Not saying to buy or sell..
Mr. Maritz Smith reports
ALPHAMIN ANNOUNCES Q2 2021 EBITDA GUIDANCE OF US$34M AND PRODUCTION, SALES AND GROWTH PROJECTS UPDATE
Alphamin Resources Corp. has provided the following operational and growth update for the quarter ended June, 2021.
- Q2 EBITDA (earnings before interest, taxes, depreciation and amortization) guidance of $34-million, at a tin price of $28,326/tonne versus current of $31,800/t;
- Net debt reduced to $29.9-million;
- Contained tin production of 2,412 tons (11 per cent below prior guidance and 8 per cent below the prior quarter);
- Fine tin recovery plant fully commissioned and producing from June 26, 2021;
- Mpama South phase 3 drilling progressing to plan with strong visual mineralization from initial step-out holes;
- Mpama North Deeps drilling commenced July 2, 2021, with additional rigs under mobilization to accelerate drilling campaign.
Operational and financial performance
Contained tin production of 2,412 tons was 11 per cent below guidance (2,700 tons), impacted by a low feed grade of 3.2 per cent Sn (tin) compared with 3.8 per cent Sn the previous quarter. The month of June, 2021, saw lower than expected grades from underground. The variable nature of tin mineralization in the orebody may cause large fluctuations in delivered grade -- as a mitigating tool the company will increase planned waste development for the remainder of the year in order to provide more mining flexibility for blending high- and low-grade areas.
Taking into consideration the lower feed grade, the processing plant performed well, treating 12 per cent more material and achieving recoveries of 72 per cent.
The company's EBITDA guidance of $34-million for Q2 2021 is 7 per cent below Q1 2021 -- the previous quarter benefited from a significant catch-up in tin sales following logistical bottlenecks during Q4 2020. Tin prices are currently trading at around $31,800/t, 12 per cent above prices achieved during the past quarter.
Net debt amounted to $29.9-million at June 30, 2021, down 50 per cent from the start of the financial year (Dec. 31, 2020: $59.9-million).
The company has appointed Jan Trouw as the on-mine managing director of its 84.14-per-cent subsidiary, Alphamin Bisie Mining, effective July 1, 2021. Mr Trouw is well known to the Alphamin team and has over 40 years of African mining experience -- recently as head of the Frontier copper mine in the DRC (Democratic Republic of the Congo) and prior to that as general manager of the high-grade Chibuluma copper mine in Zambia. He was instrumental during late 2019 in developing the new mining method and mine design criteria for Alphamin's Bisie tin mine. The company looks forward to working with Mr. Trouw in realizing its vision of becoming one of the world's largest long-life tin producers.
Alphamin's unaudited consolidated financial statements and accompanying management's discussion and analysis for the quarter ended June 30, 2021, is expected to be released on or around Aug. 9, 2021.
Growth initiatives
Fine tin recovery plant (FTP) -- The FTP is fully commissioned and produced at steady state from June 26, 2021. Expenditure at completion is substantially in line with the budget of $4.6-million (U.S.). Production from the FTP during its first week of operations increased overall contained tin production by 5 per cent. 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.
Exploration activities -- Alphamin's exploration initiative aims to: extend the life of mine at its currently producing Mpama North operation; to declare a maiden mineral resource for Mpama South (located 750 metres south of Mpama North); and to discover at least one additional orebody on the highly prospective Bisie Ridge (13 km strike length).
Drilling at the Mpama North orebody commenced on July 2, 2021. An initial 15,000-metre (22-hole) drilling campaign over four months is planned to test the strike and dip extension of the current producing orebody, below 400 m 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, five of the 24 holes have been completed showing strong visual mineralization over wide intercepts within the interpreted high-grade shoot.
In addition to Mpama North and Mpama South, drilling on the highly prospective Bisie ridge (13 km 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 specialist, TECT Geological Consulting.
Qualified person
Vaughn Duke, PrEng, PMP, MBA, BSc, mining engineering (honours), 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.
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