Andrada Mining: Unlocking Critical Mineral Value in Namibia with Polymetallic Approach & Lithium Potential

• Andrada Mining is a critical raw materials producer based in Namibia, focused on tin, tantalum, and lithium production.
• The company is cash flow positive, with tin and tantalum revenues covering operational costs, allowing lithium to potentially be produced at very low cost.
• Andrada is planning significant expansion, aiming to increase tin production by 60% in 6-12 months and targeting 40,000 tons of lithium concentrate production.
• The company has partnerships with the Development Bank of Namibia, Orion Resource Partners, and recently SQM for financing and development.
• Andrada has identified copper potential at its Brunberg West property, with grades up to 3%, adding to its polymetallic portfolio.

Unlocking Critical Minerals Potential in Namibia

Andrada Mining, formerly known as AfriTin Mining, is emerging as a significant player in the critical minerals sector, with operations centered in Namibia. The company's focus on tin, tantalum, and lithium production, coupled with its recent exploration success in copper, positions it uniquely in the global raw materials market.

Company Overview & Core Operations

Andrada Mining's primary asset is the Uis mine in Namibia, a historically significant tin mining operation that the company has successfully revitalised. The mine is now producing tin and tantalum, with lithium production on the horizon. CEO Anthony Viljoen describes the operation as a "polymetallic ore body," drawing parallels to some of the world's most productive mines:

"Some of the best and most productive mines globally are polymetallic ore bodies. If you compare things like Olympic Dam in Australia, they're incredibly productive, incredibly value active, and produce lots of revenues, which is what we chase."

This comparison to Olympic Dam, one of the world's largest mines operated by BHP, underscores the potential scale and significance of Andrada's operations.

Financial Performance & Cost Structure

A key strength of Andrada Mining's current operations is its positive cash flow position. The company reports that revenues from tin and tantalum production are covering operational costs, creating a unique opportunity for low-cost lithium production. Viljoen elaborates on the financial dynamics:

"All-in sustaining costs targets sitting around $27,000 a ton of tin, and we're selling for about $33,000. We've got a hedge in place at $33,000, so it's making a fair margin at this stage."

This margin is expected to improve significantly with the integration of lithium production, potentially pushing all-in sustaining costs into the "early teens," according to Viljoen. This cost structure could position Andrada as one of the lowest-cost hard rock lithium producers globally, a significant competitive advantage in the lithium market.

Interview with Chief Executive Officer, Anthony Viljoen

Expansion Plans & Production Targets

Andrada Mining has outlined ambitious expansion plans for the near and medium term:

Tin Production

• Current production: 1,000 tons of tin metal per year
• Near-term target: 60% increase in the next 6-12 months
• Long-term vision: 5-10 times increase from current levels

Lithium Production

• Near-term target: 40,000 tons of lithium concentrate per year
• Long-term vision: 5-10 times increase from initial production levels

These expansion plans are supported by the company's substantial resource base. Viljoen notes that the ore body at Uis is "incredibly vast," with a mine life potentially extending for "literally a century."

Strategic Partnerships & Financing

Andrada Mining has secured strategic partnerships to support its growth plans from the Development Bank of Namibia, Orion Resource Partner and SQM (Sociedad Química y Minera de Chile).

The partnership with SQM, one of the world's largest lithium producers, is particularly significant. Viljoen emphasises the importance of this development:

"You can't underplay how important this development has been for us. They are the biggest lithium miners globally, they are very aggressive in terms of acquiring new deposits, they see a lot of value in what Lithium Ridge is."

These partnerships provide Andrada with access to financing and expertise, crucial for executing its expansion plans and navigating the complexities of the lithium market.

Diversification into Copper & ESG Considerations

Recent exploration at the Brandberg West property has revealed promising copper mineralisation, with grades up to 3%. This adds another dimension to Andrada's portfolio of critical minerals. The copper mineralisation is associated with tin and tungsten in a vein system that extends for 2-3 kilometers, presenting a potentially significant new revenue stream for the company.

Andrada Mining appears to be conscientious of its environmental footprint. The company recycles 85% of its water, minimising its impact on local water resources. Future plans include exploring hybrid solar solutions for power generation, aligning with global trends towards renewable energy in mining operations.

Market Position & Competitive Advantage

Andrada Mining's focus on critical minerals positions it well in the current market environment. The company's ability to produce multiple metals from a single ore body provides a natural hedge against price volatility in any single commodity. The potential to become one of the lowest-cost hard rock lithium producers globally could give Andrada a significant competitive advantage, especially as demand for lithium continues to grow with the expansion of the electric vehicle and energy storage markets.

While Andrada Mining presents a compelling investment case, it's important to consider potential risks:

• Commodity Price Volatility: The company's revenues are exposed to fluctuations in tin, tantalum, and (in the future) lithium prices.
• Execution Risk: The planned expansions and integration of lithium production involve technical and operational challenges.
• Infrastructure Constraints: Long-term growth may be constrained by access to water and power, though the company is working on solutions.
• Geopolitical Risk: While Namibia is considered an investor-friendly jurisdiction, changes in government policies or regulations could impact operations.

The Investment Thesis for Andrada Mining

• Diversified Critical Minerals Portfolio: Exposure to tin, tantalum, lithium, and potentially copper, providing a natural hedge against single commodity price volatility.
• Low-Cost Production Potential: Existing tin and tantalum revenues cover operational costs, potentially making lithium production extremely cost-competitive.
• Significant Expansion Plans: Targets to increase tin production by 60% in the near term and establish substantial lithium concentrate production.
• Strategic Partnerships: Collaboration with major industry player SQM validates the company's lithium assets and provides expertise.
• Positive Cash Flow: Unlike many junior miners, Andrada is already generating positive cash flow, reducing financial risk.
• Long-Life Asset: The Uis mine has a potential century-long mine life, providing long-term production visibility.
• Favorable Jurisdiction: Namibia is considered an investor-friendly mining jurisdiction in Africa.
• Growing Market Demand: Critical minerals, especially lithium, are experiencing strong demand growth driven by green energy and technology sectors.

Andrada Mining represents an intriguing opportunity in the critical minerals sector. Its polymetallic approach, positive cash flow from existing operations, and ambitious expansion plans position it for potential significant growth. The strategic partnerships, particularly with SQM, validate the company's assets and approach. For investors seeking exposure to the critical minerals sector, especially lithium, Andrada Mining offers a unique value proposition with its low-cost production potential and diversified mineral portfolio.

As the global demand for critical minerals continues to grow, driven by the green energy transition and technological advancements, companies like Andrada Mining that can efficiently produce these materials are likely to play an increasingly important role in the global supply chain. However, as with any mining investment, careful consideration of the risks and ongoing monitoring of execution will be crucial.

Macro Thematic Analysis

The Critical Minerals Boom Powering the Green Energy Transition

The global push towards decarbonisation and renewable energy has sparked a surge in demand for critical minerals, creating a robust macro thematic that underpins companies like Andrada Mining. Critical minerals, including lithium, tin, tantalum, and copper, are essential components in clean energy technologies, electric vehicles, and advanced electronics.

Lithium, in particular, has seen exponential demand growth due to its crucial role in battery technology. The International Energy Agency (IEA) projects that demand for lithium could increase by up to 40 times by 2040 in a scenario aligned with the Paris Agreement goals. This growth is driven primarily by the rapid adoption of electric vehicles and the expansion of grid-scale energy storage systems.

Tin, often overlooked, is experiencing a renaissance due to its use in solar panels, electric vehicles, and advanced semiconductors. The global tin market is expected to grow at a CAGR of 3.9% from 2021 to 2026, according to Market Data Forecast.

Tantalum, crucial in electronic components and superalloys, is also seeing increased demand from the aerospace and defense sectors. The global tantalum market is projected to reach $3.4 billion by 2028, growing at a CAGR of 7.2% from 2021 to 2028 (Grand View Research).

Copper, essential for electrical infrastructure and renewable energy systems, is facing a potential supply deficit. S&P Global projects that annual copper demand will reach 50 million metric tons by 2035, more than doubling the current demand.

This macro environment creates significant opportunities for companies that can efficiently produce these critical minerals. However, it also presents challenges, including the need for sustainable mining practices and the development of new deposits to meet growing demand.

CEO Anthony Viljoen summarises the opportunity:

"When we talk about a region being a repository of critical raw materials, this area has it all, and the fact that it's been so untouched for so long gives us a competitive advantage."