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Alphamin Resources Corp

TSXV:AFMLive AI agent

Alphamin Resources is a low-cost tin concentrate producer from its high-grade deposits at Mpama North and Mpama South, located in the North Kivu Province of the Democratic Republic of Congo (DRC).

Investor website: https://alphaminresources.com/

About

Alphamin Resources is a low-cost tin concentrate producer from its high-grade deposits at Mpama North and Mpama South, located in the North Kivu Province of the Democratic Republic of Congo (DRC). Mpama North has a tin grade of approximately 4.5%, making it the world’s highest-grade tin resource, while Mpama South has a grade of about 2%. The company aims to expand production from 12,500 tonnes to around 20,000 tonnes of contained tin per year and is focused on safe mining practices, environmental impact, and stakeholder value distribution.

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Mineral resource
As part of the Feasibility Study the Mineral Resource estimates were updated in October 2015, detailed in the Independent Technical Report titled “NI 43-101 Technical Report – 15 October 2015 Mineral Resource Estimate”. The Mineral Resources contains 155,300 tonnes tin of Indicated Mineral Resource and 38,900 tonnes tin of Inferred Mineral Resources declared at a 0.5% Sn cut-off grade. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | **Classification** | **Tonnes** **(millions)** | **Sn** **%** | **Sn tonnes** **(thousands)** | **Cu** **%** | **Zn** **%** | **Pb** **ppm** | **Ag** **g/t** | | Indicated | 3.94 | 3.94 | 155.3 | 0.31 | 0.15 | 110 | 2.7 | | Inferred | 0.84 | 4.64 | 38.9 | 0.22 | 0.13 | 140 | 1.8 |
Projects
["ALPHAMIN ANNOUNCES POSITIVE FEASIBILITY STUDY RESULTS FOR 84.55% OWNED BISIE TIN PROJECT, DEMOCRATIC REPUBLIC OF CONGO\n\n**MAURITIUS**– FEBRUARY 23rd, 2016 – Alphamin Resources Corp (AFM: TSXV, “ **Alphamin**” or the “ **Company**”) is pleased to report on the results of its Feasibility Study for its 84.55% owned Bisie Tin Project ( **Bisie**) in east central Democratic Republic of Congo ( **DRC**). The study supports a technically simple underground mining operation with recovery of tin via gravity separation methods that offers low unit capital and operating costs, rapid payback and strong financial performance at metal prices of US$14,800/t tin.\n\n“The Bisie Project is an ideal foundation on which to build a mining company, and act as a catalyst for the economic development of North Kivu. It is straightforward, financeable, resilient, and has tremendous opportunity to grow. We are delighted to have reached such an important milestone, and feel strongly that our development approach is ideally suited to the attributes of the orebody.” Said Boris Kamstra, Chief Executive Officer.\n\n**Base Case Operating Highlights and Project Performance**\n| | |\n| --- | --- |\n| **Tin price** | $14,800/t |\n| **Probable Mineral Reserves** | 3.04Mt @ 3.76% Sn containing 114,366 tonnes tin (at a 1.8% Sn cut-off grade) |\n| **Production** | 9,000 tonnes per annum over 10.5 year mine life |\n| **Initial CAPEX** | US$119.2 million |\n| **NPV @ 15% (after tax)** | US$84.7 million |\n| **IRR (after tax)** | 36.4% |\n\n**The economic highlights throughout this release represent the 100% Project valuation. Alphamin owns an effective 84.55% interest in the Project.**\n\nThe Bisie Project stands out in the world of tin development projects. With very high tin grades, excellent metallurgical recoveries, very low levels of deleterious materials in concentrate, an approved mining license, modest capital requirements and low operating costs, our projected margins are healthy”, said Boris Kamstra, CEO of Alphamin Resources Corp. “In addition, the Project has been designed to provide flexibility to scale up and take advantage of the potential to deliver additional tin metal from the known areas of mineralisation, as demonstrated by our exploration team’s efforts at Mpama North. The foundations for a profitable tin producer are in place today with a proven management team to lead us forward.”\n\nThe feasibility study supports an underground mine at the Mpama North orebody containing over 190,000 tonnes of tin from defined Mineral Resources. The process plant is designed to treat the run of mine material using proven gravity separation methods.\n\nThe proposed Bisie Project implementation plan is over a period of 18 months, with underground ore development and stoping commencing 12 months before first production of tin in concentrate, which is anticipated in Q4 2018. The project requires an estimated initial capital expenditure of US$119.3 million to support the construction of an access road, underground mine, process plant, tailings dam and associated facilities with a process capacity of 360 ktpa. The mine is estimated to produce on average 9,000 tonnes of tin contained in concentrate per year over a 10.5 year mine life, with all-in operating costs of $8,450/t Sn.\n\nIt is anticipated that the Bisie Project would employ approximately 700 people during construction, and create approximately 450 permanent local jobs during operations along with significant economic benefits in an area of the DRC that has seen little foreign investment.\n\nMDM Engineering led the Bisie Project Feasibility Study, which included input from leading consultants such as Bara Consulting, Epoch and The MSA Group.\n\n**Base Case Operating Highlights and Project Performance**\n| | |\n| --- | --- |\n| **ECONOMIC ASSUMPTIONS** |\n| Plant throughput | 360ktpa |\n| Sn price (Q4 2015) | $14,800/t |\n| Oil price (Q4 2015) | $56/barrel |\n| Government royalty (% of gross revenue) | 2% |\n| Local government levy (% of gross revenue) | 1% |\n| Corporate tax rate (%) | 30% |\n\n**FINANCIAL ANALYSIS**\n| **Economic indicator** | **Units** | **Value** |\n| --- | --- | --- |\n| Ungeared NPV15 (real after tax) | US$ million | 84.7 |\n| Ungeared IRR (real after tax) | % | 36.4 |\n| Average EBITDA/annum (real terms) | US$ million | 54.1 |\n| Peak funding (real terms) | US$ million | 123.7 |\n| Payback period from first production | months | 26 |\n| Average Production | tpa | 9,000 |\n\n**CAPITAL COSTS**\n| **Area** | **US$M** |\n| --- | --- |\n| Mining | 21.7 |\n| Plant | 44.5 |\n| Transport and logistics | 5.0 |\n| Tailings and waste management | 3.3 |\n| Access road | 19.1 |\n| Engineering & Management Fees | 10.1 |\n| Pre-Production & Owners Costs | 15.3 |\n| **Total Capital Costs** | **119.2** |\n\n**OPERATING COSTS**\n| **Activity** | **US$ per ton milled** | **US$ per ton Sn** |\n| --- | --- | --- |\n| Mining | 72.4 | 2,671 |\n| Processing | 20.5 | 755 |\n| Site infrastructure | 5.5 | 203 |\n| Administration and general | 42.0 | 1,550 |\n| Transport of concentrate | 23.4 | 863 |\n| Marketing fees and treatment charges | 39.5 | 1,458 |\n| Royalties | 25.7 | 947 |\n| **Total Costs** | **228.8** | **8,448** |\n\n## Economic Sensitivities\nThe study results show that the Bisie Project has the potential to remain strongly profitable at lower tin prices as well as at increased prices for key consumables. For example, a 20% increase in the oil price would reduce the Project NPV by only 8%.\n\n## Mining\nThe Mpama North orebody will be mined by contractors using proven underground mechanised mining methods to deliver ore to the process plant at a rate of 30ktpm. No Inferred Mineral Resources have been included in the estimation of Mineral Reserves. Mineral Reserves (converting only Indicated Mineral Resources) of 3.04Mt at a grade of 3.76% Sn using a cut-off grade of 1.8% Sn have been estimated by Bara. As there are no Measured Mineral Resources in the Mineral Resource estimate, only Indicated Mineral Resources are used in the determination of the Mineral Reserve estimate.\n\n## Processing and Tin Recovery\nA comprehensive program of metallurgical testing was executed to support the Feasibility Study. Test work included mineralogical work, heavy liquid and dense media separation, spiral and jigging test work, thickening and filtration test work as well as pilot scale process plant test work. A total of 19 variability samples were tested to verify the results of the pilot testing campaign.\n\nOverall metallurgical recovery of 79% was achieved under laboratory conditions. Factoring in operating conditions and operator skill levels, an overall recovery of 72% has been applied in the evaluation of the Project economics.\n\nThe Bisie Tin Project process plant has been designed to process 42ktpm. The design is based on recovery of tin into concentrate through conventional gravity separation methods. Mined ore will be crushed to 100% passing 10mm. The coarse material (-10mm to +1mm) accounts for 75% of the mass flow and the tin contained in this size fraction will be recovered in conventional jigs. The fine material (-1mm) makes up the balance of the material and the tin contained in this stream will be recovered using spirals. The concentrates from both the jigs and spirals will be milled and subjected to flotation to remove sulphide material. The tin rich concentrate (>60% Sn) will be thickened, filtered and dispatched for transport to the smelter for further refining.\n\n## Capital Costs\nThe total pre-production capital cost (CAPEX) is estimated at US$119.2 million, inclusive of first fills, strategic spares and contingencies. The initial capital costs include the design and development of the access road, underground mine, process plant, tailings storage facility and all associated services required for the operation of the mine.\n\n**CAPITAL COSTS**\n| **Area** | **US$M** |\n| --- | --- |\n| Mining | 21.7 |\n| Plant | 44.5 |\n| Transport and logistics | 5.0 |\n| Tailings and waste management | 3.3 |\n| Access road | 19.1 |\n| Engineering & Management Fees | 10.1 |\n| Pre-Production & Owners Costs | 15.3 |\n| **Total Capital Costs** | **119.2** |\n\n## Operating Costs\nUnit and total operating costs were estimated for the Bisie Project over the life of the project. Operating costs were developed from first principles for processing and administration using operating plans as the basis for consideration of labour, materials and consumables. Mining operating costs have been estimated using contractor mining rates developed through a competitive tender process.\n\nPrimary on-mine cost drivers are diesel fuel ($1.43/L) and explosives ($3,400/t). Labour costs have been modelled on existing operations in the DRC employing work schedules which are compliant with the DRC Labour Code.\n\nOff-mine costs are based on trucking the concentrate to Goma using rough terrain vehicles. In Goma the concentrate will be transferred to standard triaxle truck and transported to Dar es Salam for shipping to Malaysia.\n\nRoyalties have been calculated on the net on mine revenue and are payable to the Central Government at 2% and the Provincial Government at 1%.\n\n**OPERATING COSTS**\n| **Activity** | **US$ per ton milled** | **US$ per ton Sn** |\n| --- | --- | --- |\n| Mining | 72.4 | 2,671 |\n| Processing | 20.5 | 755 |\n| Site infrastructure | 5.5 | 203 |\n| Administration and general | 42.0 | 1,550 |\n| Transport of concentrate | 23.4 | 863 |\n| Marketing fees and treatment charges | 39.5 | 1,458 |\n| Royalties | 25.7 | 947 |\n| **Total Costs** | **228.8** | **8,448** |\n\n## Environment\nThe Project is fully permitted to commence with construction and operation activities. Alphamin has completed the required environmental studies and management plans have been developed to mitigate against the potential negative environmental impacts of the Project.\n\n## Managing Social and Community Risk\nAlphamin has in place a robust and proactive program of community outreach and engagement. Alphamin has committed to spend 4% of its in-country operational expenses on social infrastructure and economic development. This investment will be governed with representative input from affected communities and managed by the Lowa Alliance, a not for profit registered organisation. The development of an industrial mine at Bisie will also generate leveraging of Government of DRC and donor resources for additional investment in community infrastructure and social and economic development in the project affected communities.\n\nArtisanal miners are widespread throughout the DRC. Alphamin has worked proactively with the artisanal miners themselves, the government authorities and the implementers and international donors involved in implementing conflict-free mineral supply chains to provide more attractive economic options as the miners face depleting surface minerals and increasing pressure to comply with DRC law and global supply chain expectations for conflict-free minerals. Artisanal miners working on the Bisie Project site have moved away due to increasingly difficult mining conditions, a falling tin price and more stringent controls on the provenance of concentrates by traders and smelters. Alphamin has taken this opportunity to secure its Bisie Project by fencing-off the mining site and will continue preserving its legal rights to develop Bisie whilst assisting artisanal miners to transition from illegal status to legal on conflict-free certified sites elsewhere in the region.\n\nThrough 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 unsaleable in the open market, since global smelters are under increasing pressure to assure certification and chain of custody to their customers. The complexities of certifying tin concentrates makes the product less appealing to armed groups and so reduces the risk of an attack on the mine or transporters with the intention to forcefully gain occupation of the mine site or steal final product.\n\n## Project schedule to production\nThe proposed project development schedule allows for 18 months for the mine construction program. Certain early works are required to gain access to the mine site as illustrated below.\n\n## Permitting\nThe 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\n- Build the installations and infrastructure required for mining exploitation;\n- 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;\n- Use, transport and freely sell the products originating from the mining area; and\n- Proceed with concentration, metallurgical treatment, as well as the transformation of mineral substances extracted from the deposit within the mining area.\n\nAlphamin holds legal title to additional exploration permits (PR10346, PR5266 and PR5267) adjacent to PE13155.\n\n## Funding strategy\nPeak funding for the Project is estimated to be US$123m which comprises the development capital together with the working capital required up to the point when cash flows turn positive. Alphamin envisages funding this with a combination of equity and debt.\n\nPrior to commencing with the implementation of the Project, a complete funding solution is required and the equity and debt are therefore inter-dependent. Accordingly, the target date for financial close in respect of this is early 2017 to enable development to commence at that time.\n\n## Opportunities and Next Steps\nThe Feasibility Study confirms that the Bisie Project is scalable. Whilst the Feasibility Study is based on the Mpama North orebody, Alphamin’s exploration success in proving up this world class orebody demonstrates the potential to add additional tin bearing material from Mpama South and potential extensions to the mineralisation at depth at Mpama North to extend the life of mine or provide incremental feed for the Bisie Project process plant.\n\nThe Company believes there are opportunities to further improve the economics of the Bisie Project through continued engineering, capital cost reductions, and potential process plant engineering initiatives. Capital cost estimates for the project at this level of study are believed to be conservative. During the next 9-12 months, until funding has been secured, the Company will vigorously investigate ways to reduce capital expenditures. For example, the earthworks, civils, tailings and road construction activities can be awarded to a single contractor with potential savings to the project in preliminary and general costs. By implementing smarter contracting strategies we may be able to realize significant savings. Other key areas of focus to reduce the upfront capital costs will be the design of the access road and on-site infrastructure in a phased approach. This could defer capital costs into the operational phase of the Project and so reduce the capital at risk to the Company.\n\n## Conclusion\nThe completion of the 2016 Feasibility Study for the Bisie Project is an important step towards demonstrating the robust nature of the Project and progressing the Project towards execution and production. With only a limited number of active industrial scale tin mines outside of China and Indonesia and the majority of potential new projects facing significant technical, financing, permitting and other challenges, the Project is believed to be the most advanced developing tin project in the world.\n\nIt has the significant advantages of being a very high grade tin orebody, with favourable metallurgical properties and having an approved mining license. There is no other known tin project in the world that can commit to construction under present price conditions, and as such, the Bisie Project is expected to become the next tin producer."]
Leadership
Boris Kamstra (CEO, Former CEO who led Alphamin through its development and mine build phase, now serves as an executive director focusing on investor relations and marketing.), Maritz Smith (CEO, 18 years of experience in mining operations, previously held positions at Metorex and Pangea, holds a B-Com Hons degree and is a Chartered Accountant.)

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