Alphamin Resources Corp. is pleased to report its financial results for the quarter ended June 2020. The Company has filed on SEDAR at www.sedar.com today its interim financial statements and related management’s discussion and analysis for the quarter.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Tin production up 29% to 2,739 tons versus previous quarter
- AISC per ton of tin sold down 13% to US$10,849 versus previous quarter
- EBITDA of US$12,9 million
- Q3 2020 production guidance of 2,600 – 2,800 tons contained tin
- Increase in ownership of the Bisie tin mine from 80.75% to 84.14%
- $31.2m debt reduction concluded concurrently with $31m offering of shares
- Significant improvement in debt terms following the restructure including an interest rate reduction and partial debt holiday in 2020
- Initiation of significant growth initiatives post quarter-end
Production and Financial Summary for the Quarter ended June 20201
A Media Snippet accompanying this announcement is available by clicking on the image or link below:
1 Production and financial information are disclosed on a 100% basis. Alphamin indirectly owns 80,75% (84,14% post quarter-end) of its operating subsidiary to which the information relates.
Tin production increased 29% to a quarterly record 2,739 tons and was higher than our previous market guidance due to better than expected tin feed grades. Plant throughput increased 8% to 91,928 tons from higher underground volumes derived from the new Open Stoping with Hydraulic Backfill (LHS) mining method. During the quarter, mined volumes exceeded plant throughput by some 4,000 tons increasing the run-of-mine stockpiles. The processing plant is performing well and various initiatives aimed at achieving consistently higher throughput are underway.
The all-in sustaining cost per ton of payable tin sold reduced by 13% to US$10,849 mainly attributable to increased tin production. Additionally, the previous quarter’s costs were negatively affected by high arsenic penalties and exceptional logistical costs incurred while the national road bridge was under repair.
The Bisie tin mine recorded two lost-time injuries during the past quarter. An employee and a contractor sustained minor injuries during two separate accidents – and both have returned to work.
Production Guidance for the next Quarter:
We expect contained tin production of between 2,600 and 2,8002 tons for the quarter ending September 2020. The tin price has recently increased to around US$18,000/t compared to a price realized of US$15,359/t during this past quarter which, if maintained, bodes well for the next quarter’s EBITDA and cash flow generation.
Covid-19 Pandemic and Impact on Operations:
The health of our employees is of paramount importance and in this regard the Company has a range of Covid-19 awareness, prevention and other risk mitigation controls in place.
To date, the Company has been able to continue with normal production and concentrate sales activities.
Debt reduction and reprofiling:
On May 15, 2020 the Company completed an offering of common shares pursuant to which an aggregate of 312,319,539 common shares were issued (approximately US$31.01 million) (the “Offering”).
Cash proceeds from the Offering, together with existing cash resources, were applied to a US$31,2 million debt prepayment in return for improved loan terms as set out below:
2 Production guidance is based on certain estimates and assumptions, including but not limited to: quantity of material processed, tin grades of processed material and processing recoveries and assumes mining operations will continue to be conducted in the same manner as the previous quarter and will not be further impacted by the Covid-19 pandemic or any other logistical issues.
|Previous key terms||Post restructure key terms|
|Interest rate||Libor +14%||Libor +10,5%*|
|Interest payments||$1,3m per month reducing
against capital repayments
|$0,3m per month to December 2020. An average $0,45m per
month during 2021 and reducing from 2022 against capital
|Debt capital repayments||$2,7m per month from July
2020 to June 2023
|$850k per month from July 2020 to Dec 2020#.
$2,1m per month from January 2021 to June
|Debt Service Cover Ratio covenant||1,75x||1,5x with waiver to 30 June 2021|
|Penalty on prepayment||3% payable in cash||1,7% paid in cash|
|Cash sweep as mandatory payment against loans||30% of excess cash flows||50% of excess cash flows|
|* Reverts to Libor +14% on outstanding loans from January 2022 with prepayment penalty reducing to 0%|
|# Debt capital repayments subject to the LME tin price averaging above US$13,000/t for the month preceding payment|
These revised debt terms reduce Alphamin’s estimated break-even tin price, inclusive of debt servicing, by between $2,000 to $3,000/t3 to an estimated $13,000/t3 of payable tin produced during 2020 and 2021.
The recently completed Offering proceeds were advanced to the Company’s 80,75% subsidiary, ABM, under a temporary shareholders loan which was converted into equity through a rights issue by ABM. As a result of the transaction, the Company‘s ownership of ABM will increase to 84.14%.
Following the debt reduction and restructuring, the balance sheet has been strengthened and coupled with the increase in tin prices, the Company has initiated some growth initiatives as set out below.
As part of the Company’s two-year strategy to produce over 12,000 tons of contained tin per year and proving additional resource and life-of-mine extensions, the following initiatives were initiated post quarter end:
3 Debt service break-even guidance is based on certain estimates and assumptions, including but not limited to: quantity of material processed, tin grades of processed material and processing recoveries and assumes mining operations will continue to be conducted in an uninterrupted manner and will not be further impacted by the Covid-19 pandemic or any other logistical issues.
Fine Tin Recovery Project:
Alphamin has appointed Obsideo (Pty) Ltd as its engineering, procurement and construction management (EPCM) contractor for the execution of its Fine Tin Project (FTP). The FTP is focussed on treating the tailings stream from its gravity concentration plant at Bisie to recover the fine to ultra-fine tin particles.
“When we first commissioned the gravity concentration plant at Bisie, we were focussed on ramping up to a production level of 10,000 tonnes of payable tin per annum, which we have surpassed since Q2 2020 at an annualised ~11,000 tonnes. We believe we can increase plant throughput by another 10% through minor plant de-bottlenecking activities – this could increase annual tin production to ~12,000 tonnes. Additionally, in our efforts to maximise metallurgical recoveries, we have identified process flow streams that contain fine, recoverable tin, and have selected proven metallurgical technology to recover the fine tin from these streams, which should increase tin output further at very low incremental operating costs,” said Maritz Smith, CEO of Alphamin.
The FTP will utilise Multi Gravity Separators (MGS), set-up in rougher-cleaner configuration, to treat a 20 ton per hour process flow stream from the current plant’s tailings running at a grade of 0.8-1.1% tin. The FTP is estimated to produce a concentrate containing 45-55% tin which will be blended with the concentrates from the main gravity concentration plant to produce a final concentrate estimated to contain 60% tin.
“The MGS technology was selected for the FTP as a result of its proven track record in the tin industry to recover particles down to 10um in size, low energy requirements and the high upgrade ratios achievable. Internal analysis shows the FTP has the potential to increase production at Bisie by 400 – 800 tonnes of payable tin per annum. By increasing units of production at a very low incremental cost, the FTP is expected to further decrease our all-in sustaining costs (AISC), securing our place as a lower quartile cost producer,” said Smith.
The projected timeline for the FTP execution from approval to achieving nameplate capacity is 11-months. Orders for the long lead items have already been placed and the total project expenditure is estimated at US$4,6 million.
Mpama South Drilling Program:
Alphamin has appointed T3 Drilling SARL, an internationally recognised drilling contractor, to undertake a 6,000 metre diamond core drilling program at its Mpama South prospect, expected to commence in Q3 2020. Mpama South is located approximately one kilometre south of the main processing plant at Bisie and the drilling program has been designed to delineate a maiden Mineral Resource at Mpama South.
Between 2012 and 2013, Alphamin drilled 19 drill holes for 3,364 metres to determine the extent and nature of the mineralization at Mpama South. Two distinct mineralized zones were intercepted, an upper zone showing well-developed lead, zinc and silver mineralization, and a lower zone rich in tin and copper.
“We are encouraged by the historical drilling results from Mpama South and we are optimistic that by applying our exploration experience as demonstrated at Mpama North, that this drilling program will deliver sufficient information to support the declaration of our maiden Mineral Resource at Mpama South and allow for possible extension to the life of operations at Bisie,” commented Smith. “While Mpama South is the first drill target post-successful commissioning of the Mpama North operations, we have already identified a number of areas along the Bisie Ridge showing soil geochemistry anomalies similar to those found at Mpama North. We expect to generate a further 3-5 drill targets from these anomalies over the next 18-months. Additionally, plans are being developed for deep level drilling at our producing Mpama North orebody which is currently open at depth.”
Grant of Stock Options
The Company also announces that, subject to regulatory approval, it has granted stock options to acquire an aggregate of 2,277,115 common shares to senior officers of Alphamin under its stock option plan. Each option is exercisable for a 7 year period to acquire one common share at a price of C$0.20 per share. The options granted vest over a period of 4 years from the date of grant
Subject to regulatory approval, Mrs Zain Madarun and Mr Sean Naylor were appointed to the board of directors of the Company.
Sean is a director of Wadeville International (Mauritius) Ltd, a significant shareholder in Alphamin. He has extensive experience in Southern and Central African private equity and commodity trading. He previously worked for Metmar Limited, a JSE listed commodity trading business.
Mrs Madarun has been the Company secretary since 2014. She is a chartered accountant and serves as Managing Director of Adansonia Management Services ltd, a management services company based in Mauritius. Mrs Madarun’s appointment complies with the Mauritian Companies act requirement to have a female on the board of directors.
Mr Vaughn Duke Pr.Eng. PMP, MBA, B.Sc. Mining Engineering (Hons.), is a qualified person (QP) as defined in National Instrument 43-101 and has reviewed and approved the scientific and technical information contained in this news release. He is a Principal Consultant, Partner and Director of Sound Mining Solutions, an independent technical consultant to the Company.
Alphamin Resources Corp.
Tel: +230 269 4166
Alphamin Resources Corp.
Tel: +230 269 4166
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