TIDMATM
RNS Number : 3361X
AfriTin Mining Ltd
04 May 2021
4 May 2021
AfriTin Mining Limited
("AfriTin" or the "Company")
Uis Phase 1 Expansion - Definitive Feasibility Study Results
Loan Note Update
AfriTin Mining Limited (AIM: ATM), an African tin mining company
with its flagship asset, the Uis Tin Mine ("Uis") in Namibia, is
pleased to present a summary of the Definitive Feasibility Study
("DFS") for the expansion of its Phase 1 mining and processing
facility (the "Project"), and accompanying Ore Reserve estimate for
the V1 and V2 pegmatites at Uis.
Highlights:
-- DFS confirms the feasibility of expanding the current Phase 1
processing plant, resulting in a 67% increase in tin concentrate
production from 720 tonnes per annum to 1,200 tonnes per annum,
based on:
Project scope
- DFS includes 2 of the 16 historically mined pegmatites;
significant exploration upside remains; and
- The DFS is on a tin only basis and currently excludes tantalum
and lithium concentrate as potential by-products - these
commodities are being investigated by the Company's metallurgical
test-work programme.
Robust economics (subject to sensitivities below):
- Considering capital cost of this expansion and total future
cash flows over the life-of-mine a long-term real tin price of
USD20,000 per tonne, long-term real NAD/USD exchange rate of 16.00
and a real WACC of 6.95%;
- Project capital of USD5.7 million;
- Payback period of 2.4 years;
- NPV of USD12.1 million;
- IRR of 54%; and
- Fully allocated real cash costs of USD16,200 per tonne of contained tin metal.
Low project risk:
- Modular expansion of the existing crushing circuit to increase
ore throughput by 50% and upgrade of the existing concentrator
circuit to increase projected tin recovery to from 60% to 64%;
and
- Implementation time of 8 months including a 2-week full plant shut down.
Long-term mine life:
- An initial Proved and Probable Ore Reserve estimate (JORC,
2012) over the V1 and V2 pegmatites of the Uis Tin Mine totalling
15.6 million tonnes of ore at an average grade of 0.138% tin
containing 21,536 tonnes of tin metal; and
- 18-year mine life.
-- Project economic analysis compared to spot price - real terms:
Description Unit DFS Value Spot Price
Value*
LME Tin Price USD 20,000 32,193
------------- ---------- -----------
NAD/USD exchange rate NAD/USD 16.00 14.5
------------- ---------- -----------
NPV USD million 12.1 63.3
------------- ---------- -----------
Payback Period Years 2.4 <1.0
------------- ---------- -----------
* LME closing price and NAD/USD exchange rate as at 30 April
2021
Anthony Viljoen, CEO of AfriTin Mining Limited commented:
"Publication of AfriTin's inaugural Definitive Feasibility study
marks another significant milestone for the Company and will lead
to the completion of the first phase of development of what could
potentially be the biggest open cast tin and technology metal
deposits in the world.
The DFS confirms the highly attractive economics from a low-cost
modular expansion of the current Phase 1 at Uis which can be
implemented in eight months. The DFS also coincides with the
Company achieving its first full quarter of steady state production
at the Phase 1 plant as a global tin prices reach a 10-year
high.
The initial JORC (2012)-compliant Ore Reserve estimate over the
V1 and V2 pegmatites, validates the long-term feasibility of our
flagship operation at the Uis Tin Mine and emphasizes the benefits
that the deposit derives from the scalability of the project.
Importantly, the reserve only forms a portion of the historically
declared reserve, that the Company is in the process of converting
into modern JORC compliance standards. We are especially pleased
with the robust economics of the study which provide us with an
opportunity to substantially increase the revenue and profit margin
of the current operation, while importantly de-risking the
expansion of the project into the much larger Phase 2 operation
that is intended to be 6 to 10 times bigger than the phase 1
operation. While the current estimate only considers tin
mineralisation, the Company intends to add the potential by-product
minerals of tantalum and lithium oxide in due course. Coupled with
the exploration upside of both historically mined and unexploited
proximal pegmatites, AfriTin has laid a solid foundation for
advancing the Project towards our long-term goal of becoming a
leader in the tin and technology metals mining sector."
EXECUTIVE SUMMARY
The DFS was prepared by Minxcon (Pty) Ltd ("Minxcon"), a South
African based advisory company with an international footprint
focussing on geological exploration, resource modelling, mining and
metallurgical engineering, financial evaluation, and management
consulting.
Uis was previously owned and operated by South African Iron and
Steel Industrial Corporation Limited ("ISCOR") from 1958 to 1990.
In 1987 ISCOR published an Ore Reserve estimate of 75.3 million t
onnes of ore containing 102,920 t onnes of tin (no t
JORC-compliant). AfriTin acquired the ML134 mining license
incorporating Uis in 2017.
The Company undertook a n exploration drilling programme over
the V1 and V2 pegmatites to validate the historical ISCOR database
. The V1 and V2 pegmatites comprise 2 of 16 historically mined
pegmatites, which occur within the greater Uis pegmatite swarm. The
drilling campaign resulted in the declaration of a maiden JORC
(2012 ) - compliant Mineral Resource e stimate comprising 71.54
million tonnes of ore containing a total of 95,539 t onnes of tin,
6,091 t onnes of tantalum and 450,265 t onnes of lithium oxide. The
maiden Mineral Resource e stimate was announced by the Company on
16 September 2019.
In parallel with the exploration programme , the Company
established the Phase 1 pilot mining and processing facility, which
exceeded nameplate production , of 60 tonnes per month of tin
concentrate of (720 tonnes per annum equivalent ) , in November
2020. The DFS evaluates an expansion of this facility to produce
100 tonnes of tin concentrate per month (equivalent rate of 1,200
tonnes per annum).
The study confirmed sufficient supply capacity of existing bulk
infrastructure services for the planned expansion of the operation
. This includes the installed capacity of the electrical grid power
connection and associated supply agreement, and the groundwater
network supply capacity. The P roject is further supported by the
existing product logistics chain whereby tin concentrate is
exported through the port of Walvis Bay to Thailand under the
existing long-term offtake agreement with Thailand Smelting and
Refining Corporation.
The mining study assumes parameters derived from current
operational mining practices. Uis employs conventional open-pit
mining techniques consisting of drilling, blasting, loading and
hauling. Loading and hauling pairs 50 tonne and 37 tonne class
hydraulic excavators with 30 tonne articulated dump trucks. Mining
benches are blasted in 10 metre vertical increments and loaded in
2.5 metre flitches, allowing for selective mining on the contact
between ore and waste material.
A geotechnical assessment of the rock types and domains,
combined with finite element modelling of pit slopes, resulted in a
recommended maximum slope angle of 50 degrees between haulage
ramps. This served as an input to a multi-stage pit excavation
design and accompanying mining production schedule over the
life-of-mine.
The Mineral Resource to Ore Reserve conversion employed a 0.07%
Sn marginal cut-off grade, applied to the modelled smallest mining
unit of 5.0 m (width) by 5.0 m (breadth) by 2.5 m (height). This
resulted in a 2.03% dilution of the Measured Mineral Resource and a
6.45% dilution of the Indicated Mineral Resource. A global ore loss
of 2% was applied to the diluted ore tonnes.
The economic pit limit was determined through a techno-economic
analysis assuming a long-term real LME tin price of USD20,000 per
tonne. The cost and recovery parameters for the production of tin
concentrate were derived from the current operational performance
of the Uis plant and supplemental metallurgical test work results.
The Ore Reserve estimate, presented in Table 1, is supported by a
staged mine design and mining production schedule of 850,000 ore
tonnes per annum, resulting in an 18-year mine life.
Table 1 : Ore Reserve estimate for tin (Sn) over the V1 and V2
pegmatites of the Uis Tin Mine as at 31 December 2020, prepared in
accordance with JORC (2012).
Ore Reserve Gross Net Attributable (85% Operator
Classification (1) )
---------------
Tonnes Sn (%) Contained Tonnes Sn (%) Contained
(Mt) metal (Mt) metal
(t) (t)
---------------
Proved 12.59 0.139 17,548 10.70 0.139 14,916 AfriTin Mining
------- ------- ---------- ------- ------- ---------- ---------------
Probable 3.03 0.132 3,988 2.57 0.132 3,389 AfriTin Mining
------- ------- ---------- ------- ------- ---------- ---------------
Total 15.61 0.138 21,536 13.27 0.138 18,305 AfriTin Mining
------- ------- ---------- ------- ------- ---------- ---------------
Source : Minxcon
Notes :
1. AfriTin has an attributable ownership of 85% in the Uis Tin
Mine with the remaining 15% owned by The Small Miners of Uis
(SMU)
2. Ore Reserves have been declared at a cut-off grade of 0.07% Sn.
3. Ore Reserves stated at a long-term real Sn price of
USD20,000/tonne and a long-term real exchange rate of NAD/USD
16.00.
4. Table columns may not add up due to rounding.
5. The Ore Reserve estimation prepared and signed off by Minxcon.
The DFS proposes enhancements to the current processing plant
resulting in a modular expansion of the existing crushing circuit
to increase ore throughput by 50% and upgrade of existing
concentrator circuit to accommodate the increased crushed ore feed
tonnage and increase projected overall tin recovery target from the
current 60%, to 64%. The detailed upgrades include the
following:
-- Addition of a crusher and screen between the primary jaw
crusher and the fines crushing section;
-- Addition of a buffer stockpile between the crushing and concentrating sections;
-- Water rejection capacity in the DMS 1 section is increased;
-- Combining the dense medium circuits of DMS 2 and DMS 3 to
improve operability and stability;
-- Converting the DMS 2 floats re-crush circuit to a closed circuit through the addition of a classification screen.
-- Additional spirals to re-process middlings ; and
-- Relocation of product handling infrastructure, and
installation of an additional shaking table for improved processing
capacity. The existing shaking tables will be replaced with Holman
tables for higher separation efficiency.
A project execution plan of eight months has been modelled. This
includes a 2-week total plant shutdown, but production will
otherwise continue during the implementation period, minimising
production interruptions. The Company will make use of in-house
engineering and management capabilities, and established contractor
and vendor relationships. These will be complemented by the
appointment of a skilled and experienced project management and
construction management team to reduce implementation time and
limit project implementation risks. The Company is fully permitted
and compliant with legislation to proceed with implementation.
The capital cost estimate for the Project is USD5.7 million,
including contingency of approximately 10% and escalation of
approximately 3%. The operational cost estimate in terms of unit
cost per tonne of tin contained in concentrate is presented in
Table 2.
Table 2 : Operational cost estimate in terms of unit cost per
tonne of tin contained in concentrate.
Description USD per Tonne Tin
Contained in Concentrate
Net Turnover 18,668
--------------------------
Mine Costs 7,055
--------------------------
Plant Costs 2,106
--------------------------
Other Costs 5,641
--------------------------
Direct Cash Costs 14,802
--------------------------
Sustaining CAPEX 845
--------------------------
Production Costs 15,647
--------------------------
Royalties 553
--------------------------
Fully Allocated Costs 16,200
--------------------------
EBITDA 3,313
--------------------------
EBITDA Margin (%) 18%
--------------------------
Source : Minxcon
Notes :
1. Smelter charges deducted from revenue received to calculate net revenue/turnover
2. Smelter charges are approximately USD1,577/saleable tin
tonne, which did not form part of the Direct Cash costs.
3. Values are LoM average values.
4. EBITDA excludes sustaining CAPEX.
The salient assumptions and results of the economic analysis are
presented in Table 3. The economic analysis was undertaken using
the discounted cash flow method to calculate the NPV on a Free Cash
Flow to Firm ("FCFF") basis in real terms. The economic analysis
was done at the level of the Namibian operating entity. The value
derived for the Project only reflects the Ore Reserve in the
life-of-mine.
Table 3 : Project economic analysis summary - real terms.
Description Unit Value
LME Tin Price (long-term, real) USD 20,000
------------- -------
NAD/USD exchange rate (long-term,
real) NAD/USD 16.00
------------- -------
WACC (real) % 6.95%
------------- -------
NPV USD million 12.1
------------- -------
IRR (real) % 54.4%
------------- -------
Peak Funding Requirement USD million 3.4
------------- -------
Payback Period Years 2.4
------------- -------
Source : Minxcon
Notes :
1. WACC assumes a NAD basis.
2. NPV and Peak Funding Requirement calculated in NAD and
converted to USD using the long-term real NAD/USD exchange rate of
16.00.
3. IRR calculated on a NAD basis.
The Project is most sensitive to the parameters (in order of
importance) of commodity price, exchange rate, plant feed grade of
tin and plant recovery of tin. Table 4 illustrates the sensitivity
of the Project to the LME tin price in terms of NPV and payback
period.
Table 4 : Sensitivity of the Project to the LME tin price (USD,
long-term, real).
LME Tin Price (USD, long-term, % Change NPV (USD Payback
real) million) Period (years)
17,777 (Break-even price) -11.1% 0 N/A
--------- ---------- ----------------
20,000 (Assumed long-term price
in DFS) 0% 12.1 2.4
--------- ---------- ----------------
23,000 15.0% 25.8 1.8
--------- ---------- ----------------
26,000 30.0% 39.6 1.2
--------- ---------- ----------------
28,000 40.0% 48.4 <1.0
--------- ---------- ----------------
Source : Minxcon
Implementation of the Project is subject to approval by the
Board of Directors of AfriTin.
Loan Note Update
The Company's Loan Note Facility of GBP2.05m (see announcement
dated 5 May 2020) (the "Loan Notes") was due to be repaid in cash
on 4 May 2021 (or, as set out in the announcement, the amount can
be redeemed in shares, in which case the shares are to be issued at
a 20 day VWAP calculated on the date prior to the repayment date) .
The Loan Note holder, Yellow Dragon Holdings Limited, has confirmed
that it does not intend to seek repayment or conversion at this
time; and the Company is currently in discussions with them with
regards to a formal extension of these notes. The Company is also
exploring further options for the repayment of the Loan Notes.
Further updates will be provided in due course.
Competent Person Statement:
The technical data in this announcement has been reviewed by
Daniel van Heerden of Minxcon, which provides advisory services to
AfriTin. Daniel van Heerden has 16 years of industry related
mineral project development experience and is a Competent Person
for the reporting of Ore Reserves. He has been a Fellow of the
South African Institute of Mining and Metallurgy (FSAIMM Reg. No.
37309) for more than 12 years. Mr van Heerden is registered with
the Engineering Council of South Africa (Pr.Eng. Reg. No. 20050318)
since 2005. He has reviewed the technical disclosures in this
release and has undertaken the Ore Reserve estimation and
classification for tin.
Glossary of abbreviations
DFS Definitive Feasibility Study
DMS Dense Medium Separation
------------------------------------------------------------
FCFF Free Cash Flow to Firm
------------------------------------------------------------
ISCOR South African Iron and Steel Industrial Corporation
Limited
------------------------------------------------------------
JORC The Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves
------------------------------------------------------------
LME London Metal Exchange
------------------------------------------------------------
m Metre
------------------------------------------------------------
Mt Million metric tonnes
------------------------------------------------------------
NAD Namibian Dollars
------------------------------------------------------------
NPV Net Present Value
------------------------------------------------------------
ppm Parts Per Million
------------------------------------------------------------
SMU Small Miners of Uis, a minority shareholder in Uis Tin
Mining Company (Pty) Ltd (subsidiary of AfriTin Mining
Limited)
------------------------------------------------------------
Sn Elemental symbol for Tin
------------------------------------------------------------
t Metric tonne
------------------------------------------------------------
USD United States Dollars
------------------------------------------------------------
Glossary of Technical Terms
Indicated Mineral The part of a Mineral Resource for which quantity,
Resource grade, quality, etc., can be estimated with
a level of confidence sufficient to allow
the appropriate application of technical and
economic parameters, to support mine planning
and evaluation of economic viability
Inferred Mineral The part of a Mineral Resource for which quantity
Resource 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
------------------------------------------------------
Measured Mineral The part of a Mineral Resource for which quantity,
Resource grade or quality, etc., are well enough established
that they can be estimated with confidence
sufficient to allow the appropriate application
of technical parameters to support production
planning and evaluation of economic viability
------------------------------------------------------
Ore Reserves Ore Res erv es are sub-divided, in order of
increasing confidence, into Probable and Proved
categories. A Probable Ore Res erve has a
lower level of confidence than that applied
to a Proved Ore Res erve .
------------------------------------------------------
Mineral Resources Mineral Resources are sub-divided, in order
of increasing geological confidence, into
Inferred, Indicated and Measured categories.
An Inferred Mineral Resource has a lower level
of confidence than that applied to an Indicated
Mineral Resource. An Indicated Mineral Resource
has a higher level of confidence than an Inferred
Mineral Resource but has a lower level of
confidence than a Measured Mineral Resource
------------------------------------------------------
Probable Ore Reserve The economic viable part of the Indicated
Mineral Resource proven through the application
of technical and financial parameters.
------------------------------------------------------
Proved Ore Reserve The economic viable part of the Measured Mineral
Resource proven through the application of
technical and financial parameters.
------------------------------------------------------
Pegmatite An igneous rock typically of granitic composition,
that is distinguished from other igneous rocks
by the extremely coarse and systematically
variable size of its crystals, or by an abundance
of crystals with skeletal, graphic, or other
strongly directional growth habits, or by
a prominent spatial zonation of mineral assemblages,
including monomineralic zones
------------------------------------------------------
For further information, please visit www.afritinmining.com or
contact:
AfriTin Mining Limited
Anthony Viljoen, CEO +27 (11) 268 6555
Nominated Adviser
WH Ireland Limited
Katy Mitchell
James Sinclair-Ford +44 (0) 207 220 1666
Corporate Advisor and Joint Broker
Hannam & Partners
Andrew Chubb
Jay Ashfield
Nilesh Patel +44 (0) 20 7907 8500
Joint Broker
Turner Pope Investments
Andy Thacker
James Pope +44 (0) 203 657 0050
Financial PR (United Kingdom)
Tavistock +44 (0) 207 920 3150
Jos Simson
Emily Moss
Oliver Lamb
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014
About AfriTin Mining Limited
Notes to Editors
AfriTin Mining Limited is the first pure tin company listed in
London and its vision is to create a portfolio of globally
significant, conflict-free, tin-producing assets. The Company's
flagship asset is the Uis Tin Mine in Namibia, formerly the world's
largest hard-rock opencast tin mine.
AfriTin is managed by an experienced board of directors and
management team with a current two-fold strategy: fast-track Uis
Tin Mine in Namibia to commercial production as Phase 1, and ramp
up to 5,000 tonnes of concentrate per annum in a Phase 2 expansion.
The Company strives to capitalise on the solid supply/demand
fundamentals of tin by developing a critical mass of tin resource
inventory, achieving production in the near term and further
scaling production by consolidating tin assets in Africa.
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