While consistent high volumes from Alphamin’s flagship Mpama North deposit have reaped significant rewards for the mine’s loyal shareholders over the past decade or so, development of the Mpama South deposit promises to deliver additional value in the future.
A bullish outlook and strong performing tin price, supply bottlenecks during the dark days of Covid-19, and Alphamin’s steady performance are some of the factors that contributed to the company’s share price seeing record high’s over the past three years.
Alphamin rewards shareholders
This year the company declared an interim FY2022 cash dividend of CAD$0.03 per share on the common shares, while exploration drilling to increase reserves, further define the deposit and expand the Life of Mine (LoM) at the Bisie complex continues. Alphamin said in a recent statement that “dividend distributions will be considered semi-annually based on excess free cash after taking account of capital funding requirements, including for the new Mpama South expansion project.”
Rumours about a potential outright sale injected even more vigour into a buoyed share price ahead of Alphamin’s second term results being announced last month. However, the decision to not offload and rather to probe the depths of Mpama North and Mpama South further, were met by relief and optimism on the markets.
While exploration data from Mpama South continues to deliver positive drilling results, Mpama North has been as solid as a rock and remains an anchor for Bisie to maintain its position as one of the top tin mines in the world. Alphamin now produces more than 4% of the world’s tin.
Although the tin price has come off the boil somewhat, compared to record highs last year, a lower spot price is unlikely to affect Alphamin’s significantly. According to the International Tin Association (ITA), lower tin prices in recent months, combined with Chinese smelter maintenance, means that the concentrate market for tin is currently oversupplied.
“Smaller African producers are cutting back output and stockpiling material while they wait for prices to recover. However, Alphamin’s sales volumes are unlikely to be materially affected over the coming months due to strong long-term offtake deals,” the ITA states.
Quarter 2 delivers more records
Regardless of subdued tin prices, Alphamin continued churning out the ore consistently during 2022. Despite lower tin grades and plant recoveries compared to the first quarter of 2022, the company mined about 112,600 tonnes of ore and in the process produced a quarterly record of 3,180 contained tin from its Mpama North mine in April, May, and June.
During the first three months of the year Alphamin mined 105,565 tonnes and produced 3,061 contained tin.
At average grades of 3.65 (down from 3.73 in the first quarter) Bisie counts as one of the top three highest grade tin mines globally.
Despite higher production, however, sales of tin concentrate fell quarter-on-quarter to 3,229 tonnes. According to the company, this was due to a catch-up in sales during the first quarter following delayed sales from Q4 2021. Year-to-date production of 6,241 tonnes is on track to meet the company’s production guidance of 12,000 tonnes tin-in-concentrate for 2022.
According to the ITA the cost of production at Mpama North is expected to decrease by some 6% as lower tin prices reduce off-mine costs such as royalties and export duties. All-in Sustaining Costs of some US$14,800 continue to see Alphamin operate in the lower half of the tin cost curve.
Updated LoM schedule
Earlier this month, Alphamin announced updated Mineral Resource and Mineral Reserve estimates for Mpama North. These updates replace those announced in the Technical Report of 22 April 2022 which, for Mpama North, were not updated and remained the same as those contained in the Technical Report effective 31 December 2019. The culmination of these Resource and Reserve updates is the re-design and scheduling of the Mpama North Mine into an updated LoM schedule.
Mining has progressed steadily at Mpama North since the 2019 estimation of the Reserves and LoM schedule with 990,821 tonnes of ore having been extracted in the 30 months December 2019 to June 2022. Several operational improvements and changes resulted in actual mine performance surpassing the 2019 LoM schedule. Run of Mine (RoM) tonnes mined for the financial years 2020 and 2021 exceeded the 2019 LoM schedule by 18.5% and 8.1%, respectively.
In addition, the Reserve cut-off grade calculated in the 31 December 2019 LoM schedule of 1.6% Sn, has at an operational level consistently been reduced due to the improved RoM output, optimised mine planning, out-performance versus dilution assumptions, improvements in the process plant recoveries and an increase in the tin price.
These actual results have now been captured in the updated Reserve cut-off grade and LoM schedule which are declared at 1.0% Sn. Exploration success in the form of strike extension of the high-grade chute in the Mpama North deeps target plus the reduced cut-off grade valorises previously excluded lower grade Resource Blocks, converting them into Reserve blocks, which has further added valuable additions to the LoM schedule.
The result of these positive factors is that all contained tin depleted since 31 December 2019 has been replaced in the new LoM schedule. The 154.5kt contained tin in the updated LoM versus the previous 154.2kt has also been accompanied by a valuable grade increase of 19.6% to 4.78% Sn from 4.00% Sn previously scheduled.
As with the previous LoM schedule of 31 December 2019, the updated LoM schedule contains a small portion of Inferred Resources. The Inferred Resource constitutes 18.9% of all RoM tonnes delivered to the plant. 50% of these planned Inferred Resources are scheduled in the final three years of mining in the deep portion of the mine and will be the subject of infill Resource drilling to increase confidence before they are included in any shorter term mine plans or budgets.
The annual contained tin mined target remains ~15,000 tonnes per year which, after expected processing recoveries of 78%, results in ~12,000 tonnes per year of contained tin in concentrate production at the Mpama North Mine.
Mpama North Mineral Resource Estimate
The updated Mineral Resource Estimate (MRE) at Mpama North is based on new resource exploration drilling on the northern deeps high-grade extensions as well as partial mine depletions since the last estimate effective 30 June 2019.
All resource additions have resulted from the renewed Mpama North Mine resource exploration drilling commenced in 2021. The drilling targeted and successfully extended the known dimensions of the highly mineralised linear plunging high-grade chute, returning some of the best project intercepts to date. On-going drilling continues at Mpama North with mineralisation intercepted outside the mineral resource boundaries declared in this update.
Mpama North Mineral Reserve Estimate
An updated Mineral Reserve estimation was completed subsequent to the updated MRE. Modifying factors in the updated Reserve estimate are largely based on:-
- Actual performance statistics and site-specific experience and reconciliation data to support revised modifying factors (mining recovery, dilution, pillar loss etc.),
- More detailed geotechnical data from mining allowing the mine to be divided into geotechnical domains with different stope design parameters per domain,
- Increased mining levels per mining echelon for stopping, resulting in a reduction in the pillar losses and an increased extraction ratio,
- A reduced cut-off grade based on updated calculations from actual operating costs, increased tin prices and the impact from higher processing recoveries, and
- Recent additions to Mineral Resources from 2021/2022 exploration activities.
Rapid development of Mpama South
Alphamin predicts that the combined ore from Mpama North and Mpama South will enable the Bisie complex to approximately 20,000t of tin-in-concentrate annually from 2024. According to the International Tin Association (ITA), the rapid development of Mpama South will help to narrow the forecast deficits in the tin market over the next decade.
The opportunity to take advantage of the current shortfall in tin concentrate supply and the ability of Alphamin to self-fund the projects, played a critical role in the decision to develop Mpama South over the next 20 months. At full capacity, the mine is forecast to produce some 7,232t of tin-in-concentrate annually.
Since the development decision was made on 29 March earlier this year, a few milestones in the early works have been reached. At the same time exploration drilling to update the resources at Mpama South has continued unabated.
Alphamin awarded the EPCM contract for Mpama South’s development to South African consultants Obsideo. Obsidue successfully executed Bisie’s fine tin plant in 2021. Meanwhile, long lead time plant capital orders have been placed as well as steel structure orders.
The Mpama South access road has been completed and site clearing commenced earlier this month. According to a statement by Alphamin, bidding for bulk earthworks and civil contracts have been completed and is currently under evaluation.
