Alphamin Resources (AFM): Initiation -â Alpha...
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Edison Investment Research Limited
London, UK, 16 March 2021
Alphamin Resources (AFM): Initiation - Alpha tin actually Alphamin Resources offers rare exposure to immediate positive cash flow from a metal both Rio Tinto and the Massachusetts Institute of Technology regard as being the most likely to benefit from the widespread electrification of transport networks and the world economy. Fortuitously, Alphamin's Bisie tin mine in the north-eastern Democratic Republic of the Congo (DRC) is hitting its stride at just the moment that the tin price is being forced upwards in the biggest squeeze in decades, providing it with a golden opportunity to repay debt and even to consider making distributions to shareholders as early as next year.
Bisie is now operating, to all intents and purposes, at full capacity. With the current tin price having risen by 30.2% since Q420, we estimate that there is scope for net debt to reduce to zero before end-FY21. Beyond that, at a long-term tin price of US$23,425/t, we estimate that Alphamin should be capable of generating revenues of c US$266m pa (average FY22-27), EBITDA of US$139m and EPS of 6.19 US cents per share. On this basis, we estimate a valuation for Alphamin of 39.1 US cents, or 49.6 Canadian cents per share. This valuation assumes that management executes the Bisie life of mine (LOM) schedule according to plan and applies a 10% discount rate to future forecast dividends. If, however, management proves itself adept at continually replenishing reserves and resources to the extent that it keeps its plant fully utilised beyond FY27 (NB see Exploration section on page 6), then our valuation of Alphamin's shares on average rises by 2.5 Canadian cents for every year at full capacity up to FY32 and, beyond that, potentially to as high as C$1.117/share (subject to capex etc). Click here to view the full report or here to sign up to receive research as it is published.
All reports published by Edison are available to download free of charge from its website About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Charles Gibson +44 (0)20 3077 5724 mining@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn https://www.linkedin.com/company/edison-group-/ Twitter www.twitter.com/Edison_Inv_Res YouTube www.youtube.com/edisonitv
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1175942 16-March-2021
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