Aus Tin Mining (ASX-ANW) have announced the execution of a contract with Jemrok Pty Ltd. to carry out mining activities and construction of a new tailings storage facility for the level 2 expansion of its Granville tin operation in western Tasmania.

The new tailings site is located downstream of the existing storage facility and has a design capacity appropriate for level 2 operations. The construction phase is expected to take six weeks, with mine operations also set to commence at the Granville East mine on a contract mining basis. Concentrate production will recommence once sufficient ore stockpiles from mining have been accumulated, which is expected to be the case by the middle of the year. Tin concentrate output will ramp-up in the second half of 2018.

The cash cost of production for the level 2 expansion has been revised upwards to A$17,300/t (~US$ 13,450) from A$15,600/t (~US$ 12,500) in July 2017. This is due to higher operating costs at the site related to the finalised cost of contract mining and adoption of a lower tin recovery of 60%.

Our View: The Company has already been producing tin concentrate by processing tailings material and ore stocks at Granville but had been limited by existing user rights which restricted annual processing to 2,500 tonnes of ore. The new approval increases this limit to 40,000 tonnes and permits the resumption of mining at the Granville East open pit mine.  The expansion is projected to result in an increase in tin-in-concentrate output to 550 tpa.