HomeCentral AfricaLong-term tin prices drive investment in DRC tin project

Long-term tin prices drive investment in DRC tin project

Situated in the North Kivu Province of the Democratic Republic of the Congo, the project, which is likely to become one of the most significant tin mines in the world, is expected to begin production in early 2019 with steady-state production expected towards the end of the same year.

A definitive credit agreement has been signed by Alphamin with Sprott Private Resource Lending (Collector), LP, Barak Fund SPC Limited and Tremont Master Holdings in respect of the $80 million senior secured, non-revolving, term credit facility to be provided to Alphamin’s 80.75% subsidiary, Alphamin Bisie Mining S.A. (ABM), as borrower, for the continued development of the Bisie project.

“We are very pleased that Sprott and Barak have committed to partner with our existing major shareholder, Tremont, to provide the debt financing needed for the Bisie project, as a step in drawing the fund-raising process towards a close and delivering on our commitment to stakeholders to bring it into production,” says Boris Kamstra, CEO of Alphamin.

“Bisie is advancing and our team has made excellent progress in the construction of the mine and associated infrastructure. The completion of the box cut for the underground portal of the mine is another key risk mitigating milestone for the project. We’ve also received commitments for the majority of the remaining equity funding requirement, so we are excited to move this forward with everyone involved.”

To date, Alphamin has secured in excess of 80% of the remaining financing needed for the project, which includes this $80 million credit facility, $13.7 million commitment from the Industrial Development Corporation of South Africa Ltd (IDC), and $24.7 million commitment from Tremont. As a result, Alphamin will now focus on raising the final $31.4 million of equity to complete the ABM project.

The Bisie project

“Alphamin is focused on unlocking one of the richest tin deposits in the world and, as a result, the entire North Kivu region of the DRC. This is a very rare opportunity where you have both the potential for an extraordinary financial return in a particular project and a host of developmental returns in the surrounding region and in the country in particular,” says Kamstra.

Future tin supply is globally uncertain as tin inventories are running low and economically viable tin reserves are being depleted. The International Tin Research Institute (ITRI) has forecast that there is likely to be a global shortfall of tin commencing in 2018.

“We believe that we have a world-class tin deposit that is managed by an experienced team and is supported by well capitalised investors who are astute industry specialists,” continues Kamstra, “and the Bisie project provides the ideal foundation to build a premier tin producer.”

Alphamin is expected to deliver a significant return to investors through the full range of expected tin prices. Under the Control Budget Estimate (CBE) completed in February 2017, the net present value (NPV) of the ABM project amounts to $402.2 million and the real, after tax internal rate of return (IRR) is 49.1%.

The CBE is based on a long term, real tin price of $21 400/t, whilst ITRI is predicting a long run equilibrium price of $ 25 000/t.

Project construction update

The box cut for the underground portal of the mine has been completed and the decline has already progressed 50 m underground into hard rock. The first production at the mine is expected early in 2019 and the mine is expected to reach steady state production towards the end of 2019.

Additional project construction milestones achieved to-date include opening the access road between the Walikale – Kisangani road and Bisie which has enabled trucks to make regular deliveries of material and equipment to Bisie using this road as well as the construction and inauguration of the Lukaa school near Logu.

Feature image credit: Alphamin Resources