Cornish Lithium, a UK-based lithium project developer, has warned it may go bankrupt if it does not secure a £10mn injection of cash by the end of next month.
The private company that aims to manufacture the battery metal in Cornwall needs to secure some short-term funding to allow it to breathe and negotiate a long-term financing agreement.
In its annual report, it stated that “All the scenarios modelled will require additional funding by July 2023.”
Without this, there is a material doubt that could cast significant doubts on the ability of the group to continue as an ongoing concern.
Cornish Lithium, one of the UK’s few groups that aims to produce this element which is vital for electric car batteries.
The UK is struggling to attract investment into battery plants, while the US and EU are becoming more serious about securing critical mineral supplies following Russia’s invasion in Ukraine.
The UK does not produce any lithium at present. Most of the world’s lithium is imported from Australia and Chile. Cornish Lithium plans to produce lithium by 2026.
Ian Cockerill, the company’s chairman, criticised the UK Government for not providing enough support to the battery supply chain. This is despite the UK government having released an updated critical minerals policy in March that stressed the importance of fostering domestic resource projects.
He said that the UK was currently falling behind in the global race to secure industries which will drive the energy transformation. “More assistance is required to counteract US and EU subsides that are offered to help the UK attract the investment it needs.”
Cornish Lithium hopes to close a deal with existing investors including TechMet, an investment vehicle backed by the US government and based in Dublin. It is in “advanced discussions” with new investors, as part of an overall refinancing.
According to a presentation by the company, the group has raised PS20.8mn through angel investors and crowdfunding, as well as government grants. TechMet also counts commodity traders Mercuria among its investors.
Cornish Lithium was founded in 2016 with the aim of developing lithium sources in UK by using two unconventional methods. The first method aims to recover the mineral by repurposing a kaolin mine at Trelavour. While the second method hopes to obtain it from hot salts beneath Cornwall’s granite.
In its financial statements, the company admitted that it relies on “new technologies which are highly innovative and have not been proven” in order to be successful.
The company reported a loss of £6.6mn in 2022. It ended the year with £8.1mn cash at the end December.
It has floated before the idea of listing its shares in London.
Recent setbacks have been experienced by other lithium producers who are trying to use new extraction methods. The shares of Australian-listed Lake Resources dropped by a quarter after the company revealed that it would delay its flagship project in Argentina by six years, and will cost twice as much.