Alphamin Resources (TSX-V:AFM) is a Mauritius-based emerging, leading, tin producing company. The firm’s anchor venture is the Bisie Tin Project, which consists of two high grade tin deposits approximately 60 kilometres from the DRC’s Walikale district in the North Kivu Province, with additional drill targets on its mining licence and indications of primary tin deposits on its adjacent Exploration permits.
Boris Kamstra, Alphamin’s newly appointed CEO recently joined the Alphamin team who have a strong history of mining experience in Africa, in the DRC and a positive outlook for the company’s future.
“The Alphamin team is comprised of remarkably experienced people heading up each of its operational areas, it is a privilege for me to join this team and to work with them taking Alphamin to become a leading tin producing company, and in so doing creating an anchor for the development of North Kivu,” says Kamstra.
Alphamin’s board and management team consists of skilled and seasoned personnel, all eager to continue moving the company forward. Boris described the team as robust and sturdy, while dedicated to making the project work. “Here, you have people who want to make a positive difference through the success of the project and are energised by the challenges posed in this journey.”
High-grade tin bearing gossan was discovered on the Bisie ridge in 2002, this initiated a rush by illegal artisanal miners entering the mineral-rich area. Kamstra explains the consequence of the rush at Bisie was that it supported the emergence of a number of armed groups, causing the government to take control. “Bisie has been a source of quite a number of problems for the DRC and the surrounding countries.”
Alphamin, under the former name ‘Mining and Processing Congo SPRL’ (MPC) applied for four exploration permits in 2006. It was soon awarded legal title over the area and started exploration work at the Bisie ridge. Kamstra explains it was quite tricky carrying out the required work at the time, “Well-funded artisan-miners were not terribly happy seeing people arriving with drill rigs to begin the process of developing a commercial mine on the property.”
Alphamin was forced to suspend operations at Bisie in November later that year due to security concerns. “Despite the considerable sums of money generated by the artisanal mining at Bisie, there was absolutely no investment left behind and practically no positive impact on the community surrounding it,” says Kamstra.
In 2010, the DRC’s President imposed a ban on all mining activities in the Walikale area and production and trade decreased, causing a drop in the price of tin concentrate that could be realised by the artisan-miners and associated traders. In addition, as with all rich shallow artisanal mines, the more cassiterite removed from the Bisie, the deeper they were required to go. At around 50 metres and in some cases below, mining became dangerous and costly. This caused many of the artisanal mining community to leave for other mines and gold sites, according to Kamstra.
The following year the Dodd Frank Wall Street Reform and Consumer Protection Act was introduced. The legislation aimed at halting the DRC’s national army and rebel groups from illegally funding their battles with mineral trade, allowing the area to stabilise. The President’s ban on mining in North Kivu was lifted later that year and Alphamin began drilling with African Drilling International. “Things were tricky to start, but once Alphamin got underway, the momentum built up behind us and the government have been remarkably supportive,” Kamstra explains. “Mining is a pioneering industry and mines generally act as catalysts for economic growth in the areas they are located and that is something that I think the government has recognised and are very keen to support, with Alphamin ideally positioned to be catalytic to the economic development of North Kivu.”
A positive outlook
Bisie Tin project is now one of the top tin development ventures in the world. Alphamin recently announced positive feasibility results in February – low unit capital rate and cost, rapid payback and strong financial performance – forming a solid foundation for the development of a mine at Bisie. Additionally the company also announced last year that there was a 30 per cent increase to its Indicated Mineral Resource at one of the tin deposits, Mpama North, with the ore body remaining open at depth. The company plans to construct an access road from the Walikale – Kisangani road to Bisie. Currently we have about 360 people from the local surrounding communities working on the access road. This number will increase as Alphamin starts developing the return airway drive and full scale construction later this year or early next.
Alphamin’s investment will fundamentally transform the local economy, social conditions and underlying governance of the Walikale region and North Kivu province. Responsible development and operation of the Bisie mine will create much needed jobs and spill-over economic and governance impacts in North Kivu which will help to reduce insecurity and improve social conditions in the region. Along with the direct positive impact, Alphamin is establishing a non-profit foundation which will promote social projects selected by the communities of Walikale Territory in North Kivu close to Bisie; be managed and controlled by Alphamin, but representatives of the North Kivu communities will participate in the management, and be represented on the Board of the Alliance; be jointly funded by Alphamin, which shall contribute 4% of in-country mining and processing cash costs and corporate administration, less “realization” costs of marketing, freight and treatment charges as commonly defined in the tin industry and which, for ABM SA, occur out of country to the Foundation, and donations by investors in a potential Conflict Free Tin Bond to be issued by Alphamin. The investment by Alphamin is likely to leverage further investment in the Eastern DRC and will have synergies with other humanitarian, stabilisation and development funding and initiatives of the DRC Government and multiple donors, including the World Bank, the development agencies of the U.S. (USAID) and the U.K.(DFID).
The community non-profit initiatives will be known as the Lowa Alliance (after a local river that crosses much of Walikale Territory) and be based on an in-depth and ongoing household level assessment of the 15,000 households in 24 communities (estimated at 105,000 residents) closest to Bisie. Representative committees will prioritize a range of projects to promote social and economic development to which they, local authorities, and potentially external donors, will also contribute. Anticipated projects could include alternative livelihoods, specifically oil palm, cocoa and coffee cultivation which would provide incentives for incomes beyond illegal artisanal mining; health infrastructure and services—potable water, malaria reduction and treatment, primary health care capacity building; education infrastructure, teacher training and parental governance; appropriate support to local government to improve services; and targeted community infrastructure including roads, bridges and potable water systems.
Mpama North & South
Alphamin selected tin as a commodity with a potentially promising future, due to demand rising and some existing mines moving up the cost curve as they depleted their resources. Alphamin then identified the Bisie project as a possible high grade deposit. “I think Alphamin were quick to recognise the potential of Bisie to host a world class tin producer,” Kamstra says.
The Bisie Tin project is made up of two primary tin deposits called Mpama North and Mpama South which are approximately one kilometre apart. Alphamin elected to progress Mpama North as the debut project. After an intensive drilling campaign, Mpama North had a Resource containing 194 thousand tonnes of tin at a grade approaching 4% Sn. Drilling also confirmed the ore body is open at depth. Mpama South holds a promising future with mineralisation characteristics similar to those identified at Mpama North at a similar point of its program. There are a number of additional drill targets on Alphamin’s Mining Permit area, and promising indications of primary tin on the adjacent Exploration Permit. Alphamin plans to construct a mine and processing facility at Mpama North which will then provide the capital required to progress the additional exploration required to develop a mine at Mpama South and firm up the additional targets. Alphamin’s broad development program has five phases;
Alphamin has a firm support system, liaising with their main drilling company, African Drilling as well as the assistance of BAC Helicopters, a helicopter charter service. “We have a broad spectrum of people who are invested in making sure this mine is a success and intend growing these numbers,” says Kamstra. The Mines Police, the FARDC, the national army have ensured a level of stability in the area. The firm is also a member of Voluntary Principals, an organisation that provides guidance to extractive companies operating in difficult areas. “It’s terrific to be a part of the Voluntary Principles, which provide us with input on security issues from companies that have far more experience in areas that are a lot more tricky from a security perspective than what we have to contend with,” he explains. Alphamin is currently working with traders and transport contractors from the area to finalise the logistics options available to the mine.
Alphamin confirmed they have the funds required in this period preceding full blown construction. A capital raise will be taking place towards the end of this year and early 2017. Current shareholders have indicated a willingness to support this capital raise which may comprise of a blend of some debt and some equity.
The company’s production target is at 9,000 tonnes of tin in concentrate – Bisie is expected to be profitable at a tin price of US$14,800 per tonne. “The very high grade of this project gives us a very low cost per unit tin produced, and we will be amongst the lowest cost producers in the world.”
The Bisie project not only produces tin, will be a significant contributor to the fiscus of the DRC through royalties, employee tax and corporate taxes. In addition we are looking forward to paying out dividends to the state through their shareholding in the company Boris explains this will be an enormous boost to North Kivu’s economic activity with the project also giving the country some fiscal diversity.
“Currently, the DRC has an emphasis on copper and the collapse in the copper price has really been problematic for them,” he remarks. “Copper mine’s revenues have plummeted along with them profitability which has reduced the taxes and other revenue paid across to the state. Adding a few different commodities to the mining portfolio will improve the situation”
Alphamin are planning to be in the process of concluding the capital raise for the construction of Bisie towards the end of 2016, early 2017. They are looking to start construction in earnest in early 2017. In the interim preparatory work is being undertaken such as access roads, and the smaller elements of the mine infrastructure such as the Return Airway Drive.
“The reason we are doing this is two-fold,” explains Kamstra. “Firstly, these programs have been designed to employ as many people as is possible. We could put a bulldozer in and have it done in a couple of weeks probably, but our preference is to get a lot of hands at work and they are doing a remarkable job. Secondly these activities prepare the way for the final construction program, shortening its duration.”
The firm also plans on exploring other tenements in the future which need to be refined for drill targets. “2016 is the year of preparation, with all of our financing in place, all of our people in place (and the) access road in place, our hope is to be able to launch full scale construction next year, with a view to being in production in late 2018, early 2019,” Kamstra concludes.