Australian Tin Developer Predicts: Global Supply Shortfall By 2016

An Australian tin developer has predicted a supply gap growing in the global tin market as early as 2016 – even if growth in demand in the interim period is modest.

Addressing the first day in Perth today of the three day Paydirt 2014 Africa Down Under Conference, ASX-listed Kasbah Resources Ltd Chief Operating Officer, Mr Mike Kitney, said the dynamics in the international tin market were shifting away from smelters to the owners of tin resources.

“As a result, there is some increasing supply side fragility,” he said.

“This is fuelling corporate activity in the sector as opportunities exist for more western listed tin producers that can deliver tin assets of scale – a rare commodity,” Mr Kitney said.

“The market has now entered a phase where upstream tin users are demanding new, reliable tin supply – but with supply projections suggesting production of refined tin by 2016 of 338,444 tonnes against a demand curve topping out at 360,990 tonnes.

“This is a supply shortfall of more than 22,000 tonnes – a not insignificant figure in the global tin market.”

Mr Kitney pointed to forecasts earlier this year suggesting that only seven out of 157 known tin projects had any realistic chance of getting into production by 2020.

Within this picture, only two projects, the Bofedal 11 project in Peru and Kasbah's Achmmach project in Morocco, were economic on today's price fundamentals.

Achmmach, 75% owned by Kasbah, is targeting a maiden production start-up of 5,300 tonnes of tin concentrate – a rate which would rank the Australian developer as the eighth largest tin producer in the world.

The project has a Proven and Probable resource of 8.45 million tonnes grading 0.78% tin for 65,400 tonnes of concentrate with its Definitive Feasibility Study suggesting a mine life of nine years at a recovery rate of 70.3%.

Using a London Metals Exchange average of US$23,025 per tonne, Achmmach has an estimated NPV of US$126 million and an Internal Rate of Return of 23.2%.

Mr Kitney said financing talks were well underway with final approvals anticipated by the end of calendar 2014 – targeting first production in 2016.

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