Alphamin Resources‘ new Mpama South project, which is next to the prolific, currently producing Mpama North mine, is expected to deliver about 7,200 tonnes of contained tin per year from 2024.
Once Mpama South is in operation, the combined production at the high-grade tin deposits of Mpama South and Mpama North will increase Alphamin’s annual tin production to approximately 20,000 tonnes.
The Mpama South project is on track to be commissioned according to schedule in December 2023. Overall project completion is at 18.6%, and 84.3% of the procurement requirements have been finalized and ordered. The project is looking like it’s coming in on budget, and is not expected to exceed its total cost estimate of USD116-million.
The fact that Alphamin managed to continue exploration and development projects amid extremely challenging global fundamentals is a glowing testimonial for the company’s focus and implementing its growth strategies amidst global volatility.
When both Alphamin projects operate at full capacity, the company is expected to push around 7% of the world’s mined tin production into a shrinking supply landscape.
And with demand anticipated to increase as the world’s thirst for new technologies and green energy become even more acute in the future, a third Alphamin deposit is on the cards.
Drilling for extension well advanced
In fact, drilling for resource extensions to Mpama North and Mpama South is well advanced and Alphamin’s vision of becoming one of the world’s largest sustainable tin producers is taking shape.
Over and above the drill extensions at the Mpama deposits, the company is actively exploring for more tin deposits on its licence areas. This was reiterated in Alphamin’s third quarter results where management indicated that “Resource expansion drilling, resource confidence drilling and new deposit discovery drilling progressed well during the third quarter with 9,094 metres drilled.”
The Bisie Ridge Phase 1 new discovery drilling campaign saw 2,355 metres drilled completing 17 holes in the quarter. Minor visual cassiterite was intersected in two drillholes while prospective associated chlorite alteration was intercepted in multiple other drillholes. The company is awaiting the assay results for these drill targets.
The Phase 1 campaign has been accelerated with ~90 drillholes planned in fences across the Bisie Ridge on six highly anomalous targets, following which a Phase 2 campaign will delineate any discoveries or else in-fill the most prospective targets.
The Mpama South Phase 6 drilling campaign is the largest single campaign to date on the licence and aims to both in-fill and extend the Mineral Resource announced on 30 May 2022.
An update to that Mineral Resource is expected in December 2022. Based on the success of Phase 6 and the still open-ended mineralisation showing visual cassiterite and good grades from already received assays, a Phase 7 resource extension campaign will continue upon completion of Phase 6.
According to a recent statement by Alphamin, the Mpama North Phase 2 drilling campaign progressed well during the quarter. Visual intercepts of cassiterite were intersected on the southern and eastern extensions of the orebody – many on current mining levels.
These intercepts contain the visual mineralisation style characteristic of the Mpama North mine and, although less intensely mineralised than elsewhere, should provide valuable blending material for the deeper high-grade zones of Mpama North, thus potentially extending the life of mine and maintaining current production levels for longer.
Tin’s future looks promising
Although tin prices have dropped substantially over the last two months, its future looks promising. The tin market size was about 387 kilo tons in 2021. Various projections expect the market to register a Compound Annual Growth Rate (CAGR) of more than 2.5% between 2022 and 2027. Moreover, with respect to Alphamin in particular, even when tin prices were down at $12,000/t, the company was able to produce profitably. At these tin prices, not only is Alphamin able to generate healthy margins, but fewer new entrants are enticed to restart production.
In 2021, demand for tin in electronics eclipsed supply, resulting in a 90% plus increase on the London Metals Exchange (LME). However, growth is expected to happen at a much more gradual rate over the next five years.
In the medium term, surging demand for tin is expected to be driven by an increase in the sales of electric vehicles and increasing applications in the electrical and electronics industry.
Tins applications in an increasingly technology driven economy is, amongst others, solder in electronics, tin plating, chemicals, specialised alloys, and more recently, it is being used as a coating on the anodes in lithium ion batteries.
Soldering the fastest-growing application
Tin is an essential component in solder, as it melts and adheres common base metals at temperatures well below their melting points. Tin lead wire solder is often employed in electronics when heat-sensitive components melt, shatter, or distort at high temperatures. The advantage of tin-lead solder is its resistance to corrosion. They are also used to join pipelines and electrical circuits.
On a PCB, solder is a metal alloy that serves as an electromechanical connection between the components and the substrate and provides electrical continuity to the circuit board. Currently, the electronics industry is the major end-user industry that highly utilises tin-based solders. Rising demand in the electronics industry is boosting the demand for tin-based solders.
The electronics and electrical industries use solders containing 40-70% tin, which provide strong and reliable joints under a variety of environmental conditions. At present, the majority of the assemblers are using patented tin-copper-based solders.
Owing to all these factors, soldering is expected to be the fastest-growing application over the next five to ten years.
Electronics systems in electric vehicles (EVs) are another growing source of demand. Automotive manufacturers use tin in coatings, bearings, and brake pads as well as batteries.
Good results in a bullish outlook
In the first week of October, Alphamin released solid third quarter results, while globally analysts maintain a bullish outlook for tin. Fitch Solutions is forecasting an average of USD42,000 per tonne in 2022, while dropping to USD38,000 per tonne in 2023. They cite weak Chinese demand as the main reason for the dip in price.
Fitch analysts expect tin prices to continue trending higher over the long term with demand outpacing supply. They have previously issued a tin price forecast for 2030 of USD35,500 per tonne.
Algorithm-based forecasting website Wallet Investor is bullish in its long-term outlook for the market, with its tin price forecast for 2025 reaching USD43,436 per tonne by the end of the year, up from USD21,945/t at the end of 2022.
Alphamin’s quarterly results
Alphamin contained tin production of 3,139 tonnes for the last quarter was in line with the previous quarter and above market guidance of 3,000 tonnes.
A highly mineralised area underground, not previously included in the mineral resource or mine plan due to its structurally complex nature, was successfully mined and processed during the quarter. This area delivered ore at good tin grades but contained high levels of sulphides which impacted processing recoveries.
Sales volumes were in line with production at an average achieved tin price of USD22,011/t and weighted towards the back end of the quarter. Year-to-date contained tin production of 9,380 tonnes has exceeded the forecast rate to achieve market guidance of 12,000 tonnes for the year ending December 2022. The company expects contained tin production and sales of approximately 3,000 tonnes for the quarter ending December 2022.
In its results the company remains of the opinion that global tin supply is likely to be constrained during the next five years while demand for tin is expected to increase.
The ITA is of the opinion that demand for the metal is likely to pick up moderately in the final quarter of 2022.
