Through recently increasing the estimated amount of tin, and the tin grade, at Alphamin Resources’ (AFM: TSXV, APH:JSE AltX) Mpama North deposit in the DRC, the company has demonstrated the long-term viability of the Bisie mine; a key factor to gain investor confidence.
On-going exploration at Mpama North has not only proven the sustainability of operations at Alphamin, but at the same time increased the tin grade of a mine already defying the rules of high-grade tin deposits.
Considering recent exploration results, the grade of Bisie’s Resources has increased by almost 20% from 4% Sn in 2019 to 4.78% Sn in 2022. The grade of the Reserves has also increased from 4.01% Sn in 2019 to 4.64% Sn in 2022.
Super shoot ups the grade
The main reason for the jump in tin grade is a phenomenal super-high-grade shoot within the Mpama North orebody that Alphamin refers to as the Deeps.
Close to 20% of the material that has been included in the updated mine schedule originates from the Deeps. When initial work started at Mpama North in 2019, the Deeps remained unexplored. However, as underground work continued creeping closer to this high-grade area, it became easier to do further exploration drilling.
Although results from the Deeps have been spectacular, the company has stated that more work needs to be done before it can be included in its Reserve statement (it is currently only included in the Inferred category).
The Deeps is scheduled to be mined in the final three years of Mpama North’s life, which has been maintained at 10 years after 3 years’ of mining. However, the area would need further drilling to increase confidence.
Grade the holy grail
Despite the fact that tin prices have fallen back from their record highs of $50,000/tonne seen in March 2022, prices are still above $20,000/tonne, which for Alphamin is more than sufficient to realise a very healthy profit margin. Grade however continues to be a match-winner for Alphamin, considering that grades of far below 1% Sn (which is Alphamin’s new cut-off grade from 1.6% previously) are being mined in the rest of the world. The fact that lower tin grades have now become economical to mine, combined with the elimination of bottlenecks in the processing plant, has allowed Alphamin to process previously ignored material. However, improved technology has also resuscitated a range of extremely marginal brownfield operations throughout the world. As supply increases, Alphamin’s trump card remains its superior grades.
With estimated tin grades of 4.78% the cost of mining diminishes significantly compared to low-grade, high-volume operations, especially if those mines are in remote regions with limited infrastructure. Not only that, but if the tin price totally tanks, any low-grade marginal operation would be left scrambling for cover.
Even at the best of times, low-grade tin operations remain extremely high-risk investments, even in world class mining jurisdictions, but especially when they occur in extreme climates and remote regions without the necessary infrastructure. Russia, for example, could not bring a decent tin mine into production over the last 50 years despite the fact that Russian tin reserves are estimated to sit at 2.17 million metric tonnes, which is more than 1.5 times the known reserves in China, the world’s largest tin producer in 2013.
Not taking into account today’s geopolitics and that Russia is barred from exporting commodities anyway, the main reason is that the grade of Russian tin ores is low compared to other regions (Russian Ministry of Natural Reserves).
For example, the share of free-milling ores in Russian placer deposits is only about 12% of all proven reserves, while in Indonesia this figure is close to 100%. The average content of tin ores in the indigenous deposits is 0.28% (0.63 kg/m3 in placers), which is 2-2.5 times lower than in the foreign ores and placer deposits (Russian Ministry of Natural Reserves). According to the Russian Ministry of Natural Reserves, only a third of the country’s deposits could ever be mined profitably.
Since the mid-1990s, most tin miners across the world were forced to mothball their low-grade operations and to venture out and look for new high-grade deposits, preferably in amenable jurisdictions. Low grade tin is a problem that most tin mining companies around the world are grappling with. In fact, many of the top operating tin mines are now forced to mine lower grades and to try and expand current operations and top-up diminishing resources.
Significant slow-down in production growth
Up until now, the tin market has had only a small pipeline of new projects. It has traditionally been dominated by a few large players in a handful of countries. Declining ore grades and a lack of replacement projects globally have weighed heavily on the outlook for tin supply growth.
The significant slow-down of growth in the traditional tin producing countries of Peru, China, Indonesia, Myanmar, and Malaysia has worked in Alphamin’s favour. Bisie has shot up in the ranks of top tin producers over the past two years. But factors such as more stringent environmental regulations in China, Malaysia and Indonesia have also opened the back door for smaller players to enter a very limited market.
Tin producers around the world have faced headwinds despite a favourable spot price. For example, the Perak State in Malaysia placed a moratorium on new exploration projects at the end of 2019, which halted Australian junior Elementos’ Temengor tin project. In Indonesia, protests by coastal communities threatened to disrupt PT Timah’s expansion of offshore mining for tin in the country.
Meanwhile, in China, production cuts have marred tin smelting operations due to a shortage of ore. China is the world’s largest miner of tin and smelter of tin metal but has also been a net tin importer this year. China is stockpiling tin to meet its goal of self-sufficiency in semiconductors.
Resuscitation of historic projects
All these factors have resulted in a proliferation of new tin exploration and reviving historic projects or remaining old stockpiles. Mining historical “brownfield” sites is of course a viable and low-risk venture, but only if the grades are good enough.
The problem with many of the new greenfield projects is that it might take anything from four to ten years to bring these mines into production.
Meanwhile, Alphamin is churning out high-grade material and continues finding even better ore. The company has also made some great discoveries at its Mpama South deposit, close to Mpama North, which will be a further boost to the current reserves.
While all this is good news for the tin sector at large, newcomers might unfortunately find themselves behind the curve. Nevertheless, it is still worthwhile mentioning a few interesting projects that appeared on the radar over the last year:
- Australian company TinOne Resources acquired the historic Rattler Range project in Tasmania. According to Chris Donaldson, TinOne’s Executive Chairman, the acquisition underpins the company’s key strategy of acquiring known historical tin districts and applying modern exploration techniques to unlock value. Historical records for the Rattler Range area indicate the presence of 47 named tin occurrences, with some 19 known tin mines. The grades at Rattler Range are not known.
- UK company Cornish Metals has reported the final assay results from the Phase 1 drilling programme at its United Downs project, close to Cornwall in the UK. United Downs is a collection of previously producing mines in Cornwall, located 8km east of Cornish Metals’ flagship project, South Crofty.
- Auxico Resources has signed an offtake agreement for the planned tin production from its Massangana tailings reprocessing project in Brazil. At 0.6% Sn this project is an extremely low-grade operation that would not be viable if it was a hard rock mine. However, the tailings of the historical Massangana mine in the Ariquemes region of Brazil, has produced 250,000 tonnes of tin and held about 30 Mt Sn in 2018. According to the International Tin Association (ITA) Massangana has the potential to be a notable player in the tin concentrate market in the near future. The company aims to bring the project online in the second quarter of 2023.
- First Tin, is advancing work at the Tellerhauser projects in Germany and at the Taronga project in New South Wales, Australia. The German project was a previously operating mine between 1983 and 1991, primarily for uranium. However, a vast amount of exploration work was completed on the tin mineralisation during this time.
In the scramble to get a new tin project up and running while the tin price looks good, Alphamin is looking to expand production by 60% through the development of the next door Mpama South deposit, targeting a commissioning in the last quarter of 2023. Being a high-grade, low cost producer, its status as a world leader in tin mining, continues to grow.