ALPHAMIN Resources Corporation (Alphamin) has exercised an option with lenders to defer capital repayments on its debt – a development that comes amid lower-than-planned tin pricing, partly brought about by the COVID-19 outbreak.
Commenting in a statement today, the Toronto- and Johannesburg-listed company said it would defer some $16.3m in capital repayments in its 2020 financial year.
Alphamin is building Bisie, a tin mine in the Democratic Republic of Congo’s (DRC’s) North Kivu province. The initial mining plan was for production of 9,600 tons of tin-in-concentrate annually over an initial life-of-mine of 12.5 years.
Under the previous debt repayment schedule, it was to have paid $8.17m per quarter starting from this month, but it will now pay $1.3m in interest on its debt to end-June and from July, a monthly fixed debt capital instalment of about $2.72m over 36 months plus interest of $1.3m initially a month.
The option to amend the repayment schedule was provided by lenders in October and will allow the company to “strengthen its working capital” ahead of debt repayments, the company said. A cash fee of $400,000 was paid on exercise of the option.
The repayment amendments come as the London Metal Exchange (LME) quoted tin price trades at $15,000 to $17,000 per ton. This is below the $17,000/t assumed in the firm’s technical report for Bisie ahead of its construction.
“The company continues to focus on achieving its full production targets at the lowest possible unit cost,” the firm said, acknowledging that the “… recent coronavirus outbreak is having an impact on global commodity prices”.
The tin price was trading at about $20,000/t in mid-2019. The metal’s price decline was last year blamed on “… challenges faced by the global electronics industry on the back of the US/China and Japan/South Korea trade wars”.
Alphamin has had its fair share of mishap since construction of Bisie began. A bridge used to export all concentrates and import consumables from the DRC collapsed in October last year, delaying shipments. Before that, the company changed its mining method which resulted in a slower ramp up of material to the run of mine stockpile.
Commercial production from the mine was also delayed last year following a slower-than-expected response to a request to partially export concentrates by air freight. As a result, the company was required to truck all export material which had “… impacted delivery times and related revenue receipts”.
A delay in VAT refunds from the DRC government and a further delay in the manufacture and delivery of certain components to finalise plant commissioning had also contributed towards a working capital shortfall last year.