Uis Phase 1 Expansion – DFS Results

4 May 2021

AfriTin Mining Limited

("AfriTin" or the "Company")

Uis Phase 1 Expansion - Definitive Feasibility Study Results

Loan Note Update

AfriTin Mining Limited (AIM: ATM), an African tin mining company with its flagship asset, the Uis Tin Mine ("Uis") in Namibia, is pleased to present a summary of the Definitive Feasibility Study ("DFS") for the expansion of its Phase 1 mining and processing facility (the "Project"), and accompanying Ore Reserve estimate for the V1 and V2 pegmatites at Uis.

Highlights:

▪    DFS confirms the feasibility of expanding the  current Phase 1  processing plant, resulting in a 67% increase in tin concentrate production from 720 tonnes per annum to 1,200 tonnes per annum, based on:

◦      Project scope

-    DFS includes 2 of the 16 historically mined pegmatites; significant exploration upside remains; and

-    The DFS is on a tin only basis and currently excludes tantalum and lithium concentrate as potential by-products - these commodities are being investigated by the Company's metallurgical test-work programme.

◦      Robust economics (subject to sensitivities below):

-    Considering capital cost of this expansion and total future cash flows over the life-of-mine a long-term real tin price of USD20,000 per tonne, long-term real NAD/USD exchange rate of 16.00 and a real WACC of 6.95%;

-    Project capital of USD5.7 million;

-    Payback period of 2.4 years;

-    NPV of USD12.1 million;

-    IRR of 54%; and

-    Fully allocated real cash costs of USD16,200 per tonne of contained tin metal.

◦      Low project risk:

-    Modular expansion of the existing crushing circuit to increase ore throughput by 50% and upgrade of the existing concentrator circuit to increase projected tin recovery to from 60% to 64%; and

-    Implementation time of 8 months including a 2-week full plant shut down.

◦     Long-term mine life:

-    An initial Proved and Probable Ore Reserve estimate (JORC, 2012) over the V1 and V2 pegmatites of the Uis Tin Mine totalling 15.6 million tonnes of ore at an average grade of 0.138% tin containing 21,536 tonnes of tin metal; and

-    18-year mine life.

▪      Project economic analysis compared to spot price - real terms:

Description	Unit	DFS Value	Spot Price Value*
LME Tin Price	USD	20,000	32,193
NAD/USD exchange rate	NAD/USD	16.00	14.5
NPV	USD million	12.1	63.3
Payback Period	Years	2.4	<1.0

* LME closing price and NAD/USD exchange rate as at 30 April 2021

Anthony Viljoen, CEO of AfriTin Mining Limited commented:

 

"Publication of AfriTin's inaugural Definitive Feasibility study marks another significant milestone for the Company and will lead to the completion of the first phase of development of what could potentially be the biggest open cast tin and technology metal deposits in the world.

 

The DFS confirms the highly attractive economics from a low-cost modular expansion of the current Phase 1 at Uis which can be implemented in eight months. The DFS also coincides with the Company achieving its first full quarter of steady state production at the Phase 1 plant as a global tin prices reach a 10-year high.

 

The initial JORC (2012)-compliant Ore Reserve estimate over the V1 and V2 pegmatites, validates the long-term feasibility of our flagship operation at the Uis Tin Mine and emphasizes the benefits that the deposit derives from the scalability of the project. Importantly, the reserve only forms a portion of the historically declared reserve, that the Company is in the process of converting into modern JORC compliance standards. We are especially pleased with the robust economics of the study which provide us with an opportunity to substantially increase the revenue and profit margin of the current operation, while importantly de-risking the expansion of the project into the much larger Phase 2 operation that is intended to be 6 to 10 times bigger than the phase 1 operation. While the current estimate only considers tin mineralisation, the Company intends to add the potential by-product minerals of tantalum and lithium oxide in due course. Coupled with the exploration upside of both historically mined and unexploited proximal pegmatites, AfriTin has laid a solid foundation for advancing the Project towards our long-term goal of becoming a leader in the tin and technology metals mining sector."

 

EXECUTIVE SUMMARY

The DFS was prepared by Minxcon (Pty) Ltd ("Minxcon"), a South African based advisory company with an international footprint focussing on geological exploration, resource modelling, mining and metallurgical engineering, financial evaluation, and management consulting.

Uis was previously owned and operated by South African Iron and Steel Industrial Corporation Limited ("ISCOR") from 1958 to 1990. In 1987 ISCOR published an Ore Reserve estimate of 75.3 million tonnes of ore containing 102,920 tonnes of tin (not JORC-compliant). AfriTin acquired the ML134 mining license incorporating Uis in 2017.

The Company undertook an exploration drilling programme over the V1 and V2 pegmatites to validate the historical ISCOR database. The V1 and V2 pegmatites comprise 2 of 16 historically mined pegmatites,  which occur within the greater Uis pegmatite swarm. The drilling campaign resulted in the declaration of a maiden JORC (2012)-compliant Mineral Resource estimate comprising 71.54 million tonnes of ore containing a total of 95,539 tonnes of tin, 6,091 tonnes of tantalum and 450,265 tonnes of lithium oxide. The maiden Mineral Resource estimate was announced by the Company on 16 September 2019.

In parallel with the exploration programme, the Company established the Phase 1 pilot mining and processing facility, which exceeded nameplate production, of 60 tonnes per month of tin concentrate of (720 tonnes per annum equivalent), in November 2020. The DFS evaluates an expansion of this facility to produce 100 tonnes of tin concentrate per month (equivalent rate of 1,200 tonnes per annum).

The study confirmed sufficient supply capacity of existing bulk infrastructure services for the planned expansion of the operation. This includes the installed capacity of the electrical grid power connection and associated supply agreement, and the groundwater network supply capacity. The Project is further supported by the existing product logistics chain whereby tin concentrate is exported through the port of Walvis Bay to Thailand under the existing long-term offtake agreement with Thailand Smelting and Refining Corporation. 

The mining study assumes parameters derived from current operational mining practices. Uis employs conventional open-pit mining techniques consisting of drilling, blasting, loading and hauling. Loading and hauling pairs 50 tonne and 37 tonne class hydraulic excavators with 30 tonne articulated dump trucks. Mining benches are blasted in 10 metre vertical increments and loaded in 2.5 metre flitches, allowing for selective mining on the contact between ore and waste material.

A geotechnical assessment of the rock types and domains, combined with finite element modelling of pit slopes, resulted in a recommended maximum slope angle of 50 degrees between haulage ramps. This served as an input to a multi-stage pit excavation design and accompanying mining production schedule over the life-of-mine.

 

The Mineral Resource to Ore Reserve conversion employed  a 0.07% Sn marginal cut-off grade, applied to the modelled smallest mining unit of 5.0 m (width) by 5.0 m (breadth) by 2.5 m (height). This resulted in a 2.03% dilution  of the Measured  Mineral Resource and a 6.45% dilution of the Indicated  Mineral Resource. A global ore loss of 2% was applied to the diluted ore tonnes.

 

The economic pit limit was determined through a techno-economic analysis assuming a long-term real LME tin price of USD20,000 per tonne. The cost and recovery parameters for the production of tin concentrate were derived from the current operational performance of the Uis plant and supplemental metallurgical test work results. The Ore Reserve estimate, presented in Table 1, is supported by a staged mine design and mining production schedule of 850,000 ore tonnes per annum, resulting in an 18-year mine life.

 

Table 1: Ore Reserve estimate for tin (Sn) over the  V1 and V2 pegmatites of the Uis Tin Mine as at 31 December 2020, prepared in accordance with JORC (2012).

Ore Reserve Classification	Gross			Net Attributable (85%1)			Operator
	Tonnes (Mt)	Sn (%)	Contained metal (t)	Tonnes (Mt)	Sn (%)	Contained metal (t)
Proved	12.59	0.139	17,548	10.70	0.139	14,916	AfriTin Mining
Probable	3.03	0.132	3,988	2.57	0.132	3,389	AfriTin Mining
Total	15.61	0.138	21,536	13.27	0.138	18,305	AfriTin Mining

Source: Minxcon

 

Notes:

1.     AfriTin has an attributable ownership of 85% in the Uis Tin Mine with the remaining 15% owned by The Small Miners of Uis (SMU)

2.     Ore Reserves have been declared at a cut-off grade of 0.07% Sn.

3.     Ore Reserves stated at a long-term real Sn price of USD20,000/tonne and a long-term real exchange rate of NAD/USD 16.00.

4.     Table columns may not add up due to rounding.

5.     The Ore Reserve estimation prepared and signed off by Minxcon.

 

The DFS proposes enhancements to the current processing plant resulting in a modular expansion of the existing crushing circuit to increase ore throughput by 50% and upgrade of existing concentrator circuit to accommodate the increased crushed ore feed tonnage and increase projected overall tin recovery target from the current  60%, to 64%. The detailed upgrades include the following:

▪      Addition of a crusher and screen between the primary jaw crusher and the fines crushing section;

▪      Addition of a buffer stockpile between the crushing and concentrating sections;

▪      Water rejection capacity in the DMS 1 section is increased;

▪      Combining the dense medium circuits of DMS 2 and DMS 3 to improve operability and stability;

▪      Converting the DMS 2 floats re-crush circuit to a closed circuit through the addition of a classification screen.

▪      Additional spirals to re-process middlings ; and

▪      Relocation of product handling infrastructure, and installation of an additional shaking table for improved processing capacity. The existing shaking tables will be replaced with Holman tables for higher separation efficiency.

 

A project execution plan of eight months has been modelled. This includes a 2-week total plant shutdown, but production will otherwise continue during the implementation period, minimising production interruptions. The Company will make use of in-house engineering and management capabilities, and established contractor and vendor relationships. These will be complemented by the appointment of a skilled and experienced project management and construction management team to  reduce implementation time and limit project implementation risks. The Company is fully permitted and compliant with legislation to proceed with implementation.

 

The capital cost estimate for the Project is USD5.7 million, including contingency of approximately 10% and escalation of approximately 3%. The operational cost estimate in terms of unit cost per tonne of tin contained in concentrate is presented in Table 2.

 

Table 2: Operational cost estimate in terms of unit cost per tonne of tin contained in concentrate.

Description	USD per Tonne Tin Contained in Concentrate
Net Turnover	18,668
Mine Costs	7,055
Plant Costs	2,106
Other Costs	5,641
Direct Cash Costs	14,802
Sustaining CAPEX	845
Production Costs	15,647
Royalties	553
Fully Allocated Costs	16,200
EBITDA	3,313
EBITDA Margin (%)	18%

Source: Minxcon

 

Notes:

1.     Smelter charges deducted from revenue received to calculate net revenue/turnover

2.     Smelter charges are approximately USD1,577/saleable tin tonne, which did not form part of the Direct Cash costs.

3.     Values are LoM average values.

4.     EBITDA excludes sustaining CAPEX.

 

The salient assumptions and results of the economic analysis are presented in Table 3. The economic analysis was undertaken using the discounted cash flow method to calculate the NPV on a Free Cash Flow to Firm ("FCFF") basis in real terms. The economic analysis was done at the level of the Namibian operating entity. The value derived for the Project only reflects the Ore Reserve in the life-of-mine.

 

Table 3: Project economic analysis summary - real terms.

Description	Unit	Value
LME Tin Price (long-term, real)	USD	20,000
NAD/USD exchange rate (long-term, real)	NAD/USD	16.00
WACC (real)	%	6.95%
NPV	USD million	12.1
IRR (real)	%	54.4%
Peak Funding Requirement	USD million	3.4
Payback Period	Years	2.4

Source: Minxcon

 

Notes:

1.     WACC assumes a NAD basis.

2.     NPV and Peak Funding Requirement calculated in NAD and converted to USD using the long-term real NAD/USD exchange rate of 16.00.

3.     IRR calculated on a NAD basis.

 

The Project is most sensitive to the parameters (in order of importance) of commodity price, exchange rate, plant feed grade of tin and plant recovery of tin. Table 4 illustrates the sensitivity of the Project to the LME tin price in terms of NPV and payback period.

 

Table 4: Sensitivity of the Project to the LME tin price (USD, long-term, real).

LME Tin Price (USD, long-term, real)	% Change	NPV (USD million)	Payback Period (years)
17,777 (Break-even price)	-11.1%	0	N/A
20,000 (Assumed long-term price in DFS)	0%	12.1	2.4
23,000	15.0%	25.8	1.8
26,000	30.0%	39.6	1.2
28,000	40.0%	48.4	<1.0

Source: Minxcon

 

Implementation of the Project is subject to approval by the Board of Directors of AfriTin.

 

Loan Note Update

 

The Company's Loan Note Facility of £2.05m (see announcement dated 5 May 2020) (the "Loan Notes") was due to be repaid in cash on 4 May 2021 (or, as set out in the announcement, the amount can be redeemed in shares, in which case the shares are to be issued at a 20 day VWAP calculated on the date prior to the repayment date) . The Loan Note holder, Yellow Dragon Holdings Limited, has confirmed that it does not intend to seek repayment or conversion at this time; and the Company is currently in discussions with them with regards to a formal extension of these notes. The Company is also exploring further options for the repayment of the Loan Notes. Further updates will be provided in due course.

 

Competent Person Statement:

 

The technical data in this announcement has been reviewed by Daniel van Heerden of Minxcon, which provides advisory services to AfriTin. Daniel van Heerden has 16 years of industry related mineral project development experience and is a Competent Person for the reporting of Ore Reserves.  He has been a Fellow of the South African Institute of Mining and Metallurgy (FSAIMM Reg. No. 37309) for more than 12 years. Mr van Heerden is registered with the Engineering Council of South Africa (Pr.Eng. Reg. No. 20050318) since 2005. He has reviewed the technical disclosures in this release and has undertaken the Ore Reserve estimation and classification for tin.

Glossary of abbreviations

DFS	Definitive Feasibility Study
DMS	Dense Medium Separation
FCFF	Free Cash Flow to Firm
ISCOR	South African Iron and Steel Industrial Corporation Limited
JORC	The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
LME	London Metal Exchange
m	Metre
Mt	Million metric tonnes
NAD	Namibian Dollars
NPV	Net Present Value
ppm	Parts Per Million
SMU	Small Miners of Uis, a minority shareholder in Uis Tin Mining Company (Pty) Ltd (subsidiary of AfriTin Mining Limited)
Sn	Elemental symbol for Tin
t	Metric tonne
USD	United States Dollars

 

Glossary of Technical Terms

Indicated Mineral Resource	The part of a Mineral Resource for which quantity, grade, quality, etc., can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of economic viability
Inferred Mineral Resource	The part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity
Measured Mineral Resource	The part of a Mineral Resource for which quantity, grade or quality, etc., are well enough established that they can be estimated with confidence sufficient to allow the appropriate application of technical parameters to support production planning and evaluation of economic viability
Ore Reserves	Ore Reserves are sub-divided, in order of increasing confidence, into Probable and Proved categories. A Probable Ore Reserve has a lower level of confidence than that applied to a Proved Ore Reserve.
Mineral Resources	Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource
Probable Ore Reserve	The economic viable part of the Indicated Mineral Resource proven through the application of technical and financial parameters.
Proved Ore Reserve	The economic viable part of the Measured Mineral Resource proven through the application of technical and financial parameters.
Pegmatite	An igneous rock typically of granitic composition, that is distinguished from other igneous rocks by the extremely coarse and systematically variable size of its crystals, or by an abundance of crystals with skeletal, graphic, or other strongly directional growth habits, or by a prominent spatial zonation of mineral assemblages, including monomineralic zones

 

For further information, please visit www.afritinmining.com or contact:

AfriTin Mining Limited
Anthony Viljoen, CEO	+27 (11) 268 6555
Nominated Adviser
WH Ireland Limited Katy Mitchell James Sinclair-Ford	+44 (0) 207 220 1666
Corporate Advisor and Joint Broker
Hannam & Partners Andrew Chubb Jay Ashfield Nilesh Patel	+44 (0) 20 7907 8500
Joint Broker
Turner Pope Investments Andy Thacker James Pope	+44 (0) 203 657 0050
Financial PR (United Kingdom)
Tavistock	+44 (0) 207 920 3150
Jos Simson Emily Moss Oliver Lamb

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

About AfriTin Mining Limited

Notes to Editors

AfriTin Mining Limited is the first pure tin company listed in London and its vision is to create a portfolio of globally significant, conflict-free, tin-producing assets. The Company's flagship asset is the Uis Tin Mine in Namibia, formerly the world's largest hard-rock opencast tin mine.

AfriTin is managed by an experienced board of directors and management team with a current two-fold strategy: fast-track Uis Tin Mine in Namibia to commercial production as Phase 1, and ramp up to 5,000 tonnes of concentrate per annum in a Phase 2 expansion. The Company strives to capitalise on the solid supply/demand fundamentals of tin by developing a critical mass of tin resource inventory, achieving production in the near term and further scaling production by consolidating tin assets in Africa.