Andrada Mining Limited (ATM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Andrada Mining Limited Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish our responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand over to the executive management team from Andrada Mining. Anthony, Hiten, good afternoon.

Good afternoon, and thanks for having us, and thank you to everybody for joining us today. Whether you're a current shareholder or considering investing Andrada for the first time, I'm delighted to have you here. Andrada Mining is a company that explores and mines critical minerals. These are minerals the world absolutely needs for modern technology, electric vehicles and renewable energy. We operate in Namibia in Southern Africa. The metals we mine include tin used in semiconductors and explore for lithium used in electrical vehicles and batteries, tungsten used in defense and alloys and copper used in electrical applications. Today, I'll walk you through what's changed in our company, where we think there's value for investors, what our 3 main projects are and how we plan to grow cash flow. And most importantly, today's message is about one thing, unlocking value. We believe there's a clear disconnect between the assets we have built, the cash flow we are generating and how the company is perceived. This presentation is about what has fundamentally changed, why that matters now and how we are moving to a phase of delivery and value realization. I won't go through the disclaimer in detail, but please note, this presentation contains forward-looking statements and is in no way considered investment advice. Andrada is a company on the rise. We have built a mine from scratch and expanded production and are currently generating revenues at the Uis mine. We are producing tin every single day. This is hugely important because most mining companies you'll hear about are just exploring or developing. They are not making money yet. We are. We have an experienced management team. These aren't people learning on the job. My engineering and operations teams have successfully started this mine and grown production steadily over 5 years. We know how to operate. We have $90 million of growth funding already secured from strategic partners. These aren't small local investors. These are major international companies betting big alongside us on our projects. We operate in Namibia, the best mining jurisdiction in Africa. Finally, our operations are growing strongly. In the last quarter, we increased tin production by 10% compared to last year. We're consistently hitting our recovery targets. So the key takeaway is this, the business has derisked significantly over the last year, and we are now focusing on extracting this value for shareholders. To simplify the story, think of Andrada as 3 engines. First, Uis, our flagship tin operation. We're the only tin producer listed on the London AIM market. If you want to invest in a producing tin mine in the biggest tin bull run of recent times with tangible exposure on AIM, Andrada is the company. We are in year 5 of a 100-year plus mine life. We're fully funded to expand this mine by increasing production through better equipment and processing. We're expanding our production volumes and our profit margins, and we're adding lithium production to the same operation, which will add a second revenue stream. Tin prices remain amazingly strong. They jumped 40% in 2025 and are currently over $45,000 per ton. That's excellent for our profit margins. Second, Lithium Ridge. Lithium Ridge is our recent lithium discovery and probably one of the most significant lithium discoveries in Africa in the last 4 years. If you follow the news, you will know lithium is the key ingredient in the burgeoning electric vehicle market. This is a high-grade discovery with tin and tantalum as bonus metals in the same deposit. We're drilling aggressively to figure out how much lithium is actually there. The project is funded by our partners, SQM, who are the world's largest lithium producers. They're investing $40 million to fund towards a full feasibility study. This provides a strong technical validation for the project and for my team. Third, Brandberg West. This is our entry into the mind-blowing tungsten market with additional upside from tin and copper. The project is fully funded, $51 million from our partners, BWCAM for drilling and metallurgical testing. The additional copper credits add another valuable metal to the critical mineral mix of the company. We have also started an aggressive exploration program here. So you're no longer buying into a single asset story at Andrada, you're buying cash flow today plus fully funded growth across multiple critical minerals. Uis generates the cash, partners fund the growth, shareholders retain the upside. This combination is almost unheard of on AIM. What makes Andrada particularly compelling is the scale of this opportunity. This is what underpins the long-term strategic value. When we started our prospecting in the area, our vision was to consolidate historic mines in the tin-mineralized geological region to gain critical mass that would allow us to develop a mining company. With tin as the baseload for exploration, we've discovered that associated with these various historic orebodies were associated large amounts of critical minerals. Our subsequent work and established operations on the ground have now defined a district-scale mineral system in the Erongo region, covering multiple commodities in addition to tin of tungsten, lithium, copper and tantalum. And importantly, we are the first movers in this region. In addition to the metal value in the ground, here's why scale matters for you as an investor. All these projects are close together. That means we can share infrastructure, roads, power, processing facilities, technical staff and logistics. When you're a single project company, you have to build everything from scratch. When you operate a district, you get huge cost efficiencies and expediency of delivery. These are critical minerals the world needs for smartphones, electric vehicles, renewable energy, defense and advanced manufacturing. Demand is growing, supply is tight, and we have exposure to all of them, multiple opportunities to create multiples of value. I'm going to hand over to Hiten now.

Thank you, Anthony. Let's now focus on Uis, the foundation of the group. Currently, we are processing around 1 million tons of ore. With production of roughly 1,500 tons of tin concentrate, this translates into positive EBITDA and free cash flow margins from Uis. Whilst this is a strong base, the real value lies in what we're going to do next. The growth plan is straightforward with low execution and funding risk and is driven by 4 main streams: upgrading the crushing capacity, installation of the ore sorters, which will be integrated with the crushing capacity, optimization of the mine and plant efficiencies and increasing the resource base. The successful implementation of this growth plan would enable Uis to achieve ore throughput of up to 2.5 million tons, approximately 70% increase in the concentrate production. And this would also improve the EBITDA margins as well as have a material impact on the free cash flow as a result of those volumes. Concurrently, the lithium development at Uis is also being accelerated through the collaboration with the EIB. In summary, it's all about scaling an existing operation efficiently and increasing the near-term cash generation. We are uniquely positioned across 4 commodity cycles at the same time. Firstly, tin, we continue to see ongoing structural supply deficits. We also see strong pricing up more than 40% in the last 12 months. This translates into immediate cash flow impact with the current production levels. Second, lithium. The market has corrected and is well positioned for the next EV cycle. Prices are up approximately 200% year-on-year, which provides better economics to both Uis and Lithium Ridge. Thirdly, tungsten, which has become globally strategic driven by the concentrated supply and rising demand in the defense industry. With prices up more than 500% in the last 12 months, it forms the foundation of the Bandberg West asset. And lastly, copper, which remains a critical commodity with limited substitutes and further supports the valuation of our Brandberg West asset. Why is this important to Andrada? A diversified commodity portfolio reduces the reliance on a single commodity, enhancing its resilience and supporting a more stable long-term growth profile. I'll hand back over to you, Anthony.

Thank you, Hiten. So what drives value from here? Well, there are 3 clear levers over the next 8 to 18 months. At Uis, increased volume with our new crushing circuit, enhance input grade and recovery by adding in ore sorters, delivering consistent cash flow and advancing the lithium integration towards a bankable feasibility study. At Lithium Ridge, unlocking value through drilling and metallurgical test work, early-stage resource estimation and advancing this as well towards a bankable feasibility study. Brandberg West, it's about exploration and metallurgical work across the tungsten, tin and copper mineralization and potential value uplift immediately from the historic dumps. Now importantly, the market is currently valuing the company at around $95 million. But based on our internal project economics and valuation attributed to the partnerships, the underlying value potential could be significantly higher. Across all 3 assets, the work is funded, the timelines are defined and the milestones are clearly measurable. We've also recently strengthened the shareholder base. Recent funding introduced strong institutional investors, including Greg Coffey, Talent10 as well as a number of well-known London investing institutions. That's a sophisticated investment coming in at an entry price base of 3.6p. We now have strong institutional shareholders globally recognized partners, including SQM as well as ACAM through their subsidiary, BWCAM, and established banking relationships with local Namibian banks and more recently, the European Investment Bank. This technically validates the assets, reduces funding risk and supports execution. We now have over USD 90 million in non-dilutive or project-level financing. So why is this compelling? Because the key building blocks are all now in place, a cash-generating tin business, fully funded growth projects and multiple near-term catalysts within the next 8 to 18 months. And importantly, production is growing, margins are expanding and new value streams are being unlocked. So this is not a long-dated story anymore. This is a company already delivering and about to scale. That's why we believe there is a clear pathway to unlocking value. Thank you very much, everybody, for your time, Andrada is open for business. We'll now open the session for questions.

Perfect, Anthony, and if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. I just like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can all be accessed via your investor dashboards. Guys, we have received a number of questions throughout your presentation this afternoon. Thank you to all of those on the call for taking the time to submit their questions. But Josephine, at this stage, if I may hand over to you to chair the Q&A with the team. If I pick up from you at the end, that would be great. Thank you.

Thank you very much, [ Drake ]. So the first question regards the tin expansion at Uis, which seems to be never ending with shareholder dilution over the last 3 to 4 years. How are we going to reach the 2,600 tons by 2028 when we have missed previous targets?

Thanks, Josephine. And it's a very important question and a question that we get asked a lot. It's very important at this stage to just take a step back and evaluate where we are as a company and especially on the tin plant. So when we started out the tin operation, bear in mind, this was only a pilot plant. So subsequently to that, we got the pilot plant into production. It became cash positive. We've made money. We've expanded that facility on a 17% annual growth rate. And the plant is now cash flow positive and is actually producing cash for the group. So we believe that the plant is successful. We have delivered. The numbers obviously aren't what people are wanting. But if you think what we've done, just plant utilization is at 96%, tin recovery is at 73% for the last 3 quarters. This is a producing base with a lot of momentum. Our area that we probably didn't take cognizance of was just the amount of tonnage that we needed to move. So in a plant like this, a gravity-based plant, it's all about free flow of material through the plant. So what inevitably happens is you do get bottlenecks within the plant. So once you've fixed one bottleneck, you need to move -- inevitably create a bottleneck somewhere else in the plant. The biggest area that we've what we initially focused on was in the concentrate production side of the plant, the wet side of the plant, so to speak. We've moved that now to the front end of the plant, and we've identified that we need to move a lot larger tonnage through that front end of the plant, which is why we initiated the projects of the crushing and more importantly, the ore sorting that everyone asks about. So rather than try and separate these projects into 2 separate entities, we decided to fix the entire bottleneck upfront and make sure that we could get that tonnage through the front end of the plant upfront. And that's what we are doing now. So we reengineered how that -- how we were going to integrate those ore sorters, and we've added additional crushing capacities so we can get that. So we are going to increase tonnage over the course of the year. The ore sorting is now a viable low-cost entry into the pre-concentration. So we -- as part of the reengineering, we've also reduced our capital requirements for that. But importantly, what we did subsequent to all of this was we increased the resource and reserve and are going to continue doing that at Uis. We also unlocked the value to introduce the partners at Lithium Ridge and Brandberg West. And so now, as we've mentioned in the presentation, we are primed for growth. We've got -- we've fully funded across all the assets. We've got a team operating on the ground, understanding what is required to expand this operation, and we're prime for growth. So there inevitably have been delays, but I do believe that they were all necessary to find the optimal solution for this operation.

Thank you, Anthony. You've touched on it there, but the next question is regarding the ore sorters specifically, which have been put on a bit of a backburner. When are these going to be put in place and fully operational?

Yes. So as per the previous question, we've -- all the long-lead items have been procured. They're on site. We are still procuring some of the crushing equipment. So you're going to start seeing these -- all of these different project streams kick in over the next 6 to 18 months. We've appointed engineering firms already to not only do the development and construction of these projects, but also an oversight engineering firm to ensure that all of the milestones and timelines are strictly adhered to.

Brilliant. Thank you. When will the company provide shareholders with revised forecasts for tin output?

So look, I mean, as we said, we are -- once we are going to be doubling the production just about in the next year. So the tin concentrator, as we said, in the end of financial year 2026, we're looking to increase to about 2,800 to about 3,000 tons. That will take our contained tin from about 1,100-odd tons to about 1,600 to about 1,800 tons. We also are increasing our waste stripping so that we've got access to ore at depth so that we can supply all of these new initiatives, and we can get more ore to the plant. So that's going to start taking place almost immediately. So as we said, the next 6 to 18 months, you're going to see a massive step change across multiple different work streams within this portfolio.

The next question regards the RNSs drill results for Lithium Ridge, which didn't include how many meters out of the new total of 16,500 meters have been drilled so far. What is the total now?

Yes. So I do apologize, that was an oversight on our part. But essentially, we had originally planned for 14,000 meters across 120 holes. So we are -- we did expand that drilling program by about 18-odd percent just because what we were seeing there was pretty exciting. So we, together with our partners, increased the drilling tons or drilling holes to define the scale and just understand a little bit more about the continuity of the mineralized system. So going forward, we'll keep that in mind and make sure we implement that in all of RNSs going forward.

Why weren't retail shareholders included in the latest fundraise?

So look, our share register is very retail heavy, and we value the loyalty of our retail shareholders enormously. The recent raise was a deliberate exercise to target well-known institutions and to bolster the institutional share register. So we do understand that there could have been some unhappiness around the retail not being included in the raise. But you can be rest assured that the institutions that we have brought on board are Tier 1 institutions and will massively support the company going forward. But in future, we will always and always consult with the retail shareholders.

Will Andrada need to return to the market to fund the growth plans outlined in this presentation?

So look, not for any of our growth initiatives at this stage. We are obviously across all with our joint venture partners at Lithium Ridge, Brandberg West. The recent capital raise, we've also got the lithium integration at Uis that supported by the European Investment Bank. We've also got a really good relationship with our investors -- sorry, our lenders in Namibia. So we do believe that from an equity point of view, the company is fully funded at this stage.

Thank you. The next question is, with the downgrade in CLN conversion price as well as the options to 5p, aren't you essentially stating that's the price you see as fair value now? Will this make it hard to command a valuation far above in the years ahead?

No, we actually don't believe that. With the 5p that we've actually put in, these convertible loan notes had anti-dilutive clauses in there. So naturally, the prices were already down to about 6.5p on the conversion. So basically, if we look at the sum of parts of what Anthony mentioned now, you've got various catalysts of growth that drives value. And at this stage, you look at Lithium Ridge, lithium prices are significantly up from the time that SQM entered into this. So the valuation of that inventory alongside what we've done with our Brandberg West asset tungsten, value from there still has to be derived and will continue to be unlocked as we provide the results to the market from those initiatives. In addition to that, the direct value for people looking at just a straightforward P&L and not your intangible value will come through the growth initiatives, which really takes our volumes up. And at the prices where we sit with today, naturally, we'll start seeing good value coming out of the core cash asset alongside then the intangible value coming from those exploration sites, which are funded by the JV partners.

And on the third-party ore supply agreement, are you able to tell us that meaningful discussions and progress are happening behind the scenes? And are there any loose time lines as to when it might be resolved?

Yes. So this is another great question. So look, [indiscernible] is a very clear asset that we've always had our eyes on, and we believe it will add tangible value to the portfolio. We did enter into an arrangement with the license holders to acquire the assets on an option basis provided that they achieved 3 specific targets, one of which was that they cleared up the legal case, and that's that they're dealing with currently with the third parties, and we're following that with great interest. The other was obviously the ore supply agreement and the third was the construction of the jig plant. So we've basically lived up to our end of the bargain. The legal case does seem to be protracted. So as a result, they haven't lived up to their end of the bargain. So it allows us to repurpose the jig plant, which we have done very successfully at Uis. But we do still want this asset. We do believe that it is a very valuable asset for the company, and we do hope that they reach resolution shortly within the legal system that they're dealing with.

And with the Middle East situation and the energy price spike, how much could this increase costs for the tin operation? Are you still confident of meaningfully reducing [ AISC ] through scale this year despite higher input costs?

Yes. Yes, we are. So with regards to the conflict that's ongoing, fuel is probably the main factor that will affect the unit cost. We do think that there would be about a 4% to 5% increase as a result of the fuel price increase. However, part of our expansion plans and ramping up of the actual mining activities doesn't incorporate a pure linear, I can say, extrapolation of mining vehicles. What we are looking at is optimizing basically the fleet that our mining contractors are using where they can take on double the loads and use the same amount of fuel. So we are sort of working alongside our capital growth projects with almost a continuous improvement on current operating efficiencies. And there are multiple factors that we are going to look at in terms of trying to bring down those unit costs alongside these expansions. The volume itself does give us quite a bit of a fixed cost dilution, but the other benefits do come from, firstly, upgrading these crushers where you reduce your maintenance costs as well as the lubrications on the motors, et cetera. But overall, we do see a reduction in the unit cost as we bring these expansion programs into commission.

And given the projected increases in throughput and the planned expansions at Uis, are there any utility, including electricity and water constraints expected over the course of the next couple of years?

No. So look, that's been one of the areas that we've been focusing on with all of these additional projects is making sure that we get adequate power from the utility. We are reliant on the grid. So we do make these applications. We have upgraded our electricity substations to accommodate the increases in production. And then from a water perspective, we recycle 85% of our water. It is an arid region. The water that we do take is underground water. It's non-potable, so it doesn't compete with human consumption. We are within our water extraction limits that we've been licensed for. So what we've focused on is maximizing our scale according to the infrastructure footprint that we operate within. So we are very comfortable of the infrastructure requirements and where we want to get to from a development point of view.

Thank you. Some time ago, investors were told there were numerous suitors knocking at the door for lithium petalite. Given the lithium price recovery, are there any suitors now? And what is the strategy this time around?

So the strategy is -- we're going to stick to our policy, and we're not going to comment on market speculation or any specific strategic interest. But you can be best believe that the Board reviews all options to create value for shareholders. What we can speak to is the strategy that we've actually implemented. So rather than having one strategic partner, that process resulted in 3 strategic partners in SQM, ACAM and the European Investment Bank. So we do see that there's a lot of interest in the portfolio. As you can imagine, everyone is hunting for all the elements that we currently are producing or will be producing in the short term. So it's an incredibly exciting space to be in, and we'll obviously keep the market abreast of any developments related to that.

Thank you, Anthony. The next question, these investor meet sessions allow existing shareholders to be updated and remain engaged and attract new investors. Why has it been so long since the company last did one of these? And will they be held more frequently in future?

That's a fair question. And yes, the simple answer, we will be doing a lot more of these. We've spent the last sort of 24 months or so with our heads to the grindstone. We've been building, we've been expanding. We've been producing growth assets. We're incredibly proud of where we are as a company at the moment. So we do want to tell as many people as possible of what we're doing and what the scale of what we have out there. So yes, we would be delighted to meet and discuss with as many investors and future investors as possible on any forums available.

Thank you very much, Anthony. The next question, regarding Lithium Ridge, based on current progress, when do you expect to finish the Stage 1 drilling? And when are the final results expected? What will follow the Stage 1 drilling if SQM stay interested?

So that's -- there's quite a lot of angles to that. But essentially, the drilling should be completed in the next 6 to 8 weeks. Then from there, we -- as you'll see, we're constantly releasing results. It take -- there is a lead time from the laboratories to process these results. So we do try and release them as efficiently as possible. There will be a stage gate where SQM will look to continue the financing. So far, all indications in terms of tonnage that was required and what have you seem to be looking very positive that we will meet those milestones, but that will be subject to the discussion with the joint venture partner at that stage.

Thank you, Anthony. Are you currently producing tantalum? Or is the magnetic separation of tantalum still bypassed to increase tin output?

So we are actually initiating the tantalum circuit again. At the sort of last quarter of last year, we actually prioritized cash flows with the high tin price and took advantage of that. Through the sort of post raise and higher materialization of those tin prices, we have recommissioned and started up the tantalum circuit. So we would be seeing at least some level of tantalum credits coming through within the next quarter and 2.

Thank you. I think we've got time for one more question. What -- why do you think the market has not appreciated the potential of the tin, tungsten of Andrada, but other AIM stocks like Tungsten West or Strategic Minerals have performed very strongly.

Look, we just know what we've got. And I don't like sort of doing a direct comparison with other projects or other companies' projects. Everyone's got their own cross to bear. But needless to say, if we did a direct comparison, what we have across all 3 assets would draw any of those comparables. They're single asset companies they've still got a long way, a lot of learning to do in terms of getting into production, first of all, and then scaling it. Value will come through. There's no doubt about it. I mean we -- to have a portfolio of this magnitude in this market, it will be impossible to ignore eventually.

And to that point, Anthony, are you confident that you will hit the increased thin tonnage to 2,800 tonnes following the work on the ore sorters, crushers, et cetera? And do you have time scales for this?

The short answer, yes, most definitely. We have learned from our mistakes. We have learned from where we need to debottleneck areas of the plant. We have restructured how we operate as a corporate entity. We've slimmed down our decision-making capabilities, and we are now laser-focused in terms of developing these projects over the course of the next 12 months.

Perfect, guys. If I may just jump back in at this point, thank you very much indeed for being so advance of your time then addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review, and we'll publish all those responses out on the platform. But Anthony, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

No. Well, I would really like to thank everybody for participating today. It's really great to see the number of people that firstly participated and registered for this webinar. The questions were really hard hitting. We do obviously understand all the various platforms where discussions are had about the performance of the company. So we do appreciate that there is a very keen eye in terms of what we do going forward and how we are positioned. But you can be rest assured that what we've built, what my team have built and what we are aiming to achieve and is incredibly ambitious, but we are laser-focused in terms of getting to that point now, and we really appreciate everyone's support and loyalty, and that's going to be hopefully richly rewarded in the next 12 months.

Anthony, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Andrada Mining Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.