GRAND BAIE, MAURITIUS--(Marketwired - Feb. 6, 2017) -
Editor's Note: There are Figures and Charts associated with this press release.
Alphamin Resources Corp. (TSX VENTURE:AFM) ("Alphamin" or the "Company") is pleased to announce that it has completed
the Front-End Engineering Design ("FEED") and Control Budget Estimate ("CBE") for its 80.75% owned Bisie Tin Project ("Bisie" or
the "Project") in the Democratic Republic of Congo.
HIGHLIGHTS
| • |
Increase in proven and probable reserves to 4.67 Mt @ 3.58% Sn containing 167.3 Kt of
tin |
| • |
Increase in LoM to 150 months (12.5 years) |
| • |
Optimised process flow sheet resulting in 6% higher annual average plant throughput rates, and
an increase in tin recoveries to 73% |
| • |
Cash margin per tonne of tin sold of some US$11,040, resulting in LoM annual average EBITDA of
approximately US$110 million (constant 2017 terms) |
| |
|
• |
Net Present Value 8% |
US$402.2 million |
| |
|
• |
Real, after tax, Project IRR |
49.1% |
| |
|
• |
Payback period |
17 months from 1st tin production |
The completion of the FEED program and associated CBE confirms the robust economic metrics and potential of the Bisie Project
and the development of the Alphamin Bisie Tin Project into North Kivu's first commercial mine, and a new premier global tin
producing mine. Boris Kamstra, Chief Executive Officer of Alphamin explains: "The completion of the FEED and CBE phase marks
another important and exciting milestone as Alphamin advances the Project towards becoming the first industrial mine in DRC's
North Kivu Province."
A comprehensive process for estimating capital costs was followed and the CBE results show that the Project has the potential
to remain strongly profitable at lower tin prices, as well as at increased prices for key consumables. The completed FEED and CBE
increase proven and probable reserves to 4.67 Mt at 3.58% Sn containing 167.3 Kt of tin while also increasing the life of
mine (LoM) to 150 months or 12.5 years. The optimised process flow sheet resulted in 6% higher annual average plant throughput
rates, and an increase in tin recoveries to 73%.
A cash margin of some US$ 11,040 per tonne of tin sold is foreseen, yielding a LoM annual average EBITDA of approximately US$
110 million (constant 2017 terms). Alphamin is also pleased with the robust economic performance indicators of a Net Present
Value (8%) of US$ 402.2 million as well as real, after tax, Project IRR of 49.1%. The projected payback period is 17 months from
the first tin production at the Alphamin Bisie Tin Mine.
"The FEED program's emphasis was to reduce the implementation and operational risks associated with the Project wherever
possible, and resulted in necessary increases in certain capital and operating costs. The improved mine design, process flow
sheet optimisation, and an improved tin price outlook, have enhanced the forecast economic performance indicators and overall
robustness of Bisie significantly, despite the aforementioned cost increases," explains Kamstra.
"These improvements along with the continued strong support from provincial and national government and the local communities
confirm our view that Bisie forms the ideal foundation on which to build a mining company and associated infrastructure for
mining in the tin-rich province of North Kivu. This mining project presents Alphamin shareholders with an attractive opportunity
to participate in one of the highest grade known tin deposits in the world," says Kamstra.
Kamstra explains, "This CBE is by definition conservative and based on tenders, quotes and detailed estimates. Given the
paucity of commercial operations and operating data in the area estimates used have been of necessity conservative. Once the
Bisie mine is fully operational there is considerable scope to improve operational efficiencies and recoveries from the
assumptions used in this study as well as to reduce costs, particularly in the areas of logistics. In addition, the exploration
and resource delineation drilling that will continue after the Bisie mine is established is, given the open-ended nature of the
existing Reserves upon which this CBE is based, expected to increase the Reserve inventory and thus LOM."
The project team has recently completed the optimisation of the mine and process plant design for Bisie, which has resulted in
the following changes to the mine design. The fundamental mining method has not changed but, the layout and mine design
parameters have changed notably from the updated feasibility study issued in June 2016.
The mine design was developed based on the revised criteria, including a reduction in cut off grade from 1.8% to 1.4% due to a
far higher tin price, that resulted in a 30% increase in ore tonnes mined, a 10% increase in tin tonnes mined, and a LoM
extension of 2.5 years. The capital footprint has been defined as mine development and associated infrastructure that will take
place up to and including December 2018. This includes approximately 64,000 tonnes of ore from the ore drive development, which
will be stockpiled prior to plant commissioning. Stoping will commence outside the capital footprint.
The Mineral Resource estimates were updated in May 2016. The Mineral Resource estimate contains 19 600 tonnes of tin of
Measured Mineral Resources, 188 400 tonnes of tin in Indicated Mineral Resources and 22 800 tonnes of tin in Inferred
Mineral Resources declared at a 0.5% tin cut-off grade. The Mineral Reserve estimate contains 15 896 tonnes tin in the Proven
Reserve category and 151 448 tonnes tin in the Probable Reserve category at a 1.4% tin cut-off grade.
Contractors will mine the Mpama North orebody using proven underground mechanised mining methods to deliver ore to the process
plant at an expected rate of 25 - 35ktpm. A comprehensive programme of metallurgical testing was executed to support the CBE. An
overall metallurgical recovery of 80% was achieved under laboratory conditions. Factoring in operating conditions, operator skill
levels, and an element of conservatism, an overall recovery of 73% has been applied in the evaluation of the Project economics.
The process design is based on recovery of tin into concentrate through conventional gravity separation methods. The Bisie Tin
Project process plant design capacity is 360 - 400ktpa.
Alphamin is committed to develop the first large commercial tin mine in the eastern DRC that will produce conflict-free tin
concentrate, while promoting community development, safety, health and environmentally sound practices. "The Bisie operation will
supply conflict-free tin from eastern DRC and the Alphamin operation will be the manifestation of what conflict mineral advocacy
and legislation aimed to achieve. Alphamin's conflict-free tin concentrate and social initiatives should therefore be of interest
to international trading and smelting companies and multinational brands which use tin in their products, including laptops,
mobile and smart phones and cars," explains Kamstra.
"The complexities of certifying tin concentrates as conflict free also make the product less appealing to armed groups and so
reduces the risk of threats to the mine or transporters with the intention to forcefully gain occupation of the mine site or
appropriate final product," he says. Alphamin is a member of the Conflict-Free Sourcing Initiative, a global end-user grouping of
companies who develop conflict-free certification standards and protocols, and is also a member of the International Tin Research
Institute which is involved in global conflict-free sourcing initiatives.
In April, 2016 a Memorandum of Understanding was signed between Alphamin and the Walikale Community to collaborate in creating
the Lowa Alliance. The Lowa Alliance will invest, along with the community itself and other development partners including the
Government of the DRC, in 120 projects over the initial five years, which will include schools and technical training, primary
health care services, agriculture and fish-farming, small scale renewable energy, small and micro enterprise, community
infrastructure, town zoning and road articulation to help manage growth, and women's empowerment.
Alphamin through its exploration and development phase has already created 480 new jobs, invested in road and
telecommunications infrastructure to unlock the isolated Walikale territory, developed 25 participatory local development plans
representing the long-term needs of the 14,000 households living closest to the mine, and recently completed the construction of
a quality primary school with solar powered lighting. An artisanal and small scale miner (ASM) strategy is being implemented to
work with all levels of government to optimize incentives for ASM miners to work legally off the Alphamin concession, reduce
impunity for illegal activity and assure optimal security for operations, personnel and local residents.
Alphamin is responsible for consistent monitoring of all community initiatives, including the artisanal strategy, and will
work with all involved stakeholders to assure respect for and compliance with the Voluntary Principles on Security and Human
Rights guidelines. Alphamin, therefore has a robust and proactive programme of community outreach and engagement in place.
Alphamin has completed the required environmental studies and is in full compliance with IFC Performance Standards and Equator
Principles. Comprehensive management plans have been developed to mitigate the potential negative environmental impacts of the
Project.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this News Release.
EXPLANATORY AND MORE DETAILED INFORMATION
KEY OUTPUTS OF FEED & CBE PHASE
Upon completion of the Updated Feasibility Study ("UFS") in June 2016, the Project team appointed DRA Projects as EPCM
contractor on a limited scope basis. The Project team has recently completed the optimisation of the mine and process plant
design for Bisie, which has resulted in the following changes
MINE DESIGN
The mine design was reviewed by geotechnical and sublevel caving specialists, and although the fundamental mining method has
not changed, the layout and mine design parameters have changed notably from the updated feasibility study. The Life of Mine
(LoM) design has been developed based on the revised criteria and illustrated below.
Figure 1: Mpama North Life of Mine Design and Layout
These revised criteria have resulted in a 30% increase in ore tonnes mined, a 10% increase in tin tonnes mined, and a LoM
extension of 2.5 years.
The capital footprint has been defined as mine development and associated infrastructure that will take place up to and
including December 2018. This includes approximately 64 000 tonnes of ore drive development which will be stockpiled prior to
plant commissioning. Stoping will commence outside the capital footprint.
Figure 2: Mining Capital Footprint
PROCESS PLANT DESIGN
The original flow sheet was further developed with the support of an additional test work campaign:
- Engineering of the comminution circuit remained predominantly unchanged. The pre-concentration circuit remains the same as
in the UFS with Gekko jigs employed for the task.
- Shaking tables were added as cleaners to both spiral gravity concentration circuits allowing for, amongst other things,
high grade bypasses directly to the final product.
- The oxide flotation stream in the low grade regrind circuit was replaced with a bank of shaking tables as flotation test
work was unable to produce saleable grade products at acceptable recoveries.
- The sulphide flotation remains unchanged and is critical for final product contamination control.
- A low intensity magnetic separator remains in the circuit to remove any free iron added to the process during the various
grinding processes.
The optimised process flow sheet has been simplified to produce only a single high grade product and the dewatering system for
the product stream has been changed from plate and frame filters to vacuum filters due to the coarse high grade gravity
concentrate produced early in the process plant.
Figure 3: Bisie Process Flow Sheet
These optimisations have resulted in a 6% higher annual average plant throughput rate, and an increase in tin recoveries to
73%
ESTIMATED CAPITAL COSTS
The capital cost estimate has an accuracy level of -10% to 10%, is stated in Q1 2017 terms, and was compiled on the following
basis:
- Equipment and material quantities were based on the design as depicted below:
Figure 4: 3D View of Overall Block Plan
- Mining and process plant components were priced using quotations from reputable South African suppliers and vendors.
- Foreign currency elements of quoted prices were converted to United States Dollars, using the following key rates of
exchange:
- USD1 : ZAR13.60
- USD1 : AUD1.30
- USD1 : EUR0.90
- All applicable duties and taxes have been included in the capital cost estimate with the exception of Value Added Tax
(which has however been included in the Project peak funding requirement)
CBE - OPERATING HIGHLIGHTS AND PROJECT PERFORMANCE
| ECONOMIC ASSUMPTIONS |
| |
Tin price |
$ 21 400/t(1) |
| |
Oil price |
$54/barrel |
| |
Delivered cost of diesel |
$1.50/litre |
| |
Explosives cost |
$3 400/t |
| (1) |
Current equivalent of ITRI's long run equilibrium tin price of US$22,500/t (2020 terms) |
| PRODUCTION ASSUMPTIONS |
|
| |
Plant throughput |
Up to 36ktpm |
|
| |
Plant recovery |
73 |
% |
| OPERATING COSTS (US$ per tonne tin) |
|
| Activity |
CBE(1 |
) |
UFS(1 |
) |
| |
Mining(2) |
2 909 |
|
1 951 |
|
| |
Processing(3) |
348 |
|
584 |
|
| |
Site infrastructure |
1 394 |
|
1,208 |
|
| |
• |
Power |
961 |
|
744 |
|
| |
• |
Other |
433 |
|
464 |
|
| |
Sustaining capital cost(4) |
297 |
|
130 |
|
| |
Administration and general |
1 253 |
|
1 102 |
|
| |
• |
Community development (including LOWA alliance) |
245 |
|
220 |
|
| |
• |
Health, Security & IT |
243 |
|
186 |
|
| |
• |
Other |
765 |
|
696 |
|
| |
Logistics cost |
1 081 |
|
1 036 |
|
| |
Treatment charges(5) |
1 555 |
|
1 385 |
|
| Cash cost of tin produced |
8 837 |
|
7 396 |
|
| |
Export duties & fees(6) |
529 |
|
748 |
|
| |
DRC Government royalty(7) |
416 |
|
340 |
|
| |
Marketing commissions(7) |
577 |
|
451 |
|
| Cash cost of tin sold |
10 359 |
|
8 935 |
|
| 1. |
CBE costs are denominated in 1 January 2017 terms, whereas the UFS costs were stated in 1 January 2016
terms. Inflationary cost escalation thus needs to be borne in mind when comparing the CBE costs to the UFS costs. |
| 2. |
The mine design has been modified and allows for an additional 14,610m of underground development. This
additional development allows for greater operation flexibility and reduces the dilution risk. |
| 3. |
Tin flotation removed from process flow sheet and replaced with lower operating cost and complexity shaking
tables. |
| 4. |
Additional allowance made for repairs and maintenance of access road, mining equipment and process
plant. |
| 5. |
Greater tonnes treated per tonne of tin produced owing to increased moisture in tin concentrate |
| 6. |
Removal of certain fees not applicable to an industrial mine |
| 7. |
Linked to tin price assumption |
| CAPITAL COSTS (US$'MILLION) |
|
| Area |
CBE(1&2 |
) |
UFS(1&2 |
) |
| |
Mining |
29.7 |
|
22.0 |
|
| |
Process plant(3) |
32.9 |
|
45.2 |
|
| |
Infrastructure |
28.5 |
|
22.8 |
|
| |
Project indirects(4) |
22.3 |
|
9.8 |
|
| |
Contingency |
8.0 |
|
7.6 |
|
| |
Owners costs(5) |
30.0 |
|
17.0 |
|
| Total capital costs |
151.4 |
|
124.4 |
|
| 1. |
CBE costs are denominated in 1 January 2017 terms, whereas the UFS costs were stated in 1 January 2016.
Inflationary cost escalation thus needs to be borne in mind when comparing the CBE costs to the UFS costs. |
| 2. |
A significant portion of the Project's capital costs are denominated in ZAR. The strengthening of the ZAR
relative to the US$since the date of the UFS (15.98 vs 13.40 at or about the date of this press release) contributed to the
increase in CBE capital cost relative to the UFS cost. |
| 3. |
Process flowsheet optimised, reduced total equipment requirements, reduced plant footprint and associated
earthworks costs |
| 4. |
Withholding taxes, power generation costs during construction and import inspection fees omitted in error
in UFS cost. |
| 5. |
CBE estimate based upon a 25-month period @ US$1.2 million per month whereas the UFS estimate was based
upon a 17-month period @ US$1million per month. Includes those costs set out under "Administration & General" above e.g.
community development, health, insurance, IT, security and site management, for the period to commencement of processing
operations, as well as the direct costs of the owners team. |
| FISCAL ASSUMPTIONS |
|
| |
Export duties and fees (effective US$ per t of tin) |
529 |
|
| |
DRC Government royalty (% of revenue) |
2 |
% |
| |
VAT rate |
16 |
% |
| |
Corporate tax rate (%) |
30 |
% |
| FINANCIAL ANALYSIS |
| Economic indicator |
Units |
Value |
| |
Ungeared Project NPV8 (real after tax) |
US$ million |
402.2 |
| |
Ungeared Project IRR (real after tax) |
% |
49.1 |
| |
Payback period from first tin production |
months |
17 |
| |
Peak funding (nominal terms) |
US$ million |
152.0 |
| |
Average production |
tpa |
9 642 |
| Average EBITDA per annum |
US$ million |
110.0 |
The Project NPV at various tin prices and discount rates is set out in the table below:
| PROJECT NPV |
| US$'million |
US$ 19,000/t |
US$ 20,000/t |
US$ 21,400/t |
| |
8% real discount rate |
301.0 |
343.2 |
402.2 |
| |
10% real discount rate |
250.7 |
287.7 |
339.5 |
| |
12% real discount rate |
209.2 |
241.8 |
287.4 |
| |
15% real discount rate |
159.5 |
186.8 |
225.0 |
ECONOMIC SENSITIVITIES
The CBE results show that the Project has the potential to remain strongly profitable at lower tin prices, as well as at
increased prices for key consumables.
BISIE PROJECT COMMENTARY
PERMITTING
The Bisie Project is contained within Permis de Exploitation (mining permit) PE13155. The permit was issued in
February 2015 and is valid until 2045. In terms of the DRC Mining Code, the holder of a mining permit is entitled to
- build the installations and infrastructure required for mining exploitation;
- use the water and wood within the mining area for the requirements of the mining operation, subject to the conditions of
the environmental management plan;
- use, transport and freely sell the products originating from the mining area; and
- proceed with concentration, metallurgical treatment, as well as the transformation of mineral substances extracted from the
deposit within the mining area.
Alphamin also holds the legal title to additional exploration permits (PR4246, PR5270, PR10346, PR5266 and PR5267) adjacent to
PE13155.
MINERAL RESOURCES
The Mineral Resource estimates were updated in May 2016. The Mineral Resource estimate contains 19 600 tonnes of tin of
Measured Mineral Resources, 188 400 tonnes of tin in Indicated Mineral Resources and 22 800 tonnes of tin in Inferred
Mineral Resources declared at a 0.5% tin cut-off grade. These remain unchanged from those reported in the UFS.
| Classification |
Tonnes
(millions) |
Tin
% |
Tin tonnes (thousands) |
Copper
% |
Zinc
% |
Lead
ppm |
Silver
g/t |
| |
Measured |
0.46 |
4.31 |
19.6 |
0.22 |
0.12 |
70 |
1.4 |
| |
Indicated |
4.14 |
4.55 |
188.4 |
0.32 |
0.16 |
100 |
2.8 |
| Total M&I |
4.60 |
4.52 |
208.1 |
0.31 |
0.15 |
100 |
2.7 |
| |
Inferred |
0.54 |
4.25 |
22.8 |
0.16 |
0.09 |
130 |
1.4 |
MINERAL RESERVES
A mining cut-off grade of 1.4% tin was calculated for the proposed Sub-Level Caving mining method and was applied to the
Mineral Resources declared to determine the volume of Mineral Resources that would be payable, based on the cut-off calculation
assumptions.
The modifying factors applied to convert the Mineral Resource estimate to Mineral Reserves are based on the Sub-Level Caving
mining method selected and the mining designs generated are as follows:
| • |
Cut-off grade |
1.4% tin |
| • |
Ore recovery |
85% |
| • |
Planned dilution |
14.5% |
| • |
Unplanned dilution |
35% |
The Mineral Reserve estimate contains 15 896 tonnes tin in the Proven Reserve category and 151 448 tonnes tin in the Probable
Reserve category at a 1.4% tin cut-off grade. Inferred Mineral Resources were totally omitted from the reserve
estimate. There are a number of mineable areas within the life of mine plan, where the Mineral Resource contained a
combination of Indicated and Inferred Mineral Resources. In these areas, the Mineral Resources have been totally omitted.
| Classification |
Tonnes
(millions) |
Tin
(%) |
Tin tonnes
(thousands) |
| |
Proven |
0.38 |
4.17 |
15.9 |
| |
Probable |
4.29 |
3.53 |
151.4 |
| Total Measured and Indicated |
4.67 |
3.58 |
167.3 |
| Notes: |
| 1. |
The reserves were based on applying the Datamine Mineable Shape Optimizer (MSO) software that determines
stope shapes that are economical based on the applied cut-off grade and mining parameters. |
| 2. |
The Bisie orebody contains areas where the dip of the ore footwall is less than the standard 70° normally
required for the method. In these areas, the footwall mining drive and a portion of the stope ring was placed partially in
the waste footwall as long as the MSO reading remained economic. This waste reports as planned dilution. |
| 3. |
The waste dilution entering the run of mine ore stream from the drawpoints during extraction of the blasted
stope rings has been termed unplanned dilution. It is generally experienced in standard SLC that the dilution is ±35% for
an ore recovery of 85%. |
| 4. |
The general level of ore loss experienced in the cave area in longitudinal SLC is
±15%. |
| 5. |
A delayed draw SLC extraction methodology was applied to the top 3 sub levels of the mining layout to cater
for potential air blasts if the caving process is delayed. The delayed draw application establishes an ore blanket or
cushion above and behind the rings being blasted to protect the drawpoints being drawn. The methodology entails limiting
draw of the blasted rings to 30% on the top level, 50% on the 2nd level and 90% on the 3rd level. On the assumption that
general caving has been established by the time the 4th level mining commences the ore cushion can be drawn to a normal SLC
cut off. The dilution in this process is considerably less and was nominally estimated at 10% ore with recovery, assuming
the ore cushion is drawn on the 4th level estimated at 90% for the 4 levels combined. |
No Inferred Mineral Resources have been included in the estimation of Mineral Reserves.
MINING
Contractors will mine the Mpama North orebody using proven underground mechanised mining methods to deliver ore to the process
plant at an expected rate of 25 - 35ktpm.
PROCESSING AND TIN RECOVERY
A comprehensive programme of metallurgical testing was executed to support the CBE. An overall metallurgical recovery of 80%
was achieved under laboratory conditions. Factoring in operating conditions, operator skill levels, and an element of
conservatism, an overall recovery of 73% has been applied in the evaluation of the Project economics. The process design is based
on recovery of tin into concentrate through conventional gravity separation methods. The Bisie Tin Project process plant design
capacity is 360-400ktpa.
CONFLICT FREE TIN
Through the initiatives of the global tin industry regarding the trade of conflict minerals in the Great Lakes Region, burden
of proof falls primarily on supply chain operators and exporters to prove the direct source of the tin concentrate produced for
smelting. That material which is not traceable to its direct source is at risk of being unsaleable or heavily discounted in the
open market, since global smelters are under increasing pressure to assure certification and chain of custody to their customers.
The Bisie operation will supply conflict-free tin from eastern DRC and the Alphamin operation will be the manifestation of what
conflict mineral advocacy and legislation aimed to achieve.
Alphamin's conflict-free tin concentrate and social initiatives should therefore be of interest to international trading and
smelting companies and multinational brands which use tin in their products, including laptops, mobile and smart phones and cars.
The complexities of certifying tin concentrates as conflict free also make the product less appealing to armed groups and so
reduces the risk of threats to the mine or transporters with the intention to forcefully gain occupation of the mine site or
appropriate final product.
Alphamin is a member of the Conflict-Free Sourcing Initiative, a global end-user grouping of companies who develop
conflict-free certification standards and protocols, and is also a member of the International Tin Research Institute which is
involved in global conflict-free sourcing initiatives.
ENVIRONMENT
The Project is fully permitted to commence with construction and operating activities. Alphamin has completed the required
environmental studies, is in full compliance with IFC Performance Standards and Equator Principles, and comprehensive management
plans have been developed to mitigate any potential negative environmental impacts of the Project.
COMMUNITY DEVELOPMENT
The operation is planned to deliver on the commitment to develop the first large commercial tin mine in the eastern DRC that
will produce conflict-free tin concentrate, while promoting community development, safety, health and environmentally sound
practices. Alphamin, therefore has a robust and proactive programme of community outreach and engagement in place.
In April, 2016 a Memorandum of Understanding was signed between Alphamin and the Walikale Community to collaborate in creating
the Lowa Alliance and to promote environmental conservation and the reduction of illegal artisanal mining on Alphamin
concessions. Alphamin committed, from the date of production, to spend 4% of its in-country operating and administrative expenses
on community development while initiating projects and the Alliance during construction. This investment will be governed with
representative input from local communities and will be managed by the Lowa Alliance, a Government of the DRC ("GDRC")-regulated
non-profit foundation, which is in the final stages of registration. The development of an industrial mine at Bisie will also
generate leveraging of the GDRC and donor resources for additional investment in community infrastructure and social and economic
development in the project affected communities.
The Lowa Alliance will invest, along with the community itself and other development partners including the Government of the
DRC, in 120 projects over the initial five years. Projects include schools and technical training, primary health care services,
agriculture and fish-farming, small scale renewable energy, small and micro enterprise, community infrastructure, town zoning and
road articulation to help manage growth, and women's empowerment.
Alphamin through its exploration and development phase has already created 480 new jobs, invested in road and
telecommunications infrastructure to unlock the isolated Walikale territory, developed 25 participatory local development plans
representing the long-term needs of the 14,000 households living closest to the mine, and recently completed the construction of
a quality primary school with solar powered lighting.
Figure 5: New School constructed at Logu
Alphamin's artisanal mining strategy is also highly integrated with the community development strategy and promotes incentives
for artisanal miners to operate away from project areas with improved legal and other conditions. The artisanal mining strategy
also works with authorities to improve compliance with regulatory frameworks. Alphamin will encourage and assist GDRC
authorities, supported by the supply chain and donor financed traceability systems, to identify more sites for legal artisanal
mining and to support their validation and traceability. Alphamin is responsible for consistent monitoring of all community
initiatives, including the artisanal strategy, and will work with all involved stakeholders to assure respect for and compliance
with the Voluntary Principles on Security and Human Rights guidelines.
OPERATING COSTS
The Bisie Project's unit and total operating costs were estimated over the life of the Project. Mining operating costs were
estimated using contractor mining rates developed through a competitive tender process. Other operating costs were developed from
first principles for processing, site infrastructure, and general and administration, using operating plans as the basis for
consideration of labour, materials and consumables.
Primary on-mine cost drivers are diesel fuel (US$1.50 per litre) and explosives (US$3 400 per tonne). Labour costs have been
modelled on existing operations in the DRC and, employment work schedules which are compliant with the DRC Labour Code.
Off-mine costs are based on trucking the concentrate to a secure export warehouse in Goma using rough terrain vehicles. In
Goma the concentrate will be sold to tin traders whereafter it will be transferred to standard triaxle trucks and transported to
Mombasa for shipping to Malaysia. Logistics costs are based on indicative quotes received from transportation firms. Treatment
charges and marketing commissions are likewise based upon indicative quotes received from tin smelters and traders
respectively.
Export duties and fees are based upon the prevailing legislation and practice in the DRC. Export duties and royalties were
calculated on the net on mine revenue and are payable to both the local and DRC government at 2% each.
CAPITAL COSTS
The total pre-production capital cost is estimated at US$151.4 million, inclusive of first fills, strategic spares and
contingencies. The initial capital costs include the design and development of an access road, an underground mine, the creation
of a 64,000 tonne ore stockpile, a process plant, a tailings storage facility and all associated services required for the
operation of the mine.
PROJECT SCHEDULE TO PRODUCTION
The proposed Project development schedule allows 21 months for the mine construction programme. Certain early works are
required to gain access to the mine site as illustrated below.
Funding strategy
Peak funding for the Project, as determined from the period 1 January 2017 to the date upon which the Project starts
generating positive operational cash flows on a sustainable basis, is estimated to be US$152.0 million in nominal terms:
| PEAK FUNDING REQUIREMENT (NOMINAL TERMS) |
US$M |
|
| |
Project capital expenditure (incl. owners team costs) |
155.6 |
|
| |
VAT(1) |
7.1 |
|
| |
Working capital |
0.8 |
|
| |
Cash generated by operations |
(1.5 |
) |
| Project peak funding |
162.0 |
|
| |
Less cash on hand |
(8.0 |
) |
| |
Less funds due from minority shareholders |
(2.0 |
) |
| Peak funding requirement |
152.0 |
|
| (1) |
The Company has assumed that VAT refunds may take as long as 12 months to be repaid going forward, but is
hopeful that a VAT exemption for capital and operating expenditures incurred during the period to commencement of
commercial operations will be made available to the Project. |
In principle support for up to 65% of the Project's funding requirement has been secured from the Company's existing
shareholders and a consortium of experienced mining investors, and the Company is working with a number of debt providers to
arrange the balance of the funding. The capital raising programme is expected to complete in early Q2 2017, and a further
announcement will be made closer to that time.
OPPORTUNITIES AND NEXT STEPS
While the CBE is based solely on the Mpama North orebody only, Alphamin's exploration success in proving up this world-class
orebody demonstrates the potential to add additional tin bearing material from potential extensions to the mineralisation at
depth at Mpama North, Mpama South, and other adjacent permitted exploration areas.
CONCLUSION
The completion of the FEED program and associated CBE confirms the exceptional economic metrics of the Project. These,
together with the support of shareholders, the Government of the DRC, Provincial Government of North Kivu and the citizens of
North Kivu will result in the development of Bisie into North Kivu's first industrial mine, and a new premier global tin
mine.
EDITORS NOTES:
ISSUED ON BEHALF OF THE BOARD OF DIRECTORS OF ALPHAMIN RESOURCES CORP. BY:
Boris Kamstra, Chief Executive Officer
Tel: +230 269 4166
Grand Baie, Mauritius
PLEASE NOTE THAT THROUGHOUT THIS RELEASE:
- All figures presented pertain to 100% of the Project
- Alphamin owns an effective 80.75% interest in the Project
- All currency related figures are in US dollars and are stated in real 1 January 2017 terms unless stated otherwise
MORE INFORMATION ON ALPHAMIN RESOURCES CORP.:
Alphamin is a tin exploration and development company with the vision to be respected in the international
tin sector by unleashing the full profit and potential of its world-class tin asset in North Kivu, DRC, currently under
development.
Alphamin has the vision to become a premier tin producer by:
- Leading a world-class, profitable mining company in North Kivu, delivering results for the benefit of all stakeholders and
viewed with respect by the communities and Government.
- Becoming a profitable tin producer, while continuing with exploration to increase life of mine. ABM intends to operate a
profitable tin mine in a safe environment while uplifting the local community. Alphamin is striving to develop the first,
low-cost per tonne tin, industrial mine in North Kivu, while at the same time making a marked, positive impact on the
communities surrounding the mine. We intend to be a tin mining company that excels at the production of tin and provides
leadership for the region in terms of safety, health, environment and community development.
- Delivering on the commitment to develop the first large, industrial tin mine in North Kivu - giving Alphamin credibility
locally and abroad - and becoming a business transformation reference in the tin mining industry.
- Creating value for both shareholders and the community.
- Committing, from the date of production, to spend 4% of its in-country operating and administrative expenses on community
development. This investment will be governed with representative input from local communities and managed by the Lowa
Alliance, a GDRC-regulated not-for-profit foundation. Alphamin will continue to preserve its legal rights to develop Bisie and
explore ways to assist artisanal miners to transition from illegal to legal status, conflict-free sites elsewhere in the
region.
- Implementing community projects, supported by the Lowa Alliance, being selected following an in-depth survey of the 13 500
households (approximately 70 000 residents) across the 44 communities closest to Bisie. Representative committees have
prioritised a range of projects to promote social and economic development to which they, local authorities and potentially
external donors, will also contribute. These projects would provide incentives for income beyond illegal artisanal mining while
also providing educational and health infrastructure and services like potable water, malaria reduction and treatment and
primary health care capacity building, agricultural and infrastructure capacity investment.
IMPORTANT NOTICE
Although Alphamin discloses its mineral resource and mineral reserve statement in accordance with the requirements of the
applicable disclosure standards, this news release is based on estimates, which while prepared by Qualified Persons, are subject
to numerous uncertainties inherent in estimating quantities and classification of mineral resources and mineral reserves
(including subjective judgments and determinations based on available geological, technical, contracted and economic
information). Therefore, these statements should not be interpreted as assurances of LoM, or of the profitability of current or
future operations.
Mineral resources and mineral reserves prepared by, or under the supervision of different Qualified Persons are estimates
based on different technical assumptions (all of which comply with the applicable mining standards) and may vary as a result.
There is no assurance that had such estimates been prepared by the same professional geoscientists and engineers applying a
uniform methodology, they would not differ substantially from the information contained herein.
Mineral resource and mineral reserve information contained herein is based on engineering, metallurgical, economic and
geological data assembled, and analysed by both Alphamin and third parties. Estimates as to both quantity and quality are
periodically updated to reflect extraction of commodities and new drilling, or other data received. There are numerous
uncertainties inherent in estimating quantities and qualities of mineral reserves and costs to mine them, including many
modifying factors beyond Alphamin's control. Estimates of mineral reserves necessarily depend upon a number of variable factors
and assumptions, all of which may vary considerably from the actual results, such as
- geological continuity and mining conditions, which may not be fully identified by available exploration data, or which may
differ from experience in current operations; and
- the assumed effects of regulation and taxes by governmental agencies and assumptions concerning commodity prices, operating
costs, mining technology improvements, severance and excise tax, development costs and reclamation costs.
Further, mineral resource estimates, prepared in accordance with applicable mining standards are based on concentrations or
occurrences of minerals that are judged to have reasonable prospects for eventual economic extraction, but for which the
economics of extraction cannot be assessed, whether because of insufficiency of geological information, or lack of feasibility
analysis, or for which economic extraction cannot be justified at the time of reporting. Consequently, mineral resources are of a
higher risk and are less likely to be accurately estimated or recovered than mineral reserves. As well, mineral resources that
are not mineral reserves do not have a demonstrated economic viability and require economic analysis to prove their viability for
extraction.
Assumptions that are valid at the time of estimation may change significantly when new information becomes available,
requiring a reassessment of mineral reserves. Such changes in mineral reserves could also impact depreciation and amortisation
rates, asset carrying values, and provisions for close down, restoration and environmental remediation costs.
If the prices of the commodities produced by Alphamin decrease, or if there are adverse changes in treatment charges or
foreign exchange rates, certain of Alphamin's mineral reserves, which are currently classified as probable may cease to be
classified as recoverable, as they become uneconomic to mine. In addition, changes in operating, capital or other costs may have
the same effect by rendering certain mineral reserves uneconomic to mine in the future. Should such reductions occur, material
write-downs of its investment in mining properties or the discontinuation of development might be required, and there could be
material delays in the development of new projects, increased net losses and reduced cash flow. Moreover, short-term operating
factors relating to mineral reserves, such as the need for orderly development of the mineral deposit, or the processing of new
or different mineral grades, may cause a mining operation to be unprofitable in any particular accounting period.
No assurance can be given that the anticipated tonnages and grades will be achieved, or that the indicated level of recovery
will be realised. The volume and grade of mineral reserves actually recovered and rates of production from the Company's present
mineral reserves may be less than geological measurements of the mineral reserves, which may result in Alphamin realising less
value from such mineral reserves than has been predicted. In the future, short-term operating factors relating to mineral
reserves, such as the need for development of ore bodies and other mineral resources, or the processing of different ore grades,
may cause mineral reserves to be modified or Alphamin's operations to be unprofitable in a particular period.
No assurance can be given that the indicated amount of mineral reserves of ore, or other minerals will be recovered, or will
be recovered at the prices assumed. Mineral reserve estimates are based on limited sampling and, consequently, are uncertain
because the samples may not be representative of the entire orebody and mineral resource. As a better understanding of the
orebody or mineral resource is obtained, the mineral reserve estimates may change significantly, either positively or
negatively.
For these reasons, estimates and classifications of mineral reserves prepared by different engineers, or by the same engineers
at different times may vary substantially. Actual commodity tonnage recovered from identified mineral reserves and revenue and
expenditures with respect to the mineral reserves may vary materially from estimates. Accordingly, these reserve estimates may
not accurately reflect Alphamin's actual mineral reserves. Any inaccuracy in the estimates related to the mineral reserves could
result in lower than expected revenue, higher than expected costs and decreased profitability.
All units are metric throughout this mineral resource and mineral reserve statement, unless otherwise stated.
All mineral resources and mineral reserves contained in this release should be read subject to the above risks and modifying
factors. The effective date of the mineral resources in this news release is May 2016. The effective date of the mineral reserves
in this news release is February 2017. The data was prepared by, or under the supervision of a Qualified Person as defined in NI
43-101.
Industry terms and abbreviations
The following industry terms and abbreviations are used within this document:
| CIM |
Canadian Institute of Mining and Metallurgy |
| NPV |
Net present value |
| ktpa |
Thousand tonnes per annum |
| ktpm |
Thousand tonnes per month |
| LoM |
Life of mine |
| Mt |
Million tonnes |
| NI |
National instrument |
| QP |
Qualified Person |
| ROM |
Run of mine |
| IRR |
Internal rate of return |
| US$ |
United States of America dollar |
| % |
Percentage |
Mine cut-off grade is defined as the level of mineral in an ore below, which is not economically feasible to
mine.
CIM definitions, standard definitions or similar
The following definitions have been applied in estimating the mineral resources and mineral reserves disclosed within this
release.
| Mineral reserve |
Is the economically mineable part of a measured and/or indicated mineral resource. It includes diluting
materials and allowances for losses, which may occur when the material is mined, or extracted and is defined by studies at
a pre-feasibility or feasibility level as appropriate that include application of modifying factors. Such studies
demonstrate that, at a time of reporting, extraction could be reasonably justified. The reference point at which mineral
reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important
that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is
included to ensure that the reader is fully informed as to what is being publically reported. The public disclosure of a
mineral reserve must be demonstrated by a pre-feasibility study or feasibility study. |
| Probable mineral reserve |
Is the economically mineable part of an Indicated, and, in some circumstances, a measured mineral resource.
The confidence in modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral
reserve. |
| Proven mineral reserve |
Is the economically mineable part of a measured mineral resource. A proven mineral reserve implies a high
degree of confidence in the modifying factors. |
| Mineral resource |
Is a concentration or occurrence of solid material of economic interest in, or on the earth's crust in such
form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location,
quantity, grade, or quality, continuity, and other geological characteristics of a mineral resource are known, estimated,
or interpreted from specific geological evidence and knowledge, including sampling. |
| Measured mineral resource |
Is that part of a mineral resource for which quantity, grade or quality, densities, shape, and physical
characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed
mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed
and reliable exploration, sampling and testing and is sufficient to confirm geological and grade, or quality continuity
between points of observation. The estimate has a higher level of confidence than that applying to either an indicated
mineral resource, or an inferred mineral resource. It may be converted to a proven mineral reserve, or to a probable
mineral reserve. |
| Indicated mineral resource |
Is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical
characteristics are estimated with sufficient confidence to allow the application of modifying factors to support mine
planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed
and reliable exploration, sampling, and testing and is sufficient to assume geological and grade or quality continuity
between points of observation. The estimate has a lower level of confidence than that applying to a measured mineral
resource and may only be converted to a probable mineral reserve. |
| Inferred mineral resource |
Is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of
geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an
Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued
exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic
parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be
excluded from estimates forming the basis of feasibility or other economic studies. |
QUALIFIED PERSONS
Mr Gordon Mark Cresswell (PrEng MSc, FSAIMM, MIMMM, ARSM) is a Minerals Processing Consulting Engineer of DRA Projects, an
independent EPCM consulting company to Alphamin and a Qualified Person as defined in National Instrument 43-101
Standards of Disclosure of Mineral Projects. Mr Cresswell has reviewed and approved the scientific and technical information
contained in this news release.
Mr John Anthony Cox (PrEng ECSA, BSc Mining, ARSM, FSAIMM) is a Principal Consultant for DRA Projects, an independent EPCM
consulting company to Alphamin and a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure of Mineral
Projects. Mr Cox has reviewed and approved the scientific and technical information contained in this news release.
Mr Jeremy Charles Witley (BSc Hons, MSc (Eng.)) is a Principal Mineral Resource Consultant for the MSA Group, an independent
geological consulting company to Alphamin and a Qualified Person as defined in National Instrument 43-101 Standards of
Disclosure of Mineral Projects. Mr Witley has reviewed and approved the scientific and technical information contained in this
news release.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
Information in this news release that is not a statement of historical fact constitutes forward-looking information.
Forward-looking statements contained herein include, without limitation, statements relating to costs of production, success of
mining operations, the ranking of the Project in terms of cash cost and production, economic return estimates, capital costs for
the Project, mineral resource and reserve estimates, social, community and environmental impacts, and continued positive
discussions and relationships with local communities and stakeholders. Forward-looking statements are based on assumptions
management believes to be reasonable at the time such statements are made. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements. Although Alphamin has attempted to identify
important factors that could cause actual results to differ materially from those contained in forward-looking statements, there
may be other factors that cause results not to be as anticipated, estimated or intended. Factors that may cause actual results to
differ materially from expected results described in forward-looking statements include, but are not limited to: Alphamin's
ability to secure sufficient financing to advance and complete the Bisie Tin Project, uncertainties associated with Alphamin's
resource and reserve estimates, uncertainties regarding the estimation of future costs, uncertainties regarding global supply and
demand for tin and market and sales prices, uncertainties associated with securing off-take agreements and customer contracts,
uncertainties with respect to social, community and environmental impacts, adverse political events, uncertainties with respect
to optimization opportunities for the Bisie Tin Project, as well as those risk factors set out in the Company's Management
Discussion and Analysis and other disclosure documents available under the Company's profile at www.sedar.com. Forward-looking statements contained herein are made as of the date of this news
release and Alphamin disclaims any obligation to update any forward-looking statements, whether as a result of new information,
future events or results or otherwise, except as required by applicable securities laws."
To view the Figures and Charts associated with this press release, please visit the following link: http://media3.marketwire.com/docs/1084929__Figures_Charts.pdf