ALPHAMIN RESOURCES CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS
(ALL FIGURES EXPRESSED IN US DOLLARS UNLESS OTHERWISE INDICATED)
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
C2-202, Level 2, Office Block C, La Croisette, Grand Baie 30517, Mauritius | |
Phone: +230 269 4166 | |
www.alphaminresources.com | |
TABLE OF CONTENTS | |
RISKS AND UNCERTAINTIES | 13 |
RELATED PARTY TRANSACTIONS | 26 |
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 27 | |
USE OF NON-IFRS FINANCIAL PERFORMANCE MEASURES | 27 |
FORWARD LOOKING STATEMENTS | 28 |
QUALIFIED PERSON | 29 |
APPROVAL | 30 |
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
INTRODUCTION
This Management's discussion and analysis (MD&A) of the financial position and results of operations of Alphamin Resources Corp. ("Alphamin," or the "Company") should be read in conjunction with the audited annual consolidated financial statements of the Company and the notes thereto for the years ended December 31, 2023 and December 31, 2022. In this discussion and analysis, unless the context otherwise dictates, a reference to the Company refers to Alphamin Resources Corp. and its subsidiaries.
This discussion and analysis contains forward-looking statements. Please refer to the cautionary language under Forward-Looking Statements within this report.
DATE OF REPORT
This MD&A is prepared as of March 7, 2024. All amounts in the financial statements and this MD&A are expressed in United States dollars ("$") unless indicated otherwise.
OVERVIEW AND OUTLOOK
FINANCIAL YEAR AND QUARTER ENDED DECEMBER 2023 - OPERATIONAL HIGHLIGHTS
- FY2023 tin production of 12,568 tonnes, up 1% from the prior year
- Q4 tin production of 3,126 tonnes
- Q4 tin sales of 2,046 tonnes impacted by poor road conditions, which have subsequently improved
- FY2023 EBITDA1 of US$136m at an average tin price of US$26,009/t, with EBITDA negatively affected by a temporary delay in Q4 tin sales volumes
- US$50 million tin prepayment arrangement and lower marketing commission secured
- Mpama South development project commissioning commenced post year end
Production and Financial Summary for the quarter and year ended December 2023
Description | Units | Year ended | Year ended | Change | Quarter ended | Quarter ended | Change |
December 2023 | December 2022 | December 2023 | September 2023 | ||||
Ore Processed | Tonnes | 400,691 | 436,400 | -8% | 105,510 | 100,395 | 5% |
Tin Grade Processed | % Sn | 4.15 | 3.82 | 9% | 3.98 | 4.08 | -3% |
Overall Plant Recovery | % | 75 | 75 | 1% | 75 | 76 | -2% |
Contained Tin Produced | Tonnes | 12,568 | 12,493 | 1% | 3,126 | 3,104 | 1% |
Contained Tin Sold | Tonnes | 11,385 | 12,764 | -11% | 2,046 | 3,110 | -34% |
EBITDA1 | US$'000 | 135,537 | 222,158 | -39% | 20,317 | 38,429 | -47% |
AISC1 | US$/t sold | 14,205 | 14,276 | 0% | 14,638 | 14,554 | 1% |
Dividends paid (cents per share) | C$ cps | 6 | 6 | 0% | 0 | 3 | n/a |
Average Tin Price Achieved | US$/t | 26,009 | 30,636 | -15% | 25,157 | 26,557 | -5% |
Figures in the table are for 100% of the Bisie Tin project. The Company owns an 84.14% indirect interest in the project.
__________________________________________________________________________________________
1 This is a non-GAAP financial measure, is not standardised and may not be comparable to similar financial measures of other2 issuers. See "Use of Non-IFRS Financial Performance Measures" below for a further explanation of this performance metric and how it is calculated.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
DESCRIPTION OF THE BUSINESS
Alphamin's primary business is the production and sale of high-grade tin concentrate from the Bisie Tin Mine in the Democratic Republic of the Congo ("DRC"). The Company commenced commercial production on September 1, 2019. The Bisie Tin Mine occurs within Permis de Exploitation (Mining Permit) PE13155, along with 2 research permits granted to Alphamin's DRC-registered subsidiary, Alphamin Bisie Mining SA ("ABM"). ABM is an 84.14% indirect controlled subsidiary of Alphamin, with the remaining 15.86% owned by the DRC government (5%) and the Industrial Development Corporation of South Africa Ltd ("IDC") (10.86%). All tenements are located within the Walikale District, North Kivu Province of the east-central DRC and lie within one of the world's principal gold and tin metallogenic provinces. The shares of Alphamin are listed on the TSX Venture Exchange ("TSX.V" - symbol AFM) in Canada, and the Johannesburg Stock Exchange AltX (symbol APH) in South Africa. For further information on the Company, readers are referred to the Company's website (www.alphaminresources.com) and to Canadian regulatory filings on SEDAR+ at www.sedarplus.ca.
OPERATIONAL REVIEW - YEAR AND QUARTER ENDED DECEMBER 2023
Contained tin production of 3,126 tonnes for the quarter ended December 2023 was in line with the previous quarter. Tin production of 12,568 tonnes for the year ended December 2023 exceeded market guidance of 12,000 tonnes. The Mpama North underground mine continues to deliver ore at tin grades and volumes in line with expectations. The Mpama North processing facility performed well, achieving overall recoveries of 75% during FY2023 (FY2022: 75%).
As previously reported, poor road conditions resulting from record heavy rainfall, had a negative impact on truck transit times and export revenue receipts during Q4 2023. The rains have subsided significantly from mid December 2023 with rainfall now averaging ~10% of that recorded in October/November 2023. As a result of the slower truck transit times, Q4 2023 contained tin sales of 2,046 tonnes was 1,080 tonnes less than the quarter's production and resulted in high levels of tin in stock. The delay in tin sales should catch-up during Q1 2024, possibly extending into April 2024, and accordingly only then report to EBITDA and revenue receipts.
AISC per tonne of tin produced was US$14,205 and US$14,638 for the year and quarter ended December 2023, respectively. This is in line with that of the prior periods. On-mine operating expenditure increased by 5% compared to the prior year mainly due to a 32% increase in underground development metres at Mpama North and higher diesel prices. Additional Mpama North underground development has resulted in increased developed reserves, higher run-of-mine ore stockpiles and improved future operational flexibility.
EBITDA for FY2023 and Q4 2023 was US$136m (FY2022: US$222m) and US$20m (Q3 2023: US$38m), respectively. The EBITDA variance compared to prior periods is attributable to lower tin prices and a delay in tin sales in Q4 2023 (Q4 sales delay had a ~US$14 million impact on EBITDA for the quarter and year ended December 2023).
Mpama South update and production guidance for the year ending December 2024
The initial development of the Mpama South underground mine has been completed on time. In addition, the underground development should ensure sufficient developed mineral resources to ensure adequate stockpiles ahead of the processing plant's commissioning. This should allow for a rapid ramp- up of tin production following plant commissioning. Logistical delays due to poor inbound road conditions have deferred the commencement of processing to the end of March 2024 with first tin concentrate production planned during April 2024. The processing plant mechanical erection and installation is essentially complete with the main outstanding work relating to completion of the installation of electrical cabling, the installation of instrumentation and the commissioning of the plant. The crusher plant is nearing final commissioning with first ore expected to be crushed early March 2024.
3
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
On the basis of incremental tin production from the Mpama South plant from April 2024, we expect contained tin production of between 17,000 tonnes and 18,000 tonnes for the year ending December 2024 (FY2023: 12,568 tonnes).
The Mpama South capital expenditure cost to steady state production, including operational readiness costs, are expected to exceed the US$116 million budget by approximately 10% primarily as a result of weather-related delays, higher logistical and import costs as well as minor scope changes.
Exploration Activities
Exploration during 2023 was constrained to completion of regional greenfields activities commencing with mapping, grab sampling and stream sediment sampling across the entire licence extents. The Company is planning an underground exploration drilling campaign at the Mpama North orebody towards the end of 2024 with a view to further extending resources at depth. Additional exploration activities will be considered from 2025 onwards in continuing to extend the life-of-mine at Mpama North and Mpama South and analysing the regional landscape in search of a third tin deposit.
CORPORATE DEVELOPMENTS
On November 16, 2023 the Company entered into an unsecured short term loan agreement with Westlake International Finance Ltd for an amount of $5m at a fixed interest rate of 18%. At the Company's election the facility can be rolled into the Company's existing senior credit facility.
OVERALL PERFORMANCE
Net Profit before taxes for the year ended December 31, 2023 amounted to $95,466,449 (2022: $184,663,746).
The year on year decrease was driven by a combination of a 15% lower tin price achieved and 11% fewer tonnes of tin sold as a result of poor road conditions during Q4 2023. Road conditions have subsequently normalised and the shortfall compared to production is expected to be made up in Q1, 2024, possibly extending into April 2024.
The tin price achieved in FY 2023 averaged $26,009 per tonne, compared to $30,636 per tonne in FY 2022. The current trading price for tin is approximately $26,500 per tonne.
OPERATING ACTIVITIES
During the year ended December 31, 2023 the Company processed 400,691 (2022: 436,400) tonnes
of ore at a grade of 4.15% (2022: 3.82%). Contained tin production increased by 1% from 12,493 in 2022 to 12,568 tonnes in 2023.
Processing recoveries remained consistent at 75% year on year.
Contained tin sales during the year of 11,385 tonnes were lower than tin production of 12,568 tonnes as a result of poor road conditions due to record rainfalls in Q4 2023.
SELECTED ANNUAL INFORMATION
The following information has been extracted from the Company's annual financial statements for each of the three most recently completed financial years.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
For the Years Ended: | US$ (unless otherwise | 31-Dec-23 | 31-Dec-22 | 31-Dec-21 | |
noted) | |||||
Total revenue | $'000 | 288,505 | 391,052 | 352,883 | |
Net profit/(loss) attributable to equity | $'000 | 47,223 | 100,925 | 48,205 | |
holders | |||||
Net profit/(loss) per share, basic | US$ cents per share | 3.70 | 7.94 | 4.03 | |
Net profit/(loss) per share, diluted | US$ cents per share | 3.68 | 7.86 | 3.75 | |
Cash and cash equivalents | $'000 | 7,159 | 119,389 | 90,640 | |
Total assets | $'000 | 516,760 | 490,102 | 421,150 | |
Total debt including lease liabilities | $'000 | (80,654) | (10,053) | (22,407) | |
EBITDA | $'000 | 135,537 | 222,158 | 198,592 | |
Cash dividends declared per share | CAD cents per share | 0.06 | 0.06 | 0.03 | |
Operating profit for the year decreased by 45% from $190m in 2022 to $105m in 2023 due to decreased tin sales volumes as a result of poor road conditions impacting truck transit times during Q4 2023 and a 15% decrease in the tin price achieved.
Profit before tax of $95m in 2023 compared to $185m in 2022, comprised a combination of the decrease in sales volumes and tin price and higher interest charges in 2023 as a result of increased debt financing.
Net income for the year decreased from $122m in 2022 to $58m in 2023. The effective tax rate increased marginally in 2023 as a result of the fixed nature of transport costs in the DRC which is a non-deductible expense. See note 8 of the financial statements for further details.
The table below sets out the operating profit:
Q4 2023 | Q4 2022 | Variance | FY 2023 | FY 2022 | Variance | ||
Revenue | $'000 | 49,011 | 65,526 | -25% | 288,505 | 391,052 | -26% |
Cost of sales | $'000 | (29,209) | (40,212) | -27% | (161,044) | (175,284) | -8% |
Gross profit | $'000 | 19,802 | 25,314 | -22% | 127,461 | 215,769 | -41% |
General and administrative | $'000 | (5,559) | (7,335) | -24% | (22,454) | (25,302) | -11% |
Operating profit/(loss) | $'000 | 14,243 | 17,979 | -21% | 105,007 | 190,467 | -45% |
Figures in the table are for 100% of the Bisie Tin mine. The Company owns an 84.14% indirect interest in the Bisie Tin mine.
SUMMARY OF QUARTERLY RESULTS
The table below sets out the eight most recent quarter results:
31-Dec | 30-Sep | 30-Jun | 31-Mar | 31-Dec | 30-Sep | 30-Jun | 31-Mar | ||
2023 | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | ||
Total revenue | US$'000 | 49,011 | 80,781 | 75,742 | 82,971 | 65,526 | 67,824 | 111,471 | 146,231 |
Profit/(loss) per share attributable | US cents | 0.32 | 1.16 | 1.15 | 1.08 | 0.64 | 1.61 | 2.35 | 3.35 |
to equity holders | |||||||||
Diluted Profit/(loss) per share | US cents | 0.32 | 1.15 | 1.14 | 1.07 | 0.64 | 1.60 | 2.32 | 3.28 |
attributable to equity holders | |||||||||
Net profit/(loss) attributable to | US$'000 | 4,066 | 14,734 | 14,667 | 16,406 | 8,226 | 20,444 | 29,948 | 42,307 |
equity holders | |||||||||
RESULTS OF OPERATIONS
For the three months ended December 31, 2023 compared to December 31, 2022
Net profit after tax for the three months ended December 31, 2023 was $5.1m (2022: $10.5m).
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
The Company made an operating profit of $14.2m in Q4 2023 with contained tin sales of 2,046 tonnes and an average tin price achieved of $25,157/t. As outlined above the sales for the quarter were negatively affected by road conditions in the eastern DRC. These have subsequently improved.
The Company's EBITDA and AISC per tonne of payable tin produced for the quarter and year ended December 2023 are summarised below:
Q4 2023 | Q4 2022 | Variance | FY 2023 | FY 2022 | Variance | ||
Tonnes processed | t | 105,510 | 106,087 | -1% | 400,691 | 436,400 | -8% |
Tin grade processed | t | 4.0% | 4.0% | 0% | 4.2% | 3.8% | 9% |
Recoveries | t | 75% | 73% | 1% | 75% | 75% | 1% |
Payable tin produced | t | 3,126 | 3,113 | 0% | 12,568 | 12,493 | 1% |
Payable tin Sold | t | 2,046 | 3,119 | -34% | 11,385 | 12,764 | -11% |
Average tin price achieved | $/t | 25,157 | 21,436 | 17% | 26,009 | 30,636 | -15% |
Revenue | $'000 | 49,011 | 65,526 | -25% | 288,505 | 391,053 | -26% |
Off mine costs | $'000 | (13,144) | (16,432) | -20% | (71,078) | (82,820) | -14% |
Net on mine revenue | $'000 | 35,867 | 49,094 | -27% | 217,427 | 308,233 | -29% |
Operating and administrative costs | $'000 | (22,600) | (21,959) | 3% | (88,882) | (84,459) | 5% |
Concentrate stock movement (excluding | $'000 | 7,050 | (87) | -8203% | 6,992 | (1,616) | -533% |
depreciation) | |||||||
EBITDA 1, 2 | $'000 | 20,317 | 27,048 | -25% | 135,537 | 222,158 | -39% |
*EBITDA is shown on a 100% basis for the Bisie Tin mine. The Company owns an 84.14% indirect interest in the Bisie Tin mine.
AISC per tonne of contained tin produced | Q4 2023 | Q4 2022 | Variance | FY 2023 | FY 2022 | Variance | |
On mine operating costs | $'000 | 22,600 | 21,959 | 3% | 88,882 | 84,459 | 5% |
Tonnes of contained tin sold | t | 2,046 | 3,119 | -34% | 11,385 | 12,764 | -11% |
Tonnes of contained tin produced | t | 3,126 | 3,113 | 0% | 12,568 | 12,493 | 1% |
On mine costs per tonne produced | $/t | 7,230 | 7,054 | 2% | 7,072 | 6,761 | 5% |
Off mine costs per tonne sold | $/t | 6,424 | 5,268 | 22% | 6,243 | 6,488 | -4% |
Sustaining capex per tonne produced | $/t | 984 | 1,006 | -2% | 890 | 1,027 | -13% |
AISC 1, 2 | $/t | 14,638 | 13,328 | 10% | 14,205 | 14,276 | 0% |
Reconciliation of operating profit to EBITDA | Q4 2023 | Q4 2022 | Variance | FY 2023 | FY 2022 | Variance | |
Operating Profit | $'000 | 14,243 | 17,979 | -21% | 105,007 | 190,467 | -45% |
Adjustments; | |||||||
Depreciation, depletion & amortisation | $'000 | 7,566 | 7,236 | 5% | 30,788 | 28,300 | 9% |
Depreciation in stock movement | $'000 | (1,874) | 23 | -8248% | (1,835) | 430 | -527% |
Borrowing costs in G&A | $'000 | 0 | 0 | 0 | 32 | -100% | |
Share based payments in G&A | $'000 | 256 | 1,683 | -85% | 1,072 | 2,421 | -56% |
Depreciation in G&A | $'000 | 126 | 127 | -1% | 505 | 507 | 0% |
EBITDA 1, 2 | $'000 | 20,317 | 27,048 | -25% | 135,537 | 222,157 | -39% |
All in sustaining cost (AISC) per tonne of contained tin produced was $14,638 in Q4 2023 and $14,205 for the 2023 year, up 10% and flat, respectively. AISC was higher quarter on quarter as a result of a higher tin price achieved, which impacts off-mine costs, as well as higher road maintenance costs.
On-mine costs per tonne produced were up 5% year on year as a result of higher diesel costs and increased underground development rates.
For the year-ended December 31, 2023 compared to December 31, 2022
For the twelve months ended December 31, 2023 the Company realised a profit after tax attributable to equity holders of $47.2m (2022: $100.9m).
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
EBITDA for the year amounted to $136m, which was down 39% compared to FY 2022 due to lower sales volumes and lower tin prices achieved.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023 the Company had a consolidated cash balance of $7.2m (2022: $119.4m)
and net current assets of $20m (2022: $109.2m).
Net cash decreased from $109m to Net debt of $73m during the year. As previously disclosed, FY 2023 was a particularly demanding year on cashflows which included $121m in investing activities, the majority of which related to Mpama South development expenditures, DRC income taxes paid of $103m which included paying the balance of the FY2022 tax liability of $60m and provisional tax payments of $43m (based on 80% of prior year profits) of which $10m is a prepayment against FY2024 tax. Cash flows on income tax in 2024 are expected to be in the region of $32m.
Accounts payable and accrued liabilities decreased by $44m as a result of the tax payments referred to above offset in part by higher accounts payable due to creditors as a result of delayed working capital resulting from the poor road conditions in Q4 2023.
Dividends of CAD$0.06 per share (approximately US$57m) were declared and paid during the year ended December 2023 (2022: CAD$0.06 per share).
The Company continues to generate excess operational cash. The cashflow profile in 2024 is expected to be substantially different to 2023 with approximately $170m less cash outflow on Mpama South and DRC income tax together with increased revenues expected from additional sales of tin produced from the Mpama South plant. The Company intends to make a final FY2023 dividend decision in April 2024 to align with the timing of holding the annual general meeting of Alphamin Bisie Mining SA (ABM), the Company's DRC subsidiary, to approve ABM's annual financial statements and consideration of the declaration of a dividend for distribution to the Company and other minority shareholders.
Operating activities
Net cash generated from operating activities for the year ended December 31, 2023 was $134m (December 31, 2022: $219m). The decrease is largely a result of the lower sales volumes and a lower tin price achieved year on year. Interest payments were higher in fiscal 2023 due to increased overall debt balances. Tax payments increased by $57m year on year and are expected to decrease by approximately $70m in 2024 due to having paid more in provisional payments during 2023 than the full year tax expense.
Investing activities
Cash used in investing activities for the year ended December 31, 2023 was $117m (2022: $72.8m). The difference is primarily due to the expenditure incurred on the Mpama South development project. Exploration expenditures were reduced from $17.2m in 2022 to $6m in 2023. Exploration expenditure is expected to increase from 2025 onwards.
Financing activities
Cash inflows from financing activities for the year ended December 31, 2023 amounted to $2.7m compared to an outflow of $85.1m in 2022. Distributions to shareholders including minority interests amounted to $63.7m compared to $71,5m in 2022. Debt drawdowns of $15m were made in 2023 compared to repayments of $13.6m in 2022. During the year ended December 31, 2023 the Company fully utilised a new bank overdraft facility in the amount of $51.7m (2022: Nil).
Liquidity outlook
The funding of the Mpama South expansion project, shareholder distributions and DRC income tax payments were a priority during the year ended December 2023. The allocation of capital in FY2024 will be prioritised towards completion of the Mpama South project in Q1 2024, significantly lower DRC
7
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
income taxes on the basis of large advance provisional payments made during FY2023 and, if appropriate, shareholder distributions. Management continually review cash requirements and forecasts and intend to distribute excess cash to shareholders to the extent permissible.
DIVIDENDS
The Company declared a final dividend in respect of its 2022 fiscal year of CAD$0.03 per share in January 2023 which was paid in February 2023. An interim FY2023 dividend of CAD$0.03 per share was paid in Q3 2023. A final FY2023 dividend decision will be made in April 2024.
ASSET BACKED COMMERCIAL PAPER
The Company has leased various underground mining equipment from Epiroc Financial Solutions. In addition, the Company has entered into a lease agreement with its fuel supplier regarding a fuel farm facility built and operated by the supplier at the Company's mine site. See note 12 of the financial statements - "lease agreements" for further information.
FINANCIAL INSTRUMENTS
Cash, bank overdrafts, accounts receivable, accounts payable and accrued liabilities are considered to be a reasonable approximation of their fair value due to the short-term nature of these instruments. Cash, accounts payable and long-term debt are designated as financial instruments at amortised cost. Warrants are designated as liabilities at Fair Value Through Profit or Loss. The Company's financial instruments are exposed to a number of financial and market risks, including credit, liquidity and foreign exchange risks. The Company has established active policies to manage these risks. The Company does not currently have in place any active hedging or derivative trading policies to manage these risks since the Company's management does not believe that the current size, scale and pattern of its operations would warrant such hedging activities. The Company places its cash with high credit quality financial institutions. Additional information can be found within the Company's 2023 annual consolidated financial statements.
SHARE CAPITAL
The Company had:
Authorised share capital of an unlimited number of common shares without par value.
March 7, 2024 | December 31, 2023 | December 31, 2022 | |
Common shares issued | 1,275,543,813 | 1,275,543,813 | 1,273,797,231 |
Stock options outstanding | 8,900,000 | 8,900,000 | 11,646,582 |
SARES (SAR Equivalent Shares) 11,506,742 | 11,506,742 | - | |
Unvested SARES | 1,416,667 | 1,416,667 | 5,250,000 |
A summary of stock option activity and information concerning outstanding and exercisable options as at December 31, 2023 is as follows:
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
Options outstanding | |||
Number of | Weighted | Weighted | |
options | average | average | |
exercise price | exercise price | ||
# | CAD$ | USD$ | |
Balance, December 31, 2021 | 17,490,985 | 0.39 | 0.31 |
Options forfeited during the year | (2,000,000) | 0.73 | 0.54 |
Options exercised during the year | (1,937,661) | 0.24 | 0.18 |
Options surrendered during the year | (8,006,742) | 0.21 | 0.16 |
Options issued during the year | 6,100,000 | 0.68 | 0.50 |
Balance, December 31, 2022 | 11,646,582 | 0.65 | 0.48 |
Options exercised during the year | (1,746,582) | 0.26 | 0.20 |
Options surrendered during the year | (1,000,000) | 0.68 | 0.50 |
Balance, December 31, 2023 | 8,900,000 | 0.72 | 0.52 |
OUTLOOK
The information below is in addition to the disclosure concerning specific operations included in the Results of Operations section of this MD&A.
GENERAL ECONOMIC CONDITIONS
Global commodity prices have been subject to significant volatility based on macro-economic factors. The tin price has been particularly volatile and has been as low as $13,000 per tonne and as high as over $50,000 per tonne in the last four years. It is currently trading around $26,500 per tonne which is slightly above the 2023 average price achieved. Alphamin is well placed to generate positive operational cash flows due to its place on the cost curve resulting from the high grade nature of the Bisie tin mine.
Inflation has had a relatively modest effect on cost of production.
Alphamin's primary short term target is to complete the commissioning of the Mpama South plant and reach a sustainable steady state of approximately 20,000 tonnes of contained tin production per year.
CAPITAL AND EXPLORATION EXPENDITURES
During FY2023, the Company spent approximately $100m on the Mpama South Development project. As a result, exploration expenditures were scaled back in 2023 and are expected to resume from 2025 onwards.
OFF BALANCE SHEET ARRANGEMENTS
During the fiscal years ended December 31, 2023 and 2022, the Company was not a party to any off- balance-sheet arrangements that have, or are reasonably likely to have, a material current or future effect on the results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources of the Company.
MARKET RISK DISCLOSURES
Management have been consistent in deciding not to hedge the tin price for unsold product. The Company operates the highest-grade tin mine in the world and, with a relatively small debt balance and low AISC, believe this is the appropriate policy.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
BASIS OF PREPARATION
The Company's financial statements, including comparatives, have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS® Accounting Standards) and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC®).These financial statements have been prepared on a historical cost basis except for share-based payments and certain financial assets, which have been measured at fair value. In addition, the financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
Consolidated statements of profit/(loss) and comprehensive profit/(loss) presentation
During the 2019 financial year, the Company amended its presentation of the Consolidated statements of profit/(loss) and comprehensive profit/(loss). This was due to the entity reaching commercial production. This was to enhance the readability of the financial statements of the users.
Application of new and revised standards
The following standards became effective for annual periods beginning on or after January 1, 2023. The Company adopted these standards in the current year and they did not have a material impact on its financial statements unless specifically mentioned below.
International Financial Reporting Standards and amendments effective for the first time for
December 2023 year-end
Number | Effective date | Executive summary |
IFRS 17, 'Insurance | Annual | The International Accounting Standards Board |
contracts' | periods | (IASB) issued IFRS 17, 'Insurance contracts', and |
beginning on | thereby started a new epoch of accounting for | |
or after 1 | insurers. Whereas the current standard, IFRS 4, | |
January | allows insurers to use their local GAAP, IFRS 17 | |
2023 | defines clear and consistent rules that will | |
significantly increase the comparability of financial | ||
Early | statements. For insurers, the transition to IFRS 17 | |
application is | will have an impact on financial statements and on | |
permitted for | key performance indicators. | |
entities that | ||
apply IFRS | Under IFRS 17, the general model requires entities | |
9, 'Financial | to measure an insurance contract at initial | |
Instruments', | recognition at the total of the fulfilment cash flows | |
and IFRS 15, | (comprising the estimated future cash flows, an | |
'Revenue | adjustment to reflect the time value of money and an | |
from | explicit risk adjustment for non-financial risk) and the | |
Contracts | contractual service margin. The fulfilment cash flows | |
with | are remeasured on a current basis in each reporting | |
Customers', | period. The unearned profit (contractual service | |
at or before | margin) is recognised over the coverage period. | |
the date of | ||
initial | Aside from this general model, the standard | |
application of | provides, as a simplification, the premium allocation | |
IFRS 17. | approach. This simplified approach is applicable for | |
(Published | certain types of contract, including those with a | |
coverage period of one year or less. | ||
May 2017) | ||
For insurance contracts with direct participation | ||
features, the variable fee approach applies. The | ||
variable fee approach is a variation on the general |
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Alphamin Resources Corp. published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 14:22:28 UTC.
