Alphamin Resources’ (TSXV:AFM) (JSE: APH) Bisie mine in the Democratic Republic of the Congo (DRC) remains one of the best ways for investors to get exposure to tin.
Today, Bisie produces close to 4% of the world’s tin-in-concentrate. The mine has come a long way since its inception six years ago and after initial teething problems is now producing some of the highest- grade tin in the world. Moreover, with the balance sheet firmly under control, and several growth projects in the pipeline, Bisie is set to continue doing so over at least the next 20 years.
Discovering a mineral deposit in remote Africa, raising enough capital, developing the ore body, building a world-class mine from scratch; and then continuously delivering the best quality product in the world, is an exemplary achievement.
Apart from majors like Anglo American, Goldfields, Acacia (now Barrick Gold), Randgold (now Barrick Gold) and recently Ivanhoe, few others have managed to lure the necessary investors and to bring world class mines into production from greenfield discoveries in remote and fragile states of Africa.
AIM listed Hummingbird Resources, backed up by substantial investment from London, did it in West Africa (Mali and Liberia), as did Canadian company B2Gold in Mali and Namibia. First Quantum Minerals, another Canadian based outfit, developed spectacular open pit copper mines in Zambia’s famed Copperbelt Province, and more recently at the Sentinel deposit in the Kalumbila district of the North-West province of Zambia.
Aside from the big copper mines in Zambia, most other projects were gold discoveries, which were regarded as extremely high-risk ventures at the time, despite the seemingly stable political and security situation (compared to today). Moreover, gold remains a safe-haven, and the more the world descended into turmoil, the more viable these often-marginal deposits became.
Tin a tough sell
Gold is one thing, however, developing a tin project in the North Kivu province of the DRC, is a much harder sell. But if drilling samples return results of more than 4%, any project, no matter where in the world it is located, will be in business.
Although Alphamin’s grade sets it apart from similar sized tin operation in the world, a well-established and oiled operational team in the DRC, and a tight grip on the balance sheet in Johannesburg, further boosted the company’s spectacular growth and consistent production over the last few years.
Although the company’s results for the second quarter of 2021 were slightly lower than expected, the outlook for Bisie remains positive. Although the production of tin concentrate was lower this quarter than in the recent past, Alphamin significantly reduced its net debt to USD29,9- million, which bodes well for Bisie’s growth initiatives.
The mine continues pursuing higher tin recoveries and further discoveries through ongoing exploration programmes. According to a recent statement by Alphamin, the Fine Tin Recovery Plant (FTP) is now fully commissioned and produced at steady state from 26 June 2021. Expenditure at completion is in line with the budget of USD4.6-million.
“Production from the FTP during its first week of operations increased overall contained tin production by 5%. This exceeded expectations so early after commissioning. The exceptionally high grade of the FTP concentrates provides further scope to reduce product grade in pursuit of higher tin recoveries,” says Maritz Smith, CEO of Alphamin Resources.
Further Exploration Activities a boon
Alphamin has placed a lot of hope on their exploration programmes, which continued as planned during Q2. The exploration
initiative aims to extend the life-of-mine at Mpama North, where mining is currently taking place, to declare a Maiden Mineral Resource for Mpama South, which is about 750m from Mpama North, and to discover at least one additional orebody on
the highly prospective Bisie Ridge (13km strike length).
Drilling at Mpama North got underway on 2 July 2021. An initial 15,000 metre (22 holes) drilling campaign over 4 months is planned to test the strike and dip extension of the current producing orebody, below 400m in depth from the mine portal.
The Mpama South phases 1 and 2 drilling of 10,015 metres (46 holes) have been completed with external assays for 29 holes announced to date. The remaining external lab assays are expected in two batches during July and early August 2021. Phase 3 drilling of 6,800 metres is progressing to plan – to date, 5 of the 24 holes have been completed showing strong visual mineralisation over wide intercepts within the interpreted high-grade shoot.
In addition to Mpama North and Mpama South, drilling on the highly prospective Bisie ridge (13km strike length), which falls within the Company’s mining licence is expected to commence in August 2021.
Access roads have been established and initial drill targets are being developed in consultation with the Company’s appointed structural specialists, TECT Geological Consulting.
Lower results in Q2
Data in a recent statement released by Alphamin, indicate a weaker Q2 in 2021, mainly because of a lower-than expected feed grade. Although the average grade of the Alphamin’s ore body is exceptionally high, the grade can vary significantly as the mining team encounters natural variations in the orebody. The average feed grade fell from 3.8% in Q1 of 2021 to 3.2% during Q2. As mentioned above, to counteract the variations in grades and to keep it more consistent, the company says it will increase waste development to provide more flexibility in accessing a healthy mix of low and high grade portions of the ore body. Increased waste development allows Alphamin the flexibility to smooth grade variations over time.
With lower contained tin production, EBITDA was likely to decrease. Alphamin has announced that guidance for the second quarter is USD34-million, about 7% lower than Q1. However, Q1 was boosted by catch-up sales of tin due to disruptions towards the end of 2020.
The evolution of Bisie has been spectacular, and the road to its full production nothing short of astounding. Expectations are high that the exploration drilling campaign will deliver more good news, as Mpama South shapes up to become another world class anomaly.
Bisie’s location, and the unpredictability of the ore body, will continue asking questions from management, but that is the nature
of the beast. If demand for tin continues on its current trajectory, Bisie will be with us, for at least the next twenty years. As the DRC settles into a more stable political period, it is something to look forward to.
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