Exploitation is a word that is never too far away from recent descriptions of the mining industry in Democratic Republic of Congo. The Central African nation has been ravaged by a series of bloody civil wars that were often played out in the pits of rudimental mines controlled by rampaging militias. Not only did these armed criminals bring anguish and suffering to thousands of victims during the conflict and for many years after it, these low-tech miners’ crude extraction methods also rendered huge swathes of valuable mineral deposits uneconomical for commercial exploitation. While peace and civility are finally surfacing across DRC, the scars left by years of artisanal conflict-driven mining run deep in many areas of the country.
However, Alphamin Resources is a TSXV-listed company that is hoping to make a genuine difference in the DRC through a robust commitment to conflict-free, responsible mining. CEO Boris Kamstra hopes the globally significant Bisie Tin Project will also serve as a catalyst for economic development in the region.
The law of the jungle
Alphamin’s Bisie project is nestled deep in the rainforest of North Kivu, an area which was effectively ruled by the law of the jungle between 2002 and 2011, when up to 16,000 artisanal miners toiled at Bisie surface deposits.
Several groups of armed rebels controlled the sprawling network of artisanal miners, forcing them to extract the metal from hand-dug tunnels before imposing extortionate taxes on each individual miners’ daily haul of tin.
However, the extent of the problem manifested on a worldwide scale when it emerged that around 4% of global tin supply originated from the DRC with a large component of illicit production from Bisie up until 2012. The implications were grave for corporations who discovered their supply chains had been poisoned at source and consumers who became the end recipients of conflict-tainted products.
Action was urgently required to tackle the prevalence of illicit mining in the Bisie region and since 2010 a major international legislative drive aimed at preventing these conflict minerals from entering global supply chains has been enacted.
A number of initiatives were developed in tandem with US legislation under the Dodd-Frank Act, guidance from the OECD’s responsible supply chains in high risk areas documents and several local initiatives attempting to enhance traceability of several conflict minerals from the Great Lakes Region.
“With regards to the notion of how one operates responsibly in an area, particularly in an area like North Kivu, an absolute minimum would be to comply with all international legislation,” says Kamstra.
Alphamin’s compliance to Dodd-Frank regulations along with other conflict-preventing initiatives ensures that its tin product will only be sold through legitimate channels, thus rendering stolen or misappropriated tin worth much less across open markets.
The tin concentrate produced at Bisie by Alphamin will also be certified as conflict-free tin. “Our tin will be for any potential buyer and is an absolute premium product,” says Kamstra. “Like the little sticker that says intel inside, I expect to see a little sticker that says Alphamin tin inside.”
Overall, these initiatives have led to much more stringent supply chain monitoring by companies around the world and the opening up of certified conflict-free supply chains, which has driven out conflict-driven mining in the Bisie region on a large scale.
In fact, there are currently no artisanal miners working in any of the Alphamin license areas as of December 2017, which is an impressive feat given there were 16,000 small-scale miners working across Bisie just four years ago.
However, following regulations is the least that any company should do in its role as a responsible miner, according to Kamstra. “We are looking to be a catalyst for economic development in the wider region of North Kivu.
“A basic example of responsible mining is to abide by the rules but in our instance, it means we are going to bring in local contractors and suppliers wherever possible and invest in the communities amongst whom we live and operate,” he says. Recently, Alphamin has relied on several local logistics companies to deliver vital equipment as it moves into the construction stages of the mine and plant.
“People like TMK Congo and Tembo Logistics have moved heaven and earth through hell to get equipment to us when we needed it,” says Kamstra, citing a recent occasion when TMK trucks weathered extraordinary conditions to deliver components for the construction of the mine.
The CEO reveals that construction of the mine and the plant are on track with full production expected to be reached at Mpama North – Phase 1 of the Bisie project – by Q2 2019.
“What you have to understand is that the full team at Alphamin is in a category and a class of their own anywhere in the world. These are people that can do incredible things in a difficult environment. What they have achieved so far is magnificent,” proclaims Kamstra.
“The people of the area have a capacity for work that I have yet to see anywhere else. Their willingness to work and resourcefulness reflects the environment in which they live and operate.”
This remarkable aptitude for work amongst residents of the Bisie region provides clear justification of Alphamin’s policy to work with local contractors and suppliers, aside from the fact that it also a much more cost-effective way of operating compared to importing labour from abroad.
In addition, a significant portion of Alphamin’s local contractors view themselves as part owners of this project as many have actually invested into the company in recent capital raises.
“This gives me a great degree of satisfaction because I am effectively paying them with their own money. Where else in the world do you have this sort of scenario? There is a serious ownership model within our entire contractor base.”
Alphamin is well-cashed up after a recent US$15 million equity financing raise, by way of a non-brokered private placement, which was preceded by a larger private placement at the start of the year, which generated approximately $43 million in equity.
These recent fundraisers will support the final push of the construction stages of Mpama North, but this hasn’t stopped the company from exploring other sources of potential investment, which is reflected in the secondary listing of Alphamin on the JSE AltX Board in South Africa.
“We think that the South African environment is one where investors understand the mining industry and understand how to invest in mining. We believe as we move forward, so we will see increased activity on the AltX.”
The tip of the iceberg
Alphamin’s immediate plan of action is focused on getting Phase 1 of the project into steady state production next year. However, Mpama North could potentially be just the tip of the iceberg for the company in the mineral-rich Bisie region.
“Once we get some cash flowing from Mpama North we will explore below where we stopped drilling on Mpama North and the rest of the ridge where we have some of the most extraordinary signatures from pre-geological exploration metrics, including gravity and soil sampling.
If someone were to look at the composite signature map from all of those surveys and reference them against Mpama North, they would likely say you’ve built the mine in the wrong place as there are far bigger signatures further South, explains Kamstra.
“Mpama North just happens to be the area we know most about and it’s a mining project that will produce an IRR of around 49%, which is very good for a starter project.
“It will give us the springboard and capital to explore the rest of the region and position Alphamin to be a potential producer of 30,000 tonnes per annum of tin, giving the industry confidence that there will be a responsible and meticulous provider of tin on a global scale.”
The global significance of the Bisie project has already been proven by the astounding metrics confirmed in the definitive feasibility study (see fig. 1), but its importance has been further intensified by recent research that indicates there could be a global shortfall in tin supply in the coming years.
Tin is not a new metal to mankind and has been mined by humans for centuries dating back to the Bronze age. Consequently, the easy and not so easy ore bodies have been found and mined out, hence a global supply shortfall has been on the horizon for quite some time and the only reason Bisie hasn’t already been depleted is because it was completely inaccessible until now.
Therefore, with Mpama North set to supply 10,000 tonnes of tin a year over a 12.5 mine life and additional deposits in the nearby area also likely to produce the metal on a similar scale and on a long-term basis, Alphamin’s importance to the global tin industry is unquestionable.
However, it is Alphamin’s commitment to establishing a new conflict-free era of mining in DRC and its pledge to add real socio-economic value to the Bisie region that fills Kamstra with most pride.
“It probably is the greatest honour in my life to be working on this project. To be working with the team we have and to see these guys in action really sets your measure of what can be done. We still have a long way to go, but I hope to be talking to you again in Q2 next year having made our first sale.”