REG - Andrada Mining Ltd - Q1 Ops Update for the Period ended 31 May 2024

Andrada MiningAnnouncement

21/06/2024 07:00

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RNS Number : 3670T  Andrada Mining Limited  21 June 2024

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(EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the
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21 June 2024

Andrada Mining Limited

("Andrada" or the "Company")

Operational update for the quarter ended 31 May 2024

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), the African technology metals
mining company with a portfolio of mining and exploration assets in Namibia,
hereby provides an unaudited operational update for the quarter ended 31 May
2024 ("Q1 FY2025").

HIGHLIGHTS
Operations

§ Year-on-year ("YoY") increase in ore processed to 237 976 tonnes (Q1
FY2024: 217 189 tonnes).

§ YoY increase in tin concentrate production to 364 tonnes (Q1 FY2024: 359
tonnes).

§ YoY increase in contained tin production to 223 tonnes (Q1 FY2024: 216
tonnes).

§ Plant availability increased to 93% (Q1 FY2024: 91%).

§ Production of nine tonnes of saleable tantalum concentrate, constituting a
14% increase quarter-on-quarter ("QoQ"). Of this, five tonnes were shipped to
AfriMet during the quarter per the offtake agreement

§ YoY increase in realised tin price from USD 25 149 to USD30 839 per tonne
of contained tin.

Financial

As set out below, management has maintained its guidance on costs despite the
introduction of the Orion royalty charges and ongoing mining cost increases.
The mine and plant performance are expected to remain stable during the
financial year as the pre-concentration circuit and Continuous Improvement 2
("CI2") initiatives are implemented. The enhanced plant performance, following
the completion of the expansion programme, is expected to reduce operational
costs.

§ Management guidance on quarterly average C1(1) costs is maintained at
between USD17 000 and USD20 000 per tonne of contained tin. USD18 899 recorded
in Q1 FY2025, which is within the guidance range.

§ Management guidance on quarterly average C2(2) costs is maintained between
USD20 000 and USD25 000 per tonne of contained tin. USD23 452 recorded in Q1
FY2025, which is within the guidance range.

§ Management guidance on quarterly average all-in sustaining cost ("AISC") is
maintained between USD25 000 and USD30 000 per tonne of contained tin. USD28
774 recorded in Q1 FY2025, which is within the guidance range.

§ Unaudited cash balance on 31 May 2024 was GBP11.9 million (USD15.2
million).

Anthony Viljoen, Chief Executive Officer, commented:

"Exposing planned ore zones has reduced our stripping ratio at Uis, to 1.5:1
as at the end of May 2024. Coinciding favourably with our expansion of both
tin concentrate and contained tin production, we are ideally positioned to
capitalise on the tin price rally that began in April 2024. Despite the plant
outages during the quarter, I am pleased to confirm that all the issues were
resolved and will not repeat in the future.

 

We successfully produced and delivered our first five-tonne consignment of
tantalum to AfriMet during the quarter, with the second consignment produced
and targeted for shipment in the second quarter. This is an important
milestone for the Company, that places us firmly on the path to becoming a
multi-mineral producer of critical metals. We look forward to a continuation
of this supply agreement.

 

Given the diversity of the minerals within our mining licences, we have
broadened the scope of our strategic process beyond just the Uis mining
licence. The expansion of the scope has the potential to unlock multiple
partnership opportunities across our portfolio of assets. This process is
progressing well, and we look forward to providing an update.

 

We remain highly optimistic for the remainder of the year based on the value
that will be unlocked across the portfolio."

OPERATIONAL review
TIN
Review of performance

Ore processed increased by 10% YoY but remained unchanged QoQ at 238kt. The
plant processing rate was slightly lower at 134 tph, compared to 135 tph in Q1
FY2024 and 137 tph in Q4 FY2024, mainly due to plant outages during the
quarter. The outages resulted from a malfunction in the ore preparation
section, which was expediently repaired, it did not have a material impact on
operations and is not expected to recur. Consequently, the tin concentrate
production decreased to 364 tonnes (Q4 FY2024: 371 tonnes), resulting in a
decrease in contained tin to 223 tonnes (Q4 FY2024: 231 tonnes). However, the
YoY tin concentrate and contained tin tonnages marginally increased,
reflecting the positive impact of the FY 2023 expansion project.

Table 1: Uis Mine unaudited TIN production and cost performance
 Description                   Unit                 Q1 FY2024  Q4 FY2024  Q1 FY2025  YoY                     % Δ                       QoQ
                                                                                                                                       % Δ
 Feed grade                    % Sn                 0.151      0.137      0.141      -7%                                               3%
 Plant processing rate         tonnes per hour      135        137        134        -1%                                               -2%
 Ore processed                 tonnes               217 189    238 022    237 976    10%                                               0%
 Tin concentrate               tonnes               359        371        364        1%                                                -2%
 Contained tin                 tonnes               216        231        223        3%                                                -3%
 Tin recovery*                 %                    70         72         69         -1%                                               -4%
 Plant availability            %                    91         89         93         2%                                                4%
 Plant utilisation             %                    79         89         87         10%                                               -2%
 Uis mine C1 operating cost¹   USD/t contained tin  15 741     16 273     18 899     20%                                               16%
 Uis mine C2 operating cost²   USD/t contained tin  18 235     18 775     23 452     29%                                               25%
 Uis mine AISC³                USD/t contained tin  21 377     27 800⁴    28 774     35%                                               4%
 Tin price achieved            USD/t contained tin  25 149     26 125     30 839     23%                                               18%
 Average stripping ratio       Ratio                2.6:1      4.3:1      2.4:1

 

1.        C1¹ refers to operating cash cost per unit of production
excluding selling expenses and sustaining capital expenditure associated with
Uis Mine.

2.        C2² refers to operating cash cost is C1 plus selling
expenses including logistics, smelting and royalties.

3.        All-in sustaining cost³ incorporates all costs related to
sustaining production; capital expenditure associated with developing and
maintaining the Uis operation as well as pre-stripping waste mining costs.

4.        ⁴ Updated figure incorporating the Orion tin royalty
payment that was reconciled and paid post Q4 FY2024.

*Tin recovery includes stockpiles.

Pre-concentration circuit expansion update

The XRT ore sorters from TOMRA and the crusher circuit from Metso are expected
in H2 CY2024 and construction of the pre-concentration circuit is targeted for
completion in Q1 CY2025 with commissioning commencing in April 2025.

MetC Engineering has commenced the detailed plant design in line with the
planned project timelines. The ore sorting pre-concentration circuit will be
installed parallel to the front end of the existing processing plant to
minimise disruptions to the tin and tantalum production.

The CI2 programme initiatives are ongoing and have also been aligned with the
plant expansion project timeline to ensure optimal production output.
Development of the lithium pilot plant paves the way for integration into the
existing tin processing plant. Further assessment and modelling of the
integrated plant has resulted in an increase in the planned petalite
production tonnage from 30 000tpa to between 40 000tpa and 50 000tpa.
Studies on the integration of the lithium circuit are underway and are
designed to target the production of petalite using near infra-red ore-sorting
to process discard material from the XRT ore sorters (see announcement dated
12 March 2024).

TANTALUM

Approximately nine tonnes of tantalum concentrate were produced during the
quarter, an increase of 14% from approximately eight tonnes produced during Q4
FY2024. The Company has supplied AfriMet with a five-tonne consignment and has
received a 90% provisional payment. A second consignment has been produced and
targeted for shipment in Q2 FY2025. Tantalum prices have been increasing
steadily since mid-May because of the conflict in the Democratic Republic of
Congo which has restricted supply from selected key mining areas. Furthermore,
recent increased purchasing interest from smelters is expected to support the
elevated prices.

 

 Tantalum production

 Tantalum concentrate         tonnes   9
 Contained Ta₂O₅              kg       865
 Tantalum concentrate grade   %        10
 Tantalum recovery            %        3

LITHIUM
Lithium Pilot Plant

The facility has been primarily utilised for bulk sampling campaigns, and
there has been limited commercial production during the quarter. Commercial
petalite production for off-take agreements will be undertaken through the
extension circuit that will be added to the current plant following the
completion of the pre-concentration circuit (see announcement dated 12 March
2024).

FINANCial review
COST OVERVIEW

The C1 cost of USD18 899 was within management guidance YoY but comparatively
higher QoQ due to the once-off plant outages that have been rectified. The
combination of processing and inflationary mining cost increases resulted in
the double-digit increase QoQ. The C2 cost at USD23 452 was also within
management guidance despite the increase in the Orion royalty provision by
over 100% to USD 352 763. The royalty rate is expected to be 5.13% until
2 600 tonnes per annum of tin concentrate production rate is achieved in
CY2025. The mine completed its accelerated push-back initiative at the end of
February 2024 resulting in an average stripping ratio of 2.6:1 for the quarter
improving to 1.5:1 by the end of May 2024. The lower stripping ratio resulted
in a lower increase in AISC QoQ relative to the 35% increase YoY before the
implementation of the accelerated push-back required to expose planned ore
zones. The LOM stripping ratio is expected to be 3.5:1

BANK WINDHOEK FUNDING UPDATE

Andrada confirms that the administrative processes related to the finalisation
of the conditional NAD175 million (GBP7.6 million) agreements between the
subsidiary Uis Tin Mining Company (PTY) Ltd and Bank Windhoek Limited ("BWL"),
are progressing as planned. The requisite offer documents were signed by the
Company and BWL within the conditional 30-day period. The Company is pleased
to confirm that the deal teams for all parties have been engaged and several
workstreams have commenced. The Company anticipates concluding the funding
agreement by Q3 CY 2024

CASHFLOW MANAGEMENT

Cash decreased from GBP17.5 million (USD22.2 million) at the end of February
2024 to GBP11.9 million (USD15.2 million) on 31 May 2024 mainly due to
payments for the pre-concentration circuit project and increased volume of ore
stockpiles in preparation for the expanded plant capacity. The conclusion of
the BWL agreement will potentially provide GBP7.6 million (USD9.7 million)
towards general working capital, ongoing exploration, metallurgy and study
workstreams.

Finally, discussions with regards to other funding options with several global
lenders are ongoing with the objective to enhance the optionality on project
execution. All near-term projects are fully funded.

TIN HEDGE

In view of recent tin price volatility and to minimise financial risk, the
Company concluded a hedging instrument with Standard Bank Namibia Limited in
respect of the first 20 tonnes of contained tin shipped every month in the
period from June 2024 to May 2025. The price under this agreement is fixed at
USD33 000 per tonne.

A tin price rally started in April 2024 due to a combination of supply
tightness resulting from decreased exports from Myanmar and Indonesia as well
as declining inventory in China. Speculative interest has also contributed to
the rally, with experts cautioning against an excessively bullish view of
future pricing. The LME tin spot price was USD25 450 on 2 January 2024,
increasing to above USD30 000 on 10 April and peaking at USD35 275 on 22
April 2024. The average daily price from April 2024 to date has been
approximately USD32 700, with a figure of USD30 900 applicable for the
quarter. The uncertainty in pricing informed the decision to enter into the
hedging agreement. Based on contained tin production in FY 2024 the hedge is
over approximately 30% of the quarterly production.

STRATEGIC PROCESS

The Company continues to engage with its Strategic Process with the primary
objective to enhance shareholder value through partnerships to develop its
assets. Given the diversity of the minerals within the Company's mining
licences, Andrada has now expanded the Strategic Process to explore multiple
potential partnerships with varied investors, across all assets in its
portfolio. The Company is confident that this strategy will unlock greater
long-term value.

The Company will provide updates in due course.

 Glossary of abbreviations
 CY                  Calendar year for the 12 months ending December
 FY                  Financial year for the 12 months ending March
 GBP                 British pound sterling
 LOM                 Life of mine
 NAD                 Namibian dollar
 Q1                  First quarter ending May
 Q4                  Fourth quarter ending February
 USD                 United States dollar
 CONTACT
 ANDRADA MINING LIMITED
 Anthony Viljoen, CEO                    +27 (11) 268 6555

 Sakhile Ndlovu, Investor Relations

 NOMINATED ADVISOR
 WH Ireland Limited                      +44 (0) 207 220 1666

 Katy Mitchell

 CORPORATE BROKER & ADVISOR
 H&P Advisory Limited                    +44 (0) 20 7907 8500

 Andrew Chubb

 Jay Ashfield

 Matt Hasson

 Berenberg                               +44 (0) 20 3753 3040

 Jennifer Lee

 Natasha Ninkov

 WHI Capital Markets                     +44 (0) 20 7220 1670

 Harry Ansell

 FINANCIAL PUBLIC RELATIONS
 Tavistock (United Kingdom)              +44 (0) 207 920 3150

 Jos Simson                              andrada@tavistock.co.uk

 Charles Vivian

 Adam Baynes

 

About Andrada Mining Limited

Andrada Mining Limited, formerly Afritin Mining Limited, is a London-listed
technology metals mining company with a vision to create a portfolio of
globally significant, conflict-free, production and exploration assets. The
Company's flagship asset is the Uis Mine in Namibia, formerly the world's
largest hard-rock open cast tin mine and currently being re-developed as a
major tin-tantalum-lithium producer.

 

An exploration drilling programme is currently underway with the aim of
expanding the tin resource over the fourteen additional, historically mined
pegmatites that occur within a 5 km radius of the current processing plant.
The Company has set a mineral resource target of 200 Mt to be delineated
within the next 5 years. The existing mine, together with its substantial
mineral resource potential, allows the Company to consider economies of scale.

 

Andrada is managed by a board of directors with broad industry knowledge and a
management team with extensive commercial and technical skills. Furthermore,
the Company is committed to the sustainable development of its operations and
the growth of its business. This is demonstrated by the way the leadership
team places significant emphasis on creating value for the wider community,
investors, and other key stakeholders. Andrada has established an
environmental, social and governance system that has been implemented at all
levels of the Company and aligns with international standards.

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