Rob Bruggeman, a former research analyst with more than a decade of experience at a boutique brokerage firm and a large bank-owned proprietary trading desk on Bay Street, has been blogging on his site Alpha Mining since 2017. He also invests his own capital and is a consultant to small-cap companies and investment funds.
In a recent post, Bruggeman confesses that he had thought tin was a “boring metal” used “predominantly for solder (yawn!), and for applying a thin, corrosion-resistant layer on metal (a.k.a. tin plating) (double yawn!).”
But no longer.
Citing a study by the Massachusetts Institute of Technology (MIT) that examined which metals would be most impacted by new technologies — such as autonomous and electric vehicles, renewable energy, energy storage, and advanced computing and IT — tin headed the list.
“Never in my wildest dreams would I have expected tin to come out at the top of that list, edging out lithium and cobalt,” Bruggeman writes on his blog. “This is the first time I’ve seen or heard anything about tin possibly becoming a hot metal.”
After tin, the MIT study listed the following metals in order of importance: lithium, cobalt, silver, nickel, gold, tungsten, vanadium, graphite, niobium, zinc and platinum group metals (e.g. platinum and palladium).
There aren’t many tin companies, Bruggeman says, but he has put together a list of the ones listed in Canada, which include Alphamin Resources (TSXV: AFM), Strongbow Exploration (TSXV: SBW), Eurotin (TSXV: TIN) and Tinka Resources (TSXV: TK).
“Alphamin is in the process of building a tin mine with some spectacular grades, and expects to be producing in first-quarter 2019,” Bruggeman says. “But guess what? It is located in the Democratic Republic of the Congo (DRC)! So between its undesirable geopolitical risk and being in the undesirable phase of building a mine, I personally will pass on Alphamin. However, if you are OK with the DRC, then take a closer look, because Alphamin is a real company with a $194-million market cap and it looks destined to become a producer.”
The Northern Miner did take a closer look at Alphamin. On its website, the company refers to its Bisie tin project in the eastern region of the DRC as one of the world’s most significant tin deposits.
In a YouTube video, Alphamin’s CEO, Boris Kamstra, describes Bisie as the second-largest contained tin project in the world and four and a half times the grade of the next runner.
“This is a truly industrial mine,” he says. “We originally looked at trying to put in an open-cast mine, but the area we’re in has quite big valleys … so to do it in a responsible manner would be tricky, because you’d have to dam up the whole valley, and given the rainfall, there is about a metre and a half per annum … so the metrics, the safety aspects and the economics of an open-cast mine just didn’t work.”
The company plans to drive a simple decline until it hits the orebody, and 20 metres below the orebody, a spiral decline will follow. Then the drives will go into the face, and get mined by a sub-level caving method, which the South African CEO says is suited to the orebody.
The Mpama North deposit and the Mpama South target, 1,000 metres south, are located along a ridge in dense jungle.
At the Mpama North orebody, Alphamin has drilled up to 230,000 contained tonnes tin.
“The current mine plan is based on breaking into the circle, you’ve got to start somewhere … and we believe 230,000 contained tonnes tin is a pretty good start,” the CEO says in his video. “From that, the cash flows that are generated by this plant and project will be sufficient to explore and develop any of the other targets that we could find in the area.”
Kamstra adds that if he “had to guess,” Mpama North has 400,000 or 500,000 contained tonnes tin.
“We know it goes down. We know that this particular deposit plunges to the north, and we have every indication that it continues and actually improves,” he says. “One of our greatest drill intersections was at 550 metres down … we got the most extraordinary results, in fact … that I asked the geos to check it three times because I just couldn’t believe the grade that they were reporting.”
The company has some drill holes into its Mpama South target, and initial results have been similar to ones from Mpama North, Kamstra says.
“We’ve got every indication that there is another orebody very similar to Mpama North at Mpama South,” he says. “Further down the ridge, we have geochemical soil anomalies of tin and copper, which come together in this particular emplacement structure, and geophysics that have the same signature as Mpama North further down the ridge. So that’s just on the Mpama ridge itself.”
The project area, 180 km northwest of Goma, the capital of North Kivu, and 60 km northwest of Walikale, is covered with dense vegetation and no power is available from the national grid in the area. Power will have to be obtained from either diesel generators or hydroelectric generators.
“There has been an incredible amount of work done,” Kamstra says. “We have filled about 40 km of diamond core hole … and to do that on a hill in the middle of the jungle in the middle of the DRC is an extraordinary feat, and to have done it converting drill metres to measured, indicated and inferred as efficiently as our team has been able to do is mind-blowing.”
The last mineral resource was based on drilling between July 2012 and November 2015, and was the company’s fourth resource update.
Measured and indicated resources stand at 4.60 million tonnes grading 4.52% tin for 208,100 contained tonnes tin. (The copper grade is 0.31%; zinc grade, 0.15%; lead grade, 0.010%; and silver grade, 2.7 grams silver per tonne.)
Inferred resources add 0.54 million tonnes grading 4.25% tin for 22,800 tonnes tin. The inferred resource contains a 0.16% copper grade; zinc, 0.09%; lead, 0.013%; and silver, 1.4 grams. The resource estimate used a cut-off grade of 0.5% tin.
Proven and probable reserves total 4.67 million tonnes grading 3.58% tin for 167,300 contained tonnes tin.
The main vein zone, which accounts for 97% of the resource estimate, is an average 9 metres thick, although it is narrower (less than 1 metre) at the margins and up to 22 metres thick in the central areas. The zones that occur several metres above and below the main zone are narrower than the main vein zone and cover areas between 100 metres and 220 metres in the dip and strike directions, according to the March 2017 technical report.
The mine will produce a concentrate grading 61% tin, and the company says plant commissioning should start in this year’s fourth quarter, with production ramp-up in the first quarter of next year. It hopes to reach nameplate capacity in the second half of 2019.
Capex is in the range of US$172 million.
Last November, Alphamin secured a US$80-million credit facility from a syndicate of lenders made up of Sprott Private Resource Lending, Barak Fund and Tremont Master Holdings. The proceeds will help build the mine.
This January, Alphamin raised $56 million issuing 175 million units at 32¢ per unit.
Alphamin owns 80.75% of the Bisie project. The Industrial Development Corp. of South Africa owns 14.25% and the DRC government has a non-dilutive 5% share.
Private equity firm Denham Capital owns 44% of Alphamin.
Tin-bearing gossan was found on the Bisie ridge in 2002 and soon became the focus of large-scale artisanal mining. The deposit is a cassiterite-bearing, stockwork vein system possibly distal to underlying source granite.
Highlights from drill holes at Mpama North feature 18 metres grading 1.70% tin, including 7.6 metres of 3.32% tin, 10.8 metres of 2.59% tin and 17 metres of 2.27% tin, including 2.9 metres of 9.12% tin.
Intercepts from Mpama South feature 32.2 metres grading 0.76% tin, including 22.1 metres of 1.02% tin, 32.8 metres of 2.46% tin from 192.2 metres and 1.7 metres grading 6.57% tin.
Alphamin says its tin concentrate will be conflict-free.
The company’s shares are trading at 30¢ and within the last year have varied in price from 25¢ to 43.5¢ per share. Alphamin has 647 million common shares outstanding for just over a $194-million market capitalization.
Another tin company, Strongbow Exploration, looks like a “decent tin play,” Bruggeman says.
The company owns South Crofty, a fully permitted tin mine in Cornwall, England.
A resource estimate in 2016 outlined an indicated resource of 1.66 million tonnes grading 1.81% tin for 30,000 contained tonnes tin. Inferred resources tally 740,000 tonnes averaging 1.91% tin for 14,100 contained tonnes tin.
With a base-case assumption of US$10 per lb. tin and a 5% discount rate, a 2017 preliminary economic assessment estimated that preproduction capex would run to US$118.7 million (with payback in just under four years), and that the project would have a 23.4% internal rate of return and US$130.5-million after-tax net present value, at a 5% discount rate.
“Those economics are not terribly compelling, but they could be, if tin goes on a tear,” Bruggeman says, adding that Strongbow “appears to have solid management and backing from the Osisko group.”
Osisko Gold Royalties (TSX: OR) is Strongbow’s largest shareholder, with 31% of the junior’s issued and outstanding shares.
Company directors include Grenville Thomas, chairman of the board; John Burzynski, CEO of Osisko Mining (TSX: OSK); and Patrick Anderson, president and CEO of Dalradian Resources (TSX: DNA; LON: DALR) and cofounder and former CEO of Aurelian Resources.
Strongbow acquired South Crofty in July 2016. The project is fully permitted and has an underground mining licence until 2071. In addition, it has planning permission to build a new process plant and a permit from the Environment Agency to dewater the mine. The company says it is “now focused on the construction of a water-treatment plant, so the now-flooded mine can be dewatered.”
The company “plans to bring the project to a project decision and complete a feasibility study in parallel with the mine dewatering process,” it says.
The underground permission area stretches across 14.9 sq. km and includes 26 former producing mines. Infrastructure includes four usable vertical shafts and a 300-metre decline.
The preliminary economic assessment outlined an eight-year mine life, average life-of-mine cash costs of $3.36 per equivalent lb. tin and average life-of-mine sustaining costs of $4.44 per equivalent lb. tin.
“Strongbow was kind enough to provide a summary of tin projects in its corporate presentation,” blogger Bruggeman adds. “The comparison suggests that their resource is quite small, but their presentation suggests growth potential of 17 to 21 million tonnes. So a cursory glance suggests that Strongbow is an interesting tin company in a good jurisdiction … not the DRC!”
But Bruggeman is most excited about the prospects of Tinka Resources, one of his clients and major holdings, which has a “significant” tin resource at its Ayawilca project.
The company owns 100% of Ayawilca, a 150 sq. km project 40 km northwest of Cerro de Pasco in the silver-lead-zinc belt of central Peru.
Ayawilca has two mineralization types: tin-copper mineralization (the tin zone) and zinc-indium-silver-lead mineralization (the zinc zone).
Tin mineralization was found in the project’s central east and north areas after re-assaying 2012–2013 drill holes, the company says.