Andrada Mining (LON: ATM) (OTCQB: ATMTF) shares are down 3%. ATM shares are down on the back of the results. Which are, to be fair about it, better than we might have expected. For the tin price has been falling and that’s something that we can identify from outside Andrada. So, anyone tracking the shares would have been able to note that falling tin price and the likely effect upon the results. What’s different is that Andrada has been able to offset some of that effect. If they’d not then they would have been into real loss territory.
The results: “Revenue of £9.8m (FY 2022: £13.6m) impacted by the decrease in tin prices. Cash costs (C1) decreased to US$19 762 per tonne of contained tin (FY 2022: US$21 839) due to higher tonnage. All-in sustaining cost decreased to US$24 939 per tonne of contained tin (FY 2022: US$27 515) due to higher tonnage.” That higher tonnage is important because sales prices declined: “Average tin price at US$25k per tonne (FY2022: US$39k per tonne)” As we say, it’s possible to check the tin price externally at the LME.
Cash costs means that there’s a positive margin on the mining. All in costs include the cost of capital and so on - and there they’re just squeaking by, if that. We’ve talked before and said we’re not keen on some of Andrada: “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.” We may, or may not be, right about that of course.
Andrada Mining share price from Google Finance
There’s a bigger lesson to be had here though. That collapsing tin price. Sure, it’s above cash costs to Anrada will be sensible to continue producing. They’re making a contribution to capital costs by continuing to operate. But the problem for those who would go mining tin is different. Their feasibility study must use the current price of tin - and the all in price, including capital costs.
This matters for companies like First Tin and Cornish Metals. They too are commodity producers, they too must accept the market price. And at current prices it’s not obvious that it’s a good idea to mine either of them. Therefore, it’s not certain that they’ll gain the finance to open. After all, we do know there’s tin in South Crofty, we know it’s mineable as well. But if there’s no profit to be had then why bother - and that’s the reason South Crofty closed those decades back anyway, right?