AfriTin Mining Limited (LON: ATM) is up near 10% this morning on no particular news at all. This could just be random movement, could be part of a general revaluation. What is of interest is the company’s base idea at present – re-evaluating old tin prospects and seeing if they’re worth reviving.
There are some details of their pilot plant operation at Uis – in Namibia – which are worth considering. They’re intending on installing a tantalum capture circuit for example. It is entirely common that tin and tantalum are found together. But normally the tantalum ships off with the tin ore and the miner doesn’t get paid for it. This is what makes tin slags – the waste after tin extraction – a major source of tantalum. When that market gets tight, tantalum prices rise, there’s a rush to process the wastes from tin refiners. Happens every time in fact. Some install the capture circuit and get paid at the mine head instead. Makes sense, if the numbers add up.
Similarly, lithium is often associated with the same mineralisations. This is why the historic tin provinces of Cornwall and the Krusny Hory (like Cornish Lithium. Zinnwald Lithium (LON: ZINN), European Metals (LON: EMH) and so on) are being prospected for lithium. So, work on extracting that at the same time as the tin.
However, the big thing is, well, if these all used to be tin operations then why were they closed down? What has changed to make them work, then not work, now possibly work again?
The answer being the International Tin Council. This was one of those do-gooding operations that the global world order created. It was meant to stabilise tin prices so that they would be “fair”. What actually happened was that it kept tin prices high to benefit producers. Then it went bust in the mid-1980s. At which point, of course, the price slumped. That’s when the last of the Cornish mines simply couldn’t keep going, when the Czech mines couldn’t and yes, when this Namibian mine closed – in the early 1990s.
Things have now changed. The world desires more tin – this electrical revolution – and the price has recovered from that post-ITC failure slump. So, various mines that we knocked out by the decades long price slump now make sense again. Plus, extraction technology has moved along and become more cost-effective.
AfriTin’s strategy, therefore, looks just fine. It’s working with the main economic incentives of the current day. Go back and look at those old tin mines killed off by the ITC failure.
This is not though a claim that the strategy will entirely work. For that international tin price depends on how many others of those old mines also come back online. The more sensible this strategy is for AfriTin then the more likely it is to be sensible elsewhere until all are back at that old position – too much tin and it’s too cheap.
How this will actually work out is the trading opportunity. As ever, a major factor for miners of minor metals – or metals with small markets perhaps – is what are all the other miners doing at the same time? Even for companies doing what appear to be eminently sensible things, as here, that still becomes the major factor in long-term success.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.