By Dr. Michael Green
The latest news is that Corcel has raised new funds to accelerate its endeavours in battery metals and flexible grid solution via a mix of equity and debt. Some £300,000 has been raised by issuing shares at 1.25p (with a 1-for-2 warrant exercisable at 2p over the next two years). Plus, there is £300,000 in debt finance provided by Align Research.
This funding should be seen as a minimal dilution bridging financing which provides the money for getting the Burwell Project through planning to a shovel ready status as well as funding the ongoing costs of getting a Mining Licence granted for Mambare, which would take this project out of the exploration phase and into mining. Either of these moves should result in a big inflexion point where obvious value would be added for all to see. Burwell’s big news could be as early as April 2021, with the mining licence for Mambare hopefully in H1 2021 – but this is rather in the lap of the gods.
As the Chief Executive Officer, Scott Kaintz explained “Initiatives begun in 2020 are now starting to bear fruit as we make material advancements both at Burwell here in the UK and at Mambare in PNG supporting our overarching strategy of participating in the decarbonization of the global economy. The funds secured today are designed to minimize dilution at current levels as we approach multiple significant value inflection events.”
Corcel is the old Regency Mines which is best known for its vast Papua New Guinea nickel laterite project Mambare which on its own was once valued at £40 million. It has all been a bit quiet there over recent years as the company has gone through substantially restructuring. We believe that the decks have now been cleared ready for a period of substantial growth. With James Parson now at the helm, we believe investors can look forward to the creation of a highly relevant vehicle. With this latest funding, it does look as though the real magic is really about to start now.
On the flexible grid solutions side, the flagship project is the 100%-owned Burwell Project which is a 100MW (50MW of energy storage and 50MW of solar) project located outside of the town of Burwell in Cambridgeshire. Already the land lease heads of terms are in place and the grid connection is secured. The project owns last the 100MW 132KkV connection available at the substation there and there are multiple expansion options including solar and storage. Planning could be gained as early as April 2021 making the project shovel ready. this would be a pretty big inflexion point as at that stage the project could then be sold, funded or new partners could be brought in.
The company is being positioned to really benefit from expected price hike in battery metals. It has got to be said that the transition to a low carbon world has begun in earnest. Storage is needed for renewable energy to be a viable and stable source of energy, and hence the growing clamour for batteries and battery metals where a supply crunch is expected in the mid-2020s onwards with potentially big price hikes.
All the signs are that Mambare could be poised to become a direct shipping ore (DSO) nickel supplier to large Chinese market for stainless steel production. Truth is that the Mining Lease could be awarded within the next 6 months allowing a DSO operation funded by a joint venture partner. Banged together with Wowo Gap, another big PNG nickel project that looks likely to come to Corcel, this could spell some right old M&A action.
The Wowo Gap Nickel Cobalt Project is located 250km from Mambare in PNG but is actually 100%-owned by Resource Mining Corporation (RMI). However, Corcel owns a A$4.76 million senior debt position in RMI which is repayable within the next 12 months and moves look to be on the cards by which Corcel would gain Wowo Gap. These days, when nickel is so in demand, that would make for big news. In one fell swoop, Corcel would double its nickel resources, which could spark a material stock increase in our view.
Corcel does not really control the pace of play at Woeo Gap. However, last week we learnt that RMI acquired a controlling interest in a nickel project in the Kabulwanyele Nickel Project (KNP) in Tanzania. Such a move looks as though the RMI board has found another asset to put into the business which suggests that all the pieces are being put in place for the end game.
We updated our coverage of Corcel in January 2021 with a Conviction Buy stance and a target price of 3.19p with the shares then standing at 1.325p, and we are more than happy to reiterate our stance.
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