20201118_122516

Results confirm long-term potential

Alphamin Resources 17 May 2021 Update
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Alphamin Resources

Results confirm long-term potential

Q121 results

Metals & mining

17 May 2021

Price

C$0.72

Market cap

C$854m

C$1.2090/US$

Net debt* (US$m) at end-March 2021

46.5

*Includes US$3.0m in lease liabilities

Shares in issue

1,185.4m

Free float

42%

Code

AFM

Primary exchange

TSX-V

Secondary exchange

JSE AltX

Share price performance

%

1m

3m

12m

Abs

30.9

38.5

453.9

Rel (local)

30.6

32.1

334.0

52-week high/low

C$0.66

C$0.12

Business description

Alphamin owns (84.14%) and operates the Mpama North tin mine in the North Kivu province of the Democratic Republic of the Congo with a grade of c 4.5% Sn (the world’s highest). Accounting for c 4% of the world’s mined supply, it is the second largest tin mine in the world outside China and Indonesia.

Next events

Mpama North drilling

May 2021

Q221 results

August 2021

Q321 results

October 2021

Mpama South resource

Year-end 2021

Analyst

Charles Gibson

+44 (0)20 3077 5724

Alphamin Resources is a research client of Edison Investment Research Limited

Alphamin’s Q121 financial results were released in the context of known operating results (which were announced on 9 April). These inevitably reflected the pattern whereby sales from Q4 were delayed into Q1 on account of seasonal rains and, as a result, revenue, costs and depreciation were all higher than our (pro rata) FY21 expectations. The immediate consequence of the results is that we have increased our earnings estimates for FY21 by 20.1% (see Exhibit 2). However, the much more substantive point is that they were absolutely consistent with our longer-term expectations for Alphamin that, at a long-term tin price of US$23,425/t, it is capable of generating revenues of c US$280m pa (average FY22–27), EBITDA of US$149m and EPS of 6.48 US cents/share.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(US$)

DPS
(US$)

P/E
(x)

Yield
(%)

12/19

27

(3)

0.01

0.00

100.9

N/A

12/20

187

(1)

(0.01)

0.00

N/A

N/A

12/21e

318

143

0.07

0.00

8.2

N/A

12/22e

271

115

0.06

0.00

9.7

N/A

Note: *PBT and EPS (diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Net debt on track for extinction

During the course of the quarter, Alphamin’s net debt reduced from US$57.5m to US$46.5m. However, this reduction was achieved in spite of a concurrent US$21.8m increase in accounts receivable, in the absence of which, we calculate that Alphamin’s underlying net debt reduction would have been c US$32.3m (or US$10.8m per month or US$129.2m per year).

Valuation: Exploration and tin price are key

The tin price has now risen by 58.8% since Q420 to US$29,815/t. Assuming that this price prevails for the remainder of Bisie’s life (ie adopting the current tin price as our long-term price), we calculate a valuation for Alphamin (excluding any blue-sky exploration potential) of 61.5 US cents, or 74.3 Canadian cents, per share (cf 42.4c and 51.2c, respectively, at US$25,600/t, previously). Stated alternatively, we calculate that Alphamin’s current share price of C$0.72 discounts a long-term real tin price of US$29,169/t, that is 24.5% above our assumed long-term price of US$23,425/t, but 2.2% below the current (three-month) price at the time of writing. However, if management is successful in replenishing reserves and resources to the extent that it keeps its plant at full capacity beyond FY27 (NB see Alphamin’s announcement, Alphamin confirms high grade tin mineralisation on exploration drilling at Mpama South, dated 14 May), then our valuation of Alphamin’s shares rises by an average of 2.5 Canadian cents for every year up to FY32 and, beyond that, potentially to as high as C$1.162/share (cf C$1.117/share, previously). At Edison’s long-term tin price of US$23,425/t, by contrast, we estimate an updated valuation for Alphamin of 42.4 US cents, or 51.2 Canadian cents per share – representing increases of 8.3% and 3.2% relative to our previous valuations, respectively, largely as a result of the installation and operation of the fine tin recovery circuit in the plant from June this year.

Q121 results review

Alphamin’s Q121 financial results were released in the context of known operating results, which were announced on 9 April and are summarised in the table below with respect to prior quarters.

Exhibit 1: Alphamin operating results, Q419–Q121

Q419

Q120

Q220

Q320

Q420

Q121

Tons processed

71,559

85,060

91,928

96,086

93,560

93,997

Tin grade (%)

4.9

3.5

4.3

3.8

4.2

3.8

Contained tin (t)

3,506

2,977

3,953

3,651

3,930

3,572

Overall plant recovery (%)

64

71

69

71

74

74

Actual payable tin produced (t)

2,235

2,119

2,739

2,563

2,898

2,611

Payable tin sold (t)

1,109

3,860

2,613

2,695

2,306

3,351

Tin price achieved (US$/t)

17,849

15,553

15,359

17,436

18,497

23,083

Source: Alphamin Resources.

While we have not hitherto formally published estimates of quarterly results for Alphamin, a number of features of the company’s operational and financial results (page 4, below) are noteworthy:

Operations at Bisie in Q4 and Q1 are inevitably affected by the seasonal rains that occur, largely in Q4. This typically has the effect of delaying sales of tin concentrate from Q4 until Q1 (which has the effect of inflating revenue and associated costs in Q1). However, Q1 is also invariably affected by the aftermath of the rains in Q4 when roads become degraded and are harder to traverse, which also inflates costs. As a result, both revenue and costs were higher in Q1 than the pro rata level implied by our prior FY21 full-year forecasts. Depreciation – which is conducted on a units of production basis for mine development and infrastructure – was also inflated given a pro rata contribution from sales of concentrate out of inventory. In addition, off-mine costs that are linked to the price of tin, such as marketing commissions, government royalties, export fees and smelter deductions, also increased as the tin price increased.

Q121 financial results included a US$5.6m charge relating to the company’s outstanding warrants and the fact that Alphamin’s share price rose over the period in question. This charge is non-cash in nature and therefore affects neither cash flow nor our valuation of Alphamin. In our opinion, it also distorts the results of the group and, as such, it is a cost that we decline to attempt to forecast and one that we treat as an exceptional item (as far as historic, incurred warrant charges are concerned) in our financial summary on page 7.

During the course of the quarter, Alphamin’s net debt reduced from US$57.5m to US$46.5m and its gearing (net debt/equity) and leverage (net debt/[net debt+equity]) from 33.5% and 25.1%, respectively, to 25.5% and 20.3%. However, this reduction in net debt of US$11.0m (US$44.0m on an annualised basis) would have been much greater had it not been for a simultaneous US$21.8m increase in accounts receivable. The increase resulted from the change of payment terms since mid-February 2021 from 80% free on truck (FOT) Logu to 95% on arrival in Kampala (Uganda), which resulted in an approximately 25- to 30-day delay in receiving the 80% portion of the payment. In the absence of this change, we calculate that Alphamin’s underlying net debt reduction over the course of the quarter could have been in the order of US$32.3m (or US$129.2m on an annualised basis).

Alphamin’s effective tax rate varies materially from quarter to quarter – for example, between 97.9% in Q320 to -259.4% in Q419 – not least, on account of the warrant charge discussed above. In Q121, it was a relatively high 44.6%, albeit almost all of the charge related to movements in deferred tax rather than cash taxes.

The minority interest reflected in Alphamin’s income statement has also proved to be of a similarly variable nature on a quarterly basis – eg ranging from 1,286.0% of net profit in Q320 to -8.9% in Q420. Again, in large part, this apparent variability is a function of the warrant charge (see above) that occurs at top company level and in which minorities do not share. In Q121, this item amounted to 26.3% of net profit – closer to the middle of the range, but still above the ambient 15.86% rate implied by Alphamin’s 84.14% interest in the Bisie mine. However, if the warrant charge is excluded, then the rate reduces to 17.3% (ie within one percentage point of where it would typically be expected to be).

In addition to its financial results for Q121, Alphamin also provided production guidance of 2,700t for Q221.

We have now formulated quarterly estimates for Alphamin for the remainder of the year (see Exhibit 2 below). In addition to Q121 results, Q221 guidance and the recent strength in the tin price, we have also now incorporated the effects of commissioning a fine tin recovery circuit into the plant from June 2021.

Fine and ultrafine tin losses in circuit were identified at the time of the plant’s commissioning in 2019 and the decision was taken to install a fine tin recovery circuit to reduce them. Subsequently, at the time of its operational results on 9 April, Alphamin confirmed that the fine tin recovery plant was on schedule for commissioning during June 2021. In the light of this, we have increased our overall plant recoveries by 5.5pp into the future (to 77–80%) and throughput by 5%.

Quarterly estimates for Alphamin in the light of these adjustments are provided in the table below, albeit with the caveat that the quarterly results of junior mining companies can be prone to material volatility relative to both historical results and analysts’ forecasts. At the time of writing, the current three-month price of tin is US$29,815/t. Note that, for the purposes of forecasting, we have assumed that this price will prevail for the remainder of the year.

Exhibit 2: Edison forecast of Alphamin income statement, Q121a–Q421e (US$ unless otherwise indicated)

Q121a

Q221e

Q321e

Q421e

FY21e
(current)

FY21e
(prior)

Tons Processed (t)

93,997

93,250

97,913

97,913

383,072

373,000

Tin Grade (%)

3.8

4.0

4.2

4.2

4.03

4.16

Contained tin (t)

3,572

3,707

4,073

4,073

15,425

15,517

Overall plant recovery (%)

74

73

78

78

75.8

72.8

Actual payable tin produced (t)

2,611

2,700

3,191

3,191

11,693

11,302

Payable Tin Sold (t)

3,351

2,700

3,191

2,537

11,779

11,302

Tin Price achieved (US$/t)

23,083

27,892

29,099

29,099

27,111

23,978

Revenue

76,032,045

75,308,948

92,853,212

73,818,303

318,012,509

271,012,782

Cost of goods sold

(37,256,106)

-28,239,750

-30,375,125

-23,148,892

-119,019,873

(111,372,291)

Depreciation

6,380,606

6,444,399

6,508,192

6,571,985

25,905,182

21,853,394

Gross profit

32,395,333

40,624,799

55,969,895

44,097,427

173,087,454

137,787,096

General and administrative

(4,549,884)

-4,579,482

-4,579,482

-4,579,482

-18,288,330

(18,317,928)

Operating profit/(loss)

27,845,449

36,045,317

51,390,413

39,517,945

154,799,124

119,469,168

Other

Warrants

(5,636,827)

-5,636,827

0

Profit on foreign exchange

16,595

16,595

0

Loss on write off of assets

0

0

0

Interest expense

(2,648,401)

-2,648,401

Interest income

11

11

Net interest

(2,648,390)

-1,182,789

-1,182,789

-1,182,789

-6,196,756

(6,196,756)

Profit before taxes

19,576,827

34,862,529

50,207,624

38,335,156

142,982,136

113,272,413

Current income tax expense

(11,113)

-8,715,632

-12,551,906

-9,583,789

-30,862,440

(28,318,103)

Deferred tax movement

(8,713,199)

-8,713,199

0

Total tax

(8,724,312)

-8,715,632

-12,551,906

-9,583,789

-39,575,639

(28,318,103)

Effective tax rate (%)

(44.6)

25.0

25.0

25.0

-27.7

(25.0)

Net profit/(loss)

10,852,515

26,146,897

37,655,718

28,751,367

103,406,497

84,954,309

Other Comprehensive income

Items that may be reclassified to profit or loss

Exchange differences on translation of foreign operations

(1,803)

-1,803

Total comprehensive profit/(loss) for the period

10,850,712

26,146,897

37,655,718

28,751,367

103,404,694

84,954,309

Profit/(loss) and total comprehensive profit/(loss) attributable to:

Shareholders

8,002,190

21,999,999

31,683,521

24,191,400

85,877,110

71,480,556

Non-controlling interests

2,850,325

4,146,898

5,972,197

4,559,967

17,529,387

13,473,753

Minority (%)

26.3

15.86

15.86

15.86

17.0

15.86

Total

10,852,515

26,146,897

37,655,718

28,751,367

103,406,497

84,954,309

Weighted average number of shares in period

1,182,251,580

1,185,431,350

1,185,431,350

1,185,431,350

1,184,798,408

1,184,713,455

Derivatives

119,536,582

98,507,626

98,507,626

98,507,626

98,507,626

98,604,716

Fully diluted weighted average number of shares in issue

1,301,788,162

1,283,938,976

1,283,938,976

1,283,938,976

1,283,306,034

1,283,318,171

Headline earnings

8,002,190

21,999,999

31,683,521

24,191,400

85,877,110

71,480,556

EPS (US$/share)

0.0068

0.0186

0.0267

0.0204

0.0725

0.0603

Diluted EPS (US$/share)

0.0061

0.0171

0.0247

0.0188

0.0669

0.0557

HEPS (US$/share)

0.0068

0.0186

0.0267

0.0204

0.0725

0.0603

Diluted HEPS (US$/share)

0.0061

0.0171

0.0247

0.0188

0.0669

0.0557

Source: Alphamin, Edison Investment Research. Note: Company presented basis.

Valuation

At an (unchanged) long-term real tin price of US$23,425/t, we estimate an increased discounted dividend valuation of Alphamin of 42.4 US cents (cf 39.1c previously), or 51.2 Canadian cents per share (cf 49.6 Canadian cents per share previously), largely as a result of the installation and operation of the fine tin recovery plant from June this year.

Exhibit 3: Alphamin LOM forecast EPS, DPS and NPV10 of DPS, FY18–32 (US$/share)

Source: Edison Investment Research

Note that this valuation otherwise assumes that management executes the Bisie life of mine (LOM) schedule according to plan and applies a 10% discount rate to future forecast dividends.

Key sensitivity

One key sensitivity for Alphamin is its exposure to exploration success. Alphamin’s processing schedule follows its mining schedule very closely. As this drops away towards the end of the life of the mine, so too does production, earnings and cash flow. To the extent that Alphamin is successful in its exploration at Mpama North and Mpama South in keeping its plant in full production at FY27 levels into the future (see Alphamin’s announcement, Alphamin reports extensive mineralised intercepts on drilling at Mpama South, released on 12 March 2021 and also its announcement, Alphamin confirms high grade tin mineralisation on exploration drilling at Mpama South, released on 14 May 2021), our valuation of the company increases as follows:

Exhibit 4: Alphamin valuation sensitivity to exploration success

Additional years at full capacity

To year

Valuation
(US$/share)

Valuation
(C$/share)

Incremental change (C$/share)

0.425

0.512

0

2027

0.411

0.497

-0.015

+1

2028

0.432

0.522

+0.025

+2

2029

0.458

0.553

+0.031

+3

2030

0.476

0.575

+0.022

+4

2031

0.491

0.594

+0.019

+5

2032

0.514

0.622

+0.028

Source: Edison Investment Research

For the purposes of this valuation, we have assumed an ongoing exploration commitment at Alphamin of US$2.7m per year in order to achieve the replenishment of reserves and resources required to keep the mine operating at full capacity. Readers should note that this is the reason for the apparent decline in valuation for ‘0’ years of additional life in Exhibit 4, above; in this case, extra exploration expenditure has been incurred for no additional increase in mine life.

On average therefore, each additional year by which the plant is maintained at full capacity (in the short term) adds 2.5 Canadian cents per share in value to our valuation of Alphamin. In the limiting case, in which exploration success is sufficient to maintain production at FY27 levels indefinitely (which, for these purposes may be taken to mean c 48 years), our valuation of Alphamin rises to US$0.95/share, or C$1.162/share, and its valuation profile to that shown in Exhibit 5, below:

Exhibit 5: Alphamin EPS, DPS and valuation forecast, including exploration success, FY18–32 ($/share)

Source: Edison Investment Research

Note we calculate that Alphamin’s current share price of C$0.72 discounts a long-term real tin price of US$29,169/t, that is 24.5% above our assumed long-term price of US$23,425/t, but 2.2% below the current (three-month) price of tin. Alternatively, adopting the current (three-month) tin price, of US$29,815/t, as our long-term price would result in a valuation for Alphamin (excluding any blue-sky, upside exploration potential) of 61.5 US cents, or 74.3 Canadian cents, per share.

Financials

Between Q419 and Q121, Alphamin paid down financial net debt (ie excluding leases) by US$45.2m, from US$88.6m at end-December 2019 to US$43.4m at end-March 2021. This level of net debt equates to a gearing (net debt/equity) ratio of 23.9% and a leverage (net debt/[net debt+equity]) ratio of 19.3% (cf 61.0% and 37.9% at end-FY19, respectively). As discussed previously, with the tin price remaining high and at the current (underlying) rate of net debt repayment, we estimate that there is scope for net debt to have reduced to zero before the end of FY21 and for Alphamin, at least theoretically, to be in a position to make dividend distributions to shareholders.

Exhibit 6: Financial summary

Accounts: IFRS, year-end: December, US$000s

 

 

2018

2019

2020

2021e

2022e

INCOME STATEMENT

 

 

 

 

 

 

 

Total revenues

 

 

0

27,221

187,445

318,013

270,976

Cost of sales

 

 

0

(7,915)

(119,554)

(119,020)

(111,747)

Gross profit

 

 

0

19,306

67,892

198,993

159,229

SG&A (expenses)

 

 

(9,440)

(14,526)

(17,238)

(18,288)

(18,288)

R&D costs

 

 

0

0

0

0

0

Other income/(expense)

 

 

0

0

0

0

0

Exceptionals and adjustments

 

0

(3,673)

(7,649)

0

0

Depreciation and amortisation

 

(20)

(7,927)

(25,471)

(25,905)

(26,300)

Reported EBIT

 

(9,460)

(3,147)

25,182

154,799

114,641

Finance income/(expense)

 

3

(6,330)

(15,614)

(6,197)

229

Other income/(expense)

 

7

(4)

(1,518)

17

0

Exceptionals and adjustments

 

6,272

6,850

(8,776)

(5,637)

0

Reported PBT

 

 

(3,178)

(2,632)

(725)

142,982

114,870

Income tax expense (includes exceptionals)

 

 

0

7,755

(7,141)

(39,576)

(28,718)

Reported net income

 

 

(3,178)

5,123

(7,866)

103,406

86,153

Basic average number of shares, m

 

 

733

845

1,066

1,185

1,185

Basic EPS (US$)

 

 

(0.00)

0.01

(0.01)

0.07

0.06

Adjusted EBITDA

 

 

(9,440)

8,453

58,302

180,704

140,940

Adjusted EBIT

 

 

(9,460)

526

32,831

154,799

114,641

Adjusted PBT

 

 

(9,450)

(5,809)

15,699

148,619

114,870

Adjusted EPS (US$)

 

 

(0.00)

0.01

(0.01)

0.09

0.07

Adjusted diluted EPS (US$)

 

 

(0.00)

0.00

(0.01)

0.07

0.06

BALANCE SHEET

 

 

 

 

 

 

 

Property, plant and equipment

 

 

230,626

255,125

239,103

219,577

197,616

Other non-current assets

 

 

2,467

10,632

15,882

19,628

22,338

Total non-current assets

 

 

233,093

265,757

254,985

239,206

219,954

Cash and equivalents

 

 

17,105

5,941

6,559

45,898

157,588

Inventories

 

 

3,235

27,755

21,866

17,425

14,848

Trade and other receivables

 

 

0

1,486

7,601

31,801

27,098

Other current assets

 

 

3,738

17,633

6,710

6,710

6,710

Total current assets

 

 

24,078

52,815

42,736

101,835

206,243

Non-current loans and borrowings

 

 

80,896

78,229

34,821

0

0

Other non-current liabilities

 

 

6,699

9,641

8,872

8,872

8,872

Total non-current liabilities

 

 

87,595

87,870

43,693

8,872

8,872

Trade and other payables

 

 

7,030

23,487

17,037

16,353

15,357

Current loans and borrowings

 

 

0

16,339

25,810

0

0

Other current liabilities

 

 

5,711

16,290

13,250

13,250

13,250

Total current liabilities

 

 

12,742

56,116

56,098

29,603

28,607

Equity attributable to company

 

 

131,914

145,215

171,735

258,841

331,329

Non-controlling interest

 

 

24,921

29,371

26,196

43,725

57,389

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Profit before tax

 

 

(3,178)

(2,632)

(725)

142,982

114,870

Net finance expenses

 

 

0

5,456

15,616

0

0

EBIT

 

 

0

0

0

0

0

Depreciation and amortisation

 

 

20

7,927

26,504

25,905

26,300

Share based payments

 

 

300

403

471

0

0

Other adjustments

 

 

(6,272)

(6,851)

8,842

0

0

Movements in working capital

 

 

3,942

(6,710)

(20,281)

(20,443)

6,285

Interest paid/received

 

 

0

(3,092)

(11,378)

0

0

Income taxes paid

 

 

0

0

(843)

(39,576)

(28,718)

Cash from operations (CFO)

 

 

(5,188)

(5,498)

18,205

108,868

118,737

Capex

 

 

(116,094)

(22,720)

(7,448)

(10,126)

(7,048)

Acquisitions & disposals net

 

 

0

0

0

0

0

Other investing activities

 

 

151

(46)

(96)

0

0

Cash used in investing activities (CFIA)

 

 

(115,943)

(22,766)

(7,544)

(10,126)

(7,048)

Net proceeds from issue of shares

 

 

55,235

11,936

10,010

1,229

0

Movements in debt

 

 

69,448

0

(18,735)

(60,631)

0

Dividends paid

 

 

0

0

0

0

0

Other financing activities

 

 

6,317

5,165

(1,319)

0

0

Cash from financing activities (CFF)

 

 

131,000

17,100

(10,044)

(59,403)

0

Currency translation differences and other

 

 

0

0

0

0

0

Increase/(decrease) in cash and equivalents

 

 

9,869

(11,164)

617

39,340

111,689

Currency translation differences and other

 

 

0

0

0

0

0

Cash and equivalents at end of period

 

 

17,105

5,941

6,559

45,898

157,588

Net (debt)/cash*

 

 

(63,791)

(88,627)

(54,073)

45,898

157,588

Movement in net (debt)/cash over period

 

 

(63,791)

(24,836)

34,554

99,971

111,689

Source: Company sources, Edison Investment Research. Note: *Excludes lease liabilities.

General disclaimer and copyright

This report has been commissioned by Alphamin Resources and prepared and issued by Edison, in consideration of a fee payable by Alphamin Resources. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Alphamin Resources and prepared and issued by Edison, in consideration of a fee payable by Alphamin Resources. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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