Tin Surge Powers Elementos – ShareCafe
This month, the price of tin on the London Metal Exchange (LME) hit all-time highs above US $ 36,000 per tonne. This compares to a tin price of around $ 13,000 / t a little over 18 months ago. This is a big increase by everyone’s measure and appears to be holding up as supply tightens and demand for silver picks up.
That’s right, it’s a super squeeze, the tin is pulled by both sides of the market equation. Last May, stocks of tin metal in LME warehouses fell to less than a day’s consumption for the world market. Concerns over production disruptions in Myanmar following its military coup have added to the upward pressure on prices. The Southeast Asian nation is the third largest producer in the world behind Indonesia and China, which have their own sourcing challenges and are hardly poster producers in an emerging ESG world where buyers are asking more. questions about ownership and provenance.
On the other hand, tin is in demand. It is the metal most sensitive to the rise of new green, hi-tech and intelligent technologies, to decarbonization and electrification – for its main use in soldering, electronic glue in semiconductors, printed circuits; and the role it plays in battery additives and battery anodes. In fact, tin was named as the market most affected by the technological revolution relative to its size in a 2018 Massachusetts Institute of Technology study commissioned by Rio Tinto.
Of all of its metallic counterparts, tin has the broadest potential uses in autonomous and electric vehicles (EVs), renewable energy, advanced robotics, advanced computing / computing, and lithium-ion batteries where the metal offers a potential solution for one of the most worrying. problems – their propensity to ignite, in a way that is very difficult to extinguish. It’s the alarming electric vehicle “secret” that the industry grapples with behind the scenes. The occasional “thermal runaway” phenomenon in a lithium-ion battery cannot be easily avoided, and no one wants to sit in their Tesla at a red light and experience spontaneous battery combustion.
But if tin is used as a coating on the inside of lithium-ion battery parts, that could be the solution to the problem, said Christopher Ecclestone, director of mining and energy research and consultancy Hallgarten. & Company, at the Mining Network’s August 2021 Tin Outlook.
So can discreet tin continue to fly high? According to the industry body, the International Tin Association (ITA), global demand for refined tin is expected to increase steadily over the next decade, as it serves the technological revolution, at a minimum rate of 1.8% per year. and the most probable scenarios of 3 -5% per year. Production supply is also increasing, but at a rate significantly slower than demand and at increasing costs. There is a projected tin supply shortfall of between 30,000 tonnes and 40,000 tonnes per year by 2025, and a possibly larger shortfall thereafter.
This is where Elementos (ASX: ELT) comes in.
Elementos 100% owns two world-class tin projects, with high grades, large resource bases and great exploration potential, in mining-friendly jurisdictions. Its flagship Oropesa project in Spain, acquired in January 2020, is considered to be one of the largest open-pit tin deposits in the world.
The company also owns the Cleveland project in Tasmania. Previously mined in 1908-1917 and 1968-1986, Cleveland has a JORC hard rock resource of 7.47 million tonnes (Mt) at 0.75% tin and 0.3% copper. In March, Elementos announced the resumption of exploration in Cleveland – a four-hole program that has been affected by an Australia-wide shortage of drilling rigs – but Oropesa is definitely the main game.
Oropesa has a JORC mineral resource as of 2018 of 12.54 Mt at 0.54% tin, yielding 67,500 tonnes of tin metal, enough for a potential annual production of 2,440 tonnes of tin – in a concentrate of 62% – over a mine life of 14 years. This resource breaks down into 9.34 Mt at 0.55% tin in the measured and indicated categories – i.e. 50,900 tonnes of tin metal – and an inferred resource of 3.2 Mt at 0.52% tin , for 16,600 tonnes of tin metal.
This comes from the May 2020 project “economic study”, which found that at a tin price of USD 19,750 / tonne, the mine could potentially generate an annual gross income of over USD 48 million against an expected operating cost of $ 28 million per year. year or a cash cost of US $ 11,534 / tonne of metal. With tin prices now above US $ 30,000 / t this year, the parameters are starting to add up very well.
Perhaps why Elementos Managing Director Joe David said the company is “now stepping up Oropesa into production.”
“In addition to the high level of engineering and project definition provided by the economic study, the company announced in July that it was bypassing a pre-feasibility study in favor of a definitive feasibility study (DFS) after d “Significant tin interceptions have been returned from our completed 44-hole drill program (with two new holes, one 46-hole program),” said David.
“We are awaiting assays for eight more holes (a common problem due to the recent surge in metal prices), but all together we expect our updated mineral resource estimate to be released to the market in October. .
“In fact, the main objective of this program is to increase confidence in inferred measured and indicated resources – this means that our mineral resources can then be used to support a DFS and be used as the basis of a statement. of JORC ore reserves, which is the ultimate technical-economic assessment of the economics of the mining project.
David says if everything goes perfectly for Elementos, and the DFS is completed by the end of 2022, it would allow for a Final Investment Decision (FID) by mid-2023. Assuming an 18-24 month build process, Elementos could produce concentrate in 2025 – in a tin market that is still expected to be in significant deficit. And given that the price of tin is still expected to strongly support new investment – given that very few new productions are expected – Cleveland could re-enter the production scene in 2026.
“From around 2020, the ITA forecasts this deficit of 30,000 to 40,000 tonnes per year in the tin metal industry, which will worsen after 2025. Our projects are factored into their forecasts supply, and there are still 40,000 to 50,000 tonnes-a tin metal deficit over one year when our two projects are in production. And given the predicted shortage of supply of tin, which has no natural substitutes, we really believe the price should hold up to support investment in classy projects like ours, ”said David.