UK lithium group warns it could go bust without £10mn cash injection

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UK lithium project developer Cornish Lithium has warned that it could go bust if it fails to secure a £10mn cash injection by next month.

The private company, which aims to produce the battery metal in Cornwall, needs to secure short-term funds to give it breathing space to obtain a longer term financing arrangement.

“All of the scenarios modelled require the receipt of further funding by July 2023,” it said in its annual accounts.

“Without this, a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”

Cornish Lithium is one of the UK’s few groups aiming to produce the element, which is a vital material in electric car batteries.

Its problems come as the UK struggles to attract investment in battery plants and the US and the EU grow increasingly serious about securing supplies of critical minerals following Russia’s invasion of Ukraine.

The UK currently produces none of its own lithium, with most of the world’s supply coming from Australia and Chile. Cornish Lithium hopes to produce the element by 2026.

The company’s chair Ian Cockerill criticised the UK government for insufficient support for the battery supply chain, despite issuing an updated critical minerals strategy in March emphasising the need to foster domestic resource projects.

“The UK is currently being left behind in this global race to secure the industries that will drive the energy transition,” he said. “More support is needed to counteract the effect of the US and EU subsidies that are being offered to help attract the investment required in the UK.”

Cornish Lithium is banking on completing a deal to raise £10mn in cash from existing investors, including TechMet, a Dublin-based and US government-backed investment vehicle. It is also in “advanced negotiations” with potential new investors as part of a wider refinancing.

The group has managed to raise £20.8mn to date through angel investors, crowdfunding and government grants, and a further £18mn from TechMet, which also counts commodity trader Mercuria as an investor, according to a company presentation.

Founded in 2016, Cornish Lithium aims to develop lithium sources in the UK using two unconventional methods. The first aims to extract the mineral from hard rock by repurposing an old kaolin pit at Trelavour, while the second hopes to extract it from hot brines underneath Cornwall’s granite.

The company acknowledged in its accounts that its projects rely on “new, highly innovative and unproven technologies” to succeed.

The company recorded a £6.6mn loss in 2022, ending the year with £8.1mn in cash at the end of December.

It would probably need hundreds of millions of pounds to advance its projects and has previously floated the idea of listing in London.

Other lithium producers attempting to use novel extraction methods have also faced setbacks recently. Shares in Australian-listed Lake Resources fell by a quarter last week after it revealed that its flagship project in Argentina would be delayed by six years and cost about twice as much.