11 Nov Alphamin Resources – Quarterly Update for the three months ended Sep 30, 2019
MAURITIUS – November 11, 2019 – 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:
The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. without embargo unless an embargo is indicated above Description Units Actual
Quarter ended September 2019
Quarter ended June 2019*
* Early stages of project commissioning and ramp-up
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.
The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. without embargo unless an embargo is indicated above 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.
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
The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. without embargo unless an embargo is indicated above 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 debottlenecking 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
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.
The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. without embargo unless an embargo is indicated above
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.
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.
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.
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
The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. without embargo unless an embargo is indicated above 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.