Andrada Mining - A Promising New Lithium Play in Southern Africa

About Andrada Mining

Andrada Mining (AM) is an emerging lithium and tantalum producer focused on developing its flagship Tormin Mineral Sands Project located on the west coast of South Africa. AM is dual-listed on the Singapore Exchange and the Alternative Investment Market (AIM) of the London Stock Exchange. With construction of its pilot plant nearing completion and strategic partnerships in the works, AM offers investors exciting exposure to the high-growth lithium market.

Interview with CEO, Anthony Viljoen

Producing High-Quality Lithium Concentrate

AM has achieved a major milestone by successfully producing its first bulk lithium concentrate from the Tormin project. After extensive metallurgical test work to optimize the processing flowsheet, AM conducted pilot-scale processing campaigns offsite to generate this initial bulk sample. The concentrate produced is the lithium mineral petalite (Li2O Al2O3 8SiO2), a high purity lithium compound suitable for both the industrial and battery-grade markets.

With petalite selling at a significant premium to the more common spodumene concentrates, AM is poised to benefit from strong lithium pricing driven by surging demand from the electric vehicle and energy storage sectors. The company will now focus on ramping up consistent lithium concentrate production. Its onsite pilot plant in South Africa is on track for completion in June 2022, paving the way for larger-scale test work and initial small-scale commercial production.

Optimized Processing Flowsheet

A key accomplishment has been optimization of the beneficiation process to produce a high-quality petalite concentrate from the lithium-rich tailings at Tormin. As Executive Chairman Anthony Viljoen explained, AM undertook extensive test work programs offsite to finalize the processing flowsheet. Now, with its pilot plant nearing completion onsite, AM can transition to consistent production of petalite concentrates.

The beneficiation process results in low impurity levels, meeting the stringent quality requirements of lithium consumers in the glass and ceramics industries. With some additional processing, the petalite concentrate can also be refined into battery-grade lithium chemicals. AM is already engaged with potential offtake partners to assess larger-scale supply of its lithium concentrates.

Diversified Revenue Supports Lithium Focus

Importantly, AM generates strong cash flows today from by-product tin and tantalum production at Tormin, underpinning its lithium expansion plans. With current tin production of 1,000 tonnes per year, the company realizes $1-1.5 million in tin revenue monthly. This funds onsite operations and pilot plant development.

The tantalum circuit starting up in June 2022 will add another $2-2.5 million in monthly revenues at capacity. As Viljoen emphasized, the tin revenues pay for all operating costs at Tormin, so any lithium sales will be high-margin production. With existing diversified cash flows and upcoming debt facility proceeds, AM has funding in place to advance its lithium ambitions.

Strategic Partner Sought

While AM has demonstrated it can technically produce lithium concentrates, forming a strategic partnership is the next priority. The company recently appointed Barclays to manage the process of seeking an appropriate partner. As Viljoen noted, a strategic partner can offer two major benefits: technical expertise to maximize lithium recoveries and product quality as well as access to key lithium end-markets.

With Barclays running a formal process to engage potential partners, AM hopes to finalize a strategic partnership around Q3 2022. This will be a crucial step on the path towards larger-scale lithium production and establishing AM's global market positioning.

5 Key Takeaways for Investors

1. Near-term lithium producer with pilot plant nearing completion in South Africa.
2. Producing high-purity petalite concentrate suitable for both industrial and battery markets.
3. Existing cash flows from tin and tantalum production fund lithium expansion.
4. Seeking strategic partner to provide technical expertise and market access.
5. Undervalued relative to DCF valuation with sizable upside as lithium demand grows.

Conclusion

As a near-term lithium producer with modest capital requirements, AM represents a compelling investment opportunity. The company expects to ramp up consistent petalite concentrate production around mid-2022 once its pilot plant is online. Strategic partnering will further unlock the value of AM's lithium assets.

With first-mover advantage in South Africa, demonstrated production capabilities and strong lithium market tailwinds, AM warrants investor attention. The current discounted valuation relative to projected cash flows offers sizable upside potential. Investors should consider positioning in AM to capitalize on the electric vehicle revolution and rising lithium demand.