Examining Alphamin’s financial growth and strategic expansion
The global tin market is poised for a period of heightened volatility and growth, spurred by various supply and demand factors. With respect to supply, Alphamin Resources (TSXV:AFM) has emerged as one of the world’s most significant tin producers, particularly noted for operating the high-grade Bisie tin mine in the Democratic Republic of Congo. Additionally, the company’s ability to generate considerable free cash flow, while continuing to expand resources renders it one of the most financially robust tin mining companies globally.
Alphamin Resources reports strong financial performance
In the first quarter of 2024, Alphamin Resources reported a substantial 156% increase in EBITDA, reaching US$52.0 million, driven by a clearance of sales backlog and a 7% rise in tin prices. This surge in financial performance comes despite operational challenges, including a 4% decrease in ore grade and logistical disruptions due to heavy rainfall. Nevertheless, the company managed to slightly increase tin-in-concentrate production to 3,142 tonnes and more than double its sales volume compared to the previous quarter.
Adding to the strategic developments at Alphamin, the company is in the final stages of commissioning its Mpama South expansion. On the 29th of April, Alphamin announced that it had introduced the first ore successfully and that tin concentrate production was imminent.
The company plans to ramp up concentrate production from Mpama South during May 2024 and has confirmed that the underground mine is ready to feed the plant at the targeted rates. If achieved, Alphamin’s annual tin production capacity will expand from 12,500 tonnes to 20,000 tonnes. This expansion positions Alphamin to further capitalize on its role as a major player in the global tin market, where it contributed about 4.0% of the world’s mined tin in 2023.
Rising demand amidst supply challenges: Tensions in key tin-producing regions
The global tin market itself is experiencing a resurgence in demand, especially from the electronics sector where tin is crucial for soldering in circuit boards. This demand is illustrated by the recovery in semiconductor sales, which surged by 16% year-on-year as of February 2024, reflecting a broader recovery in the electronics market.
This increased demand coincides with tightening supplies, exacerbated by geopolitical tensions and logistical disruptions in key producing regions like Indonesia, Myanmar, and now, Goma.
Artisanally mined tin flows across the Goma border crossing with Rwanda, a part of the country that has fallen under the control of the M23 rebel group. While to date, only informal producers have been affected, The International Tin Association has noted potential delays in mineral shipments as they are rerouted to avoid conflict zones, adding another layer of complexity to the already stressed supply chain, resulting in higher tin prices and increased reliance on stalwart companies like Alphamin.
Market prices and speculative activity
While listed commodities tend to add transparency and assist trade flow, the often downside of listed metals is that prices become subject to speculative activity. As a LME-listed metal, tin prices fall into this category.
As tin prices have reached near two-year highs, the price of tin surged to $33,130 per metric ton in early April 2024, underscoring the commodity’s increased market value amidst supply threats and robust demand. This price increase is further supported by speculative buying, with investment funds showing bullish positioning akin to the peaks seen during the super-charged price rallies of the past. In addition to speculative buying, investors seeking exposure to the tin bull run are looking to companies with liquidity, like Alphamin (TSX.V: AFM), which has seen its share price rally since early March, rising from 86cps to 125cps in less than two months.
Conclusion and market outlook
Looking ahead, the tin market is expected to remain under pressure from both supply constraints and burgeoning demand, particularly from sectors aligned with green energy and advanced technologies. While the expansion of Alphamin’s Mpama South project is a positive development, the overall market balance will likely continue to be challenged by geopolitical issues and logistical disruptions across key producing regions.
