Q2 Ops Update for the period ended 31 August 2023

Andrada Mining Limited

14 September 2023

 

14 September 2023

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.

Andrada Mining Limited

("Andrada" or the "Company")

Q2 Operational Update for the period ended 31 August 2023

Completion of the bulk sampling (lithium) pilot plant and tantalum circuit commissioning.

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), the African technology metals mining company with a portfolio of mining and exploration assets in Namibia hereby provides an unaudited operational update for the second quarter ending 31 August 2023 ("Q2 2024").

HIGHLIGHTS

OPERATIONS

§ 86% year-on-year ("YoY") increase in tin concentrate to 398 tonnes (Q2 2023: 214 tonnes).

§ 79% YoY increase in contained tin metal to 238 tonnes (Q2 2023: 133 tonnes).

§ Completion of the tantalum circuit ("Circuit") commissioning with 225kg produced.

§ Improved safety performance to 0.86 LTIFR at the end of the quarter compared to 0.95 at the end of Q1 2024 and 8.02 at the end of Q2 2023.

LITHIUM DEVELOPMENT

§ Commissioning of the lithium pilot plant ("Pilot Plant") completed.

§ Initial test campaigns have commenced to produce a consistent saleable grade of lithium concentrate.

EXPLORATION PROGRAMME

§ Spodumene Hill inaugural drill results over the B1 and C1 pegmatites intersected high grade spodumene mineralisation with up to 2.32% Li₂O.

o All drill holes intercepted lithium rich pegmatites.

o High grade tantalum mineralisation was also recorded highlighting upside potential.

§ Lithium Ridge Reverse Circulation ("RC") drilling programme provided initial batch of results with notable lithium intersections with up to 2.13% Li₂O.

o Second batch of results are expected shortly.

§ Lithium Ridge infill channel sampling confirmed the existence of continuous mineralisation at surface over a 6 km strike length.

o When combined, the weighted average of the 27 highest lithium grade channel sample lines amounted to 179 m at 1.20% Li₂O.

o The primary lithium minerals identified were spodumene and petalite.

FINANCIAL

§ Average C1¹ operating cash costs for Q2 2024 and H1 2024 are within management guidance for the year, of between USD17 000 and USD20 000 per tonne of contained tin, at USD19 560 and USD18 161 respectively.

§ Average C2² operating costs for Q2 2024 and H1 2024 are within management guidance for the year of between USD20 000 and USD25 000 per tonne of contained tin, at USD22 252 and USD20 796 respectively.

§ All-in sustaining cost ("AISC") ³ for Q2 2024 within and H1 2024 below management guidance for the year of between USD25 000 and USD30 000 per tonne of contained tin, at USD26 671 and USD24 662 respectively. The stripping ratios have begun to decrease as the new ore is reached through the push-back.

§ Approximately USD10 million (GBP7.7 million) raised through issuance of unsecured convertible loan notes. Proceeds mainly targeted at the expansion of the tin, tantalum, and lithium exploration and production circuits. (see announcement dated 18 July 2023).

§ USD25 million financing with Orion Resource Partners ("Orion") was updated and will potentially be completed in the quarter ending November 2023. (See announcement dated 15 August 2023).

§ Conclusion of NAD100 million (cUSD5.8 million) Development Bank of Namibia ("DBN") financing occurred after the period end, on 5 September 2023.

o Initial drawdown of the facility on 12 September 2023.

§ Cash balance on 31 August 2023 was USD7 million (GBP6 million).

CORPORATE

§ Strategic partner process discussions ongoing with parties that have met the strategic criteria.

Anthony Viljoen, Chief Executive Officer, commented:

"Our main activity over the quarter involved the completion of commissioning of the lithium pilot plant. The completion of commissioning is key to expediting the metallurgical testwork that is essential to incorporating the lithium circuit into the Run of Mine production. The main objective of the testwork programme is to determine the optimal processing facility for extracting consistent, homogenous, saleable concentrate for both the chemical and industrial lithium markets.

The operational team has been performing extremely well on the existing plant annually. Therefore, the potential additional lithium revenue credits from the integration of the lithium plant to the main production circuit, could substantially enhance total revenue. The conclusion of several work streams as well as the completion of key financing partnerships this quarter, has notably strengthened the Company's balance sheet for a transformational period of growth and development."

OPERATIONAL SUMMARY

Table 1: Unaudited Uis Mine quarterly production and cost performance

Description	Unit	Q1 FY 2024	Q2 FY 2023	Q2 FY 2024	H1 FY 2024	H1 FY 2023	YoY % Δ Quarterly	YoY % Δ Interim	QoQ % Δ
Feed grade	% Sn	0.151	0.145	0.161	0.156	0.147	11%	6%	7%
Plant processing rate	tph	135	100	138	136	99	39%	0%	3%
Ore processed	t	214 467	134 315	232 154	446 621	286 558	73%	56%	8%
Tin concentrate	t	359	214	398	758	455	86%	67%	11%
Contained tin	t	216	133	238	454	287	79%	58%	10%
Tin recovery	%	67	69	64	65	68	-7%	-2%	-5%
Plant availability	%	91	89	92	92	89	3%	3%	1%
Plant utilisation	%	79	69	83	81	74	20%	10%	5%
Uis mine C1 operating cost1	USD/t contained tin	15 741	22 903	19 560	18 161	20 094	-16%	-10%	24%
Uis mine C2 operating cost2	USD/t contained tin	18 235	25 245	22 252	20 796	22 668	-12%	-8%	14%
Uis mine AISC³	USD/t contained tin	21 377	29 282	26 671	24 662	25 812	-9%	-5%	25%
Tin price achieved	USD/t contained tin	25 149	22 975	25 183	25 912	25 525	10%	2%	0%

¹C1 refers to operating cash costs per unit of production excluding selling expenses and sustaining capital expenditure associated with Uis Mine.

²C2 operating cash cost is the C1 amount including selling expenses (logistics, smelting and royalties).

³All-in sustaining cost (AISC) incorporates all costs related to sustaining production, capital expenditure associated with developing and maintaining the Uis operation as well as pre-stripping waste mining costs.

Safety performance

There was a single LTI incident during the quarter. However, the operation's safety record continued to improve over the quarter from a LTIFR of 0.95 at the end of Q1 FY 2024 to 0.86 at the end of the quarter under review. The continued improvement in safety is the result of the implementation of safety culture programmes supported by independent external safety audits.

Increased volumes

Tin concentrate production increased by 86% to 398 tonnes resulting in a 79% increase in contained tin to 238 tonnes YoY. The plant processing rate increased by 39% YoY and 3% QoQ to 138 tph due to the positive impact of the modular expansion implemented in Q3 FY 2023. All costs in the quarter decreased YoY due to the economies of scale from higher volumes and improved efficiencies. Despite the QoQ increases, the cash costs and AISC were mostly within the management guidance except for the H1 2024 AISC figures that were below guidance.

As previously disclosed, the Company decided to expedite the waste stripping of the mining pit, which resulted in an accelerated pushback to access ore and inadvertently a spike in the quarter stripping ratio to 4.9 (Q1 2024: 2.3). Stripping ratios have begun to decrease as the ore is reached, and management expects the ratio for H2 FY 2024 to be 3.9 resulting in an annual ratio of 3.8. The lower recovery rates in the quarter were mainly due to the increased throughput and significantly finer ore processed. The costs of this however, remain within previous management guidance.

LITHIUM, TANTALUM development & METALLURGY UPDATE

Completion of the Lithium Pilot Plant commissioning

Andrada completed the commissioning of the Pilot Plant with the testing of samples to determine the optimal process for lithium extraction from all three mining licences commencing in October 2023. The feed from Uis will constitute both run of mine ("ROM") material and the discard from the tin processing plant, whilst that from Lithium Ridge and Spodumene Hill will be ROM material.

The Pilot Plant is also targeted to produce a minimum of 2 400 tpa of saleable concentrate for glass-ceramics off-takers. To date, the Company has sent high purity petalite concentrate produced off-site to several potential customers and discussions to conclude an initial sale of lithium product are advanced. The Company believes that the concentrate is also potentially suitable as feedstock for lithium refineries producing lithium carbonate or lithium hydroxide for the battery manufacturing industry.

Completion of the Tantalum Circuit commissioning.

Similarly, the commissioning of the Tantalum Circuit was successfully completed, and it is currently being optimised. During commissioning, approximately 225 Kg of tantalum was produced. Tantalum concentrate is used to produce a range of tantalum chemicals or refined into metal for use in niche metal products or alloys. Tantalum is essential for high-performance applications such as capacitors, superalloys, and electronics for aerospace, military, and consumer use. Current tantalum prices for 25% Ta₂O₅ are as high as USD170 000 per tonne⃰.   

EXPLORATION PROGRESS UPDATE

Mining licence 129: Spodumene Hill

An initial drill programme of 17 holes over the B1 and C1 pegmatite bodies was completed during the quarter All the drill holes returned positive results with spodumene being identified in all holes drilled (see announcement dated 6 July for full details of these results). The programme returned weighted average grades of up to 1.38% Li₂O and 285 ppm tantalum. The results of this programme highlight the mineral potential of Spodumene Hill. The Company has initiated a metallurgical programme to investigate the optimal beneficiation process for the recovery of both lithium and tantalum, whilst also producing tin as a by-product.

⃰Argus Non-Ferrous Markets, Issue 23 - 174.Monday 11 September 2023

Mining licence 133: Lithium Ridge

Lithium Ridge infill channel sampling results confirmed the existence of continuous mineralisation at surface over a 6 km strike length. The primary lithium minerals identified were spodumene and petalite and the weighted average of the 27 highest lithium grade channel sample lines amounted to 179 m at 1.20% Li₂O. (See announcement dated 29 August 2023).

Post-period, initial results for 14 out of 24 holes from the Lithium Ridge RC drilling programme reported notable lithium intersections with up to 2.13% Li₂O. (See announcement dated 6 September 2023).

Off-site testing update

Metallurgical test work to date has focused on the concentration of petalite due to its prevalence in all the mining areas. Lithium recovery has therefore been focussed on petalite recovery, whilst the feasibility of concentrating other lithium bearing minerals from the deposit is also being investigated. Testing for spodumene is planned to commence in Q4 FY2024. Three technologies are being explored to determine the optimal solution to extract petalite. Test work has indicated that it may be possible to upgrade ore to a saleable concentrate solely through DMS technology. Transfer of off-site DMS and XRT testing to the Pilot Plant is currently on-going.

FINANCE

Orion Resource Partners USD25 million financing

In August 2023, Andrada signed binding documentation for an updated, conditional USD25 million funding package with Orion. The financing is conditional on the satisfaction of requirements customary with transactions of this nature and shareholder approval of certain resolutions at the Company's Annual General Meeting which is to be held on 29 September 2023. (see announcement dated 15 August 2023). Funding is expected to be completed around the end of September 2023.

Development Bank of Namibia ("DBN") funding

Post-period end on 5 September 2023, DBN confirmed that all conditions had been fulfilled or waived for the finalisation of a N$100 million (USD5.8 million) financing. The proceeds are ring-fenced for implementation of the Uis Mine Stage II Continuous Improvement Project. (See announcement dated 5 September 2023). The Company has drawn N$50 million from this facility to date.

Cash balance

The combined cash and cash equivalent balance on 31 August 2023 was USD7 million (GBP6 million). During the quarter the available funds were mainly utilised for the commissioning of the Lithium Pilot Plant and the Tantalum Circuit.

CORPORATE

Strategic process update

The strategic process to identify an appropriate partner to participate in the lithium development is progressing well. Discussions are ongoing with parties that have met the strategic criteria and they are expected to continue beyond 30 September 2023. Meanwhile, the Company is focused on completing the workstreams required to finalise the process. Further updates on the strategic process will be communicated in due course as appropriate.

Glossary of abbreviations

FY	Financial year for the period March to April
GBP	British pound sterling
LTI	Lost time injury
LTIFR	Lost time injury frequency rate
ppm	Parts per million
Sn	Symbol for tin
t	Tonnes
tph/a	Tonnes per hour/annum
USD	United States Dollar

   Contact

Andrada Mining Limited Anthony Viljoen, CEO Sakhile Ndlovu, Investor Relations	[phone] [e-mail]
Nominated Adviser
WH Ireland Limited Katy Mitchell	[phone]
Corporate Adviser and Joint Broker
H&P Advisory Limited Andrew Chubb Jay Ashfield Matt Hasson	[phone]
Stifel Nicolaus Europe Limited Ashton Clanfield Calum Stewart Varun Talwar	[phone]
Tavistock Financial PR (United Kingdom) Jos Simson Catherine Drummond Adam Baynes	[phone] [e-mail]

About Andrada Mining Limited

Andrada Mining Limited, formerly Afritin Mining Limited, is a London-listed technology metals mining company with a vision to create a portfolio of globally significant, conflict-free, production and exploration assets. The Company's flagship asset is the Uis Mine in Namibia, formerly the world's largest hard-rock open cast tin mine.

An exploration drilling programme is currently underway with the aim of expanding the tin resource over the fourteen additional, historically mined pegmatites, all of which occur within a 5 km radius of the current processing plant. The Company has set a mineral resource target of 200 Mt to be delineated within the next 5 years. The existing mine, together with substantial mineral resource potential, allows the Company to consider economies of scale.

Andrada is managed by a board of directors with extensive industry knowledge and a management team with extensive commercial and technical skills. Furthermore, the Company is committed to the sustainable development of its operations and the growth of its business. This is demonstrated by the manner in which the leadership team places significant emphasis on creating value for the wider community, investors, and other key stakeholders. Andrada has established an environmental, social and governance system that has been implemented at all levels of the Company and aligns with international standards.

 

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