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Myanmar militia are threatening to suspend production in areas of the country from August 1st, will impact supply to China significantly.

However, we note the strategic funding process may eliminate the need for cash from Orion, while ATM assesses further

funding options for Phase 2. Our increased petalite price assumption drives a 40% uplift in our DCF-based, risked valuation for ATM to 35 GBp per share with +483% upside

TP 35p

Andrada Mining’s (“ATM”) transformation from junior tin producer to districtscale lithium developer in Namibia has yet to be fully appreciated by the market,

in our view. ATM is set to become the first UK-listed producer of lithium upon

commissioning of its pilot facility at Uis over the coming weeks, having confirmed

a significant M&I Resource in February and a first petalite bulk sample in May.

We believe the strategic process to select a funding partner for Uis following

unsolicited interest from multiple parties could lead to considerably larger share

price gains than the 13% rally in ATM since it was announced. We note, for

example, Kodal Minerals’ shares have risen more than three-fold through its

process, while precedent transactions and peer-group multiples suggest that ATM

should be trading on a multiple >4x where it is currently. Even this

underestimates the long-term value of ATM, in our view, with the prospect of

resource expansion, modular production growth through the addition of oresorting technology, and ongoing lithium market tightness driving a 40% uplift in

our DCF-based, risked sum-of-the-parts to 35 GBp per share, +483% from the

current share price.

T4, given the terms of the Orion 'offer', I'd be happy for them to exit stage left with the (soon, hopeful) relationship being brokered by Barclays as sufficient to plug this gap and more. The Orion deal also involves management participation in the running of the operation, something I can't see being palatable to the ATM team..?

I just hope ATM haven't committed on spending to the extent that they have to do this deal at punitive rates to the company - the interest rate on the DBN loan is eye-watering enough!

Rojo going the same way as Bojo, and liked just as much..

Thanks for posting Vike, sure we'll see this news trickle down through more formal channels shortly..

And is Namibia really the 'perfect' African mining jurisdiction..?

In the LSE interview, AV suggested there were no limits on exporting Li concentrate from the country - i'd like to see in writing. But they may want to benefit in alternative ways, although the local community already has a meaningful stake in Uis..

Namibia – Paladin Energy saw its share price falling >20% today on the back of the country’s mines and energy minister Tom Alweendo comments for greater government control of mining projects.

• The minister argued for a free carried interest in al mining companies and petroleum production with comments seem to be inline with a March 1 statement that said high levels of foreign ownership in the Namibian mining industry was “untenable”.

• Paladin holds a 75% interest in the Langer Heinrich Uranium Project that is being restarted with first production expected early next year.

• Namibia is one of the biggest African producers of diamonds and the largest of uranium.

Q. When did Andrada or any of the paid research brokers it works with actually provide a 3-5 year revenue and earnings projection for the company?

A. I can’t recall, it’s seriously been that long. It’s one thing for AV to claim the market doesn’t understand the value ATM is sitting on, and has sleepless nights worrying over the low share price, it’s actually another for the company to provide this. The last business plan presentation was back in 2021..? The revenue and earnings targets quoted by H&P were based on securing $400m of finance to complete phase 2, which seems to have been conveniently forgotten.

You can’t moan about the market failing to understand the real value of Andrada, when you’ve failed to provide any guidance on that, or demonstrate how that’s going to be reached over what time period.

The involvement of Barclays seems to have finally shown the need to focus on the financials, about time, look forward to seeing this NPV valuation as soon as it’s ready.

Indeed I am Tanz, and been happily accumulating on the quiet days.. :)

If you email me at bundeera@yahoo.co.uk I can share the news with you…

ATB

PD

I decided to upgrade to get the note, and a few others- 26 pages long, well written, and very positive.

Shard capital have released an update on Aminex this morning, it’s available on research tree but behind a paywall. I don’t have the upgraded access but in case someone on the board has, think it might be an interesting read..

Check this link to a presentation from last year, both petalite and spodumene can be processed to a chemical grade suitable for batteries, but there's a cost involved:

https://andradamining.com/company-presentations/2022-08-18-ATM%20-Lithium-Webinar.pdf

Their guidance for end Feb '24 production is 1400-1500 tonnes, so well below the 2000 required by the Orion termsheet to avoid penalties. I would hope this has been part of the negotiation since last September, and is no longer so ridiculously skewed against ATM. I'd ask about the Orion package as well, but I doubt I'd get any sort of reasonable answer - the fact that it sends the AISC up to the $25-30k band by itself tells you how bad a deal it is for ATM. Was it really the best package on the table? I'm still hopeful it falls through and Barclays has an ace up it's sleeve to bring in a more realistic option, which includes the Li as well.

I have asked AV to elaborate on the Namibian government's decision to require all lithium mined in the country to be processed in-country before export, as Zim has done. How will this affect the timeline for initial off-take agreements, and also for the much larger production volumes that are expected. Does the restriction mean that even the early offtake volumes could be restricted? It doesn't seem clear at present what the company will be allowed to export if this ban comes into effect, which it seems is pretty likely.

https://neweralive.na/posts/lithium-boom-on-the-horizon

Update from SP Angel with some projected revenue numbers for the pilot plant:

Andrada Mining (ATM LN) 5.95p, Mkt cap £88m – Initial petalite concentrate production from pilot plant tests

• Andrada Mining (formerly Afritin) reports that it has produced 0.5tonnes of petalite concentrate at an average grade of 4.16% Li2O from pilot plant work on material from its Uis mining licence in Namibia.

• The initial concentrate product was generated offsite by “Bond Equipment … a specialist in mineral processing solutions and a test work provider in South Africa” but the company confirms that “Construction of the on-site lithium bulk-sampling pilot plant is on schedule and on budget to be completed in June 2023”.

• Once it is completed, the on-site pilot plant provides 20tph of processing capacity and is expected to produce between 2,400-10,000tpa of concentrate which “could generate annual revenues of between US$5million to US$20 million at the upper levels of production assuming an average grade of 4.0% Li2O and an average petalite price of US$2,000”.

• In the meantime, Andrada Mining says that “Offsite pilot DMS … [dense heavy medium separation] … processing at Bond is ongoing, and the Company expects to produce more than ten tonnes of concentrate from these samples”.

• Concentrate product from the testing programme “will be used to conduct test work with potential offtakers, including petalite conversion to lithium carbonate and lithium hydroxide”.

• Commenting on the test work, CEO, Anthony Viljoen, explained that the production “of our first saleable bulk lithium concentrate … moves us one step closer to full-scale lithium production”.

• The company explains that its “test work to date has focussed on the concentration of petalite due to its prevalence in the current mining area on ML134. However, spodumene beneficiation has been included in the future work programme, in response to the discovery of spodumene occurrences on ML133 and ML129”.

• The company also takes the opportunity to “confirm that the senior debt facility for USD 5,5 million (N$100 million) with the Development Bank of Namibia, as detailed in the announcement of 5 July 2022 … is now on track for contractual closure at the end of May 2023, with initial drawdown in June 2023 … [and that the US$25m funding facility with] … Orion Global Resource Fund … remains subject to the finalisation of an intercreditor agreement between Orion and the senior lenders DBN and Standard Bank”.

Conclusion: Pilot plant testing has delivered the first lithium concentrate from Uis providing material for further testing by potential off-takers. Completion of the on-site pilot plant is expected in June providing the capacity to produce between 2,400tpa and 10,000tpa of concentrate generating revenues of up to US$20m.

Further £30m of buybacks being proposed at next weeks AGM, in addition to £11m outstanding from current program. Float is shrinking fast here.

Andrada Mining (“ATM”) has announced several unsolicited approaches from

international entities to accelerate production from its lithium portfolio through a

potential strategic partnership in its Uis project in Namibia. A global investment

bank has been appointed to provide a structured assessment of potential partners

based on financial and technical merits. After the expansion of the Phase 1 tin

operation in 2022, Uis achieved record quarterly tin concentrate output for the

three months to Feb’23. However, ATM’s already cash-generative tin operation is

rapidly transforming into an attractive lithium growth story, as it proves up its

ability to deliver a commercially attractive petalite concentrate product. Today’s

release confirms international recognition of Uis as a key future lithium producer.

In Feb’23, Andrada upgraded its Li2O Resource within the V1/V2 pegmatite to the

Measured & Indicated category (272kt contained) and expects to install a lithium

pilot plant in Jun’23. Bulk metallurgical test work is also underway to inform a

DFS on commercial-scale lithium production. The market has yet to recognise the

value of ATM’s pivot to lithium, in our view. We estimate the stock currently

trades on an EV/contained LCE eq. resource of US$124/t, a 71% discount to the

median of early-stage lithium peers and 79% below historic transactions.

Hot lithium market bodes well for Andrada valuation

We note corporate activity in the broader lithium space remains busy with Rio

Tinto reportedly receiving pitches for lithium deals. Livent and Allkem this week

announced a US$10.6bn merger, bringing together assets on four continents

including brines in Argentina and hardrock mines in Quebec, to create the world’s

third largest producer. In Feb, LG Chem invested US$75m in Peidmont and

committed 200kt of spodumene concentrate offtake. Elsewhere, Albemarle’s

US$3.7bn bid was denied by Liontown in Western Australia in March. More

recently, the Chilean Government has proposed a partial nationalisation of its

lithium industry, which could spur further international dealmaking outside Chile

by major players such as SQM and Albemarle, in our view.

Lithium deals continue as China competes with West for dominance in battery metals supply chain

• M&A continues at a pace in the lithium sector with a new deal every few weeks in the space.

• Allkem, headquartered in Argentina, has struck a deal to merge with Livent another, similar lithium chemicals group.

• The combined company has a value of around $11bn with Allkem shareholders owing some 56% of the merged company.

• The combined companies plan to produce 250,000tpa of Lithium carbonate by 2027 potentially making it the world’s third largest lithium producer with around 14% of global lithium production.

• Total demand for Lithium carbonate equivalent is forecast to rise to around 1.8mt on 2027 CRU projections with over 40% of new supply either classed as possible, probable or committed though we feel that much of the ‘committed’ category may still be subject to substantial extraction technology risk.

• China currently controls around 70% of global lithium production. 44% of global lithium chemical production, 78% of cathode production and 70% of cell manufacturing according to The Meghalayan.

• Recent lithium deals:

o Allkem merger with Livent $10.6bn valuation.

o Arcadia $422m acquisition by Huayou Cobalt (China) for its lithium mine in Zimbabwe

o Albemarle’s US$3.7bn offer for Liontown has so far been rejected.

o Kodal Minerals deal with Hainan Mining (Fosun).

o Ganfeng acquiring Lithea with assets in Argentina

o Ganfeng takeover of Bacanora with assets in Mexico

o Rio Tinto $825m acquisition of Rincon

o Galan acquisition of Greenbushes South

o IGO acquisition of 49% of Tianqi (Chinese) giving it a 24.99% stake in the Greenbushes spodumene mine for A$1.4bn (Albemarle holds the other 49%)

o IGO and Tianqi $136m acquisition of Essential Metals

o CATL (China) acquired Millennial Lithium for $945m. CATL is also looking to develop lithium in Bolivia despite the chemical challenges Bolivian brines present

o CATL recently acquired

o Zijin Mining acquired NeoLithium for $1.51bn. Zijin also agreed to acquire Dunan Holdings Group’s 70% stake in the Tso Salt Lake

o Sibanye Stillwater acquired 50% of Rhyolite Ridge in Nevada from Ioneer for $490m

o Sibanye Stillwater also raised its stake in Keliber in Finland to 85%

o Sinomine Resources acquired Bikita Minerals for $192m for assets in Zimbabwe

Essentially that the financing package which ATM has been trying to put in place for 8 months seems dead in the water, they have finally woken up to the fact that large scale production to meet their long-term targets is beyond them as an independent company and from here it's either as a JV or possible sale to another larger mining company. Been saying the same for several years now. Let's see what deal they can do with Barclay's help.

Bit of background on Motsepe and ARC, BEE partner to Sanlam in SA, strong credentials.

Patrice Tlhopane Motsepe (born 28 January 1962) is a South African mining billionaire businessman. Since 12 March 2021, he has been serving as the President of the Confederation of African Football.[1] He is the founder and executive chairman of African Rainbow Minerals, which has interests in gold, ferrous metals, base metals, and platinum. He sits on several company boards, including being the non-executive chairman of Harmony Gold, the world's 12th largest gold mining company, and the deputy chairman of Sanlam.

In 2003, Motsepe created Ubuntu-Botho Investments (UBI) (and in 2019 he owned 55% of it). In 2004 UBI entered into a BEE deal with insurance and financial services company Sanlam.[11] That deal ended in 2014 when the debt had been paid and UBI acquired 13.5% of Sanlam but UBI has a 18.1% voting stake in Sanlam as its BEE partner. UBI then started African Rainbow Capital (ARC), a wholly owned subsidiary of UBI. ARC's joint chief executive is Johan van Zyl, former executive of Sanlam. ARC has holdings in more than 40 companies, including TymeBank, industrial group Afrimat, agricultural company BKB, telecommunications company Rain, luxury property estate Val de Vie, and a minority stake in Alexander Forbes, the pension fund administrator.[11]