Alphamin Resources’ (TSXV:AFM) (JSE: APH) tin project in the DRC is one of the three top mining projects in Africa to watch in 2021.
Despite the challenges of 2020, mills across the world continued crushing ore. In a year when bulls became bears within a breath, mining became more important than ever. The march to a new future is led by innovation and technology. A better, more sustainable world demands resources, and these resources are either cultivated or unearthed. Therefore, mining has become more than an essential industry. It is indispensable to the future of humankind.
A continuous supply of new age minerals will become increasingly important as the world gradually transforms into a greener future. Finding and developing easy to mine, high-quality ore bodies is key to implementing the world’s new growth strategy. Africa hosts an abundance of exceptional mineral deposits that are often overlooked because of the perceived risks involved. However, those that do invest, are often richly rewarded.
Exciting projects in the pipeline
Apart from new gold mines, especially in West Africa, there are several other exciting projects across the continent to keep an eye on in 2021. With all the uncertainty, gold was without a doubt the big winner in 2020. Its exceptional performance is likely to continue well into 2021, but as vaccines against Covid-19 are rolled out and start making an impact, intrepid investors might get itchy feet and start looking for higher yields and greener pastures. The Platinum Group Metals (PGM’s) are an option and with rhodium on a roll, new projects like Ivanhoe’s Platreef mine on the northern limb of the Bushveld Igneous Complex in South Africa looks enticing. A PGM investment might be a big item ticket that will pay its dues in the future as well. Zimbabwe has an early-stage platinum project in the pipeline, but the risks in that country are just too pervasive for it to be considered a solid investment destination.
On the other hand, there are several unconventional investment paths to follow. Thinking out of the box is what is needed in a pandemic ridden world. Putting all your eggs in one basket is not a progressive strategy anyhow.
With the movers and shakers punting change at all costs, 2021 (and beyond) will be the time for copper, nickel, tin, cobalt, zinc, lithium, and all other minerals that have something to do with new technology; renewable energy; electric vehicles; and new battery technology. Projects focusing on these minerals will be favoured by those who were analysing where technology is taking us when Covid-19 knocked the wind out of the world’s sails.
The ever-controversial Elon Musk is looking to tie nickel producers into his nimble Tesla supply chain. Copper’s real value in a new world is being rediscovered almost daily, while tin’s value is often underestimated. However, the importance of tin in lithium and sodium-ion batteries is at the forefront of new research, while the the white metal’s use in all kinds of other alternative future technologies is often overlooked.
Contrary to popular belief, Africa is not far removed from these developments. Three of the most followed mining projects in the world outside the gold sector, are in Africa – and they all happen to focus on those resources the world might need in abundance within three to five years: tin, zinc, copper, nickel, and cobalt. This, of course, might change, as in the age after Coronavirus, nothing is set in stone.
The big elephants to watch in 2021
Canadian- and Johannesburg-listed Alphamin Resources’ tin mine in the North Kivu province of the Democratic Republic of the Congo (DRC); Australian listed Orion’s Prieska zinc/copper/nickel development in the arid Northern Cape Province of South Africa, and the massive Kamoa-Kakula copper project, a joint venture between another Canadian outfit Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global (0.8%) and the Government of the Democratic Republic of Congo (20%), are the big elephants to watch in 2021. They all have merit and offer immense value.
However, of the three, only Bisie is producing and running almost at full capacity, the other two being in various stages of development. Kamoa-Kakula is closer to production than Prieska. Alphamin is now producing 4% of the world’s mined tin from its high-grade Bisie mine and with exploration rigs probing what is believed to be even bigger deposits, that slice of the pie is expected to increase in the coming years. Furthermore, Alphamin mines some of the highest-grade tin in the world, and with the tin price skyrocketing over the festive season, things are looking good in North Kivu.
Jaw dropping Kamoa-Kakula
Billionaire Robert Friedland, co-chairman of Ivanhoe, stumbled upon a jaw-dropping copper deposit in the DRC that seems to be growing by the day. Kamoa-Kakula has been independently ranked as the world’s largest, undeveloped, high-grade copper discovery by international mining consultant Wood Mackenzie last year. Initial production at the Kakula mine processing plant is scheduled for July this year. If successful, then Kakula would take its place as the the world’s highest-grade major copper mine, with an initial mining rate of 3.8 million tonnes per annum (Mtpa) at an estimated average feed grade of more than 6.0% copper over the first five years of operation and an estimated mine life of 21 years.
Resuscitating Prieska
There has been a dearth of exploration and development projects in South Africa over the past ten years. But the bottleneck seems to have opened-up slightly since Minister of Mineral and Energy Resources Gwede Mantashe took over the mining portfolio in February 2018.
The Prieska project, along with Vedanta Resources’ Gamsberg zinc project, also in the Northern Cape, and Ivanhoe’s Platreef platinum project on the Northern Limb of the Bushveld Igneous Project in the Limpopo Province, shines some light on what many would like to believe is a sunset industry in South Africa.
Prieska promises to be the centre of a whole new mining hub in South Africa and with new technology, the geological riches of the Northern Cape are only beginning to be understood now. Orion is probing the right commodities. Apart from the zinc and copper deposit, the company has access to a few large potential nickel, cobalt, and even smaller platinum scatterings in and around Copperton (an old mining town) and Prieska. Furthermore, the area’s abundant sunlight and strong winds are attracting an ever-increasing number of renewable energy companies, which adds further value to the potential mineral riches underground.
Between 1971 and 1991, Prieska Copper Mine was operated as a subsidiary of Anglovaal (Anglo-Transvaal Consolidated Investment). The last stope blast occurred in 1989 and thereafter the operation cleared ore passes and processed lower grade surface rock dumps. It was a very successful investment for Anglovaal returning over five times the initial investment in dividends to the parent.
The downside is that there is still a lot of work to be done at Prieska. The mine is only expected to bring its first copper and zinc concentrate to the market by mid-2023. The upside, on the other hand, is that the project is a low-risk option and most of the infrastructure is in place, mining and processing technologies are conventional, the lead and payback periods are short, and valuation is robust.
At a time when South Africa is desperately in need of good news in the mining industry, Orion’s Prieska offers hope. Whether it meets the high expectations, is another conversation.
Further reading:
Alphamin defies the lockdown blues
The bulls run at Bisie
Alphamin’s Bisie tin mine is batting on an exceptionally good wicket. Besides the tin price playing in its favour, all the mines initial teething problems have dissipated with the extraordinary rainfall in the DRC over the past month or two. The tin price has consistently hit the USD20,000 per tonne mark on both sides of the new year, and even tested the water above these levels. At the same time physical demand has remained strong while logistic challenges hamstrung delivery from other major tin producers around the world.
Covid-19 affected most global tin operations, and if the tin price’s current cantor turns into a gallop, and the tin bulls start running, Alphamin is set to become the richest tin mine in the world. Major operations in China, Indonesia and Myanmar have felt the brunt of the Covid-19 impacts, while production at Minsur’s San Rafael mine in Peru, Metal X Limited’s Renison Bell in Australia and Taboca’s Pitinga mine in Brazil have been dwindling, for several reasons. With the tin price hovering at these levels, investors must surely be asking what they have missed.
Tin’s use in lithium and sodium-batteries, as solder in technological applications, and in touch screen applications, is often ignored by markets. With Chinese demand stirring again after its Covid-19 slumber, tin is definitely worth keeping an eye on.
Alphamin’s two big secrets are its spectacular grades of more than 4,2% tin, and its upside potential in other scattered deposits other than the main Mpama North ore body. With Alphamin’s balance sheet under control, the company can now invest in exploration at Mpama South, and investors are waiting with bated breath in anticipation of another big announcement.
Drilling at the Mpama South deposit, located only 750m south of the current processing facility, got underway in December 2020 as promised. Two drilling campaigns are scheduled on Mpama South for 2021. Phase 1 is planned as a 6,000m diamond drilling campaign to be executed from December 2020 to March 2021. Alphamin is expected to declare a maiden Mineral Resource during Q2 2021. Phase 2 of the Mpama South drilling program is planned as a 2,500m diamond drilling campaign to be executed during Q3 2021.
This second phase of drilling is aimed at testing the limits of mineralisation on this deposit to depths of up to 500m below surface and along strike to better understand the potential for establishing another long life, high grade mine at the Bisie tin complex.
While Mpama South could provide an opportunity to increase the production rate and life of operations at Alphamin’s Bisie mine, an extension of the life of mine at Mpama North (current producing orebody) can be confirmed by drilling down-dip and along strike beyond the northernmost holes drilled in the 2014 drilling campaign. A 6,000m diamond drilling campaign is planned for execution in Q2 2021 from an underground drilling drive (under development) located on Level 6 at Mpama North. Access for the drill rig to commence drilling is planned for April 2021.
Further, the 14km long Bisie Ridge, hosting both Mpama North and South, has a plethora of anomalous geochemical targets for follow up and lies entirely within Alphamin’s tenements. The company has therefore commenced an extensive soil sampling campaign and is allocating expert resources to identifying additional drill targets for H2 2021.
Despite some extraordinary challenges in 2020, Alphamin has consistently met or exceeded production guidance. Tin production increased 13% to a quarterly record of 2,898t which is higher than its previous market guidance of 2,600t to 2,800t. This exceptional performance was due to better than expected tin feed grades and plant recoveries. The processing plant performed at an average recovery of 74% for the quarter, including a record recovery of 77% achieved in December 2020.
In the new normal, consistency is as important as ever before. Alphamin has continually been able to up production and is now a consistent producer of extremely high-quality tin that is in demand worldwide. Alphamin has become a world class player in the tin market.
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