 Welcome back everyone to Investor Intel. I'm Peter Clossey today. We have a new topic with an old friend Let's say hi to Christopher from Hull Garten and Co a world-renowned metal strategist. How are you sir? I'm very well. Thanks. I haven't talked to you for a couple of months. How you doing mr. Eccleston? I'm fine. I'm just we're just coming out of lockdown here rather than going into it like you are Okay, so today we have a new topic, which is tin. I'll tell you what I know about tin global shortage after World War one Global expiration then there was a surplus of tin and I've lost track since so over to you sir Tell us about tin. Um, well, what happened tins tins interesting where it's it's a metal that had an officially sanctioned hoarding campaign Where the international tin association built up a phenomenal stock in the 80s and It found it couldn't sell it and so the tin price collapsed and the tin price in you know Inflation adjusted terms has never recovered to the levels that it was back in the 1980s um And because of that, um, there's been an underinvestment um, most of the tin That's not coming out of china is actually a luvial tin. Um, so it comes from a big alluvial deposits in indonesia and malaysia and um, those deposits are easy to mine But the trouble is one it's pretty environmentally destructive But two they've been doing it for a hundred years and so they're running out of resources So now um, mine is being forced back to hard rock tin And um with a few exceptions most tin deposits are under one percent So you've got to move a lot of rock To get um that one percent. Okay. So Do we still have a shortage of tin in the world? Oh, absolutely. Uh, because what's happening as I said is that the alluvial deposits have Uh, you know getting phased out because they've been over exploited And then you've got the problem that uh, the tin price has been Not low, but it's been lower than it's been Uh, a good reason to go out there and look for it. And so, um for most of the last 10 years um There has been virtually no new production brought on Accepting for the company that we're going to talk about today And uh, that company is blessed with um a uh, a pretty great grade Which is between three and four percent. So it's three or four times the Sort of best you could hope for most other deposits. So that's a big kicker for them Right. So then let's talk about alpha min resources, which is a company new to me Yeah, alpha min is very interesting in that I was thinking the other day that in fact because of this big crash that happened in the In the 80s in the tin market due to the the failed attempt to corner the market There has not been another new tin major in the world Since the 1970s. So for 50 years there has not been a new tin major and um alpha min, even though it's only producing four to five percent of the global supply of tin um Is does definitely quantify as a major because um, there are very few companies Outside of china that are producing that amount and if they are have been producing that amount They're actually in decline. You know, there's there's companies like minsoor which operates in Bolivia and uh, brazil and then there are these various operators in indonesia and malaysia That are in decline, but uh five percent definitely makes you a major in the in the tin space So how long did it take for them to get that mine into production? Um, well actually building it has been A task that's taken them three or four years But the travails went on a lot longer as we know, um the drc, which is where they are located has been um to varying extents a conflict zone for the last 20 30 well in fact back to the 19 back to the 1960s or 1950s. I would even go back to sing leopold Yeah, no, exactly. So um, uh, but you know that the conflicts in the drc is enormous um, and uh the conflicts in in the drc move around um, and people regard it as mon uh, you know, it's all conflicted in many parts aren't and so the area where Alpha minis um in their mine, which is called bc is up in the northeast of the country Are near the border with uh, rwanda Uganda up the up the top most of the conflict these days is uh much lower down in the country But in 2015 their mind was very brief for what their project because it wasn't really built that day time Was invaded by uh guerrillas um Not the furry kite But uh, the the gun toting kind and they were in possession of the site for a few weeks and then departed But that you know colored perceptions for a while tin is on the um The list of conflict minerals of dodds frank Um, I don't know. Dodd frank has died the death or not. Um, but I think it did but um the conflict mineral View still rains and it is one of the five conflict minerals Mainly because of the fact that it was exploited in the drc by some of these rebel groups But you know when they invaded the site, um, bc had been a um an artisanal You know covered with hundreds of locals, you know, just digging a little pits and and ripping some material high-grade material out of the ground um It wasn't mine at that stage. It's only been since um, they've asked the rebels and Got things back in order that the mine has really advanced and it began production in the second half of 2019 So Usually when a mine starts up, you have hiccups You're burning through cash and after a couple of years you start to generate free cash. Are we there yet? Yes, we are That happened really in the second half of last year the first As you said the first few months had some hiccups because they had a bridge that got washed away And with infrastructure in these countries being very, you know, tenuous at best Um, there was only one bridge that could get their product out, but they got the bridge fixed And uh, so, you know, they had a period where they had would they were producing but they weren't actually selling So with piling up, but then, you know, eventually you clear the material out They had big rains at one point last year, you know, welcome to the tropics where they are Um, so, you know, they've dealt with all those issues. Uh, now it's stabilized. They've got their um their product Storming out the door because of the enormous demand and we haven't actually spoken about the tin price Um, because the tin price hit nearly 13 000 in the first weeks of um the pandemic last year It is now knocking on 26 000 pounds. It has actually got past 26 000 26 000 per ton. Yeah us dollars and um In fact in the last few months there have been trades done In a severely depleted a spot market at over 30 000 a ton Does it treat futures or all spot like uranium? Uh, no, it's both. It's both It's one of the metals that's been traded on the alamea since the alamea was found at 150 years ago Um, it has always been a traded metal. So there's no sort of smoke and mirrors to it Uh, what happened was in the last few months Due to shipping problems reduced chinese production reduced non chinese production um, uh, the warehouses uh of the big exchanges were totally depleted There was nothing there. There were a couple of days worth of metal and um parties were desperate for the metal And as we've heard um, you know in the auto industry, you know, we've heard about problems in semiconductor supply You know, who knows where the part of the problem in the semiconductor supply Was actually coming from the tin space Because you know for for semiconductor producers They can afford to pay up if they need a metal and they need it need it now There's no haggling involved. They said we need it. We'll pay 30 000 to get it for the soldering process so um The metal has doubled in price and that has been a mighty tailwind behind um, alpha minns earnings So while it's got a full year of earnings behind it now, um in 2020 where it made a small loss Um, we're expecting it to be making over 60 million dollars a year At the bottom line after minorities that that estimate in fact is based upon 23 000 a ton in our model Um, and the price is now 3000 higher. So most of that extra 3000 um It goes straight to the bottom line. So who knows where that wouldn't be? 75 million 80 million um from that much higher price So chris, I thank you for your time educating me on tin introducing me to alpha min I'll do my own research Uh, and as far as I can tell you are the first brave analyst To actually put out a report on this company. So good for you. Thank you Chris Eccleston metal strategist from hulgarten and co. Thank you for your time, sir Peter he was signing off be safe