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Alphamin announces financial results for the quarter ended 2020 / updates corporate matters
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
(“Alphamin” or the “Company”)
ALPHAMIN ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE
2020/ UPDATES CORPORATE MATTERS
MAURITIUS – August 7, 2020 – Alphamin Resources Corp. (AFM:TSXV, APH:JSE AltX,
“Alphamin” or the “Company”) is pleased to report its financial results for the quarter ended
June 2020. The Company has filed on SEDAR at www.sedar.com today its interim financial
statements and related management’s discussion and analysis for the quarter.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Tin production up 29% to 2,739 tons versus previous quarter
- AISC per ton of tin sold down 13% to US$10,849 versus previous quarter
- EBITDA of US$12,9 million
- Q3 2020 production guidance of 2,600 - 2,800 tons contained tin
- Increase in ownership of the Bisie tin mine from 80.75% to 84.14%
- $31.2m debt reduction concluded concurrently with $31m offering of shares
- Significant improvement in debt terms following the restructure including an interest rate
reduction and partial debt holiday in 2020
- Initiation of significant growth initiatives post quarter-end
Production and Financial Summary for the Quarter ended June 2020 1
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1
Production and financial information are disclosed on a 100% basis. Alphamin indirectly owns 80,75% (84,14% post quarter-
end) of its operating subsidiary to which the information relates.
Description Units Actual
Quarter Quarter
ended June ended Variance
2020 March 2020
Tons processed Tons 91 928 85 060 8%
Tin grade % Sn 4,3 3,5 23%
Overall Plant recovery % 69 71 -3%
Payable Tin produced Tons 2 739 2 119 29%
Payable Tin sold Tons 2 613 3 860 -32%
EBITDA US$'000 12 900 12 602 2%
AISC per ton sold US$/t 10 849 12 425 -13%
Tin Price achieved US$/t 15 359 15 553 -1%
Operational Performance:
Tin production increased 29% to a quarterly record 2,739 tons and was higher than our
previous market guidance due to better than expected tin feed grades. Plant throughput
increased 8% to 91,928 tons from higher underground volumes derived from the new Open
Stoping with Hydraulic Backfill (LHS) mining method. During the quarter, mined volumes
exceeded plant throughput by some 4,000 tons increasing the run-of-mine stockpiles. The
processing plant is performing well and various initiatives aimed at achieving consistently
higher throughput are underway.
The all-in sustaining cost per ton of payable tin sold reduced by 13% to US$10,849 mainly
attributable to increased tin production. Additionally, the previous quarter’s costs were
negatively affected by high arsenic penalties and exceptional logistical costs incurred while the
national road bridge was under repair.
The Bisie tin mine recorded two lost-time injuries during the past quarter. An employee and a
contractor sustained minor injuries during two separate accidents – and both have returned to
work.
Production Guidance for the next Quarter:
We expect contained tin production of between 2,600 and 2,8002 tons for the quarter ending
September 2020. The tin price has recently increased to around US$18,000/t compared to a
price realized of US$15,359/t during this past quarter which, if maintained, bodes well for the
next quarter’s EBITDA and cash flow generation.
Covid-19 Pandemic and Impact on Operations:
The health of our employees is of paramount importance and in this regard the Company has
a range of Covid-19 awareness, prevention and other risk mitigation controls in place.
__________________________________________________________________________
2
Production guidance is based on certain estimates and assumptions, including but not limited to: quantity of material
processed, tin grades of processed material and processing recoveries and assumes mining operations will continue to be
conducted in the same manner as the previous quarter and will not be further impacted by the Covid-19 pandemic or any other
logistical issues.
To date, the Company has been able to continue with normal production and concentrate sales
activities.
Debt reduction and reprofiling:
On May 15, 2020 the Company completed an offering of common shares pursuant to which
an aggregate of 312,319,539 common shares were issued (approximately US$31.01 million)
(the “Offering”).
Cash proceeds from the Offering, together with existing cash resources, were applied to a
US$31,2 million debt prepayment in return for improved loan terms as set out below:
Previous key terms Post restructure key terms
Interest rate Libor +14% Libor +10,5%*
Interest payments $1,3m per month reducing $0,3m per month to
against capital repayments December 2020. An average
$0,45m per month during
2021 and reducing from 2022
against capital repayments
Debt capital repayments $2,7m per month from July $850k per month from July
2020 to June 2023 2020 to Dec 2020#. $2,1m per
month from January 2021 to
June 2023
Debt Service Cover Ratio 1,75x 1,5x with waiver to 30 June
covenant 2021
Penalty on prepayment 3% payable in cash 1,7% paid in cash
Cash sweep as mandatory 30% of excess cash flows 50% of excess cash flows
payment against loans
* Reverts to Libor +14% on outstanding loans from January 2022 with prepayment penalty reducing to 0%
# Debt capital repayments subject to the LME tin price averaging above US$13,000/t for the month preceding payment
These revised debt terms reduce Alphamin’s estimated break-even tin price, inclusive of debt
servicing, by between $2,000 to $3,000/t3 to an estimated $13,000/t3 of payable tin produced
during 2020 and 2021.
The recently completed Offering proceeds were advanced to the Company's 80,75%
subsidiary, ABM, under a temporary shareholders loan which was converted into equity
through a rights issue by ABM. As a result of the transaction, the Company‘s ownership of
ABM will increase to 84.14%.
Growth Initiatives:
Following the debt reduction and restructuring, the balance sheet has been strengthened and
coupled with the increase in tin prices, the Company has initiated some growth initiatives as
set out below.
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3
Debt service break-even guidance is based on certain estimates and assumptions, including but not limited to: quantity of material
processed, tin grades of processed material and processing recoveries and assumes mining operations will continue to be conducted in
an uninterrupted manner and will not be further impacted by the Covid-19 pandemic or any other logistical issues.
As part of the Company’s two-year strategy to produce over 12,000 tons of contained tin per
year and proving additional resource and life-of-mine extensions, the following initiatives were
initiated post quarter end:
Fine Tin Recovery Project:
Alphamin has appointed Obsideo (Pty) Ltd as its engineering, procurement and construction
management (EPCM) contractor for the execution of its Fine Tin Project (FTP). The FTP is
focussed on treating the tailings stream from its gravity concentration plant at Bisie to recover
the fine to ultra-fine tin particles.
"When we first commissioned the gravity concentration plant at Bisie, we were focussed on
ramping up to a production level of 10,000 tonnes of payable tin per annum, which we have
surpassed since Q2 2020 at an annualised ~11,000 tonnes. We believe we can increase plant
throughput by another 10% through minor plant de-bottlenecking activities – this could
increase annual tin production to ~12,000 tonnes. Additionally, in our efforts to maximise
metallurgical recoveries, we have identified process flow streams that contain fine, recoverable
tin, and have selected proven metallurgical technology to recover the fine tin from these
streams, which should increase tin output further at very low incremental operating costs" said
Maritz Smith, CEO of Alphamin.
The FTP will utilise Multi Gravity Separators (MGS), set-up in rougher-cleaner configuration,
to treat a 20 ton per hour process flow stream from the current plant’s tailings running at a
grade of 0.8-1.1% tin. The FTP is estimated to produce a concentrate containing 45-55% tin
which will be blended with the concentrates from the main gravity concentration plant to
produce a final concentrate estimated to contain 60% tin.
“The MGS technology was selected for the FTP as a result of its proven track record in the tin
industry to recover particles down to 10um in size, low energy requirements and the high
upgrade ratios achievable. Internal analysis shows the FTP has the potential to increase
production at Bisie by 400 – 800 tonnes of payable tin per annum. By increasing units of
production at a very low incremental cost, the FTP is expected to further decrease our all-in
sustaining costs (AISC), securing our place as a lower quartile cost producer.” said Smith.
The projected timeline for the FTP execution from approval to achieving nameplate capacity
is 11-months. Orders for the long lead items have already been placed and the total project
expenditure is estimated at US$4,6 million.
Mpama South Drilling Program:
Alphamin has appointed T3 Drilling SARL, an internationally recognised drilling contractor, to
undertake a 6,000 metre diamond core drilling program at its Mpama South prospect, expected
to commence in Q3 2020. Mpama South is located approximately one kilometre south of the
main processing plant at Bisie and the drilling program has been designed to delineate a
maiden Mineral Resource at Mpama South.
Between 2012 and 2013, Alphamin drilled 19 drill holes for 3,364 metres to determine the
extent and nature of the mineralization at Mpama South. Two distinct mineralized zones were
intercepted, an upper zone showing well-developed lead, zinc and silver mineralization, and a
lower zone rich in tin and copper.
“We are encouraged by the historical drilling results from Mpama South and we are optimistic
that by applying our exploration experience as demonstrated at Mpama North, that this drilling
program will deliver sufficient information to support the declaration of our maiden Mineral
Resource at Mpama South and allow for possible extension to the life of operations at Bisie.”
commented Smith. “While Mpama South is the first drill target post-successful commissioning
of the Mpama North operations, we have already identified a number of areas along the Bisie
Ridge showing soil geochemistry anomalies similar to those found at Mpama North. We expect
to generate a further 3-5 drill targets from these anomalies over the next 18-months.
Additionally, plans are being developed for deep level drilling at our producing Mpama North
orebody which is currently open at depth.”
Grant of Stock Options
The Company also announces that, subject to regulatory approval, it has granted stock options
to acquire an aggregate of 2,277,115 common shares to senior officers of Alphamin under its
stock option plan. Each option is exercisable for a 7 year period to acquire one common share
at a price of C$0.20 per share. The options granted vest over a period of 4 years from the date
of grant
Board Composition
Subject to regulatory approval, Mrs Zain Madarun and Mr Sean Naylor were appointed to the
board of directors of the Company.
Sean is a director of Wadeville International (Mauritius) Ltd, a significant shareholder in
Alphamin. He has extensive experience in Southern and Central African private equity and
commodity trading. He previously worked for Metmar Limited, a JSE listed commodity trading
business.
Mrs Madarun has been the Company secretary since 2014. She is a chartered accountant and
serves as Managing Director of Adansonia Management Services ltd, a management services
company based in Mauritius. Mrs Madarun’s appointment complies with the Mauritian
Companies act requirement to have a female on the board of directors.
Qualified Person
Mr Vaughn Duke Pr.Eng. PMP, MBA, B.Sc. Mining Engineering (Hons.), 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.
__________________________________________________________________________________________
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.
EBITDA
EBITDA provides insight into our overall business performance (a combination of cost
management and growth) and is the corresponding flow drivers towards the objective of
achieving industry-leading returns. This measure assists readers in understanding the ongoing
cash generating potential of the business including liquidity to fund working capital, servicing
debt, and funding capital expenditures and investment opportunities. EBITDA is profit before
net finance expense, income taxes and depreciation, depletion, and amortization.
AISC
This measures the cash costs to produce and sell a ton of payable tin plus the capital
sustaining costs to maintain the mine, processing plant and infrastructure. 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, royalties and capital sustaining costs divided by tons of payable tin sold. All-In
sustaining cost per ton sold does not include depreciation, depletion, and amortization,
reclamation, borrowing costs and exploration expenses.
Sustaining capital expenditures are defined as those expenditures which do not increase
payable mineral production at a mine site and excludes all expenditures at the Company’s
projects and certain expenditures at the Company’s operating sites which are deemed
expansionary in nature.
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 anticipated production volumes and anticipated tin grades and
processing recoveries, future exploration at Mpama South and the establishment of a fine tin
recovery project and its effects on production volumes and ASIC. 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, risks associated with mineral exploration programmes and
mining operations, 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, impacts of the global Covid-19 pandemic on mining operations and
commodity prices 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.
The JSE link to the supporting document is
https://senspdf.jse.co.za/documents/2020/jse/isse/APHE/q22020.pdf.
11 August 2020
JSE Sponsor
Nedbank Corporate and Investment Banking
Date: 11-08-2020 08:43:00
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