Dual-listed Alphamin Resources has announced a proposed nonbrokered private placement of up to $35-million as a prepayment against $98-million of senior secured debt.

Alphamin has announced an agreement in principle for up to a 31% reduction in debt, resulting in significantly reduced interest rates on the outstanding balance, improved debt covenants and debt profile; debt service headroom secured over the tenor of the remaining loans assuming a lower tin price environment; and a strengthened balance sheet and lower debt commitments enabling the company to maintain its critical path towards growth initiatives.

Lenders to the company’s 80.75% subsidiary, Alphamin Bisie Mining (ABM), which owns the Bisie tin mine in the North Kivu region of the Democratic Republic of the Congo, have agreed in principle to revised credit facility terms – subject to a minimum $31-million principal prepayment and execution of the required credit facility amendment by the parties.

These revised debt terms reduce Alphamin’s estimated break-even tin price, inclusive of debt servicing, by between $2 000/t and $3 000/t to an estimated $13 000/t of payable tin produced during 2020 and 2021.

Alphamin intends to proceed with a nonbrokered private placement of a minimum of 302.1-million common shares and a maximum of 352.5-million shares to raise gross proceeds of a minimum of C$42.3-million and a maximum of C$49.3-million.

Each share to be issued under the proposed offering will be priced at C$0.14.

Tremont Master Holdings, a 48.6% shareholder of Alphamin, has subscribed for 251.7-million shares under the proposed offering.

The proceeds from the proposed offering will be used primarily to prepay at least $31-million of principal under the credit facility, including prepayment fees, with any additional proceeds to be used for working capital and general corporate purposes.

The proposed offering is subject to a number of conditions.

GROWTH INITIATIVES

Following the anticipated revised debt terms, the balance sheet will be strengthened and Alphamin expects an increase in free cash after mandatory debt service requirements, which should enable it to maintain the critical path towards delivering on growth initiatives.

As part of the company’s two-year strategy to produce about 12 000 t/y of contained tin and proving additional resource and life-of-mine extensions, a number of initiatives are planned, subject to available funds.

Firstly, a resource drilling plan has been finalised for the company’s Mpama South prospect, located about 1.5 km south of the current producing Mpama North mine.

The resource drilling campaign is planned at $400 000 a month and expected to begin in June for six months.

Secondly, a fine tin recovery plant conceptual study has been completed, which indicates the potential to increase overall plant recoveries from the current design and improve payable tin production.

The capital expenditure is estimated at about $4-million over the next nine months.

Also, underground extensional drilling at the company’s Mpama North mine is planned for 2021 to extend the life-of-mine.

Access roads to highly prospective exploration targets adjacent to the existing mining permit area are being planned for this year.

COVID-19 IMPACT

Alphamin has a range of Covid-19 awareness, prevention and other risk mitigation controls in place.

The Covid-19 crisis has seen global disruptions to supply chains. To date, the company has been able to continue with normal production and concentrate sales activities.

The main border crossings relevant to its in- and outbound activities are still open to freight movement and its concentrate offtake customer is currently able to send product to tin smelters.

The situation remains dynamic and any issue impacting critical flow in the company’s supply chain, or that would restrict operations, or the availability of the company’s workforce, may negatively affect production and sales activities.

“During this challenging time it is important that the company continues producing and selling tin concentrates for the benefit of all our stakeholders, and the people of the North-Kivu province, DRC,” the company said.

Alphamin expects contained tin production of between 2 400 t and 2 600 t for the quarter ending June, in line with previous guidance.