Andrada Mining (LON: ATM) (FRA: 9IA) (OTCQB: ATMTF) shares are down 5% this morning. ATM shares have moved in reaction to the latest news release from the company. We've said before that we're not keen on the emphasis being laid upon tantalum revenues. We agree the tantalum's there, the addition of an extraction circuit is not a grand cost, we agree there will be revenues. However, we also think that the tantalum market is going to dive in price real soon now. So emphasis on those additional, or side, revenues makes us more than a bit nervous.
The announcement: “The Company is pleased to confirm that it has also completed the construction phase of the bulk sampling plant and tantalum circuit. Commissioning has commenced, in accordance with the timetable detailed in the announcement dated 22 May 2023.” There is also the news of a loan note issuance but we regard that as just a normal part of the financing operation at this stage of the mine life. We may be right or wrong on that but that's where we are.
We've explained before about tantalum at Andrada: “But everyone and their Granny is now out there trying to mine spodumene for lithium. No it's not quite true that all such mines will have tantalum as a byproduct but it's close to being true. Which means everyone and their Granny is going to be producing tantalum soon enough. And no, tantalum does not have a use in this new electrified world. The demand for tantalum is the same as it used to be - but the supply is about to increase by orders of magnitude. That's something that is not positive for the price of tantalum - to put matters very mildly indeed. We worry about people who say they are going to make money out of tantalum. Simply because there are so many who are about to try doing so that none will.”
Andrada Mining share price from London Stock Exchange
We have also said that we like another aspect of the plan at Andrada: “One of the things about tin is that there's often a lithium content associated with deposits. They're just two metals that often enough do turn up in the same place. You'd rarely go mining such a deposit for the Li content, but if you're already there - with plant equipment etc - for the Sn then who not co-extract the Li? You're already covering most of the overheads and it's only the marginal costs of Li extraction that have to be covered by Li revenues.”
Given current prices going for the lithium makes obvious sense to us. Given where we think tantalum prices are going to go that side of it much less so.