Tin price up by more than half in the past 12 months

The tin price has risen by over 50% in the past 12 months, to close to US$50,000 per tonne today, driven by high demand for electronics and electric vehicles pushing the market into a structural deficit as constrained supply (especially at the Man Maw mine in Myanmar) fails to match demand. While speculative activity may also have contributed to the price rises, there is a growing realisation among both market participants and investors that this may not be a transient condition and that the market could be moving into a long-term phase characterised by constrained supply coupled with high demand.

Valuation: Peers imply C$3.67/share

Our discounted dividend valuation of Alphamin is US$1.04/share, or C$1.41/share, which is identical to our DCF valuation. However, both are cum-div at the moment, so C$0.13/share for the final FY25 dividend can also be added to this number. They are both slightly ahead of our cash flow and terminal multiple valuation of C$1.39/share. However, this only reflects the inclusion of exploration capex in the latter. If this exploration investment is able to extend Alphamin’s life of mine by five years, it adds C$0.20/share to our valuation, to C$1.59/share. If it is able to extend it by 10 years it adds C$0.32/share. If it is able to extend its life indefinitely, it adds C$0.52/share (assuming no cash flow per share growth thereafter). However, all of these valuations are conducted at a long-term tin price of US$31,651/t. At the current price of tin ( US$48,753/t at the time of writing), the valuation rises to C$2.19/share. At the same time, Alphamin is priced at multiples that are cheaper than its peers on 30 out of 36 (or 83%) of valuation measures. Reverse engineered, we calculate that the Alphamin share price implied by the average multiples of its peers over the next three years is C$3.67. Finally, it is also cheap relative to history in that it is trading on a year one P/E ratio of c 5.3x currently, which compares with an average between FY21 and FY25 of 11.3x.

Q126 results and FY26 forecasts

Alphamin’s Q126 financial results were released on 29 April, within the context of operational results that had already been pre-released on 9 April, and they were nothing if not striking, with revenue, operating profit, EBITDA, PBT, net profit, attributable profit and EPS all posting records for the first quarter of the financial year. All-in sustaining costs (AISC) were also relatively high by historical standards. However, this was to be expected, given the flow through of the tin price into selling costs and royalties and not enough to offset the effect of the metal’s record average price on revenue during the quarter (at least since Alphamin has been in production). As a consequence, AFM’s gross margin, in percentage terms, grew to its third highest on record, at 68.3%, surpassed only in Q122 and Q419 (the latter of which was somewhat anomalous during the mine’s initial ramp-up into production).

One other notable feature of the results was a US$11.7m foreign exchange loss owing to the translation to spot rate on 31 March for advances for corporate tax liabilities following the enactment of a decree by the DRC Ministry of Finance requiring corporate income tax liabilities to be fixed and settled in US dollars. This therefore reversed a gain of almost exactly the same magnitude ( US$12.0m) the previous quarter.

Otherwise, in the absence of a dividend being paid during the quarter, Alphamin’s cash build was incredibly strong, with net cash of US$15.5m at end-Q425 (excluding lease liabilities) growing by US$127.2m during Q126 to reach US$142.8m. In addition, exploration capital expenditure was relatively modest, at US$1.8m, compared to our estimate for FY26 of c US$15.0m.

Given this surplus (and recall that capex for the Mpama South mine was only budgeted at US$127.6m), the board declared a final FY25 cash dividend of C$0.13/share (c US$122m in aggregate). This followed two interim dividends of C$0.07/share and C$0.04/share already paid in FY25 and brings distributions for the full-year to C$0.24/share, putting the shares, at their current price, on a historical yield of 16.7%, albeit obviously only the first two interim dividends were actually paid in the year.

In the light of Alphamin’s Q126 financial results, we have compiled the financial forecasts for Alphamin for FY26, by quarter, as shown in Exhibit 3. Aside from the tin price and its direct effect on costs, the principal change to our FY26 forecast relative to that last published is the assumption of a super profit liability. In the case of Alphamin, a super profit tax may apply to the company’s FY26 taxable profit (payable in April 2027) if the average tin price achieved during 2026 exceeds 125% of the tin price assumed in the most recently approved feasibility study. The most recently approved feasibility study included a forecast tin price for 2026 of US$30,333/t and, on this basis, the super profit tax would become applicable if the average tin price achieved during 2026 exceeds US$37,916/t. The super profit tax is determined with reference to Alphamin Bisie Mining’s Excédent Brut d’Exploitation (EBE), an OHADA (ie Central and West African) accounting measure broadly comparable to EBITDA. Under the legislation, where EBE exceeds 125% of the level contemplated in the feasibility study, an additional 20% tax may apply to the incremental portion, increasing the effective tax rate on that portion from 30% to 50%. Based on the most recently approved feasibility study, which according to management forecasts a 2026 EBE of c US$377m from 20,225 tonnes of production, this would illustratively imply a potential threshold of approximately US$471m in EBE before the additional tax would apply. No super profit tax was liable for FY25. However, with the Q126 achieved average tin price being above the applicable threshold for FY26, Alphamin has started accruing for possible super profit tax on the assumption that tin prices will remain strong for the remainder of FY26. To this end, it recognised a US$7.5m super profit tax accrual in its accounts in Q1. Nevertheless, the application of the super profit tax provisions remain subject to interpretation by the relevant authorities and the thresholds and resulting tax exposure may therefore differ from the illustrative figures presented above and from the company’s current understanding of the legislation.

Dividends

In addition to announcing its Q126 results, Alphamin’s board declared a final cash dividend of C$0.13/share for FY25. This followed two interim dividends of C$0.07/share and C$0.04/share already paid in FY25 and brings distributions for the full-year to C$0.24/share, putting the shares, at their current price, on a historical yield of 16.7%. The table below shows Alphamin’s dividend history for the periods for which dividends were declared. This compares with our financial summary (Exhibit 10 below) and our front page table (above), which show dividends for the periods in which they were paid.

By historical standards, the C$0.13/share FY25 final dividend is clearly generous. However, we believe that it is sustainable at these higher tin prices and, having set the precedent, we believe that the board will want to maintain at least this level of dividend payout for the interim FY26 payout, all other things being equal. However, we think that the distribution might come under pressure if the tin price falls to Edison’s long-term price of US$31,651/t. This will be especially true if the prior year is one in which super profits were accrued, which would also give rise to a large corporate tax outflow in April of the year in question.

We do not know the board’s intentions regarding future dividends. However, we assume that they will be prudent in their payouts to shareholders. For the purposes of our valuation (below), we have initially assumed that the tin price remains high in FY26, but then falls back to long-term levels in FY27, in which the company’s super profit liability accrued in FY26 will also become payable. This would restrain the dividend potentially payable in FY27, although the board may wish to keep the actual dividend high, depending on its assessment of circumstances at the time. From FY28 – and beyond – we assume that all dividends that can be paid will be paid, to leave the company with zero net cash at the end of its assumed life in FY38. Variations from this ‘base case’ assumption are provided in the ‘Sensitivities’ section below.

Valuation

Edison’s valuation of single asset mining companies is typically based on the value of dividends that a shareholder could expect to earn from their investment if they were to hold their shares from the moment of purchase until the end of the life of the mine, discounted to present value. Discretionary exploration investment is ordinarily excluded from the financial forecasts when this method is used, as it is presumed to be at least value adding. In practice therefore, the dividends in question are ‘maximum potential dividends’ (subject to assumptions about metals prices). However, the resulting net present value should be considered a conservative valuation since it omits the optionality of blue-sky exploration success during the operation of the mine. This method was typically used by the analyst community to value South African mines that were listed in London, such as Driefontein, Kloof, Vaal Reefs, Beatrix and Western Deep Levels, etc (albeit with different accounting practices), prior to 1995 when the South African mining house system of mine financing began to change.

Compared with the alternative discounted cash flow (DCF) method of analysis, the discounted dividend approach more purely reflects the returns that an equity shareholder may expect to receive. Hence, it is possible to calculate an internal rate of return (IRR) pertaining to an investment in a company’s equity at any particular share price and any particular point in time, rather than calculating an IRR for a project as a whole (which typically aggregates debt and equity returns and is therefore independent of a company’s share price). In its application it can also be made to naturally accommodate future equity dilution in calculating returns to shareholders. Being based on only one unit of measurement (forecast future dividends), it is also relatively simple to estimate a value (and hence share price) at some point in the future in comparison with a DCF valuation, which typically requires three inputs (namely, forecast future cash flows, net debt/cash and minority ownership). In the case of Alphamin however, we have decided to present both discounted dividend and DCF valuations in order to benefit from the latter’s ability to generate a terminal cash flow multiple to accommodate potential mine life extensions.

Given our assumptions (above), we assume that FY26 will be an exceptional year in terms of earnings and dividends, but there will be a return to normalcy in FY27. As noted previously, under these circumstances, we expect the dividend to be restrained in FY27, but then to rebound in FY28 when there is no longer any super profit liability to be paid. For the eight years thereafter, we expect EPS to average US$0.12/share and the maximum potential dividend to average C$0.19/share ( US$0.14/share). On the basis of discounted dividends therefore, our valuation of Alphamin, as at 1 January 2026, is US$1.04, or C$1.41/share (ie close to the current share price).

In this case, our discounted dividend valuation is exactly corroborated by a discounted attributable cash flow valuation also of C$1.41/share, which is as expected for a company with no net debt and assumed to pay out all excess cash and cash flow in the form of dividends (which is a key assumption of our discounted dividend valuation).

Our cash flow and terminal multiple valuation methodology uses FY29 as its terminal year, as it is representative of the cash flows per share that we estimate Alphamin is capable to earning for the following seven years. Since it includes discretionary exploration expenditure (which our discounted dividend and discounted cash flow valuations do not), this approach yields a slightly lower valuation number of C$1.39/share. Even so, the discrepancy with our discounted dividend and DCF valuations is negligible at less than 2%. Edison’s ‘base case’ assumptions already assume that sufficient resources will be upgraded into reserves at Mpama North to extend its life until FY36. However, if ongoing exploration is capable of extending the life of mining operations at Bisie indefinitely, our valuation of Alphamin would rise to US$1.66/share ( C$1.91/share).

A graph of our valuation of Alphamin as at 1 January 2026, given increasing operational life at Bisie with exploration success, is shown below:

In the meantime, at Alphamin’s current share price, our forecasts suggest a current year P/E ratio falling from 17.9x in FY23 to 5.3x in FY26.

Relative valuation

A comparison of Alphamin’s valuation relative to those of its peers, based on a series of commonly used prospective valuation multiples (where available), is provided below:

Of note is the fact that Alphamin is priced at multiples that are cheaper than the averages of its peers on 91% of valuation measures (ie 11 out of 12). On a discrete basis, it is cheaper than its peers on 30 out of 36 (or 83%) of valuation measures. Alternatively, we calculate that the average Alphamin share price implied by the average multiples of its peers is C$5.44 in FY26, followed by C$2.09 in FY27 and C$3.49 in FY28.

Sensitivities

By far Alphamin’s greatest valuation sensitivity is to the price of tin, which has risen by over 50% in the past 12 months, from US$32,271/t (ie close to Edison’s long-term price assumption) to near US$50,000/t today, driven by high demand for electronics and electric vehicles pushing the market into a structural deficit as constrained supply (especially at the Man Maw mine in Myanmar) fails to match demand growth. While speculative activity may also have contributed to the price rises, there is a growing realisation among both market participants and investors that this may not be a transient condition and that the market could be moving into a long-term phase characterised by constrained supply coupled with high demand. We are reviewing our long-term tin price assumptions in the light of these circumstances. In the meanwhile however, the table below shows our discounted dividend valuation at a variety of long-term tin price options:

Financials

Alphamin had net cash on its balance sheet of US$142.8m as at end-Q1 and declared a generous dividend (by historical standards) of C$0.13/share (c US$122m in aggregate). Given that it has no major capital projects planned and is highly cash generative, there should be no reason for it to return to a condition of net debt unless by the specific design of the board and/or unforeseen circumstances.