Transcript
Speaker: Hello and welcome to Edison TV, I'm Ashbourne. Now, surely one of the questions for our time is which metal of all the metals out there is the one that is going to benefit most from the electrification of the world economy? now You probably have a thought to yourself. I certainly have my own answer, but the experts surely hear Rio Tinto and the Massachusetts Institute of Technology.
Speaker: And they say that the answer is tin. And probably for that reason, it's not a surprise that tin is up. Well, let's say 50% in the last 12 months. And it's up by, it's the third best performing metal since 2002. Just a whisker behind gold. And we all know how much gold has gone up by.
Speaker: roughly 16 times and a little bit behind tungsten, tungsten which has a late surge. And I think we can probably say is a bit of a special case. But as I say, according to Rio Tinto and MIT, the answer is tin.
Speaker: But how do you invest in it? And that's not such an easy question. You wanna go looking for copper companies, they're all over the place. They're one a penny, but tin companies, very, very few. And if you say tin companies in the West, you're pretty much looking at the fingers of one hand. Well, my next guest not only produces tin, it's also cash flow positive, it's profitable, it's a steady state, it actually has two minds and it is paying a dividend. You could have bought their shares early on in 2020 for 13 cents, that's 13 Canadian cents, and the last dividend they declared was the interim for 2026 and that was
Speaker: 13 cents. So you get the idea. Shares now trading just shy of 150. So there are roughly 11 times in in that time period. I'll let you do the math, but let's get on with our interview. Our guest is the chief executive Owen O'Driscoll of Alfamin Resources. Owen, thank you very much indeed for joining us. Thanks, Charlie. Pleasure to be here.
Speaker: So talk us through Alfamin. Give us a story from, well, you know, before production to now. Yeah, so Bessia is an extraordinary ah deposit in an extraordinary location.
Speaker: It's the highest grade tin mine in the world. It started out in in the 2000s. It was run as an illegal artisanal mine. It was in some ways a poster child for conflict minerals in the early two thousand And the artisanals found it difficult to keep going as they dug deeper.
Speaker: Conflict mineral legislation made it more difficult for the buyers to buy the the product. And that allowed space for Alfaman to come in in the early 2010s and really apply some proper industrial exploration techniques.
Speaker: From 2012, Alfaman Resources came in and from 2013, Denham Capital came in as as our anchor funder. And from there it really snowballed. Exploration results were exceptional.
Speaker: From 2012 to 2014, we completed an exploration program at Empama North and found the highest tin grade deposit in the world at about 150,000 tons of tin.
Speaker: We rapidly accelerated development of that mine, built in Pamma North in just under two years for $180 million. dollars And that started production in the middle of 2019. So our first full year of production was 2020, which was obviously a challenging year with COVID, commodity prices were low.
Speaker: But from 2021, things really started to snowball. The tin price worked in our favor. We turned cashflow positive and we were in a dividend paying position from 2022 already.
Speaker: We were also in a position to fund further expansion and further exploration and and we very quickly added another 150,000 tons at Empama South in the space of about 18 months and again decided to develop that mine off the back of a scoping study really, which was a a calculated risk at the time and within 18 months Impalma South was up and running and and added another 7,000 tonnes from the 13 that Impalma North was doing to take us to our current level of about 20,000 tonnes per annum contained tin. That's about 7% of the world's mined production. Tin market has about 300,000 tonnes mined production per annum, 400,000 including recycling and we're in a ah a strong position as a 7% producer.
Speaker: And worth pointing out that your Empalmer North mine, which is the the first one you opened, is the highest grade mine in the world? Yeah, so Empalmer North's resource is about 4.5%. The average tin mine in the world outside of that is roughly running at a half to 0.75%. So it's an order of magnitude higher then than what is out there in the rest of the world.
Speaker: Now, dare I say that that there are many, you know, it's the DRC and, you know, the bounteous gift of nature with those sorts of grades.
Speaker: ah Other companies have had fantastic deposits, which they haven't been able to make work. What do you think the secret of your success is? Have you been able to operate in the DRC? And you're in that sort of top right hand corner aren't you? you whi them Yeah we're very much geographically in our own area essentially quite far from the the crowded space of the copper mines in Katanga.
Speaker: I think the secret to our success really has just been a sticking to what we said we would do. We've had huge government support provincially and nationally from from the outset.
Speaker: It's a particularly difficult part of DRC. It's got essentially no infrastructure. It's had security challenges over the years. As you know, there's now the Ebola outbreak. So it's a very challenging environment in which to operate, but we've had huge support from the outset to make a success of it. And because of our grade, that's allowed us to to really produce this profitable mine. There's so much enthusiasm. i mean, there's so much potential in this region and it's completely unexplored because of the security situation, because of the historical problems they've had, because of the infrastructure challenges.
Speaker: And we saw ourselves, that the government also saw us as as a catalyst for potential future investment into this region. So our success, we we always felt, and and it's been slowed down a bit recently by by the security situation, but we still feel this area is so prospective and and has so much potential that others will follow us. And and if they don't, that's okay. We'll just expand ourselves and and look around that area because it has so much mineral potential. It's incredible.
Speaker: And what is the next big challenge for you? You've got these two mines running very nicely at steady state. Yeah, so both deposits in Palmer North and South we decided to go ahead and develop as soon as we were at a sort of 10 to 12 year life of mine knowing that they would produce a good return.
Speaker: and When we developed in Palmer North we paused exploration because that was taking up all of our resources and and and capital. And again, when we decided to develop in Palma South, we paused the exploration to focus on on the development of Palma South in terms of people capacity, site capacity and and financial capacity. Both of those are now up and running and our next big challenge is life of mine. and We'll update our resources and reserves by the end of the year. But if you look at what we put out in 2022, less depletion, clearly we don't have a long life of mine left.
Speaker: That said, with current tin prices and free cash flow generation where it is, we have unprecedented capital available to apply to exploration and it's now our biggest single objective for the next two, three, four years while maintaining our 20,000 ton run rate of production to really throw the hammer at exploration and and try to do this province justice because we've always believed it's it's not just in Palma North and South, it's ah it's a thin province that's completely unexplored and we've now got the capital and the footprint to really make that happen.
Speaker: So where are you exploring at the moment and what techniques are you using? Because there's sort of so there's near and far type techniques, aren't there? Yes, so certainly the the initial focus is still extensions of North and South. When we stopped drilling at Impalma North and South to start with the development of those projects, ah we we were still in in the ore body and and we're continuing to drill for extensions.
Speaker: It's been a little bit challenging at North. We've lost contact with a little bit with with faulting and and and now we have to find it again on the other side. Palma South have had some really encouraging drill results lately. I think our last one that we put out a few weeks ago was 20 meters at 5%, which is really an in Palma North type and hit. So we'll continue drilling for extensions there, but also the wider land package is is extremely prospective. So we've recently completed this helicopter-borne VTEM survey. and which is looking for electromagnetic responses. And we're basically in the process of finalizing that now on the Western side of our package. And it's showing some very interesting targets that I think will keep us very busy for the next 12, 18 months drilling those targets once we refine them.
Speaker: So it's really a matter of ah drilling up the new resources while finding them, drilling them up, putting them, well, delineating them as a resource, then getting them into reserve, extending the life of the mine. Exactly.
Speaker: You touched on the security situation. I should probably say that I've i've i've been to site about this time two years ago, October two years ago. Fabulous trip. Loved it. But just tell us about the the security because we see the news here. We know that M23 are in Goma. We hear about the former president talking to Mr Kagame in Rwanda. We get all of that news. But to some extent, your remoteness is your security as well, isn't it?
Speaker: Yeah, absolutely. it's It's an extremely remote area and without real proper road access from from the Goma side. I think, you know, it's been a challenging 18 months. Clearly we had the evacuation last year as M23 approached the mine, but we were very encouraged by the international response and we're very grateful still to the US government who were very actively involved in in the peace process in the region and and played a lead role in creating space to allow us to go back in and and start operating again.
Speaker: Since we went back in April last year, and we haven't seen much movement in the front lines of of the conflict. it It is a very serious matter and it's ongoing. M23 still controls large swathes of North and South Kivu. But in terms of our operations, and they're they're sufficiently far from the mine for us to operate in in complete peace. And our import-export routes aren't affected by M23 control areas. So it's in some ways business as usual, albeit with a bit of reshuffling. we don't and have access to Goma anymore. We haven't been there since January last year, and but operations are continuing unaffected for now.
Speaker: Worth saying that when I went in, when we went in two years ago, we were flying into Goma and then out of Goma to site. And it was just, it was very striking to me that you just fly over miles and miles and miles and miles of of virgin rainforest. And this is not the easiest stuff to move through. So it's not like they're just coming down the road as a... No, and it, yeah, like you say, it's a very special place. It's an incredibly beautiful place, but it is extremely remote.
Speaker: The other story we get, of course, is the Ebola story. Have you noticed an effect there? It's not in your province, is it? but it's It is in North Kivu. It's not in Walakali. It's not in our part of North Kivu. There have been no cases reported in Walakali. Look, it's a devastating disease and it's a very serious outbreak. Cases continue to rise and and the the fatality rate is still close to 50%. So it's it's very serious, but it's also a kind of disease in terms of its contagiousness that requires bodily fluid transmission. So in a controlled environment, hygiene environment like a mine site, it's relatively easy to to do the proper protocols, monitor temperatures. We haven't had any issues and we don't anticipate any issues.
Speaker: and So production is very much carrying on as normal. Our import-export routes do do go through the epicenter of it. and So it's a matter of making sure those truck drivers follow the protocols and monitoring them closely when they get to the mine.
Speaker: But the borders are open for for goods and we don't anticipate any any impact on production. Worth saying that those import-export routes, they sort of curve around from the mine site, don't they?
Speaker: And ultimately go into Uganda and then out of East Africa. That's right. Ultimately to China? Yeah. Yeah. So, so far, all of our concentrate goes to to China and mainly U19, who takes about 70% of it.
Speaker: There is a smelter being built in the US at the moment, so we're hopeful to be able to conclude a deal with with them soon for a bit of diversification. And if we get to that, we'll be very pleased. But right now, everything goes to China.
Speaker: Dare I ask you your opinion on the tin price? Due to our grade, we're a very low-cost producer. So in some ways, we're tin price agnostic. We're essentially debt-free and low-cost.
Speaker: We're obviously very happy in the 50s. It looks to us like it's going to be higher for longer. and it It does seem that the marginal producers costs are under pressure ah with the diesel situation and declining grades.
Speaker: So we're very bullish about the tin price, but ultimately and we're we're fairly agnostic to it. And your last quarter, because you have put out numbers, say third quarter 2026, you made a little over 100 million dollars in that quarter. That was your cash bill-ish. Yeah, EBITDA was about 170. And so it was a record quarter for us, largely driven by thin price.
Speaker: Production has been very steady since April last year. We've we've been running at our 20,000 ton a target run rate. So that is what we we expect to do this year. We should be on track for that. We've done just about 5,000 each of the first three quarters and the remain on track for 5,000 in Q4. And that'll be our first year of of the fully expanded 20,000 rate, which is very exciting for the company.
Speaker: So happy days. Ladies and gentlemen, I'm afraid that's all we got time for. That was Owen O'Driscoll there, the chair the chief executive of Alfamin Resources, talking to me. Take a look at them. As I say, you could have bought them in early 2020 for 13 cents, Canadian cents. They paid a dividend of that for the interim in 2026.
Speaker: um And the shares are now trading just shy of 150, up more than 11 times. We'll be bringing you more such opportunities, investment opportunities, in the very near future. But until then, you have a very capital day.
