(Chart source: www.lme.com – accessed 11 Feb 2021 10h50 )
With everyone talking about the reddit-fuelled short squeeze stock rage that happened lately, mining investors have long been enduring a real short squeeze in the tin market.
Earlier this year, tin prices hit seven-year highs, with the three-month price reaching $23,435 (USD) per metric ton. Meanwhile, the tight spot market has reached $25,458/ton.
A shortfall of the metal used in solder to connect components in electronic devices pushed up the price for 12 straight weeks. This is why commodity markets can be harder to crack than individual shares, those behind the reddit frenzy couldn’t pull the same trick on silver – there was no legitimate underlying shortage.
While silver climbed on oversupply since 2015, tin has seen three straight years of global supply deficit, according to the International Tin Association (ITA). The big short in the tin market lies in the ongoing struggle for the supply chain to meet the rising demand, rather than an anonymous hedge fund.
Recently quoted at $23,240 per tonne the premium on the London Metal Exchange (LME) for tin has erupted, as stockpiles in the exchange’s warehouse system dwindle near record lows, pushing demand for the metal intensely and driving up its price.
(Chart Source: lme.com – accessed 11 Feb 2021)
This rise in tin price is no surprise to longer term participants in the tin Market. The International Tin Association has been predicting future tightness in the supply demand balance of tin with their estimates of the prices for tin that will be required to induce currently marginal projects to become producers to fill the supply gap.
Enter:
Alphamin Resources Corp. (TSX-V: AFM, OTC: AFMJF, Forum) a stable producer of 4% of the world’s mined tin from its high grade / low cost operation in the Democratic Republic of Congo (DRC) with plans to increase production and one of the few pure-play tin stocks that is well leveraged to the commodity’s price.
In
January 2021; AFM reported that its tin production increased to a quarterly record of 2,898 tons in Q4 2020, which was up 13% from the previous quarter.
Company leadership attributes this outperformance to better-than-expected tin feed grades and plant recoveries. For Q4, the processing plant performed at an average recovery of 74%, including a record recovery of 77% achieved in December 2020.
Of special interest to prospective investors – Alphamin Resources is the second largest tin producer outside of China and Indonesia – at a tin grade of approximately 4.5%, Mpama North is the world’s highest-grade tin resource – about four times higher than most other operating tin mines in the world.
AFM’s production has been steady in recent quarters and the Company is well positioned to advance its initiatives to increase production by almost 20% in the second half of 2021, along with its ongoing exploration activities which it believes may unlock significantly more tin resources. The Company also reported that its fine tin recovery plant is 70% complete and progressing on schedule for commissioning, which is set to commence by April 2021.
(Alphamin Resources Corp. Stock chart – Nov 2020 to Feb 2021. Click to enlarge.)
Supply chains have endured a combination of COVID-19-related issues which caused logistical delays in deliveries.
However, global economies are beginning to roar back to life after lockdowns – especially the electronics industry in China – which had drained physical tin stocks held in places like the LME to just 810 tons. As if this was not bad enough, 310 tons of that stock is waiting on a physical load out, which leaves only 500 tons, just half a day’s global tin consumption that is available for purchase, according to the ITA.
Investors who are holding tin are more than likely taking full advantage of the metal’s scarcity during this legitimate market squeeze. Shortages of tin will continue to drive panic-buying, which will fuel the metal’s soaring price and tight spreads on the LME. {{Link the benefit of being an Alphamin shareholder to this run in tin}}
For more information on this Company, visit
alphaminresources.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.