AN improvement in the price of tin “boded well” for Toronto- and Johannesburg-listed Alphamin Resources’ 2020 earnings, the company said in a fourth quarter production update today.
The London Metal Exchange (LME) traded price of tin increased to $21,000 a ton in the fourth quarter from an average of $18,500/t in the third quarter.
Alphamin, which runs the Bisie mine in northern Democratic Republic of Congo (DRC), required a price of about $17,000/t in order to break-even when it commissioned the mine in 2019. The initial onset of Covid-19 in March and April of last year took prices down to $13,000/t precipitating a period of balance sheet management for the company.
The company then agreed new loan terms that reduced the break-even level of the mine by $2,000 to $3,000 per ton to about a tin price of $13,000/t for the next two years.
Output increased 13% in the fourth quarter to 2,898 tons as against market guidance of 2,600 to 2,800 tons owing to better than expected tin feed grades and plant recoveries. But sales were lower by 14% owing to above average rains which led to a deterioration in road conditions.
Alphamin said that weather stations across the mine’s export route reported rainfall above 159% of the long-term mean.
However, the dry-season between January and March would allow road maintenance to be completed. “Already road conditions are improving, and we expect to recoup the majority of the quarter’s sales shortfall” in the first quarter, the company said.
A key for this year is to get to annualised tin production of about 13,000 tons representing a 5% to 10% increased on current capacity. This would be achieved once the company had completed the $4.6m fine tin recovery plant project, due for commissioning in April. The project was 70% complete at quarter-end, Alphamin said.
“On this basis, we expect contained tin production of 5,500 tons (in the first half of the 2021 financial year) increasing to 6,500 tons (in the second half) which would achieve our annualised production goal of 13,000 tons thereafter,” the company said.
Alphamin is scheduled to report its fourth quarter and full year results on March 8.