Elementos Ltd (ASX:ELT) (OTCMKTS:ELTLF) (FRA:9EM) is poised to benefit from rising demand for tin as consumer electronics rebound strongly when global economies recover and new and disruptive technologies continue to drive consumption of the metal.
Through its Oropesa Tin Project in southern Spain, one of the largest undeveloped tin resources in the world, Elementos is well-placed to take advantage of tin’s supply/demand imbalance.
Increasing uses for tin
Tin is mainly used as a solder component for consumer electronics which accounts for about half of its global consumption.
Demand is expected to remain subdued in the short-term due to the coronavirus pandemic but the long-term outlook remains bright as consumer electronics are expected to rebound strongly as global economies recover.
Further, new and disruptive technologies such as robotics, automation, smart home devices, drones, Internet of Things, 5G, advanced computing, hydrogen-related applications, carbon capture, renewable energy and electric vehicles will be the strongest new use drivers.
Tin additions to lead-acid batteries and solder used for joining solar cells have shown strong increases, plus the use of tin in lithium-ion batteries has shown some of the highest growth over the last decade, accounting for 0.4% of refined tin consumption in 2011 and growing to 3% in 2019.
This trend is set to continue, with the degree of vehicle electrification expected to increase substantially over the coming decade.
Tin was singled out as the market most favourably impacted by the technology revolution relative to its size in a 2018 Massachusetts Institute of Technology study commissioned by Rio Tinto.
And in 2017, more than 5,000 scientific papers and tin technology patents were published, which demonstrates a strong future for the metal.
Well placed to take advantage of imbalance
Elementos chairman Andy Greig (above) said: “With demand economics in our favour, visible tin stocks are very low and the consensus is that there’s a real supply issue going forward, regardless of the EV [electric vehicle] story.
“Data from the International Tin Association clearly indicates an expected shortfall in the supply of tin.
“Higher extraction costs and lower grades are expected to lead to continued declines in tin production and a market deficit is anticipated to widen through to 2021, with few new tin mines in the pipeline.
“Elementos is well-placed to take advantage of tin’s supply/demand imbalance."
Oropesa Tin Project
On December 31, 2019, the company finalised the acquisition of the Oropesa Tin Project in southern Spain - one of the world’s largest undeveloped, open-cut mineable tin deposits.
The acquisition represents an excellent opportunity to create value-uplift potential for shareholders.
About US$26 million has been spent to date at the Oropesa project, including 261 drill holes for a total of 54,026 metres of drilling.
An economic study completed in May found that at a tin price of US$19,750 per tonne, the mine could potentially generate an annual gross revenue of more than US$48 million against a forecast operating cost of US$28 million per year or cash cost of US$11,534 per tonne of metal.
The study valuation also found a base case pre-tax net present value 8% of about US$92 million and post-tax NPV 8% of about US$66 million.
Attractions of the project include:
➢ Large, well-defined resource with strong opportunities for resource expansion;
➢ Open-cut mining potential that is amendable to simple drill and blast, truck and shovel open cut mining operations;
➢ Simple metallurgy - extensive metallurgical testing and process flowsheet designed to produce a 62.4% tin concentrate at a 74.2% metallurgical recovery;
➢ Near-term production potential – a positive economic study has been completed;
➢ Permitting process advanced with a revised Environmental Impact Study (EIS) being prepared and a mining licence application has been submitted;
➢ Located close to development infrastructure, including major highways which link to export ports, water supply and power supply;
➢ Low sovereign risk - The Andalucia region of Spain is home to some of the country’s most significant mining operations and part of the European Union;
➢ Large sunk cost – significant investment in drilling, geophysics, metallurgical testing and development studies; and
➢ Local community support.
Enhancing Cleveland Tin Project
Excellent progress is also being made at Cleveland Tin Project, 80 kilometres southwest of Burnie in the mineral-rich northwest region of Tasmania, Australia, following the release of a new JORC resource estimate.
This potentially paves the way to move towards the development of a small-scale open cut and tailings retreatment processing facility.
Further exploration and metallurgical testing is planned to examine opportunities for enhancing the project economics.
It is a historic mine boasting excellent power, water and transport infrastructure - linked to Burnie Port by sealed roads and accessible power runs through the Cleveland exploration licence area.
The tin province in northwest Tasmania hosts some of the world’s highest grade and most productive tin mines, including Renison Bell, Mt Bischoff and Cleveland.
Total contained tin within the revised 2018 JORC Resource Estimate increased by 15.8% and contained copper increased by 20.0%.
The company raised A$773,000 from its oversubscribed Share Purchase Plan (SPP) in September 2020.
This amount was more than double the original target of A$300,000.
It is also in addition to the A$2,552,000 raised in a private placement, which completed in August 2020.