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Andrada Mining caps good year by producing commercial lithium

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Formerly known as AfriTin, since the last time we wrote about the AIM-listed company on Valentine’s Day this year, the company has seen a 62% increase in its share price. Opening trading today (27th June) at 8.025p, the miner has offered a 48.1% year-to-date return, with a 48.9% one-year return with shares ranging from 3.6p to 8.7p over a 52-week period.

As previously reported, the former tin miner, has repositioned itself to become a player in the lithium market, along with assets including Tin, Tungsten, Tantalum and Copper at four sites, all reasonably close to one another in the Erongo Region of Namibia which has mining heritage in marble and uranium. Erongo is on the Skeleton Coast in the centre of the country and has Walvis Bay and Swakopmund as its major population centres.

Andrada holds four licences: Uis, Brandberg West, Nai-Nais and B1C1. At Uis the company has already built a tin pilot plant and gone into production. Nameplate production of 720 tonnes a year (Tpa) has already been achieved and the plant is profitable on tin alone. However, Uis does offer significant by-product potential from lithium and tantalum and the company hopes that its Phase 2 expansion of tin concentrate production to 1300Tpa makes this Uis dramatically scalable project with potential to also become a global lithium supplier.

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Brandenberg West is an exploration licence of 35,000Ha, previously part of the Goldfields [NYSE:GFI] [JSE:GFI] stable and had 20 year of continuous tin production since 1957, but Andrada believes the tenement is under-explored and offers further opportunities in Tin, Tungsten and Copper. At Nai-Nais, there was a history of Tin and Tantalum opencast mining, but the concession also boasts spodumene, petalite and lepidolite deposits – all lithium-bearing minerals. B1C1 is only 10km from Uis and would use the operational mine’s infrastructure with a similar geology to Uis.

Andrada Mining is making money

What made Andrada stand out from the gamut of other AIM-listed mining companies was that it is in production, through its Uis tin mine, which is making money on tin mining alone, meaning that the company can finance its own exploration drilling, and doesn’t need to go cap in hand to investors with tedious regularity to raise money to make a small hole in the ground a bigger hole in the ground.

The company published an operational update to end-May. The company was “pleased to announce” that it had increased tin production by 50% year-on-year to 359 tonnes. The seam it was mining also showed improvement, with a 42% year-on-year increase in tin concentrate to 216 tonnes.

But the big news is that Andrada produced its first sellable bulk lithium concentrate in partnership with South African mineral-processing specialist Bond Equipment. The firm produced a 85% concentration of pure petalite at a grade of 4.16% lithium, which was sent off for testing to a number of potential industrial offtakers to see how much lithium carbonate and lithium hydroxide could be refined from the concentrate – both essential components cfor the renewable energy sector and lithium-ion battery manufacturers.

Again, unlike many of its peers, Andrada managed to keep to a schedule and finished construction of an onsite bulk sampling pilot plant on budget and on time. The plant should be commissioned next month.

If things go to plan, Andrada should start seeing lithium revenues during the second-half of the year.

Exploration pipeline

The company has definitively caught the lithium bug, and is continuing its Namibian exploration programme in search for further commercially-exploitable deposit of lithium-bearing rocks in its tenements. Seventen holes were drilled on ‘Spodumene Hill’ – Andrada’s ML129 licence – with the programme completing in April this year. The company was also sampling ‘Lithium Ridge’ its ML133 licence.

From changing its name from the one-dimensional ‘AfriTin’ to Andrada, in honour of nineteenth century Brazilian, poet, politician, professor, naturalist and geologist José Bonifácio de Andrada e Silva, who is credited with the discovery of petalite and spodumene in 1800 on a rock-collecting trip to Sweden, the company certainly knows the power of a name.

As well as being in production, keeping construction to schedule and energetically completing an exploration project, management at Andrada have been keeping a check on the pocketbook. The average operating cash costs have weighed in below management expectations with all-in-sustaining-costs being USD21,377/tonne of tin, below guidance of USD25,000 to USD30,000/tonne of tin.

The company also availed itself of some cheap money, securing a USD5.5m facility from the Development Bank of Namibia earlier this month, which will be ready to draw-down in July. Becoming a player in the global lithium game has raised the profile of Andrada, and the mining company secured Barclays Bank [LON:BARC] as its strategic advisor on its lithium project in May and started to trade on the OTCQB Market, an American financial market, eartlier this month, triple-listing the company on AIM, the Namibian Stock Exchange and OTC.

All-in-all it’s been a good year so far for Andrada, with Anthony Viljoen, chief executive officer, saying in a statement to the market: “The milestones achieved during the quarter have laid the necessary foundation for the accelerated growth we expect for the balance of the financial year. We have demonstrated the ability to produce saleable lithium concentrate. The completion of our on-site bulk-sampling plant remains on track for completion this month and will expedite the metallurgical testwork required to bring lithium revenues onstream.”

 

Source: the armchair trader

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