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First Tin to bring two mines into production by 2025

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First Tin LON:1SN, a relative newcomer to the London Stock Exchange, having only listed on the Main Market on 8th April, published its Interim Results for the half-year ending June 2022.

The company is developing tin mining through two projects, one in Germany and another in Australia. First Tin is planning to bring both mines into production within three years. The company raised GBP20m before expenses at IPO and used the proceeds to acquire Taronga Tin Mine in New South Wales, Australia from AusTin Mining Limited, an Australian exploitation company, which became First Tin’s biggest shareholder, owning 22.6% of the issued capital. The company said that Taronga Tin is the fifth largest undeveloped tin reserve globally.

First Tin added Taronga Tin to Tellerhäuser mine in Germany, a mine formerly operated by the German Democratic Republic (East German) state. The Tellerhäuser mine already has 180,000 metres of underground works, 500 metres of internal shafts, and drilling of over 141km.

Tin is something of the ginger stepchild in terms of metals. It doesn’t garner the same attention as copper or platinum or nickel or iron ore. But it is vital component in the new energy transition. It’s not usually used now for storing baked beans and chunky soup (tin cans are mostly made from aluminium or steel, with steel cans tin-plated, so the can is mainly a steel can, with a tin layer) – but is a critical component of high-tech hardware and electrical vehicles, and also robotics and renewables.

Tin is the ‘glue’ that sticks things together when used a solder, but as the world moves away from hydrocarbon-driven transportation solutions, electricity generation, and heating to renewable technology, tin is becoming a strategic component in this transition. Just a few of the applications for tin include: Lithium-Ion Batteries, post-Lithium-Ion batteries, redox flow batteries, photovoltaic solar cells, thermoelectric capacitors and distributors, hydrogen generation, fuel cell technology and carbon capture catalysts.

All Spice

Indeed, Charlie Cannon-Brookes, non-executive chairman of First Tin, described the metal as the “spice” ingredient to many of the future technologies the world will rely on in the coming decades, in an investor’s call this morning.

“We’re running into a wall of demand from electro-transport and renewable energy consumption for tin, something that has been brought into focus by the war in Ukraine and energy crisis in Europe…” said Thomas Bünger, First Tin’s chief executive officer, “…Photovoltaics is one of the big drivers of demand, as is transportation, where electric vehicle use three to four times the amount of tin than conventional vehicles.”

First Tin is racing to get its projects into production by 2025, and Bünger said that the company – which has been developing Tellerhäuser and Taronga in parallel – is fully funded to get the projects “investment-ready”.

Mature and close to production

“Both projects are quite mature and very close to production,” the CEO said on the call.

The projects, said Cannon-Brookes, are for mining quite low cost, with smallish capital costs and quick in time to get to production. “What you find with junior miners is that they discover a fantastic resource, but often can’t raise the capital from [the equity markets] to get the project into production […] we chose the two projects we are working on now because not only is the ultimate capital expenditure quite low, and the resource easily minable, but because the economics work even at the depressed end of the pricing scale – which is where we are now – and have great upside potential.”

Tellerhäuser will cost USD49m (GBP45m) in start-up capital expenditure, has a JORC-compliant indicated and inferred resource estimate of 53,000 tonnes of metal, and a 50-year mining licence. At a tin price of USD20,000 a tonne, has an IRR of 26% and at a price of USD40,000/t has an IRR of 87%

Taronga will cost USD76m in start-up capital expenditure, has a JORC-compliant indicated and inferred resource estimate of 57,200 tonnes of metal, and is the fifth largest undeveloped tin reserve globally. At a tin price of USD20,000 a tonne, has an IRR of 13% and at a price of USD40,000/t has an IRR of 100%

First Tin had already started its definitive feasibility studies at Taronga and Tellerhäuser, with both scheduled to be completed in 4Q23. The environmental and permitting process is also underway at both mines and should complete by the end of 2023.

Minimal impact

At Tellerhäuser the company has pledged to minimise to environmental impact to almost negligible levels, by building a processing plant underground, while waste rock and processing remains will be used as a by-product for backfill. Tellerhäuser’s underground water treatment plant will also be underground, while its power needs will be supplied by the Markersbach Hydro Power Plant, which is just 3km away.

Bünger said that Tellerhäuser will most probably produce the most environmentally-friendly tin in the world, however, he added sadly: “unfortunately – to date – no one has been able to add an ‘environmentally-friendly premium’ to the commodities they produce, although one copper producer in Germany introduced an environmentally-friendly premium to the copper they produce last week, and we’ll be watching the success or otherwise of their experiment with interest.”

He added: “First Tin is supporting a decarbonised future and is committed to best-in-class environmental responsibility.” The company is exploring the option of building a tin smelter on site at Tellerhäuser to reduce its carbon footprint.

The German project is a multi-metal resource, said Bünger and can also produce tin concentrate, indium and magnetite, whereas Taronga is a low cost simple beneficiation project that has the potential – given the V-shaped resource deposit – of developing from an underground to an open cast mine. Taronga has a very low strip rate, said Bünger, with nearly a 1:1 ratio of base rock to metal.

The company also has a number of exploration plays in both Germany and Australia, where the company is exploring the Great Britain deposit near Taronga and has already diamond-drilled Gottesberg which is adjacent to Tellerhäuser.

First Tin share price

First Tin’s share price has been pummelled since IPO. The company opened trading at 11.25p today (27th September) after debuting at 30p at IPO.

Bünger said on the call: “All of our peers – whether in production or in development – have seen their share price decline rapidly this year, apart from Cornish Metals [AIM:CUSN] which took in institutional investment this year which helped their position.”

He continued: “[The sub-sector’s] price has followed the trajectory of the tin price, which peaked in March and has now fallen to the USD20,000 to USD25,000/t range and since then our share price and that of our peers has moved sideways.”

 

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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