Alphamin achieved a strong profit margin during the third quarter of 2022, despite falling tin prices and slightly lower production.
Alphamin produced some 3,139 tonnes tin-in-concentrate from its Mpama North mine during Q3 2022. The company processed the same volume of slightly higher grade material during the quarter, but achieved lower recoveries. Overall, tin production fell by just 1% compared to the previous period.
However, the company elected to sell slightly less material than normal. Shipments amounting to 3,080 tonnes tin-in-concentrate were recorded, down 5% QoQ, building Alphamin’s on-site stockpile by some 50 tonnes tin-in-concentrate.
Tin prices have fallen sharply from their March 2022 high of US$ 50,050/tonne. In Q3 2022, LME Settlement prices averaged just US$ 23,660/tonne, a drop of nearly 53% from the peak.
Despite the significantly lower LME benchmark, Alphamin managed to achieve an average selling price of US$ 22,011/tonne. This was a QoQ decline of 38%, roughly in line with the fall in the exchange price (-36%).
Although Alphamin’s average selling price did fall QoQ, so did its operating costs. All-in Sustaining Costs (AISC) were US$ 13,200/tonne for the quarter, down 10% from the previous period. According to the company, the lower tin prices reduced variable off-site costs such as marketing fees, royalties, export duties, and smelter payables.
Our view: Alphamin built stock of tin-in-concentrate during Q3, likely due to lower interest from smelters on quiet demand for refined tin during the period. Demand for metal is likely to pick up moderately in the final quarter of 2022
Even with the continued low tin prices, we would still expect Alphamin to remain profitable. Although the company will likely sell its concentrate at lower prices during Q4 2022, the mine’s AISC should continue also decline as off-site costs trend downward.
Alphamin is a member of ITA’s Explorers and Developers Group.
