In spite of difficult times in global markets, Aim-listed mining company AfriTin managed to produce its first tin concentrate and generate its first revenue from its flagship Uis tin mine, in Namibia, during the financial year ended February 29.
The first production of a saleable tin concentrate was achieved in August 2019.
In the month before, AfriTin completed the Uis Phase 1 pilot plant, consisting of a four-stage crusher and a three-stage dense media separation (DMS) and dewatering circuit.
In addition to tin production, CEO Anthony Viljoen said on August 28 that the Phase 1 pilot plant was a “crucial step” in proving the metallurgical process in the lead-up to the Phase 2 project.
“While our focus remains on ramping up the pilot plant to its design capacity of 500 000 t of ore feed [a year], it is the lessons learned from Phase 1 that will be invaluable when we progress to Phase 2,” he commented.
AfriTin also received a strong vote of confidence in the long-term development plan of the mine when it concluded an offtake agreement with Thaisarco, a fellow tin concentrate market player.
As part of the contract signed on August 1, 2019, concentrate produced during the offtake period is to be shipped to Thaisarco, in Thailand, from the Port of Walvis Bay. Thaisarco will pay AfriTin on the basis of actual tin content in the concentrate.
Viljoen said the agreement provides the company with a steady revenue stream.
Meanwhile, the company also recorded its first revenue from the sale of tin concentrate, of £47 000, in the financial year under review.
With Uis becoming a fully-fledged operation during the year, CFO Robert Sewell said administrative expenses across the group increased to £1.8-million for the year.
He explained that the increase from the prior year’s £1-million, was as a result of the group incurring a full year of office rental costs, an increase in salary costs owing to an increase in head count, given the ramp-up of operations, as well as the one-off issue of shares to new key members of the management team and due diligence costs relating to potential future financing options.
The group’s loss for the year totalled just over £1.8-million, and a basic loss a share from operations was recorded at 0.29p.
Additionally, the start of a preliminary economic assessment for Phase 2 and other exploration and evaluation work resulted in expenditure of £522 000 being capitalised to the exploration and evaluation intangible asset.
Progress continued throughout the year on the Phase 1 pilot plant project and capex on this project amounted to £7.4-million during the year under review, relating to the construction of the processing plant, as well as capitalised ramp-up and project team costs.
As at February 2, the group had cash in the bank of £575 000 with the primary movements reflecting cash used in operations totalling £1.2-million, mainly owing to operating costs incurred, investing cash outflows of £7.7-million mainly owing to capex and £7.8-million of financing cash inflows.
During the year, Sewell noted that a working capital facility of N$38-million (about £1.9-million) was granted to the company by Nedbank Namibia.
At February 28, N$24.7-million (about £1.2-million) had been drawn down on this facility, which has successfully been renewed and increased subsequent to year-end and is due for its yearly review and renewal next in July 2021.
The remaining significant financing cash inflows related to the equity raise in May 2019 and £3.8-million raised through a convertible loan note that matures in May 2021 and can be settled in equity at the company's discretion.
Net proceeds from an equity raise in May 2019 of £2.8-million account for the majority of the movement in the share capital balance for the financial year.
Subsequent to the financial year end, the completion of a convertible loan note for just over £2-million on May 5, 2020, an equity subscription of £3-million on August 3, as well as the renewal and increase in the Nedbank Namibia working capital facility, will allow AfriTin to continue the ramp-up of the Uis project, said Sewell.
The convertible loan note matures in May 2021 and can be settled in cash or equity subject to the agreement of both parties.
Based on the recent funding, AfriTin has strengthened its financial position and forecasts indicate that the group will have sufficient working capital for at least the next 12 months.