What’s in a name change? Might be a question to ask Andrada Mining LON:ATM, the Guernsey-registered mining and exploration company with operations in Namibia, formerly known as AfriTin.
Management of the AIM-listed company said that the new name reflects its new identity, as an exploration company with assets including not just tin, but tungsten, tantalum, copper and the world’s new magic-material, lithium.
In fact, ‘Andrada’ is to honour nineteenth century Brazilian, poet, politician, professor, naturalist and geologist José Bonifácio de Andrada e Silva, who, apart from being able to knock out a good sonnet, give a good speech, and knew his monkeys from his primates, was also credited with the discovery of petalite and spodumene in 1800 on a rock-collecting trip to Sweden, both lithium-bearing minerals. A few years later Don José gave up playing with rocks and was busy trying to abolish slavery and restore an independent Brazilian Empire.
Battery minerals focus
The name change for AfriTin, does however reflect the change in its focus, and the increasing importance of lithium as a battery component in the transition to zero carbon story. In fact, Andrada is strategically placed to benefit from the transition theme, given that its principal products are all essential components to the battery industry, which will give renewables the ability to become baseline energy providers, not just supplements to nuclear, coal, oil and gas.
Andrada has put lithium front and centre of its development over the next five years. Last year the company released a five-year strategy document, in which Anthony Viljoen, the company’s chief executive explained the company’s “…ambitions and pathway to becoming a multi-tech metal producer over the next five years…” underpinned by “…underexplored lithium potential combined with multiple historic open pit tin mines.”
The company listed on AIM in November 2017 and has four sites, all reasonably close to one another in the Erongo Region of Namibia which has mining heritage in marble and uranium. Erongo is on the Skeleton Coast in the centre of the country and has Walvis Bay and Swakopmund as its major population centres.
Profitable tin production
Andrada holds four licences: Uis, Brandberg West, Nai-Nais and B1C1. At Uis the company has already built a tin pilot plant and gone into production. Nameplate production of 720 tonnes a year (Tpa) has already been achieved and the plant is profitable on tin alone.
However, Uis does offer significant by-product potential from lithium and tantalum and the company hopes that its Phase 2 expansion of tin concentrate production to 1,300Tpa will make Uis a dramatically scalable project with potential to also become a global lithium supplier.
Brandenberg West is an exploration licence of 35,000Ha, previously part of the Goldfields [NYSE:GFI JSE:GFI] stable and had 20-years of continuous tin and tungsten production since 1957, but Andrada believes the tenement is under-explored and offers further opportunities in tin, tungsten and copper. At Nai-Nais, there was a history of tin and tantalum opencast mining, but the concession also boasts spodumene, petalite and lepidolite deposits – all lithium-bearing minerals. B1C1 is only 10km from Uis and would use the operational mine’s infrastructure with a similar geology to Uis.
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Management has set itself a punchy target, to: “become a world-class tier1 mining company targeting market cap of USD1bn and revenues of USD500m,” but with its strategic mineral focus and strong fundamentals for battery minerals, it is something to aim for.
Earning, not burning
Unlike many explorers Andrada is actually earning, not burning money, as it has it tin mine at Uis in operation, an operation that is profitable just on tin. Producing around USD800,000 per month from Uis, it has financed its own drilling and exploration projects in 2022. However, the miner also has the potential to upgrade its tin production from Uis and to start producing lithium.
Last week, Andrada published an update on its mineral resource estimate for Uis, with an increase in the lithium grade previously reported in 2019 from 0.63% to 0.73%, with tonnage increasing by 30% to 587,000 tonnes. The updated resource gives a lithium carbonate equivalent of 1.45 million tonnes. The company also reported an increase in tin to 120,000 tonnes with grade increasing from 0.134% to 0.15%. As an add-on Andrada also reported 109,400 tonnes of rubidium at an average grade of 0.14%.
Viljoen said in a statement: “”I am very pleased to announce a new enlarged lithium resource at our Uis Mine in Namibia following significant drilling programme in 2022. This confirms our belief that Uis is a globally significant lithium and tin resource that remains open at depth and is one of over 180 mineralised pegmatites within 5km of the Uis processing facility.”
The exploration work backs the plan in the five-year strategy document to expand Uis mine to increase the tin it produces and to start producing lithium. This operation is envisioned as a 10 Mtpa operation producing approximately 16,000 Tpa of tin concentrate, 480,000Tpa of lithium concentrate, and 320Tpa of tantalum concentrate. It is expected that Phase 2 will require upscaled electricity and water infrastructure by tapping into existing electrical grid power and utilizing desalinated water infrastructure close to the current operation.
Project finance
The Phase 2 project expansion is being financed by a project finance facility through its banking partner, Standard Bank Namibia. Thereafter, the Company intends funding its strategic development activities at Uis Mine, at B1/C1 and at Brandberg West, mainly from incremental Phase 1 cash flows and through appropriate financing options on a project-by-project basis.
The company needs to build a bulk testing facility, to test the lithium concentrate for commercial use and secure an offtake contract with an end user. The miner hopes to produce 45,000 tonnes of lithium on an annual basis, but still has a few steps to get there. Andrada is continuing with a bankable resource study and a bankable feasibility study for its financial partners, getting the pilot bulk testing facility into operation and securing an off-take agreement.
In a recent interview Viljoen said: “[The share price appreciation] has been a bit disappointing [following the resource update] as it places us as one of the top lithium resources in the world in terms of size, and we also upgraded the grade, so what we’re finding is the further down we go in the pit, the better the grade, which helps the economics […] so its all pretty good out there.”
Tin remains key
One of the criticisms the company has fielded recently is that it has moved away from tin, in preference of lithium, however Viljoen said: “We’ve upgraded the [Uis tin] plant to show the benefits of economies of scale and better efficiencies through the gravity circuit […now] unit costs are down to about USD18,000 from about USD22,000 – which is significant – and the tin market has been very bullish for the last couple of months, so we’re making money – not many juniors get to that point.”
However, the infrastructure from the tin mining operation can be leveraged to lithium mining. The CEO said:
“…essentially what’s going to happen is that we’ll end up producing the lithium for free, as we’ll have a polymetallic plant processing both minerals, and tantalum on a smaller scale. We also announced a rubidium resource.”
“Lithium is the bonanza,” said Viljoen, “the cherry on top of the cake, which unlocks huge value especially because the size of what we’ve got is so significant for end users in China and Europe – everyone needs lithium.”
Andrada has was a small-scale tin producer. The lithium resource is a game-changer for the company. Unlike most juniors, Andrada has secured bank finance for its projects and is working with Standard Bank Namibia, Development Bank of Namibia and Orion who are preparing an inter-credit agreement currently.
The company opened business today (14th February) at 4.99p and has offered a year-to-date return of -9.5%, and -15.7% over one-year with shares ranging between 3.9p and 9.79p over a 52-week period, giving the company a market cap of GBP76.1m
The cynic often sees a name change as a mechanism to reinvigorate a flagging company, getting people to talk about them again. In Andrada/AfriTin’s case, the rebrand reflects the changing focus of the company and repositions it at the core of the transition narrative and its conscious decision to become a significant global lithium producer, making Andrada one-to-watch.
