The high-risk high-reward game is often scoffed at, with good reason, by risk averse investors in the mineral sector. The list of companies that have discovered and developed successful mines in the high-risk jurisdictions of Africa, doesn’t include many junior mining companies. If they are not swallowed by majors, a lack of funding prevents smaller outfits from moving promising discoveries through the mining life cycle.
There are many cases of spectacular failures despite good geology, or where corruption, politics and nepotism sterilise what could be world class deposits. The Simandou iron ore project in south-eastern Guinea, for example, is a classic case study of how not to go about the business of building a mine.
Apart from the majors like Anglo American, Gold Fields, Glencore, Rio Tinto and BHP Biliton, there are few examples of junior mining companies that have pulled it off in remote Africa. Randgold Resources, under South African geologist Mark Bristow, would technically not be recognized as a junior miner. Nevertheless, Randgold ventured into Africa in the late 90s only as a shadow of the mining giant it once was, shed its tainted history, and found and developed several of the world’s best gold deposits in West Africa, before Bristow eventually succumbed to gold mining giant Barrick Gold’s overtures.
Alphamin not losing steam
Mauritius based junior Alphamin Resources has been bucking the trend ever since they found and developed the Bisie complex, one of the highest-grade tin deposits the world has ever seen. Those potential investors that were pessimistic about what Alphamin stumbled across about a decade ago, would surely be kicking themselves today. After initial teething problems, Alphamin has been coining it over the past year or two on the back of a buoyed tin price.
Three years ago, investors on the Johannesburg Stock Exchange in South Africa, could have bought Alphamin shares for less than ZAR2.00 per share (±13.3 US cents). Today the share price is edging toward a whopping R13.80 (±$1.00). This happened despite initial setbacks, high debt on the balance sheet and a reluctance from funders to invest in a notoriously troubled part of the DRC. With the balance sheet now fully under control, the processing plant humming along to the beat of the Congo drum and high demand in the wake of a global pandemic, Alphamin is not losing steam.
Alphamin’s CEO Maritz Smith is not losing any sleep about the share price or which way the tin price is moving either. In fact, the Alphamin board declared a full year dividend of 0.03 Canadian Dollars (37 South African cents) for the first time earlier this year to reward its shareholders for their patience. Moreover, tin prices have enjoyed a phenomenal run, giving credence to the unlikely rise of Alphamin. Spot prices moved from less than USD15,000 a ton in April 2020 to an all-time high of more than USD39,600 a ton at the time of writing.
While Alphamin’s share price, and tin prices, continues running red hot with no indication that the gallop will slow down, the outlook has become even hotter with recent news that Alphamin will soon start developing Mpama South, Bisie’s dormant tin deposit up to now. This will cement Alphamin’s position as one of the world’s largest tin producers. The company’s Mpama North, the only deposit in a cluster of scattered tin occurrences across the Bisie Hill that is actively mined, already produces more than 4% of the world’s tin.
Mpama South expected to narrow deficits
When Alphamin combines the production from Mpama North and Mpama South, the company expects the Bisie complex to produce more than 20,000 tons (t) 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.
Earlier this month, Alphamin announced a maiden Mineral Resource Estimate (MRE) for its Mpama South deposit, just about one kilometre from its operations at Mpama North. More recent drilling work has now been incorporated into the MRE. Inferred Resources were increased by 75% to 3.42 Million tons (Mt) at 2.45% tin (Sn) for 83,700t of contained tin. Indicated Resources were relatively unchanged, but now contain about 21,500t of tin within 0.85Mt of ore.
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.
First product at Mpama South is expected to be delivered in December 2023. This might seem like a long wait, but it is a lot faster than most greenfield mines, which, in some cases, can take up to 10 years to reach full production after a maiden MRE. At full capacity, the mine is forecast to produce some 7,232t of tin-in-concentrate annually.
Exceptional exploration results at Bisie over the last year and a half confirms theories that the Bisie Ridge may soon be recognised as another tin province. Tin provinces are one of the best examples of metallogenic provinces. According to Lehmann (1990) about 85% of all historically mined tin is sourced from four main tin ore provinces within large granite belts. These are, in decreasing importance, Southeast Asia (Indonesia, Malaysia, Thailand, Myanmar), South China, the Central Andes (Bolivia, southern Peru) and Cornwall, in southwest England.
The Ridge at Bisie is about 20km in length of which an extremely small area has been drilled up to now even after the extensive drilling programme that got underway late in 2020. When Bisie was initially developed Alphamin only drilled out a deposit of five million tonnes. The Bisie mine was designed to be a “staged rollout”, where sufficient Resources were identified to support an initial operation with an adequate Life of Mine and acceptable returns. Once operating, further drilling would be carried out with internally generated cash flow.
The result was that Alphamin discontinued the exploration programme with only 40,000m drilled. The lure of Bisie was the grade though, which measured an average of close to 4.5%. In some holes, the geologists measured up to 7% Sn, which was unheard of. In the global context, that puts Bisie in a class of its own.
At that stage, the highest-grade tin mine in the world was believed to be San Raphael in Peru, which mined tin at close to 2%. Since then, the average tin grade at San Raphael has dropped to well below 1.8%. The exciting fact about Bisie is that what they found initially and then developed is only the tip of an iceberg. The current mine sits on top of a single deposit (Mpama North) located on a mineralised ridge of between 13km to 20km long.
String of pearls
About 750m from Mpama North lies Mpama South and further along the ridge there are a number of prospective targets that can only be described as a string of pearls. These targets all fall within Alphamin’s tenement at Bisie.
Mpama North fits the genetic model for tin deposits globally and like 99% of all tin in the world occurs in granite associated lithologies. What makes Bisie unique, however, is that the deposit has remained intact for millions of years, in contrast to similar deposits in the world where erosion played a much greater role a lot earlier. These deposits usually occur on intercontinental margins, whereas Bisie lies in an inter-cratonic zone and is subjected to intense and repeated compression and extension.
The Bisie Ridge thus represents the contact between a granite/basement and metasediments. Mineralisation occurs where northeast trending structures cross-cut this contact, evident at both the Mpama North and Mpama South deposits. This configuration is also evident at several other localities along this 13km ridge contact. Bisie is a strange anomaly in that it is a large, underexplored, extremely old, and very high-grade deposit.
Alphamin’s management team has mapped out a clear, near-term growth path. Its pursuit of the Mpama South Project, while continuing to produce from its northern counterpart, will raise the company’s output from 12,000 to 20,000 tons per year, accounting for over 6% of the globe’s tin output. Moreover, the ability to leverage the infrastructure from its current project significantly reduces the capital outlay to commission Mpama South and speeds up the overall payback period.
With Mpama South on the books and tin prices likely to break new records this year, Alphamin is well positioned to once again be the superstar performer in the tin sector this year.
Meanwhile Fitch has raised its price outlook to about USD42, 000 per tonne this year and according to the ITA, refined tin production rebounded from pandemic lows last year, led by Chinese Yunan Tin, and it will increase another four per cent this year.
The current rise in tin prices can be attributed to the shutdown of the Laibin smelter of Guangxi China Tin Group for maintenance from February 10. ITA said the smelter, which has a capacity to produce 25,000t, would be shut for 45 days and result in 1,200t of refined tin being “unavailable to the Chinese tin market”. This occurrence again provides Alphamin with yet another opportunity to take market share.