Alphamin Resources (TSXV: AFM; US-OTC: AFMJF) is nearing production at its Bisie tin project in North Kivu, a province in the eastern region of the Democratic Republic of the Congo (DRC).
Alphamin began constructing Bisie in 2017, developing a decline into the project’s Mpama North orebody. It hit ore in 2018’s third quarter, and by early 2019 had commissioned its crushers. It expects to commission the rest of its plant by the end of March 2019.
“It’s going to be tight,” Alphamin CEO Boris Kamstra says during an interview with The Northern Miner. “We’ll do our first sale in April, and hopefully hit our straps in terms of run-of-mine production rate in July.”
Since July 2012, the company has drilled more than 35,000 metres across 171 holes at Mpama North and more than 3,000 metres across 16 holes at Mpama South. Its focus so far has been on Mpama North, where, as of May 2018, it has delineated 4.6 million measured and indicated tonnes grading 4.52% tin for 208,100 tonnes tin, as well as 540,000 inferred tonnes grading 5.25% tin for 22,800 tonnes tin.
Based on measured and indicated resources, the project contains 3.5 million proven and probable tonnes grading 4.34% tin for 153,000 tonnes tin.
According to an updated feasibility study the company filed in 2017, the project has a US$402-million, after-tax net present value at an 8% discount rate, and a 49% after-tax internal rate of return.
According to the study, the project could produce 152,300 tonnes tin over the mine’s 12-year life for an initial US$126.1 million. It would achieve payback in 17 months.
The property is surrounded by dense forest, deeply weathered soils and experiences high rainfall. Kamstra first hiked to the property in July 2013.
“When you walk in that forest your site line is four metres. You can’t see, and very often your GPS gets cut off,” Kamstra recalls.
He was an investment executive for Pangea Exploration at the time, which historically developed projects on its own balance sheet. Denham Capital approached Pangea in late 2011, looking for exposure to resource projects in Africa. Pangea’s geologist knew the team at Alphamin that was already drilling at Bisie with small, portable drills it had flown to the site.
Alphamin acquired the Bisie licence in 2006. It sent geologists to the site that year, but armed groups profiting off the project shot at them. The company was forced to declare force majeure.
“Because it was so remote, people couldn’t get there, they couldn’t see what was happening,” Kamstra says. “All they knew was that tin was pouring out of the forest.
“Around 2008, the first guys were brave enough to go out there and see, and they were just greeted by a scene of desperation. It was just 16,000 people … waterborne-disease rife, malaria rife … indentured labour — a lot of them children. You want to keep the tunnels small because you don’t want to be mining waste, and when space is small you want small people.”
But Kamstra says that in 2010 the dynamics changed. The Dodd-Frank Act made conflict tin basically worthless, and Joseph Kabila, former president of the DRC, denounced mining in the eastern part of the country, while the illegal miners at Bisie had already largely exhausted the most accessible parts of the deposit. By 2011, Alphamin was able to go back in and drill a few holes, which formed the basis for Pangea’s investment, backed by Denham.
“They looked at it and said, ‘OK, we see an opportunity. We see it’s a risk, we get that, but we see an opportunity to potentially do well financially and do good at the same time so, go for it.’ And we did.”
The company eventually funded a 40,000-metre drill program at Bisie in 2014. It would first have to build a road, however.
“You’ve got two spectrums of the development profile,” Kamstra says. “You’ve got the Robert Friedland version, where you just cover the place in drill rigs and really get an absolute precise view of what’s there and how you’re going to mine it … you need probably a billion dollars to do that, particularly where we were, because — how do you get your drill rigs in? You’ve got to build a road. And if you’re building a road well, then maybe let’s just build a mine.
“We figured, ‘How much capital do we sincerely believe we can get applied to this project?’ and the number was $200 million. So we took that and we reverse engineered it, pretty much. Given that that’s the quantum of capital, how do we unlock it?”
Alphamin CEO Boris Kamstra (right of centre) with members of the company’s community development team. Credit: Alphamin Resources.
The next problem the company faced was how to build its road. To build the road it would need heavy, earth-moving machinery, but to get the heavy earth-moving machinery it would need a road. It ended up hiring local workers, who built the road by hand: 600 men working for a year and a half to build a 40 km track.
“Over time the road has improved,” Kamstra says, “Our initial problem was getting stuck too often, our current problem is speeding.”
When it started drilling, Kamstra says, the company didn’t have the luxury of time. The kind of capital it could attract was private equity capital, and so it drilled for its resource at the same time that it worked toward its definitive feasibility study. Although it initially wanted to build Bisie into an open-pit mine, given its rainfall and terrain, it couldn’t find a way to responsibly store tailings, and so had to develop it as an underground operation, instead.
After getting Mpama North into production, Kamstra wants to continue exploring Mpama South in the back half of 2019, with the view that Alphamin could start mining it in 2021 or 2022. Alphamin has drilled 16 holes into Mpama South so far. Highlights there include 2.46% tin over 33 metres from 192 metres downhole, and 197 grams silver over 19 metres from 61 metres downhole.
“We are in what we call a tin province,” Kamstra says. “All along the ridge there are signatures identical to where we are mining, and where we are mining is a pinhead, compared to some of the things further down the ridge.
“We need to unlock the entire region. I believe that this will produce tin for 60 to 100 years.”
Shares of Alphamin are trading at 24¢, in a 52-week range of 22¢ to 32¢. The company has a $125-million market capitalization. The company has an 80.75% interest in the 1,270 sq. km project, consisting of five exploration permits and one mining permit. The government of the DRC owns 5% of the project, and Industrial Development owns the other 14.25%.
“We will generate a significant amount of cash that we will use to retire our loan as soon as possible, if we can’t refinance it,” Kamstra says. “We’re talking to people to refinance it, but you sort of need some runs on the board before a serious banker will look at you.
“Sprott had sufficient vision to say, ‘we like the orebody, we think you guys might be able to do it,’ so they back us with an $80-million facility, and supported us with some equity in some of the raises.”