Andrada Mining. Regulatory News (ATM)

20 March 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")

Quarterly, FY 2023 production and Company update

Lithium development on track and production capacity significantly increased.

Andrada Mining Limited (AIM: ATM), an African technology metals mining company with a portfolio of mining and exploration assets in Namibia, provides an unaudited production update for the Uis Mine ("Uis") for its fourth quarter ("Q4") and full financial year ended 28 February 2023 ("FY 2023").

Highlights

Lithium

· Anticipated completion of the lithium bulk-testing pilot facility in June 2023.

· Metallurgical testwork done by Geolabs Global, an independent test facility in South Africa has identified a process that could produce a lithium concentrate suitable for buyers' specifications in industrial and battery feedstock markets.

· Drilling on the ML129 licence area (B1C1 pegmatites), to investigate the visible spodumene mineralisation, commenced in January 2023.

· Field mapping of drill targets on the ML133 licence area (Nai Nais pegmatites) finalised.

· Detailed exploration update scheduled for release in June 2023.

· Andrada is exploring several options for achieving early lithium revenues in the second half of the 2023 calendar year including concentrate production from the bulk pilot plant.

Operations

· Record quarterly production of 361 tonnes of tin concentrate in FY Q4 2023, containing 214 tonnes of tin metal.

· 19% increase in tin concentrate production year-on-year ("YoY") to 960 tonnes (FY 2022: 804 tonnes).

· 18% increase in contained tin to 586 tonnes (FY 2022: 496 tonnes).

· Lowest ever quarterly all-in sustaining costs ("AISC") at USD 18,236 per tonne of contained tin in Q4 2023.

· Full year AISC fell by 9% to USD 24,939 YoY.

· Commencement of confirmatory drilling in February 2023 to upgrade historic resources on proximal pegmatites.

Financing

· Significant progress towards fulfilling the precedent conditions for the Orion Resource Partners ("Orion") and the Development Bank of Namibia ("DBN") financing.

· Cash balance at the end of February 2023 increased by 16% to GBP 8.6 million (USD 10.3 million) from GBP 7.4 million (USD 9.9 million) on 28 February 2022.

Management restructuring

· Appointment of Frans Van Daalen as Chief Strategy Officer ("CSO") to drive business development strategy, with a focus on accelerating the lithium project and Chris Smith as the Chief Operations Officer ("COO"), both non-board positions.

Operational guidance for the 12 months ending 29 February 2024 ("FY 2024")

· Tin concentrate production guidance of between 1,400 tonnes and 1,500 tonnes, an expected increase of between 45% to 56% YoY, due to the plant expansion ramp-up.

· Average operating cash costs excluding selling expenses defined as C1 operating cash costs are projected to be between USD17,000 and USD20,000. These are costs within management's control that are expected to remain relatively flat from levels in Q4 2023 (post expansion) and subject only to exchange rate fluctuations.

· Average operating cash cost per tonne produced including selling expenses (shipping, freight, and royalties) projected to be  between USD20,000 and USD25,000 and AISC  between USD25,000 and USD30,000. These costs are expected to rise mainly because of a temporary increase in stripping rates for the V1/V2 pit and the inclusion of the 4.5% royalty costs associated with the proposed Orion transaction. The pushback width in the pit has increased from approximately 50 metres to 75 metres in line with the expanded capacity and the provision of safer and more efficient operations.

The guidance excludes potential lithium and tantalum revenues. Management will provide guidance following the commissioning of the lithium pilot plant and tantalum circuit expected in June 2023.

Anthony Viljoen, Chief Executive Officer, commented:

"The exceptional fourth quarter production performance is a demonstration of the execution capability of Andrada's management team. We have made excellent progress in realising the significant economies of scale inherent in this uniquely large ore body. We believe these economies of scale and the bringing online of lithium production, will rapidly enhance the value of this outstanding asset over the coming months.

The imminent completion of the bulk testing pilot facility will enable Andrada to expedite the production of lithium, which could place the Company as one of the foremost lithium producers on AIM. Concurrent drilling programmes on the proximal pegmatites within the ML 134 licence area aim to increase the size and confidence of this resource. Furthermore, the recently commenced drilling programmes on adjacent licence areas are designed to confirm our belief that the Erongo region is one of the emerging tech-metals provinces globally. Andrada's significant first mover advantage is its ability to capitalise on the existing proven operational footprint.

The completion of an inaugural Sustainability Report paves the way for Andrada to not only be a producer of metals for the green transition but also play its role as a responsible and sustainable resource company of the future."

Operational summary

Table 1: Uis Mine actual quarterly production and cost performance

¹ C1 refers to operating cash costs per unit of production excluding the selling expenses

2 Operating cash cost is the C1 including selling expenses (logistics, smelting and royalties), it excludes sustaining capital expenditure associated with Uis Mine.

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

* Production period includes a five - week shutdown of the processing plant from 7 September 2022 - 13 October 2022 which was required to complete the construction and commissioning of the expanded crushing and tin concentrating circuits.

LITHIUM

Metallurgical testing update

The metallurgical test work programme is focussed on producing a lithium concentrate suitable to both the industrial lithium market and the battery feedstock market. Laboratory scale test work has established three suitable technologies for beneficiating lithium in the ore, namely DMS, flotation and sensor-based ore sorting.

Test results from Geolab Global, have repeatedly produced high-grade petalite concentrate (± 90% petalite, > 4.0% Li₂O) displaying low contaminant levels (< 0.05% Fe₂O₃, < 1.0% alkalis). The Company is now conducting bulk scale DMS, flotation and ore sorting test work to optimise metallurgical parameters and to determine ore variability. The results of the bulk test work, and trials at the lithium pilot plant, will inform a definitive feasibility study for lithium expansion to the current processing plant.

Lithium pilot plant and tantalum circuit construction on schedule

The lithium pilot plant project is progressing to schedule, with the completion of construction targeted for June 2023. The project is approximately 60% complete with all long lead equipment ready for shipment to the mine. The major plant equipment is being manufactured off-site and the earthworks have been completed. The tantalum circuit construction is approximately 50% complete and on track for full completion in June 2023.

Meanwhile, several early revenue options are being evaluated such as potential output of a lithium concentrate from the lithium bulk testing facility.

Progress on the lithium exploration programme over the mining licences

Mining licence 129: B1 C1 pegmatites

Multiple exploration programmes were initiated during Q4. A drill programme was initiated on the ML129 mining licence during January 2023 to investigate the existence of spodumene mineralisation within the B1 and C1 pegmatites. This on-going programme comprises 17 diamond drill holes and to date all completed holes have yielded visual confirmation of spodumene within the pegmatite intersections. The analysis of drill core will begin immediately after the completion of the programme, targeted for end of March 2023. 

Mining licence 133: Nai Nais pegmatites

A first-pass Reverse Circulation drilling programme will commence in April 2023 on the Nai-Nais (ML133) licence area to investigate the subsurface continuation of lithium and tin mineralisation identified during the 2022 calendar year mapping and sampling programme. An infill surface exploration programme started in January 2023 to enhance the data resolution and to confirm the continuity of lithium mineralisation along an identified strike length of 6km.

OPERATIONS

Successful modular expansion of existing operations

Tin concentrate production increased by 19% to 960 tonnes resulting in an 18% increase of contained tin to 586 tonnes YoY confirming the success of the mine expansion. This double-digit increase was achieved despite the requisite plant shutdown that resulted in 35% loss of production in the third quarter (Q3") FY 2023. Production capacity has increased by approximately 70% because of the expansion programme. The significantly higher tonnage output reduced operating costs and AISC by 12% and 9% respectively YoY, confirming the view that large scale bulk mining at Uis is amenable to favourable economies of scale.

Resource expansion

The Uis proximal drilling campaign, on the ML134 mining licence commenced in February 2023 and aims to validate the historical drill information and increase confidence in the mineral resource classification for tin. This campaign will also provide initial information on the lithium and tantalum endowment of these pegmatites. Approximately 78 drill holes have been planned for an initial programme that targets the southern cluster, following which an investigation will target the pegmatites north of the V1V2 resource. An improvement in the mineral resource confidence classification will allow for the inclusion of the proximal pegmatites into the techno-financial valuation of the project.

FINANCE

Cash balance

The combined cash and cash equivalent balance on 28 February 2023 was GBP 8.6 million (USD 10.3 million), provides sufficient capital for the Company to execute its near-term capital commitments for the pilot facility and tantalum circuit, whilst in the interim the various conditions precedent for the additional financing are being completed.

Orion Resource Partners ("Orion") and Development Bank of Namibia ("DBN") funding update

The conditional finance arrangements for Orion and DBN, previously announced on 5 July 2022, 15 September 2022, and 17 November 2022, have been combined into a single legal workstream to reduce the timeline to financial closure. The Company still expects to complete the process by the end of May 2023. Further updates will be provided in due course.

EXECUTIVE STRUCTURE

Structural changes to align with strategic intent.

Andrada has strengthened its management structure by appointing Chris Smith as the Chief Operations Officer, taking over from Frans Van Daalen, who has been appointed to lead the business development strategy as the CSO from February 2023, both are non-board positions.

Chris Smith is a qualified chemist with a career spanning over 36 years at various senior management levels in the mining and metallurgical industries. He joined Andrada in 2020 as the General Manager in charge of operations, during which time he successfully ramped up production ahead of the scheduled timelines and improved safety performance by 60%. Chris has significant experience in process optimisation and a proven track record of stimulating operational performance. In the past six months, he has surpassed the targets for plant expansion and will be instrumental in optimising the operational processes for the next level of growth.

Frans Van Daalen is a qualified engineer with over 20 years of operational and technical experience across multiple commodities. He was a co-founder and director of VBKom, a mining and industrial engineering consultancy for approximately 10 years. Frans joined the Company at inception and is well placed to drive the Company's development as a significant global lithium producer. 

Glossary of abbreviations

Glossary of terms

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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. 

Lithium laboratory test work completed during the 2022 calendar year indicated a high-grade, ultra-low iron lithium petalite concentrate. The test work to convert lithium petalite concentrate to battery-grade lithium hydroxide was initiated with Nagrom, a leading Australian processing company, and commercial engagements with lithium petalite concentrate off - takers are on-going. 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 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 deep 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 how 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 which has been implemented at all levels of the Company and aligns with international standards.

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