AVZ Minerals has announced that it has signed a three-year offtake deal with Kalon Resources to sell 600 tonnes of tin concentrate per year. Kalon Resources is a subsidiary of Noble Resources, a significant trader of tin concentrates, sourcing from Africa and South America.
Manono is a historic tin mine, located in southern Democratic Republic of Congo. Operations began in 1919 and during the time it was open, the mine produced some 185,000 tonnes of tin concentrate with an average grade of 1,330 g/m3, according to now-owner AVZ.
Since the main mine closed in 1982, the Manono region has been a source of artisanal tin production. AVZ plans to incorporate this regional production into its processing plant. According to its Definitive Feasibility Study, the company expects to produce some 12,659 tonnes of tin from artisanal sources over the life of mine. This compares to a hard rock mined production of some 62,699 tonnes.
The offtake deal specifies that the concentrate must be at least 55% tin, although AVZ expects the product to be closer to 60-70% metal. Concentrate grades from the hard rock mine will likely benefit from the addition of relatively clean alluvial tin from artisanal sources.
Our view: On average, AVZ plans to produce 630 tonnes of artisanal tin every year from the Manono project. From the estimated concentrate grades, this means that the deal with Kalon Resources essentially guarantees that AVZ will sell roughly half of its artisanal production. The company now need to sign a larger offtake deal to sell the rest of the artisanal production, as well as the ~3,000 tonnes of tin that will be produced from hard rock material every year.
