Wrap Text
Quarterly update
Alphamin Resources Corp.
Continued in the Republic of Mauritius
Date of incorporation: 12 August 1981
Corporation number: C125884 C1/GBL
TSX-V share code: AFM
JSE share code: APH
ISIN: MU0456S00006
QUARTERLY UPDATE
Alphamin Resources Corporation (AFM:TSXV, “Alphamin”, or the “Company”) is pleased to announce
financial and operating results for the three months ended September 30, 2019. All financial
figures are in U.S. dollars.
Highlights:
- Quarterly Tin production up 269% to 2,345 tons contained
- Plant performance up 50% and overall recoveries improved to 65% during August and
September 2019 (target of ~72%)
- Commercial production effective 1 September 2019 - AISC of $11,518 per ton of
contained Tin sold during September 2019
- Excellent safety performance with zero lost time injuries during the quarter
- Flexibility to debt repayment profile secured
- Tin concentrate off-take terms amended to allow provisional invoicing ex-mine
This news release should be read in conjunction with Alphamin’s quarterly consolidated
financial statements and quarterly highlights for the three months ended September 30, 2019,
which are available on Alphamin’s website and SEDAR. Certain financial information is
reported herein using non-IFRS measures. See Non-IFRS Financial Performance Measures
below and in Alphamin’s accompanying Q3-2019 Management’s Discussion and Analysis.
Operational Summary and Guidance to December 2019
The following table sets forth selective operational information for the quarter ended
September 30, 2019:
Description Units Actual
Quarter Quarter
ended ended Variance
September June 2019*
2019
Tons processed Tons 74 427 36 336 105%
Tin grade % Sn 5,6 4,7 21%
Overall Plant recovery % 56 37 50%
Payable Tin produced Tons 2 345 636 269%
Payable Tin sold Tons 1 373 157 775%
AISC per ton payable Tin sold US$ 11 168 n/a n/a
* Early stages of project commissioning and ramp-up
Operational:
The operation has continued with its excellent safety record with zero lost-time injuries
recorded during the past quarter.
Contained tin production increased to 2,345 tons, reflecting improved plant recoveries and
higher tin grades from underground. Plant recoveries averaged 65% during August and
September 2019 against design levels of approximately 72%. Tin grades mined and processed
increased in the quarter to an average of 5,6% Sn, which is expected to taper off to between
4% and 5% Sn during Q4 2019.
Mining is currently taking place in an area high in arsenopyrite causing elevated levels of
arsenic in concentrate which attracts high smelter penalties and affects plant recoveries. This
is forecast to continue into November/December 2019 following which mining from areas
containing lower arsenic together with modifications to the processing plant should dilute the
impact.
Subsequent to quarter-end, a major bridge collapsed some 53km south east of Kisangani
along the main provincial road used for exporting all concentrate and importing major
consumables. The extent of the damage has been assessed and the time to repair the bridge
is estimated at 8 weeks until early January 2020. We have advanced various logistical
solutions aimed at maintaining the flow of inbound consumables and the export of some
concentrates. The outbound flow of concentrates may be limited during the bridge repair
period, however our tin concentrate off-take customer has agreed, subject to signature, to
provisional invoicing ex-mine (previously on arrival of tin concentrates in Kampala, Uganda),
which is expected to improve the Company’s liquidity during this period.
Company Guidance for the Remainder of the Financial Year:
The higher than expected levels of arsenic in the plant feed in Q4 2019 are negatively
impacting processing recoveries. We expect contained tin production for the quarter ending
December 2019 at the lower end of our previous guidance range of between 2,000 tons and
2,200 tons. Changes to the process flow, reagents and operating practices are required to
improve the performance of the processing plant in rejecting arsenic as an impurity. These
changes are expected to be completed by year-end.
High smelter penalties for arsenic in concentrate together with increased interim logistical costs
while the provincial road bridge is under repair will increase our expected AISC per ton of
contained tin to between $12,000 and $13,000 for the quarter ending December 2019.
Debt Obligations and Update:
Commercial production was achieved during Q3 2019. The Company and its lenders have
signed an amendment to the credit facility with the following key terms:
• Remove the requirement to fund a Debt Service Reserve Account for application
towards the next debt capital instalment, which would have absorbed approximately
US$1.3 million per month from commercial production to March 2020 increasing to
US$2.7 million per month thereafter;
• Monthly servicing of interest due on the credit facility (approximately US$1.3 million)
is now scheduled to commence end November 2019 (previously from commercial
production);
• The Company has the option to elect to defer the current quarterly debt capital
repayments (which commence end March 2020) to a monthly capital repayment
schedule (over 36 months) commencing July 2020 (“the Option”)
These amendments to the credit facility offer Alphamin the option to actively manage its
ongoing treasury requirements by deferring up to US$16 million in debt capital repayments
during the 2020 financial year, should the need arise.
For the above amendments to the credit agreement, Alphamin has agreed to an upfront
restructuring fee of US$400,000 payable in cash. Should Alphamin exercise the Option during
2020, then a further fee of US$400,000 will be payable in cash.
Tin Market:
LME Tin prices appear range bound between $16,500/t and $17,000/t. The decrease in prices
from $20,000/t six months ago followed a reduction in tin demand associated with challenges
faced by the global electronics industry on the back of the US/China and Japan/South Korea
trade wars. The Company continues to focus on achieving full production at the lowest possible
AISC, which should provide us with a robust operating margin based on current tin prices.
Life-of-mine optimisation plans:
The Company’s three-year objective is to increase annual tin production to over 12,000 tons,
within the lowest quartile of the global AISC curve, and over an extended life-of-mine.
The revised Mpama North life-of-mine design and scheduling process is nearing completion
following the previously announced change in mining method and an updated NI 43-101
technical report is expected to be released by year-end. A roadmap is being established aimed
at planning drilling work and mine studies for the Mpama South orebody, which is adjacent to
Mpama North and 1km away from the current tin processing facility. This will include plant de-
bottlenecking studies in pursuit of increasing the tin processing facility’s throughput to above
original design.
FOR MORE INFORMATION, PLEASE CONTACT:
Maritz Smith
CEO
Alphamin Resources Corp.
Tel: +230 269 4166
E-mail: msmith@alphaminresources.com
USE OF NON-IFRS FINANCIAL PERFORMANCE MEASURES
This news release refers to the following non-IFRS financial performance measures: Earnings
before interest, taxes, depreciation and amortization (“EBITDA”) and All-In Sustaining Cost
(“AISC”).
These measures are not recognized under IFRS as they do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures
presented by other issuers. We use these measures internally to evaluate the underlying
operating performance of the Company for the reporting periods presented. The use of these
measures enables us to assess performance trends and to evaluate the results of the
underlying business of the Company. We understand that certain investors, and others who
follow the Company’s performance, also assess performance in this way.
We believe that these measures reflect our performance and are useful indicators of our
expected performance in future periods. This data is intended to provide additional information
and should not be considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS.
Cash Costs
This measures the cash costs to produce a ton of payable tin. This measure includes mine
operating production expenses such as mining, processing, administration, indirect charges
(including surface maintenance and camp), and smelting, refining and freight, distribution and
royalties. Cash Costs do not include depreciation, depletion, and amortization, reclamation
expenses, capital sustaining and exploration expenses.
AISC
This measures the cash costs to produce a ton of payable tin plus the capital sustaining costs
to maintain the mine, processing plant and infrastructure. This measure includes the Cash
Cost per ton and capital sustaining costs divided by tons of payable tin sold. All-In Sustaining
Cost per ton does not include depreciation, depletion, and amortization, reclamation and
exploration expenses.
See “Cautionary Notes Regarding Forward-Looking Statements” below as well as “Use of
Non-IFRS Financial Performance Measures” in our Management’s Discussion and Analysis
for the three months ended June 30, 2019.
12 November 2019
JSE Sponsor
Nedbank Limited (acting through its Corporate and Investment Banking Division)
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, production volumes and anticipated tin grades and
processing recoveries. 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:
Uncertainties associated with Alphamin’s resource and reserve estimates, uncertainties
regarding estimates of the expected mined tin grades, processing plant performance and
recoveries, events causing actual operating expenditure to be different to that forecasted,
uncertainties regarding global supply and demand for tin and market and sales prices,
uncertainties with respect to social, community and environmental impacts, adverse political
events, uncertainties with respect to optimization opportunities for the Project, uncertainties
with respect to the impact of the announced bridge collapse on operational flow and liquidity
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.
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.
Date: 12/11/2019 08:00:00
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