London, UK, 4 September 2023

Alphamin Resources (AFM): Still leading the pack

Alphamin Resources (AFM) offers rare exposure to a metal (tin) that both Rio Tinto and the MIT regard as the most likely to benefit from the electrification of the world economy. Having successfully ramped up its Mpama North mine at Bisie in the Democratic Republic of the Congo in 2019–20, when the tin price was enjoying one of its biggest bull markets in decades, AFM is now in a net cash position and is paying dividends at the same time as developing a second mine (Mpama South).

Whereas in the past we have valued Alphamin as the sum of its two major assets, Mpama North (including cash) and Mpama South, in this report, for the first time, we have fully consolidated Mpama South into our full financial model. Using this approach, our consolidated valuation of Alphamin is US$1.06/share, or C$1.44/share, based on the present value of future dividends potentially payable to Alphamin shareholders. However, if exploration success extends the lives of both Mpama North and Mpama South indefinitely, we calculate that a valuation as high as C$2.36/share (in 2023 money terms) is ultimately achievable. In any event, we are forecasting earnings to more than double in FY24, by which time we expect Mpama South to have reached steady-state production and the tin price to have reached its long-term equilibrium price of US$31,651/t (cf US$25,305/t currently). In this context, Alphamin’s peers imply an AFM share price of C$1.47 for FY23, followed by C$2.76 for FY24 and C$2.89 for FY25.

  
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