DRC tin explorer to list on JSE
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DRC tin explorer to list on JSE

Johannesburg’s AltX is soon to feature a new entrant on its board in the form of Alphamin, a junior tin miner in the Democratic Republic of Congo (DRC), which plans to make its shares available to South African investors by the end of the year.

With the miner’s primary listing being on the Toronto bourse, Alphamin CEO Boris Kamstra tells finweek that the secondary inward listing will allow the company to raise the final $31.4m required to complete construction of its flagship Bisie tin mine, in the eastern DRC, which is expected to start exporting tin in early 2019.

“It’s an exceptionally rare investment opportunity in the entire commodity space,” an enthused Kamstra said of the impending listing at a media briefing on 14 November.

“The TSX is quite a foreign market for local investors and there is a lot of local knowledge of the project, but it has been difficult for locals to invest in.”

Interested local parties have already committed in-principle to investing around $10m once the company has been locally listed, he says.

Alphamin has also already raised $140m for the daring Bisie tin project, most recently through an $80m credit agreement in early November with a syndicate of lenders comprising “blue-chip royalty” Sprott Private Resource Lending, Barak Fund SPC and Tremont Master Holdings (TMH).

Sprott will provide $30m, Barak $25m and TMH $25m.

Bisie’s rich tin deposit has long been mined by artisanal miners in the DRC’s historically volatile North Kivu region, and Alphamin now has bold plans to transform the isolated forest-bound project into the world’s most prolific tin mine.

With an average grade of 4.49% and a 4.6m-ton resource, the company could well achieve this, despite the logistical headache associated with getting tin out of a region lacking even the most basic of transport infrastructure. A 30-year mining licence provides further security of tenure.

November’s debt package follows a successful $22.3m equity fundraising in July and a $13.7m commitment from government’s Industrial Development Corporation (IDC) at project level.

According to the terms of the debt deal, Alphamin will only need to start repaying the loan from March 2020 – a year after planned initial production. Thereafter, payments will be made in eleven equal quarterly instalments at a coupon of 14% plus the greater of dollar three-month LIBOR and 1% a year.

Alphamin’s long-term production plan for the 10 000 ton-a-year Bisie is based on expectations of an extended shortage of tin, which recently replaced lead in solder and resulted in a step-change in demand.

According to Alphamin’s Control Budget Estimate (CBE), Bisie’s net present value (NPV) amounts to $402.2m, with a real after-tax internal rate of return of 49.1%.

The CBE is based on a long-term real tin price of $21 400/t, which, according to Kamstra, is a remarkably conservative tin price tag, given that the International Tin Research Institute (ITRI) has predicted a long-term equilibrium price of $25 000/t.

“Every $1 000 increase in the tin price adds more than $40m to the project’s NPV at an 8% real discount rate,” comments Kamstra.

The institute has also forecast a global tin shortfall of 60 000 tons until 2018, despite an anticipated slow-down in growth in usage from the current rate of some 2.5% a year to below 1% a year from 2018, it noted in a press release.

“Tin is a tech player. It’s in cars, TV screens and cellphones. It’s the glue that holds technology together,” Kamstra says of the metal.

Tin is currently trading at around $19 475/t.

 

Publication: fin24
Written by: Natalie Greve