which were two of the most significant mines in the Cornish tin mining district. South Crofty has over 400 years of operational history until its closure in March, 1998. The project is wholly owned by Cornish Metals.

South Crofty was granted surface and underground development planning permissions by Cornwall Council, the local planning authority, in 2011 and 2013. The underground mining permissions are valid until 2071 and cover a project area of 1,490 hectares with a working depth of 1,500 metres below surface. Cornish Metals also has approximately 7.65 hectares (18.9 acres) of surface ownership that include the area covered by surface planning permission to construct a processing plant facility.

Current infrastructure at South Crofty will help support any future development of the project, and includes office and warehouse buildings, the partially refurbished New Cooks Kitchen (NCK) shaft, a recently built and commissioned water treatment plant, and a modern decline that extends to a depth of 120 metres. NCK shaft is one of the five usable main shafts serving the mine workings, and, historically, was the main service and hoisting shaft. More recent infrastructure advancements, including the continuing refurbishment and servicing of shafts, and construction and operation of the mine water treatment plant, have been implemented to support access into the historical mine. Refurbishment of NCK shaft will significantly improve functionality of the shaft, enable larger equipment to access the mine at an earlier stage in its redevelopment and ensure continued safe operations as access to underground mine workings is regained.

The project site has excellent transportation and power infrastructure, including the A30 Trunk Road located less than one kilometre to the north and the national railway line that borders the site to the south. There are modern active port facilities at Falmouth approximately 17 km to the southeast. The project is located within an industrial area with highly developed power supply and regional distribution, with two 33 kilovolts (kV) overhead power lines which cross the project area, and a dedicated 11 kV power supply to NCK shaft.

Economic benefits to the U.K. and local communities

Cornwall has a strong history of mining with significant mining capability and knowledge still present in the local work force. With a local urban population of approximately 59,000, there are sufficient local human resources to staff many skilled, unskilled or partially skilled jobs at a mine.

The PEA indicates that development of South Crofty could provide substantial economic benefits at the local and national levels, including:

• During the preproduction mine development period, the project is anticipated to generate approximately 175 direct jobs, and additional employment through contracted construction of surface and underground facilities;
• During operations, the mine is expected to directly employ up to 320 people, with permanent high-skilled and well-paid jobs;
• The project has potential to generate up to 1,000 indirect jobs with local and national contractors, and suppliers of products and services;
• Using a base case tin price of $31,000 (U.S.) per tonne, the project is estimated to pay total U.K. corporation taxes of 102 million pounds sterling (approximately $127-million (U.S.)) over the LOM. Additional government revenue will be generated by employee income tax and national insurance contributions;
• The company will provide full training and skills development where necessary in order to maximize employment of local residents at the project;
• Environmental benefits through the continuing treatment of the South Crofty mine water being discharged into the Red River, having a positive effect on the quality of the river downstream of the discharge point.

Mineral resource and mineralized material mined

The mineral resource at South Crofty is divided into two areas: the Upper Mine mineral resource, which is predominantly polymetallic tin-copper-zinc mineralization hosted in metasedimentary country rock, and the much more substantial Lower Mine mineral resource which is tin-only and hosted predominantly.

The PEA indicates that approximately six million tonnes of mineralized material, at an average grade of 0.97 per cent SnEq (tin equivalent), is amenable to mining, and is based on the National Instrument 43-101 and JORC (Joint Ore Reserve Committee) (2012) compliant mineral resource estimate (MRE) published by Cornish Metals in October, 2023, as detailed in the table entitled "South Crofty summary (JORC 2012) mineral resource estimate."

Mining methods

The South Crofty mine will be accessed via the NCK shaft, which will provide initial access to the existing mine levels and new stoping areas. NCK shaft will serve as primary access to the mine for personnel and materials, as well as hoisting of material for transfer to the processing plant, which will be located adjacent to the decline.

The mine design will utilize existing development where possible, which will be rehabilitated or slashed for larger equipment, to access production areas. New internal ramps will be developed providing mechanized access to other levels. The ramps are driven at minus-15-per-cent grade and four metres wide by four metres high to allow for truck access, ventilation and services. Sections of levels to be used for services distribution and ventilation will only require rehabilitation. Lateral access drives will be mined from slashed levels, haulage ramps, and access ramps to stopes and stope access development. Areas that are being utilized for ventilation, services or limited access will be rehabilitated only.

Annual mined material of up to approximately 500,000 tonnes (approximately 1,370 tonnes per day) is planned with longhole stoping mining methods selected. Sublevel longhole stoping is the main mining method and is well suited given the excellent ground conditions, average stope dip of 70 degrees, continuity along strike and vertically for at least 20 metres. The method also allows for selectivity of mining where required.

The mine generally consists of blocks of stopes separated by regions of lower-grade material and/or historical workings. Mining direction is generally extracted in a top-down sequence, retreating along access.

Process plant

The historic Wheal Jane concentrator, incorporating key metallurgical improvements made between 1991 and 1998, as well as results from the company's 2023 metallurgical test program, was utilized as the basis for developing the process plant flowsheet, including incorporation of a preconcentration plant. The preconcentration plant consists of XRT ore sorting and DMS for all plus-0.85-millimetre (mm) material, with fines reporting downstream without preconcentration. Preconcentration reduces the size and cost of the downstream concentrator considerably and draws on the strengths of both preconcentration technologies, XRT being more effective on coarser-size fractions and DMS on the finer size fractions.

The 2023 metallurgical test program tested the suitability of XRT preconcentration and DMS, and provided representative material to verify historic production records, operating data and flowsheet. The process plant will include:

• Underground primary single-stage crushing;
• Two-stage secondary crushing and XRT/DMS separation;
• Tertiary crushing of XRT products to produce nominal minus 15 mm material for grinding;
• Open circuit rod mill followed by closed circuit ball mill with screens;
• Provision for a flotation section to process polymetallic material from year 4 onward;
• Classification and primary gravity concentration using a combination of shaking tables and multigravity separation (MGS);
• Regrinding of primary gravity tailings followed by secondary gravity concentration using a combination of shaking tables and MGS;
• Tertiary ultrafine gravity separation using a combination of Falcon continuous concentrators and MGS;
• Tin dressing to remove sulphides from gravity concentrates and filter the final product for shipment for smelting.

Mine backfill

South Crofty will be a low-impact underground mining operation with no surface tailings storage. Process tailings will be backfilled as a paste into existing void spaces left by historic mining.

The South Crofty tailings material is a typical gravity/floatation processing product. The proportion of fines and material size range means that the whole tailings stream is suitable for paste backfill, with samples achieving suitable strength and target densities for reticulation.

The backfill plant has been designed and sized to meet the requirements of the mine with the intent of filling existing void space from previous mining prior to filling new mining voids created by current operations. In-cycle backfill is not required, and there is no requirement to undercut paste backfilled areas in the current mine plan.

The mine production is estimated to produce approximately 2.2 million cubic metres of paste backfill over the LOM.

The backfill plant will be located adjacent to the water treatment plant and the process plant, to allow for shared services and simplified operations. The backfill plant consists of four main sections: an external thickened tailings receiving tank; filtration equipment; the cement handling system; and the mixing system.

Production profile

The production profile at South Crofty is based on annual throughput of approximately 500,000 tonnes and annual processing of approximately 250,000 tonnes at an average tin grade of 1.83 per cent (1.88 per cent tin equivalent). LOM tin production is expected to total 49,310 tonnes (50,320 tonnes of tin equivalent), averaging over 4,700 tonnes of tin per year in the first five years post ramp-up (years 2 to 6) and peaking at over 5,000 tonnes in year 4.

The use of preconcentration through XRT and DMS at the front-end of the processing plant materially reduces the volume of material processed and required for backfilling to approximately half of the material mined. The impact to grades is also significant, with LOM processed tin grades averaging 1.83 per cent, almost double the average mined grade of 0.94 per cent tin. Processed tin grades in years 2 through 6 average above 2 per cent.

Capital and operating costs

The preproduction capital cost of the South Crofty project is estimated to be $177-million (U.S.). The LOM sustaining capital is estimated to be a further $54-million (U.S.), comprising mine capital development, a process plant upgrade for polymetallic material in the fourth year from start of production and processing plant sustaining capex (capital expenditures).

The South Crofty underground mining operation is estimated to have a low total unit operating cost, averaging $103 (U.S.) per tonne of mineralized material, totalling $611-million (U.S.) over the 14-year LOM.

Average LOM net unit cash costs, inclusive of treatment charges and byproduct credits from copper and zinc are estimated to be $12,705 (U.S.) per tonne of payable tin sold. The AISC is estimated at $13,661 (U.S.) per tonne, potentially positioning South Crofty within the first quartile of the global tin industry cost curve.

Cash flow generation

South Crofty's estimated low operating costs and high-margin tin sales are expected to support strong after-tax free cash flow generation, totalling approximately $447-million (U.S.) across the project ($62-million (U.S.) from start of production) and peaking at $82-million (U.S.) in the second year of production.

Opportunities and upside options

The PEA is based on the latest South Crofty MRE updated in late 2023 that produced a significant increase in contained tin in the indicated category of the lower mine (see Oct. 30, 2023, news release). Additional in-mine exploration provides the opportunity to extend South Crofty's mine life beyond the current 14-year LOM. In addition, near-mine exploration at targets such as the Wide formation provide further potential to add to the existing mineral resource base and the scope to increase production rates.

Next steps

During the remainder of 2024, the company intends to continue with its published work program, including, as a top priority, the simultaneous dewatering of the mine and refurbishment of New Cooks Kitchen shaft.

Further technical work is also under way to advance the project toward a feasibility study, including detailed engineering of the processing plant. This work will inform discussions with qualified local contractors and identify suppliers for long-lead-time items, in order to enable timely execution of the project construction schedule once a construction decision is taken.

Qualified persons

The qualified persons for the PEA are Dominic Claridge, FAusIMM, principal mining engineer (AMC); Nick Szebor, MCSM, CGeol, EurGeol, FGS, general manager (Maidenhead, U.K.) and principal geologist (AMC); Mike Hallewell, FIMMM, FSAIMM, FMES, CEng (independent consultant); Barry Balding, PGeo, EurGeol, technical director -- mining advisory, Europe (SLR); Angela Collins, Dip BA MRTPI, principal planner (SLR); Steve Wilson, ACSM, CEng, FIMMM, managing director: Europe (P&C); and Dr. Barrie O'Connell, ACSM, FIMMM, CEng (independent consultant). All are qualified persons under National Instrument 43-101 and competent persons as defined under the JORC Code (2012).

All QPs have reviewed the technical content of this news release for the South Crofty deposit and have approved its dissemination.

A technical report disclosing the PEA in accordance with the requirements of NI 43-101 will be prepared by AMC on behalf of Cornish Metals and filed on SEDAR+ within 45 days of this news release. Mr. Claridge, Mr. Szebor, Mr. Hallewell, Mr. Balding, Mr. Wilson, Mr. O'Connell and Ms. Collins consent to the inclusion in this announcement of the matters based on their information in the form and context in which it appears.

This news release has been reviewed and approved by Mr. Mihalop, MCSM, BSc (honours), MSc, FGS, MIMMM, CEng, chief operating officer for Cornish Metals, who is the designated QP for the company.

About Cornish Metals Inc.

Cornish Metals is a dual-listed company (Alternative Investment Market and TSX Venture Exchange) focused on advancing the South Crofty high-grade, underground tin project through to a construction decision, as well as exploring its additional mineral rights, located in Cornwall, United Kingdom.

We seek Safe Harbor.